Document:

Exhibit 10.1 

FIFTH AMENDMENT TO 

LOAN AND SECURITY AGREEMENT AND CONSENT 

This Fifth Amendment to Loan and Security Agreement and Consent (this “Amendment”) is entered into as of September 16, 2014, between COMERICA BANK (“Bank”) and eGAIN CORPORATION, a Delaware corporation, formerly known as eGain Communications Corporation (“Borrower”). 

RECITALS 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of June 27, 2011, as it may be amended from time to time, including without limit by that certain First Amendment to Loan and Security Agreement dated as of December 28, 2011, that certain Second Amendment to Loan and Security Agreement dated as of June 28, 2012, that certain Third Amendment to Loan and Security Agreement dated as of December 28, 2012 and that certain Fourth Amendment to Loan and Security Agreement and Consent (as amended, the “Agreement”). The parties desire to amend the Agreement, in accordance with the terms of this Amendment. 

NOW, THEREFORE, the parties agree as follows: 

1.     Consent. 

(a)      Under Section 7.3 of the Agreement, Borrower is prohibited from acquiring all or substantially all of the assets of another Person if, among other things, the acquisition cost exceeds Two Hundred Fifty Thousand Dollars ($250,000). Borrower desires to acquire substantially all of the ownership interests of Exony Limited (“Seller”) for an amount in excess of $250,000 under the terms of a Shareholder Purchase Agreement between Borrower and Seller (the “Purchase Agreement”). The transactions described in the Purchase Agreement are referred to as the “Transaction”. Borrower has requested that Bank consent to the Transaction and waive any Event of Default which would arise under the Agreement as a result of the Transaction. 

(b)      Bank hereby consents to the Transaction and waives any Event of Default which would arise under the Agreement as a result of the Transaction so long as (1) it is consummated in accordance with the terms of the Purchase Agreement previously provided by Borrower to Bank and (2) no default or Event of Default has occurred under any of the Loan Documents prior to the consummation of the Transaction or would result after giving effect thereto. 

(c)      Except as specifically set forth herein, this consent shall not be deemed to amend or alter in any respect the terms and conditions of the Agreement or any of the other Loan Documents, or to constitute a waiver or release by Bank of any right, remedy, Collateral, default or Event of Default under the Agreement or any of the other Loan Documents, except to the extent specifically set forth herein. This consent shall not act as a consent to any other transaction, act or omission, whether related or unrelated thereto and shall not extend to or affect any obligation, covenant or agreement not expressly consented hereto. Furthermore, this consent shall not affect in any manner whatsoever any rights or remedies of Bank with respect to any other non-compliance by Borrower with the Agreement or the other Loan Documents, whether in the nature of a default or Event of Default, and whether now in existence or subsequently arising, and shall not apply to any other transaction. 

2.      Section 6.6 of the Agreement is amended and restated to read in its entirety as follows: 

“6.6       Accounts. Borrower shall maintain all its depository, operating and investment accounts with Bank. Notwithstanding the foregoing, Borrower shall be permitted to maintain accounts with financial institutions other than Bank provided that at least seventy percent (70%) of all of Borrower’s cash is maintained in accounts at Bank at all times (“Minimum Cash Requirement”). If at any time Borrower does not meet the Minimum Cash Requirement, Borrower shall have five (5) days to comply with the Minimum Cash Requirement and provide evidence satisfactory to Bank of such compliance. If Borrower fails to comply with the Minimum Cash Requirement for five (5) consecutive days, an Event of Default shall be deemed to have occurred.” 

 

 

 

 

 

3.      Section 6.7(a) of the Agreement is amended and restated to read in its entirety as follows: 

“(a) Bank Debt Liquidity Coverage. A ratio of (i) the sum of Borrower’s Cash held at Bank plus all Eligible Bank Debt Liquidity Coverage Accounts, to (ii) all Indebtedness to Bank of at least (A) 1.25 to 1.00 for the months ending July 31, 2014 through September 30, 2014 and (B) 2.00 to 1.00 for the months ending October 31, 2014 and thereafter. As used herein, ‘Eligible Bank Debt Liquidity Coverage Account’ means a consolidated Account of Borrower and its consolidated Subsidiaries that has been billed and is not owing more than ninety (90) days after the date of the original invoice or other writing evidencing such Account.” 

4.      Exhibit E to the Agreement is deleted and replaced with Exhibit E attached hereto. 

5.      No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank. 

6.      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 remains in full force and effect in accordance with its 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. 

7.      Borrower waives, discharges, and forever releases Bank, Bank’s employees, officers, directors, attorneys, stockholders, and their successors and assigns, from and of any and all claims, causes of action, allegations or assertions that Borrower has or may have had at any time up through and including the date of this Amendment, against any or all of the foregoing, regardless of whether any such claims, causes of action, allegations or assertions are known to Borrower or whether any such claims, causes of action, allegations or assertions arose as result of Bank’s actions or omissions in connection with the Loan Documents, or any amendments, extensions or modifications thereto, or Bank’s administration of the Obligations or otherwise. BORROWER WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, AS IT MAY BE AMENDED FROM TIME TO TIME, WHICH STATES: 

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. 

8.      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. 

9.      As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following: 

	
(a)
	
this Amendment, executed by Borrower; 

	
(b)
	
Corporation Resolutions and Incumbency Certification (Authority to Procure Loans); 

	
(c)
	
copies of documents related to the Transaction; 

	
(d)
	
all Bank Expenses incurred through the date of this Amendment, which may be debited from any of Borrower’s accounts at Bank; and 

	
(e)
	
such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. 

10.      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. 

[signatures on following page] 

 

2

Detroit_3782283_4

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written. 

 

	
eGAIN CORPORATION, a Delaware corporation, formerly known as eGain Communications Corporation

	
 

By:
	
 
	
 

 

	
Name:
	
 

	
Title:
	
 

	
 

COMERICA BANK

	
 

By:
	
 
	
 

 

	
Name:
	
 

	
Title:
	
 

 

 

 

 

3

Detroit_3782283_4

 

EXHIBIT E 

COMPLIANCE CERTIFICATE 

 

	
Please send all Required Reporting to:
	
  
	
Comerica Bank

	
 
	
  
	
Technology & Life Sciences Division

Loan Analysis Department

250 Lytton Avenue

3rd Floor, MC 4240

Palo Alto CA 94301

Phone: (650) 462-6060

Fax: (650) 462-6061

FROM: eGain Communications Corporation 

The undersigned authorized Officer of eGain Communications Corporation (“Borrower”), hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower end Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending          , 201            with all required covenants, including without limitation the ongoing registration of intellectual property rights in accordance with Section 6.8, except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct in all material respects as of the date hereof; provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date. Attached herewith are the required documents supporting the above certification (“Supporting Documents”). The Officer further certifies the Supporting Documents are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied form one period to the next except as explained in an accompanying letter or footnotes. 

Please indicate compliance status by circling Yes/No under “Complies” or “Applicable” column, 

 

	
REPORTING COVENANTS
	
 
	
REQUIRED
	
  
	
COMPLIES

	
Company Prepared Monthly F/S
	
 
	
Monthly, within 30 days
	
  
	
YES
	
 
	
NO

	
Compliance Certificate
	
 
	
Monthly, within 30 days
	
  
	
YES
	
 
	
NO

	
CPA Audited. Unqualified F/S
	
 
	
Annually, within 90 days of FYE
	
  
	
YES
	
 
	
NO

	
Borrowing Base Cert, A/R & A/P Agings
	
 
	
Monthly, within 30 days or, subject to Section 6.2(a), Quarterly, within 30 days
	
  
	
YES
	
 
	
NO

	
Annual Business Plan
	
 
	
Annually, within 60 days after the beginning of each FY
	
  
	
YES
	
 
	
NO

	
Intellectual Property Report
	
 
	
Quarterly within 30 days
	
  
	
YES
	
 
	
NO

	
Audit
	
 
	
Semi-annual
	
  
	
YES
	
 
	
NO

	
 

If Public:
	
 
	
 
	
  
	
 
	
 
	
 

	
10-Q
	
 
	
Quarterly, within 5 days of SEC filing (50 days)
	
  
	
YES
	
 
	
NO

	
10-K
	
 
	
Annually, within 5 days of SEC tiling (95 days)
	
  
	
YES
	
 
	
NO

	
 

Total amount of Borrower’s cash and investments
	
 
	
Amount: $                                                         
	
  
	
YES
	
 
	
NO

	
Total amount of Borrower’s cash and investments maintained with Bank
	
 
	
Amount: $                                                         
	
  
	
YES
	
 
	
NO

 

	
 
	
 
	
DESCRIPTION
	
 
	
  
	
APPLICABLE

	
Legal Action > $500,000 (Sect. 6.2(iv))
	
 
	
Notify promptly upon notice 

 
	
 
	
  
	
YES
	
 
	
NO

	
Mergers & Acquisitions> $250,000 (Sect. 7.3)
	
 
	
Notify promptly upon notice 

 
	
 
	
  
	
YES
	
 
	
NO

	
Cross default with other agreements >$250,000 (Sect. 8.7)
	
 
	
Notify promptly upon notice 

 
	
 
	
  
	
YES
	
 
	
NO

	
Judgments and settlements $1,000,000 (Sect. 8.9)
	
 
	
Notify promptly upon notice 

 
	
 
	
  
	
YES
	
 
	
NO

 

Detroit_3782283_4

 

	
FINANCIAL COVENANTS
	
  
	
REQUIRED
	
  
	
ACTUAL
	
  
	
COMPLIES

	
TO BE TESTED MONTHLY, UNLESS OTHERWISE NOTED
	
  
	
 
	
  
	
 

	
Minimum Liquidity Ratio
	
  
	
See Section 6.7(a)
	
  
	
            :1.00
	
  
	
YES
	
 
	
NO

	
Minimum Consolidated Cash
	
  
	
70%
	
  
	
                %
	
  
	
YES
	
 
	
NO

 

	
FINANCIAL COVENANTS
	
  
	
REQUIRED
	
  
	
ACTUAL
	
  
	
COMPLIES

	
Permitted Indebtedness for equipment leases
	
  
	
<$500,000
	
  
	
$                             
	
  
	
YES
	
 
	
NO

	
Permitted Investments for stock repurchase
	
  
	
<$250,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

	
Permitted Investments for subsidiaries
	
  
	
<$500,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

	
Permitted Investments for employee loans
	
  
	
<$100,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

	
Permitted Investments for joint ventures
	
  
	
<$100,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

	
Permitted Liens for equipment leases
	
  
	
<$500,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

	
Permitted Transfers
	
  
	
<$500,000
	
  
	
$                            
	
  
	
YES
	
 
	
NO

Please Enter Below Comments Regarding Violations: 

 

 

 

 

Detroit_3782283_4

The undersigned further acknowledges that at any time Borrower is not in compliance with all the terms set forth in the Agreement, including, without limitation, the financial covenants, no credit extensions will be made. 

 

	
Very truly yours,

	
 

	
Authorized Signer

	
 

	
Name

	
 

 

 

 

 

Detroit_3782283_4

Corporation Resolutions and Incumbency Certification 

Authority to Procure Loans 

 

I certify that I am the duly elected and qualified Secretary of eGAIN CORPORATION, a Delaware corporation, formerly known as eGain Communications Corporation (the “Corporation”); that the following is a true and correct copy of resolutions duly adopted by the Board of Directors of the Corporation in accordance with its bylaws and applicable statutes. 

Copy of Resolutions: 

Be it Resolved, That: 

	
1.
	
Any one (1) of the following                           (insert titles only) of the Corporation are/is authorized, for, on behalf of, and in the name of the Corporation to: 

(a)      Negotiate and procure loans, letters of credit and other credit or financial accommodations from Comerica Bank (“Bank”), a Texas banking association, from time to time, in an unlimited amount; 

(b)      Discount with Bank, commercial or other business paper belonging to the Corporation made or drawn by or upon third parties, without limit as to amount; 

(c)      Purchase, sell, exchange, assign, endorse for transfer and/or deliver certificates and/or instruments representing stocks, bonds, evidences of Indebtedness or other securities owned by the Corporation, whether or not registered in the name of the Corporation; 

(d)      Give security for any liabilities of the Corporation to Bank by grant, security interest, assignment, lien, deed of trust or mortgage upon any real or personal property, tangible or intangible of the Corporation; 

(e)      Issue a warrant or warrants to purchase the Corporation’s capital stock; 

(f)      Appoint, delegate and authorize such other person(s) (the “Delegated Person(s)”) as may be designated in writing from time to time by the above referenced Authorized Signer(s), or any one or more of them, to (i) request loans, advances and/or letters of credit under any line of credit, loan or other credit or financial accommodation made available by Bank to or in favor of the Corporation, and to execute and/or deliver unto Bank, in form and content as may be required by the Bank, such agreements, instruments and documents as may be necessary or required to carry out such purposes, (ii) make loan payments for and on behalf of the Corporation, and (iii) execute and certify borrowing base certificates, account agings, inventory reports and collateral reports (together with any documents, reports and certificates required to be delivered in connection with any of the foregoing) for and on behalf of the Corporation; and 

(g)      Execute and deliver in form and content as may be required by Bank any and all notes, evidences of Indebtedness, applications for letters of credit, guaranties, subordination agreements, loan and security agreements, financing statements, assignments, liens, deeds of trust, mortgages, trust receipts and other agreements, instruments or documents to carry out the purposes of these Resolutions, any or all of which may relate to all or to substantially all of the Corporation’s property and assets. 

	
2.
	
Said Bank be and it is authorized and directed to pay the proceeds of any such loans or discounts as directed by the persons so authorized to sign, whether so payable to the order of any of said persons in their individual capacities or not, and whether such proceeds are deposited to the individual credit of any of said persons or not. 

	
3.
	
Any and all agreements, instruments and documents previously executed and acts and things previously done to carry out the purposes of these Resolutions are ratified, confirmed and approved as the act or acts of the Corporation. 

	
4.
	
These Resolutions shall continue in force, and Bank may consider the holders of said offices and their signatures to be and continue to be as set forth in a certified copy of these Resolutions delivered to Bank, until notice to the contrary in writing is duly served on Bank (such notice to have no effect on any action previously taken by Bank in reliance on these Resolutions). 

 

Detroit_3782283_4

	
5.
	
Any person, corporation or other legal entity dealing with Bank may rely upon a certificate signed by an officer of Bank to effect that these Resolutions and any agreement, instrument or document executed pursuant to them are still in full force and effect and binding upon the Corporation. 

	
6.
	
Bank may consider the holders of the offices of the Corporation and their signatures, respectively, to be and continue to be as set forth in the Certificate of the Secretary of the Corporation until notice to the contrary in writing is duly served on Bank. 

I further certify that the above Resolutions are in full force and effect as of the date of this Certificate; that these Resolutions and any borrowings or financial accommodations under these Resolutions have been properly noted in the corporate books and records, and have not been rescinded, annulled, revoked or modified; that neither the foregoing Resolutions nor any actions to be taken pursuant to them are or will be in contravention of any provision of the certificate of incorporation or bylaws of the Corporation or of any agreement, indenture or other instrument to which the Corporation is a party or by which it is bound; and that neither the certificate of incorporation nor bylaws of the Corporation nor any agreement, indenture or other instrument to which the Corporation is a party or by which it is bound require the vote or consent of shareholders of the Corporation to authorize any act, matter or thing described in the foregoing Resolutions. 

I further certify that the following named persons have been duly elected to the offices set opposite their respective names, that they continue to hold these offices at the present time, and that the signatures which appear below are the genuine, original signatures of each respectively: 

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW) 

 

	
Name (Type or Print)
	
 
	
Title
	
 
	
Signature

	
  

 
	
 
	
 
	
 
	
 

	
  

 
	
 
	
 
	
 
	
 

	
  

 
	
 
	
 
	
 
	
 

	
  

 
	
 
	
 
	
 
	
 

	
  

 
	
 
	
 
	
 
	
 

In Witness Whereof, I have affixed my name as Secretary and have caused the corporate seal (where available) of said Corporation to be affixed on September 16, 2014. 

 

	
  

	
Secretary

*** 

 

	
The Above Statements are Correct.
	
  
	
 

	
 
	
  
	
SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE. A

SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY

IS AUTHORIZED TO SIGN ALONE.

Failure to complete the above when the Secretary is authorized to sign alone shall constitute a certification by the Secretary that the Secretary is the sole Shareholder, Director and Officer of the Corporation. 

 

Detroit_3782283_4Exhibit 10.2

eGAIN CORPORATION 

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN 

(Adopted by the Board of Directors on September 30, 2014) 

 

 

 

 

eGAIN CORPORATION

Amended & Restated 2005 Stock Incentive Plan

 

Table of Contents 

 

	
 
	
 
	
 
	
 
	
 
	
 
	
Page

	
SECTION 1.     ESTABLISHMENT AND PURPOSE.
	
 
	
5

	
 
	
 
	
 

	
SECTION 2.     DEFINITIONS.
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
“Affiliate”
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
“Award”
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
“Award Agreement”
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
“Board of Directors” or “Board”
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
“Change in Control”
	
 
	
5

	
 
	
 
	
 

	
 
	
  
	
(f)
	
  
	
“Code”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(g)
	
  
	
“Committee”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(h)
	
  
	
“Company”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(i)
	
  
	
“Consultant”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(j)
	
  
	
“Employee”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(k)
	
  
	
“Exchange Act”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(l)
	
  
	
“Exercise Price”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(m)
	
  
	
“Fair Market Value”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(n)
	
  
	
“ISO”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(o)
	
  
	
“Nonstatutory Option”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(p)
	
  
	
“Option”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(q)
	
  
	
“Outside Director”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(r)
	
  
	
“Parent”
	
 
	
6

	
 
	
 
	
 

	
 
	
  
	
(s)
	
  
	
“Participant”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(t)
	
  
	
“Performance Based Award”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(u)
	
  
	
“Plan”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(v)
	
  
	
“Purchase Price”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(w)
	
  
	
“Restricted Share”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(x)
	
  
	
“SAR”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(y)
	
  
	
“Service”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(z)
	
  
	
“Share”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(aa)
	
  
	
“Stock”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(bb)
	
  
	
“Stock Unit”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(cc)
	
  
	
“Subsidiary”
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(dd)
	
  
	
“Total and Permanent Disability”
	
 
	
7

	
 
	
 
	
 

	
SECTION 3.     ADMINISTRATION.
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Committee Composition
	
 
	
7

	
 
	
 
	
 

 

eGAIN CORPORATION

Amended & Restated 2005 Stock Incentive Plan

- i -

 

	
 
	
  
	
(b)
	
  
	
Committee for Non-Officer Grants
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Committee Procedures
	
 
	
7

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Committee Responsibilities
	
 
	
8

	
 
	
 
	
 

	
SECTION 4.     ELIGIBILITY.
	
 
	
8

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
General Rule
	
 
	
8

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Automatic Grants to Outside Directors
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Ten-Percent Stockholders
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Attribution Rules
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Outstanding Stock
	
 
	
9

	
 
	
 
	
 

	
SECTION 5.     STOCK SUBJECT TO PLAN.
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Basic Limitation
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Section 162(m) Award Limitation
	
 
	
9

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Additional Shares
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Substitution and Assumption of Awards
	
 
	
10

	
 
	
 
	
 

	
SECTION 6.     RESTRICTED SHARES.
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Restricted Share Award Agreement
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Payment for Awards
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Vesting
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Voting and Dividend Rights
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Restrictions on Transfer of Shares
	
 
	
10

	
 
	
 
	
 

	
SECTION 7.    TERMS AND CONDITIONS OF OPTIONS.
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Stock Option Award Agreement
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Number of Shares
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Exercise Price
	
 
	
10

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Withholding Taxes
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Exercisability and Term
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(f)
	
  
	
Exercise of Options
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(g)
	
  
	
Effect of Change in Control
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(h)
	
  
	
No Rights as a Stockholder
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(i)
	
  
	
Modification, Extension and Renewal of Options
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(j)
	
  
	
Restrictions on Transfer of Shares
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(k)
	
  
	
Buyout Provisions
	
 
	
11

	
 
	
 
	
 

	
SECTION 8.     PAYMENT FOR SHARES.
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
General Rule
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Surrender of Stock
	
 
	
11

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Services Rendered
	
 
	
12

	
 
	
 
	
 

 

eGAIN CORPORATION

Amended & Restated 2005 Stock Incentive Plan

- ii -

 

	
 
	
  
	
(d)
	
  
	
Cashless Exercise
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Exercise/Pledge
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(f)
	
  
	
Net Exercise
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(g)
	
  
	
Promissory Note
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(h)
	
  
	
Other Forms of Payment
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(i)
	
  
	
Limitations under Applicable Law
	
 
	
12

	
 
	
 
	
 

	
SECTION 9.     STOCK APPRECIATION RIGHTS.
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
SAR Award Agreement
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Number of Shares
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Exercise Price
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Exercisability and Term
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Effect of Change in Control
	
 
	
12

	
 
	
 
	
 

	
 
	
  
	
(f)
	
  
	
Exercise of SARs
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(g)
	
  
	
Modification or Assumption of SARs
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(h)
	
  
	
Buyout Provisions
	
 
	
13

	
 
	
 
	
 

	
SECTION 10.   STOCK UNITS.
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Stock Unit Award Agreement
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Payment for Awards
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Vesting Conditions
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Voting and Dividend Rights
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(e)
	
  
	
Form and Time of Settlement of Stock Units
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(f)
	
  
	
Death of Participant
	
 
	
13

	
 
	
 
	
 

	
 
	
  
	
(g)
	
  
	
Creditors’ Rights
	
 
	
14

	
 
	
 
	
 

	
SECTION 11.   ADJUSTMENT OF SHARES.
	
 
	
14

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Adjustments
	
 
	
14

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Dissolution or Liquidation
	
 
	
14

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Reorganizations
	
 
	
14

	
 
	
 
	
 

	
 
	
  
	
(d)
	
  
	
Reservation of Rights
	
 
	
14

	
 
	
 
	
 

	
SECTION 12.   DEFERRAL OF AWARDS.
	
 
	
15

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Committee Powers
	
 
	
15

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
General Rules
	
 
	
15

	
 
	
 
	
 

	
SECTION 13.   AWARDS UNDER OTHER PLANS.
	
 
	
15

	
 
	
 
	
 

	
SECTION 14.   PAYMENT OF DIRECTOR’S FEES IN SECURITIES.
	
 
	
15

	
 
	
 
	
 

	
 
	
  
	
(a)
	
  
	
Effective Date
	
 
	
15

	
 
	
 
	
 

	
 
	
  
	
(b)
	
  
	
Elections to Receive NSOs, SARs, Restricted Shares or Stock Units
	
 
	
15

	
 
	
 
	
 

	
 
	
  
	
(c)
	
  
	
Number and Terms of NSOs, SARs, Restricted Shares or Stock Units
	
 
	
15

	
 
	
 
	
 

 

eGAIN CORPORATION

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SECTION 15.   LEGAL AND REGULATORY REQUIREMENTS.
	
 
	
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SECTION 16.   TAXES.
	
 
	
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(a)
	
  
	
Withholding Taxes
	
 
	
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(b)
	
  
	
Share Withholding
	
 
	
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(c)
	
  
	
Section 409A
	
 
	
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SECTION 17.   TRANSFERABILITY.
	
 
	
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SECTION 18.   PERFORMANCE BASED AWARDS
	
 
	
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SECTION 19.   NO EMPLOYMENT RIGHTS.
	
 
	
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SECTION 20.   DURATION AND AMENDMENTS.
	
 
	
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(a)
	
  
	
Term of the Plan
	
 
	
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(b)
	
  
	
Right to Amend the Plan
	
 
	
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(c)
	
  
	
Effect of Termination
	
 
	
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SECTION 21.   EXECUTION.
	
 
	
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Amended & Restated 2005 Stock Incentive Plan

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EGAIN CORPORATION 

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN 

SECTION 1.  ESTABLISHMENT AND PURPOSE. 

The Plan was adopted by the Board of Directors effective March 11, 2005 (the “Effective Date”) and was subsequently amended and restated on September 10, 2009 and on September 30, 2014. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options), or stock appreciation rights. 

SECTION 2.  DEFINITIONS. 

(a)    “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity. 

(b)    “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan. 

(c)    “Award Agreement” shall mean the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award. 

(d)    “Board of Directors” or “Board” shall mean the Board of Directors of the Company, as constituted from time to time. 

(e)    “Change in Control” shall mean the occurrence of any of the following events: 

	
(i)
	
A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either: 

	
(A)
	
Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or 

	
(B)
	
Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); 

	
 (ii)
	
Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 

	
(iii)
	
The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or 

	
(iv)
	
The sale, transfer or other disposition of all or substantially all of the Company’s assets. 

For purposes of subsection (d)(i) above, the term “look-back” date shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control. 

 

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For purposes of subsection (d)(ii) above, the term “person” shall have the same meaning as when used in Sections 12(d) and 13(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock. 

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the public offering of securities or debt of the Company to the public. 

(f)    “Code” shall mean the Internal Revenue Code of 1986, as amended. 

(g)    “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof. 

(h)    “Company ” shall mean eGain Corporation, a Delaware corporation. 

(i)    “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee. 

(j)    “Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate. 

(k)    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

(l)    “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR. 

(m)    “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows: 

	
(i)
	
If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the OTC Link Quote system; 

	
(ii)
	
If the Stock was traded on any established stock exchange (such as the New York Stock Exchange or The NASDAQ Stock Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and 

	
(iii)
	
If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons. 

(n)    “ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 

(o)    “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 

(p)    “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 

(q)    “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary. 

(r)    “Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting 

 

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power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date. 

(s)    “Participant” shall mean a person who holds an Award. 

(t)    “Performance Based Award” shall mean any Restricted Share Award or Stock Unit Award granted to a Participant that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code. 

(u)    “Plan” shall mean this 2005 Stock Incentive Plan of eGain Corporation, as amended from time to time. 

(v)    “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 

(w)    “Restricted Share” shall mean a Share awarded under the Plan. 

(x)    “SAR” shall mean a stock appreciation right granted under the Plan. 

(y)    “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan. 

(z)    “Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable). 

(aa) “Stock” shall mean the Common Stock of the Company. 

(bb) “Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement. 

(cc) “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 

(dd) “Total and Permanent Disability” shall mean any permanent and total disability as defined by Section 22(e)(3) of the Code. 

SECTION 3.  ADMINISTRATION. 

(a)    Committee Composition. The Plan shall be administered by a Committee appointed by the Board, or by the Board acting as the Committee. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code. 

(b)    Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such Awards. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so grant. 

(c)    Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members 

 

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present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee. 

(d)    Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions: 

	
(i)
	
To interpret the Plan and to apply its provisions; 

	
(ii)
	
To adopt, amend or rescind rules, procedures and forms relating to the Plan; 

	
(iii)
	
To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws; 

	
(iv)
	
To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; 

	
(v)
	
To determine when Awards are to be granted under the Plan; 

	
(vi)
	
To select the Participants to whom Awards are to be granted; 

	
(vii)
	
To determine the type of Award and number of Shares or amount of cash to be made subject to each Award; 

	
(viii)
	
To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award; 

	
 (ix)
	
To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired; 

	
(x)
	
To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration; 

	
(xi)
	
To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage; 

	
(xii)
	
To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business; 

	
(xiii)
	
To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement; 

	
(xiv)
	
To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and 

	
(xv)
	
To take any other actions deemed necessary or advisable for the administration of the Plan. 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan. 

SECTION 4.  ELIGIBILITY. 

(a)    General Rule. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Awards. Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. 

 

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(b)    Automatic Grants to Outside Directors. 

	
(i)
	
On the first business day following the conclusion of each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after the Effective Date, each Outside Director who was not elected to the Board for the first time at such meeting and who will continue serving as a member of the Board of Directors thereafter shall receive an Option to purchase 500 Shares (subject to adjustment under Section 11), provided that such Outside Director has served on the Board of Directors for at least six months. Each Option granted under this Section 4(b)(ii) shall vest and become exercisable on the first anniversary of the date of grant; provided, however, that each such Option shall become vested and exercisable in full immediately prior to the next regular annual meeting of the Company’s stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date. Notwithstanding the foregoing, each Option granted under this Section 4(b)(ii) shall become vested and exercisable in full if a Change in Control occurs with respect to the Company during the Participant’s Service. 

	
(ii)
	
The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b), (d), (e), (f) or (h). 

	
(iii)
	
All Nonstatutory Options granted to an Outside Director under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any reason; provided, however, that any such Options that are not vested upon the termination of the Outside Director’s Service as a member of the Board of Directors for any reason shall terminate immediately and may not be exercised. 

	
(iv)
	
The Board of Directors or the Committee in its discretion may change and otherwise revise the terms of the Nonstatutory Options granted to Outside Directors under this Section 4(b), including, without limitation, the number of Shares subject thereto, the type of Award to be granted under this Section 4(b), for Options or other Awards granted on or after the date the Board of Directors or Committee determines to make any such change or revision. 

(c)    Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code. 

(d)    Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. 

(e)    Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 

SECTION 5.  STOCK SUBJECT TO PLAN. 

(a)    Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 3,460,000 Shares. Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed 3,460,000 Shares plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 5(c). The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 11. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 

(b)    Section 162(m) Award Limitation. Notwithstanding any contrary provisions of the Plan and subject to the provisions of Section 11, with respect to any Option or SAR intended to qualify as “performance-based compensation” under Section 162(m) of the Code, no Participant eligible for an Award may receive Options or SARs under the Plan in any calendar year that relate to an aggregate of more than 500,000 Shares, and no more than two times this amount in the first year of employment. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitation with respect to a Participant, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number 

 

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of Shares with respect to which Options and SARs may be granted to the Participant. For this purpose, the repricing of an Option or SAR shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR. 

(c)    Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, or an Award is settled in cash without the delivery of Shares to the holder, then any Shares subject to the Award shall again become available for Awards under the Plan. Only the number of Shares (if any) actually issued in settlement of Awards (and not forfeited) shall reduce the number available in Section 5(a) and the balance shall again become available for Awards under the Plan. Any Shares withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available for Awards under the Plan. Notwithstanding the foregoing provisions of this Section 5(c), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Shares that are forfeited and do not become vested. 

(d)    Substitution and Assumption of Awards. The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate). The terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate. Any such substitute or assumed Awards shall not count against the Share limitation set forth in Section 5(a). 

SECTION 6.  RESTRICTED SHARES. 

(a)    Restricted Share Award Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical. 

(b)    Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. 

(c)    Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement. A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company. 

(d)    Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Share Award Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 

(e)    Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

SECTION 7.  TERMS AND CONDITIONS OF OPTIONS. 

(a)    Stock Option Award Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement. The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical. 

(b)    Number of Shares. Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 11. 

(c)    Exercise Price. Each Stock Option Award Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the 

 

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foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8. 

(d)    Withholding Taxes. As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. 

(e)    Exercisability and Term. Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)). A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 

(f)    Exercise of Options. Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 

(g)    Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company. 

(h)    No Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 11. 

(i)    Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Participant, materially impair his or her rights or obligations under such Option. 

(j)    Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

(k)    Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize a Participant to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 

SECTION 8.  PAYMENT FOR SHARES. 

(a)    General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below. 

(b)    Surrender of Stock. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Participant or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action 

 

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would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 

(c)    Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b). 

(d)    Cashless Exercise. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. 

(e)    Exercise/Pledge. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price. 

(f)    Net Exercise. To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Optionee in cash other form of payment permitted under the Stock Option Agreement. 

(g)    Promissory Note. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note. 

(h)    Other Forms of Payment. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules. 

(i)    Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion. 

SECTION 9.  STOCK APPRECIATION RIGHTS. 

(a)    SAR Award Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Award Agreements entered into under the Plan need not be identical. 

(b)    Number of Shares. Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11. 

(c)    Exercise Price. Each SAR Award Agreement shall specify the Exercise Price. The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion. 

(d)    Exercisability and Term. Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Award Agreement shall also specify the term of the SAR. A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control. 

(e)    Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company. 

 

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(f)    Exercise of SARs. Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price. 

(g)    Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR. 

(h)    Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize a Participant to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 

SECTION 10.  STOCK UNITS. 

(a)    Stock Unit Award Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical. 

(b)    Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients. 

(c)    Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement. A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company. 

(d)    Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach. 

(e)    Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments. A Stock Unit Award Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A of the Code. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11. 

(f)    Death of Participant. Any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries. Each recipient of a Stock Unit Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate. 

 

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(g)    Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Award Agreement. 

SECTION 11.  ADJUSTMENT OF SHARES. 

(a)    Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in: 

	
(i)
	
The number of Shares available for future Awards under Section 5; 

	
(ii)
	
The limitations set forth in Sections 5(a) and (b) and Section 18; 

	
(iii)
	
The number of NSOs to be granted to Outside Directors under Section 4(b); 

	
(iv)
	
The number of Shares covered by each outstanding Award; and 

	
(v)
	
The Exercise Price under each outstanding Option and SAR. 

(b)    Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 

(c)    Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for: 

	
(i)
	
The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; 

	
(ii)
	
The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary; 

	
(iii)
	
The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards; 

	
(iv)
	
Immediate vesting, exercisability and settlement of outstanding Awards followed by the cancellation of such Awards upon or immediately prior to the effectiveness of such transaction; or 

	
(v)
	
Settlement of the intrinsic value of the outstanding Awards (whether or not then vested or exercisable) in cash or cash equivalents or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Awards or the underlying Shares) followed by the cancellation of such Awards (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment); in each case without the Participant’s consent. Any acceleration of payment of an amount that is subject to section 409A of the Code will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A. 

The Company will have no obligation to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly. 

(d)    Reservation of Rights. Except as provided in this Section 11, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of 

 

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administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event. 

SECTION 12.  DEFERRAL OF AWARDS. 

(a)    Committee Powers. Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to: 

	
(i)
	
Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; 

	
(ii)
	
Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or 

	
(iii)
	
Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant. 

(b)    General Rules. A deferred compensation account established under this Section 12 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 12. 

SECTION 13.  AWARDS UNDER OTHER PLANS. 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5. 

SECTION 14.  PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 

(a)    Effective Date. No provision of this Section 14 shall be effective unless and until the Board has determined to implement such provision. 

(b)    Elections to Receive NSOs, SARs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Alternatively, the Board may mandate payment in any of such alternative forms. Such NSOs, SARs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the prescribed form. 

(c)    Number and Terms of NSOs, SARs, Restricted Shares or Stock Units. The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, SARs, Restricted Shares or Stock Units shall also be determined by the Board. 

SECTION 15.  LEGAL AND REGULATORY REQUIREMENTS. 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and 

 

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(b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan. 

SECTION 16.  TAXES. 

(a)    Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. 

(b)    Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the minimum legally required tax withholding. 

(c)    Section 409A. Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A. If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A. 

SECTION 17.  TRANSFERABILITY. 

Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17 shall be void and unenforceable against the Company. 

SECTION 18.  PERFORMANCE BASED AWARDS. 

The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals. The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals; provided, however, that in the case of any Performance Based Award, the following conditions shall apply: 

	
(i)
	
The amount potentially available under a Performance Based Award shall be subject to the attainment of pre-established, objective performance goals relating to a specified period of service based on one or more of the following performance criteria: (a) cash flow (including operating cash flow), (b) earnings per share, (c) earnings before any combination of interest, taxes, depreciation or amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) achievement of target levels of discovery and/or development of products or services, including but not limited to research or regulatory achievements, (t) third party coverage and/or reimbursement objectives, or (u) test volume metrics (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award; 

	
(ii)
	
Unless specified otherwise by the Committee at the time the performance goals are established or otherwise within the time prescribed by Section 162(m) of the Code, the Committee shall appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (i) to exclude asset write-downs, (ii) to exclude litigation or claim judgments or settlements, (iii) to exclude the effect 

 

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of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) to exclude accruals for reorganization and restructuring programs, (v) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) to exclude the dilutive effects of acquisitions or joint ventures, (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (ix) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; and (x) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles, in each case in compliance with Section 162(m); 

	
(iii)
	
The Committee shall establish the applicable performance goals in writing and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain and not later than the 90th day of the performance period (but in no event after 25% of the period of service with respect to which the performance goals relate has elapsed), and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award; and 

	
(iv)
	
The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of the pre-established performance goals to a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code. 

	
(v)
	
The maximum aggregate number of Shares that may be subject to Performance Based Awards granted to a Participant in any calendar year is 500,000 Shares (subject to adjustment under Section 11), and no more than two times this amount in the first year of employment. 

SECTION 19.  NO EMPLOYMENT RIGHTS. 

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice. 

SECTION 20.  DURATION AND AMENDMENTS. 

(a)    Term of the Plan. The Plan, as set forth herein, shall terminate automatically on September 30, 2024. The Board of Directors may suspend or terminate the Plan at any time. 

(b)    Right to Amend the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 

(c)    Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan. 

SECTION 21.  EXECUTION.

To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same. 

 

			
	
EGAIN CORPORATION

	
 
	
 
	
 

	
By
	
 
	
/s/ Eric N. Smit

	
 
	
 
	
 

	
Name
	
 
	
Eric N. Smit

	
 
	
 
	
 

	
Title
	
 
	
Chief Financial Officer

 

 

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