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Exhibit 4.1  

 
 

OVERSTOCK.COM, INC.
  2005 EQUITY INCENTIVE PLAN    
    

        1.    Purposes of the Plan.    The purposes of this 2005 Equity Incentive Plan are: 

	•
	to
attract and retain the best available personnel for positions of substantial responsibility,

	•
	to
provide additional incentive to Service Providers, and

	•
	to
promote the success of the Company's business. 

        Awards
granted under the Plan may be Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Shares, Performance Units or Deferred
Stock Units, as determined by the Administrator at the time of grant. 

        2.    Definitions.    As used herein, the following definitions shall apply: 

        (a)   "Administrator" means the Board or any of its Committees that shall be administering the Plan, in accordance with
Section 4 of the Plan. 

        (b)   "Applicable Laws" means the requirements relating to the administration of equity compensation plans under U.S. state
corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Awards are granted under the Plan. 

        (c)   "Award" means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Stock Appreciation
Rights, Performance Shares, Performance Units or Deferred Stock Units. 

        (d)   "Award Agreement" means the written or electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 

        (e)   "Award Exchange Program" means a program whereby outstanding Awards are surrendered or cancelled in exchange for Awards
(of the same or different type), which may have a lower exercise or purchase price, or in exchange for cash or a combination of cash and Awards. 

        (f)    "Awarded Stock" means the Common Stock subject to an Award. 

        (g)   "Board" means the Board of Directors of the Company. 

        (h)   "Cash Position" means the Company's level of cash and cash equivalents. 

        (i)    "Cause" means (i) an act of personal dishonesty taken by the Participant in connection with his or her
responsibilities as a Service Provider and intended to result in personal enrichment of the Participant, (ii) Participant being convicted of a felony, (iii) a willful act by the
Participant which constitutes gross misconduct and which is injurious to the Company, or (iv) following delivery to the Participant of a written demand for performance from the Company which
describes the basis for the Company's reasonable belief that the Participant has not substantially performed his duties, continued violations by the Participant of his or her obligations to the
Company which are demonstrably willful and deliberate on the Employee's part. 

        (j)    "Change of Control" means the occurrence of any of the following events: 

          (i)  Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than Patrick M. Byrne, Dorothy M. Byrne or John J. Byrne or an individual or 

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entity
that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with Patrick M. Byrne, Dorothy M. Byrne and/or John J. Byrne, becomes
the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities; or 

         (ii)  The
consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; 

        (iii)  A
change in the composition of the Board occurring within a one-year period, as a result of which fewer than a majority of the directors are Incumbent
Directors. "Incumbent Directors" means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the Company); or 

        (iv)  The
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its
parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation. 

        (k)   "Code" means the Internal Revenue Code of 1986, as amended. 

        (l)    "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. 

        (m)  "Common Stock" means the common stock of the Company. 

        (n)   "Company" means Overstock.com, Inc. 

        (o)   "Consultant" means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render
services to such entity. 

        (p)   "Deferred Stock Unit" means a deferred stock unit Award granted to a Participant pursuant to Section 14. 

        (q)   "Director" means a member of the Board. 

        (r)   "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. 

        (s)   "Earnings Per Share" means as to any Fiscal Year, the Company's or a business unit's Net Income, divided by a weighted
average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles. 

        (t)    "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the
Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three 

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(3) months
following the 91st day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. 

        (u)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (v)   "Expenses" means as to any Performance Period, the Company's or business unit's incurred expenses. 

        (w)  "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

          (i)  If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system
on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

         (ii)  If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

        (iii)  In
the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. 

        (x)   "Fiscal Year" means a fiscal year of the Company. 

        (y)   "Gross Margin" means as to any Performance Period, the Company's Revenues less the related cost of Revenues expressed in
dollars or as a percentage of Revenues. 

        (z)   "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder. 

        (aa) "Individual Objectives" means, as to any Participant for any Performance Period, the objective and measurable goals set
by a process and approved by the Administrator. 

        (bb) "Net Income" means as to any Fiscal Year, the income after taxes of the Company for the Fiscal Year determined in
accordance with generally accepted accounting principles. 

        (cc) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (dd) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Award.
The Notice of Grant is part of the Option Agreement or Award Agreement. 

        (ee) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder. 

        (ff)  "Operating Cash Flow" means the Company's or a business unit's sum of Net Income plus depreciation and amortization less
capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments
from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles. 

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        (gg) "Operating Income" means the Company's or a business unit's income from operations but excluding any unusual items,
determined in accordance with generally accepted accounting principles. 

        (hh) "Operating Margin" means, as to any Performance Period, the Company's or a business unit's Operating Income divided by
Revenue, expressed as a percentage. 

        (ii)   "Option" means a stock option granted pursuant to the Plan. 

        (jj)   "Option Agreement" means a written or electronic agreement between the Company and a Participant evidencing the terms
and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 

        (kk) "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the
Code. 

        (ll)   "Participant" means the holder of an outstanding Award granted under the Plan. 

        (mm) "Performance Goals" means the goal(s) (or combined goal(s)) determined by the Administrator (in its discretion) to be
applicable to a Participant with respect to an Award. As determined by the
Administrator, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) Cash Position,
(b) Earnings Per Share, (c) Expenses, (d) Gross Margin, (e) Individual Objectives, (f) Net Income, (g) Operating Cash Flow, (h) Operating Income,
(i) Operating Margin, (j) Return on Assets, (k) Return on Equity, (l) Return on Sales, (m) Revenue, (n) Total Stockholder Return, and/or (o) Unit
Sales. The Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative
terms (including, but not limited to, passage of time and/or against another company or companies), (iii) on a per-share basis, (iv) against the performance of the Company as
a whole or of a business unit of the Company or by product or product line, (v) on a pre-tax or after-tax basis, and/or on a GAAP or non-GAAP basis. Prior to
the beginning of the applicable Performance Period, the Administrator shall determine whether any significant element(s) shall be included or excluded from the calculation of any Performance Goal with
respect to any Participants. For example, but not by way of limitation, the Administrator may determine that the measures for one or more Performance Goals shall consist of non-GAAP
variations of any of the foregoing measures. The Committee may set different goals for Awards not intended to qualify for exemption from the limitations of Section 162(m) of the Code. 

        (nn) "Performance Period" means any Fiscal Year or such other period as determined by the Administrator in its sole
discretion. 

        (oo) "Performance Share" means a performance share Award granted to a Participant pursuant to Section 12. 

        (pp) "Performance Unit" means a performance unit Award granted to a Participant pursuant to Section 13. 

        (qq) "Plan" means this 2005 Equity Incentive Plan. 

        (rr)  "Restricted Stock" means Shares granted pursuant to Section 11 of the Plan. 

        (ss)  "Return on Assets" means the percentage equal to the Company's or a business unit's Operating Income before incentive
compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles. 

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        (tt)  "Return on Equity" means the percentage equal to the Company's Net Income divided by average stockholder's equity,
determined in accordance with generally accepted accounting principles. 

        (uu) "Return on Sales" means the percentage equal to the Company's or a business unit's Operating Income before incentive
compensation, divided by the Company's or the business unit's, as applicable, revenue, determined in accordance with generally accepted accounting principles. 

        (vv) "Revenue" means, as to any Performance Period, the Company's or a business unit's gross revenues, net sales or gross
sales, as determined by the Administrator. 

        (ww) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 

        (xx) "Section 16(b)" means Section 16(b) of the Exchange Act. 

        (yy) "Service Provider" means an Employee, Director or Consultant. 

        (zz) "Share" means a share of the Common Stock, as adjusted in accordance with Section 16 of the Plan. 

        (aaa) "Stock Appreciation Right" or "SAR" means an Award granted pursuant to
Section 10 hereof. 

        (bbb) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f)
of the Code. 

        (ccc) "Total Stockholder Return" means the total return (change in share price plus reinvestment of any dividends) of a
Share. 

        (ddd) "Unit Sales" means, as to any Performance Period, gross or net sales of units, consisting of any merchandise or type or
category of merchandise or other product or service sold by the Company at any time, now or hereafter, as determined and specified by the Administrator. 

        (eee) "Voluntary Termination for Good Reason" means the Participant voluntarily resigns within ninety (90) days after
the occurrence of any of the following (i) without the Participant's express written consent, a material reduction of the Participant's duties, title, authority or responsibilities, relative to
the Participant's duties, title, authority or responsibilities as in effect immediately prior to such reduction, or the assignment to Participant of such reduced duties, title, authority or
responsibilities; provided, however, that a reduction in duties, title, authority or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example,
when the Chief Executive Officer of the Company remains as such following a Change of Control and is not made the Chief Executive Officer of the acquiring corporation) shall not by itself constitute
grounds for a "Voluntary Termination for Good Reason;" (ii) a reduction by the Company in the base salary of the Participant as in effect immediately prior to such reduction; (iii) the
relocation of the Participant to a facility or a location outside of a 35 mile radius from the present facility or location, without the Participant's express written consent; or (iv) any act
or set of facts or circumstances which would, under applicable case law or statute constitute a constructive termination of the Participant. 

        3.    Stock Subject to the Plan.    Subject to the provisions of Section 16 of the Plan, the maximum aggregate
number of Shares which may be issued under the Plan is 1,184,158 Shares (consisting of the Shares remaining available for grant under the Company's 2002 Stock Option Plan, as amended (the "2002 Plan")
as of December 31, 2004), less Shares covered by any grants made under the 2002 Plan after December 31, 2004, plus any Shares returned to the 2002 Plan after December 31, 2004,
plus (a) any Shares which have been reserved but not issued under the Company's 1999 Stock Option Plan (the "1999 Plan") or the Gear.com, Inc. Restated 1998 Stock Option Plan (the "Gear.com
Plan") and 

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(b) any
Shares returned to the 1999 Plan or the 2002 Plan or the Gear.com Plan as a result of termination of options or repurchase of Shares issued under the 1999 Plan or the 2002 Plan or the
Gear.com Plan. The Shares may be authorized, but unissued, or reacquired Common Stock. Regardless of the number of Shares returned to the 1999 Plan or the 2002 Plan or the Gear.com Plan, the maximum
aggregate number of Shares that may be issued under the Plan is 3,000,000. 

        If
an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Award Exchange Program, or, with respect to Restricted Stock,
Performance Shares, Performance Units or Deferred Stock Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options and SARs, the forfeited or
repurchased shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to SARs, only shares actually issued
pursuant to an SAR shall cease to be available under the Plan; all remaining shares under SARs shall remain available for future grant or sale under the Plan (unless the Plan has terminated). However,
Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan; provided, however, that if
Shares of Restricted Stock, Performance Shares, Performance Units or Deferred Stock Units are repurchased by the Company at their original purchase price or are forfeited to the Company, such Shares
shall become available for future grant under the Plan. Shares used to pay the exercise price of an Option or Stock Purchase Right shall become available for future grant or sale under the Plan. To
the extent an Award under the Plan is paid out in cash rather than stock, such cash payment shall not result in a reduction to the number of Shares available for issuance under the Plan. 

        4.    Administration of the Plan.    

        (a)    Procedure.    

        (i)    Multiple Administrative Bodies.    The Plan may be administered by different Committees with respect to
different groups of Service Providers. 

        (ii)    Section 162(m).    To the extent that the Administrator determines it to be desirable to qualify
Options or other Awards granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section 162(m) of the Code. 

        (iii)    Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. 

        (iv)    Other Administration.    Other than as provided above, the Plan shall be administered by (A) the Board
or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. 

        (b)    Powers of the Administrator.    Subject to the provisions of the Plan, and in the case of a Committee, subject
to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 

          (i)  to
determine the Fair Market Value; 

         (ii)  to
select the Service Providers to whom Awards may be granted hereunder; 

        (iii)  to
determine whether and to what extent Awards or any combination thereof, are granted hereunder; 

        (iv)  to
determine the number of shares of Common Stock or equivalent units to be covered by each Award granted hereunder; 

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         (v)  to
approve forms of agreement for use under the Plan; 

        (vi)  to
reduce the exercise price of an Award to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Award shall have declined
since the date the Award was granted; 

       (vii)  to
institute an Award Exchange Program; 

      (viii)  to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or SARs may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine; 

        (ix)  to
construe and interpret the terms of the Plan and Awards; 

         (x)  to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose
of qualifying for preferred tax treatment under foreign tax laws; 

        (xi)  to
modify or amend each Award (subject to Section 18(c) of the Plan), including the discretionary authority to extend the post-service-termination
exercisability period of Options and SARs longer than is otherwise provided for in the Plan; 

       (xii)  to
authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; 

      (xiii)  to
allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of
an Award (or distribution of a Deferred Stock Unit) that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld (but no more). The Fair Market Value of
any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose
shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; 

      (xiv)  to
determine the terms and restrictions applicable to Awards; and 

       (xv)  to
make all other determinations deemed necessary or advisable for administering the Plan. 

        (c)    Effect of Administrator's Decision.    The Administrator's decisions, determinations and interpretations shall
be final and binding on all Participants and any other holders of Awards. 

        5.    Eligibility.    Restricted Stock, Performance Shares, Performance Units, Stock Appreciation Rights, Deferred
Stock Units and Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

        6.    No Employment Rights.    Neither the Plan nor any Award shall confer upon a Participant any right with respect
to continuing the Participant's employment with the Company or its Subsidiaries, nor shall they interfere in any way with the Participant's right or the Company's or Subsidiary's right, as the case
may be, to terminate such employment at any time, with or without cause. 

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        7.    Code Section 162(m) Provisions.    

        (a)    Option and SAR Annual Share Limit.    No Participant shall be granted, in any Fiscal Year, Options and Stock
Appreciation Rights to purchase more than 423,430 Shares; provided, however, that such limit shall be 846,860 Shares in the Participant's first Fiscal Year of Company service. 

        (b)    Restricted Stock and Performance Share Annual Limit.    No Participant shall be granted, in any Fiscal Year,
more than 211,715 Shares of Restricted Stock or Performance Shares; provided, however, that such limit shall be 635,145 Shares in the Participant's first Fiscal Year of Company service. 

        (c)    Performance Units Annual Limit.    No Participant shall receive Performance Units, in any Fiscal Year, having
an initial value greater than $1,000,000, provided, however, that such limit shall be $3,000,000 in the Participant's first Fiscal Year of Company service. 

        (d)    Section 162(m) Performance Restrictions.    For purposes of qualifying grants of Restricted Stock,
Performance Shares or Performance Units as "performance-based compensation" under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set by the Administrator on or before the latest date permissible to enable the Restricted Stock, Performance Shares or Performance
Units to qualify as "performance-based compensation" under Section 162(m) of the Code. In granting Restricted Stock, Performance Shares or Performance Units which are intended to qualify under
Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under
Section 162(m) of the Code (e.g., in determining the Performance Goals). 

        (e)    Changes in Capitalization.    The numerical limitations in Sections 7(a) and (b) shall be adjusted
proportionately in connection with any change in the Company's capitalization as described in Section 16(a). 

        (f)    If
an Award is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 16), the cancelled
Award will be counted against the limits set forth in subsections (a) and (b) above. For this purpose, if the exercise price of an Award is reduced, the transaction will be treated as a
cancellation of the Award and the grant of a new Award. 

        8.    Term of Plan.    The Plan shall continue in effect for a term of ten (10) years following the date upon
which the Board approved the Plan in 2005. 

        9.    Stock Options.    

        (a)    Term.    The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall
be ten (10) years from the date of grant or such shorter term as may be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Notice of Grant. 

        (b)    Option Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an
Option shall be determined by the Administrator, subject to the following: 

          (i)  In
the case of an Incentive Stock Option: 

        (A)  granted
to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of 

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stock
of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

        (B)  granted
to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant. 

         (ii)  In
the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator. In the case of a Nonstatutory Stock Option intended
to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant. 

        (iii)  Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a merger or other corporate transaction. 

        (c)    Waiting Period and Exercise Dates.    At the time an Option is granted, the Administrator shall fix the period
within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may
not be exercised until the completion of a service period or until performance milestones are satisfied. 

        (d)    Form of Consideration.    The Administrator shall determine the acceptable form of consideration for exercising
an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Subject to Applicable
Laws, such consideration may consist entirely of: 

          (i)  cash;

         (ii)  check;

        (iii)  other
Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Participant for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; 

        (iv)  delivery
of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale proceeds required to pay the exercise price; 

         (v)  such
other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, including, to the extent permitted by Applicable
Laws and approved by the Administrator, delivery of a promissory note, consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan,
or a reduction in the amount of any Company liability to the Participant; or 

        (vi)  any
combination of the foregoing methods of payment. 

        (e)    Exercise of Option; Rights as a Stockholder.    Any Option granted hereunder shall be exercisable according to
the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An
Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of 

9

 

payment
authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by
the Participant, in the name of the Participant and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the optioned stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued, except as provided in Section 16 of the Plan. Exercising an Option in any manner shall decrease the number of Shares
thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised. 

        (f)    Termination of Relationship as a Service Provider.    If a Participant ceases to be a Service Provider, other
than upon the Participant's death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three months following the Participant's termination. If, on the date of termination, the Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

        (g)    Disability.    If a Participant ceases to be a Service Provider as a result of the Participant's Disability,
the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Participant's termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan. 

        (h)    Death of Participant.    If a Participant dies while a Service Provider, the Option may be exercised following
the Participant's death within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised
later than the expiration of the term of such Option as set forth in the Option Agreement), by the Participant's designated beneficiary, provided such beneficiary has been designated prior to
Participant's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the
Participant's estate or by the person(s) to whom the Option is transferred pursuant to the Participant's will or in accordance with the laws of descent and distribution. In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following Participant's death. If, at the time of death, the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. 

10

 

        (i)    ISO $100,000 Rule.    Each Option shall be designated in the Notice of Grant as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value: 

          (i)  of
Shares subject to a Participant's Incentive Stock Options granted by the Company, any Parent or Subsidiary, which 

         (ii)  become
exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall
be treated as Nonstatutory Stock Options. For purposes of this Section 9(j), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant. 

        10.    Stock Appreciation Rights.    

        (a)    Grant of SARs.    Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any
time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the number of SARs granted to any
Participant. 

        (b)    Exercise Price and other Terms.    Subject to Section 7(a) of the Plan, the Administrator, subject to
the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs
granted under the Plan; provided, however, that no SAR may have a term of more than ten (10) years from the date of grant. The exercise price for the Shares or cash to be issued pursuant to an
already granted SAR may not be changed without the consent of the Company's stockholders. This shall include, without limitation, a repricing of the SAR as well as an SAR exchange program whereby the
Participant agrees to cancel an existing SAR in exchange for an Option, SAR or other Award. 

        (c)    Payment of SAR Amount.    Upon exercise of a SAR, a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying: 

          (i)  The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 

         (ii)  the
number of Shares with respect to which the SAR is exercised. 

        (d)    Payment upon Exercise of SAR.    At the discretion of the Administrator, payment for a SAR may be in cash,
Shares or a combination thereof. 

        (e)    SAR Agreement.    Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise
price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, shall determine. 

        (f)    Expiration of SARs.    A SAR granted under the Plan shall expire upon the date determined by the Administrator,
in its sole discretion, and set forth in the Award Agreement. 

        (g)    Termination of Relationship as a Service Provider.    If a Participant ceases to be a Service Provider, other
than upon the Participant's death or Disability termination, the Participant may exercise his or her SAR within such period of time as is specified in the Award Agreement to the extent that the SAR is
vested on the date of termination (but in no event later than the expiration of the term of such SAR as set forth in the SAR Agreement). In the absence of a specified time in the Award Agreement, the
SAR shall remain exercisable for three months following the Participant's termination. If, on the date of termination, the Participant is not vested as to his or her entire SAR, the Shares covered by
the unvested portion of the SAR shall revert to the Plan. If, after termination, the Participant does not exercise his or her SAR within the time specified by the 

11

 

Administrator,
the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan. 

        (h)    Disability.    If a Participant ceases to be a Service Provider as a result of the Participant's Disability,
the Participant may exercise his or her SAR within such period of time as is specified in the Award Agreement to the extent the SAR is vested on the date of termination (but in no event later than the
expiration of the term of such SAR as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the SAR shall remain exercisable for twelve (12) months
following the Participant's termination. If, on the date of termination, the Participant is not vested as to his or her entire SAR, the Shares covered by the unvested portion of the SAR shall revert
to the Plan. If, after termination, the Participant does not exercise his or her SAR within the time specified herein, the SAR shall terminate, and the Shares covered by such SAR shall revert to the
Plan. 

        (i)    Death of Participant.    If a Participant dies while a Service Provider, the SAR may be exercised following the
Participant's death within such period of time as is specified in the Award Agreement (but in no event may the SAR be exercised later than the expiration of the term of such SAR as set forth in the
Award Agreement), by the Participant's designated beneficiary, provided such beneficiary has been designated prior to Participant's death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such SAR may be exercised by the personal representative of the Participant's estate or by the person(s) to whom the SAR is transferred
pursuant to the Participant's will or in accordance with the laws of descent and distribution. In the absence of a specified time in the SAR Agreement, the SAR shall remain exercisable for twelve
(12) months following Participant's death. If the SAR is not so exercised within the time specified herein, the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan. 

        11.    Restricted Stock.    

        (a)    Grant of Restricted Stock.    Subject to the terms and conditions of the Plan, Restricted Stock may be granted
to Participants at any time as shall be determined by the Administrator, in its sole discretion. Subject to Section 7(b) hereof, the Administrator shall have complete discretion to determine
(i) the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii) the conditions that must be satisfied, which may include a performance-based component,
upon which is conditioned the grant, vesting or issuance of Restricted Stock. Restricted Stock shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one
Share for purposes of determining the number of Shares subject to an Award. Restricted Stock may be granted in the form of restricted stock units that are not issued until the vesting conditions are
satisfied. Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares. 

        (b)    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to
determine the terms and conditions of Restricted Stock granted under the Plan. Restricted Stock grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at
the time the stock or the restricted stock unit is awarded. The Administrator may require the recipient to sign an Award Agreement as a condition of the award. Any certificates representing the Shares
of stock awarded shall bear such legends as shall be determined by the Administrator. 

        (c)    Restricted Stock Award Agreement.    Each Restricted Stock grant shall be evidenced by an Award Agreement that
shall specify the purchase price (if any) and such other terms and conditions as the Administrator, in its sole discretion, shall determine; provided; however, that if 

12

 

the
Restricted Stock grant has a purchase price, such purchase price must be paid no more than ten (10) years following the date of grant. 

        12.    Performance Shares.    

        (a)    Grant of Performance Shares.    Subject to the terms and conditions of the Plan, Performance Shares may be
granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. Subject to Section 7(b) hereof, the Administrator shall have complete discretion to
determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based
principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares. Performance Shares shall
be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are
issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares. 

        (b)    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to
determine the terms and conditions of Performance Shares granted under the Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at
the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign an Award
Agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator. 

        (c)    Performance Share Award Agreement.    Each Performance Share grant shall be evidenced by an Award Agreement
that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine. 

        13.    Performance Units.    

        (a)    Grant of Performance Units.    Performance Units are similar to Performance Shares, except that they shall be
settled in a cash equivalent to the Fair Market Value of the underlying Shares, determined as of the vesting date. Subject to the terms and conditions of the Plan, Performance Units may be granted to
Participants at any time and from time to time as shall be determined by the Administrator, in its
sole discretion. The Administrator shall have complete discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance
milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Units. Performance Units shall be granted in the form of units to acquire Shares.
Each such unit shall be the cash equivalent of one Share of Common Stock. No right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Performance Units or
the cash payable thereunder. 

        (b)    Number of Performance Units.    Subject to Section 7(c) hereof, the Administrator will have complete
discretion in determining the number of Performance Units granted to any Participant. 

        (c)    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to
determine the terms and conditions of Performance Units granted under the Plan. Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at
the time the grant is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign an Award
Agreement as a condition of the award. 

13

 

Any
certificates representing the units awarded shall bear such legends as shall be determined by the Administrator. 

        (d)    Performance Unit Award Agreement.    Each Performance Unit grant shall be evidenced by an Award Agreement that
shall specify such terms and conditions as the Administrator, in its sole discretion, shall determine. 

        14.    Deferred Stock Units.    

        (a)    Description.    Deferred Stock Units shall consist of a Restricted Stock, Performance Share or Performance Unit
Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator. Deferred
Stock Units shall remain subject to the claims of the Company's general creditors until distributed to the Participant. 

        (b)    162(m) Limits.    Deferred Stock Units shall be subject to the annual 162(m) limits applicable to the
underlying Restricted Stock, Performance Share or Performance Unit Award as set forth in Section 7 hereof. 

        (c)    409A Limitations.    If the Deferred Stock Units are considered to be deferred compensation under Code
Section 409A, then the terms of such Deferred Stock Units shall comply with Code Section 409A. 

        15.    Non-Transferability of Awards.    Unless determined otherwise by the Administrator, an Award may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the
recipient, only by the recipient. If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate. 

        16.    Adjustments Upon Changes in Capitalization, Dissolution or Liquidation or Change of Control.    

        (a)    Changes in Capitalization.    In the event that 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 such that an adjustment is determined by the
Administrator (in its sole discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the
Administrator shall, in such manner as it may deem equitable, adjust the number and class of Shares which may be delivered under the Plan, the number, class, and price of Shares covered by each
outstanding Award, and the relevant numerical Share limits herein. 

        (b)    Dissolution or Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the
Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have
the right to exercise his or her Option or SAR until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not
otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall
accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with respect to Options
and SARs) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action. 

14

 

        (c)    Change of Control.    

        (i)    Stock Options and SARs.    In the event of a merger of the Company with or into another corporation, or a
Change of Control, each outstanding Option and SAR shall be assumed or an equivalent option or SAR substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the Option or SAR, the Participant shall fully vest in and have the right to exercise the Option or SAR as to all of the
Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or SAR becomes fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets or Change of Control, the Administrator shall notify the Participant in writing or electronically that the Option or SAR shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or SAR shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option or SAR shall
be considered assumed if, following the merger or Change of Control, the option or stock appreciation right confers the right to purchase or receive, for each Share of Awarded Stock subject to the
Option or SAR immediately prior to the merger or Change of Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change of Control by holders of
Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such consideration received in the merger or Change of Control is not solely common stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or SAR, for each Share of Awarded Stock subject to the Option or SAR,
to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change of Control. 

        (ii)    Restricted Stock, Performance Shares, Performance Units and Deferred Stock Units.    In the event of a merger
or Change of Control, each outstanding Restricted Stock, Performance Share, Performance Unit and Deferred Stock Unit award shall be assumed or an equivalent Restricted Stock, Performance Share,
Performance Unit and Deferred Stock Unit award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Restricted Stock, Performance Share, Performance Unit or Deferred Stock Unit award, the Participant shall fully vest in the Restricted Stock, Performance Share,
Performance Unit or Deferred Stock Unit including as to Shares (or with respect to Performance Units, the cash equivalent thereof) which would not otherwise be vested. For the purposes of this
paragraph, a Restricted Stock, Performance Share, Performance Unit and Deferred Stock Unit award shall be considered assumed if, following the merger or Change of Control, the award confers the right
to purchase or receive, for each Share (or with respect to Performance Units, the cash equivalent thereof) subject to the Award immediately prior to the merger or Change of Control, the consideration
(whether stock, cash, or other securities or property) received in the merger or Change of Control by holders of Common Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
merger or Change of Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration
to be received, for each Share and each unit/right to acquire a Share subject to the Award, to be solely common stock 

15

 

of
the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change of Control. 

        (d)    Involuntary Termination other than for Cause, Death or Disability or a Voluntary Termination for Good Reason, Following a Change of
Control.    If, within eighteen (18) months following a merger or Change of Control, Participant's employment is terminated involuntarily by the Company or
successor corporation other than for Cause, on account of death or Disability or by the Participant by a Voluntary Termination for Good Reason, then Participant shall fully vest in and have the right
to exercise his or her Award as to all of the Shares subject to each such Award including Shares as to which such Award would not otherwise be vested or exercisable. 

        17.    Date of Grant.    The date of grant of an Award shall be, for all purposes, the date on which the Administrator
makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time
after the date of such grant. 

        18.    Amendment and Termination of the Plan.    

        (a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan; provided,
however, that the Board may not materially amend the Plan without obtaining stockholder approval. 

        (b)    Stockholder Approval.    The Company shall obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Law. 

        (c)    Effect of Amendment or Termination.    No amendment, alteration, suspension or termination of the Plan shall
impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing (or electronic format) and signed by the
Participant and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination. 

        19.    Conditions Upon Issuance of Shares.    

        (a)    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the
Award or the issuance and delivery of such Shares (or with respect to Performance Units, the cash equivalent thereof) shall comply with Applicable Laws. 

        (b)    Investment Representations.    As a condition to the exercise or receipt of an Award, the Company may require
the person exercising or receiving such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 

        20.    Liability of Company.    

        (a)    Inability to Obtain Authority.    The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 

        (b)    Grants Exceeding Allotted Shares.    If the Awarded Stock covered by an Award exceeds, as of the date of grant,
the number of Shares which may be issued under the Plan without additional stockholder approval, such Award shall be void with respect to such excess Awarded Stock, unless stockholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 18(b) of the Plan. 

        21.    Reservation of Shares.    The Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

16

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Exhibit 10.15  

 
 

SECOND MODIFICATION AGREEMENT    
    

        BY THIS SECOND MODIFICATION AGREEMENT, made and entered into as of the 1st day of February, 2005, STAR BUFFET, INC., a Delaware corporation, whose address
is 420 Lawndale Drive, Salt Lake City, Utah 84115 (hereinafter called "Borrower"), and M&I MARSHALL & ILSLEY BANK, a banking corporation
organized and existing under the laws of the State of Wisconsin, whose address is One East Camelback Road, P.O. Box 11856, Phoenix, Arizona 85061-1856 (hereinafter called
"Lender"), confirm and agree as follows: 

SECTION 1.    RECITALS    

        1.1   Borrower
and Lender entered into a Loan Agreement dated October 28, 2003 (as modified by the Prior Modification, defined below, the "Loan
Agreement"), which provided for a revolving line of credit by Lender to Borrower in the amount of $3,000,000.00 (the "Loan"),
all upon the terms and conditions contained therein. 

        1.2   The
Loan is evidenced by a Promissory Note (Revolving Note) dated October 28, 2003 executed by Borrower, payable to the order of Lender, in the principal amount
of $3,000,000.00 (as modified by the Prior Modification, the "Note"). 

        1.3   Borrower
and Lender have entered into a Modification Agreement, dated October 31, 2004 (the "Prior Modification"). 

        1.4   The
Loan Agreement, the Note, the Prior Modification, this Agreement and all other documents and instruments evidencing or executed and delivered in connection with the
Loan, together with all modifications and amendments thereto and any documents required herein, are hereinafter collectively called the "Loan
Documents." 

        1.5   Borrower
and Lender desire to modify the Loan and the Loan Documents as set forth herein. 

SECTION 2.    LOAN AGREEMENT    

        2.1   The
last sentence of Section 3.1 of the Loan Agreement is hereby amended to read as follows: 

        The
"Commitment" shall be the principal sum of $3,000,000.00; provided that (i) during the period commencing November 1,
2004 through January 31, 2005, the Commitment shall be reduced to and shall be shall be the principal sum of $1,000,000.00, and (ii) commencing February 1, 2005, the Commitment shall be
increased from $1,000,000.00 to, and shall thereafter be, the principal sum of $2,000,000.00. 

        2.2   Section 9.8
of the Loan Agreement is hereby amended to read as follows: 

        9.8    Dividends.    Purchase, redeem, retire or otherwise acquire for value any shares of its capital stock or
declare or pay any dividend on, or make any other distribution with respect to, whether by reduction of capital or otherwise, any shares of its capital stock, except, (i) in the case of
Borrower, dividends that do not exceed $2,500,000.00 in any fiscal year, and (ii) in the case of the Subsidiaries, dividends and distributions to Borrower. 

SECTION 3.    OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS    

        3.1   All
references to the Loan Agreement in the other Loan Documents are hereby amended to refer to the Loan Agreement as hereby amended. 

        3.2   All
references to any Loan Document in the other Loan Documents are hereby amended to refer to that Loan Document as hereby amended. 

        3.3   Borrower
acknowledges that the indebtedness evidenced by the Loan Documents is just and owing, that the balance thereof is correctly shown in the records of Lender as of
the date hereof, and 

 

Borrower
agrees to pay the indebtedness evidenced and secured by the Loan Documents, according to the terms thereof, as herein modified. 

        3.4   Borrower
hereby reaffirms to Lender each of the representations, warranties, covenants and agreements of Borrower set forth in the Loan Documents, with the same force
and effect as if each were separately stated herein and made as of the date hereof. 

        3.5   All
terms, conditions and provisions of the Loan Documents are continued in full force and effect and shall remain unaffected and unchanged except as specifically
amended hereby. Borrower hereby ratifies, reaffirms, acknowledges, and agrees that the Loan Documents, as amended hereby, represent valid, enforceable and collectible obligations of Borrower, and that
there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to any of these documents or instruments. Borrower further acknowledges and represents that
no event has occurred and no condition exists that, after notice or lapse of time, or both, would constitute a default under this Agreement or any Loan Document. 

        3.6   The
Loan Documents, as amended hereby, are hereby ratified and reaffirmed by Borrower, and Borrower specifically acknowledges the validity and enforceability thereof. 

SECTION 4.    GENERAL    

        4.1   The
modifications contained herein shall not be binding upon Lender until Lender shall have received all of the following: 

        (a)   An
original of this Agreement fully executed by the Borrower; 

        (b)   If
Borrower is a corporation, partnership or trust, such resolutions or authorizations and such other documents as Lender may require relating to the existence and good
standing of that corporation, partnership or trust, and the authority of any person executing this Agreement or other documents on behalf of that corporation, partnership or trust. 

        (c)   Receipt
by Lender of a modification/loan fee in the amount of $2475.00 in connection with this Agreement. 

        4.2   Borrower
shall execute and deliver such additional documents and do such other acts as Lender may reasonably require to fully implement the intent of this Agreement. 

        4.3   Borrower
shall pay all costs and expenses, including, but not limited to, reasonable attorneys' fees incurred by Lender in connection herewith, whether or not all of the
conditions described in Paragraph 4.1 above are satisfied. Lender, at its option, but without any obligation to do so, may advance funds to pay any such costs and expenses that are the
obligation of the Borrower, and all such funds advanced shall bear interest at the highest rate provided in the Note, shall be due and payable upon demand and shall be secured by all of the Loan
Documents. 

        4.4   Notwithstanding
anything to the contrary contained herein or in any other instrument executed by Borrower or Lender, or in any other action or conduct undertaken by
Borrower or Lender on or before the date hereof, the agreements, covenants and provisions contained herein shall constitute the only evidence of Lender's consent to modify the terms and provisions of
the Loan Documents. Accordingly, no express or implied consent to any further modifications involving any of the matters set forth in this Agreement or otherwise shall be inferred or implied by
Lender's execution of this Agreement. Further, Lender's execution of this Agreement shall not constitute a waiver (either express or implied) of the requirement that any further modification of the
Loan or of the Loan Document shall require the express written approval of Lender; no such approval (either express or implied) has been given as of the date hereof. 

        4.5   Notwithstanding
this or any prior forbearance, actual or implied, of any nature by Lender, time is hereby declared to be of the essence hereof, of the Loan, of all Loan
Documents, and Lender 

2

 

requires,
and Borrower agrees to, strict performance of each and every covenant, condition, provision and agreement hereof and of all Loan Documents. 

        4.6   This
Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their heirs, personal representatives, successors and assigns. 

        4.7   This
Agreement is made for the sole protection and benefit of the parties hereto, and no other person or entity shall have any right of action hereon. 

        4.8   This
Agreement shall be governed by and construed according to the laws of the State of Arizona. 

        IN
WITNESS WHEREOF, these presents are executed as of the date indicated above. 

	 	 	STAR BUFFET, INC., a Delaware corporation
	

 	
 	

By:	

/s/  ROBERT E. WHEATON      

	 	 	Name:	Robert E. Wheaton
	 	 	Title:	President
	

 	
 	

BORROWER

	

 	
 	

M&I MARSHALL & ILSLEY BANK, a banking corporation organized and existing under the laws of the State of Wisconsin
	

 	
 	

By:	

/s/  GREG RECKER      

	 	 	Name:	Greg Recker
	 	 	Title:	SVP

	

 	
 	

By:	

/s/  FRANK X. MENDOZA      

	 	 	Name:	Frank X. Mendoza
	 	 	Title:	SVP
	

 	
 	

LENDER

3

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SECOND MODIFICATION AGREEMENT

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