EXHIBIT 10.04



Mark C. Shepherd
28 Chestnut Place
Danville, CA 94506

Dear Mark:

March 15, 2001

On behalf of Egghead.com I am pleased to offer you the
position of Chief Financial Officer and Sr. Vice President, reporting to me in
my role as President & CEO. You will start working with us during the latter
part of March on some date mutually agreed upon between the two of us.

Your annual base salary will be $250,000 paid in 26
increments over the course of the year. After we reach profitability, you will
participate in Egghead's Sr. Management Bonus Program, which can add substantial
income in the form of variable cash compensation.

In the event that you are involuntarily terminated, except
for a Termination for Cause as defined below, you will be paid 6 months of base
salary in a lump sum within 30 days of your termination date. Further, if you
voluntarily terminate within six months following the close of a Change of
Control transaction as defined below, because your duties, responsibilities, or
compensation is materially diminished, or the location of your office is changed
by more than 50 miles, you will be paid 6 months base salary in a lump sum
within 30 days of your termination date.

You will receive an option to purchase 500,000 shares of
Egghead common stock, subject to board approval. 375,000 shares of this stock
will vest monthly over a four-year period after a six-month "cliff". Your stock
option price for this option will be based upon the closing price of Egghead.com
stock the workday prior to the commencement of your employment with us. The
remaining 125,000 shares of stock will be in the form of a Time Accelerated Sock
Option Program (TASOP). This is a new program for Egghead and will be introduced
early in the second quarter of 2001.

Your strike price for this second option will be based upon
the closing price of Egghead.com stock the day before the program is announced.
This option either vests ratably over a 36 month period after a six-month cliff,
or as Egghead reaches profitability, whichever occurs first. On the day we
publicly announce that the company made a profit during the previous quarter,
50% of the shares vest. On the day we publicly announce that Egghead earned 2%
in net income during the previous quarter, an additional 25% of the shares vest.
Finally, on the day we publicly announce that the company earned 3% in net
income during the previous quarter the remaining 25% of the shares vest. Net
income excludes special charges that are related to acquisitions,
amortization/write-off of goodwill and acquired R&D, special compensation
charges, etc.

Egghead provides employees a wide array of benefits including
a 401(K) plan through Fidelity Investments and an Employee Stock Purchase Plan.
Most of these benefits, including health care benefits will begin on the first
day of your employment. A brochure describing all our benefits plans is
enclosed.

You will be required to sign a standard Employee Inventions
and Assignment Agreement and an Acknowledgement and Receipt of Egghead.com's
Employee Handbook. Your employment will at all times be "at will", which means
that you or Egghead can terminate your employment at any time with or without
cause. There will be no express or implied agreements to the contrary.

Please sign and return a copy of this letter to indicate your
acceptance of our offer. This offer is contingent on the completion of a
background check. If you have any questions, please feel free to call me or any
other member of the executive staff. This offer expires if not signed and
returned by Friday, March 16, 2001. You may fax it to me on (650) 473 6990.

Sincerely,

/s/ Jeff Sheahan

Jeff Sheahan

President & CEO

I accept this job offer as described above:

Signature: /s/ Mark C. ShepherdDate:3/15/01

Definition of Termination for Cause: The company's
termination of an executive's employment for (I) willful failure or refusal
without proper cause, to substantially perform his duties as an employee of the
company; (ii) the executive's conviction for any criminal act, except that a
misdemeanor conviction shall not constitute "Termination for Cause" unless it
shall have involved misappropriate use of funds or property, fraud, or other
similar activity which bears directly upon the executive's ability to perform
faithfully his duties as an employee of the Company. The executive shall have an
opportunity to appeal such termination to the board of directors of the
company.

Definition of Change of Control Transaction: (i) a merger or
consolidation in which the voting shares of the Corporation immediately before
the merger or consolidation do not represent, or are not converted into shares
representing, a majority of the voting poser of the surviving corporation; (ii)
a transfer of shares representing more than 50% of the voting power of the
Corporation to a single entity or person or group of related entities or
persons; or (iii) a sale of substantially all of the assets of the
Corporation.

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