[drugstore.com, inc. logo]
411 108th Ave NE " Suite 1400 "
Bellevue, Washington 98004 " Telephone 425.372.3200 " Facsimile
425.372.3800
January 30, 2007
Mr. Robert A. Barton
c/o drugstore.com
411 108th Ave. NE, Suite
1400
Bellevue, WA 98004
Re.
Transition and Separation Agreement
Dear Bob:
This letter agreement (this
"Agreement") will confirm our understanding with regard to your
decision to transition out of your current role as an employee and
Chief Financial Officer ("CFO") of drugstore.com and its
subsidiaries (the "Company").
-
Transition.
Subject to the terms set forth
herein, you will remain a full time employee of the Company and
serve as its CFO through the earlier of (a) April 30,
2007, (b) the date on which your successor commences his or
her employment with the Company as its CFO, or (c) such other
date as may be mutually agreed upon in writing by you and the
Company (the "Transition Date"). The Company will endeavor to
identify and hire a qualified successor before April 30,
2007.
-
Role through the Transition
Date. From the date
hereof until the Transition Date, you will continue to
conscientiously and diligently perform the duties of CFO of the
Company on a full-time basis. The Company may allocate some of your
job responsibilities to others. However, subject to the foregoing,
the Company will rely upon you to continue to function as its CFO
until a successor is available to assume that role.
-
Role through the Separation
Date. Subject to the
terms set forth herein, following the Transition Date and through
the Separation Date (defined below) you will remain available to
assist the Company, as it may request, in transitioning your
current duties to your successor(s) or in serving in an advisory
capacity to me, the Company's CEO. As used above "Separation Date"
means the earlier of (a) September 30, 2007, (b) the
date on which you begin providing substantial, compensated services
to any individual or entity other than the Company, whether as an
employee or independent contractor, or (c) such other date as
may be mutually agreed upon in writing by you and the
Company.
-
Salary and benefits.
From the date hereof through your
Separation Date, subject to the terms set forth herein, the Company
will continue to pay your regular base salary and you will continue
to be eligible for all benefits and perquisites that you currently
enjoy; provided, however, that you will not be eligible for any new
equity grants or other new incentive bonus
opportunities.
-
Bonus. You are entitled to receive your bonus for the
Company's fiscal year ending December 31, 2006. Further, with
respect to the fiscal year ending December 31, 2007, subject
to (i) your compliance with the terms of this Agreement and
any other agreement with the Company by which you are bound, and
(ii) the discretion of the Company's CEO, the Company will pay
you in 2008 an amount equal to the bonus you would have been
eligible to receive for the fiscal year based on your current,
regular base salary and on full year results, prorated for period
through your Separation Date. Any payment of such bonus will be
made to you at the same time in 2008 as bonuses are paid to other
senior executives of the Company for the fiscal year ending
December 31, 2007.
-
Equity compensation
. As long as you remain employed by
drugstore.com, stock options of the Company that have been granted
to you as of the date hereof will continue to vest through your
Separation Date. Assuming successful discharge of your duties
through the Separation Date, the Company will extend to
December 31, 2007 the time period for exercising any vested
stock options.
-
Accrued obligations.
You will be paid for accrued, unused
vacation dates, if any, and any other accrued obligations of the
Company (e.g., unpaid base salary, unreimbursed business expenses,
etc.) after your Separation Date in a manner consistent with the
Company's then applicable policies for such payments to terminating
employees.
-
Severance and Release
Agreement. As a
condition of receiving the above benefits, you agree to execute on
or near the Separation Date, a Severance and Release Agreement
substantially in the form attached.
-
Integration.
While we will honor our commitments
to you under this Agreement in good faith, nothing in this
Transition and Separation Agreement is intended to alter your
at-will employment status at drugstore.com. This Transition and
Separation Agreement represents the entire understanding between
you and the Company concerning the matters described herein, and
supersedes all prior communications. It can only be modified
expressly in a writing signed by both parties.
On behalf of the Company, I wish
to thank you for the many contributions you have made to
drugstore.com over the years. I also appreciate your willingness to
enable the Company to effect an orderly transition. I look forward
to continuing to work with you through the transition and wish you
good luck in your future endeavors.
Sincerely,
drugstore.com, inc.
/s/
Dawn G. Lepore
By:
Dawn G. Lapore
Title:
President and CEO; Chairman of the Board
Agreed to and
accepted:
/s/ Robert A. Barton
By:
Robert A. Barton
Date:
January 31, 2007
Attachment to Letter to Robert A.
Barton dated January 30, 2007
SEVERANCE AND RELEASE
AGREEMENT
THIS SEVERANCE AND RELEASE
AGREEMENT (the "Agreement") is entered into by Robert A. Barton
(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
.
RECITALS
WHEREAS, Employee has been
employed by the Company as Vice President, Finance &
Operations, Chief Financial Officer and Treasurer; and
WHEREAS, the Employee wishes to
terminate his employment with the Company, effective
; and
WHEREAS, the Employee is hereby
advised of his right to consult an attorney prior to signing this
Agreement. Employee has either consulted an attorney of his choice
or voluntarily elected not to consult legal counsel, and
understands that he is waiving all potential claims against the
Company arising prior to the effective date of this Agreement and
relating to his employment in any way; and
WHEREAS, Employee acknowledges
that he 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 he wished to sign this
Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration
of the foregoing recitals and the mutual promises contained below,
it is agr
