Employment Agreement - drugstore.com inc. and Jed Smith
DRUGSTORE.COM, INC.
2730 Sand Hill Road
Menlo Park, CA 94025
June 18, 1998
Jed Smith
c/o Kleiner Perkins Caufield & Byers
2759 Sand Hill Road
Menlo Park, CA 94025
Offer Letter
Dear Jed:
On behalf of DrugStore.com, Inc. (the "Company", I am pleased to confirm
in writing our offer to you of the position of Vice President of Strategy and
Business Development at a monthly salary of approximately $10,417 that is
equivalent to an annual salary of $125,000. Your salary will be paid bimonthly
in equal installments in accordance with the Company's standard payroll
policies. So long as you remain an employee of the Company and achieve certain
agreed upon milestones, you will receive a $25,000 bonus at the end of calendar
1998. You will also be entitled to the benefits that the Company customarily
makes available to its employees, including reimbursement for travel and
relocation expenses. You will be entitled to three weeks of paid vacation each
year. For the duration of your employment with the Company, you will devote your
full working time, skill and attention to your duties and responsibilities as
the Company's Vice President of Strategy and Business Development and will
perform them faithfully, diligently and competently. As we have discussed, you
will also serve as the Company's acting Chief Executive Officer and President
and will participate in the recruiting and hiring of the Company's permanent
Chief Executive Officer and President. Your compensation package will be
reviewed annually by the Company's Board of Directors beginning on January 1,
1999.
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. If
the Company terminates your employment other than for Cause (as defined below),
you will be entitled to continue to receive your then-current base salary and
benefits (including medical benefits) for a period equal to six 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
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Jed Smith
June 18, 1998
Page 2
may be) from any claims relating to your employment, and pursuant to which you
may agree to provide a certain minimum number of hours of consulting services to
the Company during such six month period. The specific terms of the consulting
services are to be mutually agreed between you and the Company at the time of
your termination. In addition, if your employment with the Company is terminated
as a result of your disability or death, you or your estate will be entitled to
receive your then-current base salary and benefits (including medical benefits)
for a period equal to six months following such termination, either from the
Company or from the Company's benefit plans then in effect. For the purposes of
this letter, "Cause" means (1) gross negligence or willful misconduct in the
performance of duties to the Company which is demonstrably and materially
injurious to the business or reputation of the Company or its subsidiaries; (2)
commission of any act of fraud against, or the misappropriation of material
property belonging to, the Company; or (3) conviction of a felony or a crime
that is demonstrably and materially injurious to the business or reputation of
the Company, in each case as determined in good faith by the Company's Board of
Directors.
We both agree that any dispute arising with respect to your employment, the
termination of that employment or a breach of any covenant of good faith and
fair dealing related to your employment, shall be conclusively settled by
arbitration in accordance with the Voluntary Labor Arbitration Rules of the
American Arbitration Association (AAA) at the AAA office in San Francisco,
California.
The Company asks that you complete its standard form "Employee Information
and Inventions Agreement" prior to commencing employment, a copy of which will
be provided to you upon acceptance of this letter. In part, the agreement
requests that a departing employee refrain from using or disclosing the
Company's Confidential Information (as defined in the agreement) or any
confidential information received during your relationship with the Company in
any manner which might be detrimental to or conflict with the business interests
of the Company or its employees. The agreement does not prevent a former
employee from using his or her general knowledge and experience -- no matter
when or how gained -- in any new field or position. If you should have any
questions about the "Employee Confidential Information and Inventions
Agreement," please call me.
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 "Employee Confidential Information and Inventions
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
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Jed Smith
June 18, 1998
Page 3
discretion, adjust the salaries and benefits paid to you and its other
employees. The Company will reimburse you for the reasonable fees and expenses
of one legal counsel representing you in connection with the matters set forth
in this letter up to $3,000. 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 on the terms set forth above was on or before April
1, 1998. Kindly indicate your consent to the terms contained in this offer
letter by signing and returning a copy to me by June 25, 1998.
Very truly yours,
DRUGSTORE.COM, INC.
By: /s/ Brook H. Byers
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Brook Byers, Director
ACCEPTED:
/s/Jed A Smith
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Jed Smith
June 22, 1998
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Date