X0202 4 2007-05-16 0 0001089907 KANA SOFTWARE INC KANA.OB 0001325442 NightWatch Capital Management, LLC 5314 RIVER RUN DRIVE, SUITE 350 PROVO UT 84604 0 0 1 0 Common Stock 2007-05-16 4 P 0 109900 3.26 A 6317273 I See Footnotes The shares of Common Stock to which this note relates are held directly by a separate account managed by NightWatch Capital Advisors, LLC (the ?Investment Manager?). The Investment Manager serves as investment manager to, and has investment discretion over, the securities to which this note relates. The shares of Common Stock to which this note relates are held directly by a separate managed account managed by the Investment Manager with respect to 350,000 shares of Common Stock, and 5,967,273 shares of Common Stock held directly by NightWatch Capital Partners II, L.P., a Delaware limited partnership (?NWCP II?). NightWatch Capital Management, LLC (the ?General Partner?) serves as the general partner of, and has investment discretion over, the securities held by NWCP II. John Nemelka is the managing member of the managing member of the managing member of the managing member of the managing member of the General Partner. Each managing member and the General Partner understand that by reason of Rule 16a-1 of the Securities Exchange Act of 1934, as amended (the ?Exchange Act?) each may be deemed to be the beneficial owners of the Common Stock of Kana Software, Inc. held by NWCP II or managed by the Investment Manager, although each disclaims beneficial ownership of such Common Stock except to the extent of any indirect pecuniary interest (within the meaning of Rule 16a-1 of the Exchange Act) therein in an indeterminate portion of the Common Stock beneficially owned by NWCP II or managed by the Investment Manager. Paul Burgon 2007-05-16