Exhibit 10.2

DRUGSTORE.COM, INC.

2008 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT- NOTICE OF GRANT

Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Company’s 2008 Equity Incentive Plan (the “Plan”).

Name (the “Participant”): _________________________

You have been granted              shares of Restricted Stock, subject to the
terms and conditions of the Plan and this Agreement. Additional terms of this
grant are as follows:

Date of Grant: ______________________

Grant Number: _____________________

Vesting Commencement Date: ________________________

Vesting Schedule*: Subject to any acceleration provisions contained in the Plan
or set forth in the Agreement, the Restricted Stock will vest and the Company’s
right to repurchase or reacquire the Restricted Stock will lapse in accordance
with the following schedule:

One-eighth (1/8th) of the Shares of Restricted Stock will vest on each six
(6) month anniversary of the Vesting Commencement Date, subject to Participant
continuing to be a Service Provider through each such date.

Notwithstanding the foregoing or anything in the Plan or this Agreement to the
contrary, if within twelve (12) months following a Change in Control,
Participant’s status as a Service Provider is terminated (i) by the Company
without Cause (as defined below) or (ii) by Participant for Good Reason (as
defined below), one hundred percent (100%) of the Shares of Restricted Stock
will immediately vest.

For purposes of this Agreement, “Cause” shall mean (a) Participant’s willful or
negligent failure to comply with the lawful directions of the Company; (b) gross
negligence or willful misconduct in the performance of Participant’s duties to
the Company, (c) commission of any act of fraud against the Company that results
in an injury to the Company other than a de minimus injury to the Company, or
(d) misappropriation of material property of the Company to the material
detriment of the Company.

For purposes of this Agreement, “Good Reason” means the occurrence of one or
more of the following, without Participant’s consent (a) the failure of the
Company to pay or cause to be paid to Participant his or her annual salary or
any other earned compensation when due; (b) the substantial reduction of
Participant’s annual salary; (c) a material diminution in Participant’s
authority, responsibilities, or duties; (d) relocation of Participant’s primary
work place for the Company to a location more than thirty-five (35) miles from
its current location; provided that such events shall constitute Good Reason
only if the Company fails to cure such event within a reasonable period of time
(not to exceed fifteen (15) business days) after receipt from Participant of
written notice of the event constituting Good Reason; provided, further, that
“Good Reason” shall cease to exist for an event on the 90th day following its
occurrence, unless Participant have given the Company written notice thereof
prior to such date.

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* Except as may be provided in the Restricted Stock Agreement, Participant will
not vest in the Restricted Stock unless he or she is a Service Provider through
the applicable vesting date(s). Important additional information on vesting and
forfeiture of the Restricted Stock covered by this grant is contained in the
attached Restricted Stock Agreement; please be sure to read the entire
agreement.

The Restricted Stock evidenced by this Notice of Grant is part of and subject in
all respects to the terms and conditions of the Plan (a copy of which has been
made available to you by the Company) and the attached Restricted Stock
Agreement (together with this Notice of Grant, the “Agreement”).

Participant and the Company agree that this Award of Restricted Stock is granted
under and governed by the terms and conditions of the Plan and this Agreement.
By Participant’s signature below, Participant represents and warrants that
Participant is familiar with, and agrees to be bound by, the terms and
provisions of the Plan and this Agreement. Participant further represents and
warrants that Participant has reviewed this Agreement and the Plan in their
entirety has had an opportunity to obtain the advice of counsel prior to
executing this Agreement, and fully understand all provisions of the Plan and
this Agreement.

Participant also agrees (1) to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan or this Agreement and (2) to notify the Company upon any change
in the residence address indicated below (and any subsequent change).

 

Participant:     DRUGSTORE.COM, INC.           Signature     By:           Print
Name     Title Residence Address    

 

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DRUGSTORE.COM, INC.

2008 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

1. Grant. The Company hereby grants to the Participant as a separate incentive
in connection with his or her future services and not in lieu of any salary or
other compensation for his or her future services, the number of Shares of
Restricted Stock set forth in the Notice of Grant attached to (and part of) this
Restricted Stock Agreement (together, the “Agreement” or the “Restricted Stock
Agreement”) and subject to all of the terms and conditions in this Agreement and
the Company’s 2008 Equity Incentive Plan (the “Plan”), which is incorporated
herein by reference. The per share price for this Award of Restricted Stock is
par value, or $0.0001 per share, and is deemed to be paid by Participant’s
provision of future services to the Company. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this
Restricted Stock Agreement.

2. Shares Held in Escrow.

(a) All Shares of Restricted Stock will, upon execution of this Agreement, be
issued in the name of the Participant and delivered and deposited with an Escrow
Agent designated by the Company (the “Escrow Agent”) together with the
Assignment Separate from Certificate (the “Stock Assignment”) duly endorsed in
blank, attached hereto as Exhibit B-1. The Shares of Restricted Stock will be
held by the Escrow Agent, and shall not be sold, transferred or otherwise
disposed of, and shall not be pledged or otherwise hypothecated, until such time
as the Shares of Restricted Stock vest or the date Participant ceases to be a
Service Provider. The unvested Shares of Restricted Stock and the Stock
Assignment will be held by the Escrow Agent, pursuant to the Joint Escrow
Instructions of the Company and Participant attached as Exhibit B-2 hereto,
until such time as the Shares of Restricted Stock vest or are forfeited. The
Shares, which may be issued in certificate or book entry form, shall not be
delivered by the Escrow Agent to the Participant unless and until the Shares
have vested and all other terms and conditions in this Agreement have been
satisfied.

(b) The Escrow Agent will not be liable for any act it may do or omit to do with
respect to holding the Shares of Restricted Stock in escrow while acting in good
faith and in the exercise of its judgment.

(c) Upon Participant’s termination as a Service Provider for any reason, the
Escrow Agent, upon receipt of written notice of such termination, will take all
steps necessary to accomplish the transfer of the unvested Shares of Restricted
Stock to the Company. Participant hereby appoints the Escrow Agent with full
power of substitution, as Participant’s true and lawful attorney-in-fact with
irrevocable power and authority in the name and on behalf of Participant to take
any action and execute all documents and instruments, including, without
limitation, stock powers which may be necessary to transfer the certificate or
certificates evidencing such unvested Shares of Restricted Stock to the Company
upon such termination.

(d) The Escrow Agent will take all steps necessary to accomplish the transfer of
Shares of Restricted Stock to Participant after they vest following
Participant’s request that the Escrow Agent do so.

 

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(e) Subject to the terms hereof, Participant will have all the rights of a
stockholder with respect to the Shares while they are held in escrow, including
without limitation, the right to vote the Shares and to receive any cash
dividends declared thereon.

(f) If in the event of any dividend or other distribution (whether in the form
of cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, or other change in the corporate structure of the Company affecting
the Shares, the Shares of Restricted Stock are increased, reduced or otherwise
changed in accordance with the terms of the Plan, and by virtue of any such
change Participant will in his or her capacity as owner of unvested Shares of
Restricted Stock be entitled to new or additional or different shares of stock,
cash or securities (other than rights or warrants to purchase securities); such
new or additional or different shares, cash or securities will thereupon be
considered to be unvested Shares of Restricted Stock and will be subject to all
of the conditions and restrictions which were applicable to the unvested Shares
of Restricted Stock pursuant to this Agreement. If Participant receives rights
or warrants with respect to any unvested Shares of Restricted Stock, such rights
or warrants may be held or exercised by Participant, provided that until such
exercise any such rights or warrants and after such exercise any shares or other
securities acquired by the exercise of such rights or warrants will be
considered to be unvested Shares of Restricted Stock and will be subject to all
of the conditions and restrictions which were applicable to the unvested Shares
of Restricted Stock pursuant to this Agreement. The Administrator in its
absolute discretion at any time may accelerate the vesting of all or any portion
of such new or additional shares of stock, cash or securities, rights or
warrants to purchase securities or shares or other securities acquired by the
exercise of such rights or warrants.

(g) The Company may determine to issue the Shares in book entry form and/or may
instruct the transfer agent for its Common Stock to place a legend on the
certificates representing the Restricted Stock or otherwise note its records as
to the restrictions on transfer set forth in this Agreement.

3. Vesting Schedule/Period of Restriction. Subject to paragraphs 4 and 5 and the
terms of the Plan, the Shares of Restricted Stock awarded by this Agreement will
vest in the Participant according to the vesting schedule specified in the
Notice of Grant. Shares of Restricted Stock scheduled to vest on a certain date
or upon the occurrence of a certain condition will not vest in accordance with
any of the provisions of this Agreement unless the Participant shall have
continuously remained a Service Provider through the applicable vesting date.

4. Administrator Discretion. The Administrator, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance, of
the unvested Shares of Restricted Stock at any time, subject to the terms of the
Plan. If so accelerated, such Shares of Restricted Stock will be considered as
having vested as of the date specified by the Administrator.

5. Forfeiture. Notwithstanding any contrary provision of this Agreement, the
balance of the Shares of Restricted Stock that have not vested at the time the
Participant ceases to be a Service Provider automatically will be forfeited as
of the date Participant ceases to be a Service Provider and shall automatically
be transferred to and reacquired by the Company at no cost to the Company. The
Participant hereby appoints the Escrow Agent with full power of substitution, as
the Participant’s true and lawful attorney-in-fact with irrevocable power and
authority in the name and

 

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on behalf of the Participant to take any action and execute all documents and
instruments, including, without limitation, stock powers which may be necessary
to transfer the certificate or certificates evidencing such unvested Shares to
the Company upon such cessation of the Service Provider relationship.

6. Payments after Death. Any distribution or delivery to be made to the
Participant under this Agreement will, if the Participant is then deceased, be
made to Participant’s designated beneficiary, or if no beneficiary survives
Participant, the administrator or executor of the Participant’s estate. Any such
transferee must furnish the Company with (a) written notice of his or her status
as transferee, (b) evidence satisfactory to the Company to establish the
validity of the transfer and compliance with any laws or regulations pertaining
to said transfer, and (c) written acceptance of the terms and conditions of this
Award as set forth in this Agreement.

7 Rights as Stockholder. Neither the Participant nor any person claiming under
or through the Participant will have any of the rights or privileges of a
stockholder of the Company in respect of any Shares deliverable hereunder unless
and until certificate(s) representing such Shares (which may be in book entry
form) will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to the Participant or Participant’s
broker or the Escrow Agent (including through electronic delivery to a brokerage
account). After such issuance, recordation and delivery, the Participant will
have all the rights of a stockholder of the Company with respect to voting such
Shares and receipt of dividends and distributions on such Shares).

8. No Effect on Employment or Service. The Participant acknowledges and agrees
that the vesting of the shares of Restricted Stock pursuant to the vesting
schedule hereof is earned only by maintaining continuous status as a Service
Provider at the will of the Company (or the Parent or Subsidiary employing or
retaining participant) and not through the act of being hired, being granted
this Restricted Stock or acquiring Shares hereunder. The Participant’s
employment or service with the Company and its Parent or Subsidiaries is on an
at-will basis only, subject to the provisions of Applicable Laws. Accordingly,
subject to any written, express employment contract with the Participant,
nothing in this Agreement or the Plan shall confer upon the Participant any
express or implied right to continue to be employed by or in service with the
Company or any Parent or Subsidiary or shall interfere with or restrict in any
way the rights of the Company or the employing Parent or Subsidiary, which are
hereby expressly reserved, to terminate or change the terms of the employment or
service of the Participant at any time for any reason whatsoever, with or
without good cause or notice.

9. Tax Consequences. Participant has reviewed with Participant’s own tax
advisors the federal, state, local and non-U.S. tax consequences of this
investment and the transactions contemplated by this Agreement. Participant is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. Participant understands that Participant (and
not the Company) shall be responsible for Participant’s own tax liability that
may arise as a result of the transactions contemplated by this Agreement.
Participant understands that, with respect to U.S. taxpayers, Section 83 of the
U.S. Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary
income the difference between the purchase price for the Shares of Restricted
Stock and the Fair Market Value of such Shares as of each vesting date.
Participant understands that if Participant is subject to U.S. taxation,
Participant may instead elect to be taxed at the time the Shares of Restricted
Stock are granted rather than when such Shares vest by filing an election under
Section 83(b) of the Code with the IRS within thirty (30) days from the date of
grant of the Restricted Stock. The form for making this election is attached as
Exhibit B-3 hereto.

 

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THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY
AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF
THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON THE PARTICIPANT’S BEHALF.

If making an 83(b) Election, Participant is also required to (i) provide a copy
of the Election to the Company, and (ii) attach a copy of the 83(b) Election to
Participant’s U.S. federal tax return covering the year in which the exercise
occurred.

10. Tax Withholding. Notwithstanding any contrary provision of this Agreement,
no certificate representing the Shares of Restricted Stock may be released from
the escrow established pursuant to Section 2, unless and until satisfactory
arrangements (as determined by the Company) will have been made by Participant
with respect to the payment of income, employment and other taxes that the
Company determines must be withheld with respect to such Shares (the
“Withholding Taxes”). To the extent determined appropriate by the Company in its
discretion, it shall have the right (but not the obligation) to satisfy any tax
withholding obligations by reducing the number of Shares otherwise deliverable
to Participant. In addition, pursuant to such procedures as the Administrator
may specify from time to time, the Company shall withhold the minimum amount
required to be withheld for the payment of tax withholding obligations with
respect to the Withholding Taxes, in whole or in part by one or more of the
following: (i) requiring the Participant to pay cash; (ii) withholding the
amount of such Withholding Taxes from Participant’s paycheck(s), (iii) requiring
Participant to deliver to the Company already vested and owned Shares having a
value equal to the minimum amount statutorily required to be withheld,
(iv) selling a sufficient number of such Shares otherwise deliverable to the
Participant through such means as the Administrator may determine in its sole
discretion (whether through a broker or otherwise) equal to the amount required
to be withheld; (v) requiring Participant to make appropriate arrangements with
the Company (or the Parent or Subsidiary employing or retaining Participant) for
the satisfaction of all Withholding Taxes, or (vi) a combination of the
foregoing. The Company shall not retain fractional Shares to satisfy any portion
of the Withholding Taxes. Accordingly, if any withholding is done through the
withholding of Shares, Participant shall pay to the Company an amount in cash
sufficient to satisfy the remaining Withholding Taxes due and payable as a
result of the Company not retaining fractional Shares. Should the Company be
unable to procure such cash amounts from Participant, Participant agrees and
acknowledges that Participant is giving the Company permission to withhold from
Participant’s paycheck(s) an amount equal to the remaining Withholding Taxes due
and payable as a result of the Company not retaining fractional Shares. If the
Participant fails to make satisfactory arrangements for the payment of any
Withholding Taxes at the time tax withholdings are otherwise due with respect to
the Shares, the Participant will permanently forfeit such Shares and the Shares
will be returned to the Plan at no cost. All income, employment and other taxes
related to the Shares, and any Shares delivered in payment thereof are the sole
responsibility of Participant.

 

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11. Address for Notices. Any notice to be given to the Company under the terms
of this Agreement will be addressed to the Company, in care of its General
Counsel at drugstore.com, inc., 411 108th Avenue, Suite 1400, Bellevue,
Washington 98004, or at such other address as the Company may hereafter
designate in writing or electronically.

12. Grant is Not Transferable. The unvested Shares subject to this Award and the
rights and privileges conferred hereby may not be transferred, assigned, pledged
or hypothecated in any manner (whether by operation of law or otherwise)
otherwise than by will or by the laws of descent or distribution and will not be
subject to sale under execution, attachment or similar process. The terms of the
Plan and this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Participant. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of any unvested Shares subject
to this Award, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the
rights and privileges conferred hereby immediately will become null and void.

13. Binding Agreement. Subject to the limitation on the transferability of this
grant contained herein, this Agreement will be binding upon and inure to the
benefit of the heirs, legatees, legal representatives, successors and assigns of
the parties hereto.

14. Additional Conditions to Release from Escrow. The Company will not be
required to issue any certificate or certificates for Shares hereunder or
release such Shares from the escrow established pursuant to Section 2 prior to
fulfillment of all the following conditions: (a) the admission of such Shares to
listing on all stock exchanges on which such class of stock is then listed;
(b) the completion of any registration or other qualification of such Shares
under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Administrator will, in its absolute discretion, deem necessary or
advisable; (c) the obtaining of any approval or other clearance from any state
or federal governmental agency, which the Administrator will, in its absolute
discretion, determine to be necessary or advisable; and (d) the lapse of such
reasonable period of time following the date of grant of the Restricted Stock as
the Administrator may establish from time to time for reasons of administrative
convenience.

15. Plan Governs. This Agreement (including the Notice of Grant) is subject to
all terms and provisions of the Plan. Subject to Section 19(c) of the Plan, in
the event of a conflict between one or more provisions of this Agreement
(including the Notice of Grant) and one or more provisions of the Plan, the
provisions of the Plan will govern.

16. Electronic Delivery. The Company may, in its sole discretion, decide to
deliver any documents related to the Shares of Restricted Stock awarded under
the Plan or future Restricted Stock that may be awarded under the Plan by
electronic means or request Participant’s consent to participate in the Plan by
electronic means. Participant hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through any on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

17. Headings. Headings provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

 

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18. Administrator Authority. The Administrator will have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Shares of Restricted Stock have vested). All
actions taken and all interpretations and determinations made by the
Administrator in good faith will be final and binding upon Participant, the
Company and all other interested persons. Neither the Administrator nor any
person acting on behalf of the Administrator will be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan or this Agreement.

19. Agreement Severable. In the event that any provision in this Agreement shall
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this Agreement.

20. Amendment, Suspension or Termination of the Plan. By accepting this Award,
Participant expressly warrants that he or she has received an Award of
Restricted Stock under the Plan, and has received, read and understood a
description of the Plan. Participant understands that the Plan is discretionary
in nature and may be amended, suspended or terminated by the Company at any
time.

21. Entire Agreement; Modifications to the Agreement. The Plan is incorporated
herein by reference. The Plan and this Agreement (including the Notice of Grant)
constitute the entire understanding of the parties on the subjects covered and
supersede in their entirety all prior undertakings and agreements of the Company
and Participant with respect to the subject matter hereof, and may not be
modified adversely to the Participant’s interest except by means of a writing
signed by the Company and Participant. Participant expressly warrants that he or
she is not accepting this Agreement in reliance on any promises,
representations, or inducements other than those contained herein.
Notwithstanding anything to the contrary in the Plan or this Agreement, the
Company reserves the right to revise this Agreement as it deems necessary or
advisable, in its sole discretion and without the consent of Participant, to
comply with Code Section 409A or to otherwise avoid imposition of any additional
tax or income recognition under Code Section 409A in connection with this Award
of Restricted Stock. The Company may delay settlement of restricted stock for
six months in order to avoid the imposition of additional taxes under Code
Section 409A.

22. Governing Law. This Agreement will be governed by the laws of the State of
Washington, without giving effect to the conflict of law principles thereof. For
purposes of litigating any dispute that arises under this Award of Restricted
Stock or this Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of Washington, and agree that such litigation will be
conducted in the courts of King County, Washington, or the federal courts for
the United States for the Western District of Washington, and no other courts,
where this Award of Restricted Stock is made and/or to be performed.

 

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EXHIBIT B-1

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, _______________________, hereby sell, assign and transfer
unto drugstore.com, inc. _____________ shares of the Common Stock of
drugstore.com, inc. standing in my name on the books of said corporation
represented by Certificate No. ________ herewith and do hereby irrevocably
constitute and appoint __________________________ to transfer the said stock on
the books of the within named corporation with full power of substitution in the
premises.

This Stock Assignment may be used only in accordance with the Restricted Stock
Agreement between drugstore.com, inc. and the undersigned dated _______________,
_______ (the “Agreement”).

 

Dated: __________________, ______     Signature:    

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to transfer the unvested
Shares of Restricted Stock to the Company upon Participant’s termination as a
Service Provider, without requiring additional signatures on the part of the
Participant.

 

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EXHIBIT B-2

JOINT ESCROW INSTRUCTIONS

____________, ____

Corporate Secretary

drugstore.com, inc.

411 108th Avenue, Suite 1400

Bellevue, Washington 98004

Dear                             :

As Escrow Agent for both drugstore.com, inc. (the “Company”), and the
undersigned recipient of stock of the Company (the “Participant”), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Agreement (the “Agreement”)
between the Company and the undersigned, in accordance with the following
instructions:

1. At the closing, you are directed (a) to date the stock assignments necessary
for the transfer in question, (b) to fill in the number of shares being
transferred, and (c) to deliver the stock assignments, together with the
certificate evidencing the shares of stock to be transferred, to the Company or
its assignee.

2. Participant irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Participant does hereby irrevocably constitute and appoint you as Participant’s
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this paragraph 2, Participant shall exercise all
rights and privileges of a stockholder of the Company while the stock is held by
you.

3. Upon vesting of the shares held in escrow, you shall deliver or
electronically transfer to Participant, or electronically transfer, a
certificate or certificates representing so many shares of stock as are vested.
Upon any forfeiture of such shares, you shall deliver or electronically transfer
such shares to the Company.

4. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to
Participant, you shall deliver all of the same to Participant and shall be
discharged of all further obligations hereunder.

5. Your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.

 

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6. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Participant while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

7. You are hereby expressly authorized to disregard any and all warnings given
by any of the parties hereto or by any other person or corporation, excepting
only orders or process of courts of law and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In case you obey
or comply with any such order, judgment or decree, you shall not be liable to
any of the parties hereto or to any other person, firm or corporation by reason
of such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

8. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

9. You shall not be liable for the outlawing of any rights under the Statute of
Limitations with respect to these Joint Escrow Instructions or any documents
deposited with you.

10. You shall be entitled to employ such legal counsel and other experts as you
may deem necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor.

11. Your responsibilities as Escrow Agent hereunder shall terminate if you shall
cease to be an officer or agent of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint a successor Escrow Agent.

12. If you reasonably require other or further instruments in connection with
these Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.

13. It is understood and agreed that should any dispute arise with respect to
the delivery and/or ownership or right of possession of the securities held by
you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

14. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the
United States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
(10) days advance written notice to each of the other parties hereto.

 

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15. By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions; you do not become a party to
the Agreement.

16. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

17. These Joint Escrow Instructions shall be governed by the internal
substantive laws, but not the choice of law rules, of Washington.

 

PARTICIPANT     DRUGSTORE.COM, INC.           Signature     By           Print
Name     Print Name               Title          Residence Address     ESCROW
AGENT              Corporate Secretary     Dated:
__________________________________________    

 

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EXHIBIT B-3

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income
or alternative minimum taxable income, as the case may be, for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer’s receipt of the property described below.

 

1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

 

NAME:        SPOUSE:      ADDRESS:                    

TAXPAYER IDENTIFICATION NO.:        TAXABLE YEAR:      

 

2. The property with respect to which the election is made is described as
follows: _________ shares (the “Shares”) of the Common Stock of drugstore.com,
inc. (the “Company”).

 

3. The date on which the property was transferred is:_________________, _______.

 

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms
of an agreement between the taxpayer and the Company. These restrictions lapse
upon the satisfaction of certain conditions contained in such agreement.

 

5. The Fair Market Value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms shall never lapse,
of such property is: $_________________.

 

6. The amount (if any) paid for such property is: $_____________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned’s receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated: ______________________, _____            Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ______________________, _____            Spouse of Taxpayer