Document:

Third Amendment to Loan and Security Agreement

 Exhibit 10.1 
 THIRD AMENDMENT 
 TO 
 LOAN AND SECURITY AGREEMENT 
 THIS THIRD AMENDMENT to Loan and Security
Agreement (this “Amendment”) is entered into this [16th] day of March, 2006, by and between Silicon Valley Bank (“Bank”) and DRUGSTORE.COM, INC., a Delaware corporation (“Borrower”) whose address is 411 108th
Avenue NE, Suite 1400, Bellevue, WA 98004. 
 RECITALS 
 A. Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of December 29, 2004, as
amended by that certain First Amendment to Loan and Security Agreement by and between Bank and Borrower dated as of August 4, 2005 and that certain Second Amendment to Loan and Security Agreement between Bank and Borrower dated as of
December 9, 2005 (collectively, as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”). 
 B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement. 
 C.
Borrower has requested that Bank amend the Loan Agreement to (i) increase the amount available to be borrowed under the Committed Revolving Line, (ii) extend the maturity date, (iii) revise the financial covenants, and
(iv) make certain other revisions to the Loan Agreement as more fully set forth herein. 
 D. Bank has agreed to so amend certain
provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below. 
 AGREEMENT 
 NOW, THEREFORE,
in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 
 1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement. 
 2. Acknowledgement of Extension of Revolving Maturity Date. Prior to the date hereof, Borrower and Bank agreed that the “Revolving Maturity Date”, as
defined in Section 13 of the Loan Agreement, would be extended to March 15, 2006. No such agreement is effective unless in writing signed by Bank. Therefore, as of the date hereof, Borrower and Bank acknowledge and agree to such extension
(such date to be further amended as set forth below). 
 3. Amendments to Loan Agreement. 
 (a) Section 2.1.2(d). Section 2.1.2(d) is amended in its entirety and replaced with the following: 
 (d) As of the Term Loan Conversion Date, Borrower elected to convert $1,000,000 of the Advances into a term loan (the “Term
Loan”), which is being repaid by Borrower in equal monthly installments of principal in the amount of $27,777.78, plus all accrued interest, on the first day of each month. On the date which is 36 months from the first day of the month
following the Term Loan Conversion Date, Borrower shall repay all outstanding Term Loan principal and accrued interest. Any amounts repaid with respect to the Term Loan may not be reborrowed pursuant to the Term Loan and no additional amounts may be
requested under the Term Loan. 

 (b) Section 2.1.2(e). A new Section 2.1.2(e) is hereby added to read as follows:

 (e) Notwithstanding the foregoing, Borrower may elect, upon 30 days prior written notice to Bank, to convert up to
$2,500,000 in the aggregate of the outstanding Advances into a term loan (the “Term Loan II”), provided that, at the time Borrower delivers any such notice, Borrower shall pay to Bank a nonrefundable fee equal to one quarter of one percent
(0.25%) of the amount of the Term Loan II. Such notice may only be delivered during the 60 days immediately prior to the Revolving Maturity Date. On the first day of the month following the Term Loan II Conversion Date, Borrower shall pay any
accrued but unpaid interest with respect to the Term Loan II and the Advances which were converted into the Term Loan II. Beginning on the first day of the next month, Borrower will repay the Term Loan in 36 equal monthly installments of principal
plus interest. On the date which is 36 months from the first day of the month following the Term Loan II Conversion Date, Borrower shall repay all outstanding Term Loan II principal and accrued interest. Borrower may only request one Term Loan II
hereunder. 
 (c) Section 2.4.2 (Additional Interest Rates; Payments). 
 Section 2.4.2(i) is hereby amended to read “(i) Advances accrue interest on the outstanding principal balance at a per annum
rate equal to the Prime Rate;”. 
 A new Section 2.4.2(iv) is hereby added to the first sentence of
Section 2.4.2 to read “(iv) the Term Loan II accrues interest on the outstanding principal balance at a floating per annum rate equal to one half of one percentage point (0.50%) above the greater of (A) the Prime Rate as in effect
from time to time and (B) the Prime Rate as of the Term Loan Conversion Date”. 
 (d) Section 6.7 (Financial
Covenants). Section 6.7 is amended in its entirety and replaced with the following: 
 6.7 Financial
Covenants. Borrower will maintain: 
 (i) Cash Balance. At all times, a balance of unrestricted cash of at least
$20,000,000. 
 (ii) EBITDA Loss. As of the last day of each month, Borrower’s EBITDA Loss for the three months
immediately preceding the date of measurement shall not exceed (i) through the month ending March 31, 2006, ($5,000,000), (ii) thereafter through the month ending June 30, 2006, ($2,750,000), (iii) thereafter through the
month ending September 30, 2006, ($1,250,000), and (iv) for each month thereafter, Zero ($0). 
 (e) Section 13
(Definitions). Section 13.1 is hereby amended to add or amend the following defined terms to read as follows: 
 “Committed Revolving Line” is an Advance of up to $7,500,000. 
 “Revolving Maturity
Date” is March 14, 2007. 
 “Term Loan II Conversion Date” means the date on which Advances are
converted into the Term Loan II pursuant to Section 2.1.2(e) hereof. 
 (f) Exhibit C (Compliance Certificate). Exhibit C
is amended in its entirety and replaced with Exhibit C attached hereto. 
 4. Limitation of Amendments. 
 (a) The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as
written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the
future under or in connection with any Loan Document. 

 (b) This Amendment shall be construed in connection with and as part of the Loan Documents and all
terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect. 
 5. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows: 
 (a) Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has
occurred and is continuing; 
 (b) Borrower has the power and authority to execute and deliver this Amendment and to perform its
obligations under the Loan Agreement, as amended by this Amendment; 
 (c) The organizational documents of Borrower delivered to Bank
prior to the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect; 
 (d) The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; 
 (e) The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower; 
 (f) The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and 

(g) This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’
rights. 
 6. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. 
 7. Effectiveness. This Amendment shall be deemed effective as of March [16], 2006, upon
(a) the due execution and delivery to Bank of this Amendment and the Borrowing Resolutions by each party thereto, and (b) Borrower’s payment of a nonrefundable amendment fee in an amount equal to $19,375. 
 [Signature page follows.] 

 IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered as of the date first written above. 
  

									
	BANK	 		 	BORROWER
			
	 Silicon Valley Bank
	 		 	 DRUGSTORE.COM, INC.

					
	 By:
	 	/s/ Scott Bergquist	 		 	 By:
	 	 /s/ Robert Barton

	 Name:
	 	 Scott Bergquist
	 		 	 Name:
	 	 Robert Barton

	 Title:
	 	 Division Manager
	 		 	 Title:
	 	 CFO

					
		 		 		 		 	 /s/ Dawn G. Lepore

 EXHIBIT C 
 COMPLIANCE CERTIFICATE 
  

			
	 TO:        SILICON VALLEY BANK
	  	Date:                    
	FROM:        DRUGSTORE.COM, INC.	  	

 The undersigned authorized officer of DRUGSTORE.COM, INC. (“Borrower”) certifies that
under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending
                     with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations
and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date,
(4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower, and
(5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certifies that these are prepared in accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned
acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.
Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement. 
 Please indicate compliance status by
circling Yes/No under “Complies” column. 
  

					
	 Reporting Covenant
	  	 Required
	  	 Complies

			
	 Monthly financial statements + CC
	  	 Monthly within 30 days
	  	 Yes     No

	 Annual (Audited)
	  	 FYE within 120 days
	  	 Yes     No

	 10-Q, 10-K and 8-K
	  	 Within 5 days after filing with SEC
	  	 Yes     No

  

							
	 Financial Covenant
	  	Required	 	Actual	  	Complies
				
	 Maximum Trailing 3 Mo. EBITDA Loss
	  	See Section
6.7(ii)	 	$            	  	Yes    No
				
	 Minimum Cash
	  	$20,000,000	 	$            	  	Yes    No

 Borrower has deposit accounts located at the following institutions:
                     
  

									
	DRUGSTORE.COM, INC.	 		 	BANK USE ONLY
		 		 		 	 Received by:
	 	  
	 By:   
	 	  	 		 		 	AUTHORIZED SIGNER
	 Name:
	 	  	 		 	 Date:
	 	  
	 Title:
	 	  	 		 	 Verified:
	 	  
		 		 		 		 	AUTHORIZED SIGNER
		 		 		 	 Date:
	 	  
		 		 		 	 Compliance Status:
	 	Yes    NoAmended and Restated Loan and Security Agreement

 Exhibit 10.2 
 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 
 DRUGSTORE.COM, INC. 

 This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of the Effective Date, between SILICON
VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 with a loan production office located at 4110 Carillon Point, Kirkland, Washington 98033 and DRUGSTORE.COM, INC. (“Borrower”), whose address
is 13920 SE Eastgate Way, Suite 300, Bellevue, Washington 98005 provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows: 
 1. ACCOUNTING AND OTHER TERMS. Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations
must be made following GAAP. The term “financial statements” includes the notes and schedules. The terms “including” and “includes” always mean “including (or includes) without limitation,” in this or any Loan
Document. 
 2. LOAN AND TERMS OF PAYMENT. 
 2.1 Promise to Pay. Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid
principal amount of the Credit Extensions. 
 2.1.1 Equipment Advances. 
 (a) Bank has made advances (each an “Equipment Advance” and, collectively, “Equipment Advances”) to Borrower, in an
outstanding amount equal to $53,814.69 as of the Effective Date. Borrower shall not request nor receive any further Equipment Advances. 
 (b) Interest accrues from the date of each Equipment Advance at the rate in Section 2.3. Equipment Advances are payable in 24 equal monthly installments of principal, and accrued interest, beginning on the 5th
day of each month following the respective Equipment Advance and ending 24 months thereafter (each, the “Equipment Maturity Date”). Equipment Advances when repaid may not be reborrowed. 
 (c) On the Equipment Maturity Date, with respect to each Equipment Advance, Borrower will pay, in addition to the unpaid principal and
accrued interest and all other amounts due on such date with respect to such Equipment Advance, an amount equal to the Final Payment. 
 2.1.2 Revolving Advances. 
 (a) Bank will make Advances not exceeding (i) the
Committed Revolving Line, minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (iii) the Cash Management Services Sublimit, minus (iv) the aggregate amount of any
Advances which have been converted into the Term Loan. Amounts borrowed under this Section may be repaid and reborrowed prior to the Revolving Maturity Date. 
 (b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 p.m. Pacific time on the Business Day the
Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Payment/Advance Form attached as Exhibit B. Bank will credit Advances to Borrower’s deposit account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank
believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance. 
 (c) The Committed Revolving Line terminates on the Revolving Maturity Date, when, subject to the term out option described below, all Advances are immediately payable. 
 (d) Notwithstanding the foregoing, Borrower may elect, upon 30 days prior written notice to Bank, to convert any or all of the
outstanding Advances into a term loan (the “Term Loan”), provided that, at the time Borrower delivers any such notice, Borrower shall pay to Bank a nonrefundable fee equal 

  

 1 

 
to one half of one percent (0.5%) of the amount of the Term Loan. Such notice may only be delivered during the 60 days immediately prior to the Revolving
Maturity Date. On the first day of the month following the Term Loan Conversion Date, Borrower shall pay any accrued but unpaid interest with respect to the Term Loan and the Advances which were converted into the Term Loan. Beginning on the first
day of the next month, Borrower will repay the Term Loan in 36 equal monthly installments of principal plus interest. On the date which is 36 months from the first day of the month following the Term Loan Conversion Date, Borrower shall repay all
outstanding Term Loan principal and accrued interest. Borrower may only request one Term Loan hereunder. 
 2.1.3 Letters
of Credit Sublimit. Bank will issue or have issued Letters of Credit for Borrower’s account not exceeding (i) the Committed Revolving Line minus (ii) the outstanding principal balance of the Advances (including any Advances which
have been converted into a Term Loan) minus the Cash Management Sublimit; however, the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) may not exceed $2,000,000. All Letters of Credit shall be, in
form and substance, acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form of standard application and letter of credit agreement, which Borrower hereby agrees to execute, including a fee equal
to 1.15% per annum of the face amount of each Letter of Credit. Borrower’s Letter of Credit reimbursement obligation will be secured by unencumbered cash in a certificate of deposit at Bank on terms acceptable to Bank at least five
(5) Business Days prior to the Revolving Maturity Date if such date is not extended by Bank. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. 
 2.1.4 Cash Management Services Sublimit. Borrower may use up to $500,000 for Bank’s Cash Management Services, which may
include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in various cash management services agreements related to such services (the “Cash Management Services”). All amounts Bank
pays for any Cash Management Services will be treated as Advances under the Committed Revolving Line. 
 2.1.5 Non-Formula
Equipment Advance. 
 (a) On the Closing Date, Bank will make an advance (the “Non-Formula Equipment Advance”)
in an amount not to exceed $2,000,000. The Non-Formula Equipment Advance may only be used to finance or refinance Equipment and software purchased by Borrower between January 1, 2004 and the Effective Date. 
 (b) On January 1, 2005, Borrower shall pay all accrued interest with respect to the Non-Formula Equipment Advance. The Non-Formula
Equipment Advance shall be payable in 36 equal monthly installments of principal, plus accrued interest, beginning on February 1, 2005 and ending on January 1, 2008. The Facility B Equipment Advance, or any portion thereof, when repaid may
not be reborrowed. Borrower may prepay the Non-Formula Equipment Advance, or any portion thereof, by paying the applicable principal amount and any accrued interest thereon to Bank, provided that, if the prepayment is made on or before the first
anniversary of the Effective Date, Borrower shall also pay a Make-Whole Premium to Bank at the time of such prepayment. 
 (c) To obtain the Non-Formula Equipment Advance, Borrower must notify Bank (the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time 1 Business Day before the day on which the Non-Formula Equipment Advance is to be
made. The notice in the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer or designee. 
 2.2 Termination of Commitment to Lend. Bank’s obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank’s sole discretion, there has been a material adverse change in the general affairs,
management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and
accepted by Bank prior to the execution of this Agreement. 
 2.3 Overadvances. If Borrower’s Obligations under
Sections 2.1.2, 2.1.3, and 2.1.4 exceed the Committed Revolving Line at any time, Borrower must immediately pay Bank the excess. 
  

 2 

 2.4 Interest Rate, Payments. 
 2.4.1 Equipment Advances. Equipment Advances accrue interest on the outstanding principal balance at a per annum fixed rate of
5.75%. After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. Interest is computed on a 360 day year for the actual number of days elapsed. 
 2.4.2 Additional Interest Rates; Payments. 
 (a) Interest Rate. (i) Advances accrue interest on the outstanding principal balance at a per annum rate one quarter of one
percentage point (0.25%) above the Prime Rate; (ii) the Term Loan accrues interest on the outstanding principal balance at a per annum rate equal to one half of one percentage point (0.50%) above the greater of (A) the Prime Rate, as
revised from time to time according to the terms hereof, and (B) the Prime Rate as of the Term Loan Conversion Date, and (iii) the Non-Formula Equipment Advance shall accrue interest on the outstanding principal balance at a per annum rate
equal to the greater of (A) one half of one percentage point (0.5%) above the Prime Rate and (B) five percent (5.0%). After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the
Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of days elapsed. 
 (b) Payments. Interest due on the Committed Revolving Line is payable on the first day of each month. Payments received after
12:00 noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional interest shall accrue.

 2.4.3 Request to Debit Accounts. Bank may debit any of Borrower’s deposit accounts including Account Number
3300380008 for principal and interest payments or any amounts Borrower owes Bank when due. Bank will notify Borrower when it debits Borrower’s accounts. These debits are not a set-off. 
 2.5 Fees. Borrower will pay: 
 (a) Facility Fee. A fully earned Facility Fee of $15,000 for the Committed Revolving Line (which shall be non-refundable unless Borrower has complied with Section 6.6 prior to March 31, 2005, in which
case such amount shall be refunded to Borrower), and a fully earned non-refundable Facility Fee of $10,000 for the Non-Formula Equipment Advance; and 
 (b) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and reasonable expenses) incurred through and after the date of this Agreement, are payable when due. 
 3. CONDITIONS OF LOANS. 
 3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees it requires. 
 3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following: 
 (a) timely receipt of any Payment/Advance Form; and 
 (b) the representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the
effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and
warranties of Section 5 remain true. 
  

 3 

 4. CREATION OF SECURITY INTEREST. 
 4.1 Grant of Security Interest. Borrower grants Bank a continuing security interest in all presently existing and later acquired
Collateral to secure all Obligations and performance of each of Borrower’s duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. If this Agreement is
terminated, Bank’s lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations. 
 4.2 Authorization of File. Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank’s interest in the
Collateral. 
 5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows: 
 5.1 Due Organization and Authorization. Borrower and each Subsidiary is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change. Borrower has not changed its state of formation or its organizational structure or type or any organizational number (if any) assigned by its jurisdiction of formation. 
 The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents,
nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse
Change. 
 5.2 Collateral. Borrower has good title to the Collateral, free of Liens except Permitted Liens or Borrower
has Rights to each asset that is Collateral. Borrower has no other deposit account, other than the deposit accounts described in the Schedule. The Accounts are bona fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. The Collateral is not in the possession of any third party bailee (such as at a warehouse). In the event that Borrower, after
the date hereof, intends to store or otherwise deliver the Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the
benefit of Bank. All Inventory is in all material respects of good and marketable quality, free from material defects. 
 5.3
Litigation. Except as shown in the Schedule, there are no actions or proceedings pending or, to the Borrower’s knowledge, threatened by or against Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected
to result in damages or costs to Borrower or any Subsidiary of $250,000 or more. 
 5.4 No Material Adverse Change in
Financial Statements. All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of
operations for the period covered by such statements. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank. 
 5.5 Solvency. The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value
of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 
 5.6 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act. 

  

 4 

 
Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous
substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
 5.7 Investments
in Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 
 5.8 Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written
statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. It being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted
results. 
 6. AFFIRMATIVE COVENANTS. Borrower will do all of the following for so long as Bank has an obligation to lend, or there
are outstanding Obligations: 
 6.1 Government Compliance. Borrower will maintain its and all Subsidiaries’ legal
existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower’s business or
operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business or operations or would
reasonably be expected to cause a Material Adverse Change. 
 6.2 Financial Statements, Reports, Certificates.

 (a) Borrower will deliver to Bank: (i) as soon as available, but no later than 30 days after the last day of each
month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no
later than 120 days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent
certified public accounting firm reasonably acceptable to Bank; (iii) within 5 days of filing, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any
Subsidiary of $250,000 or more; and (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests. 
 (b) Within 30 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of
Exhibit C. 
 (c) Allow Bank to audit Borrower’s Collateral at Borrower’s expense. Such audits will be
conducted no more often than every year unless an Event of Default has occurred and is continuing. 
 6.3 Inventory;
Returns. Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors will follow 

  

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Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and
claims, that involve more than $250,000. 
 6.4 Taxes. Borrower will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on demand, appropriate certificates attesting to the payment. 
 6.5 Insurance. Borrower will keep its business and the Collateral insured for risks and in amounts, as is consistently required in
Borrower’s industry. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank
as an additional loss payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy. At Bank’s request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account of the Obligations. 
 Statutory notice regarding insurance: 
 WARNING 
 Unless you provide us with evidence of the insurance coverage as required by our contract or loan agreement, we may purchase insurance at your expense to
protect our interest. This insurance may, but need not, also protect your interest. If the collateral becomes damaged, the coverage we purchase may not pay any claim you make or any claim made against you. You may later cancel this coverage by
providing evidence that you have obtained property coverage elsewhere. 
 You are responsible for the cost of any insurance purchased by us.
The cost of this insurance may be added to your contract or loan balance. If the cost is added to your contract or loan balance, the interest rate on the underlying contract or loan will apply to this added amount. The effective date of coverage may
be the date your prior coverage lapsed or the date you failed to provide proof of coverage. 
 This coverage we purchased may be
considerably more expensive than insurance you can obtain on your own and may not satisfy any need for property damage coverage or any mandatory liability insurance requirements imposed by applicable law. 
 6.6 Primary Accounts. Borrower will maintain its primary depository and operating accounts (excluding merchant services) with Bank,
such accounts to be established no later than June 30, 2005 
 6.7 Financial Covenants. Borrower will maintain:

 (i) Cash Balance. At all times, a balance of unrestricted cash of at least $15,000,000; and 
 (ii) EBITDA Loss. As of the last day of each month, Borrower’s EBITDA Loss for the three months immediately preceding the date
of measurement shall not exceed $3,500,000. 
 6.8 Intellectual Property Rights. Borrower will (i) protect, defend
and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without
Bank’s written consent. 
 6.9 Landlord Waivers. On or before April 1, 2005, (A) Borrower will deliver
to Bank an original Consent to Removal of Personal Property in form and substance acceptable to Bank (a “Landlord Waiver”), duly executed and delivered by Borrower’s landlord for its new headquarters office at One Bellevue Center, 411
108th Ave NE, 12th floor, Bellevue, WA 98004, and (B) Borrower will use its best efforts to deliver a Landlord Waiver, duly executed and delivered by Borrower’s landlord for its fulfillment centers located at each of the 

  

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following addresses: (i) International Vision Direct-Distribution Center, 5500 Hovander Road, Ferndale, WA 98248, (ii) Exodus, 12301 Tukwila
International Boulevard, Tukwila, WA 98168, and (iii) drugstore.com, Distribution Ctr., 407 Heron Drive, Building A, Bridgeport, NJ 08014. 
 6.10 Further Assurances. Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest in the Collateral or to effect the
purposes of this Agreement. 
 7. NEGATIVE COVENANTS. For so long as Bank has an obligation to lend or there are any outstanding
Obligations, Borrower shall not, without Bank’s prior written consent (which shall be a matter of its good faith business judgment), do any of the following: 
 7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property (including its intellectual property), except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (iii) of worn-out or obsolete Equipment. 
 7.2 Changes in Business, Ownership, Management or Locations of Collateral. Engage in or permit any of its Subsidiaries to engage in
any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership of greater than 25% or have a material change in senior management. Borrower will not, without at least
30 days prior written notice, relocate its chief executive office (other than to One Bellevue Center, 411 108th Ave NE, 12th floor, Bellevue, WA 98004), change its state of formation (including reincorporation), change its organizational number
or name or add any new offices or business locations (such as warehouses) in which Borrower maintains or stores over $100,000 in Collateral. 
 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, except where (i) no Event of Default has occurred and is continuing or would result from such action during the term of this Agreement and (ii) such transaction
would not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower. 
 7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 7.5 Encumbrance. Create, incur, or allow any Lien on any of its property (including its intellectual property), or assign or convey
any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted here, subject to
Permitted Liens. 
 7.6 Distributions; Investments. Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock. 
 7.7 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate
of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a nonaffiliated
Person. 
 7.8 Subordinated Debt. Make or permit any payment on any Subordinated Debt, except under the terms of the
Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent. 
  

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 7.9 Compliance. Become an “investment company” or a company controlled
by an “investment company,” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
 8. EVENTS OF DEFAULT. Any one of the following is an Event of Default: 
 8.1 Payment Default. If Borrower fails to pay any of the Obligations within 5 Business Days after their due date, however, during
such period no Credit Extensions will be made; 
 8.2 Covenant Default. 
 (a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7 or violates any of the covenants contained in
Section 7 of this Agreement, provided, however, that failure to perform under Section 6.7 may be cured by the pledge, within five Business Days of such failure to perform, of unrestricted, unencumbered cash at Bank in an amount sufficient
to secure the entire amount of the Obligations (including without limitation any outstanding Letters of Credit and Cash Management Services) then outstanding on terms satisfactory to Bank (provided that, after such cure, Bank shall have no further
obligation to make Credit Extensions to Borrower which are not cash secured), or 
 (b) If Borrower fails or neglects to
perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within
the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period
(which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions
will be made during such cure period); 
 8.3 Material Adverse Change. If there (i) occurs a material adverse
change in the business, operations, or financial condition of the Borrower, or (ii) is a material impairment of the prospect of repayment of any portion of the Obligations; or (iii) is a material impairment of the value or priority of
Bank’s security interests in the Collateral (the foregoing being defined as a “Material Adverse Change”). 
 8.4 Attachment. If any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is
enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed
against any of Borrower’s assets by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions
will be made during the cure period); 
 8.5 Insolvency. If Borrower becomes insolvent or if Borrower begins an
Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 30 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed); 
 8.6 Other Agreements. If there is a default in any agreement between Borrower and a third party that gives the third party the
right to accelerate any Indebtedness exceeding $100,000 or that could cause a Material Adverse Change; 
  

 8 

 8.7 Judgments. If a money judgment(s) in the aggregate of at least $250,000 is
rendered against Borrower and is unsatisfied and unstayed for 10 days (but no Credit Extensions will be made before the judgment is stayed or satisfied); or 
 8.8 Misrepresentations. If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement
now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document. 
 9. BANK’S RIGHTS AND REMEDIES. 
 9.1 Rights and Remedies. When an Event of
Default occurs and continues Bank may, without notice or demand, do any or all of the following: 
 (a) Declare all
Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank); 
 (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between
Borrower and Bank; 
 (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any
order that Bank considers advisable; notify any Person owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank,
immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit; 
 (d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral, provided such acts are permissible under applicable law. Borrower will assemble the Collateral if Bank requires
and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 
 (e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for
the credit or the account of Borrower; 
 (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names,
Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights
under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and 
 (g) Dispose of the Collateral according to the Code. 
 Bank may place a “hold” on any account maintained with Bank and
deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral. 
 9.2 Power of Attorney. Effective only when an Event of Default occurs and continues, Borrower irrevocably appoints Bank as its
lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against account debtors, (iii) make,
settle, and adjust all claims under Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank 

  

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determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of
attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and
all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 
 9.3 Bank Expenses. If Borrower fails to pay any amount or furnish any required proof of payment to third persons, Bank may make all
or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then
applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
 9.4 Bank’s Liability for Collateral. If Bank complies with reasonable banking practices and Section 9-207 of the Code, it
is not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other
person. Except as provided above, Borrower bears all risk of loss, damage or destruction of the Collateral. 
 9.5 Remedies
Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or
remedy is not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given. 
 9.6 Demand Waiver. Borrower waives demand, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable. 
 10. NOTICES. All notices or demands by any party about this Agreement or any other related agreement must be in writing and
be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at the beginning of this Agreement. A party may change its notice address
by giving the other party written notice. 
 11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. California law governs the Loan Documents
without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in King County, Washington. 
 BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL
OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
 12. GENERAL PROVISIONS. 
 12.1 Successors and Assigns. This Agreement binds and
is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has
the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 
  

 10 

 12.2 Indemnification. Borrower will indemnify, defend and hold harmless Bank and
its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct. 
 12.3 Time of Essence. Time is of the essence for the performance of all obligations in this Agreement. 
 12.4 Severability of Provision. Each provision of this Agreement is severable from every other provision in determining the
enforceability of any provision. 
 12.5 Amendments in Writing, Integration. All amendments to this Agreement must be
in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement merge into this Agreement and the Loan Documents. UNDER WASHINGTON AND OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK AFTER OCTOBER 3, 1989
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE ENFORCEABLE. 
 12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 
 12.7
Survival. All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes
of limitations for actions that may be brought against Bank have run. 
 12.8 Effect of Amendment and Restatement. This
Agreement is intended to and does completely amend and restate, without novation, that certain Loan and Security Agreement between Bank and Borrower dated as of September 20, 2002, as amended (the “Original Agreement”). All security
interests granted under the Original Agreement are hereby confirmed and ratified and shall continue to secure all Obligations under this Agreement. 
 12.9 Confidentiality. In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made
(i) to Bank’s subsidiaries or affiliates in connection with their business with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially reasonable efforts in
obtaining such prospective transferee or purchasers agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and
(v) as Bank considers appropriate exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank’s possession when disclosed to Bank, or becomes part
of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. Borrower and Bank have entered into a Mutual Confidentiality
Agreement, dated August 20, 2002, such agreement shall remain in full force and effect. 
 12.10 Attorneys’ Fees,
Costs and Expenses. In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable costs and expenses incurred,
in addition to any other relief to which it may be entitled. 
  

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 13. DEFINITIONS. 
 13.1 Definitions. In this Agreement: 
 “Accounts” are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other
technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing, as such definition may be amended from time to
time according to the Code. 
 “Advance” or “Advances” is a loan advance (or advances) under
the Committed Revolving Line (excluding, unless otherwise indicated, any Advances which have been converted to a Term Loan). 
 “Affiliate” of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior
executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. 
 “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and
enforcing the Loan Documents (including appeals or Insolvency Proceedings). 
 “Borrower’s Books” are
all Borrower’s books and records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the
information. 
 “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is
closed. 
 “Cash Management Services” are defined in Section 2.1.4. 
 “Code” is the California Uniform Commercial Code, as applicable. 
 “Collateral” is the property described on Exhibit A. 
 “Committed Revolving Line” is an Advance of up to $1,000,000, provided that, after Borrower has complied with
Section 6.6, “Committed Revolving Line” shall mean an Advance of up to $3,000,000. 
 “Contingent
Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or
commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement.

 “Copyrights” are all copyright rights, applications or registrations and like protections in each work or
authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 
  

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 “Credit Extension” is each Advance, Equipment Advance, Term Loan, Letter
of Credit, Non-Formula Equipment Advance, the Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit. 
 “EBITDA Loss” means a loss of earnings before interest, taxes, depreciation and amortization. At Bank’s discretion, the EBITDA Loss calculation will be adjusted following extraordinary expenses
or income associated with one-time charges such as merger and acquisition expenses, restructuring charges, or sales of assets or discontinued business lines. 
 “Effective Date” is the date Bank executes this Agreement. 
 “Equipment” is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools,
parts and attachments in which Borrower has any interest. 
 “Equipment Advance” is defined in
Section 2.1. 
 “Equipment Maturity Date” is defined in Section 2.1.1. 
 “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations. 
 “Final Payment” is a payment (in addition to and not a substitution for the regular monthly payments of principal plus
accrued interest) due on the Equipment Maturity Date for such Equipment Advance equal to the original amount of such Equipment Advance (which constituted $615,016.19) multiplied by the Final Payment Percentage. 
 “Final Payment Percentage” is, for each Equipment Advance, 3%. 
 “GAAP” is generally accepted accounting principles. 
 “Guarantor” is any present or future guarantor of the Obligations. 
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as
reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations. 
 “Insolvency Proceeding” are proceedings by or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 
 “Intellectual Property” is all of Borrower’s: 
 (a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use
and all license fees and royalties from the use; 
 (b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired or held; 
 (c) All design rights which may
be available to Borrower now or later created, acquired or held; 
  

 13 

 (d) Any claims for damages (past, present or future) for infringement of any of the
rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above; 
 All proceeds and products of the foregoing, including all insurance, indemnity or warranty payments. 
 “Inventory” is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in
transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title. 
 “Investment” is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or
any loan, advance or capital contribution to any Person. 
 “Letter of Credit” is defined in
Section 2.1.3. 
 “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance. 
 “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed
by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 
 “Make-Whole Premium” is an amount equal to 1% of the prepaid amount of the Non-Formula Equipment Advance. 
 “Mask Works” are all mask works or similar rights available for the protection of semiconductor chips, now owned or later
acquired. 
 “Material Adverse Change” is defined in Section 8.3. 
 “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including
cash management services, letters of credit and foreign exchange contracts, if any and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 
 “Patents” are patents, patent applications and like protections, including improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same. 
 “Permitted Indebtedness” is:

 (a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document; 
 (b) Indebtedness existing on the Effective Date and shown on the Schedule; 
 (c) Subordinated Debt; 
 (d) Indebtedness to trade creditors incurred in the ordinary course of business; and 
 (e)
Indebtedness secured by Permitted Liens. 
  

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 “Permitted Investments” are: 
 (a) Investments shown on the Schedule and existing on the Effective Date; and 
 (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing
within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and
(iii) Bank’s certificates of deposit issued maturing no more than 1 year after issue. 
 “Permitted
Liens” are: 
 (a) Liens existing on the Effective Date and shown on the Schedule or arising under this Agreement or
other Loan Documents; 
 (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent
or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests; 
 (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries incurred for financing the acquisition of
the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; 
 (d) Licenses or sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or under
any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest; 
 (e) Leases or
subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property; 
 (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may not increase. 
 “Person” is
any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company,
estate, entity or government agency. 
 “Prime Rate” is Bank’s most recently announced “prime
rate,” even if it is not Bank’s lowest rate. 
 “Responsible Officer” is each of the Chief
Executive Officer, the President, the Chief Financial Officer and the Controller of Borrower. 
 “Revolving Maturity
Date” is December 28, 2005. 
 “Rights”, as applied to the Collateral, means the
Borrower’s rights and interests in, and powers with respect to, that Collateral, whatever the nature of those rights, interests and powers and, in any event, including Borrower’s power to transfer rights in such Collateral to Bank.

 “Schedule” is any attached schedule of exceptions. 
  

 15 

 “Subordinated Debt” is debt incurred by Borrower subordinated to
Borrower’s indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in writing. 
 “Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
 “Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, and (c) reserves not already deducted from assets, and (ii) Total Liabilities. 

“Term Loan Conversion Date” means the date on which Advances are converted into a Term Loan pursuant to
Section 2.1.2 hereof. 
 “Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt. 
 “Trademarks” are trademark and servicemark rights, registered or not, applications to register and registrations and like
protections, and the entire goodwill of the business of Assignor connected with the trademarks. 
  

									
	BORROWER:	 		 	BANK:
			
	DRUGSTORE.COM, INC.	 		 	SILICON VALLEY BANK
					
	By:	 	/s/ Robert Barton	 		 	By:	 	/s/ Annette Sager
					
	Title:	 	CFO	 		 	Title:	 	Vice President
				
		 		 		 	Effective Date: December 29, 2004

  

 16 

 EXHIBIT A 
 The Collateral consists of all of Borrower’s right, title and interest in and to the following whether owned now or hereafter arising and whether the Borrower has rights now or hereafter has rights therein and
wherever located: 
 All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures,
vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 

All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping
materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above; 
 All contract
rights and general intangibles (as such definitions may be amended from time to time according to the Code), now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents,
patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs,
design rights, income tax refunds, payments of insurance and rights to payment of any kind; 
 All now existing and hereafter arising
accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (as such definitions may be
amended from time to time according to the Code) whether or not earned by performance, and any and all credit insurance, insurance (including refund) claims and proceeds, guaranties, and other security therefor, as well as all merchandise returned
to or reclaimed by Borrower; 
 All documents, cash, deposit accounts, securities, securities entitlements, securities accounts, investment
property, financial assets, letters of credit, letter of credit rights, certificates of deposit, instruments and chattel paper and electronic chattel paper now owned or hereafter acquired and Borrower’s Books relating to the foregoing; and

 All Borrower’s Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions
for, additions and accessions to and proceeds thereof. 
 Notwithstanding the foregoing, the Collateral shall not include any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present and future infringement of any of the foregoing (collectively, the “Intellectual
Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the
“Rights to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights
to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment. 
 Borrower and Bank are parties to that certain negative pledge arrangement, whereby Borrower, in connection with Bank’s loan or loans to Borrower, has agreed,
among other things, not to sell, transfer, assign, mortgage, pledge, lease grant a security interest in, or encumber any of its Intellectual Property, without Bank’s prior written consent. 
  

 17 

 EXHIBIT B 
 LOAN PAYMENT/ADVANCE REQUEST FORM 
 DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T. 
  

			
	Fax To:	  	Date:
                        

  ̈ LOAN PAYMENT: 
 DRUGSTORE.COM, INC. (Borrower) 
  

			
	From Account
#                                        
                                    	  	To Account
#                                        
                                    
	(Deposit Account #)	  	(Loan Account #)

 Principal
$                                        
                                 and/or Interest
$                                        
                                 
 All Borrower’s representation and warranties in the Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects up to
and including the date of the transfer request for a loan payment, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date: 
 Authorized
Signature:                                      
                                       Phone
Number:                                 
  ̈ LOAN
ADVANCE: 
 Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance
are for an outgoing wire. 
  

			
	From Account
#                                        
                                    	  	To Account
#                                        
                                    
	(Loan Account #)	  	(Deposit Account #)

 Amount of Advance
$                     
 All Borrower’s
representation and warranties in the Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects up to and including the date of the transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date: 
 Authorized
Signature:                                      
                                       Phone
Number:                                 
 OUTGOING WIRE REQUEST 
 Complete only if all or a portion of funds from the loan advance above are to be wired. 
 Deadline for same day
processing is 12:00pm, P.S.T. 
  

			
	Beneficiary Name:
                                        
                                	  	Amount of Wire:
$                                        
                                
		
	Beneficiary Bank:
                                        
                                 	  	Account Number:
                                        
                                 
		
	City and State:
                                        
                                      	  	
		
	Beneficiary Bank Transit (ABA) #:                   
                   	  	Beneficiary Bank Code (Swift, Sort, Chip, etc.):
                        
		  	(For International Wire Only)
	Intermediary Bank:
                                        
                                	  	Transit (ABA) #:                                
                                 
	
	For Further Credit to:
                                        
                                        
                                        
                                    
	
	Special Instruction:
                                        
                                        
                                        
                                       
 
	
	 By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms
and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

		
	Authorized Signature:
                                        
                            	  	2nd Signature (If Required):
                                        
                
		
	Print Name/Title:
                                        
                                     	  	Print Name/Title:
                                        
                                 
		
	Telephone #
                                        
                                        
     	  	Telephone #
                                        
                                        
 

  

 18 

 EXHIBIT C 
 COMPLIANCE CERTIFICATE 
  

			
	TO:	  	SILICON VALLEY BANK
		  	3003 Tasman Drive
		  	Santa Clara, CA 95054
		
	FROM:	  	DRUGSTORE.COM, INC.

 The undersigned Responsible Officer of DRUGSTORE.COM, INC. (“Borrower”) certifies that
under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                         with all required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned certifies that (i) Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision
to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP and (ii) no liens has been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or
benefits which Borrower has not previously notified in writing to Bank. In addition, the undersigned certifies that Borrower, and each Subsidiary, has timely filed all required tax returns and paid, or made adequate provision to pay, all material
taxes, except those being contested in good faith with adequate reserves under GAAP. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Responsible Officer acknowledges that no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

									
	 Reporting Covenant
	  	 Required
	  	Complies
	 Monthly financial statements + CC
	  	 Monthly within 30 days
	  	Yes	  	No
	 Annual (Audited)
	  	 FYE within 120 days
	  	Yes	  	No
	 10-Q, 10-K and 8-K
	  	 Within 5 days after filing with SEC
	  	Yes	  	No
				
	 Financial Covenant
	  	 Required
	  	 Actual
	  	Complies
	 Maximum Trailing 3 Mo. EBITDA Loss
	  	 $3,500,000
	  	 $                    
	  	Yes	  	No
	 Minimum Cash
	  	 $15,000,000
	  	 $                    
	  	Yes	  	No

 Borrower only has deposit accounts located at the following
institutions:                    . 
  

									
	Comments Regarding Exceptions: See Attached.	 		 	BANK USE ONLY
					
		 		 		 	 Received by:
	 	  
	Sincerely,	 		 		 	AUTHORIZED SIGNER
		 		 		 	 Date:
	 	
	 DRUGSTORE.COM, INC.
	 		 		 	
	  	 		 	 Verified:
	 	  
	 		 		 	AUTHORIZED SIGNER
	 SIGNATURE
	 		 		 	
	  	 		 	 Date:
	 	
	 		 		 	
	 TITLE
	 		 	Compliance
Status:                                       
             Yes        No
	  	 		 		 	
	 		 		 	
	 DATE
	 		 		 	

  

 19

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