KANA SOFTWARE INC
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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<DESCRIPTION>AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>E<SMALL>XHIBIT</SMALL> 10.01 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>KANA SOFTWARE, INC. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>BRIDGE BANK, N.A. </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT </B></FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of February&nbsp;27, 2007, by
and between BRIDGE BANK, N.A. (&#147;Bank&#148;) and KANA SOFTWARE, INC. (&#147;Borrower&#148;). </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>RECITALS </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">A. Bank and Borrower are parties to that certain Business Financing Agreement dated as of November&nbsp;30, 2005, as amended from time to time (the
&#147;Original Agreement&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">B. Borrower and Bank wish to amend and restate the terms of the Original Agreement. This Agreement sets
forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>AGREEMENT
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The parties agree as follows: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>1.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>DEFINITIONS AND CONSTRUCTION. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>1.1
Definitions.</B> As used in this Agreement, the following terms shall have the following definitions: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Accounts&#148; means all
presently existing and hereafter arising accounts, contract rights, payment intangibles, and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and
other technology) or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and
Borrower&#146;s Books relating to any of the foregoing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Advance&#148; or &#147;Advances&#148; means a cash advance or cash advances
under the Revolving Facility. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Affiliate&#148; means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person&#146;s senior executive officers, directors, and partners. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Bank Expenses&#148; means all: reasonable costs or expenses (including reasonable attorneys&#146; fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank&#146;s reasonable attorneys&#146; fees and expenses incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;Borrower&#146;s Books&#148; means all of Borrower&#146;s books and records including: ledgers; records concerning Borrower&#146;s assets or liabilities, the Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Borrowing Base&#148; means an amount equal to eighty percent (80%)&nbsp;of Eligible Accounts, as
determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Business Day&#148; means any
day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;Cash&#148; means unrestricted cash and cash equivalents. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Cash Management Sublimit&#148; means a sublimit for cash
management transactions approved by Bank under the Revolving Line subject to the availability under the Revolving Line and the Borrowing Base in an aggregate amount not to exceed $2,500,000 <I>minus</I>, in each case, any amounts outstanding under
the Letter of Credit Sublimit and the Foreign Exchange Sublimit. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Change in Control&#148; shall mean a transaction in which any
&#147;person&#148; or &#147;group&#148; (within the meaning of Section&nbsp;13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the &#147;beneficial owner&#148; (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such &#147;person&#148; or &#147;group&#148; to elect a majority of
the Board of Directors of Borrower, who did not have such power before such transaction. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Closing Date&#148; means the date of this
Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Code&#148; means the California Uniform Commercial Code. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Collateral&#148; means the property described on <B>Exhibit A</B> attached hereto. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Consolidated Net Income (or Deficit)&#148; means the consolidated net income (or deficit) of any Person and its Subsidiaries, after deduction of
all expenses, taxes, and other proper charges, determined in accordance with GAAP, after eliminating therefrom all extraordinary nonrecurring items of income. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">&#147;Consolidated Total Interest Expense&#148; means with respect to any Person for any period, the aggregate amount of interest required to be paid or accrued by a Person and its Subsidiaries during such period on
all Indebtedness of such Person and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in
respect of any capitalized lease or any synthetic lease, and including commitment fees, agency fees, facility fees, balance deficiency fees and similar fees or expenses in connection with the borrowing of money. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Contingent Obligation&#148; means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect
to (i)&nbsp;any indebtedness, lease, dividend, letter of credit or other obligation of another; (ii)&nbsp;any obligations with respect to undrawn letters of credit, corporate credit cards, or merchant services issued or provided for the account of
that Person; and (iii)&nbsp;all obligations arising under any agreement or arrangement designed to protect such Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term
&#147;Contingent Obligation&#148; shall not include endorsements for </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by Bank in good faith; provided,
however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;Copyrights&#148; means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Credit Extension&#148; means each Advance, Term Advance, Letter of Credit, or any other extension of credit by Bank for the benefit of Borrower
hereunder. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Current Liabilities&#148; means, as of any applicable date, all amounts that should, in accordance with GAAP, be included
as current liabilities on the consolidated balance sheet of Borrower and its Subsidiaries, as at such date, plus, to the extent not already included therein, all outstanding Credit Extensions made under this Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Daily Balance&#148; means the amount of the Obligations owed at the end of a given day. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Deferred Revenue&#148; means all amounts received in advance of performance under maintenance contracts and not yet recognized as revenue.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;EBITDA&#148; means with respect to any fiscal period an amount equal to the sum of (a)&nbsp;Consolidated Net Income of the Borrower
and its Subsidiaries for such fiscal period, plus (b)&nbsp;in each case to the extent deducted in the calculation of the Borrower&#146;s Consolidated Net Income and without duplication, (i)&nbsp;depreciation and amortization for such period, plus
(ii)&nbsp;income tax expense for such period, plus (iii)&nbsp;Consolidated Total Interest Expense paid or accrued during such period, plus (iv)&nbsp;non-cash expense associated with granting stock options, and minus, to the extent added in computing
Consolidated Net Income, and without duplication, all extraordinary and non-recurring revenue and gains (including income tax benefits) for such period, all as determined in accordance with GAAP. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Eligible Accounts&#148; means those Accounts that arise in the ordinary course of Borrower&#146;s business that comply with all of Borrower&#146;s
representations and warranties to Bank set forth in Section&nbsp;5.4; provided, that standards of eligibility may be fixed and revised from time to time by Bank in Bank&#146;s reasonable judgment and upon notification thereof to Borrower in
accordance with the provisions hereof. Unless otherwise agreed to by Bank, Eligible Accounts shall not include the following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(a)
</B>Accounts that the account debtor has failed to pay within ninety (90)&nbsp;days of invoice date; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>Accounts with respect to
an account debtor, thirty-five percent (35%)&nbsp;of whose Accounts the account debtor has failed to pay within ninety (90)&nbsp;days of invoice date; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) </B>Accounts with respect to which the account debtor is an officer, employee, or agent of
Borrower; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) </B>Accounts with respect to which services have not been rendered (other than pre-billed maintenance), goods are placed
on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the account debtor may be conditional; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>(e) </B>Accounts with respect to which the account debtor is an individual or an Affiliate of Borrower; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>(f) </B>Accounts with respect to which the account debtor does not have its principal place of business in the United States, except for Eligible Foreign Accounts; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(g) </B>Accounts with respect to which the account debtor is the United States or any department, agency, or instrumentality of the United States;
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(h) </B>Accounts with respect to which Borrower is liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower or for deposits or other property of the account debtor held by Borrower, but only to the extent of any amounts owing to the account debtor against amounts owed to Borrower; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(i) </B>Accounts with respect to an account debtor, including Subsidiaries and Affiliates, whose total obligations to Borrower exceed thirty percent
(30%)&nbsp;of all Accounts (the &#147;Concentration Limit&#148;), to the extent such obligations exceed the aforementioned percentage, except as approved in writing by Bank and except that the Concentration Limit for Accounts with respect to which
the account debtor is IBM shall be fifty percent (50%); </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(j) </B>Accounts with respect to which the account debtor disputes liability or
makes any claim with respect thereto as to which Bank believes, in its sole discretion, that there may be a basis for dispute (but only to the extent of the amount subject to such dispute or claim), or is subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(k) </B>Accounts the collection of which Bank reasonably determines to be doubtful.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Eligible Foreign Accounts&#148; means Accounts with respect to which the account debtor does not have its principal place of
business in the United States and (i)&nbsp;that are supported by one&nbsp;or more letters of credit in an amount and of a tenor, and issued by a financial institution, acceptable to Bank, (ii)&nbsp;that Bank approves on a case-by-case basis, or
(ii)&nbsp;Accounts with respect to which the account debtor is IBM. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Equipment&#148; means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;ERISA&#148; means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Event of Default&#148; has the meaning assigned in Article 8. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Foreign Exchange Sublimit&#148; means a sublimit for foreign exchange contracts under the Revolving Line, subject to the availability under the
Revolving Line and the Borrowing Base, in an aggregate amount not to exceed $2,500,000 less, in each case, any amounts outstanding under the Letter of Credit Sublimit and the Cash Management Sublimit. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;GAAP&#148; means generally accepted accounting principles as in effect from time to time. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Indebtedness&#148; means (a)&nbsp;all indebtedness for borrowed money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b)&nbsp;all obligations evidenced by notes, bonds, debentures or similar instruments, (c)&nbsp;all capital lease obligations and (d)&nbsp;all
Contingent Obligations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Insolvency Proceeding&#148; means any proceeding commenced by or against any person or entity under any
provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Intellectual Property Collateral&#148; means all of
Borrower&#146;s right, title, and interest in and to the following: Copyrights, Trademarks and Patents; all trade secrets, all design rights, claims for damages by way of past, present and future infringement of any of the rights included above, all
licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights; all amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and all proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Inventory&#148; means all inventory in which Borrower has or acquires any interest, including work in process and finished products intended for
sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or possession, actual or constructive, of Borrower, including such inventory as is temporarily out of
its custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the
above, and Borrower&#146;s Books relating to any of the foregoing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Investment&#148; means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;IRC&#148;
means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Letter of Credit&#148; means a commercial or
standby letter of credit or similar undertaking issued by Bank at Borrower&#146;s request in accordance with Section&nbsp;2.1(c). </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">5 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Letter of Credit Sublimit&#148; means a sublimit for Letters of Credit under the Revolving Line,
subject to the availability under the Revolving Line and the Borrowing Base, in an aggregate amount not to exceed $2,500,000 less, in each case, any amounts outstanding under the Foreign Exchange Sublimit and the Cash Management Sublimit.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Lien&#148; means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Loan Documents&#148; means, collectively, this Agreement, any note or notes executed by Borrower, and any other agreement entered into in
connection with this Agreement, all as amended or extended from time to time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Material Adverse Effect&#148; means a material adverse
effect on (i)&nbsp;the business operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole or (ii)&nbsp;the ability of Borrower to repay the Obligations or otherwise perform its obligations under
the Loan Documents or (iii)&nbsp;the value or priority of Bank&#146;s security interests in the Collateral: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Negotiable
Collateral&#148; means all letters of credit of which Borrower is a beneficiary, notes, drafts, instruments, securities, documents of title, and chattel paper, and Borrower&#146;s Books relating to any of the foregoing. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Obligations&#148; means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any
other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Patents&#148; means all patents, patent applications
and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">&#147;Periodic Payments&#148; means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or
agreement now or hereafter in existence between Borrower and Bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Permitted Indebtedness&#148; means: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>Indebtedness existing on the Closing Date and disclosed in the Schedule; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) </B>Indebtedness secured by a lien described in clause (c)&nbsp;of the defined term &#147;Permitted Liens,&#148; provided (i)&nbsp;such
Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness and (ii)&nbsp;such Indebtedness does not exceed $100,000 in the aggregate at any given time; and </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) </B>Subordinated Debt. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Permitted Investment&#148; means: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>(a) </B>Investments existing on the Closing Date disclosed in the Schedule; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(b)</B> (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1)&nbsp;year from the date of acquisition thereof, (ii)&nbsp;commercial paper maturing no more than one (1)&nbsp;year from
the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard&nbsp;&amp; Poor&#146;s Corporation or Moody&#146;s Investors Service, (iii)&nbsp;certificates of deposit maturing no more than one (1)&nbsp;year
from the date of investment therein issued by Bank and (iv)&nbsp;Bank&#146;s money market accounts. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Permitted Liens&#148; means the
following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>Any Liens existing on the Closing Date and disclosed in the Schedule or arising under this Agreement or the other
Loan Documents; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being
contested in good faith by appropriate proceedings, provided the same have no priority over any of Bank&#146;s security interests; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(c)
</B>Liens (i)&nbsp;upon or in any equipment which was not financed by Bank acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii)&nbsp;existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) </B>Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses
(a)&nbsp;through (c)&nbsp;above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not
increase. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Person&#148; means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">&#147;Prime Rate&#148; means the variable rate of interest, per annum, most recently announced by Bank, as its prime rate,&#148; whether or not such announced rate is the lowest rate available from Bank. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Profitability&#148; means Borrower&#146;s net income after tax, net of any stock-based compensation expense. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Responsible Officer&#148; means each of the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer and the Controller of Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Facility&#148; means the facility under which Borrower may
request Bank to issue Advances, as specified in Section&nbsp;2.1(a) hereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Line&#148; means a credit extension of up to
Ten Million Dollars ($10,000,000). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Maturity Date&#148; means the second anniversary of the Closing Date. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Schedule&#148; means the schedule of exceptions attached hereto and approved by Bank, if any. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Subordinated Debt&#148; means any debt incurred by Borrower that is subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank
(and identified as being such by Borrower and Bank). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Subsidiary&#148; means any corporation, company or partnership in which
(i)&nbsp;any general partnership interest or (ii)&nbsp;more than 50% of the stock or other units of ownership which by the terms thereof has the ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time
as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Term Advance&#148; means
a cash advance under Section&nbsp;2.1(b). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Term Line&#148; means a credit extension of up to Five Million Dollars ($5,000,000).
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Term Maturity Date&#148; means the fourth anniversary of the Closing Date. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;Total Liabilities&#148; means at any date as of which the amount thereof shall be determined, all obligations that should, in accordance with GAAP
be classified as liabilities on the consolidated balance sheet of Borrower, including in any event all Indebtedness. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;Trademarks&#148; means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>1.2 Accounting Terms.</B> All accounting terms not specifically defined herein shall be construed in
accordance with GAAP and all calculations made hereunder shall be made in accordance with GAAP. When used herein, the terms &#147;financial statements&#148; shall include the notes and schedules thereto. </FONT></P> <P
STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>2.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>LOAN AND TERMS OF PAYMENT. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.1 Credit
Extensions.</B> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Borrower promises to pay to the order of Bank, in lawful money of the United States of&nbsp;America, the aggregate unpaid
principal amount of all Credit Extensions made by Bank to Borrower hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(a)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Revolving Advances. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">(i) Subject to and upon the
terms and conditions of this Agreement, Borrower may request Advances in an aggregate outstanding amount not to exceed the lesser of (i)&nbsp;the Revolving Line or (ii)&nbsp;the Borrowing Base, <I>minus</I>, in each case, the aggregate amount of the
outstanding Term Advances and any amounts outstanding under the Letter of Credit Sublimit, the Cash Management Sublimit and the Foreign Exchange Sublimit. Subject to the terms and conditions of this Agreement, amounts borrowed pursuant to this
Section&nbsp;2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances under this Section&nbsp;2.1(a) shall be immediately due and payable. Borrower may prepay any Advances without penalty or
premium. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">(ii) Whenever Borrower desires an Advance, Borrower will notify Bank by facsimile transmission or telephone no later than 3:00
p.m. Pacific time, on the Business Day that the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance Form in substantially the form of <B>Exhibit B</B> hereto. Bank is authorized to make Advances under this
Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without instructions if in Bank&#146;s discretion such Advances are necessary to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given by a person who Bank reasonably believes to be a Responsible Officer or a designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss suffered by
Bank as a result of such reliance. Bank will credit the amount of Advances made under this Section&nbsp;2.1(a) to Borrower&#146;s deposit account. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman"
SIZE="2"><B>(b) Term Advances.</B> Subject to and upon the terms and conditions of this Agreement, at any time from the date hereof through the first anniversary of the Closing Date (the &#147;Availability End Date&#148;), Bank agrees to make Term
Advances to Borrower in an aggregate amount not to exceed the lesser of (i)&nbsp;the Term Line or (ii)&nbsp;the Borrowing Base. Interest shall accrue from the date of each Term Advance at the rate specified in Section&nbsp;2.3, and&nbsp;shall be
payable monthly on the first day of each month so long as any Term Advances are outstanding. Any Term Advances that are outstanding on the Availability End Date shall be payable in thirty six (36)&nbsp;equal monthly installments of principal, plus
all accrued interest, beginning on February&nbsp;1, 2008, and continuing on the same day of each month thereafter through the Term Maturity Date, at which time all amounts owing under this Section&nbsp;2.1(b) and any other amounts owing under this
Agreement shall be immediately due and payable. Term Advances, once repaid, may not be reborrowed. Borrower may prepay any Term Advances without penalty or premium. When Borrower desires to obtain a Term Advance, Borrower shall notify Bank (which
notice shall be irrevocable) by facsimile transmission to be received no later than 3:00&nbsp;p.m. Pacific time three (3)&nbsp;Business Days before the day on which the Term Advance is to be made. Such notice shall be substantially in the form of
<B>Exhibit B</B>. The notice shall be signed by a Responsible Officer or its designee. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) Letters of Credit.</B> Subject to the terms and conditions of this Agreement and the availability
under the Revolving Line and the Borrowing Base, at any time prior to the Revolving Maturity Date, Bank agrees to issue letters of credit for the account of Borrower (each, a &#147;Letter of Credit&#148; and collectively, the &#147;Letters of
Credit&#148;) in an aggregate outstanding face amount not to exceed $2,500,000 less any amounts outstanding under the Cash&nbsp;Management Sublimit and the Foreign Exchange Sublimit, and that availability under the Revolving Line shall be reduced
by, the Letters of Credit. All Letters of Credit shall be, in form&nbsp;and substance, acceptable to Bank in its sole discretion and shall be subject to the terms and&nbsp;conditions of Bank&#146;s form of standard application and letter of credit
agreement (the &#147;Application&#148;), which Borrower hereby agrees to execute, including Bank&#146;s standard fee. On&nbsp;any drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed an Advance under Section&nbsp;2.1(a).
If at any time the Revolving Facility is terminated or otherwise ceases to exist, Borrower shall immediately secure in cash all obligations under any outstanding Letters of Credit on terms acceptable to Bank. The obligation of Borrower to reimburse
Bank for drawings made under Letters of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, the Application, and such Letters of Credit, under all circumstances
whatsoever. Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense or liability, including, without limitation, reasonable attorneys&#146; fees, arising out of or in connection with any Letters of Credit,
except for expenses caused by Bank&#146;s gross negligence or willful misconduct. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) Cash Management Sublimit.</B> Subject to the
terms and conditions of this Agreement and the availability under the Revolving Line and the Borrowing Base, Borrower may request cash management services which may include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in various cash management services agreements related to such services (the &#147;Cash Management Services&#148;) by delivering to Bank such applications on Bank&#146;s standard forms as requested by Bank;
provided, however, that the total amount of the Cash Management Services shall not exceed $2,500,000 less any amounts outstanding under the Letter of Credit Sublimit and the Foreign Exchange Sublimit, and that availability under the Revolving Line
shall be reduced by, the Cash Management Sublimit. In addition, Bank may, in its sole discretion, charge as Advances any amounts that become due or owing to Bank in connection with the Cash Management Services. If at any time the Revolving Facility
is terminated or otherwise ceases to exist, Borrower shall immediately secure to Bank&#146;s satisfaction its obligations with respect to any Cash Management Services, and, effective as of such date, the balance in any deposit accounts held by Bank
and the&nbsp;certificates of deposit issued by Bank in Borrower&#146;s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates), shall automatically secure such
obligations to the extent of the then outstanding Cash Management Services. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or otherwise
transfer any part of such balances for so long as the Cash Management Services continue. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(e) Foreign Exchange Sublimit.</B> Subject to
and upon the terms and conditions of this Agreement and any other agreement that Borrower may enter into with the Bank in connection with foreign exchange transactions (&#147;FX Contracts&#148;) and subject to the availability under the Revolving
Line and the Borrowing Base, Borrower may request Bank to </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">enter into FX Contracts with Borrower due not later than the Revolving Maturity Date unless cash secured on terms satisfactory to Bank. Borrower shall pay
any standard issuance and other fees that Bank notifies Borrower will be charged for issuing and processing FX Contracts for Borrower. The FX Amount shall at all times be equal to or less than $2,500,000 minus any amounts outstanding under the
Letter of Credit Sublimit and the Cash Management Sublimit. The &#147;FX Amount&#148; shall equal the amount determined by multiplying (i)&nbsp;the aggregate amount, in United States Dollars, of FX Contracts between Borrower and Bank remaining
outstanding as of any date of determination by (ii)&nbsp;the applicable Foreign Exchange Reserve Percentage as of such date. The &#147;Foreign Exchange Reserve Percentage&#148; shall be a percentage as determined by Bank, in its sole discretion from
time to time. If at any time the Revolving Facility is terminated or otherwise ceases to exist, Borrower shall immediately secure in cash all obligations under the Foreign Exchange Sublimit on terms acceptable to Bank. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.2 Overadvances.</B> If the sum of aggregate amount of the outstanding Advances <U>plus</U> the aggregate amount of the outstanding Term Advances
<U>plus</U> any amounts outstanding under the Letter of Credit Sublimit, the Cash Management Sublimit and the Foreign Exchange Sublimit exceeds the lesser of the Revolving Line or the Borrowing Base at any time, Borrower shall immediately pay to
Bank, in cash, the amount of such excess. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.3 Interest Rates, Payments, and Calculations.</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) Interest Rates.</B> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2">(i)
<B>Advances.</B> Except as set forth in Section&nbsp;2.3(b), the Advances shall bear interest, on the outstanding Daily Balance thereof, at a rate equal to one and&nbsp;one quarter of one percent (1.25%)&nbsp;above the Prime Rate. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2">(ii) <B>Term Advances.</B> Except as set forth in Section&nbsp;2.3(b), the Term Advances shall bear interest, on the outstanding Daily Balance thereof,
at a rate equal to (a)&nbsp;beginning on the Closing Date through the Availability End Date, one and one quarter of one percent (1.25%)&nbsp;above the Prime Rate, and (b)&nbsp;beginning on the Availability End Date through the Term Maturity Date,
one and three quarters of one percent (1.75%)&nbsp;above the Prime Rate. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) Late Fee; Default Rate.</B> If any payment is not made
within ten (10)&nbsp;days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of&nbsp;(i) five percent (5%)&nbsp;of the amount of such unpaid amount or (ii)&nbsp;the maximum amount permitted to be charged under
applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5)&nbsp;percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) Payments.</B> Interest hereunder shall be due and payable on the first calendar day of each
month during the term hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower&#146;s deposit accounts or against the Revolving Line, in which case those amounts shall thereafter
accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings, duties, impositions or other charges, to the
end that Bank will receive the entire amount of any Obligations payable hereunder, regardless of source of payment. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(d)
Computation.</B> In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in
the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty (360)&nbsp;day year for the actual number of days elapsed. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.4 Crediting Payments.</B> Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment
to such deposit account or Obligation as Borrower specifies. After the occurrence of an Event of Default, the receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to
the contrary contained herein, any wire transfer or payment received by Bank after 12:00 noon Pacific time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to
Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall
accrue and be payable for the period of such extension. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.5 Fees.</B> Borrower shall pay to Bank the following: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) Facility Fee.</B> On the Closing Date, a Facility Fee equal to $25,000, which shall be nonrefundable; and </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) Non-Usage Fee.</B> A per annum fee equal to one quarter of one percent (0.25%) of the difference between (1)&nbsp;the amount of the Revolving
Line available on each date of determination, and (2)&nbsp;the average daily balance owing on account of the Revolving Line during the term hereof, paid quarterly in arrears, which shall be nonrefundable provided however that such fee shall not be
assessed during a calendar quarter during which (i)&nbsp;the average aggregate amount outstanding under the Revolving Line and the Term Line exceeds $4,500,000, or (ii)&nbsp;the average amount of cash maintained by Borrower at Bank exceeds
$5,000,000; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) Bank Expenses.</B> On the Closing Date, all Bank Expenses incurred through the Closing Date, including reasonable
attorneys&#146; fees and expenses and, after the Closing Date, all Bank Expenses, including reasonable attorneys&#146; fees and expenses, as and when they are incurred by Bank. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>2.6 Term.</B> This Agreement shall become effective on the Closing Date and, subject to Section&nbsp;12.8, shall continue in full force and effect for
so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Notwithstanding
termination, Bank&#146;s Lien on&nbsp;the Collateral shall remain in effect for so long as any Obligations are outstanding. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>3.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>CONDITIONS OF LOANS. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>3.1 Conditions Precedent
to Initial Credit Extension.</B> The obligation of Bank to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>this Agreement; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>a
certificate of the Secretary of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman"
SIZE="2"><B>(c) </B>UCC National Form Financing Statement; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) </B>an intellectual property security agreement; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(e) </B>an agreement to provide insurance; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman"
SIZE="2"><B>(f) </B>payment of the fees and Bank Expenses then due specified in Section&nbsp;2.5 hereof; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(g) </B>current financial
statements of Borrower; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(h) </B>an audit of the Collateral, the results of which shall be satisfactory to Bank; and </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(i) </B>such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>3.2 Conditions Precedent to all Credit Extensions.</B> The obligation of Bank to make each Credit Extension, including the initial Credit Extension,
is further subject to the following conditions: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>timely receipt by Bank of the Payment/Advance Form as provided in
Section&nbsp;2.1; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>the representations and warranties contained in Section&nbsp;5 shall be true and correct in all material
respects on and as of the date of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and continuing, or would exist alter giving effect
to such Credit Extension. The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section&nbsp;3.2. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>4.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>CREATION OF SECURITY INTEREST. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>4.1 Grant of
Security Interest.</B> Borrower grants and pledges to Bank a continuing security interest in all presently existing and hereafter acquired or arising Collateral in&nbsp;order to secure prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date hereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>4.2 Delivery of
Additional Documentation Required.</B> Borrower shall from time to time execute and deliver to Bank, at the request of Bank, all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form
satisfactory to Bank, to perfect and continue the perfection of Bank&#146;s security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. Borrower from time to time may deposit
with Bank specific time deposit accounts to secure specific Obligations. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer
any part of such balances for so long as the Obligations are outstanding. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>4.3 Right to Inspect.</B> Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower&#146;s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect
Borrower&#146;s Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower&#146;s financial condition or the amount, condition of, or any other matter relating to, the Collateral. </FONT></P> <P
STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>5.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>REPRESENTATIONS AND WARRANTIES. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Borrower
represents and warrants as follows: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.1 Due Organization and Qualification.</B> Borrower and each Subsidiary is a corporation duly
existing under the laws of its state of incorporation and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.2 Due Authorization; No Conflict.</B> The execution, delivery, and performance of the Loan Documents are within Borrower&#146;s powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower&#146;s Articles of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement to which Borrower is a
party or by which Borrower is bound. Borrower is not in default under any material agreement to which it is a party or by which it is bound. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>5.3 No Prior Encumbrances.</B> Borrower has good and marketable title to its property, free and clear of Liens, except for Permitted Liens. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>5.4 Bona Fide Eligible Accounts.</B> The Eligible Accounts are bona fide existing obligations. The property and services giving rise to such Eligible Accounts has been </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">delivered or rendered to the account debtor or to the account debtor&#146;s agent for immediate and unconditional acceptance by the account debtor. Borrower
has not received notice of actual or imminent Insolvency Proceeding of any account debtor that is included in any Borrowing Base Certificate as an Eligible Account. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>5.5 Merchantable Inventory.</B> All Inventory is in all material respects of good and marketable quality, free from all material defects, except for Inventory for which adequate reserves have been made. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.6 Intellectual Property Collateral.</B> Borrower is the sole owner of the Intellectual Property Collateral, except for non-exclusive licenses
granted by Borrower to its customers in the ordinary course of business. Each of the Patents is valid and enforceable, and no part of the Intellectual Property Collateral has been judged invalid or unenforceable, in whole or in part, and no claim
has been made that any part of the Intellectual Property Collateral violates the rights of any third party. Except as set forth in the Schedule, Borrower&#146;s rights as a&nbsp;licensee of intellectual property do not give rise to more than five
percent (5%)&nbsp;of its gross revenue in any given month, including without limitation revenue derived from the sale, licensing, rendering or disposition of any product or service. Except as set forth in the Schedule, Borrower is not a party to, or
bound by, any agreement that restricts the grant by Borrower of a security interest in Borrower&#146;s rights under such agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.7
Name; Location of Chief Executive Office.</B> Except as disclosed in the Schedule, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office of Borrower is located at the address
indicated in Section&nbsp;10 hereof. All Borrower&#146;s Inventory and Equipment is located only at the location set forth in Section&nbsp;10 hereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>5.8 Litigation.</B> Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which an adverse decision
could have a Material Adverse Effect, or a material adverse effect on Borrower&#146;s interest or Bank&#146;s security interest in the Collateral. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>5.9 No Material Adverse Change in Financial Statements.</B> All consolidated and consolidating financial statements related to Borrower and any Subsidiary that Bank has received from Borrower fairly present in all material respects
Borrower&#146;s financial condition as of the date thereof and Borrower&#146;s consolidated and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or the consolidating
financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.10 Solvency,
Payment of Debts.</B> Borrower is solvent and able to pay its debts (including trade debts) as they mature. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.11 Regulatory
Compliance.</B> Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA, and no event has occurred resulting from Borrower&#146;s failure to comply with ERISA that
could result in Borrower&#146;s incurring any material liability. Borrower is not an &#147;investment </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">15 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">company&#148; or a company &#147;controlled&#148; by an &#147;investment company&#148; within the meaning of the Investment Company Act of 1940. Borrower is
not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve
System). Borrower has complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, violation of which could have a Material Adverse Effect. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.12 Environmental Condition.</B> Except as disclosed in the Schedule, none of Borrower&#146;s or any Subsidiary&#146;s properties or assets has
ever been used by Borrower or any Subsidiary or, to the best of Borrower&#146;s knowledge, by previous owners or operators, in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance
other than in accordance with applicable law; to the best of Borrower&#146;s knowledge, none of Borrower&#146;s properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien arising under any environmental protection statute has attached to any revenues or to any real or personal property
owned by Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal, state or other governmental agency concerning any
action or omission by Borrower or any Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>5.13 Taxes.</B> Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of all taxes reflected therein.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.14 Subsidiaries.</B> Borrower does not own any stock, partnership interest or other equity securities of any Person, except for
Permitted Investments. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.15 Government Consents.</B> Borrower and each Subsidiary have obtained all material consents, approvals and
authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower&#146;s business as currently conducted. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.16 Accounts.</B> None of Borrower&#146;s nor any Subsidiary&#146;s property is maintained or invested with a Person other than Bank, except as
disclosed in the Schedule provided that Bank has received a control agreement in form satisfactory to Bank covering such property, or as otherwise consented to by Bank in writing. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>5.17 Full Disclosure.</B> No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading. </FONT></P> <P
STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>6.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>AFFIRMATIVE COVENANTS. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Borrower shall do all of
the following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.1 Good Standing.</B> Borrower shall maintain its and each of its Subsidiaries&#146; corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which it is required under applicable law. Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses,
approvals and agreements, the loss of which could have a Material Adverse Effect. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">16 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.2 Government Compliance.</B> Borrower shall meet, and shall cause each Subsidiary to meet, the
minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it
is subject, noncompliance with which could have a Material Adverse Effect. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.3 Financial Statements, Reports, Certificates.</B>
Borrower shall deliver the following to Bank: (a)&nbsp;as soon as available, but in any event within thirty (30)&nbsp;days after the end of each calendar month, a company prepared consolidated balance sheet and income statement covering
Borrower&#146;s consolidated operations during such period, prepared in accordance with GAAP, consistently applied, in a form acceptable to Bank and certified by a Responsible Officer; (b)&nbsp;copies of all statements, reports and notices sent or
made available generally by Borrower to its security holders or to any holders of Subordinated Debt and as soon as available, but in any event within five (5)&nbsp;days after the filing thereof, all reports filed with the Securities and Exchange
Commission including without limitation on Forms 10-K and 10-Q; (c)&nbsp;promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of Fifty Thousand Dollars ($50,000) or more; (d)&nbsp;as soon as available, but in any event within thirty (30)&nbsp;days after Borrower&#146;s fiscal year end, an operating budget in form reasonably acceptable to Bank and
approved by Borrower&#146;s board of directors; and (e)&nbsp;such budgets, sales projections, operating plans or other financial information as Bank may reasonably request from time to time. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Within thirty (30)&nbsp;days after the last day of each month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of <B>Exhibit&nbsp;C</B> hereto, together with aged listings of accounts receivable and accounts payable. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in substantially the form of <B>Exhibit D</B> hereto. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Bank shall have a right from time to time hereafter to audit Borrower&#146;s Accounts and appraise Collateral at Borrower&#146;s expense, provided that
such audits will be conducted no more often than every six (6)&nbsp;months unless an Event of Default has occurred and is continuing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>6.4 Taxes.</B> Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and
deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof, and Borrower will make, and will cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required
of it by applicable laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to Bank indicating that
Borrower or a Subsidiary </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">has made such payments or deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested
in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.5 Insurance.
</B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>Borrower, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers,
and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Borrower&#146;s business is conducted on the date hereof. Borrower shall also maintain
insurance relating to Borrower&#146;s business, ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower&#146;s. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT
FACE="Times New Roman" SIZE="2"><B>(b) </B>All such policies of insurance shall be in such form, with such companies, and in such amounts as are reasonably satisfactory to Bank. All such policies of property insurance shall contain a lender&#146;s
loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof, and all liability insurance policies shall show the Bank as an additional insured and shall specify that the insurer must give at least
twenty (20)&nbsp;days notice to Bank before canceling its policy for any reason. Upon Bank&#146;s request, Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All
proceeds payable under any such policy shall, at the option of Bank, be payable to Bank to be applied on account of the Obligations. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>6.6 Accounts.</B> Borrower shall maintain and shall cause each of its Subsidiaries to maintain its primary depository, operating, and investment accounts with Bank Borrower shall cause any securities intermediary or depositary
institution in which Borrower maintains any accounts outside Bank in accordance with the terms of this Section&nbsp;6.6 to execute a control agreement in form and substance satisfactory to Bank. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.7 Adjusted Quick Ratio.</B> Borrower shall maintain, measured monthly, a ratio of Cash in which Bank has a first priority perfected security
interest plus Accounts to Current Liabilities plus (to the extent not already included therein) all Indebtedness to Bank less&nbsp;Deferred Revenue of at least 1.00 to 1.00. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.8 Profitability.</B> Borrower shall maintain a Profitability, measured on a quarterly basis, of not less than One Dollar ($1.00). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.9 Debt Service Coverage.</B> Borrower shall maintain, measured quarterly beginning with the quarter immediately preceding the amortization of the
Term Advances, a ratio of EBITDA (net of stock based compensation), annualized for the preceding three-month period to the current portion of all long-term Indebtedness plus annualized interest expense of at&nbsp;least 1.50 to 1.00. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.10 Intellectual Property Rights. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman"
SIZE="2"><B>(a) </B>Borrower shall promptly give Bank written notice of any applications or registrations of intellectual property rights filed with the United States Patent and Trademark Office, including the date of such filing and the
registration or application numbers, </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">18 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">if&nbsp;any. Borrower shall (i)&nbsp;give Bank not less than 30 days prior written notice of the filing of any applications or registrations with the United
States Copyright Office, including the title of such intellectual property rights to be registered, as such title will appear on such applications or registrations, and the date such applications or registrations will be filed, and (ii)&nbsp;prior
to the filing of any such applications or registrations, shall execute such documents as Bank may reasonably request for Bank to maintain its perfection in such intellectual property rights to be registered by Borrower, and upon the request of Bank,
shall file such documents simultaneously with the filing of any such applications or registrations. Upon filing any such applications or registrations with the United States Copyright Office, Borrower shall promptly provide Bank with (i)&nbsp;a copy
of such applications or registrations, without the exhibits, if any, thereto, (ii)&nbsp;evidence of the filing of any documents requested by Bank to be filed for Bank to maintain the perfection and priority of its security interest in such
intellectual property rights, and (iii)&nbsp;the date of such filing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>Bank may audit Borrower&#146;s Intellectual Property
Collateral to confirm compliance with this Section, provided such audit may not occur more often than twice per year, unless an Event of Default has occurred and is continuing. Bank shall have the right, but not the obligation, to take, at
Borrower&#146;s sole expense, any actions that Borrower is required under this Section to take but which Borrower fails to take, after 15 days&#146; notice to Borrower. Borrower shall reimburse and indemnify Bank for all reasonable costs and
reasonable expenses incurred in the reasonable exercise of its rights under this Section. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>6.11 Further Assurances.</B> At any time and
from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. </FONT></P> <P
STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>7.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>NEGATIVE COVENANTS. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Borrower will not do any of
the following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.1 Dispositions.</B> Convey, sell, lease, transfer or otherwise dispose of (collectively, a &#147;Transfer&#148;), or
permit any of its Subsidiaries to Transfer, all or any part of its business or property, other than: (i)&nbsp;Transfers of Inventory in the ordinary course of business; (ii)&nbsp;Transfers of non-exclusive licenses and similar arrangements for the
use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (iii)&nbsp;Transfers of worn-out or obsolete Equipment which was not financed by Bank. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.2 Change in Business; Change in Control or Executive Office.</B> Engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto (or incidental thereto); or cease to conduct business in the manner conducted by Borrower as of the Closing Date; or
suffer or permit a Change in Control; or without thirty (30)&nbsp;days prior written notification to Bank, relocate its chief executive office or state of incorporation or change its legal name; or without Bank&#146;s prior written consent, change
the date&nbsp;on which its fiscal year ends. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">19 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.3 Mergers or Acquisitions.</B> Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with or into any other business organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person without Bank&#146;s prior written consent which consent
shall not be unreasonably withheld. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.4 Indebtedness.</B> Create, incur, assume or be or remain liable with respect to&nbsp;any
Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.5 Encumbrances.</B> Create, incur, assume or
suffer to exist any Lien with respect to any of its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or agree with any
Person other than Bank not to grant a security interest in, or&nbsp;otherwise encumber, any of its property, or permit any Subsidiary to do so. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>7.6 Distributions.</B> Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, or permit any of its Subsidiaries to do so, except that Borrower may
repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist&nbsp;prior to such repurchase or would not exist after giving effect to such repurchase. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.7 Investments.</B> Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments; or maintain or invest any of its property with a Person other than Bank or permit any of its Subsidiaries to do so unless such Person has entered into an account control agreement with Bank in form and substance
satisfactory to Bank; or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.8 Transactions with Affiliates.</B> Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in&nbsp;the ordinary course of Borrower&#146;s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm&#146;s length transaction with a non-affiliated Person.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.9 Subordinated Debt.</B> Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such
payment, except in compliance with the&nbsp;terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated Debt without Bank&#146;s prior written consent. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.10 Inventory and Equipment.</B> Store the Inventory or the Equipment with a&nbsp;bailee, warehouseman, or other third party unless the third party
has been notified of Bank&#146;s security interest and Bank (a)&nbsp;has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank&#146;s benefit or (b)&nbsp;is in pledge possession of the
warehouse receipt, where negotiable, covering such Inventory or Equipment. Store or maintain any Equipment or Inventory at a location other than the location set forth in Section&nbsp;10 of this Agreement. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">20 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>7.11 Compliance.</B> Become an &#147;investment company&#148; or be controlled by an &#147;investment
company,&#148; within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or
use the proceeds of any Credit Extension for such purpose. Fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair Labor
Standards Act or violate any law or regulation, which violation could have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank&#146;s Lien on the Collateral, or permit any of its Subsidiaries to do any
of the foregoing. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>8.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>EVENTS OF DEFAULT. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Any one or more of the
following events shall constitute an Event of Default by Borrower under this Agreement: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>8.1 Payment Default.</B> If Borrower fails to
pay, when due, any of the Obligations; </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>8.2 Covenant Default. </B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>If Borrower fails to perform any obligation under Article 6 or violates any of the covenants contained in Article 7 of this Agreement; or
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this
Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within
ten days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the ten day period or cannot after diligent attempts by Borrower be cured
within such ten day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>8.3 Material Adverse Effect.</B> If there occurs any circumstance or circumstances that could have a Material Adverse Effect; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>8.4 Attachment.</B> If any portion of Borrower&#146;s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity
and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10)&nbsp;days, or if&nbsp;Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other claim becomes a&nbsp;lien or encumbrance upon any material portion of Borrower&#146;s assets, or if a notice of lien, levy, or assessment is filed of record with respect to
any of Borrower&#146;s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10)&nbsp;days after Borrower
</FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">21 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond
has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be required to be made during such cure period); </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>8.5 Insolvency.</B> If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within thirty (30)&nbsp;days
(provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding); </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>8.6 Other Agreements.</B> If
there is a default or other failure to perform in any agreement to which Borrower is a party or by which it is bound resulting in a right by a third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an
amount in excess of Fifty Thousand Dollars ($50,000) or which could have a Material Adverse Effect; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>8.7 Judgments.</B> If a judgment or
judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10)&nbsp;days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); or </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>8.8 Misrepresentations.</B> If any
material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter
into this Agreement or any other Loan Document. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>9.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>BANK&#146;S RIGHTS AND REMEDIES. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>9.1 Rights and
Remedies.</B> Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(a) </B>Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable (provided that upon the occurrence of an Event of Default described in Section&nbsp;8.5, all Obligations shall become immediately due and payable without any action by Bank); </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(b) </B>Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(c) </B>Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever
order that Bank reasonably considers advisable; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(d) </B>Make such payments and do such acts as Bank considers necessary or reasonable
to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in
Bank&#146;s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower&#146;s owned premises, Borrower hereby grants Bank a license to enter into
possession of such premises and to occupy the same, without charge, in order to exercise any of Bank&#146;s rights or remedies provided herein, at law, in equity, or otherwise; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(e) </B>Set off and apply to the Obligations any and all (i)&nbsp;balances and deposits of Borrower held by Bank, or (ii)&nbsp;indebtedness at any
time owing to or for the credit or the account of Borrower held by Bank; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(f) </B>Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section&nbsp;9.1, to use, without charge,
Borrower&#146;s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and, in connection with Bank&#146;s exercise of its rights under this Section&nbsp;9.1, Borrower&#146;s rights under all licenses and all franchise agreements shall inure to Bank&#146;s benefit;
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(g) </B>Dispose of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such
places (including Borrower&#146;s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2"><B>(h) </B>Bank may credit bid and purchase at any public sale; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT
FACE="Times New Roman" SIZE="2"><B>(i) </B>Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT
FACE="Times New Roman" SIZE="2"><B>9.2 Power of Attorney.</B> Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank&#146;s designated officers, or employees)
as Borrower&#146;s true and lawful attorney to: (a)&nbsp;send requests for verification of Accounts or notify account debtors of Bank&#146;s security interest in the Accounts; (b)&nbsp;endorse Borrower&#146;s name on any checks or other forms of
payment or security that may come into Bank&#146;s possession; (c)&nbsp;sign Borrower&#146;s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (d)&nbsp;dispose of any. Collateral; (e)&nbsp;make, settle, and adjust all claims under and decisions with respect to Borrower&#146;s policies of insurance; (f)&nbsp;settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g)&nbsp;to file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative
to any of the Collateral. The appointment of Bank as Borrower&#146;s attorney in fact, and each and every one of Bank&#146;s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank&#146;s obligation to provide Credit Extensions hereunder is terminated. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">23 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>9.3 Accounts Collection.</B> At any time after the occurrence of an Event of Default, Bank may notify
any Person owing funds to Borrower of Bank&#146;s security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank&#146;s trustee, and
immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman"
SIZE="2"><B>9.4 Bank Expenses.</B> If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after
reasonable notice to Borrower: (a)&nbsp;make payment of the same or any part thereof; (b)&nbsp;set up such reserves under a loan facility in Section&nbsp;2.1 as Bank deems necessary to protect Bank from the exposure created by such failure; or
(c)&nbsp;obtain and maintain insurance policies of the type discussed in Section&nbsp;6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar
payments in the future or a waiver by Bank of any Event of Default under this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>9.5 Bank&#146;s Liability for Collateral.</B>
So long as Bank complies with reasonable banking practices, Bank shall not in any way or manner be liable or responsible for: (a)&nbsp;the safekeeping of the Collateral; (b)&nbsp;any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c)&nbsp;any diminution in the value thereof; or (d)&nbsp;any act or default of any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of loss, damage or destruction of the Collateral shall
be borne by Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>9.6 Remedies Cumulative.</B> Bank&#146;s rights and remedies under this Agreement, the Loan Documents, and all
other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by
Bank of any Event of Default on Borrower&#146;s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on
behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT FACE="Times New Roman" SIZE="2"><B>9.7
Demand; Protest.</B> Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>10.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>NOTICES. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Unless otherwise provided in this
Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in&nbsp;writing and (except for financial statements and other informational documents which may be </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">24 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid,
return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">If to Borrower:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">KANA Software, Inc.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">181 Constitution Drive</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Menlo Park, CA 94025</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Fax: (650) 614-8350</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attn:
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">If to Bank:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Bridge Bank, N.A.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">55 Almaden Blvd.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">San Jose, CA 95113</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attn: Technology Banking Group</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">FAX: (408) 282-1681</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>11.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This
Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive jurisdiction of the state and
Federal courts located in the County of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR&nbsp;ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">If the jury waiver set forth in Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Agreement, the Loan
Documents or any of the transactions contemplated therein shall be settled by judicial reference pursuant to Code of Civil Procedure Section&nbsp;638 et seq. before a referee sitting without a jury, such referee to be mutually acceptable to the
parties or, if no agreement is reached, by a referee appointed by the Presiding Judge of the California Superior Court for Santa Clara County. This Section shall not restrict a party from exercising remedies under the Code or from exercising
pre-judgment remedies under applicable law. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">25 </FONT></P>


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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>12.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>GENERAL PROVISIONS.</B> </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.1 Successors and
Assigns.</B> This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without
Bank&#146;s prior written consent, which consent may be granted or withheld in Bank&#146;s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any
part of, or any interest in, Bank&#146;s obligations, rights and benefits hereunder. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.2 Indemnification.</B> Borrower shall defend,
indemnify and hold harmless Bank and its officers, employees, and agents against: (a)&nbsp;all obligations, demands, claims, and&nbsp;liabilities claimed or asserted by any other party in connection with the transactions contemplated by this
Agreement; and (b)&nbsp;all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys&#146; fees. and expenses), except for losses caused&nbsp;by Bank&#146;s gross negligence or willful misconduct. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.3 Time of Essence.</B> Time is of the essence for the performance of all obligations set forth in this Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.4 Severability of Provisions.</B> Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.5 Amendments in Writing, Integration.</B> Neither this Agreement
nor the Loan Documents can be amended or terminated orally. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the Loan Documents,
if any, are merged into this Agreement and the Loan Documents. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.6 Effect of Amendment and Restatement.</B> This Agreement is intended
to and does completely amend and restate, without novation, the Original Agreement. All security interests granted under the Original Agreement are hereby confirmed and ratified and shall continue to secure all Obligations under this Agreement.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.7 Counterparts.</B> This Agreement may be executed in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and&nbsp;delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.8 Survival.</B> All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make Credit Extensions to Borrower. The obligations of Borrower </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">26 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section&nbsp;12.2 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought against Bank have run. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.9 Confidentiality.</B> In handling
any confidential information Bank and all employees and agents of Bank, including but not limited to accountants, shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i)&nbsp;to the subsidiaries or affiliates of Bank in connection with their present or
prospective business relations with Borrower, (ii)&nbsp;to prospective transferees or purchasers of any interest in the Loans, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy
to Borrower, (iii)&nbsp;as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv)&nbsp;as may be required in connection with the examination, audit or similar investigation of Bank and (v)&nbsp;as Bank may
determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a)&nbsp;is in the public domain or in the knowledge or possession of Bank when disclosed to Bank,
or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (b)&nbsp;is disclosed to Bank by a third party, provided Bank does not have actual knowledge that such third party is prohibited from disclosing such
information. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>12.10 Patriot Act.</B> To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. WHAT THIS MEANS FOR YOU: when you open an account, we will ask your name, address, date of birth, and other information
that will allow us to identify you. We may also ask to see your driver&#146;s license or other identifying documents. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date first above written. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="100%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">KANA Software, Inc.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Michael S. Fields</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">Chairman and CEO</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">BRIDGE BANK, N.A.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Deborah Bowman</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By: Deborah Bowman</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title: SVP</FONT></TD></TR>
</TABLE></DIV> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">27 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>LOAN AND SECURITY MODIFICATION AGREEMENT </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This Loan and Security Modification Agreement is entered into as of February&nbsp;28, 2007, by and between KANA SOFTWARE, INC. (the &#147;Borrower&#148;)
and Bridge Bank, National Association (&#147;Bank&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>1. <U>DESCRIPTION OF EXISTING INDEBTEDNESS</U>. </B>Among other indebtedness
which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, an Amended and Restated Loan and Security Agreement, dated as of February&nbsp;27, 2007, by and between Borrower to Bank, (the &#147;Loan and
Security Agreement&#148;). Capitalized terms used without definition herein shall have the meanings assigned to them in the Loan and Security Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the &#147;Indebtedness&#148; and the Loan and Security Agreement and any and all other documents executed by Borrower in favor of Bank shall be referred to as
the &#147;Existing Documents.&#146; </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>2.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>DESCRIPTION OF CHANGE IN TERMS</U>. </B></FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">A.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Modification(s) to Loan and Security Agreement: </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">1. The
defined term Permitted Investments is amended to include the following Permitted Investment: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2">(c) cash and cash equivalents Borrower or
its Subsidiaries maintains in foreign depository institutions in an aggregate amount not to exceed $2,000,000. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">2. The defined term
Revolving Line is amended to read as follows: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Line&#148; means a credit extension of up to Ten Million Dollars
($10,000,000), however, capped at $5,000,000 until Bank is in receipt of the account control agreements as identified in Section&nbsp;6.6. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman"
SIZE="2">3. Section&nbsp;6.6 is amended add the following: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2">Notwithstanding the foregoing, Borrower shall cause Bank of America and
Silicon Valley Bank to execute an Account Control Agreement with respect to all of Borrower&#146;s Cash held at such financial institutions, in a form and substance acceptable to Bank, no later than 60 days from the date of this Loan and Security
Modification Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">4. Section&nbsp;6.7 is amended in its entirety to read as follows: </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2"><B>6.7</B> <B>Adjusted Quick Ratio.</B> Borrower shall maintain, measured monthly, a ratio of the sum of (i)&nbsp;Cash in which Bank has a first
priority perfected security interest plus (ii)&nbsp;Permitted investments plus (iii)&nbsp;Accounts, to Current Liabilities plus (to the extent not already included therein) all indebtedness to Bank less Deferred Revenue of at least 1.00 to 1.00.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></P>


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<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:13%"><FONT FACE="Times New Roman" SIZE="2">5. Section&nbsp;6.8 is amended in its entirety to read as follows: </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:17%"><FONT FACE="Times New Roman" SIZE="2"><B>6.8 Profitability.</B> Beginning with the quarter ending March 2007 and each quarter thereafter, Borrower shall maintain a Profitability of not less
than One Dollar ($1.00). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>3. <U>CONSISTENT CHANGES</U>.</B> The Existing Documents are each hereby amended wherever necessary to reflect
the changes described above. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>4. <U>NO DEFENSES OF BORROWER</U>.</B> Borrower agrees that, as of this date, it has no defenses against
the obligations to pay any amounts under the Indebtedness. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>5. <U>CONTINUING VALIDITY</U>.</B> Borrower understands and agrees that in
modifying the existing Indebtedness, Bank is relying upon Borrower&#146;s representations, warranties, and agreements, as set forth in the Existing Documents. Except as expressly modified pursuant to this Loan and Security Modification Agreement,
the terms of the Existing Documents remain unchanged and in full force and effect. Bank&#146;s agreement to modifications to the existing Indebtedness pursuant to this Loan and Security Modification Agreement in no way shall obligate Bank to make
any future modifications to the Indebtedness. Nothing in this Loan and Security Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers
of Existing Documents, unless the party is expressly released by Bank in writing. No maker, endorser, or guarantor will be released by virtue of this Loan and Security Modification Agreement. The terms of this paragraph apply not only to this Loan
and Security Modification Agreement, but also to any subsequent Loan and Security modification agreements. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>6.
<U>COUNTERSIGNATURE</U>.</B> This Loan and Security Modification Agreement shall become effective only when executed by Bank and Borrower. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD WIDTH="46%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="5%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="47%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>BORROWER:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>BANK:</B></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">KANA SOFTWARE, INC.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">BRIDGE BANK, NATIONAL ASSOCIATION</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ William Feichtmann</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">/s/ Deborah Bowman</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">William Feichtmann</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">Deborah Bowman</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">VP Finance</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">SVP</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FIRST AMENDMENT </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">TO <U> </U></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><U>LOAN AND SECURITY AGREEMENT </U></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This First Amendment to Loan and Security Agreement is entered into as of May&nbsp;7, 2007 (the &#147;<B><I>Amendment</I></B>&#148;), by and between
BRIDGE BANK, N.A. (&#147;<B><I>Bank</I></B>&#148;) and KANA SOFTWARE, INC. (&#147;<B><I>Borrower</I></B>&#148;). </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><U>RECITALS
</U></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Borrower and Bank are parties to that certain Loan and Security Agreement dated as of February&nbsp;27, 2006 (the
&#147;<B><I>Agreement</I></B>&#148;). The parties desire to amend the Agreement in accordance with the terms of this Amendment. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">NOW,
THEREFORE, the parties agree as follows: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>1. </B>Bank waives the obligation of Borrower to comply with Section&nbsp;6.7 for any period
prior to the month ending June&nbsp;30, 2007. Beginning the month ending June&nbsp;30, 2007, Borrower shall comply with Section&nbsp;6.7. Borrower represents that, as calculated in Section&nbsp;6.7, the Adjusted Quick Ratio at March&nbsp;31, 2007
was no less than 0.95 to 1.00, and at April&nbsp;30, 2007, was no less than 0.55 to 1.00. Borrower covenants that the Adjusted Quick Ratio at May&nbsp;31, 2007 will not be less than 0.55 to 1.00. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>2. </B>Bank waives the obligation of Borrower to comply with Section&nbsp;6.8 for the quarter ending March&nbsp;31, 2007. Beginning the quarter ending
June&nbsp;30, 2007, Borrower shall comply with Section&nbsp;6.8. Borrower represents that its Net Loss for the quarter ended March&nbsp;31, 2007, excluding non-cash compensation, is not more than ($2,998,000). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2"><B>3. </B>Until Borrower is profitable on a quarterly basis, and Borrower maintains as of quarter
end an Adjusted Quick Ratio of at least 1.00 to 1.00, Borrower shall deliver to Bank a Borrowing Base Certificate, together with accounts receivable agings certified by a Responsible Officer, within 5 days of the first and 15</FONT><FONT
FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> days of each month. After Borrower achieves both financial results, Borrower shall deliver to Bank the Borrowing Base and
accounts receivable agings certified by a Responsible Officer, within 20 days of the last day of each month. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>4. </B>By June&nbsp;30,
2007, Borrower shall close all accounts with Bank of America, and transfer the balance in those accounts to Bank. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>5. </B>By
May&nbsp;31, 2007, Borrower shall cause an account control agreement with Silicon Valley Bank in form reasonably acceptable to Bank to be completely executed. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B>6. </B>Until Bank (i)&nbsp;receives a fully executed account control agreement from Silicon Valley Bank and (ii)&nbsp;Borrower complies with Sections 6.7, 6.8 and 6.9 for two consecutive quarters, the aggregate
outstanding Obligations under the Agreement may not exceed $5,000,000, and Borrower shall immediately pay to Bank, in cash, the amount by which the Obligations exceed $5,000,000 from time to time. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>7. </B>Bank consents to Borrower&#146;s acquisition of eVergance. After that acquisition, Borrower may include the Accounts of eVergance in the
Borrowing Base after (i)&nbsp;Bank completes legal and credit diligence on eVergance and (ii)&nbsp;Bank obtains a first priority security interest in those Accounts. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B>8. </B>As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following: </FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(a)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B></B>this Amendment, duly executed by Borrower; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(b)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B></B>corporate resolutions and incumbency certification; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(c)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B></B>payment of a fee of $10,000 plus Bank Expenses incurred in connection with this Amendment; and </FONT></TD></TR></TABLE>

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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>(d)</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B></B>such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>9. </B>Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall
not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in
connection with the Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>10. </B>Borrower represents and warrants that the representations and warranties contained in the
Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing. If any representation made in Section&nbsp;2 or Section&nbsp;3 of this Amendment is untrue in any respect, or if Borrower
fails to perform any covenant set forth in this Amendment, it shall be an Event of Default under the Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>11. </B>This Amendment
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TR>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="89%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">KANA SOFTWARE, INC.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ John M. Thompson</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Executive Vice President and Chief Financial Officer</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">BRIDGE BANK, N.A.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="border-bottom:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">/s/ Dan Pistone</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Senior Vice President</FONT></TD></TR>
</TABLE></DIV>
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