UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 14, 1997
----------------------------------
Date of Report
(Date of earliest event reported)
EGGHEAD, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Washington 0-16930 91-1296187
--------------------------- ------------------- --------------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
22705 E. Mission Avenue
Liberty Lake, Washington 99019
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(Address of principal executive offices, including zip code)
(509) 922-7031
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(Registrant's telephone number, including area code)
Exhibit Index appears on page 13
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF SURPLUS SOFTWARE, INC.
On August 14, 1997, Egghead, Inc. ("Egghead") acquired all the outstanding
stock of Surplus Software, Inc., an Oregon corporation ("Surplus Direct"),
pursuant to an Agreement and Plan of Merger, dated as of April 30, 1997 and
amended as of May 23, 1997 (the "Merger Agreement"), by and among Egghead,
Surplus Direct, North Face Merger Sub, Inc., an Oregon corporation and a wholly
owned subsidiary of Egghead ("Merger Sub"), and the principal shareholders of
Surplus Direct (the "Principal Shareholders"). In accordance with the terms of
the Merger Agreement, Surplus Direct merged into Merger Sub, with Merger Sub as
the surviving corporation (the "Merger").
At the time of effectiveness of the Merger on August 14, 1997 (the
"Effective Time"), Egghead issued 5,310,887 shares of common stock, par value
$.01 per share (the "Egghead Common Shares"), in exchange for all the
outstanding shares of common stock, no par value, of Surplus Direct (the
"Surplus Direct Common Stock"), and all outstanding shares of preferred stock,
no par value, of Surplus Direct (the "Surplus Direct Preferred Stock" and,
together with the Surplus Direct Common Stock, the "Surplus Direct Stock").
Each issued and outstanding share of Surplus Direct Common Stock converted into
the right to receive approximately 1.55169 Egghead Common Shares, and each
issued and outstanding share of Surplus Direct Preferred Stock converted into
the right to receive approximately 1.97261 Egghead Common Shares. The
allocation of the Egghead Common Shares among the Surplus Direct Common Stock
and the Surplus Direct Preferred Stock was based on the average closing price of
Egghead Common Shares during the 30-day period ending three days prior to the
closing of the Merger (the "Closing Average"). The shareholders of Surplus
Direct (the "Surplus Direct Shareholders") received cash in lieu of any
fractional Egghead Common Shares. In addition, each option to purchase shares
of Surplus Direct Common Stock that was outstanding at the Effective Time was
assumed by Egghead and will be treated as an option to purchase a number of
Egghead Common Shares equal to the product of the conversion ratio for the
Surplus Direct Common Stock (1.55169) and the number of shares of Surplus Direct
Common Stock subject to such option. Immediately following the Effective Time,
the Surplus Direct Shareholders owned approximately 23.17% of the outstanding
Egghead Common Shares (including the Holdback Shares described below, excluding
Egghead Common Shares owned by Surplus Direct Shareholders prior to the Merger
and assuming no exercise of outstanding options to purchase Surplus Direct
Stock) (the "Share Consideration").
Pursuant to the Merger Agreement, the Surplus Direct Shareholders have
agreed to jointly and severally indemnify and hold Egghead harmless for any
losses in excess of $300,000 that may be suffered by Egghead arising out of or
in connection with any inaccuracies in the representations and warranties made
by Surplus Direct in the Merger Agreement and related documents or any failure
by Surplus Direct or any Principal Shareholder to perform its obligations under
the Merger Agreement and related agreements.
2
Shares representing 10% of the Share Consideration (the "Holdback Shares") have
been retained by Egghead to secure such indemnification obligations. The
Holdback Shares will be Egghead's sole recourse in the event of claims for
indemnification pursuant to the Merger Agreement. Any claims by Egghead against
the Holdback Shares will be accounted for as a reduction of the Share
Consideration.
Egghead's shareholders approved the issuance of Egghead Common Shares in
connection with the Merger at a special meeting held on August 14, 1997. The
Surplus Direct Shareholders also approved the Merger Agreement at a special
meeting held on August 14, 1997.
Pursuant to the Merger Agreement, Gregory J. Boudreau, Chief Executive
Officer and a director of Surplus Direct, and Jonathan W. Brodeur, President and
a director of Surplus Direct, have been appointed to Egghead's Board of
Directors. Certain officers and other employees of Surplus Direct entered into
amendments to their employment agreements with Surplus Direct that became
effective at the Effective Time, providing for adjusted base salaries, annual
bonuses and approximately $1 million in signing bonuses.
REGISTRATION RIGHTS AGREEMENT
Per the terms of the Merger Agreement, on August 14, 1997, Egghead executed
a Registration Rights Agreement (the "Registration Rights Agreement") that
requires Egghead to include in any registration of its securities the Egghead
Common Shares issued to Gregory J. Boudreau, Jonathan W. Brodeur and
Stephen M. Wood (the "Significant Shareholders") in connection with the Merger.
The Registration Rights Agreement terminates on the earlier of three years
following the Effective Time or such time as none of the Significant
Shareholders owns any of the Egghead Common Shares issued to such Significant
Shareholder in connection with the Merger.
The Merger Agreement and the Registration Rights Agreement (together, the
"Agreements") and a press release issued by Egghead to announce the consummation
of the Merger are filed as exhibits to this report and are incorporated herein
by reference. The descriptions of the Agreements herein do not purport to be
complete and are qualified in their entirety by the provisions of the
Agreements.
The Egghead Common Shares are quoted on the Nasdaq National Market under
the trading symbol "EGGS."
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
Egghead's financial statements are hereby incorporated by reference to
pages F-2 through F-17 of Egghead's Registration Statement on Form S-4 (File
No. 333-31251) filed with the Securities and Exchange Commission (the
"Commission") on July 14, 1997 and to
3
Egghead's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28,
1997, as filed with the Commission on August 8, 1997.
Surplus Direct's financial statements are hereby incorporated by reference
to pages F-18 through F-32 of Egghead's Registration Statement on Form S-4 (File
No. 333-31251) filed with the Commission on July 14, 1997.
(b) Pro Forma Financial Information
The following Pro Forma Condensed Balance Sheet and Statements of
Operations give effect to the Merger according to the purchase method of
accounting. These Pro Forma Condensed Financial Statements have been prepared
from the historical consolidated financial statements of Egghead and the
historical financial statements of Surplus Direct incorporated by reference
herein and should be read in conjunction therewith. The pro forma condensed
financial information is presented for illustrative purposes only and is not
necessarily indicative of the financial position or results of operations that
would have actually been reported had the Merger occurred at the beginning of
the period presented, nor is it necessarily indicative of future financial
positions or results of operations, and does not incorporate any benefits from
cost savings or synergies of operations of the combined company.
The Pro Forma Condensed Balance Sheet gives effect to the merger as if it
had occurred on June 28, 1997, combining the balance sheets of Egghead as of
June 28, 1997 and of Surplus Direct as of May 31, 1997. The Pro Forma Condensed
Statements of Operations for the fiscal year ended March 29, 1997 give effect to
the Merger as if it had occurred on March 31, 1996, the beginning of Egghead's
1997 fiscal year, combining the results of Egghead for the fiscal year ended
March 29, 1997 with the results of Surplus Direct for the fiscal year ended
May 31, 1997. The Pro Forma Condensed Statements of Operations for the thirteen
weeks ended June 28, 1997 give effect to the Merger as if it had occurred on
March 30, 1997, the beginning of the first fiscal quarter in Egghead's 1998
fiscal year, combining the results of Egghead for the thirteen weeks ended June
28, 1997 with the results of Surplus Direct for its fourth fiscal quarter ended
May 31, 1997.
Egghead and Surplus Direct estimate that they will incur direct transaction
costs of approximately $1.4 million associated with the Merger. It is expected
that approximately $0.9 million of direct transaction costs will be capitalized
as part of the purchase price and $0.5 million of stock issuance costs will be
charged to additional paid-in capital. In addition, it is expected that Egghead
will incur additional charges to operations to reflect costs associated with
integrating the two companies. However, these integration costs cannot
currently be reasonably estimated. There can be no assurance that Egghead will
not incur additional charges to reflect costs associated with the Merger or that
management will be successful in its efforts to integrate the operations of the
two companies.
4
EGGHEAD, INC.
PRO FORMA
CONDENSED BALANCE SHEET
JUNE 28, 1997
------------------------------------------------------------------
HISTORICAL PRO FORMA(a)
--------------------- -----------------------------------------
NET JOINT
SURPLUS VENTURE OTHER
EGGHEAD DIRECT ADJUSTMENTS(d) ADJUSTMENTS COMBINED
-------- ------- -------------- ----------- ---------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents and
short-term investments . . . . . . $ 74,176 $ 539 $861 $(8,933)(j) $ 66,643
Accounts receivable, net . . . . . . 18,503 1,511 (3,959) -- 16,055
Merchandise inventories, net . . . . 42,894 6,837 3,061 -- 52,792
Other current assets . . . . . . . . 3,703 2,138 -- -- 5,841
Property held for sale . . . . . . . 7,742 -- -- -- 7,742
-------- ------- ---- ------- ---------
Total current assets . . . . . . 147,018 11,025 (37) (8,933) $ 149,073
Property and equipment, net. . . . . . 11,356 1,898 463 -- 13,717
Other assets, net. . . . . . . . . . . 692 230 (257) -- 665
Goodwill . . . . . . . . . . . . . . . -- -- -- 31,739 31,739
-------- ------- ---- ------- ---------
$159,066 $13,153 $169 $22,806 $195,194
-------- ------- ---- ------- ---------
-------- ------- ---- ------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . $ 36,479 $ 1,335 $ -- $ -- $ 37,814
Accrued liabilities. . . . . . . . . 10,738 2,097 169 1,400(c) 14,404
Bridge Loan. . . . . . . . . . . . . -- 2,000 -- (2,000) --
Bank line of credit. . . . . . . . . -- 3,495 -- (3,495)(e) --
Subordinated debt. . . . . . . . . . . -- 2,000 -- (2,000)(e) --
Current portion of long-term
debt . . . . . . . . . . . . . . . -- 438 -- (438)(e) --
Other current liabilities. . . . . . 15,172 -- -- -- 15,172
-------- ------- ---- ------- ---------
Total current liabilities. . . . . . 62,389 11,365 169 (6,533) 67,390
Other obligations. . . . . . . . . . . 288 46 -- -- 334
Shareholders' equity . . . . . . . . . 96,389 1,742 -- 29,339 127,470
-------- ------- ---- ------- ---------
Total liabilities and
shareholders' equity . . . . . . . . $159,066 $13,153 $169 $22,806 $195,194
-------- ------- ---- ------- ---------
-------- ------- ---- ------- ---------
See accompanying notes to pro forma condensed financial statements.
5
EGGHEAD, INC.
PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 29, 1997
------------------------------------------------------------------
HISTORICAL PRO FORMA(b)
--------------------- -----------------------------------------
NET JOINT
SURPLUS VENTURE OTHER
EGGHEAD DIRECT ADJUSTMENTS(d) ADJUSTMENTS COMBINED
-------- ------- -------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net sales. . . . . . . . . . . . . . . $360,715 $58,697 $(4,843) $-- $414,569
Cost of sales, including certain
buying, occupancy and
distribution costs . . . . . . . . . 326,044 48,655 (5,723) -- 368,976
--------- -------- ------- -------- ---------
Gross margin . . . . . . . . . . . . . 34,671 10,042 880 -- 45,593
Selling, general and administrative
expenses . . . . . . . . . . . . . . 60,632 12,011 1,008 -- 73,651
Depreciation and amortization
expenses . . . . . . . . . . . . . . 6,043 288 54 1,587 (f) 7,972
Restructuring and impairment
charge . . . . . . . . . . . . . . . 15,597 -- -- -- 15,597
--------- -------- ------- -------- ---------
Operating loss . . . . . . . . . . . . (47,601) (2,257) (182) (1,587) (51,627)
Other income (expense) . . . . . . . . 3,428 (291) 182 -- 3,319
--------- -------- ------- -------- ---------
Loss from continuing operations
before income taxes. . . . . . . . . (44,173) (2,548) -- (1,587) (48,308)
Income (tax) benefit . . . . . . . . . (4,788) 218 -- -- (4,570)
--------- -------- ------- -------- ---------
Loss from continuing operations
before effects of discontinued
operations and cumulative effect
of change in accounting
principle(h) . . . . . . . . . . . . $(48,961) $(2,330) $ -- $(1,587) $(52,878)
--------- -------- ------- -------- ---------
Loss from continuing operations
per share. . . . . . . . . . . . . . $ (2.78) $ (0.86) $ (2.31)
--------- -------- ---------
Shares used in per share
calculations . . . . . . . . . . . . 17,591 2,718 22,892 (i)
--------- -------- ---------
See accompanying notes to pro forma condensed financial statements.
6
EGGHEAD, INC.
PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
THIRTEEN WEEKS ENDED JUNE 29, 1997
------------------------------------------------------------------
HISTORICAL PRO FORMA(b)
--------------------- -----------------------------------------
NET JOINT
SURPLUS VENTURE OTHER
EGGHEAD DIRECT ADJUSTMENTS(d) ADJUSTMENTS COMBINED
-------- ------- -------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net sales. . . . . . . . . . . . . . . $56,160 $18,577 $(1,558) $ -- $73,179
Cost of sales, including certain
buying, occupancy and
distribution costs . . . . . . . . . 50,385 15,929 (1,937) -- 64,377
--------- -------- -------- ------ --------
Gross margin . . . . . . . . . . . . . 5,775 2,648 379 -- 8,802
Selling, general and administrative
expenses . . . . . . . . . . . . . . 9,481 3,580 476 -- 13,537
Depreciation and amortization
expenses . . . . . . . . . . . . . . 958 96 53 397 (f) 1,504
Restructuring and impairment
charge . . . . . . . . . . . . . . . -- -- -- -- --
-------- -------- -------- ------ --------
Operating loss . . . . . . . . . . . . (4,664) (1,028) (150) (397) (6,239)
Other income (expense) . . . . . . . . 1,006 (133) 150 -- 1,023
-------- -------- -------- ------ --------
Loss from continuing operations
before income taxes. . . . . . . . . (3,658) (1,161) -- (397) (5,216)
Income (tax) benefit . . . . . . . . . -- -- -- -- --
-------- -------- -------- ------ --------
Loss from continuing operations
before effects of discontinued
operations and cumulative effect
of change in accounting
principle(h) . . . . . . . . . . . . $(3,658) $(1,161) $ -- $(397) $(5,216)
-------- -------- -------- ------ --------
Loss from continuing operations
per share. . . . . . . . . . . . . . $ (.21) $ (0.43) $ (.23)
-------- -------- --------
Shares used in per share
calculations . . . . . . . . . . . . 17,581 2,718 22,902 (i)
-------- -------- ---------
See accompanying notes to pro forma condensed financial statements.
7
EGGHEAD-SURPLUS DIRECT
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(a) The pro forma condensed balance sheet gives effect to the Merger as if it
had occurred on June 28, 1997, combining the balance sheets of Egghead as
of June 28, 1997 and Surplus Direct as of May 31, 1997.
(b) The pro forma condensed statement of operations for the fiscal year ended
March 29, 1997 gives effect to the Merger as if it had occurred on March 31,
1996, the beginning of Egghead's 1997 fiscal year, combining the results of
continuing operations of Egghead for the fiscal year ended March 29, 1997
with the results of Surplus Direct for the fiscal year ended May 31, 1997.
Egghead's results of continuing operations include a one-time restructuring
and impairment charge of $24.0 million related to the closure of 77 retail
stores, head count reductions, closure of a distribution center and the
impairment of certain real estate assets that Egghead plans to sell.
Egghead also recorded a valuation allowance offsetting its previously
recorded deferred assets. The net noncash charge for the year of
$10.7 million is a component of income expense.
The pro forma condensed statement of operations for the thirteen weeks
ended June 28, 1997 gives effect to the Merger as if it had occurred on
March 30, 1997, the beginning of the first fiscal quarter in Egghead's 1998
fiscal year, combining the results of Egghead for the thirteen weeks ended
June 28, 1997 with the results of Surplus Direct for its fourth fiscal
quarter ended May 31, 1997.
(c) Total direct transaction costs to be incurred by Egghead and Surplus Direct
in connection with the Merger are estimated to be approximately $1.4
million and are shown as a pro forma adjustment to increase accrued
liabilities. These costs relate primarily to legal, accounting, investment
advisory and printing services and filing fees. It is expected that
approximately $0.9 million of direct transaction costs will be capitalized
as part of the purchase price and $0.5 million of stock issuance costs will
be charged to additional paid-in capital. It is possible that Egghead will
incur additional charges to operations to reflect costs associated with
integrating the two companies. However, these integration costs cannot
currently be reasonably estimated.
(d) Had the Merger occurred on June 28, 1997 (for balance sheet purposes),
March 31, 1996 (for statement of operations purposes) or on March 30, 1997
(for interim statement of operations purposes), a joint venture of Egghead
and Surplus Direct (Egghead Computer Surplus) would have been consolidated.
The pro forma adjustments, shown net of eliminating entities, reflect the
assets, liabilities, revenues and expenses of the joint venture as of June
28, 1997 and for the period from November 1, 1996 through March 29, 1997
and the interim period from March 30, 1997 through June 28, 1997.
8
(e) Pursuant to the terms of the Merger Agreement, Egghead paid approximately
$5.9 million of Surplus Direct's borrowings as of May 31, 1997. For
purposes of pro forma adjustments, this is shown as a reduction in cash and
borrowings.
(f) The excess of the purchase price over the fair value of net assets
purchased (goodwill) would have been $31.7 million had the Merger occurred
on March 29, 1997. Egghead intends to amortize the goodwill over 20 years,
resulting in additional annual amortization expense of approximately $1.6
million annually or $0.4 million for the thirteen weeks ended June 28,
1997. Pursuant to the terms of the Merger Agreement, Egghead will issue up
to 5,600,000 Egghead Common Shares for all outstanding shares of Surplus
Direct Preferred Stock, Surplus Direct Common Stock and Surplus Direct
Options. For purposes of computing the purchase price and pro forma
adjustments, the Egghead Common Share price was assumed to be $5.875, the
closing price on August 14, 1997, the date that Egghead acquired Surplus
Direct. The goodwill was calculated as follows:
Maximum number of Egghead Common Shares to be issued . . . . . . . . . . . . . . 5,600,000
Assumed Closing Average. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.875
-------------
Assumed purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,900,000
Net assets of Surplus Direct at May 31, 1997(1). . . . . . . . . . . . . . . . . 2,061,000
-------------
Excess of purchase price over fair value of net assets acquired. . . . . . . . . 30,839,000
Add transaction costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
-------------
Total goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,739,000
-------------
-------------
- --------------------
(1) For purposes of calculating pro forma adjustments, the book value of
net assets acquired was assumed to approximate fair value.
(g) Pursuant to the Merger Agreement and related employment agreements,
approximately $1 million in signing bonuses were paid by Egghead to certain
Surplus Direct employees and will be recorded as compensation expense. For
purposes of calculating pro forma adjustments, the signing bonuses have
been shown as a reduction in cash and an increase in retained deficit.
(h) In connection with the signing of the Merger Agreement, Egghead and Surplus
Direct entered into a Bridge Loan Agreement, dated April 30, 1997, pursuant
to which Egghead loaned Surplus Direct $2.0 million to finance its working
capital needs pending completion of the Merger. For purposes of
calculating the pro forma adjustments, the Bridge Loan was eliminated and
shown as a reduction in cash.
9
(i) The following table reconciles the number of shares used in the pro forma
per share calculations to the number set forth in Egghead's historical
statements of operations:
TWELVE MONTHS ENDED THIRTEEN WEEKS ENDED
JUNE 28, 1997 JUNE 28, 1997
------------------- --------------------
(IN THOUSANDS, EXCEPT EXCHANGE RATIO)
Weighted average common and common
equivalent shares used in per share calculation:
Historical-Egghead. . . . . . . . . . . . . . . . . 17,581 17,591
Historical-Surplus Direct Preferred Stock . . . . . 553 553
Exchange ratio(1) . . . . . . . . . . . . . . . . . 1.97 1.97
------ ------
Pro forma number of Egghead Common
Shares . . . . . . . . . . . . . . . . . . . . . . . 1,090 1,090
Historical-Surplus Direct Common Stock . . . . . . . 2,720 2,720
Exchange ratio(1). . . . . . . . . . . . . . . . . . 1.55 1.55
------ ------
Pro forma number of Egghead Common
Shares . . . . . . . . . . . . . . . . . . . . . . 4,221 4,221
Pro forma combined shares. . . . . . . . . . . . . . 22,892 22,902
------ ------
------ ------
- ---------------------
(1) Under the terms of the Merger Agreement, the total number of Egghead
Common Shares to be issued was fixed; however, the allocation of the
Egghead Common Shares among the Surplus Direct Common Stock, the
Surplus Direct Preferred Stock and the Surplus Direct Options was
determined based on the Closing Average of the Egghead Common Shares.
The Closing Average of Egghead Common Shares was determined to be
$5.41667, and each outstanding share of Surplus Direct Common Stock
and Surplus Direct Preferred Stock were converted into 1.55169 and
1.97261 Egghead Common Shares, respectively. The terms of each
Surplus Direct Option have been adjusted to reflect the conversion
ratio for the Surplus Direct Common Stock. Accordingly, the Surplus
direct Common Stock and the Surplus Direct Preferred Stock were
converted into approximately 4,220,847 and 1,090,048 Egghead Common
Shares, respectively. The remaining 289,104 Egghead Common Shares
have been reserved for future conversion under the Surplus Direct
Options.
For purposes of computing the pro forma combined weighted average
common and common equivalent shares, the dilutive impact of the
Surplus Direct Options was not considered, as Surplus Direct recorded
a loss for the 12-month period ended May 31, 1997, and the impact of
those options would have been antidilutive.
(j) A reconciliation of the net pro forma adjustment to cash follows:
Payment of Surplus Direct borrowings (see Note e) . . . . . $5,933
Payment of signing bonuses (see Note g) . . . . . . . . . . 1,000
Elimination of Bridge Loan (see Note h) . . . . . . . . . . 2,000
-------
Net adjustment . . . . . . . . . . . . . . . . . . . . . $8,933
-------
-------
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(c) Exhibits
Exhibit Number Description
-------------- -----------
2.1* Agreement and Plan of Merger among Egghead, Inc.,
Surplus Software, Inc., North Face Merger Sub, Inc. and
certain Shareholders of Surplus Direct, dated as of
April 30, 1997 and amended as of May 23, 1997.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
99.1 Registration Rights Agreement among Egghead, Inc.,
Gregory J. Boudreau, Jonathan W. Brodeur and Stephen M.
Wood, dated as of August 14, 1997.
99.2 Press Release issued August 14, 1997.
- ------------------
* Incorporated by reference to Egghead's Registration Statement on Form S-4
(File No. 333-31251) filed with the Commission on July 14, 1997.
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EGGHEAD, INC.
Dated: August 27, 1997 By /s/ George P. Orban
------------------------------------
George P. Orban, Chairman of the
Board and Chief Executive Officer
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EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1* Agreement and Plan of Merger among Egghead, Inc.,
Surplus Software, Inc., North Face Merger Sub,
Inc. and certain Shareholders of Surplus Direct,
dated as of April 30, 1997 and amended as of May
23, 1997.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
99.1 Registration Rights Agreement among Egghead, Inc.,
Gregory J. Boudreau, Jonathan W. Brodeur and
Stephen M. Wood dated as of August 14, 1997.
99.2 Press Release issued August 14, 1997.
- ---------------------
* Incorporated by reference to Egghead's Registration Statement on Form S-4
(File No. 333-31251) filed with the Commission on July 14, 1997.
13