CABLE ADVERTISING AGREEMENT
This Cable Advertising Agreement (the "Agreement") is made effective as of
May 19, 1999 (the "Effective Date") between Vulcan Ventures Incorporated, a
Washington corporation ("Vulcan"), and drugstore.com, Inc., a
Delaware corporation ("Company").
Concurrently with the signing of this Agreement, Vulcan has agreed to
purchase a Convertible Promissory Note of the Company in the amount of
$40,000,000.85 (the "Note"). As a condition to purchasing the Series D Preferred
Stock of the Company, Vulcan and the Company have agreed that Vulcan shall make
available to the Company free local cable advertising inventory from Vulcan's
affiliated cable company, Charter Communications Communications Holdings LLC or
its subsidiaries ("Charter").
In consideration of the mutual promises and covenants contained herein, and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, Vulcan and Company hereby agree as follows:
1. Dollar Value
Vulcan shall, through Charter, provide $5,000,000, in the aggregate, of
Inventory (as defined below) distributed ratably over the term or as mutually
agreed by the Company, Vulcan and Charter.
This Agreement will commence on the date first appearing above and will
continue in effect for three years unless earlier terminated pursuant to Section
3 of this Agreement.
The Company can terminate this Agreement if Vulcan materially breaches any
of its obligations under the Agreement and fails to cure such breach within 30
days after the Company gives Vulcan written notice of the breach.
Vulcan may stop performing under this Agreement if and for so long as the
Company is in default under the Note. This Agreement will automatically
terminate upon termination or repayment of the Note; provided however, that this
Agreement shall survive any conversion of the Notes into equity securities.
4. Advertising Plan, Local Markets and Specific Inventory
Vulcan and the Company will use reasonable efforts to facilitate
communication between the Company's and Charter's respective management to
establish an advertising plan within 90 days of the effective date of this
Agreement. Vulcan, Charter and the Company will mutually agree upon the local
markets in which the advertisements will be aired and the specific advertisement
be allocated to the Company under this Agreement. The advertising plan,
including agreement on the local markets in which the advertisements will be
aired and the specific advertising inventory to be allocated to the Company
under this Agreement will hereinafter be referred to as the "Inventory." Such
Inventory will be valued at the amount that it would be offered in a comparable,
arms-length transaction to a third party by Charter.
5. Liquidated Damages
In the event that Vulcan materially breaches any of its obligations under
this Agreement and the Company properly terminates the Agreement pursuant to
Section 3 of this Agreement, then Vulcan will, upon written notice from the
Company, pay to the Company as liquidated damages, an amount to be mutually
agreed by Vulcan and the Company, in full satisfaction of Vulcan's obligations
hereunder. Following execution of this Agreement, Vulcan and the Company will
enter into good faith negotiations with the objective of determining the amount
of such liquidated damages within 90 days after the effective date of this
6. Change of Control
If Vulcan's equity ownership in Charter is reduced below 50%, Vulcan shall
use its best efforts to ensure that the Company will receive the Inventory. If
Vulcan is unsuccessful, it shall pay to the Company the fair market value of the
Inventory not yet deployed on behalf of the Company.
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
8. Entire Agreement
This Agreement and the documents referred to herein constitute the entire
agreement between the parties 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 cancelled.
Signature page follows
In witness whereof, the parties have duly entered into this Cable Advertising
Agreement as of the Effective Date.
VULCAN VENTURES INCORPORATED DRUGSTORE.COM, INC.
DS Pharmacy, Inc.