Overstock.com 2010 Annual Report Download - page 125

Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
15. INDEMNIFICATIONS AND GUARANTEES
During our normal course of business, we have made certain indemnities, commitments, and guarantees under which we may be required to make
payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities to various lessors in connection with facility leases
for certain claims arising from such facility or lease, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State
of Delaware. The duration of these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these
indemnities, commitments, and guarantees do not provide for any limitation of the maximum potential future payments we could be obligated to make. As
such, we are unable to estimate with any reasonableness our potential exposure under these items. We have not recorded any liability for these indemnities,
commitments, and guarantees in the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability,
including those that may arise from indemnification provisions, when future payment is both probable and reasonably estimable.
16. STOCKHOLDERS' EQUITY
Common Stock
Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally
available and when declared by the Board of Directors, subject to prior rights of holders of all classes of stock outstanding having priority rights as to
dividends. No dividends have been declared or paid on our common stock through December 31, 2010.
Redeemable Common Stock
In June 2009, we discovered that we had inadvertently issued 203,737 more shares of our common stock in connection with our 401(k) plan than had
been registered with the Securities and Exchange Commission for offer in connection with the 401(k) plan. These shares were contributed to or otherwise
acquired by participants in the 401(k) plan between August 16, 2006, and June 17, 2009. As a result, certain participants in the 401(k) plan may have or have
had rescission rights relating to the unregistered shares, although we believe that the federal statute of limitations applicable to any such rescission rights
would be one year, and that the statute of limitations had already expired at June 30, 2009 with respect to most of the inadvertent issuances.
On August 31, 2009, we entered into a Tolling and Standstill Agreement (the "Tolling Agreement") with the Overstock.com, Inc. Employee Benefits
Committee (the "Committee") relating to the 401(k) plan. We entered into the Tolling Agreement in order to preserve certain rights, if any, of plan
participants who acquired shares of Overstock common stock in the plan between July 1, 2008 and June 30, 2009. In August 2010, we made a registered
rescission offer to affected participants in the plan who acquired shares of Overstock common stock during the Purchase Period. The rescission offer applied
to shares purchased during the Purchase Period at prices ranging from $6.77 per share to $21.17 per share. On October 6, 2010, our rescission offer expired.
As a result of the offer, we repurchased 1,202 shares of common stock for $26,000. On October 14, 2010 we terminated the Tolling Agreement. We
reclassified 17,763 shares or $260,000 of common stock from temporary to permanent equity due to the expiration of potential rescission rights. The
remaining redeemable shares will be reclassified into permanent equity upon the expiration of potential rescission rights associated with those common
shares. At December 31, 2010 and 2009, approximately 46,000 shares or $570,000 and
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