KANA SOFTWARE INC
LOAN AND SECURITY MODIFICATION AGREEMENT
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<TYPE>EX-10.41
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<DESCRIPTION>LOAN AND SECURITY MODIFICATION AGREEMENT
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.41 </B></FONT></P> <P STYLE="margin-top:12px;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"><B></B>This Loan and Security Modification Agreement is
entered into as of May&nbsp;26, 2009, by and between Kana Software, Inc. (the &#147;Borrower&#148;) and Bridge Bank, National Association (&#147;Lender&#148;).<B> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">1. <U>DESCRIPTION OF EXISTING INDEBTEDNESS</U>: Among other indebtedness which may be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among other documents, a Second Amended and Restated Loan
and Security Agreement, dated March&nbsp;28, 2008 by and between Borrower and Lender, as may be amended from time to time, including without limitation by that certain Loan and Security Modification Agreement dated as of March&nbsp;17, 2009
(collectively, 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 Lender 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
Lender shall be referred to as the &#147;Existing Documents&#148;. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">2. <U>ACKNOWLEDGEMENT OF DEFAULTS</U>. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Borrower hereby acknowledges that as of the date hereof, the following Events of Default (the &#147;Existing Defaults&#148;) have occurred and remain uncured under the
Loan and Security Agreement: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">For the months ended January&nbsp;31, 2009,&nbsp;February&nbsp;28, 2009,&nbsp;March&nbsp;31, 2009 and April&nbsp;30, 2009, failure to maintain the monthly Asset Coverage Ratio of at
least 2.00 to 1.00, as required in Section&nbsp;6.7, entitled &#147;Asset Coverage Ratio.&#148; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">For the quarter ended March&nbsp;31, 2009, failure to maintain the quarterly Profitability of not less than One Dollar ($1.00), as required in Section&nbsp;6.8, entitled
&#147;Profitability.&#148; </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">For the quarter ended March&nbsp;31, 2009, failure to maintain a Debt Service Coverage ratio of at least 1.50:1.00, as required in Section&nbsp;6.9, entitled &#147;Debt Service
Coverage.&#148; </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">3. <U>WAIVER OF DEFAULT</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Lender hereby agrees to waive the Existing Defaults, provided, and only so long as, Borrower complies in all respects with the Loan and Security Agreement and with the Existing Documents. This waiver shall not constitute a continuing waiver
or a course of conduct waiving this or any other provisions of the Loan and Security Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">4. <U>DESCRIPTION OF CHANGE IN TERMS</U>. </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" 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"><U>Modifications to Loan and Security Agreement:</U> </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The following defined terms in Section&nbsp;1.1 are hereby amended as follows: </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><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, plus (v)&nbsp;extraordinary and non-recurring restructuring costs, 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: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; margin-left:8%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Line&#148; means a credit extension of up to an aggregate amount of Six Million Dollars
($6,000,000) less the Existing Equipment Advances and the Equipment Loan B Advances. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%"><FONT FACE="Times New Roman" SIZE="2">&#147;Revolving Maturity Date&#148; means
June&nbsp;30, 2010. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Sections 6.7, 6.8 and 6.9 of the Loan and Security Agreement are amended in their entirety to read as follows: </FONT></TD></TR></TABLE> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>6.7 Asset Coverage Ratio</B>. Beginning with the period ending May&nbsp;31, 2009, Borrower shall maintain, measured monthly, a ratio
of Cash plus Eligible Accounts to all Indebtedness to Bank of at least 1.50 to 1.00. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>6.8 Minimum EBITDA. </B>Beginning
with the period ending June&nbsp;30, 2009, Borrower shall maintain a minimum EBITDA, measured on a quarterly basis, of not less than Five Hundred Thousand Dollars ($500,000). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>6.9 Term Sheets/New Equity.</B> By no later than June&nbsp;15, 2009, Borrower shall provide Bank with fully executed term sheets from
investors acceptable to Bank that have been approved and accepted by Borrower&#146;s Board of Directors providing cash proceeds for a minimum amount of Two Million Dollars ($2,000,000) received after May&nbsp;26, 2009 (the &#147;New Equity&#148;)
from the sale or issuance of Borrower&#146;s equity or Subordinated Debt securities. By no later than July&nbsp;7, 2009, Borrower shall close the New Equity and any related Lien on Borrower&#146;s assets shall be formally subordinated to the
Bank&#146;s Lien in the Collateral in form and substance acceptable to Bank. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Exhibit D to the Loan and Security Agreement is hereby replaced with Exhibit D attached hereto. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">5. <U>PREPAYMENT OF EXISTING EQUIPMENT ADVANCE AND TERM LOAN B ADVANCES</U>. On May&nbsp;26, 2009, Borrower shall request an Advance in an amount sufficient to repay in full all outstanding Obligations owing under the
Existing Equipment Advance and the Term Loan B Advances. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">6. <U>CONSISTENT CHANGES</U>. 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"><FONT FACE="Times New Roman" SIZE="2">7. <U>PAYMENT OF MODIFICATION FEE</U>. Borrower shall pay Lender a fee in the amount of $20,000
(&#147;Modification Fee&#148;) plus all out-of-pocket expenses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">8. <U>NO DEFENSES OF BORROWER/GENERAL RELEASE</U>. Borrower agrees that, as of this date,
it has no defenses against the obligations to pay any amounts under the Indebtedness. Borrower (&#147;Releasing Party&#148;) acknowledges that Lender would not enter into this Loan and Security Modification Agreement without Releasing Party&#146;s
assurance that it has no claims against Lender or any of Lender&#146;s officers, directors, employees or agents. Except for the obligations arising hereafter under this Loan and Security Modification Agreement, Releasing Party releases Lender, and
each of Lender&#146;s and entity&#146;s officers, directors and employees from any known or unknown claims that Releasing Party now has against Lender of any nature, including any claims that Releasing Party, its successors, counsel, and advisors
may in the future discover they would have now had if they had known facts not now known to them, whether founded in contract, in tort or pursuant to any other theory of liability, including but not limited to any claims arising out of or related to
the Agreement or the transactions contemplated thereby. Releasing Party waives the provisions of California Civil Code section 1542, which states: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">&#147;A
general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the
debtor.&#148; </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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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The provisions, waivers and releases set forth in this section are binding upon Releasing Party and its shareholders,
agents, employees, assigns and successors in interest. The provisions, waivers and releases of this section shall inure to the benefit of Lender and its agents, employees, officers, directors, assigns and successors in interest. The provisions of
this section shall survive payment in full of the Obligations, full performance of all the terms of this Loan and Security Modification Agreement and the Agreement, and/or Lender&#146;s actions to exercise any remedy available under the Agreement or
otherwise. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">9. <U>CONTINUING VALIDITY</U>. Borrower understands and agrees that in modifying the existing Indebtedness, Lender 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. Lender&#146;s agreement to modifications to the existing Indebtedness pursuant to this Loan and Security Modification Agreement in no way shall obligate Lender 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 Lender and Borrower to retain as liable parties all makers and endorsers of Existing Documents, unless the party is expressly
released by Lender 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"><FONT FACE="Times New Roman" SIZE="2">10. <U>CONDITIONS</U>. The effectiveness of this Loan and Security Modification Agreement is
conditioned (a)&nbsp;upon payment of the Modification Fee and all Bank Expenses incurred to date and (b)&nbsp;the Corporate Borrowing and Incumbency Certificate executed by Borrower. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">11. <U>COUNTERSIGNATURE</U>. This Loan and Security Modification Agreement shall become effective only when executed by Lender and Borrower. </FONT></P> <P
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>BORROWER:</B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">KANA SOFTWARE, INC.</FONT></P></TD>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>LENDER:</B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">BRIDGE BANK, NATIONAL ASSOCIATION</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Jay A. Jones</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Nader Maghsoudnia</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Jay A. Jones</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Nader Maghsoudnia</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">CAO and CFO</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Vice President</FONT></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></P>

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