EX-10.5





                     AMENDED AND RESTATED SECURITY AGREEMENT


                            dated as of April 5, 2000

                                       by

                                  PEAPOD, INC.

                                     Debtor

                                       to

                                    BEW, Inc.

                                       and

                              KONINKLIJKE AHOLD NV

                              each a Secured Party

<PAGE>
                                                 TABLE OF CONTENTS


                                                                            Page



Section 1.  Definitions........................................................1


Section 2.  Collateral.........................................................6

         2.1  Grant of Security Interest.......................................6
         2.2  Perfection and Protection of Security Interest...................7
         2.3  Location of Offices and Collateral...............................8
         2.4  Title to, Liens on, and Sale and Use of Collateral...............8
         2.5  Appraisals.......................................................9
         2.6  Access and Examination; Confidentiality..........................9
         2.7  Collateral Reporting............................................10
         2.8  Accounts........................................................10
         2.9  Collection of Accounts; Payments................................11
         2.10  Inventory......................................................12
         2.11  Equipment......................................................12
         2.12  Assigned Contracts.............................................13
         2.13  Documents, Instruments, and Chattel Paper......................14
         2.14  Right to Cure..................................................14
         2.15  Power of Attorney..............................................14
         2.16  The Secured Party's Rights, Duties and Liabilities.............15

Section 3.  Information and Notices...........................................15

         3.1  Information.....................................................15
         3.2  Notices to Secured Party........................................15

Section 4.  Events of Default.................................................17


Section 5.  Remedies..........................................................17

         5.1  Remedies of Secured Party.......................................17
         5.2  Debtor's Waiver of Rights.......................................18

Section 6.  Representations and Warranties....................................18

         6.1  Due Organization................................................18
         6.2  Valid Execution; Binding Effect.................................18
         6.3  No Violation....................................................18
         6.4  No Consents.....................................................19
         6.5  Liens...........................................................19

Section 7.  Miscellaneous.....................................................19

         7.1  Cumulative Remedies; No Prior Recourse to Collateral............19
         7.2  Illegality, Etc.................................................19
         7.3  GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS..............19
         7.4  WAIVER OF JURY TRIAL............................................20
         7.5  WAIVER OF CERTAIN CLAIMS........................................21
         7.6  Survival of Representations and Warranties......................21
         7.7  Other Security and Guaranties...................................21
         7.8  Fees and Expenses; Interest.....................................21
         7.9  Notices.........................................................22
         7.10  Waiver of Notices..............................................22
         7.11  Binding Effect.................................................22
         7.12  Indemnity of the Secured Party by the Debtor...................23
         7.13  Final Agreement; Amendments....................................23
         7.14  Right of Setoff................................................23
         7.15  Severability...................................................24
         7.16  Section Headings...............................................24
         7.17  Counterparts...................................................24
         7.18  Release of Collateral..........................................24


  SCHEDULES

         Schedule 1            Existing Permitted Liens
         Schedule 2.3          Location of Offices and Collateral

<PAGE>
                     AMENDED AND RESTATED SECURITY AGREEMENT



     AMENDED  AND  RESTATED  SECURITY  AGREEMENT  dated as of  April 5,  2000 by
PEAPOD,  Inc., a Delaware  corporation (the "Debtor"),  to BEW, Inc., a Delaware
corporation ("BEW") and KONINKLIJKE AHOLD NV ("Ahold").

                                R E C I T A L S:


     A. BEW has made, and may hereafter make,  loans in the aggregate  principal
amount of U.S.  $3,000,000  (collectively  the "Term Loan") to the Debtor,  such
Term Loan being  evidenced by a promissory  note dated April 5, 2000 made by the
Debtor to the order of BEW in the principal  amount of U.S.  $3,000,000 (as from
time to time amended,  reissued or renewed,  and any  promissory  note issued in
substitution therefor, the "Term Note").

     B. To secure  the Term Loan the  Debtor  executed  and  delivered  to BEW a
Security Agreement dated as of April 5, 2000 (the "Existing Security Agreement")
pursuant to which the Debtor granted to BEW a security  interest on the Debtor's
rights, title and interest in the property described therein.

     C. Ahold may hereafter make additional  loans to the Debtor in an aggregate
principal  amount not exceeding,  together with the Term Loan, U.S.  $20,000,000
pursuant to, and on the terms and  conditions  set forth in, a Credit  Agreement
(the "Credit  Agreement")  proposed to be entered into by Ahold with the Debtor,
which loans will be used first to repay the Term Note and all other indebtedness
evidenced  by the Term Note (the Term Loan and all loans  outstanding  under the
Credit Agreement hereinafter collectively referred to as the "Loans").

     D. To  induce  BEW and Ahold  (collectively  and  individually  hereinafter
referred to as the "Secured  Party") to make the Loans, the Debtor has agreed to
amend and restate the  Existing  Security  Agreement  in its  entirety  pursuant
hereto.

     E. The execution and delivery by the Debtor of this Agreement is one of the
conditions  to the  willingness  of the Secured Party to make the balance of the
Loans to the Debtor.

     ACCORDINGLY,  in  consideration  of the  foregoing  and for other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  and to induce the Secured Party to make and maintain the Loans to
the Debtor,  the Existing  Security  Agreement is hereby amended and restated to
read in its entirety as follows:

     Section 1.  Definitions.  (a) Capitalized terms used but not defined herein
shall have the  meanings  given to such terms in the Term Note,  the  Collateral
Assignment or (upon the execution  thereof) the Credit  Agreement.  In addition,
the following terms shall have the meanings specified for such terms below:

     "Account Debtor" means each Person obligated in any way on or in connection
with an Account.

     "Accounts"  means all of the Debtor's  now owned or  hereafter  acquired or
arising  accounts (as such term is defined in the UCC),  whether now existing or
hereafter  arising,  and any other  rights to  payment  for the sale or lease of
goods or  rendition  of  services,  whether  or not they  have  been  earned  by
performance.

     "Assigned  Contracts" means,  collectively,  all rights and remedies of the
Debtor,  and all moneys and claims for money due or to become due to the Debtor,
under any contracts of the Debtor, and any amendments, supplements,  extensions,
and renewals thereof,  including without limitation all rights and claims of the
Debtor  now  or  hereafter  existing:  (i)  under  any  insurance,  indemnities,
warranties,  and guarantees provided for or arising out of or in connection with
any of the  foregoing  contracts;  (ii) for any  damages  arising  out of or for
breach or default  under or in connection  with any of the foregoing  contracts;
(iii)  to all  other  amounts  from  time to time  paid or  payable  under or in
connection with any of the foregoing  contracts;  or (iv) to exercise or enforce
any and all covenants, remedies, powers and privileges thereunder.

     "Attorney  Costs"  means and includes all  reasonable  fees,  out-of-pocket
expenses and  disbursements of any law firm or other external counsel engaged by
the Secured Party,  the  reasonable  allocated cost of internal legal counsel of
the Secured Party and all reasonable out-of-pocket expenses and disbursements of
internal counsel of the Secured Party.

     "Collateral" has the meaning specified in section 2.1.

     "Collateral   Assignment"  means  that  certain  Collateral  Assignment  of
Intellectual  Property Agreement of even date herewith by and between Debtor and
the  Secured  Party,  as the  same may be  amended,  restated,  supplemented  or
otherwise modified from time to time.

     "Credit  Documents"  means the Credit  Agreement (if executed by the Debtor
and Ahold), the Notes, the Collateral  Assignment,  this Agreement and all other
documents  and  instruments  executed and  delivered by the Debtor in connection
with, or to evidence or secure, the Obligations.

     "Default" means an Event of Default or an event or circumstances which with
the giving of notice or lapse of time or both would be an Event of Default.

     "Environmental Release" means a release, spill, emission, leaking, pumping,
injection,  deposit, disposal,  discharge,  dispersal,  leaching or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of any
property,  including the movement of Hazardous  Materials through or in the air,
soil, surface water, ground water or other property.

     "Equipment"  means all of the  Debtor's  now owned and  hereafter  acquired
machinery,  equipment,  furniture,  furnishings,  fixtures,  and other  tangible
personal  property  (except  Inventory),   including  without  limitation  motor
vehicles  with respect to which a  certificate  of title has been issued,  dies,
tools,  jigs,  and office  equipment,  as well as all of such types of  property
leased by the Debtor and all of the Debtor's  rights and interests  with respect
thereto under such leases (including,  without limitation, options to purchase);
together  with  all  present  and  future  additions  and  accessions   thereto,
replacements therefor,  component and auxiliary parts and supplies used or to be
used in connection therewith,  and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.

     "Financial  Assets"  means  all of the  Debtor's  now  owned  or  hereafter
acquired financial assets (as defined in the UCC).

     "General  Intangibles"  means all of the  Debtor's  now owned or  hereafter
acquired  general  intangibles  (as  defined  in  the  UCC),  including  without
limitation the uniform resource  locator,  www.peapod.com,  choses in action and
causes of action and all other  intangible  personal  property  of any Debtor of
every kind and nature (other than Accounts),  including, without limitation, all
contract  rights,  corporate  or other  business  records,  Proprietary  Rights,
inventions,  designs,  blueprints,  plans,  specifications,  goodwill,  computer
software,  customer  lists,  registrations,  licenses,  franchises,  tax  refund
claims,  any funds  which may become due to the  Debtor in  connection  with the
termination  of any pension  plan or other  employee  benefit plan or any rights
thereto and any other  amounts  payable to the Debtor  from any pension  plan or
other employee  benefit plan,  rights and claims against  carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property,  casualty or any similar type of insurance  and any proceeds  thereof,
proceeds of insurance covering the lives of key employees on which the Debtor is
beneficiary,  and any letter of credit,  guarantee,  claim, security interest or
other security held by or granted to the Debtor.

     "Governmental Authority" means any nation or government, any state or other
political  subdivision  thereof,  any  central  bank  (or  similar  monetary  or
regulatory  authority) thereof,  any entity exercising  executive,  legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any  corporation  or other  entity  owned or  controlled,  through  stock or
capital ownership or otherwise, by any of the foregoing.

     "Inventory"  means all of the  Debtor's  now owned and  hereafter  acquired
inventory (as such term is defined in the UCC) and any other goods, merchandise,
and  other  personal  property,  wherever  located,  to be  furnished  under any
contract  of  service  or held  for  sale or  lease,  all  returned  goods,  raw
materials, other materials and supplies of any kind, nature or description which
are or might be consumed in the Debtor's business or used in connection with the
packing, shipping, advertising,  selling or finishing of such goods, merchandise
and such other personal property,  and all documents of title or other documents
representing them.

     "Investment  Property"  means all of the  Debtor's  now owned or  hereafter
acquired  investment  property (as defined in the UCC) and includes the Debtor's
now owned or hereafter  acquired  rights,  title and interests in and to any and
all:  (a)  securities,  whether  certificated  or  uncertificated,  (b) security
entitlements, (c) securities accounts, (d) commodity contracts and (e) commodity
accounts (as such terms are defined in the UCC).

     "Lien" means: (a) any interest in property  securing an obligation owed to,
or a claim by, a Person  other  than the  owner of the  property,  whether  such
interest  is based on the common  law,  statute,  or  contract,  and  including,
without limitation, a security interest, charge, claim, lien (including any lien
or charge  arising  from a  mortgage  or deed of  trust),  encumbrance,  pledge,
hypothecation,  assignment, deposit arrangement,  agreement, security agreement,
conditional  sale or trust  receipt  or a lease,  consignment  or  bailment  for
security  purposes;  and (b) to the extent not  included  under  clause (a), any
reservation,   exception,   encroachment,   easement,  right-of-way,   covenant,
condition,  restriction, lease or other title exception or encumbrance affecting
property.

     "Material  Adverse  Effect" means any change or effect (or any  development
that,  insofar as can  reasonably  be foreseen,  is likely to result in any such
change or effect) or fact or condition (or any development that,  insofar as can
reasonably be foreseen,  is likely to result in any fact or  condition)  that is
(a) materially adverse to the business,  properties, assets, financial condition
or  results of  operations  of the  Debtor  taken as a whole,  or Debtor and its
Subsidiaries  taken as a whole,  as the case may be, or (b) a  material  adverse
change in, or a material adverse effect upon the Collateral;  provided, however,
that (i) any adverse change,  effect or development that is caused by or results
from conditions  affecting the United States economy generally or the economy of
any nation or region in which the Debtor or its Subsidiaries  conducts  business
that is material to the business of the Debtor and its Subsidiaries,  taken as a
whole, shall not be taken into account in determining whether there has been (or
whether  there could  reasonably be foreseen) a "Material  Adverse  Effect" with
respect to the Debtor,  (ii) any adverse change,  effect or development  that is
caused by or results from conditions generally affecting the industries in which
the Debtor  conducts its business shall not be taken into account in determining
whether  there has been (or  whether  there  could  reasonably  be  foreseen)  a
"Material  Adverse  Effect"  with  respect to the Debtor,  and (iii) any adverse
change, effect or development that is caused by or results from the announcement
or pendency of this Agreement,  the other Credit Documents,  the merger  between
the  Debtor  (or any of its  affiliates)  and the  Secured  Party (or any of its
affilaites),  or the  transactions  contemplated  hereby shall not be taken into
account in determining whether there has been (or whether there could reasonably
be foreseen) a "Material Adverse Effect" with respect to the Debtor.

     "Notes" means the Term Note and each other  promissory  note evidencing any
Loan.

     "Obligations"  means  all  present  and  future  liabilities,  obligations,
covenants,  duties,  and debts owing by the Debtor to the Secured Party under or
pursuant to or in connection with the Loans, the Notes, the Credit Agreement (if
executed by the Debtor and Ahold), this Agreement or any other Credit Documents,
whether or not evidenced by any note, or other  instrument or document,  whether
arising from an extension of credit, loan, advance, guaranty, indemnification or
otherwise,  whether direct or indirect, absolute or contingent, due or to become
due,  primary or secondary,  as principal or guarantor,  and including,  without
limitation,  all principal,  interest,  charges,  out-of-pocket expenses,  fees,
Attorney  Costs,  filing  fees  and any  other  sums  chargeable  to the  Debtor
hereunder or under any of the other Credit Documents.

     "Permitted Liens" means:

          (i) the Secured Party's Liens;

          (ii)  Liens for  taxes,  provided  that the  payment of any such taxes
     which  are due  and  payable  is  being  contested  in  good  faith  and by
     appropriate  proceedings  diligently  pursued,  adequate financial reserves
     have been  established  on the  Debtor's  books and  records  with  respect
     thereto, and a stay of enforcement of any such Lien is in effect;

          (iii) Liens securing the claims or demands of materialmen,  mechanics,
     service  providers,  carriers,  warehousemen,   landlords  and  other  like
     Persons,  provided that if any such Lien arises from the nonpayment of such
     claims or demands when due, such claims or demands could not  reasonably be
     expected to have a Material  Adverse Effect or are being  contested in good
     faith by appropriate  proceedings  diligently  pursued, so long as adequate
     financial reserves have been established on the Debtor's books with respect
     thereto and a stay of enforcement of any such Lien is in effect;

          (iv) reservations,  exceptions,  encroachments,  easements,  rights of
     way, covenants, conditions,  restrictions,  leases, and other similar title
     exceptions  or  encumbrances  affecting  any  real  estate  of the  Debtor;
     provided  that they do not in the  aggregate  materially  detract  from the
     value of such  real  estate  or  materially  interfere  with its use in the
     ordinary conduct of the Debtor's business;

          (v) judgment,  writs,  warrants of attachment  and other similar Liens
     arising  in  connection  with  court  proceedings,  provided  that any such
     judgments,  writs and warrants do not  constitute an Event of Default under
     the Term Note;

          (vi) Liens described on Schedule 1 hereto;

          (vii) Liens securing  indebtedness  that is incurred to pay or finance
     the  purchase  price or cost of  Equipment  provided  that  (x) such  Liens
     encumber only the Equipment paid for or financed with the  indebtedness  so
     secured and (y) such  indebtedness  does not exceed the acquisition cost of
     such Equipment;

          (viii)  deposits made in the ordinary course of business in connection
     with workers' compensation, unemployment insurance or other types of social
     security  benefits or to secure the  performance of bids,  tenders,  sales,
     contracts (other than for repayment of borrowed money),  surety, appeal and
     performance  bonds;  provided  that the  foregoing do not in the  aggregate
     materially  detract from the value of the Debtor's assets or property taken
     as a whole or  materially  impair the use thereof in the  operation  of the
     businesses taken as a whole;

          (ix) leases or subleases  granted to others in the ordinary  course of
     business  which do not interfere in any material  respect with the business
     of the Debtor taken as a whole; and

          (x) any interest or title of the lessor in the property subject to any
     operating  lease entered into by the Debtor or any of its  Subsidiaries  in
     the ordinary course of business.

     "Person" means any  individual,  sole  proprietorship,  partnership,  joint
venture, trust, unincorporated organization,  association,  corporation, limited
liability  company  or other  entity of kind or any  governmental  authority  or
political subdivision, agency, department or instrumentality thereof.

     "Premises"  means all land,  together with all buildings,  improvements and
fixtures thereon and all tenements, hereditaments and appurtenances belonging or
in any way  appertaining  thereto now owned or leased or  hereafter  acquired or
leased by the Debtor including, without limitation, any interest arising from an
option to purchase or lease any Premises or any portion thereof.

     "Proprietary  Rights"  means all of the  Debtor's  now owned and  hereafter
arising or acquired:  licenses,  franchises,  permits,  patents,  patent rights,
copyrights  and  copyrights   applications  (including  without  limitation  all
software  and related  documentation),  works  which are the  subject  matter of
copyrights,  trademarks,  service marks,  trade names,  trade styles,  corporate
names, brand names,  slogans,  patent,  trademark and service mark applications,
trade secrets and inventions,  and all licenses and rights related to any of the
foregoing,  and all other rights  under any of the  foregoing,  all  extensions,
renewals, reissues, divisions,  continuations,  and continuations-in-part of any
of the foregoing,  all goodwill  associated with the foregoing and all rights to
sue for past, present and future infringement of any of the foregoing.

     "Secured  Party's  Liens"  means  any Lien  granted  to the  Secured  Party
pursuant to this Agreement or any other Credit Document or under  applicable law
and which secures the Obligations.

     "UCC" means the Uniform  Commercial  Code (or any successor  statute) as in
effect from time to time in the State of New York or in any other state the laws
of which are  required to be applied  with  respect to the  creation,  validity,
attachment, perfection or priority of the Secured Party's Liens.

     (b) References  herein to any party hereto shall include its successors and
permitted assigns; references herein to any statute shall include all amendments
thereto  and all  successors  statute;  and  reference  herein  to  Sections  or
Schedules  are to Sections of or Schedules to this  Agreement  unless  otherwise
specified.

     Section 2. Collateral.

     2.1 Grant of Security Interest.  (a) As security for all present and future
Obligations, the Debtor hereby grants to the Secured Party a continuing security
interest in, lien on, and right of set-off  against,  all personal  property and
fixtures  of the  Debtor,  including  without  limitation  all of the  following
property of the Debtor,  whether now owned or existing or hereafter  acquired or
arising, regardless of where located:

          (i) all  Accounts  of the Debtor  (including  all credit  enhancements
     therefor);

          (ii) all Inventory of the Debtor;

          (iii) all Equipment of the Debtor  (provided that (x) the Debtor shall
     not be required to record the Secured  Party's Lien on any  certificate  of
     title  relating  to any  motor  vehicle  unless  requested  to do so by the
     Secured Party and (y) no such security interest shall extend to any item of
     Equipment to the extent that such  Equipment is subject to a Permitted Lien
     to which the Secured  Party's Liens thereon would be subordinate  and which
     prohibits the grant of such security interest to the Secured Party);

          (iv)  all  Assigned  Contracts,   letter  of  credit,  chattel  paper,
     promissory  notes,  instruments  and  documents  of  title  of the  Debtor;
     provided,  that the Collateral  shall not include any Assigned  Contract in
     respect of which the grant of the security  contemplated  by this Agreement
     shall  be  prohibited  by its  terms;  provided,  however,  that  upon  the
     termination of such prohibitions for any reason whatsoever,  the provisions
     of this Section 2.1 shall be deemed to apply thereto automatically;

          (v) all General  Intangibles of the Debtor,  including all Proprietary
     Rights of the Debtor;  provided,  that the Collateral shall not include any
     General   Intangible  in  respect  of  which  the  grant  of  the  security
     contemplated by this Agreement shall be prohibited by its terms;  provided,
     however,  that upon the  termination  of such  prohibitions  for any reason
     whatsoever,  the  provisions  of this  Section 2.1 shall be deemed to apply
     thereto automatically;

          (vi) all Investment Property and Financial Assets of the Debtor;

          (vii) to the extent not  included in the  foregoing,  all claims which
     the Debtor has against any other Person, including all amounts owing to the
     Debtor by any  Person  for loans and  advances  made by the  Debtor to such
     Person;

          (viii)  all  money,  cash,  cash  equivalents,  securities  and  other
     property of any kind of the Debtor held directly or indirectly by, or under
     the control of, the Secured Party or any affiliates  thereof or by a bailee
     thereof;

          (ix) all deposit  accounts,  credits and  balances of the Debtor with,
     and other  claims of the Debtor  against,  the  Secured  Party,  any of its
     affiliates or any other Person;

          (x) all books,  records and other property  related to or referring to
     any  of the  foregoing,  including,  without  limitation,  books,  records,
     account  ledgers,  data  processing  records,  computer  software and other
     property at any time evidencing or relating to any of the foregoing; and

          (xi) all accessions to,  substitutions for and replacements,  products
     and  proceeds  of any of the  foregoing,  including,  but not  limited  to,
     proceeds of any  insurance  policies,  claims  against third  parties,  and
     condemnation  or  requisition  payments  with  respect to all or any of the
     foregoing.

All of the foregoing,  and all other property of the Debtor in which the Secured
Party may at any time be  granted a Lien to secure  the  Obligations,  is herein
collectively referred to as the "Collateral."

     (b) All of the Obligations  shall be secured by all of the Collateral.  The
Secured Party may in its sole discretion,  (i) exchange, waive or release any of
the  Collateral,  and (ii) when any  payment  Event of Default  exists (x) apply
Collateral  and direct the order or manner of sale thereof as the Secured  Party
may determine, and (y) settle,  compromise,  collect, or otherwise liquidate any
Collateral in any manner,  all without  affecting the Obligations or the Secured
Party's right to take any other action with respect to any other Collateral.

     2.2 Perfection and Protection of Security  Interest.  (a) The Debtor shall,
at its expense,  perform all steps  requested by the Secured Party in writing at
any time to perfect,  maintain,  protect, and enforce the Secured Party's Liens,
including,   without   limitation:   (i)  executing  and  filing   financing  or
continuation   statements,   and  amendments  thereof,  in  form  and  substance
satisfactory  to the Secured  Party;  (ii)  delivering  to the Secured Party the
originals  of all  instruments,  documents,  and  chattel  paper,  and all other
Collateral  of which  the  Secured  Party  determines  it should  have  physical
possession in order to perfect and protect the Secured Party's security interest
therein,  duly  pledged,  endorsed  or assigned  to the  Secured  Party  without
restriction;  provided,  however, that if no Event of Default exists the Secured
Party will at the Debtor's  request  promptly,  and in any event,  within 5 days
following receipt of request  therefor,  redeliver any such promissory notes and
instruments  to the  Debtor as the  Debtor  may  reasonably  require in order to
enforce  its  rights  thereunder  in the  ordinary  course  of  business;  (iii)
delivering to the Secured Party warehouse  receipts  covering any portion of the
Collateral  located in warehouses and for which  warehouse  receipts are issued;
(iv) placing  notations on the Debtor's books of account to disclose the Secured
Party's  security  interest;  (v) delivering to the Secured Party all letters of
credit on which the Debtor is named beneficiary and which provide for or relates
to payment  of any  Account;  and (vi)  taking  such  other  steps as are deemed
reasonably  necessary or desirable by the Secured  Party to maintain and protect
the Secured  Party's  Liens.  To the extent  permitted  by  applicable  law, the
Secured Party may file,  without the Debtor's  signature,  one or more financing
statements  disclosing the Secured  Party's Liens or may sign any such financing
statements  in  the  name  of the  Debtor.  The  Debtor  agrees  that a  carbon,
photographic,  photostatic,  or other  reproduction  of this  Agreement  or of a
financing statement is sufficient as a financing statement.

     (b) If any  Collateral  is at any time in the  possession or control of any
warehouseman, bailee or the Debtor's agents or processors, then the Debtor shall
notify the Secured  Party  thereof and, if so  requested  by the Secured  Party,
shall  notify  such  Person of the  Secured  Party's  security  interest in such
Collateral  and,  during the  existence  of a Default  upon the Secured  Party's
request in writing,  instruct  such Person to hold all such  Collateral  for the
Secured Party's account subject to the Secured Party's  instructions.  If at any
time any  Collateral is located on any facility of the Debtor which is not owned
by the Debtor,  then the Debtor  shall,  at the  written  request of the Secured
Party,  use  commercially   reasonable  efforts  (including  without  limitation
enforcing lease  obligations) to obtain written  waivers,  in form and substance
satisfactory  to the Secured Party, of all present and future Liens to which the
owner  or  lessor  of such  premises  may be  entitled  to  assert  against  the
Collateral.

     (c) From time to time, the Debtor shall,  upon the Secured  Party's written
request,  execute and deliver  confirmatory  written instruments pledging to the
Secured Party, the Debtor's interest in any item of Collateral, but the Debtor's
failure to do so shall not affect or limit the Secured Party's security interest
or the Secured  Party's other rights in and to any  Collateral.  So long as this
Agreement is in effect and until all Obligations have been fully satisfied,  the
Secured Party's Liens shall continue in full force and effect in all Collateral.

     2.3 Location of Offices and Collateral.  The Debtor represents and warrants
to the Secured Party that:  (a) as of the date hereof  Schedule 2.3 is a correct
and complete list of the Debtor's chief  executive  office,  the location of its
books and records, the locations of the Collateral,  and the locations of all of
its other  places of business  of the Debtor;  and (b)  Schedule  2.3  correctly
identifies  any of such  facilities  and  locations  that  are not  owned by the
Debtor.  The Debtor  covenants  and  agrees  that it will not (i)  maintain  any
Collateral at any location other than those  locations  listed for the Debtor on
Schedule 2.3 or in transit to such  locations,  (ii) otherwise  change or add to
any of such  locations,  or (iii)  change the  location  of its chief  executive
office from the location identified in Schedule 2.3, unless it gives the Secured
Party at least thirty (30) days' prior written  notice  thereof and executes any
and all  financing  statements  and  other  documents  that  the  Secured  Party
reasonably requests in writing in connection therewith.  The Debtor shall not in
any event  change its chief  executive  office to a location  outside the United
States.

     2.4  Title  to,  Liens  on,  and Sale  and Use of  Collateral.  The  Debtor
represents  and warrants to the Secured  Party and agrees with the Secured Party
that:  (a) all of the  Collateral is and will continue to be owned by the Debtor
free and clear of all Liens  whatsoever,  except for  Permitted  Liens;  (b) the
Secured Party's Liens in the Collateral of the Debtor will not be subject to any
prior Lien, except Permitted Liens; (c) the Debtor will use, store, and maintain
the Collateral  with all reasonable care and will use such Collateral for lawful
purposes  only; and (d) the Debtor will not,  without the Secured  Party's prior
written  approval,  sell, or dispose of or permit the sale or disposition of any
of the  Collateral  except  for sales of  Inventory  in the  ordinary  course of
business and sales of Equipment as permitted by Section  2.11(c).  The inclusion
of  proceeds in the  Collateral  shall not be deemed to  constitute  the Secured
Party's  consent to any sale or other  disposition of the  Collateral  except as
expressly permitted herein.

     2.5 Appraisals. [Intentionally Omitted]

     2.6 Access and  Examination;  Confidentiality.  (a) No more than once every
four (4) months (and at any time when a Default  exists),  the Secured Party may
at all reasonable  times and upon  reasonable  notice,  have access to, examine,
audit,  make  extracts  from or copies of and inspect any or all of the Debtor's
records,  files,  and books of  account  and the  Collateral,  and  discuss  the
Debtor's  affairs  with the  Debtor's  officers,  management  and  internal  and
external auditors and accountants.  The Debtor will deliver to the Secured Party
any  instrument  necessary  for the  Secured  Party to obtain  records  from any
service bureau maintaining records for the Debtor. The Secured Party may, at any
time when a Default exists,  and at the Debtor's expense,  make copies of all of
the Debtor's books and records,  or require the Debtor to deliver such copies to
the Secured Party.  The Secured Party may, without expense to the Secured Party,
but  (unless an Event of  Default  exists)  without  materially  disrupting  the
Debtor's business, use such of the Debtor's personnel, supplies, and premises as
may be reasonably  necessary for  maintaining  or enforcing the Secured  Party's
Liens.  The  Secured  Party  shall have the right,  at any time,  in the Secured
Party's  name or in the name of a nominee of the Secured  Party,  to verify with
commercially  reasonable  frequency  the  validity,  amount or any other  matter
relating to the Accounts,  Inventory or other Collateral,  by mail, telephone or
otherwise.

     (b) The Secured Party agrees to take normal and reasonable  precautions and
exercise due care to maintain the confidentiality of all information  identified
as  "confidential"  or "secret" by the Debtor and provided to or obtained by the
Secured Party or by or on behalf of the Debtor under this Agreement or any other
Credit  Document,  and  neither the  Secured  Party nor any of their  respective
Affiliates  shall use any such  information  other than in connection with or in
enforcement  of this  Agreement  and the other Credit  Documents,  except to the
extent  that such  information  (i) was or becomes  generally  available  to the
public other than as a result of disclosure by the Secured Party, or (ii) was or
becomes  available  on a  nonconfidential  basis  from a source  other  than the
Debtor,  provided that such source is not bound by a  confidentiality  agreement
with the Debtor known to the Secured Party; provided,  however, that the Secured
Party may  disclose  such  information  (1) at the  request or  pursuant  to any
requirement of any governmental  authority to which the Secured Party is subject
or in  connection  with  an  examination  of  the  Secured  Party  by  any  such
governmental  authority;  (2) pursuant to subpoena or other court  process;  (3)
when  required to do so in  accordance  with the  provisions  of any  applicable
requirement of law; (4) to the extent reasonably required in connection with any
litigation  or  proceeding  (including,  but  not  limited  to,  any  bankruptcy
proceeding) to which the Secured Party,  or their  respective  affiliates may be
party;  provided that, to the extent practicable,  the Debtor has had reasonable
notice of such  litigation  or  proceeding  and shall be  afforded a  reasonable
opportunity  to  raise  its  objections  to  disclosure  in such  litigation  or
proceeding;  (5) to the  extent  reasonably  required  in  connection  with  the
exercise of any remedy hereunder or under any other Credit Document;  (6) to the
Secured  Party's  independent   auditors,   accountants,   attorneys  and  other
professional  advisors;  (7) to any  affiliate  of the Secured  Party and to any
participant  in or assignee of, or potential  participant in or assignee of, the
Secured  Party's  rights  and  obligations  under the Note,  provided  that such
affiliate,  participant or assignee agrees to keep such information confidential
to the same extent required of the Secured Party hereunder; and (8) as expressly
permitted  under  the  terms  of  any  other  document  or  agreement  regarding
confidentiality  to which a Debtor is party or is deemed  party with the Secured
Party.  The Secured  Party shall have no  liability  for the breach by any other
Person of the provisions of this Section 2.6.]

     2.7 Collateral  Reporting.  No more than once each quarter (and at any time
upon the  Secured  Party's  request  following  the  occurrence  and  during the
continuance  of an Event of  Default),  the Debtor  shall  promptly  provide the
Secured  Party upon its written  request with the following  documents,  in form
satisfactory to the Secured Party:  (a) an aging of the Debtor's  Accounts;  (b)
Inventory  reports;  (c) copies of  invoices  in  connection  with the  Debtor's
Accounts,  customer  statements,  credit memos,  remittance advices and reports,
deposit slips,  shipping and delivery  documents in connection with the Debtor's
Accounts and for Inventory and Equipment acquired by the Debtor, purchase orders
and invoices;  (d) such other reports as to the  Collateral as the Secured Party
shall reasonably request in writing from time to time; and (e) with the delivery
of each of the foregoing,  a certificate of an officer of the Debtor  certifying
the accuracy and  completeness of the foregoing.  If any of the Debtor's records
or reports of the  Collateral  are  prepared by an  accounting  service or other
agent,  the Debtor  hereby  authorizes  such  service  or agent to deliver  such
records,  reports,  and related documents to the Secured Party, upon its written
request  following  the  occurrence  and during the  continuance  of an Event of
Default.

     2.8 Accounts.  (a) The Debtor hereby represents and warrants to the Secured
Party,  with respect to the Debtor's  Accounts,  that: (i) each existing Account
is, and each future  Account  will be, owned by the Debtor free and clear of all
Liens other than Permitted  Liens,  (ii) each existing Account  represents,  and
each future  Account will  represent,  a bona fide sale or lease and delivery of
goods by the Debtor,  or  rendition  of services by the Debtor,  in the ordinary
course of the Debtor's business; (iii) each existing Account is, and each future
Account will be, for a liquidated  amount  payable by the Account Debtor thereon
on the  terms set  forth in the  invoice  therefor  or in the  schedule  thereof
delivered  to the Secured  Party,  without any offset,  deduction,  defense,  or
counterclaim except those known to the Debtor and disclosed to the Secured Party
in accordance with this Agreement; (iv) no payment will be received with respect
to any Account,  and no credit,  discount,  or extension,  or agreement therefor
will be granted on any Account,  except in the ordinary course of business or as
reported to the Secured Party in accordance with this  Agreement;  (v) each copy
of any invoice  relating to an Account and delivered to the Secured Party by the
Debtor will be a genuine copy of the original invoice sent to the Account Debtor
named  therein;  and (vi) all goods  described  in each  invoice  will have been
delivered to the Account Debtor and all services  described in each invoice will
have been performed.

     (b) The  Debtor  shall not  re-date  any  invoice  or sale or make sales on
extended  dating  beyond that  customary in the  Debtor's  business or extend or
modify any Account  except in the  ordinary  course of  business.  If the Debtor
becomes  aware of any  matter  adversely  affecting  the  collectibility  of any
Account or Accounts of any Account  Debtor  involving in the aggregate an amount
greater than  $50,000,  including  information  regarding  the Account  Debtor's
creditworthiness, the Debtor will promptly so advise the Secured Party.

     (c) The Debtor shall not accept any promissory note or other  instrument in
excess of $100,000 in aggregate amount or maturing more than 12 months after the
issuance  date  thereof,  except a check or other  instrument  for the immediate
payment of money,  with  respect to any  Account  without  the  Secured  Party's
written  consent,  and the Debtor  shall  notify the  Secured  Party of any such
promissory notes in excess of $100,000 delivered to the Debtor in respect of any
Account;  provided  that if an Event of Default  exists,  the  Debtor  shall not
accept any such note or instrument (regardless of amount) without the consent of
the Secured Party.  Any such note or instrument  shall be considered as evidence
of the Account and not payment thereof and the Debtor will promptly  deliver any
such instrument in excess of $100,000 (and, if an Event of Default  exists,  all
such notes and instruments) to the Secured Party,  endorsed by the Debtor to the
Secured  Party in a manner  satisfactory  in form and  substance  to the Secured
Party.  Regardless of the form of presentment,  demand or notice of protest with
respect  thereto,  the Debtor shall remain liable on any such note or instrument
pledged  by it to the  Secured  Party,  up to  the  amount  of  the  outstanding
Obligations, until such instrument is paid in full.

     (d) The Debtor shall notify the Secured Party  promptly of all disputes and
claims with any Account Debtors in excess of $50,000,  individually, or $100,000
in the  aggregate  for all  Account  Debtors,  and the Debtor  agrees to settle,
contest,  or adjust such dispute or claim at no expense to the Secured Party. No
discount,  credit or  allowance  shall be  granted  to any such  Account  Debtor
without the Secured Party's prior written consent, except for discounts, credits
and  allowances  made or given in the ordinary  course of the Debtor's  business
when no Event of Default exists  hereunder.  The Secured Party may, at all times
when an Event of Default  exists,  settle or adjust disputes and claims directly
with Account  Debtors for amounts and upon terms which the Secured Party,  shall
consider  advisable  and,  in all  cases,  the  Secured  Party  will  credit the
Obligations  with only the net amounts  received by the Secured Party in payment
of any Accounts of the Debtor.

     (e) If an Account  Debtor returns any Inventory to the Debtor when no Event
of Default  exists,  then the Debtor shall,  to the extent  consistent with past
practice, promptly determine the reason for such return and shall issue a credit
memorandum to the Account  Debtor in the  appropriate  amount.  The Debtor shall
immediately report to the Secured Party any return involving an amount in excess
of $100,000. Each such report shall indicate the reasons for the returns and the
locations and condition of the returned Inventory.  All returned Inventory shall
be subject to the Secured Party's Liens thereon.

     2.9  Collection of Accounts;  Payments.  Beginning on or after the Maturity
Date,  (a) until the Secured  Party  notifies  the Debtor to the  contrary,  the
Debtor  shall make  collection  of all  Accounts  and other  Collateral  for the
Secured Party,  shall receive all payments as the Secured Party's  trustee,  and
shall, if so requested in writing by the Secured Party,  immediately deliver all
payments in their  original form duly endorsed in blank to the Secured Party or,
during the  existence  of a Default if so  requested  in writing by the  Secured
Party, shall deposit the same into a blocked deposit account established for the
Debtor at a bank  acceptable to the Secured  Party and subject to  documentation
reasonably  acceptable to the Secured Party. When an Event of Default exists, if
the Debtor is so  requested  in writing by the Secured  Party,  the Debtor shall
establish a lock-box service for collections of Accounts at a bank acceptable to
the Secured Party and pursuant to documentation  reasonably  satisfactory to the
Secured  Party.  If such  lock-box  service is  established,  the  Debtor  shall
instruct  all  Account  Debtors to make all  payments  directly  to the  address
established for such service. If, notwithstanding such instructions,  the Debtor
receives any proceeds of Accounts, it shall receive such payments as the Secured
Party's  trustee,  and shall  immediately  deliver such  payments to the Secured
Party in their original form duly endorsed in blank. All collections received in
any such lock-box or blocked  deposit  account or directly by the Secured Party,
and all funds in any  blocked  deposit  account  to which such  collections  are
deposited  shall be subject to the Secured  Party's  sole  control.  The Secured
Party or the Secured Party's  designee may, at any time when an Event of Default
exists,  notify  Account  Debtors  that the Accounts  have been  assigned to the
Secured Party and of the Secured  Party's  security  interest  therein,  and may
collect them directly and charge the collection costs and out-of-pocket expenses
to the Debtor.  So long as an Event of Default has occurred  and is  continuing,
the Debtor, at the Secured Party's written request, shall execute and deliver to
the Secured Party such documents as the Secured Party shall require to grant the
Secured Party access to any post office box in which collections of Accounts are
received.

     (b) If sales of  Inventory  are made for  cash,  the  Debtor  shall,  if so
requested by the Secured  Party in writing,  immediately  deliver to the Secured
Party or  deposit  into a blocked  deposit  account  the cash  which the  Debtor
receives.

     (c) All payments  (including  funds received by the Secured Party at a bank
designated by it) received by the Secured Party on the Accounts of the Debtor or
as proceeds  of other  Collateral  solely in an amount up to the then  aggregate
amount of the  Obligations  will be the Secured  Party's  sole  property for its
benefit  and  will  be  credited  to the  Obligations  (conditional  upon  final
collection upon receipt by the Secured  Party),  and any excess thereof shall be
the sole  property of the Debtor and shall be  immediately  delivered  to and/or
deposited for the account of, the Debtor.

     2.10 Inventory. The Debtor represents and warrants to the Secured Party and
agrees with the Secured Party that all of the  Inventory  owned by the Debtor is
and will be held for sale or lease,  or to be furnished in  connection  with the
rendition of services,  in the ordinary course of the Debtor's business,  and is
and will be fit for such  purposes.  The Debtor will keep its  Inventory in good
and marketable  condition,  at its own expense. The Debtor will not, without the
prior  written  consent  of  the  Secured  Party  (which  consent  shall  not be
unreasonably  withheld),  acquire  or accept any  Inventory  on  consignment  or
approval.  The Debtor agrees that all Inventory,  if any, produced by any Debtor
in the United States will be produced in accordance  with the Federal Fair Labor
Standards  Act of 1938,  as  amended,  and all  rules,  regulations,  and orders
thereunder.  The Debtor will conduct a physical  count of the Inventory at least
once per fiscal year (and at any time upon the Secured Party's request following
the  occurrence  and during the  continuance  of an Event of  Default),  without
materially  disrupting  the  business,  at such other times as the Secured Party
reasonably requests in writing. The Debtor will not, without the Secured Party's
written  consent (which consent shall not be  unreasonably  withheld),  sell any
Inventory on a bill-and-hold, guaranteed sale, sale or return, sale on approval,
consignment, or other repurchase or return basis.

     2.11 Equipment. (a) The Debtor represents and warrants to the Secured Party
and agrees with the Secured Party that all of the Equipment  owned by the Debtor
that is material to the  day-to-day  operations of the Debtor's  business is and
will be used or held for use in the  Debtor's  business,  and is and will be fit
for such  purposes.  The Debtor shall keep and  maintain  its  Equipment in good
operating  condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof.

     (b) The Debtor  shall  promptly  inform the Secured  Party of any  material
additions to or deletions  from the  Equipment.  The Debtor shall not permit any
Equipment  to become a fixture  with  respect to real  property  or to become an
accession with respect to other personal  property with respect to which real or
personal  property the Secured Party does not have a first  priority  Lien.  The
Debtor will not,  without the  Secured  Party's  prior  written  consent  (which
consent shall not be  unreasonably  withheld),  alter or remove any  identifying
symbol or number on any of the Debtor's Equipment constituting Collateral.

     (c) The  Debtor  shall not,  without  the  Secured  Party's  prior  written
consent,  sell, lease as a lessor,  or otherwise  dispose of any of the Debtor's
Equipment;  provided,  however,  that the Debtor may dispose of Equipment to the
extent  permitted  by the Term  Note and the  Credit  Agreement  (if the same is
executed by the Debtor and Ahold);  and provided,  further,  that the Debtor may
dispose of  obsolete,  unusable  or  non-useful  Equipment  without  the Secured
Party's  consent,  subject to the conditions set forth in the next sentence.  In
the event any of such Equipment is sold,  transferred  or otherwise  disposed of
pursuant to the second proviso contained in the immediately  preceding sentence,
(1) if such sale,  transfer or  disposition is effected  without  replacement of
such Equipment,  or such Equipment is replaced by Equipment leased by the Debtor
or by  Equipment  purchased  by the Debtor  subject to a Permitted  Lien,  which
replacement  in either case, may occur up to thirty (30) days following the date
of such sale, transfer or disposition,  then the Debtor shall deliver all of the
cash proceeds of any such sale,  transfer or  disposition  to the Secured Party,
and (2) if such sale,  transfer or  disposition  is made in connection  with the
purchase by the Debtor of replacement  Equipment,  then the Debtor shall use the
proceeds of such sale,  transfer or  disposition  to purchase  such  replacement
Equipment  within thirty (30) days after such  disposition  and shall deliver to
the Secured Party written evidence of the use of the proceeds for such purchase.
All replacement Equipment purchased by the Debtor shall be free and clear of all
Liens except Permitted Liens.

     2.12  Assigned  Contracts.  The  Debtor  shall  fully  perform  all  of its
obligations under each of the Assigned  Contracts,  and shall enforce all of its
material rights and remedies thereunder.  Without limiting the generality of the
foregoing, the Debtor shall take all action reasonably necessary or appropriate,
as  determined  solely by the Debtor,  to permit,  and shall not take any action
which would have any materially adverse effect upon, the full enforcement of all
indemnification rights under the Assigned Contracts. The Debtor shall notify the
Secured Party in writing,  promptly after the Debtor  becomes aware thereof,  of
any event or fact  which  could  give rise to a claim by it for  indemnification
under any of the material Assigned Contracts, and shall diligently pursue, as it
deems  appropriate,  such right and report to the  Secured  Party on all further
developments  with  respect  thereto.  The Debtor  shall  remit  directly to the
Secured Party for  application  to the  Obligations in such order as the Secured
Party shall determine,  all amounts received by the Debtor as indemnification or
otherwise pursuant to its Assigned Contracts. If the Debtor shall fail after the
Secured  Party's  demand  to pursue  diligently  any  right  under the  material
Assigned  Contracts,  or an Event of Default then exists,  the Secured Party may
directly  enforce such right in its own or the Debtor's  name and may enter into
such  settlements or other agreements with respect thereto as the Secured Party,
shall determine.  In any suit, proceeding or action brought by the Secured Party
under any  Assigned  Contract  for any sum owing  thereunder  or to enforce  any
provision thereof, the Debtor shall indemnify, defend and hold the Secured Party
harmless from and against all expense  (including  without  limitation  Attorney
Costs), loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment,  or  reduction  of liability  whatsoever  of the obligor  thereunder
arising out of a breach by the Debtor of any  obligation  thereunder  or arising
out of any other agreement, indebtedness or liability at any time owing from the
Debtor to or in favor of such obligor or its successors.  All obligations of the
Debtor under an Assigned  Contract shall be and remain  enforceable only against
the  Debtor  and  shall  not  be   enforceable   against  the   Secured   Party.
Notwithstanding  any provision  hereof to the contrary,  the Debtor shall at all
times  remain  liable to observe  and  perform  all of its  material  duties and
obligations  under the Assigned  Contracts,  and the Secured Party's exercise of
any of its rights with  respect to the  Collateral  shall not release the Debtor
from  any of such  duties  and  obligations.  The  Secured  Party  shall  not be
obligated to perform or fulfill the  Debtor's  duties or  obligations  under the
Assigned Contracts or to make any payment thereunder,  or to make any inquiry as
to the  nature  or  sufficiency  of  any  payment  or  property  received  by it
thereunder or the  sufficiency  of performance  by any party  thereunder,  or to
present  or file any claim,  or to take any  action to  collect  or enforce  any
performance, any payment of any amounts, or any delivery of any property.

     2.13 Documents,  Instruments,  and Chattel Paper. The Debtor represents and
warrants to the Secured Party that (a) all documents,  instruments,  and chattel
paper,  if any,  describing,  evidencing,  or constituting  Collateral,  and all
signatures  and  endorsements  thereon,  are and will be  complete,  valid,  and
genuine in all material respects, and (b) all goods evidenced by such documents,
instruments,  and chattel  paper are and will be owned by the  Debtor,  free and
clear of all Liens other than Permitted Liens.

     2.14 Right to Cure.  The  Secured  Party may,  in its  discretion,  pay any
amount or do any act  required  of the Debtor  hereunder  in order to  preserve,
protect,  maintain or enforce the  Obligations of the Debtor,  the Collateral or
the Secured Party's Liens therein, and which the Debtor fails to pay or do after
reasonable  prior notice from the Secured  Party (which in any event need not be
longer than 10 days),  including,  without  limitation,  payment of any judgment
against the Debtor, any insurance  premium,  any warehouse charge, any finishing
or processing  charge,  any  landlord's  claim,  and any other Lien upon or with
respect to the Collateral.  The Debtor shall  immediately  upon demand reimburse
the  Secured  Party for all  payments  that the  Secured  Party makes under this
Section 2.14 and all  out-of-pocket  costs and expenses  that the Secured  Party
pays or  incurs  in  connection  with  any  action  taken by the  Secured  Party
hereunder  with  respect  to  the  Obligations  or  the  Collateral,   and  such
reimbursement obligation shall be added to the Debtor's Obligations. Any payment
made or other action taken by the Secured Party under this Section 2.14 shall be
without  prejudice  to any  right to  assert an Event of  Default  under  Credit
Document and to proceed thereafter as herein provided.

     2.15 Power of  Attorney.  During  the  existence  of a Default,  the Debtor
hereby  appoints  the  Secured  Party and the  Secured  Party's  designee as the
Debtor's  attorney,  with power: (a) to endorse the Debtor's name on any checks,
notes,  acceptances,  money  orders,  or other forms of payment or security that
come into the Secured Party's  possession;  (b) to sign the Debtor's name on any
invoice,  bill of lading,  warehouse receipt or other document of title relating
to any Collateral,  on drafts against customers,  on assignments of Accounts, on
notices of assignment,  financing  statements and other public  records;  (c) so
long as there exists any Event of Default, to notify the post office authorities
to change the address for delivery of the Debtor's mail to an address designated
by the Secured Party and to receive,  open and dispose of all mail  addressed to
the Debtor;  (d) to send requests for  verification  of Accounts to customers or
Account  Debtors;  (e) to clear Inventory  through customs in the Debtor's name,
the Secured  Party's name or the name of the Secured  Party's  designee,  and to
sign and deliver to customs  officials  powers of attorney in the Debtor's  name
for  such  purpose;  and  (f) to do all  things  necessary  to  carry  out  this
Agreement.  The Debtor  ratifies  and approves  all acts of such  attorney.  The
Secured  Party will not be liable for any acts or  omissions or for any error of
judgment  or mistake of fact or law except for its gross  negligence  or willful
misconduct.  This power,  being coupled with an interest,  is irrevocable  until
this  Agreement  has  been  terminated  and  the  Obligations  have  been  fully
satisfied.

     2.16 The Secured Party's Rights, Duties and Liabilities. The Debtor assumes
all  responsibility  and liability  arising from or relating to the use, sale or
other  disposition of the Collateral.  Neither the Secured Party, nor any of its
officers, directors,  employees or agents, shall be liable or responsible in any
way for the  safekeeping  of any of the  Collateral,  or for any loss or  damage
thereto,  or for any diminution in the value thereof,  or for any act of default
of any warehouseman,  carrier, forwarding agency or other person whomsoever, all
of which  shall be at the  Debtor's  sole  risk  except  that in the case of any
Collateral in the Secured  Party's  possession,  the Secured Party shall use the
same  degree of care in the respect  thereto as it uses with  respect to its own
property.  The  Obligations  shall not be affected by any failure of the Secured
Party to take any steps to perfect  the Secured  Party's  Liens or to collect or
realize  upon the  Collateral,  nor shall  loss of or  damage to the  Collateral
release  any Debtor  from any of the  Obligations.  So long as there  exists any
Event of Default,  the Secured Party may (but shall not be required to), without
notice to or consent from the Debtor, sue upon or otherwise collect,  extend the
time for  payment  of,  modify or amend the terms of,  compromise  or settle for
cash, credit, or otherwise upon any terms, grant other indulgences,  extensions,
renewals,  compositions,  or releases, and take or omit to take any other action
with respect to the Collateral,  any security  therefor,  any agreement relating
thereto,  any insurance  applicable  thereto,  or any Person liable  directly or
indirectly in  connection  with any of the  foregoing,  without  discharging  or
otherwise  affecting  the liability of the Debtor for the  Obligations  or under
this  Agreement,  any  other  Credit  Document  or any  other  agreement  now or
hereafter existing between the Secured Party and the Debtor.

     Section 3. Information and Notices.

     3.1 Information. The Debtor shall promptly deliver to the Secured Party all
such  information  regarding  the financial  and business  affairs,  operations,
and/or conditions of the Debtor as the Secured Party shall reasonably request in
writing, and shall notify its accountants and auditors that the Secured Party is
authorized to obtain such information directly from them.

     3.2 Notices to Secured Party. The Debtor shall notify the Secured Party, in
writing, of the following matters at the following times:

          (a) Promptly,  and in any event within five (5) days,  after  becoming
     aware of any Event of Default.

          (b) Promptly,  and in any event within five (5) days,  after  becoming
     aware of any material adverse change in the Collateral.

          (c) Promptly,  and in any event within five (5) days,  after  becoming
     aware  of  any  pending  or  threatened  action,   suit,   proceeding,   or
     counterclaim by any Person, or any pending or threatened investigation by a
     Governmental  Authority  which may have a  material  adverse  effect on the
     Collateral.

          (d) Promptly,  and in any event within five (5) days,  after  becoming
     aware of any pending or  threatened  strike,  work  stoppage,  unfair labor
     practice claim,  or other labor dispute  affecting any Debtor or any of its
     Subsidiaries  in a manner  which  could  reasonably  be  expected to have a
     material adverse effect on the Collateral.

          (e) Promptly,  and in any event within five (5) days,  after  becoming
     aware of any violation of any law, statute,  regulation,  or ordinance of a
     governmental  Authority affecting the Debtor or any Subsidiary or affiliate
     thereof  which could  reasonably  be  expected  to have a material  adverse
     effect on the Collateral.

          (f) Promptly,  and in any event within five (5) days, after receipt of
     any notice of any violation by the Debtor or any Subsidiary  thereof of any
     Environmental  Law which  could  reasonably  be expected to have a material
     adverse  effect on the  Collateral or that any  Governmental  Authority has
     asserted  that the Debtor or any  Subsidiary  thereof is not in  compliance
     with  any  Environmental  Law or is  investigating  the  Debtor's  or  such
     Subsidiary's compliance therewith.

          (g) Promptly,  and in any event within five (5) days, after receipt of
     any written notice that the Debtor or any  Subsidiary  thereof is or may be
     liable to any Person as a result of an Environmental  Release or threatened
     Environmental  Release of any Hazardous Materials or that the Debtor or any
     Subsidiary   thereof  is  subject  to  investigation  by  any  Governmental
     Authority evaluating whether any remedial action is needed to respond to an
     Environmental Release or threatened  Environmental Release of any Hazardous
     Materials  which,  in either  case,  is  reasonably  likely to give rise to
     liability  in excess of $100,000 or have a material  adverse  effect on the
     Collateral.

          (h) Promptly,  and in any event within five (5) days, after receipt of
     any written notice of the imposition of any Environmental  Lien against any
     property of the Debtor or any of its Subsidiaries which could reasonably be
     expected to have a material adverse effect on the Debtor or the Collateral.

          (i) Any change in the Debtor's name, state of  incorporation,  or form
     of  organization,  trade  names or styles  under which the Debtor will sell
     Inventory  or  create  Accounts,  or to which  instruments  in  payment  of
     Accounts may be made payable,  in each case at least thirty (30) days prior
     thereto.

     Each notice  given under this Section 3 shall  describe the subject  matter
thereof in reasonable detail, and shall set forth the action that the Debtor has
taken or proposes to take with respect thereto.

     Section 4.  Events of  Default.  The  occurrence  of any one or more of the
following  events or  circumstance  shall  constitute  an  "Events  of  Default"
hereunder:

          (a) the Debtor  shall fail to pay in full when due any amount  payable
     by the Debtor  hereunder  or under any other  Credit  Document,  subject to
     applicable cure periods as may be agreed upon, if any;

          (b) the Debtor shall default in the  performance  or observance of any
     other  covenant,  agreement or obligation of the Debtor  hereunder and such
     default shall continue for 30 days after the Debtor receives notice thereof
     from the Secured Party;

          (c) any  representation  or warranty  made or deemed to be made by the
     Debtor  hereunder  or under any other Credit  Document or any  certificate,
     financial  statement or report  furnished by the Debtor  pursuant hereto or
     thereto shall prove to be untrue in any material respect when made,  deemed
     made or furnished;

          (d) this  Agreement  shall cease to be in full force and effect or the
     Debtor  shall  assert  that this  Agreement,  the Note or any other  Credit
     Document to which the Debtor is a party is not binding upon it; or

          (e) there shall  occur any Event of Default  under (and as defined in)
     the Note or (if  executed by the Debtor and Ahold) the Credit  Agreement or
     any other Credit Document.

     Section 5. Remedies.

     5.1 Remedies of Secured Party.  Except to the extent otherwise  provided in
the Credit Agreement (if executed by the Debtor and Ahold),  upon the occurrence
and during the  continuance of an Event of Default:  (i) the Secured Party shall
have,  in  addition  to all other  rights  hereunder  or under any other  Credit
Document,  the rights and  remedies  of a secured  party under the UCC and other
applicable  law; (ii) the Secured Party may, at any time, take possession of the
Collateral  and  keep it on the  Debtor's  premises,  at no cost to the  Secured
Party,  or remove  any part of it to such other  place or places as the  Secured
Party may desire,  or the Debtor shall,  upon the Secured Party's demand, at the
Debtor's  cost,  assemble  the  Collateral  and make it available to the Secured
Party at a place specified by the Secured Party; and (iii) the Secured Party may
sell and deliver  any  Collateral  at public or private  sales,  for cash,  upon
credit or  otherwise,  at such prices and upon such terms as the  Secured  Party
deems advisable, in its sole discretion,  and may, if the Secured Party deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at
the time and place of sale or of such postponed or adjourned sale without giving
a new  notice of sale.  Without in any way  requiring  notice to be given in the
following  manner,  the Debtor  agrees that any notice by the  Secured  Party of
sale,  disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise,  shall constitute reasonable notice to
the Debtor if such notice is mailed by  registered  or  certified  mail,  return
receipt requested,  postage prepaid, or is delivered personally against receipt,
at least ten (10) days prior to such action to the Debtor's address specified in
or  pursuant  to Section  7.9.  If any  Collateral  is sold on terms  other than
payment  in full at the time of sale,  no  credit  shall  be given  against  the
Obligations until the Secured Party receives payment,  and if the buyer defaults
in payment,  the Secured Party may resell the Collateral  without further notice
to the Debtor. In the event the Secured Party seeks to take possession of all or
any  portion of the  Collateral  by  judicial  process,  the Debtor  irrevocably
waives:  (i) the posting of any bond,  surety or security  with respect  thereto
which might otherwise be required;  (ii) any demand for possession  prior to the
commencement  of any suit or action to  recover  the  Collateral;  and (iii) any
requirement  that the Secured  Party  retain  possession  and not dispose of any
Collateral  until  after  trial or final  judgment.  The Debtor  agrees that the
Secured Party has no obligation to preserve  rights to the Collateral or marshal
any  Collateral  for the  benefit of any  Person.  The  Secured  Party is hereby
granted a license or other right to use,  without charge,  the Debtor's  labels,
patents,  copyrights,  name, trade secrets,  trade names,  trademarks,  customer
lists and advertising matter, or any similar property,  in completing production
of,  advertising or selling any  Collateral,  and the Debtor's  rights under all
licenses and all franchise agreements shall inure to the Secured Party's benefit
for  such  purpose.  The  proceeds  of  sale  shall  be  applied  first  to  all
out-of-pocket  expenses of sale,  including without limitation  attorneys' fees,
and then to the  Obligations  in whatever  order the Secured Party  elects.  The
Secured  Party will return any excess to the Debtor or as a court may  otherwise
direct, and the Debtor shall remain liable for any deficiency.

     5.2 Debtor's  Waiver of Rights and Claims.  If an Event of Default  occurs,
the Debtor  hereby waives all rights to notice and hearing prior to the exercise
by the Secured Party of the Secured  Party's  rights to repossess the Collateral
without  judicial  process  or to  replevy,  attach or levy upon the  Collateral
without  notice or  hearing.  The Debtor  also  waives all  claims,  damages and
demands against the Lender arising out of the repossession, retention or sale of
the Collateral or any part or parts thereof, except any such claims, damages and
demands arising out of the gross negligence or willful misconduct of the Lender.

     Section  6.  Representations  and  Warranties.  The Debtor  represents  and
warrants to the Secured Party that:

     6.1 Due Organization. The Debtor (a) is a corporation duly incorporated and
validly   existing,   in  good  standing,   under  the  laws  of  its  State  of
incorporation,  (ii) has the power and  authority to own its property and assets
and to transaction the business in which it is engaged and (c) is duly qualified
and authorized to engage in business in each jurisdiction where the ownership by
it of property or the conduct by it of  business  makes such  qualification  and
authorization  necessary,  except  where  the  failure  to be so  qualified  and
authorized would not have a Material Adverse Effect.

     6.2 Valid Execution;  Binding Effect.  The Debtor has the power to execute,
deliver and perform this  Agreement  and each of the other  Credit  Documents to
which it is a party and has taken all  necessary  corporate  action to authorize
the execution,  delivery and performance by it of this Agreement. The Debtor has
duly executed and delivered this Agreement,  and this Agreement  constitutes its
legal, valid and binding  obligations  enforceable in accordance with its terms,
subject, as to enforceability,  to applicable bankruptcy, insolvency and similar
laws affecting  creditors' rights generally and to general  principals of equity
(regardless  of whether  enforcement  is sought in a proceeding  in equity or at
law).

     6.3 No Violation.  Neither the  execution,  delivery or  performance by the
Debtor of this  Agreement  or of any  other  Credit  Documents  to which it is a
party,  nor  compliance by it with the terms and  provisions  hereof or thereof,
will (i) violate any provision of the  certificate or articles of  incorporation
or By-Laws of the Debtor,  (ii)  contravene  any material  provision of any law,
statute,  rule or  regulation  or any order,  writ,  injunction or decree of any
court or  Governmental  Authority or (iii) conflict or be  inconsistent  with or
result in any breach of any of the terms,  covenants,  conditions  or provisions
of, or  constitute a default  under,  or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than the Secured Party's
Liens) upon any of the property or assets of the Debtor pursuant to the terms of
any agreement, contract or instrument to which the Debtor is a party or by which
it or any of its property or assets is bound or to which it may be subject.

     6.4 No Consents. No order,  consent,  approval,  license,  authorization or
validation of, or filing,  recording or registration  with, or exemption by, any
Governmental  Authority is required to  authorize,  or is otherwise  required in
connection with (other than as have  heretofore been obtained or made),  (i) the
execution,  delivery and  performance by the Debtor of this Agreement or (b) the
legality,  validity,  binding effect or  enforceability of this Agreement or the
Liens granted hereunder,  except for the filing of UCC financing  statements and
continuation  statements with respect thereto in all jurisdictions  specified by
the UCC, and the filing of all necessary recording instruments in respect of the
Debtor's intellectual property with the appropriate recording office.

     6.5 Liens. This Agreement  creates,  in favor of the Secured Party, a valid
and (upon filing of UCC financing  statements and other instruments with respect
thereto)  perfected  security  interest in all  Collateral  owned by the Debtor,
subject to no other Liens (other than Permitted Liens).

     Section 7. Miscellaneous.

     7.1 Cumulative Remedies;  No Prior Recourse to Collateral.  The enumeration
herein  of the  Secured  Party's  rights  and  remedies  is not  intended  to be
exclusive,  and such  rights and  remedies  are in addition to and not by way of
limitation of any other rights or remedies that the Secured Party may have under
any other Credit Document or under the UCC or other  applicable law. The Secured
Party shall have the right,  in its sole  discretion,  to determine which rights
and remedies are to be exercised  and in which order.  The exercise of one right
or remedy shall not  preclude the exercise of any others,  all of which shall be
cumulative. The Secured Party may, without limitation,  proceed directly against
the  Debtor  to  collect  the  Obligations  without  any prior  recourse  to the
Collateral, or any other obligor on the Obligations.  No failure to exercise and
no delay in  exercising,  on the part of the Secured Party,  any right,  remedy,
power or privilege  hereunder,  shall operate as a waiver thereof; nor shall any
single or partial exercise of any right,  remedy,  power or privilege  hereunder
preclude  any other or further  exercise  thereof or the  exercise  of any other
right, remedy, power or privilege.

     7.2 Illegality, Etc.. The illegality or unenforceability of the Note or any
other Credit  Document or any  instrument or agreement  referred to herein shall
not in any  way  affect  or  impair  the  legality  or  enforceability  of  this
Agreement.

     7.3 GOVERNING LAW; CHOICE OF FORUM;  SERVICE OF PROCESS. (a) THIS AGREEMENT
SHALL BE  INTERPRETED  AND THE  RIGHTS AND  LIABILITIES  OF THE  PARTIES  HERETO
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD
TO ITS CHOICE OF LAW RULES  THAT  WOULD MAKE THE LAWS OF ANY OTHER  JURISDICTION
APPLICABLE TO THIS AGREEMENT; PROVIDED THAT PERFECTION ISSUES UNDER ARTICLE 9 OF
THE UCC MAY,  TO THE EXTENT  REQUIRED  BY SAID  ARTICLE 9, BE  DETERMINED  UNDER
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLES 9 OF THE UCC.

     (b) 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 FOR THE
SOUTHERN  DISTRICT  OF NEW YORK (AND SHALL BE BROUGHT BY THE DEBTOR ONLY IN SAID
COURTS),  AND BY EXECUTION AND DELIVERY OF THIS  AGREEMENT THE DEBTOR  CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE  JURISDICTION OF
THOSE  COURTS  (AND  ALL  APPELLATE  COURTS  THEREFROM)  IN ANY SUCH  ACTION  OR
PROCEEDING. THE DEBTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER  HAVE TO THE BRINGING OF ANY ACTION OR  PROCEEDING  IN SUCH
COURTS  IN  RESPECT  OF  THIS   AGREEMENT  OR  ANY  DOCUMENT   RELATED   HERETO.
NOTWITHSTANDING  THE FOREGOING,  THE SECURED PARTY SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST THE DEBTOR OR ITS PROPERTY IN THE COURTS OF ANY
OTHER  JURISDICTION  WHICH THE SECURED PARTY DEEMS  NECESSARY OR  APPROPRIATE IN
ORDER TO COLLECT THE  OBLIGATIONS OR REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS.

     (c) THE DEBTOR HEREBY WAIVES  PERSONAL  SERVICE OF ANY AND ALL PROCESS UPON
IT AND CONSENTS  THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY  REGISTERED  OR
CERTIFIED MAIL (RETURN RECEIPT REQUESTED)  DIRECTED TO THE DEBTOR AT ITS ADDRESS
SET FORTH IN OR PURSUANT TO SECTION  7.9, AND SERVICE SO MADE SHALL BE DEEMED TO
BE COMPLETED  FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED
IN THE U.S. MAILS POSTAGE  PREPAID.  NOTHING  CONTAINED  HEREIN SHALL AFFECT THE
RIGHT OF SECURED PARTY TO SERVE LEGAL  PROCESS BY ANY OTHER MANNER  PERMITTED BY
LAW.

     7.4 WAIVER OF JURY TRIAL.  THE DEBTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING OUT OF OR RELATED TO
THIS  AGREEMENT,  THE OTHER CREDIT  DOCUMENTS OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY,  WHETHER WITH  RESPECT TO CONTRACT  CLAIMS,  TORT CLAIMS,  OR
OTHERWISE.  WITHOUT  LIMITING THE FOREGOING,  THE DEBTOR FURTHER AGREES THAT ITS
RIGHT  TO A TRIAL BY JURY IS  WAIVED  BY  OPERATION  OF THIS  SECTION  AS TO ANY
ACTION,  COUNTERCLAIM OR OTHER  PROCEEDING  WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR  ENFORCEABILITY  OF THIS AGREEMENT OR THE OTHER CREDIT
DOCUMENTS  OR ANY  PROVISION  HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS,  RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER CREDIT DOCUMENTS.

     7.5 WAIVER OF CERTAIN  CLAIMS.  THE DEBTOR  AGREES  THAT IT WILL NOT ASSERT
AGAINST THE  SECURED  PARTY,  AND HEREBY  WAIVES,  ANY CLAIM FOR  CONSEQUENTIAL,
INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE  OTHER  CREDIT  DOCUMENTS  OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  OR
THEREBY.

     7.6  Survival  of  Representations  and  Warranties.  All of  the  Debtor's
representations  and warranties  contained in this  Agreement  shall survive the
execution, delivery, and acceptance thereof by the parties,  notwithstanding any
investigation by the Secured Party or its agents.

     7.7 Other Security and Guaranties. The Secured Party may, without notice or
demand and without affecting the Debtor's  obligations  hereunder,  from time to
time: (a) take from any Person and hold  collateral  (other than the Collateral)
for the payment of all or any part of the Obligations  and exchange,  enforce or
release  such  collateral  or any  part  thereof;  and (b)  accept  and hold any
endorsement  or  guaranty of payment of all or any part of the  Obligations  and
release or  substitute  any such  endorser or  guarantor,  or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations,  or any other Person in any way obligated to pay all or
any part of the Obligations.

     7.8 Fees and  Expenses;  Interest.  (a) The  Debtor  agrees,  to pay to the
Secured Party, on demand,  all reasonable costs and out-of-pocket  expenses that
the Secured Party pays or incurs in connection  with the  administration  (after
the occurrence and during the  continuance of an Event of Default),  enforcement
and termination of this Agreement,  including, without limitation: (i) costs and
out-of-pocket  expenses  (including  Attorneys Costs) paid or incurred to obtain
payment of the Obligations, enforce the Secured Party's Liens, sell or otherwise
realize  upon the  Collateral,  and  otherwise  enforce the  provisions  of this
Agreement or to defend any claims made or  threatened  against the Secured Party
arising  out  of  the  transactions  contemplated  hereby  (including,   without
limitation,  preparations  for and  consultations  concerning any such matters);
(ii)  costs  and  out-of-pocket  expenses  (including  Attorney  Costs)  for any
amendment,  supplement,  waiver or consent in  connection  with this  Agreement;
(iii) costs and  out-of-pocket  expenses of lien searches;  (iv) taxes, fees and
other  charges for filing  financing  statements  and  continuations,  and other
actions to perfect,  protect,  and continue the Secured Party's Liens;  (v) sums
paid or  incurred  to pay any amount or take any action  required  of the Debtor
under  this  Agreement  that the  Debtor  fails to pay or  take;  (vi)  costs of
inspections, and verifications of the Collateral, including, without limitation,
travel,  lodging,  and meals for  inspections of the Collateral and the Debtor's
operations  by the  Secured  Party;  (vii) costs and  out-of-pocket  expenses of
collecting  checks and other items of payment,  and establishing and maintaining
blocked accounts and lock boxes; and (viii) costs and expenses of preserving and
protecting  the  Collateral.  The foregoing  shall not be construed to limit any
other  provisions  of the Credit  Documents  regarding  costs and  out-of-pocket
expenses to be paid by the Debtor.

     (b) If the  Debtor  fails to pay when due any  amount  payable by it to the
Secured Party hereunder  (including any reimbursement  obligations of the Debtor
hereunder),  after written notice  thereof from the Secured  Party,  such unpaid
amount shall bear interest, payable by the Debtor on demand, at a rate per annum
equal to the rate borne by the Note on overdue amounts of principal.

     7.9 Notices. Except as otherwise provided herein, all notices,  demands and
requests  that any party is  required or elects to give to any other shall be in
writing and any such notice shall become  effective (a) upon  personal  delivery
thereof,  including,  but not limited to, delivery by overnight mail and courier
service or (b) three (3) business days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, in each
case  addressed to the party to be notified as follows  (provided that no notice
to the Secured party shall be effective until actually received by it):

If to BEW:

                  BEW, Inc.
                  19 Skelley Ave.
                  Weymouth, MA 02189
                  Attention:  Anne J. Longo


if to Ahold:

                  Koninklijke Ahold NV
                  Albert Heijnweg 1
                  1507 EH Zaandam, The Netherlands
                  Attention:  Ton van Tielraden, Esq.


if to the Debtor:

                  Peapod, Inc.
                  9933 Woods Drive
                  Skokie, Illinois 60077
                  Attention: Daniel Rabinowitz


or, as to any party,  to such other  address as such party shall  designate  for
itself by like  notice  to the other  parties.  Failure  or delay in  delivering
copies of any notice, demand, request, consent,  approval,  declaration or other
communication  to the  Persons  designated  above to  receive  copies  shall not
adversely affect the  effectiveness of such notice,  demand,  request,  consent,
approval, declaration or other communication.

     7.10 Waiver of Notices.  Unless otherwise  expressly  provided herein,  the
Debtor waives presentment,  protest and notice of demand or dishonor and protest
as to any instrument and notice of intent to accelerate the Obligations, as well
as any and all other notices to which it might otherwise be entitled.  No notice
to or demand on the  Debtor  which the  Secured  Party may elect to give  shall,
except as  otherwise  expressly  provided  herein,  entitle the Debtor to any or
further notice or demand in the same, similar or other circumstances.

     7.11 Binding Effect. The provisions of this Agreement shall be binding upon
and inure to the  benefit  of the  respective  representatives,  successors  and
assigns of the  parties  hereto;  provided,  however,  that no right or interest
herein or any  obligation  hereunder  may be assigned by the Debtor  without the
prior  written  consent of the  Secured  Party.  The rights and  benefits of the
Secured Party hereunder shall inure to the benefit of any successor thereto and,
if the Secured  Party so agrees,  to any Person  acquiring  any  interest of the
Secured Party in the Obligations or any part thereof.

     7.12 Indemnity of the Secured Party by the Debtor. [Intentionally Omitted]

     7.13 Final  Agreement;  Amendments.  This  Agreement  and the other  Credit
Documents  are  intended  by the Debtor and the  Secured  Party to be the final,
complete,   and  exclusive  expression  of  the  agreement  between  them.  This
Agreement,  together  with the other Credit  Documents,  supersedes  any and all
prior oral or written  agreements  relating to the  subject  matter  hereof.  No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement shall be made,  except by a written agreement signed by the Debtor and
the Secured Party.

     7.14 Right of Setoff. In addition to any rights and remedies of the Secured
Party provided by law, the Secured Party is authorized at any time and from time
to time, without prior notice to the Debtor, any such notice being waived by the
Debtor to the fullest extent  permitted by law, to set-off and apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held by, and other  indebtedness  at any time owing by, the Secured  Party to or
for the  credit or the  account of the Debtor  against  any and all  Obligations
owing to the Secured Party, now or hereafter  existing,  irrespective of whether
or not the  Secured  Party shall have made demand  under this  Agreement  or any
Credit  Document and although such  Obligations  may be contingent or unmatured.
The Secured  Party  agrees  promptly to notify the Debtor after any such set-off
and application made by the Secured Party;  provided,  however, that the failure
to  give  such  notice  shall  not  affect  the  validity  of such  set-off  and
application.

     7.15 Severability. If any part of this Agreement is contrary to, prohibited
by or  deemed  invalid  under  any  applicable  law  of any  jurisdiction,  such
provision shall, as to such jurisdiction,  be inapplicable and deemed omitted to
the  extent  so  contrary,  prohibited  or  invalid,  without  invalidating  the
remainder hereof or affecting the validity or  enforceability  of such provision
in any other jurisdiction.

     7.16 Section  Headings.  Section  headings  used in this  Agreement are for
convenience only and shall not affect the construction of this Agreement.

     7.17  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts  and by the Secured Party and the Debtor in separate  counterparts,
each of which shall be an original,  but all of which shall together  constitute
one and the same agreement.  Delivery by a party by facsimile  transmission of a
counterpart  of this  Agreement  signed by such party  shall be  effective  as a
manual delivery by such party of such counterpart.

     7.18 Release of Collateral. Upon payment in full of all the Obligations and
the  termination  of the Notes and (if the Credit  Agreement  is executed by the
Debtor and Ahold) the  termination of all  obligations the Secured Party to make
loans to the  Debtor,  the  Secured  Party at the  request of the  Debtor  shall
promptly,  and in any event within 2 Weeks after the request therefor,  execute,
deliver and file such instruments as the Debtor shall reasonably request (and at
the Debtor's expense) in order to reassign, release or terminate its security in
the Collateral.

     7.19 References. Unless and until the Credit Agreement is executed by Ahold
and the Debtor and loans are made to Debtor  thereunder,  all  references to the
"Secured Party" shall be to BEW. Upon execution of the Credit Agreement by Ahold
and Debtor and the repayment of the Term Loan and all other  indebtedness  owing
to BEW by Debtor  under  the  Credit  Documents,  all  references  herein to the
"Secured  Party" (except in Sections 2.16, 7.3, 7.4, 7.5 and 7.8) shall refer to
Ahold;  provided,  however,  in the event  BEW is  required  to return  any such
payments  to Debtor or trustee  or  receiver  therefor,  all  references  to the
"Secured Party" shall again include BEW.

    [Remainder of this page intentionally left blank; signature pages follow]

<PAGE>
     IN WITNESS  WHEREOF,  each party  hereto has executed  and  delivered  this
Agreement by its duly authorized officer as of the date first written above.

                                         Debtor

                                         PEAPOD, INC.

                                         By: ___________________________________
                                             Name:   Dan Rabinowitz
                                             Title:  Senior VP and
                                                      Chief Financial Officer


<PAGE>
     IN WITNESS  WHEREOF,  each party  hereto has executed  and  delivered  this
Agreement by its duly authorized officer as of the date first written above.

                                         Secured Party

                                         BEW, Inc.

                                         By: ___________________________________
                                             Name:   Anne J. Longo
                                             Title:  President

<PAGE>
     IN WITNESS  WHEREOF,  each party  hereto has executed  and  delivered  this
Agreement by its duly authorized officer as of the date first written above.

                                         Secured Party

                                         Koninklijke Ahold NV

                                         By: ___________________________________
                                             Name:
                                             Title: