Overstock.com 2009 Annual Report Download - page 136

Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
17. INDEMNIFICATIONS AND GUARANTEES (Continued)
in the accompanying Consolidated Balance Sheets. The Company does, 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.
18. 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 the Company's common stock through December 31, 2009.
Redeemable Common Stock
In June 2009, the Company discovered that it inadvertently issued 203,737 more shares of the Company's common stock in connection with its 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 the Company believes 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 December 31, 2009 with respect to most of the inadvertent
issuances. At December 31, 2008 and 2009, approximately 98,000 shares or $1.3 million and 65,000 shares or $744,000 of the Company's common stock plus
interest were classified outside stockholders' equity because of the potential rescission rights.
On August 31, 2009, the Company entered into a Tolling and Standstill Agreement (the "Agreement") with the Overstock.com, Inc. Employee Benefits
Committee (the "Committee") relating to the Overstock.com, Inc. 401(k) plan (the "Plan"). The Company entered into the Agreement in order to preserve
certain rights, if any, of Plan participants who acquired shares of Overstock.com common stock in the Plan between July 1, 2008 and June 30, 2009. The
Company intends to make a rescission offer to affected participants in the Plan who acquired shares of Overstock.com common stock between July 1, 2008
and June 30, 2009, subject to compliance with applicable regulatory requirements.
Based on the closing price of Overstock common stock of $13.56 at December 31, 2009, the Company anticipates that of the $744,000 of affected stock
outstanding as of December 31, 2009, it would be uneconomical for participants to attempt to rescind their acquisitions of more than $169,000 of the stock.
19. STOCK AND DEBT REPURCHASE PROGRAM
On January 14, 2008, the Company's Board of Directors authorized a repurchase program that allowed the Company to purchase up to $20.0 million of
its common stock and or its 3.75% Senior Convertible Notes due 2011 ("Senior Notes") through December 31, 2009. Under this repurchase program, the
Company repurchased approximately 1.2 million shares of its common stock in open
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