Skip to main content
Find a Lawyer

Employment Agreement - Intelligent Systems for Retail Inc., Webvan Group Inc. and Mark Zaleski

December 14, 1998

Mark Zaleski
Jan Moorkensstraat, 48
B-2600 Berchem (Antwerp) - Belgium

Dear Mark:

We are very pleased to extend you an offer to serve as the President of Webvan -
Bay Area and COO for Intelligent Systems for Retail, Inc. ("ISR").

We at ISR believe that your skills, experience, and personal attributes will
enable us to be a leader in the development of this internet commerce company.

This letter serves as an offer of employment to you from ISR. The terms of the
offer supersede all prior oral and written communications between you and ISR or
any representative thereof. If the terms below are acceptable, please sign and
return one copy of the letter to accept our offer of employment.


Your job title will be President of Webvan - Bay Area & COO of ISR.


Your first date to report to work at ISR, 1241 E. Hillsdale Blvd., Suite 210,
Foster City, CA 94404, will be on December 14, 1998.


You will report to Louis H. Borders, President & CEO of ISR. You will have full
P&L responsibilities for Webvan operations.

You will also be a member of the Executive Team with responsibility for
determining the long term direction and goals of ISR, and for developing
strategies and tactics to meet those goals, along with all other duties as



Your salary shall be $25,000.00 per month. This salary shall be paid bi-weekly.
Your salary shall be reviewed each January on an annual basis in accordance with
review procedures established by the ISR Associate Handbook.

Within 90 days of your Commencement Date, by written notice to ISR, you may
elect to reduce your future salary to $20,833.33 per month from $25,000.00 per
month. If you make such election, you will be granted an additional option to
purchase 50,000 shares of Common Stock at an exercise price equal to the fair
market value (not to exceed 15% of the Preferred Stock price) of the Common
Stock at the date of grant. The vesting schedule and other terms of the option
will be the same as those for your 631,560 share grant.


In addition, ISR will pay you $4,000.00 per month, included as part of your base
salary to help cover miscellaneous monthly expenses.


You shall be granted an incentive stock option (the "Option") to purchase
631,560 shares of ISR's common stock (based on 42,104,000 fully deluded shares
outstanding as of September 2, 1998) at an exercise price based on the company's
fair market value, which will be determined by the Board of Directors as of your
employment commencement date. The Option shall vest at the rate of 25% of the
shares subject to Option at the end of twelve months and at the rate of 6.25% of
the shares subject to Option each three months thereafter, so that 100% of the
Option shall be vested after four years, subject to your continued full-time
employment with the Company as of each vesting date. Except as specified herein,
the Option is in all respects subject to the terms and conditions of the 1997
Stock Plan (the "Stock Plan") and standard form of option agreement (the "Option
Agreement"). ISR agrees that it will, from time to time, review in good faith
your equity ownership in ISR for the purpose of determining whether the dilutive
effect of stock awards and stock sales by ISR on your ownership position
justifies additional option grants to you.


Except as provided below, you will receive the standard benefits for full-time
Associates at ISR. These standard benefits are listed and explained in the ISR
Associate Handbook, administered via TriNet Employer Group. A copy of the
policies and benefits section of the handbook will be provided for your
information. Notwithstanding the foregoing, you will be entitled to annual
vacation of four (4) weeks per year. You



agree and acknowledge that you will not be eligible for a sabbatical under the
Company's sabbatical program.

In addition, ISR makes available a 401(k) plan to all employees at the beginning
of the month following Employee's date of hire. Eligible Employees may elect to
contribute up to 15% of their salary to the 401(k) plan, subject to the legal
maximum per year. The company will match 100% of the first $500 and 25%
thereafter up to a maximum Employer match of $2,000 per year of qualifying
Employee contributions. Further details will be provided in the 401(k) Plan
Handbook at the time of enrollment.


Upon accepting our offer of employment, ISR will loan you up to $200,000 to be
used as the down payment on a house in the Bay Area. In order to ensure that the
loan can be tax and interest free, you agree to sign a loan agreement which will
include such terms as necessary to qualify the loan as an "Employee-Relocation
Bridge Loan" (as that term is defined under proposed Treasury Regulation
1.7872-5(c)(1)(ii)). The loan will become due and payable on the earlier of (i)
one year after the date upon which the loan is made by the Company, or (ii) 15
days after the date of close of your current residence.

Upon the close on the sale of your current residence, ISR will loan you an
amount, up to $200,000. This loan will have a term of 36 months and have an
interest rate (compounded semi-annually) equal to the minimum applicable federal
rate (as published by the Internal Revenue Service). The principal and interest
on the loan are due and payable at the end of the loan term. However, both the
principal and interest may be prepaid by you with no penalty.


You will receive a relocation allowance of up to $75,000.00. This relocation
allowance shall not exceed $75,000.00 and is based on actual expense receipts.
This allowance includes all closing costs and moving, travel (and family travel)
and lodging (prior to moving) expenses, as well as all residential deposit fees
in your current location.


ISR is an equal-opportunity employer, and will not discriminate against its
employees or applicants in any employment decision or practice because of race,
color, religion, sex, national origin, marital status, pregnancy, age, ancestry,
physical handicaps, or medical condition.




You will be required, as a condition of employment, to sign a Proprietary
Information Agreement. A sample Proprietary Information Agreement is attached


All ISR Associates are expected to devote their full energies, efforts, and
abilities to their employment. Accordingly, full-time Associates are not
permitted to accept outside employment on a full-time or part-time basis without
first obtaining their supervisor's written approval.


The relationship between you and ISR will be for an unspecified term and will be
considered at will. No employment contract is created by the existence of any
policy, rule or procedure in the ISR Associate Handbook, any ISR document, or
any verbal statements made to you by representatives of ISR. Consequently, the
employment relationship between you and ISR can be terminated at will, either by
you or ISR, with or without cause or advance notice.

In the event that your employment with ISR is terminated (i) by the Company
without "cause" or (ii) by you for "good reason" (as such terms are defined
below), ISR agrees that you will receive six months salary and benefits as
severance. In addition to this six month severance package, you will continue to
receive full salary and benefits for a period of up to another 12 months or
until subsequent employment is obtained. In addition, in such event the unvested
portion of the Option shall vest and become exercisable to an additional extent
as though you had remained employed for a period of 12 months following such

For purposes of this offer of employment, the terms "cause" and "good reason"
shall be defined as follows:

"Cause" shall mean: (i) willful and continued failure to perform substantially
all of your duties with the Company (other than a failure resulting from your
incapacity due to physical or mental illness), which failure has continued for a
period of at least twenty (20) days after a written notice of demand for
substantial performance has been delivered to you specifying the manner in which
you have failed to substantially perform; (ii) willful engagement in conduct
with regard to the Company or its business which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or (iii) your conviction of,
or pleading of nolo contendere to a felony (other than solely a traffic
violation, but not excluding other felonies resulting from such violation). No
act, nor failure to act, on your part shall be considered "willful" unless you
have acted or failed to act, with an absence of good faith and without a
reasonable belief that your



action or failure to act was in the best interests of the Company. Any
termination for cause shall procedurally be done as follows: a termination for
cause shall be evidenced by a resolution adopted in good faith by two-thirds
(2/3) of the Board of Directors of the Company (the "Board") that you performed
one of the acts specified above; provided, however, that no termination of your
employment shall be for cause unless (x) there shall have been delivered to you
a copy of a written notice setting forth the acts (or failures to act) by you
that give rise to a finding of cause and (y) you shall have been provided an
opportunity on at least seven (7) days' notice to be heard by the Board (with
the assistance of you if you so desire). For this purpose, the term "Company"
shall include the Company and its subsidiaries.

"Good Reason" shall mean the occurrence of any of the following without your
express written consent:

        (i) the assignment to you of any duties materially inconsistent with you
        current position, duties, responsibilities or status with the Company,
        or a material change or a substantial diminution in your then current
        authority, reporting responsibilities, titles or offices.

        (ii) a reduction by the Company in your base salary, unless such
        reduction is part of and consistent with a good faith management-wide or
        Company-wide cost cutting program, and then only if the percentage of
        your reduction is no greater than that of the other management

        (iii) a relocation of you to an office located anywhere other than
        within fifty (50) miles of your primary residence or away from the
        Company's executive offices, except for required travel on the business
        of the Company or any of its subsidiaries to an extent substantially
        consistent with your then current business travel obligations;

        (iv) the failure by the Company or any of its subsidiaries to continue
        in effect any compensation plan or benefit plan provided by the Company
        or any of its subsidiaries in which you are then participating, unless
        there shall have been instituted a replacement or substitute plan
        providing comparable benefits or unless such failure is part of and
        consistent with a good faith benefit discontinuance applicable to all of
        the management personnel of the Company and then only if the scope of
        the discontinuance with respect to you is no greater than that of the
        other management personnel;

        (v) the failure of the Company to obtain (and deliver to you) an
        agreement from any successor to the Company to assume and agree to
        perform this Agreement. The Company shall use its best efforts to
        require any successor (whether direct or indirect, by purchase, merger,
        consolidation or otherwise) to all



        or substantially all of the businesses or assets of the Company to
        expressly assume and agree to perform this Agreement;

        (vi) the material breach by the Company of any material provision of
        this offer of employment that remains uncured for thirty (30) days after
        written notice thereof has been given by you to the Company; or

        Any notice of termination of employment by you for "good reason" shall
        be given within one hundred eighty (180) days after the occurrence of
        the "good reason."


ISR has an Associate Handbook. The policies in the Associate Handbook govern the
relationship between ISR and its Associates. The policies are hereby
incorporated by reference. Acceptance of this offer binds the offeree to follow
the policies.

We look forward to your favorable consideration of this offer and to the
commencement of a long and rewarding relationship.



Louis Borders
ISR, President & CEO

I hereby acknowledge that I have reviewed the terms and conditions of this offer
of employment and have had the opportunity to consult with counsel. I hereby
accept the offer of employment upon the terms and conditions contained in this

Accepted: /s/ MARK X. ZALESKI                             Date:
         ---------------------------                           -----------------
              Mark Zaleski




As an additional guarantee to this Offer Letter, I, Louis H. Borders, hereby
personally guarantee the following: all loans specified in the Housing Loans of
this Offer Letter, and the severance pay as specified in the second paragraph of
the At-Will Employment section.

                                            /S/ LOUIS H. BORDERS
                                            --------------------------  --------
                                            Louis H. Borders              Date

Was this helpful?

Copied to clipboard