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.
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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:
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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
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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
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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.
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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.
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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.
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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
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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.
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