SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy [_]Confidential, for Use
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(as permitted by Rule
[X] Definitive Proxy 14a-6(e)(2))
Statement
[_] Definitive Additional
Materials
[_] Soliciting Material
Pursuant to
(S)240.14a-12
eGain Communications Corporation
(Name of Registrant as Specified In Its Charter)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
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E-Gain [LOGO]
eGAIN COMMUNICATIONS
CORPORATION
714 East Evelyn Ave
Sunnyvale, California 94086
(408) 212-3400
October 15, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
eGain Communications Corporation that will be held on November 15, 2001, at
1:00 P.M., at the Sheraton Sunnyvale located at 1100 North Mathilda Avenue,
Sunnyvale, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at an
early date, the enclosed proxy in the enclosed prepaid envelope to ensure that
your shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN,
DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of eGain's 2001 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ Ashutosh Roy
Ashutosh Roy
Chief Executive Officer
eGAIN COMMUNICATIONS CORPORATION
-----------------
Notice of Annual Meeting of Stockholders
to be held November 15, 2001
-----------------
To the Stockholders of eGain Communications Corporation:
The Annual Meeting of Stockholders of eGain Communications Corporation, a
Delaware corporation ("eGain"), will be held at the Sheraton Sunnyvale located
at 1100 North Mathilda Avenue, Sunnyvale, California, on Thursday, November 15,
2001, at 1:00 P.M., Pacific Time, for the following purposes:
1. To elect directors to serve until the 2002 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified;
2. To consider and vote upon a proposal to amend eGain's 1999 Employee
Stock Purchase Plan to increase the number of shares reserved for
issuance thereunder by 750,000 shares;
3. To ratify the appointment of Ernst & Young LLP as eGain's independent
auditors; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment of the Annual Meeting.
Stockholders of record as of the close of business on September 21, 2001 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. A complete list of stockholders entitled to vote at the Annual Meeting
will be available at eGain's offices, 714 East Evelyn Avenue, Sunnyvale,
California 94086 for ten days before the meeting.
It is important that your shares are represented at this meeting. Even if
you plan to attend the meeting, we hope that you will promptly mark, sign, date
and return the enclosed proxy. This will not limit your right to attend or vote
at the meeting.
By Order of the Board of Directors,
/s/ Stanley F. Pierson
Stanley F. Pierson
Secretary
Sunnyvale, California
October 15, 2001
eGAIN COMMUNICATIONS CORPORATION
714 East Evelyn Avenue
Sunnyvale, California 94086
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PROXY STATEMENT
------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of eGain Communications Corporation, a Delaware corporation
("eGain"), of proxies in the accompanying form to be used at the Annual Meeting
of Stockholders of eGain to be held at the Sheraton Sunnyvale located at 1100
North Mathilda Avenue, Sunnyvale, California on Thursday, November 15, 2001, at
1:00 P.M., Pacific Time, and any postponement or adjournment thereof (the
"Annual Meeting"). The shares represented by the proxies received in response
to this solicitation and not properly revoked will be voted at the Annual
Meeting in accordance with the instructions therein. A stockholder who has
given a proxy may revoke it at any time before it is exercised by filing with
the Secretary of eGain a written revocation or a duly executed proxy bearing a
later date or by voting in person at the Annual Meeting. On the matters coming
before the Annual Meeting for which a choice has been specified by a
stockholder by means of the ballot on the proxy, the shares will be voted
accordingly. If no choice is specified, the shares will be voted "FOR" the
election of the five nominees for director listed in this Proxy Statement and
"FOR" approval of the proposals referred to in Items 2 and 3 in the Notice of
Annual Meeting and described in this Proxy Statement.
Stockholders of record at the close of business on September 21, 2001 (the
"Record Date"), are entitled to vote at the Annual Meeting. As of the close of
business on that date, eGain had 36,404,177 shares of common stock, $0.001 par
value (the "common stock"), outstanding. The presence in person or by proxy of
the holders of a majority of eGain's outstanding shares of common stock
constitutes a quorum for the transaction of business at the Annual Meeting.
Each holder of common stock is entitled to one vote for each share held as of
the Record Date.
Directors are elected by a plurality vote. The five nominees for director
who receive the most votes cast in their favor will be elected to serve as a
director. Each of the other proposals submitted for stockholder approval at the
Annual Meeting will be decided by the affirmative vote of the majority of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on such proposal. Abstentions with respect to any proposal are
treated as shares present or represented and entitled to vote on that proposal
and thus have the same effect as negative votes. If a broker which is the
record holder of shares indicates on a proxy that it does not have
discretionary authority to vote on a particular proposal as to such shares, or
if shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to a particular proposal, these
non-voted shares will be counted for quorum purposes but are not deemed to be
present or represented for purposes of determining whether stockholder approval
of that proposal has been obtained.
The expense of printing, mailing proxy materials and solicitation of proxies
will be borne by eGain. eGain will reimburse brokerage firms and others for
their reasonable expenses in forwarding solicitation materials to beneficial
owners of the common stock.
This Proxy Statement, the accompanying form of proxy and the Annual Report
to Stockholders for the fiscal year ended June 30, 2001, including financial
statements, are being mailed to stockholders on or about October 15, 2001.
IMPORTANT
Please mark, sign and date the enclosed proxy and return it at your earliest
convenience in the enclosed postage-prepaid return envelope so that, whether
you intend to be present at the Annual Meeting or not, your shares can be
voted. This will not limit your rights to attend or vote at the Annual Meeting.
1
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Board of Directors proposes the election of five directors of eGain to
serve until the next annual meeting of stockholders and thereafter until their
successors are elected and qualified. If any nominee is unable or declines to
serve as director at the time of the Annual Meeting, an event not now
anticipated, proxies will be voted for any nominee designated by the Board of
Directors to fill the vacancy.
Names of the nominees and certain biographical information about them are
set forth below:
Ashutosh Roy, age 35, co-founded eGain and has served as Chief Executive
Officer and a director of eGain since September 1997. From May 1995 through
April 1997, Mr. Roy served as Chairman of WhoWhere? Inc., an Internet-services
company co-founded by Mr. Roy. From June 1994 to April 1995, Mr. Roy co-founded
Parsec Technologies, a call center company based in New Delhi, India. From
August 1988 to August 1992, Mr. Roy worked as software engineer at Digital
Equipment Corp. Mr. Roy holds a B.S. in Computer Science from the Indian
Institute of Technology, New Delhi, a Masters degree in Computer Science from
Johns Hopkins University and an MBA from Stanford University.
Gunjan Sinha, age 34, co-founded eGain and has served as a director of eGain
since inception in September 1997 and as President of eGain since January 1,
1998. From May 1995 through April 1997, Mr. Sinha served as President of
WhoWhere? Inc., an Internet-services company co-founded by Mr. Sinha. Prior to
co-founding WhoWhere? Inc., Mr. Sinha was a developer of hardware for
multiprocessor servers at Olivetti Advanced Technology Center. In June 1994,
Mr. Sinha co-founded Parsec Technologies. Mr. Sinha holds a degree in Computer
Science from the Indian Institute of Technology, New Delhi, a Masters degree in
Computer Science from UC Santa Cruz, and a Masters degree in Engineering
Management from Stanford University.
Mark A. Wolfson, age 49, has served as a director of eGain since June 1998.
Mr. Wolfson has served as a managing partner of Oak Hill Capital Management
since October 1998 and as Vice President of Keystone, Inc. since September
1995. Mr. Wolfson has also served as an officer of Oak Hill Venture Partners
since August 1999, and, in addition to eGain, serves on the Boards of Directors
of Investment Technology Group, Financial Engines, DaVinci I, LLC, Oreck Corp.
and Caribbean Restaurants and on the Boards of Advisors of Oak Hill Strategic
Partners and FEP Capital Holdings. Mr. Wolfson has served as a member of the
faculty at the Stanford Graduate School of Business since 1977, where he has
held various academic positions, including Dean Witter Professor of Accounting
and Finance and Associate Dean for Academic Affairs. Mr. Wolfson has also
taught at the Harvard Business School and the University of Chicago and has
been a Visiting Scholar at the Sloan School of Management at Massachusetts
Institute of Technology and the Hoover Institution at Stanford University. Mr.
Wolfson has been a Research Associate at The National Bureau of Economic
Research since 1988 and has served on the Board of Trustees of Menlo School
since 2001.
David G. Brown, age 44, has served as a director of eGain since August 2000.
Mr. Brown has served as the managing partner of Oak Hill Venture Partners since
August 1999, and a principal of Arbor Investors, LLC since August 1995, and
Chief Financial Officer (1998-1999), as well as a Vice President of Keystone,
Inc. since August 1993. Prior to joining Arbor Investors, Mr. Brown was a Vice
President in the Corporate Finance Department of Salomon Brothers from August
1985 to July 1993. In addition to eGain, Mr. Brown serves on the Boards of
Directors of AER Energy Resources, Emplanet, eScout, Malachite Technologies,
MarketTools, ProQuest, Sitara Networks, and WideOpen West.
Phiroz P. Darukhanavala, age 53, has served as a director of eGain since
September 2000. Dr. Darukhanavala has served in various capacities with BP
Amoco p.l.c. and The British Petroleum Company since 1975, most recently as
Vice President and Chief Technology Officer for Group Digital business. Before
assuming his current position, Dr. Darukhanavala was Director of Global IT
Services for the BP Group
2
responsible for the rollout of the Common Operating Environment project
worldwide and IT Functional Chief for BP-Exploration. Dr. Darukhanavala has
also served as CIO of BP-Alaska and Director of BP-Exploration Business
Systems. Dr. Darukhanavala holds a Ph.D. and M.S. degrees in Operations
Research from Case Western Reserve University in Cleveland, Ohio.
Board Meetings and Committees
The Board of Directors held eight meetings during fiscal 2001. All
directors, with the exception of Dr. Darukhanavala, attended at least 75% of
the aggregate number of meetings of the Board of Directors and of the
committees on which such directors serve.
The Board of Directors has appointed a Compensation Committee, a Stock
Option Committee and an Audit Committee.
The members of the Compensation Committee are David G. Brown, Phiroz P.
Darukhanavala and Mark A. Wolfson. The Compensation Committee held one meeting
during fiscal 2001. The Compensation Committee's functions are to assist in the
implementation of, and provide recommendations with respect to, general and
specific compensation policies and practices of eGain.
The members of the Stock Option Committee are Ashutosh Roy and Mr. Wolfson.
The Stock Option Committee held ten meetings during fiscal 2001. The Stock
Option Committee's functions are to grant options to eGain's employees and
other service providers, consistent with eGain's compensation policies and
practices.
The members of the Audit Committee are Mr. Brown, Dr. Darukhanavala and Mr.
Wolfson. The Audit Committee held three meetings during fiscal 2001. The Audit
Committee's functions are to review the scope of the annual audit, monitor the
independent auditor's relationship with eGain, advise and assist the Board of
Directors in evaluating the independent auditor's examination, supervise
eGain's financial and accounting organization and financial reporting, and
nominate, for approval of the Board of Directors, a firm of certified public
accountants whose duty it is to audit the financial records of eGain for the
fiscal year for which it is appointed.
Director Compensation
Directors of eGain do not currently receive any fees for service on the
Board of Directors. Directors are reimbursed for their expenses for each
meeting attended. Pursuant to the 1998 Stock Plan, each non-employee director
will receive, if re-elected as a director at the Annual Meeting, an additional
option to purchase 5,000 shares of common stock at an exercise price equal to
the fair market value of the common stock on the date of grant. Such options
will vest on the first anniversary of the grant.
The Board of Directors recommends a vote "FOR" election as director of the
nominees set forth above.
3
PROPOSAL 2
PROPOSAL TO AMEND THE eGAIN COMMUNICATIONS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved an amendment to eGain's 1999 Employee
Stock Purchase Plan (the "ESPP"), subject to the approval of eGain's
stockholders at the Annual Meeting. The following summary of the principal
features of the Stock Purchase Plan is qualified by reference to the terms of
the ESPP, a copy of which is available without charge upon stockholder request
to Milind Kasbekar, eGain Communications Corporation, 714 East Evelyn Avenue,
Sunnyvale, California 94086.
Summary of Amendment
The amendment to the ESPP approved by the Board of Directors and submitted
for stockholder approval provides for an increase in the number of shares of
common stock reserved for sale and issuance under the ESPP by an aggregate of
750,000 shares.
Stock Purchase Plan
The ESPP was adopted by the Board of Directors in July 1999 and approved by
eGain's stockholders thereafter. The purpose of the ESPP is to encourage stock
ownership by eGain's employees and in doing so assist eGain in retention and
motivation of employees who are in a position to make material contributions to
eGain's progress.
The ESPP permits employees to purchase eGain common stock at a favorable
price and possibly with favorable tax consequences to the employees. Employees
(including officers and employee directors of eGain but excluding 5% or greater
stockholders) are eligible to participate if they are customarily employed for
more than 20 hours per week and for at least five months in any calendar year.
An employee may not, during any calendar year, participate in the ESPP if the
rights of the employee to purchase eGain common stock under the ESPP and all
other qualified employee stock purchase plans of eGain or its subsidiaries
would accrue at a rate that exceeds $25,000 of the fair market value of such
stock determined at the time such rights are granted. Participation in the ESPP
ends automatically on termination of employment with eGain. As of June 30,
2001, 437 employees were eligible to participate in the ESPP.
As of June 30, 2001, the following persons or groups had in total, purchased
common stock under the ESPP as follows: (i) the Chief Executive Officer and the
other executive officers named in the Summary Compensation Table: Mr. Roy, no
shares, Mr. Sinha, no shares, Mr. Jepson, no shares, Mr. Kedlaya, 8,322 shares,
Mr. Grewal 4,134 shares and Mr. Smit, 3,274 shares; (ii) all current executive
officers of eGain as a group: 21,943 shares; (iii) all current directors who
are not executive officers as a group: no shares; (iv) each nominee for
director (other than the two directors listed in (i) above): Mr. Brown, no
shares, Dr. Darukhanavala, no shares and Mr. Wolfson, no shares; and (v) all
employees of eGain, including all current officers who are not executive
officers as a group: 441,151 shares.
Administration and Term
The ESPP is administered by a Plan Administrator appointed by the Board of
Directors. The ESPP is currently administered by the Compensation Committee of
the Board of Directors. The ESPP will terminate in July 2009, unless sooner
terminated by the Board of Directors.
Shares Offered for Sale
The Board of Directors will establish participation periods for the ESPP,
none of which will exceed six months. During each participation period, payroll
deductions will accumulate, without interest. On the purchase
4
dates set by the Board of Directors for each participation period, accumulated
payroll deductions will be used to purchase common stock. The purchase price of
the common stock under the ESPP will be equal to 85% of the fair market value
per share of common stock on either the first day of the participation period
or on the purchase date, whichever is less. Employees may withdraw their
accumulated payroll deductions at any time up to the last day of a
participation period. If an employee withdraws his or her payroll deductions
during a participation period, payroll deductions shall cease and eGain will
refund all amounts credited to the participants account in cash, without
interest.
Amendment and Termination
The ESPP may be amended or modified by the Board of Directors, subject to
applicable laws and stockholder approval only to the extent required by
applicable laws, regulations or rules.
The Board of Directors recommends a vote "FOR" amendment of eGain's 1999
Employee Stock Purchase Plan.
5
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Ernst & Young LLP as eGain's independent auditors for the
fiscal year ending June 30, 2002, subject to ratification by the stockholders.
Ernst & Young LLP has audited eGain's financial statements since eGain's
inception in 1997. Representatives of Ernst & Young LLP are expected to be
present at eGain's Annual Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions.
Ratification will require the affirmative vote of a majority of the shares
present and voting at the meeting in person or by proxy. In the event
ratification is not provided, the Board of Directors will review its future
selection of eGain's independent auditors.
Audit Fees
The following table sets forth approximate aggregate fees billed to eGain
for fiscal year 2001 by Ernst & Young LLP.
Audit fees.................................................. $175,850
Financial information systems design and implementation fees $ --
Other fees (1).............................................. $276,750
--------
(1)Includes fees for various advisory services principally related to tax
consultation and preparation services.
The Board of Directors recommends a vote "FOR" ratification of Ernst & Young
LLP as eGain's independent auditors.
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of common stock of eGain as of September 21, 2001 for the following:
. each person or entity who is known by eGain to own beneficially more
than 5% of the outstanding shares of eGain's common stock;
. each of eGain's current directors;
. eGain's Chief Executive Officer, President and four other most highly
compensated executive officers during the fiscal year ended June 30,
2001; and
. all directors and executive officers of eGain as a group.
Unless otherwise noted, the address of each named beneficial owner is that
of eGain.
The percentage ownership is based on 36,404,177 shares of eGain common stock
outstanding as of September 21, 2001. All shares subject to (i) the conversion
of outstanding preferred stock and (ii) the exercise of options and warrants
exercisable within 60 days after September 21, 2001 are deemed to be
beneficially owned by the person or entity holding such preferred stock,
options and warrants. In computing the percentage ownership of any person, the
amount of shares is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of such acquisition rights.
Unless otherwise indicated below, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
Shares Percentage
Beneficially Beneficially
Owned Owned
------------ ------------
5% Stockholders:
OHCP GenPar, L.P. (1)............................................ 7,630,545 17.3%
201 Main Street, Suite 2300
Ft. Worth, TX 76102
Robert M. Bass (2)............................................... 2,833,154 7.8
201 Main Street, Suite 3100
Ft. Worth, TX 76102
Elliot Associates, L.P. (3)...................................... 2,785,402 7.1
712 Fifth Avenue
New York, NY 10019
J. Taylor Crandall (4)........................................... 2,505,669 6.4
201 Main Street, Suite 3100
Ft. Worth, TX 76102
GeoCapital, LLC (5).............................................. 2,153,630 5.9
767 Fifth Avenue, 45th Floor
New York, NY 10153
Granite Private Equity III, LLC (6).............................. 1,995,681 5.2
One Cablevision Center
Liberty, NY 12754
Directors and Executive Officers:
Gunjan Sinha (7)(8).............................................. 5,795,861 15.4
Ashutosh Roy (7)................................................. 4,621,931 12.7
Charles Jepson (9)............................................... 356,317 *
Ram Kedlaya (10)................................................. 270,405 *
Mark A. Wolfson (11)............................................. 166,664 *
David G. Brown (12).............................................. 161,664 *
Eric Smit (13)................................................... 150,612 *
Harpreet Grewal (14)............................................. 73,374 *
Phiroz P. Darukhanavala.......................................... -- *
All executive officers and directors as a group (10 persons) (15) 11,413,035 30.2
--------
* Indicates less than one percent.
7
(1) Includes 6,069,763 shares subject to the conversion of preferred stock and
1,370,018 shares subject to an immediately exercisable warrant held by Oak
Hill Capital Partners, L.P. and 155,635 shares subject to the conversion
of preferred stock and 35,129 shares subject to an immediately exercisable
warrant held by Oak Hill Capital Management Partners, L.P. OHCP MGP, LLC,
a Delaware limited liability company, is the general partner of OHCP
GenPar, L.P., a Delaware limited partnership, which is the general partner
of Oak Hill Capital Partners, L.P. and consequently has voting control and
investment discretion over securities held by Oak Hill Capital Partners,
L.P. OHCP MGP, LLC disclaims beneficial ownership of the shares held by
Oak Hill Capital Partners, L.P. OHCP MGP, LLC, a Delaware limited
liability company, is the general partner of OHCP GenPar, L.P., a Delaware
limited partnership, which is the general partner of Oak Hill Capital
Management Partners, L.P. OHCP MGP, LLC disclaims beneficial ownership of
the shares held by Oak Hill Capital Management Partners, L.P. and
consequently has voting control and investment discretion over securities
held by Oak Hill Capital Management Partners, L.P. Mark Wolfson, a
director of eGain, is a vice president of Oak Hill Capital Management,
Inc., a Delaware corporation which provides management and consulting
services to Oak Hill Capital Partners, L.P. and Oak Hill Capital
Management Partners, L.P.
(2) Represents shares that are beneficially owned as a result of the
distribution by FW Ventures I, L.P.
(3) As reported on Schedule 13G, filed by Elliot Associates, L.P. on August
17, 2001. Includes shares held by Elliot International, L.P. Paul E.
Singer is the general partner of Elliot Associates, L.P. and consequently
has voting control and investment discretion over securities held by
Elliot Associates, L.P. Elliot International Capital Advisors, Inc., is
attorney-in-fact for Elliott International, L.P. (formerly known as
Westgate International, L.P.) and consequently has voting control and
investment discretion over securities held by Elliott International, L.P.
Mr. Singer is the President of Elliot International Capital Advisors, Inc.
(4) Includes 2,011,282 shares subject to the conversion of preferred stock and
453,971 shares subject to an immediately exercisable warrant held by FW
Investors V, L.P., a Delaware limited partnership, and 40,416 shares held
by Group III 31, LLC. FW Management II, L.L.C., a Delaware limited
liability company is the general partner of FW Investors V, L.P. and
consequently has voting control and investment discretion over securities
held by FW Investors V, L.P. FW Management II, L.L.C. disclaims beneficial
ownership of the shares held by FW Investors V, L.P. J. Tayor Crandall is
the sole member of FW Management II, L.L.C. and Group III 31, LLC.
(5) As reported on Schedule 13G, filed by GeoCapital, LLC on March 29, 2001.
(6) Represents 1,628,181 shares subject to the conversion of preferred stock
and 367,500 shares subject to an immediately exercisable warrant. Alan
Gerry is the managing member of Gerry Holding Co. II, LLC, which is the
managing member of Granite Private Equity III, LLC and consequently has
voting control and investment discretion over securities held by Granite
Private Equity III, LLC.
(7) Includes 25,000 shares subject to immediately exercisable options.
(8) Includes 957,754 shares subject to the conversion of preferred stock and
216,176 shares subject to an immediately exercisable warrant.
(9) Includes 344,790 shares subject to currently exercisable options, which
expire on October 13, 2001.
(10) Includes 22,083 shares subject to currently exercisable options or options
exercisable within 60 days of September 21, 2001. Also includes 94,792
shares subject to eGain's right of repurchase.
(11) Represents 161,664 shares that are beneficially owned as a result of the
distribution by FW Ventures I, L.P. and 5,000 shares that would be
beneficially owned upon exercise of director options held by Mr. Wolfson.
(12) Represents shares that are beneficially owned as a result of the
distribution by FW Ventures I, L.P.
(13) Includes 36,869 shares subject to eGain's right of repurchase.
(14) Includes 68,200 shares subject to currently exercisable options or options
exercisable within 60 days of September 21, 2001.
(15) Includes 158,745 shares subject to eGain's right of repurchase and 222,432
shares subject to currently exercisable options or options exercisable
within 60 days of September 21, 2001. Also includes 957,754 shares subject
to the conversion of preferred stock and 216,176 shares subject to an
immediately exercisable warrant.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes information concerning compensation paid to
eGain's Chief Executive Officer, its President and each of eGain's other four
most highly compensated executive officers whose total annual salary and bonus
exceeded $100,000, for services rendered in all capacities to eGain during for
the fiscal years ended June 30, 2001, 2000 and 1999. These individuals are
referred to as the "named executive officers."
Long-Term
Annual Compensation Compensation
------------------- ------------
Security
Fiscal Underlying
Name and Principal Position Year Salary Bonus Options (#)
--------------------------- ------ -------- -------- ------------
Ashutosh Roy (1)..................................... 2001 $112,505 $ -- 25,000
Chief Executive Officer and Chairman 2000 100,008 -- --
1999 100,008 -- --
Gunjan Sinha (1)..................................... 2001 112,505 -- 25,000
President 2000 100,008 -- --
1999 100,008 -- --
Charles Jepson (2)................................... 2001 250,000 310,207 58,000
Senior Vice President of North American Sales 2000 -- -- --
1999 -- -- --
Ram Kedlaya (3)...................................... 2001 194,994 113,644 50,000
Senior Vice President of International Operations 2000 135,000 18,000 --
1999 70,615 -- 250,000
Harpreet Grewal (4).................................. 2001 175,000 30,000 83,200
Chief Financial Officer 2000 125,023 -- 120,000
1999 -- -- --
Eric Smit (5)........................................ 2001 150,000 26,524 22,005
Vice President of Operations 2000 110,000 -- --
1999 105,381 -- 125,000
--------
(1) Mr. Roy's grant of an option to purchase 25,000 shares and Mr. Sinha's
grant of an option to purchase 25,000 shares were immediately vested in
full.
(2) Mr. Jepson's fiscal 2001 bonus includes a nonrecurring payment of $250,000
in connection with the acquisition of Inference Corporation on June 29,
2000. Mr. Jepson's grants of options to purchase 50,000 and 8,000 shares
(56,000 of which were cancelled following Mr. Jepson's resignation from
eGain in July 2001) vested as to 25% of the shares on the first anniversary
of such options start date and 1/48 of the shares each full month
thereafter.
(3) Mr. Kedlaya's grants of options to purchase 140,000 and 110,000 shares in
fiscal 1999 vests as to 25% of the shares on the first anniversary of such
option's vesting start date and 1/48 of the shares each full month
thereafter. Mr. Kedlaya's grant of an option to purchase 50,000 shares in
fiscal 2001 vests as to 33% of the shares on the first anniversary of such
option's vesting start date and 1/36 of the shares each full month
thereafter.
(4) Mr. Grewal's grant of options to purchase 120,000 shares in fiscal 2000
vests as to 25% of the shares on the first anniversary of such option's
vesting start date and 1/48 of the shares each full month thereafter. Mr.
Grewal's grant of an option to purchase 80,000 shares in fiscal 2001 was
surrendered on August 10, 2001, pursuant to eGain's stock option exchange
program. Mr. Grewal's grant of an option to purchase 3,200 shares in fiscal
2001 was immediately vested in full.
(5) Mr. Smit's grants of options to purchase 75,000 and 50,000 shares in fiscal
1999 vests as to 25% of the shares on the first anniversary of such
option's vesting start date and 1/48 of the shares each full month
thereafter. Mr. Smit's grant of an option to purchase 20,000 shares in
fiscal 2001 vests as to 33% of the shares on the first anniversary of such
option's vesting start date and 1/36 of the shares each full month
thereafter. Mr. Smit's grant of an option to purchase 2,005 shares in
fiscal 2001 was immediately vested in full.
9
Recent Option Grants
The following tables set forth certain information as of June 30, 2001 and
for the fiscal year then ended with respect to stock options granted to and
exercised by the individuals named in the Summary Compensation Table above.
Percentage Potential Realizable
of Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Employees or Base for Option Term (1)
Options in Fiscal Price Expiration ---------------------
Name Granted 2001 ($/Share) Date 5% 10%
---- ------- ---------- --------- ---------- -------- ----------
Ashutosh Roy....... 25,000 0.5% $4.47 1/17/06 $ 30,835 $ 68,261
Gunjan Sinha....... 25,000 0.5 4.47 1/17/06 30,835 68,261
Chuck Jepson....... 50,000 1.1 6.50 10/19/10 204,425 518,050
8,000 0.2 8.69 8/19/10 43,715 110,783
Ram Kedlaya........ 50,000 1.1 8.69 8/19/10 273,222 692,394
Harpreet Grewal (2) 80,000 1.8 8.69 8/19/10 437,155 1,107,830
3,200 -- 2.22 5/14/06 1,961 4,340
Eric Smit.......... 20,000 0.4 8.69 8/19/10 109,289 276,958
2,005 -- 2.22 5/14/06 1,228 2,720
--------
(1) Potential realizable value assumes that the stock price increases from the
exercise price from the date of grant until the end of the option term (5
or 10 years) at the annual rate specified (5% and 10%). For a ten-year
option term, annual compounding results in total appreciation of
approximately 62.9% (at 5% per year) and 159.4% (at 10% per year). For a
five-year option term, annual compounding results in total appreciation of
approximately 27.6% (at 5% per year) and 61.1% (at 10% per year). The
assumed annual rates of appreciation are specified in SEC rules and do not
represent eGain's estimate or projection of future stock price growth.
eGain does not necessarily agree that this method can properly determine
the value of an option.
(2) Mr. Grewal was granted options to purchase 83,200 shares in fiscal 2001, of
which 80,000 were surrendered on August 10, 2001, pursuant to eGain's stock
option exchange program.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at June 30, 2001 at June 30, 2001 (2)
Shares Value ------------------- --------------------
Acquired on Realized Exercisable/ Exercisable/
Name Exercise ($)(1) Unexercisable Unexercisable
---- ----------- -------- ------------------- --------------------
Ashutosh Roy....... -- $ -- 25,000 -- $ -- $ --
Gunjan Sinha....... -- -- 25,000 -- -- --
Chuck Jepson....... -- -- 344,790 62,902 -- --
Ram Kedlaya........ -- -- -- 50,000 -- --
Harpreet Grewal (3) 5,000 67,188 55,700 142,500 90,229 105,625
Eric Smit.......... -- -- 2,005 20,000 942 --
--------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) Calculated on the basis of the fair market value of the underlying
securities at June 29, 2001 ($2.69 per share) minus the exercise price.
(3) Mr. Grewal was granted options to purchase 83,200 shares in fiscal 2001, of
which 80,000 were surrendered on August 10, 2001, pursuant to eGain's stock
option exchange program.
10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The following report on executive compensation is provided by the
Compensation Committee of the Board of Directors (the "Compensation Committee")
to assist stockholders in understanding the committee's objectives and
procedures in establishing the compensation of eGain's executive officers and
describes the bases on which it made fiscal 2001 compensation determinations.
The Compensation Committee is currently comprised of two non-employee
directors. In making its determinations, the Compensation Committee relied, in
part, on independent surveys and public disclosures of compensation of
management of companies in the ecommerce software industry.
Compensation Objectives
The Compensation Committee believes that compensation of eGain's executive
officers should:
. encourage creation of stockholder value and achievement of strategic
corporate objectives;
. provide a competitive total compensation package that enables eGain to
attract and retain, on a long-term basis, high caliber personnel;
. integrate compensation with eGain's annual and long-term corporate
objectives and focus executive behavior on the fulfillment of those
objectives;
. align the interests of management and stockholders and enhance
stockholder value by providing management with longer term incentives
through equity ownership by management;
. provide total compensation opportunity that is competitive with
companies in eGain's industry, taking into account relative company
size, performance and geographic location as well as individual
responsibilities and performance; and
. provide fair compensation consistent with internal compensation
programs.
Key Elements of Executive Compensation
The compensation of executive officers is based upon eGain's financial
performance as well as an evaluation of eGain's progress in the achievement of
certain business objectives, including the execution of corporate and
collaborative agreements, the expansion of eGain's business and the attainment
of certain operational and research and development milestones in eGain's
technology development programs, as well as the achievement of individual
business objectives by each executive officer. eGain's existing compensation
structure for executive officers generally includes a combination of salary and
stock options and may include cash bonuses for performance determined to be
deserving of such bonuses by the Compensation Committee.
Salary. Salary levels are largely determined through comparisons with
companies of similar headcount and market capitalizations or complexity in the
ecommerce software industry. Actual salaries are based on individual
performance contributions within a competitive salary range for each position
that is established through job evaluation of responsibilities and market
comparisons. The Compensation Committee, on the basis of its knowledge of
executive compensation in the industry, believes that eGain's salary levels for
the executive officers are at a level that the Compensation Committee, at the
time such salary determinations were made, considered to be reasonable and
necessary given eGain's financial resources and the stage of its development.
The Compensation Committee reviews salaries on an annual basis. At such time,
the Compensation Committee may change each executive officer's salary based on
the individual's contributions and responsibilities over the prior 12 months
and changes in median comparable company pay levels.
Stock Options. The Compensation Committee believes that by providing those
persons who have substantial responsibility for the management and growth of
eGain with an opportunity to increase their ownership of eGain stock through
stock option grants, the interests of stockholders and executive officers will
be closely aligned. Therefore, executive officers are eligible to receive stock
options when the Compensation Committee performs
11
its annual salary review; although the Option Committee, at its discretion, may
grant options at other times in recognition of exceptional achievements. The
number of shares underlying stock options granted to executive officers is
based on competitive practices in the industry as determined by independent
surveys and the Compensation Committee's knowledge of industry practice.
Chief Executive Officer Compensation
Ashutosh Roy is the eGain's Chief Executive Officer. For the year ended June
30, 2001, the Compensation Committee set Mr. Roy's annual salary at $125,000.
The Compensation Committee established Mr. Roy's salary for fiscal 2001 in
recognition of his performance in advancing the development and growth of eGain
and its achievement of specific corporate objectives, which included the
following: the achievement of additional collaborations; the financial
performance of eGain; and the compensation of eGain's management relative to
industry norms.
eGain's policy is generally to qualify compensation paid to executive
officers for deductibility under Section 162(m) of the Internal Revenue Code.
However, eGain reserves the discretion to pay compensation to its executive
officers that may not be deductible.
Mr. Roy is a member of the Board of Directors, but did not participate in
matters involving the evaluation of his own performance or the setting of his
own compensation.
Compensation Committee
Mark A. Wolfson
David G. Brown
Phiroz P. Darukhanavala
12
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors (the "Audit Committee")
operates under a written charter adopted by the Board of Directors on April 24,
2001. A copy of the Audit Committee Charter is attached as Annex A to this
Proxy Statement. The current members of the Audit Committee are Mark A.
Wolfson, David G. Brown and Phiroz P. Darukhanavala, each of whom meets the
independence standards established by The Nasdaq Stock Market.
The Audit Committee performs the following activities:
. overseeing eGain's financial reporting process on behalf of the Board of
Directors; and
. providing independent, objective oversight of eGain's accounting
functions and internal controls.
The Audit Committee reviewed and discussed the audited financial statements
contained in the 2001 Annual Report on Form 10-K with eGain's management and
its independent auditors. Management is responsible for the financial
statements and the reporting process, including the system of internal
controls. The independent auditors are responsible for expressing an opinion on
the conformity of those financial statements with accounting principles
generally acceptable in the United States.
The Audit Committee met privately with the independent auditors, and
discussed issues deemed significant by the auditors, including those required
by Statement on Auditing Standards No. 61 (Codification of Statements on
Auditing Standards), as amended. In addition, the Audit Committee discussed
with the independent auditors their independence from eGain and its management,
including the matters in the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions with the Audit
Committees).
In reliance on the reviews and discussions outlined above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in eGain's Annual Report on Form 10-K for the year ended
June 30, 2001, for filing with the Securities and Exchange Commission.
Audit Committee
Mark A. Wolfson
David G. Brown
Phiroz P. Darukhanavala
13
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of eGain's
common stock with a Self-Determined Peer Group (the "Peer Group") and the CRSP
Total Return Index for the Nasdaq U.S. and Foreign Stocks (the "Nasdaq
Composite Index"), assuming an investment of $100 in each on September 23,
1999. eGain's common stock is traded on the Nasdaq National Market. The
comparisons in the table are required by the Securities and Exchange Commission
and are not intended to forecast or be indicative of possible future
performance of eGain's common stock.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 9/23/99)
[CHART]
Total Returns Analysis
23-Sep-99 30-Jun-00 29-Jun-01
---------------------------------------------------------
eGain $100.00 $52.72 $11.70
---------------------------------------------------------
NASDAQ $100.00 $144.23 $78.57
---------------------------------------------------------
Peer Group $100.00 $207.21 $44.29
Companies in the Self-Determined Peer Group:
Kana Software Primus Knowledge
Onyx Software Seibel Systems
Pivotal Corp. Exchange Applications
14
RELATED PARTY TRANSACTIONS
Since July 1, 2000, there has not been any transaction or series of
transactions to which eGain was or is a party in which the amount involved
exceeded or exceeds $60,000 and in which any director, executive officer,
holder of more than 5% of any class of eGain's voting securities or any member
of the immediate family of any of the foregoing persons had or will have a
direct or indirect material interest, other than the transactions described
below.
Transactions with Management and Others
In August 2000, Mr. Sinha and Oak Hill Venture Fund I, L.P. and its
affiliated funds purchased an aggregate of 1.98 and 19.44 shares of eGain's
Series A preferred stock, and 48.02 and 470.55 shares of eGain's Series B
preferred stock, respectively. The price of each of the Series A preferred
stock and Series B preferred stock was $100,000 per share. Upon approval of
eGain's stockholders at the 2000 Annual Meeting, the Series B Preferred Stock
was converted to Series A Preferred Stock. In connection with this financing,
each investor received a warrant to purchase eGain's common stock. Mr. Sinha
and Oak Hill Venture Fund I, L.P. and its affiliated funds received warrants to
purchase an aggregate of 216,176 and 2,118,530 shares, respectively, of eGain's
common stock at an initial exercise price of $9.2517 per share. This exercise
price is subject to adjustment upon the occurrence of certain dilutive events.
On August 8, 2001, the conversion price of the Series A preferred stock and the
exercise price of the warrants was reset to $5.6875 per share. Messrs. Brown
and Wolfson have a direct or indirect passive limited partnership interest in
Oak Hill Venture Fund I, L.P. and its affiliated funds.
In the past, eGain has granted options to purchase common stock to its
directors and executive officers. eGain intends to grant such options to its
directors and executive officers in the future. See "Proposal 1--Compensation
of Directors" and "EXECUTIVE COMPENSATION--Recent Option Grants."
These affiliates purchased the securities described above at the same price
and on the same terms and conditions as the unaffiliated investors in the
private financing.
Business Relationships
In connection with eGain's private placement of securities in August 2000,
FW Investors V, L.P. and Oak Hill Capital Management, Inc. received transaction
fees of $1,203,125 and $1,421,875, respectively. Mr. Wolfson is a limited
partner of FW Investors V, L.P. and is a Vice President of Oak Hill Capital
Management, Inc. Due to the interests of Messrs. Wolfson and Sinha in the
transaction, a committee consisting of A. Michael Spence (a former director)
and Ashutosh Roy was created to review the merits of the transaction together
with Harpreet Grewal, eGain's Chief Financial Officer. In connection with such
review, eGain engaged Donaldson, Lufkin & Jenrette as independent advisors to
the committee. Mr. Roy and Mr. Spence had indirect passive limited partnership
interests in certain entities affiliated with the Oak Hill Entities, but waived
rights to any participation, including participation in any profits, derived by
the Oak Hill Entities in connection with eGain's private placement. Messrs.
Wolfson and Sinha abstained from the director vote which approved the
transaction. Mr. Brown, a current director of eGain who was not a director at
the time of the private placement, is a limited partner of FW Investors V, L.P.
eGain has entered into indemnification agreements with each of its directors
and executive officers. Such agreements require eGain to indemnify such
individuals to the fullest extent permitted under Delaware law.
eGain believes the foregoing transactions were in its best interests. It is
eGain's current policy that all transactions between eGain and its officers,
directors, 5% stockholders and eGain's affiliates will be entered into only if
these transactions are approved by a majority of the disinterested directors,
are on terms no less favorable to eGain than could be obtained from
unaffiliated parties and are reasonably expected to benefit eGain.
15
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Proposals of stockholders of eGain that are intended to be presented by such
stockholders at eGain's 2002 Annual Meeting must be received by the Secretary
of eGain no later than September 25, 2002 in order that they may be included in
eGain's proxy statement and form of proxy relating to that meeting.
A stockholder proposal not included in eGain's proxy statement for the 2002
Annual Meeting will be ineligible for presentation at the meeting unless the
stockholder gives timely notice of the proposal in writing to the Secretary of
eGain at the principal executive offices of eGain and otherwise complies with
the provisions of its Bylaws. To be timely, eGain's Bylaws provide that eGain
must have received the stockholder's notice not less than 50 days nor more than
75 days prior to the scheduled date of such meeting. However, if notice or
prior public disclosure of the date of the annual meeting is given or made to
stockholders less than 65 days prior to the meeting date, eGain must receive
the stockholder's notice by the close of business on the 15th day after the
earlier of the day eGain mailed notice of the annual meeting date or provided
such public disclosure of the meeting date.
OTHER MATTERS
eGain knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
it is intended that proxies in the enclosed form will be voted in accordance
with the judgment of the persons voting the proxies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, eGain's directors, executive
officers and any persons holding more than 10% of eGain's common stock are
required to report their initial ownership of eGain's common stock and any
subsequent changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established and eGain is
required to identify in this Proxy Statement those persons who failed to timely
file these reports. All of the filing requirements were satisfied for fiscal
2001 except that Mr. Kedlaya reported certain sales of common stock two months
late on Form 5.
ANNUAL REPORT ON FORM 10-K
A copy of eGain's combined annual report to stockholders and Annual Report
on Form 10-K for the year ended June 30, 2001 accompanies this proxy statement.
An additional copy will be furnished without charge to beneficial stockholders
or stockholders of record upon request to Milind Kasbekar, eGain Communications
Corporation, 714 East Evelyn Avenue, Sunnyvale, California 94086.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
eGain's Annual Report on Form 10-K for the fiscal year ended June 30, 2001
was filed with the Securities and Exchange Commission on September 28, 2001.
The following portions of the Annual Report are incorporated in this proxy
statement by reference:
. Report of Independent Auditors
. Consolidated Balance Sheets
. Consolidated Statements of Operations
. Consolidated Statements of Stockholders' Equity
. Consolidated Statements of Cash Flow
. Notes to Consolidated Financial Statements
16
. Selected Consolidated Financial Data
. Management's Discussion and Analysis of Financial Condition and Results
of Operation
. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
. Quantitative and Qualitative Disclosure About Market Risk
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
By Order of the Board of Directors,
/s/ Ashutosh Roy
Ashutosh Roy
Chief Executive Officer
October 15, 2001
17
ANNEX A
eGain Communications Corporation
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and eGain. If an audit committee chair is not
designated or present the members of the committee may designate a chair by
majority vote of the committee membership. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and eGain. All committee members
shall be financially literate, and at least one member shall have accounting or
related financial management expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to eGain's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of eGain's financial statements, and the legal
compliance and ethics programs as established by management and the board. In
so doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal
auditors, and management of eGain. In discharging its oversight role, the
committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities, and personnel of eGain and the
power to retain outside counsel, or other experts, for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee eGain's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing eGain's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The committee should take the
appropriate actions to set the overall corporation "tone" for quality financial
reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
. The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
eGain's shareholders. The committee shall have the ultimate authority
and responsibility to evaluate and, where appropriate, recommend the
replacement of the independent auditors. The committee shall discuss
with the auditors their independence from management and eGain and the
matters included in the written disclosures required by the Independence
Standards Board. Annually, the committee shall review and recommend to
the board the selection of eGain's independent auditors, subject to
shareholder's approval.
. The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting
and financial controls, including eGain's system to
A-1
monitor and manage business risk, and legal and ethical compliance
programs. Further, the committee shall meet separately with the internal
auditors and the independent auditors, with and without management
present, to discuss the results of their examinations.
. The committee shall review the internal financial statements with
management and the independent auditors prior to the filing of eGain's
Quarterly Report on Form 10-Q. Also, the committee shall discuss the
results of the quarterly review and any other matters required to be
communicated to the committee by the independent auditors under
generally accepted auditing standards. The chair of the committee may
represent the entire committee for the purposes of this review.
. The committee shall review with management and the independent auditors
the financial statements to be included in eGain's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to
the committee by the independent auditors under generally accepted
auditing standards.
A-2
AUDIT COMMITTEE MEETING PLANNER-FISCAL 2001
Planned
A=Annually; Q=Quarterly; AN=As Necessary Timing Frequency Timing (fiscal)
--------------------------------------------------------------- ----------- ---------------
Financial Management A Q AN Q1 Q2 Q3 Q4
--------------------------------------------------------------- -- -- --- --- --- --- ---
Annual Report on Form 10-K and proxy statement X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Quarterly Reports on Form 10-Q* X X X X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Assessment of internal control environment and systems of
internal controls X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
New accounting and financial reporting requirements X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Status of significant accounting estimates and judgments
(e.g., reserves) and special issues (e.g., major transactions,
accounting changes, etc.) X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Other matters (adequacy of staffing, succession planning, etc.) X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Executive session with management X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Independent Auditors
--------------------------------------------------------------- -- -- --- --- --- --- ---
Results of annual audit, (including required communications)
SAS 61 report X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Results of timely quarterly reviews (including required
communications)* X X X X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Report on internal control weaknesses and other
recommendations and management response X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Scope of interim reviews and annual audit and fees X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Required written communication and discussion of
independence X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Other matters (adequacy of financial staff, succession
planning, etc.) X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Executive session with independent auditors X X X X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Internal Auditor
--------------------------------------------------------------- -- -- --- --- --- --- ---
Scope of internal auditing plan for upcoming year X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Internal auditing costs (budget/actual) X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Coordination with independent auditors X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Defalcations and irregularities X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Compliance review: Business conduct policy X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Compliance review: Director and executive officer
perquisites and expenses X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Summary of significant audit findings and status update
relative to annual plan X X X X X
--------------------------------------------------------------- -- -- --- --- --- --- ---
Executive session with Director of Internal Auditing X
--------------------------------------------------------------- -- -- --- --- --- --- ---
A-3
AUDIT COMMITTEE MEETING PLANNER (CONTINUED)
Planned
A=Annually; Q=Quarterly; AN=As Necessary Timing Frequency Timing (fiscal)
-------------------------------------------------------------- ----------- ---------------
Other Members of Management A Q AN Q1 Q2 Q3 Q4
-------------------------------------------------------------- -- -- --- --- --- --- ---
Legal Matters (General Counsel)
-------------------------------------------------------------- -- -- --- --- --- --- ---
. Conflict of interest and ethics policies X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
. Litigation status/regulatory matters X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Information systems matters (IT Director) X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Risk management processes and assessment (Vice President
Finance and Administration) X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Tax matters (Controller) X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Others X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Audit Committee
-------------------------------------------------------------- -- -- --- --- --- --- ---
Report results of annual independent audit to the board X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Recommend to the board the appointment of independent
auditors X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Review annual proxy statement audit committee report and
charter X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Evaluate audit committee effectiveness (i.e., self-assessment) X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Reassess the adequacy of the audit committee charter and
obtain board approval X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Approve audit committee meeting planner for the upcoming
year and confirm mutual expectations with management
and the auditors X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Evaluate Internal Auditing's performance X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Approve minutes of previous meeting X X X X X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Report significant matters to the board X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Executive session of committee members X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Orientation of new members and continuing education (e.g.,
accounting and financial topics) X
-------------------------------------------------------------- -- -- --- --- --- --- ---
Other matters X
-------------------------------------------------------------- -- -- --- --- --- --- ---
The committee meeting planner contemplates committee chairperson leadership
(with input from management and the auditors) in:
. Developing a detailed agenda for each meeting
. Keeping lines of communication open among the board, auditors and the
committee members
*Note the chair of the audit committee may represent the entire committee in
order to facilitate conducting these reviews timely
A-4
1926-PS-01
--------------------------------------------------------------------------------
[_] FOLD AND DETACH HERE [_]
PROXY
eGain Communications Corporation
Proxy Solicited by the Board of Directors
for the Annual Meeting of Stockholders, November 15, 2001
(see Proxy Statement for discussion of items)
The undersigned hereby appoints Ashutosh Roy, Gunjan Sinha and
Milind Kasbekar as proxy, with power of substitution, to vote all shares of
eGain Communications Corporation Common Stock which the undersigned is entitled
to vote on all matters which may properly come before the 2001 Annual Meeting of
Stockholders of eGain Communications Corporation, or any adjournment thereof.
----------------- -----------------
SEE REVERSE SEE REVERSE
SIDE SIDE
----------------- -----------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
eGain Communications Corporation
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
--------------------------------------------------------------------------------
[_] FOLD AND DETACH HERE [_]
--- Please mark
X votes as in
--- this example.
-------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
-------------------------------------------------------------------------------
1. Re-election of five directors to serve for the ensuing year until their
successors are duly elected and qualified or until earlier death or
resignation.
Nominees: (01) Ashutosh Roy, (02) Gunjan Sinha, (03) Mark A. Wolfson,
(04) David G. Brown and (05) Phiroz P. Darukhanavala
FOR [_] WITHHELD [_]
THE FROM THE
NOMINEES NOMINEES
[_]
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For all nominees except as noted above
FOR AGAINST ABSTAIN
2. The Amendment of the Employee
Stock Purchase Plan. [_] [_] [_]
3. The Appointment of Ernst & Young
LLP as Independent Auditors. [_] [_] [_]
The shares represented by this Proxy Card will be voted as specified above, but
if no specification is made they will be voted FOR Items 1, 2, and 3 at the
discretion of the proxies on any other matter that may properly come before the
meeting.
MARK HERE [_] MARK HERE [_]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full name and title as such.
Please sign, date and return promptly in the accompanying envelope.
Signature: _______________________________________ Date: ____________