<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1995
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
EGGHEAD, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 91-1296187
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
22011 S.E. 51ST STREET
P.O. BOX 7004
ISSAQUAH, WASHINGTON 98027
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
1993 STOCK OPTION PLAN
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
BRIAN W. BENDER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
EGGHEAD, INC.
22011 S.E. 51ST STREET
P.O. BOX 7004
ISSAQUAH, WASHINGTON 98027
(206) 391-0800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------------
COPY TO:
MICHAEL E. STANSBURY
PERKINS COIE
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED(1) OFFERING PRICE PER SHARE(2) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK,
$.01 PAR VALUE 3,466,780 $9.625 $33,367,757 $11,506
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Of this number, 3,291,780 shares are being registered for issuance under
the 1993 Stock Option Plan and 175,000 shares are being registered for
issuance under the Nonemployee Director Stock Option Plan, together with an
indeterminate number of additional shares which may be necessary to adjust
the number of shares reserved for issuance pursuant to the 1993 Stock
Option Plan and the Nonemployee Director Stock Option Plan as the result of
any future stock split, stock dividend or similar adjustment of the
outstanding Common Stock of the Registrant.
(2) Estimated pursuant to Rule 457 of the Securities Act of 1933, as amended
(the "Securities Act"), solely for the purpose of calculating the amount of
the registration fee. The price per share is estimated to be $9.625 based
on the average of the high and low trading prices for the Common Stock in
the over-the-counter market on May 25, 1995, as reported on the Nasdaq
National Market.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference into this
Registration Statement:
(a) The Registrant's latest Annual Report on Form 10-K for the year
ended April 1, 1995, filed with the Securities and Exchange Commission (the
"Commission") on May 25, 1995;
(b) All other reports filed by the Registrant 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 Annual Report on Form 10-
K referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on May 13, 1988
under Section 12 of the Exchange Act, including any amendments or reports filed
for the purpose of updating such descriptions.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. As permitted by Section 23B.08.320 of the Washington Business Corporation
Act, Article X of the Registrant's Articles of Incorporation limits a director's
liability to the Registrant or its shareholders for monetary damages arising
from his or her conduct as a director, except for acts or omissions that involve
intentional misconduct or a knowing violation of law, approval of distributions
or loans in violation of Section 23B.06.400 of the Washington Business
Corporation Act or any transaction from which the director will personally
receive a benefit in money, property or services to which the director is not
legally entitled.
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act. As permitted by
Section 23B.08.560 of the Washington Business Corporation Act, Article IX of the
Registrant's Bylaws provides that the Registrant shall indemnify its officers
and directors and may indemnify its employees and other agents against any and
all loss, liability, expenses (including attorneys' fees), judgments, fines,
ERISA excise taxes or penalties and amounts to be paid in settlement (each, a
"Loss") actually and reasonably incurred or suffered in connection with any
actual or threatened claim, suit or proceeding, whether civil, criminal,
administrative or investigative, except for a Loss arising out of acts or
omissions finally adjudged to be intentional misconduct or a known violation of
law, approval of distributions or loans that are finally adjudged to be in
violation of RCW 23B.06.400 or any transaction in which it is finally adjudged
that the indemnitee personally received a benefit in money, property or services
to which the indemnitee was not legally entitled. The Registrant's Bylaws also
permit it to secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws would permit indemnification, and to
enter into agreements to indemnify its officers and directors in furtherance of
Article IX of the Registrant's Bylaws. The Registrant has entered into such
agreements with certain of its officers and directors.
B. The undersigned Registrant hereby undertakes 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 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement 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.
<PAGE>
C. 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 of 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.
<PAGE>
ITEM 8. EXHIBITS
Exhibit
Number Description
- ------------- ----------------------------------------------------------------
5.1 Opinion of Perkins Coie regarding legality of the common stock
being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in its Opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 1993 Stock Option Plan
99.2 Nonemployee Director Stock Option Plan
ITEM 9. UNDERTAKINGS
A. The undersigned 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:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs 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 this 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 that remain unsold at the termination of the
offering.
<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 Issaquah, State of Washington, on the 31st day of
May, 1995.
EGGHEAD, INC.
By TERENCE M. STROM
---------------------------
Terence M. Strom
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Terence
M. Strom and Carolyn J. Tobias, and each of them, as true and lawful attorneys-
in-fact and agents with full power of substitution and resubstitution, to sign
in the name and on behalf of such person, individually and in each capacity
stated below, any or all amendments (including pre-effective and post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
the 31st day of May, 1995 in the capacities indicated.
Signature Title
--------- -----
TERENCE M. STROM President, Chief Executive
- ---------------------------------- Officer and Director
Terence M. Strom (Principal Executive
Officer)
BRIAN W. BENDER Vice President and Chief
- ---------------------------------- Financial Officer (Principal
Brian W. Bender Financial and Accounting
Officer)
PAUL G. ALLEN Director
- ----------------------------------
Paul G. Allen
RICHARD P. COOLEY Director
- ----------------------------------
Richard P. Cooley
STEVEN E. LEBOW Director
- ----------------------------------
Steven E. Lebow
LINDA FAYNE LEVINSON Director
- ----------------------------------
Linda Fayne Levinson
GEORGE P. ORBAN Director
- ----------------------------------
George P. Orban
SAMUEL N. STROUM Director
- ----------------------------------
Samuel N. Stroum
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Description Numbered Page
- ------------- --------------------------------------- ---------------------
5.1 Opinion of Perkins Coie regarding
legality of the common stock being
registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in
its Opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see Signature Page)
99.1 1993 Stock Option Plan
99.2 Nonemployee Director Stock Option Plan
<PAGE>
EXHIBIT 5.1
May 31, 1995
Egghead, Inc.
22011 S.E. 51st St.
P.O. Box 7004
Issaquah, WA 98027
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen and Ladies:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission with respect to 3,466,780 shares of common
stock, par value $.01 per share (the "Shares"), 3,291,780 of which may be issued
upon the exercise of stock options granted or to be granted pursuant to the
Egghead, Inc. 1993 Stock Option Plan and 175,000 of which may be issued upon the
exercise of stock options granted or to be granted pursuant to the Egghead, Inc.
Nonemployee Director Stock Option Plan (together, the "Plans"). We have
examined the Registration Statement and such documents and records of Egghead,
Inc. and other documents as we have deemed necessary for the purpose of this
opinion.
Based upon and subject to the foregoing, we are of the opinion that the
Shares that may be issued upon the exercise of stock options granted or to be
granted pursuant to the Plans have been duly authorized and that, upon the due
execution by Egghead, Inc. and the registration by its registrars of the Shares
and the sale thereof by Egghead, Inc. in accordance with the terms of the Plans,
and the receipt of the consideration therefor in accordance with the terms of
the Plans, the Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
PERKINS COIE
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Egghead, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated May 16, 1995
included in the Egghead, Inc. Form 10-K for the year ended April 1, 1995, and to
all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Seattle, Washington,
May 30, 1995
<PAGE>
EXHIBIT 99.1
EGGHEAD, INC.
1993 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the 1993 Stock Option Plan (this "Plan") is to provide a
means whereby selected employees, directors, officers, agents, consultants,
advisors and independent contractors of Egghead, 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 non-qualified 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 Board (or the committee) may be eligible,
subject to the restrictions set forth in Section 4, to participate in or receive
or hold options under this Plan, no member of the Board or the committee 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, may be filled by the Board.
With respect to grants made under the Plan to officers and directors of the
Company 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 RESPONSIBILITIES
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.
2.2 SECTION 16(b) 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 and, 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
A-1
<PAGE>
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 use of any provision of this Plan to participants who are officers
and directors subject to Section 16 of the Exchange Act without so restricting,
limiting, or conditioning this Plan with respect to other participants.
SECTION 3. STOCK SUBJECT TO THIS PLAN
The stock subject to this Plan shall be the Company's Common Stock (the
"Common Stock"), presently 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 (a) 2,000,000 shares as such Common Stock was
constituted on or about June 16, 1993, plus (b) to the extent that additional
options are not granted under the Company's 1986 Combined Incentive and
Non-Qualified Stock Option Plan, as amended (the "1986 Plan"), an additional
number of shares of Common Stock equal to the number of shares which are
currently reserved for issuance under the 1986 Plan and which (i) are available
for options not yet granted under the 1986 Plan as of June 16, 1993, or
(ii) would become available for issuance thereafter under the 1986 Plan as a
result of the cancellation, expiration or other termination of outstanding
options. 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 any individual who, at the
time the option is granted, is an employee of the Company or any 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.
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 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
that the Plan Administrator shall act in good faith to establish the 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 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 related corporation will
achieve the purpose and receive the benefits contemplated in this Plan, any
option
A-2
<PAGE>
granted to any eligible person hereunder ("Optionee") 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:
Period of Optionee's Continuous
Relationship With the Company
or Related Corporation From the Portion of Total Option
Date the Option Is Granted That Is Exercisable
-------------------------------- -----------------------
After one year . . . . . . . . . . . . . . 16-2/3%
After two years . . . . . . . . . . . . . . 50 %
After three years . . . . . . . . . . . . . 100 %
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 rights hereunder and that only whole shares will be issued
pursuant to the exercise of any option. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Options 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.
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 Common Stock 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 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;
(b) delivery of a full-recourse promissory note executed by the
Optionee; 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; and (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 the Optionee's shares to the Company for the
purpose of securing the payment of such note 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; or
(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.
A-3
<PAGE>
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 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 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 election made by an officer or director
who is subject to Section 16 of the Exchange Act must be an irrevocable election
made six months prior to the date the option exercise becomes taxable or such
irrevocable election must become effective during the quarterly 10-day window
period required under Section 16(b) of the Exchange Act for exercises of stock
appreciation rights.
5.6 HOLDING PERIODS
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.
5.7 NONTRANSFERABILITY 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. 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, if the Company permits, an Optionee may, during
the Optionee's lifetime, designate a person who may exercise the option after
the Optionee's death by giving written notice of such designation to the Plan
Administrator. Such designation may be changed from time to time by the
Optionee by giving written notice to the Plan Administrator revoking any earlier
designation and making a new designation.
5.8 TERMINATION OF RELATIONSHIP
The Plan Administrator shall determine the terms and conditions under which
an option may be exercised following termination of an Optionee's relationship
with the Company or any related corporation.
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.
A-4
<PAGE>
5.9 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 any such option has been exercised.
5.10 CONTINUATION OF RELATIONSHIP
Nothing in this Plan or in any option granted pursuant to this Plan 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.
5.11 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 stock (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 incentive stock options are granted under this Plan to employees who
own 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 Common Stock 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 stock owned, directly or indirectly, by or for his or
her brothers, sisters, spouse, ancestors and lineal descendants. Stock 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 stock of the Company, the stock
subject to that portion of the option or warrant that is unexercised shall not
be counted in determining stock ownership. For purposes of this Section 6,
stock owned by an employee shall include all stock 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.
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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 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, 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 in the option
agreement have been satisfied.
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, consolidation, acquisition of
property or stock, separation, or reorganization, 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; provided, however, that all options granted
hereunder shall be converted automatically into Exchange Stock in (i) 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, (ii) a mere
reincorporation, or (iii) the creation of a holding company. 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
Common Stock receive in such merger, consolidation, acquisition of property
or stock, separation, or reorganization. The converted options shall
retain the vesting requirements applicable to the options granted
hereunder, unless the Company and the corporation issuing the Exchange
Stock, in their sole discretion, determine otherwise.
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 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
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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.
SECTION 9. AMENDMENT AND TERMINATION
9.1 BOARD ACTION
The board may amend, suspend, or terminate this Plan at any time, provided
that no such amendment shall be made without the approval of the Company's
shareholders if such approval is required to comply with Rule 16b-3 under the
Exchange Act or the Washington Business Corporation Act or, with respect to
incentive stock options, Section 422 of the Code or any successor provision.
9.2 TERM OF THE PLAN
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 a majority of stock represented by shareholders voting either in
person or by proxy at a duly held shareholders' meeting any time within 12
months before or after the adoption of this Plan.
Plan adopted by the Board of Directors on June 16, 1993, and approved by
the shareholders on Sept. 15, 1993.
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EXHIBIT 99.2
EGGHEAD, INC.
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I
PURPOSES
The purposes of the Egghead, Inc. Nonemployee Director Stock Option Plan
(the "Plan") are to attract and retain the services of experienced and
knowledgeable nonemployee directors of Egghead, Inc. (the "Corporation") and to
provide an incentive for such directors to increase their proprietary interests
in the Corporation's long-term success and progress.
ARTICLE II
SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Article VI hereof, the total
number of shares of the Corporation's common stock (the "Common Stock"), for
which options may be granted under the Plan is 175,000 (the "Shares"). The
Shares shall be shares presently authorized but unissued or subsequently
acquired by the Corporation and shall include shares representing the
unexercised portion of any option granted under the Plan that expires or
terminates without being exercised in full.
ARTICLE III
ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator") shall be the Board
of Directors of the Corporation (the "Board"). Subject to the terms of the
Plan, the Plan Administrator shall have the power to construe the provisions of
the Plan, to determine all questions arising thereunder, and to adopt and amend
such rules and regulations for the administration of the Plan as it may deem
desirable. No member of the Plan Administrator shall participate in any vote by
the Plan Administrator on any matter materially affecting the rights of any such
member under the Plan.
ARTICLE IV
PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not otherwise an
employee of the Corporation or any parent or subsidiary corporation (an
"Eligible Director") shall automatically receive the following options:
(a) Each Eligible Director who is presently in office and who
continues in office after the annual meeting of shareholders to be held in
1993 (the "1993 Annual Meeting") shall automatically receive a grant of an
option to purchase 9,000 Shares on the day this Plan is adopted by the
Board of Directors.
(b) Each Eligible Director who is elected for the first time at the
1993 Annual Meeting or at an annual meeting of shareholders thereafter
shall automatically receive a grant of an option to purchase 9,000 Shares
on the day after such annual meeting.
(c) Each Eligible Director who is appointed or elected other than at
an annual meeting of shareholders shall, on the day of such appointment or
election, automatically receive a grant of an option to purchase that
number of Shares equal to 3,000 multiplied by a fraction, the numerator
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of that is 12 minus the number of whole months which have elapsed since the
last annual meeting of shareholders and the denominator of which is 12;
provided, however, that such option shall vest in full on the day after the
first annual meeting of shareholders to occur after the grant.
(d) Each Eligible Director who holds an option that has become fully
vested shall automatically receive a grant of an option to purchase 9,000
Shares on the day after the annual meeting of shareholders at which such
prior option has become fully vested.
ARTICLE V
OPTION TERMS
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
1. OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an option
agreement (an "Agreement") duly executed on behalf of the Corporation. Each
Agreement shall comply with and be subject to the terms and conditions of the
Plan. Any Agreement may contain such other terms, provisions, and conditions
not inconsistent with the Plan as may be determined by the Plan Administrator.
2. OPTION EXERCISE PRICE
The option exercise price for an option granted under the Plan shall be the
fair market value of the Shares covered by the option at the time the option is
granted. For purposes of the Plan, "fair market value" shall be the average of
the high and low sales prices at which the Common Stock was sold on such date as
reported by the NASDAQ National Market System on such date or, if no Common
Stock was traded on such date, on the next preceding date on which Common Stock
was so traded.
3. VESTING AND EXERCISABILITY
Except as set forth in paragraph (c) of Article IV, an option shall become
exercisable in accordance with the following schedule and vested portions may be
exercised in full at one time or in part from time to time:
PERIOD OF OPTIONEE'S CONTINUOUS SERVICE
AS A DIRECTOR WITH THE COMPANY FROM THE PORTION OF GRANT
DATE THE OPTION IS GRANTED THAT IS EXERCISABLE
---------------------------------------- -------------------
Until first subsequent annual meeting of
shareholders after grant . . . . . . . . . . . . 0 %
Until second subsequent annual meeting of
shareholders after grant . . . . . . . . . . . . 33-1/3%
Until third subsequent annual meeting of
shareholders after grant . . . . . . . . . . . . 66-2/3%
Thereafter . . . . . . . . . . . . . . . . . . . . 100 %
For purposes of options granted at the time this Plan is adopted by the Board of
Directors, the first subsequent annual meeting of shareholders shall be the
meeting held in 1994.
4. TIME AND MANNER OF EXERCISE OF OPTION
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 rights hereunder and that only whole
Shares will be issued pursuant to the exercise of any option.
Any option may be exercised by giving written notice, signed by the person
exercising the option, to the Corporation stating the number of Shares with
respect to which the option is being exercised,
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accompanied by payment in full for such Shares, which payment may be in whole or
in part of in cash or by check or (ii) in shares of Common Stock already owned
for at least six (6) months by the person exercising the option, valued at fair
market value at the time of such exercise.
5. TERM OF OPTIONS
Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as follows:
(a) In the event that an optionee ceases to be a director of the
Corporation for any reason other than the death of the optionee, the
options granted to such optionee may be exercised by him or her only within
one (1) year after the date such optionee ceases to be a director of the
Corporation and only as to that portion of the option that has become
vested as of the date of such cessation.
(b) In the event of the death of an optionee, whether during the
optionee's service as a director or during the one (1) year period referred
to in Section 5(a), the options granted to such optionee shall be
exercisable, to the extent vested as provided in Section 5(a) or as of the
date of death, as the case may be, and such options shall expire unless
exercised within one (1) year after the date of the optionee's death, by
the legal representatives or the estate of such optionee, by any person or
persons whom the optionee shall have designated in writing on forms
prescribed by and filed with the Corporation or, if no such designation has
been made, by the person or persons to whom the optionee's rights have
passed by will or the laws of descent and distribution.
6. TRANSFERABILITY
During an optionee's lifetime, an option may be exercised only by the
optionee. Options granted under the Plan and the rights and privileges
conferred thereby shall not be subject to execution, attachment, or similar
process and 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 except that, to the extent permitted
by applicable law and Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Plan
Administrator may permit a recipient of an option to designate in writing during
the optionee's lifetime a beneficiary to receive and exercise options in the
event of the optionee's death (as provided in Section 5(b)). Any attempt to
transfer, assign, pledge, hypothecate, or otherwise dispose of any option under
the Plan or of any right or privilege conferred thereby, contrary to the
provisions of the Plan, or the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, shall be null and void.
7. PARTICIPANT'S OR SUCCESSOR'S RIGHTS AS STOCKHOLDER
Neither the recipient of an option under the Plan nor the optionee's
successor(s) in interest shall have any rights as a stockholder of the
Corporation with respect to any Shares subject to an option granted to such
person until such person becomes a holder of record of such Shares.
8. LIMITATION AS TO DIRECTORSHIP
Neither the Plan nor the granting of an option nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right to continue as a
director for any period of time or at any particular rate of compensation.
9. REGULATORY APPROVAL AND COMPLIANCE
The Corporation shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, without obtaining to the complete satisfaction of the
Plan Administrator the approval of all regulatory bodies deemed necessary by the
Plan Administrator, and without complying, to the Plan Administrator's complete
satisfaction, with all rules and regulations under federal, state, or local law
deemed applicable by the Plan Administrator.
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ARTICLE VI
CAPITAL ADJUSTMENTS
The aggregate number and class of Shares for which options may be granted
under the Plan, the number and class of Shares covered by each automatic grant
and each outstanding option and the exercise price per Share thereof (but not
the total price) shall all be proportionately adjusted for any stock dividends,
stock splits, recapitalizations, combinations or exchanges of shares, split-ups,
split-offs, spinoffs, or other similar changes in capitalization. Upon the
effective date of a dissolution or liquidation of the Corporation, or of a
reorganization, merger, or consolidation of the Corporation with one or more
corporations that results in more than 20% of the outstanding voting shares of
the Corporation being owned by one or more affiliated corporations or other
affiliated entities, or of a transfer of all or substantially all the assets or
more than 20% of the then-outstanding shares of the Corporation to another
corporation or other entity, this Plan and all options granted hereunder shall
terminate. In the event of such dissolution, liquidation, reorganization,
merger, consolidation, transfer of assets, or transfer of stock, each optionee
shall be entitled, for a period of twenty days prior to the effective date of
such transaction, to purchase the full number of shares under his or her option
which he or she otherwise would have been entitled to purchase during the
remaining term of such option.
Adjustments under this Article VI shall be made by the Plan Administrator,
whose determination shall be final. 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.
ARTICLE VII
EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Corporation; none of such expenses shall be charged to any
optionee.
ARTICLE VIII
EFFECTIVE DATE AND DURATION OF THE PLAN
Subject to approval by the shareholders of the Corporation at the 1993
Annual Meeting, the Plan shall be effective on June 16, 1993. The Plan shall
continue in effect until it is terminated by action of the Board or the
Corporation's shareholders, but such termination shall not affect the then-
outstanding terms of any options.
ARTICLE IX
TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate, or suspend the Plan at any time, in its
sole and absolute discretion; provided, however, that if required to qualify the
Plan under Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, no
amendment may be made more than once every six (6) months that would change the
amount, price, timing, or vesting of the options, other than to comply with
changes in the Internal Revenue Code of 1986, as amended, or the rules and
regulations promulgated thereunder; and provided, further, that if required to
qualify the Plan under Rule 16b-3, no amendment that would
(a) materially increase the number of Shares that may be issued under
the Plan,
(b) materially modify the requirements as to eligibility for
participation in the Plan, or
(c) otherwise materially increase the benefits accruing to
participants under the Plan shall be made without the approval of the
Corporation's shareholders.
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ARTICLE X
COMPLIANCE WITH RULE 16b-3
It is the intention of the Corporation that the Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Exchange Act and that
Plan participants remain disinterested persons ("Disinterested Persons") for
purposes of administering other employee benefit plans of the Corporation and
having such other plans be exempt from Section 16(b) of the Exchange Act.
Therefore, if any Plan provision is later found not to be in compliance with
Rule 16b-3 or if any Plan provision would disqualify Plan participants from
remaining Disinterested Persons, that provision shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
Adopted by the Corporation's Board of Directors on June 16, 1993, and
approved by the Corporation's shareholders on Sept 15, 1993.
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