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


 

















 


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