Exhibit 10.1


 


Seventh Modification to Credit Agreement


 


This Seventh
Modification to Credit Agreement Note (this “Modification”) is entered into as
of December 31, 2005, by and between OVERSTOCK.COM, INC., a Delaware
corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).


 


Recitals:


 


A.    Bank has agreed to extend
credit to Borrower in the maximum principal amount of $30,000,000.00 pursuant
to the terms and conditions of that certain Credit Agreement dated as of
February 13, 2004 and a related Revolving Line of Credit Note dated December
22, 2004, executed by Borrower and payable to the order of Bank, as amended
most recently by a Sixth Amendment to Credit Agreement dated October 18, 2005
(as amended, the “Agreement” and the “Note”).


 


B.    The obligations of Borrower
under the Agreement and the Note are secured by the security interests and
liens granted by Borrower pursuant to (1) a Security Agreement: Securities
Account, (2) an Addendum to Securities Agreement: Securities Account, and (3) a
Securities Account Control Agreement, all dated as of October 18, 2005 (which,
together with all other security agreements and control agreements in favor of
Bank, shall be referred to as the “Security Agreement”).  The Agreement, the Note and the Security
Agreement shall be referred to collectively as the “Loan Documents.”


 


C.    The security interests granted
by the Security Agreement includes a security interest in two (2) fixed income
securities bearing the guaranty of Bayerische Landesbank, with respective
maturity dates of September 20, 2006 and November 1, 2006 (collectively the “Fixed
Income Investments”).


 


D.    Bank
and Borrower have agreed (1) to extend the termination date of the line of
credit represented by the Agreement and the maturity date of the Note to
December 31, 2007 and (2) to provide for pricing and funding adjustments upon
the substitution of collateral for the Fixed Income Investments encumbered by
the Security Agreement.


 


Agreement:


 


Now,
therefore, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Note shall be
modified as follows:


 


1.                                       Subsection (a)
of the “Borrowing and Repayment” section of the Note shall be amended to read
as follows:


 


(a)                                  Borrowing
and Repayment:  Borrower may from
time to time during the term of this Note borrower, partially or wholly repay
its outstanding borrowings, and reborrow, subject to all of the limitations,
terms and conditions of this Note and of any document executed in connection
with


 





















 


or governing
this Note; provided however, that the total outstanding borrowings under this
Note shall not at any time exceed the principal amount stated above.  The unpaid principal balance of this
obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for any
Borrower, which balance may be endorsed hereon from time to time by the
holder.  The outstanding principal
balance of this Note shall be due and payable in full on January 1, 2008.


 


2.                                       Borrower hereby
agrees to replace the Fixed Income Investments upon their respective maturities
with replacement collateral that satisfies all required qualifications and
valuations set forth in the Security Agreement. 
Upon a determination by Lender that such replacement and substitution
has been completed and that the interest of Lender therein has attached and has
been perfected, Lender hereby agrees to modify the Note to provide that
interest under both the Fixed Rate Term LIBOR option and the Daily LIBOR rate
option shall accrue at an increment equal to one-half of one percent (0.50%)
above the applicable LIBOR determination.


 


3.                                       Upon completion
of the collateral substitution set forth in paragraph 2 above, the definition
of “Collateral Value” in the Addendum to Security Agreement: Securities
Account, which is included in the definition of 
“Security Agreement” and which governs the amounts that may be disbursed
under the Agreement and the Note, shall be amended to read as follows:


 


“Collateral
Value” means the percentage set forth below of the lower of the face or
market value, or the lower of the face or redemption value, as appropriate, for
each type of investment property held in the Securities Account at the time of
computation, with such value and the classification of any particular
investment property in all instances determined by Bank in its sole discretion,
and excluding from such computation (a) all WF Securities and Collective
Investment Funds, (b) any stock with a market value of $10.00 or less, and (c)
all investment property from an issuer if Bank determines such issuer to be
ineligible.


 


	
  Type of Investment Property

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cash and
  Cash Equivalents

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S.
  Government Bills, Notes and U.S. Government Sponsored Agency Securities:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)   with maturities less than or
  equal to 5 years

  	
   

  	
  90

  	
  %

  
	
  (b)   with maturities greater than
  5 years but less than or equal to 10 years

  	
   

  	
  85

  	
  %

  
	
  (c)   with maturities greater than
  10 years

  	
   

  	
  80

  	
  %

  



 


2





















 


	
  Type of Investment Property

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Corporate
  and Municipal Bonds and Notes:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)   rated AAA/Aaa, AA/Aa or SP-1
  by a nationally recognized rating agency with maturities less than or equal
  to 5 years

  	
   

  	
  85

  	
  %

  
	
  (b)   rated AAA/Aaa, AA/Aa or SP-1
  by a nationally recognized rating agency with maturities greater than 5 years
  but less than or equal to 10 years

  	
   

  	
  80

  	
  %

  
	
  (c)   rated AAA/Aaa, AA/Aa or SP-1
  by a nationally recognized rating agency with maturities grater than 10 years

  	
   

  	
  75

  	
  %

  
	
  (d)   rated A, Baa, BBB or SP-2 by
  a nationally recognized rating agency with maturities less than or equal to 5
  years

  	
   

  	
  80

  	
  %

  
	
  (e)   rated A, Baa, BBB or SP-2 by
  a nationally recognized rating agency with maturities greater than 5 years
  but less than or equal to 10 years

  	
   

  	
  75

  	
  %

  
	
  (f)    rated A, Baa, BBB or SP-2 by
  a nationally recognized rating agency with maturities greater than 10 years

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Commercial
  Paper:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)   rated A1 or P1 by a
  nationally recognized rating agency

  	
   

  	
  80

  	
  %

  
	
  (b)   rated A2 or P2 by a
  nationally recognized rating agency

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Common
  and Preferred Stock:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)   traded on the New York Stock
  Exchange

  	
   

  	
  75

  	
  %

  
	
  (b)   traded on NASDAQ, the
  American Stock Exchange or a regional exchange:

  	
   

  	
   

  	
   

  
	
  (i)    with a market capitalization
  grater than $7.5B and

  	
   

  	
   

  	
   

  
	
  **   rated A+, A or A- by a
  nationally recognized rating agency

  	
   

  	
  75

  	
  %

  
	
  **   rated B+ by a nationally
  recognized rating agency

  	
   

  	
  60

  	
  %

  
	
  **   rated B, B- or C by a
  nationally recognized rating agency

  	
   

  	
  50

  	
  %

  
	
  (ii)   with a market capitalization
  greater than $1B but less than or equal to $7.5B and

  	
   

  	
   

  	
   

  
	
  **   rated A+, A or A- by a
  nationally recognized rating agency

  	
   

  	
  60

  	
  %

  
	
  **   rated B+ by a nationally
  recognized rating agency

  	
   

  	
  50

  	
  %

  



 


3





















 


	
  Type of Investment Property

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  **   rated B, B- or C by a
  nationally recognized rating agency

  	
   

  	
  40

  	
  %

  
	
  (iii)  with a market capitalization
  grater than or equal to $500MM but less than $1B and

  	
   

  	
   

  	
   

  
	
  **   rated A+, A or A- by a
  nationally recognized rating agency

  	
   

  	
  50

  	
  %

  
	
  **   rated B+ by a nationally
  recognized rating agency

  	
   

  	
  40

  	
  %

  
	
  **   rated B, B- or C by a
  nationally recognized rating agency

  	
   

  	
  30

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Mutual
  Funds:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)   Listed Money Market

  	
   

  	
  95

  	
  %

  
	
  (b)   Short Term Taxable or Tax
  Exempt Bonds

  	
   

  	
  90

  	
  %

  
	
  (c)   Intermediate Term Taxable or
  Tax Exempt Bonds

  	
   

  	
  85

  	
  %

  
	
  (d)   General Taxable Bonds

  	
   

  	
  80

  	
  %

  
	
  (e)   Municipal Bonds, Single State
  Bonds or Long Term Corporate Taxable Bonds

  	
   

  	
  75

  	
  %

  
	
  (f)    Balanced Stock and Bond
  Funds (includes flexible portfolio

  	
   

  	
  75

  	
  %

  
	
  (g)   Domestic Large Cap Stock

  	
   

  	
  70

  	
  %

  
	
  (h)   Domestic Equity Income Stock

  	
   

  	
  70

  	
  %

  
	
  (i)    Domestic Mortgage Taxable
  Bonds

  	
   

  	
  70

  	
  %

  
	
  (j)    Multi Cap Growth, Value and
  Core Stock

  	
   

  	
  60

  	
  %

  
	
  (k)   Mid Cap Growth, Value and
  Core Stock

  	
   

  	
  60

  	
  %

  
	
  (l)    Small Cap Growth, Value and
  Core Stock

  	
   

  	
  50

  	
  %

  
	
  (m)  Specialty Equity Stock

  	
   

  	
  50

  	
  %

  
	
  (n)   Sector, International, High
  Yield Taxable and Tax Exempt Stocks and Bonds

  	
   

  	
  50

  	
  %

  
	
  (o)   Listed NASDAQ Mutual Funds

  	
   

  	
  50

  	
  %

  



 


4.                                       In consideration
for the changes set forth herein and as a condition to the effectiveness
hereof, Borrower shall pay herewith a non-refundable fee equal to $37,500, (one
eight of one percent of the LOC commitment amount of $30,000,000).


 


4





















 


5.                                       Except as
expressly set forth herein, all terms and conditions of the Loan Documents
remain in full force and effect.  All
terms defined in the Loan Agreement shall have the same meaning when used in
this Modification.  This Modification and
the Loan Documents shall be read together as one document.


 


6.                                       Borrower
certifies that as of the date of this Modification (a) there exists no Event of
Default under the Loan Documents, nor any condition, act or event which with
the giving of notice or the passage of time or both would constitute any such
Event of Default, and (b) Borrower has no defense offset or counterclaim with
respect to Borrower’s obligations under the Loan Documents.


 


7.                                       All security
interests and liens granted pursuant to the Loan Documents, including without
limitation the Security Agreement, and any related document shall continue to
secure the Note.  Wells Fargo
Institutional Trust Services, the designated “Intermediary” in the Securities
Account Control Agreement, is a division of Bank, and the execution of such
Account Control Agreement is intended to evidence the control that Bank has
with respect to the collateral granted by the Security Agreement.


 


IN THE WITNESS
WHEREOF, the parties hereto have caused this Modification to be executed as of
the day and year first written above.


 


 


	
  OVERSTOCK.COM,
  INC.

  
	
   

  
	
  By:

  	
  /s/ David K. Chidester

  	
   

  
	
   

  	
  David K. Chidester

  	
   

  
	
   

  	
  Senior Vice President,
  Finance

  	
   

  
	
   

  
	
   

  
	
  WELLS FARGO
  BANK,

  
	
  NATIONAL
  ASSOCIATION

  
	
   

  
	
  By:

  	
  /s/ Lisbeth
  M. Hopper

  	
   

  
	
   

  	
  Lisbeth M.
  Hopper

  	
   

  
	
   

  	
  Vice
  President,

  	
   

  
	
   

  	
  Relationship
  Manager

  	
   

  



 


5