Overstock.com 2004 Annual Report Download - page 96

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$100,000,000
OVERSTOCK.COM, INC.
3.75% Convertible Senior Notes due 2011
PURCHASE AGREEMENT
November 17, 2004
LEHMAN BROTHERS INC.
As Representative of the Initial Purchasers
c/o LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, NY 10019
Ladies and Gentlemen:
Overstock.com, Inc., a Delaware corporation (the "Company"), proposes, upon the terms and conditions set forth herein, to issue and sell to Lehman
Brothers Inc. and the other initial purchasers identified in Schedule 1 hereto (together, the "Initial Purchasers"), for whom Lehman Brothers Inc. is acting as
representative (the "Representative"), $100,000,000 in aggregate principal amount of its 3.75% Convertible Senior Notes due 2011 (the "Firm Notes"). In
addition, the Company proposes to grant to the Initial Purchasers an option (the "Option") to purchase up to an additional $20,000,000 in aggregate principal
amount of Convertible Senior Notes due 2011 (the "Optional Notes" and, together with the Firm Notes, the "Notes"). The Notes will (i) have terms and
provisions which are summarized in the Offering Memorandum (as defined below) and (ii) be issued pursuant to an indenture (the "Indenture") to be entered
into between the Company and Wells Fargo Bank, National Association, as trustee (the "Trustee"). Pursuant to and as set forth in the Indenture, each $1,000
principal amount of Notes shall be convertible into common stock of the Company, par value $0.0001 (the "Common Stock"), on the terms, and subject to the
conditions, set forth in the Indenture. As used herein, "Conversion Shares" means the shares of Common Stock into which the Notes are convertible.
The Notes will be offered and sold to the Initial Purchasers without registration under the Securities Act of 1933, as amended (the "Act"), in reliance on
an exemption pursuant to Section 4(2) under the Act. The Company has prepared a preliminary offering memorandum, dated November 12, 2004 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated November 17, 2004 (the "Offering Memorandum"), setting forth information
regarding the Company and the Notes. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto and all information incorporated by reference therein. The Company hereby confirms that it has authorized
the use of the Preliminary Offering Memorandum and the Offering Memorandum in connection with the offering and resale of the Notes by the Initial
Purchasers.
You have advised the Company that you will make offers (the "Exempt Resales") of the Notes purchased by you hereunder on the terms set forth in the
Offering Memorandum only to persons you reasonably believe to be qualified institutional buyers as defined in Rule 144A under the Act (each, a "Qualified
Institutional Buyer") in reliance on Rule 144A under the Act. You will offer the Notes initially at a price equal to 100% of the principal amount thereof. You
may change such price at any time without notice.
Holders of the Notes (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Registration Rights
Agreement, dated as of the First Delivery Date (as defined herein), between the Company and the Representative (the "Registration Rights Agreement"),
pursuant to which the Company will agree to file with the Securities and Exchange Commission (the "Commission") one or more shelf registration statements
pursuant to Rule 415 under the Act (each a "Registration Statement") covering the resale of the Notes and the Conversion Shares, and to use its commercially
reasonable efforts to cause the Registration Statement to be declared effective.
This Agreement, the Indenture, the Notes and the Registration Rights Agreement are referred to herein collectively as the "Operative Documents."
1. Representations, Warranties and Agreements of the Company. The Company represents, warrants and agrees that:
(a) Since the date as of which information is given in the Preliminary Offering Memorandum, there has been no material adverse change in the general
affairs, management, financial condition, results of operations, stockholders' equity, cash flow, business or prospects of the Company and its subsidiaries,
taken as a whole, whether or not arising in the ordinary course of business (a "Material Adverse Effect").
(b) When the Notes are issued and delivered pursuant to this Agreement, they will not be deemed to be, for purposes of Rule 144A, of the same class
(within the meaning of Rule 144A under the Act) as securities of the Company that are listed on a national securities exchange registered under Section 6 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that are quoted in a United States automated inter-dealer quotation system.
(c) Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 6 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Notes to the Initial Purchasers and the offer, resale and
delivery of the Notes by the Initial Purchasers in the manner contemplated by this Agreement, the Indenture, the Registration Rights Agreement and the
Offering Memorandum, to register the Notes or the Conversion Shares under the Act or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(d) The Company is an issuer that is subject to filing requirements under Section 13 or 15(d) of the Exchange Act.