<SUBMISSION>
<ACCESSION-NUMBER>0001047469-08-003627
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20080513
<FILING-DATE>20080328
<DATE-OF-FILING-DATE-CHANGE>20080328
<EFFECTIVENESS-DATE>20080328
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>OVERSTOCK.COM, INC
<CIK>0001130713
<ASSIGNED-SIC>5961
<IRS-NUMBER>870634302
<STATE-OF-INCORPORATION>UT
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-49799
<FILM-NUMBER>08718260
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6350 SOUTH 3000 EAST
<CITY>SALT LAKE CITY
<STATE>UT
<ZIP>84121
<PHONE>8019473100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6350 SOUTH 3000 EAST
<CITY>SALT LAKE CITY
<STATE>UT
<ZIP>84121
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>OVERSTOCK COM INC
<DATE-CHANGED>20001227
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>a2184216zdef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML>
<HEAD>
</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<BR>
<P><FONT SIZE=3 >
Use these links to rapidly review the document<BR>
<A HREF="#bg42201_table_of_contents">  TABLE OF CONTENTS</A><BR></font>
</P>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>


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 </FONT> <FONT SIZE=2><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><B> SCHEDULE 14A</B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Proxy
Statement Pursuant to Section 14(a) of<BR>
the Securities Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;) </FONT></P>

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<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><BR><FONT SIZE=2>Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><BR><FONT SIZE=2><B>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%" style="font-family:times;"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-12<BR></FONT>
</TD>
</TR>
</TABLE>
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<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B>Overstock.com, Inc.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE><FONT SIZE=2> (Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
No fee required.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%" style="font-family:times;"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
</TABLE>
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<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=1,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=715758,FOLIO='blank',FILE='DISK114:[08ZAH1.08ZAH42201]BA42201A.;4',USER='MBRADT',CD='27-MAR-2008;16:31' -->
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>


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 </FONT> <FONT SIZE=2><B>
<IMG SRC="g206682.jpg" ALT="LOGO" WIDTH="316" HEIGHT="70">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>6350 South 3000 East<BR>
Salt Lake City, Utah 84121  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<BR>
To Be Held at 1:00&nbsp;p.m. on May&nbsp;13, 2008  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Dear
Fellow Stockholders: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
cordially invite you to attend the 2008 Annual Meeting of Stockholders of Overstock.com,&nbsp;Inc. (the "Company"). The meeting will be held at 1:00&nbsp;p.m. on Tuesday,
May&nbsp;13, 2008, at the Company's distribution center located at 1455 South 5500 West, Salt Lake City, Utah 84104, for the following purposes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
elect two Class&nbsp;III directors of the Company to serve a term of three (3)&nbsp;years and hold office until their respective successors have been elected and qualified or
until their earlier resignation or removal. A majority of the independent members of the Board of Directors has recommended, and the Company's Board of Directors intends to present, Allison H. Abraham
and Joseph J. Tabacco, Jr. for re-election to the Board;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
approve an amendment of the Company's 2005 Equity Incentive Plan to increase the number of shares available thereunder by 1,000,000;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
ratify the Audit Committee's selection of PricewaterhouseCoopers&nbsp;LLP as the Company's independent registered public accounting firm for the fiscal year ending
December&nbsp;31, 2008; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>4.</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To
transact any other business properly coming before the Annual Meeting or any adjournments or postponements thereof. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
proposals are discussed in more detail in the attached Proxy Statement. Please read the attached Proxy Statement carefully. Only stockholders who owned shares at the close of
business on March&nbsp;18, 2008 are entitled to attend and vote at the meeting or any adjournment of the meeting. A complete list of the stockholders of record of the Company on March&nbsp;18,
2008 will be available at the Company's principal executive offices at 6350 South 3000 East, Salt Lake City, Utah for at least ten days prior to the meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the meeting, we will report on our performance in 2007 and answer your questions. </FONT></P>

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<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><FONT SIZE=2>By Order of the Board of Directors,</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><BR><FONT SIZE=2><B>
<IMG SRC="g634146.jpg" ALT="SIGNATURE" WIDTH="331" HEIGHT="90">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><FONT SIZE=2>Jonathan E. Johnson III<BR>
Secretary</FONT></TD>
</TR>
</TABLE>
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<P style="font-family:times;"><FONT SIZE=2>Salt
Lake City, Utah<BR>
March&nbsp;28, 2008 </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Whether or not you plan to attend the meeting, please complete, sign, date and return the accompanying Proxy Card in the enclosed self-addressed,
stamped envelope or, if available, follow the instructions for Internet or telephone voting on the Proxy Card.</B></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=2,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=841476,FOLIO='blank',FILE='DISK114:[08ZAH1.08ZAH42201]BC42201A.;3',USER='MBRADT',CD='27-MAR-2008;16:31' -->
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NAME="page_bg42201_1_1"> </A>


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 </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="bg42201_table_of_contents"> </A>
<BR></FONT><FONT SIZE=2><B>TABLE OF CONTENTS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
<A NAME="BG42201_TOC"></A> </FONT></P>

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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="85%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dc42201_proxy_statement"><FONT SIZE=2>PROXY STATEMENT</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#de42201_questions_and_answers"><FONT SIZE=2>QUESTIONS AND ANSWERS</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dg42201_proposals_to_be_voted_on_"><FONT SIZE=2>PROPOSALS TO BE VOTED ON:</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>1.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%" style="font-family:times;"><A HREF="#dg42201_1._election_of_directors"><FONT SIZE=2>ELECTION OF DIRECTORS</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>2.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%" style="font-family:times;"><A HREF="#dg42201_2._amendment_of_2005_equity_incentive_plan."><FONT SIZE=2>AMENDMENT OF&nbsp;2005 EQUITY INCENTIVE PLAN</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>3.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%" style="font-family:times;"><A HREF="#dg42201_3._ratification_of_selection_o__3._02988"><FONT SIZE=2>RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>4.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%" style="font-family:times;"><A HREF="#dg42201_4._other_business"><FONT SIZE=2>OTHER BUSINESS</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dg42201_the_board"><FONT SIZE=2>THE BOARD</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#dg42201_general"><FONT SIZE=2> General</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_board_and_committee_meetings"><FONT SIZE=2> Board and Committee Meetings</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_board_independence"><FONT SIZE=2> Board Independence</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_committees_of_the_board"><FONT SIZE=2> Committees of the Board</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_director_qualifications"><FONT SIZE=2> Director Qualifications</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_identification_and_eva__di402220"><FONT SIZE=2> Identification and Evaluation of Nominees for Director</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_communications_with_the_board"><FONT SIZE=2> Communications with the Board</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_annual_meeting_attendance"><FONT SIZE=2> Annual Meeting Attendance</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_code_of_ethics"><FONT SIZE=2> Code of Ethics</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_policies_and_procedure__di402495"><FONT SIZE=2> Policies and Procedures Regarding Related Party Transactions</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_information_regarding___di402451"><FONT SIZE=2> Information Regarding Director Nominees and Other Directors</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><A HREF="#di42201_compensation_committee__di402474"><FONT SIZE=2>COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION</FONT></A></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>21</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#di42201_compensation_discussion_and_analysis"><FONT SIZE=2>COMPENSATION DISCUSSION AND ANALYSIS</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_introduction"><FONT SIZE=2> Introduction</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_compensation_objectives"><FONT SIZE=2> Compensation Objectives</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_elements_of_compensation"><FONT SIZE=2> Elements of Compensation</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>23</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_executive_compensation_action_taken_after_year-end"><FONT SIZE=2> Executive Compensation Action Taken After Year-End</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_timing_of_stock_option_grants"><FONT SIZE=2> Timing of Stock Option Grants</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>26</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><A HREF="#di42201_severance_and_change_of_control_arrangements"><FONT SIZE=2> Severance And Change of Control Arrangements</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>26</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_compensation_committee_report"><FONT SIZE=2>COMPENSATION COMMITTEE REPORT</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>27</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_summary_compensation_table"><FONT SIZE=2>SUMMARY COMPENSATION TABLE</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>27</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_grants_of_plan-based_awards(1)"><FONT SIZE=2>GRANTS OF PLAN-BASED AWARDS</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>28</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_outstanding_equity_awards_at_fiscal_year-end(1)"><FONT SIZE=2>OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_option_exercises_and_stock_vested(1)"><FONT SIZE=2>OPTION EXERCISES AND STOCK VESTED</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_director_compensation_table"><FONT SIZE=2>DIRECTOR COMPENSATION TABLE</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><A HREF="#dk42201_potential_payments_upo__dk402280"><FONT SIZE=2>POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL</FONT></A></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_equity_compensation_plan_information"><FONT SIZE=2>EQUITY COMPENSATION PLAN INFORMATION</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dk42201_report_of_the_audit_committee"><FONT SIZE=2>REPORT OF THE AUDIT COMMITTEE</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP" style="font-family:times;"><A HREF="#dm42201_share_ownership_of_management,__sha02679"><FONT SIZE=2>SHARE OWNERSHIP OF MANAGEMENT, DIRECTORS, NOMINEES AND 5% STOCKHOLDERS</FONT></A></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#dm42201_other_information"><FONT SIZE=2>OTHER INFORMATION</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#hk42201_exhibit_a"><FONT SIZE=2>EXHIBIT A&#151;2005 Equity Incentive Plan</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>A-1</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4 style="font-family:times;"><A HREF="#hm42201_exhibit_b"><FONT SIZE=2>EXHIBIT B&#151;Audit Committee Charter</FONT></A></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>B-1</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>OVERSTOCK.COM,&nbsp;INC.<BR>
6350 South 3000 East<BR>
Salt Lake City, Utah 84121  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dc42201_proxy_statement"> </A>
<A NAME="toc_dc42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROXY STATEMENT    <BR>    </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Board of Directors (the "Board") is soliciting proxies for the 2008 Annual Meeting of Stockholders to be held at 1:00&nbsp;p.m. on May&nbsp;13, 2008 at the Company's distribution
center located at 1455 South 5500 West, Salt Lake City, Utah 84104. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters before the meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board set March&nbsp;18, 2008 as the record date for the meeting. Stockholders who owned Overstock common stock on that date are entitled to attend and vote at the meeting. Each
share is entitled to one vote. There were 22,712,522 shares of common stock outstanding on the record date. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voting
materials, which include this Proxy Statement, the proxy card and Overstock's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 2007, are being
mailed to stockholders on or about March&nbsp;28, 2008. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
date of this Proxy Statement is March&nbsp;28, 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
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<A NAME="toc_de42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>QUESTIONS AND ANSWERS    <BR>    </B></FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Why am I receiving this Proxy Statement?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>This Proxy Statement describes proposals on which we would like you, as a stockholder, to vote. It also gives you information on these
issues so that you can make an informed decision.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Who can vote at the Annual Stockholders Meeting?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Stockholders who owned Overstock common stock on March&nbsp;18, 2008 may attend and vote at the Annual Meeting. Each share is entitled
to one vote. There were 22,712,522 shares of common stock outstanding on March&nbsp;18, 2008. Information about the stockholdings of our directors and executive officers is contained in the section
entitled "Share Ownership of Management, Directors, Nominees and 5% Stockholders" beginning on page&nbsp;33 of this Proxy Statement.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What is the proxy card?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The proxy card enables you to appoint Patrick M. Byrne and Jonathan E. Johnson III as your representatives at the Annual Meeting. By
completing and returning the proxy card you are authorizing Messrs.&nbsp;Byrne and Johnson to vote your shares at the meeting, as you have instructed them on the proxy card. This way, your shares
will be voted whether or not you attend the meeting. Even if you plan to attend the meeting, it is a good idea to complete and return your proxy card before the meeting date just in case your plans
change.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What am I voting on?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You are being asked to vote on:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the
election of two directors;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>an
amendment of the Company's 2005 Equity Incentive Plan; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>ratification
of our Audit Committee's selection of PricewaterhouseCoopers&nbsp;LLP as our independent registered public accounting firm. </FONT></DD></DL>
</UL>
</DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>The
section entitled "Proposals to be Voted On" on page&nbsp;6 of this Proxy Statement gives you more information about the nominees for election to our Board, the proposed amendment of the 2005
Equity Incentive Plan, and the Company's independent registered public accounting firm. You may also find more information on the nominees in the section entitled "The Board&#151;Information
Regarding Director Nominees and Other Directors" beginning on page&nbsp;20 of this Proxy Statement. We will also transact any other business that properly comes before the meeting. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How do I vote?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You may vote either by attending the meeting and voting in person, or you may vote by mail by completing, signing and dating your proxy
card and returning it in the enclosed, postage-paid and addressed envelope, or, if available, by the Internet or by telephone by following the instructions on the proxy card. If you mark
your voting instructions on the proxy card, your shares will be voted:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>as
you instruct, and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>according
to the best judgment of the Board (or the proxy holders, in the absence of instructions from the Board) if a proposal comes up for a vote at the meeting that is
not on the proxy card. </FONT></DD></DL>
</UL>
</DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>If
you return a signed card but do not provide voting instructions, your shares will be voted: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>for
the named nominees for director;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>for
the proposed amendment of the 2005 Equity Incentive Plan; </FONT></DD></DL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<UL>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>for
ratification of the Audit Committee's selection of PricewaterhouseCoopers&nbsp;LLP as our independent registered public accounting firm, and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>according
to the best judgment of the Board (or the proxy holders, in the absence of instructions from the Board) if a proposal comes up for a vote at the meeting that is
not on the proxy card. </FONT></DD></DL>
</UL>
</UL>
<BR>
<UL>

<P style="font-family:times;"><FONT SIZE=2>We
will hand out written ballots to anyone who wants to vote at the meeting. However, if you hold your shares in street name, you must obtain a legal proxy from the record holder in order to vote at
the meeting. Holding shares in "street name" means you hold them through a brokerage firm, bank or other nominee, and therefore the shares are not held in your individual name. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>We encourage you to examine your proxy card closely to make sure you are voting all of your shares in the Company.</I></FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What does it mean if I receive more than one proxy card?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>It means that you may have multiple accounts at the transfer agent and/or with stockbrokers or other nominees. Please sign and return
all proxy cards to ensure that all of your shares are voted.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What if I change my mind after I return my proxy?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You may revoke your proxy and change your vote at any time before the polls close at the meeting. You may do this by:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>sending
a written notice to the Secretary of the Company (at the address shown on the cover page) stating that you are revoking your proxy of a particular date,
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>signing
another proxy with a later date and returning it before the polls close at the meeting, or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>attending
the Annual Meeting and voting in person.
<BR><BR> </B></FONT></DD></DL>
</UL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Will my shares be voted if I do not sign and return my proxy card or vote via the Internet or by telephone?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>(1) If your shares are held in street name, your brokerage firm or other nominee, under certain circumstances, may vote your shares.
Nominees have authority under the Nasdaq rules to vote customers' unvoted shares on some "routine" matters. The proposals to elect directors and ratify the appointment of the independent registered
public accounting firm are routine matters. The proposal to approve the amendment of the 2005 Equity Incentive Plan is not a routine matter. If you do not give a proxy to vote your shares, your
brokerage firm may either:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>vote
your shares on routine matters, or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>leave
your shares unvoted. </FONT></DD></DL>
</UL>
</DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>If
a brokerage firm entitled to vote your shares leaves those shares unvoted, it is called a "broker nonvote." A brokerage firm cannot vote customers' shares on non-routine matters without
instructions from you. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>You
may have granted to your stockbroker discretionary voting authority over your account. Your stockbroker may be able to vote your shares depending on the terms of the agreement you have with your
broker. If you hold your shares in street name and you do not authorize your broker to vote on your behalf, you must obtain a legal proxy from your stockbroker in order to vote at the meeting. We
encourage you to provide instructions to your broker. This ensures your shares will be voted at the meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>(2)
If your shares are in your name and you do not sign and return your proxy card or vote via the Internet or by telephone, your shares will not be voted unless you vote in person at the meeting. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How may I vote?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You may vote:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>with
respect to the nominees for election to the Board, either "for" the nominees or to "withhold" your vote from any nominee,
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>"for,"
"against," or "abstain" on the proposal to amend the Company's 2005 Equity Incentive Plan, and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>"for,"
"against," or "abstain" on the ratification of PricewaterhouseCoopers&nbsp;LLP as the Company's independent registered public accounting firm.
<BR><BR> </B></FONT></DD></DL>
</UL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How many stockholders are needed either in person or by proxy to hold the meeting?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>To hold the meeting and conduct business, a majority of the Company's outstanding shares entitled to vote as of March&nbsp;18, 2008
must be present at the meeting. This is called a quorum. </FONT></DD></DL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>Shares
are counted as present at the meeting if the stockholder either: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>is
present in person at the meeting, or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>has
properly submitted a proxy card. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>On
proposals for routine matters, a broker nonvote is counted for determining the presence of a quorum. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How many votes must each nominee have to be elected as a director?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The two nominees receiving the highest number of "yes" votes will be elected as directors. This number is called a plurality.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What happens if a nominee is unable to stand for re-election?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A majority of the independent members of the Board may designate a substitute nominee. If you have completed and returned your proxy,
Messrs.&nbsp;Byrne and Johnson can vote your shares for a substitute nominee. They cannot vote for more than two nominees.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How many votes are required to approve the amendment of the 2005 Equity Incentive Plan?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A majority of the shares present, in person or by proxy, excluding broker nonvotes, voting in favor is required to approve the amendment
of the 2005 Equity Incentive Plan. Brokers do not have discretion to vote on this proposal without your instruction.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How many votes are required to ratify the appointment of PricewaterhouseCoopers&nbsp;LLP?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A majority of the shares present, in person or by proxy, including broker nonvotes, voting in favor is required to ratify the
appointment of PricewaterhouseCoopers&nbsp;LLP as our independent registered public accounting firm.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>How many votes are required to approve other matters that may come before the stockholders at the meeting?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>A majority of the shares present, in person or by proxy, excluding broker nonvotes, voting in favor is required to approve other matters
that may come before the stockholders at the meeting.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>What happens if I don't indicate how to vote my proxy?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>If you just sign your proxy card without providing further instructions, your shares will be counted as a "for" vote for the director
nominees, "for" the proposed amendment of the 2005 Equity Incentive Plan, and "for" ratification of the selection of PricewaterhouseCoopers&nbsp;LLP. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Is my vote kept confidential?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Proxies, ballots and voting tabulations identifying stockholders are kept confidential and will not be disclosed except as may be
necessary to meet legal requirements.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Where do I find the voting results of the meeting?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>We will announce preliminary voting results at the meeting. We will publish the final results in our quarterly report on
Form&nbsp;10-Q for the second quarter of 2008 on or before August&nbsp;11, 2008. We will file that report with the SEC, and you can get a copy by calling Investor Relations at
(801)&nbsp;947-3282 or the SEC at (800)&nbsp;SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. You can also get a
copy from our website at </FONT><FONT SIZE=2><I>http://investors.overstock.com.</I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>Q:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Who can help answer my questions?</B></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>A:</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2>You can call Georgeson Shareholder Communications, our proxy solicitor, toll-free at (800)&nbsp;314-4549 with
any questions about the proposals described in this Proxy Statement or the mechanics of voting. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg42201_proposals_to_be_voted_on_"> </A>
<A NAME="toc_dg42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSALS TO BE VOTED ON:    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> <A NAME="dg42201_1._election_of_directors"> </A>
<A NAME="toc_dg42201_2"> </A>
1.&nbsp;&nbsp;&nbsp;&nbsp;ELECTION OF DIRECTORS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The nominees for election this year as Class&nbsp;III directors, for three-year terms ending in 2011, are Allison H. Abraham and Joseph J. Tabacco,
Jr. Ms.&nbsp;Abraham has been a director since 2002, and Mr.&nbsp;Tabacco has been a director since June 2007. Ms.&nbsp;Abraham and Mr.&nbsp;Tabacco have each consented to serve a new
three-year term. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
information about the nominees, see "The Board&#151;Information Regarding Director Nominees and Other Directors" beginning on page&nbsp;20. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Recommendation of the Board of Directors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors unanimously recommends a vote "for" each of Ms.&nbsp;Abraham and Mr.&nbsp;Tabacco. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Vote Required  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors are elected by a plurality of the votes of the shares of common stock present in person or represented by proxy at the meeting. Votes withheld are
counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but otherwise they have no legal effect under Delaware law. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> <A NAME="dg42201_2._amendment_of_2005_equity_incentive_plan."> </A>
<A NAME="toc_dg42201_3"> </A>
2.&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENT OF&nbsp;2005 EQUITY INCENTIVE PLAN.    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's stockholders are being asked to approve an increase in the number of shares of common stock reserved for issuance under the Company's 2005 Equity
Incentive Plan (the "2005 Plan") by 1,000,000 shares. The increase was approved by the Board of Directors of the Company on February&nbsp;6, 2008, subject to stockholder approval. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2007, 23,820,617 shares of common stock were outstanding, options to purchase 4,165,089 shares had been granted under the 2005 plan and prior plans, and options
to purchase 1,160,603 shares of common stock remained outstanding under the 2005 Plan and prior plans. During 2007, we granted employees, consultants and directors options under the 2005 Plan to
purchase a total of 760,500 shares, including options to purchase 300,000 shares granted to current executive officers of the Company. At December&nbsp;31, 2007, 608,485 shares of common stock
remained available for future grants, and at February&nbsp;29, 2008, after the Company made the restricted stock grants described below, only 157,235 shares of common stock remained available for
future grants. The Compensation Committee and the Board believe that it is in the best interest of the Company and its stockholders for the Company to have the ability to grant additional equity
awards under the 2005 Plan, and consequently have approved the proposed increase. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
2005 Plan replaced the Company's 2002 Stock Option Plan (the "2002 Plan"), which was terminated as to new grants on April&nbsp;26, 2005. All options outstanding under the 2002 Plan
on April&nbsp;26, 2005 remained outstanding, and any shares available for grant under the 2002 Plan or prior plans became available for grant under the 2005 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
2005 Plan authorizes the Board of Directors to grant stock-based awards to our employees, directors and consultants. The 2005 Plan is structured to allow the Board of Directors
discretion in creating equity incentives in order to assist the Company in attracting, retaining and motivating the best available personnel for the successful conduct of the Company's business. From
its inception, the Company has provided stock options as an incentive to its employees and executives as a means to promote increased stockholder value. In January 2008, the Company granted restricted
stock units under the 2005 Plan covering an aggregate of 451,250 shares of Common Stock to an aggregate of 108 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>key
employees, including the grants to named executive officers described under "Compensation Discussion and Analysis&#151;Executive Compensation Action Taken After Year-End." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Vote Required  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a quorum is present, the affirmative vote of a majority of the shares present, entitled to vote and cast at the Annual Meeting, will be required to approve the
amendment to the 2005 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brokers
do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a
non-vote on this proposal. Broker non-votes, if any, will have no effect on the outcome of the vote on this proposal. Abstentions will have the effect of a vote "against" the
proposal. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Terms of the 2005 Plan  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal features of the 2005 Plan are summarized below. This summary does not purport to be complete and is subject to, and qualified in its entirety by,
the provisions of the 2005 Plan, which, as proposed to be amended, is attached as Appendix&nbsp;A. Capitalized terms used herein and not defined shall have the meanings set forth in the 2005 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purpose.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purposes of the 2005 Plan are to attract and retain the best available personnel, to provide additional
incentive to our employees, consultants and non-employee directors, and to promote the success of our business. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2005 Plan may be administered by our Board of Directors or a committee, which our Board of Directors may
appoint from among its members (the "Administrator"). Subject to the provisions of the 2005 Plan, the Administrator has the authority to: (i)&nbsp;interpret the 2005 Plan and apply its provisions;
(ii)&nbsp;prescribe, amend or rescind rules and regulations relating to the 2005 Plan; (iii)&nbsp;select the persons to whom awards are to be granted; (iv)&nbsp;subject to individual fiscal year
limits applicable to each type of award, determine the number of shares or equivalent units to be made subject to each award; (v)&nbsp;determine whether and to what extent awards are to be granted;
(vi)&nbsp;determine the terms and conditions applicable to awards generally and of each individual award (including the provisions of the award agreement to be entered into between the Company and
the participant); (vii)&nbsp;amend any outstanding award subject to applicable legal restrictions; (viii)&nbsp;authorize any person to execute, on our behalf, any instrument required to effect the
grant of an award; (ix)&nbsp;approve forms of agreement for use under the 2005 Plan; (x)&nbsp;allow participants to satisfy withholding tax obligations by electing to have the Company withhold
from the shares or cash to be issued that number of shares or cash having a fair market value equal to the minimum amount required to be withheld; (xi)&nbsp;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 the award has declined since the date the award was granted; (xii)&nbsp;institute an award exchange
program; and (xiii)&nbsp;subject to certain limitations, take any other actions deemed necessary or advisable for the administration of the 2005 Plan. All decisions, interpretations and other
actions of the Administrator shall be final and binding on all holders of awards and on all persons deriving their rights therefrom. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2005 Plan provides that awards may be granted to our employees, consultants and non-employee
directors, and employees and consultants of our parent or subsidiary corporations. Incentive options may be granted only to employees (including officers and employee directors). Approximately 200
persons are eligible to participate in the 2005 Plan. Participation is based on the Compensation Committee's determination to grant awards under the 2005 Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Code Section&nbsp;162(m) Performance Goals.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2005 Plan permits us to issue awards that qualify as performance-based
under Section&nbsp;162(m) of the Code. Thus, the Administrator may make performance goals applicable to a participant with respect to an award. At the Administrator's discretion, one or </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>more
of the following or any other reasonable performance goals may apply: cash position, earnings per share, expenses, gross margin, individual objectives, net income, operating cash flow, operating
income, operating margin, return on assets, return on equity, return on sales, revenue, total stockholder return, and/or unit sales, all as determined in accordance with accounting principles
generally accepted in the United States or on a non-GAAP basis. Except for cash position, return on equity and total stockholder return, a performance goal may apply either to us or to one
of our business units. The Administrator may use other performance goals for awards that are not intended to qualify as performance-based under Section&nbsp;162(m) of the Code. To date we have not
issued performance-based awards for purposes of Section&nbsp;162(m). </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Terms and Conditions of Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each option granted under the 2005 Plan is evidenced by a written stock option agreement
between the optionee and the Company and is subject to the following terms and conditions: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator determines the exercise price of options at the time the options are
granted. The option price of all incentive stock options under the 2005 Plan and non-statutory options granted under the 2005 Plan intended to qualify as "performance-based compensation"
within the meaning of Section&nbsp;162(m) of the Code may not be less than the fair market value of the common stock on the date the option is granted. Subject to the foregoing, and subject to
Section&nbsp;409A of the Internal Revenue Code, non-statutory stock options may be granted with a per share exercise price determined by the Administrator. Non-statutory
options may be granted with an 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. In the case of an incentive
stock option granted to an optionee who at the time of grant owns stock representing more than 10% of the voting power of all classes of stock of the Company, the option price must be not less than
110% of the fair market value on the date of grant. For purposes of the 2005 Plan, fair market value is defined as the closing sale price per share of the common stock on the date of grant as reported
on the Nasdaq Global Market. On March&nbsp;18, 2008, the closing price of the common stock as reported on the Nasdaq Global Market was $10.36. Optionees are not required to pay the Company any
amount upon the grant of an option. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Form of Consideration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The means of payment for shares issued upon exercise of an option is specified in
each option agreement and generally may be made by cash, check, other shares of our common stock owned by the optionee, delivery of an exercise notice together with irrevocable instructions to a
broker to deliver to us the exercise price from sale proceeds, or by a combination thereof. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise of the Option.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each stock option agreement specifies the term of the option and the date when the
option is to become exercisable. However, in no event shall an option granted under the 2005 Plan be exercised more than 10&nbsp;years after the date of grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2005 Plan provides that if the optionee's employment relationship with the
Company is terminated for any reason, other than death or disability, the period of time during which an option may be exercised following such termination may be determined by the Administrator and
set forth in the option agreement and the option may be exercised only to the extent the options were exercisable on the date of termination and in no event later than the expiration of the term of
the option. In the absence of a specified time in the option agreement, the option will generally remain exercisable for three months after the optionee's termination. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Permanent Disability.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If an optionee's employment or other service is terminated due to a disability,
options granted to such optionee may be exercised within such period of time as is determined by the Administrator and set forth in the option agreement, but only to the extent that the options were
exercisable on the date of termination and 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 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>option
agreement, the option will generally remain exercisable for one year following the optionee's termination due to disability. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Death.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If an optionee should die while an employee of or other service provider to the Company, options
granted to such optionee may be exercised within such period of time as is determined by the Administrator and set forth in the option agreement but only to the extent that the options were
exercisable on the date of death and 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 will generally remain exercisable for one year following the optionee's death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;ISO Limitation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Plan provides a limit of $100,000 on the aggregate fair market value of shares subject
to all incentive options held by an employee that are exercisable for the first time in any one calendar year. To the extent the limit is exceeded, the options relating to the excess shares will be
treated as nonstatutory options. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;162(m) Share Limit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No participant may be granted stock options and stock appreciation rights to purchase
more than 423,430 shares of common stock in any fiscal year, except that up to 846,860 shares may be granted in the participant's first fiscal year of service. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Other Provisions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The stock option agreement may contain other terms, provisions and conditions as
determined by the Administrator. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Terms and Conditions of Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator, subject to the provisions of the 2005 Plan (including
the 162(m) share limit referred to above), shall have complete discretion to determine the terms and conditions of SARs granted under the 2005 Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Stock Appreciation Right Amount.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Upon exercise of an SAR, the holder of the SAR shall be entitled to receive
payment in an amount equal to the product of (i)&nbsp;the difference between the fair market value of a share on the date of exercise and the exercise price and (ii)&nbsp;the number of shares for
which the SAR is exercised. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment upon Exercise of Stock Appreciation Right.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At the discretion of the Administrator, payment to the holder of an SAR
may be in cash, shares of our common stock or a combination thereof. To the extent that an SAR is settled in cash, the shares available for issuance under the 2005 Plan shall not be diminished as a
result of the settlement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Right Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each SAR grant shall be evidenced by an 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expiration of Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;SARs granted under the 2005 Plan expire as determined by the Administrator, but in
no event later than ten (10)&nbsp;years from date of grant. No SAR may be exercised by any person after its expiration. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment, Disability and Death.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;SARs are treated in the same manner as described above for options in the
event of the holder's termination of service, disability or death. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of the 2005 Plan, restricted stock may be granted to our employees and
consultants at any time and from time to time at the discretion of the Administrator. The Administrator shall have complete discretion to determine (i)&nbsp;the number of shares subject to a
restricted stock award granted to any participant and (ii)&nbsp;the conditions for grant or for vesting that must be satisfied, which may be based principally or solely on continued provision of
services but may include a performance-based component. However, no participant shall be granted a restricted stock award and performance shares covering more than 211,715 shares in any of our fiscal
years, except that up to 635,145 shares may be granted in the participant's first fiscal year of service. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>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 underlying shares. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each restricted stock grant shall be evidenced by an agreement that shall specify the
purchase price (if any) and such other terms and conditions as the Administrator shall determine; </FONT><FONT SIZE=2><I>provided, however</I></FONT><FONT SIZE=2>, that if the restricted stock grant
has a purchase price, the purchase price must be paid no more than ten (10)&nbsp;years following the date of grant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of the 2005 Plan, performance shares may be granted to our employees
and consultants at any time and from time to time as shall be determined at the discretion of the Administrator. The Administrator shall have complete discretion to determine (i)&nbsp;the number of
shares of our common stock subject to a performance share award granted to any service provider and (ii)&nbsp;the conditions that must be satisfied for grant or for vesting, which may be based
principally or solely on achievement of performance milestones but may include a service-based
component. However, no participant shall be granted performance shares and restricted stock awards covering more than 211,715 shares in any of our fiscal years, except that up to 635,145 shares may be
granted in the participant's first fiscal year of service. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Share Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each performance share grant shall be evidenced by an agreement that shall specify such
other terms and conditions as the Administrator, in its sole discretion, shall determine. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Performance units are similar to performance shares, except that they shall be settled in cash equivalent
to the fair market value of the underlying shares of our common stock, determined as of the vesting date. The shares available for issuance under the 2005 Plan shall not be diminished as a result of
the settlement of a performance unit. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Unit Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each performance unit grant shall be evidenced by an agreement that shall specify such
terms and conditions as shall be determined at the discretion of the Administrator. However, no participant shall be granted a performance unit award covering more than $1,000,000 in any of the
Company's fiscal years, except that a performance unit award covering up to $3,000,000 may be granted in the participant's first fiscal year of service. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred Stock Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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 are subject to the individual annual limits that apply to each type of award. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Transferability of Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unless determined otherwise by the Administrator, an award granted under the 2005
Plan 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 granted under the 2005 Plan transferable, such award shall contain such additional terms and conditions as the
Administrator deems appropriate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acceleration upon Death.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event that a participant dies while a service provider, the award may be exercised within the
time period set forth in the relevant agreement, but in no event later than the expiration date of the relevant award. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustment Upon Changes in Capitalization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event that our capital stock is changed by reason of any stock split,
reverse stock split, stock dividend, combination or reclassification of our common stock or any other increase or decrease in the number of issued shares of common stock effected without receipt of
consideration by us, appropriate proportional adjustments shall be made in </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>10</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>the
number and class of shares of stock subject to the 2005 Plan, the individual fiscal year limits applicable to restricted stock, performance share awards, SARs and options, the number and class of
shares of stock subject to any award outstanding under the 2005 Plan, and the exercise price of any such outstanding option or SAR or other award. Any such adjustment shall be made by the
Administrator or the Compensation Committee of our Board of Directors, whose determination shall be conclusive. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change of Control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a change of control, the successor corporation (or its parent or subsidiary) will assume
or substitute each outstanding award. If the successor corporation refuses to assume the awards or to substitute equivalent awards, such awards shall become 100% vested. In such event, the
Administrator shall notify the participant that each option and SAR is fully exercisable for 15&nbsp;days from the date of such notice and that the award terminates upon expiration of such period.
If, within eighteen (18)&nbsp;months following a merger or Change of Control, a participant's employment is terminated involuntarily by the Company or successor corporation other than for cause (as
defined), on account of death or disability or by the participant by a voluntary termination for good reason (as defined), then the participant shall fully vest in and have the right to exercise his
or her award as to all of the shares subject to the award including shares as to which such award would not otherwise be vested or exercisable. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment, Suspensions and Termination of the 2005 Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors may amend, suspend or terminate the 2005 Plan
at any time; </FONT><FONT SIZE=2><I>provided, however</I></FONT><FONT SIZE=2>, that stockholder approval is required for any amendment to the extent necessary to comply with
Rule&nbsp;16b-3 promulgated under the Securities Exchange Act of 1934 ("Rule&nbsp;16b-3") or Section&nbsp;422 of the Code, or any other applicable rule or statute or by
the rules of any stock exchange or automated quotation system on which the Company's shares may then be listed or quoted. The 2005 Plan will terminate in April 2015. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Federal Income Tax Information  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;An optionee who is granted an incentive stock option will not recognize taxable income either at the
time the option is granted or upon its exercise, although the exercise is an adjustment for alternative minimum tax purposes and may subject the optionee to the alternative minimum tax. Upon the sale
or exchange of the shares more than two years after grant of the option and one year after exercise of the option, any gain or loss will be treated as long-term capital gain or loss. If
these holding periods are not satisfied, the optionee will recognize ordinary
income at the time of sale or exchange equal to the difference between the exercise price and the lower of (i)&nbsp;the fair market value of the shares at the date of the option exercise or
(ii)&nbsp;the sale price of the shares. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-statutory Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;All other options that do not qualify as incentive stock options are referred to as
non-statutory options. An optionee will not recognize any taxable income at the time a non-statutory option is granted. However, upon its exercise, the optionee will recognize
ordinary income generally measured as the excess of the then fair market value of the shares purchased over the purchase price. Any taxable income recognized in connection with an option exercise by
an optionee who is also an employee of the Company will be subject to tax withholding by the Company. Upon resale of such shares by the optionee, any difference between the sales price and the
optionee's purchase price, to the extent not recognized as taxable income as described above, will be treated as long-term or short-term capital gain or loss, depending on the
holding period. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No taxable income is reportable when an SAR is granted to a participant. Upon exercise, the
participant will recognize ordinary income in an amount equal to the fair market value of any shares of our common stock received and/or the amount of cash received. Any </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>11</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>additional
gain or loss recognized upon any later disposition of the shares of our common stock would be a capital gain or loss. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock, Performance Units and Performance Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A participant will not have taxable income upon grant (unless,
with respect to restricted stock, he or she elects to be taxed at that time). Instead, he or she will recognize ordinary income at the time of vesting equal to the fair market value (on the vesting
date) of the vested shares or cash received minus any amount paid for the shares of our vested common stock. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax Effect for the Company.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We generally will be entitled to a tax deduction in connection with an award under the 2005 Plan
in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income. Special rules limit the deductibility of compensation paid to our chief
executive officer and to each of our four most highly compensated executive officers. Under Section&nbsp;162(m) of the Code, the annual compensation paid to any of these specified executives will be
deductible only to the extent that it does not exceed $1,000,000. However, we can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section&nbsp;162(m)
are met with respect to awards. These conditions include stockholder approval of the 2005 Plan and performance goals under the 2005 Plan, setting individual annual limits on each type of award, and
certain other requirements. The 2005 Plan has been designed to permit the Administrator to grant awards that qualify as performance-based for purposes of satisfying the conditions of
Section&nbsp;162(m), thereby permitting us to continue to receive a federal income tax deduction in connection with any such awards. To date we have not issued performance-based awards for purposes
of Section&nbsp;162(m). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Requirements Regarding "Deferred Compensation."</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certain of the benefits under the 2005 Plan may constitute "deferred
compensation" within the meaning of Section&nbsp;409A of the Internal Revenue Code, which is a provision governing "nonqualified deferred compensation plans." Failure to comply with the requirements
of the provisions of Section&nbsp;409A regarding participant elections and the timing of payment distributions could result in the affected participants being required to recognize ordinary income
for federal tax purposes earlier than expected, and to be subject to substantial penalties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing is only a summary of the effect of federal income taxation upon us and upon the participant, does not purport to be complete, and does not discuss the tax consequences of
the participant's death or the income tax laws of any municipality, state or foreign country in which a participant may reside. It also does not discuss the potential application of
Section&nbsp;280G of the Internal Revenue Code, which can apply to an "excess parachute payment." Further, different rules may apply if the participant is also an officer, director, or 10%
stockholder of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Accounting Treatment  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Financial Accounting Standards Board has adopted Statement of Financial Accounting Standards No.&nbsp;123(R), Share Based Payments ("SFAS&nbsp;123(R)"),
which requires mandatory expensing for equity awards for public companies. Consequently, we expect that all Plan awards granted after the effective date of this standard (January&nbsp;1, 2006) and
any Plan awards granted prior to the effective date with outstanding unvested awards as of the effective date will result in direct charges to our reported earnings over the future respective vesting
periods. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>New Plan Benefits  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The grant of awards under the 2005 Plan, including grants to our named executive officers and directors, is discretionary. As of the date of this proxy statement,
there has been no determination with respect to future awards under the 2005 Plan, and the amount of any future discretionary awards is not determinable. The following table sets forth information
with respect to the grant of options during the fiscal year ended December&nbsp;31, 2007, and the grant of restricted stock units in January 2008, to </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>(a)&nbsp;each
of our named executive officers; (b)&nbsp;all current executive officers as a group; (c)&nbsp;all current non-employee directors as a group; and (d)&nbsp;all
employees, including current officers who are not executive officers, as a group: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>PLAN GRANTS IN 2007 AND 2008  </B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="52%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name of Individual or Identity of Group and Position</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Shares Subject to<BR>
Options Granted</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Exercise<BR>
Price(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Restricted<BR>
Stock Units(3)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne, CEO</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>David K. Chidester, Senior Vice President, Finance</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey, President and Chief Operating Officer(2)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>80,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon, Senior Vice President, Customer Care, PR and Branding</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>40,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>Steven P. Tryon, Senior Vice President, Logistics</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>All current executive officers as a group (7 people)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>220,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>105,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>All current directors who are not executive officers as a group (4 people) (4)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>75,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24.89</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="52%" style="font-family:times;"><FONT SIZE=2>All other employees as a group</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>465,500</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.56</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>331,250</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Represents
the weighted average per share exercise price for options granted in 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey
resigned as our President and Chief Operating Officer effective December&nbsp;31, 2007, but remains an employee of the Company.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Restricted
stock unit grants were made in January 2008, and vest over a three-year period commencing on the date of grant at the rate of 25% at the end of year one, 25% at
the end of year two, and 50% at the end of year three. The exercise price for each unit is the par value of the underlying shares, which is $0.0001.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Includes
40,000 options held by James V. Joyce, a consultant to the Company, which were granted prior to his appointment to the Board, having a weighted average exercise price of
$30.38 per share and vesting, with respect to 30,000 shares, on December&nbsp;31, 2008, and with respect to 10,000 shares, 28% on the date one year after the date of grant and 2% per month
thereafter. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company does not have any equity compensation plans not approved by the stockholders. See "Equity Compensation Plan Information." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Vote Required  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a quorum is present, the affirmative vote of a majority of the shares present, entitled to vote and cast at the Annual Meeting will be required to approve the
amendment to the plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brokers
do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a
non-vote on this proposal. Broker non-votes, if any, will have no effect on the outcome of the vote on this proposal. Abstentions will have the effect of a vote "against" the
proposal. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Recommendation Of The Board Of Directors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors unanimously recommends that stockholders vote "for" approval of the plan, as amended. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>13</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<BR>

<P style="font-family:times;"><FONT SIZE=2><B> <A NAME="dg42201_3._ratification_of_selection_o__3._02988"> </A>
<A NAME="toc_dg42201_4"> </A>
3.&nbsp;&nbsp;&nbsp;&nbsp;RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has selected PricewaterhouseCoopers&nbsp;LLP as the Company's independent registered public accounting firm for the current fiscal year.
PricewaterhouseCoopers&nbsp;LLP has served as our independent registered public accounting firm since 1999. Although ratification of the Audit Committee's selection of
PricewaterhouseCoopers&nbsp;LLP is not required under our bylaws or other legal requirements, the Company is submitting the appointment of PricewaterhouseCoopers&nbsp;LLP to the stockholders as a
matter of good corporate practice. If stockholders do not ratify the appointment of PricewaterhouseCoopers&nbsp;LLP, the Audit Committee will reconsider whether or not to retain
PricewaterhouseCoopers&nbsp;LLP. Even if stockholders ratify the selection of PricewaterhouseCoopers&nbsp;LLP, the Audit Committee may appoint a different independent registered public accounting
firm or replace PricewaterhouseCoopers&nbsp;LLP with a different independent registered public accounting firm at any time if the Audit Committee determines it is in the best interests of the
Company and the stockholders to do so. Representatives of PricewaterhouseCoopers&nbsp;LLP are expected to attend the meeting in order to respond to appropriate questions from stockholders and will
have an opportunity to make a statement if they desire to do so. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Audit Fees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate fees and out-of-pocket expenses PricewaterhouseCoopers&nbsp;LLP billed us for each of the last two fiscal years for
professional services for the audits of our annual financial statements, the effectiveness of internal control over financial reporting and reviews of financial statements included in our Reports on
Form&nbsp;10-K and Form&nbsp;10-Q and for their services assisting us with our responses to accounting comments from the Staff of the SEC and to the SEC's investigation
into our accounting and other matters were $611,000 in 2006 and $761,000 in 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Audit-Related Fees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers&nbsp;LLP did not bill us any fees in the last two fiscal years for assurance and related services that are reasonably related to the
performance of the audit or review of the Company's financial statements and are not reported above under the caption "Audit Fees." </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Tax Fees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers&nbsp;LLP did not bill us any fees in the last two fiscal years for compliance, tax advice, or tax planning. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>All Other Fees  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers&nbsp;LLP did not bill us any fees in 2006 and 2007 for products and services provided by PricewaterhouseCoopers&nbsp;LLP, other than
the services reported above, except for $2,400 in 2007 for the use of proprietary software. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B>Auditor Independence  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has considered the role of PricewaterhouseCoopers&nbsp;LLP in providing us with the services described above, and has concluded that those
services are compatible with their independence from management and from the Company. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>14</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><B>Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>General  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy, which sets forth the procedures and the conditions
pursuant to which services to be performed by the independent registered public accounting firm are to be pre-approved. Under the Policy, proposed services either may be
pre-approved by agreeing to a framework with descriptions of allowable services with the Audit Committee ("general pre-approval"), or require the specific
pre-approval of the Audit Committee ("specific pre-approval"). Unless a type of service has received general pre-approval, it requires specific
pre-approval by the Audit Committee if it is to be provided by the independent registered public accounting firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Policy describes the Audit, Audit-related, Tax and All Other Services that are subject to the general pre-approval of the Audit Committee. The Audit Committee annually
reviews and pre-approves the services that may be provided by the independent registered public accounting firm that are subject to general pre-approval. Under the Policy, the
Audit Committee may delegate either type of pre-approval authority to its chairperson or any other member or members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee at its next meeting. The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent registered public accounting firm to management. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Audit Services  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The annual Audit services engagement scope and terms are subject to the general pre-approval of the Audit Committee. Audit services include the annual
financial statement audit (including required quarterly reviews) and other procedures required to be performed by the independent registered public accounting firm to be able to form an opinion on the
Company's consolidated financial statements. Audit services also include the attestation engagement for the independent registered public accounting firm's report on the effectiveness of internal
control over financial reporting and, for 2006, management's assertion on internal control over financial reporting. The Policy provides that the Audit Committee will monitor the Audit services
engagement throughout the year and will also approve, if necessary, any changes in terms and conditions resulting from changes
in audit scope or other items. The Policy provides for Audit Committee pre-approval of specific Audit services outside the engagement scope. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Audit-related Services  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial
statements or that are traditionally performed by the independent registered public accounting firm. Under the Policy, the Audit Committee grants general pre-approval to specified
Audit-related services. All other Audit-related services not specified must be specifically pre-approved by the Audit Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Tax Services  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Policy, the Audit Committee grants general pre-approval to specific tax compliance, planning and advice services that have historically been
provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC's rules on auditor independence.
Other tax services must be specifically approved by the Audit Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>15</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><I>All Other Services  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Policy, the Audit Committee grants general pre-approval to specific permissible non-audit services classified as All Other
Services that it believes are routine and recurring services, would not impair the independence of the independent registered public accounting firm and are consistent with the SEC's rules on auditor
independence. Services permissible under applicable rules but not specifically approved in the Policy require further specific pre-approval by the Audit Committee. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Procedures  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Policy provides that at the beginning of each year, the Senior Vice President, Finance (our principal financial and accounting officer) and the Company's
independent registered public accounting firm will jointly submit to the Audit Committee a schedule of audit, audit-related, tax and other non-audit services that are subject to general
pre-approval. This schedule will provide a description of each type of service that is subject to general pre-approval and, where possible, will provide projected fees (or a
range of projected fees) for each service. The Audit Committee will review and approve the types of services and review the projected fees for the next fiscal year. Any changes to the fee amounts
listed in the schedule will be subject to further specific approval of the Audit Committee. The Policy prohibits the independent registered public accounting firm from commencing any project not
described in the schedule approved by the Audit Committee until specific approval has been given. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>Recommendation of the Board of Directors  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors unanimously recommends that the stockholders vote "for" ratification of the selection of PricewaterhouseCoopers&nbsp;LLP as the Company's
independent registered public accounting firm. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>Vote Required  </I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The affirmative vote of a majority of the shares represented at the meeting, in person or by proxy, will be required to approve the proposal. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="dg42201_4._other_business"> </A>
<A NAME="toc_dg42201_5"> </A>
<BR></FONT><FONT SIZE=2><B>4.&nbsp;&nbsp;&nbsp;&nbsp;OTHER BUSINESS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board knows of no other business for consideration at the meeting. If other matters are properly presented at the meeting, or at any adjournment or
postponement of the meeting, Messrs.&nbsp;Byrne and Johnson will vote, or otherwise act, on your behalf in accordance with the Board's (or, in the absence of instructions from the Board, their)
judgment on such matters. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg42201_the_board"> </A>
<A NAME="toc_dg42201_6"> </A>
<BR></FONT><FONT SIZE=2><B>THE BOARD    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="dg42201_general"> </A>
<A NAME="toc_dg42201_7"> </A></FONT> <FONT SIZE=2><B>General    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors is currently composed of five members. Two current directors are nominees for re-election this year. The remaining three
directors will continue to serve the terms described below. Our directors serve staggered terms. This is accomplished as follows: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
director serves a three-year term,
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the
directors are divided into three classes,
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the
classes are as nearly equal in number as possible, and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>the
term of each class begins on a staggered schedule. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>16</FONT></P>

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<UL>
</UL>
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<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise instructed, the proxy holders will vote the proxies received by them for each of Allison H. Abraham and Joseph J. Tabacco, Jr., each of whom is a current director of the
Company. In the event that either nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by a
majority of the independent members of the present Board of Directors to fill the vacancy. In the event that additional persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will ensure the election of the nominees approved by a majority of the independent members of the Board, if possible. The term of office of the
persons elected as directors will continue until the 2011 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified or until his or her earlier death,
resignation or removal. It is not expected that either nominee will be unable or will decline to serve as a director. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_board_and_committee_meetings"> </A>
<A NAME="toc_di42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>Board and Committee Meetings    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board held nine meetings during 2007. The Audit Committee held 11 meetings during 2007, and the Compensation Committee held one meeting during 2007. Each
director attended at least 75% of the meetings of the Board and of the committees on which he or she served during 2007. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_board_independence"> </A>
<A NAME="toc_di42201_2"> </A>
<BR></FONT><FONT SIZE=2><B>Board Independence    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board currently consists of five members. The Board of Directors has determined that, except for Patrick M. Byrne, who serves as our Chief Executive Officer,
and James&nbsp;V. Joyce, who serves as a consultant to us, each of our current directors is independent within the meaning of the Nasdaq director independence standards. In reaching this
determination, the Board considered that neither Allison H. Abraham nor Joseph J. Tabacco, Jr. has any relationship with the Company except as a director and stockholder. With respect to Barclay
(Clay) F. Corbus, the Board considered the fact that Mr.&nbsp;Corbus formerly served as Co-CEO of WR Hambrecht +&nbsp;Co., and considered the services that WR Hambrecht +&nbsp;Co.
has performed for the Company and determined that Mr.&nbsp;Corbus met the independence requirements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_committees_of_the_board"> </A>
<A NAME="toc_di42201_3"> </A>
<BR></FONT><FONT SIZE=2><B>Committees of the Board    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors has an Audit Committee and a Compensation Committee, each of which has adopted a written charter. All members of the committees are
appointed by the Board of Directors, and each member is independent within the meaning of the Nasdaq director independence standards and SEC rules. The committees are described in more detail below.
In addition, the Board has adopted resolutions authorizing a majority of the independent members of the Board of Directors to recommend nominees for election to the Board, as described in more detail
below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Board has an Audit Committee consisting of Allison H. Abraham, who serves as Chair, Barclay (Clay) F.
Corbus and Joseph J. Tabacco, Jr., each of whom is independent within the meaning of the Nasdaq director independence standards. The Board of Directors has determined that each of Ms.&nbsp;Abraham
and Mr.&nbsp;Corbus is an "audit committee financial expert" as defined by the SEC. The Audit Committee is responsible for reviewing and monitoring our financial statements and internal accounting
procedures, selecting, reviewing and monitoring our independent registered public accounting firm, evaluating the scope of the annual audit, reviewing audit results, and consulting with management and
our independent registered public accounting firm prior to presentation of financial statements to stockholders. The Audit Committee Report is included beginning on page&nbsp;32 of this proxy
statement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Board also has a Compensation Committee consisting of Barclay (Clay) F. Corbus, who serves as
Chairman, Allison H. Abraham and Joseph J. Tabacco, Jr., each of whom is a non-employee and independent under the Nasdaq independence standards. The </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_di42201_1_18"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>Compensation
Committee is responsible for determining salaries, incentives and other forms of compensation for our directors, officers and other employees and administering various incentive
compensation and benefit plans. The Compensation Committee Report is included on page&nbsp;27 of this proxy statement. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nominations.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Board does not have a standing nominating committee or committee performing similar functions. The Board has
adopted resolutions in accordance with applicable Nasdaq rules authorizing a majority of the independent members of the Board to recommend nominees to the full Board. The Board believes that it is
appropriate for the Board not to have a nominating committee because of the small size of the full Board. The Board currently consists of five members, three of whom are independent. The Board
considered forming a nominations committee consisting of some or all of the independent members of the Board. Forming a committee consisting of less than all the independent members was unattractive
because it would have omitted one or more of the independent members of the Board. The Board desired the participation in the nomination procedure of all of its independent members, and therefore
authorized a majority of the independent members of the Board to make nominations. The Board intends to review this matter periodically, and may in the future elect
to designate a formal nominations committee. Each member of the Board of Directors has historically participated in the consideration of director nominees. The independent members of the Board do not
have a nominating committee charter, but act pursuant to Board resolutions as described above. Each of the members of the Board authorized to recommend nominees to the full Board is independent within
the meaning of the Nasdaq director independence standards. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_director_qualifications"> </A>
<A NAME="toc_di42201_4"> </A>
<BR></FONT><FONT SIZE=2><B>Director Qualifications    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The independent members of the Board have not formalized specific minimum qualifications they believe must be met by a candidate to be recommended by the
independent members. The independent members believe that candidates for election to the Board should have the highest professional and personal ethics and values, consistent with those of the
Company. Candidates should have broad relevant experience, and should be committed to enhancing long-term stockholder value. They should be able and willing to provide insight and
practical advice based on experience, and they must actively represent the interests of the stockholders. The independent members believe that a variety of types and a balance of knowledge, experience
and capabilities among the members of the Board are in the best interests of the stockholders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_identification_and_eva__di402220"> </A>
<A NAME="toc_di42201_5"> </A>
<BR></FONT><FONT SIZE=2><B>Identification and Evaluation of Nominees for Director    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The independent members of the Board believe that the current Board composition is serving the stockholders of the Company well. The independent Board members
have recommended additional persons, including Mr.&nbsp;Barclay (Clay) F. Corbus, who joined the Board in March 2007, and Mr.&nbsp;Joseph&nbsp;J. Tabacco, Jr., who joined the Board in June 2007,
as candidates for the Board from time to time, based largely on the qualifications of the potential candidates, as well as on the needs of the Company. In the future, the independent members may
consider candidates identified through current members of the Board, professional search firms, stockholders or other persons. Candidates may be evaluated at regular or special meetings of the Board,
and may be considered at any point during the year. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
independent members have a policy that they will consider any properly submitted director candidates recommended by stockholders of the Company. Any stockholder who desires to submit
a recommendation should submit a written recommendation to the Board, including information about the qualifications of the person to be a nominee for election to the Board, and a consent of the
person to serve if elected, addressed to Board of Directors, Overstock.com,&nbsp;Inc., 6350 South 3000 East, Salt Lake City, Utah 84121. There is no difference in the manner in which the independent
members would evaluate a nominee based on whether the nominee is recommended by a stockholder. There has been </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_di42201_1_19"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>no
material change to the procedures by which stockholders may recommend nominees to the independent members that was implemented after the Company's most recent disclosure pursuant to
Item&nbsp;407(c)(2) of Regulation&nbsp;S-K. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
independent members have not approved any nominee for inclusion on the Company's proxy card for the 2008 Annual Meeting other than Allison H. Abraham and Joseph J. Tabacco, Jr., each
of whom is standing for re-election. The Company has not paid a fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominees. The
independent members did not receive, by December&nbsp;1, 2007, any recommended nominee from any stockholder that beneficially owned more than 5% of the Company's voting common stock for at least one
year as of the date the recommendation was made, or from a group of stockholders that beneficially owned, in the aggregate, more than 5% of the Company's voting common stock, with each of the
securities used to calculate that ownership held for at least one year as of the date the recommendation was made. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_communications_with_the_board"> </A>
<A NAME="toc_di42201_6"> </A>
<BR></FONT><FONT SIZE=2><B>Communications with the Board    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2004 the Board adopted resolutions to provide a formal process by which stockholders may communicate with the Board. Although the adoption of the
formal process did not change the previously existing informal procedures by which stockholders could communicate with the Board, whether for the purpose of recommending nominees for election to the
Company's Board of Directors or for other purposes, the adoption of the formal process did clarify that stockholders may communicate directly with the Board, whether for the purpose of recommending
nominees for election to the Company's Board of Directors or for other purposes. The formal process adopted by the Board permits stockholders to communicate with the Board either in writing, addressed
to the Board at the Company's headquarters at 6350 South 3000 East, Salt Lake City, Utah 84121, or by e-mail, sent to </FONT> <FONT SIZE=2><I>boardofdirectors@overstock.com</I></FONT><FONT SIZE=2>. All communications from stockholders regarding
matters appropriate for stockholder communications with the Board and
delivered as described will be delivered to Board members. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_annual_meeting_attendance"> </A>
<A NAME="toc_di42201_7"> </A>
<BR></FONT><FONT SIZE=2><B>Annual Meeting Attendance    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's policy is that Board members should attend annual stockholder meetings if reasonably possible. All the members of the Board, other than Barclay
(Clay) F. Corbus, attended the 2007 annual stockholders meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_code_of_ethics"> </A>
<A NAME="toc_di42201_8"> </A>
<BR></FONT><FONT SIZE=2><B>Code of Ethics    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has adopted a code of ethics that applies to all of the Company's directors and employees, including the Company's principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company will provide a copy of the code of ethics to any person without charge,
upon request. Requests for a copy of the code of ethics may be made in writing addressed to: General Counsel, Overstock.com,&nbsp;Inc., 6350 South 3000 East, Salt Lake City, Utah 84121. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_policies_and_procedure__di402495"> </A>
<A NAME="toc_di42201_9"> </A>
<BR></FONT><FONT SIZE=2><B>Policies and Procedures Regarding Related Party Transactions    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board has established a written policy and procedures for the review, approval or ratification of related party transactions. Under the Board's policy, any
related party transaction that would be required to be disclosed pursuant to Item&nbsp;404 of Regulation&nbsp;S-K is subject to the prior approval of the Audit Committee unless prior
approval is not feasible, in which case the transaction is required to be considered at the Audit Committee's next meeting and, if the Audit Committee determines it to be appropriate, may be ratified
at that meeting. In determining whether to approve or ratify a related party transaction, the Audit Committee takes into account, among other factors it deems appropriate, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>19</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_di42201_1_20"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>whether
the transaction is on terms no less favorable to the Company than terms generally available from an unrelated person under the same or similar circumstances, and the extent of the related
person's interest in the transaction. No member of the Audit Committee participates in any approval or ratification of a related party transaction in which such member is a related person, other than
to provide all material information regarding the transaction, including information regarding the extent of the member's interest in the transaction, to the Audit Committee. If a related party
transaction will be ongoing, the Audit Committee may establish guidelines or other parameters or conditions relating to the Company's participation in the transaction. The Audit Committee may from
time to time pre-approve types or categories of transactions by related persons. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_information_regarding___di402451"> </A>
<A NAME="toc_di42201_10"> </A>
<BR></FONT><FONT SIZE=2><B>Information Regarding Director Nominees and Other Directors    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is certain information as of the record date regarding the nominees for election and all other directors of Overstock whose term of office
continues after the 2008 Annual Meeting. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Class&nbsp;III Directors (Term Expiring in 2008) and Nominees for Election for Terms Expiring in 2011  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="68%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="45%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Position with the Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Director Since</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>Allison H. Abraham</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>March 2002</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="45%" style="font-family:times;"><FONT SIZE=2>Joseph J. Tabacco, Jr.&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>59</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>June 2007</FONT></TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Allison H. Abraham</I></FONT><FONT SIZE=2> has served as a Director of Overstock since March 2002 and is currently a consultant to several early stage companies
and individuals. She is Chair of the Audit Committee and a member of the Compensation Committee. Ms.&nbsp;Abraham served as President and as a director of LifeMinders,&nbsp;Inc., an online direct
marketing company, from May 2000 until the acquisition of LifeMinders by Cross Media Marketing Corp. in October 2001. Prior to joining LifeMinders, Ms.&nbsp;Abraham served as Chief Operating Officer
of iVillage&nbsp;Inc., an online media company, from May 1998 to May 2000. From February 1997 to April 1998, Ms.&nbsp;Abraham was President, Chief Operating Officer and a director of Shoppers
Express, an online grocery service, and also served as Vice President of Sales and Marketing for several months prior to her promotion. From 1992 to 1996, Ms.&nbsp;Abraham held several marketing and
management positions at Ameritech Corporation. She was employed at American Express Travel Related Services in New York City from 1988 to 1992, focusing on the launch of new products and loyalty
programs. Ms.&nbsp;Abraham holds a Bachelor of Arts in Economics from Tufts University and a MBA degree from the Darden School at the University of Virginia. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Joseph J. Tabacco, Jr. </I></FONT><FONT SIZE=2>has served as a Director of Overstock since June 2007. Mr.&nbsp;Tabacco is a member of the Audit Committee and
the Compensation Committee. For more than the last five years Mr.&nbsp;Tabacco has served as the managing partner of Berman DeValerio Pease Tabacco Burt&nbsp;&amp; Pucillo's San Francisco office. A
1974 honors graduate of George Washington University School of Law, Mr.&nbsp;Tabacco litigates antitrust, securities fraud, commercial high tech, and intellectual property matters. Since entering
private practice in the early 1980s, Mr.&nbsp;Tabacco has served as trial or lead counsel in numerous antitrust and securities cases and has been involved in all aspects of state and federal
litigation. Prior to 1981, Mr.&nbsp;Tabacco served as senior trial attorney for the U.S. Department of Justice, Antitrust Division, and in both the Central District of California and the Southern
District of New York. Mr.&nbsp;Tabacco frequently lectures and authors articles on securities and antitrust law issues and is a member of the Advisory Board of the Institute for Consumer Antitrust
Studies at Loyola University Chicago School of Law. Mr.&nbsp;Tabacco is also a former teaching fellow of the Attorney General's Advocacy Institute in Washington, D.C., and has served on the faculty
of ALI-ABA on programs about U.S.-Canadian business litigation and trial of complex securities cases. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Class&nbsp;I Directors (Term Expiring in 2009)  </B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="25%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Position with the Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Director Since</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" style="font-family:times;"><FONT SIZE=2>Chief Executive Officer</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=2>October 1999</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%" style="font-family:times;"><FONT SIZE=2>Barclay (Clay) F. Corbus</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" style="font-family:times;"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=2>March 2007</FONT></TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Dr.&nbsp;Patrick M. Byrne</I></FONT><FONT SIZE=2> has served as our principal executive officer and as a Director since October 1999, as Chairman of the Board
from February 2001 through October 2005 and from April 2006 to the present, and currently serves as our President, Chief Operating Officer and Chief Executive Officer. From September 1997 to May 1999,
Dr.&nbsp;Byrne served as President and Chief Executive Officer of Fechheimer Brothers,&nbsp;Inc., a manufacturer and distributor of uniforms. From 1995 until its sale in September 1999,
Dr.&nbsp;Byrne was Chairman, President and Chief Executive Officer of Centricut,&nbsp;LLC, a manufacturer and distributor of industrial torch parts. From 1994 to the present, Dr.&nbsp;Byrne has
served as a Manager of the Haverford Group, an investment company and an affiliate of Overstock. Dr.&nbsp;Byrne has a Bachelor of Arts degree in Chinese studies from Dartmouth College, a Master's
degree from Cambridge University as a Marshall Scholar, and a Ph.D. in philosophy from Stanford University. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Barclay (Clay) F. Corbus</I></FONT><FONT SIZE=2> has served as a Director of Overstock since March 2007. He is a member of the Audit Committee and Chairman of the
Compensation Committee. Mr.&nbsp;Corbus has served as Senior Vice President of Clean Energy Fuels Corp., with responsibility for strategic development, since
September 2007. He served as Co-CEO of WR Hambrecht +&nbsp;Co. from July 2004 to September 2007, and prior to that date served in other executive positions with WR Hambrecht +&nbsp;Co.
Prior to joining WR Hambrecht&nbsp;+&nbsp;Co in March 1999, Mr.&nbsp;Corbus was in the investment banking group at Donaldson, Lufkin and Jenrette. Mr.&nbsp;Corbus graduated from Dartmouth
College with an AB in Government and has an MBA in Finance from Columbia Business School. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Class&nbsp;II Directors (Term Expiring in 2010)  </B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="42%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Position with the Company</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="21%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Director Since</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%" style="font-family:times;"><FONT SIZE=2>James V. Joyce</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=2>Consultant</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" style="font-family:times;"><FONT SIZE=2>February 2008</FONT></TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>James V. Joyce</I></FONT><FONT SIZE=2> has served as a Director of Overstock since February 2008. He is also the chief executive officer of Icent&nbsp;LLC,
which is a management consulting company through which Mr.&nbsp;Joyce has provided consulting services to clients, including the Company, for more than the last five years. Mr.&nbsp;Joyce holds a
Bachelor of Arts degree as well as a Master's degree in Jurisprudence from the University of Oxford and an MBA from Dartmouth College. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_compensation_committee__di402474"> </A>
<A NAME="toc_di42201_11"> </A>
<BR></FONT><FONT SIZE=2><B>COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION    <BR>    </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The members of the Compensation Committee during 2007 were Barclay (Clay) F. Corbus (Chairman), Allison H. Abraham and Joseph J. Tabacco, Jr. During 2007: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>None
of the members of the Compensation Committee was an officer (or former officer) or employee of the Company or any of its subsidiaries;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>None
of the members of the Compensation Committee was a participant in any "related person" transaction;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>None
of the Company's executive officers served on the compensation committee of another entity where one of that entity's executive officers served on the Company's Board
or Compensation Committee; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>None
of the Company's executive officers was a director of another entity where one of that entity's executive officers served on the Company's Compensation Committee. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>21</FONT></P>

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<UL>
<UL>
</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_compensation_discussion_and_analysis"> </A>
<A NAME="toc_di42201_12"> </A>
<BR></FONT><FONT SIZE=2><B>COMPENSATION DISCUSSION AND ANALYSIS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_introduction"> </A>
<A NAME="toc_di42201_13"> </A></FONT> <FONT SIZE=2><B>Introduction    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee administers our executive compensation program. The committee, which is composed entirely of independent directors, is responsible for
reviewing and approving the compensation policies for executive officers and directors, for reviewing and approving all forms of compensation for our executive officers and directors, for
administering our incentive compensation programs (including our 2005 Equity Incentive Plan and our Performance Share Plan), for approving and overseeing the administration of our employee benefits
programs, and for providing insight and guidance to management with respect to employee compensation and retention generally. Following is a discussion of the objectives and implementation of our
executive compensation programs. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee operates under a charter adopted by the board of directors. The committee annually reviews the adequacy of its charter and recommends changes to the board for
approval as it considers appropriate. The committee meets at scheduled times during the year and also acts upon occasion by written consent. The committee reports on its activities and makes committee
recommendations at meetings of the board of directors. The committee collects and analyzes comparative executive compensation information from relevant peer groups, approves executive salary
adjustments, approves awards under incentive/bonus plans, approves discretionary bonuses, and administers the Company's 2005 Equity Incentive Plan and Performance Share Plan. Additionally, from time
to time, the committee reviews other human resource issues, including qualified and non-qualified benefits, management performance appraisals, and succession planning. Our Chief Executive
Officer and other executive officers make recommendations and participate with respect to decisions concerning other executive officers, and provide information and make recommendations to the
committee regarding the amount and form of director compensation. Neither the committee nor the Company has used outside compensation consultants to determine or recommend the amount or form of
executive or director compensation. The committee has not delegated any of its authority to any other person. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_compensation_objectives"> </A>
<A NAME="toc_di42201_14"> </A>
<BR></FONT><FONT SIZE=2><B>Compensation Objectives    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive compensation programs seek to attract and retain highly competent executive management who will build long-term economic value for the
Company. Our Chief Executive Officer has refused to accept any salary or bonus since our inception, and we have intentionally set all executive salaries at levels below the amounts we believe our
executives could have earned at comparable public companies based in Utah. In order to retain our executive management, in early 2007 the committee authorized increases to our executives' salaries,
but nevertheless continues to adhere to a compensation philosophy that the executive salary and bonus levels should remain modest in comparison to those paid at comparable companies, and that
executives' opportunities for more significant compensation should be tied closely to the Company's performance. The objectives of our executive compensation plans and programs are to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Emphasize
the enhancement of the long-term economic value of the Company;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Retain
the senior executives;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Deliver
the total executive compensation package in a cost-effective manner; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Encourage
management ownership of our common stock. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
executive compensation policy is designed to encourage decisions and actions that have a positive effect on our economic value and our overall corporate performance. Specifically,
the Performance Share Plan is designed to have no value to the Named Executive Officers or other participants if the Company's economic value fails to increase as described below, and to have </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>22</FONT></P>

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<A NAME="page_di42201_1_23"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>increasing
value if the Company's economic value and stock price increase. Similarly, option grants under the Company's 2005 Equity Incentive Plan have no value to the executives or other participants
if the Company's stock price fails to increase above the exercise prices of the respective option grants. Restricted stock unit grants, which we first made in January 2008, are intended to have value
to the recipients, subject to compliance with the vesting requirements, that is tied directly to the Company's stock price. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accounting and tax treatment of particular forms of compensation generally do not affect the committee's compensation decisions. However, the committee evaluates the effects of
accounting and tax treatment on an ongoing basis and takes those effects into account to the extent it considers appropriate. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
committee reviews executive pay practices at other publicly-held companies based in Utah as part of its process of determining the appropriate levels of compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_elements_of_compensation"> </A>
<A NAME="toc_di42201_15"> </A>
<BR></FONT><FONT SIZE=2><B>Elements of Compensation    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The elements of total compensation the Company pays to its named executive officers identified in the Summary Compensation Table below (the "Named Executive
Officers") other than its Chief Executive Officer (the "CEO") are as follows: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Base
salary;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Annual
individual cash bonuses;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Awards
under our Performance Share Plan;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Awards
under our 2005 Equity Incentive Plan;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Matching
contributions under our 401(k) plan; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Benefits
under our health and welfare benefits plans. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
of these elements is discussed below. In January 2008 our CEO received a grant of restricted stock units under the Company's 2005 Equity Incentive Plan, as discussed below, but
declined to accept any compensation during or relating to 2007. The amounts shown for the CEO in the Stock Awards and Option Awards columns of the Summary Compensation Table reflect stock option
grants and grants under our Performance Share Plan made in prior years. No awards have been made to any Named Executive Officer or other person under the Performance Share Plan since January 2006. See
"Performance Share Plan" below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base Salary.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The base salaries of the Named Executive Officers are reviewed by the committee annually. Salaries for the named
executive officers in 2007 were set at $200,000 each, except for our President, Jason C. Lindsey, who was paid $300,000, and our CEO, Patrick Byrne, who did not receive any salary. We intentionally
set all executive salaries at levels below the amounts we believe our executives could have earned elsewhere, but increased them significantly from the base salaries we paid in 2006 in order to retain
the executives. In 2007 we paid Mr.&nbsp;Lindsey a higher salary than we paid the other Named Executive Officers because of the greater responsibilities assumed by Mr.&nbsp;Lindsey in his role as
President and Chief Operating Officer. In setting the salaries, the committee reviewed 2006 base salaries paid by other publicly held companies based in Utah with revenues between $250&nbsp;million
and $2&nbsp;billion. The companies reviewed were EnergySolutions, Franklin Covey, Headwaters, ICON Health&nbsp;&amp; Fitness, Nu Skin Enterprises and USANA Health Services. The base salaries paid by
the Company in 2007 were substantially lower than those paid in 2006 by five of these six companies. Salary income for each Named Executive Officer for calendar year 2007 is reported in the Summary
Compensation Table. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>23</FONT></P>

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<A NAME="page_di42201_1_24"> </A>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual Individual Cash Bonuses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Annual individual cash bonuses paid to the Named Executive Officers are determined by the
committee annually after the end of the year and are intended to serve both as recognition for individual and Company performance and as a retention mechanism. The amounts of the bonuses are
determined by the committee based on recommendations made by the CEO and on the committee's subjective view of the performance of the respective Named Executive Officers during the prior year. In
determining the amount of the bonuses paid to the Named Executive Officers, the committee first established the aggregate amount of bonuses to be paid to all Company employees, including the Named
Executive Officers, and then allocated the aggregate amount to employees, including the Named Executive Officers. The amounts of the bonuses are intended to be sufficient to enable the Company to
retain the services of the Named Executive officers, and to be meaningful to the Named Executive Officers as recognition for performance in 2007, but without being more than the amounts necessary to
achieve these purposes. Bonus amounts paid to each Named Executive Officer for calendar year 2007 are reported in the Summary Compensation Table. Except for the CEO, who declined to accept any bonus
payment, the bonus payments to each Named Executive Officer were either $175,000 or $225,000, depending on the Committee's subjective evaluation of the contributions made by each Named Executive
Officer. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Share Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The committee approved the adoption of the Company's Performance Share Plan in January 2006. The
Performance Share Plan provides for a three-year period for the measurement of the Company's attainment of the performance goal described in the form of grant. At the Company's sole option
the Company had the ability to make a payment of estimated amounts payable to a plan participant after two years, but the Compensation Committee did not approve any such payments. The performance goal
is measured by growth in economic value, as defined in the plan. The amount of payments due to participants under the plan is a function of the then current market price of a share of the Company's
common stock, multiplied by a percentage dependent on the extent to which the performance goal has been attained, which is between 0% and 200%. If the growth in economic value is 10% compounded
annually, or less, the percentage will be 0%. If the growth in economic value is 25% compounded annually, the percentage is 100%. If the growth in economic value is 40% compounded annually or more,
the percentage is 200%. If the percentage growth is between these percentages, the payment percentage is determined on the basis of straight line interpolation. Amounts payable under the plan will be
payable in shares of common stock. The provisions of section&nbsp;162(m) of the Internal Revenue Code could limit the Company's ability to deduct payments made pursuant to the plan. The dollar
amount recognized as compensation cost for financial statement reporting purposes for calendar years 2006 and 2007 with respect to each such award (determined in accordance with FAS&nbsp;123R) is
set forth in the Summary Compensation Table. The plan is designed to provide at-risk (incentive) compensation that aligns management's financial interests with those of our stockholders.
No actual cash, stock or other payments were made under these awards during 2007, and no awards have been made under the plan since January 2006. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005 Equity Incentive Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We use the grant of stock options under our 2005 Equity Incentive Plan to provide
long-term incentive compensation opportunities to our key employees, including the Named Executive Officers. The plan was approved by the stockholders in 2005 and provides for the grant of
awards, including qualified and non-qualified stock options to purchase shares of our common stock. Options granted under the plan have been granted at a per share exercise price which is
not less than 100% of the fair market value of the underlying shares on the date that the option is granted. Accordingly, options granted under the plan have no intrinsic value unless the market price
of the Company's common stock increases after the date of grant. The plan also provides for the grant of restricted stock awards and other types of awards, although prior to 2008 we had not made any
such awards. The plan is designed to provide at-risk (incentive) compensation that aligns management's financial interests with those of our stockholders and encourages management
ownership of our common stock. We have not adopted any specific policy regarding the amount or timing of any stock-based compensation under the plan. The dollar amount recognized as compensation cost
for financial </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>24</FONT></P>

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<A NAME="page_di42201_1_25"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>statement
reporting purposes for calendar years 2006 and 2007 (determined in accordance with SFAS&nbsp;123(R) without regard to forfeitures) is set forth in the Summary Compensation Table. In early
2007 the Compensation Committee approved option grants to the Named Executive Officers (other than the CEO, who did not receive any option grant) covering 35,000 shares to each of
Messrs.&nbsp;Chidester and Tryon, 40,000 shares to Ms.&nbsp;Simon, and 80,000 shares to Mr.&nbsp;Lindsey. The committee approved the grants in an effort to retain and motivate the executives.
Information concerning the number of options held by each Named Executive Officer as of December&nbsp;31, 2007 is set forth in the Outstanding Equity Awards at Fiscal Year-End Table. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;401(k) Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We maintain a 401(k) plan, in which Named Executive Officers may participate. During 2007 we matched 50% of
participants' contributions on up to 6% of their salaries and contributed 2% as a discretionary contribution. The amounts of matching contributions and profit sharing contributions allocated to our
Named Executive Officers are set forth in the Summary Compensation Table. Participation in the 401(k) plan is available to employees on a non-discriminatory basis. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Health and Welfare Benefits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We provide health, life and disability insurance and other employee benefits programs to our
employees, including our Named Executive Officers. The committee is responsible for overseeing the administration of these programs and believes that the employee benefits programs should be generally
comparable to those maintained by comparable companies so that we are able to attract and retain officers and other employees. Our employee benefits plans are provided on a
non-discriminatory basis to all employees. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_executive_compensation_action_taken_after_year-end"> </A>
<A NAME="toc_di42201_16"> </A>
<BR></FONT><FONT SIZE=2><B>Executive Compensation Action Taken After Year-End    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2008, the Compensation Committee set salaries for our Named Executive Officers at the same rates they were paid during 2007, except that the committee
decreased the base salary of
Mr.&nbsp;Lindsey, who resigned as our President and Chief Operating Officer as of December&nbsp;31, 2007, but will remain an employee, from $300,000 to $100,000. Patrick Byrne, our CEO, declined
to accept any salary for 2008, and the salaries for the other Named Executive Officers were set at $200,000. The committee determined that the $200,000 salaries to be paid to the three Named Executive
Officers other than Messrs.&nbsp;Byrne and Lindsey were consistent with the committee's philosophy that the salaries should be modest in comparison to salaries being paid by comparable public
companies. At the same time, the committee approved cash bonuses for 2007 performance for the Named Executive Officers (other than the CEO, who declined to accept any bonus) as described above under
"Annual Individual Cash Bonuses." </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2008 the committee approved the grant of restricted stock units under the Company's 2005 Equity Incentive Plan to 108 employees of the Company, including the Named Executive
Officers. Each Named Executive Officer other than Mr.&nbsp;Lindsey received a grant of 15,000 units. Mr.&nbsp;Lindsey, who had resigned as our President and Chief Operating Officer, but remains an
employee of the Company, received a grant of 7,500 units. Restricted stock units vest over a three-year period commencing on the date of grant at the rate of 25% at the end of year one,
25% at the end of year two, and 50% at the end of year three. The committee made the determination to grant restricted stock units rather than stock options in part because of the volatility of the
Company's stock price. The committee wanted to provide an equity incentive that would have value to the recipient, and thus serve as an incentive, even during periods when the stock price may be lower
than it was on the date of the grant of the award. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
committee has indicated that in January 2009 it will consider the year over year improvement, if any, in the Company's total contribution, which for this purpose consists of the
Company's earnings or loss plus its noncash charges, less capital expenditures. The committee has indicated that if total contribution improves in 2008 in accordance with management's plan, the
committee will consider </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>authorizing
cash bonuses for Named Executive Officers in early 2009. However, the committee has complete discretion to determine the amount of any bonus to be paid to any Company employee, including
any Named Executive Officer, with respect to 2008. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_timing_of_stock_option_grants"> </A>
<A NAME="toc_di42201_17"> </A>
<BR></FONT><FONT SIZE=2><B>Timing of Stock Option Grants    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have any program, plan or practice to time option grants to its Named Executive Officers or to any other employee in coordination with the
release of material non-public information. The Company's Board of Directors and Board committees, including the Compensation Committee, normally schedule their regular meetings at least a
year in advance. Meetings of the Compensation Committee are generally held in connection with the regularly scheduled Board meetings. The meetings are scheduled in an effort to meet a number of
different timing objectives, including the review of financial results and the review of press releases and filings containing financial results. Because the Compensation Committee approves stock
option grants at
some of its regularly scheduled meetings, option grants are sometimes made within a week before or after the public release of financial results or other material information. However, that is a
result of the fact that the Compensation Committee holds its meetings in connection with the Board meetings, not as a result of a program, plan or practice to time option grants. The Company also does
not set the grant date of its stock option grants to new executives in coordination with the release of material non-public information, and has not timed, and does not plan to time, its
release of material non-public information for the purpose of affecting the value of executive compensation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="di42201_severance_and_change_of_control_arrangements"> </A>
<A NAME="toc_di42201_18"> </A>
<BR></FONT><FONT SIZE=2><B>Severance And Change of Control Arrangements    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of our executive officers has any contractual right to any severance or change of control payments under any employment or severance agreement. Our executive
officers hold options and restricted stock units issued under our 2005 Equity Incentive Plan, and have certain payment rights under our Performance Share Plan, and the vesting of options, restricted
stock units or rights issued under those plans may be accelerated, under certain circumstances, upon or in connection with a change of control of the Company or upon the termination of the employment
of the holder within a period of time after a change of control has occurred. The Performance Share Plan provides that if a participant is terminated within 24&nbsp;months after a change of control
(as defined in the plan), the participant's award under the plan will be cancelled and the participant will receive a payment equal to the then market value of the common stock multiplied by the
harvest percentage (as previously described), with the harvest percentage being determined based on the extent to which the relevant performance goal had been achieved as of the end of the calendar
quarter prior to the employee's termination, and contains a similar provision applicable if the Company sells a business unit to a purchaser which does not assume responsibility for awards held by
employees of that business unit. If a triggering event had taken place with a measurement date of December&nbsp;31, 2007, no amounts would have been payable under the Performance Share Plan to any
Named Executive Officer. The 2005 Equity Incentive Plan provides that in the event of a merger or change of control (as defined in the plan) outstanding awards shall be assumed by the successor or an
equivalent award shall be substituted, or the award shall vest and the participant will have the right to exercise the award. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>26</FONT></P>

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 </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_compensation_committee_report"> </A>
<A NAME="toc_dk42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>COMPENSATION COMMITTEE REPORT    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed it with management. Based on its review and discussions with
management, the committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in the Company's Annual Report on Form&nbsp;10-K for 2007 and
the Company's 2008 proxy statement. This report is provided by the following independent directors, who are all of the members of the Compensation Committee: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Barclay
(Clay) F. Corbus (Chairman)<BR>
Allison H. Abraham<BR>
Joseph J. Tabacco, Jr. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Compensation Paid to Executive Officers  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information for the two years ended December&nbsp;31, 2007 concerning the compensation for services in all capacities to the
Company and its subsidiaries of our principal executive officer and our principal financial officer, as well as our other three most highly compensated executive officers, calculated in accordance
with the SEC's rules. We refer to these individuals throughout this proxy statement as the "Named Executive Officers". </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_summary_compensation_table"> </A>
<A NAME="toc_dk42201_2"> </A>
<BR></FONT><FONT SIZE=2><B>SUMMARY COMPENSATION TABLE    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="18%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name and Principal Position</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Year</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Salary<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Bonus(1)<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock<BR>
Awards(2)<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Awards(3)<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other<BR>
Compensation(4)<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=21 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne,<BR>
CEO</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2007<BR>
2006</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
0</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
0</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24,709<BR>
114,235</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
16,583</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0<BR>
6,750</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24,709<BR>
137,568</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>David K. Chidester,<BR>
Senior Vice President, Finance</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2007<BR>
2006</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195,833<BR>
100,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>175,000<BR>
120,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,884<BR>
45,694</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>165,635<BR>
89,584</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,225<BR>
12,375</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>557,577<BR>
367,653</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey,<BR>
President and Chief Operating Officer(5)</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2007<BR>
2006</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>291,666<BR>
100,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>225,000<BR>
180,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24,709<BR>
114,235</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>294,030<BR>
205,200</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,650<BR>
3,281</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>851,055<BR>
602,717</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon,<BR>
Senior Vice President, Customer Care, PR and Branding</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2007<BR>
2006</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195,833<BR>
100,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>225,000<BR>
120,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,825<BR>
68,541</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>254,512<BR>
167,854</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,225<BR>
12,375</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>701,395<BR>
468,770</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=2>Steven P. Tryon,<BR>
Senior Vice President, Logistics</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2007<BR>
2006</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195,833<BR>
100,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>175,000<BR>
120,000</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,884<BR>
45,694</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>252,600<BR>
165,900</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,725<BR>
10,979</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>642,042<BR>
442,573</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Bonuses
shown for 2006 were paid in February 2007 and relate to 2006. Bonuses shown for 2007 were paid in February 2008 and relate to 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Stock Awards column reflects grants made in 2006 under the Company's Performance Share Plan. No awards were made under this plan in 2007. The Performance Share Plan is a
long-term incentive-based plan. Performance goals under the plan are measured by growth in economic value, as defined in the plan, and are specified in the grants made to participants in
the plan. The plan provides for a three-year period for the measurement of the Company's attainment of the performance goal. The payments due to participants under the plan are a function
of the then-current market price of a share of the Company's common stock, multiplied by a percentage </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=30,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=478275,FOLIO='27',FILE='DISK114:[08ZAH1.08ZAH42201]DK42201A.;6',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<A NAME="page_dk42201_1_28"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2>dependent
on the extent to which the performance goal has been attained, which will be between 0% and 200%. If the growth in economic value is 10% compounded annually or less, the percentage will be
0%. If the growth in economic value is 25% compounded annually, the percentage will be 100%. If the growth in economic value is 40% compounded annually or more, the percentage will be 200%. If the
percentage growth is between these percentages, the payment percentage will be determined on the basis of straight line interpolation. Amounts payable under the plan are payable in shares of common
stock. The amounts reflect the dollar amount recognized for financial statement reporting purposes in accordance with SFAS&nbsp;123(R) without regard to forfeitures. Assumptions used in the
calculation of these amounts are discussed in Note&nbsp;18 to the Company's audited financial statements for the fiscal year ended December&nbsp;31, 2007, included in the Company's Annual Report
on Form&nbsp;10-K filed with the Securities and Exchange Commission on March&nbsp;17, 2008. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
Option Awards column reflects options granted under the Company's 2005 Equity Incentive Plan and previous equity incentive plans. The amounts reflect the dollar amount recognized
for financial statement reporting purposes in accordance with SFAS&nbsp;123(R) without regard to forfeitures and thus include amounts from awards granted prior to 2007. Assumptions used in the
calculation of these amounts are discussed in Note&nbsp;17 to the Company's audited financial statements for the fiscal year ended December&nbsp;31, 2007, included in the Company's Annual Report
on Form&nbsp;10-K filed with the Securities and Exchange Commission on March&nbsp;17, 2008.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Except
with respect to the CEO, amounts shown are 401(k) matching contributions from the Company and were made in the form of Company common stock. With respect to the CEO, the amount
shown is for assistance with Schedule&nbsp;13D filings in 2006.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey
resigned as our President and Chief Operating Officer as of December&nbsp;31, 2007, but remains an employee of the Company. </FONT></DD></DL>
<BR>

<P style="font-family:times;"><FONT SIZE=2><B>Grants of Plan-Based Awards  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning grants of awards pursuant to plans made to the Named Executive Officers during the year ended
December&nbsp;31, 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_grants_of_plan-based_awards(1)"> </A>
<A NAME="toc_dk42201_3"> </A>
<BR></FONT><FONT SIZE=2><B>GRANTS OF PLAN-BASED AWARDS(1)    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="34%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>All Other Option Awards:<BR>
Number of Securities<BR>
Underlying Options<BR>
(#)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Exercise or Base Price<BR>
of Option Awards<BR>
($/Sh)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="20%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Grant Date Fair<BR>
Value of Stock and<BR>
Option Awards(2)</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>David K. Chidester</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>387,100</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey(3)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>80,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>884,800</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>40,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>442,400</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="34%" style="font-family:times;"><FONT SIZE=2>Steven P. Tryon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.08</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>387,100</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Amounts
reported relate to option grants under the Company's 2005 Equity Incentive Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>The
amounts reflect the dollar amount recognized for financial statement reporting purposes in accordance with SFAS&nbsp;123(R) without regard to forfeitures.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey
resigned as our President and Chief Operating Officer as of December&nbsp;31, 2007, but remains an employee of the Company. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=31,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=118156,FOLIO='28',FILE='DISK114:[08ZAH1.08ZAH42201]DK42201A.;6',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<A NAME="page_dk42201_1_29"> </A>

<P style="font-family:times;"><FONT SIZE=2><B>Outstanding Equity Awards at Fiscal Year-End  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning outstanding equity awards held by each Named Executive Officer as of December&nbsp;31, 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_outstanding_equity_awards_at_fiscal_year-end(1)"> </A>
<A NAME="toc_dk42201_4"> </A>
<BR></FONT><FONT SIZE=2><B>OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END(1)    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Stock Awards(3)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Unexercised<BR>
Options (#)<BR>
Exercisable</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Unexercised<BR>
Options (#)<BR>
Unexercisable</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Exercise<BR>
Price&nbsp;($)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option<BR>
Expiration<BR>
Date</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Shares or<BR>
Units That<BR>
Have Not<BR>
Vested (#)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Market Value<BR>
of Shares or<BR>
Units That<BR>
Have Not<BR>
Vested&nbsp;($)</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
25,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
208,416</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=2>David K. Chidester</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,000<BR>
2,766<BR>
25,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
&#151;<BR>
35,000<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$<BR>$<BR>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13.57<BR>
13.09<BR>
18.58<BR>
17.08<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>03/16/08<BR>
07/28/08<BR>
01/22/09<BR>
02/06/17<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
10,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
83,366</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey(4)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,700<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,300<BR>
80,000<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35.41<BR>
17.08<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10/24/10<BR>
02/06/17<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
25,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
208,416</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,207<BR>
7,500<BR>
7,800<BR>
15,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
2,200<BR>
&#151;<BR>
40,000<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$<BR>$<BR>$<BR>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13.09<BR>
12.84<BR>
58.30<BR>
18.58<BR>
17.08<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7/28/08<BR>
10/27/08<BR>
01/24/10<BR>
01/22/09<BR>
02/06/17<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
15,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
&#151;<BR>
125,050</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=2>Steven P. Tryon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30,800<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,200<BR>
35,000<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$<BR>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31.03<BR>
17.08<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>08/23/09<BR>
02/06/17<BR>
&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
10,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;<BR>
&#151;<BR>
83,366</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Awards
shown in this table consist of option grants under the Company's 2005 Equity Incentive Plan and of grants under the Company's Performance Share Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Options
vest over the first four years of the option term at a rate of 25% at the end of the first year and 2% per month thereafter.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Amounts
shown relate to grants under the Company's Performance Share Plan, the material terms of which are described in note&nbsp;2 to the Summary Compensation Table. The target
amount is calculated as the amount that would have been payable if the Company's growth in economic value were 16.5% compounded annually and the market price of the common stock were $19.15 per share,
which was the fair value determined by the Company on August&nbsp;7, 2007. If a triggering event had taken place with a measurement date of December&nbsp;31, 2007, no amount would have been
payable to any Named Executive Officer. Awards under the Performance Share Plan vest on December&nbsp;31, 2008, subject to acceleration provisions.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey
resigned as our President and Chief Operating Officer as of December&nbsp;31, 2007, but remains an employee of the Company. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>29</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=32,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=876483,FOLIO='29',FILE='DISK114:[08ZAH1.08ZAH42201]DK42201B.;6',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<A NAME="page_dk42201_1_30"> </A>

<P style="font-family:times;"><FONT SIZE=2><B>Option Exercises and Stock Vested  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following Option Exercises and Stock Vested table provides additional information about the value realized by our Named Executive Officers on option award
exercises during the year ended December&nbsp;31, 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_option_exercises_and_stock_vested(1)"> </A>
<A NAME="toc_dk42201_5"> </A>
<BR></FONT><FONT SIZE=2><B>OPTION EXERCISES AND STOCK VESTED(1)    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="55%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=4 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="55%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="21%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of Shares<BR>
Acquired on Exercise<BR>
(#)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Value Realized on<BR>
Exercise(2)<BR>
($)</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="55%" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>119,972</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,164,928</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="55%" style="font-family:times;"><FONT SIZE=2>David K. Chidester</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,881</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>99,897</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="55%" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey(3)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,131</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>59,536</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="55%" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,293</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33,913</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="55%" style="font-family:times;"><FONT SIZE=2>Steven P. Tryon</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Amounts
shown in this table relate to options granted under the Company's 2005 Equity Incentive Plan.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Calculated
by multiplying the number of shares purchased by the difference between the exercise price and the market price on the date of exercise.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey
resigned as our President and Chief Operating Officer as of December&nbsp;31, 2007, but remains an employee of the Company. </FONT></DD></DL>
<BR>

<P style="font-family:times;"><FONT SIZE=2><B>Compensation of Directors  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We pay our non-employee directors $60,000 annually at the rate of $15,000 per quarter, and grant options to our non-employee directors,
generally at the first Board meeting after the director first joins the Board, and then periodically thereafter. In 2007 we granted options to our non-employee directors as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="43%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="20%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Grant Date</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Exercise Price ($)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of<BR>
Options Granted</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=7 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Allison H. Abraham</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>April&nbsp;20, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.58</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Barclay (Clay) F. Corbus</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>April&nbsp;20, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.58</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Joseph J. Tabacco, Jr.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>August&nbsp;16, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.00</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Ray J. Groves(1)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>April&nbsp;20, 2007</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17.58</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>John A. Fisher(2)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="43%" style="font-family:times;"><FONT SIZE=2>Gordon S. Macklin(3)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Groves
resigned from the Board on May&nbsp;24, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Fisher
resigned from the Board on February&nbsp;23, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Macklin
passed away on January&nbsp;30, 2007. </FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also reimburse our directors for out-of-pocket expenses incurred in connection with attending Board and committee meetings. Haverford Valley, L.C., an
affiliate of the Company, and certain </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>30</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dk42201_1_31"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>affiliated
entities which make travel arrangements for our executives, also occasionally make travel arrangements for directors to attend Board meetings, for which we reimburse Haverford Valley at
rates not in excess of commercially available airline rates. The following table sets forth information concerning compensation paid or accrued by the Company to each non-employee member
of the board of directors during the year ended December&nbsp;31, 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_director_compensation_table"> </A>
<A NAME="toc_dk42201_6"> </A>
<BR></FONT><FONT SIZE=2><B>DIRECTOR COMPENSATION TABLE    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="90%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="47%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Name</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Fees Earned or<BR>
Paid in Cash<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Option Awards(1)<BR>
($)</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Total<BR>
($)</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=10 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>Allison H. Abraham</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>111,787</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>141,787</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>Barclay (Clay) F. Corbus</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31,462</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>56,462</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>Joseph J. Tabacco, Jr.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,594</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>37,594</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>Ray J. Groves(2)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>107,563</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>117,563</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>John A. Fisher(3)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,000</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>101,236</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>106,236</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>Gordon S. Macklin(4)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>101,594</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>101,594</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reflects
the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December&nbsp;31, 2007 in accordance with SFAS&nbsp;123(R) without
regard to forfeitures and thus includes amounts from awards granted in and prior to 2007. At December&nbsp;31, 2007, the number of options held by each non-employee director was as
follows: Ms.&nbsp;Abraham: 30,000; Mr.&nbsp;Corbus: 15,000; and Mr.&nbsp;Tabacco: 15,000.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Groves
resigned from the Board on May&nbsp;24, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Fisher
resigned from the Board on February&nbsp;23, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Macklin
passed away on January&nbsp;30, 2007. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_potential_payments_upo__dk402280"> </A>
<A NAME="toc_dk42201_7"> </A>
<BR></FONT><FONT SIZE=2><B>POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As described in the Compensation Discussion and Analysis included in this proxy statement, none of our Named Executive Officers has any contractual right to any
severance or change of control payments under any employment or severance agreement. Our Named Executive Officers hold options and restricted stock units ("RSUs") issued under our equity incentive
plans, and have certain payment rights under our Performance Share Plan. The vesting of options, RSUs or rights issued under those plans may be accelerated, under certain circumstances, upon or in
connection with a change of control of the Company or upon the termination of the employment of the Named Executive Officer within a period of time after a change of control has occurred or, under the
Performance Share Plan, in connection with the sale of a business unit by the Company or a termination of the Named Executive Officer without cause or a constructive termination of the Named Executive
Officer. These provisions do not discriminate in scope, terms or operation in favor of the executive officers of the Company. If a triggering event under the Performance Share Plan had taken place
with a measurement date of December&nbsp;31, 2007, no Named Executive Officer would have received any amount under the Performance Share Plan. If a triggering event under the 2005 Equity Incentive
Plan had taken place on December&nbsp;31, 2007, the vesting of options and RSUs held by Named Executive Officers could have been accelerated, but no additional payments or other benefits would have
been paid as a result of the acceleration. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>31</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dk42201_1_32"> </A>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_equity_compensation_plan_information"> </A>
<A NAME="toc_dk42201_8"> </A>
<BR></FONT><FONT SIZE=2><B>EQUITY COMPENSATION PLAN INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information as of December&nbsp;31, 2007 with respect to shares of our common stock that may be issued under our existing equity
compensation plans. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="93%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="32%" ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Plan category</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="22%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities to<BR>
be issued upon exercise<BR>
of outstanding options,<BR>
warrants and rights</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Weighted average<BR>
exercise price of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><BR></TH>
<TH WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number of securities<BR>
remaining available<BR>
for future issuance</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;"><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Equity compensation plans approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,160,603</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.48</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>608,485</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Equity compensation plans not approved by security holders</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="32%" style="font-family:times;"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,160,603</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.48</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>608,485</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42201_report_of_the_audit_committee"> </A>
<A NAME="toc_dk42201_9"> </A>
<BR></FONT><FONT SIZE=2><B>REPORT OF THE AUDIT COMMITTEE    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary set forth in any of the Company's previous or future filings under the Securities Act of 1933, as amended, or the
Exchange Act of 1934, as amended, that might incorporate this Proxy Statement or future filings with the SEC, in whole or in part, the following report shall not be deemed to be incorporated by
reference into any such filings. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following report concerns the Audit Committee's activities regarding oversight of the Company's financial reporting and auditing process. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee is composed solely of independent directors, as defined by Nasdaq rules, and operates under a written charter adopted by the Board of Directors. The composition of
the Audit Committee, the attributes of its members and the responsibilities of the Audit Committee, as reflected in its charter, are intended to be in accordance with applicable requirements for
corporate audit committees. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
described more fully in its charter, the purpose of the Audit Committee is to provide general oversight of the Company's financial reporting, internal control and audit functions.
Management is responsible for the preparation, presentation and integrity of the Company's financial statements, accounting and financial reporting principles, and internal controls and procedures
designed to ensure compliance with accounting standards, applicable laws and regulations. PricewaterhouseCoopers&nbsp;LLP, the Company's independent registered public accounting firm, is responsible
for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards and the effectiveness of internal control over financial reporting
in accordance with standards established by the Public Company Accounting Oversight Board. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives,
discussions with management and the auditors and the experience of the Audit Committee's members in business, financial and accounting matters. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among
other matters, the Audit Committee monitors the activities and performance of the Company's external auditors, including the audit scope, external audit fees, auditor independence
matters and the extent to which the independent registered public accounting firm may be retained to perform non-audit services. The Audit Committee has authority and responsibility for
the appointment, compensation, retention and oversight of the Company's independent registered public accounting firm. The Audit Committee also reviews the results of the external audit work with
regard to the adequacy and appropriateness of the Company's financial, accounting and internal controls. In addition, the Audit Committee generally oversees the Company's internal compliance programs. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>32</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
NAME="page_dm42201_1_33"> </A>


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 </FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm (i)&nbsp;the consolidated financial statements for each of the
three years in the period ended December&nbsp;31, 2007, (ii)&nbsp;management's assessment of the effectiveness of the Company's internal control over financial reporting as of December&nbsp;31,
2007, and (iii)&nbsp;PricewaterhouseCoopers&nbsp;LLP's evaluation of the effectiveness of the Company's internal control over financial reporting as of December&nbsp;31, 2007. Management has
represented to the Audit Committee that the Company's consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has discussed
with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No.&nbsp;61, as amended, "Communications with Audit Committees." The
Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No.&nbsp;1, "Independence
Discussions with Audit Committees," and the Committee discussed with the independent registered public accounting firm the independent registered public accounting firm's independence. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on the review and discussions referred to above with management and the independent registered public accounting firm, the Audit Committee recommended that the Board of Directors
include the audited consolidated financial statements in the Company's annual report on Form&nbsp;10-K for the year ended December&nbsp;31, 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Members
of the Audit Committee </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Allison
H. Abraham (Chair)<BR>
Barclay (Clay) F. Corbus<BR>
Joseph J. Tabacco, Jr. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm42201_share_ownership_of_management,__sha02679"> </A>
<A NAME="toc_dm42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>SHARE OWNERSHIP OF MANAGEMENT, DIRECTORS, NOMINEES AND 5% STOCKHOLDERS    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding the beneficial ownership of our common stock as of December&nbsp;31, 2007 by the following individuals or
groups: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
person or entity who is known by us to own beneficially more than 5% of our outstanding stock;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
of our Named Executive Officers;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>each
of our directors and nominees; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>all
directors and executive officers as a group. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table is based upon information supplied by officers, directors, nominees and principal stockholders and Schedules&nbsp;13D and 13G filed with the SEC. Except as otherwise
indicated below or in the referenced filings on Schedule&nbsp;13G, and subject to applicable community property laws, to our knowledge the persons named in the table have sole voting and investment
power with respect to all shares of common stock held by them. Applicable percentages are based on 23,820,617 shares of </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>33</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dm42201_1_34"> </A>
<BR>

<P style="font-family:times;"><FONT SIZE=2>common
stock outstanding as of December&nbsp;31, 2007, as adjusted as required by rules promulgated by the SEC. </FONT></P>

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<TABLE WIDTH="79%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Shares Beneficially Owned</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Beneficial Owner (Name and Address)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Percent</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><B>5% Stockholders</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>High Plains Investments&nbsp;LLC<BR>
700 Bitner Road<BR>
Park City, Utah 84098</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>5,592,127</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>23.5%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2> Fairfax Financial Holdings Limited<BR>
95 Wellington Street West, Suite&nbsp;800<BR>
Toronto, Ontario Canada MSJ 2N7</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
3,872,481</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>(2)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
16.3%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2> Chou Associates Management&nbsp;Inc.<BR>
95 Wellington Street West, Suite&nbsp;710<BR>
Toronto, Ontario Canada MSJ 2N7</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2,323,999</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>(3)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
9.8%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2> AXA Financial,&nbsp;Inc. and affiliates<BR>
1290 Avenue of the Americas<BR>
New York, New York 10104</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
2,157,453</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
9.1%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><BR><FONT SIZE=2><B>Directors and Named Executive Officers</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Patrick M. Byrne</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>6,825,514</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>28.7%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Allison H. Abraham</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>23,200</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(6)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Joseph J. Tabacco, Jr.&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Barclay (Clay) F. Corbus</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>750</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(7)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Stephen P. Tryon</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>55,100</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(8)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Jason C. Lindsey</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>203,638</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(9)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Jonathan E. Johnson III</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>86,200</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(10)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>David K. Chidester</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>65,800</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(11)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Stormy D. Simon</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>54,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>(12)</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>Directors and Executive Officers as a Group (9&nbsp;persons)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>7,314,202</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>31.0%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Less
than 1% of the outstanding shares of common stock.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Patrick
M. Byrne, our Chief Executive Officer and Chairman of our Board of Directors, holds 100% of the voting interest in and controls High Plains Investments&nbsp;LLC. Voting and
dispositive power are shared.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reference
is hereby made to the Schedule&nbsp;13G filed by Fairfax Financial Holdings Limited and other reporting persons for information about the number of shares held by each and
the nature of the beneficial ownership of each such person as of December&nbsp;31, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reference
is hereby made to the Schedule&nbsp;13G filed by Chou Associates Management&nbsp;Inc. and other reporting persons for information about the number of shares held by each
and the nature of the beneficial ownership of each such person as of December&nbsp;31, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reference
is hereby made to the Schedule&nbsp;13G filed by AXA Financial,&nbsp;Inc. and other reporting persons for information about the number of shares held by each and the
nature of the beneficial ownership of each such person as of December&nbsp;31, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Patrick
M. Byrne's shares include 5,592,127 shares held by High Plains Investments&nbsp;LLC, as to which voting and investment power are shared.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ms.&nbsp;Abraham's
shares include 20,700 shares issuable under stock-based awards. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>34</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Corbus'
shares are held in a margin account and are pledged to secure indebtedness.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Tryon's
shares include 40,600 shares issuable under stock-based awards.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Lindsey's
shares include 31,400 shares issuable under stock-based awards. Mr.&nbsp;Lindsey resigned as our President and Chief Operating Officer and as a member of our
Board of Directors as of December&nbsp;31, 2007.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Johnson's
shares include 44,868 shares issuable under stock-based awards.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Mr.&nbsp;Chidester's
shares include 41,566 shares issuable under stock-based awards. The balance of the shares are held in a margin account and are pledged to secure indebtedness.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ms.&nbsp;Simon's
shares include 48,707 shares issuable under stock-based awards. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm42201_other_information"> </A>
<A NAME="toc_dm42201_2"> </A>
<BR></FONT><FONT SIZE=2><B>OTHER INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Certain Relationships and Related Transactions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since January&nbsp;1, 2007, there has not been, and there is not currently proposed, any transaction or series of similar transactions requiring disclosure
under Item&nbsp;404 of Regulation&nbsp;S-K except as described below. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
time to time Haverford Valley, L.C., which is an affiliate of ours controlled by our chief executive officer, Patrick Byrne, and certain affiliated entities make travel arrangements
for our executives and pay the travel related expenses incurred by our executives on Company business. In 2007 the amount we reimbursed Haverford Valley, L.C. for these expenses was less than
$120,000. Although the amount of these reimbursements in 2008 is unknown, the amount could exceed $120,000. The amounts we pay to Haverford Valley, L.C. as reimbursement of air travel expenses are at
rates not in excess of commercially available airline rates. The other amounts we reimburse to Haverford Valley, L.C. are reimbursed at its actual cost. Dr.&nbsp;Byrne owns 100% of the equity
interest in Haverford Valley, L.C. The amounts paid to Haverford Valley, L.C. are simply reimbursements of costs incurred on behalf of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dan
Lindsey, who is the brother of our former President Jason Lindsey, is an employee of ours. Under the terms of Dan Lindsey's employment arrangement, Dan Lindsey earns a base salary
and a commission based on the sales, less certain expenses, of the business unit he supervises. Although the amount Dan Lindsey will earn in 2008 is unknown, the aggregate amount could exceed
$120,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Section&nbsp;16(a) Beneficial Ownership Reporting Compliance  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Securities and Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent (10%) of
the Company's common stock, to file certain reports regarding ownership of, and transactions in, the Company's securities with the SEC. Such officers, directors, and 10% stockholders are also required
to furnish the Company with copies of all Section&nbsp;16(a) forms that they file. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
solely on a review of reports filed by, and on written representations from, its officers, directors and 10% stockholders, the Company believes that during 2007, all of its
officers, directors and 10% stockholders complied with requirements for reporting ownership and changes in ownership of Company common stock under Section&nbsp;16(a) of the Securities Act of 1934,
except that one Form&nbsp;4 filed by Allison H. Abraham reporting one transaction was filed one day late. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Deadline For Receipt of Stockholder Proposals  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you wish to submit a proposal for possible inclusion in our 2009 proxy material, we must receive your notice, in accordance with rules of the SEC and the
Company's Bylaws on or before </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>35</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>November&nbsp;26,
2008. The proposal(s) should be mailed to our Secretary at our principal executive offices at 6350 South 3000 East, Salt Lake City, Utah 84121. If you intend to submit a proposal
at the 2009 Annual Meeting but do not intend to include the proposal in our proxy statement for that meeting, you must provide appropriate notice to us on or before January&nbsp;25, 2009. Our bylaws
contain specific requirements regarding a stockholder's ability to nominate a candidate for director or to submit a proposal for consideration at an upcoming annual meeting. If you would like a copy
of the requirements contained in our bylaws, please contact our Secretary at the address shown above. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Costs of Proxy Solicitation  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The solicitation is made on behalf of the Board of Directors of the Company. The Company will pay the cost of soliciting these proxies. We will reimburse
brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses they incur in sending these proxy materials to you if you are a beneficial holder of our shares. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without
receiving additional compensation, officials and regular employees of the Company may solicit proxies personally, by telephone, fax or email from stockholders if proxies are not
promptly received. We have also hired Georgeson Shareholder Communications to assist in the solicitation of proxies at a cost of approximately $3,500 plus out-of-pocket
expenses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
Annual Report on Form&nbsp;10-K, excluding exhibits, for the fiscal year ended December&nbsp;31, 2007 is enclosed with this Proxy Statement. You may obtain an
additional copy without charge by sending a written request to Overstock.com,&nbsp;Inc., Attention Investor Relations, 6350 South 3000 East, Salt Lake City, Utah 84121. The Annual Report is also
available on our website at </FONT><FONT SIZE=2><I>http://investors.overstock.com.</I></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>Voting by Internet or Telephone  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For shares of common stock that are registered in the name of the stockholder directly with our transfer agent, Computershare Trust Company, you may vote in
person, by returning the enclosed proxy card or by Internet or telephone. Specific instructions to be followed by any registered stockholder interested in voting by Internet or telephone are set forth
on the enclosed proxy card. The Internet and telephone voting procedures are designed to authenticate the stockholder's identity and to allow stockholders to vote their shares and confirm that
stockholders' instructions have been properly recorded. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
shares of common stock that are beneficially owned by a stockholder and held in "street name" through a bank or brokerage, the stockholder may be eligible to vote such shares
electronically by Internet or telephone. A large number of banks and brokerage firms are participating in the ADP Investor Communication Services online program, which provides eligible stockholders
who receive a paper copy of our proxy statement and annual report the opportunity to vote by Internet or telephone. If your bank or brokerage firm is participating in ADP's program, your voting form
from the bank or brokerage will provide instructions. If your voting form does not reference Internet or telephone information, please complete and return the paper proxy card in the
self-addressed, postage paid envelope provided. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>36</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
voting via the Internet or telephone should understand that there may be costs associated with Internet or telephone access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the stockholder. </FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><FONT SIZE=2>By Order of the Board,</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><BR><FONT SIZE=2><B>
<IMG SRC="g634146.jpg" ALT="SIGNATURE" WIDTH="331" HEIGHT="90">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="53%" style="font-family:times;"><FONT SIZE=2>Jonathan E. Johnson III<BR>
Secretary</FONT></TD>
</TR>
</TABLE>
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<P style="font-family:times;"><FONT SIZE=2>March&nbsp;28,
2008<BR>
Salt Lake City, Utah </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Overstock.com,&nbsp;Inc.<BR>
6350 South 3000 East Salt Lake City, Utah 84121<BR>
(801)&nbsp;947-3100 </FONT><FONT SIZE=2><I>www.overstock.com </I></FONT><FONT SIZE=2>Nasdaq: OSTK </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>37</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="hk42201_exhibit_a"> </A>
<A NAME="toc_hk42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit&nbsp;A    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>OVERSTOCK.COM,&nbsp;INC.<BR>
2005 EQUITY INCENTIVE PLAN  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (as proposed to be amended)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Purposes of the Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purposes of this 2005 Equity Incentive Plan are: </FONT></P>

<UL>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>to
attract and retain the best available personnel for positions of substantial responsibility,
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>to
provide additional incentive to Service Providers, and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>to
promote the success of the Company's business. </FONT></DD></DL>
</UL>
</UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Definitions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As used herein, the following definitions shall apply: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Administrator</I></FONT><FONT SIZE=2>" means the Board or any of its Committees that shall be administering the Plan, in accordance with
Section&nbsp;4 of the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Applicable Laws</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Award</I></FONT><FONT SIZE=2>" means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Stock Appreciation
Rights, Performance Shares, Performance Units or Deferred Stock Units. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Award Agreement</I></FONT><FONT SIZE=2>" 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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Award Exchange Program</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Awarded Stock</I></FONT><FONT SIZE=2>" means the Common Stock subject to an Award. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Board</I></FONT><FONT SIZE=2>" means the Board of Directors of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Cash Position</I></FONT><FONT SIZE=2>" means the Company's level of cash and cash equivalents. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Cause</I></FONT><FONT SIZE=2>" means (i)&nbsp;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)&nbsp;Participant being convicted of a felony, (iii)&nbsp;a willful act by the Participant which constitutes gross misconduct and which is injurious to the Company, or (iv)&nbsp;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. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-1</FONT></P>

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<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Change of Control</I></FONT><FONT SIZE=2>" means the occurrence of any of the following events: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Any
"person" (as such term is used in Sections&nbsp;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 entity that directly, or indirectly through one or more intermediaries, controls, or is controlled </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>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&nbsp;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 </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;The
consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;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)&nbsp;are Directors as of the effective date of the Plan, or (B)&nbsp;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 </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Code</I></FONT><FONT SIZE=2>" means the Internal Revenue Code of 1986, as amended. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Committee</I></FONT><FONT SIZE=2>" means a committee of Directors appointed by the Board in accordance with Section&nbsp;4 of the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Common Stock</I></FONT><FONT SIZE=2>" means the common stock of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company</I></FONT><FONT SIZE=2>" means Overstock.com,&nbsp;Inc. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Consultant</I></FONT><FONT SIZE=2>" means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render
services to such entity. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Deferred Stock Unit</I></FONT><FONT SIZE=2>" means a deferred stock unit Award granted to a Participant pursuant to Section&nbsp;14. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Director</I></FONT><FONT SIZE=2>" means a member of the Board. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Disability</I></FONT><FONT SIZE=2>" means total and permanent disability as defined in Section&nbsp;22(e)(3) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Earnings Per Share</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Employee</I></FONT><FONT SIZE=2>" 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)&nbsp;any leave of absence approved by the Company or (ii)&nbsp;transfers </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-2</FONT></P>

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<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>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
(3)&nbsp;months following the 91st&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Exchange Act</I></FONT><FONT SIZE=2>" means the Securities Exchange Act of 1934, as amended. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Expenses</I></FONT><FONT SIZE=2>" means as to any Performance Period, the Company's or business unit's incurred expenses. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Fair Market Value</I></FONT><FONT SIZE=2>" means, as of any date, the value of Common Stock determined as follows: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation 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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;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 </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;In
the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Fiscal Year</I></FONT><FONT SIZE=2>" means a fiscal year of the Company. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Gross Margin</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Incentive Stock Option</I></FONT><FONT SIZE=2>" means an Option intended to qualify as an incentive stock option within the meaning of
Section&nbsp;422 of the Code and the regulations promulgated thereunder. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Individual Objectives</I></FONT><FONT SIZE=2>" means, as to any Participant for any Performance Period, the objective and
measurable goals set by a process and approved by the Administrator. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Net Income</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Nonstatutory Stock Option</I></FONT><FONT SIZE=2>" means an Option not intended to qualify as an Incentive Stock Option. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Notice of Grant</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Officer</I></FONT><FONT SIZE=2>" means a person who is an officer of the Company within the meaning of Section&nbsp;16 of the
Exchange Act and the rules and regulations promulgated thereunder. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Operating Cash Flow</I></FONT><FONT SIZE=2>" 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 </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-3</FONT></P>

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<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Operating Income</I></FONT><FONT SIZE=2>" 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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Operating Margin</I></FONT><FONT SIZE=2>" means, as to any Performance Period, the Company's or a business unit's Operating
Income divided by Revenue, expressed as a percentage. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Option</I></FONT><FONT SIZE=2>" means a stock option granted pursuant to the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Option Agreement</I></FONT><FONT SIZE=2>" 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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Parent</I></FONT><FONT SIZE=2>" means a "parent corporation", whether now or hereafter existing, as defined in
Section&nbsp;424(e) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Participant</I></FONT><FONT SIZE=2>" means the holder of an outstanding Award granted under the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Goals</I></FONT><FONT SIZE=2>" 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)&nbsp;Cash Position, (b)&nbsp;Earnings Per Share, (c)&nbsp;Expenses, (d)&nbsp;Gross Margin, (e)&nbsp;Individual Objectives,
(f)&nbsp;Net Income, (g)&nbsp;Operating Cash Flow, (h)&nbsp;Operating Income, (i)&nbsp;Operating Margin, (j)&nbsp;Return on Assets, (k)&nbsp;Return on Equity, (l)&nbsp;Return on Sales,
(m)&nbsp;Revenue, (n)&nbsp;Total Stockholder Return, and/or (o)&nbsp;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)&nbsp;in absolute terms, (ii)&nbsp;in relative terms (including, but not limited to, passage of time and/or against another company or companies), (iii)&nbsp;on a
per-share basis, (iv)&nbsp;against the performance of the Company as a whole or of a business unit of the Company or by product or product line, (v)&nbsp;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&nbsp;162(m) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Period</I></FONT><FONT SIZE=2>" means any Fiscal Year or such other period as determined by the Administrator in its
sole discretion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Share</I></FONT><FONT SIZE=2>" means a performance share Award granted to a Participant pursuant to
Section&nbsp;12. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Unit</I></FONT><FONT SIZE=2>" means a performance unit Award granted to a Participant pursuant to Section&nbsp;13. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Plan</I></FONT><FONT SIZE=2>" means this 2005 Equity Incentive Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Restricted Stock</I></FONT><FONT SIZE=2>" means Shares granted pursuant to Section&nbsp;11 of the Plan. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-4</FONT></P>

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<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Return on Assets</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Return on Equity</I></FONT><FONT SIZE=2>" means the percentage equal to the Company's Net Income divided by average stockholder's
equity, determined in accordance with generally accepted accounting principles. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Return on Sales</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Revenue</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Rule&nbsp;16b-3</I></FONT><FONT SIZE=2>" means Rule&nbsp;16b-3 of the Exchange Act or any successor
to Rule&nbsp;16b-3, as in effect when discretion is being exercised with respect to the Plan. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Section&nbsp;16(b)</I></FONT><FONT SIZE=2>" means Section&nbsp;16(b) of the Exchange Act. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Service Provider</I></FONT><FONT SIZE=2>" means an Employee, Director or Consultant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Share</I></FONT><FONT SIZE=2>" means a share of the Common Stock, as adjusted in accordance with Section&nbsp;16 of the Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaa)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Stock Appreciation Right</I></FONT><FONT SIZE=2>" or "</FONT><FONT SIZE=2><I>SAR</I></FONT><FONT SIZE=2>" means an Award
granted pursuant to Section&nbsp;10 hereof. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbb)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Subsidiary</I></FONT><FONT SIZE=2>" means a "subsidiary corporation", whether now or hereafter existing, as defined in
Section&nbsp;424(f) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ccc)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Total Stockholder Return</I></FONT><FONT SIZE=2>" means the total return (change in share price plus reinvestment of any
dividends) of a Share. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ddd)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Unit Sales</I></FONT><FONT SIZE=2>" 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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eee)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Voluntary Termination for Good Reason</I></FONT><FONT SIZE=2>" means the Participant voluntarily resigns within ninety
(90)&nbsp;days after the occurrence of any of the following (i)&nbsp;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)&nbsp;a reduction by the Company in the base salary of the Participant as in effect immediately prior to such
reduction; (iii)&nbsp;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)&nbsp;any act or set of facts or circumstances which would, under applicable case law or statute constitute a constructive termination of the Participant. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Subject to the Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of Section&nbsp;16 of the Plan, the maximum aggregate
number of Shares which may be issued under the Plan after approval by the shareholders at the 2008 annual meeting of shareholders is 1,157,235 Shares (consisting of the Shares remaining </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-5</FONT></P>

<HR NOSHADE>
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<A NAME="page_hk42201_1_6"> </A>

<P style="font-family:times;"><FONT SIZE=2>available
for grant under the Plan at February&nbsp;29, 2008 plus the 1,000,000 Shares approved by the shareholders at the 2008 annual meeting), less Shares covered by any grants made under the Plan
after February&nbsp;29, 2008 and prior to approval at the 2008 annual meeting, plus any Shares returned or otherwise made available under the Plan or any of its predecessor plans as a result of
termination of options or repurchase of awards or Shares issued under the Plan or any of its predecessor plans. 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 6,000,000. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Administration of the Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Procedure.</I></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Multiple Administrative Bodies.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Plan may be administered by different Committees with respect to
different groups of Service Providers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;162(m).</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;162(m) of the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section&nbsp;162(m) of the Code. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Rule&nbsp;16b-3.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To the extent desirable to qualify transactions hereunder as exempt under
Rule&nbsp;16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule&nbsp;16b-3. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Other Administration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other than as provided above, the Plan shall be administered by (A)&nbsp;the Board
or (B)&nbsp;a Committee, which committee shall be constituted to satisfy Applicable Laws. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Powers of the Administrator.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;to
determine the Fair Market Value; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;to
select the Service Providers to whom Awards may be granted hereunder; </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-6</FONT></P>

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<UL>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;to
determine whether and to what extent Awards or any combination thereof, are granted hereunder; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;to
determine the number of shares of Common Stock or equivalent units to be covered by each Award granted hereunder; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;to
approve forms of agreement for use under the Plan; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;to
institute an Award Exchange Program; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;to
construe and interpret the terms of the Plan and Awards; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;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; </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;to
modify or amend each Award (subject to Section&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii)&nbsp;&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv)&nbsp;to
determine the terms and restrictions applicable to Awards; and </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv)&nbsp;to
make all other determinations deemed necessary or advisable for administering the Plan. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Effect of Administrator's Decision.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator's decisions, determinations and interpretations shall
be final and binding on all Participants and any other holders of Awards. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Employment Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-7</FONT></P>

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<BR>

<P style="font-family:times;"><FONT SIZE=2>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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Code Section&nbsp;162(m) Provisions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Option and SAR Annual Share Limit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Restricted Stock and Performance Share Annual Limit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Performance Units Annual Limit.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;162(m) Performance Restrictions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;For purposes of qualifying grants of Restricted Stock,
Performance Shares or Performance Units as "performance-based compensation" under Section&nbsp;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&nbsp;162(m) of the Code. In granting Restricted Stock, Performance Shares or Performance Units which are intended to qualify under
Section&nbsp;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&nbsp;162(m) of the Code (e.g.,&nbsp;in determining the Performance Goals). </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Changes in Capitalization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The numerical limitations in Sections&nbsp;7(a) and (b)&nbsp;shall be
adjusted proportionately in connection with any change in the Company's capitalization as described in Section&nbsp;16(a). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;16), the cancelled
Award will be counted against the limits set
forth in subsections&nbsp;(a) and (b)&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Term of Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall continue in effect for a term of ten (10)&nbsp;years following the date upon
which the Board approved the Plan in 2005. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Term.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall
be ten (10)&nbsp;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)&nbsp;years from the date of grant or such shorter term as may be provided in the Notice of Grant. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-8</FONT></P>

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<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Option Exercise Price.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;In
the case of an Incentive Stock Option: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;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
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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;granted
to any Employee other than an Employee described in paragraph&nbsp;(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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;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&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Waiting Period and Exercise Dates.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Form of Consideration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;cash; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;check;
</FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;other
Shares which (A)&nbsp;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)&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;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; </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;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 </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;any
combination of the foregoing methods of payment. </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-9</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_hk42201_1_10"> </A>
<UL>
<UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Exercise of Option; Rights as a Stockholder.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the
Option, and (ii)&nbsp;full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of 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&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Termination of Relationship as a Service Provider.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Disability.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Death of Participant.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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 </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-10</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=10,SEQ=50,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=33835,FOLIO='A-10',FILE='DISK114:[08ZAH1.08ZAH42201]HK42201B.;4',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<A NAME="page_hk42201_1_11"> </A>
<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>distribution.
In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>ISO $100,000 Rule.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;of
Shares subject to a Participant's Incentive Stock Options granted by the Company, any Parent or Subsidiary, which </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;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&nbsp;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. </FONT></P>

</UL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Grant of SARs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Exercise Price and other Terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section&nbsp;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)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Payment of SAR Amount.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Upon exercise of a SAR, a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying: </FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;the
number of Shares with respect to which the SAR is exercised. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Payment upon Exercise of SAR.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At the discretion of the Administrator, payment for a SAR may be in cash,
Shares or a combination thereof. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>SAR Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Expiration of SARs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Termination of Relationship as a Service Provider.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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 </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-11</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_hk42201_1_12"> </A>
<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>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
Administrator, the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Disability.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Death of Participant.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Grant of Restricted Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;7(b) hereof, the Administrator shall have complete discretion to determine
(i)&nbsp;the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Other Terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-12</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_hk42201_1_13"> </A>
<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>Any
certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Restricted Stock Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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 the Restricted Stock grant has a
purchase price, such purchase price must be paid no more than ten (10)&nbsp;years following the date of grant. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Grant of Performance Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;7(b) hereof, the Administrator shall have complete discretion to
determine (i)&nbsp;the number of Shares subject to a Performance Share award granted to any Participant, and (ii)&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Other Terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Performance Share Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Grant of Performance Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Number of Performance Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section&nbsp;7(c) hereof, the Administrator will have complete
discretion in determining the number of Performance Units granted to any Participant. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-13</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_hk42201_1_14"> </A>
<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Other Terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>Any
certificates representing the units awarded shall bear such legends as shall be determined by the Administrator. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Performance Unit Award Agreement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Deferred Stock Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Description.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>162(m) Limits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;7 hereof. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>409A Limitations.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If the Deferred Stock Units are considered to be deferred compensation under Code
Section&nbsp;409A, then the terms of such Deferred Stock Units shall comply with Code Section&nbsp;409A. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Non-Transferability of Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments Upon Changes in Capitalization, Dissolution or Liquidation or Change of Control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Changes in Capitalization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Dissolution or Liquidation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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 </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-14</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Change of Control.</I></FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Stock Options and SARs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Restricted Stock, Performance Shares, Performance Units and Deferred Stock Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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, </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-15</FONT></P>

<HR NOSHADE>
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<UL>
<UL>
<BR>

<P style="font-family:times;"><FONT SIZE=2>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 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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Involuntary Termination other than for Cause, Death or Disability or a Voluntary Termination for Good Reason, Following a Change of
Control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If, within eighteen (18)&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Date of Grant.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination of the Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Amendment and Termination.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Stockholder Approval.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company shall obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Law. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Effect of Amendment or Termination.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions Upon Issuance of Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Legal Compliance.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Investment Representations.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Liability of Company.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Inability to Obtain Authority.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-16</FONT></P>

<HR NOSHADE>
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<UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Grants Exceeding Allotted Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;18(b) of the Plan. </FONT></P>

</UL>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Reservation of Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-17</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="hm42201_exhibit_b"> </A>
<A NAME="toc_hm42201_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit&nbsp;B    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Audit Committee Charter  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>PURPOSE:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Audit Committee of the Board of Directors of Overstock.com,&nbsp;Inc. (the "Company") shall be to oversee the accounting and financial
reporting processes of the Company and the audits of the financial statements of the Company. The Audit Committee will undertake those specific duties and responsibilities listed below and such other
duties as the Board of Directors may from time to time prescribe. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>MEMBERSHIP:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee members will be appointed by, and will serve at the discretion of, the Board of Directors, and will consist of at least three members of the
Board of Directors. Each member shall meet the independence and experience requirements of the Nasdaq Stock Market, Section&nbsp;10A(m)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations of the Securities and Exchange Commission, and each member shall be able to read and understand fundamental financial statements, including a balance
sheet, income statement and cash flow statement, in accordance with the Nasdaq National Market Listing Standards. In addition, at least one member of the Audit Committee shall have past employment
experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background that results in the individual's financial sophistication,
including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. A director who qualifies
as an "audit committee financial expert" under the rules of the Securities and Exchange Commission shall be presumed to qualify as a financially sophisticated audit committee member. No member of the
Audit Committee shall have participated in the preparation of the financial statements of the Company or any subsidiary at any time during the past three years. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>RESPONSIBILITIES:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The independent auditors shall report directly to the Audit Committee. The responsibilities of the Audit Committee shall include: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Being
directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditors, including being responsible for resolving any
disagreements between management and the independent auditors regarding financial reporting;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Obtaining
and reviewing a report from the independent auditor at least annually regarding (a)&nbsp;the independent auditor's internal quality-control procedures,
(b)&nbsp;any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more independent audits carried out by the firm and (c)&nbsp;any steps taken to deal with any such issue;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Evaluating
the qualifications, performance and independence of the independent auditor, including considering whether the auditor's quality controls are adequate and the
provision of permitted non-audit services is compatible with maintaining the auditor's independence, and taking into account the opinions of management and internal auditors, and
presenting the Committee's conclusions to the Board;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
the independent auditors' proposed audit scope, approach and independence, and approving all audit engagement fees and terms; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>B-1</FONT></P>

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<UL>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Providing
oversight and monitoring of Company management and its activities with respect to the Company's financial reporting process;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
and discussing with management and the independent auditor any major issues regarding the adequacy of the Company's internal controls, any special steps adopted in
light of any material control deficiencies, and the adequacy of disclosures about changes in internal control over financial reporting;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
and discussing with management (including the senior internal audit executive) and the independent auditor the Company's internal controls report and the
independent auditor's attestation of the report prior to the filing of the Company's Form&nbsp;10-K;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Approving
or preapproving all auditing services, internal control-related services, and permitted non-audit services to be provided to the Company by the
independent auditors in accordance with Section&nbsp;10A(i) of the Exchange Act, subject to the de minimus exceptions for non-audit services described in Section&nbsp;10A(i)(l)(B) of
the Exchange Act which are approved by the Audit Committee prior to the completion of the audit; provided that the Audit Committee may delegate authority to subcommittees consisting of one or more
members when appropriate, including authority to grant pre-approvals of audit and permitted non-audit services, provided that the decisions of such subcommittee to grant
pre-approvals shall be presented to the Audit Committee at its next scheduled meeting;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ensuring
the regular rotation of the lead or coordinating audit partner, and of the audit partner responsible for reviewing the audit, as required by Section&nbsp;10A(j)
of the Exchange Act;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Ensuring
its receipt from the independent auditors of a formal written statement delineating all relationships between the auditors and the Company, consistent with
Independent Standards Board Standard No.&nbsp;1, and actively engaging in a dialogue with the auditors with respect to any disclosed relationships or services that may impact the objectivity or
independence of the auditors, and taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent auditors;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
and directing the Company's independent auditors to review before filing with the SEC the Company's interim financial statements included in Quarterly Reports on
Form&nbsp;10-Q, using professional standards and procedures for conducting such reviews;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with the Company's independent auditors the matters required to be discussed by Statement on Auditing Standards No.&nbsp;61 relating to the conduct of the
audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with
management;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
with management and the independent auditors, before release, the audited financial statements and Management's Discussion and Analysis in the Company's Annual
Report on Form&nbsp;10-K, as well as the auditors' judgment about the quality, not just the acceptability, of the Company's accounting principles as applied in its financial reporting,
including the selection, application and disclosure of critical accounting policies;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Obtaining
and considering quarterly reports from the independent auditors regarding: (1)&nbsp;all critical accounting policies and practices to be used; (2)&nbsp;all
alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials of the Company, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the independent auditors; and (3)&nbsp;other material written communications between the independent auditors and Company
management, such as any management letter or schedule of unadjusted differences; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>B-2</FONT></P>

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<UL>
<UL>
</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with the independent auditors the auditors' conclusions regarding the reasonableness of the judgments and estimates made in the preparation of the financial
statements that may be viewed as critical, as well as the clarity of the Company's financial statement disclosures;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with the independent auditors any material issues on which the Company's audit team consulted the national office of the independent auditors;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Obtaining
from the independent auditors assurance that Section&nbsp;10A(b) of the Exchange Act has not been implicated so as to require the independent auditors to inform
the Audit Committee of any illegal act or to provide a report with respect to any illegal act;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Obtaining
reports from management, the Company's senior internal auditing executive and the independent auditors that the Company and its subsidiary/foreign affiliated
entities are in compliance with applicable legal requirements and the Company's Code of Business Conduct and Ethics.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with the Company's senior legal officers any legal matters that may have a material effect on the financial statements or the Company's compliance policies;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
and discussing with management the Company's earnings press releases, including the use of any non-GAAP financial measures, prior to release;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with management and the independent auditor the effect of regulatory and accounting initiatives as well as any off-balance sheet structures on the
Company's financial statements;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company's
risk assessment and risk management policies;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
the appointment and replacement of the Company's senior internal auditing executive;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
significant reports to management prepared by the internal auditing department and management's responses;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Discussing
with management and the independent auditors the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope
of the internal audit;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
the CEO and CFO certifications under Sections&nbsp;302 and 906 of the Sarbanes-Oxley Act and the Company's disclosures relating thereto;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Recommending
to the Board whether the financial statements should be included in the Company's Annual Report on Form&nbsp;10-K;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Providing
a report in the Company's proxy statement in accordance with the requirements of Item&nbsp;306 of Regulation&nbsp;S-K and Item&nbsp;7(e)
(3)&nbsp;of Schedule&nbsp;14A;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Causing
the Company to establish hiring practices for employees or former employees of the independent auditor that are consistent with Section&nbsp;10A(l) of the Exchange
Act;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
and approving any transaction that would require disclosure as a related party transaction pursuant to Item&nbsp;404 of Regulation&nbsp;S-K;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Establishing
procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls and auditing
matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>B-3</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=60,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=322191,FOLIO='B-3',FILE='DISK114:[08ZAH1.08ZAH42201]HM42201A.;3',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<A NAME="page_hm42201_1_4"> </A>
<UL>
<UL>
</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
with management and the independent auditors any correspondence with regulators and any published reports that raise material issues regarding the Company's
accounting policies;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Reviewing
the Audit Committee's own structure, processes and membership requirements, reviewing and reassessing the adequacy of this Charter on an annual basis, and
recommending proposed changes to this Charter to the Board for approval; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;"><FONT SIZE=2>Performing
such other duties as may be requested by the Board of Directors. </FONT></DD></DL>
</UL>

<P style="font-family:times;"><FONT SIZE=2>In
carrying out its duties, the Audit Committee shall have full authority to engage, without further Board approval, independent legal, accounting and other advisors as the Audit Committee may deem
necessary. The Company shall provide appropriate funding, as determined by the Audit Committee, for the compensation of any such advisors and to pay any ordinary administrative expenses of the Audit
Committee that are necessary or appropriate in carrying out its duties. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>MEETINGS:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee will meet at least quarterly. The Audit Committee may establish its own schedule, which it will provide to the Board of Directors in advance. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee will meet in executive session at least twice a year and will meet separately with the independent auditors as well as members of the Company's management as it deems
appropriate in order to review the financial controls of the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>MINUTES:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board of Directors. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>REPORTS:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Apart from the report prepared pursuant to Item&nbsp;306 of Regulation&nbsp;S-K and Item&nbsp;7(e) (3)&nbsp;of Schedule&nbsp;14A, the Audit
Committee will summarize its examinations and recommendations to the Board from time to time as may be appropriate, consistent with the Committee's charter. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B>RELIANCE ON INFORMATION:  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In adopting this Audit Committee Charter, the Board of Directors acknowledges that the Audit Committee members are not employees of the Company and are not
providing any expert or special assurance as to the Company's financial statements or any professional certification as to the independent auditors' work or auditing standards. Each member of the
Audit Committee shall be entitled to rely on the integrity of the persons and organizations within and without the Company that provide information to the Audit Committee and the accuracy and
completeness of the financial and other information provided to the Audit Committee by such persons or organizations absent actual knowledge that any such information is inaccurate or incorrect. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>B-4</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=61,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=60848,FOLIO='B-4',FILE='DISK114:[08ZAH1.08ZAH42201]HM42201A.;3',USER='MBRADT',CD='27-MAR-2008;16:32' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->

<P style="font-family:times;"><FONT SIZE=2>


<!-- COMMAND=ADD_BASECOLOR,"Black" -->




<!-- COMMAND=ADD_DEFAULTFONT,"font-family:times;" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1><B>
<IMG SRC="g476922.jpg" ALT="Logo" WIDTH="234" HEIGHT="52">
 </B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>000004</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>MR A SAMPLE</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>DESIGNATION (IF ANY)</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="23%" style="font-family:times;"><FONT SIZE=1>000000000.000000 ext</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>ADD 1<BR>
ADD 2<BR>
ADD 3<BR>
ADD 4<BR>
ADD 5<BR>
ADD 6</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=7 style="font-family:times;"><FONT SIZE=1><B>Electronic Voting Instructions<BR>
You can vote by Internet or telephone!<BR>
Available 24&nbsp;hours a day, 7&nbsp;days a week!<BR> </B></FONT><FONT SIZE=1>Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.<BR>
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.<BR></FONT> <FONT SIZE=1><B>Proxies submitted by the Internet or telephone must be received by 1:00&nbsp;a.m., Central Time, on May&nbsp;13, 2008.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>[ICON]</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1><B>Vote by Internet</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&#149;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>Log on to the Internet and go to<BR></FONT> <FONT SIZE=1><B>www.investorvote.com</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&#149;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>Follow the steps outlined on the secured website.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>[ICON]</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1><B>Vote by telephone</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&#149;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>Call toll free 1-800-652-VOTE (8683) within the United States, Canada&nbsp;&amp; Puerto Rico any time on a touch tone telephone. There is </FONT><FONT SIZE=1><B>NO CHARGE </B></FONT><FONT SIZE=1>to you for the
call.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&#149;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=1>Follow the instructions provided by the recorded message.</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P style="font-family:times;"><FONT SIZE=1>Using
a </FONT><FONT SIZE=1><B><I>black ink </I></B></FONT><FONT SIZE=1>pen, mark your votes with an </FONT><FONT SIZE=1><B>X</B></FONT><FONT SIZE=1> as shown in<BR>
this example. Please do not write outside the designated areas.&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT> </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="47%" style="font-family:times;"><FONT SIZE=3><B>Annual Meeting Proxy Card</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>123456</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>C0123456789</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" style="font-family:times;"><FONT SIZE=1>12345</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>IF
YOU HAVE NOT VOTED VIA THE INTERNET </FONT><FONT SIZE=1><I>OR </I></FONT><FONT SIZE=1>TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1><B>A</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=1><B>Proposals&#151;The Board of Directors recommends a vote </B></FONT><FONT SIZE=1><B><I>FOR </I></B></FONT><FONT SIZE=1><B>all the nominees listed and  </B></FONT><FONT SIZE=1><B><I>FOR
</I></B></FONT><FONT SIZE=1><B>Proposals 2 and 3.  </B></FONT></DD></DL>
<BR>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="92%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>1.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>Election of Directors:</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>For</B></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Withhold</B></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>For</B></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Withhold</B></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>01&#151;Allison H. Abraham</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>02&#151;Joseph J. Tabacco, Jr.</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="19%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>For</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Against</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Abstain</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>For</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Against</B></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Abstain</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>2.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1>Approval of an amendment of the Company's 2005 Equity Incentive Plan to increase the number of shares available thereunder by 1,000,000 shares.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>3.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="22%" style="font-family:times;"><FONT SIZE=1>Ratification of the selection of PricewaterhouseCoopers&nbsp;LLP as Overstock.com's independent accountants for 2008.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
</TABLE>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1><B>B</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=1><B>Non-Voting Items  </B></FONT></DD></DL>
<BR>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=1><B>Change of Address</B></FONT><FONT SIZE=1>&#151;Please print new address below.</FONT><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="36%" style="font-family:times;"><FONT SIZE=1><B>Comments</B></FONT><FONT SIZE=1>&#151;Please print your comments below.<BR></FONT>
<HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="18%" style="font-family:times;"><FONT SIZE=1><B>Meeting Attendance</B></FONT><FONT SIZE=1><BR>
Mark the box to the right if you plan to attend the Annual Meeting.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="4%" style="font-family:times;"><FONT SIZE=1><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2><B>C</B></FONT></DT><DD style="font-family:times;"><FONT SIZE=2><B>Authorized Signatures&#151;This section must be completed for your vote to be counted.&#151;Date and Sign Below  </B></FONT></DD></DL>

<P style="font-family:times;"><FONT SIZE=1>Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=1>Date (mm/dd/yyyy)&#151;Please print date below.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><FONT SIZE=1>Signature 1&#151;Please keep signature within the box.</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><FONT SIZE=1>Signature 2&#151;Please keep signature within the box.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="10%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><HR NOSHADE></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><FONT SIZE=2><BR>
C 1234567890&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;J NT<BR>
2 2 D V&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0 1 6 8 5 7 1</FONT></TD>
<TD WIDTH="2%" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%" style="font-family:times;"><BR><FONT SIZE=1>MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE<BR>
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND<BR>
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND<BR>
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND</FONT></TD>
</TR>
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<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=62,EFW="2184216",CP="OVERSTOCK.COM, INC.",DN="1",CHK=84048,FOLIO='blank',FILE='DISK124:[08ZAH2.08ZAH42202]MA42202A.;7',USER='BSKELLE',CD='26-MAR-2008;18:45' -->
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>IF YOU HAVE NOT VOTED VIA THE INTERNET </FONT><FONT SIZE=1><I>OR </I></FONT><FONT SIZE=1>TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. </FONT></P>

<P style="font-family:times;"><FONT SIZE=1><B>
<IMG SRC="g476922.jpg" ALT="Logo" WIDTH="234" HEIGHT="52">
  </B></FONT></P>

<HR NOSHADE>

<P style="font-family:times;"><FONT SIZE=3><B>Proxy&#151;Overstock.com, Inc.  </B></FONT></P>

<HR NOSHADE>

<P style="font-family:times;"><FONT SIZE=1><B>PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS<BR>
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON TUESDAY, MAY 13, 2008  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=1>The undersigned hereby appoints Patrick M. Byrne and Jonathan E. Johnson III, or either of them, as proxies and attorneys-in-fact, each with full power
of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Overstock.com,&nbsp;Inc. (the "Company") to be held at the distribution center of the Company located at 1455
South 5500 West, Salt Lake City, UT 84104, at 1:00&nbsp;p.m. on May&nbsp;13, 2008, including any adjournments or postponements thereof, and to vote the number of shares the undersigned would be
entitled to vote if personally present at the meeting. </FONT></P>

<P style="font-family:times;"><FONT SIZE=1>UNLESS
A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND FOR PROPOSAL 3, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THOSE INSTRUCTIONS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING. </FONT></P>

<P style="font-family:times;"><FONT SIZE=1><B>PLEASE COMPLETE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.  </B></FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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