Overstock.com 2009 Annual Report Download - page 79

Table of Contents
Borrowings and outstanding letters of credit under the Credit Agreement are required to be completely collateralized by cash balances held at Wells
Fargo Bank, N.A, and therefore the facility does not provide additional liquidity to us.
On December 23, 2009, we terminated our credit facility with Wells Fargo Bank, National Association, subject to provisions relating to outstanding
letters of credit issued by Wells Fargo for our account and other transitional provisions. On December 31, 2009, per the provisions relating to the outstanding
letters of credit, the letters of credit issued by Wells Fargo expired on December 31, 2009, and were replaced by $2.6 million of letters of credit issued by U.S.
Bank National Association ("U.S. Bank") on behalf of the Company.
Wells Fargo Retail Finance Agreement. On January 6, 2009 we entered into an Amended and Restated Loan and Security Agreement dated January 6,
2009 (the "WFRF Agreement") with Wells Fargo Retail Finance, LLC ("WFRF"). The WFRF Agreement replaced our Loan and Security Agreement dated
December 12, 2005 with WFRF, which had previously been amended and had terminated in accordance with its terms.
On August 3, 2009, we terminated the WFRF Agreement.
Wells Fargo Commercial Purchasing Card Agreement. We had a commercial purchasing card agreement (the "Purchasing Card") with Wells Fargo
Bank, National Association ("Wells Fargo") that expired on January 1, 2010. We used the Purchasing Card for business purpose purchasing and must pay it in
full each month. We are required to maintain a cash balance of $1.4 million at Wells Fargo Bank, N.A. as collateral for the Purchasing Card, and these
amounts are included in Restricted cash in the accompanying consolidated balance sheets, and therefore the facility does not provide additional liquidity to us.
At December 31, 2008 and 2009, $436,000 and $1.0 million, respectively, was outstanding. No further amounts were available to the Purchasing Card as of
December 31, 2009.
U.S. Bank Financing Agreement. On December 23, 2009 we entered into (i) a Financing Agreement dated December 22, 2009 (the "Financing
Agreement") with U.S. Bank National Association ("U.S. Bank"), and (ii) a Security Agreement dated December 22, 2009 with U.S. Bank (the "Security
Agreement") and related agreements described in the Financing Agreement and/or Security Agreement.
The Financing Agreement provides for revolving loans and other financial accommodations to or for the benefit of the Company of (i) up to $10 million
for cash-collateralized advances, and (ii) up to $10 million for advances supported by the Company's non-cash collateral. The maximum credit potentially
available under the revolving facility is $20 million. Our obligations under the Financing Agreement and all related agreements are secured by all or
substantially all of our assets, excluding our interest in certain litigation. Subject to certain exceptions, the full amount of the revolving facility is expected to
be available to us as long as $20 million is maintained on deposit with U.S. Bank. The obligation of U.S. Bank to make advances under the Financing
Agreement is subject to the conditions set forth in the Financing Agreement.
Our failure to keep at least $20 million on deposit in certain accounts with U.S. Bank would constitute a "triggering event" under the Financing
Agreement. If a triggering event occurs, we would become subject to financial covenants (i) limiting our capital expenditures to $20 million annually, and
(ii) requiring us to maintain a fixed charges coverage ratio of at least 1.10 to 1.00 as of the end of any fiscal quarter for the period of the prior four quarters.
The occurrence of a triggering event could also result in a decrease in the amount available to us under the non cash-collateralized portion of the facility, as
availability would then depend, in part, on the Borrowing Base (as defined in the Financing Agreement). The Financing Agreement and the credit facility
terminate on October 2, 2011. As of December 31, 2010, we had $20.0 million in compensating cash balances held at U.S. Bank.
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