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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Egghead.com, Inc.
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(Name of Issuer)
Common Stock
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(Title of class of securities)
282330-10-9
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(CUSIP Number)
S. Jerrold Kaplan Horace L. Nash, Esq.
Onsale, Inc. Fenwick & West LLP
1350 Willow Road, Suite 100 Two Palo Alto Square
Menlo Park, California 94025 Palo Alto, California 94306
(650) 470-2400 (650) 494-0600
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(Name, address and telephone number of persons authorized
to receive notices and communications)
July 13, 1999
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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 [_].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act.
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SCHEDULE 13D
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CUSIP No. 282330-10-9
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Onsale, Inc. 77-0408319
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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
WC
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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
State of Delaware
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7 SOLE VOTING POWER
NUMBER 6,123,718 (1)
OF -------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,522,148 (2)
OWNED -------------------------------------------------
BY 9 SOLE DISPOSITIVE POWER
EACH 6,123,718 (1)
REPORTING -------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH Not Applicable
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,645,866 (1)(2)
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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)
20.7% (3)
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14 TYPE OF REPORTING PERSON
CO
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(1) If the Option (defined in Item 4 below) becomes exercisable and is
exercised in full, Onsale will have sole voting power with respect to
that number of shares equal to 19.9% of the outstanding shares of Egghead
common stock at the time of exercise. Based upon the 30,772,457 shares of
Egghead common stock outstanding as of July 13, 1999 (as represented by
Egghead in the Merger Agreement, which is defined in Item 4), the Option
would be subject to 6,123,718 shares of
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Egghead common stock. Unless and until the Option is exercised, Onsale is
not entitled to any rights as a shareholder of Egghead as to the shares
of Egghead common stock covered by the Option. The Option will only
become exercisable if certain conditions are triggered (see Item 4). As of
the date of this Statement, none of these conditions had been triggered.
Onsale disclaims beneficial ownership of the shares of Egghead common
stock subject to the Option unless and until Onsale acquires the shares
by exercising the Option.
(2) 1,522,148 shares of Egghead common stock (as of July 6, 1999, as
represented to us by Egghead) are subject to the Voting Agreements entered
into between Onsale and certain officers and directors of Egghead (see Item
4 and Schedule B). Under the Voting Agreements, these shareholders agree to
vote in favor of the Merger and certain related matters and to waive
certain rights, but they retain voting rights with respect to all other
matters. Onsale expressly disclaims beneficial ownership of any of the
shares of Egghead common stock subject to the Voting Agreements. Based on
the number of shares of Egghead common stock outstanding as of July 13,
1999 (as represented by Egghead in the Merger Agreement), the number of
shares of Egghead common stock subject to these Voting Agreements
represents approximately 4.9% of the outstanding shares of Egghead common
stock.
(3) This percentage is based on 36,896,175 shares of Egghead common stock
outstanding, after giving effect to the 6,123,718 shares that would be
issued if the Option had become exercisable and had been exercised on
July 13, 1999.
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ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (this "Statement") relates to the
common stock of Egghead.com, Inc., a Washington corporation
("Egghead" or the "Issuer"). The principal executive offices of
Egghead are located at 521 S.E. Chkalov Drive, Vancouver,
Washington 98683.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed on behalf of Onsale, Inc., a Delaware
corporation ("Onsale"). Onsale is an Internet retailer selling
retail and wholesale goods to businesses, resellers and
consumers. The address of Onsale's principal business and
principal office is 1350 Willow Road, Suite 100, Menlo Park,
California 94025.
Please refer to Schedule A to this Statement for information
pursuant to Item 2 (a), (b) and (c) with respect to each director
and executive officer of Onsale.
During the last five years, neither Onsale nor, to Onsale's
knowledge, any person named in Schedule A to this Statement has
been: (a) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors); or (b) a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which, he, she or it 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.
To Onsale's knowledge, except for John E. Labbett, who is a
citizen of Great Britain, each of the individuals identified on
Schedule A to this Statement is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As an inducement for Onsale to enter into the Merger Agreement,
Egghead and Onsale entered into the Option Agreement, under which
Egghead granted the Option to Onsale (see Item 4). The Option was
negotiated as a material term of the overall transaction, and
Onsale did not pay additional consideration to Egghead for the
Option. The Option becomes exercisable if certain conditions are
triggered (see Item 4). If the Option becomes exercisable and
Onsale elects to exercise the Option, Onsale anticipates that it
will use working capital to pay the exercise price of $12.06 per
share. Please refer to Item 4(a)-(b).
As a further inducement for Onsale to enter into the Merger
Agreement, certain officers and directors of Egghead entered into
the Voting Agreements with Onsale (see Item 4). Onsale did not
pay additional consideration to any of these shareholders in
connection with the execution and delivery of the Voting
Agreements.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(b) Pursuant to an Agreement and Plan of Merger dated July 13, 1999
among Onsale, EO Corporation, a Washington corporation and wholly
owned subsidiary of Onsale
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("Merger Sub") and Egghead, Merger Sub will merge with and into
Egghead, with Egghead to survive the Merger and to become a
wholly owned subsidiary of Onsale (the "Merger"). The closing of
the Merger is subject to several conditions, including clearance
under the Hart-Scott-Rodino Antitrust Improvements Act and
approval by the Onsale stockholders and Egghead shareholders.
Upon the closing of the Merger, Onsale will issue .565 share of
its common stock in exchange for each outstanding share of
Egghead common stock (the "Exchange Ratio"), and each outstanding
option to purchase Egghead common stock issued under Egghead's
stock option plans will be assumed by Onsale and converted into
an option to purchase Onsale common stock according to the
Exchange Ratio.
As an inducement for Onsale to enter into the Merger Agreement,
Egghead and Onsale entered into the Company Stock Option
Agreement dated July 13, 1999 (the "Stock Option Agreement"),
under which Egghead granted Onsale an option to acquire up to the
number of shares of Egghead common stock equal to 19.9% of
Egghead's outstanding common stock as of the date of exercise
(the "Option"). The Option becomes exercisable if one or more of
the following occurs:
. Egghead's Board of Directors withdraws or amends its
unanimous recommendation in favor of the Merger and the
approval of the Merger Agreement;
. Egghead fails to include in the proxy statement/prospectus
concerning the Merger the unanimous recommendation of
Egghead's Board of Directors in favor of the Merger and the
approval of the Merger Agreement;
. the Egghead Board of Directors fails to reaffirm this
unanimous recommendation within 10 business days of a
written request from Onsale following the public
announcement of a "Company Acquisition Proposal" (defined
in full in the Merger Agreement, but generally defined as
an offer or proposal: (i) to acquire a 15% or greater
interest in the voting securities of Egghead, (ii) to enter
into any transaction resulting in a change in ownership of
Egghead voting securities such that Egghead shareholders
prior to the transaction would own less than 85% of the
Egghead voting securities following the transaction, (iii)
to acquire 50% or more of the assets of Egghead, or for
Egghead to dispose of 50% or more its assets, or (iv) to
dissolve Egghead);
. the Egghead Board of Directors approves or publicly
recommends any Company Acquisition Proposal;
. Egghead enters into any agreement or commitment accepting any
Company Acquisition Proposal;
. any party unaffiliated with Onsale commences a tender or
exchange offer relating to Egghead securities and Egghead
does not send a notice to its shareholders in accordance
with Rule 14e-2 under the Securities Act stating that it
recommends rejection of the tender or exchange offer;
. public announcement of an "Option Acquisition Proposal"
(defined in full in the Option Agreement, but generally
defined as an offer or proposal to acquire a 10% or greater
interest in Egghead voting securities or assets,
disposition by
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Egghead of 10% or more of its assets or dissolution of
Egghead), and one of the following events together with or
following such Option Acquisition Proposal: (A) failure to
get Egghead shareholder approval of the Merger Agreement
and the Merger, (B) tender or exchange offer for 15% or
more of the outstanding shares of Egghead common stock is
commenced, or (C) Egghead fails to call and hold the
Egghead shareholders' meeting to vote on the Merger by
April 13, 2000; or
. commencement of a solicitation seeking to alter the
composition of Egghead's board of directors.
The Option will terminate on the earliest to occur of: (i) the
effective time of the Merger; (ii) termination of the Merger
Agreement under Section 7.1(a) or (c) thereof; (iii) 14 months
following the termination of the Merger Agreement under any other
section thereof; or (iv) later in limited circumstances related
to governmental clearance. Under the terms of the Option
Agreement, Onsale must return any proceeds in connection with the
sale or disposition of the Option or underlying securities in
excess of 5% of the "Company Equity Value" (as defined in the
Merger Agreement).
As a further inducement for Onsale to enter into the Merger
Agreement, certain officers and directors of Egghead (the
"Shareholders") each entered into a Company Voting Agreement
dated July 13, 1999 with Onsale (the "Voting Agreements").
Schedule B to this Statement sets forth the name of and number of
shares of Egghead common stock beneficially owned by each
Shareholder. Under the Voting Agreements, each of the
Shareholders agreed to vote all of their shares of Egghead common
stock, until the earlier of the effective time of the Merger or
the valid termination of the Merger Agreement under Article VII
thereof: (i) in favor of the Merger, the adoption and execution
of the Merger Agreement and other transactions contemplated by
the Merger Agreement; (ii) in favor of the waiver of any
registration rights, rights of first refusal, first offer, co-
sale or other similar rights under any agreement applicable to
his or her Egghead shares. The Shareholders also waived all
appraisal and dissenters' rights that they may acquire in
connection with the Merger. Together with the Voting Agreements,
each Shareholder delivered an irrevocable proxy to Onsale and
certain of its officers granting them the right to vote his or her
shares of Egghead common stock in favor of the matters referenced
above. The Shareholders retain other rights with respect to their
shares, including voting rights on other matters.
The purpose of the transactions under the Merger Agreement, Stock
Option Agreement and Voting Agreements are to enable Onsale and
Egghead to consummate the Merger and other related transactions
contemplated by these agreements.
(c) Not applicable.
(d) Upon the closing of the Merger, the directors and officers of
Merger Sub will become the directors and officers of Egghead
(which will survive the Merger as a wholly owned subsidiary of
Onsale) until their respective successors are duly elected or
appointed and qualified, as applicable.
Subject to approval of the Merger by the Onsale stockholders and
Egghead shareholders, the board of directors of Onsale will
consist of nine members, of which four members will be appointed
by Onsale, four members will be appointed by Egghead and the
other member will be selected mutually.
(e) Other than as described in the Merger Agreement, the Option
Agreement and the Voting Agreements, Onsale does not have any
plans or proposals to materially change the present
capitalization or dividend policy of Egghead.
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(f) Not applicable.
(g) The Articles of Incorporation and Bylaws of Egghead, as in effect
immediately prior to the Merger, will remain in effect upon the
closing of the Merger.
Onsale plans to amend its Certificate of Incorporation upon the
closing of the Merger to change its corporate name to
Egghead.com, Inc. and make other changes in connection with the
Merger.
(h)-(i) Upon the closing of the Merger, Egghead common stock will be
deregistered under the Act and delisted from the Nasdaq National
Market. However, Onsale's common stock may trade under the
ticker symbol EGGS.
(j) Not applicable.
References to, and descriptions of, the Merger Agreement, the
Stock Option Agreement and the Voting Agreements are qualified in
their entirety be reference to the copies of these documents
filed as exhibits to this Statement. These agreements are
incorporated by reference into this Item 4 where these references
and descriptions appear.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As a result of the Voting Agreements, Onsale may be deemed to be
the beneficial owner of at least 1,522,148 shares of Egghead
common stock, representing approximately 4.9% of the issued and
outstanding shares of Egghead common stock outstanding as of July
13, 1999 (as represented by Egghead in the Merger Agreement).
Other than the voting rights conferred by the Voting Agreements,
Onsale is not entitled to any rights as a shareholder of Egghead
as to these shares and disclaims beneficial ownership of these
shares.
In the event the Option becomes exercisable and is exercised in
full, Onsale will become the beneficial owner of that number of
shares of Egghead common stock equal to 19.9% of the outstanding
shares of Egghead common stock at the time of exercise, which,
based on the shares of Egghead common stock outstanding as of
July 13, 1999 (as represented by Egghead in the Merger
Agreement), currently equals 6,123,718 shares of Egghead common
stock. Onsale disclaims beneficial ownership of the shares of
Egghead common stock subject to the Option unless and until
Onsale acquires such shares by exercising the Option.
Bari Abdul currently is the beneficial owner of 3,000 shares of
Egghead common stock, which is less than 1% of the Egghead common
stock currently outstanding. To Onsale's knowledge, none of the
other directors or officers of Onsale named in Item 2
beneficially own any shares of Egghead common stock.
(b) Onsale may be deemed to have shared voting power over the
1,522,148 shares of Egghead common stock covered by the Voting
Agreements. Onsale does not have the power to dispose of these
shares. If Onsale acquires shares of Egghead common stock by
exercising the Option, Onsale will acquire sole power to vote and
dispose of these shares.
Bari Abdul has sole power to vote and dispose of the shares of
Egghead common stock of which he is the beneficial owner.
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(c) Onsale entered into the Merger Agreement, Option Agreement and
Voting Agreements with Egghead and Egghead shareholders on July
13, 1999. To the knowledge of Onsale, no other transactions in
Egghead common stock were effected during the past 60 days by the
persons named in Item 5(a).
(d) Onsale is not aware of the right of any other person to receive
or the power to direct the receipt of dividends from, or the
proceeds from the sale of, shares of Egghead common stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Onsale is a party to the Merger Agreement and the exhibits
thereto, including the Stock Option Agreement, the Voting
Agreements (and accompanying Irrevocable Proxies) and a stock
option agreement for the benefit of Egghead. Onsale's directors
and officers have entered into voting agreements with Egghead.
Other than the foregoing, neither Onsale nor, to Onsale's
knowledge, the other persons named in Item 2 to this Statement
are a party to any contract, arrangement, understanding or
relationship of the type specified by this Item 6 with respect to
any Egghead securities.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits hereto:
1. Agreement and Plan of Merger, dated July 13, 1999, among
Onsale, Merger Sub and Excite.*
2. Company Stock Option Agreement dated July 13, 1999 between
Egghead and Onsale, pursuant to which Onsale holds an option
to purchase Egghead common stock.*
3. Form of Company Voting Agreement entered into between Onsale
and certain shareholders of Egghead on July 13, 1999,
together with the form of Irrevocable Proxy delivered
therewith.*
* Incorporated by reference to exhibits to Onsale's current
report on Form 8-K, filed with the Securities and Exchange
Commission on July 23, 1999.
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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.
Dated: July 23, 1999 Onsale, Inc.
By: /s/ John E. Labbett
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John E. Labbett
Senior Vice President and Chief Financial
Officer
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SCHEDULE A
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The following table sets forth the name, business address and present
principal occupation or employment of each director and executive officer of
Onsale. Unless otherwise indicated below, the business address of each such
person is 1350 Willow Road, Suite 100, Menlo Park, California 94025.
Board of Directors
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<TABLE>
<CAPTION>
Name and Business Address Present Principal Occupation
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<S> <C>
S. Jerrold Kaplan President and Chief Executive Officer, Onsale
Alan S. Fisher Chief Technical Officer, Vice President of Development and
Operations, Onsale
Peter L. Harris Chairman, Chief Executive Officer and President,
1157 Triton Drive, Suite B The Picture People, a family portrait studio chain
Foster City, CA 94404
Peter H. Jackson President and Chief Executive Officer,
25 Orinda Way Intraware, Inc., a developer and distributor of intranet
Orinda, CA 94563 software tools and applications
Kenneth J. Orton Chief Strategist, E-Business,
234 Front Street Cognitiative, Inc., a planning, marketing and consulting
San Francisco, CA 94111 business for electronic commerce
</TABLE>
Executive Officers
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<TABLE>
<CAPTION>
Name and Business Address Present Principal Occupation
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<S> <C>
S. Jerrold Kaplan President and Chief Executive Officer, Onsale
Alan S. Fisher Chief Technical Officer,
Vice President of Development and Operations, Onsale
Merle W. McIntosh Senior Vice President of Merchandise Acquisition, Onsale
John E. Labbett Senior Vice President and Chief Financial Officer, Onsale
Jeffrey F. Sheahan Chief Operating Officer, Onsale
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Bari M. Abdul Vice President of Marketing, Onsale
</TABLE>
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SCHEDULE B
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Shareholders Subject to Voting Agreements
(as of July 6, 1999, as represented to us by Egghead)
<TABLE>
<CAPTION>
Shares
Beneficially
Shareholder Owned
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<S> <C>
Jonathan W. Brodeur 75,972
Tommy E. Collins 125,600
C. Scott Gibson 12,450
Norman F. Hullinger 80,833
James F. Kalasky 64,999
George P. Orban 1,076,294
Eric P. Robison 22,250
Robert T. Wall 22,000
Karen L. White 12,000
Melvin A. Wilmore 29,750
</TABLE>
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