EXCHANGE AGREEMENT
AND FIRST AMENDMENT TO
PURCHASE AGREEMENT (Dated April 14, 2000)
by and among
PEAPOD, INC.,
and
KONINKLIJKE AHOLD N.V.
Dated as of October 12, 2000
TABLE OF CONTENTS
Page
ARTICLE I EXCHANGE AND AMENDMENT.............................................1
1.1. Exchange.......................................................1
1.2. The Closing....................................................2
1.3. Deliveries at the Exchange Closing.............................2
1.4. Amendment to the Purchase Agreement Following the Exchange.....2
ARTICLE II CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR.....................3
2.1. Accuracy of Representations and Warranties.....................3
2.2. Approval.......................................................3
ARTICLE III CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.....................3
3.1. Accuracy of Representations and Warranties.....................3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................3
4.1. Organization and Standing......................................3
4.2. Capital Stock..................................................4
4.3. Subsidiaries...................................................5
4.4. Authorization; Enforceability..................................5
4.5. No Violation; Consents.........................................5
4.6. Fully Paid Shares..............................................5
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.....................6
5.1. Authorization; Enforceability; No Violations...................6
5.2. Consents.......................................................6
5.3. Private Placement..............................................6
5.4. Ownership......................................................7
ARTICLE VI COVENANTS.........................................................7
6.1. Agreement to Pay Accrued Dividends.............................7
6.2. Securities Legends.............................................8
ARTICLE VII SURVIVAL; INDEMNIFICATION........................................8
7.1. Survival.......................................................8
7.2. Indemnification................................................8
ARTICLE VIII DEFINITIONS....................................................10
8.1. Definitions...................................................10
ARTICLE IX MISCELLANEOUS....................................................12
9.1. Notices.......................................................12
9.2. Fees and Expenses.............................................13
9.3. Specific Performance..........................................13
9.4. Entire Agreement; Waivers and Amendments......................14
9.5. Assignment; Binding Effect....................................14
9.6. Severability..................................................14
9.7. No Third Party Beneficiaries..................................14
9.8. Public Announcements..........................................14
9.9. Governing Law.................................................15
9.10. Interpretation...............................................15
9.11. Captions.....................................................15
9.12. Counterparts.................................................15
EXHIBITS
Exhibit A.........Series B Certificate of Designations
Exhibit B.........Form of Series C Certificate of Designations
Exhibit C.........Waiver
Exhibit D.........Amended and Restated Stockholders Rights Agreement
Exhibit E.........Opinion of Sidley & Austin
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT AND FIRST AMENDMENT TO PURCHASE AGREEMENT
(dated April 14, 2000) (this "Agreement") is made and entered into as of October
12, 2000, by and between PEAPOD, INC., a Delaware corporation (the "Company")
and Koninklijke Ahold N.V., a public company with limited liability incorporated
under the laws of The Netherlands (the "Investor"). Certain capitalized terms
used herein shall have the meanings set forth in Article VIII.
R E C I T A L S
WHEREAS, the Investor purchased from the Company, and the Company sold
to the Investor, 726,371 shares of Series B Convertible Preferred Stock, par
value $0.01 per share, of the Company ("Series B Preferred Stock"), having the
rights, preferences and terms set forth in the form of Certificate of
Designations of Series B Convertible Preferred Stock of the Company, filed with
the Secretary of State of the State of Delaware on June 29, 2000 (attached
hereto as Exhibit A) (the "Series B Certificate of Designations"), all upon the
terms and subject to the conditions set forth in that certain Purchase
Agreement, dated as of April 14, 2000 by and between the Company and the
Investor (the "Purchase Agreement");
WHEREAS, the Investor desires to exchange the 726,371 shares of Series
B Preferred Stock for 726,371 shares of Series C Convertible Preferred Stock,
par value $0.01 per share, of the Company, (the "Series C Preferred Stock")
having the rights, preferences and terms set forth in the form of Certificate of
Designations of Series C Convertible Preferred Stock of the Company, attached
hereto as Exhibit B (the "Series C Certificate of Designations"); and
WHEREAS, the Company desires to issue 726,371 shares of Series C
Preferred Stock in exchange for 726,371 shares of the Series B Preferred Stock;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
EXCHANGE AND AMENDMENT
1.1. Exchange. Upon the terms and subject to the conditions set forth
in this Agreement, the Investor and the Company agree to exchange (the
"Exchange") the 726,371 shares of Series B Preferred Stock (the "Series B
Shares") held by the Investor for 726,371 shares of Series C Preferred Stock
(the "Series C Shares").
1.2. The Closing. The closing (the "Exchange Closing") of the Exchange
hereunder shall take place at the offices of Sidley & Austin, Bank ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m. Chicago time, on the date hereof
or at such other time and place as the parties hereto shall agree in writing.
The date on which the Exchange Closing occurs is referred to herein as the
"Exchange Closing Date."
1.3. Deliveries at the Exchange Closing. (a) At the Exchange Closing,
the Company shall issue and deliver to the Investor all of the following:
(i) Certificates representing an aggregate of 726,371 shares
of Series C Preferred Stock in definitive form and registered in the
name of the Investor or its nominee or designee and in such
denominations as the Investor shall request in writing at least two
(2) Business Days prior to the Exchange Closing Date, together with
all other documents required hereunder to be delivered by the Company
to the Investor at the Exchange Closing;
(ii) Certificate of good standing of the Company issued as
of a recent date by the Secretary of State of the State of Delaware;
and
(iii) Certificate of the secretary of the Company, dated the
Exchange Closing Date, in form and substance reasonably satisfactory
to the Investor, as to (A) the Certificate of Incorporation of the
Company; (B) the resolutions of the board of directors of the Company
authorizing the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and (iii) the incumbency of
the officers of the Company executing this Agreement.
(b) At the Exchange Closing, the Investor shall deliver to the Company
all of the following;
(i) Certificates representing 726,371 shares of the Series B
Preferred Stock; and
(ii) Duly executed stock powers in favor of the Company in
respect of such certificates.
1.4. Amendment to the Purchase Agreement Following the
Exchange. Effective as of the Exchange Closing Date, the Purchase Agreement
shall be amended as follows: in Article I, the definition of "Series B Preferred
Stock" shall be amended by adding, after the phrase "shall mean the Series B
Convertible Preferred Stock, par value $0.01 per share, of the Company" the
words "or any securities for which the Series B Convertible Preferred Stock is
exchanged."
ARTICLE II
CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR
The obligation of the Investor to consummate the Exchange is subject
to the satisfaction of the following conditions as of the Exchange Closing:
2.1. Accuracy of Representations and Warranties. The representations
and warranties contained in Article IV hereof shall be true and correct in all
material respects at and as of the Exchange Closing as though then made, except
to the extent of changes caused by the transactions expressly contemplated
herein;
2.2. Approval. The transactions contemplated by this Agreement shall
have been approved by all requisite corporate action by the Company's board of
directors under the laws of the State of Delaware.
2.3. Certificate of Designations. The Certificate of Designations of
Series C Convertible Preferred Stock shall have been filed with the Secretary of
State of the State of Delaware.
2.4. Stockholders Rights Agreement. The Amended and Restated
Stockholders Rights Agreement between the Company and First Chicago Trust
Company of New York, a division of Equiserve, shall have been amended as
reflected in the form attached as Exhibit D hereto.
2.5. Opinion of Sidley & Austin. Sidley & Austin, counsel to the
Company, shall have delivered to the Investor an opinion, dated such Exchange
Closing Date, addressed to the Investor, substantially in the form attached as
Exhibit E hereto.
ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligation of the Company to consummate the Exchange is subject to
the satisfaction of the following condition as of the Exchange Closing:
3.1. Accuracy of Representations and Warranties. The representations
and warranties contained in Article V shall be true and correct in all material
respects at and as of the Exchange Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in that section of the document of even date
herewith and delivered by the Company to the Investor prior to the execution and
delivery of this Agreement (the "Disclosure Schedule") corresponding to the
Section of this Agreement to which any of the following representations or
warranties pertain, the Company hereby represents and warrants to the Investor,
as of the date of this Agreement, as follows:
4.1. Organization and Standing. The Company is duly incorporated,
validly existing and in good standing as a domestic corporation under the laws
of the State of Delaware and has all requisite corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and as proposed to be conducted. The Company is duly qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of its business makes such qualification necessary, except where the
failure to so qualify or be in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.2. Capital Stock. On the date hereof, the authorized capital stock
of the Company will consist solely of (a) 100,000,000 shares of Common Stock and
(b) 10,000,000 shares of Preferred Stock. As of the date hereof, of the
100,000,000 shares of Common Stock authorized, (i) 17,967,562 shares of Common
Stock are issued and outstanding, (ii) 41,913,066 shares are reserved for
issuance pursuant to outstanding options and warrants and existing employee
stock plans, (iii) immediately prior to the Exchange, 19,369,873 shares are
reserved for issuance upon conversion of the shares of Series B Preferred Stock,
and (iv) 19,369,873 shares will be reserved for issuance upon conversion of the
shares of Series C Preferred Stock. As of the date hereof, of the 10,000,000
shares of Preferred Stock authorized, (i) 1,000,000 shares have been designated
Series A Preferred Stock, none of which will be issued or outstanding but all of
which have been reserved for issuance upon the exercise of rights under the
Rights Agreement, (ii) 730,000 shares have been designated Series B Preferred
Stock, 726,371 of which are issued and outstanding immediately prior to the
Exchange, and (ii) 730,000 shares will have been designated Series C Preferred
Stock. Each share of capital stock of the Company that is issued and outstanding
is duly authorized, validly issued, fully paid and nonassessable, and will not
be subject to nor issued in violation of, any preemptive rights. All shares of
Series C Preferred Stock issued at the Exchange Closing, or as a dividend on any
outstanding shares of Series C Preferred Stock, will be duly authorized, validly
issued, fully paid and nonassessable. Upon conversion of any shares of Series C
Preferred Stock in accordance with their terms, all of the Common Stock issued
upon such conversion will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 4.2 or as contemplated by this
Agreement, at the date hereof there are, and immediately following the Exchange
Closing there will be (a) no outstanding or authorized options, warrants,
agreements, conversion rights, preemptive rights, other rights, subscriptions,
claims of any character, obligations, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to shares of capital stock
of the Company or any of its Subsidiaries or pursuant to which the Company or
any of its Subsidiaries is or may become obligated to issue shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, purchase or acquire, any shares of the
capital stock of the Company or any of its Subsidiaries, (b) no restrictions
upon the dividends, voting or transfer of any shares of capital stock of the
Company pursuant to its Charter, Bylaws or other governing documents or any
agreement or other instruments to which it is a party or by which it is bound,
and (c) no shares of Common Stock or Preferred Stock held by the Company in its
treasury. The holders of the Series C Preferred Stock will, upon issuance
thereof, have the rights set forth in the Series C Certificate of Designations.
Neither the Company nor any of its Subsidiaries has authorized or outstanding
bonds, debentures, notes or other indebtedness the holders of which have the
right to vote (or convertible or exercisable for or exchangeable into securities
the holders of which have the right to vote) with the stockholders of such
person on any matter. Following the Exchange Closing, and except as contemplated
by this Agreement or the Rights Agreement or as set forth on Schedule 4.2, there
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Common
Stock or capital stock of the Company or any of its Subsidiaries.
4.3. Subsidiaries. The Company has no Subsidiaries.
4.4. Authorization; Enforceability. The Company has the corporate
power to execute, deliver and perform its obligations under this Agreement and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of this Agreement and to consummate the transactions
contemplated hereby and thereby. No other corporate proceedings on the part of
the Company are necessary therefor. The Company has duly executed and delivered
this Agreement. This Agreement will constitute, when executed and delivered by
the Company, assuming due execution by the Investor, the legal, valid and
binding obligations of the Company enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
4.5. No Violation; Consents. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby does not and will not contravene any Applicable
Law, except for any such contraventions that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby (i) will not (x) violate,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, Benefit Plan, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which any of them is
bound or to which any of their properties or assets is subject, except to the
extent any such conflict or breach, singly or in the aggregate, would not have a
Material Adverse Effect, (y) result in the creation or imposition of any Lien
(other than a Permitted Lien) upon any of the properties or assets of any of
them, or (z) except as set forth on Schedule 4.5(a), obligate the Company to
make any payment or incur any additional obligation, or give rise to any right
of any person with respect to the Company, under any term or provision of any
contract or agreement, the Charter or Bylaws of the Company, any Benefit Plan or
any Applicable Law, that relates to a change of control or ownership of the
Company or any similar provision, (ii) will not violate any provision of its
Charter or Bylaws, and (iii) will not result in the Investor or any of its
Affiliates or Permitted Transferees being (x) an "Acquiring Person" under the
Amended and Restated Stockholder Rights Agreement, dated as of April 14, 2000
(the "Rights Agreement"), by and between the Company and First Chicago Trust
Company of New York, a division of Equiserve, as Rights Agent, or (y) an
"interested stockholder," under Section 203 of the DGCL.
(b) Except as set forth on Schedule 4.5(b), no consent, authorization
or order of, or filing or registration with, any Governmental Authority or other
person is required to be obtained or made by the Company or any of its
Subsidiaries for the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Except as disclosed in that section of the document of even date
herewith and delivered by the Investor to the Company prior to the execution and
delivery of this Agreement (the "Investor Disclosure Schedule") corresponding to
the Section of this Agreement to which any of the following representations or
warranties pertain, the Investor hereby represents and warrants to the Company,
as of the date of this Agreement, as follows:
5.1. Authorization; Enforceability; No Violations. (a) The Investor is
duly organized and validly existing in good standing as a corporation under the
laws of its jurisdiction of organization and has all requisite corporate power
and authority to own its properties and assets and to carry on its business as
it is now being conducted. The Investor has the corporate power to execute,
deliver and perform the terms and provisions of this Agreement and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of the Agreement and to consummate the transactions contemplated hereby.
No other corporate proceedings on the part of the Investor are necessary
therefor.
(b) The Investor has duly executed and delivered this Agreement. This
Agreement will constitute, when executed and delivered by the Investor, assuming
the due execution by the Company, the legal, valid and binding obligations of
the Investor, enforceable against the Investor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
5.2. Consents. No consent, authorization or order of, or filing or
registration with, any Governmental Authority or other person is required to be
obtained or made by the Investor for the execution, delivery and performance by
the Investor of this Agreement or the consummation of the transactions
contemplated hereby.
5.3. Private Placement. (a) The Investor understands that (i) the
issuance of the Series C Shares by the Company to the Investor is intended to be
exempt from registration under the Securities Act pursuant to section 4(2)
thereof, and (ii) there is no existing public or other market for the
Securities.
(b) The Series C Shares to be acquired by the Investor pursuant to
this Agreement are being acquired for its own account and without a view to
making a distribution thereof in violation of the Securities Act, without
prejudice, however, to its right to sell or otherwise dispose of all or any part
of such securities in compliance with the provisions of the Securities Act and
applicable state securities or "blue sky" laws.
(c) The Investor has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Series C Preferred Stock and the Investor is capable of
bearing the economic risks of such investment, including a complete loss of its
investment in the shares of Series C Preferred Stock.
(d) The Investor is an "accredited investor," as such term is defined
in Regulation D under the Securities Act.
(e) The Investor acknowledges that the Company will rely on the
accuracy and truth of its representations in this Section 5.3, and the Investor
hereby consents to such reliance.
(f) The Investor has had the opportunity to ask questions of, and
receive answers from, representatives of the Company concerning the Company and
the terms and conditions of this transaction, as well as to obtain any
information requested by the Investor. Any questions raised by the Investor
concerning the transaction have been answered to the satisfaction of the
Investor. The Investor's decision to enter into the transactions contemplated
hereby is based in part on the answers to such questions as the Investor has
raised concerning the transaction and on the Investor's own evaluation of the
risks and merits of the purchase and the Company's proposed business activities.
5.4. Ownership. The Series B Shares are free and clear of any Liens or
Encumbrances (except for those expressly set forth in this Agreement, the Series
B Certificate of Designations and applicable Federal and state securities laws
and regulations). The exchange of the Series B Shares for the Series C Shares as
contemplated by this Agreement is not subject to any preemptive right or right
of first refusal. Upon the consummation of the Exchange, the Company will
acquire good and marketable title to each of the Series B Shares, free and clear
of any Lien or Encumbrance, and will be entitled to all the rights and benefits
of a holder of such securities.
ARTICLE VI
COVENANTS
6.1. Agreement to Pay Accrued Dividends. The parties hereto hereby
acknowledge and agree that as of September 30, 2000, dividends had accrued and
become payable with respect to the Series B Shares, subject to that certain
waiver, dated as of October 2, 2000 between the parties (attached hereto as
Exhibit C) (the "Waiver"). The Company hereby agrees that such dividends are due
and owing to the Investor and, notwithstanding the Exchange, shall be
accumulated, compounded and paid in accordance with the terms of the Series B
Certificate of Designations and the Waiver.
6.2. Securities Legends. Each certificate evidencing ownership of the
Series C Shares shall be stamped or otherwise have endorsed or imprinted thereon
a legend in substantially the following form, so long as applicable:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH,
IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT, THE RULES AND
REGULATIONS PROMULGATED THEREUNDER AND THE SECURITIES LAWS OF ANY
APPLICABLE STATE."
Notwithstanding the foregoing, upon receipt by the Company of evidence
and documents reasonably satisfactory to it of the termination of the
requirement that all or any part of any of the foregoing legends be placed upon
a certificate and upon the written request of the holders of the securities
represented thereby, the Company shall issue certificates for such securities
that do not bear such legend.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1. Survival. All representations, warranties, covenants and
agreements of the parties contained in this Agreement, or in any Schedule
hereto, shall survive for a period of two years following the Exchange Closing;
provided, however, that with respect to claims asserted pursuant to Section 7.2
before the expiration of the applicable representation or warranty, such claims
shall survive until the date they are finally liquidated or otherwise resolved.
The covenants and agreements of the parties contained in this Agreement shall
remain in full force and effect in accordance with the terms hereof.
7.2. Indemnification. (a) The Company and each of its Subsidiaries
hereby agree to indemnify, defend, and hold harmless the Investor (and its
directors, officers, Affiliates, successors, and assigns) from and against all
losses, liabilities, damages, costs, or expenses, including interest, penalties,
and reasonable attorneys' fees and expenses, (collectively, "Losses"), or other
diminution in the value of the Series C Shares, arising out of, based upon, or
otherwise resulting from (i) any inaccuracy in any representation or breach of
any warranty of the Company contained in this Agreement or in any Schedule
hereto or (ii) the breach or nonfulfillment of any covenant, agreement, or other
obligation of the Company under this Agreement or the Series C Certificate of
Designations.
(b) The Investor hereby agrees to indemnify, defend, and hold harmless
the Company (and its respective directors, officers, partners, principals,
Affiliates, successors, and assigns) from and against any Losses arising out of,
based upon, or otherwise resulting from (i) any inaccuracy in any representation
or breach of any warranty of the Investor contained in this Agreement or in any
Schedule hereto or (ii) the breach or nonfulfillment of any covenant, agreement,
or other obligation of the Investor under this Agreement.
(c) Promptly after the receipt by any party hereto of notice of any
third-party claim or the commencement of any third-party action, suit or
proceeding subject to indemnification hereunder (a "Third-Party Claim"), such
party (the "Indemnified Party") will, if a claim in respect thereto is to be
made against any party obligated to provide indemnification hereunder (the
"Indemnifying Party"), give such Indemnifying Party prompt written notice of
such Third-Party Claim; provided, however, that the failure to provide such
notice will not relieve the Indemnifying Party of any of its obligations, or
impair the right of the Indemnified Party to indemnification pursuant to this
Section 7.2 unless, and only to the extent that, such failure materially
prejudices the Indemnifying Party's opportunity to defend or compromise the
Third-Party Claim or such failure directly increases the amount of
indemnification payments hereunder over and above the amount thereof that would
otherwise have been payable had such notice been provided as aforesaid. If the
Indemnified Party is not a litigant, participant, or real party in interest in
the Third-Party Claim, the Indemnifying Party shall be entitled and required to
assume the defense of such Third-Party Claim and defend the same at its own
expense and shall have sole authority to compromise or settle the same. If the
Indemnified Party is a litigant, participant, or real party in interest in the
Third-Party Claim (an "Interested Third-Party Claim"), the Indemnifying Party
shall have the right, at its option, to defend at its own expense and by its own
counsel such Interested Third-Party Claim, provided that (i) such counsel is
reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party is
kept reasonably informed of all developments, is furnished with copies of all
documents and papers related thereto, and is given the right to participate in
the defense and investigation thereof at the expense of the Indemnified Party as
provided below, and (iii) such counsel proceeds with diligence and in good faith
with respect thereto. If any Indemnifying Party shall undertake to defend any
Interested Third-Party Claim, it shall notify the Indemnified Party of its
intention to do so promptly (and in any event no later than thirty (30) days)
after receipt of notice of the Interested Third-Party Claim, and the Indemnified
Party agrees to cooperate in good faith with the Indemnifying Party and its
counsel in the defense of such Interested Third-Party Claim. Notwithstanding the
foregoing, the Indemnified Party shall have the right to participate in the
defense and investigation of any such Interested Third-Party Claim with its own
counsel at its own expense, except that the Indemnifying Party shall bear the
expense of one such separate counsel if (A) in the written opinion of counsel to
the Indemnified Party reasonably acceptable to the Indemnifying Party, the use
of counsel of the Indemnifying Party's choice to represent both the Indemnifying
Party and the Indemnified Party in such matter would be expected to give rise to
a conflict of interest, (B) there are or may be legal defenses available to the
Indemnified Party that are different from or additional to those available to
the Indemnifying Party, (C) the Indemnifying Party shall not have employed
counsel to represent the Indemnified Party within a reasonable time after notice
of such Interested Third-Party Claim is given to the Indemnifying Party or after
notice that the Indemnifying Party intends to assume the defense of the
Interested Third-Party Claim is given to the Indemnified Party, or (D) the
Indemnifying Party shall authorize the Indemnified Party in writing to employ
separate counsel at the expense of the Indemnifying Party. The Indemnifying
Party shall not settle any Interested Third-Party Claim without the prior
written consent of the Indemnified Party, which shall not be unreasonably
withheld (except that no such consent shall be required if such settlement
contains a complete release of all liability related to such Interested
Third-Party Claim). If, under the foregoing provisions, the Indemnified Party
assumes control of the defense of any Interested Third-Party Claim, the
Indemnified Party shall not settle such Interested Third-Party Claim without the
prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld.
(d) Except to the extent otherwise required by law, any indemnity
payment made pursuant to this Section 7.2 or other payment made pursuant to this
Agreement shall be treated by the parties and their Affiliates on their Tax
Returns as an adjustment to the consideration being provided for the Series C
Shares hereunder. For purposes of this Section 7.2, Losses shall include any tax
liabilities of the Indemnified Party resulting from the indemnity payments and
shall be reduced by the Indemnified Party by any tax benefits realized by the
Indemnified Party as a result of the losses, liabilities, damages, costs or
expenses included in computing the Losses.
ARTICLE VIII
DEFINITIONS
8.1. Definitions. The following terms when used in this Agreement
(including the Schedules and Exhibits hereto) shall have the following
respective meanings:
"Affiliate" of a Person means any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with such Person. For purposes of this definition and the
definition of "Subsidiary" below, "control" (or "controlled," as the context may
require) shall have the meaning set forth in Rule 12b-2 under the Exchange Act.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Applicable Law" means, with respect to any person, any law, statute,
rule regulation, order, writ, injunction, judgment or decree of any Governmental
Authority to which such person or any of its subsidiaries is bound or to which
any of their respective properties is subject.
"Benefit Plan" has the meaning set forth in the Purchase Agreement.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in Illinois or New York are required or authorized
by law to be closed.
"Charter" means, with respect to any corporation, the certificate of
incorporation or articles of incorporation of such corporation.
"Common Stock" has the meaning set forth in the recitals of this
Agreement.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Disclosure Schedule" has the meaning set forth in the first paragraph
of Article II.
"Exchange" shall have the meaning set forth in Section 1.1.
"Exchange Closing" has the meaning set forth in Section 1.2.
"Exchange Closing Date" has the meaning set forth in Section 1.2.
"Governmental Authority" means any federal, state, local or foreign
governmental or regulatory authority.
"Indemnified Party" and "Indemnifying Party" have the respective
meanings set forth in Section 5.2.
"Indemnity Threshold" has the meaning set forth in Section 7.2.
"Interested Third Party Claim" has the meaning set forth in Section
7.2.
"Investor" has the meaning set forth in the first paragraph of this
Agreement.
"Investor Disclosure Schedule" has the meaning set forth in the first
paragraph of Article III.
"Lien or Encumbrance" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right, easement, servitude, transfer
limit, restriction, title defect or other encumbrance.
"Losses" has the meaning set forth in Section 7.2.
"Material Adverse Effect" means a material adverse effect (i) on the
business, operations, prospects, properties, earnings, assets, liabilities or
condition (financial or other) of the Company and its Subsidiaries, taken as a
whole, or (ii) on the ability of the Company or any of its Subsidiaries to
perform its obligations hereunder.
"Permitted Lien" means: (i) liens for Taxes and other governmental
charges and assessments arising in the ordinary course of business which are not
yet due and payable, (ii) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable, (iii) other liens
or imperfections on property which are not material in amount, do not interfere
with, and are not violated by, the consummation of the transactions contemplated
by this Agreement, and do not impair the marketability of, or materially detract
from the value of or materially impair the existing use of, the property
affected by such lien or imperfection, and (iv) liens created or permissible
under the Credit and Security Agreements, dated as of April 14, 2000 between the
Company and the Investor.
"Permitted Transferee" means any Person.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, Governmental Authority or other entity or
organization.
"Preferred Stock" means the preferred stock, par value $.01 per share,
of the Company.
"Purchase Agreement" has the meaning set forth in the recitals of this
Agreement.
"Rights Agreement" has the meaning set forth in Section 4.5.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Series B Certificate of Designations" has the meaning set forth in
the recitals of this Agreement.
"Series C Certificate of Designations" has the meaning set forth in
the recitals of this Agreement.
"Series B Preferred Stock" and "Series B Shares" have the respective
meanings set forth in the recitals of this Agreement.
"Series C Preferred Stock" and "Series C Shares" have the respective
meanings set forth in the recitals of this Agreement.
"Subsidiary" means, with respect to any Person, any entity controlled
(as such term is defined in the definition of "Affiliate" above) by such Person.
"Tax Returns" has the meaning set forth in the Purchase Agreement.
"Third Party Claim" has the meaning set forth in Section 7.2.
"Waiver" has the meaning set forth in Section 6.1.
ARTICLE IX
MISCELLANEOUS
9.1. Notices. Any notices and other communications required to be
given pursuant to this Agreement shall be in writing and shall be effective upon
delivery by hand (against written receipt) or upon receipt if sent by certified
or registered mail (postage prepaid and return receipt requested) or by a
nationally recognized overnight courier service (appropriately marked for
overnight delivery) or upon transmission if sent by telex or facsimile (with
request for immediate confirmation of receipt in a manner customary for
communications of such respective type and with physical delivery of the
communication being made by one of the other means specified in this Section
10.1 as promptly as practicable thereafter). Notices are to be addressed as
follows:
(a) If to the Company to:
Peapod, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Sidley & Austin
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Investor to:
Koninklijke Ahold N.V.
c/o The Stop and Shop Supermarket Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and:
Koninklijke Ahold N.V.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Ton van Tielraden, Esq.
Telecopy No.: (▇▇-▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq./▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other respective addresses as any of the parties hereto shall
designate to the others by like notice, provided that notice of a change of
address shall be effective only upon receipt thereof.
9.2. Fees and Expenses. Except as provided herein, each of the parties
hereto shall pay its own respective fees and expenses (including, without
limitation, the fees and disbursements of any attorneys, accountants, investment
bankers, consultants or other Representatives) incurred in connection with this
Agreement and the transactions contemplated hereby, whether or not such
transactions are consummated.
9.3. Specific Performance. Each party hereto acknowledges and agrees
that in the event of any breach or default by the other party under this
Agreement, the other party hereto would be irreparably and immediately harmed
and could not be made whole by monetary damages. It is accordingly agreed that
in such case (i) each defaulting party hereto will waive, in any action, suit or
proceeding for specific performance or other relief referred to in this
paragraph, the defense of adequacy of money damages or a remedy at law, and (ii)
the other non-defaulting party shall be entitled, in addition to any other
remedy to which it may be entitled at law or in equity or otherwise, to compel
specific performance of this Agreement or to obtain a temporary restraining
order, preliminary and permanent injunction or other equitable relief or remedy,
in any action, suit or proceeding instituted in any state or federal court.
9.4. Entire Agreement; Waivers and Amendments. This Agreement
(including the Exhibits hereto and the documents and instruments referred to
herein) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements, representations and understandings with respect thereto except for
the purposes of Section 6.1, the Series B Certificate of Designations and the
Waiver. This Agreement may only be amended or modified, and the terms hereof may
only be waived, by a writing signed by both parties hereto or, in the case of a
waiver, by the party entitled to the benefit of the terms being waived.
9.5. Assignment; Binding Effect. This Agreement may not be assigned or
delegated, in whole or in part, by either party hereto without the prior written
consent of the other party hereto, except that the Investor shall have the right
at any time, without such consent, to assign its right hereunder to exchange the
Series B Shares for the Series C Shares to any wholly owned Subsidiary of the
Investor (in which event, the Investor shall irrevocably and unconditionally
guarantee the performance by such Subsidiary of the Investor's obligation
hereunder to exchange such Series B Shares for such Series C Shares). Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
9.6. Severability. In the event that any provision of this Agreement
shall be declared invalid or unenforceable by a court of competent jurisdiction
in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent declared invalid or unenforceable without affecting
the validity or enforceability of the other provisions of this Agreement, and
the remainder of this Agreement shall remain binding on the parties hereto (so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any party). Upon such determination,
the parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
9.7. No Third Party Beneficiaries. This Agreement is for the benefit
of the parties hereto and is not intended to confer upon any other Person any
rights or remedies hereunder.
9.8. Public Announcements. Each party hereto shall notify the other
prior to issuing any press release or making any public statement pertaining to
this Agreement or the transactions contemplated hereby, and shall not issue any
such press release or make any such public statement without obtaining the
reasonable approval of the other parties prior thereto, except that the Company
shall be permitted to disclose this Agreement, the Transaction Documents and the
transactions contemplated herein and therein to Nasdaq and each party will in
any event have the right to issue any such release or statement upon advice of
its counsel that such issuance is required in order to comply with any
applicable law or any listing agreement with, or rules of, a national securities
exchange to which such party is a party or subject.
9.9. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, and each party
hereto submits to the non-exclusive jurisdiction of the state and federal courts
within the County of New York in the State of New York. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of the
State of New York or of the United States of America for the Southern District
of New York and, by execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property, generally jurisdiction of the
aforesaid courts. The Company further irrevocably consents to the service of
process out of any of the aforementioned courts in any action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to the Company at its address set forth in Section 7.1, such service to become
effective seven days after such mailing. Nothing herein shall affect the right
of the Investor to serve process in any of the matters permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any other
jurisdiction. The Company hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with the Agreement brought in the
courts referred to above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
9.10. Interpretation. This Agreement is the result of arms-length
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
9.11. Captions. The Article and Section Headings in this Agreement are
inserted for convenience of reference only, and shall not affect the
interpretation of this Agreement.
9.12. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first written above.
PEAPOD, INC.
By:
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Name:
Title:
KONINKLIJKE AHOLD N.V.
By:
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Name:
Title:
[SIGNATURE PAGES TO EXCHANGE AGREEMENT]