Employment Agreement - drugstore.com inc. and Mark L. Silverman
December 4, 1998
Offer Letter
Mark L. Silverman
125 Pineview Lane
Menlo Park, CA 94025
Dear Mark:
On behalf of DrugStore.com, Inc. (the "Company"), I am pleased to offer you
the position of Vice President, General Counsel and Secretary at a monthly
salary of $14,585 that is equivalent to an annual salary of approximately
$175,000. You will report directly to the Company's Chief Executive Officer.
Your salary will be paid bimonthly in equal installments in accordance with the
Company's standard payroll policies. You will receive a $35,000 "signing" bonus
upon commencement of your employment with the Company which is intended to cover
your relocation and related expenses. In addition, you will receive bonuses in
the discretion of the Company's Chief Executive Officer and Board of Directors
commensurate with other officers of the Company. You will also be entitled to
the benefits that the Company customarily makes available to its officers. You
will be entitled to two weeks of paid vacation each year. For the duration of
your employment with the Company, you will devote your free time, skill and
attention to your duties and responsibilities as the Company's Vice President,
General Counsel and Secretary and will perform them faithfully, diligently and
competently. Your compensation package will be reviewed annually by the
Company's Chief Executive Officer and Board of Directors.
In addition, you will be granted an option (the "Option") to purchase
150,000 shares of the Company's Common Stock at an exercise price of $.45 per
share. The shares of Common Stock subject to such Option (the "Option Shares")
will vest over a four year period as follows: 25% of the shares will vest on
January 1, 2000, and the remaining shares will vest in six equal installments at
the end of each six month period thereafter (the "Vesting Period"). Vesting will
depend upon your continued employment with the Company. The Option will be an
incentive stock option to the maximum extent permitted under the Internal
Revenue Code and will be subject to the terms of the Company's 1998 Stock Option
Plan and the related Stock Option Agreement between you and the Company. If
during your employment with the Company (i) there is a Change of Control (as
defined below), and (ii) you are not offered a Comparable Position (as defined
below) by the surviving corporation, all of the Option Shares shall vest and
become exercisable immediately prior to the Change of Control. A "Comparable
Position" is a position with similar or greater responsibilities at your then
current base salary and bonus potential, and with the same for Cause termination
provisions set forth below. We agree that being offered the position of Vice
President and/or General Counsel of a division or subsidiary of a drugstore
chain, pharmaceutical benefit management company or pharmaceutical company will
not constitute a Comparable Position. With that exception, you agree that a
Comparable Position will include any position in which you continue to have full
executive responsibility over all of the surviving company's legal matters and
responsibility for substantial business development activities of the surviving
company. "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 shareholders 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.
If your employment with the Company is involuntarily terminated by the
Company other than for Cause (as defined below), all of the Option Shares shall
vest and be immediately exercisable, and you shall have up to one year to
exercise the Option. "Cause" means: (a) willful and repeated failure to comply
with the lawful directions of the Chief Executive Officer or 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
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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. For purposes of this letter,
your employment will be deemed involuntarily terminated other than for Cause if
your duties are reduced without Cause, your title as Vice President, General
Counsel or Secretary is reduced without Cause, your compensation is
involuntarily reduced, you no longer report to the Company's Chief Executive
Officer (without your consent), you die or become disabled, or if following a
Change of Control you are not offered a Comparable Position by the surviving
entity. For the purpose of this last sentence, compensation shall include base
salary, bonus plan and benefits, although the details of the bonus plan may
change from year to year.
We hope that you and the Company will find mutual satisfaction with your
employment. All of us at the Company are very excited about your 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 without Cause, you
will be entitled to continue to receive your then-current base salary and
benefits (including medical benefits) for a period equal to 12 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 the form Confidentiality and Inventions
Agreement which is attached to this letter prior to commencement of employment
with the Company. In addition, 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.
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This letter and the Confidentiality and Inventions Agreement contain the
entire agreement with respect to your employment. The terms of this offer may
only be changed by written agreement. Should you have any with regard to any of
the items indicated above, please call me. It is my understanding that your
employment commencement date will be on January 1, 1999, or as soon thereafter
as is practical. Kindly indicate your consent to the terms contained in this
offer letter by signing and returning a copy to me by December 11, 1998.
Very truly yours,
/s/Peter M. Neupert
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Peter Neupert, President and
Chief Executive Officer
ACCEPTED:
/s/Mark Silverman
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Mark Silverman
12/11/98
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Date
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