The options are additional comp for issuing the loans; I think of them as interest. The loan does not have to be paid back if he exercises the options.
I don't honestly know what Ash thinks. I do try to read "tea leaves" when investing by trying to interpret what management thinks by what they do but Ash has gone so far that I think all one can say is that he is very committed to eGain, its shareholders and its employees. To say that he thinks the shares are worth more than the current price is not a leap I'm willing to make.
A year or two ago I would have referenced Eric Smit's purchase of stock as very encouraging but I don't think things have gone nearly as well as he anticipated so I don't rely on that either.