-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U+6KobOWseP2tfgJrs+L/lWym2kIfd4O4wSrPYzOQm69mVDee/cofNbMnLxFDJ0L ly2uDMl/U9LFSa9WvDqx3w== /in/edgar/work/20000816/0000891020-00-001529/0000891020-00-001529.txt : 20000922 0000891020-00-001529.hdr.sgml : 20000922 ACCESSION NUMBER: 0000891020-00-001529 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000816 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DRUGSTORE COM INC CENTRAL INDEX KEY: 0001086467 STANDARD INDUSTRIAL CLASSIFICATION: [5912 ] IRS NUMBER: 043416255 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-57797 FILM NUMBER: 704060 BUSINESS ADDRESS: STREET 1: 13920 SOUTHEAST EASTGATE SUITE 300 CITY: BELLEVUE STATE: WA ZIP: 98005 BUSINESS PHONE: 4258815131 MAIL ADDRESS: STREET 1: 13920 SOUTHEAST EASTGATE WAY STREET 2: SUITE 300 CITY: BELLEVUE STATE: WA ZIP: 98005 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMAZON COM INC CENTRAL INDEX KEY: 0001018724 STANDARD INDUSTRIAL CLASSIFICATION: [5961 ] IRS NUMBER: 911646860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1200 12TH AVENUE S SUITE 1200 CITY: SEATTLE STATE: WA ZIP: 98144 BUSINESS PHONE: 2062661000 MAIL ADDRESS: STREET 1: 1200 12TH AVENUE S SUITE 1200 CITY: SEATTLE STATE: WA ZIP: 98144 SC 13D/A 1 sc13da.txt SCHEDULE 13 D AMENDMENT NO. 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. 1)(1) DRUGSTORE.COM, INC. ------------------------------------- (Name of Issuer) COMMON STOCK ------------------------------------- (Title of Class of Securities) 26224110 ------------------------------------- (CUSIP Number of Class of Securities) L. Michelle Wilson Scott L. Gelband Amazon.com, Inc. with a copy to: Perkins Coie LLP 1200 12th Avenue South, Suite 1201 Third Avenue, 40th Floor 1200 Seattle, Washington 98101 Seattle, Washington 98144 (206) 583-8888 (206) 266-1000
- -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 4, 2000 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ] Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 12 Pages) - ------------ (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D (AMENDMENT NO. 1) CUSIP NO. 26224110 PAGE 2 OF 12 PAGES - ----------- ------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Amazon.com, Inc. 91-1646860 - ----------- ------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] 2 (b) [ ] - ----------- ------------------------------------------------------------------- SEC USE ONLY 3 - ----------- ------------------------------------------------------------------- SOURCE OF FUNDS* 4 WC - ----------- ------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 5 - ----------- ------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ----------- ------------------------------------------------------------------- SOLE VOTING POWER 7 15,463,339(1) --------------------------------------------------- NUMBER OF SHARES SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 0 EACH --------------------------------------------------- REPORTING SOLE DISPOSITIVE POWER PERSON 9 WITH 15,463,339(2) --------------------------------------------------- SHARED DISPOSITIVE POWER 10 0 - ----------- ------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 15,463,339(3) - ----------- ------------------------------------------------------------------- (1) Includes 2,500,000 shares of Common Stock issuable pursuant to the Warrant (as defined herein). (2) Includes 2,500,000 shares of Common Stock issuable pursuant to the Warrant (as defined herein). (3) Includes 2,500,000 shares of Common Stock issuable pursuant to the Warrant (as defined herein). Page 2 of 12 3 - ----------- ------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 12 - ----------- ------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 22.6%(4) - ----------- ------------------------------------------------------------------- TYPE OF REPORTING PERSON 14 CO - ----------- ------------------------------------------------------------------- - ---------- (4) This percentage is based on 68,276,897 shares of Common Stock outstanding as of August 04, 2000, which number of shares was provided to Amazon.com by drugstore.com and includes (i) 2,500,000 shares of Common Stock issuable upon exercise of the Warrant (as defined herein) which may be issued within 60 days of the date hereof, and (ii) 4,593,989 shares of Common Stock which may be issued within 60 days of the date hereof, if approved by the stockholders of drugstore.com, upon conversion of Preferred Stock (as defined herein) issued pursuant to the Preferred Stock Purchase Agreement (as defined herein). Page 3 of 12 4 ITEM 1. SECURITY AND ISSUER. This Amendment No. 1 supplements and amends the Schedule 13D originally filed with the Securities and Exchange Commission (the "Commission") on February 10, 2000 (the "Original Filing"), and relates to the common stock, $0.0001 par value per share (the "Common Stock"), of drugstore.com, inc., a Delaware corporation ("drugstore.com" or the "Issuer"). The principal executive and business office of drugstore.com is located at 13920 South Eastgate Way, Suite 300, Bellevue, WA 98005. ITEM 2. IDENTITY AND BACKGROUND. The information contained in Item 2 of the Original Filing is hereby amended as follows: This Amendment No. 1 to Schedule 13D is filed by Amazon.com, Inc., a Delaware corporation ("Amazon.com"), whose principal business is online retail merchandising. The address of Amazon.com's principal business office is 1200 12th Avenue South, Suite 1200, Seattle, Washington 98144. The following provides certain information as to the directors and executive officers of Amazon.com (where no business address is given, the address is that of Amazon.com's principal executive and business offices stated in this Item 2): AMAZON.COM DIRECTORS:
- -------------------------------------------------------------------------------- NAME: PRINCIPAL OCCUPATION AND BUSINESS ADDRESS - -------------------------------------------------------------------------------- Jeffrey P. Bezos Chairman of the Board and Chief Executive Officer - -------------------------------------------------------------------------------- Tom A. Alberg Principal in Madrona Venture Group Madrona Venture Group 1000 Second Avenue, Suite 3700 Seattle, WA 98104 - -------------------------------------------------------------------------------- Scott D. Cook Chairman of the Executive Committee of the Board of Intuit, Inc. Intuit, Inc. 2535 Garcia Ave. Mountain View, CA 94043 - -------------------------------------------------------------------------------- L. John Doerr General Partner Kleiner Perkins Caufield & Byers 2750 Sand Hill Road Menlo Park, CA 94025 - -------------------------------------------------------------------------------- Patricia Q. Stonesifer President and Chairman Bill & Melinda Gates Foundation P.O. Box 23350 Seattle, WA 98102 - --------------------------------------------------------------------------------
AMAZON.COM EXECUTIVE OFFICERS: Page 4 of 12 5
- -------------------------------------------------------------------------------- NAME: PRINCIPAL OCCUPATION AND BUSINESS ADDRESS* - -------------------------------------------------------------------------------- Jeffrey P. Bezos Chief Executive Officer and Chairman of the Board - -------------------------------------------------------------------------------- Mark Britto Senior Vice President, Marketing & Cross-Site Merchandising - -------------------------------------------------------------------------------- Richard L. Dalzell Vice President and Chief Information Officer - -------------------------------------------------------------------------------- Warren C. Jenson Senior Vice President and Chief Financial Officer - -------------------------------------------------------------------------------- Mark Peek Vice President, Finance, and Chief Accounting Officer - -------------------------------------------------------------------------------- Diego Piacentini Senior Vice President and General Manager, International - -------------------------------------------------------------------------------- John D. Risher Senior Vice President and General Manager, U.S. Stores - -------------------------------------------------------------------------------- Jeffrey A. Wilke Vice President and General Manager, Operations - --------------------------------------------------------------------------------
* The present principal occupation of all executive officers of Amazon.com is with Amazon.com. The business address of all executive officers is Amazon.com, Inc., 1200 12th Avenue South, Suite 1200, Seattle, Washington 98144. During the last five years, neither Amazon.com nor, to the best knowledge of Amazon.com, any person named in this Item 2 has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he or she is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Each person named in this Item 2 is a citizen of the United States of America, with the exception of Mr. Piacentini, who is citizen of Italy. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The information contained in Item 3 of the Original Filing is hereby supplemented as follows: On July 30, 2000, drugstore.com, entered into a Stock Purchase Agreement (the "Common Stock Purchase Agreement") with Amazon.com and certain other Purchasers (as defined therein) pursuant to which on August 4, 2000, Amazon.com purchased 607,594 shares of Common Stock for $4.9375 per share, for an aggregate purchase price of $2,999,995.37. On July 30, 2000, drugstore.com also issued to Amazon.com an immediately exercisable warrant to purchase up to 2,500,000 shares of drugstore.com's Common Stock at an exercise price of $4.9375 per share (the "Warrant"). All of the funds used by Amazon.com to purchase the Common Stock pursuant to the Common Stock Purchase Agreement were obtained from Amazon.com's working capital. None of the funds used by Amazon.com to purchase the shares of Common Stock consisted of funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, trading or voting the shares of Common Stock. In addition, on July 30, 2000, drugstore.com also entered into a Stock Purchase Agreement (the "Preferred Stock Purchase Agreement") with L. John Doerr and certain other Purchasers (as defined therein) pursuant to which on August 4, 2000, Mr. Doerr purchased 10,126.58 shares of Page 5 of 12 6 drugstore.com's Series 1 Preferred Stock, par value $.0001 per share (the "Preferred Stock") at a price per share of $493.75, for an aggregate purchase price of $4,999,998.87. Each share of Preferred Stock will be convertible into 100 shares of Common Stock upon the approval of drugstore.com's stockholders, which approval may be obtained within 60 days of the date of hereof. ITEM 4. PURPOSE OF TRANSACTION. The information contained in Item 4 of the Original Filing is hereby supplemented as follows: Amazon.com acquired the Warrant and the Common Stock as a strategic investment. Amazon.com expects to evaluate on an ongoing basis drugstore.com's financial condition, business operations and prospects, the market price of the Common Stock, alternative investment opportunities, conditions in the securities market generally and other factors. Accordingly, Amazon.com reserves the right to change its plans and intentions at any time. Subject to compliance with applicable laws, Amazon.com may, at any time and from time to time, acquire or dispose of shares of Common Stock or other securities of drugstore.com pursuant to public or private offerings or otherwise. To the knowledge of Amazon.com, each of the directors and officers listed in Item 2 (as applicable) may make the same evaluation and reserves the same rights. Except as set forth above or as described in Item 6 of this Amendment No.1 to Schedule 13D, neither Amazon.com nor, to the best of Amazon.com's knowledge, any of the individuals named in Item 2 (as applicable), presently has any plans or proposals that relate to or would result in any of the actions specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. The information contained in Item 5 of the Original Filing is hereby amended as follows: (a) (1) As of the date of this Amendment No. 1 to Schedule 13D, Amazon.com beneficially owns 15,463,339 shares of Common Stock. Based on 68,276,897 shares of Common Stock outstanding as of August 4, 2000, (which number includes (i) the 2,500,000 shares of Common Stock issuable upon exercise of the Warrant which may be issued within 60 days of the date hereof and (ii) the 4,593,989 shares of Common Stock which may be issued within 60 days of the date hereof, if approved by the stockholders of drugstore.com, upon conversion of the Preferred Stock), Amazon.com's beneficial ownership represents approximately 22.6% of the total outstanding shares of Common Stock. Amazon.com does not beneficially own any outstanding shares of Common Stock of drugstore.com other than these 15,463,339 shares of Common Stock. The table below summarizes the beneficial ownership of Amazon.com's directors and executive officers: AMAZON.COM DIRECTORS AND EXECUTIVE OFFICERS: - --------------------------------------------------------------------------------
NAME SHARES OF DRUGSTORE.COM COMMON STOCK BENEFICIALLY OWNED - -------------------------------------------------------------------------------- Jeffrey P. Bezos 0 - -------------------------------------------------------------------------------- Tom A. Alberg 0 - --------------------------------------------------------------------------------
Page 6 of 12 7 - -------------------------------------------------------------------------------- Scott D. Cook 0 - -------------------------------------------------------------------------------- L. John Doerr 11,083,903(5) - -------------------------------------------------------------------------------- Patricia Q. Stonesifer 0 - -------------------------------------------------------------------------------- Mark Britto 0 - -------------------------------------------------------------------------------- Richard L. Dalzell 0 - -------------------------------------------------------------------------------- Mark Peek 0 - -------------------------------------------------------------------------------- Warren C. Jenson 0 - -------------------------------------------------------------------------------- Diego Piacentini 0 - -------------------------------------------------------------------------------- John D. Risher 0 - -------------------------------------------------------------------------------- Jeffrey A. Wilke 0 - --------------------------------------------------------------------------------
(2) As of the date of this Amendment No. 1 to Schedule 13D, L. John Doerr beneficially owns 11,083,903 shares of Common Stock, including the shares issuable upon conversion of the Preferred Stock. Based on 68,276,897 shares of Common Stock outstanding as of August 4, 2000, (which number includes (i) the 2,500,000 shares of Common Stock issuable upon exercise of the Warrant which may be issued within 60 days of the date hereof and (ii) the 4,593,989 shares of Common Stock which may be issued within 60 days of the date hereof, if approved by the stockholders of drugstore.com, upon conversion of the Preferred Stock), Mr. Doerr's beneficial ownership represents approximately 16.2% of the total outstanding shares of Common Stock. Mr. Doerr is not deemed to beneficially own any outstanding - ---------------- (5) Includes 6,313,633 shares of Common Stock held by Kleiner Perkins Caufield & Byers VIII, L.P. ("KPCB VIII"), 365,600 shares of Common Stock held by KPCB VIII Founders Fund, L.P., ("Founders Fund"), 351,538 shares of Common Stock held by KPCB Life Sciences Zaibatsu Fund II, L.P. and 2,500 shares of Common Stock held by KPCB IX Associates LLC. KPCB VIII and Founders Fund are wholly controlled by KPCB VIII Associates, L.P. KPCB Life Sciences Zaibatsu Fund II, L.P. is wholly controlled by KPCB VII Associates, L.P. As a general partner of each of KPCB VIII Associates, L.P. and KPCB VII Associates, L.P., and as a managing director of KPCB IX Associates LLC, Mr. Doerr may be deemed to beneficially own the shares of Common Stock controlled by those entities. Mr. Doerr disclaims beneficial ownership of the above shares of Common Stock except to the extent of his pecuniary interest in the shares. Also includes 28,715.7 shares of Preferred Stock held by KPCB VIII, 1,664.04 shares of Preferred Stock held by Founders Fund and 10,126.58 shares of Preferred Stock held by Mr. Doerr personally. Upon the approval of drugstore.com's stockholders, which approval may be obtained within 60 days of the date hereof, each share of Preferred Stock will be convertible into 100 shares of Common Stock. Mr. Doerr disclaims beneficial ownership of the shares of Preferred Stock held by KPCB VIII and Founders Fund, except to the extent of his pecuniary interest in such entities. Page 7 of 12 8 shares of Common Stock of drugstore.com other than these 11,083,903 shares of Common Stock. With the exception of the 10,126.58 shares of Preferred Stock purchased by Mr. Doerr in his individual capacity, Mr. Doerr disclaims beneficial ownership of the shares of Common Stock and Preferred Stock held by the funds affiliated with Kleiner Perkins Caufield & Byers, except to the extent of his pecuniary interest in such entities. Amazon.com disclaims beneficial ownership of all shares beneficially owned by any of its executive officers and directors. (b) (1) Amazon.com has the sole power to vote and to direct the vote of, and the sole power to dispose of and to direct the disposition of, 15,463,339 shares of Common Stock. (2) Mr. Doerr has (assuming the conversion of Mr. Doerr's 10,126.58 shares of Preferred Stock) the sole power to vote and to direct the vote of, and the sole power to dispose and to direct the disposition of, 1,012,658 shares of Common Stock and, with certain funds affiliated with Kleiner Perkins Caufield & Byers, shared voting power to vote and direct the vote of, and shared power to dispose and direct the disposition of, 10,071,245 shares of Common Stock. (c) Except as described in Items 3 and 4 above, neither Amazon.com nor any of its directors or executive officers has effected any transactions in the Common Stock during the past 60 days. (d) No other person is known to Amazon.com to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock beneficially owned by Amazon.com on the date of this Amendment No. 1 to Schedule 13D. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The information contained in Item 6 of the Original Filing is hereby supplemented as follows: Under the terms of the Common Stock Purchase Agreement and the Preferred Stock Purchase Agreement, drugstore.com has agreed to cause either (i) a special meeting of its common stockholders within three months after August 4, 2000, for the purpose of approving the conversion of the Preferred Stock into Common Stock or (ii) the holders of the requisite number of shares of Common Stock to deliver written consents approving the conversion of such Preferred Stock into Common Stock. If drugstore.com fails to obtain the requisite stockholder approval within three months after August 4, 2000, then drugstore.com is obligated to repurchase all of the Preferred Stock at a price per share equal to the then current market price of drugstore.com's Common Stock multiplied by the number of shares of Common Stock into which one share of Preferred Stock would have been convertible. Pursuant to the terms of a voting agreement between drugstore.com and Amazon.com dated as of July 30, 2000 (the "Voting Agreement"), Amazon.com agreed to vote its shares of Common Stock to approve the conversion of the Preferred Stock. Mr. Doerr and Kleiner, Perkins, Caufield & Byers have entered into similar voting agreements with respect to the conversion of the Preferred Stock. Page 8 of 12 9 Also pursuant to the terms of the Common Stock Purchase Agreement and the Preferred Stock Purchase Agreement, drugstore.com has agreed to use its best efforts to file a resale shelf registration statement (the "Registration Statement") with, and within 60 days of August 4, 2000 have such Registration Statement declared effective by, the Commission for purposes of registering the resale of the Common Stock issued pursuant to the Common Stock Purchase Agreement (and of the Common Stock issuable upon conversion of the Preferred Stock issued pursuant to the Preferred Stock Purchase Agreement). drugstore.com has further agreed to maintain the effectiveness of the Registration Statement until the earlier of (i) the eighteen month anniversary of the effective date of the Registration Statement and (ii) the date on which all shares of Common Stock have been resold by the Purchasers. In connection with Amazon.com's purchase of the Common Stock, Amazon.com entered into an agreement with drugstore.com (the "Lock Up Agreement") with respect to the transfer, sale or other disposition of any shares of drugstore's Common Stock, including the shares purchased pursuant to the Common Stock Purchase Agreement, held by Amazon.com such that Amazon.com will not, without the prior written consent of drugstore.com and subject to certain exceptions, during the period commencing July 30, 2000 and ending 180 days after the date of the effectiveness of the Registration Statement, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock. Mr. Doerr and Kleiner, Perkins, Caufield & Byers have also each entered into agreements that are similar to the Lock Up Agreement. Page 9 of 12 10 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NUMBER - -------- 1 Common Stock Purchase Agreement dated as of July 30, 2000 between drugstore.com, Amazon.com and the other Purchasers (as defined therein) 2. Preferred Stock Purchase Agreement dated as of July 30, 2000 between drugstore.com, L. John Doerr and the other Purchasers (as defined therein) 3 Certificate of Designation of Series 1 Preferred Stock 4 Warrant for the Purchase of Shares of Common Stock 5 Lock Up Agreement dated as of July 30, 2000 between drugstore.com and Amazon.com 6 Voting Agreement dated as of July 30, 2000 between drugstore.com and Amazon.com
Page 10 of 12 11 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. August 16, 2000 ------------------------------------ AMAZON.COM, INC. /s/ MARK BRITTO ------------------------------------ By: Mark Britto Title: Senior Vice President, Marketing & Cross-Site Merchandising Page 11 of 12 12 EXHIBIT INDEX
EXHIBIT NUMBER - ------- 1. Common Stock Purchase Agreement dated as of July 30, 2000 between drugstore.com, Amazon.com and the other Purchasers (as defined therein) 2. Preferred Stock Purchase Agreement dated as of July 30, 2000 between drugstore.com, L. John Doerr and the other Purchasers (as defined therein) 3 Certificate of Designation of Series 1 Preferred Stock 4 Warrant for the Purchase of Shares of Common Stock 5 Lock Up Agreement dated as of July 30, 2000 between drugstore.com and Amazon.com 6 Voting Agreement dated as of July 30, 2000 between drugstore.com and Amazon.com
Page 12 of 12 EX-1 2 ex1.txt EXHIBIT 1 1 EXHIBIT 1 DRUGSTORE.COM, INC. STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this "Agreement") is made as of July 30, 2000 by and among drugstore.com, inc., a Delaware corporation (the "Company"), and the investors listed on Schedule I attached hereto (each a "Purchaser" and together the "Purchasers"). The parties hereby agree as follows: 1. PURCHASE AND SALE OF COMMON STOCK. 1.1 SALE AND ISSUANCE OF COMMON STOCK. 1.2 Subject to the terms and conditions of this Agreement, each of the Purchasers agrees to purchase and the Company agrees to sell and issue to such Purchaser that number of shares of Common Stock, par value $0.0001, of the Company (the "Common Stock"), determined by dividing the Purchase Commitment listed opposite such Purchaser's name on Schedule I by $4.9375. The Company shall have the right to amend Schedule I hereto to add additional Purchasers at any time prior to the Closing, and any such Purchasers shall become parties to this Agreement. The shares of Common Stock issued to the Purchasers pursuant to this Agreement are hereinafter referred to as the "Stock." (a) The Common Stock shall have the rights and restrictions as set forth in the Amended and Restated Certificate of Incorporation of drugstore.com, inc. (the "Restated Certificate") attached hereto as Exhibit A. (b) The parties hereto acknowledge that, concurrently herewith, the Company is entering into a Series 1 Preferred Stock Purchase Agreement with the several purchasers listed on Schedule I thereto (the "Preferred Stock Purchase Agreement"), pursuant to which such purchasers have agreed to purchase, subject to the terms and conditions of the Preferred Stock Purchase Agreement, at least 45,939 shares of Series 1 Preferred Stock, par value $0.0001 per share, of the Company (the "Series 1 Preferred Stock"), having the rights, privileges, preferences and restrictions set forth in the Certificate of Designations of the Series 1 Preferred Stock attached hereto as Exhibit B (the "Certificate of Designations.") Upon the receipt of the approval of the stockholders of the Company, the shares of Series 1 Preferred Stock shall be converted into shares of Common Stock. 1.3 CLOSING; DELIVERY. (a) The purchase and sale of the Stock shall take place at the offices of Simpson Thacher & Bartlett (or such other location mutually agreeable to the parties hereto) no later than 5 business days after the satisfaction or (subject to applicable law) waiver of the 2 conditions set forth in Sections 4 and 5 (excluding conditions that, by their terms, cannot be satisfied until the Closing) (which time and place are designated as the "Closing"). (b) At the Closing, the Company shall deliver to each Purchaser a certificate or certificates for the number of shares of the Stock to be purchased by such Purchaser pursuant to this Agreement against delivery of the consideration therefor, by wire transfer of immediately available funds to the Company's bank account. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to each Purchaser that: 2.1 GOOD STANDING. Each of Company and its Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified could reasonably be expected to have a material adverse effect on the business, assets, operations or financial condition of the Company ("Material Adverse Effect"). 2.2 CAPITALIZATION. (a) The authorized capital of the Company consists of 250,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, $0.0001 per share (the "Preferred Stock"). The Common Stock has the rights, preferences and privileges set forth in the Company's Restated Certificate, and the Preferred Stock has the rights, preferences and privileges set forth in the Certificate of Designations. (b) As of the date of this Agreement, 52,962,714 shares of Common Stock and no shares of Preferred Stock are issued and outstanding. All of the outstanding shares of Common Stock have been, and when issued and paid for in accordance with the terms of this Agreement the Stock will be, validly issued, duly authorized, fully paid and nonassessable, and issued in compliance with all applicable federal and state securities laws (in the case of the issuance of the Stock, based in part upon the representations of the Purchasers in Sections 3.4, 3.5, 3.6, 3.7 and 3.8). All of the shares of Series 1 Preferred Stock, when issued and paid for in accordance with the terms of the Preferred Stock Purchase Agreement, will be validly issued, duly authorized, fully paid and nonassessable, and issued in compliance with all applicable federal and state securities laws (based in part upon the representations of the purchasers thereof contained in the Preferred Stock Purchase Agreement). (c) As of the date of this Agreement (i) 17,509,148 shares of Common Stock are reserved for issuance under the Company's 1998 Stock Plan (of which 8,000 shares have been issued pursuant to restricted stock agreements, 890,839 shares are issuable under outstanding options that are currently exercisable, 10,367,423 shares are issuable under other outstanding options that are not currently exercisable and 6,250,886 shares remain available for future grants), (ii) 32,404 shares of Common Stock are reserved for issuance under the Company's Beauty.com Inc. Stock Plan (of which 9,606 shares are issuable under outstanding options, all of which are currently exercisable and 22,798 remain available for 2 3 future grants) and (iii) 1,000,000 shares of Common Stock are reserved for issuance under the Company's 1999 Employee Stock Purchase Plan (of which 87,719 have been issued to date). (d) Except for the conversion privileges of the Series 1 Preferred Stock and except as set forth in (i) the warrant to purchase 500,000 shares of Common Stock issued on June 26, 2000 to Tel-Drug, Inc. (the "Tel-Drug Warrant") and (ii) the warrant to purchase 2,500,000 shares of Common Stock issued on July 30, 2000 to Amazon.com, Inc. (the "Amazon Warrant"), as of the date of this Agreement there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, oral or in writing, for the purchase or acquisition from the Company of any shares of its capital stock. (e) The Stock shall constitute 14.25% of the Common Stock outstanding as of the date of this Agreement, assuming (i) all warrants for Common Stock outstanding as of the date of this Agreement have been exercised for Common Stock, (ii) all options to purchase Common Stock outstanding as of the date of this Agreement that are exercisable as of the date of this Agreement have been exercised for Common Stock and (iii) all other rights outstanding as of the date of this Agreement to acquire Common Stock or securities convertible into Common Stock have been exercised for or converted into Common Stock. The Company's only subsidiaries are DS Pharmacy, Inc., DS Non-Pharmaceutical Sales, Inc., DS Distribution, Inc., DSGC Idaho, Inc., Beauty.com, Inc. and Beauty.com Sales, Inc. (each a "Subsidiary" and together, the "Subsidiaries"). 2.3 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Preferred Stock Purchase Agreement (collectively, the "Agreements") and the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance and delivery of the Stock and the Series 1 Preferred Stock has been taken or will be taken prior to the Closing (subject, in the case of the conversion of the Series 1 Preferred Stock into Common Stock, to the receipt of the Stockholder Approval (as defined herein)), and the Agreements, when executed and delivered by the Company, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors' rights generally, as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and except as may be limited by Section 6.2(c). 2.4 VALID ISSUANCE OF STOCK. The Stock that will be issued to the Purchaser at Closing will have been duly and validly reserved for issuance and, when issued and delivered in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable, and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws. Based in part upon the representations of the Purchasers in this Agreement, the Stock will be issued in compliance with all applicable federal and state securities laws. The Common Stock issuable upon conversion of the Series 1 Preferred Stock has been duly and validly reserved for issuance, and 3 4 upon issuance in accordance with the terms of the Certificate of Designations, will be duly authorized, validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Preferred Stock Purchase Agreement and applicable federal and state securities laws and will be issued in compliance with all applicable federal and state securities laws. 2.5 LITIGATION. There is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company or any of its subsidiaries that (i) questions the validity of the Agreements or the right of the Company or any of its subsidiaries, as applicable, to enter into them, or to consummate the transactions contemplated hereby or thereby nor is the Company aware that there is any basis for the foregoing or (ii) if adversely determined, would have a Material Adverse Effect. Neither the Company nor any of its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that (i) challenges the validity of the Agreements or the right of the Company or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby and thereby or (ii) would have a Material Adverse Effect. 2.6 LIABILITIES. The Company and its subsidiaries, on a consolidated basis, have no liabilities and there are no contingent liabilities, required by generally accepted accounting principles to be disclosed on a balance sheet but that are not disclosed on the Company's audited balance sheet as of January 2, 2000 and/or on the Company's unaudited balance sheet as of July 2, 2000 except liabilities that would not have a Material Adverse Effect. Subsequent to July 2, 2000, the Company and its subsidiaries, on a consolidated basis, have not incurred any liabilities or any contingent liabilities required by generally accepted accounting principles to be disclosed on the Company's balance sheet except liabilities that would not have a Material Adverse Effect. 2.7 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and performance of the Agreements and the consummation of the transactions contemplated hereby and thereby will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under or cause acceleration under any provision of the Restated Certificate or the bylaws of the Company or any instrument, judgment, order, writ, decree or contract to which the Company or any of its Subsidiaries is a party or by which it is bound, or any provision of any federal or state statute, rule or regulation applicable to the Company or any of its Subsidiaries, the effect of which would (i) have a Material Adverse Effect, (ii) materially and adversely affect the ability of the Company and its Subsidiaries to perform their respective obligations under the Agreements or (iii) result in the creation of any material lien, charge or encumbrance upon any assets of the Company or any of its Subsidiaries. 2.8 MATERIAL AGREEMENTS. The Company has filed with the SEC all agreements in existence as of the date of this Agreement that (a) define or affect the rights of security holders of the Company in their capacity as security holders including, but not limited to, such security holders' voting rights, registration rights or standstill rights or obligations, other than (i) the Agreement dated June 23, 2000 between the Company and WellPoint Health 4 5 Networks Inc., (ii) the Tel-Drug Warrant and (iii) the Amazon Warrant or (b) are required to be filed under Item 601 of Regulation S-K. 2.9. FINANCIAL STATEMENTS. The financial statements of Company that have been delivered to the Investors (including those for the period ended July 2, 2000), (i) are in accordance with the books and records of Company and its Subsidiaries, which have been maintained in accordance with good business practice; (ii) have been prepared in conformity with GAAP (except as discussed therein, the absence of footnotes for all unaudited periods and, in the case of audited financial statements, as approved by the relevant firm of accountants); and (iii) fairly present the consolidated financial position of Company as of the dates presented therein and the results of operations, changes in financial positions or cash flows, as the case may be, for the periods presented therein (except, in the case of financial statements for the period ended July 2, 2000, for normal year-end audit adjustments). None of the Company or any of the Company's Subsidiaries has any contingent obligations, liability for taxes or other outstanding obligations that are material in the aggregate, except as disclosed in the unaudited financial statements for the period ended July 2, 2000 (except for normal year-end audit adjustments). None of the Company or its Subsidiaries has any contingent obligations or liability for taxes that are material in the aggregate and that would be required to be reflected or reserved against in the latest balance sheet of the Company, except as disclosed in the unaudited financial statements for the period ended July 2, 2000 (except for normal year-end audit adjustments). 2.10. INVESTMENT COMPANY. None of Company or its Subsidiaries is subject to regulation under the Investment Company Act of 1940, or to any federal or state statute or regulation limiting its ability to incur indebtedness. 2.11. SEC REPORTING; INFORMATION PROVIDED. As of the date each was filed, none of the Company's registration statements, reports or other filings made with the Securities and Exchange Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Neither this agreement nor any document, certificate or instrument furnished to any of the Purchasers by or on behalf of the Company when taken in conjunction with any supplemental or revised information furnished to any of the Purchasers in writing prior to the date hereof contains any untrue statement of a material fact or omits, or will omit, to state a material fact necessary to make the statements in such documents, certificates, instruments or other information provided, in light of the circumstances in which they were made, not misleading, except that with respect to any projected financial information, the Company only represents that it was prepared in good faith and the Company reasonably believes that the assumptions made in preparing such projections were reasonable as of the date of such projections. 2.12. ABSENCE OF CERTAIN CHANGES. Since July 2, 2000, no event has occurred and no condition exists which would have a Material Adverse Effect, other than (i) any change in the price of the Common Stock or (ii) changes in general economic conditions or conditions affecting the Company's industry generally. 5 6 2.13. REAL PROPERTY HOLDING COMPANY. The Company is not, and has not been, a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), during the applicable period described in Section 897(c)(1)(A)(ii) of the Code. 2.14 FORM S-3 ELIGIBILITY. The Company and the transactions contemplated by Section 6.2 of this Agreement meet the requirements for using Form S-3 under the Securities Act for resale. 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser hereby represents and warrants to the Company with respect to itself that: 3.1 AUTHORIZATION. Such Purchaser has full power and authority to enter into and deliver this Agreement, and this Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors' rights generally, as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and except as may be limited by Section 6.2(c).. 3.2 LITIGATION. There is no action, suit, proceeding or investigation pending or, to the Purchaser's knowledge, currently threatened against the Purchaser or any of its subsidiaries that questions the validity of this Agreement or the right of the Purchaser or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby nor is the Purchaser aware that there is any basis for the foregoing. Neither the Purchaser nor any of its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that challenges the validity of this Agreement or the right of the Purchaser or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby. 3.3 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any provision of the governing documents of the Purchaser or any instrument, judgment, order, writ, decree or contract to which the Purchaser or any of its subsidiaries is a party or by which it is bound, or any provision of any federal or state statute, rule or regulation applicable to the Purchaser or any of its subsidiaries, the effect of which would have a material adverse effect on the ability of the Purchaser and its subsidiaries to perform their respective obligations under this Agreement or result in the creation of any lien, charge or encumbrance upon any assets of the Purchaser or any of its subsidiaries. 3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the Purchaser in reliance upon the Purchaser's representation to the Company, which by the 6 7 Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the Stock to be acquired by the Purchaser will be acquired for investment for the Purchaser's own account, not as a nominee or agent, and not with a view to the resale or public distribution of any part thereof in violation of any requirements of the Securities Act of 1933, as amended (the "Securities Act") or applicable state securities laws. The Purchaser has no present intention of selling, granting any participation in, or otherwise distributing any Stock purchased hereunder, including, without limitation, entering into any arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Stock, whether any such transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Stock. 3.5 DISCLOSURE OF INFORMATION. The Purchaser (i) has had an opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Stock with the Company's management and (ii) has had an opportunity to review the Company's facilities. The Purchaser understands that such discussions and reviews, as well as any written information delivered by the Company to the Purchaser, were intended to describe the aspects of the Company's business that it believes to be material. 3.6 RESTRICTED SECURITIES. The Purchaser understands that the Stock has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations as expressed herein. The Purchaser understands that the shares of Stock are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the shares of Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Stock for resale except as set forth in Section 6.2 hereof. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Stock, and on requirements relating to the Company that are outside of the Purchaser's control, and that the Company is under no obligation, and may not be able, to satisfy. 3.7 LEGENDS. The Purchaser understands that the Stock, and any securities issued in respect thereof, may bear one or all of the following legends: (a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM 7 8 SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933." (b) Any legend required by the "Blue Sky" laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended. 3.8 ACCREDITED INVESTOR. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations of the Purchasers to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by each Purchaser: 4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and correct on and as of the date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except with respect to the representations and warranties contained in Section 2.2(b), 2.2(c) and the first sentence of Section 2.2(e), which shall be true and correct in all material respects as of the date of the Closing). 4.2 PERFORMANCE. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing and the Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreements. 4.3 RESERVATION OF SHARES. The Stock issuable pursuant to this Agreement shall have been duly authorized and reserved for issuance at the Closing. 4.4 COMPLIANCE CERTIFICATE. The President of the Company shall deliver to the Purchasers at the Closing a certificate certifying that the conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled. 4.5 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be obtained and effective as of the Closing including, without limitation, the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"). 4.6 OPINION OF COMPANY COUNSEL. The Purchasers at the Closing shall have received from Simpson Thacher & Bartlett, counsel for the Company, an opinion dated as of the Closing covering the matters set forth on Exhibit C. 4.7 PREFERRED STOCK PURCHASE AGREEMENT. The Company and the purchasers parties thereto shall have executed and delivered the Preferred Stock Purchase Agreement covering the purchase of at least 45,939 shares of Series 1 Preferred Stock. 8 9 4.8 DELIVERY OF LOCKUP AGREEMENTS. Each person listed on Exhibit D hereto shall have executed and delivered to the Company a lockup agreement in the form attached hereto as Exhibit F (each, a "Lockup Agreement.") 4.9 DELIVERY OF VOTING AGREEMENTS. Each person listed on Exhibit E hereto shall have executed and delivered to the Purchasers a voting agreement in the form attached hereto an Exhibit G (each, a "Voting Agreement") to the effect that such person will vote its shares of Common Stock at the Stockholder Meeting (as defined) in favor of the approval of the issuance of the Common Stock issuable upon conversion of the Series A Preferred Stock. The persons delivering Voting Agreements shall represent a majority of the Common Stock. 4.10. MINIMUM INVESTMENT AT CLOSING. At the Closing, Purchasers investing at least $62,682,825 in the aggregate in the Company under the Agreements shall have wired their respective investments in the Company into an escrow account maintained by Brobeck, Phleger & Harrison or an escrow agent mutually agreeable to the Company and purchasers of a majority of the Stock for delivery to the Company (or with respect to amounts to be wired by Hearst Communications Corp., as may be mutually agreed between Hearst Communications Corp. and the Purchasers), before any Purchaser is obligated to close. 4.11 OPINION OF GENERAL COUNSEL TO THE COMPANY. The Purchasers at the Closing shall have received from the General Counsel of the Company an opinion dated as of the Closing covering the matters set forth on Exhibit H. 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the Company to the Purchasers under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived: 5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Purchasers contained in Section 3 shall be true and correct in all material respects on and as of the date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except to the extent such representations and warranties speak as of the date of this Agreement, in which case they shall be true and correct in all material respects on and as of the date of this Agreement). 5.2 PERFORMANCE. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchasers on or prior to the Closing shall have been performed or complied with in all material respects. 5.3 COMPLIANCE CERTIFICATE. A senior executive officer of each of the Purchasers shall deliver to the Company at the Closing a certificate certifying that the conditions specified in Sections 5.1 and 5.2 have been fulfilled. 5.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be obtained and effective as of the Closing including, without limitation, the expiration or termination of all waiting periods under the HSR Act. 9 10 5.5 PREFERRED STOCK PURCHASE AGREEMENT. The Company and the purchasers parties thereto shall have executed and delivered the Preferred Stock Purchase Agreement covering the purchase of at least 45,939 shares of Series 1 Preferred Stock. 5.6 DELIVERY OF LOCKUP AGREEMENTS. Each person listed on Exhibit D hereto shall have executed and delivered to the Company a Lockup Agreement. 5.7 DELIVERY OF VOTING AGREEMENTS. Each person listed on Exhibit D hereto shall have executed and delivered to the Purchasers a Voting Agreement. The persons delivering Voting Agreements shall represent a majority of the Common Stock. 6. COVENANTS. 6.1 HSR ACT FILINGS. As soon as practicable after the execution of this Agreement, the Company and each relevant Purchaser will separately file with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission pursuant to the HSR Act all requisite documents and notifications in order to provide for the issuance and sale of the Stock pursuant to this Agreement. The parties will cooperate and coordinate with one another in exchanging information and providing reasonable assistance as the other party may request in connection with the foregoing. 6.2 REGISTRATION RIGHTS. (a) The Company hereby agrees: (i) to use its best efforts to file a resale shelf registration statement (the "Registration Statement") under the Securities Act as soon as reasonably practicable covering resales of the Stock by the Purchasers and resales of the Common Stock issuable upon conversion of the Series 1 Preferred Stock pursuant to the Preferred Stock Purchase Agreement, (ii) to use its best efforts to cause the Registration Statement to be declared effective as soon as reasonably practicable but in any event within 60 days of the Closing and (iii) to maintain the effectiveness of the Registration Statement until the earlier of (x) the eighteen month anniversary of the effective date of the Registration Statement and (y) the date on which all shares of Stock have been resold by the Purchasers. At any time when the Registration Statement is effective, the Board of Directors of the Company may determine, as indicated in a certificate signed by any Director of the Company, the Chief Financial Officer of the Company or the Secretary of the Company, to suspend offers and sales by Purchasers under the Registration Statement if an event has occurred or is reasonably likely to occur that would require additional disclosure by the Company and that the Company has a bona fide business purpose for keeping confidential, and the nondisclosure of which would reasonably be expected to cause the Registration Statement to fail to comply with applicable disclosure requirements. The Company shall give the Purchasers written notice of the Board of Directors' determination and the Purchasers agree to suspend offers and sales under the Registration Statement until the Company has delivered a subsequent notice to the Purchasers revoking its prior notice; provided, however, that the eighteen month period during which the Registration Statement is required to be effective shall be extended by the number of days of such suspensions. The Company may not revoke the ability of Purchasers to make offers and sales under the Registration Statement more than three times or for more than 90 days in the aggregate. (b) For the period during which the Registration Statement is effective, the 10 11 Company shall: (i) furnish to the Purchaser with respect to the Stock registered under the Registration Statement (and to each underwriter, if any, of such Stock) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Stock by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses; (ii) during the period when such prospectuses are required to be delivered under the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the rules and regulations promulgated thereunder; (iii) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; (iv) authorize for listing on the Nasdaq National Market the shares of Stock by filing with the Nasdaq National Market a Notification of Listing of Additional Shares (or such other form, if any, as may be required by the Nasdaq National Market) as soon as reasonably practicable after the filing of the Registration Statement or otherwise in accordance with the rules and regulations of the Nasdaq National Market; and (v) bear all expenses in connection with the procedures in this Section 6.2 and the registration of the Stock pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the Purchaser, if any. (c) For purposes of this Section 6.2(c), the term "Registration Statement" shall include any preliminary or final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 6.2(a). (i) The Company agrees to indemnify and hold harmless each of the Purchasers and each of their respective directors, officers, members and partners, and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers and each of their respective directors, officers, members and partners, or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected 11 12 with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in or incorporated by reference in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including the preliminary or final prospectus any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the rules and regulations of the Commission under the Securities Act (the "Regulations"), or the prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any failure of the Company to perform its obligations under or a violation of the Securities Act, the Exchange Act or any state securities law, and will reimburse each Purchaser and each of their respective directors, officers, members and partners, and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in this Section 6.2 respecting the sale of the Stock, or (iii) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser. (ii) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and 12 13 schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434 of the Regulations, or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any failure of such Purchaser to perform its obligations under the Securities Act, the Exchange Act or any state securities law, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein. (iii) Promptly after receipt by an indemnified party under this Section 6.2(c) of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 6.2(c) promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 6.2(c) or to the extent it is not prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 6.2(c) for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption 13 14 of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party, representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. (iv) If the indemnification provided for in this Section 6.2 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (i), (ii) or (iii) of this Section 6.2(c) in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such loss, claim, damage, liability or expense as well as any other relevant equitable considerations. The relative fault of the Company and such Purchaser shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (iii) of this Section 6.2(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (iii) of this Section 6.2(c) with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (iv); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (iii) for purposes of indemnification. Notwithstanding the provisions of this Section 6.2(c)(iv), no Purchaser shall be required to contribute any amount in excess of the net proceeds of the offering received by such Purchaser, except in the case of willful fraud by such Purchaser. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 6.2(c)(iv) are several and not joint. 6.3 STOCKHOLDER MEETING. The Company shall cause (i) a special meeting of its common stockholders (the "Stockholder Meeting") to be held as soon as practicable but in no event later than three months from the Closing, for the purpose of approving the conversion of the Series 1 Preferred Stock issued pursuant to the Preferred Stock Purchase Agreement into Common Stock or (ii) holders of the requisite number of shares of Common 14 15 Stock to deliver written consents approving the conversion of the Series 1 Preferred Stock issued pursuant to the Preferred Stock Purchase Agreement into Common Stock (the action called for in (i) and (ii), the "Stockholder Approval"). 6.4 NO WAIVER OF LOCKUP AGREEMENT. The Company shall not waive any provision of any Lockup Agreement without having obtained the prior consent of the holders of at least sixty-seven percent (67%) of the shares of Stock purchased hereunder; provided, that any Stock purchased hereunder by persons who have signed a Lockup Agreement shall not be deemed to be shares of Stock for purposes of this Section 6.4; and provided, further, that the Company shall not in any event waive any provision of any Lockup Agreement with respect to any person listed on Exhibit D without concurrently waiving the Lockup Agreement with respect to all persons listed on Exhibit D. 7. MISCELLANEOUS. 7.1 SURVIVAL OF WARRANTIES. The warranties and representations of the Company and the Purchasers contained herein shall terminate on the second anniversary of the Closing. 7.2 TRANSFER; NO THIRD PARTY BENEFICIARIES. This Agreement and each party's rights and obligations hereunder shall not be assigned without the prior written consent of the other party; provided, that a Purchaser may transfer its rights hereunder to an affiliate, so long as such affiliate agrees in writing to be bound by all obligations under this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement. 7.3 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws. 7.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 7.5 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 7.6 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by telegram or fax, or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page hereto, or as subsequently modified by written notice, and if to the Company, with copies to the General Counsel of the Company at the address of the Company set forth below and Simpson Thacher & Bartlett, 3373 15 16 Hillview Avenue, Suite 250, Palo Alto, CA 94304, Attention: William H. Hinman, telecopy no: (650)-251-5002), and if to any of Integral Capital Partners IV, L.P., Integral Capital Partners IV MS Side Fund, L.P., Integral Capital Partners V, L.P. and Integral Capital Partners V Side Fund, L.P. with a copy to Brobeck, Phleger & Harrison, Spear Street Tower, One Market, San Francisco, CA 94105, Attention: Ronald Moskovitz, telecopy no: (415-442-1010), and if to the Baron Asset Fund or Baron Capital Funds Trust, with a copy to the Baron Asset Fund, 767 Fifth Avenue, 49th Floor, New York, NY 10153, Attention: Linda S. Martinson, Esq. 7.7 FINDER'S FEE. Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which such Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 7.8 FEES AND EXPENSES. The Company and the Purchasers shall pay their respective fees and other expenses in connection with the negotiation, execution, delivery and performance of the Agreements, provided that if the Closing occurs the Company will pay the reasonable fees and expenses of counsel for the Purchasers up to $20,000 in the aggregate. 7.9 ATTORNEY'S FEES. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of the Agreements, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or waived only with the written consent of the Company and each of the Purchasers. Any amendment or waiver effected in accordance with this Section 7.10 shall be binding upon each Purchaser and each transferee of the Stock, each future holder of all such Stock, and the Company. 7.11 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms. 7.12 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter 16 17 occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 7.13 ENTIRE AGREEMENT. This Agreement, and the documents referred to herein, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled. 7.14 CONFIDENTIALITY. Except as provided below, each party hereto agrees that, except with the prior written permission of the other party, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other party to which such party has been or shall become privy by reason of the Agreements, discussions or negotiations relating to the Agreements, the performance of its obligations thereunder or the ownership of Stock purchased hereunder. Notwithstanding the foregoing, nothing herein shall prevent any party from disclosing (i) such information that has been publicly disclosed, (ii) such information that becomes available to the party on a non-confidential basis from a source other than the other party hereto, provided that such source is not bound by a confidentiality agreement with such other party, (iii) information required to be disclosed pursuant to subpoena or other court process or otherwise required to be disclosed by law or the regulations of any securities exchange (provided that, to the extent practicable, advance notice is given to the party whose confidential information is to be disclosed so that such party can attempt to obtain a protective order) and (iv) such information that was known to the party prior to its first receipt from the other party. Notwithstanding the foregoing, the provisions of this Section 7.14 shall not be applicable to any Purchaser that has executed a separate Non-Disclosure Agreement with the Company (such agreement, a "Separate Agreement"), in which case the obligations of such Purchaser shall continue in accordance with the provisions of such Separate Agreement; provided, that the definition of "Confidential Information" in such Separate Agreement shall be deemed to include all non-public information received by the Purchaser to which such Purchaser shall become privy by reason of its ownership of Stock purchased hereunder. In the event of an express inconsistency between a Separate Agreement and this Agreement, then this Agreement shall govern. 7.15 PUBLICITY. After the execution of this Agreement, any of the parties may issue a press release disclosing that the Purchasers have agreed to invest in the Company and the terms of the future relationship between the parties in a form approved by the other party, which approval will not be unreasonably withheld, conditioned or delayed. In addition, any party may disclose such information regarding the Purchasers' investment and the relationship between the parties as required by law or the regulations of any securities exchange. 17 18 7.16 TERMINATION. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (i) at any time by mutual written consent of the Company and each of the Purchasers; or (ii) by any party hereto if the Closing does not occur on or prior to October 31, 2000; (provided, that if on October 31, 2000 any authorization, approval or permit of any governmental authority or regulatory body of the United States or of any state that is required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement has not been obtained, then no party shall be entitled to terminate this Agreement pursuant to this clause (ii) until December 15, 2000 and then only if the Closing has not occurred on or prior to such date). Upon any such termination, this Agreement shall become void and of no further effect, except for Sections 7.3, 7.7, 7.8, 7.9, 7.14 and this Section 7.16 which shall survive such termination. [Signature Pages Follow] 18 19 The parties have executed this Stock Purchase Agreement as of the date first written above. COMPANY: DRUGSTORE.COM, INC. By: /s/ DAVID ROSTOV --------------------------------- Name: David Rostov Title: Chief Financial Officer Address: 13920 SE Eastgate Way, Suite 300 Bellevue, WA 98005 SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 20 PURCHASERS: Integral Capital Partners IV, L.P. By: Integral Capital Management IV, LLC, its General Partner By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ Integral Capital Partners IV MS Side Fund, L.P. By: Integral Capital Management NBT, LLC, its General Partner By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ Integral Capital Partners V, L.P. By: Integral Capital Management V, LLC, its General Partner By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ Integral Capital Partners V Side Fund, L.P. By: ICP Management V, LLC, its General Partner By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 21 HEARST COMMUNICATIONS, INC. By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 22 BARON ASSET FUND, on behalf of the Baron iOpportunity Fund series By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: 767 Fifth Avenue, 49th Floor New York, NY 10153 BARON ASSET FUND, on behalf of the Baron Growth Fund series By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: 767 Fifth Avenue, 49th Floor New York, NY 10153 BARON CAPITAL FUNDS TRUST, on behalf of the Baron Capital Asset Fund series By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: 767 Fifth Avenue, 49th Floor New York, NY 10153 SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 23 MAVERON EQUITY PARTNERS, L.P. By: _______________________________________ Name: _______________________________________ Title: _______________________________________ Address: ______________________________________ ______________________________________ SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 24 AMAZON.COM, INC. By: /s/ MARK BRITTO --------------------------------------- Name: Mark Britto --------------------------------------- Title: Senior Vice President, Marketing & Cross-Site Merchandising --------------------------------------- Address: --------------------------------------- --------------------------------------- SIGNATURE PAGE TO THE COMMON STOCK PURCHASE AGREEMENT 25 SCHEDULE I
Purchaser Purchase Commitment - --------- ------------------- Integral Capital Partners IV, L.P. $10,620,700.75 Integral Capital Partners IV MS Side $50,165.00 Fund, L.P. Integral Capital Partners V, L.P. $4,278,067.25 Integral Capital Partners V Side $51,068.57 Fund, L.P. Hearst Communications, Inc. $5,000,000 Baron Asset Fund, on behalf of the $2,000,000 Baron iOpportunity Fund series Baron Asset Fund, on behalf of the $11,000,000 Baron Growth Fund series Baron Capital Funds Trust, on behalf $2,000,000 of the Baron Capital Asset Fund Series Maveron Equity Partners, L.P. $2,000,000 Amazon.com, Inc. $3,000,000 Total
26 EXHIBITS Exhibit A - Amended and Restated Certificate of Incorporation of the Company Exhibit B - Certificate of Designation of Series 1 Preferred Stock Exhibit C - Matters to be covered in legal opinion of Simpson Thacher & Bartlett Exhibit D - Persons that will deliver Lockup Agreements Exhibit E - Persons that will deliver Voting Agreements Exhibit F - Form of Lockup Agreement Exhibit G-Form of Voting Agreement Exhibit H - Matters to be covered in opinion of General Counsel to the Company 27 EXHIBIT A AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY 28 EXHIBIT B CERTIFICATE OF DESIGNATIONS OF SERIES 1 PREFERRED STOCK 29 EXHIBIT C MATTERS TO BE COVERED BY LEGAL OPINION OF SIMPSON THACHER & BARTLETT 30 EXHIBIT D PERSONS THAT WILL SIGN LOCKUP AGREEMENTS Kleiner Perkins Caufield & Byers VIII, L.P. KPCB Life Sciences Zaibatsu Fund II, L.P. KPCB VIII Founders Fund, L.P. Amazon.com, Inc. (except in respect of 1,066,667 shares of Common Stock) Maveron Equity Partners, L.P. Vulcan Ventures Incorporated Rite Investments Corp. General Nutrition Investment Company Peter Neupert Peter Neupert and Sheryl Neupert, Tenants in Common Kal Raman David Rostov (other than in respect of 40,000 shares) David Rostov, as custodian Judith H. McGarry (other than in respect of 40,000 shares) Drugstore.com Foundation L. John Doerr 31 EXHIBIT E PERSONS THAT WILL SIGN VOTING AGREEMENTS Kleiner Perkins Caufield & Byers VIII, L.P. KPCB Life Sciences Zaibatsu Fund II, L.P. KPCB VIII Founders Fund, L.P. Amazon.com, Inc. Maveron Equity Partners, L.P. Vulcan Ventures Incorporated Rite Investments Corp. General Nutrition Investment Company Peter Neupert Peter Neupert and Sheryl Neupert, Tenants in Common Kal Raman Mark L. Silverman David Rostov David Rostov, as custodian Judith H. McGarry Drugstore.com Foundation Hearst Communications, Inc. Integral Capital Partners IV, L.P. Integral Capital Partners IV MS Side Fund, L.P. Integral Capital Partners V, L.P. Integral Capital Partners V Side Fund, L.P. Baron Asset Fund 32 EXHIBIT E (CONTINUED) Baron Capital Funds Trust L. John Doerr 33 EXHIBIT F FORM OF LOCKUP AGREEMENT 34 EXHIBIT G FORM OF VOTING AGREEMENT 35 EXHIBIT H MATTERS TO BE COVERED BY THE OPINION OF GENERAL COUNSEL TO THE COMPANY EX-2 3 ex2.txt EXHIBIT 2 1 EXHIBIT 2 DRUGSTORE.COM, INC. PREFERRED STOCK PURCHASE AGREEMENT This Preferred Stock Purchase Agreement (this "Agreement") is made as of July 30, 2000 by and among drugstore.com, inc., a Delaware corporation (the "Company"), and the investors listed on Schedule I attached hereto (each a "Purchaser" and together the "Purchasers"). The parties hereby agree as follows: 1. PURCHASE AND SALE OF PREFERRED STOCK. 1.1 SALE AND ISSUANCE OF PREFERRED STOCK. (a) Subject to the terms and conditions of this Agreement, each of the Purchasers agrees to purchase and the Company agrees to sell and issue to such Purchaser that number of shares of Series 1 Preferred Stock, par value $0.0001, of the Company (the "Preferred Stock"), determined by dividing the Purchase Commitment listed opposite such Purchaser's name on Schedule 1 by $493.75. The Company shall have the right to amend Schedule I hereto to add additional Purchasers at any time prior to the Closing, and any such Purchasers shall become parties to this Agreement. (b) The Preferred Stock shall have the rights and restrictions as set forth in the Certificate of Designation of Series 1 Preferred Stock of drugstore.com, inc. (the "Certificate of Designation") attached hereto as Exhibit A. (c) The parties hereto acknowledge that, concurrently herewith, the Company is entering into a Common Stock Purchase Agreement with the several purchasers listed on Schedule I thereto (the "Common Stock Purchase Agreement"), pursuant to which such purchasers have agreed to purchase, subject to the terms and conditions of the Common Stock Purchase Agreement, at least 8,101,265 shares of Common Stock, par value $0.0001 per share, of the Company (the "Common Stock"), having the rights and restrictions set forth in the Amended and Restated Certificate of Incorporation of drugstore.com, inc. attached hereto as Exhibit B (the "Restated Certificate."). The Common Stock to be issued pursuant to the Common Stock Purchase Agreement shall hereinafter be referred to as the "Stock". 1.2 CLOSING; DELIVERY. (a) The purchase and sale of the Preferred Stock shall take place at the offices of Simpson Thacher & Bartlett (or such other location mutually agreeable to the parties hereto) no later than 5 business days after the satisfaction or (subject to applicable law) waiver of the conditions set forth in Sections 4 and 5 (excluding conditions that, by their terms, cannot be satisfied until the Closing) (which time and place are designated as the "Closing"). 2 (b) At the Closing, the Company shall deliver to each Purchaser a certificate or certificates for the number of shares of the Preferred Stock to be purchased by such Purchaser pursuant to this Agreement against delivery of the consideration therefor, by wire transfer of immediately available funds to the Company's bank account. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to each Purchaser that: 2.1 GOOD STANDING. Each of Company and its Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified could reasonably be expected to have a material adverse effect on the business, assets, operations or financial condition of the Company ("Material Adverse Effect"). 2.2 CAPITALIZATION. (a) The authorized capital of the Company consists of 250,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, $0.0001 per share (the "Preferred Stock"). The Common Stock has the rights, preferences and privileges set forth in the Company's Restated Certificate, and the Preferred Stock has the rights, preferences and privileges set forth in the Certificate of Designations (b) As of the date of this Agreement, 52,962,714 shares of Common Stock and no shares of Preferred Stock are issued and outstanding. All of the outstanding shares of Common Stock have been, and when issued and paid for in accordance with the terms of the Common Stock Purchase Agreement the Stock will be, validly issued, duly authorized, fully paid and nonassessable, and issued in compliance with all applicable federal and state securities laws (based in part upon the representations of the purchasers thereof contained in the Common Stock Purchase Agreement). All of the shares of Series 1 Preferred Stock, when issued and paid for in accordance with the terms of this Agreement, will be validly issued, duly authorized, fully paid and nonassessable, and issued in compliance with all applicable federal and state securities laws (based in part upon the representations of the Purchasers contained in Sections 3.4, 3.5, 3.6, 3.7 and 3.8). (c) As of the date of this Agreement (i) 17,509,148 shares of Common Stock are reserved for issuance under the Company's 1998 Stock Plan (of which 8,000 shares have been issued pursuant to restricted stock agreements, 890,839 shares are issuable under outstanding options that are currently exercisable, 10,367,423 shares are issuable under other outstanding options that are not currently exercisable and 6,250,886 shares remain available for future grants), (ii) 32,404 shares of Common Stock are reserved for issuance under the Company's Beauty.com Inc. Stock Plan (of which 9,606 shares are issuable under outstanding options, all of which are currently exercisable and 22,798 remain available for future grants) and (iii) 1,000,000 shares of Common Stock are reserved for issuance under the Company's 1999 Employee Stock Purchase Plan (of which 87,719 have been issued to date). 2 3 (d) Except for the conversion privileges of the Preferred Stock and except as set forth in (i) the warrant to purchase 500,000 shares of Common Stock issued on June 26, 2000 to Tel-Drug, Inc. (the "Tel-Drug Warrant") and (ii) the warrant to purchase 2,500,000 shares of Common Stock issued on July 30, 2000 to Amazon.com, Inc. (the "Amazon Warrant"), as of the date of this Agreement there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, oral or in writing, for the purchase or acquisition from the Company of any shares of its capital stock. (e) The Company's only subsidiaries are DS Pharmacy, Inc., DS Non-Pharmaceutical Sales, Inc., DS Distribution, Inc., DSGC Idaho, Inc., Beauty.com, Inc. and Beauty.com Sales, Inc. (each a "Subsidiary" and together, the "Subsidiaries"). 2.3 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Common Stock Purchase Agreement (collectively, the "Agreements") and the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance and delivery of the Stock and the Preferred Stock has been taken or will be taken prior to the Closing (subject, in the case of the conversion of the Preferred Stock into Common Stock, to the receipt of the Stockholder Approval (as defined herein)), and the Agreements, when executed and delivered by the Company, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors' rights generally, as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and except as may be limited by Section 6.2(c). 2.4 VALID ISSUANCE OF PREFERRED STOCK. The Preferred Stock that will be issued to the Purchasers at Closing will have been duly and validly reserved for issuance and, when issued and delivered in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws. Based in part upon the representations of the Purchasers in this Agreement, the Preferred Stock will be issued in compliance with all applicable federal and state securities laws. The Common Stock issuable upon conversion of the Preferred Stock has been duly and validly reserved for issuance, and upon issuance in accordance with the terms of the Certificate of Designations, will be duly authorized, validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable federal and state securities laws and will be issued in compliance with all applicable federal and state securities laws. 2.5 LITIGATION. There is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company or any of its subsidiaries that (i) questions the validity of the Agreements or the right of the Company or any of its subsidiaries, as applicable, to enter into them, or to consummate the transactions 3 4 contemplated hereby or thereby nor is the Company aware that there is any basis for the foregoing or (ii) if adversely determined would have a Material Adverse Effect. Neither the Company nor any of its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that (i) challenges the validity of the Agreements or the right of the Company or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby and thereby or (ii) would have a Material Adverse Effect. 2.6 LIABILITIES. The Company and its subsidiaries, on a consolidated basis, have no liabilities and there are no contingent liabilities, required by generally accepted accounting principles to be disclosed on a balance sheet but that are not disclosed on the Company's audited balance sheet as of January 2, 2000 and/or on the Company's unaudited balance sheet as of July 2, 2000 except liabilities that would not have a Material Adverse Effect. Subsequent to July 2, 2000, the Company and its subsidiaries, on a consolidated basis, have not incurred any liabilities or any contingent liabilities required by generally accepted accounting principles to be disclosed on the Company's balance sheet except liabilities that would not have a Material Adverse Effect. 2.7 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and performance of the Agreements and the consummation of the transactions contemplated hereby and thereby will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under or cause acceleration under any provision of the Restated Certificate or the bylaws of the Company or any instrument, judgment, order, writ, decree or contract to which the Company or any of its Subsidiaries is a party or by which it is bound, or any provision of any federal or state statute, rule or regulation applicable to the Company or any of its Subsidiaries, the effect of which would (i) have a Material Adverse Effect, (ii) materially and adversely affect the ability of the Company and its Subsidiaries to perform their respective obligations under the Agreements or (iii) result in the creation of any material lien, charge or encumbrance upon any assets of the Company or any of its Subsidiaries. 2.8 MATERIAL AGREEMENTS. The Company has filed with the SEC all agreements in existence as of the date of this Agreement that (a) define or affect the rights of security holders of the Company in their capacity as security holders including, but not limited to, such security holders' voting rights, registration rights or standstill rights or obligations, other than (i) the Agreement dated June 23, 2000 between the Company and WellPoint Health Networks Inc., (ii) the Tel-Drug Warrant and (iii) the Amazon Warrant or (b) are required to be filed under Item 601 of Regulation S-K. 2.9. FINANCIAL STATEMENTS. The financial statements of Company that have been delivered to the Investors (including those for the period ended July 2, 2000), (i) are in accordance with the books and records of Company and its Subsidiaries, which have been maintained in accordance with good business practice; (ii) have been prepared in conformity with GAAP (except as discussed therein, the absence of footnotes for all unaudited periods and, in the case of audited financial statements, as approved by the relevant firm of accountants); and (iii) fairly present the consolidated financial position of Company as of the dates presented 4 5 therein and the results of operations, changes in financial positions or cash flows, as the case may be, for the periods presented therein (except, in the case of financial statements for the period ended July 2, 2000, for normal year-end audit adjustments). None of the Company or any of the Company's Subsidiaries has any contingent obligations, liability for taxes or other outstanding obligations that are material in the aggregate, except as disclosed in the unaudited financial statements for the period ended July 2, 2000 (except for normal year-end audit adjustments). None of the Company or its Subsidiaries has any contingent obligations or liability for taxes that are material in the aggregate and that would be required to be reflected or reserved against in the latest balance sheet of the Company, except as disclosed in the unaudited financial statements for the period ended July 2, 2000 (except for normal year-end audit adjustments). 2.10. INVESTMENT COMPANY. None of Company or its Subsidiaries is subject to regulation under the Investment Company Act of 1940, or to any federal or state statute or regulation limiting its ability to incur indebtedness. 2.11. SEC REPORTING; INFORMATION PROVIDED. As of the date each was filed, none of the Company's registration statements, reports or other filings made with the Securities and Exchange Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Neither this agreement nor any document, certificate or instrument furnished to any of the Purchasers by or on behalf of the Company when taken in conjunction with any supplemental or revised information furnished to any of the Purchasers in writing prior to the date hereof contains any untrue statement of a material fact or omits, or will omit, to state a material fact necessary to make the statements in such documents, certificates, instruments or other information provided, in light of the circumstances in which they were made, not misleading, except that with respect to any projected financial information, the Company only represents that it was prepared in good faith and the Company reasonably believes that the assumptions made in preparing such projections were reasonable as of the date of such projections. 2.12. ABSENCE OF CERTAIN CHANGES. Since July 2, 2000, no event has occurred and no condition exists which would have a Material Adverse Effect, other than (i) any change in the price of the Common Stock or (ii) changes in general economic conditions or conditions affecting the Company's industry generally. 2.13. REAL PROPERTY HOLDING COMPANY. The Company is not, and has not been, a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), during the applicable period described in Section 897(c)(1)(A)(ii) of the Code. 2.14 FORM S-3 ELIGIBILITY. The Company and the transactions contemplated by Section 6.2 of this Agreement meet the requirements for using Form S-3 under the Securities Act for resale. 5 6 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser hereby represents and warrants to the Company with respect to itself that: 3.1 AUTHORIZATION. Such Purchaser has full power and authority to enter into and deliver this Agreement, and this Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors' rights generally, as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and except as may be limited by Section 6.2(c).. 3.2 LITIGATION. There is no action, suit, proceeding or investigation pending or, to the Purchaser's knowledge, currently threatened against the Purchaser or any of its subsidiaries that questions the validity of this Agreement or the right of the Purchaser or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby nor is the Purchaser aware that there is any basis for the foregoing. Neither the Purchaser nor any of its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that challenges the validity of this Agreement or the right of the Purchaser or any of its subsidiaries, as applicable, to enter into this Agreement, or to consummate the transactions contemplated hereby. 3.3 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any provision of the governing documents of the Purchaser or any instrument, judgment, order, writ, decree or contract to which the Purchaser or any of its subsidiaries is a party or by which it is bound, or any provision of any federal or state statute, rule or regulation applicable to the Purchaser or any of its subsidiaries, the effect of which would have a material adverse effect on the ability of the Purchaser and its subsidiaries to perform their respective obligations under this Agreement or result in the creation of any lien, charge or encumbrance upon any assets of the Purchaser or any of its subsidiaries. 3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the Purchaser in reliance upon the Purchaser's representation to the Company, which by the Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the Preferred Stock to be acquired by the Purchaser will be acquired for investment for the Purchaser's own account, not as a nominee or agent, and not with a view to the resale or public distribution of any part thereof in violation of any requirements of the Securities Act of 1933, as amended (the "Securities Act") or applicable state securities laws. The Purchaser has no present intention of selling, granting any participation in, or otherwise distributing any Preferred Stock purchased hereunder, including, without limitation, entering into any arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Stock, whether any such transaction is to be settled by delivery of Preferred Stock, Common Stock or 6 7 other securities, in cash or otherwise. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Preferred Stock or the Common Stock issuable upon conversion thereof. 3.5 DISCLOSURE OF INFORMATION. The Purchaser (i) has had an opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Preferred Stock with the Company's management and (ii) has had an opportunity to review the Company's facilities. The Purchaser understands that such discussions and reviews, as well as any written information delivered by the Company to the Purchaser, were intended to describe the aspects of the Company's business that it believes to be material. 3.6 RESTRICTED SECURITIES. The Purchaser understands that the Preferred Stock has not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations as expressed herein. The Purchaser understands that the shares of Preferred Stock are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the shares of Preferred Stock indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Preferred Stock for resale except with regards to the Common Stock issuable upon conversion of the Preferred Stock as set forth in Section 6.2 hereof. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Preferred Stock, and on requirements relating to the Company that are outside of the Purchaser's control, and that the Company is under no obligation, and may not be able, to satisfy. 3.7 LEGENDS. The Purchaser understands that the Preferred Stock, and any securities issued in respect thereof, may bear one or all of the following legends: (a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933." (b) Any legend required by the "Blue Sky" laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended. 7 8 3.8 ACCREDITED INVESTOR. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations of the Purchasers to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by each Purchaser: 4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and correct on and as of the date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except with respect to the representations and warranties contained in Section 2.2(b), 2.2(c) and the first sentence of Section 2.2(e), which shall be true and correct in all material respects as of the date of the Closing). 4.2 PERFORMANCE. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing and the Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreements. 4.3 RESERVATION OF SHARES. The Preferred Stock issuable pursuant to this Agreement shall have been duly authorized and reserved for issuance at the Closing. The Common Stock issuable upon conversion of the Preferred Stock pursuant to the Certificate of Designations shall have been duly authorized and reserved for issuance at the Closing. 4.4 COMPLIANCE CERTIFICATE. The President of the Company shall deliver to the Purchasers at the Closing a certificate certifying that the conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled. 4.5 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Preferred Stock pursuant to this Agreement shall be obtained and effective as of the Closing including, without limitation, the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"). 4.6 OPINION OF COMPANY COUNSEL. The Purchasers at the Closing shall have received from Simpson Thacher & Bartlett, counsel for the Company, an opinion dated as of the Closing covering the matters set forth on Exhibit C. 4.7 COMMON STOCK PURCHASE AGREEMENT. The Company and the purchasers parties thereto shall have executed and delivered the Common Stock Purchase Agreement covering the purchase of at least 8,101,265 shares of Common Stock. 4.8 DELIVERY OF VOTING AGREEMENTS. Each person listed on Exhibit D hereto shall have executed and delivered to the Purchasers a voting agreement in the form attached hereto an Exhibit E (each, a "Voting Agreement") to the effect that such person will 8 9 vote its shares of Common Stock at the Stockholder Meeting (as defined) in favor of the approval of the issuance of the Common Stock issuable upon conversion of the Preferred Stock. The persons delivering Voting Agreements shall represent a majority of the Common Stock. 4.9. MINIMUM INVESTMENT AT CLOSING. At the Closing, Purchasers investing at least $62,682,825 in the aggregate in the Company under the Agreements shall have wired their respective investments in the Company into an escrow account maintained by Brobeck, Phleger & Harrison or an escrow agent mutually agreeable to the Company and purchasers of the majority of the Preferred Stock for delivery to the Company, or shall be otherwise legally obligated to wire such amounts to the Company, before any Purchaser is obligated to close. 4.10. OPINION OF GENERAL COUNSEL TO THE COMPANY. The Purchasers at the Closing shall have received from the General Counsel of the Company an opinion dated as of the Closing covering the matters set forth on Exhibit F. 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the Company to the Purchasers under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived: 5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Purchasers contained in Section 3 shall be true and correct in all material respects on and as of the date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except to the extent such representations and warranties speak as of the date of this Agreement, in which case they shall be true and correct in all material respects on and as of the date of this Agreement). 5.2 PERFORMANCE. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchasers on or prior to the Closing shall have been performed or complied with in all material respects. 5.3 COMPLIANCE CERTIFICATE. A senior executive officer of each of the Purchasers shall deliver to the Company at the Closing a certificate certifying that the conditions specified in Sections 5.1 and 5.2 have been fulfilled. 5.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Preferred Stock pursuant to this Agreement shall be obtained and effective as of the Closing including, without limitation, the expiration or termination of all waiting periods under the HSR Act. 5.5 COMMON STOCK PURCHASE AGREEMENT. The Company and the purchasers parties thereto shall have executed and delivered the Common Stock Purchase Agreement covering the purchase of at least 8,101,265 shares of Common Stock. 9 10 5.6 DELIVERY OF VOTING AGREEMENTS. Each person listed on Exhibit D hereto shall have executed and delivered to the Purchasers a Voting Agreement. The persons delivering Voting Agreements shall represent a majority of the Common Stock. 6. COVENANTS. 6.1 HSR ACT FILINGS. As soon as practicable after the execution of this Agreement, the Company and each relevant Purchaser will separately file with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission pursuant to the HSR Act all requisite documents and notifications in order to provide for the issuance and sale of the Preferred Stock pursuant to this Agreement. The parties will cooperate and coordinate with one another in exchanging information and providing reasonable assistance as the other party may request in connection with the foregoing. 6.2 REGISTRATION RIGHTS. (a) The Company hereby agrees: (i) to use its best efforts to file a resale shelf registration statement (the "Registration Statement") under the Securities Act as soon as reasonably practicable covering resales of the Common Stock to be issued upon conversion of the Preferred Stock (such shares of Common Stock, the "Conversion Stock") by the Purchasers and the Stock to be issued pursuant to the Common Stock Purchase Agreement, (ii) to use its best efforts to cause the Registration Statement to be declared effective as soon as reasonably practicable but in any event within 60 days of Closing and (iii) to maintain the effectiveness of the Registration Statement until the earlier of (x) the eighteen month anniversary of the effective date of the Registration Statement and (y) the date on which all shares of Conversion Stock have been resold by the Purchasers. At any time when the Registration Statement is effective, the Board of Directors of the Company may determine, as indicated in a certificate signed by any Director of the Company, the Chief Financial Officer of the Company or the Secretary of the Company, to suspend offers and sales by Purchasers under the Registration Statement if an event has occurred or is reasonably likely to occur that would require additional disclosure by the Company and that the Company has a bona fide business purpose for keeping confidential, and the nondisclosure of which would reasonably be expected to cause the Registration Statement to fail to comply with applicable disclosure requirements. The Company shall give the Purchasers written notice of the Board of Directors' determination and the Purchasers agree to suspend offers and sales under the Registration Statement until the Company has delivered a subsequent notice to the Purchasers revoking its prior notice; provided, however, that the eighteen month period during which the Registration Statement is required to be effective shall be extended by the number of days of such suspensions. The Company may not revoke the ability of Purchasers to make offers and sales under the Registration Statement more than three times or for more than 90 days in the aggregate. (b) For the period during which the Registration Statement is effective, the Company shall: (i) furnish to the Purchaser with respect to the Conversion Stock registered under the Registration Statement (and to each underwriter, if any, of such Conversion Stock) such reasonable number of copies of prospectuses in order to facilitate the 10 11 public sale or other disposition of all or any of the Conversion Stock by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses; (ii) during the period when such prospectuses are required to be delivered under the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the rules and regulations promulgated thereunder; (iii) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; (iv) authorize for listing on the Nasdaq National Market the shares of Conversion Stock by filing with the Nasdaq National Market a Notification of Listing of Additional Shares (or such other form, if any, as may be required by the Nasdaq National Market) as soon as reasonably practicable after the filing of the Registration Statement or otherwise in accordance with the rules and regulations of the Nasdaq National Market; and (v) bear all expenses in connection with the procedures in this Section 6.2 and the registration of the Conversion Stock pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the Purchaser, if any. (c) For purposes of this Section 6.2(c), the term "Registration Statement" shall include any preliminary or final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 6.2(a). (i) The Company agrees to indemnify and hold harmless each of the Purchasers and each of their respective directors, officers, members and partners, and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers and each of their respective directors, officers, members and partners, or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in or incorporated by reference in the Registration Statement, including the 11 12 prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including the preliminary or final prospectus any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the rules and regulations of the Commission under the Securities Act (the "Regulations"), or the prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any failure of the Company to perform its obligations under or a violation of the Securities Act, the Exchange Act or any state securities law, and will reimburse each Purchaser and each of their respective directors, officers, members and partners, and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in this Section 6.2 respecting the sale of the Stock, or (iii) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser. (ii) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Regulations, or the Prospectus, or any amendment or 12 13 supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any failure of such Purchaser to perform its obligations under the Securities Act, the Exchange Act or any state securities law, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein. (iii) Promptly after receipt by an indemnified party under this Section 6.2(c) of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 6.2(c) promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 6.2(c) or to the extent it is not prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 6.2(c) for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party, representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party 13 14 shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. (iv) If the indemnification provided for in this Section 6.2 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (i), (ii) or (iii) of this Section 6.2(c) in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such loss, claim, damage, liability or expense as well as any other relevant equitable considerations. The relative fault of the Company and such Purchaser shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (iii) of this Section 6.2(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (iii) of this Section 6.2(c) with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (iv); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (iii) for purposes of indemnification. Notwithstanding the provisions of this Section 6.2(c)(iv), no Purchaser shall be required to contribute any amount in excess of the net proceeds of the offering received by such Purchaser, except in the case of willful fraud by such Purchaser. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 6.2(c)(iv) are several and not joint. 6.3 STOCKHOLDER MEETING. The Company shall cause (i) a special meeting of its common stockholders (the "Stockholder Meeting") to be held as soon as practicable but in no event later than three months from the Closing, for the purpose of approving the conversion of the Preferred Stock issued pursuant to this Agreement into Common Stock or (ii) the holders of the requisite number of shares of Common Stock to deliver written consents approving the conversion of the Preferred Stock into Common Stock (the action called for in (i) and (ii), the "Stockholder Approval"). 14 15 7. MISCELLANEOUS. 7.1 SURVIVAL OF WARRANTIES. The warranties and representations of the Company and the Purchasers contained herein shall terminate on the second anniversary of the Closing. 7.2 TRANSFER; NO THIRD PARTY BENEFICIARIES. This Agreement and each party's rights and obligations hereunder shall not be assigned without the prior written consent of the other party; provided, that a Purchaser may transfer its rights hereunder to an affiliate, so long as such affiliate agrees in writing to be bound by all obligations under this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement. 7.3 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws. 7.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 7.5 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 7.6 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by telegram or fax, or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page hereto, or as subsequently modified by written notice, and if to the Company, with copies to the General Counsel of the Company at the address of the Company set forth below and Simpson Thacher & Bartlett, 3373 Hillview Avenue, Suite 250, Palo Alto, CA 94304, Attention: William H. Hinman, telecopy no: (650)-251-5002). 7.7 FINDER'S FEE. Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which such Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 15 16 7.8 FEES AND EXPENSES. Except as otherwise specifically provided herein, the Company and the Purchasers shall pay their respective fees and other expenses in connection with the negotiation, execution, delivery and performance of the Agreements. 7.9 ATTORNEY'S FEES. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of the Agreements, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or waived only with the written consent of the Company and each of the Purchasers. Any amendment or waiver effected in accordance with this Section 7.10 shall be binding upon each Purchaser and each transferee of the Preferred Stock, each future holder of all such Preferred Stock, each transferee and future holder of Common Stock issued upon conversion of Preferred Stock and the Company. 7.11 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms. 7.12 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 7.13 ENTIRE AGREEMENT. This Agreement, and the documents referred to herein, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled. 7.14 CONFIDENTIALITY. Except as provided below, each party hereto agrees that, except with the prior written permission of the other party, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other party to which such party has been or shall become privy by reason of the Agreements, discussions or negotiations relating to the Agreements, the performance of its obligations 16 17 thereunder or the ownership of Stock purchased hereunder. The provisions of this Section 7.14 shall be in addition to, and not in substitution for, the provisions of any separate nondisclosure agreement executed by the parties hereto with respect to the transactions contemplated by the Agreements. Notwithstanding the foregoing, nothing herein shall prevent any party from disclosing (i) such information that has been publicly disclosed, (ii) such information that becomes available to the party on a non-confidential basis from a source other than the other party hereto, provided that such source is not bound by a confidentiality agreement with such other party, (iii) information required to be disclosed pursuant to subpoena or other court process or otherwise required to be disclosed by law or the regulations of any securities exchange (provided that, to the extent practicable, advance notice is given to the party whose confidential information is to be disclosed so that such party can attempt to obtain a protective order) and (iv) such information that was known to the party prior to its first receipt from the other party. 7.15 PUBLICITY. After the execution of this Agreement, any of the parties may issue a press release disclosing that the Purchasers have agreed to invest in the Company and the terms of the future relationship between the parties in a form approved by the other party, which approval will not be unreasonably withheld, conditioned or delayed. In addition, any party may disclose such information regarding the Purchasers' investment and the relationship between the parties as required by law or the regulations of any securities exchange. 7.16 TERMINATION. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (i) at any time by mutual written consent of the Company and each of the Purchasers; or (ii) by any party hereto if the Closing does not occur on or prior to October 31, 2000; (provided, that if on October 31, 2000 any authorization, approval or permit of any governmental authority or regulatory body of the United States or of any state that is required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement has not been obtained, then no party shall be entitled to terminate this Agreement pursuant to this clause (ii) until December 15, 2000 and then only if the Closing has not occurred on or prior to such date). Upon any such termination, this Agreement shall become void and of no further effect, except for Sections 7.3, 7.7, 7.8, 7.9, 7.14 and this Section 7.16 which shall survive such termination. [Signature Pages Follow] 17 18 The parties have executed this Preferred Stock Purchase Agreement as of the date first written above. COMPANY: DRUGSTORE.COM, INC. By: /s/ DAVID ROSTOV ------------------------------------- Name: David Rostov Title: Chief Financial Officer Address: 13920 SE Eastgate Way, Suite 300 Bellevue, WA 98005 SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 19 PURCHASERS: KPCB VIII L.P. By: ------------------------------------ Name: ------------------------------------ Title: ---------------------------------- Address: -------------------------------- -------------------------------- SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 20 KPCB VIII FOUNDERS FUND, L.P. By: ------------------------------------ Name: ------------------------------------ Title: ---------------------------------- Address: -------------------------------- -------------------------------- SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 21 VULCAN VENTURES INCORPORATED By: ------------------------------------ Name: ------------------------------------ Title: ---------------------------------- Address: -------------------------------- -------------------------------- SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 22 L. JOHN DOERR By: ------------------------------------ Name: ------------------------------------ Title: ---------------------------------- Address: -------------------------------- -------------------------------- SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 23 [Other Purchasers]. By: ------------------------------------ Name: ------------------------------------ Title: ---------------------------------- Address: -------------------------------- -------------------------------- SIGNATURE PAGE TO THE PREFERRED STOCK PURCHASE AGREEMENT 24 SCHEDULE I
Purchaser Purchase Commitment - --------- ------------------- KPCB VIII L.P. $14,178,000 KPCB Founders Fund, L.P. $822,000 L. John Doerr $5,000,000 Vulcan Ventures Incorporated $2,682,825.00 Total
25 EXHIBITS Exhibit A - Certificate of Designation of Series 1 Preferred Stock Exhibit B - Amended and Restated Certificate of Incorporation of the Company Exhibit C - Matters to be covered in legal opinion of Simpson Thacher & Bartlett Exhibit D - Persons to deliver Voting Agreements Exhibit E- Form of Voting Agreement Exhibit F - Matters to be covered in legal opinion of the General Counsel of the Company 26 EXHIBIT A CERTIFICATE OF DESIGNATIONS OF SERIES 1 PREFERRED STOCK 27 EXHIBIT B AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY 28 EXHIBIT C MATTERS TO BE COVERED BY LEGAL OPINION OF SIMPSON THACHER & BARTLETT 29 EXHIBIT D PERSONS TO DELIVER VOTING AGREEMENTS Kleiner Perkins Caufield & Byers VIII, L.P. KPCB Life Sciences Zaibatsu Fund II, L.P. KPCB VIII Founders Fund, L.P. Amazon.com, Inc. Maveron Equity Partners, L.P. Vulcan Ventures Incorporated Rite Investments Corp. General Nutrition Investment Company Peter Neupert Peter Neupert and Sheryl Neupert, Tenants in Common Kal Raman Mark L. Silverman David Rostov David Rostov, as custodian Judith H. McGarry Drugstore.com Foundation Hearst Communications, Inc. Integral Capital Partners IV, L.P. Integral Capital Partners IV MS Side Fund, L.P. Integral Capital Partners V, L.P. Integral Capital Partners V Side Fund, L.P. Baron Asset Fund Baron Capital Funds Trust 30 L. John Doerr 31 EXHIBIT E FORM OF VOTING AGREEMENT 32 EXHIBIT F MATTERS TO BE COVERED BY LEGAL OPINION OF GENERAL COUNSEL OF THE COMPANY EX-3 4 ex3.txt EXHIBIT 3 1 EXHIBIT 3 CERTIFICATE OF DESIGNATION of SERIES 1 PREFERRED STOCK of DRUGSTORE.COM, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware Drugstore.com, Inc., a Delaware corporation (the "Corporation"), certifies that pursuant to the authority contained in its Amended and Restated Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors (the "Board of Directors") has adopted the following resolution creating a series of its Preferred Stock, par value $0.0001 per share, designated as Series 1 Preferred Stock: RESOLVED, that a series of authorized Preferred Stock, par value $0.0001 per share, of the Corporation be hereby created, and that the designation and amount thereof and the powers, preferences and other rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as the "Series 1 Preferred Stock" (the "Series 1 Preferred Stock") and the number of shares constituting such series shall be 100,000 shares of Series 1 Preferred Stock. Section 11 below contains the definitions of certain defined terms used herein. SECTION 2. DIVIDENDS AND DISTRIBUTIONS. (a) The holders of shares of Series 1 Preferred Stock shall not be entitled to any dividends or distributions except as provided in Section 2(b). (b) In case the Corporation or any Subsidiary of the Corporation shall at any time or from time to time declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of stock or other securities or property or rights or warrants to subscribe for securities of the Corporation or any of its Subsidiaries by way of dividend or spin off) on the Common Stock, the holders of shares of Series 1 Preferred Stock shall be entitled to receive from the Corporation, with respect to each share of Series 1 Preferred Stock held, the 2 same dividend or distribution received by a holder of the number of shares of Common Stock equal to one share multiplied by the Conversion Rate. SECTION 3. NO VOTING RIGHTS. The holders of shares of Series 1 Preferred Stock shall not be entitled to vote on any matters involving the Corporation, except as may be required by law. SECTION 4. MANDATORY REPURCHASE BY THE CORPORATION. (a) If the Stockholder Approval shall not have been received by May 1, 2001, then the Corporation shall repurchase from each holder of Series 1 Preferred Stock the number of shares of Series 1 Preferred Stock held by such holder on such date. Repurchases made pursuant to this Section 4(a) shall be effected on such date (or such other day upon which the holder and the Corporation may agree) and shall be an amount per share of Series 1 Preferred Stock equal to the Common Equivalent Amount in cash. The place of payment shall be at an office or agency fixed therefor by the Corporation or, if not fixed, at the principal executive office of the Corporation. (b) (i) On the date fixed for repurchase, each holder of shares of Series 1 Preferred Stock shall surrender the certificate representing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive payment in cash therefor provided in this Section 4. Such shares shall no longer be deemed outstanding after such date and the holders thereof shall cease to be holders of Series 1 Preferred Stock of the Corporation and all rights whatsoever with respect to the shares so purchased shall terminate. As promptly as practicable, and in any event within three Business Days after the surrender of such certificate or certificates, the Corporation shall deliver or cause to be delivered cash in the amounts specified above to the holders of the Series 1 Preferred Stock. The repurchase shall be deemed to have been made at the close of business on the date of surrender of the certificate or certificates representing the shares of Series 1 Preferred Stock to be repurchased so that the rights of the holders as to the shares being repurchased shall cease except for the right to receive cash. (ii) If the cash legally available for such purchase is not sufficient to purchase all the shares of Series 1 Preferred Stock tendered to the Corporation for purchase pursuant to paragraph (a) of this Section 4, the Corporation shall purchase the greatest number of whole shares for which such funds are so available on a pro rata basis among all holders based on the ratio of the number of shares held by each of them to the aggregate amount of all shares so held, and the certificates representing the unpurchased shares shall be deemed not to be surrendered for repurchase, such unpurchased shares shall remain outstanding and the rights of the holders of shares of Series 1 Preferred Stock thereafter shall continue to be those of a holder of shares of the Series 1 Preferred Stock; provided, however, the Corporation shall thereafter be required to repurchase all such remaining shares at the first date it has sufficient funds legally available for such purpose at the price it would have paid at the date such shares were actually tendered and the Corporation shall give notice as aforesaid to each holder whose shares were not repurchased for such reason and such holder shall thereafter have the right to elect to have such shares repurchased, such election to be made within 30 days of receipt of such notice. For purposes of 3 this Section, the Corporation shall be deemed not to have sufficient funds legally available for any such purchase if the Board of Directors reasonably determines that immediately after such repurchase the Corporation would be insolvent or if such repurchase would conflict with the terms or conditions of, or result in a default under, any instrument or agreement applicable to or binding upon the Corporation involving an amount in excess of twenty-five thousand dollars ($25,000). (c) Whenever the Corporation shall not have redeemed the shares of Series 1 Preferred Stock within five (5) Business Days of the date such redemption is required by Section 4(a), thereafter and until all redemption payments shall have been made, if and so long as any shares of Series 1 Preferred Stock remain outstanding, the Corporation shall not, nor shall it permit any of its Subsidiaries to: (i) declare or pay dividends, or make any other distributions, on any shares of Common Stock or other capital stock of the Corporation ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 1 Preferred Stock ("Junior Stock"), other than dividends or distributions payable in Junior Stock; (ii) redeem or purchase or otherwise acquire for consideration (other than Junior Stock) any shares of Junior Stock; or (iii) purchase or otherwise acquire for consideration any shares of Series 1 Preferred Stock, other than purchases ratably among all holders of the Series 1 Preferred Stock. (d) The Corporation shall not permit any Subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of capital stock of the Corporation unless the Corporation could, pursuant to paragraph (c) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. SECTION 5. CONVERSION. (a) Upon receipt by the Corporation of the Stockholder Approval, all of the shares of Series 1 Preferred Stock shall be converted into shares of Common Stock as set forth in this Section 5. The Corporation shall send notice of mandatory conversion to each of the holders of the Series 1 Preferred Stock at such holder's address as it appears on the transfer books of the Corporation. Each share of Series 1 Preferred Stock shall be converted into a number of fully paid and nonassessable shares of Common Stock equal to the Conversion Rate then in effect. (b) On the date fixed for conversion, each holder of shares of Series 1 Preferred Stock shall surrender the certificate representing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive the number of shares of Common Stock provided in this Section 5. Such shares of Series 1 Preferred Stock shall no longer be deemed outstanding after such date and the holders thereof shall cease to be holders of Series 1 Preferred Stock of the Corporation and all rights whatsoever with respect to such shares so purchased shall terminate. The conversion shall be deemed to have been made at the close of business on the date of surrender of the certificate or certificates representing the shares of Series 1 Preferred Stock to be converted so that the rights of the holders as to the shares being converted shall cease except for the right to receive Common Stock as set forth in this Section 5. 4 SECTION 6. REACQUIRED SHARES. Any shares of Series 1 Preferred Stock purchased, converted or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof, and, if necessary to provide for the lawful purchase of such shares, the capital represented by such shares shall be reduced in accordance with the General Corporation Law of the State of Delaware. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, par value $0.0001 per share, of the Corporation and may be reissued as part of another series of Preferred Stock, par value $0.0001 per share, of the Corporation. SECTION 7. LIQUIDATION, DISSOLUTION OR WINDING UP; REORGANIZATIONS. (a) If the Corporation shall adopt a plan of liquidation or of dissolution, or commence a voluntary case under the Federal bankruptcy laws or any other applicable state or Federal bankruptcy, insolvency or similar law, or consent to the entry of an order for relief in any involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the Federal bankruptcy laws or any other applicable Federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall be unstayed and in effect for a period of ninety (90) consecutive days and on account of such event the Corporation shall liquidate, dissolve or wind up, or upon any other liquidation, dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of Junior Stock, unless prior thereto, the holders of shares of Series 1 Preferred Stock shall have received in cash the Liquidation Preference. After the payment of the Liquidation Preference, holders of the Series 1 Preferred Stock shall participate on an as-converted basis in the distribution of the entire remaining assets and funds of the Corporation legally available for distribution, if any. A sale or other disposition of all or substantially all of the assets of the Corporation in one transaction or series of related transactions shall be deemed to be a "liquidation" within the meaning of this Section 7 unless approved by the Requisite Holders. (b) Upon the occurrence of a consolidation, merger, corporate reorganization, recapitalization or other similar transaction as a result of which the beneficial holders of the Corporation's Common Stock immediately prior to such transaction do not hold, directly or indirectly, in excess of 50% of the combined voting securities entitled to vote generally in the election of the directors of the surviving or resulting corporation immediately after such transaction (such occurrence, a "Change of Control Event"), then, as part of such Change of Control Event, provision shall be made so that the holders of the Series 1 Preferred Stock shall receive the same consideration from such Change of Control Event as is received by the holders of Common Stock of the Corporation (based upon the number of shares of Common Stock deliverable to the holders of the Series 1 Preferred Stock at the then-applicable Conversion Rate). 5 SECTION 8. RANK. The Series 1 Preferred Stock shall rank, with respect to dividend rights and rights upon liquidation, winding up and dissolution, junior to all classes and series of the Corporation's preferred stock authorized or outstanding on the date of initial issuance of the Series 1 Preferred Stock. Other than in respect of the Liquidation Preference, as to which it shall rank senior to the Common Stock, the Series 1 Preferred Stock shall rank pari passu with all classes of Common Stock. SECTION 9. OTHER COVENANTS. (a) Transfer Taxes. The Corporation shall pay any and all issue or other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of the Series 1 Preferred Stock and other securities. The Corporation shall not, however, be required to pay any income tax or tax that may be payable in respect of any transfer involved in the issue or delivery of Series 1 Preferred Stock (or other securities or assets) in a name other than that in which the shares of Series 1 Preferred Stock so exchanged were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of such tax or has established, to the satisfaction of the Corporation, that such tax has been paid. (b) Prior Notice of Certain Events. In case: (i) the Corporation shall authorize the granting to all holders of Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights or warrants; or (ii) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation shall be required, or of the sale or transfer of all or substantially all of the assets of the Corporation or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or other property; or (iii) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then the Corporation shall cause to be filed with the transfer agent for the Series 1 Preferred Stock, and shall cause to be mailed to the holders of record of the Series 1 Preferred Stock, at their last addresses as they shall appear upon the stock transfer books of the Corporation, at least fifteen days prior to the applicable record date hereinafter specified, a notice stating, as the case may be, (x) the record date (if any) for the purpose of such dividend, distribution, redemption, repurchase or granting of rights or warrants or, if no record date is to be set, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective, and the date, if any, as of which it is expected that holders of 6 shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). SECTION 10. SEVERABILITY OF PROVISIONS. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. SECTION 11. DEFINITIONS. For the purposes of the Certificate of Designation of Series 1 Preferred Stock that embodies this resolution: (a) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which commercial banks in the City of New York are authorized or obligated by law or executive order to close. (b) "Capital Stock" shall mean (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person. (c) "Closing Price" per share of Common Stock on any date shall mean the last sale price, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as reported on the Nasdaq National Market or, if the Common Stock is not listed on the Nasdaq National Market, the last quoted sale price or, if not so quoted, the average of the high bid and low asked prices in the over-the- counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or such other system then in use, or, if on any such date the Common Stock is not quoted by any such organization, the average of the Closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors. (d) "Common Equivalent Amount" shall mean the product of the Current Market Price and the Conversion Rate. (e) "Common Stock" shall mean the common stock, par value $0.0001 per share, of the Corporation. 7 (f) "Conversion Rate" shall mean 100; provided, however, that in case the Corporation shall at any time or from time to time after the original issuance of the Series 1 Preferred Stock declare a dividend, or make a distribution, on the outstanding shares of Common Stock in either case, in shares of Common Stock, or effect a subdivision, combination, consolidation or reclassification of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock, then, and in each such case, the Conversion Rate in effect immediately prior to such event or the record date therefor, whichever is earlier, shall be adjusted by multiplying the Conversion Rate by a fraction, the numerator of which is the number of shares of Common Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event. An adjustment made pursuant to this definition shall become effective (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution, or (y) in the case of any such subdivision, reclassification, consolidation or combination, at the close of business on the day upon which such corporate action becomes effective. (g) "Current Market Price" per share of Common Stock on any date shall mean the average of the Closing Prices of a share of Common Stock for the five (5) consecutive Trading Days ending on the date in question. If on any such Trading Day the Common Stock is not quoted by any organization referred to in the definition of Closing Price, the fair value of the Common Stock on such day, as reasonably determined in good faith by the Board of Directors of the Corporation, shall be used. (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (i) "Liquidation Preference" shall mean an amount per share of Series 1 Preferred Stock equal to $5.00; provided, however, that in case the Corporation shall at any time or from time to time declare a dividend, or make a distribution, on the outstanding shares of Series 1 Preferred Stock in either case, in shares of Series 1 Preferred Stock, or effect a subdivision, combination, consolidation or reclassification of the outstanding shares of Series 1 Preferred Stock into a greater or lesser number of shares of Series 1 Preferred Stock, then, and in each such case, the Liquidation Preference in effect immediately prior to such event or the record date therefor, whichever is earlier, shall be adjusted by multiplying the Liquidation Preference by a fraction, the numerator of which is the number of shares of Series 1 Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series 1 Preferred Stock outstanding immediately after such event. An adjustment made pursuant to this definition shall become effective (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Series 1 Preferred Stock entitled to receive such dividend or distribution, or (y) in the case of any such subdivision, reclassification, consolidation or combination, at the close of business on the day upon which such corporate action becomes effective. 8 (j) "Person" shall mean an individual, partnership, corporation, limited liability company or partnership, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind. (k) "Requisite Holders" shall mean the holders of sixty-seven percent (67%) of the then-outstanding shares of Series 1 Preferred Stock. (l) "Stock Purchase Agreement" shall mean that certain Series 1 Stock Purchase Agreement dated as of July 30, 2000 by and among the Corporation and the purchasers of the Series 1 Preferred Stock parties thereto. (m) "Stockholder Approval" shall mean the approval of the stockholders of the Corporation to convert the shares of Series 1 Preferred Stock issued pursuant to the Stock Purchase Agreement into Common Stock. (n) "Subsidiary" of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person. (o) "Trading Day" shall mean a day on which the principal national securities exchange on which the Common Stock is quoted, listed or admitted to trading is open for the transaction of business or, if the Common Stock is not quoted, listed or admitted to trading on any national securities exchange (including the Nasdaq Stock Market), any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. [Remainder of Page Intentionally Left Blank] 9 IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation of Series 1 Preferred Stock to be duly executed by its President this 2nd day of August, 2000. /s/ PETER M. NEUPERT ------------------------------------ Peter M. Neupert, Chairman of the Board, President and Chief Executive Officer EX-4 5 ex4.txt EXHIBIT 4 1 EXHIBIT 4 NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS. drugstore.com, inc. Warrant for the Purchase of Shares of Common Stock Name of Registered Holder: Amazon.com, Inc. (the "Initial Holder") No. W-3 2,500,000 Shares of Common Stock This certifies that, for value received, the Initial Holder (or any registered assignee of the Initial Holder) (each of the Initial Holder and any such registered assignee being hereinafter referred to as the "Holder"), is entitled, subject to the conditions and upon the terms of this Warrant, to purchase from drugstore.com, inc. (the "Company"), at any time or from time to time during the Exercise Period (as defined in Section 1 hereof), the number of shares of Common Stock (as defined in Section 1 hereof) set forth above. The number of shares of Common Stock to be received upon the exercise of this Warrant and the Exercise Price are subject to adjustment from time to time as hereinafter set forth. Section 1. Certain Definitions. Terms defined in the preceding paragraph and elsewhere in this Warrant have the respective meanings provided for therein. The following additional terms, as used herein, have the following respective meanings: "Act" means the Securities Act of 1933, as amended. "Common Stock" means the fully paid and nonassessable shares of common stock of the Company, $.0001 par value per share, together with any other equity securities that may be issued by the Company in addition thereto or in substitution therefor in accordance with Section 7 herein. "Exercise Period" means the two-year period beginning on the date hereof and ending on July 30, 2002. 1 2 "Exercise Price" means $4.9375 per share, subject to change or adjustment pursuant to Section 7 hereof. "Reorganization Event" means (i) any capital reorganization or reclassification of the Common Stock (other than as a result of a subdivision, combination or stock dividend for which adjustment is provided in Section 7(a) hereof and other than a change in the par value of the Common Stock or an increase in the authorized capital stock of the Company not involving the issuance of any shares thereof), or (ii) any consolidation of the Company with, or merger of the Company with or into, another person (including any partnership, joint venture, limited liability company, limited partnership, corporation, trust, other entity or group thereof) (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in a reclassification or change of the outstanding Common Stock (or for which adjustment is provided in Section 7(a) hereof)) or any sale, lease, transfer or conveyance of all or substantially all of the property and assets of the Company. "Warrant" means this warrant and any warrant or warrants that may be issued pursuant to Section 4 hereof in substitution or exchange for or upon transfer of this warrant, any warrant that may be issued pursuant to Section 2 hereof upon partial exercise of this warrant and any warrant which may be issued pursuant to Section 5 hereof upon the loss, theft, destruction or mutilation of this warrant. "Warrant Register" means the register maintained at the principal office of the Company, or at the office of its agent, in which the name of the Holder of this Warrant shall be registered. "Warrant Shares" means the shares of Common Stock, as adjusted from time to time in accordance with Section 7 hereof, deliverable upon exercise of this Warrant. Section 2. Exercise of Warrant. (a) Subject to compliance with all applicable securities laws, this Warrant may be exercised, in whole or in part, at any time or from time to time during the Exercise Period, by presentation and surrender hereof to the Company at its principal office at the address set forth on the signature page hereof (or at such other address of the Company or any agent appointed by the Company to act hereunder as the Company or such agent may hereafter designate in writing to the Holder), with the exercise form annexed hereto (the "Exercise Form") duly executed and accompanied by cash or a certified or official bank check drawn to the order of "drugstore.com, inc." (or its successor in interest, if any) in the amount of the applicable Exercise Price, multiplied by the number of Warrant Shares specified in such Exercise Form, together with applicable transfer taxes, if any. If this Warrant should be exercised in part only, the Company or its agent shall, upon surrender of this Warrant, execute and deliver a Warrant evidencing the right of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt by the Company during the Exercise Period of this Warrant and such Exercise Form in proper form for exercise, together with proper payment of the applicable Exercise Price at its principal office, or by its agent at its office, the Holder shall be deemed to be the holder of record of the number of Warrant Shares specified in such Exercise Form; provided, however, that if the date of such receipt by the Company or its agent is a date on which the stock transfer books of the Company are closed, such person shall be deemed to have become the record holder of such Warrant Shares on the next business day on which the stock transfer books of the Company are open. Any Warrant issued upon partial exercise of this Warrant pursuant to this Section 2 shall be dated the date of this Warrant. (b) Notwithstanding the payment provisions set forth above, the Holder may surrender this Warrant and, in lieu of payment of the Exercise Price in cash, elect to have the Company cancel such number of Warrant Shares as may be sufficient to satisfy the Exercise Price. If the Holder so elects, then the Company shall issue to the Holder the number of Warrant Shares determined as follows: 2 3 X = Y (A - B) --------- A Where: X = the number of shares of Common Stock to be issued to the Holder Y = the number of Warrant Shares subject to this Warrant A = the Fair Market Value (as defined below) of one (1) Warrant Share B = the Exercise Price Y-X = the number of Warrant Shares cancelled to satisfy the Exercise Price For purposes of the above calculation, the "Fair Market Value" shall be determined by the average of the closing bid and asked prices of the Company's capital stock as quoted in the Over-the-Counter Market Summary or the last reported sale price of the capital stock or the closing price quoted on the Nasdaq National Market System or on any exchange on which such capital stock is then listed, whichever is applicable, for the five trading days prior to the date of exercise of this Warrant, provided, however, that if no public market for the Company's capital stock exists at the time of such exercise, "Fair Market Value" of a Warrant Share shall be determined in good faith by the Board of Directors of the Company. For purposes of a transaction specified in Section 7(b), "Fair Market Value" of a Warrant Share shall mean the value of the consideration (determined, in the case of non-cash consideration, in good faith by the Company's Board of Directors) to be received pursuant to such transaction by the holder of one share of Warrant Stock. Section 3. Reservation of Shares. The Company agrees that at all times it will keep reserved solely for issuance and delivery pursuant to this Warrant the number of shares of its Common Stock that are or would be issuable from time to time upon exercise of this Warrant in full. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and nonassessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free of all preemptive rights. Before taking any action that would cause an adjustment pursuant to Section 7 hereof reducing the Exercise Price below the then par value (if any) of the Warrant Shares issuable upon exercise of this Warrant, the Company will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the Exercise Price as so adjusted. Section 4. Transfer in Compliance with Applicable Securities Laws. Neither this Warrant nor any of the Warrant Shares, nor any interest in either, may be sold, assigned, pledged, hypothecated, encumbered or in any other manner transferred or disposed of, in whole or in part, except in accordance with applicable United States federal and state securities laws and the terms and conditions hereof. The Company may require the Holder to obtain an opinion of counsel, at the expense of the Holder, reasonably satisfactory to the Company, that the proposed sale, offer for sale, pledge, hypothecation or other transfer or disposition may be effected without registration under the Act or state securities or Blue Sky laws. No opinion of counsel shall be necessary for a transfer by the Holder to one or more Affiliates (as such term is defined in Section 11(f) of the Warrant). Each Warrant shall bear a legend in substantially the same form as the legend set forth on the first page of this Warrant. Each certificate for Warrant Shares issued upon exercise of this Warrant, unless at the time of exercise such Warrant Shares are registered under the Act, shall bear a legend substantially in the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF 3 4 EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS. Subject to this Section 4, this Warrant may be transferred and assigned, in whole or in part, upon surrender of this Warrant to the Company at its principal office or to the Company's agent at its office, with the Warrant Assignment Form duly executed and accompanied by funds sufficient to pay any transfer tax, except that no transfer or assignment of this Warrant may be made unless (A) the Company consents in writing to such transfer or assignment, which consent may be withhold in its absolute discretion, and (B) the transferee has agreed in writing for the benefit of the Company to be bound by the provisions of this Section 4 to the extent this Section 4 is then applicable. Notwithstanding the foregoing, the Company agrees that consent will not be withheld in the case of a transfer or assignment of the Warrant in whole or in part by the Holder to one or more Affiliates; provided, however, that if the Warrant is transferred or assigned in part by the Holder to one or more Affiliates, at least 100,000 Warrant Shares (subject to adjustment pursuant to Section 7) must underlie each transferred or assigned part of the Warrant. The Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees named in such Warrant Assignment Form and, if the Holder's entire interest is not being transferred or assigned, in the name of the Holder; and this Warrant shall promptly be cancelled. Section 5. Lost, Mutilated or Missing Warrant. Upon receipt by the Company or its agent of evidence satisfactory to it of the loss, theft or destruction of this Warrant, and of satisfactory indemnification, and upon surrender and cancellation of this Warrant if mutilated, the Company or its agent shall execute and deliver a Warrant of like tenor and date in exchange for this Warrant. Section 6. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or in equity, and the rights of the Holder are limited to those expressed in this Warrant. Section 7. Certain Events. (a) Stock Dividends, Subdivisions, Combinations. If the Company shall (A) declare a dividend or distribution on the Common Stock (or other securities deliverable hereunder) payable in shares of capital stock (whether shares of Common Stock or capital stock of any other class), (B) subdivide shares of the Common Stock into a greater number of shares or (C) combine the Common Stock into a smaller number of shares then, in any such event, the Holder shall be entitled to receive the aggregate number and kind of shares which, if the Warrant had been exercised immediately prior to the record date for such action, he would have been entitled to receive by virtue of such dividend, distribution, subdivision or combination, and the Exercise Price shall be appropriately adjusted. Such adjustment shall be made successively whenever any event listed above shall occur. (b) Reorganization Event. In case of any Reorganization Event the Company shall, as a condition precedent to the consummation of the transaction constituting, or announced as, such Reorganization Event, cause effective provisions to be made so that the Holder shall have the right immediately thereafter, by exercising this Warrant, to receive the aggregate amount and kind of shares of stock and other securities and property that were receivable upon such Reorganization Event by a holder 4 5 of the number of shares of Common Stock that would have been received immediately prior to such Reorganization Event upon exercise of this Warrant. Any such provision shall include provision for adjustments in respect of such shares of stock and other securities and property that shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 7(a). The foregoing provisions of this Section 7(b) shall similarly apply to successive Reorganization Events. (c) Certain Events. If any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors in its reasonable judgment shall make an appropriate adjustment in the number of Warrant Shares obtainable upon exercise of this Warrant so as to protect the rights of the Holders of the Warrant. (d) Fractional Shares. No fractional shares of Common Stock (or other securities deliverable hereunder) or scrip shall be issued to any Holder in connection with the exercise of this Warrant. Instead of any fractional share of Common Stock (or other securities deliverable hereunder) that would otherwise be issuable to such Holder, the Company shall pay to such Holder a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Exercise Price on the date of such exercise. (e) Carryover. Notwithstanding any other provision of this Section 7, no adjustment shall be made to the number of shares of Common Stock (or other securities deliverable hereunder) to be delivered to each Holder (or corresponding change to the Exercise Price) if such adjustment would represent less than one percent of the number of shares to be so delivered, but any such adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to one percent or more of the number of shares to be so delivered. (f) Notices of Certain Events. If at any time after the date hereof and before the expiration of the Exercise Period: (i) the Company declares any dividend or distribution on its Common Stock payable in shares of its capital stock or otherwise subdivides or combines the Common Stock; (ii) there shall be any Reorganization Event; (iii) there shall be any voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (iv) there shall be any other event that would result in an adjustment pursuant to this Section 7 in the Exercise Price or the number of Warrant Shares that may be purchased upon the exercise hereof; the Company will cause to be mailed to the Holder, at least twenty days before the applicable record or effective date, as applicable, for the action hereinafter specified, a notice stating (A) the date as of which the holders of Common Stock of record entitled to receive any such dividends or distributions is to be determined, or (B) the date on which any such subdivision, combination, Reorganization Event, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record will be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such Reorganization Event, dissolution, liquidation or winding-up. 5 6 (g) Failure to Give Notice. The failure to give the notice required by Section 7(f) hereof or any defect therein shall not affect the legality or validity of any dividend or distribution, subdivision, combination, Reorganization Event, dissolution, liquidation or winding-up or the vote upon any such action. Section 8. Officers' Certificate. Whenever the number of Warrant Shares that may be purchased on exercise of this Warrant or the Exercise Price is adjusted as required by the provisions of Section 7 hereof, the Company will forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and at the office of its agent an officers' certificate showing the adjusted number of Warrant Shares that may be purchased at the Exercise Price on exercise of this Warrant and the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the Chief Executive Officer, President or Chief Financial Officer of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder. The Company shall, promptly after each such adjustment, cause such certificate to be mailed to the Holder. Section 9. Warrant Register. The Company will register this Warrant in the Warrant Register in the name of the record holder to whom it has been distributed or assigned in accordance with the terms hereof. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise hereof or any distribution to the Holder and for all other purposes, and the Company shall not be affected by any notice to the contrary. Section 10. Representations and Warranties of the Company. The Company hereby represents and warrants to the Initial Holder as of the date of this Agreement as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to execute and deliver this Warrant and to perform its obligations hereunder. (b) This Warrant has been duly authorized, executed and delivered by the Company, and constitutes its valid and legally binding obligation, enforceable in accordance with its terms except (i) as limited by any applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. (c) The Warrant Shares have been duly authorized and reserved for issuance in accordance herewith, and, upon issuance in accordance with the terms hereof, will be validly issued, fully paid and nonassessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free of all preemptive rights. Section 11. Representations and Warranties of each Holder. The Holder hereby represents and warrants that: (a) Purchase Entirely for Own Account. This Warrant and the right to acquire the Common Stock issuable upon exercise of the Holder's rights contained herein will be acquired for investment for the Holder's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Holder has no present intention of selling, granting any participation in, or otherwise distributing the same. The Holder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any 6 7 third person, with respect to this Warrant or any of the shares of Common Stock issuable upon exercise of the Holder's rights contained herein. (b) Investment Experience. The Holder (i) possesses sufficient knowledge and experience in financial and business matters (including experience with investments of a similar nature) to be capable of evaluating the merits and risks of an investment in the Company and (ii) has adequate net worth and means of providing for its current needs and personal contingencies to sustain a complete loss of its investment in the Company and has no need for liquidity in its investment in the Company. (c) Access to Information. The Holder acknowledges that (i) it has been furnished or been afforded access to information describing the Company, the terms of an investment in the Company, the Company's past, present and anticipated future activities and any other matters the Holder has deemed relevant to its decision to make an investment in the Company; (ii) it has been provided an opportunity to obtain additional information concerning the Company, the Company's past, present and anticipated future activities and any other matters the Holder has deemed relevant to its decision to make an investment in the Company; and (iii) it has been given the opportunity to ask questions of, and receive answers from the Company concerning the Company, the Company's past, present and anticipated future activities and any other matters the Holder has deemed relevant to its decision to make an investment in the Company. (d) Accredited Investor. The Holder is an "accredited investor", as that term is defined in Rule 501 of Regulation D as promulgated under the Act. (e) Restricted Securities. The Holder understands that this Warrant and the shares of Common Stock issuable upon exercise hereof have not been registered under the Act nor registered or qualified under state securities laws (including the securities laws of its state of residence) by reason of specific exemptions therefrom, which exemptions depend upon, among other things, the bona fide nature of Holder's investment intent as expressed herein. The Holder understands that this Warrant and any shares of Common Stock issued upon exercise hereof must be held indefinitely unless such securities are subsequently registered under the Act and all applicable state securities laws and regulations or an exemption from such registration or qualification is available, and that the Company is under no obligation to register or qualify such securities. (f) Restriction on Sale of Common Stock. The Holder agrees that the Holder, together with its Affiliates, will not, in any 90-day period, sell, contract to sell or otherwise sell, dispose of, loan, pledge or grant any rights with respect to (or, with respect to any of the foregoing, offer to do so), except, in any such case, to one or more Affiliates of the Holder, more than 250,000 shares of the Common Stock (subject to adjustment pursuant to Section 7). "Affiliate" means an entity that is a wholly owned subsidiary of the Holder Section 12. Successors. All of the provisions of this Warrant by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and assigns. Section 13. Headings. The headings of sections of this Warrant have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. Section 14. Amendments. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company. 7 8 Section 15. Notices. Unless otherwise provided in this Warrant, any notice or other communication required or permitted to be made or given to any party hereto pursuant to this Warrant shall be in writing and shall be deemed made or given if delivered by hand, on the date of such delivery to such party or, if mailed, on the fifth day after the date of mailing, if sent to such party by certified or registered mail, postage prepaid, addressed to it (in the case of a Holder) at its address in the Warrant Register or (in the case of the Company) at its address on the signature page hereto, or to such other address as is designated by written notice, similarly given to each other party hereto. Section 16. Governing Law. This Warrant shall be governed by and construed under and in accordance with the laws of the State of Washington without giving effect thereof to the principles of conflict of laws. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8 9 Section 17. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together will constitute one instrument. IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed and attested by its duly authorized officer and to be dated as of July 30, 2000. drugstore.com, inc. By: /s/ DAVID ROSTOV --------------------------------- Name: David Rostov ------------------------------- Title: Chief Financial Officer ------------------------------ 13920 SE Eastgate Way Suite 300 Bellevue, WA 98005 Fax:425-372-3808 Attn: General Counsel ACCEPTED AND AGREED: Amazon.com, Inc. By: /s/ MARK BRITTO ------------------------------------- Name: Mark Britto ----------------------------------- Title: Senior Vice President, Marketing & Cross-Site Merchandising ---------------------------------- 1200 S. 12th, Ste. 1200 Seattle, WA 98144 Attn: General Counsel 9 10 EXERCISE FORM 1. The undersigned, _______________, hereby irrevocably elects to purchase _____ shares of Common Stock pursuant to the terms of the attached Warrant and [ ] hereby makes payment of $__________ in payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any, or [ ] tenders the attached Warrant for cancellation to the extent necessary to effect the payment therefor in accordance with the net exercise provision of Section 2 (b) of the attached Warrant. 2. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned. 3. The undersigned represents it is acquiring the shares of Common Stock solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof and that such acquisition is in compliance with Section 4 and Section 5 of the Warrant. The undersigned further confirms and acknowledges the investment representations and warranties previously made to the Company in Section 11 of the Warrant with respect to the shares being acquired upon exercise hereof. Date: , ------------ --- ----------------------------------- [Signed] ------------------------------------ [Print Name of Holder] ------------------------------------ [Street Address] ------------------------------------ [City and State] 10 11 WARRANT ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned, _______________ ("Assignor"), hereby sells, assigns and transfers unto Name: ("Assignee") ----------------------------- (Please type or print in block letters.) Address: ----------------------------------- ----------------------------------- This Warrant and all rights evidenced thereby and does hereby irrevocably constitute and appoint the Company and any of its officers, secretary, or assistant secretaries, as attorneys-in-fact to transfer the same on the books of the Company, with full power of substitution in the premises. Date: , -------------- ----- ----------------------------------- Name of Holder: Title: In the presence of: --------------- Note: The signature of this Warrant Assignment must correspond to the name as it appears on the face of this Warrant. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. 11 EX-5 6 ex5.txt EXHIBIT 5 1 EXHIBIT 5 LOCKUP AGREEMENT July 30, 2000 drugstore.com, inc. 13920 SE Eastgate Way, Suite 300 Bellevue, WA 98005 Dear Sirs and Mesdames: The undersigned understands that drugstore.com, inc., a Delaware corporation (the "Company") and the Purchasers listed on Schedule I thereto (the "PURCHASERS") have entered into a Stock Purchase Agreement, dated as of July 30, 2000 (the "PURCHASE AGREEMENT") providing for the purchase (the "PURCHASE") by the Purchasers of shares (the "SHARES") of Common Stock, $0.0001 par value per share, of the Company (the "COMMON STOCK"). To induce the Purchasers to enter into the Purchase Agreement, the undersigned hereby agrees that, without the prior written consent of the Company, it will not, during the period commencing upon the date of this agreement and ending 180 days after the date of the effectiveness of the Registration Statement (as defined in the Purchase Agreement), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (a) transactions relating to shares of Common Stock or other securities acquired in open market transactions after the completion of the Purchase; (b) a bona fide gift or gifts to the undersigned's immediate family, provided that the donee or donees thereof agree in writing to be bound by the terms of this agreement; (c) a distribution to the limited partners or stockholders of the undersigned after the date of the Purchase Agreement, provided that the distributees thereof agree in writing to be bound by the terms of this agreement; (d) a transfer to any trust for the benefit of the undersigned or the undersigned's immediate family, provided that the trustee of the trust agrees in writing, on behalf of the trust, to be bound by the terms of this agreement, (e) a transfer to an affiliate of the undersigned, provided that such affiliate agrees in writing to be bound by the terms of this agreement or (f) the transfer of an aggregate of 1,066,667 shares of Common Stock owned by the undersigned. If the donor or transferor in (b), (c) or (d) above is a reporting person subject to Section 16(a) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT"), any gifts or transfers made in accordance with this paragraph shall not require such person to, and such person shall not voluntarily, file a report of such transaction on Form 4 under the Exchange Act. As used herein, the term "immediate family" shall mean the undersigned's spouse or lineal descendants or ancestors. The obligations of the undersigned pursuant to this letter agreement shall terminate immediately upon the termination of the Purchase Agreement in accordance with its terms. Very truly yours, AMAZON.COM, INC. /s/ MARK BRITTO ---------------------------------------- (Signature) Print Name: Mark Britto, Vice President ---------------------------- P.O. BOX 81226 ---------------------------------------- (Address) SEATTLE, WA 98108-1226 ---------------------------------------- EX-6 7 ex6.txt EXHIBIT 6 1 EXHIBIT 6 VOTING AGREEMENT July 30, 2000 The Purchasers listed on Schedule I (the "PURCHASERS") to the Stock Purchase Agreement, dated as of July 30, 2000, among The Purchasers and drugstore.com, inc. (the "PURCHASE AGREEMENT") The Purchasers listed on Schedule I (the "PURCHASERS") to the Series A Preferred Stock Purchase Agreement, dated as of July 30, 2000, among the Purchasers and drugstore.com, inc. (the "PURCHASE AGREEMENT") Dear Sirs and Mesdames: The undersigned is a holder of common stock, par value $0.0001 per share (the "COMMON STOCK"), of drugstore.com, inc. (the "COMPANY"). The undersigned hereby agrees that it shall vote all of its shares of Common Stock at the Stockholder Meeting (as defined in the Purchase Agreement) in favor of the conversion of the Company's Series A Preferred Stock, par value $0.0001 per share, into Common Stock as contemplated by the Purchase Agreement and in accordance with the provisions of the Certificate of Designations of the Series A Preferred Stock attached to the Purchase Agreement as Exhibit B. The obligations of the undersigned pursuant to this letter agreement shall terminate immediately upon the termination of the Purchase Agreement in accordance with its terms. Very truly yours, AMAZON.COM, INC. /s/ MARK BRITTO ---------------------------------------- (Signature) Print Name: Mark Britto, Vice President ---------------------------- P.O. BOX 81226 ---------------------------------------- (Address) SEATTLE, WA 98108-1226 ---------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----