Document:

Exhibit 10.13 (Form of Pledge)

                                                                                                                                 Exhibit
      10.13

    
 

    PLEDGE

     

    WHEREAS
      QUEST
      CANADA CORP. (the
      "Corporation"),
      a
      corporation incorporated under the laws of the Province of Alberta, has executed
      a debenture dated as of the date of this Pledge payable to the lenders, as
      more
      particularly described in Schedule "A" attached hereto (the "Lenders")
      in the
      principal amount of FIFTEEN MILLION UNITED STATES DOLLARS (US$15,000,000.00)
      (hereinafter referred to as the “Debenture”),
      the
      Corporation, for valuable consideration, hereby covenants and agrees with the
      Lender as follows:

     

    
      	1.     	
              The
                Debenture is hereby assigned, transferred, pledged, deposited,
                hypothecated and delivered to and in favour of the Lenders as general
                and
                continuing collateral security for the payment and fulfillment of
                all
                debts, liabilities and obligations, present and future, direct or
                indirect, absolute or contingent, matured or not, extended or renewed,
                of
                the Corporation to the Lenders of whatsoever nature and kind and
                whether
                arising from any agreement, guarantee or other dealings between the
                Lenders and the Corporation or from any agreement or dealings between
                the
                Lenders and any third party by which the Lenders may be or become
                in any
                manner whatsoever a creditor of the Corporation or howsoever otherwise
                arising and whether the Corporation be bound alone or with another
                or
                others and whether as principal or surety including without limitation
                any
                indebtedness, liabilities, and obligations pursuant to the Debenture,
                or
                any promissory notes granted from time to time in connection therewith
                (collectively referred to as the "Liabilities").

            

    

     

    
      	2.     	
              In
                the event of any default in payment of any part of the monies secured
                under the Debenture or in the observance or performance of any other
                obligation of the undersigned to the Lenders, including those contained
                in
                the Debenture, the Lenders may at any time during the continuance
                of any
                such default realize upon the Debenture by sale, transfer or delivery,
                or
                exercise and enforce in accordance with the terms of the Debenture
                all the
                rights and remedies of a holder of the Debenture as if the Lenders
                were
                absolute owner thereof, without notice to or control by the undersigned,
                and any such remedy may be exercised separately or in combination
                and
                shall be in addition to and not in substitution for any other rights
                of
                the Lenders however created, provided that the Lenders shall not
                be bound
                to exercise any such right or
                remedy.

            

    

     

    
      	3.     	
              The
                records of the Lenders as to payment of the debts, liabilities and
                obligations being in default or of any demand in payment having been
                made
                will be, in the absence of manifest error, prima facie evidence of
                such
                default or demand.

            

    

     

    
      	4.     	
              The
                Lenders may grant extensions of time and other indulgences, take
                and give
                up securities, accept compositions, grant releases and discharges
                and
                otherwise deal with the Corporation and all other parties and securities
                as the Lenders may see fit, all without prejudice to the debts,
                liabilities and obligations of the Corporation under the Debenture,
                or the
                Lenders' rights in respect of the Debenture and the security thereby
                and
                hereby constituted.

            

    

     

    
      	5.     	
              The
                proceeds of the Debenture may be applied by the Lenders on account
                of such
                part of the Liabilities as it chooses without prejudice to the Lenders'
                claim upon the Corporation for any
                deficiency.

            

    

     

    
      	6.     	
              Payment
                by the Corporation to the Lenders of interest as may be provided
                for in
                agreements between the Corporation and the Lenders for any period
                in
                respect of the debts, liabilities and obligations of the Corporation
                to
                the Lenders shall be deemed to be payment in full satisfaction of
                any
                interest payment for the same period provided for under the terms
                of the
                Debenture.

            

    

     

    
      	7.     	
              Notwithstanding
                the principal amount of the Debenture and
                the interest rate provided therein on such principal amount, the
                obligations secured by the deposit hereof to the Lenders pursuant
                hereto
                shall not exceed the amount of the
                Liabilities.

            

    

     

    
      	8.     	
              During
                the currency of the Debenture and so long as the Debenture is held
                as
                continuing security, the Corporation will duly observe and perform
                all its
                covenants and agreements in favour of the Lenders contained in the
                Debenture and in all agreements between the Corporation and the
                Lenders.

            

    

     

    
      	9.     	
              The
                Lenders may charge on their own behalf and pay to others reasonable
                sums
                for services rendered in realizing, enforcing, collecting, selling,
                transferring, delivering or obtaining payment of or under the Debenture,
                and may deduct the amount of such charge and payments from the proceeds
                thereof. The balance of such proceeds may be held in lieu of the
                Debenture
                and may, as and when the Lenders think fit, be applied on account
                of such
                parts of the Liabilities as the Lenders deem
                appropriate.

            

    

     

    
      	10.     	
              The
                Debenture and the security hereby constituted are in addition to
                and not
                in substitution for any other security now or hereafter held by the
                Lenders and shall not operate as a merger of any of the debts, liabilities
                and obligations of the Corporation to the Lenders (including without
                limitation under any deed, guarantee, indemnity, contract, draft,
                bill of
                exchange, promissory note or other negotiable instrument evidencing
                same)
                or suspend the fulfillment of, or affect the rights, remedies or
                powers of
                the Lenders in respect of any present or future debts, liabilities
                or
                obligations of the Corporation to the Lenders or any securities now
                or
                hereafter held by the Lenders for the payment or fulfillment thereof,
                and
                no judgment recovered by the Lenders shall operate by way of merger
                or in
                any way affect the security of the
                Debenture.

            

    

     

    
      	11.     	
              This
                Pledge shall be governed by and interpreted in accordance with the
                laws of
                the Province of Alberta and the laws of Canada applicable therein,
                and
                shall be treated as an Alberta contract. The Corporation irrevocably
                submits to the non-exclusive jurisdiction of the courts of the Province
                of
                Alberta, without prejudice to the rights of the Lenders to take
                proceedings in any other
                jurisdictions.

            

    

     

    
      	12.     	
              This
                pledge shall be binding upon the Corporation and its successors and
                assigns and shall enure to the benefit of the Lenders and their successors
                and assigns.

            

    

     

    IN
      WITNESS WHEREOF the Corporation has caused this agreement to be executed by
      its
      proper officer duly authorized in that behalf as of the _____ day of September,
      2005

     

    QUEST
      CANADA CORP.

    

    

    Per:
       
      ______________________________

    Name:
       
      Cameron
      King

    Title:
      President and Chief Executive Officer

    

    
      
        
          677966.v3 

        

        
        

      

      
        1

        
          

        

      

      
        
        

        - -

      

    

    SCHEDULE
      "A" ATTACHED TO AND FORMING PART OF THE PLEDGE GRANTED BY QUEST CANADA CORP.
      AND
      DATED THE ____ DAY OF SEPTEMBER, 2005

    

    

    
      	
              Names
                

              of
                Lenders

            	
              Addresses
                

              of
                Lenders

            
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

    

    

    
      
         

      

      
        2SEPARATION AGREEMENT AND RELEASE

SEPARATION AGREEMENT AND RELEASE

THIS SEPARATION AGREEMENT AND RELEASE (the "Agreement") is entered into by Kathy Gersch (hereinafter referred to as "Employee") and drugstore.com, its parent, affiliates, subsidiaries, officers, directors, and managers (hereinafter referred to as "drugstore.com" or "Employer").  The effective date of this Agreement is October 3, 2005.
RECITALS

WHEREAS, Employee was employed by the Company as Vice President, General Manager, & Chief Marketing Officer and most recently as the Vice President, Retail Over the Counter; and

WHEREAS, the Employee wishes to terminate her employment with the Company, effective October 14, 2005; but has agreed to assist the Company until December 31, 2005 to facilitate a smooth transition of this termination (the "Transition Period"); and  

WHEREAS, the parties wish to clarify and resolve any disputes that may exist between the Employee and drugstore.com arising out of her employment relationship; and 

WHEREAS, the Employee is hereby advised of her right to consult an attorney prior to signing this Agreement.  Employee has either consulted an attorney of her choice or voluntarily elected not to consult legal counsel, and understands that she is waiving all potential claims against the Company arising prior to the effective date of this Agreement and relating to her employment in any way; and 

WHEREAS, Employee acknowledges that she enters into this Agreement knowingly and voluntarily without coercion or duress from any source.  Employee has had a reasonable time in which to consider whether she wished to sign this Agreement.
AGREEMENTS

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises contained below, it is agreed as follows:
1.EMPLOYMENT AND OFFICES:  ENDING DATE AND RESPONSIBILITIES

The Company and Employee acknowledge and agree that Employee's employment with the Company and its affiliates, and her status as an officer, will terminate effective October 14, 2005 (the "Termination Date"); provided however that Employee will use best efforts to be available to consult with or perform small projects for the Company during the Transition Period.  Employee understands and agrees that this termination is effective with respect to all offices and positions she holds with the Company and any of its affiliates.  
2.BENEFITS FROM EMPLOYER

As consideration for the release of claims set forth below and other obligations under this Agreement:

drugstore.com will pay Employee separation payments up to an amount equivalent to her current base salary through December 31, 2005 (the "Separation Payments").  In addition, if any vice president receives a bonus for his or her performance during the 2005 Fiscal Year, Employee will be awarded a bonus at the discretion of the CEO.  All payments will be subject to customary tax withholdings and paid on regularly scheduled payroll dates after the effective date of this Agreement.  The Company will accelerate vesting on options that would have otherwise vested during the Transition Period.  The Company shall allow Employee to exercise vested option grants until March 31, 2006.  

drugstore.com has paid its portion of the medical and dental benefits insurance premium that Employee has been receiving as an employee of drugstore.com through October 31, 2005.   In addition, if Employee elects to continue coverage under COBRA, and in exchange for the promises contained in paragraph six below, drugstore.com will, through the end of December 2005 pay that portion of Employee's COBRA premium that corresponds to the same level of medical and dental benefits insurance coverage paid for by drugstore.com as of the date of Employee's termination (the "COBRA" Benefits").  Employee understands that Employee has the obligation to formally elect COBRA coverage if such coverage is desired and that drugstore.com may, at its discretion, reimburse Employee for COBRA payments or make COBRA payments directly on behalf of the Employee.  

The Employee's right to Separation Payments and COBRA Benefits will immediately cease if Employee earns any amount from employment, consulting or other performance of personal services through December 31, 2005.  Employee shall disclose to the Company if she receives (or has the right to receive) any such earnings.  

  
3.VALID CONSIDERATION

Employee and drugstore.com agree that the offer of Separation pay and benefits by drugstore.com to Employee described in the preceding paragraph is not required by drugstore.com's policies or procedures or by any pre-existing contractual obligation of drugstore.com or by any statute, regulation or ordinance, and is offered by drugstore.com solely as consideration for this Agreement.  In the event Employee fails to abide by the terms of this Agreement, drugstore.com may elect, at its option and without waiver of other rights or remedies it may have, not to pay or provide any unpaid Separation payments or benefits, and to seek to recover previously paid Separation pay.
4.STOCK OPTIONS

Except for the acceleration of vesting described in Section 2, Employee acknowledges and agrees that no shares will vest after her Termination Date.  
5.REAFFIRMATION OF CONFIDENTIALITY AND INVENTIONS AGREEMENT

Employee expressly reaffirms and incorporates herein as part of this Agreement the Confidentiality and Inventions Agreement, which Employee signed as part of her employment with drugstore.com, a copy of which is attached hereto as Exhibit A, which shall remain in full effect.  
6.RELEASE OF CLAIMS

Employee expressly waives any claims against drugstore.com (including, for purposes of this paragraph 6, all parents, affiliates, subsidiaries, officers, directors, stockholders, managers, employees, former employees, agents, investors, and representatives, predecessors and successors) and further releases drugstore.com (including its parents, affiliates, subsidiaries, officers, directors, stockholders, managers, employees, former employees, agents, investors, and representatives, predecessors and successors) from any claims, whether known or unknown, which existed or may have existed at any time up to the date of this Agreement, including claims related in any way to Employee's employment with drugstore.com or the ending of that relationship.  This release includes, but is not limited to, any claims for wages, bonuses, employment benefits, stock options, or damages of any kind whatsoever, claims arising out of any common law torts, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of wrongful discharge, any theory of negligence, any theory of retaliation, any theory of discrimination or harassment in any form, any legal restriction on drugstore.com's right to terminate employees, or any federal, state, or other governmental statute, executive order, or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964 as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C. Section 1981, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Washington Law Against Discrimination, or any other legal limitation on or regulation of the employment relationship.  Employee agrees to indemnify and hold drugstore.com harmless from and against any and all loss, costs, damages, or expenses, including, without limitation, reasonable attorneys' fees incurred by drugstore.com arising out of any breach of this Agreement by Employee or resulting from any representation made herein by Employee that was false when made.  Notwithstanding any other provision of this Agreement to the contrary, this waiver and release shall not apply to any claims by either party arising under that certain Indemnification Agreement between Employee and drugstore.com, and which is reaffirmed and incorporated herein as part of this Agreement.

Employee represents that Employee has not filed any complaints, charges or lawsuits against drugstore.com with any governmental agency or any court, and agrees that Employee will not initiate, assist or encourage any such actions, except as required by law.  Employee further agrees that if a commission, agency, or court assumes jurisdiction of such claim, complaint or charge against drugstore.com on behalf of Employee, Employee will request the commission, agency or court to withdraw from the matter. This clause does not prohibit employee from enforcing the terms of this Agreement.

Employee represents and warrants that she is the sole owner of the actual or alleged claims, rights, causes of action, and other matters which are released herein, that the same have not been assigned, transferred, or disposed of in fact, by operation of law, or in any manner and that she has the full right and power to grant, execute and deliver the releases, undertakings, and agreements contained herein.
7.NO ADMISSION OF WRONGDOING

This Agreement shall not be construed as an admission by either party of any wrongful act, unlawful discrimination, or breach of contract. Employer specifically disclaims any liability to or discrimination against Employee or any other person.
8.NONDISPARAGEMENT  

Employee agrees to refrain from making any derogatory or disparaging comments to the press or any individual or entity regarding drugstore.com's business or related activities or the relationship between the parties.    
9.RETURN OF PROPERTY

Employee confirms that Employee has returned to Employer all files, memoranda, records, credit cards, pagers, computers, computer files, passwords and passkeys, Card Keys, or related physical or electronic access devices, and any and all other property received from Employer or any of its current or former employees or generated by Employee in the course of employment.
10.BREACH OR DEFAULT 

Any party's failure to enforce this Agreement in the event of one or more events that violate this Agreement shall not constitute a waiver of any right to enforce this Agreement against subsequent violations.
11.SEVERABILITY

The provisions of this Agreement are severable, and if any part of it is found to be unlawful or unenforceable, the other provisions of this Agreement shall remain fully valid and enforceable to the maximum extent consistent with applicable law.  If any one or more of the provisions of this Agreement is for any reason held to be excessively broad as to duration, geographical scope, activity, subject or for any other reason, it will be construed by limiting it and reducing it, so as to be enforceable to the extent compatible with the applicable law as it then appears in order to carry out the intent of the provision to the greatest extent possible. 
12.ENTIRE AGREEMENT

This Agreement sets forth the entire understanding between Employee and drugstore.com and supersedes any prior agreements or understandings, express or implied, pertaining to the terms of Employee's employment with drugstore.com and the employment relationship.  Employee acknowledges that in executing this Agreement, Employee does not rely upon any representation or statement by any representative of drugstore.com concerning the subject matter of this Agreement, except as expressly set forth in the text of the Agreement.  No modification or waiver of this Agreement will be effective unless evidenced in a writing signed by both parties.
13.GOVERNING LAW

This Agreement will be governed by and construed exclusively in accordance with the laws of the State of Washington without reference to its choice of law principles.  Any disputes arising under this Agreement shall be brought in a court of competent jurisdiction in the State of Washington.
14.KNOWING AND VOLUNTARY AGREEMENT

Employee represents and agrees that Employee has read this Agreement, understands its terms and the fact that this Agreement releases any claims that Employee might have against Employer.  Further, Employee understands that Employee has the right to consult counsel of choice and has either done so or knowingly waived the right to do so, and enters into this Agreement without duress or coercion from any source.
15.OPPORTUNITY TO CONSIDER AND REVOKE AGREEMENT

Employee agrees that she has been encouraged to seek legal counsel to review this Agreement, has been provided the opportunity to consider whether to enter this Agreement, and has voluntarily chosen to enter the Agreement on this date.  Employee acknowledges that she  is voluntarily executing this Agreement, that she  has carefully read and fully understands all aspects of this Agreement, that she  has not relied upon any representations or statements not set forth herein or made by Employer's agents or representatives.

IN WITNESS WHEREOF, the parties have executed this Agreement. 

	

drugstore.com 

By:  /s/ Dawn G. Lepore

Its:   Chairman & CEO   

	

Kathy Gersch

/s/ Kathy Gersch

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