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Employment Agreement - drugstore.com inc. and Peter Neupert

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June 29, 1998
                                                                  
Peter Neupert
13121 NE 38th Place
Bellevue, WA 98005

Dear Peter:

     On behalf of DrugStore.com (the "Company"), we are pleased to offer you the
position of President and Chief Executive Officer reporting directly to the
Company's Board of Directors. You will be elected to the Company's Board of
Directors promptly upon commencement of your employment with the Company. For
the duration of your employment with the Company, you will devote your full
time, skill and attention to your duties and responsibilities as the Company's
President and Chief Executive Officer and will perform them faithfully,
diligently and competently. You will be located at the Company's principal
executive offices which will be at the location in the Seattle metropolitan area
that you determine to be in the best interests of the Company.

     You will receive a monthly salary of approximately $20,834 that is
equivalent to an annual salary of $250,000. Your salary will be paid bimonthly
in equal installments in accordance with the Company's standard payroll
policies. You will be eligible to receive up to a $125,000 bonus annually based
upon the Company's performance. The exact bonus formula will be determined by
mutual agreement with you. Your compensation package will be reviewed annually
by the Company's Board of Directors, the first review occurring one year from
your start date. You will also be entitled to the benefits that the Company
customarily makes available to its employees, and will be responsible for
establishing the Company's benefit plans as soon as practicable after
commencement of your employment. Until such time as the Company's benefit plans
are established, the Company will reimburse you for any COBRA payments that you
are required to make to maintain the benefits available to you upon termination
of your current employment (assuming you make timely and accurate election to
receive such benefits). In addition, you will be entitled to three weeks of paid
vacation each year.

     In addition, subject to approval of the Company's Board of Directors, you
will have a one-time right to purchase up to 1,260,000 shares of the Company's
Common Stock (the "Shares") at a purchase price of $.04 per share. The Shares
will be subject to repurchase by the Company at your original purchase price
(the "Repurchase Right") within one year following termination of your
employment with the Company. Except as otherwise set forth below, the Repurchase
Right will lapse over the term of your employment: (i) with respect to 1/4th of
the Shares on the date of purchase; (ii) with respect to the balance of the
Shares, the repurchase right will lapse one (1) year after your start date at
the rate of 1/48th of the Shares per month at the close of each month while you
remain employed with the Company, over the remainder of the four (4) year
vesting term. If you prefer, all or a portion of the Shares can be provided in
the form of an incentive stock option (to the maximum extent permitted under the
Internal Revenue Code), subject to the same vesting provisions set forth above.

     If during your employment with the Company (i) there is a Change of Control
(as defined below), and (ii) you are not offered a position with similar
responsibilities (at the same or greater base salary and bonus potential) by the
surviving corporation, the Company's Repurchase Right will immediately lapse
with respect to all of the Shares. We agree that managing the online division of
a major drugstore chain will not constitute a position with similar
responsibilities. With that exception, you agree that a position with similar
responsibilities will include any position in which you continue to run the
operations of the Company with full executive responsibility for strategic and
business planning, profit and loss, marketing, pricing and sales. You also agree
that you will not consider your responsibilities to be dissimilar solely because
the acquiring company combines and operates warehousing, distribution and other
similar operations. "Change of Control" shall mean the sale of all or
substantially all of the assets of the Company or the acquisition of the Company
by another entity by means of consolidation or merger after which the then
current stockholders of the Company hold less than 50% of the voting power of
the surviving corporation; provided that a reincorporation of the Company shall
not be a Change of Control.
<PAGE>

Peter Neupert
June 29, 1998
Page two

     Alternatively, if your employment with the Company is involuntarily
terminated by the Company other than for Cause (as defined below), the
Repurchase Right will lapse with respect to an additional 236,250 of the Shares
(in addition to any Shares that already have vested over the time period between
your commencement of employment and the termination of your employment). "Cause"
means: (a) willful and repeated failure to comply with the lawful directions of
the Board of Directors; (b) gross negligence or willful misconduct in the
performance of your duties to the Company; (c) commission of any act of fraud
against, or the misappropriation of material property belonging to the Company;
or (d) conviction of a crime that is materially injurious to the business or
reputation of the Company, in each case as determined in good faith by the Board
of Directors.

     As a shareholder of the Company, you will not have preemptive rights.
However, prior to the Company's initial public offering and for so long as you
remain an employee of the Company, whenever the Company issues stock in the
future in order to raise capital, the Company will use its best efforts to
permit you to purchase your pro rata share of the stock offered, provided that
doing so is consistent with the Company's best interests in receiving the
necessary funding.

     The Company will acquire and maintain director and officer liability
insurance coverage in amounts that you, as Chief Executive Officer, deem
appropriate given the nature and size of the Company's business. In addition,
the Company will maintain general and product liability insurance coverage in
amounts you deem appropriate.

     We hope that you and the Company will find mutual satisfaction with your
employment. All of us at the Company are very excited about you joining our team
and look forward to a beneficial and rewarding relationship. Nevertheless,
employees have the right to terminate their employment at any time with or
without cause or notice, and the Company reserves for itself an equal right. In
the event that your employment is terminated by the Company for any reason, you
will be entitled to continue to receive your then-current base salary and
benefits for a period equal to nine months following such termination. The
Company, at its sole discretion, may elect to accelerate such payments and pay
you in a lump sum. The foregoing severance benefits will be contingent upon your
entering into an appropriate agreement at the time of your termination releasing
the Company (and any successor, as the case may be) from any claims relating to
your employment.

     The Company asks that you complete a standard form "Confidentiality,
Noncompetition and Invention Assignment Agreement" prior to commencing
employment. The terms of the agreement will be reasonably satisfactory to you.
In part, the agreement will request that you refrain for a period of time after
employment from competing with the Company or using or disclosing the Company's
Confidential Information (as defined in the agreement) or any confidential
information received during your prior employment in any manner which might be
detrimental to or conflict with the business interests of the Company or its
employees.

     For purposes of federal immigration law, you must provide to the Company
documentary evidence of your identity and eligibility for employment in the
United States. Such documentation must be provided to the Company within three
business days of commencement of your employment with the Company.

     This letter and the "Confidentiality, Noncompetition and Invention
Assignment Agreement" contain the entire agreement with respect to your
employment. The terms of this offer may only be changed by written agreement,
although the Company may from time to time, in its sole discretion, adjust the
salaries and benefits paid to you and its other employees.

     Should you have any questions with regard to any of the items indicated
above, please call me. It is my understanding that your employment commencement
date will be as soon as practicable taking into account your existing
commitments. Kindly indicate your consent to the terms contained in this offer
letter by signing and returning a copy to us by July 2, 1998.

                                      -2-
<PAGE>

Peter Neupert
June 29, 1998
Page three

Sincerely,

DrugStore.com, Inc.


/s/ Brook H. Byers
----------------------------
Brook H. Byers, Director                                      


Agreed to and accepted:

/s/ Peter M. Neupert                   June 30, 1998
--------------------                   -------------
Peter Neupert                          Date

This offer is subject to withdrawal by DrugStore.com, Inc. prior to acceptance,
and expires if not accepted by July 2, 1998.

                                      -3-