<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
PEAPOD, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-4118175
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
9933 WOODS DRIVE 60077
SKOKIE, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
PEAPOD, INC.
1997 LONG-TERM INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
JOHN C. WALDEN
EXECUTIVE VICE PRESIDENT,
PEAPOD, INC.
9933 WOODS DRIVE
SKOKIE, ILLINOIS 60077
(847) 583-9400
(NAME, ADDRESS, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE PRICE FEE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..... 4,300,000 $8.50(2) $365,550,000(2) $11,076.00
shares(1)
- ------------------------------------------------------------------------------------
Preferred Stock Purchase Rights.. 4,300,000
rights (3) (3) (3)
- ------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) This registration statement also covers an additional and indeterminate
number of shares as may become issuable because of the provisions of the
Peapod, Inc. 1997 Long-Term Incentive Plan (the "Plan") relating to
adjustments for changes resulting from stock dividends, stock splits and
similar changes.
(2) Estimated solely for the purpose of calculating the registration fee and,
pursuant to Rule 457(h) under the Securities Act of 1933, based upon the
last sale price of the Common Stock reported on the Nasdaq National Market
on September 4, 1997.
(3) The Preferred Stock Purchase Rights initially are attached to and trade
with the shares of Common Stock being registered hereby. Value
attributable to such Rights, if any, is reflected in the market price of
the Common Stock.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") by Peapod, Inc. (the "Company") are incorporated
herein by reference:
(a) The Company's Prospectus, dated June 10, 1997, included in the
Company's Registration Statement on Form S-1 (No. 333-24341);
(b) The Company's Quarterly Report on Form 10-Q for the three months
ended June 30, 1997; and
(c) The description of the Common Stock, par value $.01 per share, of the
Company and the description of the related Preferred Stock Purchase Rights,
which are contained in the Company's Registration Statement on Form 8-A,
filed May 12, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and all documents filed by the Plan pursuant to Section
15(d) of the Exchange Act, after the date of this Registration Statement and
prior to the filing of a post-effective amendment to this Registration
Statement which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the respective dates of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 ("Section 145") of the Delaware General
Corporation Law (the "Delaware GCL") which provides for indemnification of
directors and officers in certain circumstances.
The Delaware GCL, the Company's Restated Certificate of Incorporation, as
amended (the "Charter"), and Restated By-Laws (the "By-Laws") provide for
indemnification of the Company's directors and officers for liabilities and
expenses that they may incur in such capacities. In general, directors and
offices are indemnified with respect to actions taken in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
the Company, and with respect to any criminal action or proceeding, actions
that the indemnitee had no reasonable cause to believe were unlawful.
Reference is made to the Company's Charter and By-Laws filed as Exhibits 4.1
and 4.3 hereto, respectively.
In accordance with Section 102(b)(7) of the Delaware GCL, the Company's
Charter provides that directors shall not be personally liable for monetary
damages for breaches of their fiduciary duty as directors except for (i)
breaches of their duty of loyalty to the Company or its stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, (iii) certain transactions under Section 174 of the
Delaware GCL (unlawful payment of dividends) or (iv) transactions from which a
director derives an improper personal benefit.
The Company has indemnity agreements with each of its directors and certain
officers, including its executive officers, that require the Company to
advance expenses to each such director and officer in the event that a claim
is brought against such director or officer with respect to an action for
which the Company is obligated to provide indemnification under the Company's
Charter and By-Laws.
The Underwriting Agreement relating to the Company's initial public offering
of Common Stock pursuant to its Registration Statement on Form S-1 (No. 333-
24341) provides that the Underwriters are obligated, under certain
circumstances, to indemnify directors, officers and controlling persons of the
Company against certain liabilities, including liabilities under the
Securities Act.
The Company maintains directors' and officers' liability insurance coverage.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.1 Restated Certificate of Incorporation of the Company (incorporated
by reference to Exhibit 3.1 of the Company's Registration Statement
on Form S-1 (No. 333-24341) (the "IPO Registration Statement")).
4.2 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company, dated as of May 30, 1997.
4.3 Restated By-laws of the Company (incorporated by reference to
Exhibit 3.2 of the IPO Registration Statement).
4.4 Rights Agreement, dated as of June 9, 1997, between the Company and
First Chicago Trust Company of New York, as Rights Agent
(incorporated by reference to Exhibit 4.1 of the IPO Registration
Statement).
5 Opinion of Sidley & Austin.
10 Peapod, Inc. Employee Stock Purchase Plan.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Sidley & Austin (contained in Exhibit 5 hereto).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remained unsold at the
termination of the offering.
II-2
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
THE REGISTRANT. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS ON THIS
11TH DAY OF SEPTEMBER, 1997.
Peapod, Inc.
/s/ John C. Walden
By: _________________________________
John C. Walden
Executive Vice President, Finance
and Business Development
(Authorized Officer and Principal
Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
IMMEDIATELY BELOW CONSTITUTES AND APPOINTS ANDREW B. PARKINSON AND JOHN C.
WALDEN, AND EACH OR ANY OF THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND
AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS
NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL
AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION
STATEMENT, AND TO FILE THE SAME WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS
IN CONNECTION THEREWITH WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING
UNTO SAID ATTORNEY-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND
NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-
IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS SUBSTITUTE OR SUBSTITUTES,
MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED, ON THIS 11TH DAY OF SEPTEMBER, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<S> <C>
/s/ Andrew B. Parkinson Chairman, President and Chief Executive
___________________________________________ Officer (principal executive officer)
Andrew B. Parkinson
/s/ Thomas L. Parkinson Executive Vice President, Chief Technology
___________________________________________ Officer and Director
Thomas L. Parkinson
/s/ John C. Walden Executive Vice President, Finance and
___________________________________________ Business Development (principal financial
John C. Walden officer)
/s/ Earl W. Rachowicz Vice President and Controller (principal
___________________________________________ accounting officer)
Earl W. Rachowicz
/s/ Tasso H. Coin Director
___________________________________________
Tasso H. Coin
/s/ Steven M. Friedman Director
___________________________________________
Steven M. Friedman
Director
___________________________________________
Trygve E. Myhren
/s/ Seth L. Pierrepont Director
___________________________________________
Seth L. Pierrepont
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.1 Restated Certificate of Incorporation of the Company (incorporated
by reference to Exhibit 3.1 of the Company's Registration Statement
on Form S-1 (No. 333-24341) (the "IPO Registration Statement")).
4.2* Certificate of Amendment of the Restated Certificate of
Incorporation of the Company, dated as of May 30, 1997.
4.3 Restated By-laws of the Company (incorporated by reference to
Exhibit 3.2 of the IPO Registration Statement).
4.4 Rights Agreement, dated as of June 9, 1997, between the Company and
First Chicago Trust Company of New York, as Rights Agent
(incorporated by reference to Exhibit 4.1 of the IPO Registration
Statement).
5* Opinion of Sidley & Austin.
10* Peapod, Inc. Employee Stock Purchase Plan.
23.1* Consent of KPMG Peat Marwick LLP.
23.2* Consent of KPMG Peat Marwick LLP.
23.3* Consent of Sidley & Austin (contained in Exhibit 5 hereto).
</TABLE>
- --------
*Filed herewith
II-5
<PAGE>
Exhibit 4.2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NEW PEAPOD, INC.
New Peapod, Inc. (the "Corporation"), a corporation organized and existing
under any by virtue of the General Corporation Law of the State of Delaware,
does hereby certify that:
FIRST: The Board of Directors of the Corporation, by unanimous written
consent, duly adopted a resolution proposing and approving the following
amendment to the Restated Certificate of Incorporation of the Corporation and
directing that it be submitted to the stockholders of the Corporation to
consider and adopt the same.
RESOLVED, that the Restated Certificate of Incorporation of the
Corporation be amended by changing the FIRST ARTICLE thereof so that, as
amended, the FIRST ARTICLE shall be as follows:
FIRST: "The name of the Corporation is Peapod, Inc."
SECOND: That the sole stockholder of the Corporation has given written
consent to the foregoing amendment to the Restated Certificate of Incorporation
in accordance with the provisions of Section 228 of the General Corporation Law
of the State of Delaware.
THIRD: The amendment of the Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of the General Corporation Law of the
State of Delaware, including Section 242.
FOURTH: Pursuant to Section 103(d) of the General Corporation Law of the
State of Delaware, this Certificate of Amendment shall become effective as of
May 31, 1997.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed this 30th day of May, 1997 by Andrew B. Parkinson, its President and
attested by John C. Walden, its Secretary, who hereby acknowledge their
signatures as the act and deed of the Corporation.
By: /s/ Andrew B. Parkinson
--------------------------------
Its: President
Attest:
By: /s/ John C. Walden
------------------------
Its: Secretary
<PAGE>
Exhibit 5
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telephone 312 853 7000
Facsimile 312 853 7036
September 11, 1997
Peapod, Inc.
9933 Woods Drive
Skokie, Illinois 60077
Re: Peapod, Inc.
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for Peapod, Inc., a Delaware corporation (the
"Company"), in connection with the filing of a Registration Statement on Form S-
8 (the "Registration Statement") relating to 4,300,000 shares of common stock,
par value $.01 per share, including associated preferred stock purchase rights
of the Company ("Common Stock"), to be offered to participants in the Company's
1997 Long-Term Incentive Plan (the "Plan").
We are familiar with the Restated Certificate of Incorporation and the By-
laws of the Company and all amendments thereto and resolutions of the Board of
Directors of the Company relating to the Plan and the Registration Statement.
In this connection, we have examined originals, or copies of originals
certified or otherwise identified to our satisfaction, of such records of the
Company and others, have examined such questions of law and have satisfied
ourselves as to such matters of fact as we have considered relevant and
necessary as a basis for the opinions set forth herein. We have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures, the legal capacity of all natural persons and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
<PAGE>
Peapod, Inc.
September 11, 1997
Page 2
Based upon the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the laws of
the State of Delaware.
2. Each share of Common Stock will be legally issued, fully paid and
nonassessable when: (i) the Registration Statement shall have become effective
under the Securities Act; (ii) such share of Common Stock shall have been duly
issued and sold in the manner contemplated by the Plan; and (iii) a certificate
representing such share shall have been duly executed, countersigned and
registered and duly delivered to the purchaser thereof against payment of the
agreed consideration therefor (not less than the par value thereof) in
accordance with the Plan.
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to the application of the securities or
blue sky laws of the various states to the sale of shares of common stock.
This opinion is limited to the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Sidley & Austin
<PAGE>
EXHIBIT 10
PEAPOD, INC.
1997 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 Purposes. The purposes of the 1997 Long-Term Incentive Plan (the
"Plan") of Peapod, Inc. (the "Company"), and its subsidiaries from time to time
(individually a "Subsidiary" and collectively the "Subsidiaries"), are (a) to
align the interests of the Company's stockholders and the recipients of awards
under this Plan by increasing the proprietary interest of such recipients in the
Company's growth and success, (b) to advance the interests of the Company by
attracting and retaining officers and other key employees, and well-qualified
persons who are not officers or employees of the Company ("non-employee
directors") for service as directors of the Company and (c) to motivate such
employees and non-employee directors to act in the long-term best interests of
the Company's stockholders. For purposes of this Plan, references to employment
by the Company shall also mean employment by a Subsidiary.
1.2 Certain Definitions.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the effective date of this
Plan, under the Exchange Act; provided, however, that no director or officer of
the Company shall be deemed an Affiliate or Associate of any other director or
officer of the Company solely as a result of his or her being a director or
officer of the Company.
"Agreement" shall mean the written agreement evidencing an award
hereunder between the Company and the recipient of such award.
"Beneficial Owner" (including the terms "Beneficially Own" and
"Beneficial Ownership"), when used with respect to any Person, shall be deemed
to include any securities which:
(a) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule 13d-3,
as in effect on the effective date of this Plan, under the Exchange Act);
(b) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has:
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of
any conditions, or both) pursuant
<PAGE>
to any written or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling group members
with respect to a bona fide public offering of securities), upon the
exercise of any options, warrants, rights or conversion or exchange
privileges or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or
(ii) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, any security
otherwise subject to this item (ii) if such agreement, arrangement or
understanding to vote (1) arises solely from a revocable proxy or consent
given to such Person or any of such Person's Affiliates or Associates in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange
Act and (2) is not also then reportable by such Person on Schedule 13D (or
any comparable or successor report then in effect) under the Exchange Act;
or
(iii) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary agreements
with and among underwriters and selling group members with respect to a
bona fide public offering of securities); or
(c) are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any written or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
item (ii) of subparagraph (b) of the first paragraph of this definition) or
disposing of any securities of the Company.
Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.
"Board" shall mean the Board of Directors of the Company.
-2-
<PAGE>
"Bonus Stock" shall mean shares of Common Stock which are not subject
to a Restriction Period or Performance Measures.
"Bonus Stock Award" shall mean an award of Bonus Stock under this
Plan.
"Cause" shall mean embezzlement or misappropriation of corporate
funds, other act of dishonesty, significant activities harmful to the reputation
of the Company, willful refusal to perform or substantial disregard of an
employee's duties or significant violation of any statutory or common law duty
of loyalty to the Company.
"Change in Control" shall have the meaning set forth in Section
6.8(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee designated by the Board,
consisting of two or more members of the Board, each of whom shall be (a) a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act
and (b) an "outside director" within the meaning of Section 162(m) of the Code,
subject to any transition rules applicable to the definition of outside
director.
"Common Stock" shall mean the common stock, $.01 par value, of the
Company.
"Conversion" shall mean the conversion effected in accordance with
that certain Conversion Agreement and Plan of Reorganization pursuant to which
(i) all equity interests in Peapod LP, an Illinois limited partnership ("Old
Peapod"), will be transferred to the Company for shares of Common Stock, (ii)
Old Peapod will dissolve, (iii) all assets and liabilities of Old Peapod will be
transferred to the Company and (iv) outstanding options and warrants for equity
interests in Old Peapod will be converted into options and warrants for shares
of Common Stock.
"Company" has the meaning specified in Section 1.1.
"Directors Options" shall have the meaning set forth in Section 5.1.
"Disability" shall mean the inability for a continuous period of at
least six months of the holder of an award to perform substantially such
holder's duties and responsibilities, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
-3-
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempt Person" shall mean each of Andrew B. Parkinson and Thomas L.
Parkinson and each Affiliate thereof.
"Fair Market Value" shall mean, on the commencement of the Company's
initial public offering of Common Stock, the initial public offering price of a
share of Common Stock, and thereafter, the last sale price of a share of Common
Stock as reported in the National Association of Securities Dealers Automated
Quotation National Market System on the date as of which such value is being
determined, or, if the Common Stock is listed on a national securities exchange,
the last sale price of a share of Common Stock on the principal national stock
exchange on which the Common Stock is traded on the date as of which such value
is being determined, or, if there shall be no reported transactions for such
date, on the next preceding date for which transactions were reported; provided,
however, that if Fair Market Value for any date cannot be so determined, Fair
Market Value shall be determined by the Committee by whatever means or method as
the Committee, in the good faith exercise of its discretion, shall at such time
deem appropriate.
"Free-Standing SAR" shall mean an SAR which is not issued in tandem
with, or by reference to, an option, which entitles the holder thereof to
receive, upon exercise, shares of Common Stock (which may be Restricted Stock),
cash or a combination thereof with an aggregate value equal to the excess of the
Fair Market Value of one share of Common Stock on the date of exercise over the
base price of such SAR, multiplied by the number of such SARs which are
exercised.
"Incentive Stock Option" shall mean an option to purchase shares of
Common Stock that meets the requirements of Section 422 of the Code, or any
successor provision, which is intended by the Committee to constitute an
Incentive Stock Option.
"Incumbent Board" shall have the meaning set forth in Section
6.8(b)(ii) hereof.
"Mature Shares" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (a) has held for at least six months or (b) has purchased on
the open market.
"Non-Employee Director" shall mean any director of the Company who is
not an officer or employee of the Company or any Subsidiary (except in the
definition of Committee, in which case "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3 under the Exchange Act).
-4-
<PAGE>
"Non-Statutory Stock Option" shall mean a stock option which is not an
Incentive Stock Option.
"Old Options" shall mean the outstanding options to purchase equity
interests in Old Peapod, which options are being exchanged in the Conversion for
options to purchase a like number of shares of Common Stock in the Company.
"Performance Measures" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met (a) as a condition
to the exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), return on equity, earnings
of the Company, revenues, market share, cash flows or cost reduction goals, or
any combination of the foregoing. If the Committee desires that compensation
payable pursuant to any award subject to Performance Measures be "qualified
performance-based compensation" within the meaning of section 162(m) of the
Code, the Performance Measures shall be established by the Committee no later
than the end of the first quarter of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue
Service).
"Performance Period" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"Performance Share" shall mean a right, contingent upon the attainment
of specified Performance Measures within a specified Performance Period, to
receive one share of Common Stock, which may be Restricted Stock, or in lieu
thereof, the Fair Market Value of such Performance Share in cash.
"Performance Share Award" shall mean an award of Performance Shares
under this Plan.
"Permanent and Total Disability" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any of
the forgoing.
-5-
<PAGE>
"Restricted Stock" shall mean shares of Common Stock which are subject
to a Restriction Period.
"Restricted Stock Award" shall mean an award of Restricted Stock under
this Plan.
"Restriction Period" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"SAR" shall mean a stock appreciation right which may be a Free-
Standing SAR or a Tandem SAR.
"Stock Award" shall mean a Restricted Stock Award or a Bonus Stock
Award.
"Substitute Options" shall mean the options to purchase shares of
Common Stock in the Company that are being substituted in the Conversion for the
outstanding options to purchase equity interests in Old Peapod.
"Tandem SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.
"Tax Date" shall have the meaning set forth in Section 6.5.
"Ten Percent Holder" shall have the meaning set forth in Section
2.1(a).
1.3 Administration. This Plan shall be administered by the
Committee. Subject to Section 6.1, any one or a combination of the following
awards may be made under this Plan to eligible persons: (a) options to purchase
shares of Common Stock in the form of Incentive Stock Options or Non-Statutory
Stock Options, (b) SARs in the form of Tandem SARs or Free-Standing SARs, (c)
Stock Awards in the form of Restricted Stock or Bonus Stock and (d) Performance
Shares. The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan and determine the form, amount and timing
of each award to such persons and, if applicable, the
-6-
<PAGE>
number of shares of Common Stock, the number of SARs and the number of
Performance Shares subject to such an award, the exercise price or base price
associated with the award, the time and conditions of exercise or settlement of
the award and all other terms and conditions of the award, including, without
limitation, the form of the Agreement evidencing the award. The Committee shall,
subject to the terms of this Plan, interpret this Plan and the application
thereof, establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of an award,
conditions with respect to the award, such as limiting competitive employment or
other activities. All such interpretations, rules, regulations and conditions
shall be conclusive and binding on all parties.
The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or other executive officer of the
Company as the Committee deems appropriate; provided, however, that the
Committee may not delegate its power and authority with regard to (a) the grant
of an award under this Plan to any person who is a "covered employee" within the
meaning of Section 162(m) of the Code or who, in the Committee's judgment, is
likely to be a covered employee at any time during the period an award hereunder
to such employee would be outstanding or (b) the selection for participation in
this Plan of an officer or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an award to such an
officer or other person.
No member of the Board of Directors or Committee, and neither the
Chief Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company's Certificate of Incorporation and/or By-laws, as the
same may be amended or restated from time to time, and under any directors' and
officers' liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (a) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (b) acts approved in
writing by a majority of the members of the Committee without a meeting.
-7-
<PAGE>
Notwithstanding anything to the contrary herein, any grant of awards
to a Non-Employee Director (not including awards under Article V) shall require
the approval of the Board.
1.4 Eligibility. Participants in this Plan shall consist of such
directors, officers or other key employees of the Company and its Subsidiaries
as the Committee, in its sole discretion, may select from time to time. The
Committee's selection of a person to participate in this Plan at any time shall
not require the Committee to select such person to participate in this Plan at
any other time. Non-Employee Directors shall also be eligible to participate in
this Plan in accordance with Article V.
1.5 Shares Available. Subject to adjustment as provided in Sections
6.7 and 6.8, 4,300,000 shares of Common Stock shall be available under this
Plan, reduced by the sum of the aggregate number of shares of Common Stock (a)
that are issued upon the grant of a Stock Award and (b) which become subject to
outstanding options, including Directors' Options, outstanding Free-Standing
SARs and outstanding Performance Shares. To the extent that shares of Common
Stock subject to an outstanding option (other than in connection with the
exercise of a Tandem SAR), Free-Standing SAR or Performance Share are not issued
or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under
this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options (excluding the Substitute Options) or SARs, Stock
Awards or Performance Share Awards, or a combination thereof may be granted
during any calendar year to any person shall be 330,000 subject to adjustment as
provided in Section 6.7.
1.6 Substitute Options. Notwithstanding anything to the contrary
herein, the exercise price, vesting schedule and expiration of the Substitute
Options shall be as set forth in the new option agreements covering such
Substitute Options, which agreements reflect certain terms of the Old Options.
-8-
<PAGE>
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 Stock Options. The Committee may, in its discretion, grant
options to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each option, or portion thereof, that is not an
Incentive Stock Option, shall be a Non-Statutory Stock Option. Each Incentive
Stock Option shall be granted within ten years of the effective date of this
Plan. To the extent that the aggregate Fair Market Value (determined as of the
date of grant) of shares of Common Stock with respect to which options
designated as Incentive Stock Options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or Subsidiary) exceeds the amount (currently $100,000)
established by the Code, such options shall constitute Non-Statutory Stock
Options.
Options shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of
Common Stock subject to an option shall be determined by the Committee. The
purchase price per share of Common Stock purchasable upon exercise of the option
shall be determined by the Committee; provided, however, that the purchase price
per share of Common Stock purchasable upon exercise of an option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the date
of grant of such option; provided further, that if an Incentive Stock Option
shall be granted to any person who, at the time such option is granted, owns
capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any parent or
Subsidiary) (a "Ten Percent Holder"), the purchase price per share of Common
Stock shall be the price (currently 110% of Fair Market Value) required by the
Code in order to constitute an Incentive Stock Option.
(b) Option Period and Exercisability. The period during which an
option may be exercised shall be determined by the Committee; provided, however,
that no Incentive Stock Option shall be exercised later than ten years after its
date of grant; provided further, that if an Incentive Stock Option shall be
granted to a Ten Percent Holder, such option shall not be exercised later than
five years after its date of grant. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a condition to
the grant of an option or to the exercisability of all or a portion of an
option. The Committee shall determine whether an option shall become exercisable
in cumulative or non-cumulative installments and in part or in full at any time.
An exercisable option, or portion thereof, may be exercised only with respect to
whole shares of
-9-
<PAGE>
Common Stock, except that if the remaining option then exercisable is for less
than a whole share, such remaining amount may be exercised.
(c) Method of Exercise. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of Common
Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (1) in
cash, (2) by delivery of Mature Shares having a Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable by reason
of such exercise, (3) by authorizing the Company to withhold whole shares of
Common Stock which would otherwise be delivered upon exercise of the option
having a Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (4) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (5) a combination of (1), (2) and (3), in each
case to the extent set forth in the Agreement relating to the option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are canceled by
reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). Any fraction of a
share of Common Stock which would be required to pay such purchase price shall
be disregarded and the remaining amount due shall be paid in cash by the
optionee. No certificate representing Common Stock shall be delivered until the
full purchase price therefor has been paid.
(d) Additional Options. The Committee shall have the authority to
include in any Agreement relating to an option a provision entitling the
optionee to an additional option in the event such optionee exercises the option
represented by such option agreement, in whole or in part, by delivering
previously owned whole shares of Common Stock in payment of the purchase price
in accordance with this Plan and such Agreement. Any such additional option
shall be for a number of shares of Common Stock equal to the number of delivered
shares, shall have a purchase price determined by the Committee in accordance
with this Plan, shall be exercisable on the terms and subject to the conditions
set forth in the Agreement relating to such additional option.
2.2 Stock Appreciation Rights. The Committee may, in its discretion,
grant SARs to such eligible persons as may be selected by the Committee. The
Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and
-10-
<PAGE>
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) Number of SARs and Base Price. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such Incentive
Stock Option is granted. The base price of a Tandem SAR shall be the purchase
price per share of Common Stock of the related option. The base price of a
Free-Standing SAR shall be determined by the Committee; provided, however, that
such base price shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant of such SAR.
(b) Exercise Period and Exercisability. The Agreement relating to an
award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a combination
thereof. The period for the exercise of an SAR shall be determined by the
Committee; provided, however, that no Tandem SAR shall be exercised later than
the expiration, cancellation, forfeiture or other termination of the related
option. The Committee may, in its discretion, establish Performance Measures
which shall be satisfied or met as a condition to the exercisability of an SAR.
The Committee shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only
with respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR, only with respect to a whole number of SARs. If an SAR is exercised for
shares of Restricted Stock, a certificate or certificates representing such
Restricted Stock shall be issued in accordance with Section 3.2(c) and the
holder of such Restricted Stock shall have such rights of a stockholder of the
Company as determined pursuant to Section 3.2(d). Prior to the exercise of an
SAR for shares of Common Stock, including Restricted Stock, the holder of such
SAR shall have no rights as a stockholder of the Company with respect to the
shares of Common Stock subject to such SAR.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing such
documents as the Company may reasonably request. A Free-Standing SAR may be
exercised (i) by giving written notice to the Company specifying the whole
number (or if the remaining SAR then exercisable is for less then one whole
share, such remaining amount) of SARs which are being exercised and (ii) by
executing such documents as the Company may reasonably request.
-11-
<PAGE>
2.3 Termination of Employment or Service with the Company.
(a) Disability. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment or service with the Company of the holder of an
option or SAR terminates by reason of Disability, each option and SAR held by
such holder shall be exercisable only to the extent that such option or SAR, as
the case may be, is exercisable on the effective date of such holder's
termination of employment or service and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months (or such
other period as set forth in the Agreement relating to such option or SAR) after
the effective date of such holder's termination of employment or service and
(ii) the expiration date of the term of such option or SAR.
(b) Retirement. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment or service with the Company of the holder of an
option or SAR terminates by reason of retirement on or after age 65 with the
consent of the Company, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR, as the case may be, is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(c) Death. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment or service with the Company of the holder of an
option or SAR terminates by reason of death, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as the
case may be, is exercisable on the date of such holder's death, and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until and
including the earliest to occur of (i) the date which is one year (or such other
period as set forth in the Agreement relating to such option or SAR) after the
date of death and (ii) the expiration date of the term of such option or SAR.
(d) Other Termination. If the employment or service with the Company
of the holder of an option or SAR is terminated
-12-
<PAGE>
by the Company for Cause, each option and SAR held by such holder shall
terminate automatically on the effective date of such holder's termination of
employment or service.
Subject to paragraph (f) below and Section 6.8, and unless specified
in the Agreement relating to an option or SAR, as the case may be, if the
employment or service with the Company of the holder of an option or SAR
terminates for any reason other than Disability, retirement on or after age 65
with the consent of the Company, death or for Cause, each option and SAR held by
such holder shall be exercisable only to the extent that such option or SAR is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(e) Death Following Termination of Employment or Service. Subject to
paragraph (f) below and Section 6.8, and unless otherwise specified in the
Agreement relating to an option or SAR, as the case may be, if the holder of an
option or SAR dies during the three-month period following termination of
employment or service by reason of Disability, or if the holder of an option or
SAR dies during the six-month period following termination of employment or
service by reason of retirement on or after age 65 with the consent of the
Company, or if the holder of an option or SAR dies during the three-month period
following termination of employment or service for any reason other than
Disability or retirement on or after age 65 with the consent of the Company (or,
in each case, such other period as set forth in the Agreement relating to such
option or SAR), each option and SAR held by such holder shall be exercisable
only to the extent that such option or SAR is exercisable on the effective date
of such holder's termination and may thereafter be exercised by the holder's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be, until and including the earliest to occur of (i) the date which
is one year (or such other period as set forth in the Agreement relating to such
option or SAR) after the date of death and (ii) the expiration date of the term
of such option or SAR.
(f) Termination of Employment or Service - Incentive Stock Options.
Subject to Section 6.8 and unless otherwise specified in the Agreement relating
to the option, if the employment or service with the Company of a holder of an
incentive stock option terminates by reason of Permanent and Total Disability
(as defined in Section 22(e)(3) of the Code), each incentive stock option held
by such optionee shall be exercisable only to the extent that such option is
exercisable on
-13-
<PAGE>
the effective date of such optionee's termination of employment or service by
reason of Permanent and Total Disability, and may thereafter be exercised by
such optionee (or such optionee's legal representative or similar person) until
and including the earliest to occur of (i) the date which is three months (or
such other period no longer than one year as set forth in the Agreement relating
to such option) after the effective date of such optionee's termination of
employment or service by reason of Permanent and Total Disability and (ii) the
expiration date of the term of such option.
Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such other period as set forth in
the Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
If the employment or service with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each Incentive
Stock Option held by such optionee shall terminate automatically on the
effective date of such optionee's termination of employment or service.
If the employment or service with the Company of a holder of an
Incentive Stock Option terminates for any reason other than Permanent and Total
Disability, death or Cause, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent such option is exercisable on the
effective date of such optionee's termination of employment or service, and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is three months after the effective date of such optionee's termination of
employment or service and (ii) the expiration date of the term of such option.
If the holder of an Incentive Stock Option dies during the three-month
period following termination of employment or service by reason of Permanent and
Total Disability (or such other period as set forth in the Agreement relating to
such option), or if the holder of an Incentive Stock Option dies during the
three-month period following termination of employment or service for any reason
other than Permanent and Total Disability, death or Cause, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent such option
is exercisable on the effective date of such optionee's termination and may
thereafter be exercised by the optionee's
-14-
<PAGE>
executor, administrator, legal representative, beneficiary or similar person
until and including the earliest to occur of (i) the date which is one year (or
such other period as set forth in the Agreement relating to such option) after
the date of death and (ii) the expiration date of the term of such option.
III. STOCK AWARDS
3.1 Stock Awards. The Committee may, in its discretion, grant Stock
Awards to such eligible persons as may be selected by the Committee. Subject to
adjustment as provided in Sections 6.7 and 6.8 of this Plan, the aggregate
number of shares of Common Stock available under this Plan for all Stock Awards
shall not exceed 500,000 of the aggregate number of shares of Common Stock
available under this Plan. The Agreement relating to a Stock Award shall
specify whether the Stock Award is a Restricted Stock Award or Bonus Stock
Award.
3.2 Terms of Stock Awards. Stock Awards shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable.
(a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award remains continuously in the employment or service of
the Company during the specified Restricted Period and for the forfeiture of the
shares of Common Stock subject to such award (x) if specified Performance
Measures are not satisfied or met during the specified Restriction Period or (y)
if the holder of such award does not remain continuously in the employment or
service of the Company during the specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award shall be registered in the
holder's name and may bear a legend, in addition to any legend which may be
required pursuant to Section 6.6, indicating that the ownership of the
-15-
<PAGE>
shares of Common Stock represented by such certificate is subject to the
restrictions, terms and conditions of this Plan and the Agreement relating to
the Restricted Stock Award. All such certificates shall be deposited with the
Company, together with stock powers or other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate by the Company, which would permit
transfer to the Company of all or a portion of the shares of Common Stock
subject to the Restricted Stock Award in the event such award is forfeited in
whole or in part. Upon termination of any applicable Restriction Period (and
the satisfaction or attainment of applicable Performance Measures), or upon the
grant of a Bonus Stock Award, in each case subject to the Company's right to
require payment of any taxes in accordance with Section 6.5, a certificate or
certificates evidencing ownership of the requisite number of shares of Common
Stock shall be delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise
set forth in the Agreement relating to a Restricted Stock Award, and subject to
the terms and conditions of a Restricted Stock Award, the holder of such award
shall have all rights as a stockholder of the Company, including, but not
limited to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment applicable to all holders of Common Stock;
provided, however, that a distribution with respect to shares of Common Stock,
other than a distribution in cash, shall be deposited with the Company and shall
be subject to the same restrictions as the shares of Common Stock with respect
to which such distribution was made.
(e) Awards to Certain Executive Officers. Notwithstanding any other
provision of this Article III, and only to the extent necessary to ensure the
deductibility of the award to the Company, the Fair Market Value of the number
of shares of Common Stock subject to a Stock Award granted to a "covered
employee" within the meaning of Section 162(m) of the Code shall not exceed
$1,000,000 (i) at the time of grant in the case of a Stock Award granted upon
the attainment of Performance Measures or (ii) in the case of a Restricted Stock
Award with Performance Measures which shall be satisfied or met as a condition
to the holder's receipt of the shares of Common Stock subject to such award, on
the earlier of (x) the date on which the Performance Measures are satisfied or
met and (y) the date the holder makes an election under Section 83(b) of the
Code.
3.3 Termination of Employment or Service. Subject to Section 6.8 and
unless otherwise set forth in the Agreement relating to a Restricted Stock
Award, if the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Restriction Period
shall terminate as of the effective date of such holder's
-16-
<PAGE>
termination of employment or service and shall be forfeited and such portion
shall be canceled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 Performance Share Awards. The Committee may, in its discretion,
grant Performance Share Awards to such eligible persons as may be selected by
the Committee.
4.2 Terms of Performance Share Awards. Performance Share Awards shall
be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The number
of Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if specified
Performance Measures are not satisfied or met during the specified Performance
Period.
(c) Settlement of Vested Performance Share Awards. The Agreement
relating to a Performance Share Award (i) shall specify whether such award may
be settled in shares of Common Stock (including shares of Restricted Stock) or
cash or a combination thereof and (ii) may specify whether the holder thereof
shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on any deferred
dividend equivalents, with respect to the number of shares of Common Stock
subject to such award. If a Performance Share Award is settled in shares of
Restricted Stock, a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a Performance
Share Award in shares of Common Stock, including Restricted Stock, the holder of
such award shall have no rights as a stockholder of the Company with respect to
the shares of Common Stock subject to such award.
4.3 Termination of Employment or Service. Subject to Section 6.8 and
unless otherwise set forth in the Agreement relating to a Performance Share
Award, if the employment or service with the Company of the holder of such award
terminates,
-17-
<PAGE>
the portion of such award which is subject to a Performance Period on the
effective date of such holder's termination of employment or service shall be
forfeited and such portion shall be canceled by the Company.
V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 Eligibility. Each Non-Employee Director shall be granted options
to purchase shares of Common Stock in accordance with this Article V
(collectively "Directors Options"). All options granted under this Article V
shall constitute Non-Statutory Stock Options.
5.2 Grants of Stock Options. Each Non-
Employee Director shall be granted Non-Statutory Stock Options as follows:
(a) Time of Grant. On the date of the initial public offering (the
"IPO") of Common Stock by the Company, each Non-Employee Director shall be
granted an option to purchase 15,000 shares of Common Stock at a purchase price
equal to the initial public offering purchase price. In addition, following the
IPO, (i) on the date on which a person is first elected or begins to serve as a
Non-Employee Director (other than by reason of termination of employment) he or
she shall be granted an option to purchase 15,000 shares of Common Stock at a
purchase price per share equal to the Fair Market Value of a share of Common
Stock on the date of grant of such option and (ii) on the date of each annual
meeting of the Company, each Non-Employee Director shall be granted an option to
purchase 5,000 shares of Common Stock at a purchase price per share equal to the
Fair Market Value of a share of Common Stock on the date of grant of such
option; provided, however, that no such grants will be made to the extent an
automatic option grant is being or has been made to such Non-Employee Director
as of or with respect to such date pursuant to another incentive compensation
plan of the Company.
(b) Option Period and Exercisability. Except as otherwise provided
herein and except for options granted pursuant to Section 5.2(a)(ii), each
option granted under this Article V shall not be exercisable during the first
year following its date of grant. Thereafter, such option may be exercised: (i)
on or after the first anniversary of its date of grant, for up to one-third of
the shares of Common Stock subject to such option on its date of grant, (ii) on
or after the second anniversary of its date of grant, for up to an additional
one-third (two-thirds on a cumulative basis) of the shares of Common Stock
subject to such option on its date of grant, and (iii) on or after the third
anniversary of its date of grant, for up to the remaining one-third (all shares
on a cumulative basis) of the shares of Common Stock subject to such option on
its date of grant. Each option granted pursuant to Section 5.2(a)(ii) shall not
be exercisable until, and such option shall become exercisable in full as of,
-18-
<PAGE>
the date immediately preceding the date of the Company's annual meeting next
following the annual meeting on which such option was granted. Each option
granted under this Article V shall expire ten years after its date of grant. An
exercisable option, or portion thereof, may be exercised in whole or in part
only with respect to whole shares of Common Stock. Options granted under this
Article V shall be exercisable in accordance with Section 2.1(c).
5.3 Termination of Directorship.
(a) Disability. Subject to Section 6.8, if the holder of an option
granted under this Article V ceases to be a director of the Company by reason of
Disability, each such option held by such holder shall be exercisable only to
the extent that such option is exercisable on the effective date of such
holder's ceasing to be a director and may thereafter be exercised by such holder
(or such holder's guardian, legal representative or similar person) until the
earliest to occur of the (i) date which is three months after the effective date
of such holder's ceasing to be a director and (ii) the expiration date of the
term of such option.
(b) Retirement. Subject to Section 6.8, if the holder of an option
granted under this Article V ceases to be a director of the Company on or after
age 65, each such option held by such holder shall be exercisable only to the
extent that such option is exercisable on the effective date of such holder's
ceasing to be a director and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until the earliest to occur of
the (i) date which is three months after the effective date of such holder's
ceasing to be a director and (ii) the expiration date of the term of such
option.
(c) Death. Subject to Section 6.8, if the holder of an option granted
under this Article V ceases to be a director of the Company by reason of death,
each such option held by such holder shall be fully exercisable and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of (i) the date which is one year after the date of death and
(ii) the expiration date of the term of such option.
(d) Other Termination. Subject to Section 6.8, if the holder of an
option granted under this Article V ceases to be a director of the Company for
any reason other than Disability, retirement on or after age 65 or death, each
such option held by such holder shall be exercisable only to the extent such
option is exercisable on the effective date of such holder's ceasing to be a
director and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earliest to occur of (i) the date
which is three months after the
-19-
<PAGE>
effective date of such holder's ceasing to be a director and (ii) the expiration
date of the term of such option.
(e) Death Following Termination of Directorship. Subject to Section
6.8, if the holder of an option granted under this Article V dies during the
three-month period following such holder's ceasing to be a director of the
Company by reason of Disability, or if such a holder dies during the three-month
period following such holder's ceasing to be a director of the Company on or
after age 65, or if such a holder dies during the three-month period following
such holder's ceasing to be a director for any reason other than by reason of
Disability or retirement on or after age 65, each such option held by such
holder shall be exercisable only to the extent that such option is exercisable
on the effective date of such holder's ceasing to be a director and may
thereafter be exercised by the holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of the (i) date one year after the date of death and (ii) the
expiration date of the term of such option.
5.4 Directors Options. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) Option Period and Exercisability. Directors Options shall become
exercisable as provided in Section 5.2(b). If at any time prior to the time that
a Directors Option first becomes exercisable, a Non-Employee Director shall no
longer be a member of the Board, such Directors Option shall become void and of
no further force or effect.
(b) Purchase Price. The purchase price for the shares of Common Stock
subject to any Directors Option shall be equal to 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such Directors Option. Such
Directors Options shall be exercisable in accordance with Section 2.1(c).
(c) Restrictions on Transfer. Directors Options shall be subject to
the transfer restrictions and other provisions of Section 6.4.
(d) Expiration. Each Directors Option which has become exercisable
pursuant to Section 5.4(a), to the extent not theretofore exercised, shall
expire on the first to occur of (i) the date which is three months after the
first date on which the Non-Employee Director shall no longer be a member of the
Board or the Board of Directors of a Subsidiary and (ii) the tenth anniversary
of the date of grant of such option; provided, however, that if the Non-Employee
Director shall die within such three-month period following the date on which he
shall have ceased to serve as such a director or if the Non-Employee
-20-
<PAGE>
Director shall cease to be a director of the Company by reason of death, such
option may be exercised at any time within the one-year period following the
date of death to the extent not theretofore exercised (but in no event later
than the tenth anniversary of the date of grant).
VI. GENERAL
6.1 Effective Date and Term of Plan; Submission to Stockholders. This
Plan shall be submitted to the stockholders of the Company for approval and, if
approved by the affirmative vote of a majority of the voting power of the shares
of capital stock of the Company entitled to vote thereon, shall become effective
as of the commencement of the IPO. This Plan shall terminate ten years after its
effective date unless terminated earlier by the Board. Termination of this Plan
shall not affect the terms or conditions of any award granted prior to
termination.
Awards hereunder may be made at any time prior to the termination of
this Plan, provided that no award may be made later than ten years after the
effective date of this Plan. In the event that this Plan is not approved by the
stockholders of the Company, this Plan and any awards hereunder shall be void
and of no force or effect.
6.2 Amendments. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation, including Section 162(m) and Section 422 of
the Code; provided, however, that no amendment shall be made without stockholder
approval if such amendment would (a) reduce the minimum purchase price in the
case of an option or the base price in the case of an SAR, (b) effect any change
inconsistent with Section 422 of the Code or (c) extend the term of this Plan.
No amendment may impair the rights of a holder of an outstanding award without
the consent of such holder.
6.3 Agreement. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.
6.4 Non-Transferability of Stock Options, SARs and Performance
Shares. No option, SAR or Performance Share shall be transferable other than (i)
by will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company or (ii) as otherwise set forth in
the Agreement relating to such award. Each option, SAR or Performance Share may
be exercised or settled during the
-21-
<PAGE>
participant's lifetime only by the holder or the holder's legal representative
or similar person. Except as permitted by the second preceding sentence, no
option, SAR or Performance Share may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process, and any
attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of any option, SAR or Performance Share, shall be null and void and of
no force or effect.
6.5 Tax Withholding. The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash pursuant to an award made hereunder, payment by the holder of such
award of any Federal, state, local or other taxes which may be required to be
withheld or paid in connection with such award. An Agreement may provide that
(i) the Company shall withhold whole shares of Common Stock which would
otherwise be delivered to a holder, having an aggregate Fair Market Value
determined as of the date the obligation to withhold or pay taxes arises in
connection with an award (the "Tax Date"), or withhold an amount of cash which
would otherwise be payable to a holder, in the amount necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of the
following means: (1) a cash payment to the Company, (2) delivery to the Company
of Mature Shares having an aggregate Fair Market Value, determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (3)
authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered having an aggregate Fair Market Value, determined as of
the Tax Date, or withhold an amount of cash which would otherwise be payable to
a holder, equal to the amount necessary to satisfy any such obligation, (4) in
the case of the exercise of an option, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted an irrevocable
notice of exercise or (5) any combination of (1), (2) and (3), in each case to
the extent set forth in the Agreement relating to the award; provided, however,
that the Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5). An Agreement may provide for shares of
Common Stock to be delivered or withheld having an aggregate Fair Market Value
in excess of the minimum amount required to be withheld. Any fraction of a share
of Common Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the holder.
6.6 Restrictions on Shares. Each award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such award upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other
-22-
<PAGE>
action is necessary or desirable as a condition of, or in connection with, the
delivery of shares thereunder, such shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the
Company. The Company may require that certificates evidencing shares of Common
Stock delivered pursuant to any award made hereunder bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
6.7 Adjustment. Except as provided in Section 6.8, in the event of
any stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the number of
securities subject to each option to be granted to Non-Employee Directors
pursuant to Article V, the terms of each outstanding SAR, the number and class
of securities subject to each outstanding Stock Award, and the terms of each
outstanding Performance Share shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options and SARs without
an increase in the aggregate purchase price or base price. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (1) the Fair Market Value on the
vesting, exercise or settlement date over (2) the exercise or base price, if
any, of such award.
6.8 Change in Control.
(a) (i) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control pursuant to Section (b)(iii) or (iv)
below, (1) all outstanding options and SARS shall immediately become
exercisable in full, (2) the Restriction Period applicable to any
outstanding Restricted Stock Award shall lapse, (3) the Performance Period
applicable to any outstanding Performance Share shall lapse and (4) the
Performance Measures applicable to any outstanding Restricted Stock Award
(if any) and to any outstanding Performance Share shall be
-23-
<PAGE>
deemed to be satisfied at the maximum level. If, in connection with such
Change in Control, holders of Common Stock receive solely shares of common
stock that are registered under Section 12 of the Exchange Act, there shall
be substituted for each share of Common Stock available under this Plan,
whether or not then subject to an outstanding award, the number and class
of shares into which each outstanding share of Common Stock shall be
converted pursuant to such Change in Control. If, in connection with such
Change in Control, holders of Common Stock receive solely cash and shares
of common stock that are registered under Section 12 of the Exchange Act,
each outstanding award shall be surrendered to and canceled by the Company,
and the holder shall receive, within ten days of the occurrence of such
Change in Control, a proportionate amount of cash in the manner provided in
Section (a)(ii) below, and there shall be substituted for the award
surrendered a similar award reflecting a proportionate number of the class
of shares into which each outstanding share of Common Stock shall be
converted to such Change in Control. In the event of any such substitution,
the proportion of cash and common stock, the purchase price per share in
the case of an option and the base price in the case of an SAR, and any
other terms of outstanding awards shall be appropriately adjusted by the
Committee, such adjustments to be made in the case of outstanding options
and SARs without an increase in the aggregate purchase price or base price;
provided, that the proportion of cash and common stock substituted for
outstanding awards shall reflect the approximate proportion of cash and
common stock received by holders of Common Stock in such Change in Control.
If, in connection with a Change in Control, holders of Common Stock receive
any portion of the consideration in a form other than cash or shares of
common stock that are registered under Section 12 of the Exchange Act, each
share of Common Stock available under this Plan, whether or not then
subject to an outstanding award, shall be substituted or surrendered for
such proportion of common stock, cash or other consideration as shall be
determined by the Committee pursuant to Section 6.7.
(ii) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(i) or (ii) below,
or in the event of a Change in Control pursuant to Section (b)(iii) or (iv)
below in connection with which the holders of Common Stock receive cash,
each outstanding award shall be surrendered to the Company by the holder
thereof, and each such award shall immediately be canceled by the Company,
and the holder shall receive, within ten days of the occurrence of a Change
in Control pursuant to Section (b)(i) or (ii) below or within ten days of
the approval of the stockholders of the Company contemplated by Section
(b)(iii) or (iv) below, a cash
-24-
<PAGE>
payment from the Company in an amount equal to (1) in the case of an
option, the number of shares of Common Stock then subject to such option,
multiplied by the excess, if any, of the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction
whereby the Change in Control takes place or (B) the Fair Market Value of a
share of Common Stock on the date of occurrence of the Change in Control,
over the purchase price per share of Common Stock subject to the option;
(2) in the case of a Free-Standing SAR, the number of shares of Common
Stock then subject to such SAR, multiplied by the excess, if any, of the
greater of (A) the highest per share price offered to stockholders of the
Company in any transaction whereby the Change in Control takes place or (B)
the Fair Market Value of a share of Common Stock on the date of occurrence
of the Change in Control, over the base price of the SAR; and (3) in the
case of a Restricted Stock Award or Performance Share Award, the number of
shares of Common Stock or the number of Performance Shares, as the case may
be, then subject to such award, multiplied by the greater of (A) the
highest per share price offered to stockholders of the Company in any
transaction whereby the Change in Control takes place or (B) the Fair
Market Value of a share of Common Stock on the date of occurrence of the
Change in Control. In the event of a Change in Control, each Tandem SAR
shall be surrendered by the holder thereof and shall be canceled
simultaneously with the cancellation of the related option. Except as may
be provided in an agreement relating to an award, the Company may, but is
not required to, cooperate with any person who is subject to Section 16 of
the Exchange Act to assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section 16 and the
rules and regulations thereunder.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act, of Beneficial Ownership of 20% or more of either (1)
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (2) the combined voting power of the
then outstanding securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
providing however, the following acquisitions shall not constitute a Change
of Control: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or
exchange privilege unless the security being so exercised, converted or
exchanged was acquired directly from the Company), (B) any acquisition by
the Company, (C) any acquisition by an
-25-
<PAGE>
Exempt Person, (D) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company, or (E) any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and (3) of subsection
(iii) of this Section 6.8(b); provided further, that for purposes of clause
(B), if any Person (other than an Exempt Person, the Company or any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
Beneficial Owner of 20% or more of the Outstanding Company Common Stock or
20% or more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company, and such Person shall, after such acquisition
by the Company, become the Beneficial Owner of any additional shares of the
Outstanding Company Common Stock or any additional Outstanding Company
Voting Securities and such Beneficial Ownership is publicly announced, such
additional Beneficial Ownership shall constitute a Change in Control;
(ii) individuals who, as of the effective date hereof, constitute
the Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any individual
who becomes a director of the Company subsequent to the effective date
hereof whose election by the Company's stockholders, was approved by the
vote of at least 66-2/3% of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall not be
deemed a member of the Incumbent Board;
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals or entities who are
the Beneficial Owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to
such Corporate Transaction will Beneficially Own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock, and
the combined voting power of the outstanding securities of such corporation
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Corporate Transaction
(including,
-26-
<PAGE>
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets either
directly or indirectly) in substantially the same proportions relative to
each other as their Beneficial Ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no Person
(other than an Exempt Person; the Company; any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which Beneficially Owned, immediately prior to
such Corporate Transaction, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) will Beneficially Own, directly or
indirectly, 20% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such corporation
entitled to vote generally in the election of directors and (3) individuals
who were members of the Incumbent Board will constitute at least a majority
of the members of the board of directors of the corporation resulting from
such Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
Notwithstanding anything to the contrary herein, no Change of Control
shall be deemed to have taken place as a result of the issuance of shares of
Common Stock by the Company or the sale of shares of Common Stock by its
stockholders in connection with the Company's initial public offering.
6.9 No Right of Participation or Employment/Service. No person shall
have any right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment or
service by the Company, any Subsidiary or any affiliate of the Company or affect
in any manner the right of the Company, any Subsidiary or any affiliate of the
Company to terminate the employment or service of any person at any time without
liability hereunder.
6.10 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
6.11 Governing Law. This Plan, each award hereunder and the related
Agreement, and all determinations made and
-27-
<PAGE>
actions taken pursuant thereto, to the extent not otherwise governed by the Code
or the laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without giving effect to
principles of conflicts of laws.
-28-
<PAGE>
EXHIBIT 23.1
Independent Auditors' Consent
The Board of Directors
Peapod, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of Peapod, Inc. of our report dated May 9, 1997, relating to the balance
sheet of Peapod, Inc. as of December 31, 1996, and the related statement of
operations for the period from December 5, 1996 (inception) through December 31,
1996, which report appears in the registration statement (No. 333-24341) on Form
S-1 of Peapod, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
September 11, 1997
<PAGE>
EXHIBIT 23.2
Independent Auditors' Consent
We consent to incorporation by reference in the registration statement on Form
S-8 of Peapod, Inc. of our report dated February 7, 1997, relating to the
balance sheets of Peapod LP as of December 31, 1995 and 1996, and the related
statements of operations, partners' capital, and cash flows for each of the
years in the three-year period ended December 31, 1996, which report appears in
the registration statement (No. 333-24341) on Form S-1 of Peapod, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
September 11, 1997
