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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __________)*
Onsale, Inc.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
682838-10-7
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(CUSIP Number)
BRIAN W. BENDER, CHIEF FINANCIAL OFFICER
EGGHEAD.COM, INC.
521 S.E. CHKALOV DRIVE
VANCOUVER, WASHINGTON 98683
(360) 883-3447
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(Name, Address and Telephone Number of Person 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 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 682838-10-7 PAGE 2 OF 12 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Egghead.com, Inc. I.R.S. Identification No.: 91-1296187
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
N/A
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
WC, 00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
N/A
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Washington
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SOLE VOTING POWER
7
NUMBER OF
3,901,090 (1)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 10,109,724 (2)
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 3,901,090
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
N/A
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
14,010,814 (1)(2)
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
71.5%
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) In the event the Option (discussed in Items 3 and 4 below) becomes
exercisable and is exercised in full, Egghead.com will have sole voting
power with respect to that number of shares equal to 19.9% of the then
outstanding shares of Common Stock of Onsale, which, based upon the
19,603,467 shares of Onsale Common
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Stock outstanding as of July 13, 1999 (as represented by Onsale in the
Merger Agreement discussed in Items 3 and 4) currently equals 3,901,090
shares of Onsale Common Stock. Prior to the exercise of the Option,
Egghead.com is not entitled to any rights as a stockholder of Onsale as to
the shares of Onsale Common Stock covered by the Option. The Option may
only be exercised upon the happening of certain events referred to in Item
4, none of which has occurred as of the date hereof. Egghead.com expressly
disclaims beneficial ownership of any of the shares of Onsale Common Stock
which are purchasable by Egghead.com upon exercise of the Option until such
time as Egghead.com purchases any such shares of Onsale Common Stock upon
any such exercise.
(2) 10,109,724 shares of Onsale Common Stock are subject to Voting Agreements
entered into by Egghead.com and certain stockholders of Onsale (discussed
in Items 3 and 4 below). Egghead.com expressly disclaims beneficial
ownership of any of the shares of Onsale Common Stock covered by the Voting
Agreements. Based on the number of shares of Onsale Common Stock
outstanding as of July 13, 1999 (as represented by Onsale in the Merger
Agreement discussed in Items 3 and 4), the number of shares of Onsale
Common Stock indicated represents approximately 51.6% of the outstanding
Onsale Common Stock, excluding the shares of outstanding shares of Onsale
Common Stock issuable upon exercise of the Option.
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SCHEDULE 13D
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement") relates to the Common Stock of
Onsale, Inc., a Delaware corporation ("Onsale" or "Issuer"). The principal
executive offices of Onsale are located at 1350 Willow Road, Menlo Park,
California, 94025.
Item 2. Identity and Background.
The name of the corporation filing this statement is Egghead.com, Inc., a
Washington corporation ("Egghead.com"). Egghead.com is a leading online
retailer of personal computer hardware, software, peripherals and accessories.
The address of Egghead.com's principal business is 521 S.E. Chkalov Drive,
Vancouver, Washington 98683.
Set forth on Schedule A is the name, and present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of each of the
directors and executive officers of Egghead.com as of the date hereof.
To Egghead.com's knowledge, no person named on Schedule A hereto is required to
disclose legal proceedings pursuant to Items 2(d) or 2(e). To Egghead.com's
knowledge, except for George P. Orban, who is a citizen of Canada, each of the
individuals identified on Schedule A is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to an Agreement and Plan of Merger dated as of July 13, 1999 (the
"Merger Agreement"), among Onsale, EO Corporation, a Washington corporation and
wholly-owned subsidiary of Onsale ("Merger Sub") and Egghead.com, and subject to
the conditions set forth therein (including approval by stockholders of Onsale
and the shareholders of Egghead.com), Merger Sub will merge with and into
Egghead.com and Egghead.com will become a wholly-owned subsidiary of Onsale
(such events constituting the "Merger"). Once the Merger is consummated, Merger
Sub will cease to exist as a corporation and all of the business, assets,
liabilities and obligations of Merger Sub will be merged into Egghead.com with
Egghead.com remaining as the surviving corporation (the "Surviving
Corporation"). As a result of the Merger, each outstanding share of Egghead.com
Common Stock, other than shares owned by Merger Sub, Onsale or any wholly-owned
subsidiary of Onsale, will be converted into the right to receive .565 shares
(the "Exchange Ratio") of Onsale Common Stock, and each outstanding option to
purchase Egghead.com's Common Stock under Egghead.com's stock option plans
(each, an "Egghead.com Common Stock Option") will be assumed by Onsale (each, an
"Assumed Option"). Each Assumed Option will become an option to purchase that
number of shares of Onsale Common Stock as is equal to the number of shares of
Egghead.com Common Stock that was subject to such option immediately prior to
the Merger except that each Assumed Option will be exercisable for that number
of whole shares of Onsale Common Stock equal to the product of the number of
shares of Egghead.com Common Stock that were issuable upon exercise of such
Assumed Option immediately prior to the Merger multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Onsale Common Stock and
the per share exercise price for the shares of Onsale Common Stock issuable upon
exercise of such Assumed Option will be equal to the quotient determined by
dividing the exercise price per share of Egghead.com Common Stock at which such
Assumed Option was exercisable immediately prior to the Merger by the Exchange
Ratio, rounded up to the nearest whole cent.
As an inducement to Egghead.com to enter into the Merger Agreement, Egghead.com
and Onsale entered into the Parent Stock Option Agreement dated as of July 13,
1999 (the "Stock Option Agreement") pursuant to which Onsale granted Egghead.com
the right (the "Option"), under certain conditions, to acquire up to the number
of shares of Onsale Common Stock sufficient to give Egghead.com ownership of
19.9% of Onsale's outstanding Common Stock. Onsale's obligation to issue shares
pursuant to the exercise of the Option is subject to the occurrence of certain
events (discussed in Item 4 below), which may not occur. The granting of the
Option was negotiated as a material term of the entire Merger transaction.
Egghead.com did not pay additional consideration to Onsale in connection with
Onsale entering into the Stock
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Option Agreement and granting the Option. In the event the Option becomes
exercisable, Egghead.com anticipates it will use working capital for any
exercise of the Option.
As a further inducement for Egghead.com to enter into the Merger Agreement and
in consideration thereof, certain stockholders of Onsale (the "Stockholders")
entered into a Parent Voting Agreement (as such term is defined in the Merger
Agreement), dated as of July 13, 1999 with Egghead.com (collectively, the
"Voting Agreements") whereby the Stockholders agreed, severally and not jointly,
to vote, among other things, all of the shares of Onsale Common Stock
beneficially owned by them in favor of the issuance of the shares of Onsale
Common Stock pursuant to the Merger and in favor of an amendment to Onsale's
Certificate of Incorporation to change the name of Onsale to "Egghead.com,
Inc.," effective at the Effective Time (as such term is defined in the Merger
Agreement), and to increase the authorized number of shares of Onsale Common
Stock so as to permit the transactions contemplated by the Merger and, to the
extent that approval by Onsale's stockholders is required under the Delaware
General Corporation Law, in favor of the Merger, the execution and delivery by
Onsale of the Merger Agreement and the adoption and approval of the terms
thereof and in favor of each of the other actions contemplated by the Merger
Agreement, and any action required in furtherance thereof.
References to, and descriptions of, the Merger, the Merger Agreement, the Stock
Option Agreement and the Voting Agreements as set forth herein are qualified in
their entirety by reference to the copies of the Merger Agreement, the Stock
Option Agreement and the form of Parent Voting Agreement, respectively, included
as Exhibits 1, 2 and 3, respectively, to this Schedule 13D, and are incorporated
herein in their entirety where such references and descriptions appear.
Item 4. Purpose of Transaction.
(a)-(b) As described in Item 3 above, this statement relates to the Merger of
Merger Sub, a wholly-owned subsidiary of Onsale, with and into Egghead.com
in a statutory merger pursuant to the Washington Business Corporation Act.
At the effective time of the Merger, the separate existence of Merger Sub
will cease and Egghead.com will continue as the Surviving Corporation and
as a wholly-owned subsidiary of Onsale. Each holder of outstanding
Egghead.com Common Stock will receive, in exchange for each share of
Egghead.com Common Stock held by such holder, .565 shares of Onsale Common
Stock. Onsale will assume each Egghead.com Stock Option.
Each of the Stockholders has, by executing a Voting Agreement,
agreed to vote such portion of the 10,109,724 shares, collectively, of
Onsale Common Stock (the "Shares") beneficially owned by them as described
below. The Stockholders and the number of outstanding shares beneficially
owned by each of them as of July 13, 1999, is set forth in Schedule B
hereto which is hereby incorporated by this reference.
Pursuant to the Voting Agreements, the Stockholders have agreed,
at every Onsale stockholders meeting and on every action or approval by
written consent in lieu of such meeting, to cause the Shares to be voted in
favor of: (i) the issuance of the shares of Onsale Common Stock pursuant to
the Merger, (ii) and an amendment to Onsale's Certificate of Incorporation
to change the name of Onsale to "Egghead.com, Inc.," effective at the
Effective Time (as such term is defined in the Merger Agreement), (iii) to
increase the authorized number of shares of Onsale Common Stock so as to
permit the transactions contemplated by the Merger, and (iv) to the extent
that approval by Onsale's stockholders is required under the Delaware
General Corporation Law, in favor of the Merger, the execution and delivery
by Onsale of the Merger Agreement and the adoption and approval of the
terms thereof and in favor of each of the other actions contemplated by the
Merger Agreement, and any action required in furtherance thereof. The
Stockholders may vote the Shares on all other matters. The Voting
Agreements terminate upon the earlier to occur of (i) such date and time as
the Merger shall become effective in accordance with the terms and
provisions of the Merger Agreement or (ii) such date and time as the Merger
Agreement shall have been terminated pursuant to Article VII of the Merger
Agreement.
Pursuant to the Stock Option Agreement Onsale granted Egghead.com
the Option, under certain conditions, to acquire up to the number of shares
of Onsale Common Stock sufficient to give Egghead.com ownership of 19.9% of
Onsale's outstanding Common Stock. Onsale's obligation to issue shares
pursuant to the exercise of the Stock Option is subject to the occurrence
of certain events (each, an "Exercise Event"), which may not occur. In
general,
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an Exercise Event may be deemed to occur: (a) if (i) the occurrence of a
Parent Triggering Event (as such term is defined in the Merger Agreement),
(ii) a public announcement of an Option Acquisition Proposal (as defined
below) is made prior to the date the Merger Agreement is terminated
pursuant to the terms thereof (the "Merger Termination Date") and the
occurrence of one or more of the following on or after the date of the
announcement of an Option Acquisition Proposal: (1) the requisite vote of
the stockholders of Onsale in favor of the issuance of shares of Onsale
Common Stock pursuant to the Merger and the amendment of Onsale's
Certificate of Incorporation to change the name of Onsale to "Egghead.com,
Inc.," and to increase the authorized number of shares of Onsale Common
Stock so as to permit the transactions contemplated by the Merger
Agreement, is not obtained at Onsale's Stockholders' Meeting (as such term
is defined in the Merger Agreement); (2) the commencement of a tender offer
or exchange offer for 15% or more of the outstanding shares of Onsale
Common Stock (other than by Egghead.com or an affiliate of Egghead.com); or
(3) for any reason Onsale fails to call and hold the Onsales Stockholders'
Meeting by the Outside Date (as such term is defined in the Merger
Agreement), or (iii) the commencement of a solicitation within the meaning
of Rule 14a-1(1) by any person or entity other than Egghead.com or its
Board of Directors (or any person or entity acting on behalf of Egghead.com
or its Board of Directors) seeking to alter the composition of Onsale's
Board of Directors. For purposes of the Stock Option Agreement, "Option
Acquisition Proposal" means any offer or proposal (other than an offer or
proposal by Egghead.com) relating to any transaction or series of related
transactions involving: (A) any purchase from Onsale or acquisition by any
person or "group" (as defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended) of more than a 10% interest in the total
outstanding voting securities of Onsale or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any
person or "group" beneficially owning 10% or more of the total outstanding
voting securities of Onsale or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving
Onsale; (B) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 10% of the assets of Onsale (other than in the
ordinary course of business); or (C) any liquidation or dissolution of
Onsale.
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.
The purpose of the transactions under the Voting Agreements and
the Stock Option Agreement are to enable Egghead.com and Onsale to
consummate the transactions contemplated by the Merger Agreement.
(c) Not applicable.
(d) Not applicable.
(e) Other than as a result of the Merger described in Item 3 above, not
applicable.
(f) Not applicable.
(g) Not applicable.
(h)-(i) The Common Stock of Issuer will continue to be registered under the
Securities Act of 1934, as amended, and listed on the Nasdaq National
Market. However, Issuer's Common Stock will trade under the symbol "EGGS"
after the Effective Time (as such term is defined in the Merger Agreement).
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(j) Other than described above, Egghead.com currently has no plan or proposals
which relate to, or may result in, any of the matters listed in Items 4(a)
- (j) of Schedule 13D (although Egghead.com reserves the right to develop
such plans).
References to, and descriptions of, the Merger Agreement, the Stock Option
Agreement and the Voting Agreements as set forth above in this Item 4 are
qualified in their entirety by reference to the copies of the Merger Agreement,
the Stock Option Agreement and the form of Parent Voting Agreement,
respectively, included as Exhibits 1, 2 and 3, respectively, to this Schedule
13D, and are incorporated in this Item 4 in their entirety where such references
and descriptions appear.
Item 5. Interest in Securities of the Issuer.
(a)-(b) As a result of the Voting Agreements, Egghead.com may be deemed to be
the beneficial owner of at least 10,109,724 shares of Onsale Common Stock.
Such Onsale Common Stock constitutes approximately 51.6% of the issued and
outstanding shares of Onsale Common Stock based on the number of shares of
Onsale Common Stock outstanding as of July 13, 1999 (as represented by
Onsale in the Merger Agreement discussed in Items 3 and 4). Egghead.com may
be deemed to have the shared power to vote the Shares with respect to those
matters described above. However, Egghead.com (i) is not entitled to any
rights as a stockholder of Onsale as to the Shares and (ii) disclaims any
beneficial ownership of the shares of Onsale Common Stock which are covered
by the Voting Agreements.
In the event the Option becomes exercisable and is exercised in full,
Egghead.com will have the sole power to vote, and the sole power to dispose
of, that number of shares equal to 19.9% of the then outstanding shares of
Onsale Common Stock, which, based upon the 19,603,467 shares of Onsale
Common Stock outstanding as of July 13, 1999, currently equals 3,901,090
shares of Onsale Common Stock.
To the knowledge of Egghead.com, the following persons listed on Schedule A
have ownership interests in Onsale:
(i) Orban Partners, a general partnership, beneficially owns
5,000 shares of Onsale Common Stock. George P. Orban, Chairman of the
Board of Directors and Chief Executive Officer of Egghead.com, is the
managing partner of Orban Partners.
(c) To the knowledge of Egghead.com, no transactions in the class of securities
reported have been effected during the past sixty days by any person named
in response to Item 5(a)-(b).
(d) Certain persons not named pursuant to Item 2 may have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from
the sale of, the securities described in clause (i) in Item 5(a)-(b) above.
To the knowledge of Egghead.com, except as described in the foregoing
sentence, no other person has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the
securities of Onsale.
(e) N/A.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the Merger Agreement and the exhibits thereto, including the Voting
Agreements and the Stock Option Agreement, to the knowledge of Egghead.com,
there are no contracts, arrangements, understandings or relationships among the
persons named in Item 2 and between such persons and any person with respect to
any securities of Onsale, including but not limited to transfer or voting of any
of the securities, finder's fees, joint ventures, loan or option arrangement,
puts or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
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Item 7. Material to Be Filed as Exhibits.
The following documents are filed as exhibits:
1. Agreement and Plan of Merger, dated July 13, 1999 by and among Onsale,
Merger Sub and Egghead.com. (incorporated by reference to exhibits to the
Report on Form 80K filed on Egghead.com on July 23, 1999 (File No. 000-
16930)).
2. Form of Parent Voting Agreement, dated July 13, 1999, between Egghead.com
and certain stockholders of Onsale (incorporated by reference to exhibits
to the Report on Form 8-K filed on Egghead.com on July 23, 1999 (File No.
000-16930)).
3. Stock Option Agreement dated July 13, 1999 by and between Egghead.com and
Onsale (incorporated by reference to exhibits to the Report on Form 8-K
filed on Egghead.com on July 23, 1999 (File No. 000-16930)).
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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.
EGGHEAD.COM, INC.
By: /s/ Brian W. Bender
--------------------
Brian W. Bender
Chief Financial Officer, Vice President
and Secretary
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SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
EGGHEAD.COM, INC.
The following table sets forth the name, business address and present principal
occupation or employment of each director and executive officer of Egghead.com.
Except as indicated below, the business address of each such person is 521 S.E.
Chkalov Drive, Vancouver, WA 98683.
<TABLE>
Name and Title Present Principal Occupation
<S> <C>
George P. Orban Chairman of the Board of Directors
Chairman of the Board of Directors and and Chief Executive Officer of Egghead.com
Chief Executive Officer
Brian W. Bender Chief Financial Officer, Vice President of
Chief Financial Officer, Vice President Finance of Egghead.com
of Finance and Secretary
Tommy E. Collins Vice President of Information Systems and
Vice President of Information Systems and Chief Technology Officer of Egghead.com
Chief Technology Officer
Norman F. Hullinger Vice President of Sales and Operations
Vice President of Sales and Operations of Egghead.com
James Kalasky Vice President of Merchandising and Advertising
Vice President of Merchandising and Advertising of Egghead.com
Jonathan Brodeur President and Director, Surplus Direct
Director 521 S.E. Chkalov Drive
Vancouver, Washington 98683
C. Scott Gibson Consultant
Director Gibson Enterprises
1900 Twin Points Road
Lake Oswego, Oregon 97034
Eric P. Robison Business Development Associate
Director Vulcan Ventures, Inc.
110 110th Avenue N.E., Suite 550
Bellevue, Washington 98004
Robert T. Wall President
Director OnPoint Developments, L.L.C
2320 Hyde Street
San Francisco, California 94109
Karen White Senior Vice President, Worldwide Business
Director Development and Emerging Markets
Oracle Corporation
500 Oracle Parkway, Box 5op 10
Redwood Shores, California 94065
</TABLE>
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<TABLE>
Name and Title Present Principal Occupation
<S> <C>
Melvin A. Wilmore President, Chief Operating Officer and director
Director Ross Stores, Inc.
8333 Central Avenue
Newark, California 94560
</TABLE>
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SCHEDULE B
<TABLE>
<CAPTION>
Stockholder Shares Beneficially Owned
- ----------- -------------------------
<S> <C>
S. Jerrold Kaplan 5,048,960
Alan Fisher 3,318,185
Razi Moihuddin 1,741,315
John Labbett 564
Bari Abdul 700
</TABLE>
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