Document:

Exhibit 10.1

 

OVERSTOCK.COM

Performance Share Plan

2006-2008

 

The Purpose of the Plan:

 

1.               The purpose of the Plan is to
advance the interest of Overstock.com, Inc. (the “Company”) and its owners
by providing executive incentives and by providing for a reasonable sharing of
the financial performance of the enterprise.

 

2.               Summary:  From time to time the Board of Directors
of the Company (the “Board”) may grant to an executive of the Company an award
of Performance Shares.  Each Performance
Share shall have the financial value of the market value per share, conditioned
upon attainment of a stated Performance Goal over the Award Period specified in
the Grant.  At the end of the Award
Period the Board will determine the degree of attainment of the Performance Goal
and will assign a Harvest Percentage based on that determination.  The matured Performance Shares will then be
exchanged for a cash payment equal to the then financial value of the shares
multiplied by the Harvest Percentage.

 

3.               Administration:  The Plan shall be administered by the
Board.  The Board shall have the
authority to select the executives who shall be participants, to determine the
size and terms of an award, to modify the terms of any award that has been
granted, to determine the time when awards will be made, to determine the Award
Periods applicable to an award, to determine the Harvest Percentages applicable
to an award, to determine the terms of a Participant’s grant agreement (which
need not be identical or uniform), to establish Performance Goals in respect of
such Award Periods, to certify whether such Performance Goals were attained and
to make such other determinations that are not prohibited by this plan.  The Board is authorized to interpret the plan
to establish amend and rescind any rules and regulations relating to the
plan and to make any other determinations that it deems necessary or desirable.  Any decision of the Board in the
interpretation and administration of the plan shall lie within its sole and
absolute discretion and shall be final conclusive and binding on all parties
concerned.  Determinations made by the Board
under the plan need not be uniform and may be made selectively among participants
regardless of whether such Participants are similarly situated. The Board shall
have the right to deduct from any payment made under the plan any taxes
required by law to be withheld with respect to such payment. The Board may delegate
its duties hereunder to its Compensation Committee.

 

4.               Eligibility and Participation:  The Board shall designate those executives
who shall be Participants.  Participants
shall be selected from among the executives who are in a position to have a
material impact on the financial results of the Company.  The designation of the Participants may be
made individually or by groups or classifications of executives, as the Board
deems appropriate.  Executives shall not
have a right to be designated as Participants and the 

 

1

 

designation of an executive as a Participant
shall not obligate the Board to continue such executive as a participant in
subsequent periods.

 

5.              Grants:

 

(a) Grant:  In each Grant the committee shall specify,
among other matters, (i) the number of Performance Shares awarded, (ii) the
Award Period, (iii) the Performance Goal to be attained within the Award
Period, (iv) the method for determining the Harvest Percentage based upon
the level of achievement of the Performance Goal, and (v) the maximum Award
Payment.

 

(b)  Performance
measures:  The performance
measures for any award shall be as determined by the Board and as stated in the
grant agreement.  Normally the goal will
be based on some reasonable measure of growth in economic value per share of
the enterprise, or on some similar measure of financial performance.

 

(c)  Payment:  As soon as practicable after the end of the Award
Period, the Board shall determine (i) whether the applicable Performance
Goal have been attained with respect to a given award and (ii) the Harvest
Percentage applied to a given award.  At
the end of the Award Period the Board shall ascertain the actual value of the
award.  Unless otherwise determined by
the Board or otherwise set forth in a grant agreement the actual value of an
award shall be equal to the then financial value of the shares multiplied by
the Harvest Percentage.  A Participant’s
actual value will be settled through a cash payment to the Participant no later
than March 15 of the calendar year immediately following the last day of
the Award Period.

 

6.               Termination of Employment:  Except as set forth in Section 7 or
otherwise set forth in a grant agreement a Participant shall immediately
forfeit all outstanding awards upon any termination of employment prior to the
end of the applicable Award Period.  The
Board may at its discretion provide that if a Participant dies, retires, is
disabled, or is granted a leave of absence, or if the Participant’s employment
is otherwise terminated in a manner reasonably judged to be not seriously
detrimental to the company, then all or a portion of the Participant’s award,
as determined by the Board, may be paid to the Participant (or beneficiary) at
the time set forth in Section 5(c).

 

7.               Change of Control:  (a) If a Termination event occurs with
respect to a Participant within 24 months after a Change of Control, then each
award held by such Participant that was granted prior to the Change of Control
shall be cancelled and such Participant shall be entitled to receive in respect
of each such canceled award a payment equal to the product of (i) the then
financial value of 100% of the Performance Shares and (ii) the applicable Harvest
Percentage.  Such payment shall be made
on the date of termination of the Participant’s employment or as soon as
administratively feasible thereafter, but in no event after the later of (i) the
last day of the calendar year in which the Participant’s employment terminates,
or (ii) the fifteenth (15th) day of the third calendar month
following the date of termination of the Participant’s employment.  The applicable Harvest Percentage 

 

2

 

will be determined based on the extent to
which the Performance Goal has been achieved as of the last day of the calendar
quarter ending prior to the date of the applicable Termination event.

 

(b) Notwithstanding anything herein to
the contrary, if, following a Change of Control, a Participant’s employment
remains continuous through the end of an Award Period, then the Participant
shall be paid with respect to those awards for which he would have been paid
had there not been a Change of Control, and the actual value and time of
payment shall be determined in accordance with section 5 above.

 

8.               Code Section 409A:  Notwithstanding anything in this Plan to
the contrary, in the event that a Participant is deemed to be a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), no payment that is “deferred compensation”
subject to Code Section 409A shall be made to the Participant prior to the
date that is six (6) months after the date of the Participant’s separation
from service (as defined in Code Section 409A) or, if earlier, the
Participant’s date of death.

 

9.               Amendments or Termination:  The Board may amend alter or discontinue the
Plan, but no amendment, alteration or discontinuation shall be made which would
impair any of the rights or obligations under any award theretofore granted to
a Participant without such Participant’s consent; provided, however, that the Board
may amend the plan in such manner as it deems necessary to permit the granting
of awards meeting the requirements of the Code, or any successor thereto, or
other applicable laws.

 

10.         No Right
to Employment:  Neither
the Plan nor any action taken hereunder shall be construed as giving any
Participant or other person any right to continue to be employed by, or to
continue to perform services for, the Company or any subsidiary, and the right
to terminate the employment of or performance of services by any Participant at
any time and for any reason is specifically reserved to the Company and its
subsidiaries.

 

11.         Nontransferability
of Awards:  An award shall
not be transferable or assignable by the Participant, other than as described
in Section 17 of this Plan.

 

12.         Reduction
of Awards: 
Notwithstanding anything to the contrary herein, the Board, in its sole
discretion (but subject to applicable law), may reduce any amounts payable to
any Participant hereunder in order to satisfy any liabilities owed to the
Company or any of its subsidiaries by the Participant.

 

13.         Participation
of Subsidiaries:  If a
subsidiary wishes to participate in the Plan and its participation shall have
been approved by the Board, the Board of Directors of the subsidiary shall
adopt a resolution in form and substance satisfactory to the Committee
authorizing participation by the subsidiary in the Plan.  A subsidiary that adopts the Plan in
accordance with the Section shall be permitted to rename the Plan under
the name of such subsidiary.  A
subsidiary 

 

3

 

may cease to participate in the Plan at any
time by action of the Board or by action of the Board of Directors of such
subsidiary, which latter action shall be effective not earlier than the date of
delivery to the Secretary of the Company of a certified copy of a resolution of
the subsidiary’s Board of Directors taking such action.  Termination of participation in the Plan
shall not relieve a subsidiary of any obligations theretofore incurred by it
under the Plan.  The Board in its
discretion may waive compliance with any provisions in this section.

 

14.         Claims
Procedure:  In general,
any claim for benefits under the Plan shall be filed with the Board of
Directors by a Participant or beneficiary. 
The Board will consider the claim promptly.

 

15.         Miscellaneous
Provisions:  The Company
is the sponsor and legal obligor under the Plan and shall make all payments
hereunder, other than any payments to be made by any of the subsidiaries, as
described below (in which case such payments shall be made by such subsidiary, as
appropriate).  If a subsidiary adopts the
Plan in accordance with Section 12, the subsidiary shall be responsible
for all payments made under the Plan for Awards granted by the Board of
Directors of the subsidiary including expenses involved in administering the
Plan at the subsidiary level.  The Plan
is unfunded.  The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to ensure the payment of any amounts under the Plan, and the Participant’s
rights to any payment hereunder shall be no greater than the rights of the
Company’s (or the applicable subsidiary’s) unsecured creditors.  All references to Sections herein shall be
deemed to be references to the specified sections of this Plan.

 

16.         Taxes:  The Company and its subsidiaries shall have
the right to deduct from any payment made under the Plan any taxes required by
law to be withheld with respect to such payment.

 

17.         Choice of
Law:  The Plan shall be
governed by and construed in accordance with the laws of Utah.

 

18.         Designation
of Beneficiary by Participant: 
A Participant may name a beneficiary to receive any payment to which he/she
may be entitled in respect to a Grant in the event of his/her death.  A Participant may change his/her beneficiary
from time to time.  If the Participant
has not designated a beneficiary, or if no designated beneficiary is living on
the date on which any amount becomes payable, that amount shall be paid to the
Participant’s estate.

 

19.         Schedule of
Definitions:  The attached
Schedule of Definitions shall be considered an integral part of this Plan.

 

20.         Effective
Date of the Plan:  The
Plan shall be effective as of January 1, 2006.

 

IN WITNESS WHEREOF, the Company has caused
this Plan to be executed this 23th day of January, 2006.

 

4

 

	
   

  	
  Overstock.com, Inc.

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Patrick M. Byrne

  
	
   

  	
   

  	
  President

  
					

 

5

 

OVERSTOCK.COM

Performance Share Plan

2006-2008

 

Schedule of Definitions:  terms
used in the Plan or in a Grant shall have the following meanings:

 

Change of Control:  shall
mean If any person or group (within the
meaning of  sections 13(d) or 14(d)2
of the Exchange Act) other than members of the Byrne Family own  thirty-five percent or more of the then
outstanding common stock of the Company.

 

Economic Value (EV):
shall mean the economic value of the Company calculated consistent with the
regularly calculated EV in the financial account prepared by the controller in
accordance with the EV definition adopted by the Board at the beginning of
award period.

 

Economic Value Per Share:
shall mean the EV divided by the number of fully diluted common shares
outstanding.

 

Grant:  shall
mean an offer by the Board to an executive to participate in the Performance
Share Plan. Such Grant will specify the number of Performance Shares being
granted, the Performance Goal, the Award Period, the method for judging
attainment of the goal and for setting the Harvest Percentage, a maximum award
value if any, and other relevant terms.

 

Harvest Percentage:  shall
be determined by the Board at the end of the Award Period specified in the
Grant, and will represent the Board’s judgment of the degree to which the
Company’s actual financial performance has met the Performance Goal specified
in the Grant. Normally the Harvest Percentage will range from 0% thru 200%
according to a scale specified in the Grant. This Harvest Percentage will then
be multiplied by the market value of the Performance Shares granted, to produce
the actual cash value of the Grant.

 

Performance Share:
a unit granted to an executive under the Performance Share Plan. The unit will
have the financial equivalence of a share of common stock in the Company,
conditioned upon the attainment of a specified Performance Goal over a
specified Award Period.

 

Related Employment:   shall mean the employment of a participant by
an employer who is not the Company or an affiliate of the Company, provided (i) such
employment is undertaken by the participant and continued at the request of the
Company; (ii) immediately prior to undertaking such employment the
participant was an employee of the Company, or any of its affiliates or was
engaged in related employment; and (iii) such employment is recognized by
the Board, in its sole discretion, as related employment. 

 

Termination event:  shall
be considered for this plan to be a Termination Without Cause or to be a
Constructive Termination.

 

6

 

a.               Termination
Without Cause: A termination of the
Participant’s employment with the Company or a subsidiary by the Company or the
subsidiary other than (i) due to the Participant’s death or disability as
defined in the Performance Plan Grant, or (ii) for Cause.   A transfer of a Participant’s employment to
an affiliate of the Company shall not, by itself, be considered a Termination
without Cause hereunder.  For this
purpose, “Cause” shall mean (a) an act or omission by the Participant that
constitutes a felony, (b) willful gross negligence or willful gross
misconduct by the Participant in connection with his employment by the Company
or by a subsidiary which causes, or is likely to cause, material loss or damage
to the Company.  Notwithstanding anything
herein to the contrary, a termination of a Participant’s employment with the
Company or one of its subsidiaries due solely to the consummation of a
corporate transaction described in clause (i) of the definition of Change
in Control shall not be deemed to be a “Termination Without Cause” if the
Participant is employed by the acquiror or one of its affiliates and the
acquiror or one of its affiliates formally assumes the Company’s obligations
under this Plan or places the Participant in a similar or like plan with no
diminution of the value of the awards granted.

 

b.              Constructive
Termination.  A termination of
employment with the Company and its affiliates at the initiative of the
Participant that the Participant declares, by prior written notice delivered to
the Secretary of the Company, to be a Constructive Termination by the Company
or an affiliate and which follows (i) a material decrease in his/her
salary or (ii) a material diminution in the authority, duties or
responsibilities of his/her position as a result of which the Participant
determines in good faith that he/she cannot continue to carry out his/her job
in substantially the same manner as it was intended to be carried out immediately
before such diminution.  Notwithstanding
anything herein to the contrary, a Constructive Termination shall not occur
until and unless 30 days have elapsed from the date the Company receives such
written notice from the Participant and, during that period, the Company fails
to cure, or cause to be cured, the circumstance serving as the basis on which
the declaration of Constructive Termination is given.

 

7Exhibit
10.2

 

OVERSTOCK.COM

Performance Share Plan

2006-2008 Grant

 

THIS GRANT is made,
effective as of January 1, 2006, between Overstock.com, Inc. (the “Company”)
and                 
(the “Participant”).

 

RECITALS:

 

WHEREAS, the Company has
adopted the Performance Share Plan (“Plan”), which Plan is incorporated herein
by reference and made part of this Grant; and

 

WHEREAS, the Board has
determined that it would be in the best interest of the Company and its owners to
grant the award provided for herein to the Participant pursuant to the Plan and
the terms set forth herein.

 

NOW THEREFORE, in consideration
of the mutual covenants set forth herein, the parties hereto agree as follows:

 

1.             Grant:  Subject to the terms and conditions of the
Plan and the additional terms and conditions set forth in this Grant, the
Company hereby grants to the Participant a Performance Share Award of          
shares.

 

2.             Award
Period:  The Award Period shall be January
1, 2006 through December 31, 2008.

 

3.             Performance
Goal:  The Performance Goal shall be
a 25% return on equity, measured by compounded growth in EV per share of the Company.

 

4.             Harvest
Percentage:  Shall be dependent on
the extent to which the Performance Goal is attained, and shall be determined
as follows:

 

	
  Growth in Economic Value

  	
   

  	
  Harvest Percentage

  	
   

  
	
  10% or lower

  	
   

  	
  0%

  	
   

  
	
  25%

  	
   

  	
  100%

  	
   

  
	
  40% or higher

  	
   

  	
  200%

  	
   

  

 

For percentage growth between 10% and 40%,
the Harvest Percentage will be determined on the basis of straight line
interpolation.

 

5.             Award
Payment:  Subject to all terms and
conditions of the Plan, the Participant’s actual value at the end of the Award
Period will be settled through a cash payment to the Participant.  Unless otherwise determined by the Board or
otherwise set forth in a Grant, a Participant’s actual value with respect to an
Award shall be equal to the then market value of the shares multiplied by the
Harvest Percentage. If the Company receives

 

1

 

stockholder approval to do so,
the Board may consider settlement with common stock, if the participant so
requests.  Nothwithstanding any other
provision of this Grant, the Award, or the Plan, the maximum Award payment made
pursuant to this Notice of Grant and the Award granted hereunder shall not
exceed $5,000,000.  Any such payment
hereunder shall be made so as not to cause the application of penalties under
Section 409A of the Internal Revenue Code.

 

6.             Termination
of Employment:  Except as provided in
Section 6 or Section 7 of the Plan, this Award shall be canceled, and no
payment shall be payable hereunder, if the Participant’s continuous employment
or Related Employment with the Company shall terminate for any reason prior to
the end of the Award Period.

 

7.             Successor Requirement:  This Grant shall inure to the benefit of and
be binding upon the Company and its successors and assigns.  The Company shall request any purchaser of a
business unit in which the Participant is employed (a “Purchaser”), to fully
assume the obligations of the Company under this Grant.  If a Purchaser declines to assume such
obligations, the Company shall remain obligated under the terms of this Grant
and the Board, in its sole discretion, may elect to cancel the Grant and to
make an Award Payment based on the applicable measures at the time of purchase
or in accordance with Section 7 of the Plan, if the Plan’s Change in Control
provisions are applicable. Any such payment hereunder shall be made so as not
to cause the application of penalties under Section 409A of the Internal Revenue
Code.

 

8.             Definitions:  All terms not otherwise defined herein shall
have the same meaning as in the Plan.

 

9.             Withholding:  The Participant agrees to make appropriate
arrangements with the Company for satisfaction of any applicable income tax
withholding  requirements, including the
payment to the Company, at the termination of the Award Period (or such earlier
or later date as may be applicable under the Code), of all such taxes and other
amounts, and the Company shall be authorized to take such action as may be
necessary, in the opinion of the company’s counsel (including, without
limitation, withholding amounts from any compensation or other amount owing
from the Company to the Participant), to satisfy all obligations for the
payment of such taxes and other amounts.

 

10.           Reduction
of the Award:  Notwithstanding
anything to the contrary herein, the Board, in its sole discretion (but subject
to applicable law), may reduce any amounts payable to the Participant in order
to satisfy any liabilities owed to the Company by the Participant.

 

11.           No
Right to Continued Employment: 
Neither the Plan nor this Grant shall be construed as giving the
Participant the right to be retained in the employ of, or in any consulting
relationship to, the Company or any of its subsidiaries.  Further, the Company may at any time dismiss
the Participant or discontinue any consulting relationship, free from any
liability or any claim under the Plan or this Grant, except as otherwise
expressly

 

2

 

provided in the Plan and in this Grant.  In addition, nothing herein shall obligate
the Company to make future Grants to the Participant.

 

12.           Award
Subject to Plan:  By entering in this
Grant the Participant agrees and acknowledges that the Participant has received
and read a copy of the Plan and that this Award is subject to all of the terms
and provisions set forth in the Plan and in this Grant.  In the event of a conflict between any term
or provision contained in this Grant and a terms or provision of the Plan, the
applicable terms and provisions of the Plan will govern and prevail.

 

13.           Designation
of Beneficiary by Participant:  A
Participant may name a beneficiary to receive any payment to which he/she may
be entitled in respect of this Award in the event of his/her death, by
notifying the Company.  A Participant may
change his/her beneficiary from time to time in the same manner.  If the Participant has not designated a
beneficiary or if no designated beneficiary is living on the date on which any
amount becomes payable to a Participant’s beneficiary, that amount shall be
paid to the Participant’s estate.

 

14.           Notices:  Any notice necessary under this Grant shall
be addressed to the Company at its primary corporate headquarters and to the
Participant at the address appearing in the personnel records of the Company
for such Participant or to either party at such other address as such party
hereto may hereafter designate in writing to the other. Any such notice shall
be deemed effective upon receipt thereof by the addressee.

 

15.           Signature
in Counterparts:  This Grant may be
signed in counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

 

16.           Special
2006-2008 Understanding with Respect to Early Partial Distribution: 
For this 2006-20808 Grant only, the Company, in its sole discretion, may,
at the end of the second calendar year during the Award Period, distribute 2/3
of the expected value of this Grant to the Participant, provided that the
Participant’s continuous employment or Related Employment with the Company has
not terminated prior to December 31, 2007.  Such distribution, if made,
shall be made no later than March 15, 2008.  The expected value of the
Grant will be calculated by the Controller and approved by the Board or the
Compensation Committee. The expected value may include a margin for
unexpected unfavorable developments.  The amount of the distribution will
be based on the fair market value of the stock as of the date the
distribution is made.  If a distribution is made pursuant to this
paragraph, the value of the Grant as of any future date shall be offset by the
amount distributed pursuant to this paragraph.  Notwithstanding anything
herein to the contrary, no distribution may be made pursuant to this paragraph
if any portion of this Grant ceases to be subject to a substantial risk of
forfeiture for purposes of Section 409A of the Internal Revenue Code of 1986,
as amended, prior to January 1, 2007.

 

3

 

IN WITNESS WHEREOF, the
parties hereto have executed this Grant as of the effective date set forth
above.

 

	
  Participant

  	
  Overstock.com, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
  Name

  	
  Patrick M. Byrne

  
	
   

  	
   

  	
  President

  
						

 

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