Did Egghead Renege On Land Deal? Company, Momentum Agree That Contract Wasn’t Breached

Even though Egghead Software has fallen below the employment threshold that earned it a $225,000 gift from Spokane’s Momentum organization, none of the parties say Egghead has breached the good faith of that agreement.

Since Egghead sold one of its major divisions last month, the 550 employees it once had here are split between two companies.

“Egghead’s position is that there are still in excess of 500 people employed at the site, so it’s not an issue,” said Nancy Goodspeed, speaking for Egghead.

“We entered into this transaction in good faith and I think they followed through in good faith,” said Gordon Budke, president of Momentum ‘96. “This is just one of those things that happens in the business world.”

Last year, Egghead relocated its call center operations to Spokane, and was so pleased with what it found that it moved its corporate headquarters here from the Puget Sound area as well.

The key to Egghead’s decision to come here was an agreement by Momentum that it would buy a $225,000 parking lot near the Liberty Lake facility that Egghead acquired to house its operations here.

The agreement was that Momentum would give the land to Egghead if Egghead would employ at least 400 people locally. If Egghead exercised its option to take the land, and then fell short of the 400 jobs, it would repay Momentum $1,000 for each job it was short.

Egghead announced it would relocate its corporate headquarters late last year, bringing its local employment to 550. It exercised its option on the land in December. Then in March, it announced it was selling its Corporate, Government and Education Division to Software Spectrum. The sale cuts Egghead’s local employment to about 300.

Software Spectrum will lease space at the Egghead site for three years and operate its own call center there, although the company is not yet sure how many of the displaced 250 Egghead employees it will keep.

Goodspeed, an employee of The Rockey Co. public relations firm that represents Egghead, said Egghead wanted to see as many of those jobs remain in Spokane as possible.

“There were other companies that approached Egghead about buying that division that would have moved those jobs elsewhere,” Goodspeed said. “Egghead determined at the start it wouldn’t sell to someone who didn’t keep the jobs here. Egghead knew as a good corporate citizen it had to keep the jobs here. It had to act in good faith.”

Bob Cooper, president of the Spokane Area Economic Development Council, said Egghead agreed in the parking lot deal to create more than 400 jobs and they did.

“So it’s hindsight to say, ‘Yes, but for how long,”’ Cooper said.

Cooper and Budke both said Egghead told them of the sale well before it was announced in an effort to explain the company’s action.

“This puts Egghead in a stronger financial position, and gives it better growth potential to have expanded operations in Spokane,” Cooper said.

“My take on this is that we end up with two companies with great growth potential rather than one company that was having a real struggle as they were growing,” Budke said.

“It’s exciting news, from an identity standpoint, that a Dallas-based company now has operations here,” Cooper said. “The challenge now is to work with Software Spectrum so they understand why Egghead moved here in the first place, so that in three years, we don’t lose (Software Spectrum.)”

, DataTimes