Overstock.com 2003 Annual Report Download - page 39

retirement at the Company's request, or disability, or (ii) three months after termination for reasons other than retirement, early retirement at the Company's
request, or disability. Generally, if termination is due to death, the option will remain exercisable for twelve (12) months from the date of such termination. If
termination is for Cause (as defined in the Plan), the option will automatically terminate upon first notification to the optionee of such termination. In no event
may an option be exercised after the expiration of the option term.
The Gear.com Restated 1998 Stock Option Plan generally provides that in the event of (i) the consummation of a merger or consolidation in which we
are not the surviving corporation or in which more than 331/3% of our total combined voting power is transferred to persons different from the persons
holding those securities immediately prior to such merger or consolidation, (ii) the consummation of any sale, exchange or transfer of all or substantially all of
our assets (other than a transfer to our majority owned subsidiary corporation), or (iii) shareholder approval of a plan or proposal for our liquidation or
dissolution, each outstanding option shall automatically accelerate so that immediately prior to the effective date of the corporate transaction each option shall
become 100% vested and exercisable; provided, however, that options shall not accelerate if and to the extent the options are assumed or substituted by the
successor corporation or parent thereof. If an executive officer's employment is terminated within two years following a corporate transaction in which
options were assumed or substituted, other than a voluntary termination of the executive officer without Good Reason (as defined in the Plan) or a termination
by the successor corporation for Cause (as defined in the Plan), then the executive officer's option shall accelerate and become fully vested. Except to the
extent assumed or substituted by the successor corporation, all options will terminate and cease to be outstanding immediately following the consummation of
a corporate transaction.
Amended and Restated 1999 Stock Option Plan
Our Amended and Restated 1999 Stock Option Plan was adopted by our board of directors on May 1, 1999, and approved by our stockholders on
October 5, 1999. Our Amended and Restated 1999 Stock Option Plan provides for the grant of incentive stock options to our employees, and the grant of
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nonstatutory stock options to our employees, directors and consultants. We reserved an aggregate of 1,764,291 shares of our common stock for issuance under
this plan; however, any shares of our common stock available for issuance thereunder have been and continue to be assumed by our 2002 Stock Option Plan.
As of the closing of our initial public offering we are not granting any additional options under this plan. Instead we are granting options under our 2002
Stock Option Plan.
The Amended and Restated 1999 Stock Option Plan provides that after termination of service, an optionee may exercise his or her option to the extent it
was exercisable on the date of such termination for a certain period of time. Generally, if termination is due to death or disability, the option will remain
exercisable for twelve (12) months from the date of such termination. If termination is due to an optionee's misconduct, the option will terminate and cease to
be outstanding. In all other cases, the option will generally remain exercisable for a period of three (3) months following termination.
The Amended and Restated 1999 Stock Option Plan provides that in the event of the sale, transfer or other disposition of all or substantially all of our
assets in our complete liquidation or dissolution, or a merger or consolidation in which more than 50% of our total combined voting power is transferred to
persons different from the persons holding those securities immediately prior to such merger or consolidation, the outstanding options under the plan may be
assumed by the successor entity or, in the administrator's discretion, the vesting of all outstanding options may be accelerated so that the options become fully
vested and exercisable immediately prior to such transaction. In addition, the administrator may accelerate the vesting of assumed options in the event the
optionee is involuntarily terminated within eighteen (18) months following such transaction. After such an involuntary termination, the accelerated options
will remain exercisable for one (1) year from the date of termination or the expiration of the option term, whichever is shorter. In the event of the direct or
indirect acquisition by any person of beneficial ownership representing more than 50% of the total combined voting power of our outstanding securities, or a
change in the composition of the board over a period of thirty-six (36) consecutive months, or less, in which a majority of the board members cease to be
incumbent directors, or were not elected by at least a majority of the incumbent directors, the administrator has the discretion to accelerate the vesting of any
outstanding options so that the options become fully vested and exercisable upon such occurrence, or to condition such option acceleration on an optionee's
involuntary termination within a period of up to 18 months following such change in control.
2002 Stock Option Plan.
Our 2002 Stock Option Plan was adopted by our board of directors and approved by our stockholders in April 2002. Our 2002 Stock Option Plan
provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees, and for the grant of nonstatutory stock
options and stock purchase rights to our employees, directors and consultants.
Number of Shares of Common Stock Available under the 2002 Stock Option Plan. We have reserved a total of 638,680 shares of our common stock for
issuance pursuant to the 2002 Stock Option Plan. In addition, any remaining shares that were initially reserved under our Amended and Restated 1999 Stock
Option Plan and would have been available for issuance under our Amended and Restated 1999 Stock Option Plan are instead reserved for issuance and
assumed under our 2002 Stock Option Plan. As of December 31, 2003, 328,128 shares were available for future issuance.
Administration of the 2002 Stock Option Plan. Our board of directors or, with respect to different groups of optionees, different committees appointed
by our board, will administer the 2002 Stock Option Plan. In the case of options intended to qualify as "performance based compensation" within the meaning
of Section 162(m) of the Code, the committee will consist of two or more "outside directors" within the meaning of Section 162(m) of the Code. The
administrator has the power to determine the terms of the options and stock purchase rights granted, including the exercise price, the
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number of shares subject to each option or stock purchase right, the exercisability of the options and stock purchase rights and the form of consideration
payable upon exercise.