Exhibit 10.20
PEAPOD, INC.
PERFORMANCE ACCELERATED 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 September 27, 1999 (the "Option Date") a non-qualified option to purchase
from the Company (the "Option") 500,000 shares ("Option Shares") of its Common
Stock, $0.01 par value ("Stock"), at the price of $8.02562 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 September 27, 2009 (the "Expiration Date").
2.2 Exercise of Option.
(a) The Option shall not be exercisable until September 27, 2008 and
shall be fully exercisable thereafter until and including the Expiration Date,
provided, however, that 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, the Option shall become fully exercisable; and provided
further that:
(i) if the market price of a share of Stock shall have sustained a
price level of Sixteen Dollars ($16.00), the Option shall thereafter be
exercisable with respect to 166,667 shares subject to the Option;
(ii) if the market price of a share of Stock shall have sustained a
price level of Thirty Two Dollars ($32.00), the Option shall thereafter be
exercisable with respect to an additional 166,667 shares subject to the Option;
(iii) if the market price of a share of Stock shall have sustained a
price level of Fifty Dollars ($50.00), the Option shall thereafter be
exercisable with respect to all of the shares subject to the Option.
The market price shall be deemed to sustained the required price levels on the
last day of any period of twenty (20) consecutive trading days during which the
average closing price of a share of Stock on the National Association of
Securities Dealers Automated Quotation National Market System ("NASDAQ"), or on
the principal securities exchange on which the Stock is then traded, equals or
exceeds the required levels.
(b) If the Optionee's employment with the Company is terminated due to
his
death or disability, the Option shall be exercisable only to the extent it would
have vested and become exercisable within one year following the effective date
of termination of employment, and may thereafter be exercised by the Optionee or
his Legal Representative until and including the earliest to occur of (i) the
first anniversary of the effective date of termination of employment and (ii)
the Expiration Date, immediately after which the Option shall terminate.
(c) If the Optionee's employment with the Company is terminated by the
Company for "Cause" or by the Executive for any reason other than "Good Reason,"
the Option shall be exercisable only to the extent it is exercisable on the
effective date of the Optionee's termination of employment 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 termination of
employment and (ii) the Expiration Date, immediately after which the Option
shall terminate.
(d) If the Optionee's employment with the Company is terminated for
any other reason, the Option shall be exercisable only to the extent it is
exercisable on the effective date of the Optionee's termination of employment
(including any accelerated exercise rights under Section 2.2(a)) and may
thereafter be exercised by the Optionee or his Legal Representative until and
including the earliest to occur of (i) the third anniversary of the effective
date of termination of employment (ii) a date one year after the Optionee's
death and (iii) the Expiration Date, immediately after which the Option shall
terminate.
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) 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
Committee shall have sole discretion to disapprove of an election pursuant to
clause (iii) and if the Optionee is subject to Section 16 of the Securities
Exchange Act of 1933, 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) "Fair Market Value" shall mean the last sale price of a share of
Stock as reported on NASDAQ 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
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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 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.
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(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 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) 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
Committee 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 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
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and Exchange Commission to register the Option Share, 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.
3.9 Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.
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.
(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.
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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:
Chairman of the Board, 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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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman of the Board
Accepted as of the 27th
day of September, 1999.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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