Document:

Form of Warrant to Purchase Common Stock

 Exhibit 4.1 
  

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES. 
  
 No. WC- B_ 
  
 WARRANT TO
PURCHASE COMMON STOCK 
  
 OF 
  
 eGAIN COMMUNICATIONS CORPORATION 
  
 This certifies that, for value received,
             or its registered assigns (“Holder”) is entitled, subject to the terms and conditions set forth below, to purchase from eGAIN COMMUNICATIONS
CORPORATION (the “Company”), in whole or in part that number of fully paid and nonassessable shares (the “Warrant Shares”) of Common Stock (as defined below) determined in accordance with Section 2
below and at a purchase price per share (the “Exercise Price”) determined in accordance with Section 2 below. The number, character and Exercise Price of such shares of Common Stock are subject to adjustment as provided below
and all references to “Warrant Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments. The term “Warrant” as used herein shall mean this Warrant, and any warrants
delivered in substitution or exchange therefor as provided herein. This Warrant is issued in connection with the issuance by the Company of a certain Subordinated Secured Promissory Note of even date herewith (the “Note”)
issued pursuant to that certain Note and Warrant Purchase Agreement (the “Purchase Agreement”) by and between the Company and Holder dated as of March 31, 2004. 
  
 1. Term of Warrant. 
  
 (a) Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term commencing on (i) with
respect to fifty percent (50%) of the Warrant Shares, the date which is nine (9) months from the date hereof and (ii) with respect to the remaining Warrant Shares, the date which is one (1) year from the date hereof, and ending at 5:00 p.m., Pacific
time, three (3) years from the date hereof, and shall be void thereafter (the “Exercise Period”). 
  
 (b) In the event that the Note is prepaid (the date of such prepayment, the “Prepayment Date”) prior to the Maturity Date (as
defined in the Note) any Warrant Shares that are not exercisable in accordance with Section 1(a) hereof shall not become exercisable and this Warrant shall only be exercisable from and after the Prepayment Date for that number of Warrant Shares for
which the Warrant is exercisable on the Prepayment Date. 

 2. Exercise Price; Common Stock; Number of Shares. 
  
 (a) Exercise Price. The term “Exercise Price” shall mean
the greater of (i) one hundred ten percent (110%) of the fair market value of one (1) share of Common Stock, such fair market value to be determined based on the average closing price of the Common Stock for the five (5) consecutive trading days
immediately prior to but not including the date of the Note, on the Nasdaq Stock Market, or if the Common Stock not then listed on the Nasdaq Stock Market, such other exchange, market or system that the Common Stock is then listed or traded on, or
(ii) two dollars ($2.00). 
  
 (b) Common Stock. The term
“Common Stock” shall mean the Company’s common stock, par value $0.001 per share. 
  
 (c) Number of Shares. Subject to the provisions of Section 1, this Warrant shall be exercisable for up to that number of shares of Common Stock
determined according to the following formula: 
  

			
	 x =
	  	 [25% of purchase price]

	 	  	Exercise Price
		
	 x =
	  	the maximum number of shares of Common Stock which may be purchased.

  
 The number of shares subject to the
Warrant shall be subject to adjustment as set forth in Section 11. 
  
 3. Exercise of Warrant. 
  
 (a) Cash
Exercise. This Warrant may be exercised by the Holder during the Exercise Period by (i) the surrender of this Warrant to the Company, with the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, at the office
of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) during the Exercise Period and (ii) the delivery of payment to
the Company, for the account of the Company, by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier’s check, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form in lawful money of the United States of America. The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for the Warrant Shares as aforesaid. A stock certificate or certificates for the Warrant Shares specified in the Exercise Form shall be delivered to the Holder as promptly as
practicable, and in any event within 10 days, thereafter. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the stock certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. 
  

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 (b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section 3(a), this Warrant
may be exercised by the Holder by the surrender of this Warrant to the Company, with a duly executed Exercise Form marked to reflect Net Issue Exercise and specifying the number of shares of Common Stock to be purchased, during normal business hours
on any Business Day during the Exercise Period. The Company agrees that such shares of Common Stock shall be deemed to be issued to the Holder as the record holder of such shares of Common Stock as of the close of business on the date on which this
Warrant shall have been surrendered as aforesaid. Upon such exercise, the Holder shall be entitled to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant to the Company together with
notice of such election in which event the Company shall issue to Holder a number of shares of Common Stock computed as of the date of surrender of this Warrant to the Company using the following formula: 
  
 X = Y(A-B) 
     A 
  

					
	 Where
	  	X =	  	the number of shares of Common Stock to be issued to Holder under this Section 3(b);
			
	 	  	Y =	  	the number of shares of Common Stock otherwise purchasable under this Warrant (as adjusted to the date of such calculation);
			
	 	  	A =	  	the fair market value of one share of the Common Stock at the date of such calculation;
			
	 	  	B =	  	the Exercise Price (as adjusted to the date of such calculation).

  
 (c) Fair Market
Value. For purposes of Section 3(b) only, fair market value of one share of the Company’s Common Stock shall mean, as of any date: 
  
 (i) the last closing price per share of the Company’s Common Stock on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or 
  
 (ii) the last reported sales price per share of the Company’s Common Stock on the Nasdaq National Market or the Nasdaq Small-Cap Market (collectively, “Nasdaq”) if the Company’s Common Stock is not listed
or traded on any such exchange, or 
  
 (iii) the
average of the bid and asked price per share as reported in the “pink sheets” published by the National Quotation Bureau, Inc. (the “pink sheets”) if the Company’s Common Stock is not listed or traded on any
exchange or Nasdaq, or 
  
 (iv) if such
quotations are not available, the fair market value per share of the Company’s Common Stock on the date such notice was received by the Company as reasonably determined in good faith by the Board of Directors of the Company. 
  

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 (d) This Warrant shall be deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided above, and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on
such date. As promptly as practicable on or after such date and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may
then be exercised. 
  
 4. No Fractional Shares or Scrip. No
fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise
Price multiplied by such fraction. 
  
 5. Replacement of
Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in
form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount. 
  
 6. Rights of Stockholders. Subject to Sections 9 and 11 of this
Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein. 
  
 7. Transfer of Warrant. 
  
 (a) Warrant Register. The Company will maintain a register (the “Warrant Register”) containing the names and addresses of
the Holder or Holders. Any Holder of this Warrant or any portion thereof may change his address as shown on the Warrant Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be
given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat
the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary. 
  

 -4- 

 (b) Warrant Agent. The Company may, by written notice to the Holder, appoint an agent for the
purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Warrant Shares or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or any or all of the
foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent. 
  
 (c) Transferability and Nonnegotiability of Warrant. This Warrant may only be transferred or assigned in whole or in part in accordance with the
transfer and assignment provisions set forth in Section 9.14 of the Purchase Agreement and compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if such are requested by the Company). Notwithstanding the foregoing, no investment representation letter or opinion of counsel shall be required for any transfer of this Warrant (or
any portion thereof) or any shares of Common Stock issued upon exercise hereof (i) in compliance with Rule 144 or Rule 144A of the Act, or (ii) by gift, will or intestate succession by the Holder to his or her spouse or lineal descendants or
ancestors or any trust for any of the foregoing; provided that in each of the foregoing cases the transferee agrees in writing to be subject to the terms of this Section 7(c). Subject to the provisions of this Warrant with respect to compliance with
the Securities Act of 1933, as amended (the “Act”), title to this Warrant may be transferred by endorsement (by the Holder executing the Assignment Form annexed hereto) and delivery in the same manner as a negotiable
instrument transferable by endorsement and delivery. 
  
 (d)
Exchange of Warrant Upon a Transfer. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on
assignments and transfers and contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 
  
 (e) Compliance with Securities Laws. 
  
 (i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not
as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof except under circumstances that will not result in a
violation of the Act or any applicable state securities laws. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are
being acquired solely for the Holder’s own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale. 
  

 -5- 

 (ii) This Warrant and all shares of Common Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws): 
  
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES. 
  
 (iii) The Company agrees to remove promptly, upon the request of the holder of this Warrant and Securities issuable upon exercise of the
Warrant, the legend set forth in Section 7(e)(ii) above from the documents/certificates for such securities upon full compliance with this Agreement and Rules 144 and 145. 
  
 8. Reservation of Stock. The Company covenants that during the term this Warrant is exercisable, the Company will
reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its Restated Certificate
of Incorporation (the “Restated Certificate”) to provide sufficient reserves of shares of Common Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise
of rights represented by this Warrant, upon exercise of the rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). 
  
 9. Notices. 
  
 (a)
Whenever the Exercise price or number of shares purchasable hereunder shall be adjusted pursuant to Section 11 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant. 
  
 (b) In case: 
  
 (i) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution,
or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; 
  

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 (ii) of any capital reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; 
  
 (iii) of any voluntary dissolution, liquidation or
winding-up of the Company; or 
  
 (iv) of any
redemption or conversion of all outstanding Common Stock; 
  
 then, and in each
such case, the Company will mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed at least fifteen (15) days prior to the date
therein specified. 
  
 (c) All such notices, advices and
communications shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the third business day following the date of such mailing if sent to a U.S. address and on
the tenth (10th) business day following the date of such mailing if sent to an address outside the U.S. 
  
 10. Amendments. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the
Company and Holder. 
  
 11. Adjustments. The Exercise Price
and the number of shares purchasable hereunder are subject to adjustment from time to time as follows: 
  
 (a) Reclassification, etc. If the Company, at any time while this Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 11. 
  
 (b) Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant, or any portion
thereof, remains outstanding and unexpired shall split, subdivide or 
  

 -7- 

 combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the
same class, then (i) in the case of a split or subdivision, the Exercise Price for such securities shall be proportionately decreased and the securities issuable upon exercise of this Warrant shall be proportionately increased, and (ii) in the case
of a combination, the Exercise Price for such securities shall be proportionately increased and the securities issuable upon exercise of this Warrant shall be proportionately decreased. 
  
 (c) Adjustments for Dividends in Stock or Other Securities or Property. If while this Warrant, or any portion hereof,
remains outstanding and unexpired the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible Stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in
addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash)
of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 11.

  
 (d) Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment pursuant to this Section 11, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder
a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of
the Warrant. 
  
 (e) No Impairment. The Company will not,
by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this
Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of this Warrant against impairment. 
  
 12. Miscellaneous. 
  
 (a) This Warrant shall be governed by the laws of the State of Delaware as applied to agreements entered into in the State of Delaware by and among
residents of the State of Delaware. 
  

 -8- 

 (b) In the event of a dispute with regard to the interpretation of this Warrant, the prevailing party may
collect the cost of attorneys’ fees, litigation expenses or such other expenses as may be incurred in the enforcement of the prevailing party’s rights hereunder. 
  
 (c) This Warrant shall be exercisable as provided for herein, except that in the event that the expiration date of this
Warrant shall fall on a Saturday, Sunday and or United States federally recognized Holiday, this expiration date for this Warrant shall be extended to 5:00 p.m. Pacific standard time on the business day following such Saturday, Sunday or recognized
Holiday. 
  
  

 -9- 

 IN WITNESS WHEREOF, eGAIN COMMUNICATIONS CORPORATION has caused this Warrant to be executed by its
officers thereunto duly authorized. 
  
 Dated: March 31, 2004

  

			
	 COMPANY:

	
	 eGAIN COMMUNICATIONS CORPORATION

		
	 By
	 	  

	 Name:
	 	 Eric Smit

	 Its:
	 	 Chief Financial Officer

  
 eGAIN COMMUNICATIONS CORPORATION 
 WARRANT TO
PURCHASE COMMON STOCK 

 NOTICE OF EXERCISE 
  
 To: eGAIN COMMUNICATIONS CORPORATION 
  
 (1) The undersigned hereby elects to purchase              shares of Common Stock of
eGAIN COMMUNICATIONS CORPORATION, pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. 
  
 (2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock to be issued upon exercise hereof are
being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws. 
  
 (3) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is
specified below: 
  

	
	  

 (Name)
  

	(Name)

  
 (4) Please issue
a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: 
  

	
	  

 (Name)

  

			
		
	  

 (Date)
	  	  

 (Signature)

 ASSIGNMENT FORM 
  
 FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock set forth below: 
  

					
	 Name of Assignee

	 	 Address

	 	 No. of
 Shares

  
 and does hereby irrevocably constitute
and appoint Attorney                          to make such transfer on the books of eGAIN COMMUNICATIONS CORPORATION,
maintained for the purpose, with full power of substitution in the premises. 
  
 The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of stock to be issued upon exercise hereof or conversion thereof are being acquired for investment
and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except under circumstances which will not result in a violation of the Securities Act of
1933, as amended, or any applicable state securities laws. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that
the shares of stock so purchased are being acquired for investment and not with a view toward distribution or resale. 
  
 Dated:                      
  

	
	  

 Signature of
HolderNote and Warrant Purchase Agreement

 Exhibit 10.1 
  
 NOTE AND WARRANT PURCHASE AGREEMENT 
  
 This NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”), dated as of March 31, 2004, between
eGain Communications Corporation, a Delaware corporation (the “Company”), and those entities and individuals listed on Schedule A attached hereto (each a “Lender” and collectively, the
“Lenders”). 
  
 PREAMBLE 

 
 The Company wishes to obtain debt financing. Each Lender is willing, on
the terms contained in this Agreement, to purchase Notes in the principal amount listed on Schedule A attached hereto, from the Company (i) on a fully subordinated basis vis a vis the indebtedness of
the Company to Silicon Valley Bank and (ii) on a parity with the notes issued pursuant to the Prior Credit Facility. 
  
 ARTICLE I 
 DEFINITIONS 
  
 Capitalized terms not otherwise defined herein shall have the meanings set
forth below when used in this Agreement and in the Exhibits hereto: 
  
 “Acceptable Currency” means and includes cash and any other method of payment which will result in that payment being credited to the account of the Company at the bank previously designated to the Lenders in time to
earn interest for the day of each Closing. 
  
 “Accounts” means all existing and later arising accounts, contract rights, and other obligations owed the Company in connection with its sale or lease of goods (including licensing software and other technology) or
provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by the Company and the Company’s books and records relating to any of the foregoing. 
  
 “Affiliate” of a Person is a Person that owns or
controls, directly or indirectly, the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members. 
  
 “Bylaws” means the bylaws of the Company, as amended. 
  
 “Certificate of Incorporation” means the Company’s certificate of incorporation, as in effect on the date of this Agreement. 
  
 “Closing” and “Closing Date” mean each consummation of a sale by the Company
and a purchase by the Lenders of one or more Notes pursuant to the terms and conditions set forth in this Agreement. 
  
 “Collateral” means the property described on Annex A. 
  
 “Contingent Obligations” means, for any Person, any direct or indirect liability, contingent or not,
of that Person for (i) any indebtedness, lease, dividend, letter of credit or other 

 obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not
include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably
anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. 
  
 “Copyrights” means all copyright rights, applications or registrations and like protections in each
work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 
  
 “Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts
and attachments in which the Company has any interest. 
  
 “ERISA” means the Employment Retirement Income Security Act of 1974, and its regulations. 
  
 “Event of Default” means the occurrence of one of the events described in Section 9.1. 
  
 “Indebtedness” means (a) indebtedness for borrowed
money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and
(d) Contingent Obligations. 
  
 “Intellectual
Property” means: 
  
 (a) Copyrights,
Trademarks, and Patents including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and royalties from the use; 
  
 (b) Any trade secrets and any intellectual property rights in computer software and computer software products now or later existing, created, acquired or
held; 
  
 (c) All design rights which may be available to the
Company now or later created, acquired or held; 
  
 (d) Any claims
for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above; 
  
 All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments. 
  

 2 

 “Inventory” means all present and future inventory in which the Company has any
interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of the Company, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance
proceeds) from the sale or disposition of any of the foregoing and any documents of title. 
  
 “Investment” means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person; provided,
however, that in no event shall the payments by the Company to its Subsidiaries pursuant to transfer pricing arrangements with such Subsidiaries be considered Investments. 
  
 “Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance. 
  
 “Loan Documents” means,
collectively, this Agreement, the Notes, and the Warrants. 
  
 “Material Adverse Change” means (i) a material adverse change in the business operations, or condition (financial or otherwise) of the Company; (ii) a material impairment of the prospect of repayment of any portion
of the Obligations; or (iii) a material impairment of the priority of the Lenders’ security interests in the Collateral. 
  
 “Notes” means the Subordinated Secured Promissory Notes of the Company issued to the Lenders under this Agreement in the form of
the Note attached to this Agreement as Annex B. 
  
 “Obligations” means the Company’s obligation to repay amounts to the Lenders as evidenced by the Notes. 
  
 “Patents” means, renewals, reissues, extensions and continuations-in-part of the same. 
  
 “Permitted Indebtedness” means (a) the Company’s
indebtedness to the Lenders under this Agreement or any other Loan Document; (b) Indebtedness existing on the Closing Date and shown on Exhibit 6.4, (c) Subordinated Debt; (d) Indebtedness to trade creditors incurred in the ordinary
course of business; (e) Indebtedness secured by a Lien described in clause (c) of the defined term “Permitted Liens”, provided, however, that (i) such Indebtedness does not exceed the lesser of the cost or fair market value of the
Equipment financed with such Indebtedness and (ii) such Indebtedness does not exceed $10,000,000 in the aggregate at any given time; (f) capital leases; and (g) Indebtedness secured by Permitted Liens outstanding as of the date hereof. 

 
 “Permitted Investments” means (a) Investments
shown on Exhibit 3.7 and existing on the Closing Date; (b) Investments made by the Company or any Subsidiary, provided, however, that the Company may make Investments in its Subsidiaries, provided, however, that (i) the aggregate
amount of such Investments shall not exceed $300,000 in any given quarter and (ii) no Event of Default has occurred which is continuing or would exist immediately after giving effect to any such Investment; (iii) marketable direct obligations issued
or unconditionally guaranteed by the United States or its agency or any State maturing within 2 years from its acquisition, (iii) commercial paper maturing no more than 1 year after its creation and currently having a rating of at least A-1 or P-1
from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iv) Bank certificates of deposit issued maturing no more than 2 years after issue. 
  

 3 

 “Permitted Liens” means (a) Liens existing at the Closing and set forth in
Exhibit 3.2 hereto (including liens pursuant to the Prior Credit Facility) or arising under this Agreement or the Notes, (b) purchase money Liens (i) on equipment acquired or held by the Company incurred for financing the acquisition
of the equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; (c) Liens incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) and (b) above; provided that any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase. 
  
 “Person” means any individual, sole proprietorship,
partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

  
 “Prior Credit Facility” means the
subordinated secured promissory notes and accompanying warrants issued by the Company pursuant to that certain Note and Warrant Purchase Agreement by and between Ashutosh Roy and the Company dated as of December 23, 2002. 
  
 “Securities Act” means the Securities Act of 1933, as
amended, or any similar federal law then in force. 
  
 “SVB Loan Agreement” means that certain Loan and Security Agreement, dated as of March 27, 2002, by and between the Company and Silicon Valley Bank, as amended, modified, and supplemented from time to time. 

  
 “Subordinated Debt” means debt
incurred by the Company subordinated to the Company’s indebtedness owed to the Lenders and which is reflected in a written agreement in a manner and form acceptable to the Lenders and approved in writing by each of the Lenders. 
  
 “Subordination Agreement” means that certain
Subordination Agreement, dated as of even date herewith, between the Lenders and Silicon Valley Bank, substantially in the form of Annex C hereto. 
  
 “Subsidiary” means any Person in which the Company, directly or indirectly through Subsidiaries or otherwise, beneficially owns at
least 50% of either the equity interest in, or the voting control of, such Person. 
  
 “Tangible Net Worth” means, on any date, the consolidated total assets of the Company and its Subsidiaries minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such
as unamortized debt discount and expense, Patents, trade and service marks and names, Copyrights and research and development expenses except prepaid expenses, and (c) reserves not already deducted from assets, and (ii) Total Liabilities.

  

 4 

 “Trademarks” means trademark and servicemark rights, registered or not,
applications to register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks. 
  
 “Warrants” mean the Warrants to purchase Common Stock of the Company granted to the Lenders under this Agreement at the Closing in
the form of the Warrant attached to this Agreement as Annex D. 
  
 Additional defined terms are found in the body of the following text. 
  
 The masculine form of words includes the feminine and the neuter and vice versa, and, unless the context otherwise requires, the singular form of words includes the plural and vice versa. The words
“herein,” “hereof,” “hereunder,” and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular section or
subsection. 
  
 ARTICLE II 
 PURCHASE AND SALE TERMS 
  
 Section 2.1 Purchase and Sale of Notes. Subject to the terms of this Agreement, on or before March 31, 2004, or such other time as shall be
agreed by the Company and the Lenders in writing (the “Closing”), the Company shall issue and sell to each Lender, and such Lender shall purchase from the Company, a Note in the form of the Note attached to this Agreement as
Annex B. The purchase price payable by such Lender for such Note, as well as the face amount of such Note, are set forth opposite such Lenders’ name on Exhibit 2.1. 
  
 Section 2.2 Warrants. Subject to the terms of this Agreement,
at each Closing, as further consideration for the purchase of the Notes, the Company shall grant to each Lender, and such Lender shall receive from the Company, a Warrant in the form of the Warrant attached to this Agreement as Annex D.

  
 Section 2.3 Payment. At the Closing, each Lender
shall pay, in full and in Acceptable Currency, the purchase price (as set forth on Exhibit 2.1) of the Note purchased by it. 
  
 ARTICLE III 
 REPRESENTATIONS AND
WARRANTIES OF THE COMPANY 
  
 Except as otherwise set
forth in the Exhibits furnished pursuant to this Agreement, the Company represents and warrants to each Lender at each Closing that: 
  
 Section 3.1 Due Organization; Authorization and Other Matters. The Company and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified. The execution, delivery and performance of the Loan
Documents have been duly authorized, and do not conflict with the Company’s formation documents, nor constitute an event of default under any material agreement by which the Company is bound. The Company is not in default under any agreement to
which or by which it is bound in which the default could cause a Material Adverse Change. The Loan Documents have 
  

 5 

 been validly executed by the Company, and each such document is the Company’s legal, valid and binding obligation,
enforceable against the Company in accordance with its terms. The Company represents and warrants that (i) the Loan Documents and the transactions contemplated therein have been approved by a disinterested majority of the Board of Directors, after
full disclosure of all relevant facts regarding such transactions, including knowledge of each Lender’s relationship as an officer, director or shareholder of the Company; (ii) the principal terms contained in the Loan Documents were negotiated
on behalf of the Company with the assistance of one or more disinterested, outside directors whose collective financial sophistication and experience negotiating and conducting financial transactions equals or exceeds the financial sophistication
and experience of such Lender; and (iii) the Company has for several months explored many other alternatives for securing necessary working cash for the Company, and has elected to move forward with the Loan Documents in large part due to the
present absence of suitable alternatives and the Company’s urgent need for cash. 
  
 Section 3.2 Collateral. The Company has good title to the Collateral, free of Liens except Permitted Liens. All Inventory is in all material respects of good and marketable quality, free from material
defects. The Company is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is valid and enforceable and no part of the Intellectual Property has
been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party. 
  
 Section 3.3 Litigation. Except as shown in Exhibit 3.3, there are no actions or proceedings
pending or, to the Company’s knowledge, threatened by or against the Company or any Subsidiary in which an adverse decision could cause a Material Adverse Change. 
  
 Section 3.4 No Material Adverse Change in Financial Statements. All consolidated financial statements for the
Company, and any Subsidiary, delivered to each Lender fairly present in all material respects the Company’s consolidated financial condition and the Company’s consolidated results of operations. There has not been any material
deterioration in the Company’s consolidated financial condition since the date of the most recent financial statements submitted to each Lender. 
  
 Section 3.5 Solvency. The fair salable value of the Company’s assets (including goodwill minus disposition costs) exceeds the fair
value of its liabilities; the Company is not left with unreasonably small capital after the transactions contemplated by this Agreement; and the Company is able to pay its debts (including trade debts) as they mature. 
  
 Section 3.6 Regulatory Compliance. The Company is not an
“investment company” or a company “controlled” by an “investment company” under the Investment Company Act. The Company is not engaged as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). The Company has complied with the Federal Fair Labor Standards Act. The Company has not violated any laws, ordinances or rules, the violation of which could cause a Material Adverse
Change. None of Company’s or any Subsidiary’s properties or assets has been used by the Company or any Subsidiary or, to the best of the Company’s knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. The 
  

 6 

 Company and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate reserves under GAAP. The 
 Company and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted. 
  
 Section 3.7 Subsidiaries. The Company does not own any stock,
partnership interest or other equity securities except for Permitted Investments. 
  
 Section 3.8 Full Disclosure. No representation, warranty or other statement of the Company in any certificate or written statement given to each Lender contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. 
  
 ARTICLE IV 
 REPRESENTATIONS AND
WARRANTIES OF THE LENDER 
  
 Each Lender represents and
warrants, severally and not jointly, to the Company that: 
  
 Section 4.1 Such Lender is an “accredited investor” within the meaning of Rule 501 under the Securities Act and is a resident of the State of California. 
  
 Section 4.2 Such Lender has sufficient knowledge and experience in investing in companies similar to the Company in
terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company and is able financially to bear the risks thereof, including the complete loss of its investment. 
  
 Section 4.3 Such Lender has had an opportunity to discuss the
Company’s business, management and financial affairs with the Company’s management. 
  
 Section 4.4 The Notes being purchased by such Lender are being acquired for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof.

  
 Section 4.5 Such Lender understands that (i) the Notes
purchased have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated under the
Securities Act, and (ii) the purchase of the Notes is a speculative investment that involves a high degree of risk of loss of the entire investment. 
  
 Section 4.6 No broker has acted on behalf of such Lender in connection with this Agreement, and there are no brokerage commissions, finders’
fees or similar fees or commissions payable in connection therewith based on any agreement, arrangement or understanding with such Lender or any action taken by it. 
  
 Section 4.7 Such Lender has full corporate or other power and authority to enter into and to perform this Agreement
and all documents and agreements contemplated by this Agreement, and each such document has been validly executed by such Lender and is such Lender’s legal, valid and binding obligation, enforceable against such Lender in accordance with its
terms. 
  

 7 

 Section 4.8 Such Lender has sufficient funds unconditionally available to it (without the need to
obtain any additional third party financing or to satisfy any other financing contingency) to perform its obligations hereunder, including its obligations to purchase the Notes. 
  
 ARTICLE V  
 AFFIRMATIVE COVENANTS OF THE COMPANY 
  
 The Company will do all of the following: 
  
 Section
5.1 Government Compliance. The Company will maintain its and all Subsidiaries’ corporate existence and good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so
qualify could have a material adverse effect on the Company’s business or operations. The Company will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could
have a material adverse effect on the Company’s business or operations or cause a Material Adverse Change. 
  
 Section 5.2 Inventory; Returns. The Company will keep all Inventory in good and marketable condition, free from material defects. Returns
and allowances between the Company and its account debtors will follow the Company’s customary practices as they exist on the Closing Date. The Company will promptly notify each Lender of all returns, recoveries, disputes and claims, that
involve more than $100,000. 
  
 Section 5.3 Taxes.
The Company will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments and will deliver to each Lender, on demand, appropriate certificates attesting to the payment. 
  
 Section 5.4 Insurance. The Company will keep its business and
the Collateral insured for risks and in amounts, as the Lenders reasonably request. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to the Lenders. All property policies will have a lender’s loss
payable endorsement showing the Lenders as a loss payee and all liability policies will show the Lenders as an additional insured and provide that the insurer must give the Lenders at least 30 days notice before canceling its policy. At a
Lender’s request, the Company will deliver certified copies of policies and evidence of all premium payments. Subject to the Subordination Agreement, proceeds payable under any policy will, at the Lenders’ option, be payable to the Lenders
on account of the Obligations. 
  
 Section 5.5 Control
Agreements. Within thirty (30) days of the opening of any deposit account or investment account, the Company will execute and deliver to the Lenders control agreements in order for the Lenders to perfect their security interest in such
deposit accounts or investment accounts. 
  
 Section 5.6
Further Assurances. The Company will execute any further instruments and take further action as the Lenders reasonably requests to perfect or continue the Lenders’ security interest in the Collateral or to effect the purposes of this
Agreement. Without limiting the 
  

 8 

 foregoing, the Company agrees to cooperate in all respects, as and if reasonably requested by a Lender, to facilitate
filing by such Lender of UCC-1 financing statements in Delaware and California, and filing of customary perfection documentation in the United Stated Patent and Trademark Office (“USPTO filings”), and the Company agrees to pay any and all
ordinary course filing fees associated with the USPTO filings. 
  
 ARTICLE VI  
 NEGATIVE COVENANTS 
  
 The Company will not do any of the following without the prior written consent of each of the Lenders, which will not be
unreasonably withheld or delayed: 
  
 Section 6.1
Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, other than Transfers (i) of Inventory in
the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of the Company or its Subsidiaries in the ordinary course of business; or (iii) of worn-out or obsolete Equipment. 
  
 Section 6.2 Changes in Business, Ownership, Management or Business
Locations. Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by the Company or have a change in its ownership (other than the sale of the Company’s equity securities in
a public or private offering) of greater than 51%. The Company will not, without at least 30 days prior written notice, relocate its chief executive office or add any new offices or business locations. 
  
 Section 6.3 Mergers or Acquisitions. Merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) no Event of
Default has occurred and is continuing or would result from such action during the term of this Agreement and (ii) such transaction would not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or consolidate into
another Subsidiary or into the Company. 
  
 Section 6.4
Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
  
 Section 6.5 SVB Loan Agreement. The Company will not agree to or enter into any amendment of the SVB Loan Agreement, or enter into any new
agreement, with Silicon Valley Bank (including its Affiliates, “SVB”) which would increase the aggregate potential aggregate lending commitment of SVB to the Company beyond the potential aggregate lending commitment of SVB to the Company
existing on the date of the Closing (i.e., $1.5 million). 
  
 Section 6.6 Encumbrance. Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, or permit the Lenders’ security interest in the Collateral to change, subject to Permitted Liens. 
  

 9 

 Section 6.7 Distributions; Investments. Directly or indirectly acquire or own any Person,
or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, except that the Company may
repurchase the Common Stock of former employees (if such stock was originally issued pursuant to an incentive equity plan or agreement) pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or
would not exist after giving effect to such repurchase. 
  
 Section 6.8 Transactions with Affiliates. Directly or indirectly enter into or permit any material transaction with any Affiliate except transactions that are in the ordinary course of the Company’s business, on terms
less favorable to the Company than would be obtained in an arm’s length transaction with a non-affiliated Person. 
  
 Section 6.9 Subordinated Debt. Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or
amend any provision in any document relating to the Subordinated Debt without the prior written consent of each of the Lenders, such consent not to be unreasonably withheld. 
  
 Section 6.10 Compliance. Become an “investment company” or a company controlled by an
“investment company,” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Note for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a “reportable event” or “prohibited transaction”, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on the Company’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
  
 ARTICLE VII 
 CREATION OF SECURITY INTEREST 
  
 Section 7.1 Grant of Security Interest. The Company grants the Lenders a continuing security interest in all presently existing and later
acquired Collateral to secure all Obligations and performance of each of the Company’s duties under the Loan Documents. If this Agreement is terminated, the Lenders’ lien and security interest in the Collateral will continue until the
Company fully satisfies its Obligations; provided that the lien and security interest hereunder shall be on a parity with the lien and security interest granted pursuant to the Prior Debt Facility. 
  
 ARTICLE VIII  
 THE CLOSING AND CLOSING CONDITIONS 
  
 Section 8.1 The Closing. The purchase and sale of the Notes shall take place at the Closing to be held at the offices of Pillsbury Winthrop
LLP, 2475 Hanover Street, Palo Alto, California 94304 on or before March 31, 2004 or at such other time as shall be agreed in writing by the Company and such Lender. The obligation of each Lender to purchase a Note at the Closing shall be subject to
satisfaction or waiver of each of the conditions set forth in this Section 8.1: 
  
 8.1.1 The Company shall have performed and complied with all agreements and conditions contained herein required to be performed or complied with by it prior to or at the Closing Date; 
  

 10 

 8.1.2 The Company shall have duly issued and delivered the Note and the Warrant related thereto to
such Lender as provided by this Agreement; 
  
 8.1.3 Such
Lender and Silicon Valley Bank shall have executed and delivered the Subordination Agreement. 
  
 8.1.4 Such Lender and its special counsel shall have received copies of the following supporting documents: (i) copies of the Company’s Certificate of Incorporation certified as of a recent date by the
Delaware Secretary of State; (ii) a certificate of good standing for the Company certified as of a recent date by the Delaware Secretary of State; and (iii) a certificate of the Secretary of the Company, dated as of the date on which the Closing
occurs and certifying that attached thereto is a true and complete copy of the Bylaws of the Company as in effect on the date of that certification; 
  
 8.1.5 All corporate and other proceedings to be taken by the Company in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in form and substance to such Lender and its special counsel; and 
  
 8.1.6 The Company shall have delivered a certificate to such Lender signed by the Chief Financial Officer of the Company stating that the
representations and warranties made by the Company in this Agreement are true and correct in all material respects as of such date and that no Event of Default exists or would be caused by consummation of the Closing. 
  
 ARTICLE IX  
 MISCELLANEOUS 
  
 Section 9.1 Events of Default. Subject to the terms and conditions of the Subordination Agreement, any one of the following is an Event of
Default: (a) if the Company fails to pay any of the Obligations within 3 days after their due date; (b) if the Company does not perform any obligation in Section 5 or violates any covenant in Section 6 or does not perform or observe any other
material term, condition or covenant in this Agreement or in any of the Loan Documents and has not cured the default within 10 days after it occurs, or if the default cannot be cured within 10 days or cannot be cured after the Company’s
attempts in the 10 day period, and the default may be cured within a reasonable time, then the Company has an additional time (of not more than 30 days) to attempt to cure the default; (c) if an event of default occurs under the SVB Loan Agreement;
and (d) without limiting (c) in any way, if SVB takes any action against the Collateral. Upon the occurrence of one or more of the Events of Default set forth in this Section 9.1, the Lenders shall be entitled to exercise all rights under applicable
law, including those rights set forth in the Notes and the Warrants. 
  
 Section 9.2 Expenses. Upon consummation of the Closing, legal fees and other out-of-pocket expenses incurred by the Lenders will be payable by the Company, but not in an amount to exceed $5,000. 
  

 11 

 Section 9.3 Remedies Cumulative. Except as herein provided, the remedies provided herein
shall be cumulative and shall not preclude assertion by any party hereto of any other rights or the seeking of any other remedies against the other party hereto. 
  
 Section 9.4 Brokerage. Each party hereto will indemnify and hold harmless the others against and in respect of
any claim for brokerage or other commission relative to this Agreement or to the transaction contemplated hereby, based in any way on agreements, arrangements or understandings made or claimed to have been made by that party with any third party.

  
 Section 9.5 Severability. Whenever possible,
each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, those provisions shall be
ineffective to the extent of that prohibition or invalidity, without invalidating the remainder of those provision or the remaining provisions of this Agreement. 
  
 Section 9.6 Parties in Interest. All covenants and agreements contained in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective legal representatives, successors and assigns of the parties hereto whether so expressed or not. 
  
 Section 9.7 Notices. Any notice, demand, request or other communication which the Lender or the Company may be
required to give hereunder shall be in writing, shall be effective and deemed received the following business day when sent by overnight mail, or the third business day after deposited in first class United States mail, postage prepaid, and shall be
addressed as follows, or to such other addresses as the parties may designate by like notice: 
  
 If to the Company: 
  
 eGain Communications Corporation 
 624 East Evelyn Avenue 
 Sunnyvale, CA 94086 
 Attn: Eric Smit 
           Chief Financial Officer 
 Phone: (408) 212-3400

 Fax: (408) 212-3500 
  
 If to a Lender, at the address of such Lender set forth on Schedule A attached hereto. 
  
 Notwithstanding anything to the contrary, all notices and demands for payment from the Lender
actually received in writing by the Company shall be considered to be effective upon the receipt thereof by the Company regardless of the procedure or method utilized to accomplish delivery thereof to the Company. 
  
 Section 9.8 No Waiver. No failure to exercise and no delay in
exercising any right, power or privilege granted under this Agreement shall operate as a waiver of that right, power or privilege. No single or partial exercise of any right, power or privilege granted under this Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement are cumulative and are not exclusive of any rights or remedies provided by law. 
  

 12 

 Section 9.9 Amendments and Waivers. Except as herein provided, this Agreement may be
modified or amended only by a writing signed by the Company and with respect to a Lender, such Lender. 
  
 Section 9.10 Survival of Agreements, etc. All agreements, representations and warranties contained in this Agreement or made in writing by
or on behalf of the Company or a Lender in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, the Closing, and any investigation at any time made by or on behalf of the
Lenders. Notwithstanding the preceding sentence, however, all those representations (other than intentional misrepresentations) and warranties, but no such agreements, shall expire three years after the date of this Agreement. 
  
 Section 9.11 Construction. This Agreement shall be governed by
and construed in accordance with the procedural and substantive laws of the State of California without regard for its conflicts-of-laws rules. 
  
 Section 9.12 Entire Understanding. This Agreement and the documents expressly referenced in this Agreement express the entire understanding
of the parties and supersede all prior and contemporaneous agreements and undertakings of the parties with respect to the subject matter of this Agreement and such documents. 
  
 Section 9.13 Assignment; No Third-Party Beneficiaries. 
  
 9.13.1 This Agreement and the rights hereunder shall not be assignable
or transferable by the Lenders or the Company, except by operation of law in connection with a merger, consolidation or sale of substantially all the assets of the Company, without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective, legal representatives, successors and assigns.

  
 9.13.2 This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and those assigns, any legal or equitable rights hereunder. 
  
 Section 9.14 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one agreement. 
  

 13 

 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officer of each party hereto as of the date first above written. 
  

			
	 COMPANY:

	
	 eGAIN COMMUNICATIONS CORPORATION

		
	 By:
	 	 \s\ Eric Smit

	 Name:
	 	 Eric Smit

	 Its:
	 	 Chief Financial Officer

	
	 LENDER:

	
	 ASHUTOSH ROY

	
	 \s\ Ashutosh Roy

  
 Signature page to the
eGain Communications Corporation 
 Note and Warrant Purchase Agreement, 
 dated March 31, 2004. 

			
	 OAK HILL CAPITAL PARTNERS, L.P.

		
	 By:
	 	 OHCP GenPar, L.P.,

	 	 	 its general partner

		
	 By:
	 	 OHCP MGP, LLC,

	 	 	 its general partner

		
	 By:
	 	 \s\ John H. Fant

	 	 	 John H. Fant, Vice President

	
	OAK HILL CAPITAL MANAGEMENT PARTNERS, L.P.
		
	 By:
	 	 OHCP GenPar, L.P.,

	 	 	 its general partner

		
	 By:
	 	 OHCP MGP, LLC,

	 	 	 its general partner

		
	 By:
	 	 \s\ John H. Fant

	 	 	 John H. Fant, Vice President

	
	 FW INVESTORS V, L.P.

		
	 By:
	 	FW Management II, L.L.C., general partner
		
	 By:
	 	 \s\ John H. Fant

	 	 	 John H. Fant, Vice President

  
 Signature page to the
eGain Communications Corporation 
 Note and Warrant Purchase Agreement, 
 dated March 31, 2004. 

 Annex A 
  
 List of Collateral 
  
 The Collateral consists of all of the Company’s right, title and interest in and to the following: 
  
 All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located; 
  
 All inventory, now owned or
hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is held for sale or lease, or to be furnished under
a contract of service or is temporarily out of the Company’s custody or possession or in transit and including any returns or repossession upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition
of any of the foregoing and any documents of title representing any of the above; 
  
 All contract rights and general intangibles now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance, payment intangibles, and rights to payment of any kind; 
  
 All now existing and hereafter arising accounts (including health-care insurance receivables), contract rights, royalties, license rights and all other forms of obligations owing to the Company arising out of the sale
or lease of goods, the licensing of technology or the rendering of services by the Company, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or
reclaimed by the Company; 
  
 All documents (including negotiable
documents), cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, letter of credit rights, money, certificates of deposit, instruments (including promissory notes)
and chattel paper (including tangible and electronic chattel paper) now owned or hereafter acquired and the Company’s Books relating to the foregoing; 
  
 All copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or hereafter
acquired; all claims for damages by way of any past, present and future infringement of any of the foregoing; and 

 All of the Company’s Books relating to the foregoing, and the computers and equipment containing
said books and records, and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof. 

 SCHEDULE A 
  
 Lenders 
  
 Ashutosh Roy 
  
 Oak Hill Capital Partners, L.P. 
  
 Oak Hill Capital Management Partners, L.P. 
  
 FW Investors V, L.P. 

 Exhibit 2.1 
  
 Purchase Price 
  

							
	 Purchaser

	  	 Purchase Price
 for Initial Note

	  	 Face Amount
 of Initial Note

	 Oak Hill Capital Partners, L.P.
	  	$	1,077,806	  	$	1,899,462.44
	 Oak Hill Capital Management Partners, L.P.
	  	 	27,636	  	 	48,704.07
	 FW Investors V, L.P.
	  	 	561,225	  	 	989,070.21
	 Ashutosh Roy
	  	 	833,333	  	 	1,468,617.48

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