-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DOeSkcvThB502d3OFLhPCiOxLUMANcINvDossrhbYFeZUVCUIJ6PXchebBXR6ObO g6Jy7+GEz4kDBTkmWZrkPA== 0001032210-98-000592.txt : 19980608 0001032210-98-000592.hdr.sgml : 19980608 ACCESSION NUMBER: 0001032210-98-000592 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19980605 EFFECTIVENESS DATE: 19980605 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EGGHEAD INC /WA/ CENTRAL INDEX KEY: 0000832320 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 911296187 STATE OF INCORPORATION: WA FISCAL YEAR END: 0330 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-56211 FILM NUMBER: 98643393 BUSINESS ADDRESS: STREET 1: 22705 EAST MISSION CITY: LIBERTY LAKE STATE: WA ZIP: 99019 BUSINESS PHONE: 5098914883 MAIL ADDRESS: STREET 1: 22705 EAST MISSION CITY: LIBERTY LAKE STATE: WA ZIP: 99019 S-8 1 FORM S-8 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 5, 1998 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) WASHINGTON 91-1296187 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) 22705 EAST MISSION AVENUE LIBERTY LAKE, WASHINGTON 99019 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) 1997 NONOFFICER EMPLOYEE STOCK OPTION PLAN AND EMPLOYEE STOCK ISSUANCE PROGRAM (FULL TITLE OF THE PLANS) GEORGE P. ORBAN CHAIRMAN AND CHIEF EXECUTIVE OFFICER EGGHEAD.COM, INC. 22705 EAST MISSION AVENUE LIBERTY LAKE, WASHINGTON 99019 (509) 922-7031 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ______________________ COPIES TO: CHARLES J. KATZ, JR. PERKINS COIE LLP 1201 THIRD AVENUE, 40TH FLOOR SEATTLE, WASHINGTON 98101-3099 ______________________ CALCULATION OF REGISTRATION FEE
============================================================================================================================= 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 - ----------------------------------------------------------------------------------------------------------------------------- Common Stock, $.01 par value per share: 1997 Nonofficer Employee Stock Option Plan 1,000,000 $7.25 $7,250,000 $2,139 Employee Stock Issuance Program 25,000 7.25 181,250 54 TOTAL 2,193 =============================================================================================================================
(1) Together with an indeterminate number of additional shares that may be necessary to adjust the number of shares reserved for issuance pursuant to the 1997 Nonofficer Employee Stock Option Plan and the Employee Stock Issuance Program 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, solely for the purpose of calculating the amount of the registration fee. The price per share is estimated to be $7.25, based on the average of the high sales price ($7.50) and low sales price ($7.00) for the Registrant's Common Stock as reported on the Nasdaq National Market on June 2, 1998. 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 Annual Report on Forms 10-K and 10-K/A for the fiscal year ended March 29, 1997, filed with the Securities and Exchange Commission (the "Commission") on June 26, 1997 and July 15, 1997, respectively; (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 Forms 10-K and 10-K/A 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(g) of the Exchange Act, including any amendments or reports filed for the purpose of updating such descriptions. Any document filed by the Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the filing of a post-effective amendment that indicates that the securities offered hereby have been sold or that 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 date on which such document is filed. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS As permitted by Section 23B.08.320 of the Washington Business Corporation Act (the "WBCA"), Article X of the Registrant's Restated Articles of Incorporation, as amended, 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 WBCA 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 WBCA 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 of 1933, as amended (the "Securities Act"). As permitted by Section 23B.08.560 of the WBCA, 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. II-1 ITEM 8. EXHIBITS Exhibit Number Description - ------- --------------------------------------------------------------------- 5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock being registered 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Perkins Coie LLP (included in its Opinion filed as Exhibit 5.1) 24.1 Power of Attorney (see Signature Page) 99.1 1997 Nonofficer Employee Stock Option Plan 99.2 Employee Stock Issuance Program 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. 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. II-2 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. II-3 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 Liberty Lake, State of Washington, on the 29th day of May, 1998. EGGHEAD.COM, INC. By /s/ GEORGE P. ORBAN ------------------- George P. Orban Chairman and Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints George P. Orban and Brian W. Bender, 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 29th day of May, 1998 in the capacities indicated. Signature Title --------- /s/ GEORGE P. ORBAN Chairman and Chief Executive Officer - ------------------------ George P. Orban /s/ BRIAN W. BENDER Vice President, Secretary and Chief Financial - ------------------------ Officer (Principal Financial and Accounting Brian W. Bender Officer) /s/ GREGORY J. BOUDREAU Director - ------------------------ Greg Boudreau /s/ JONATHAN W. BRODEUR Director - ------------------------ Jonathan Brodeur /s/ RICHARD P. COOLEY Director - ------------------------ Richard P. Cooley /s/ ERIC P. ROBISON Director - ------------------------ Eric P. Robison /s/ SAMUEL N. STROUM Director - ------------------------ Samuel N. Stroum /s/ MELVIN A. WILMORE Director - ------------------------ Melvin A. Wilmore II-4 INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 5.1 Opinion of Perkins Coie LLP regarding legality of the Common Stock being registered 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Perkins Coie LLP (included in its Opinion filed as Exhibit 5.1) 24.1 Power of Attorney (see Signature Page) 99.1 1997 Nonofficer Employee Stock Option Plan 99.2 Employee Stock Issuance Program EX-5.1 2 OPINION OF PERKINS COIE LLP EXHIBIT 5.1 PERKINS COIE LLP A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS 1201 THIRD AVENUE, 40TH FLOOR, SEATTLE, WASHINGTON 98101-3099 TELEPHONE: (206) 583-8888 FACSIMILE: (206) 583-8500 June 4, 1998 Egghead.com, Inc. 22705 East Mission Avenue Liberty Lake, WA 99019 Re: Registration Statement on Form S-8 of Shares of Common Stock, Par Value $.01 Per Share, of Egghead.com, Inc. Ladies and Gentlemen: 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 1,000,000 shares of Common Stock, par value $.01 per share (the "Shares"), which may be issued pursuant to the Egghead.com, Inc. 1997 Nonofficer Employee Stock Option Plan (the "Plan") and 25,000 Shares which may be issued pursuant to the Egghead.com, Inc. Employee Stock Issuance Program (the "Program"). We have examined the Registration Statement and such documents and records of the Company and other documents as we have deemed necessary for the purpose of this opinion. In giving this opinion, we are assuming the authenticity of all instruments presented to us as originals, the conformity with originals of all instruments presented to us as copies and the genuineness of all signatures. Based upon and subject to the foregoing, we are of the opinion that any original issuance Shares that may be issued pursuant to the Plan and pursuant to the Program have been duly authorized and that, upon the due execution by the Company and the registration by its registrar of such Shares, issuance thereof by the Company in accordance with the terms of the Plan and with the terms of the Program, and the receipt of consideration therefor in accordance with the terms of the Plan and with the terms of the Program, such Shares will be validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as Exhibit 5.1 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, /s/ PERKINS COIE LLP EX-23.1 3 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our reports dated May 13, 1997 included in Egghead.com, Inc.'s Annual Report on Forms 10-K and 10-K/A for the year ended March 29, 1997, and to all references to our firm included in this Registration Statement. /s/ ARTHUR ANDERSEN LLP Seattle, Washington June 4, 1998 EX-99.1 4 1997 NONOFFICER EMPLOYEE STOCK OPTION PLAN EXHIBIT 99.1 EGGHEAD.COM, INC. 1997 NONOFFICER EMPLOYEE STOCK OPTION PLAN SECTION 1. PURPOSE The purpose of the 1997 Nonofficer Employee Stock Option Plan (the "Plan") is to provide a means whereby selected employees of Egghead.com, Inc. (the "Company") and selected employees (including employees who are officers or directors) of any parent or subsidiary (as defined in subsection 5.7 and referred to hereinafter as "related corporations") thereof, who are not officers or directors of the Company, may be granted 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 and officers 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 a committee or committees (which term includes subcommittees) appointed by, and consisting of two or more members of, the Board. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. In addition to any committees appointed by the Board to administer the Plan and to the extent consistent with applicable law, the Board may also authorize a senior executive officer of the Company to administer the Plan, within limits specifically prescribed by the Board. The administrator of this Plan shall hereinafter be referred to as the "Plan Administrator." 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. ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 1 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 6, the aggregate amount of Common Stock to be delivered upon the exercise of all options granted under this Plan shall not exceed 1,000,000 shares. 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. SECTION 4. ELIGIBILITY Any employee of the Company and any employee of any related corporation who, at the time an option is granted, is not a director or officer of the Company shall be eligible to receive options under the Plan. 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. 5.2 TERM AND MATURITY The term of each 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 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: ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 2
Period of Optionee's Continuous Relationship With the Company or Related Corporation From the Date the Portion of Total Option That Is Option Is Granted Exercisable ------------------------------------- ------------------------------- After one year 25% Each month thereafter an additional 1/48 After four 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 50 shares (or the remaining shares then purchasable under the option, if less than 50 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. 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. Unless the Plan Administrator in its sole discretion determines otherwise, either at the time the option is granted or at any time before it is exercised, and to the extent permitted by 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 combination of cash and/or check (if any) and one or more of the following alternative forms: (a) tendering (either actually or by attestation) 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; 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 ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 3 months (or any shorter period necessary to avoid a charge to the Company's earnings for financial accounting purposes); (b) delivery of a full-recourse promissory note executed by the Optionee; provided that (i) such note 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 any time prior to exercise of the option, and (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. 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. ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 4 5.6 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. During an Optionee's lifetime, any options granted under this Plan are personal to him or her and are exercisable solely by such Optionee or a permitted assignee or transferee of such Optionee (as provided below). 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, 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 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) or (ii) transfer the option and the rights and privileges conferred hereby; provided, however, that any option so assigned or transferred shall be subject to all the same terms and conditions contained in the instrument evidencing the option. 5.7 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. ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 5 5.8 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. 5.9 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. SECTION 6. 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) 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. 6.1 EFFECT OF LIQUIDATION OR REORGANIZATION 6.1.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK Except as provided in subsection 6.1.2, 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. ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 6 6.1.2 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 6.1.1; 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. 6.2 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. 6.3 DETERMINATION OF BOARD TO BE FINAL All Section 6 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. SECTION 7. 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 ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 7 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. SECTION 8. AMENDMENT AND TERMINATION 8.1 BOARD ACTION The Board may amend, suspend or terminate this Plan at any time. 8.2 TERM OF THIS PLAN Unless sooner terminated by the Board, this Plan shall terminate ten years from the date on which this Plan is adopted by the Board. 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 9. EFFECTIVENESS OF THIS PLAN This Plan shall become effective upon adoption by the Board. This Plan was adopted by the Board of Directors on October 29, 1997. ________________________________________________________________________________ NONOFFICER EMPLOYEE STOCK OPTION PLAN Page 8 EX-99.2 5 EMPLOYEE STOCK ISSUANCE PROGRAM EXHIBIT 99.2 EGGHEAD.COM, INC. EMPLOYEE STOCK ISSUANCE PROGRAM Egghead.com, Inc. (the "Company") hereby establishes its Employee Stock Issuance Program (the "Program") as follows: 1. ELIGIBILITY The Program is designed to reward and/or incentivize five of the Company's key executive officers, exclusive of the Company's Chief Executive Officer (the "Eligible Employees"). The Eligible Employees are Brian W. Bender, Jonathan W. Brodeur, James F. Kalasky, Norman F. Hullinger and Tommy E. Collins. 2. DESCRIPTION OF THE PROGRAM A stock bonus of 5,000 shares of the Company's common stock will be granted to each of the Eligible Employees upon the effectiveness of the Company's Form S-8 Restration Statement for the Program filed with the Securities and Exchange Commission (the "Registration Statement"). 3. PRICE No payment will be due from the Eligible Employees for the stock bonuses. 4. TAX Payment for any taxes due upon receipt or sale of the stock bonus will be the responsibility of the Eligible Employees. 5. ELIGIBLE EMPLOYEES' RIGHTS AS SHAREHOLDERS 5.1 No Eligible Employee shall have any right as a shareholder with respect to any shares until the shares are issued upon the effectiveness of the Registration Statement. 5.2 Shares to be delivered to an Eligible Employee under the Program will be issued in the name of the Eligible Employee or, if the Eligible Employee so directs by written notice to the Company prior to the issuance, in the names of the Eligible Employee and one other person as may be designated by the Eligible Employee, as joint tenants with rights of survivorship, tenants in common, or as community property, to the extent and in the manner permitted by applicable law. 6. ADMINISTRATION The Program will be administered by the Company's Legal Department. 7. REGISTRATION The Program was adopted by the Board on April 29, 1998. The shares reserved for issuance under the Program will not be granted or issued until the Registration Statement is effective. -2- -----END PRIVACY-ENHANCED MESSAGE-----