Document:

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

  	
   

  

 

5Exhibit 10.2

 

REVOLVING LINE OF CREDIT
NOTE

 

 

	
  $30,000,000.00

  	
   

  	
  Salt Lake City, Utah

  
	
   

  	
   

  	
  January 1, 2006

  

 

FOR VALUE RECEIVED, the undersigned OVERSTOCK.COM,
INC. (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”) at its office at 299 South Main, 9th Floor,
Salt Lake City, Utah, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of Thirty Million Dollars ($30,000,000.00),
or so much thereof as may be advanced and be outstanding, with interest
thereon, to be computed on each advance from the date of its disbursement as
set forth herein.

 

DEFINITIONS:

 

As used herein, the following terms shall have the
meanings set forth after each, and any other term defined in this Note shall
have the meaning set forth at the place defined:

 

(a)           “Business
Day” means any day except a Saturday, Sunday or any other day on which
commercial banks in Utah are authorized or required by law to close.

 

(b)           “Daily
LIBOR” means the fluctuating rate per annum to apply to all or a portion of the
outstanding principal amount of this Note which bears interest determined in
relation to LIBOR, as designated by Borrower, based upon the Base LIBOR (as
defined below) with respect to such rate.

 

(c)           “Fixed
Rate Term” means a period commencing on a Business Day and continuing for 1, 2,
3, 6 or 12 months, as designated by Borrower, during which all or a portion of
the outstanding principal balance of this Note bears interest determined in
relation to LIBOR; provided however, that no Fixed Rate Term may be selected
for a principal amount less than Five Hundred Thousand Dollars ($500,000.00);
and provided further, that no Fixed Rate Term shall extend beyond the scheduled
maturity date hereof.  If any Fixed Rate
Term would end on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.

 

(d)           “LIBOR”
means the rate per annum (rounded upward, if necessary, to the nearest whole
1/8 of 1%) and determined pursuant to the following formula:

 

	
  LIBOR =

  	
   

  	
  Base LIBOR

  
	
   

  	
   

  	
  100% - LIBOR Reserve
  Percentage

  

 

(i)            “Base
LIBOR” means:

 

(A)          With respect to a LIBOR selection for
a Fixed Rate Term, the rate per annum for United States dollar deposits quoted
by Bank as the Inter-Bank Market Offered Rate, with the understanding that such
rate is quoted by Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of a Fixed Rate
Term for delivery of funds on said date for a period of time approximately

 

1

 

equal to the number of days in such Fixed Rate Term
and in an amount approximately equal to the principal amount to which such
Fixed Rate Term applies.  Borrower
understands and agrees that Bank may base its quotation of the Inter-Bank
Market Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market; and

 

(B)           With respect to a LIBOR selection
based upon Daily LIBOR, the rate per annum for United States dollar deposits
quoted by Bank as of 10:00 a.m. on each Business Day, as the Inter-Bank Market
Offered Rate, with the understanding that such rate is quoted by Bank for the
purpose of calculating effective rates of interest for loans making reference
thereto, for delivery of funds on such Business Day for a period of time equal
to one (1) month and in an amount approximately equal to the principal amount
to which such rate shall apply.  Borrower
understands and agrees that Bank may base its quotation of the Inter-Bank
Market Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

 

(ii)           “LIBOR
Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency
Liabilities” (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term.

 

(e)           “Prime
Rate” means at any time the rate of interest most recently announced within
Bank at its principal office as its Prime Rate, with the understanding that the
Prime Rate is one of Bank’s base rates and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Bank may designate.

 

INTEREST:

 

(a)           Interest.  The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day year, actual
days elapsed) either (i) at a fixed rate per annum determined by Bank to be one
and thirty five hundredths percent (1.35%) above LIBOR in effect on the first
day of an applicable Fixed Rate Term, or (iii) at a fluctuating rate per annum
determined by Bank to be one and thirty five hundredths percent (1.35%) above
Daily LIBOR in effect on each Business Day a change in Daily LIBOR is announced
within Bank.  With respect to each LIBOR
selection hereunder, Bank is hereby authorized to note the date, principal
amount, interest rate and Fixed Rate Term, if applicable thereto, and any
payments made thereon on Bank’s books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

 

(b)           Selection
of Interest Rate Options.  At any
time any portion of this Note bears interest determined in relation to LIBOR,
it may be continued by Borrower at the end of the Fixed Rate Term, if
applicable thereto, so that all or a portion thereof bears interest determined
in relation to LIBOR and for a new Fixed Rate Term if designated by
Borrower.  At such time as Borrower
requests an advance hereunder or wishes to select a LIBOR option for all or a
portion

 

2

 

of the outstanding principal balance hereof, and at the end of any
Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest
rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) if applicable, the length of the applicable Fixed Rate
Term.  Any such notice may be given by
telephone (or such other electronic method as Bank may permit) so long as, with
respect to a LIBOR selection for a Fixed Rate Term (A) if requested by Bank,
Borrower provides to Bank written confirmation thereof not later than three (3)
Business Days after such notice is given, and (B) such notice is given to Bank
prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time
during any Business Day if Bank, at it’s sole option but without obligation to
do so, accepts Borrower’s notice and quotes a fixed rate to Borrower.  If Borrower does not immediately accept a
fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent
LIBOR request from Borrower for a Fixed Rate Term shall be subject to a
redetermination by Bank of the applicable fixed rate.  If no specific designation of interest is
made at the time any advance is requested hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Daily LIBOR interest selection
for such advance or the principal amount to which such Fixed Rate Term applied.

 

(c)           Taxes
and Regulatory Costs.  Borrower shall
pay to Bank immediately upon demand, in addition to any other amounts due or to
become due hereunder, any and all (i) withholdings, interest equalization taxes,
stamp taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any manner to LIBOR,
and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority and related in any manner to LIBOR to the
extent they are not included in the calculation of LIBOR.  In determining which of the foregoing are
attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

 

(d)           Payment
of Interest.  Interest accrued on
this Note shall be payable on the last day of each month, commencing February
28, 2006.

 

(e)           Default
Interest.  From and after the
maturity date of this Note, or such earlier date as all principal owing
hereunder becomes due and payable by acceleration or otherwise, the outstanding
principal balance of this Note shall bear interest until paid in full at an
increased rate per annum (computed on the basis of a 360-day year, actual
days elapsed) equal to four percent (4%) above the rate of interest from time
to time applicable to this Note.

 

BORROWING AND REPAYMENT:

 

(a)           Borrowing
and Repayment.  Borrower may from
time to time during the term of this Note borrow, 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

 

3

 

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 31, 2008.

 

(b)           Advances.  Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the oral or
written request of (i) David Chidester or Lisiate (Rich) Paongo or Daniel Lee,
any one acting alone, who are authorized to request advances and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (ii) any
person, with respect to advances deposited to the credit of any deposit account
of any Borrower, which advances, when so deposited, shall be conclusively
presumed to have been made to or for the benefit of each Borrower regardless of
the fact that persons other than those authorized to request advances may have
authority to draw against such account. 
The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by any Borrower.

 

(c)           Application
of Payments.  Each payment made on
this Note shall be credited first, to any interest then due and second, to the
outstanding principal balance hereof. 
All payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest determined in
relation to Daily LIBOR, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR for a
Fixed Rate Term, with such payments applied to the oldest Fixed Rate Term
first.

 

PREPAYMENT:

 

(a)           Daily
LIBOR.  Borrower may prepay principal
on any portion of this Note which bears interest determined in relation to
Daily LIBOR at any time, in any amount and without penalty.

 

(b)           LIBOR
for Fixed Rate Term.  Borrower may
prepay principal on any portion of this Note which bears interest determined in
relation to LIBOR for a Fixed Rate Term at any time and in the minimum amount
of Five Hundred Thousand Dollars ($500,000.00); provided however, that if the
outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof.  In consideration of
Bank providing this prepayment option to Borrower, or if any such portion of this
Note shall become due and payable at any time prior to the last day of the
Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall
pay to Bank immediately upon demand a fee which is the sum of the discounted
monthly differences for each month from the month of prepayment through the
month in which such Fixed Rate Term matures, calculated as follows for each
such month:

 

(i)                                     Determine
the amount of interest which would have accrued each month on the amount
prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable thereto.

 

(ii)                                  Subtract
from the amount determined in (i) above the amount of interest which would have
accrued for the same month on the amount prepaid for the remaining term of such
Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made
for such term and in a principal amount equal to the amount prepaid.

 

4

 

(iii)                               If
the result obtained in (ii) for any month is greater than zero, discount that
difference by LIBOR used in (ii) above.

 

Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities.  Borrower, therefore, agrees
to pay the above-described prepayment fee and agrees that said amount
represents a reasonable estimate of the prepayment costs, expenses and/or
liabilities of Bank.  If Borrower fails
to pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum two percent (2.0%)
above the Prime Rate in effect from time to time (computed on the basis of a
360-day year, actual days elapsed). 
Each change in the rate of interest on any such past due prepayment fee
shall become effective on the date each Prime Rate change is announced within
Bank.

 

EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the
terms and conditions of that certain Credit Agreement between Borrower and Bank
dated as of December 22, 2004, as amended from time to time (the “Credit
Agreement”).  Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default”
under this Note.

 

MISCELLANEOUS:

 

(a)           Remedies.  Upon the occurrence of any Event of Default,
the holder of this Note, at the holder’s option, may declare all sums of
principal and interest outstanding hereunder to be immediately due and payable
without presentment, demand, notice of nonperformance, notice of protest,
protest or notice of dishonor, all of which are expressly waived by each
Borrower, and the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate.  Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all allocated costs of the holder’s in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder’s rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.

 

(b)           Obligations
Joint and Several.  Should more than
one person or entity sign this Note as a Borrower, the obligations of each such
Borrower shall be joint and several.

 

(c)           Governing
Law.  This Note shall be governed by
and construed in accordance with the laws of the State of Utah.

 

5

 

IN WITNESS WHEREOF, the undersigned has executed this
Note as of the date first written above.

 

	
  OVERSTOCK.COM, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ David K. Chidester

  	
   

  
	
   

  	
  David K. Chidester,

  
	
   

  	
  Senior Vice President of Finance

  

 

6

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