Document:

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                                                                   EXHIBIT 10.12

         This Warrant and any shares acquired upon the exercise of this Warrant
         have not been registered under the Securities Act of 1933 and may not
         be transferred in the absence of such registration or an exemption
         therefrom, except under circumstances where neither such registration
         nor such an exemption is required by law. This Warrant may be
         transferred only in compliance with the conditions specified in this
         Warrant.

                          Eco-form International, Inc.

                          Common Stock Purchase Warrant
                             Expiring June 30, 2003

                                                                    July 5, 2000

No. W2000A-001

Eco-form International, Inc. a Delaware corporation (the "Company"), for value
received, hereby certifies that VerticalVC, Inc., a Michigan corporation, or its
registered assigns, is entitled to purchase from the Company Two Million
(2,000,000) duly authorized, validly issued, fully paid and nonassessable shares
of the Company's common stock, (the "Common Stock"), at the purchase price of
$.01 per share (the "Exercise Price") at any time or from time to time prior to
5 P.M., Eastern time, on June 30, 2003 subject to the terms, conditions and
adjustments set forth below in this Warrant (this Warrant and all Warrants
issued in substitution therefor being hereinafter referred to as the
"Warrants").

         1.   Exercise of Warrant.

         1.1. Manner of Exercise. Subject to Section 1.2, this Warrant may be
exercised by the registered holder hereof, in whole or in part, during normal
business hours on any business day by surrender of this Warrant, with the notice
of exercise attached hereto as Attachment A (or a reasonable facsimile thereof)
duly executed by such holder, to the Company at the principal office of the
Company, accompanied by payment in cash or by certified or official bank check
payable to the order of the Company in the amount obtained by multiplying (a)
the number of shares of Common Stock (without giving effect to any adjustment
therein) designated in such notice of exercise by (b) the Exercise Price, and
such holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
determined as provided in Section 2.

         1.2. Restrictions on Exercise. In order to ensure compliance with the
federal and state securities laws, the Company may require the holder hereof to
obtain an opinion of counsel, satisfactory to the Company, to the effect that
the shares to be issued upon exercise of the Warrant may be issued pursuant to
exemptions from registration under the Securities Act of 1933 and all applicable
state securities laws. The holder also agrees to execute any and all
subscription documents, questionnaires and instruments that may be required by
the Company to ensure compliance with the federal and state securities laws. In
the event the holder is unable to provide

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the Company with a satisfactory legal opinion that the shares to be issued upon
the exercise of this Warrant may be issued without registration under the
Securities Act of 1933 and applicable state securities laws, the Company will
not be required to issue that stock to the holder and will return the holder's
exercise funds and the Warrant to holder.

         1.3. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1, and at such time the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such exercise as provided in Section 1.4 shall be deemed to have
become the holder or holders of record thereof.

         1.4. Delivery of Stock Certificate, Etc. As soon as practicable after
the exercise of this Warrant, in whole or in part, and in any event within five
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to the restrictions contained in
Sections 1.2 and 3, as such holder (upon payment by such holder of any
applicable transfer taxes) may direct,

                  (a) a certificate or certificates for the number of duly
         authorized, validly issued, fully paid and nonassessable shares of
         Common Stock to which such holder shall be entitled upon such exercise,
         and

                  (b) in case such exercise is in part only, a new Warrant or
         Warrants of like tenor, calling in the aggregate on the face or faces
         thereof for the number of shares of Common Stock equal (without giving
         effect to any adjustment therein) to the number of such shares called
         for on the face of this Warrant minus the number of such shares
         designated by the holder upon such exercise as provided in Section 1.1.

         2. Adjustments: Stock Dividends, Reclassification, Reorganization,
            Merger and Anti-Dilution Provisions.

         (a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights and
privileges of such shares, by means of (i) the payment of a stock dividend or
the making of any other distribution on such shares payable in its Common Stock,
(ii) a stock split or subdivision of shares, (iii) a consolidation or
combination of shares, or (iv) a reclassification or recapitalization involving
its Common Stock, then the Exercise Price in effect at the time of such action
and the number of shares of Common Stock purchasable pursuant to this Warrant
(the "Warrant Stock") at that time shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the shares of Common Stock then
purchasable pursuant to this Warrant shall be increased, decreased or changed in
like manner, for the same aggregate purchase price as set forth in this Warrant,
as if the shares of Common Stock purchasable pursuant to this Warrant
immediately prior to the event at issue had been issued, outstanding, fully paid
and nonassessable at the time of that event. As an example, if the Company were
to declare a two-for-one stock split or a one hundred percent stock dividend,
then the number of unpurchased shares of Warrant Stock subject to this Warrant
would be doubled and the Exercise Price for all unpurchased shares of Warrant
Stock would be reduced by 50 percent.

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These adjustments would result in the Holder's rights under this Warrant not
being diluted by the stock split or stock dividend.

         (b) If the Company pays or makes any dividend or other distribution
upon its Common Stock payable in securities or other property, excluding money
or the Company's Common Stock but including (without limitation) shares of any
other class of the Company's stock or stock or other securities convertible into
or exchangeable for shares of Common Stock or any other class of the Company's
stock or other interests in the Company or its assets ("Convertible
Securities"), a proportionate part of those securities or that other property
shall be set aside by the Company and delivered to the Holder in the event that
the Holder exercises this Warrant. The securities and other property then
deliverable to the Holder upon the exercise of this Warrant shall be in the same
ratio to the total securities and property set aside for the Holder as the
number of shares of Common Stock with respect to which the Warrant is then
exercised is to the total shares of Common Stock purchasable pursuant to this
Warrant at the time the securities or property were set aside for the Holder.

         (c) If at any time the Company grants to its shareholders rights to
subscribe pro rata for additional securities of the Company, whether Common
Stock, Convertible Securities, or other classifications, or for any other
securities or interests that the Holder would have been entitled to subscribe
for if, immediately prior to such grant, the Holder had exercised this Warrant,
then the Company shall also grant to the Holder the same subscription rights
that the Holder would be entitled to if the Holder had exercised this Warrant in
full immediately prior to such grant.

         (d) Upon the occurrence of any of the following events, the Company
shall cause effective provision to be made so that the Holder shall have the
right at any time thereafter prior to the expiration date of this Warrant, by
the exercise of this Warrant, to purchase for the aggregate Exercise Price
described in this Warrant the kind and amount of share of stock and other
securities, and property and interests, as would be issued or payable with
respect to or in exchange for the number of shares of Warrant Stock of the
Company that are then purchasable pursuant to this Warrant as if such shares of
Warrant Stock had been issued to the Holder immediately before such event: (i)
the reclassification, capital reorganization, or other similar change of
outstanding shares of Common Stock of the Company, other than as described and
provided for in subsection (a) above; (ii) the merger or consolidation of the
Company with one or more other corporations or other entities, other than a
merger with a subsidiary or affiliate pursuant to which the Company is the
continuing entity and the outstanding shares of Common Stock, including the
shares of Warrant Stock purchasable pursuant to this Warrant, are not affected;
or (iii) the spin-off of assets, a subsidiary or an affiliated entity, or the
sale, lease, or exchange of a significant portion of the Company's assets, in a
transaction pursuant to which the Company's shareholders of record are to
receive securities or other interests in a successor entity. Any such provision
made by the Company for adjustments with respect to this Warrant shall be as
nearly equivalent to the adjustments otherwise provided for in this Warrant as
is reasonably practicable. The foregoing provisions of this subsection (d) shall
similarly apply to successive reclassifications, capital reorganizations and
similar changes of shares of Common Stock and to successive consolidations,
mergers, spin-offs, sales, leases or exchanges.

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         (e) Except as otherwise provided in this Section 2, upon any adjustment
of the Exercise Price, the Holder shall be entitled to purchase, at the new
Exercise Price, the number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock purchasable pursuant to this Warrant
immediately prior to the adjustment of the Exercise Price by the Exercise Price
in effect immediately prior to its adjustment and dividing the product so
obtained by the new Exercise Price.

(f) The provisions of this Section 2 shall apply to successive events that may
occur from time to time but shall only apply to a particular event if it occurs
prior to the expiration of this Warrant either by its terms of by its exercise
in full.

         (g) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
such price; provided, however, that any adjustments which by reason of this
Section 2(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 2(g)
shall be made to the nearest mill ($.001) or to the nearest ten thousandth
(0.0001) of a share as the case may be.

         3. Restrictions on Transfer.

         3.1. Restricted Securities. As used in this Agreement, the term
"Restricted Securities" shall mean all Warrants and all shares of Common Stock
acquired or to be acquired by a holder pursuant to the exercise of Warrants;
provided, that any such Warrants or shares of Common Stock shall cease to be
Restricted Securities once they are sold or otherwise disposed of pursuant to
one or more registration statements under the Securities Act of 1933 or pursuant
to Rule 144 adopted by the Securities and Exchange Commission.

         3.2. Restrictive Legends. Each Warrant issued in substitution or on
transfer or exchange of any Warrant which is a Restricted Security (as defined
in Section 3.1) shall bear the following legend, unless the holder of the
Warrant to be issued delivers to the Company an opinion of counsel of the holder
reasonably satisfactory to the Company that the following legend is no longer
required to ensure compliance with the Securities Act of 1933, as amended:

         "This Warrant and any shares acquired upon the exercise of this Warrant
         have not been registered under the Securities Act of 1933 and may not
         be transferred in the absence of such registration or an exemption
         therefrom, except under circumstances where neither such registration
         nor such an exemption is required by law. This Warrant may be
         transferred only in compliance with the conditions specified in this
         Warrant."

Stock certificates issued upon exercise of a Warrant which are Restricted
Securities shall bear the following legend, unless the holder of a Warrant being
exercised delivers to the Company an opinion of counsel of the holder reasonably
satisfactory to the Company that the following legend is no longer required to
ensure compliance with the Securities Act of 1933, as amended:

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         "The shares represented by this certificate have not been registered
         under the Securities Act of 1933 and may not be transferred in the
         absence of such registration or an exemption therefrom, except under
         circumstances where neither such registration nor such an exemption is
         required by law."

         3.3. Restriction on Transfer. Prior to any transfer of Restricted
Securities which are not registered under an effective registration statement
under the Securities Act of 1933, as amended, the registered holder of such
securities shall, upon the Company's request, furnish to the Company an opinion
of counsel of the holder reasonably satisfactory to the Company to the effect
that the proposed transfer may be effected without registration of such
Restricted Securities under the Securities Act of 1933.

         4. Registered Holder and Transfer and Exchange; Replacement of
            Warrants.

         4.1. Registered Holder and Transfer and Exchange. This Warrant shall be
registered in the holder's name on the books of the Company as the registered
holder hereof at its principal office. No transfer of this Warrant shall be
valid unless made in compliance with Section 3.3 and the Warrant is surrendered
at the Company's principal office by the registered holder hereof or by his
attorney duly authorized in writing accompanied by a properly executed
assignment in the form attached hereto as Attachment B. This Warrant is
exchangeable, without expense, at the option of the holder, upon surrender
hereof at the Company's principal office for other Warrants of like tenor and of
different denominations calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock called for on the face hereof. Upon the
surrender of any Warrant for registration of transfer or for exchange at the
principal office of the Company, the Company at its expense will execute and
deliver to or upon the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered. A Warrant, if
properly assigned, may be exercised by a new holder without first having a new
Warrant issued. The Company may treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notice of ownership or
writing made hereon by anyone other than an authorized officer or employee of
the Company) for all purposes.

         4.2. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, upon delivery of indemnity reasonably satisfactory to the Company
in form and amount or, in the case of any such mutilation, upon surrender of
such Warrant for cancellation at the principal office of the Company, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

         5. Maintenance of Reserved Shares. The Company shall reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the exercise of this Warrant, the
full number of shares then issuable upon the exercise of the outstanding
Warrant.

         6. Common Stock to be Validly Issued. All shares of Common Stock which
may be issued upon the exercise of the Warrant will, upon issuance, be validly
issued, fully paid and

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nonassessable, and free from all taxes (other then taxes payable in respect of
the transfer of any such shares), claims, liens, encumbrances, charges or
equities with respect to the issue thereof.

         7. Warrant Holder Not Shareholder. No Warrant Holder, as such, shall be
entitled to vote or receive dividends or be deemed the holder of shares of
Common Stock for any purpose, nor shall anything contained in this Warrant be
construed to confer upon any Warrant Holder, as such, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
action by the Company (whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings or other action affecting shareholders, except as
provided herein, receive dividends or subscription rights, or otherwise, until
the Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise of the Warrant shall have become deliverable hereunder.

         8. Notices. All notices, certificates, requests, or other similar items
provided for in this Warrant shall be in writing and shall be personally
delivered or deposited in the mail, postage prepaid, addressed to the Company at
1040 Riverside Drive, Suite 33, London, Ontario, Canada N6H 5H1 or to the Holder
at the address of the Holder shown on the Company's records. All notices shall
be deemed to be delivered upon personal delivery or upon the expiration of three
business days following deposit in the United States mail. The addresses of the
parties may be changed, and addresses of other Holders and holders of Warrant
Stock may be specified, by written notice delivered pursuant to this Section.

         9. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and assigns, whether so expressed or
not.

         10. Governing Law. This Warrant shall be construed and interpreted in
accordance with the laws of the State of Michigan without reference to its
principles of conflicts of law.

         11. Definitions. For all purposes of this Warrant, unless the context
otherwise requires:

                  (a) Common Stock: the Common Stock of the Company as
         constituted on June 30, 2003, any stock, securities or other property
         into which such Common Stock shall have been changed or any stock
         resulting from any reclassification of such Common Stock.

                  (b) Company: includes any corporation which shall become fully
         liable for the obligations of the Company hereunder.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its officers thereunto duly authorized, and to be dated as of the day and year
first above written.

                                        ECO-FORM INTERNATIONAL, INC.

                                        By:
                                            ------------------------------------
                                                 Howard W. Keep, President

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                                                                    Attachment A

                               NOTICE OF EXERCISE

(To be executed by a Holder desiring to exercise the right to purchase Common
Stock pursuant to a Warrant).

The undersigned Holder of Warrant Number W2000A-        hereby

         (i)      irrevocably elects to exercise the Warrant to the extent of
                  purchasing           shares of Common Stock;

         (ii)     makes payment in full of the aggregate Exercise Price for
                  those shares in the amount of $        by the delivery of cash
                  or certified or cashier's check in that amount;

         (iii)    requests that a certificate for such shares be issued in the
                  name of the undersigned or, if the name and address of some
                  other person is specified below, in the name of such other
                  person:

                                   ---------------------------------------------

                                   ---------------------------------------------

                                   ---------------------------------------------
                                   (Name and address of person other than the
                                   undersigned in whose name shares are to be
                                   registered)

         (iv)     requests, if the number of shares transferred are not all the
                  shares purchasable pursuant to the unexercised portion of the
                  Warrant, that a new Warrant of like tenor for the remaining
                  shares purchasable pursuant to the Warrant be issued and
                  delivered to the undersigned at the address stated below.

Date:
                                   ---------------------------------------------
                                   Signature
                                   (This signature must conform in all respects
                                   to the name of the Holder as specified on the
                                   face of the Warrant.)

                                   ---------------------------------------------
                                   Printed Name
                                   Address:
                                            ------------------------------------

                                            ------------------------------------
                                                                    Attachment B

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                                 ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned,           , hereby sells, assigns and
transfers unto:

Name:
       -----------------------------------------------------------
                  (Please type or print in block letters)

Address:
         --------------------------------------------------------

         --------------------------------------------------------

the right to purchase        shares of Common Stock pursuant to the terms and
conditions of Warrant Number W2000A-           held by the undersigned. The
undersigned hereby authorizes and directs the Company (i) to issue and deliver
to the above-named assignee at the above address a new Warrant pursuant to which
the rights to purchase being assigned may be exercised, and (ii) if there are
rights to purchase Common Stock remaining pursuant to the undersigned's Warrant
after the assignment contemplated herein, to issue and deliver to the
undersigned at the address stated below a new Warrant covering such remaining
rights. Except for the number of shares purchasable, the new Warrants to be
issued and delivered by the Company are to contain the same terms and conditions
as the undersigned's Warrant.

         To complete the assignment contemplated by this Assignment Form, the
undersigned hereby irrevocably constitutes and appoints                      as
the undersigned's attorney-in-fact to transfer the Warrants and the rights
thereunder on the books of the Company with full power of substitution for these
purposes.

The undersigned acknowledges that this transfer may only be effective and
recorded on the records of the Company if it is made pursuant to the
restrictions on transfer set forth in Sections 3.3 and 4.1 of the Warrant.

Date:
                                   ---------------------------------------------
                                   Signature
                                   (This signature must conform in all respects
                                   to the name of the Holder as specified on the
                                   face of the Warrant.)

                                   ---------------------------------------------
                                   Printed Name
                                   Address:
                                            ------------------------------------

                                            ------------------------------------

                                       8EXCHANGE AGREEMENT

                             AND FIRST AMENDMENT TO

                    PURCHASE AGREEMENT (Dated April 14, 2000)

                                  by and among

                                  PEAPOD, INC.,

                                       and

                             KONINKLIJKE AHOLD N.V.

                          Dated as of October 12, 2000

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page

ARTICLE I  EXCHANGE AND AMENDMENT.............................................1

         1.1.  Exchange.......................................................1
         1.2.  The Closing....................................................2
         1.3.  Deliveries at the Exchange Closing.............................2
         1.4.  Amendment to the Purchase Agreement Following the Exchange.....2

ARTICLE II  CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR.....................3

         2.1.  Accuracy of Representations and Warranties.....................3
         2.2.  Approval.......................................................3

ARTICLE III  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.....................3

         3.1.  Accuracy of Representations and Warranties.....................3

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................3

         4.1.  Organization and Standing......................................3
         4.2.  Capital Stock..................................................4
         4.3.  Subsidiaries...................................................5
         4.4.  Authorization; Enforceability..................................5
         4.5.  No Violation; Consents.........................................5
         4.6.  Fully Paid Shares..............................................5

ARTICLE V  REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.....................6

         5.1.  Authorization; Enforceability; No Violations...................6
         5.2.  Consents.......................................................6
         5.3.  Private Placement..............................................6
         5.4.  Ownership......................................................7

ARTICLE VI  COVENANTS.........................................................7

         6.1.  Agreement to Pay Accrued Dividends.............................7
         6.2.  Securities Legends.............................................8

ARTICLE VII  SURVIVAL; INDEMNIFICATION........................................8

         7.1.  Survival.......................................................8
         7.2.  Indemnification................................................8

ARTICLE VIII  DEFINITIONS....................................................10

         8.1.  Definitions...................................................10

ARTICLE IX  MISCELLANEOUS....................................................12

         9.1.  Notices.......................................................12
         9.2.  Fees and Expenses.............................................13
         9.3.  Specific Performance..........................................13
         9.4.  Entire Agreement; Waivers and Amendments......................14
         9.5.  Assignment; Binding Effect....................................14
         9.6.  Severability..................................................14
         9.7.  No Third Party Beneficiaries..................................14
         9.8.  Public Announcements..........................................14
         9.9.  Governing Law.................................................15
         9.10.  Interpretation...............................................15
         9.11.  Captions.....................................................15
         9.12.  Counterparts.................................................15

<PAGE>

EXHIBITS

Exhibit A.........Series B Certificate of Designations

Exhibit B.........Form of Series C Certificate of Designations

Exhibit C.........Waiver

Exhibit D.........Amended and Restated Stockholders Rights Agreement

Exhibit E.........Opinion of Sidley & Austin

<PAGE>

                               EXCHANGE AGREEMENT

          THIS  EXCHANGE  AGREEMENT  AND FIRST  AMENDMENT TO PURCHASE  AGREEMENT
(dated April 14, 2000) (this "Agreement") is made and entered into as of October
12, 2000, by and between PEAPOD,  INC., a Delaware  corporation  (the "Company")
and Koninklijke Ahold N.V., a public company with limited liability incorporated
under the laws of The Netherlands (the  "Investor").  Certain  capitalized terms
used herein shall have the meanings set forth in Article VIII.

                                 R E C I T A L S

          WHEREAS, the Investor purchased from the Company, and the Company sold
to the Investor,  726,371 shares of Series B Convertible  Preferred  Stock,  par
value $0.01 per share, of the Company ("Series B Preferred  Stock"),  having the
rights,  preferences  and  terms  set  forth  in  the  form  of  Certificate  of
Designations of Series B Convertible Preferred Stock of the Company,  filed with
the  Secretary  of State of the State of  Delaware  on June 29,  2000  (attached
hereto as Exhibit A) (the "Series B Certificate of Designations"),  all upon the
terms  and  subject  to the  conditions  set  forth  in  that  certain  Purchase
Agreement,  dated  as of April  14,  2000 by and  between  the  Company  and the
Investor (the "Purchase Agreement");

          WHEREAS, the Investor desires to exchange the 726,371 shares of Series
B Preferred  Stock for 726,371 shares of Series C Convertible  Preferred  Stock,
par value $0.01 per share,  of the  Company,  (the  "Series C Preferred  Stock")
having the rights, preferences and terms set forth in the form of Certificate of
Designations of Series C Convertible  Preferred  Stock of the Company,  attached
hereto as Exhibit B (the "Series C Certificate of Designations"); and

          WHEREAS,  the  Company  desires  to issue  726,371  shares of Series C
Preferred Stock in exchange for 726,371 shares of the Series B Preferred Stock;

          NOW,   THEREFORE,   in   consideration   of  the   foregoing  and  the
representations,  warranties, covenants and agreements contained herein, and for
other good and valuable  consideration  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

                                    ARTICLE I

                             EXCHANGE AND AMENDMENT

          1.1. Exchange.  Upon the terms and subject to the conditions set forth
in this  Agreement,  the  Investor  and  the  Company  agree  to  exchange  (the
"Exchange")  the  726,371  shares of Series B  Preferred  Stock  (the  "Series B
Shares")  held by the  Investor for 726,371  shares of Series C Preferred  Stock
(the "Series C Shares").

          1.2. The Closing. The closing (the "Exchange Closing") of the Exchange
hereunder shall take place at the offices of Sidley & Austin, Bank One Plaza, 10
South Dearborn, Chicago, Illinois at 10:00 a.m. Chicago time, on the date hereof
or at such other time and place as the  parties  hereto  shall agree in writing.
The date on which  the  Exchange  Closing  occurs is  referred  to herein as the
"Exchange Closing Date."

          1.3. Deliveries at the Exchange Closing.  (a) At the Exchange Closing,
the Company shall issue and deliver to the Investor all of the following:

                    (i) Certificates representing an aggregate of 726,371 shares
          of Series C Preferred  Stock in definitive  form and registered in the
          name  of  the  Investor  or  its  nominee  or  designee  and  in  such
          denominations  as the Investor  shall  request in writing at least two
          (2) Business Days prior to the Exchange  Closing  Date,  together with
          all other documents  required hereunder to be delivered by the Company
          to the Investor at the Exchange Closing;

                    (ii)  Certificate  of good standing of the Company issued as
          of a recent date by the  Secretary  of State of the State of Delaware;
          and

                    (iii) Certificate of the secretary of the Company, dated the
          Exchange Closing Date, in form and substance  reasonably  satisfactory
          to the Investor,  as to (A) the  Certificate of  Incorporation  of the
          Company;  (B) the resolutions of the board of directors of the Company
          authorizing the execution,  delivery and performance of this Agreement
          and the transactions  contemplated hereby; and (iii) the incumbency of
          the officers of the Company executing this Agreement.

          (b) At the Exchange Closing, the Investor shall deliver to the Company
all of the following;

                    (i) Certificates representing 726,371 shares of the Series B
          Preferred  Stock;  and

                    (ii) Duly  executed  stock powers in favor of the Company in
          respect of such certificates.

                  1.4.  Amendment  to  the  Purchase  Agreement   Following  the
Exchange.  Effective as of the Exchange  Closing  Date,  the Purchase  Agreement
shall be amended as follows: in Article I, the definition of "Series B Preferred
Stock"  shall be amended by adding,  after the phrase  "shall  mean the Series B
Convertible  Preferred  Stock,  par value $0.01 per share,  of the  Company" the
words "or any securities for which the Series B Convertible  Preferred  Stock is
exchanged."

                                   ARTICLE II

                  CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR

          The  obligation of the Investor to consummate  the Exchange is subject
to the satisfaction of the following conditions as of the Exchange Closing:

          2.1. Accuracy of Representations  and Warranties.  The representations
and  warranties  contained in Article IV hereof shall be true and correct in all
material  respects at and as of the Exchange Closing as though then made, except
to the  extent of  changes  caused by the  transactions  expressly  contemplated
herein;

          2.2. Approval.  The transactions  contemplated by this Agreement shall
have been approved by all requisite  corporate  action by the Company's board of
directors under the laws of the State of Delaware.

          2.3.  Certificate of Designations.  The Certificate of Designations of
Series C Convertible Preferred Stock shall have been filed with the Secretary of
State of the State of Delaware.

          2.4.   Stockholders   Rights  Agreement.   The  Amended  and  Restated
Stockholders  Rights  Agreement  between  the Company  and First  Chicago  Trust
Company  of New York,  a  division  of  Equiserve,  shall  have been  amended as
reflected in the form attached as Exhibit D hereto.

          2.5.  Opinion  of Sidley & Austin.  Sidley &  Austin,  counsel  to the
Company,  shall have  delivered to the Investor an opinion,  dated such Exchange
Closing Date,  addressed to the Investor,  substantially in the form attached as
Exhibit E hereto.

                                   ARTICLE III

                  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY

          The obligation of the Company to consummate the Exchange is subject to
the satisfaction of the following condition as of the Exchange Closing:

          3.1. Accuracy of Representations  and Warranties.  The representations
and warranties  contained in Article V shall be true and correct in all material
respects at and as of the  Exchange  Closing as though then made,  except to the
extent of changes caused by the transactions expressly contemplated herein.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as  disclosed  in that  section  of the  document  of even date
herewith and delivered by the Company to the Investor prior to the execution and
delivery of this  Agreement (the  "Disclosure  Schedule")  corresponding  to the
Section  of this  Agreement  to which any of the  following  representations  or
warranties pertain,  the Company hereby represents and warrants to the Investor,
as of the date of this Agreement, as follows:

          4.1.  Organization  and  Standing.  The Company is duly  incorporated,
validly existing and in good standing as a domestic  corporation  under the laws
of the State of Delaware and has all requisite  corporate power and authority to
own its  properties  and assets and to carry on its  business as it is now being
conducted  and as proposed to be  conducted.  The Company is duly  qualified  to
transact  business  as a foreign  corporation  and is in good  standing  in each
jurisdiction  in which the character of the properties  owned or leased by it or
the nature of its business makes such qualification necessary,  except where the
failure to so qualify or be in good standing could not,  individually  or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

          4.2. Capital Stock. On the date hereof,  the authorized  capital stock
of the Company will consist solely of (a) 100,000,000 shares of Common Stock and
(b)  10,000,000  shares  of  Preferred  Stock.  As of the  date  hereof,  of the
100,000,000  shares of Common Stock authorized,  (i) 17,967,562 shares of Common
Stock are issued and  outstanding,  (ii)  41,913,066  shares  are  reserved  for
issuance  pursuant to  outstanding  options and warrants  and existing  employee
stock plans,  (iii)  immediately  prior to the Exchange,  19,369,873  shares are
reserved for issuance upon conversion of the shares of Series B Preferred Stock,
and (iv) 19,369,873  shares will be reserved for issuance upon conversion of the
shares of Series C Preferred  Stock.  As of the date hereof,  of the  10,000,000
shares of Preferred Stock authorized,  (i) 1,000,000 shares have been designated
Series A Preferred Stock, none of which will be issued or outstanding but all of
which have been  reserved  for  issuance  upon the  exercise of rights under the
Rights  Agreement,  (ii) 730,000 shares have been designated  Series B Preferred
Stock,  726,371  of which are issued and  outstanding  immediately  prior to the
Exchange,  and (ii) 730,000 shares will have been designated  Series C Preferred
Stock. Each share of capital stock of the Company that is issued and outstanding
is duly authorized,  validly issued, fully paid and nonassessable,  and will not
be subject to nor issued in violation of, any preemptive  rights.  All shares of
Series C Preferred Stock issued at the Exchange Closing, or as a dividend on any
outstanding shares of Series C Preferred Stock, will be duly authorized, validly
issued, fully paid and nonassessable.  Upon conversion of any shares of Series C
Preferred Stock in accordance  with their terms,  all of the Common Stock issued
upon such conversion  will be duly  authorized,  validly issued,  fully paid and
nonassessable.  Except as set forth on Schedule 4.2 or as  contemplated  by this
Agreement,  at the date hereof there are, and immediately following the Exchange
Closing  there  will be (a) no  outstanding  or  authorized  options,  warrants,
agreements,  conversion rights, preemptive rights, other rights,  subscriptions,
claims of any character, obligations, convertible or exchangeable securities, or
other commitments,  contingent or otherwise, relating to shares of capital stock
of the  Company or any of its  Subsidiaries  or pursuant to which the Company or
any of its  Subsidiaries  is or may  become  obligated  to issue  shares  of its
capital  stock  or  any  securities  convertible  into,   exchangeable  for,  or
evidencing  the right to subscribe for,  purchase or acquire,  any shares of the
capital  stock of the Company or any of its  Subsidiaries,  (b) no  restrictions
upon the  dividends,  voting or transfer  of any shares of capital  stock of the
Company  pursuant to its  Charter,  Bylaws or other  governing  documents or any
agreement or other  instruments  to which it is a party or by which it is bound,
and (c) no shares of Common Stock or Preferred  Stock held by the Company in its
treasury.  The  holders of the Series C  Preferred  Stock  will,  upon  issuance
thereof,  have the rights set forth in the Series C Certificate of Designations.
Neither the Company nor any of its  Subsidiaries  has  authorized or outstanding
bonds,  debentures,  notes or other  indebtedness  the holders of which have the
right to vote (or convertible or exercisable for or exchangeable into securities
the  holders  of which  have the right to vote)  with the  stockholders  of such
person on any matter. Following the Exchange Closing, and except as contemplated
by this Agreement or the Rights Agreement or as set forth on Schedule 4.2, there
are  no  outstanding  contractual  obligations  of  the  Company  or  any of its
Subsidiaries  to  repurchase,  redeem or otherwise  acquire any shares of Common
Stock or capital stock of the Company or any of its Subsidiaries.

          4.3. Subsidiaries. The Company has no Subsidiaries.

          4.4.  Authorization;  Enforceability.  The Company  has the  corporate
power to execute,  deliver and perform its obligations  under this Agreement and
has taken all necessary  corporate  action to authorize the execution,  delivery
and  performance  by it of this  Agreement  and to consummate  the  transactions
contemplated hereby and thereby.  No other corporate  proceedings on the part of
the Company are necessary therefor.  The Company has duly executed and delivered
this Agreement.  This Agreement will constitute,  when executed and delivered by
the  Company,  assuming  due  execution by the  Investor,  the legal,  valid and
binding obligations of the Company enforceable against it in accordance with its
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general  principles of equity  (regardless
of whether enforcement is sought in a proceeding in equity or at law).

          4.5.  No  Violation;   Consents.  (a)  The  execution,   delivery  and
performance  by the  Company  of  this  Agreement  and the  consummation  of the
transactions contemplated hereby does not and will not contravene any Applicable
Law, except for any such contraventions  that could not,  individually or in the
aggregate,  reasonably  be  expected  to have a  Material  Adverse  Effect.  The
execution,  delivery and  performance  by the Company of this  Agreement and the
consummation of the transactions  contemplated  hereby (i) will not (x) violate,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any  contract,  lease,  loan  agreement,  Benefit Plan,  mortgage,
security  agreement,  trust  indenture or other agreement or instrument to which
the  Company  or any of its  Subsidiaries  is a party or by which any of them is
bound or to which any of their  properties  or assets is subject,  except to the
extent any such conflict or breach, singly or in the aggregate, would not have a
Material  Adverse  Effect,  (y) result in the creation or imposition of any Lien
(other than a  Permitted  Lien) upon any of the  properties  or assets of any of
them,  or (z) except as set forth on Schedule  4.5(a),  obligate  the Company to
make any payment or incur any additional  obligation,  or give rise to any right
of any person with  respect to the  Company,  under any term or provision of any
contract or agreement, the Charter or Bylaws of the Company, any Benefit Plan or
any  Applicable  Law,  that  relates to a change of control or  ownership of the
Company or any similar  provision,  (ii) will not violate any  provision  of its
Charter or  Bylaws,  and (iii)  will not  result in the  Investor  or any of its
Affiliates or Permitted  Transferees  being (x) an "Acquiring  Person" under the
Amended and Restated  Stockholder  Rights Agreement,  dated as of April 14, 2000
(the "Rights  Agreement"),  by and between the Company and First  Chicago  Trust
Company  of New York,  a  division  of  Equiserve,  as Rights  Agent,  or (y) an
"interested stockholder," under Section 203 of the DGCL.

          (b) Except as set forth on Schedule 4.5(b), no consent,  authorization
or order of, or filing or registration with, any Governmental Authority or other
person  is  required  to be  obtained  or  made  by  the  Company  or any of its
Subsidiaries  for the execution,  delivery and  performance of this Agreement or
the consummation of the transactions contemplated hereby.

                                    ARTICLE V

                 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

          Except as  disclosed  in that  section  of the  document  of even date
herewith and delivered by the Investor to the Company prior to the execution and
delivery of this Agreement (the "Investor Disclosure Schedule") corresponding to
the Section of this Agreement to which any of the following  representations  or
warranties pertain,  the Investor hereby represents and warrants to the Company,
as of the date of this Agreement, as follows:

          5.1. Authorization; Enforceability; No Violations. (a) The Investor is
duly organized and validly existing in good standing as a corporation  under the
laws of its jurisdiction of organization  and has all requisite  corporate power
and authority to own its  properties  and assets and to carry on its business as
it is now being  conducted.  The  Investor has the  corporate  power to execute,
deliver and perform the terms and provisions of this Agreement and has taken all
necessary corporate action to authorize the execution,  delivery and performance
by it of the Agreement and to consummate the transactions  contemplated  hereby.
No  other  corporate  proceedings  on the  part of the  Investor  are  necessary
therefor.

          (b) The Investor has duly executed and delivered this Agreement.  This
Agreement will constitute, when executed and delivered by the Investor, assuming
the due execution by the Company,  the legal,  valid and binding  obligations of
the Investor,  enforceable  against the Investor in  accordance  with its terms,
except as enforceability  may be limited by applicable  bankruptcy,  insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors' rights generally and by general  principles of equity  (regardless of
whether enforcement is sought in a proceeding in equity or at law).

          5.2.  Consents.  No consent,  authorization  or order of, or filing or
registration with, any Governmental  Authority or other person is required to be
obtained or made by the Investor for the execution,  delivery and performance by
the  Investor  of  this  Agreement  or  the  consummation  of  the  transactions
contemplated hereby.

          5.3.  Private  Placement.  (a) The Investor  understands  that (i) the
issuance of the Series C Shares by the Company to the Investor is intended to be
exempt from  registration  under the  Securities  Act  pursuant to section  4(2)
thereof,  and  (ii)  there  is no  existing  public  or  other  market  for  the
Securities.

          (b) The Series C Shares to be  acquired  by the  Investor  pursuant to
this  Agreement  are being  acquired  for its own  account and without a view to
making a  distribution  thereof in  violation  of the  Securities  Act,  without
prejudice, however, to its right to sell or otherwise dispose of all or any part
of such  securities in compliance  with the provisions of the Securities Act and
applicable state securities or "blue sky" laws.

          (c) The Investor has sufficient  knowledge and experience in financial
and business  matters so as to be capable of evaluating  the merits and risks of
its  investment  in the Series C Preferred  Stock and the Investor is capable of
bearing the economic risks of such investment,  including a complete loss of its
investment in the shares of Series C Preferred Stock.

          (d) The Investor is an "accredited  investor," as such term is defined
in Regulation D under the Securities Act.

          (e) The  Investor  acknowledges  that  the  Company  will  rely on the
accuracy and truth of its  representations in this Section 5.3, and the Investor
hereby consents to such reliance.

          (f) The  Investor has had the  opportunity  to ask  questions  of, and
receive answers from,  representatives of the Company concerning the Company and
the  terms  and  conditions  of  this  transaction,  as well  as to  obtain  any
information  requested by the  Investor.  Any  questions  raised by the Investor
concerning  the  transaction  have  been  answered  to the  satisfaction  of the
Investor.  The Investor's  decision to enter into the transactions  contemplated
hereby is based in part on the answers to such  questions  as the  Investor  has
raised  concerning the  transaction  and on the Investor's own evaluation of the
risks and merits of the purchase and the Company's proposed business activities.

          5.4. Ownership. The Series B Shares are free and clear of any Liens or
Encumbrances (except for those expressly set forth in this Agreement, the Series
B Certificate of Designations  and applicable  Federal and state securities laws
and regulations). The exchange of the Series B Shares for the Series C Shares as
contemplated  by this Agreement is not subject to any preemptive  right or right
of first  refusal.  Upon the  consummation  of the  Exchange,  the Company  will
acquire good and marketable title to each of the Series B Shares, free and clear
of any Lien or Encumbrance,  and will be entitled to all the rights and benefits
of a holder of such securities.

                                   ARTICLE VI

                                    COVENANTS

          6.1.  Agreement to Pay Accrued  Dividends.  The parties  hereto hereby
acknowledge  and agree that as of September 30, 2000,  dividends had accrued and
become  payable  with  respect to the Series B Shares,  subject to that  certain
waiver,  dated as of October 2, 2000  between  the parties  (attached  hereto as
Exhibit C) (the "Waiver"). The Company hereby agrees that such dividends are due
and  owing  to  the  Investor  and,   notwithstanding  the  Exchange,  shall  be
accumulated,  compounded  and paid in accordance  with the terms of the Series B
Certificate of Designations and the Waiver.

          6.2. Securities Legends. Each certificate  evidencing ownership of the
Series C Shares shall be stamped or otherwise have endorsed or imprinted thereon
a legend in substantially the following form, so long as applicable:

          "THE  SECURITIES  EVIDENCED  HEREBY HAVE NOT BEEN REGISTERED
     UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED (THE  "ACT"),  OR
     UNDER  APPLICABLE  STATE  SECURITIES  LAWS,  AND MAY NOT BE SOLD,
     ASSIGNED,  PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
     EFFECTIVE  REGISTRATION  UNDER THE ACT OR IN A TRANSACTION WHICH,
     IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
     QUALIFIES AS AN EXEMPT  TRANSACTION  UNDER THE ACT, THE RULES AND
     REGULATIONS PROMULGATED THEREUNDER AND THE SECURITIES LAWS OF ANY
     APPLICABLE STATE."

          Notwithstanding the foregoing, upon receipt by the Company of evidence
and  documents  reasonably   satisfactory  to  it  of  the  termination  of  the
requirement that all or any part of any of the foregoing  legends be placed upon
a  certificate  and upon the written  request of the  holders of the  securities
represented  thereby,  the Company shall issue  certificates for such securities
that do not bear such legend.

                                   ARTICLE VII

                            SURVIVAL; INDEMNIFICATION

          7.1.  Survival.   All  representations,   warranties,   covenants  and
agreements  of the  parties  contained  in this  Agreement,  or in any  Schedule
hereto,  shall survive for a period of two years following the Exchange Closing;
provided,  however, that with respect to claims asserted pursuant to Section 7.2
before the expiration of the applicable  representation or warranty, such claims
shall survive until the date they are finally liquidated or otherwise  resolved.
The covenants and agreements of the parties  contained in this  Agreement  shall
remain in full force and effect in accordance with the terms hereof.

          7.2.  Indemnification.  (a) The Company  and each of its  Subsidiaries
hereby agree to  indemnify,  defend,  and hold  harmless  the Investor  (and its
directors, officers,  Affiliates,  successors, and assigns) from and against all
losses, liabilities, damages, costs, or expenses, including interest, penalties,
and reasonable attorneys' fees and expenses, (collectively,  "Losses"), or other
diminution  in the value of the Series C Shares,  arising out of, based upon, or
otherwise  resulting from (i) any inaccuracy in any  representation or breach of
any  warranty of the Company  contained  in this  Agreement  or in any  Schedule
hereto or (ii) the breach or nonfulfillment of any covenant, agreement, or other
obligation  of the Company under this  Agreement or the Series C Certificate  of
Designations.

          (b) The Investor hereby agrees to indemnify, defend, and hold harmless
the Company  (and its  respective  directors,  officers,  partners,  principals,
Affiliates, successors, and assigns) from and against any Losses arising out of,
based upon, or otherwise resulting from (i) any inaccuracy in any representation
or breach of any warranty of the Investor  contained in this Agreement or in any
Schedule hereto or (ii) the breach or nonfulfillment of any covenant, agreement,
or other obligation of the Investor under this Agreement.

          (c)  Promptly  after the receipt by any party  hereto of notice of any
third-party  claim  or the  commencement  of any  third-party  action,  suit  or
proceeding subject to indemnification  hereunder (a "Third-Party  Claim"),  such
party (the  "Indemnified  Party") will,  if a claim in respect  thereto is to be
made  against any party  obligated  to provide  indemnification  hereunder  (the
"Indemnifying  Party"),  give such  Indemnifying  Party prompt written notice of
such  Third-Party  Claim;  provided,  however,  that the failure to provide such
notice will not relieve the  Indemnifying  Party of any of its  obligations,  or
impair the right of the Indemnified  Party to  indemnification  pursuant to this
Section  7.2  unless,  and only to the  extent  that,  such  failure  materially
prejudices  the  Indemnifying  Party's  opportunity  to defend or compromise the
Third-Party   Claim  or  such   failure   directly   increases   the  amount  of
indemnification  payments hereunder over and above the amount thereof that would
otherwise  have been payable had such notice been provided as aforesaid.  If the
Indemnified Party is not a litigant,  participant,  or real party in interest in
the Third-Party  Claim, the Indemnifying Party shall be entitled and required to
assume  the  defense  of such  Third-Party  Claim and defend the same at its own
expense and shall have sole  authority to  compromise or settle the same. If the
Indemnified Party is a litigant,  participant,  or real party in interest in the
Third-Party Claim (an "Interested  Third-Party  Claim"),  the Indemnifying Party
shall have the right, at its option, to defend at its own expense and by its own
counsel such  Interested  Third-Party  Claim,  provided that (i) such counsel is
reasonably  satisfactory to the Indemnified Party, (ii) the Indemnified Party is
kept reasonably  informed of all  developments,  is furnished with copies of all
documents and papers related  thereto,  and is given the right to participate in
the defense and investigation thereof at the expense of the Indemnified Party as
provided below, and (iii) such counsel proceeds with diligence and in good faith
with respect thereto.  If any  Indemnifying  Party shall undertake to defend any
Interested  Third-Party  Claim,  it shall  notify the  Indemnified  Party of its
intention  to do so  promptly  (and in any event no later than thirty (30) days)
after receipt of notice of the Interested Third-Party Claim, and the Indemnified
Party  agrees to  cooperate  in good faith with the  Indemnifying  Party and its
counsel in the defense of such Interested Third-Party Claim. Notwithstanding the
foregoing,  the  Indemnified  Party shall have the right to  participate  in the
defense and investigation of any such Interested  Third-Party Claim with its own
counsel at its own expense,  except that the  Indemnifying  Party shall bear the
expense of one such separate counsel if (A) in the written opinion of counsel to
the Indemnified Party reasonably  acceptable to the Indemnifying  Party, the use
of counsel of the Indemnifying Party's choice to represent both the Indemnifying
Party and the Indemnified Party in such matter would be expected to give rise to
a conflict of interest,  (B) there are or may be legal defenses available to the
Indemnified  Party that are different  from or additional to those  available to
the  Indemnifying  Party,  (C) the  Indemnifying  Party shall not have  employed
counsel to represent the Indemnified Party within a reasonable time after notice
of such Interested Third-Party Claim is given to the Indemnifying Party or after
notice  that the  Indemnifying  Party  intends  to  assume  the  defense  of the
Interested  Third-Party  Claim  is given to the  Indemnified  Party,  or (D) the
Indemnifying  Party shall authorize the  Indemnified  Party in writing to employ
separate  counsel at the expense of the  Indemnifying  Party.  The  Indemnifying
Party  shall not settle  any  Interested  Third-Party  Claim  without  the prior
written  consent  of the  Indemnified  Party,  which  shall not be  unreasonably
withheld  (except  that no such  consent  shall be required  if such  settlement
contains  a  complete  release  of all  liability  related  to  such  Interested
Third-Party  Claim). If, under the foregoing  provisions,  the Indemnified Party
assumes  control  of  the  defense  of any  Interested  Third-Party  Claim,  the
Indemnified Party shall not settle such Interested Third-Party Claim without the
prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld.

          (d) Except to the extent  otherwise  required  by law,  any  indemnity
payment made pursuant to this Section 7.2 or other payment made pursuant to this
Agreement  shall be treated by the  parties  and their  Affiliates  on their Tax
Returns as an adjustment to the  consideration  being  provided for the Series C
Shares hereunder. For purposes of this Section 7.2, Losses shall include any tax
liabilities of the Indemnified  Party resulting from the indemnity  payments and
shall be reduced by the  Indemnified  Party by any tax benefits  realized by the
Indemnified  Party as a result of the  losses,  liabilities,  damages,  costs or
expenses included in computing the Losses.

                                  ARTICLE VIII

                                   DEFINITIONS

          8.1.  Definitions.  The  following  terms when used in this  Agreement
(including  the  Schedules  and  Exhibits   hereto)  shall  have  the  following
respective meanings:

          "Affiliate"  of a Person  means  any other  Person  that  directly  or
indirectly through one or more intermediaries  controls,  is controlled by or is
under common control with such Person.  For purposes of this  definition and the
definition of "Subsidiary" below, "control" (or "controlled," as the context may
require) shall have the meaning set forth in Rule 12b-2 under the Exchange Act.

          "Agreement"  has the meaning set forth in the first  paragraph of this
Agreement.

          "Applicable Law" means, with respect to any person,  any law, statute,
rule regulation, order, writ, injunction, judgment or decree of any Governmental
Authority to which such person or any of its  subsidiaries  is bound or to which
any of their respective properties is subject.

          "Benefit Plan" has the meaning set forth in the Purchase Agreement.

          "Business  Day" means any day other than a  Saturday,  Sunday or other
day on which commercial banks in Illinois or New York are required or authorized
by law to be closed.

          "Charter" means,  with respect to any corporation,  the certificate of
incorporation or articles of incorporation of such corporation.

          "Common  Stock"  has the  meaning  set forth in the  recitals  of this
Agreement.

          "Company"  has the  meaning set forth in the first  paragraph  of this
Agreement.

          "Disclosure Schedule" has the meaning set forth in the first paragraph
of Article II.

          "Exchange" shall have the meaning set forth in Section 1.1.

          "Exchange Closing" has the meaning set forth in Section 1.2.

          "Exchange Closing Date" has the meaning set forth in Section 1.2.

          "Governmental  Authority" means any federal,  state,  local or foreign
governmental or regulatory authority.

          "Indemnified  Party"  and  "Indemnifying  Party"  have the  respective
meanings set forth in Section 5.2.

          "Indemnity Threshold" has the meaning set forth in Section 7.2.

          "Interested  Third  Party  Claim" has the meaning set forth in Section
7.2.

          "Investor"  has the meaning set forth in the first  paragraph  of this
Agreement.

          "Investor  Disclosure Schedule" has the meaning set forth in the first
paragraph of Article III.

          "Lien or  Encumbrance"  means any  lien,  pledge,  mortgage,  security
interest,  claim, lease, charge,  option, right, easement,  servitude,  transfer
limit, restriction, title defect or other encumbrance.

          "Losses" has the meaning set forth in Section 7.2.

          "Material  Adverse Effect" means a material  adverse effect (i) on the
business, operations,  prospects,  properties,  earnings, assets, liabilities or
condition  (financial or other) of the Company and its Subsidiaries,  taken as a
whole,  or (ii) on the  ability  of the  Company or any of its  Subsidiaries  to
perform its obligations hereunder.

          "Permitted  Lien"  means:  (i) liens for Taxes and other  governmental
charges and assessments arising in the ordinary course of business which are not
yet  due  and  payable,   (ii)  liens  of  landlords   and  liens  of  carriers,
warehousemen,  mechanics  and  materialmen  and other like liens  arising in the
ordinary course of business for sums not yet due and payable,  (iii) other liens
or imperfections on property which are not material in amount,  do not interfere
with, and are not violated by, the consummation of the transactions contemplated
by this Agreement, and do not impair the marketability of, or materially detract
from the  value of or  materially  impair  the  existing  use of,  the  property
affected by such lien or  imperfection,  and (iv) liens  created or  permissible
under the Credit and Security Agreements, dated as of April 14, 2000 between the
Company and the Investor.

          "Permitted Transferee" means any Person.

          "Person"  means  any  individual,  corporation,  partnership,  limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated   organization,   Governmental   Authority  or  other  entity  or
organization.

          "Preferred Stock" means the preferred stock, par value $.01 per share,
of the Company.

          "Purchase Agreement" has the meaning set forth in the recitals of this
Agreement.

          "Rights Agreement" has the meaning set forth in Section 4.5.

          "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

          "Series B Certificate  of  Designations"  has the meaning set forth in
the recitals of this Agreement.

          "Series C Certificate  of  Designations"  has the meaning set forth in
the recitals of this Agreement.

          "Series B Preferred  Stock" and "Series B Shares" have the  respective
meanings set forth in the recitals of this Agreement.

          "Series C Preferred  Stock" and "Series C Shares" have the  respective
meanings set forth in the recitals of this Agreement.

          "Subsidiary"  means, with respect to any Person, any entity controlled
(as such term is defined in the definition of "Affiliate" above) by such Person.

          "Tax Returns" has the meaning set forth in the Purchase Agreement.

          "Third Party Claim" has the meaning set forth in Section 7.2.

          "Waiver" has the meaning set forth in Section 6.1.

                                   ARTICLE IX

                                  MISCELLANEOUS

          9.1.  Notices.  Any  notices and other  communications  required to be
given pursuant to this Agreement shall be in writing and shall be effective upon
delivery by hand (against  written receipt) or upon receipt if sent by certified
or  registered  mail  (postage  prepaid and return  receipt  requested)  or by a
nationally  recognized  overnight  courier  service  (appropriately  marked  for
overnight  delivery) or upon  transmission  if sent by telex or facsimile  (with
request  for  immediate  confirmation  of  receipt  in a  manner  customary  for
communications  of such  respective  type  and  with  physical  delivery  of the
communication  being made by one of the other means  specified  in this  Section
10.1 as promptly as  practicable  thereafter).  Notices are to be  addressed  as
follows:

          (a)  If to the Company to:

               Peapod, Inc.
               9933 Woods Drive
               Skokie, Illinois  60077
               Attention: Andrew Parkinson, Chairman
               Telecopy No.:  (847) 583-9495

               With a copy to:

               Sidley & Austin
               Bank One Plaza
               10 South Dearborn Street
               Chicago, Illinois 60603
               Attention: Christine A. Leahy, Esq.
               Telecopy No.:  (312) 853-7036

          (b)  If to the Investor to:

                Koninklijke Ahold N.V.
                c/o The Stop and Shop Supermarket Company
                1385 Hancock Street
                Quincy, Massachusetts  02169
                Attention:  David Kramer, Esq.
                Telecopy No.:  (617) 770-6013

          and:

                Koninklijke Ahold N.V.
                Albert Heijnweg 1
                1507 EH Zaandam, The Netherlands
                Attention:  Ton van Tielraden, Esq.
                Telecopy No.:  (31-75) 659-8366

          with a copy (which shall not constitute notice) to:

                 White & Case
                 1155 Avenue of the Americas
                 New York, New York  10036
                 Attention:  Maureen S. Brundage, Esq./John M. Reiss, Esq.
                 Telecopy No.:  (212) 354-8113

or to  such  other  respective  addresses  as any of the  parties  hereto  shall
designate  to the others by like  notice,  provided  that  notice of a change of
address shall be effective only upon receipt thereof.

          9.2. Fees and Expenses. Except as provided herein, each of the parties
hereto  shall  pay its own  respective  fees and  expenses  (including,  without
limitation, the fees and disbursements of any attorneys, accountants, investment
bankers,  consultants or other Representatives) incurred in connection with this
Agreement  and  the  transactions  contemplated  hereby,  whether  or  not  such
transactions are consummated.

          9.3. Specific  Performance.  Each party hereto acknowledges and agrees
that in the  event of any  breach  or  default  by the other  party  under  this
Agreement,  the other party hereto would be irreparably and  immediately  harmed
and could not be made whole by monetary damages.  It is accordingly  agreed that
in such case (i) each defaulting party hereto will waive, in any action, suit or
proceeding  for  specific  performance  or  other  relief  referred  to in  this
paragraph, the defense of adequacy of money damages or a remedy at law, and (ii)
the other  non-defaulting  party  shall be  entitled,  in  addition to any other
remedy to which it may be entitled at law or in equity or  otherwise,  to compel
specific  performance  of this  Agreement  or to obtain a temporary  restraining
order, preliminary and permanent injunction or other equitable relief or remedy,
in any action, suit or proceeding instituted in any state or federal court.

          9.4.  Entire  Agreement;   Waivers  and  Amendments.   This  Agreement
(including  the Exhibits  hereto and the documents and  instruments  referred to
herein)  contains the entire  agreement  and  understanding  of the parties with
respect to the subject  matter hereof and  supersedes  all prior written or oral
agreements,  representations  and understandings with respect thereto except for
the purposes of Section 6.1, the Series B Certificate  of  Designations  and the
Waiver. This Agreement may only be amended or modified, and the terms hereof may
only be waived,  by a writing signed by both parties hereto or, in the case of a
waiver, by the party entitled to the benefit of the terms being waived.

          9.5. Assignment; Binding Effect. This Agreement may not be assigned or
delegated, in whole or in part, by either party hereto without the prior written
consent of the other party hereto, except that the Investor shall have the right
at any time, without such consent, to assign its right hereunder to exchange the
Series B Shares for the Series C Shares to any wholly  owned  Subsidiary  of the
Investor (in which event,  the Investor shall  irrevocably  and  unconditionally
guarantee  the  performance  by such  Subsidiary  of the  Investor's  obligation
hereunder to exchange such Series B Shares for such Series C Shares). Subject to
the foregoing,  this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.

          9.6.  Severability.  In the event that any provision of this Agreement
shall be declared invalid or unenforceable by a court of competent  jurisdiction
in  any  jurisdiction,  such  provision  shall,  as  to  such  jurisdiction,  be
ineffective to the extent declared  invalid or unenforceable  without  affecting
the validity or  enforceability  of the other provisions of this Agreement,  and
the remainder of this  Agreement  shall remain binding on the parties hereto (so
long as the economic or legal substance of the transactions  contemplated hereby
is not affected in any manner  adverse to any party).  Upon such  determination,
the parties  shall  negotiate  in good faith to modify this  Agreement  so as to
effect the  original  intent of the parties as closely as possible in a mutually
acceptable  manner  in  order  that  the  transactions  contemplated  hereby  be
consummated as originally contemplated to the greatest extent possible.

          9.7. No Third Party  Beneficiaries.  This Agreement is for the benefit
of the parties  hereto and is not  intended to confer upon any other  Person any
rights or remedies hereunder.

          9.8.  Public  Announcements.  Each party hereto shall notify the other
prior to issuing any press release or making any public statement  pertaining to
this Agreement or the transactions  contemplated hereby, and shall not issue any
such press  release or make any such  public  statement  without  obtaining  the
reasonable approval of the other parties prior thereto,  except that the Company
shall be permitted to disclose this Agreement, the Transaction Documents and the
transactions  contemplated  herein and  therein to Nasdaq and each party will in
any event have the right to issue any such release or  statement  upon advice of
its  counsel  that  such  issuance  is  required  in  order to  comply  with any
applicable law or any listing agreement with, or rules of, a national securities
exchange to which such party is a party or subject.

          9.9.  Governing Law. This Agreement shall be governed by and construed
in accordance  with the internal  laws of the State of New York,  and each party
hereto submits to the non-exclusive jurisdiction of the state and federal courts
within  the  County of New York in the State of New  York.  Any legal  action or
proceeding  with respect to this  Agreement  may be brought in the courts of the
State of New York or of the United  States of America for the Southern  District
of New York and, by execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property, generally jurisdiction of the
aforesaid  courts.  The Company further  irrevocably  consents to the service of
process out of any of the  aforementioned  courts in any action or proceeding by
the mailing of copies thereof by registered or certified mail,  postage prepaid,
to the Company at its address set forth in Section  7.1,  such service to become
effective  seven days after such mailing.  Nothing herein shall affect the right
of the  Investor to serve  process in any of the matters  permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any other
jurisdiction.  The Company hereby  irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid  actions or
proceedings  arising out of or in connection  with the Agreement  brought in the
courts referred to above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or  proceeding  brought in
any such court has been brought in an inconvenient forum.

          9.10.  Interpretation.  This  Agreement  is the result of  arms-length
negotiations  between the parties  hereto and has been  prepared  jointly by the
parties.  In applying and interpreting  the provisions of this Agreement,  there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.

          9.11. Captions. The Article and Section Headings in this Agreement are
inserted  for   convenience  of  reference   only,  and  shall  not  affect  the
interpretation of this Agreement.

          9.12.  Counterparts.  This Agreement may be executed in  counterparts,
each of which shall be deemed an  original  and all of which  together  shall be
considered one and the same agreement.

                           [SIGNATURE PAGE TO FOLLOW]

<PAGE>

          IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first written above.

                                              PEAPOD, INC.

                                              By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                              KONINKLIJKE AHOLD N.V.

                                              By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                     [SIGNATURE PAGES TO EXCHANGE AGREEMENT]

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