Overstock.com 2004 Annual Report Download - page 99

warrants), (ii) incurred any liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock.
(cc) The Company (i) makes and keeps accurate books and records and (ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C) access to its assets is permitted only in accordance with management's authorization and
(D) the reported accountability for its assets is compared with existing assets at reasonable intervals.
(dd) Neither the Company nor any of its subsidiaries (i) is in violation of its charter or by-laws, (ii) is in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject or (iii) is in violation in any material respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the conduct of its business.
(ee) Neither the Company nor any of its subsidiaries, nor any director, officer, agent, employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries, has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(ff) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes,
hazardous wastes or hazardous substances by the Company or any of its subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action which would not have, singularly or in the aggregate with all such violations
and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries or with respect to which the Company or any of its subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect. The terms "hazardous wastes," "toxic wastes," "hazardous
substances" and "medical wastes" shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to
environmental protection.
(gg) Neither the Company nor any subsidiary of the Company is, nor as of the Delivery Date will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
(hh) None of the Company or any of its affiliates (as defined in Rule 501(b) of Regulation D under the Act ("Regulation D")) has, directly or through an
agent (other than the Initial Purchasers, about which no representation is made by the Company), engaged in any form of general solicitation or general
advertising in connection with the offering of the Notes (as those terms are used in Regulation D) under the Act or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; the Company has not entered into any contractual arrangement with respect to the distribution of the Notes
except for this Agreement and the Company will not enter into any such arrangement except for the Registration Rights Agreement.
(ii) Neither the Company nor, to its knowledge, any of its affiliates has taken, directly or indirectly, any action designed to cause or result in, or which
has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company in
connection with the offering of the Notes.
(jj) The statistical and market-related data included in the Offering Memorandum are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects.
2. Purchase, Sale and Delivery of Notes.
(a) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to the Initial
Purchasers, and the Initial Purchasers agree, severally and not jointly, to purchase from the Company, at a purchase price of 97% of the principal amount
thereof (the "purchase price"), the aggregate principal amount of Firm Notes set forth opposite that Initial Purchaser's name in Schedule 1 hereto.
Delivery of and payment for the Firm Notes shall be made at the office of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York
10006, at 10:00 a.m. (New York time) on the fourth full business day following the date of this Agreement, or at such other date or place as shall be
determined by agreement between the Initial Purchasers and the Company (such date and time of delivery and payment for the Firm Notes being herein called
the "First Delivery Date"). Delivery of the Firm Notes shall be made to the Initial Purchasers against payment of the purchase price by the Initial Purchasers.
Payment for the Firm Notes shall be effected either by wire transfer of immediately available funds to an account with a bank in The City of New York, the
account number and the ABA number for such bank to be provided by the Company to the Initial Purchasers at least two business days in advance of the First
Delivery Date, or by such other manner of payment as may be agreed by the Company and the Initial Purchasers.
(b) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company hereby grants the Option to
the Initial Purchasers to purchase the Optional Notes at the same price as the Initial Purchasers shall pay for the Firm Notes. The Option may be exercised at
the sole discretion of the Initial Purchasers. The Option may be exercised once in whole or in part at any time not more than 30 days subsequent to the date of
this Agreement upon notice in writing or by facsimile by the Representative to the Company setting forth the amount (which shall be an integral multiple of