NOTE PURCHASE AGREEMENT,
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT, AND
FIRST AMENDMENT TO SUB-SUBLEASE AGREEMENT

 

This Note Purchase Agreement, First Amendment to Stock Purchase Agreement and
First Amendment to Sub-Sublease Agreement (this “Agreement”), dated as of
January     , 2009, is entered into by and among Overstock.com, Inc., a Delaware
corporation (“Seller”), Mountain Reservations, Inc. (f/k/a OTravel.com, Inc.), a
Utah corporation (the “Company”) and Castles Travel, Inc., a Delaware
corporation (“Buyer”).  Seller, the Company and Buyer are referred to herein
individually as a “Party” and collectively as the “Parties”.  Capitalized terms
used but not defined herein shall have the respective meanings ascribed thereto
in the Purchase Agreement (as defined below).

 

WHEREAS, the Parties have entered into a Stock Purchase Agreement dated as of
April 25, 2007 (the “Purchase Agreement”);

 

WHEREAS, pursuant to Section 1.5(b)(ii) of the Purchase Agreement, Buyer issued
to Seller the Junior Seller Note, with an initial principal amount of
$3,000,000, and the Senior Seller Note, with an initial principal amount of
$3,000,000, each dated as of April 25, 2007 (collectively, the “Seller Notes”);

 

WHEREAS, in connection with the Senior Seller Note, Buyer and Seller entered
into a Pledge Agreement dated as of April 25, 2007 (the “Pledge Agreement”),
whereby Buyer pledged to Seller and granted Seller a security interest in all of
the issued and outstanding capital stock of the Company (the “Pledged Stock”);

 

WHEREAS, the Parties desire to enter into this Agreement to provide for the sale
to Buyer of the Seller Notes in exchange for the consideration described herein;

 

WHEREAS, in accordance with Section 9.3 of the Purchase Agreement, the Parties
desire to amend the Purchase Agreement as set forth herein; and

 

WHEREAS, the Company and Seller have entered into a Sub-Sublease Agreement dated
as of January 30, 2008 (the “Sub-Sublease Agreement”), and desire to amend the
Sub-Sublease Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained, the receipt and sufficiency of which is
acknowledged, the Parties agree as follows:

 

1.                                      NOTE PURCHASE AGREEMENT.

 

(A)                                  PURCHASE AND SALE OF SELLER NOTES;
TERMINATION OF THE PLEDGE AGREEMENT.  SELLER HEREBY SELLS TO BUYER, AND BUYER
HEREBY PURCHASES FROM SELLER, ALL RIGHT, TITLE AND INTEREST IN THE SELLER NOTES
(INCLUDING ALL RIGHTS TO RECEIVE PAYMENT OF ANY UNPAID PRINCIPAL AND/OR ACCRUED
INTEREST THEREUNDER) (THE “PURCHASE OF SELLER NOTES”) IN EXCHANGE FOR A CASH
PAYMENT OF $1,250,000 (THE “NOTE PURCHASE PRICE”).  AS A RESULT OF THE PURCHASE
OF SELLER NOTES, AND CONDITIONED UPON RECEIPT BY SELLER OF

 

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THE PURCHASE PRICE AS SPECIFIED IN SECTION 1(B) BELOW, BUYER AND SELLER HEREBY
AGREE THAT (I) THE SELLER NOTES ARE HEREBY CANCELLED AND THAT NEITHER SELLER NOR
ANY OTHER PERSON HAVE ANY FURTHER RIGHTS THEREUNDER AND (II) THE PLEDGE
AGREEMENT IS HEREBY TERMINATED AND CANCELLED WITH NO FURTHER ACTION REQUIRED
FROM ANY PARTY OR OTHER PERSON.

 

(B)                                 PAYMENT OF THE NOTE PURCHASE PRICE.  ON THE
DATE HEREOF, BUYER SHALL MAKE A PAYMENT TO SELLER BY WIRE TRANSFER, OR DELIVERY
OF OTHER IMMEDIATELY AVAILABLE FUNDS, IN AN AMOUNT EQUAL TO THE NOTE PURCHASE
PRICE TO AN ACCOUNT DESIGNATED BY SELLER.

 

(C)                                  DELIVERY TO BUYER OF EACH SELLER NOTE AND
STOCK CERTIFICATE(S).  WITHIN A REASONABLE TIME AFTER THE DATE HEREOF, SELLER
SHALL DELIVER TO BUYER (I) THE JUNIOR SELLER NOTE AND THE SENIOR SELLER NOTE FOR
CANCELLATION AND (II) THE STOCK CERTIFICATE(S) REPRESENTING THE PLEDGED STOCK,
TOGETHER WITH ANY DULY EXECUTED FORMS OF ASSIGNMENT OR STOCK POWERS HELD BY
SELLER IN CONNECTION THEREWITH.

 

2.                                      AMENDMENT TO PURCHASE AGREEMENT. 
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, EFFECTIVE AS OF CLOSING,
THE PURCHASE AGREEMENT SHALL BE AMENDED AS FOLLOWS:

 

(A)                                  SECTION 6.3(A).  THE PHRASE “ON AND AFTER
THE CLOSING UNTIL THE FIFTH ANNIVERSARY OF THE CLOSING DATE (THE “RESTRICTED
PERIOD”)” SET FORTH IN SECTION 6.3(A) OF THE PURCHASE AGREEMENT IS HEREBY
AMENDED AND RESTATED IN ITS ENTIRETY TO THE FOLLOWING:

 

“on and after the Closing until January     , 2009 (the “Restricted Period”)”

 

(B)                                 SECTION 6.3(D).  SECTION 6.3(D) OF THE
PURCHASE AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY TO THE
FOLLOWING:

 

“Seller hereby covenants and agrees that on and after the Closing until the
fifth anniversary of the Closing Date, Seller and its Affiliates (including any
company or other entity controlled by or under common control with Seller
(whether currently existing or hereafter acquired or formed)) shall not,
directly or indirectly, (i) solicit or induce, or attempt to solicit or induce,
any employee of the Company or of any of the Company’s Subsidiaries to leave the
employ of the Company or any of its Affiliates for any reason whatsoever,
(ii) hire or employ any employee of the Company or of any of the Company’s
Subsidiaries, or (iii) without the prior written consent of Buyer, employ any
employee of the Company or of any of the Company’s Subsidiaries within one year
of such Company employee leaving the employment of the Company or any of the
Company’s Subsidiaries; provided however that Seller will be deemed not to have
violated this clause merely as a result of publishing a solicitation of general
circulation.”

 

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(C)                                  NO OTHER AMENDMENTS.  EXCEPT AS EXPRESSLY
MODIFIED HEREIN, THE PURCHASE AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT IN
ACCORDANCE WITH ITS TERMS.

 

3.             AMENDMENT TO SUB-SUBLEASE AGREEMENT.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, EFFECTIVE AS OF CLOSING, THE SUB-SUBLEASE
AGREEMENT SHALL BE AMENDED AS FOLLOWS:

 

(A)                                  SECTION 4.  SECTION 4 OF THE SUB-SUBLEASE
AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY AS FOLLOWS:

 

“Base Rental.  Tenant agrees to pay directly to Landlord the monthly Base Rental
in advance on the first of every month, without previous demand therefore and
without set-off, abatement, credit, deduction or claim of offset, on the first
day of each and every calendar month during the Term (the “Due Date”) pursuant
to the following schedule:

 

Period

 

Base Rental

 

Annual Cost Per
Rentable Square Foot

 

July 25, 2007 through August 1, 2008, inclusive

 

$

10,063.44 per month

 

$

19.44

 

August 2, 2008 through February 1, 2009, inclusive

 

$

10,415.66 per month

 

$

20.12

 

February 2, 2009 through August 1, 2009, inclusive

 

$

9,374.09 per month

 

$

18.11

 

August 2, 2009 through August 1, 2010, inclusive

 

$

9,702.19 per month

 

$

18.74

 

August 2, 2010 through August 1, 2011, inclusive

 

$

10,041.77 per month

 

$

19.40

 

August 2, 2011 through August 1, 2012, inclusive

 

$

10,393.23 per month

 

$

20.08

 

August 2, 2012 through August 1, 2013, inclusive

 

$

10,756.99 per month

 

$

20.78

 

August 2, 2013 through August 1, 2014, inclusive

 

$

11,133.49 per month

 

$

21.51

 

August 2, 2014 through July 17, 2015, inclusive

 

$

11,523.16 per month

 

$

22.26

 

 

(B)                                 SECTION 7.  THE FOLLOWING SENTENCE SHALL BE
ADDED TO THE END OF SECTION 7 OF THE SUB-SUBLEASE AGREEMENT:

 

“Notwithstanding the foregoing, beginning on January     , 2009 and continuing
for the remainder of the Term of the Sub-Sublease Agreement, the Additional Rent
that Tenant shall pay to Landlord shall be reduced by an amount equal to ten
percent (10%) of such Additional Rent.”

 

(C)                                  SECTION 17(C).  SECTION 17(C) OF THE
SUB-SUBLEASE AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY AS
FOLLOWS:

 

“Data Center Space.  Tenant is hereby granted the permission to occupy and
access approximately 108 rentable square feet on the First Floor of the Building
in an “as-is” condition for the duration of the Term in order to install not
more than three (3) server racks.  Tenant shall pay $900.00 per month for the
use of this space escalating at 3.5% per year for each succeeding year of the
Lease term.  Tenant shall additionally pay a one-time $500.00 set up fee to
cover expenses related to preparing the space for occupation.”

 

(D)                                 NO OTHER AMENDMENTS.  EXCEPT AS EXPRESSLY
MODIFIED HEREIN, THE SUB-SUBLEASE AGREEMENT SHALL REMAIN IN FULL FORCE AND
EFFECT IN ACCORDANCE WITH ITS TERMS.

 

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4.             REPRESENTATIONS AND WARRANTIES OF SELLER.  SELLER HEREBY
REPRESENTS AND WARRANTS TO BUYER AND THE COMPANY THAT THE FOLLOWING STATEMENTS
CONTAINED IN THIS SECTION 4 ARE TRUE, CORRECT AND COMPLETE AS OF THE DATE
HEREOF:

 

(A)                                  TITLE TO SELLER NOTES.  SELLER IS THE
RECORD AND BENEFICIAL OWNER OF EACH OF THE JUNIOR SELLER NOTE AND THE SENIOR
SELLER NOTE AND IS THE OWNER OF SELLER’S RIGHTS IN THE PLEDGE AGREEMENT, FREE
AND CLEAR OF ANY AND ALL LIENS, SECURITY INTERESTS OR OTHER ENCUMBRANCES EXCEPT
FOR THE SECURITY INTEREST IN THE JUNIOR SELLER NOTE, THE SENIOR SELLER NOTE AND
THE PLEDGE AGREEMENT GRANTED BY SELLER TO WELLS FARGO RETAIL FINANCE, LLC
(“WELLS FARGO”) ON APRIL 25, 2007 (SUCH SECURITY INTEREST, THE “WELLS FARGO
SECURITY INTEREST”).  SELLER HAS NOT SOLD, TRANSFERRED, CONVEYED, ASSIGNED OR
OTHERWISE DISPOSED OF THE SELLER NOTES TO ANY OTHER PERSON.

 

(B)                                 WELLS FARGO SECURITY INTEREST. 
CONTEMPORANEOUS WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT, AND THE
CONSUMMATION OF THE PURCHASE OF SELLER NOTES, WELLS FARGO HAS RELEASED AND
TERMINATED THE WELLS FARGO SECURITY INTEREST, AND SELLER HAS DELIVERED EVIDENCE
OF SUCH RELEASE AND TERMINATION TO BUYER.

 

(C)                                  EXISTENCE AND AUTHORIZATION.  SELLER IS
DULY FORMED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF ITS
JURISDICTION OF FORMATION, AND HAS THE POWER AND THE GOVERNMENTAL LICENSES,
AUTHORIZATIONS, CONSENTS AND APPROVALS REQUIRED TO CARRY ON ITS BUSINESS AS NOW
CONDUCTED.  THE EXECUTION, DELIVERY AND PERFORMANCE BY SELLER OF THIS AGREEMENT
HAVE BEEN DULY AUTHORIZED BY SELLER.  THIS AGREEMENT CONSTITUTES A VALID AND
BINDING OBLIGATION OF SELLER ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS
SUCH ENFORCEABILITY MAY BE LIMITED BY:  (I) APPLICABLE INSOLVENCY, BANKRUPTCY,
REORGANIZATION, MORATORIUM OR OTHER SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS
GENERALLY, OR (II) APPLICABLE EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A
PROCEEDING AT LAW OR IN EQUITY).

 

(D)                                 NO BREACH.  THE EXECUTION, DELIVERY AND
PERFORMANCE BY SELLER OF THIS AGREEMENT WILL NOT (I) RESULT IN ANY MATERIAL
BREACH OF ANY TERMS OR PROVISIONS OF, OR CONSTITUTE A MATERIAL DEFAULT UNDER,
ANY MATERIAL CONTRACT, AGREEMENT OR INSTRUMENT TO WHICH SELLER IS A PARTY OR BY
WHICH SELLER IS BOUND OR (II) VIOLATE ANY LAW APPLICABLE TO SELLER.

 

5.             REPRESENTATIONS AND WARRANTIES OF BUYER AND THE COMPANY.  BUYER
AND THE COMPANY HEREBY REPRESENT AND WARRANT TO SELLER THAT THE FOLLOWING
STATEMENTS CONTAINED IN THIS SECTION 5 ARE TRUE, CORRECT AND COMPLETE AS OF THE
DATE HEREOF:

 

(A)                                  EXISTENCE AND AUTHORIZATION.  EACH OF BUYER
AND THE COMPANY IS DULY FORMED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF ITS JURISDICTION OF FORMATION, AND HAS THE POWER AND THE GOVERNMENTAL
LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS REQUIRED TO CARRY ON ITS
BUSINESS AS NOW CONDUCTED.  THE EXECUTION, DELIVERY AND PERFORMANCE BY BUYER AND
THE COMPANY OF THIS AGREEMENT HAVE BEEN DULY AUTHORIZED BY BUYER AND THE
COMPANY.  THIS AGREEMENT CONSTITUTES A VALID AND BINDING OBLIGATION OF BUYER AND
THE COMPANY ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH
ENFORCEABILITY MAY BE

 

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LIMITED BY:  (I) APPLICABLE INSOLVENCY, BANKRUPTCY, REORGANIZATION, MORATORIUM
OR OTHER SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY, OR (II) APPLICABLE
EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING AT LAW OR IN EQUITY).

 

(B)                                 NO BREACH.  THE EXECUTION, DELIVERY AND
PERFORMANCE BY THE COMPANY OR BUYER OF THIS AGREEMENT WILL NOT (I) RESULT IN ANY
MATERIAL BREACH OF ANY TERMS OR PROVISIONS OF, OR CONSTITUTE A MATERIAL DEFAULT
UNDER, ANY MATERIAL CONTRACT, AGREEMENT OR INSTRUMENT TO WHICH THE COMPANY OR
BUYER IS A PARTY OR BY WHICH THE COMPANY OR BUYER IS BOUND OR (II) VIOLATE ANY
LAW APPLICABLE TO THE COMPANY OR BUYER.

 

6.             MISCELLANEOUS.

 

(A)                                  FEES AND EXPENSES.  ALL FEES AND EXPENSES
INCURRED IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, INCLUDING THE FEES AND DISBURSEMENTS OF COUNSEL, FINANCIAL ADVISORS AND
ACCOUNTANTS, SHALL BE PAID BY THE PARTY INCURRING SUCH FEES AND EXPENSES.

 

(B)                                 DESCRIPTIVE HEADINGS; INTERPRETATION. 
SECTION HEADINGS USED IN THIS AGREEMENT ARE FOR CONVENIENCE ONLY AND ARE NOT TO
AFFECT THE CONSTRUCTION OF, OR TO BE TAKEN INTO CONSIDERATION IN INTERPRETING,
SUCH AGREEMENT.  THE USE OF THE WORD “INCLUDING” OR ANY VARIATION OR DERIVATIVE
THEREOF IN THIS AGREEMENT IS BY WAY OF EXAMPLE RATHER THAN BY LIMITATION.

 

(C)                                  COUNTERPARTS; AMENDMENT AND WAIVER.  THIS
AGREEMENT MAY BE EXECUTED SIMULTANEOUSLY IN TWO OR MORE COUNTERPARTS, ANY ONE OF
WHICH NEED NOT CONTAIN THE SIGNATURES OF MORE THAN ONE PARTY, BUT ALL SUCH
COUNTERPARTS TAKEN TOGETHER SHALL CONSTITUTE ONE AND THE SAME AGREEMENT. 
DELIVERY OF AN EXECUTED SIGNATURE PAGE OF THIS AGREEMENT (WHICH MAY BE BY
ELECTRONIC OR FACSIMILE TRANSMISSION) SHALL BE EFFECTIVE AS DELIVERY OF A
MANUALLY EXECUTED COUNTERPART HEREOF.  THIS AGREEMENT MAY NOT BE AMENDED OR
MODIFIED, AND NO PROVISIONS HEREOF MAY BE WAIVED, WITHOUT THE WRITTEN CONSENT OF
THE PARTY SOUGHT TO BE BOUND BY ANY SUCH AMENDMENT, MODIFICATION OR WAIVER.

 

(D)                                 SUCCESSORS AND ASSIGNS.  NO PARTY SHALL
ASSIGN ANY OF ITS RIGHTS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT
OF THE OTHER PARTIES (AND ANY ATTEMPTED ASSIGNMENT WITHOUT SUCH CONSENT SHALL BE
NULL AND VOID).  THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT
OF THE PARTIES AND THEIR RESPECTIVE SUCCESSORS, HEIRS AND PERMITTED ASSIGNS.

 

(E)                                  SEVERABILITY.  WHENEVER POSSIBLE, EACH
PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
IS HELD TO BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY,
WITHOUT INVALIDATING THE REMAINDER OF THIS AGREEMENT.

 

(F)                                    GOVERNING LAW.  ALL ISSUES AND QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY, AND

 

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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF UTAH OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF UTAH.

 

(G)                                 NO STRICT CONSTRUCTION.  THE PARTIES HAVE
PARTICIPATED JOINTLY IN THE NEGOTIATION AND DRAFTING OF THIS AGREEMENT.  IN THE
EVENT AN AMBIGUITY OR QUESTION OF INTENT OR INTERPRETATION ARISES, THIS
AGREEMENT SHALL BE CONSTRUED AS IF DRAFTED JOINTLY BY THE PARTIES, AND NO
PRESUMPTION OR BURDEN OF PROOF SHALL ARISE FAVORING OR DISFAVORING ANY PARTY BY
VIRTUE OF THE AUTHORSHIP OF ANY OF THE PROVISIONS OF THIS AGREEMENT.

 

(H)                                 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE
OTHER DOCUMENTS REFERRED TO HEREIN CONTAIN THE ENTIRE AGREEMENT BETWEEN THE
PARTIES AND SUPERSEDE ANY PRIOR UNDERSTANDINGS, AGREEMENTS OR REPRESENTATIONS BY
OR BETWEEN THE PARTIES, WRITTEN OR ORAL, WHICH MAY HAVE RELATED TO THE SUBJECT
MATTER HEREOF IN ANY WAY.

 

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IN WITNESS WHEREOF, the Parties have executed this Note Purchase Agreement,
First Amendment to Stock Purchase Agreement and First Amendment to Sub-Sublease
Agreement on the date first written above.

 

 

 

OVERSTOCK.COM, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MOUNTAIN RESERVATIONS, INC.

 

 

 

 

 

By:

 

 

 

Name: Julian Castelli

 

 

Title:   Chief Executive Officer

 

 

 

 

 

CASTLES TRAVEL, INC.

 

 

 

 

 

By:

 

 

 

Name: Julian Castelli

 

 

Title:   Chief Executive Officer

 

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