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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EGGHEAD, INC.
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(Name of Issuer)
Common Stock, par value $.01 per Share
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(Title of Class of Securities)
282330109
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(CUSIP Number)
Stephen M. Wood Charles J. Katz, Jr., Esq.
22705 East Mission Avenue with a copy to: Perkins Coie
Liberty Lake, WA 99019 1201 Third Avenue, 40th Floor
(509) 922-7031 Seattle, WA 98101
(206) 583-8888
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 14, 1997
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
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SCHEDULE 13D
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CUSIP NO. 282330109 PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen M. Wood ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
SC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER 1,717,202
OF -------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 82,754(1)
OWNED BY -------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,717,202
PERSON -------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
82,754(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,799,956(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.9%(2)
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(1) Includes 82,754 shares transferred by Mr. Wood to trusts the
beneficiaries of which are Mr. Wood's children. Mr. Wood disclaims beneficial
ownership of such 82,754 shares.
(2) Percentage is based upon 22,925,230 shares of Common Stock outstanding
as of August 14, 1997.
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14 TYPE OF REPORTING PERSON
IN
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Common Stock, par value $.01 per share
("Common Stock"), of Egghead, Inc., a Washington corporation ("Egghead"), the
principal executive office of which is located at 22705 East Mission Avenue,
Liberty Lake, Washington 99019.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Schedule 13D relates to Stephen M. Wood.
(b) The business address of Mr. Wood is 22705 East Mission Avenue, Liberty
Lake, Washington 99019.
(c) Mr. Wood is the Executive Vice President of Surplus Software,
Inc., a wholly-owned subsidiary of Egghead, Inc., whose principal business
address is 22705 East Mission Avenue, Liberty Lake, Washington 99019.
(d) During the last five years, Mr. Wood has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, Mr. Wood has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Mr. Wood is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
All of the shares of Common Stock reported in this Schedule 13D were
acquired in exchange for Mr. Wood's shares of common stock of Surplus Software,
Inc.("Surplus"), a privately-held corporation acquired by Egghead in a
stock-for-stock exchange pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated April 30, 1997 and amended as of May 23, 1997, by and
among Egghead, Surplus, North Face Merger Sub, Inc., a wholly owned subsidiary
of Egghead ("Merger Sub"), and certain shareholders of Surplus. Pursuant to the
Merger Agreement, Surplus merged with and into Merger Sub, and all shares of
capital stock of Surplus were converted into the right to receive shares of
Egghead Common Stock (the "Merger"). The Merger was consummated on August 14,
1997.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the transaction pursuant to which Mr. Wood acquired the
Common Stock reported herein is as described in Item 3 above.
Mr. Wood has no present plans or intentions that relate to or would result
in any of the transactions required to be described in Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Wood beneficially owns 1,799,956 shares of Common Stock of
Egghead, Inc., which includes 82,754 shares transferred by Mr. Wood to trusts
the beneficiaries of which are Mr. Wood's children. Mr. Wood disclaims
beneficial ownership of such 82,754 shares. Mr. Wood's aggregate beneficial
ownership represents approximately 7.9% of Common Stock of Egghead, Inc., based
on 22,925,230 shares of Common Stock outstanding as of August 14, 1997.
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(b) Sole voting power: 1,717,202
Sole dispositive power: 1,717,202
Shared voting power: 82,754
Shared dispositive power: 82,754
(c) Except as reported herein, during the past sixty days, Mr. Wood has
not effected any transaction in the Common Stock of Egghead, Inc.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The shares of Egghead common stock owned by Mr. Wood are subject to a
Letter Agreement, dated April 30, 1997, between Mr. Wood and Egghead that
prohibits the sale, transfer or other disposition by Mr. Wood of any shares of
Egghead stock owned by him until after such time as financial results covering a
period of at least 30 days of combined operations of Egghead and Surplus have
been published by Egghead in the form of a quarterly report, an effective
registration statement filed with the Securities and Exchange Commission
("SEC"), a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public
filing or press release or other announcement which includes such results.
The shares of Egghead common stock owned by Mr. Wood also are subject to a
Letter Agreement, dated May 23, 1997, between Mr. Wood and Egghead that
prohibits the sale, transfer or other disposition by Mr. Wood of fifty-five
percent (55%) of the shares of Egghead Common Stock received by him pursuant to
the Merger for a period of one year.
In addition, ten percent (10%) of the shares of Egghead Common Stock issued
to Mr. Wood pursuant to the Merger have been pledged to, and will be held by,
Egghead for a period of one year, in order to satisfy any claims by Egghead for
indemnification under the Merger Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
Exhibit
Number Description
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2.1* Agreement and Plan of Merger, dated April 30, 1997 and
amended as of May 23, 1997, by and among Egghead, Inc.,
North Face Merger Sub, Inc., Surplus Software, Inc. and
certain shareholders of Surplus Software, Inc.
99.1 Letter Agreement, dated April 30, 1997, between
Egghead, Inc. and Stephen M. Wood
99.2 Letter Agreement, dated May 23, 1997, between Egghead,
Inc. and Stephen M. Wood
* Incorporated herein by reference to Exhibit 2.1 to Egghead, Inc.'s
Registration Statement on Form S-4, File No. 333-31251, as filed with the SEC on
July 14, 1997.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
August 20, 1997
- ------------------------------- By: /s/ Stephen M. Wood
Date -----------------------------------
Signature
Stephen M. Wood
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Name
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger, dated April 30, 1997 and amended as of
May 23, 1997, by and among Egghead, Inc., North Face Merger Sub,
Inc., Surplus Software, Inc. and certain shareholders of Surplus
Software, Inc. (Incorporated by reference to Exhibit 2.1 to Egghead,
Inc.'s Registration Statement on Form S-4, File No. 333-31251, as
filed with the SEC on July 14, 1997)
99.1 Letter Agreement, dated April 30, 1997, between Egghead, Inc. and
Stephen M. Wood
99.2 Letter Agreement, dated May 23, 1997, between Egghead, Inc. and
Stephen M. Wood
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EXHIBIT 99.1
April 30, 1997
Egghead, Inc.
Attn: President
22705 E. Mission
Seattle, WA 99019
RE: SHARES OF EGGHEAD COMMON STOCK
Dear Sir:
In connection with the proposed acquisition (the "Merger") by Egghead, Inc.
("Egghead") of Surplus Software, Inc. ("Surplus"), of which I am a shareholder,
pursuant to an Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), and as a material inducement to Egghead to enter into the Merger
Agreement, I hereby agree that, from and after the Effective Time (as defined in
the Merger Agreement), without the prior written consent of Egghead, I will not
sell, transfer or otherwise dispose of any shares of Egghead capital stock
received by me in the Merger or otherwise until after such time as financial
results covering a period of at least 30 days of combined operations of Egghead
and Surplus have been published by Egghead in the form of a quarterly earnings
report, an effective registration statement filed with the SEC, a report to the
SEC on Form 10-K, 10-Q or 8-K, or any other public filing or press release or
other announcement which includes the combined sales and net income of Egghead
and Surplus.
Very truly yours,
/s/ Stephen M. Wood
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Signature
Stephen M. Wood
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Name (typed or printed)
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Exhibit 99.2
STOCK RESTRICTION AGREEMENT
Egghead, Inc.
22705 East Mission Avenue
Liberty Lake, Washington 99019
Attention: George Orban, Chief Executive Officer
Ladies and Gentlemen:
The undersigned (the "Shareholder") is a holder of Common Stock and/or
Preferred Stock of Surplus Software, Inc., an Oregon corporation (dba Surplus
Direct) (the "Company"), which has entered into that certain Agreement and Plan
of Merger dated as of April 30, 1997, among Egghead, Inc., a Washington
corporation ("Egghead"), North Face Merger Sub, Inc., an Oregon corporation and
a wholly owned subsidiary of Egghead ("Merger Sub"), the Company and certain
shareholders of the Company (the "Merger Agreement"). The Merger Agreement
provides for the merger of Merger Sub with and into the Company subject to the
terms and conditions set forth therein (the "Merger"). Capitalized terms used
in this letter agreement and not otherwise defined shall have the meanings
ascribed to them in the Merger Agreement.
The parties to the Merger Agreement intend that the Merger qualify as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended. In order to provide greater assurance that the Merger will so
qualify, the Company has requested that the Merger Agreement be amended to
provide that the Company will be merged into Merger Sub, with Merger Sub as the
surviving corporation of the Merger. Egghead has agreed to execute such an
amendment in the form of the Amendment to the Agreement and Plan of Merger dated
as of May 23, 1997, on the condition that this letter agreement be executed by
the shareholders of the Company set forth on the attached Exhibit A.
Accordingly, in consideration for Egghead's agreement to amend the Merger
Agreement, the Shareholder agrees as follows:
(a) Such Shareholder will not sell, transfer or otherwise dispose of more
than 45% of the Egghead Common Shares received by such Shareholder
pursuant to the Merger Agreement during a period of one year following
the Effective Time (the "Restricted Period"). The remaining 55% of
such Egghead Common Shares held by such Shareholder shall constitute
restricted shares in accordance with this letter agreement (the "Tax
Restricted Shares") and may not be sold, transferred or otherwise
disposed of during the Restricted Period without the prior written
consent of Egghead, which may be withheld in its sole discretion.
(b) The Tax Restricted Shares shall include the Egghead Common Shares that
constitute Holdback Shares pursuant to the Merger Agreement
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(c) Each certificate representing Tax Restricted Shares shall bear the
following legend:
"The shares represented by this certificate are subject to
the terms and conditions of a certain Stock Restriction
Agreement dated as of May 23, 1997, as at any time amended,
and may not be sold, transferred or encumbered except in
accordance with the terms and provisions of such agreement,
a copy of which is on file at the principal offices of
Egghead, Inc. and will be furnished to the holder of this
certificate upon request without charge."
Egghead shall also instruct its transfer agent to place stop transfer
orders on the transfer of any Tax Restricted Shares during the
Restricted Period. After the Restricted Period, Egghead shall
instruct its transfer agent to remove, upon request by the
Shareholder, the legend set forth above.
(d) If the Shareholder is a party to that certain Registration Rights
Agreement dated as of April 30, 1997 between Egghead and certain
Shareholders, such Shareholder agrees not to exercise its rights to
register any Tax Restricted Shares under such agreement during the
Restricted Period.
(e) If the Shareholder is a party to that certain Shareholders Agreement
dated as of April 30, 1997 among Egghead, the Company and certain
Shareholders, the Shareholder acknowledges its representations and
covenants set forth therein and that this letter agreement shall not
constitute a waiver or amendment to such agreement.
(f) During the Restricted Period, the Shareholder shall remain the owner
of the Tax Restricted Shares and shall have the right to vote the Tax
Restricted Shares and to receive any dividends and distributions
thereon.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Oregon.
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Please acknowledge your acceptance of this letter agreement by executing
and returning to the undersigned one of the two enclosed copies hereof.
Effective as of May 23, 1997.
Very truly yours,
Shareholder
STEPHEN M. WOOD
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(Name of Shareholder)
/s/ Stephen M. Wood
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(Signature)
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(Printed name of person signing
on behalf of Shareholder)
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(Title of person signing on behalf of
Shareholder)
Accepted and Agreed:
EGGHEAD, INC.
By: /s/ George Orban
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Name: George Orban
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Title: Chief Executive Officer
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