<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No.1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended March 28, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _________ to _________
Commission file number 0-16930
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EGGHEAD.COM, INC.
-----------------
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1296187
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
EAST 22705 MISSION
LIBERTY LAKE, WASHINGTON 99019
------------------------ -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (509) 922-7031
---------------
Securities registered pursuant to Section 12(b) of the Act: NONE
----
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K ____________
To the best of Egghead.com, Inc.'s knowledge, the aggregate market value of
the voting stock held by non-affiliates of the registrant at May 23, 1998 was
$199,100,000.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS MAY 23, 1998
----- ------------
Common Stock, $.01 par value 23,591,788 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement relating to the
Company's 1998 Annual Meeting of Shareholders are incorporated by reference into
Part III of this Form 10-K.
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of this report:
<S> <C>
1. Financial Statements - The Consolidated
Financial Statements, Notes thereto,
Financial Statement Schedules (none), and
Accountants' Report thereon are included in
Part II, Item 8 of this report.
2(a) Exhibits
(xii) 3.1 Restated Articles of Incorporation of
Egghead.com, Inc.
3.2|X| Bylaws of Egghead.com, Inc., as amended to
date
(xii) 3.3 Articles of Amendment to Articles of
Incorporation of Egghead, Inc. changing its
name to Egghead.com, Inc.
(x) 10.1* Microsoft 1995/1996 Channel Agreement dated
July 1, 1995, as amended through January 1,
1996.
(xi) 10.2* Amendment No. 1 to the Microsoft 1995/1996
Channel Agreement, with attached addendums
and amendments to the addendums of such
Agreement, through June 30, 1997.
10.3** Intentionally left blank
(xi) 10.4** Executive Deferred Compensation Plan and
related documents effective July 1, 1996
(xi) 10.5** Executive Employment Agreement between
Egghead, Inc. and DJ&J Software Corporation
and George P. Orban dated as of January 31,
1997. (Previously filed with registrant's
Form 10-Q for the fiscal quarter ended June
28, 1997.)
(xii) 10.5a** Pledge Agreement between Egghead.com, Inc.
and George P. Orban dated as of February 25,
1998.
(xi) 10.6** Nonqualified Stock Option Letter Agreement
and Plan Summary between Egghead Inc. and
George P. Orban dated January 31, 1997.
10.7** Egghead.com, Inc. 1997 Nonofficer Employee
Stock Option Plan (Previously field with
registrants' Form S-8 dated June 5, 1998 as
Exhibit 99.1.)
10.8** Employee Stock Issuance Program (Previously
filed with registrant's Form S-8 dated June
5, 1998 as Exhibit 99.2.)
10.9 Agreement and Plan of Merger, dated April
30, 1997, among Egghead, Inc. ("Egghead"),
North Face Merger Sub, Inc. ("North Face")
and Surplus Software, Inc. ("Surplus
Direct") and certain shareholders of Surplus
Direct, and amendment thereto dated May 23,
1997 (Previously filed with registrant's
Registration Statement on Form S-4
(Registration No. 333-31251 as Exhibit 2.1,
filed with the SEC on July 14, 1997.)
10.10** Employment Agreement between Surplus
Software, Inc. and Gregory
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<PAGE>
Boudreau, dated May 15, 1996 (Previously
filed with registrant's Form 10-Q for the
quarter ended September 27, 1997.)
10.11** Employment Agreement Amendment, effective
April 30, 1997, between Surplus Software,
Inc. and Gregory Boudreau (Previously filed
with as part of registrant's Registration
Statement on Form S-4 (Registration No.
333-31251) as Annex III to the Proxy
Statement/Prospectus contained in the
Registration Statement filed with the SEC on
July 14, 1997.)
10.12** Employment Agreement between Surplus
Software, Inc. and Jonathan Brodeur, dated
May 15, 1996 (Previously filed with
registrant's Form 10-Q for the quarter ended
September 27, 1997.)
10.13 Employment Agreement Amendment, effective
April 30, 1997, between Surplus Software,
Inc. and Jonathan Brodeur (Incorporated by
reference to, and previously filed with as
part of registrant's Registration Statement
on Form S-4 (Registration No. 333-31251) as
Annex III to the Proxy Statement/Prospectus
contained in the Registration Statement
filed with the SEC on July 14, 1997.)
10.14 Intentionally left blank.
10.15 Lease, as amended, dated June 9, 1988,
between Sammamish Park Place I Limited
Partnership as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
administrative headquarters. (Previously
filed with registrant's Form 10-K for the
fiscal year ended April 1, 1989, as Exhibit
10.46.)
10.16 First Amendment to June 9, 1988 Lease
between Sammamish Park Place I Limited
Partnership and DJ&J Software Corporation
dated October 4, 1989. (Previously filed
with registrant's Form 10-K for the fiscal
year ended March 31, 1990, as Exhibit
10.46a.)
10.17 Lease dated March 23, 1992 between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant regarding registrant's administrative
headquarters. (Previously filed with
registrant's Form 10-K for the fiscal year
ended March 28, 1992, as Exhibit 10.47.)
10.18 Lease Termination and Rent Payment Agreement
between Sammamish Park Place II Limited
Partnership as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
administrative headquarters. (Previously
filed with registrant's Form 10-Q for the
quarter ended July 2, 1994.)
(vi) 10.18a First Amendment to Lease Termination and
Rent Payment Agreement between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant.
(vi) 10.18b Second Amendment to Lease Termination and
Rent Payment Agreement between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant.
(iii) 10.19 Lease dated March 23, 1989, between The CHY
Company as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
<PAGE>
Sacramento distribution facility.
(iii) 10.20 First amendment to lease between The CHY
Company as Landlord and DJ&J Software as
Tenant regarding registrant's Sacramento
distribution facility.
(xi) 10.21 Lease dated May 15, 1995 between Central
Valley Limited Liability Company as Lessor
and DJ&J Software Corporation d/b/a Egghead
Software as Lessee, regarding Registrant's
Sacramento distribution facility, with
attached Exercise of Option extending lease
term date to September 30, 1998.
(i) 10.22 Lease Agreement dated January 7, 1988 with
Granite Properties, a limited partnership,
as Landlord and DJ&J Software Corporation,
as Tenant, regarding registrant's Lancaster
distribution facility.
10.23 Intentionally left blank
10.24 Intentionally left blank
(viii) 10.25 Asset Purchase Agreement by and among
Software Spectrum, Inc., Egghead, Inc. and
DJ&J Software Corporation dated as of March
23, 1996 with Exhibits 4.11 and 4.12
thereto.
10.26 Intentionally left blank.
10.27 Intentionally left blank
10.28 Intentionally left blank
10.29 Intentionally left blank
10.30 Intentionally left blank
10.31 Intentionally left blank.
10.32 Intentionally left blank.
10.33 Intentionally left blank
(ii) 10.34** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Plan.
(ii) 10.35** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Stuart M. Sloan dated
February 23, 1989.
(ii) 10.36** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Stuart M. Sloan dated
February 23, 1989.
(iii) 10.36a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Non-Qualified Stock
Option Agreement between Egghead, Inc. and
Stuart M. Sloan dated April 17, 1991.
10.37 Intentionally left blank.
10.38 Intentionally left blank.
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(ii) 10.39** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Ronald A. Weinstein dated
February 23, 1989.
(iii) 10.39a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Incentive Stock Option
Agreement between Egghead, Inc. and Ronald
A. Weinstein dated April 17, 1991.
(ii) 10.40** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Ronald A. Weinstein dated
February 23, 1989.
(iii) 10.40a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Non-Qualified Stock
Option Agreement between Egghead, Inc. and
Ronald A. Weinstein dated April 17, 1991.
10.41 Intentionally left blank.
10.42 Intentionally left blank.
(ii) 10.43** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
February 23, 1989.
(ii) 10.44** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
February 23, 1989.
(iii) 10.44a** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
April 17, 1991.
10.45 Intentionally left blank.
10.46 Intentionally left blank.
10.47 Intentionally left blank.
10.48** Egghead, Inc. 1989 Employee Stock Purchase
Plan. (Previously filed with registrant's
Form S-8 dated June 23, 1990, as Exhibit
10.)
10.49** Egghead, Inc. 1993 Stock Option Plan.
(Previously filed with registrant's Form 10-
Q dated for the quarter ended October 16,
1993, as Exhibit 10.31.)
10.49(a)** Amended Egghead, Inc. 1993 Stock Option Plan
(Previously filed with registrant's Form 10-
Q for fiscal quarter ended September 27,
1997.)
(xii) 10.49(b)** Second Amended Egghead, Inc. 1993 Stock
Option Plan.
(x) 10.50** Egghead.com, Inc. Restated Nonemployee
Director Stock Option Plan.
10.51** Executive Employment Agreements with each of
Tommy Collins, Brian W. Bender, Norma
Hullinger and James Kalasky (Previously
filed with registrant's Form 10-Q for the
fiscal quarter ended December 27, 1997.)
(xii) 21.1 List of subsidiaries of Egghead.com, Inc.
<PAGE>
(xii) 23.1 Consent of Arthur Andersen LLP.
(xii) 24.1 Power of Attorney
(xii) 27.1 Financial Data Schedule
(xi) 99.1** Resignation & Release Agreement between
Peter F. Grossman and Egghead Inc. and DJ&J
Software Corporation effective April 25,
1997.
(xi) 99.2** Resignation & Release Agreement between
Ronald J. Smith and Egghead Inc. and DJ&J
Software Corporation effective February 15,
1997.
(xi) 99.3** Resignation & Release Agreement between
Terrence M. Strom and Egghead Inc. and DJ&J
Software Corporation effective February 15,
1997.
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|X| Filed herewith.
(i) Previously filed with registrant's Registration Statement on
Form S-1, Registration No. 33-21472, as same exhibit number.
(ii) Previously filed with registrant's Form 8-K dated February
23, 1989, as Exhibits 10.1 to 10.13.
(iii) Previously filed with registrant's Form 10-K for the fiscal
year ended March 29, 1992, as same exhibit number.
(iv) Previously filed with registrant's Form 10-K for the fiscal
year ended April 3, 1993, as same exhibit number.
(v) Previously filed with registrant's Form 10-K for the fiscal
year ended April 2, 1994, as same exhibit number.
(vi) Previously filed with registrant's Form 10-Q for the quarter
ended October 1, 1994.
(vii) Previously filed with registrant's Form 10-K for the fiscal
year ended April 1, 1995, as same exhibit number.
(viii) Previously filed with registrant's Form 8-K dated March 23,
1996, as Exhibit 2.1.
(x) Previously filed with registrant's Form 10-K for the fiscal
year ended March 30, 1996, as same exhibit number.
(xi) Previously filed with registrant's Form 10-K for the fiscal
year ended March 29, 1997, as same exhibit number.
(xii) Previously filed with registrant's Form 10-K for the fiscal
year ended March 28, 1998, as same exhibit number.
* Confidential portions of this exhibit have been omitted and
filed separately with the Securities and Exchange Commission
pursuant to an Application for Confidential Treatment under
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. Each exhibit has been marked to identify the
confidential portions that are omitted.
** Designates management contract or compensatory plan or
arrangement.
(b). Form 8-K
Egghead.com, Inc. filed two reports on Form 8-K, dated, during the
fourth quarter of its fiscal year ended March 28, 1998: a report on
Form 8-K, filed January 28, 1998, which reported on Item 5 of Form
8-K; and a report on Form 8-K, filed June 5, 1998, which reported on
Item 1 of Form 8-K and contained certain pro-forma financial
information.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this amendment
to the report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vancouver, State of Washington, on March 10, 1999.
EGGHEAD.COM, INC.
By /s/ GEORGE P. ORBAN
---------------------
George P. Orban
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, this amendment to the report has been signed
by the following persons in the capacities indicated below on March 10, 1999.
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<CAPTION>
Signature Title
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/s/ GEORGE P. ORBAN Chairman of the Board and Chief Executive Officer (Principal
- --------------------------- Executive Officer)
George P. Orban
/s/ BRIAN W. BENDER Chief Financial Officer, Vice President of Finance and
- --------------------------- Secretary (Principal Financial and Accounting Officer)
Brian W. Bender
GREGORY J. BOUDREAU* Director
- ---------------------------
Gregory J. Boudreau
JONATHAN W. BRODEUR* Director
- ---------------------------
Jonathan W. Brodeur
ERIC P. ROBISON* Director
- ---------------------------
Eric P. Robison
MELVIN A. WILMORE* Director
- ---------------------------
Melvin A. Wilmore
*By: /s/ GEORGE P. ORBAN
- ---------------------------
George P. Orban
Attorney-in-Fact
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT INDEX
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1. Financial Statements - The Consolidated
Financial Statements, Notes thereto,
Financial Statement Schedules (none), and
Accountants' Report thereon are included in
Part II, Item 8 of this report.
2(a) Exhibits
(xii) 3.1 Restated Articles of Incorporation of
Egghead.com, Inc.
3.2|X| Bylaws of Egghead.com, Inc., as amended to
date
(xii) 3.3 Articles of Amendment to Articles of
Incorporation of Egghead, Inc. changing its
name to Egghead.com, Inc.
(x) 10.1* Microsoft 1995/1996 Channel Agreement dated
July 1, 1995, as amended through January 1,
1996.
(xi) 10.2* Amendment No. 1 to the Microsoft 1995/1996
Channel Agreement, with attached addendums
and amendments to the addendums of such
Agreement, through June 30, 1997.
10.3** Intentionally left blank
(xi) 10.4** Executive Deferred Compensation Plan and
related documents effective July 1, 1996
(xi) 10.5** Executive Employment Agreement between
Egghead, Inc. and DJ&J Software Corporation
and George P. Orban dated as of January 31,
1997. (Previously filed with registrant's
Form 10-Q for the fiscal quarter ended June
28, 1997.)
(xii) 10.5a** Pledge Agreement between Egghead.com, Inc.
and George P. Orban dated as of February 25,
1998.
(xi) 10.6** Nonqualified Stock Option Letter Agreement
and Plan Summary between Egghead Inc. and
George P. Orban dated January 31, 1997.
10.7** Egghead.com, Inc. 1997 Nonofficer Employee
Stock Option Plan (Previously field with
registrants' Form S-8 dated June 5, 1998 as
Exhibit 99.1.)
10.8** Employee Stock Issuance Program (Previously
filed with registrant's Form S-8 dated June
5, 1998 as Exhibit 99.2.)
10.9 Agreement and Plan of Merger, dated April
30, 1997, among Egghead, Inc. ("Egghead"),
North Face Merger Sub, Inc. ("North Face")
and Surplus Software, Inc. ("Surplus
Direct") and certain shareholders of Surplus
Direct, and amendment thereto dated May 23,
1997 (Previously filed with registrant's
Registration Statement on Form S-4
(Registration No. 333-31251 as Exhibit 2.1,
filed with the SEC on July 14, 1997.)
10.10** Employment Agreement between Surplus
Software, Inc. and Gregory
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Boudreau, dated May 15, 1996 (Previously
filed with registrant's Form 10-Q for the
quarter ended September 27, 1997.)
10.11** Employment Agreement Amendment, effective
April 30, 1997, between Surplus Software,
Inc. and Gregory Boudreau (Previously filed
with as part of registrant's Registration
Statement on Form S-4 (Registration No.
333-31251) as Annex III to the Proxy
Statement/Prospectus contained in the
Registration Statement filed with the SEC on
July 14, 1997.)
10.12** Employment Agreement between Surplus
Software, Inc. and Jonathan Brodeur, dated
May 15, 1996 (Previously filed with
registrant's Form 10-Q for the quarter ended
September 27, 1997.)
10.13 Employment Agreement Amendment, effective
April 30, 1997, between Surplus Software,
Inc. and Jonathan Brodeur (Incorporated by
reference to, and previously filed with as
part of registrant's Registration Statement
on Form S-4 (Registration No. 333-31251) as
Annex III to the Proxy Statement/Prospectus
contained in the Registration Statement
filed with the SEC on July 14, 1997.)
10.14 Intentionally left blank.
10.15 Lease, as amended, dated June 9, 1988,
between Sammamish Park Place I Limited
Partnership as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
administrative headquarters. (Previously
filed with registrant's Form 10-K for the
fiscal year ended April 1, 1989, as Exhibit
10.46.)
10.16 First Amendment to June 9, 1988 Lease
between Sammamish Park Place I Limited
Partnership and DJ&J Software Corporation
dated October 4, 1989. (Previously filed
with registrant's Form 10-K for the fiscal
year ended March 31, 1990, as Exhibit
10.46a.)
10.17 Lease dated March 23, 1992 between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant regarding registrant's administrative
headquarters. (Previously filed with
registrant's Form 10-K for the fiscal year
ended March 28, 1992, as Exhibit 10.47.)
10.18 Lease Termination and Rent Payment Agreement
between Sammamish Park Place II Limited
Partnership as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
administrative headquarters. (Previously
filed with registrant's Form 10-Q for the
quarter ended July 2, 1994.)
(vi) 10.18a First Amendment to Lease Termination and
Rent Payment Agreement between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant.
(vi) 10.18b Second Amendment to Lease Termination and
Rent Payment Agreement between Sammamish
Park Place II Limited Partnership as
Landlord and DJ&J Software Corporation as
Tenant.
(iii) 10.19 Lease dated March 23, 1989, between The CHY
Company as Landlord and DJ&J Software
Corporation as Tenant regarding registrant's
</TABLE>
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<TABLE>
<S> <C> <C>
Sacramento distribution facility.
(iii) 10.20 First amendment to lease between The CHY
Company as Landlord and DJ&J Software as
Tenant regarding registrant's Sacramento
distribution facility.
(xi) 10.21 Lease dated May 15, 1995 between Central
Valley Limited Liability Company as Lessor
and DJ&J Software Corporation d/b/a Egghead
Software as Lessee, regarding Registrant's
Sacramento distribution facility, with
attached Exercise of Option extending lease
term date to September 30, 1998.
(i) 10.22 Lease Agreement dated January 7, 1988 with
Granite Properties, a limited partnership,
as Landlord and DJ&J Software Corporation,
as Tenant, regarding registrant's Lancaster
distribution facility.
10.23 Intentionally left blank
10.24 Intentionally left blank
(viii) 10.25 Asset Purchase Agreement by and among
Software Spectrum, Inc., Egghead, Inc. and
DJ&J Software Corporation dated as of March
23, 1996 with Exhibits 4.11 and 4.12
thereto.
10.26 Intentionally left blank.
10.27 Intentionally left blank
10.28 Intentionally left blank
10.29 Intentionally left blank
10.30 Intentionally left blank
10.31 Intentionally left blank.
10.32 Intentionally left blank.
10.33 Intentionally left blank
(ii) 10.34** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Plan.
(ii) 10.35** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Stuart M. Sloan dated
February 23, 1989.
(ii) 10.36** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Stuart M. Sloan dated
February 23, 1989.
(iii) 10.36a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Non-Qualified Stock
Option Agreement between Egghead, Inc. and
Stuart M. Sloan dated April 17, 1991.
10.37 Intentionally left blank.
10.38 Intentionally left blank.
</TABLE>
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(ii) 10.39** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Ronald A. Weinstein dated
February 23, 1989.
(iii) 10.39a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Incentive Stock Option
Agreement between Egghead, Inc. and Ronald
A. Weinstein dated April 17, 1991.
(ii) 10.40** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Ronald A. Weinstein dated
February 23, 1989.
(iii) 10.40a** Amendment No. 1 to Egghead, Inc. 1989
Executive Retention Non-Qualified Stock
Option Agreement between Egghead, Inc. and
Ronald A. Weinstein dated April 17, 1991.
10.41 Intentionally left blank.
10.42 Intentionally left blank.
(ii) 10.43** Egghead, Inc. 1989 Executive Retention
Incentive Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
February 23, 1989.
(ii) 10.44** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
February 23, 1989.
(iii) 10.44a** Egghead, Inc. 1989 Executive Retention Non-
Qualified Stock Option Agreement between
Egghead, Inc. and Matthew J. Griffin dated
April 17, 1991.
10.45 Intentionally left blank.
10.46 Intentionally left blank.
10.47 Intentionally left blank.
10.48** Egghead, Inc. 1989 Employee Stock Purchase
Plan. (Previously filed with registrant's
Form S-8 dated June 23, 1990, as Exhibit
10.)
10.49** Egghead, Inc. 1993 Stock Option Plan.
(Previously filed with registrant's Form 10-
Q dated for the quarter ended October 16,
1993, as Exhibit 10.31.)
10.49(a)** Amended Egghead, Inc. 1993 Stock Option Plan
(Previously filed with registrant's Form 10-
Q for fiscal quarter ended September 27,
1997.)
(xii) 10.49(b)** Second Amended Egghead, Inc. 1993 Stock
Option Plan.
(x) 10.50** Egghead.com, Inc. Restated Nonemployee
Director Stock Option Plan.
10.51** Executive Employment Agreements with each of
Tommy Collins, Brian W. Bender, Norma
Hullinger and James Kalasky (Previously
filed with registrant's Form 10-Q for the
fiscal quarter ended December 27, 1997.)
(xii) 21.1 List of subsidiaries of Egghead.com, Inc.
</TABLE>
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<TABLE>
<S> <C> <C>
(xii) 23.1 Consent of Arthur Andersen LLP.
(xii) 24.1 Power of Attorney
(xii) 27.1 Financial Data Schedule
(xi) 99.1** Resignation & Release Agreement between
Peter F. Grossman and Egghead Inc. and DJ&J
Software Corporation effective April 25,
1997.
(xi) 99.2** Resignation & Release Agreement between
Ronald J. Smith and Egghead Inc. and DJ&J
Software Corporation effective February 15,
1997.
(xi) 99.3** Resignation & Release Agreement between
Terrence M. Strom and Egghead Inc. and DJ&J
Software Corporation effective February 15,
1997.
- -------------
|X| Filed herewith.
(i) Previously filed with registrant's Registration Statement on
Form S-1, Registration No. 33-21472, as same exhibit number.
(ii) Previously filed with registrant's Form 8-K dated February
23, 1989, as Exhibits 10.1 to 10.13.
(iii) Previously filed with registrant's Form 10-K for the fiscal
year ended March 29, 1992, as same exhibit number.
(iv) Previously filed with registrant's Form 10-K for the fiscal
year ended April 3, 1993, as same exhibit number.
(v) Previously filed with registrant's Form 10-K for the fiscal
year ended April 2, 1994, as same exhibit number.
(vi) Previously filed with registrant's Form 10-Q for the quarter
ended October 1, 1994.
(vii) Previously filed with registrant's Form 10-K for the fiscal
year ended April 1, 1995, as same exhibit number.
(viii) Previously filed with registrant's Form 8-K dated March 23,
1996, as Exhibit 2.1.
(x) Previously filed with registrant's Form 10-K for the fiscal
year ended March 30, 1996, as same exhibit number.
(xi) Previously filed with registrant's Form 10-K for the fiscal
year ended March 29, 1997, as same exhibit number.
(xii) Previously filed with registrant's Form 10-K for the fiscal
year ended March 28, 1998, as same exhibit number.
* Confidential portions of this exhibit have been omitted and
filed separately with the Securities and Exchange Commission
pursuant to an Application for Confidential Treatment under
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. Each exhibit has been marked to identify the
confidential portions that are omitted.
** Designates management contract or compensatory plan or
arrangement.
</TABLE>
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
EGGHEAD.COM, INC.
ARTICLE I
Offices
(l) Registered Office and Registered Agent: The registered office of
---------------------------------------
the corporation shall be located in the State of Washington at such place as may
be fixed from time to time by the Board of Directors upon filing of such notices
as may be required by law, and the registered agent shall have a business office
identical with such registered office.
(2) Other Offices: The corporation may have other offices within or
--------------
outside the State of Washington at such place or places as the Board of
Directors may from time to time determine.
ARTICLE II
Shareholders' Meetings
(1) Meeting Place: All meetings of the shareholders shall be held at
--------------
the principal place of business of the corporation, or at such other place as
shall be determined from time to time by the Board of Directors, and the place
at which any such meeting shall be held shall be stated in the notice of the
meeting.
(2) Annual Meeting Time: The annual meeting of the shareholders for
--------------------
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date and at such hour as
may be determined by the Board of Directors.
(3) Annual Meeting - Order of Business: At the annual meeting of
-----------------------------------
shareholders, the order of business shall be as follows:
(a) Calling the meeting to order.
(b) Proof of notice of meeting (or filing waiver).
(c) Reading of minutes of last annual meeting.
(d) Reports of officers.
(e) Reports of committees.
(f) Election of directors.
(g) Miscellaneous business.
(4) Special Meetings: Special meetings of the shareholders for
-----------------
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any purpose may be called at any time by the President, Board of Directors, or
the holders of not less than one tenth of all shares entitled to vote at the
meeting.
(5) Notice:
-------
(a) Notice of the time and place of the annual meeting of
shareholders shall be given by delivering personally or by mailing a written or
printed notice of the same, at least ten days, and not more than sixty days,
prior to the meeting to each shareholder of record entitled to vote at such
meeting.
(b) At least ten days and not more than sixty days prior to the
meeting, written or printed notice of each special meeting of shareholders,
stating the place, day and hour of such meeting, and the purpose or purposes for
which the meeting is called, shall be delivered personally, or mailed to each
shareholder of record entitled to vote at such meeting.
(6) Voting Record: At least ten days before each meeting of
--------------
shareholders, a complete record of the shareholders entitled to vote at such
meeting, or any adjournment thereof, shall be made, arranged in alphabetical
order, with the address of and number of shares held by each, which record shall
be kept on file at the registered office of the corporation for a period of ten
days prior to such meeting. The record shall be kept open at the time and place
of such meeting for the inspection of any shareholder.
(7) Quorum: Except as otherwise required by law:
-------
(a) A quorum at any annual or special meeting of shareholders
shall consist of shareholders representing, either in person or by proxy, a
majority of the outstanding capital stock of the corporation entitled to vote at
such meeting.
(b) The votes of a majority in interest of those present at any
properly called meeting or adjourned meeting of shareholders at which a quorum
as in this paragraph defined is present shall be sufficient to transact
business.
(8) Voting of Shares: Except as otherwise provided in these Bylaws or
-----------------
to the extent that voting rights of the shares of any class or classes are
limited or denied by the Articles of Incorporation, each shareholder, on each
matter submitted to a vote at a meeting of shareholders, shall have one vote for
each share of stock registered in his name on the books of the corporation.
(9) Closing of Transfer Books and Fixing Record Date: For the purpose
-------------------------------------------------
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or entitled to receive payment of any
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dividend, the Board of Directors may provide that the stock transfer books shall
be closed for a stated period not to exceed sixty days nor be less than ten days
preceding such meeting. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance a record date for any such determination of
shareholders, such date to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
(10) Proxies: A shareholder may vote either in person or by proxy
--------
executed in writing by the shareholder or his duly authorized attorney-in-fact.
No proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
(11) Action by Shareholders without a Meeting: Any action required or
-----------------------------------------
which may be taken at a meeting of shareholders of the corporation may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as a
unanimous vote of shareholders.
(12) Waiver of Notice: A waiver of any notice required to be given
-----------------
any shareholder, signed by the person or persons entitled to such notice,
whether before or after the time stated therein for the meeting, shall be
equivalent to the giving of such notice.
(13) Action of Shareholders by Communications Equipment: Shareholders
---------------------------------------------------
may participate in a meeting of shareholders by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting.
ARTICLE III
Stock
(l) Certificated Shares: Shares may but need not be represented by
--------------------
certificates. Unless otherwise provided by law, the rights and obligations of
shareholders are identical whether or not their shares are represented by
certificates. If shares are represented by certificates, certificates of stock
shall be issued in numerical order, and each shareholder shall be entitled to a
certificate signed by the President, or a Vice President, and the Secretary or
an Assistant Secretary, or by such other two officers as designated by the Board
of Directors, and may be sealed with the seal of the corporation or a facsimile
thereof. The signatures of such officers may be facsimiles if the certificate
is manually signed on behalf of a transfer agent, or registered by a registrar,
other than the
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corporation itself or an employee of the corporation. If an officer who has
signed or whose facsimile signature has been placed upon such certificate ceases
to be such officer before the certificate is issued, it may be issued by the
corporation with the same effect as if the person were an officer on the date of
issue.
At a minimum each certificate of stock shall state:
(a) the name of the issuing corporation;
(b) that the corporation is organized under the laws of this
state;
(c) the name of the person to whom issued;
(d) the number and class of shares and the designation of the
series, if any, which such certificate represents; and
(e) if the corporation is authorized to issue different classes
of shares or different series within a class, the designations, relative rights,
preferences, and limitations applicable to each class and the variations in
rights, preferences and limitations determined for each series, and the Board's
authority to determine variations for future series, summarized either on the
front or back of the certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish the
shareholder this information upon written request and without charge.
In case of any mutilation, loss or destruction of any certificate of
stock, another may be issued in its place on proof of such mutilation, loss or
destruction. The Board of Directors may impose conditions on such issuance and
may require the giving of a satisfactory bond or indemnity to the corporation in
such sum as they might determine or establish such other procedures as they deem
necessary.
(2) Uncertificated Shares:
----------------------
(a) Unless the Articles of Incorporation provide otherwise, the
Board of Directors may authorize the issue of any of the corporation's classes
or series of shares without certificates. The authorization does not affect
shares already represented by certificates until they are surrendered to the
corporation.
(b) Within a reasonable time after the issue of shares without
certificates, the corporation shall send the shareholder a complete written
statement of the information required on certificates as provided in Article III
(1) herein.
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(3) Transfers:
----------
(a) Transfers of stock shall be made only upon the stock transfer
books of the corporation, kept at the registered office of the corporation or at
its principal place of business, or at the office of its transfer agent or
registrar. The Board of Directors may, by resolution, open a share register in
any state of the United States, and may employ an agent or agents to keep such
register, and to record transfers of shares therein.
(b) Shares of certificated stock shall be transferred by delivery
of the certificates therefor, accompanied either by an assignment in writing on
the back of the certificate or an assignment separate from certificate, or by a
written power of attorney to sell, assign and transfer the same, signed by the
holder of said certificate. No shares of certificated stock shall be transferred
on the books of the corporation until the outstanding certificates therefor have
been surrendered to the corporation.
(c) Shares of uncertificated stock shall be transferred upon
receipt by the corporation of a written request for transfer signed by the
shareholder. Within a reasonable time after the transfer, the corporation will
acknowledge to such shareholder that said shares have been transferred on the
books of the corporation.
(4) Registered Owner: Registered shareholders shall be treated by the
----------------
corporation as the holders in fact of the stock standing in their respective
names and the corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
below or by the laws of the State of Washington. The Board of Directors may
adopt by resolution a procedure whereby a shareholder of the corporation may
certify in writing to the corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) The classification of shareholder who may certify;
(b) The purpose or purposes for which the certification may be
made;
(c) The form of certification and information to be contained
therein;
(d) If the certification is with respect to a record date or
closing of the stock transfer books, the date within which the certification
must be received by the corporation; and
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<PAGE>
(e) Such other provisions with respect to the procedure as are
deemed necessary or desirable.
Upon receipt by the corporation of a certification complying with
the procedure, the persons specified in the certification shall be deemed, for
the purpose or purposes set forth in the certification, to be the holders of
record of the number of shares specified in place of the shareholder making the
certification.
(5) Fractional Shares or Scrip: The corporation may: (a) issue
---------------------------
fractions of a share which shall entitle the holder to exercise voting rights,
to receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation; (b) arrange for the disposition of
fractional interests by those entitled thereto; (c) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
shares are determined; or if certificates are being used to represent shares of
such class or series, (d) issue scrip in registered or bearer form which shall
entitle the holder to receive a certificate for a full share upon the surrender
of such scrip aggregating a full share.
(6) Shares of Another Corporation: Shares owned by the corporation in
------------------------------
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the Board of Directors may determine or, in the absence of such
determination, by the President of the corporation.
ARTICLE IV
Board of Directors
(1) Number and Powers: The management of all the affairs, property
-----------------
and interest of the corporation shall be vested in a Board of Directors. The
Board of Directors shall consist of not less than six (6) nor more than twelve
(12) persons, the specific number to be set by resolution of the Board of
Directors. The directors shall be divided into three classes: Class I, Class
II and Class III. Such classes shall be as nearly equal in number of directors
as possible. Each director shall serve for a term ending on the day of the
third annual meeting following the annual meeting at which such director was
elected. Notwithstanding the foregoing, directors shall serve until their
successors are elected and qualified or until their earlier death, resignation
or removal from office or until there is a decrease in the number of directors.
Directors need not be shareholders or residents of the State of Washington. In
addition to the powers and authorities by these Bylaws and the Articles of
Incorporation expressly conferred upon it, the Board of Directors may exercise
all such powers of the corporation and do all such lawful acts as are not
prohibited by statute or by the
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<PAGE>
Articles of Incorporation or by these Bylaws or as directed or required to be
exercised or done by the shareholders.
(2) Change of Number: The number of directors may at any time be
-----------------
increased or decreased by the shareholders or directors at any annual or special
meeting, or at any regular meeting of the Board of Directors, provided that no
decrease shall have the effect of shortening the term of any incumbent director
except as provided in paragraphs (3) and (4) hereunder.
(3) Vacancies: All vacancies in the Board of Directors, whether
----------
caused by resignation, death or otherwise, may be filled by the affirmative vote
of a majority of the remaining directors though less than a quorum of the Board
of Directors. A director elected to fill any vacancy shall hold office for the
unexpired term of his predecessor and until his successor is elected and
qualified. Any directorship to be filled by reason of an increase in the number
of directors may be filled by the Board of Directors for a term of office
continuing only until the next election of directors by the shareholders.
(4) Removal of Directors: At a meeting of shareholders called
---------------------
expressly for that purpose, the entire Board of Directors, or any member
thereof, may be removed by a vote of the holders of a majority of shares then
entitled to vote at an election of such directors.
(5) Regular Meetings: Regular meetings of the Board of Directors or
-----------------
any committee may be held without notice at the principal place of business of
the corporation or at such other place or places, either within or without the
State of Washington, as the Board of Directors or such committee, as the case
may be, may from time to time designate. The annual meeting of the Board of
Directors shall be held without notice immediately after the adjournment of the
annual meeting of shareholders.
(6) Special Meetings:
-----------------
(a) Special meetings of the Board of Directors may be called at
any time by the President or by any director, to be held at the principal place
of business of the corporation or at such other place or places as the Board of
Directors or the person or persons calling such meeting may from time to time
designate. Notice of all special meetings of the Board of Directors shall be
given to each director by two (2) days' service of the same by telegram, by
facsimile transmission, by letter or personally. Such notice need not specify
the business to be transacted at, nor the purpose of, the meeting.
(b) Special meetings of any committee may be called at any time by
such person or persons and with such notice as shall be specified for such
committee by the Board of Directors, or in the absence of such specification, in
the
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<PAGE>
manner and with the notice required for special meetings of the Board of
Directors.
(7) Quorum: A majority of the whole Board of Directors shall be
-------
necessary at all meetings to constitute a quorum for the transaction of
business; and the votes of a majority of those directors present at any properly
called meeting at which a quorum as in this subsection defined is present shall
be sufficient to transact business.
(8) Waiver of Notice: Attendance of a director at a meeting shall
-----------------
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A waiver of notice signed by
the director or directors, whether before or after the time stated for the
meeting, shall be equivalent to the giving of notice.
(9) Registering Dissent: A director who is present at a meeting of
--------------------
the Board of Directors at which action on a corporate matter is taken shall be
presumed to have assented to such action unless his dissent shall be entered in
the minutes of the meeting, or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting, before the
adjournment thereof, or shall forward such dissent by registered mail to the
Secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
(10) Executive and Other Committees: The Board of Directors, by
-------------------------------
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an Executive Committee and one or more other standing or
special committees. The Executive Committee shall have and may exercise all the
authority of the Board of Directors, and other standing or special committees
may be invested with such powers, subject to such conditions, as the Board of
Directors shall see fit; provided that, notwithstanding the above, no committee
--------------
of the Board of Directors shall have the authority to: (l) Declare
distributions, or the issuance of shares, unless a resolution of the Board of
Directors, or the Bylaws or the Articles of Incorporation expressly so provide;
(2) approve or recommend to shareholders actions or proposals required by law to
be approved by shareholders; (3) fill vacancies on the Board of Directors or any
committee thereof; (4) amend the Bylaws; (5) fix compensation of any director
for serving on the Board of Directors or on any committee thereof; (6) approve a
plan of merger, consolidation, or exchange of shares not requiring shareholder
approval; (7) appoint other committees of the Board of Directors or the members
thereof; or (8) amend the Articles of Incorporation, except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares adopted by the Board of Directors as otherwise provided by
law, fix any of the relative rights and
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<PAGE>
preferences of such shares. All committees so appointed shall keep regular
minutes of their meetings and shall cause them to be recorded in books kept for
that purpose in the office of the corporation. The designation of any such
committee and the delegation of authority thereto shall not relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
(11) Remuneration: No stated salary shall be paid directors, as such,
-------------
for their service, but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of such Board; provided, that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of standing or special
committees may be allowed like compensation for attending committee meetings.
(12) Loans and Guarantees: The corporation may not lend money to or
---------------------
guarantee the obligation of a director of the corporation unless:
(a) The particular loan or guarantee is approved by vote of the
holders of at least a majority of the votes represented by the outstanding
voting shares of all classes, except the votes of the benefited director; or
(b) The corporation's Board of Directors determines that the loan
or guarantee benefits the corporation and either approves the specific loan or
guarantee or a general plan authorizing loans and guarantees.
(13) Action by Directors Without a Meeting: Any action required or
--------------------------------------
which may be taken at a meeting of the directors, or of a committee thereof, may
be taken without a meeting if a consent in writing, setting forth the action so
taken or to be taken, shall be signed by all of the directors, or all of the
members of the committee, as the case may be. Such consent shall have the same
effect as a unanimous vote.
(14) Action of Directors by Communications Equipment: Any action
------------------------------------------------
required or which may be taken at a meeting of directors, or of a committee
thereof, may be taken by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time.
ARTICLE V
Officers
(l) Designations: The officers of the corporation shall be a
-------------
Chairman, a Chief Executive Officer, a President, one or more Vice-Presidents
(one or more of whom may be Executive or Senior Vice-Presidents), a Secretary
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<PAGE>
and a Treasurer, and such Assistant Secretaries and Assistant Treasurers as the
Board may designate, who shall be elected for one year by the directors at their
first meeting after the annual meeting of shareholders, and who shall hold
office until their successors are elected and qualified. Any two or more offices
may be held by the same person.
(2) The Chairman: The Chairman shall have such duties as the Board of
-------------
Directors shall assign to him from time to time. He shall preside at all
meetings of the Shareholders and the Board of Directors at which he is present.
The Chairman may also be the Chief Executive Officer and/or the President of the
Corporation. During the absence or disability of the Chief Executive Officer or
the President (if the Chief Executive Officer is also absent or disabled), the
Chairman shall exercise all the powers and discharge all of the duties of the
Chief Executive Officer and/or the president, as applicable.
(3) The Chief Executive Officer: The Chief Executive Officer shall be
----------------------------
the principal executive officer of the Corporation. He shall be generally
responsible for the proper conduct of the business of the Corporation. He shall
possess the power to sign all certificates, contracts and other instrument of
the Corporation. He shall have such other duties as the Board of Directors
shall assign to him from time to time. The Chief Executive Officer may also be
the Chairman and/or the President of the Corporation. During the absence or
disability of the Chairman or the president, the Chief Executive Officer shall
exercise all of the powers and discharge all of the duties of the Chairman
and/or the President, as applicable.
(4) The President: The President shall have such duties as the Board
--------------
of Directors or the Chief Executive Officer shall assign to him from time to
time. The President may also be the Chairman and/or the Chief Executive Officer
of the Corporation. During the absence or disability of the Chairman and the
Chief Executive Officer, the President shall exercise all of the powers and
discharge all of the duties of the Chairman and the Chief Executive Officer.
(5) Vice-Presidents: During the absence or disability of the
----------------
President, the Executive Vice-Presidents, if any, the Senior Vice-Presidents, if
any, and the other Vice-Presidents, in the order designated by the Board of
Directors, shall exercise all the functions of the president. Each Vice-
President shall have such powers and discharge such duties as may be assigned to
him from time to time by the Board of Directors.
(6) Secretary and Assistant Secretaries: The Secretary shall issue
-------------------------------------
notices for all meetings, except for notices for special meetings of the
shareholders and special meetings of the directors which are called by the
requisite number of shareholders or directors, shall keep minutes of all
meetings, shall have charge of the seal and the corporate books, and shall make
such reports and perform such
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<PAGE>
other duties as are incident to his office, or are properly required of him by
the Board of Directors. The Assistant Secretary, or Assistant Secretaries in the
order designated by the Board of Directors, shall perform all of the duties of
the Secretary during the absence or disability of the Secretary, and at other
times may perform such duties as are directed by the President or the Board of
Directors.
(7) The Treasurer: The Treasurer shall have the custody of all moneys
--------------
and securities of the corporation and shall keep regular books of account. He
shall disburse the funds of the corporation in payment of the just demands
against the corporation or as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Board of
Directors from time to time as may be required of him an account of all his
transactions as Treasurer and of the financial condition of the corporation. He
shall perform such other duties incident to his office or that are properly
required of him by the Board of Directors. The Assistant Treasurer, or Assistant
Treasurers in the order designated by the Board of Directors, shall perform all
of the duties of the Treasurer in the absence or disability of the Treasurer,
and at other times may perform such other duties as are directed by the
President or the Board of Directors.
(8) Delegation: In the case of absence or inability to act of any
-----------
officer of the corporation and of any person herein authorized to act in his
place, the Board of Directors may from time to time delegate the powers or
duties of such officer to any other officer or any director or other person whom
it may select.
(9) Vacancies: Vacancies in any office arising from any cause may be
----------
filled by the Board of Directors at any regular or special meeting of the Board.
(l0) Other Officers: Directors may appoint such other officers and
---------------
agents as it shall deem necessary or expedient, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
(11) Term - Removal: The officers of the corporation shall hold
---------------
office until their successors are appointed and qualified. Any officer or agent
elected or appointed by the Board of Directors may be removed at any time, with
or without cause, by the affirmative vote of a majority of the whole Board of
Directors, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
(12) Bonds: The Board of Directors may, by resolution, require any
------
and all of the officers to give bonds to the corporation, with sufficient surety
or sureties, conditioned for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time to
time be
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<PAGE>
required by the Board of Directors.
ARTICLE VI
Distributions and Finance
(l) Distributions: The Board of Directors may authorize a
--------------
distribution of money or other property to the corporation's shareholders in the
form of a dividend or a purchase, redemption or other acquisition of the
corporation's shares; provided that no distribution may be made if, after giving
it effect, either:
(a) the corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) the corporation's total assets would be less than the sum of
its total liabilities plus the amount which would be needed to satisfy any
shareholder's preferential rights in liquidation if the corporation is in the
process of liquidation at the time of the authorization of the distribution.
The stock transfer books may be closed for the making of distributions
during such periods of not exceeding sixty days, as from time to time may be
fixed by the Board of Directors. The Board of Directors, however, without
closing the books of the corporation, may authorize distributions to only the
holders of record at the close of business, on any business day not more than
sixty days prior to the date on which distribution is made.
(2) Measure of Effect of Distribution: For purposes of determining
----------------------------------
whether a distribution may be authorized by the Board of Directors and paid by
the corporation under Article VI, paragraph (l) of these bylaws, the effect of
distribution is measured,
(a) in the case of a distribution by purchase, redemption or other
acquisition of the corporation's shares, as of the earlier of (i) the date on
which the money or other property is transferred to the shareholders or the date
on which the debt is incurred by the corporation; or (ii) the date on which the
shareholder ceases to be a shareholder with respect to the acquired shares; and
(b) in any other case, (i) as of the date on which the
distribution is authorized, if payment occurs within one hundred and twenty days
thereafter; or (ii) the date of payment if such date occurs more than one
hundred and twenty days after the date of authorization.
(3) Reserves: Before making any distribution, there may be set aside
----------
out of the sum available to the corporation for distribution such sum or sums
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as the directors from time to time in their absolute discretion deem expedient
as a reserve fund to meet contingencies, or for equalizing distributions, or for
maintaining any property of the corporation, or for any other purpose. Any sum
in any year which is not distributed in that year shall be deemed to have been
thus set aside until otherwise disposed of by the Board of Directors.
(4) Depositories: The moneys of the corporation shall be deposited in
-------------
the name of the corporation in such bank or banks or trust company or trust
companies or such investment company or investment companies or other financial
depositories as the Board of Directors shall designate, and shall be drawn out
only by check or other order for payment of money signed by such persons and in
such manner as may be determined by resolution of the Board of Directors.
ARTICLE VII
Notices
Except as may otherwise be required by law, any notice to any
shareholder or director may be delivered personally or by mail. If mailed, the
notice shall be deemed to have been delivered when deposited in the United
States mail, addressed to the addressee at his last known address in the records
of the corporation, with postage thereon prepaid.
ARTICLE VIII
Seal
The corporate seal of the corporation shall be in such form and bear
such inscription as may be adopted by resolution of the Board of Directors, or
by usage of the officers on behalf of the corporation.
ARTICLE IX
Indemnification of Officers, Directors, Employees and Agents
(1) Definitions: As used in this Article:
------------
(a) "Action" means any actual or threatened claim, suit or
proceeding, whether civil, criminal, administrative or investigative.
(b) "Another Enterprise" means a corporation (other than the
Corporation), partnership, joint venture, trust, association, committee,
employee benefit plan or other group or entity.
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(c) "Corporation" means EGGHEAD.COM, INC. and any predecessor to
it and any constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger.
(d) "Director or Officer" means each person who is serving or who
has served as a director or officer of the Corporation or, at the request of the
Corporation, as a director, officer, partner, trustee, employee or agent of
Another Enterprise.
(e) "Indemnitee" means each person who was, is or is threatened to
be made a party to or is involved (including without limitation, as a witness)
in an Action because the person is or was a Director or Officer of the
Corporation.
(f) "Loss" means loss, liability, expenses (including attorneys'
fees), judgments, fines, ERISA excise taxes or penalties and amounts to be paid
in settlement, actually and reasonably incurred or suffered by Indemnitee in
connection with an Action.
(2) Right to Indemnification: The Corporation shall indemnify and
-------------------------
hold each Indemnitee harmless against any and all Loss except for Losses arising
out of: (a) the Indemnitee's acts or omissions finally adjudged to be
intentional misconduct or a knowing violation of law, (b) the Indemnitee's
approval of certain distributions or loans which are finally adjudged to be in
violation of RCW 23A.08.450, or (c) any transaction in which it is finally
adjudged that the Indemnitee personally received a benefit in money, property or
services to which the Indemnitee was not legally entitled. Except as provided
in Section 4 of this Article, the Corporation shall not indemnify an Indemnitee
in connection with an Action (or part thereof) initiated by the Indemnitee
unless such Action (or part thereof) was authorized by the board of directors of
the Corporation. If, after the effective date of this Article, the Washington
Business Corporation Act is amended to authorize further indemnification of
directors or officers, then Directors and Officers of this Corporation shall be
indemnified to the fullest extent permitted by the Washington Business
Corporation Act, as so amended.
(3) Burden of Proof. Procedure for Payment and Notification of
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Shareholders:
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(a) The Indemnitee shall be presumed to be entitled to
indemnification under this Article upon submission of a written claim (including
a claim for expenses incurred in defending any Action in advance of its final
disposition, where the undertaking in (b) below has been tendered to the
Corporation), and thereafter the Corporation shall have the burden of proof to
overcome the presumption that the Indemnitee is so entitled.
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(b) The right to indemnification conferred in this Article shall
include the right to be paid by the Corporation all expenses (including
attorneys' fees) incurred in defending any Action in advance of its final
disposition; provided, however, that the payment of such expenses in advance of
the final disposition of an Action shall be made upon delivery to the
Corporation of an undertaking, by or on behalf of such Director or Officer, to
repay all amounts so advanced if it shall ultimately be determined that such
Director or Officer is not entitled to be indemnified under this Article or
otherwise.
(c) Any indemnification of a Director in accordance with this Article,
including any payment or reimbursement of expenses, shall be reported to the
shareholders with the notice of the next shareholders' meeting or prior thereto
in a written report containing a brief description of the proceedings involving
the directors being indemnified and the nature and extent of such
indemnification.
(4) Right of Indemnitee to Bring Suit: If a claim under this Article
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is not paid in full by the Corporation within 60 days after a written claim has
been received by the Corporation, except in the case of a claim for expenses
incurred in defending a proceeding in advance of its final disposition, in which
case the applicable period shall be 20 days, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, to the extent successful in whole or in part, the Indemnitee
shall be entitled to be paid also the expense of prosecuting such claim.
Neither the failure of the Corporation (including its board of directors, its
shareholders or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification of or reimbursement or
advancement of expenses to the claimant is proper in the circumstances, nor an
actual determination by the Corporation (including its board of directors, its
shareholders or independent legal counsel) that the Indemnitee is not entitled
to indemnification or to the reimbursement or advancement of expenses, shall be
a defense to the action or create a presumption that the Indemnitee is not so
entitled.
(5) Nonexclusivity of Rights: The right to indemnification and the
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payment of expenses incurred in defending an Action in advance of its final
disposition conferred in this Article shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Articles of Incorporation, Bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
(6) Insurance. Contracts and Funding: The Corporation may maintain
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insurance, at its expense, to protect itself and any Director, Officer, employee
or agent of the Corporation or Another Enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to
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indemnify such person against such expense, liability or loss under the
Washington Business Corporation Act. The Corporation may, without further
corporate action, enter into contracts with any Director or Officer of the
Corporation in furtherance of the provisions of this Article and may create a
trust fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this Article.
(7) Indemnification of Employees and Agents of the Corporation: The
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Corporation may, by action of its board of directors from time to time, provide
indemnification and pay expenses in advance of the final disposition of an
Action to employees and agents of the Corporation with the same scope and effect
as the provisions of this Article with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation or pursuant
to rights granted pursuant to, or provided by, the Washington Business
Corporation Act or otherwise.
(8) Contract Right: Rights of indemnification under this Article
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shall continue as to an Indemnitee who has ceased to be a Director or Officer
and shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred in this Article shall be
a contract right upon which each Director or Officer shall be presumed to have
relied in determining to serve or to continue to serve as such. Any amendment
to or repeal of this Article shall not adversely affect any right or protection
of a Director or Officer of the Corporation for or with respect to any acts or
omissions of such Director or Officer occurring prior to such amendment or
repeal.
(9) Severability: If any provision of this Article or any application
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thereof shall be invalid, unenforceable or contrary to applicable law, the
remainder of this Article, or the application of such provisions to persons or
circumstances other than those as to which it is held invalid, unenforceable or
contrary to applicable law, shall not be affected thereby and shall continue in
full force and effect.
ARTICLE X
Books and Records
The corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders and Board
of Directors, and shall keep at its registered office or principal place of
business, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of the shares held by each. Any books, records, and minutes may be in
written form or any other form capable of being converted into written form
within a reasonable
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time.
ARTICLE XI
Amendments
(l) By Shareholders: These Bylaws may be altered, amended or repealed
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by the affirmative vote of a majority of the voting stock issued and outstanding
at any regular or special meeting of the shareholders.
(2) By Directors: The Board of Directors shall have power to make,
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alter, amend and repeal the Bylaws of this corporation. However, any such
Bylaws, or any alteration, amendment or repeal of the Bylaws, may be changed or
repealed by the holders of a majority of the stock entitled to vote at any
shareholders' meeting.
(3) Emergency Bylaws: The Board of Directors may adopt emergency
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Bylaws, subject to repeal or change by action of the shareholders, which shall
be operative during any emergency in the conduct of the business of the
corporation resulting from an attack on the United States or any nuclear or
atomic disaster.
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