EXHIBIT 10.49b
EGGHEAD, INC.
SECOND AMENDED 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 nonqualified stock options to purchase the Common Stock (as defined in
Section 3) of the Company, in order to attract and retain the services or advice
of such employees, directors, officers, agents, consultants, advisors and
independent contractors and to provide added incentive to such persons by
encouraging stock ownership in the Company.
SECTION 2. ADMINISTRATION
This Plan shall be administered by the Board of Directors of the Company
(the "Board") or a committee or committees (which term includes subcommittees)
appointed by, and consisting of two or more members of, the Board. The
administrator of this Plan shall hereinafter be referred to as the "Plan
Administrator." So long as the Common Stock is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Board shall consider, in selecting the Plan Administrator and the
membership of any committee acting as the Plan Administrator of this Plan with
respect to any persons subject or likely to become subject to Section 16 under
the Exchange Act, the provisions regarding (a) "outside directors," as
contemplated by Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (b) "nonemployee directors," as contemplated by Rule 16b-3
under the Exchange Act. The Board may delegate the responsibility for
administering this Plan with respect to designated classes of eligible
participants to different committees, subject to such limitations as the Board
deems appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time.
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
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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 Code, the regulations thereunder and any
amendments thereto.
2.2 SECTION 16
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.
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,
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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 maximum number of shares with respect to which an option or options may
be granted to any Optionee in any one fiscal year of the Company shall not
exceed 300,000 shares, except that the Company may make one-time grants of
options for up to 750,000 shares per individual to newly hired individuals (the
"Maximum Annual Optionee Grants"); and provided, further, 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
provided, further, 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
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") on or after October 29, 1997 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 Portion of Total Option That Is
the Date the Option Is Granted Exercisable
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After one year 25%
Each month thereafter an additional 1/48 (2.08%)
After four years 100%
and any option granted to any Optionee prior to October 29, 1997 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 Portion of Total Option That Is
the Date the Option Is Granted 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. 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.
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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, with respect to options granted after
July 11, 1997, payment in stock held by an Optionee shall not be made unless the
stock shall have been owned by the Optionee for a period of at least six months
(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 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, 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
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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.
5.6 HOLDING PERIODS
If an individual subject to Section 16 of the Exchange Act sells shares of
Common Stock obtained upon the exercise of a stock option within six months
after the date the option was granted, such sale may result in short-swing
profit liability under Section 16(b) of the Exchange Act.
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. 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, to the
extent permitted by Section 422 of the Code, the Plan Administrator may permit
an Optionee
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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.
5.8 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.
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 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.
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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 which 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.
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SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The aggregate number and class of shares for which options may be granted
under this Plan, the Maximum Annual Optionee Grants set forth in subsection 5.1,
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.
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
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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 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
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shareholders if such approval is required to comply (a) with respect to
incentive stock options, Section 422 of the Code or any successor provision or
(b) any other law or regulation.
9.2 TERM OF THIS 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 September 15, 1993. Amended and restated by the Board on
July 11, 1997 and approved by the shareholders on September 4, 1997. Amended
again by the Board on October 29, 1997.
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