EGGHEAD, INC
RESTATED NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I. PURPOSES
The purposes of the Egghead, Inc. Restated 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 450,000 (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:
1. INITIAL GRANTS
(a) Each Eligible Director who is in office on the day the Plan is
adopted by the Board 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.
(b) Each Eligible Director who is elected for the first time at the 1993
Annual Meeting or at any subsequent annual meeting of shareholders prior to
June 7, 1995 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 elected for the first time at an
annual meeting of shareholders after June 7, 1995 shall automatically
receive a grant of an option to purchase 22,500 Shares on the day after such
annual meeting.
(d) Each Eligible Director who is appointed or elected after June 7,
1995 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 7,500 multiplied by a fraction, the
numerator of which 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 of
the first annual meeting of shareholders to occur after the grant.
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2. SUPPLEMENTAL INITIAL GRANTS
Each Eligible Director who is in office on June 7, 1995 shall automatically
receive a grant of an option to purchase 13,500 Shares on that date.
3. ADDITIONAL GRANTS
Each Eligible Director who holds an option granted on or after June 7, 1995
that has become fully vested shall automatically receive a grant of an option to
purchase 22,500 Shares on the day after the annual meeting of shareholders at
which such prior option has become fully vested.
If insufficient Shares remain available for issuance under the Plan to fully
fund one or more grants to be made under this Article IV on the same grant date,
then such grant or grants shall be made as follows: (i) a single Initial Grant
shall be made for the remaining number of Shares reserved under this Article IV
on that grant date; and (ii) multiple Initial and/or Additional Grants shall be
reduced ratably so that the aggregate number of Shares subject to all such
grants equals the remaining number of Shares available for issuance under this
Article IV on that grant date. If the Company's shareholders do not approve the
amendment to the Plan dated June 7, 1995, all grants made pursuant to paragraphs
1(c), 1(d), 2 and 3 above shall be deemed null and void.
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 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 1(d) of Article IV, Initial Grants (other
than Supplemental Initial Grants) and Additional Grants 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 PORTION OF GRANT
WITH THE COMPANY FROM THE DATE THE OPTION IS GRANTED THAT IS EXERCISABLE
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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 initially adopted
by the Board, the first subsequent annual meeting of shareholders shall be the
meeting held in 1994.
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Supplemental Initial Grants 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 PORTION OF GRANT
WITH THE COMPANY FROM THE DATE THE OPTION IS GRANTED THAT IS EXERCISABLE
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Until first subsequent annual meeting of shareholders after grant.............................. 33 1/3%
Until second subsequent annual meeting of shareholders after grant............................. 66 2/3%
Thereafter..................................................................................... 100%
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 given 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, accompanied by payment in full
for such Shares, which payment may be in whole or in part (i) 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.
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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.
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
The Plan became 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
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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.
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.
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