SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 27, 1999
PEAPOD, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-22557
(State or Other Jurisdiction of Incorporation) (Commission File Number)
36-4118175
(IRS Employer Identification No.)
9933 Woods Drive
Skokie, Illinois 60077
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (847) 583-9400
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Item 5. Other Events.
As described in a press release issued by Peapod, Inc. (the "Company")
on September 27, 1999:
On September 27, 1999 William Malloy accepted an offer of employment with the
Company as its President and Chief Executive Officer. The principal terms of Mr.
Malloy's employment are outlined below and will be formalized in an employment
agreement to be entered into between Mr. Malloy and the Company.
Summary of Principal Terms of Employment Agreement between William Malloy
("Executive") and Peapod, Inc., September 23, 1999.
1. Position: President and Chief Executive Officer. Executive will also be
elected a director of the Company. Executive's employment will commence as of
the date of his acceptance, and he will assume these positions as soon as
possible, and in any event no later than November 1, 1999.
2. Term: Through December 31, 2003, with a daily three-year evergreen feature
effective December 31, 2001, so that the remaining term will always be at least
three years, subject to either party being able, by written notice, to stop
further operation of that evergreen feature, and provided further that
Executive's employment may be terminated on notice by either party pursuant to
the Severance Agreement (referred to below).
3. Annual Salary: $350,000 through 12/31/00, subject to increase thereafter.
Executive to be given opportunity to forego all or a portion of the annual
salary in return for equity-based awards of equivalent value.
4. Bonuses:
(1) Beginning in 2000, annual performance bonus based upon the terms
and conditions of the Company's Executive Bonus Plan, with target at 50% of
salary, and maximum at 100% of salary.
(2) Additional bonuses as awarded in the discretion of the Board of
Directors.
(3) Executive to be given opportunity to forego all or a portion of the
bonus in return for equity-based awards of equivalent value.
5. Group/Executive Benefits: Participation by Executive and his family, on terms
no less favorable to Executive than the terms offered to other senior executives
of the Company, in any group and/or executive life, hospitalization or
disability insurance plan, health program (with COBRA equivalent premiums paid
on a grossed-up basis during any waiting period), pension, profit sharing,
401(k) and similar benefit plans (qualified, non-qualified and supplemental) or
other fringe benefits of the Company, including automobile allowance, club
memberships and dues, and similar programs as in effect from time to time
(collectively referred to as the "Benefits").
6. Equity Based Incentive Compensation:
(1) Initial grant on date of employment of ten-year option with respect
to 1,100,000 shares, to vest as to 350,000 of the shares on the date hereof and
as to 187,500 of the shares on each of the first four anniversaries of the
commencement of Executive's employment with the Company. The exercise price for
the option will be equal to the opening NASDAQ price on the date hereof (the
"Employment Date Price"). In the event of termination of the Executive's
employment without Cause or his resignation for Good Reason (as defined in the
Severance Agreement referred to below), or in the event of any termination of
employment after the option has fully vested, the option will remain exercisable
for a period of three years following any such termination of employment (but
not later than the tenth anniversary of the grant date).
(2) Executive shall be eligible to receive future grants under the
Company's stock incentive programs consistent with competitive pay practices
generally and with awards made to other senior executives of the Company as
determined by the Board of Directors or Compensation Committee of the Company.
(3) All equity based awards (including the sign-on incentive below)
will fully vest upon a Change of Control or upon the termination of Executive's
employment without Cause or his resignation for Good Reason.
(4) In the event of termination of employment due to the Executive's
death or disability, all equity-based awards (other than the
performance-accelerated options described below) shall, if not otherwise fully
vested, vest on the date of termination to the extent such award was scheduled
to vest during the one year period following termination of employment, and such
award as then vested shall remain exercisable throughout such one-year period.
7. Sign-On Bonus and Incentives.
(1) $2,500,000 cash payment to be made within three business days of
the commencement of Executive's employment, which is not contingent on the
performance of services for the Company and does not represent compensation for
services rendered.
(2) The Company will extend to Executive a share purchase loan (the
"Loan") in the amount of $2,500,000 to enable the Executive to purchase from the
Company $2,500,000 of common stock at a price per share equal to the Employment
Date Price (as defined above). Principal and accrued interest will be due and
payable on the earlier of the fifth anniversary of the date hereof (the
"Maturity Date") or the termination of the Executive's employment. The principal
and accrued interest will be subject to forgiveness in full on the Maturity Date
if the Executive remains in the employ of the Company through such date. Some or
all of the principal and interest will be forgiven upon earlier termination of
employment as follows. If the Executive's employment terminates due to death,
disability, termination without Cause or Executive resigns for Good Reason, or
any time after a Change in Control, then the principal and interest shall be
forgiven in full. Otherwise, a portion of the principal and accrued interest
will be forgiven, based upon the number of full months the Executive was
employed by the Company during the five-year period to the Maturity Date.
(3) The Company will grant performance-accelerated, ten-year options
with respect to 500,000 shares of common stock. Such options will be fully
vested on the ninth anniversary of the date of grant, provided that the vesting
will accelerate with respect to one-third of such shares if the market price of
the stock reaches $16.00, with respect to an additional one-third of such shares
shall if the market price reaches $32.00 and with respect to the remaining
shares if the market price reaches $50.00. The market price will be deemed to
have reached these plateaus as of the last day of a twenty-consecutive-trading
day period during which the average closing price for the stock equals the
required level.
8. Severance Agreement. Executive will be extended the Company's standard
executive Severance Agreement (as filed with the SEC in connection with the
Company's IPO), and the Executive shall have all the benefits thereof effective
as of this date, except to the extent the terms hereof would be adversely
affected by or provide greater benefits than the benefits described in the
Severance Agreement; provided, however, that notwithstanding the terms of the
Severance Agreement, the Executive shall receive:
(1) lump sum payment of any cash amount payable upon termination of
employment (other than a nonqualifying Termination under the Severance
Agreement); and
(2) a multiple and/or period for determining severance pay and benefits
continuation equal to the remaining full and partial years remaining on the Term
at the time of termination, but not less than 2.0 and/or two years.
9. Gross-Up Payment for Golden Parachute Taxes: If it is determined that any
payment by the Company to or for the benefit of Executive, under the employment
agreement or otherwise, would be subject to the federal excise taxes imposed on
golden parachute payments, the Company will make an additional payment to
Executive (the "Gross-Up Payment") in an amount sufficient to cover (a) any
golden parachute excise tax payable by Executive, (b) all taxes on the Gross-Up
Payment, and (c) all interest and/or penalties imposed with respect to such
taxes.
10. Fees and Expenses: The Company will pay all reasonable professional fees and
related expenses incurred by Executive in connection with the negotiation and
preparation of this Agreement and the employment agreement.
11. Employee Non-Solicitation and Noncompete Agreement. The Executive shall
become a party to the Company's Employee Nonsolicitation and Noncompete
Agreement in the form heretofore entered into by the Company's current Chairman,
President and CEO.
EMPLOYEMENT OFFER LETTER
September 23, 1999
Mr. William Malloy
Dear Bill:
It is my pleasure to extend to you an offer of employment with Peapod,
Inc. (the "Company"), upon the terms set forth in the attached term sheet (such
terms to be formalized as soon as possible in an employment agreement between
you and the Company). This offer has been approved by the Board of Directors of
the Company and will remain open for your acceptance until 11:00 p.m. (C.D.T.)
September 27, 1999. Please signify your acceptance of such employment by signing
as indicated below, at which your employment will commence. This letter
agreement may be executed in counterparts.
/s/ Andrew B. Parkinson
Andrew B. Parkinson
Chairman of the Board Peapod, Inc.
(Date) 9/27/99
/s/ William Malloy
William Malloy
(Date) 9/27/99
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereto duly authorized.
PEAPOD, INC.
(Registrant)
By: /s/ Dan Rabinowitz
Senior Vice President - Chief Financial Officer
Date: October 7, 1999
