EXHIBIT 10.3
PEAPOD, INC.
STOCK OPTION AGREEMENT
FOR ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Pursuant to the provisions of the Executive Employment Agreement and
related agreements (collectively the "EMPLOYMENT AGREEMENT") entered
concurrently herewith by Peapod, Inc., a Delaware corporation (the "COMPANY")
and ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ (the "OPTIONEE"), the Company hereby grants to the Optionee
as of May 1, 2000 (the "OPTION DATE") a non-qualified option to purchase from
the Company (the "Option") 250,000 shares ("OPTION SHARES") of its Common Stock,
$0.01 par value ("STOCK"), at the price of $3.75 per share upon and subject to
the terms and conditions set forth below. Capitalized terms not defined herein
shall have the meanings specified in the Employment Agreement.
1. OPTION SUBJECT TO ACCEPTANCE OF AGREEMENT. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. TIME AND MANNER OF EXERCISE OF OPTION.
2.1 MAXIMUM TERM OF OPTION. In no event may the Option be exercised,
in whole or in part, after May 1, 2008 (the "EXPIRATION DATE").
2.2 EXERCISE OF OPTION. The Option shall become exercisable on the
first anniversary of the Option Date with respect to 62,500 of the Option Shares
and, thereafter, on the last day of each month with respect to an additional
5208.33 of the Option Shares (provided that, there shall be no vesting with
respect to any fraction of an Option Share, and such fraction shall be carried
over and aggregated with other Option Share fractions that would have otherwise
vested, so that vesting takes place with respect to a whole Share).
Notwithstanding the foregoing, the Option shall become fully exercisable upon a
"Change in Control," upon termination of the Optionee's employment without
"Cause," or upon the Optionee's termination of his employment for "Good Reason"
as those terms are defined in the Severance Agreement entered into by the
Company and the Optionee concurrently with the Employment Agreement ("SEVERANCE
AGREEMENT") and, upon termination of Optionee's employment with the Company, the
Option shall be exercisable only as follows:
(a) If the Optionee's employment terminates by reason of death,
the Option shall be exercisable only to the extent that the Option is
exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative until and including the earliest to occur of (i)
one year after the date of death and (ii) the Expiration Date.
(b) If the Optionee's employment is terminated by the Company
for Cause as defined in the Severance Agreement, the Option shall terminate
immediately and shall not be exercisable.
(c) If the Optionee's employment terminates for any reason other
than death or Cause, the Option shall be exercisable only to the extent such
Option is exercisable on the effective date of the Optionee's termination of
employment (including any accelerated exercise rights under Section 2.2), and
may thereafter be exercised by the Optionee or his Legal Representative until
and including the earliest to occur of (i) three months after the effective date
of the Optionee's termination of employment and (ii) the Expiration Date.
(d) Notwithstanding Section 2.2(c), if the Optionee dies during
the three-month period following termination of employment for any reason other
than Cause, the Option shall be exercisable only to the extent such Option is
exercisable on the effective date of such Optionee's termination of employment
and may thereafter be exercised by the Optionee's Legal Representative until and
including the earliest to occur of (i) one year after the date of death and (ii)
the Expiration Date.
2.3 METHOD OF EXERCISE.
(a) Subject to the limitations set forth in this Agreement, the
Option may be exercised in whole or in part by the Optionee (1) by giving
written notice to the Company specifying the number of whole shares of Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (i) in cash, (ii) by
delivery of previously owned whole shares of Stock (which the Optionee has held
for at least six months prior to the delivery of such shares or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances ("MATURE SHARES")) having a Fair
Market Value (defined below), determined as of the date of exercise, equal to
the aggregate purchase price payable pursuant to the Option by reason of such
exercise, (iii) by authorizing the Company to withhold whole shares of 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 pursuant to the Option by reason of such exercise, (iv)
in cash by a broker-dealer acceptable to the Company to whom the Optionee has
submitted an irrevocable notice of exercise or (v) a combination of (i), (ii)
and (iii), and (2) by executing such documents as the Company may reasonably
request. The Board shall have sole discretion to disapprove of an election
pursuant to clauses (ii) through (v) and, if the Optionee is subject to Section
16 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), the
Company may require that the method of making such payment be in compliance with
Section 16 and the rules and regulations thereunder. Any fraction of a share of
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 a share of Stock shall be delivered until the full
purchase price therefor has been paid.
(b) In the event that, prior to the termination of Optionee's
employment with the Company, Optionee exercises the Option, in whole or in part,
by delivering a whole number of Mature Shares in accordance with Section 2.3(ii)
in payment of the purchase price payable by reason of such exercise, Optionee
may elect, and upon such election shall be entitled to receive upon payment in
full of such purchase price in Mature Shares, a replacement option (a
"REPLACEMENT OPTION"). Such Replacement Option: (i) shall be for a number of
shares of Stock equal to the total of the number of whole Mature Shares
delivered to satisfy the purchase price payable by reason of such exercise or as
payment for withholding taxes under Section 3.3 plus the number of whole shares
of Stock, if any, withheld by the Company as payment for such withholding taxes;
(ii) shall have an option grant date that is the date of such exercise of the
original Option (or portion thereof); (iii) shall be immediately exercisable,
and have an exercise price equal to the Fair Market Value of a share of Stock on
the option grant date of the Replacement Option; (iv) shall in no event be
exercised, in whole or in part, after the Expiration Date; (v) shall be subject
to all other terms of the Option not inconsistent with the foregoing; and (vi)
shall not be designated as an incentive Stock Option.
(c) "FAIR MARKET VALUE" shall mean the last sale price of a
share of 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 Stock is listed on a
national securities exchange, the last sale price of a share of Stock on the
principal national stock exchange on which the Stock is traded, or, if there
shall be no reported transactions for such date, on the next preceding date for
which transactions were reported; PROVIDED that, if Fair Market Value for any
date cannot be so determined, Fair Market Value shall be determined by the Board
by whatever means the Board, in the good faith exercise of its discretion, shall
deem appropriate.
2.4 TERMINATION OF OPTION.
(a) In no event may the Option be exercised after it terminates
as set forth in this Section 2.4. The Option shall terminate, to the extent not
exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2,
on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Stock subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within ten days of the Optionee's delivery
of this Agreement to the Company, either (i) ▇▇▇▇ this Agreement to indicate the
extent to which the Option has expired or been exercised, cancelled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be at least as favorable to the Optionee
as this Agreement in form and substance.
3. ADDITIONAL TERMS AND CONDITIONS OF OPTION.
3.1 NONTRANSFERRABILITY OF OPTION. The Option may not be transferred
by the Optionee other than by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except
to the extent permitted by the foregoing sentence, during the Optionee's
lifetime the Option is exercisable only by the Optionee or the Optionee's Legal
Representative. Except to the extent permitted by the foregoing, the Option may
not 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. Any attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of the Option shall
be null and void and of no force or effect.
3.2 INVESTMENT REPRESENTATION. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
opinion of counsel reasonably acceptable to the Company that such registration
is not required; and (c) if requested by the Company, the Optionee shall submit
a written statement in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option, the Optionee shall comply with all regulations and requirements of
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any regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board shall in its reasonable judgment deem necessary or advisable to
comply with the Securities Act, applicable state securities laws or the
regulations or requirements of any such regulatory authority.
3.3 WITHHOLDING TAXES.
(a) As a condition precedent to the delivery of Stock upon
exercise of the Option, the Optionee shall, upon request by the Company, pay to
the Company in addition to the purchase price of the shares, such amount of cash
as the Company may be required, under all applicable federal, state, local or
other laws or regulations, to withhold and pay over as income or other
withholding taxes (the "REQUIRED TAX PAYMENTS") with respect to such exercise of
the Option. If the Optionee shall fail to advance the Required Tax Payments
after request by the Company, the Company may, in its discretion, deduct any
Required Tax Payments from any amount then or thereafter payable by the Company
to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned Mature Shares having a Fair Market Value, determined as of
the date the obligation to withhold or pay taxes first arises in connection with
the Option (the "TAX DATE"), equal to the Required Tax Payments, (3) authorizing
the Company to withhold whole shares of Stock which would otherwise be delivered
to the Optionee upon exercise of the Option having a Fair Market Value,
determined as of the Tax Date, equal to the Required Tax Payments, (4) 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). The Board shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5) and, if the Optionee is subject to Section 16
of the Exchange Act, the Company may require that the method of making such
payment be in compliance with Section 16 and the rules and regulations
thereunder. Shares of Stock to be delivered or withheld may have a Fair Market
Value in excess of the minimum amount of the Required Tax Payments, but not in
excess of the amount determined by applying the Optionee's maximum marginal tax
rate. Any fraction of a share of Stock which would be required to satisfy any
such obligation shall be disregarded and the remaining amount due shall be paid
in cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
3.4 ADJUSTMENT. 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 Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Board (such
adjustment to be made reasonably and in good faith by the Board) without an
increase in the aggregate purchase price. If any adjustment would result in a
fractional security being subject to the Option, the Company shall pay the
Optionee, in connection with the first exercise of the Option, 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 (A) the Fair Market Value on the exercise date
over (B) the exercise price of the Option. Such a decision of the Board
regarding
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any such adjustment shall be final, binding and conclusive.
3.5 COMPLIANCE WITH APPLICABLE LAW. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not approved by the
Company (which approval will not be unreasonably withheld). The Company agrees
to file a registration statement on Form S-8 with the Securities and Exchange
Commission to register the Option Shares, and to use all reasonable efforts to
effect or obtain any other necessary listing, registration, qualification,
consent or approval.
3.6 DELIVERY OF CERTIFICATES. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3. Each share certificate representing Shares not registered under the
Securities Act shall bear the following legend to the extent applicable:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 or under any
state securities laws and may not be sold, encumbered or
otherwise transferred in the absence of such registration or
an opinion of counsel reasonably acceptable to the Company
that such registration is not required."
3.7 OPTION CONFERS NO RIGHTS AS STOCKHOLDER. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8 DECISIONS OF BOARD. The Board shall have the right to resolve all
questions and make all determinations which may arise in connection with the
Option or its exercise (which rights the Board shall exercise reasonably and in
good faith), and any interpretation, determination or other action so made or
taken by the Board regarding this Agreement shall be final, binding and
conclusive.
4. MISCELLANEOUS PROVISIONS.
4.1 DESIGNATION AS NONQUALIFIED STOCK OPTION. The Option is hereby
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2 MEANING OF CERTAIN TERMS.
(a) References in this Agreement to sections of the Code shall
be deemed to refer to any successor section of the Code or any successor
internal revenue law.
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(b) As used herein, the term "LEGAL REPRESENTATIVE" shall
include an executor, administrator, legal representative, guardian or similar
person.
4.3 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement.
4.4 NOTICES. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to Peapod, Inc.,
Attention: Treasurer, and if to the Optionee, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ at his address on
the records of the Company. All notices, requests or other communications
provided for in this Agreement shall be made in writing either (a) by personal
delivery to the party entitled thereto, (b) by facsimile with confirmation of
receipt, (c) by mailing in the United States mails to the last known address of
the party entitled thereto or (d) by express courier service. The notice,
request or other communication shall be deemed to be received upon personal
delivery, upon confirmation of receipt of facsimile transmission or upon receipt
by the party entitled thereto if by United States mail or express courier
service; PROVIDED, HOWEVER, that if a notice, request or other communication is
not received during regular business hours, it shall be deemed to be received on
the next succeeding business day of the Company.
4.5 GOVERNING LAW. This Agreement, the Option and all determinations
made and actions taken pursuant hereto and thereto, to the extent not governed
by 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.
4.6 COUNTERPARTS. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
PEAPOD, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Treasurer
Accepted as of the
1st day of May, 2000.
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
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