Restructuring Agreement

EXHIBIT 10.1


eGAIN COMMUNICATIONS CORPORATION


RESTRUCTURING AGREEMENT

THIS RESTRUCTURING AGREEMENT (the "Agreement") is dated as of September 29, 2004, by and between eGAIN COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company") and each holder of Series A Preferred (as defined herein) listed on Schedule A attached hereto (each a "Holder").


W I T N E S S E T H:

WHEREAS, holders of the Company's 6.75% Series A Cumulative Convertible Preferred Stock (the "Series A Preferred") issued pursuant to that certain Securities Purchase Agreement dated August 8, 2000, between the Company and the Holders (the "Series A Agreement") possess certain rights, preferences and privileges, including but not limited to certain conversion, redemption and registration rights (the "Rights"); and


WHEREAS, the Series A Preferred is currently convertible into shares Common Stock of the Company at a conversion ratio equal to the face amount per share of Series A Preferred ($100,000) plus accreted dividends divided by $56.875 (as adjusted for any stock splits, dividends, combinations or the like occurring after the date hereof and prior to the Conversion (as defined below));

WHEREAS, the Company has requested that the Holders agree to modify certain Rights held by such Holders in return for the enhanced liquidity associated with an earlier conversion of the Series A Preferred into Common Stock;


WHEREAS, holders of at least (i) sixty-six and two-thirds percent (66 2 / 3 %) of all outstanding shares of the Series A Preferred and (ii) a majority of all outstanding shares of the Series A Preferred not held by Oak Hill Capital Partners, L.P., FW Investors V, L.P., Oak Hill Venture Fund I, L.P. and Oak Hill Capital Management Partners, L.P. (the "Oak Hill Entities") have the authority under the Certificate of Designation of 6.75% Series A Cumulative Convertible Preferred Stock dated as of August 21, 2000 pursuant to which the Series A Preferred was issued, have the power and authority to amend the Rights for all holders of Series A Preferred;


WHEREAS, following the execution of this Agreement and the Voting Agreement (as defined herein), the Company shall as soon as reasonably practicable solicit the approval (the "Common Stockholder Approval") of the holders of the Company's Common Stock of the adoption of the Restated Certificate and the conversion of the Series A Preferred into Common Stock pursuant thereto (the "Conversion");

WHEREAS, the Company and the Holders anticipate that the holders of the Common Stock resulting from the Conversion will be permitted, under applicable United States securities law, to tack the holding period during which such holder held the shares of Series A Preferred:

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto further agree as follows:

1. Restructuring. Each of the Holders hereby agree to modify the Rights held by the Holders, by (i) consenting to the filing of the Amended and Restated Certificate of Incorporation in substantially the form attached hereto as Exhibit B (the "Restated Certificate") following Common Stockholder Approval and (ii) executing the Amendment No. 1 to Registration Rights Agreement in substantially the form attached hereto as Exhibit C (the "Rights Agreement Amendment") at the Closing (as defined herein). The filing of the Restated Certificate and the execution of the Rights Agreement Amendment shall be referred to as the "Restructuring."


2. Voting Agreement . In connection with the execution of this Agreement, the Company and each Holder shall execute a Voting Agreement and Proxy in substantially the form attached hereto as Exhibit A (the "Voting Agreement").

3. Closing . The closing of the Restructuring shall be held by fax at 10:00 a.m., California time on the filing of the Restated Certificate as soon as practicable but in any event within fifteen (15) business days following the Common Stockholder Approval, currently anticipated to be on or about November 30, 2004 (the "Closing") or at such other time and place as shall be mutually agreed upon by the Company and Holders holding at least (i) sixty-six and two-thirds percent (66 2/3%) of all outstanding shares of the Series A Preferred and (ii) a majority of all outstanding shares of the Series A Preferred not held by the Oak Hill Entities.


4. Representations and Warranties of the Company . The Company hereby represents and warrants to each Holder as follows:


4.1 Authorization . All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Rights Agreement Amendment (collectively, the "Restructuring Documents"), the performance of all obligations of the Company hereunder and thereunder and the authorization and issuance of the Common Stock issuable in connection with the Conversion has been taken or will be taken prior to the Closing, and the Restructuring Documents constitute valid and legally binding obligations of the Company. The Common Stock issuable upon the Conversion (collectively, the "Securities") have been duly authorized and, when issued in compliance with the provisions of this Agreement and the Restated Certificate, will be validly issued, fully paid and non-assessable, and free of any liens or encumbrances.


4.2 Offering Valid . Assuming the accuracy of the representations and warranties of the Holders contained in Section 5 hereof, the issuance of the Securities will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

4.3 SEC Filings; S-3 Eligibility .

(a) All reports and filings required of the Company by the Securities and Exchange Commission, whether pursuant to the Securities Act or the Securities Exchange Act of 1934,


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which have become due prior to the date of this Agreement have been filed on a timely basis, are complete in all material respects and do not contain any materially misleading or untrue statements or omit to state a material fact or anything otherwise necessary to prevent such report or filing from being materially misleading. The Company covenants and agrees that it will file all such reports and filings required of the Company prior to the date of the Conversion on a timely basis and that all of such filings will be complete in all material respects and will not contain any materially misleading or untrue statements or omit to state a material fact or anything otherwise necessary to prevent such report or filing from being materially misleading.

(b) The Company represents and warrants that it is eligible to file a Form S-3 Registration Statement in accordance with the Securities Act registering the resale of the Shares of Common Stock issued in the Conversion. The Company knows of no reason why it will not be able to file an S-3 Registration Statement within sixty days of the date of Conversion.

5. Representations and Warranties of each Holder . Each Holder hereby represents and warrants severally, and not jointly, that:


5.1 Authorization . Each Holder has full corporate power and authority to enter into the Restructuring Documents, and that the Restructuring Documents constitute valid and legally binding obligations of such Holder, enforceable in accordance with their respective terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally, and is subject to general principles of equity.


5.2 Purchase Entirely for Own Account . The Securities will be acquired for investment for such Holder's own account, not as a nominee or agent. The Holder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation in any of the Securities to such person or to any third person.


5.3 Disclosure of Information . The Holder believes it has received all of the information it considers necessary or appropriate for deciding whether to purchase the Securities. The Holder has had an opportunity to ask questions of the Company regarding the terms and conditions of the offering and sale of the Securities.


5.4 Accredited Investor . The Holder is an "accredited investor" within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.


5.5 Restricted Securities . The Holder understands that the Securities it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Securities Act"), only in certain limited circumstances. In this connection, the Holder is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.


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6. Conditions to Closing .


6.1 Conditions to the Obligations of each Holder and the Company at Closing . The obligations of the Company and each Holder to effect the Restructuring shall be conditioned upon satisfaction of the following conditions:

(a) The Restated Certificate shall have been duly adopted by the Company by all necessary corporate action of its Board of Directors and the Company's stockholders.


(b) The terms of the Conversion shall have been duly approved by the holders of the majority of the outstanding shares of Common Stock of the Company.

(c) The Company and the Holders shall have entered into the Rights Agreement Amendment.


6.2 Conditions to the Obligations of each Holder at Closing . The obligations of the each Holder to effect the Restructuring shall be conditioned upon satisfaction of the following conditions:


(a) The representations and warranties made by the Company in Section 3 hereof shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.


(b) The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or prior to the date of Closing.

(c) Except for the notices required or permitted to be filed after the date of Closing pursuant to applicable federal and state securities laws, the Company shall have obtained all governmental approvals required in connection with the lawful issuance of the Securities.

(d) At the Closing, the issuance by the Company of the Securities shall be legally permitted by all laws and regulations to which such Holder and/or the Company are subject.

6.3 Conditions to the Obligations of the Company at Closing . The obligations of the Company to effect the Restructuring shall be conditioned upon satisfaction of the following conditions:


(a) The representations and warranties made by the Holders in Section 4 hereof shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.


(b) Except for any notices required or permitted to be filed after the date of Closing pursuant to applicable federal or state securities laws, the Company shall have obtained all governmental approvals required in connection with the lawful issuance of the Securities.

(c) At the Closing, the issuance by the Company of the Securities shall be legally permitted by all laws and regulations to which such Holder and/or the Company are subject.


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7. Miscellaneous .


7.1 Waivers and Amendments . Any provision of this Agreement may be amended, waived or modified (either generally or in a particular instance and either for a specified period of time or indefinitely), upon the written consent of the Company and of Holders holding at least (i) sixty-six and two-thirds percent (66 2 / 3 %) of all outstanding shares of Series A Preferred and (ii) a majority of all outstanding shares of Series A Preferred not held by the Oak Hill Entities.


7.2 Governing Law . This Agreement shall be construed under Delaware General Corporation Law as to matters of corporate law and, as to all other matters of law, shall be governed and construed under the laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California.


7.3 Survival . All representations, warranties, covenants and agreements made herein by the Company or each Holder shall survive the execution of the Agreement and the Closing and in no way shall be affected by any investigation of the subject matter thereof made by or on behalf of the Company or the Holder.


7.4 Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.


7.5 Entire Agreement . This Agreement (including the exhibits attached hereto) constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.


7.6 Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt, shall be in writing, and may be delivered in person, by telecopy, electronic mail, overnight delivery service or United States mail, in which event they may be mailed by first-class, certified or registered, postage prepaid, addressed (a) if to an Holder, at such Holder's address as such Holder shall have furnished to the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such shares who has so furnished an address to the Company, and a copy of which shall be likewise delivered to such Holder's counsel at such address as shall have been furnished to the Company, or (b) if to the Company, at its address set forth on the signature page hereto, or at such other address as the Company shall have furnished to the Holder and each such other holder in writing.

7.7 Severability of this Agreement . If any provision or set of provisions of this Agreement (or any portion thereof) is held by an arbitrator or court of competent jurisdiction to be invalid, illegal or unenforceable for any reason whatever: (a) such provision shall be limited or modified in its application to the minimum extent necessary to avoid the invalidity, illegality or unenforceability of such provision and such modified provision shall be reduced to a writing and signed by the parties hereto; (b) the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and (c) to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision (or portion thereof) held invalid, illegal or unenforceable.


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7.8 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.


7.9 Expenses . Regardless of whether the Closing is effected, each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.


[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have caused this Restructuring Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.


COMPANY

eGAIN COMMUNICATIONS CORPORATION By /s/ Ashutosh Roy

Its Chief Executive Officer

Address: 345 E. Middlefield Road Mountain View, CA 94043


7 HOLDERS: OAK HILL CAPITAL PARTNERS, L.P.

By: OHCP GenPar, L.P. By: OHCP MGP, LLC By: /s/ Kevin G. Levy

Name: Kevin G. Levy

Title: Vice President

OAK HILL CAPITAL MANAGEMENT PARTNERS, L.P.

By: OHCP GenPar, L.P. By: OHCP MGP, LLC By: /s/ Kevin G. Levy

Name: Kevin G. Levy

Title: Vice President


Signature Page to Restructuring Agreement


OAK HILL VENTURE FUND I, L.P.

By: OHVP Genpar I, L.P. By: OHVP MGP I, LLC By: /s/ Kevin G. Levy

Name: Kevin G. Levy

Title: Vice President

FW INVESTORS V. L.P.

By: FW Management II, L.L.C. By: /s/ Kevin G. Levy

Name: Kevin G. Levy

Title: Vice President

/s/ Gunjan Sinha

Gunjan Sinha


Signature Page to Restructuring Agreement

GRANITE PRIVATE EQUITY III, LLC By: /s/ Daren J. Wells Its: Vice President


DEUTSCHE BANK, A.G. LONDON BRANCH

BY ITS AGENT DEUTSCHE

BANK SECURITIES INC. By: Its: and By: Its:

/s/ Ashutosh Roy Ashutosh Roy

/s/ Eric Smit Eric Smit

/s/ Promod Narang Promod Narang


Signature Page to Restructuring Agreement

SOCIETE GENERALE PARIS By: Its:

ELLIOTT ASSOCIATES, L.P. By: Its:

WESTGATE INTERNATIONAL. L.P. By: ELLIOTT INTERNATIONAL CAPITAL ADVISORS, INC., Attorney-In-Fact By: Its:


Signature Page to Restructuring Agreement

THE DAVID & SILKE HENKEL-WALLACE FAMILY TRUST DATED 8 NOV 1999 By: /s/ David Henkel-Wallace Its: Trustee


Signature Page to Restructuring Agreement

EXHIBIT A


Voting Agreement


A-1

eGAIN COMMUNICATIONS CORPORATION


VOTING AGREEMENT

THIS VOTING AGREEMENT is made and entered into as of September , 2004 (the "Agreement") by and among eGain Communications Corporation, a Delaware corporation (the "Company"), the undersigned holder of capital stock of the Company (such holder, a "Stockholder" and together with those other stockholders of the Company executing identical voting agreements (the "Voting Agreements") with the Company, the "Stockholders") and the Company.


W I T N E S S E T H:

WHEREAS, holders of the Company's 6.75% Series A Cumulative Convertible Preferred Stock (the "Series A Preferred") issued pursuant to that certain Securities Purchase Agreement dated August 8, 2000, between the Company and the Stockholders (the "Series A Agreement") possess certain rights, preferences and privileges, including but not limited to certain conversion, redemption and registration rights (the "Rights");


WHEREAS, the Company's Board of Directors has approved a nonbinding preliminary term sheet (the "Term Sheet"), which provides for, upon the terms and subject to the conditions set forth therein, including the approval of the Company's existing common stockholders, a conversion (the "Conversion") of the Series A Preferred into shares of the Company's common stock (the "Common Stock");


WHEREAS, the Series A Preferred is currently convertible into shares Common Stock of the Company at a conversion ratio equal to the face amount per share of Series A Preferred ($100,000) plus accreted dividends divided by $56.875 (as adjusted for any stock splits, dividends, combinations and the like occurring after the date hereof and prior to the date of the Conversion);


WHEREAS, the Company has requested that the Stockholders agree to modify certain Rights held by such Stockholders in return for the enhanced liquidity associated with an earlier conversion of the Series A Preferred into Common Stock;

WHEREAS, as of the date hereof, Stockholder beneficially owns (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) the number of shares of Series A Preferred set forth opposite such Stockholder's name on the signature page hereto (all such shares so owned, being referred to herein as such Stockholder's "Shares");


WHEREAS, the Company, upon execution of this Agreement and Restructuring Agreement by Stockholders holding (i) at least sixty-six and two-thirds percent (66 2 / 3 %) of the Shares held by the Stockholders and (ii) at least a majority of the Shares held by persons other than Oak Hill Capital Partners, L.P., FW Investors V, L.P., Oak Hill Venture Fund I, L.P. and Oak Hill Capital Management Partners, L.P. (the "Oak Hill Entities"), intends to solicit the approval of the holders of the Company's common stock to the Conversion and the transactions contemplated by the Restructuring Agreement (the "Solicitation"); and


WHEREAS, in connection with the execution of the Restructuring Agreement, Stockholder is willing to enter into this Agreement and the other Stockholders are willing to


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enter into the Voting Ag ...