<PAGE>
As filed with the Securities and Exchange Commission on November 30, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EGGHEAD.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0408319
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1350 Willow Road
Menlo Park, California 94025
(Address of principal executive offices)
Options and purchase rights issued under the following plans
and assumed by the Registrant in connection with its acquisition of Egghead:
Egghead.com, Inc. 1997 Nonofficer Employee Stock Option Plan
Egghead.com, Inc. Amended and Restated 1993 Stock Incentive Compensation Plan
Surplus Software, Inc. 1996 Stock Option Plan
Egghead.com, Inc. Restated Nonemployee Director Stock Option Plan
(Full title of the plans)
John E. Labbett
Senior Vice President, Chief Financial Officer, Controller and Secretary
1350 Willow Road
Menlo Park, California 94025
(650) 470-2400
(Name, address and telephone number of agent for service)
Copies to:
Horace L. Nash, Esq.
Thomas J. Hall, Esq.
Nina L. Hong, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title of Shares To Be Aggregate Aggregate Amount of
To Be Registered Registered Price Per Share Offering Price Registration Fee
====================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value per share 1,348,819 (1) $ 13.5529 (2) $ 18,280,442 (3) $ 5,082
====================================================================================================================================
Common Stock,
$0.001 par value per share 15,000 (4) $ 20.2813 (5) $ 304,219 (5) $ 85
====================================================================================================================================
</TABLE>
(1) Represents the aggregate of the following amounts, each as of November 19,
1999:
-- 340,681 shares subject to options outstanding under the Egghead.com,
Inc. 1997 Nonofficer Employee Stock Option Plan;
-- 877,025 shares subject to options outstanding under the Egghead.com,
Inc. Amended and Restated 1993 Stock Incentive Compensation Plan;
-- 6,813 shares subject to options outstanding under the Surplus
Software, Inc. 1996 Stock Option Plan; and
-- 124,300 shares subject to options outstanding under the Egghead.com,
Inc. Restated Nonemployee Director Stock Option Plan.
(2) Estimated weighted average per share exercise price for these outstanding
options.
(3) Calculated based on the weighted average per share exercise price, pursuant
to Rule 457(h)(1) under the Securities Act of 1933, as amended (the
"Securities Act"). (4) Represents shares available for grant upon the
exercise of purchase rights outstanding as of November 19, 1999 under the
Egghead.com, Inc. 1989 Employee Stock Purchase Plan.
(5) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h)(1) and Rule 457(c) under the Securities Act,
based on the average of the high and low prices of the Registrant's common
stock as reported by the Nasdaq National Market on November 29, 1999
<PAGE>
PART II: INFORMATION REQUIRED IN THE REGISTRTION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated into this registration statement by
reference:
(a) our most recent annual report on Form 10-K;
(b) all other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since
the end of the fiscal year covered by the document referred to in (a)
above; and
(c) the description of our common stock contained in our registration
statement on Form 8-A filed under Section 12(g) of the Exchange Act,
including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities registered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability:
. for any breach of the director's duty of loyalty to the Registrant
and its stockholders;
. for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law;
. under Section 174 of the Delaware General Corporation Law; or
. for any transaction from which the director derived an improper
personal benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Amended and Restated Bylaws provide that:
. the Registrant is required to indemnify its directors and
executive officers to the fullest extent permitted by the Delaware
General Corporation Law, subject to certain exceptions;
. the Registrant is required, with certain exceptions, to advance
expenses, as incurred, to its directors and executive officers in
connection with a legal proceeding to the fullest extent permitted
by the
1
<PAGE>
Delaware General Corporation Law;
. the rights conferred in the Amended and Restated Bylaws are not
exclusive; and
. the Registrant is authorized to enter into indemnity agreements
with its directors, officers, employees, and agents.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers to give such directors and executive officers
additional contractual assurances regarding the scope of the indemnification set
forth in the Amended and Restated Bylaws and to provide additional procedural
protections. The Registrant has also obtained directors' and officers' liability
insurance.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above:
<TABLE>
<CAPTION>
Exhibit
-------
Document Number
- -------- ------
<S> <C>
The Registrant's Amended and Restated Certificate of Incorporation, as filed with 4.01
the Delaware Secretary of State on November 19, 1999.
The Registrant's Amended and Restated Bylaws, as adopted on September 10, 1999. 4.02
Form of Indemnity Agreement entered into by the Registrant with certain of its N/A
directors and executive officers (incorporated by reference to exhibit 10.04 to
the Registrant's registration statement on Form S-1 (File No. 333-18489) filed
with the Commission on December 20, 1996).
</TABLE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. CONSULTANTS AND ADVISORS.
Not applicable.
ITEM 9. EXHIBITS.
For the purposes of this item, the terms "Egghead.com, Inc." and
"Egghead" refer to Egghead.com, Inc., a Washington corporation, which was
acquired by the Registrant on November 19, 1999.
Exhibit Exhibit
Number Title
- ------ -----
4.01 The Registrant's Amended and Restated Certificate of Incorporation, as
filed with the Delaware Secretary of State on November 19, 1999
(incorporated by reference to Exhibit 3.02 to the Registrant's
registration statement on Form S-4 (File No. 333-87377) filed with the
Commission on September 17, 1999).
4.02 The Registrant's Amended and Restated Bylaws, as adopted on September
10, 1999 (incorporated by reference to Exhibit 4.05 to the
Registrant's registration statement on Form S-8 (File No. 333-91045)
filed with the Commission on November 16, 1999).
4.03 Form of Certificate of the Registrant's common stock, representing
shares issued on or after November 19, 1999 (incorporated by reference
to Exhibit 4.02 to the Registrant's registration statement on Form S-3
(File No. 333-91553) filed with the Commission on November 23, 1999).
2
<PAGE>
4.04 Egghead.com, Inc. 1997 Nonofficer Employee Stock Option Plan
(incorporated by reference to Exhibit 99.1 to Egghead's registration
statement on Form S-8 (File No. 333-56211) filed with the Commission on
June 5, 1998).
4.05 Egghead.com, Inc. Amended and Restated 1993 Stock Incentive
Compensation Plan (incorporated by reference to Exhibit 10.1 to
Egghead's quarterly report on Form 10-Q for the quarter ended December
26, 1998).
4.06 Surplus Software, Inc. 1996 Stock Option Plan.
4.07 Egghead.com, Inc. Restated Nonemployee Director Stock Option Plan
(incorporated by reference to Exhibit 10.2 to Egghead's quarterly
report on Form 10-Q for the quarter ended December 26, 1998).
4.08 Egghead, Inc. 1989 Employee Stock Purchase Plan.
5.01 Opinion of Fenwick & West LLP regarding the legality of the securities
being registered.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of PricewaterhouseCoopers LLP, independent accountants.
24.01 Power of Attorney (see signature page following Item 9).
ITEM 9. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that (a) and (b) do not apply if the information
required to be included in a post-effective amendment by (a) and (b)
is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the
3
<PAGE>
securities offered in the registration statement, and the offering of
the securities at that time shall be deemed to be the initial bona
fide offering of those securities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Menlo Park, State of California, on this 30th
day of November, 1999.
EGGHEAD.COM, INC.
By: /s/ S. Jerrold Kaplan
-----------------------------------------------
S. Jerrold Kaplan
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below and on the next page constitutes and appoints S. Jerrold Kaplan
and John E. Labbett, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-8, and to
file the same with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Principal Executive Officer:
President, Chief Executive Officer
/s/ S. Jerrold Kaplan and Director November 30, 1999
- ----------------------------------
S. Jerrold Kaplan
Principal Financial and
Accounting Officer:
/s/ John E. Labbett Senior Vice President and Chief
- --------------------------------- Financial Officer November 30, 1999
John E. Labbett
Additional Directors:
Chairman of the Board
- ---------------------------------
George Orban
/s/ Alan S. Fisher Director November 30, 1999
- ---------------------------------
Alan S. Fisher
/s/ C. Scott Gibson Director November 24, 1999
- ---------------------------------
C. Scott Gibson
/s/ Peter L. Harris Director November 24, 1999
- ---------------------------------
Peter L. Harris
/s/ Kenneth J. Orton Director November 24, 1999
- ---------------------------------
Kenneth J. Orton
/s/ Robert T. Wall Director November 30, 1999
- ---------------------------------
Robert T. Wall
/s/ Karen White Director November 23, 1999
- ---------------------------------
Karen White
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit
Number Title
- ------ -----
4.06 Surplus Software, Inc. 1996 Stock Option Plan.
4.08 Egghead, Inc. 1989 Employee Stock Purchase Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of PricewaterhouseCoopers LLP, independent accountants.
24.01 Power of Attorney (see signature page following Item 9).
<PAGE>
Exhibit 4.06
------------
SURPLUS SOFTWARE, INC.
1996 STOCK OPTION PLAN
Section 1. Purpose
The purpose of the Surplus Software, Inc. 1996 Stock Option Plan (this
"Plan") is to provide a means whereby selected employees, directors, officers,
agents, consultants, advisors and independent contractors of Surplus Software,
Inc. (the "Company"), or of any parent or subsidiary (as defined in subsection
5.8 and referred to hereinafter as "related corporations") thereof, may be
granted incentive stock options and/or nonqualified stock options to purchase
the Common Stock (as defined in Section 3) of the Company, in order to attract
and retain the services or advice of such employees, directors, officers,
agents, consultants, advisors and independent contractors and to provide added
incentive to such persons by encouraging stock ownership in the Company.
Section 2. Administration
This Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee to administer this Plan, by such committee. The administrator of this
Plan shall hereinafter be referred to as the "Plan Administrator."
In the event a member of the Plan Administrator may be eligible, subject to
the restrictions set forth in Section 4, to participate in this Plan, no member
of the Plan Administrator shall vote with respect to the granting of an option
hereunder to himself or herself, as the case may be, and, if state corporate law
does not permit a committee to grant options to directors, then any option
granted under this Plan to a director for his or her services as such shall be
approved by the full Board.
The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
from time to time remove members from, or add members to, the committee.
Vacancies on the committee, however caused, shall be filled by the Board.
With respect to grants made under this Plan to individuals who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan Administrator shall be constituted at all times so as to meet
the requirements of Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act if any of the Company's equity securities are registered pursuant to Section
12(b) or 12(g) of the Exchange Act.
2.1 Procedures
The Board shall designate one of the members of the Plan Administrator as
chairman. The Plan Administrator may hold meetings at such times and places as
it shall determine. The acts of a majority of the members of the Plan
Administrator present at meetings at which a quorum exists, or acts reduced to
or approved in writing by all Plan Administrator members, shall be valid acts of
the Plan Administrator.
2.2 Responsibilities
<PAGE>
Except for the terms and conditions explicitly set forth in this Plan, the
Plan Administrator shall have the authority, in its discretion, to determine all
matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
correspond to the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations thereunder and any amendments
thereto.
2.3 Rule 16b-3 Compliance and Bifurcation of Plan
It is the intention of the Company that, if any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, this Plan shall comply in all respects with Rule 16b-3 under the Exchange
Act. If any Plan provision is later found not to be in compliance with such
Section, the provision shall be deemed null and void, and in all events this
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3.
Notwithstanding anything in this Plan to the contrary, the Board, in its
absolute discretion, may bifurcate this Plan so as to restrict, limit or
condition the application of any provision of this Plan to participants who are
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning this Plan with respect to other participants.
Section 3. Shares Subject to This Plan
The shares subject to this Plan shall be the Company's Common Stock, no par
value (the "Common Stock"), currently authorized but unissued or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7, the
aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under this Plan shall not exceed 376,000 shares as such Common
Stock was constituted on the effective date of this Plan. If any option granted
under this Plan shall expire or be surrendered, exchanged for another option,
canceled or terminated for any reason without having been exercised in full, the
unpurchased shares subject thereto shall thereupon again be available for
purposes of this Plan, including for replacement options which may be granted in
exchange for such expired, surrendered, exchanged, canceled or terminated
options.
Section 4. Eligibility
An incentive stock option may be granted only to an individual who, at the
time the option is granted, is an employee of the Company or a related
corporation. A nonqualified stock option may be granted to any employee,
director, officer, agent, consultant, advisor or independent contractor of the
Company or any related corporation, whether an individual or an entity. Any
party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
Section 5. Terms and Conditions of Options
Options granted under this Plan shall be evidenced by written agreements
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem
2
<PAGE>
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, options shall include or incorporate by reference the following terms
and conditions:
5.1 Number of Shares and Price
The maximum number of shares that may be purchased pursuant to the exercise
of each option and the price per share at which such option is exercisable (the
"exercise price") shall be as established by the Plan Administrator; provided,
however that the Plan Administrator shall act in good faith to establish an
exercise price which shall be not less than the fair market value per share of
the Common Stock at the time the option is granted with respect to incentive
stock options and not less than 85% of the fair market value of the Common Stock
at the time the option is granted with respect to nonqualified stock options,
and not less than the par value per share of the Common Stock at the time the
option is granted with respect to nonqualified stock options and also provided
that, with respect to incentive stock options granted to greater than 10%
shareholders, the exercise price shall be as required by subsection 6.1.
5.2 Term and Maturity
Subject to the restrictions contained in Section 6 with respect to granting
incentive stock options to greater than 10% shareholders, the term of each
incentive stock option shall be as established by the Plan Administrator and, if
not so established, shall be 10 years from the date it is granted but in no
event shall it exceed 10 years. The term of each nonqualified stock option
shall be as established by the Plan Administrator and, if not so established,
shall be 10 years. To ensure that the Company or a related corporation will
achieve the purpose and receive the benefits contemplated by this Plan, any
option granted to any Optionee hereunder shall, unless the condition of this
sentence is waived or modified in the agreement evidencing the option or by
resolution adopted at any time by the Plan Administrator, be exercisable
according to the following schedule:
<TABLE>
<CAPTION>
Period of Optionee's Continuous
Relationship With the Company or
Related Corporation From the Date Portion of Total Option Which Is
the Option Is Granted Exercisable
- ----------------------------------------------- ------------------------------------------
<S> <C>
after twelve months 25%
on or after each full calendar month thereafter 2.083% additional for each such full month
</TABLE>
5.3 Exercise
Subject to the vesting schedule described in subsection 5.2, each option
may be exercised in whole or in part at any time and from time to time;
provided, however, that no fewer than 100 shares (or the remaining shares then
purchasable under the option, if less than 100 shares) may be purchased upon any
exercise of option hereunder and that only whole shares will be issued pursuant
to the exercise of any option and that the exercise price shall not be less than
the par value per share of the Common Stock at the time the option is exercised.
An Option shall be exercised by delivery to the Company of notice of the number
of shares with respect to which the option is exercised, together with payment
of the exercise price. The Company may require as a condition of exercise that
optionee enter into a stock transfer agreement imposing restrictions on the
transfer of shares of the Company's stock.
3
<PAGE>
5.4 Payment of Exercise Price
Payment of the option exercise price shall be made in full at the time the
notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check, or personal check (unless at the time
of exercise the Plan Administrator in a particular case determines not to accept
a personal check) for the shares being purchased.
The Plan Administrator can determine at any time before exercise that
additional forms of payment will be permitted. To the extent permitted by the
Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator; provided,
however, that payment in stock held by an Optionee shall not be made unless the
stock shall have been owned by the Optionee for a period of at least six months;
and
(b) delivery of a full-recourse promissory note executed by the
Optionee in an amount which shall not exceed that portion of the exercise price
which is in excess of the amount determined to be stated capital pursuant to the
Oregon Business Corporation Act; provided that (i) such note delivered in
connection with an incentive stock option shall, and such note delivered in
connection with a nonqualified stock option may, in the sole discretion of the
Plan Administrator, bear interest at a rate specified by the Plan Administrator
but in no case less than the rate required to avoid imputation of interest
(taking into account any exceptions to the imputed interest rules) for federal
income tax purposes, (ii) the Plan Administrator in its sole discretion shall
specify the term and other provisions of such note at the time an incentive
stock option is granted or at any time prior to exercise of a nonqualified stock
option, (iii) the Plan Administrator may require that the Optionee pledge to the
Company for the purpose of securing the payment of such note the shares of
Common Stock to be issued to the Optionee upon exercise of the option and may
require that the certificate representing such shares be held in escrow in order
to perfect the Company's security interest, and (iv) the Plan Administrator in
its sole discretion may at any time restrict or rescind this right upon
notification to the Optionee.
(c) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.
5.5 Withholding Tax Requirement
The Company or any related corporation shall have the right to retain and
withhold from any payment of cash or shares of Common Stock under this Plan the
amount of taxes required by any government to be withheld or otherwise deducted
and paid with respect to such payment. At its discretion, the Company may
require an Optionee receiving shares of Common Stock to reimburse the Company
for any such taxes required to be withheld by the Company and withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due or to become due from the Company to the Optionee an amount equal to
such taxes. The Company may also retain
4
<PAGE>
and withhold or the Optionee may elect, subject to approval by the Company at
its sole discretion, to have the Company retain and withhold a number of shares
having a market value not less than the amount of such taxes required to be
withheld by the Company to reimburse the Company for any such taxes and cancel
(in whole or in part) any such shares so withheld. In order to qualify such
election for exemption under Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, any individual who is subject to Section 16 under the Exchange Act
must exercise the option during the quarterly 10-day window period required
under Section 16(b) of the Exchange Act for exercises of stock appreciation
rights, and the election relating to such option exercise must be (i) an
irrevocable election made six months prior to the date the option exercise
becomes taxable; (ii) an election that is made during a window period; or (iii)
an election that is made prior to a window period, provided the election becomes
effective as of the next window period.
5.6 Holding Periods
5.6.1 Securities and Exchange Act Section 16
Shares of Common Stock obtained upon the exercise of a stock option may not
be sold by a person subject to Section 16 of the Exchange Act until six months
after the date the option was granted.
5.6.2 Taxation of Stock Options
In order to obtain certain tax benefits afforded to incentive stock options
under Section 422 of the Code, an Optionee must hold the shares issued upon the
exercise of an incentive stock option for two years after the date of grant of
the option and one year from the date of exercise. An Optionee may be subject
to the alternative minimum tax at the time of exercise of an incentive stock
option.
The Plan Administrator may require an Optionee to give the Company prompt
notice of any disposition of shares acquired by the exercise of an incentive
stock option prior to the expiration of such holding periods.
Tax advice should be obtained by an Optionee when exercising any option and
prior to the disposition of the shares issued upon the exercise of any option.
5.7 Transferability of Options
Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of any option under this Plan or of any right or privilege
conferred hereby, contrary to the Code or to the provisions of this Plan, or the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. Notwithstanding the foregoing, to the
extent permitted by Rule 16b-3 under the Exchange Act and other applicable law
and regulation, the Plan Administrator may permit an Optionee to (i) during the
Optionee's lifetime, designate a person who may exercise the option after the
Optionee's death by giving written notice of such
5
<PAGE>
designation to the Company (such designation may be changed from time to time by
the Optionee by giving written notice to the Company revoking any earlier
designation and making a new designation) or (ii) with respect to nonqualified
stock options, transfer the option and the rights and privileges conferred
hereby.
5.8 Termination of Relationship
If the Optionee's relationship with the Company or any related corporation
ceases for any reason other than termination for cause, death or total
disability, and unless by its terms the option sooner terminates or expires,
then the Optionee may exercise, for a three-month period, that portion of the
Optionee's option which is exercisable at the time of such cessation, but the
Optionee's option shall terminate at the end of such period following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived in the agreement evidencing the option. If, in
the case of an incentive stock option, an Optionee's relationship with the
Company or any related corporation changes (i.e., from employee to nonemployee,
such as a consultant), such change shall constitute a termination of an
Optionee's employment with the Company or any related corporation and the
Optionee's incentive stock option shall terminate in accordance with this
subsection 5.8. Upon the expiration of the three-month period following
cessation of employment in the case of an incentive stock option, or at any time
prior to the expiration of the option in the case of a nonqualified stock
option, the Plan Administrator shall have sole discretion in a particular
circumstance to extend the exercise period following such cessation to any date
up to the termination or expiration of the option. If, however, in the case of
an incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment, the option will no longer
qualify as an incentive stock option under the Code.
If an Optionee is terminated for cause, each option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime (except minor
violations), fraud, misconduct or disclosure of confidential information. If an
Optionee's relationship with the Company or any related corporation is suspended
pending an investigation of whether or not the Optionee shall be terminated for
cause, the Optionee's rights under each option granted hereunder likewise shall
be suspended during the period of investigation.
If an Optionee's relationship with the Company or any related corporation
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock option, cease to be treated as an
incentive stock option until the end of the 12-month period following such
cessation (unless by its terms it sooner terminates or expires). As used in
this Plan, the term "total disability" refers to a mental or physical impairment
of the Optionee which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Optionee to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Plan Administrator.
Options granted under the Plan shall not be affected by any change of
relationship with
6
<PAGE>
the Company so long as the Optionee continues to be an employee, director,
officer, agent, consultant, advisor or independent contractor of the Company or
of a related corporation; however, a change in an Optionee's status from an
employee to a nonemployee (e.g., consultant or independent contractor) shall
result in the termination of an outstanding incentive stock option held by such
Optionee. The Plan Administrator, in its absolute discretion, may determine all
questions of whether particular leaves of absence constitute a termination of
services; provided, however, that with respect to incentive stock options, such
determination shall be subject to any requirements contained in the Code. The
foregoing notwithstanding, with respect to incentive stock options, employment
shall not be deemed to continue beyond the first 90 days of such leave, unless
the Optionee's reemployment rights are guaranteed by statute or by contract.
As used herein, the term "related corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50% or more of the total combined
voting power of all classes of stock of each of the corporations other than the
Company is owned by one of the other corporations in such chain. When referring
to a parent corporation, the term "related corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
5.9 Death of Optionee
If an Optionee dies while he or she has a relationship with the Company or
any related corporation or within the three-month period (or 12-month period in
the case of totally disabled Optionees) following cessation of such
relationship, any option held by such Optionee to the extent that the Optionee
would have been entitled to exercise such option, may be exercised within one
year after his or her death by the personal representative of his or her estate
or by the person or persons to whom the Optionee's rights under the option shall
pass (i) by will or by the applicable laws of descent and distribution or (ii)
by a designation or transfer pursuant to Section 5.7.
5.10 No Status as Shareholder
Neither the Optionee nor any party to which the Optionee's rights and
privileges under the option may pass shall be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of any option granted under this Plan unless and
until such option has been exercised.
5.11 Continuation of Relationship
Nothing in this Plan or in any option shall confer upon any Optionee any
right to continue in the employ or other relationship of the Company or of a
related corporation, or to interfere in any way with the right of the Company or
of any such related corporation to terminate his or her employment or other
relationship with the Company at any time.
5.12 Modification and Amendment of Option
Subject to the requirements of Code Section 422 with respect to incentive
stock options and to the terms and conditions and within the limitations of this
Plan, the Plan Administrator
7
<PAGE>
may modify or amend any outstanding option granted under this Plan. The
modification or amendment of an outstanding option shall not, without the
consent of the Optionee, impair or diminish any of his or her rights or any of
the obligations of the Company under such option. Except as otherwise provided
in this Plan, no outstanding option shall be terminated without the consent of
the Optionee.
5.13 Limitation on Value for Incentive Stock Options
As to all incentive stock options granted under the terms of this Plan, to
the extent that the aggregate fair market value of the shares (determined at the
time the incentive stock option is granted) with respect to which incentive
stock options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans of the
Company, a related corporation or a predecessor corporation) exceeds $100,000,
such options shall be treated as nonqualified stock options. The previous
sentence shall not apply if the Internal Revenue Service issues a public rule,
issues a private ruling to the Company, any Optionee or any legatee, personal
representative or distributee of an Optionee or issues regulations changing or
eliminating such annual limit.
Section 6. Greater Than 10% Shareholders
6.1 Exercise Price and Term of Incentive Stock Options
If an incentive stock option is granted under this Plan to any employee who
owns more than 10% of the total combined voting power of all classes of stock of
the Company or any related corporation, the term of such incentive stock options
shall not exceed five years and the exercise price shall be not less than 110%
of the fair market value of the shares at the time the incentive stock option is
granted. This provision shall control notwithstanding any contrary terms
contained in an option agreement or any other document.
6.2 Attribution Rule
For purposes of subsection 6.1, in determining stock ownership, an employee
shall be deemed to own the shares owned, directly or indirectly, by or for his
or her brothers, sisters, spouse, ancestors and lineal descendants. Shares
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust shall be deemed to be owned proportionately by or for its shareholders,
partners or beneficiaries. If an employee or a person related to the employee
owns an unexercised option or warrant to purchase shares of the Company, the
shares subject to that portion of the option or warrant which is unexercised
shall not be counted in determining stock ownership. For purposes of this
Section 6, shares owned by an employee shall include all shares actually issued
and outstanding immediately before the grant of the incentive stock option to
the employee.
Section 7. Adjustments Upon Changes in Capitalization
The aggregate number and class of shares for which options may be granted
under this Plan, the number and class of shares covered by each outstanding
option and the exercise price per share thereof (but not the total price), and
each such option, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend.
8
<PAGE>
7.1 Effect of Liquidation or Reorganization
7.1.1 Cash, Stock or Other Property for Stock
Except as provided in subsection 7.1.2, upon a merger (other than a merger
of the Company in which the holders of shares of Common Stock immediately prior
to the merger have the same proportionate ownership of shares of Common Stock in
the surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, any option granted hereunder shall terminate, but the Optionee
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise such Optionee's option in whole or in part whether or not the vesting
requirements set forth herein or in the option agreement have been satisfied;
provided that such acceleration will not occur (i) unless such Optionee has been
a full-time employee of the Company for the period of at least one year or, (ii)
if, in the opinion of the Company's outside accountants, such acceleration would
render unavailable "pooling of interests" accounting treatment for any
reorganization, merger or consolidation of the Company for which pooling of
interests accounting treatment is sought by the Company.
7.1.2 Conversion of Options on Stock for Stock Exchange
If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Company and the corporation
issuing the Exchange Stock, in their sole discretion, determine that any or all
such options granted hereunder shall not be converted into options to purchase
shares of Exchange Stock but instead shall terminate in accordance with the
provisions of subsection 7.1.1. The amount and price of converted options shall
be determined by adjusting the amount and price of the options granted hereunder
in the same proportion as used for determining the number of shares of Exchange
Stock the holders of the shares of Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or reorganization.
Unless accelerated by the Board, the vesting schedule set forth in the option
agreement shall continue to apply to the options granted for the Exchange Stock.
7.2 Fractional Shares
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
7.3 Determination of Board to Be Final
All Section 7 adjustments shall be made by the Board, and its determination
as to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. Unless
9
<PAGE>
an Optionee agrees otherwise, any change or adjustment to an incentive stock
option shall be made in such a manner so as not to constitute a " modification"
as defined in Code Section 425(h) and so as not to cause his or her incentive
stock option issued hereunder to fail to continue to qualify as an incentive
stock option as defined in Code Section 422(b).
Section 8. Securities Regulation
Shares shall not be issued with respect to an option granted under this
Plan unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance, including the
availability, if applicable, of an exemption from registration for the issuance
and sale of any shares hereunder. Inability of the Company to obtain, from any
regulatory body having jurisdiction, the authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares hereunder
or the unavailability of an exemption from registration for the issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the nonissuance or sale of such shares as to which such requisite
authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred, unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Plan
Administrator may also require such other action or agreement by the Optionees
as may from time to time be necessary to comply with the federal and state
securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange, all stock issued hereunder if not previously listed on such exchange
shall be authorized by that exchange for listing thereon prior to the issuance
thereof
Section 9. Amendment and Termination
9.1 Board Action
The Board may at any time suspend, amend or terminate this Plan, provided
that, to the extent required for compliance with Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act, Section 422 of the Code or by any applicable
law or regulation, the Company's shareholders must approve any amendment which
will:
(a) increase the number of shares that may be issued under this Plan;
10
<PAGE>
(b) with respect to nonqualified stock options, materially modify the
requirements as to eligibility for participation in this Plan or, with respect
to incentive stock options, change the designation of the participants or class
of participants eligible for participation in this Plan;
(c) materially increase the benefits accruing to the participants
under this Plan; or
(d) otherwise require shareholder approval under any applicable law or
regulation.
Such shareholder approval must be obtained (i) within 12 months of the
adoption by the Board of such amendment or (ii) if earlier, and to the extent
required for compliance with Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, at the next annual meeting of shareholders after such adoption by
the Board.
Any amendment made to this Plan which would constitute a "modification" to
incentive stock options outstanding on the date of such amendment, shall not be
applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
9.2 Automatic Termination
Unless sooner terminated by the Board, this Plan shall terminate ten years
from the earlier of (a) the date on which this Plan is adopted by the Board or
(b) the date on which this Plan is approved by the shareholders of the Company.
No option may be granted after such termination or during any suspension of this
Plan. The amendment or termination of this Plan shall not, without the consent
of the option holder, alter or impair any rights or obligations under any option
theretofore granted under this Plan.
Section 10. Effectiveness of This Plan
This Plan shall become effective upon adoption by the Board so long as it
is approved by the Company's shareholders at any time within 12 months of such
adoption of this Plan or, if earlier, and to the extent required for compliance
with Rule 16b-3 under the Exchange Act, at the next annual meeting of
shareholders after adoption by the Board.
The Plan was adopted by the Board of Directors on April 25, 1996 and approved by
the shareholders on April 26, 1996; it was amended to increase the number of
shares available under the Plan to 376,000 by Board action effective September
26, 1996 and approved by the shareholders effective as of October 31, 1996.
11
<PAGE>
Exhibit 4.08
------------
EGGHEAD, INC.
1989 EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED AS OF JULY 15, 1992
1. PURPOSE OF THE PLAN. THIS 1989 EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN")
--------------------
IS INTENDED AS AN INCENTIVE AND TO ENCOURAGE STOCK OWNERSHIP BY ALL
ELIGIBLE EMPLOYEES OF EGGHEAD, INC., A WASHINGTON CORPORATION (THE
"COMPANY"), AND PARTICIPATING SUBSIDIARIES SO THAT THEY MAY SHARE IN THE
FORTUNES OF THE COMPANY BY ACQUIRING OR INCREASING THEIR PROPRIETARY
INTEREST IN THE COMPANY. THE PLAN IS DESIGNED TO ENCOURAGE ELIGIBLE
EMPLOYEES TO REMAIN IN THE EMPLOY OF THE COMPANY. IT IS INTENDED THAT
OPTIONS ISSUED PURSUANT TO THIS PLAN SHALL CONSTITUTE OPTIONS ISSUED
PURSUANT TO AN "EMPLOYEE STOCK PURCHASE PLAN" WITHIN THE MEANING OF SECTION
423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
2. DEFINITIONS.
-----------
2.1 "Account" shall mean the funds accumulated with respect to
an individual employee as a result of deductions from his or her paycheck for
the purpose of purchasing stock under this Plan. The funds allocated to an
employee's Account shall remain the property of the respective employee at all
times during each offering.
2.2 "Base Pay" means regular straight time earnings or draw, but
excludes compensation for overtime, commissions, bonuses, amounts paid as
reimbursement of expenses and other additional compensation.
2.3 "Fair Market Value" means the last sale price for the common
stock (the "Common Stock") of the Company as reported on the National
Association of Securities Dealers Automated Quotation System, or if the stock is
traded on a stock exchange, the closing price for the stock on the principal
such exchange.
2.4 "Offering Date" means commencement date of the offering if
such date is a regular business day or the first business day following such
commencement date. A different date may be set by resolution of the Board of
Directors of the Company (the "Board").
2.5 "Participating subsidiaries" means any subsidiary of the
Company which is designated by the Board to participate in the Plan. The Board
shall have the power to make such designation before or after the Plan is
approved by the shareholders.
3. Employees Eligible to Participate. Any person who is in the
---------------------------------
employ of the Company or any of its subsidiaries is eligible to receive options
under the Plan, except (a) employees whose customary employment is twenty (20)
hours or less per week, and (b) employees whose customary employment is for not
more than five (5) months in any calendar year; provided, however, that no
employee who after the grant of options hereunder owns shares (including all
shares which may be purchased under outstanding options granted
<PAGE>
under the Plan) possessing 5% or more of the total combined voting power or
value of all classes of shares of the Company or of its parent or subsidiary
corporations shall be eligible to participate. For this purpose, the rules of
Section 424(d) of the Code shall apply in determining share ownership
4. Offerings. The first offering under this Plan shall commence on
---------
August l, 1989 and terminate on July 3l, 1990. The second offering shall
commenced on August 1, 1990 and terminate on June 30, 1991. Thereafter,
offerings shall commence on each subsequent July 1 and terminate on the
following June 30 until this Plan is terminated by the Board or no additional
shares of Common Stock of the Company are available for purchase under the Plan.
5. Price. The purchase price per share shall be the lesser of (1)
-----
85% of the Fair Market Value of the stock on the Offering Date; or (2) 85% of
the Fair Market Value of the stock on the last business day of the offering.
6. Stock Subject to the Plan. The stock subject to the options
-------------------------
shall be shares of the Company's authorized but unissued Common Stock or shares
of Common Stock reacquired by the Company, including shares purchased in the
open market. The aggregate number of shares which may be issued pursuant to the
Plan is 650,000, subject to increase or decrease by reason of stock split-ups,
reclassifications, stock dividends, changes in par value and the like.
7. Changes in Capital Structure.
----------------------------
7.1 In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company or
of another corporation, by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividend payable in shares, appropriate adjustment shall be made by the Board in
the number or kind of shares as to which an option granted under this Plan shall
be exercisable, to the end that the participant's proportionate interest shall
be maintained as before the occurrence of such event. Any such adjustment made
by the Board of Directors shall be conclusive.
7.2 If the Company is not the surviving or resulting
corporation in any reorganization, merger, consolidation or recapitalization,
each outstanding option shall be assumed by the surviving or resulting
corporation and each option shall continue in full force and effect, and shall
apply to the same number and class of securities of the surviving corporation as
a holder of the number of shares of Common Stock subject to the option would be
entitled under the terms of the reorganization, merger, consolidation or
recapitalization.
8. Participation. An eligible employee may become a participant by
-------------
completing, signing and filing an enrollment agreement ("Enrollment Agreement")
and any other necessary papers with the Company at least ten days prior to the
commencement of the particular offering in which he or she wishes to
participate. Payroll deductions for a participant shall commence on the Offering
Date and shall end on the termination date of such offering unless earlier
terminated by the employee as provided in Section 14. Participation in one
offering under the Plan shall neither limit, or require, participation in any
other offering.
<PAGE>
9. Payroll Deductions.
------------------
9.1 At the time a participant files his or her Enrollment
Agreement, he or she shall elect to have deductions made from his or her pay on
each pay day during the time he or she is a participant in an offering at not
less than $15 or more than 15% of his or her Base Pay.
9.2 All payroll deductions made for a participant shall be
credited to his or her Account under the Plan. A participant may not make any
separate cash payment into such Account nor may payment for shares be made other
than by payroll deduction.
9.3 A participant may discontinue his or her payroll deductions
or participation in the Plan as provided in Section 14, but no other change can
be made during an offering and, specifically, except as provided in Section 14,
a participant may not alter the rate of his or her payroll deductions for that
offering.
10. Granting of Option.
------------------
10.1 On the Offering Date, this Plan shall be deemed to have
granted to the participant an option for as many full shares as he or she will
be able to purchase with the payroll deductions credited to his or her Account
during his or her participation in that offering.
10.2 Notwithstanding the foregoing, no employee shall be granted
an option which permits his or her rights to purchase Common Stock under the
Plan and any similar employee stock purchase plans of the Company or any parent
or subsidiary corporations to accrue at a rate which exceeds $25,000 of Fair
Market Value of such stock (determined at the time such option is granted) for
each calendar year which such option is outstanding at. any time. The purpose
of the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code.
10.3 If the total number of shares for which options are to be
granted on any date in accordance with Paragraph 10.1 exceeds the number of
shares then available under the Plan (after deduction of all shares for which
options have been exercised or are then outstanding), the Company shall make a
pro rata allocation of the shares remaining available in as nearly a uniform
manner as shall be practical and as it shall determine to be equitable.
11. Exercise of Option. Each employee who continues to be a
------------------
participant in an offering on the last business day of that offering shall be
deemed to have exercised his or her option on such date and shall be deemed to
have purchased from the Company such number of full shares of Common Stock
reserved for the purpose of the Plan as his or her accumulated payroll
deductions on such date will pay for at the purchase price.
12. Employee's Rights as a Shareholder.
----------------------------------
12.1 No participating employee shall have any right as a
shareholder with respect to any shares under the Plan until the shares have been
purchased in accordance with Section 11 above and the stock certificate has
actually been issued.
12.2 Shares to be delivered to a participant under the Plan will
be registered in the name of the participant, or, if the participant so directs,
by written notice to the Company prior to the termination date of the pertinent
offering, in the names of the participant
<PAGE>
and one such other person as may be designated by the participant, as joint
tenants with right of survivorship, tenants in common or as community property,
to the extent and in the manner permitted by applicable law.
13. Delivery. Certificates for stock issued to participants will be
--------
delivered as soon as practicable after the end of each offering.
14. Withdrawal.
----------
14.1 An employee may withdraw from the Plan, in whole but not in
part, at any time prior to the last business day of each offering by delivering
a withdrawal notice ("Withdrawal Notice") to the Company, in which event the
Company will refund the entire balance of his or her Account as soon as
practicable thereafter.
14.2 To re-enter the Plan, an employee who has previously
withdrawn must file a new Enrollment Agreement in accordance with Section 8.
His or her re-entry into the Plan cannot, however, become effective before the
beginning of the next offering following his or her withdrawal.
14.3 An employee may elect to discontinue his or her payroll
deductions during the course of a particular offering, at any time prior to the
last business day preceding the final pay day during such offering by delivering
an election to discontinue deductions to the Company, and such election shall
not constitute a withdrawal for the purposes of this Section 14. In the event
that an employee elects to discontinue his or her payroll deductions pursuant to
this Paragraph 14.3, the employee shall remain a participant in such offering
and shall be entitled to purchase from the Company such number of full shares of
Common Stock as set forth in and in accordance with Section 11 of the Plan.
15. No Carryover of Account. At the termination of each offering the
-----------------------
Company shall return to the employee the balance of his or her Account. Upon
termination of the Plan, the balance of each employee's Account shall be
returned to him or her.
16. Interest. No interest will be paid or allowed on any money in
--------
the Accounts of participating employees.
17. Rights Not Transferable. No participant shall be permitted to
-----------------------
sell, assign, transfer, pledge, or otherwise dispose of or encumber either the
payroll deductions credited to his or her Account or any rights with regard to
the exercise of an option or to receive shares under the Plan other then by will
or the laws of descent and distribution, and such right and interest shall not
be liable for, or subject to, the debts, contracts, or liabilities of the
employee. If any such action is taken by the participant, or any claim is
asserted by any other party in respect of such right and interest whether by
garnishment, levy, attachment or otherwise, such action or claim will be treated
as an election to withdraw funds in accordance with Section 14.
18. Termination of Employee's Rights. An employee's rights under the
--------------------------------
Plan will terminate when he or she ceases to be an employee because of
resignation, lay-off, discharge, or change of status. A Withdrawal Notice will
be considered as having been received from the employee on the day his or her
employment ceases, and all payroll deductions not used will be refunded.
<PAGE>
If an employee's employment shall be terminated by reason of normal
retirement, death, or disability prior to the end of the current offering, he or
she (or his or her designated beneficiary, in the event of his or her death, or
if none, his or her legal representative) shall have the right, within 90 days
thereafter, to elect to have the balance of his or her account either paid to
him or her in cash or applied at the end of the current offering toward the
purchase of Common Stock.
19. Administration of the Plan. The Plan shall be administered by
--------------------------
the Board, if each director is a "disinterested person" (as defined below). If
all directors are not "disinterested persons," the Plan shall be administered by
a committee consisting of two or more members of the Board, each of whom shall
be a "disinterested person," which committee (the "Committee") may be an
executive, compensation or other committee, including a separate committee
especially created for this purpose. The Committee shall have such of the
powers and authority vested in the Board hereunder as the Board may delegate to
it (including the power and authority to interpret any provision of this Plan or
of any option). The members of such Committee shall serve at the discretion of
the Board. A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument signed by all
of the members of the Committee and any action so taken shall be fully effective
as if it had been taken at a meeting. The Board and/or the Committee, if one
has been established by the Board, shall be referred to in this Plan as the
"Plan Administrator." Once the Plan Administrator has authorized action to be
taken under this Plan, option agreements entered into consistent with such
action may validly be executed on behalf of the Company by means of a facsimile
or stamped signature of the Company's President, Chief Executive Officer or
Secretary. "Disinterested person" shall be defined by reference to the rules
and regulations promulgated under Section 16(b) of the Securities Exchange Act
of 1934 (the "Act"), and any action taken by the Plan Administrator that is not
in full compliance with the disinterested administration provisions of such
rules and regulations shall be void and of no effect.
Subject to the provisions of this Plan, and with a view to effecting
its purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) construe and interpret this Plan; (b) define the terms used
in this Plan; (c) prescribe, amend and rescind rules and regulations relating to
this Plan; (d) correct any defect, supply any omission or reconcile any
inconsistency in this Plan; (e) determine the time or times at which options
shall be granted under this Plan; (f) determine all other terms and conditions
of options; and (g) make all other determinations necessary or advisable for the
administration of this Plan. All decisions, determinations and interpretations
make by the Plan Administrator shall be binding and conclusive on all
participants in this Plan and on their legal representatives, heirs and
beneficiaries.
20. Termination and Amendments to Plan. The Plan may be terminated
----------------------------------
at any time by the Board. It will terminate in any case on the earlier of (a)
the date on which all or substantially all of the unissued shares of Common
Stock reserved for the purpose of the Plan have been purchased, or (b) twenty
years from the date the Plan is adopted by the Board. Upon such termination or
any other termination of the Plan, all payroll deductions not used to purchase
stock will be refunded.
The Board also reserves the right to amend the Plan from time to time
in any
<PAGE>
respect, provided, however, that no amendment shall be effective without prior
approval of the shareholders (a) which would, except as provided in Section 6
and 7, increase the aggregate number of shares of Common Stock to be issued
under the Plan, (b) which would change the class of employees eligible to
receive options under the Plan or (c) if such amendment requires shareholder
approval for any other reason in order for the Plan to be eligible or continue
to qualify for the benefits conferred by Securities and Exchange Commission Rule
16b-3, as amended from time to time, or any successor rule or regulatory
requirements.
21. Approval of Shareholders. The Plan shall not take effect until
------------------------
approved by the holders of a majority of the outstanding shares of Common Stock
of the Company, which approval must occur within the period beginning twelve
months before and ending twelve months after the date the Plan is adopted by the
Board.
Date Approved by Board: April 19, 1989.
Date Approved by Shareholders: September 12, 1989
<PAGE>
Exhibit 5.01
------------
November 29, 1999
Egghead.com, Inc. (formerly Onsale, Inc.)
1350 Willow Road
Menlo Park, CA 94025
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement") to be filed by Egghead.com, Inc., a Delaware
corporation formerly known as Onsale, Inc. (the "Company"), with the Securities
and Exchange Commission (the "Commission") on or about November 29, 1999 in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 1,363,819 shares of the Company's Common Stock, $0.001 par
value (the "Stock"), which are subject to issuance by the Company upon the
exercise of the following rights.
(a) Stock options originally granted by the following:
(i) Egghead.com, Inc., a Washington corporation ("Egghead WA") that
has since been renamed EO Corporation, and that is a subsidiary
of the Company, under the:
(A) Egghead WA 1997 Nonofficer Employee Stock Option
Plan;
(B) Egghead WA Amended and Restated 1993 Stock Incentive Plan;
and
(C) Egghead WA Restated Nonemployee Director Stock Option
Plan.
(ii) Surplus Software, Inc., an Oregon corporation, under the Surplus
Software, Inc. 1996 Stock Option Plan.
(b) Purchase rights granted under the Egghead WA 1989 Employee Stock
Purchase Plan.
Each option and purchase right was assumed by the Company pursuant to the
Agreement and Plan of Merger dated as of July 13, 1999 among the Company,
Egghead WA and EO Corporation (the "Merger Agreement"). The Egghead WA 1997
Nonofficer Employee Stock Option Plan, Egghead WA Amended and Restated 1993
Stock Incentive
<PAGE>
Compensation Plan, Surplus Software, Inc. 1996 Stock Option Plan
and Egghead WA Restated Nonemployee Director Stock Option Plan are collectively
referred to in this letter as the "Option Plans."
In rendering this opinion, we have examined the following:
(1) your registration statement on Form 8-A filed with the Commission on
March 11, 1997 (File No. 000-21945), together with the order of
effectiveness issued by the Commission therefor on April 17, 1997;
(2) your quarterly report on Form 10-Q for the quarter ended
September 30;
(3) the Registration Statement, together with the exhibits filed as a part
thereof or incorporated therein by reference;
(4) the prospectus prepared in connection with the Registration Statement
(the "Prospectus");
(5) the Option Plans, the Egghead WA 1989 Employee Stock Purchase Plan and
related stock option agreement forms;
(6) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in your minute
books and the minute books of your predecessor, Onsale, Inc., a
California corporation ("Onsale California"), that are in our
possession;
(7) the minutes of meetings and actions by written consent of the sole
stockholder and the Board of Directors of EO Corporation that are
contained in the minute book of EO Corporation that is in our
possession;
(8) your Amended and Restated Certificate of Incorporation and your
Amended and Restated Bylaws that are listed as exhibits to the
Registration Statement;
(9) the stock records for both you and Onsale California that you have
provided to us (consisting of a certificate from your transfer agent
of even date herewith verifying the number of your issued and
outstanding shares of capital stock as of the date hereof and summary
reports from you confirming the number of your issued and outstanding
shares of capital stock and the number of options, warrants and any
other rights to acquire shares of your capital stock outstanding as of
the date hereof); and
(10) a Management Certificate addressed to us and dated of even date
herewith executed by you containing certain factual and other
representations; and
(11) the Merger Agreement.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and the completeness of all documents
submitted to us as originals, the
-2-
<PAGE>
conformity to originals and completeness of all documents submitted to us as
copies, the legal capacity of all natural persons executing the same, the lack
of any undisclosed termination, modification, waiver or amendment to any
document reviewed by us and the due authorization, execution and delivery of all
documents where due authorization, execution and delivery are prerequisites to
the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from public records and
documents referred to above. We have made no independent investigation or other
attempt to verify the accuracy of any of such information or to determine the
existence or non-existence of any other factual matters; however, we are not
-------
aware of any facts that would cause us to believe that the opinion expressed
herein is not accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California and (without reference to any case law or secondary
sources) the existing Delaware General Corporation Law.
Based on the foregoing, it is our opinion that:
(i) the up to 1,348,819 shares of Stock that may be issued and sold by you
pursuant to the exercise of the Assumed Options, when issued, sold and
delivered in the manner and for the consideration stated in the
Prospectus and the Registration Statement and in accordance with the
Stock Option Plans and any applicable stock option agreement with
respect to the Assumed Options, will be validly issued, fully paid and
nonassessable; and
(ii) the up to 15,000 shares of Stock that may be issued and sold by you
upon the exercise of purchase rights granted under the Egghead WA 1989
Employee Stock Purchase Plan, when issued, sold and delivered in the
manner and for the consideration stated in the Prospectus and the
Registration Statement and in accordance with the Egghead WA 1989
Employee Stock Purchase Plan and any applicable purchase agreements
entered into thereunder, will be validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended
-3-
<PAGE>
solely for your use as an exhibit to the Registration Statement for the purpose
of the above sale of the Stock and is not to be relied upon for any other
purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ Horace L. Nash
____________________________
Horace L. Nash, a Partner
-4-
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of Onsale, Inc. of our report dated February 12, 1998
appearing on page 28 of the Annual Report to Stockholders which is incorporated
in this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears on
page S-2 of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
San Jose, California
November 24, 1999
