Overstock.com 2009 Annual Report Download - page 80

Table of Contents
Subject to certain interest rate floors and other exceptions, advances under the Financing Agreement bear interest at either (a) Libor plus 1% for cash-
collateralized financing, including letters of credit, or (b) Libor plus 2.5% for non cash- collateralized advances. The default rate of interest is 2.0% per annum
over the otherwise applicable interest rate. An unused line fee of 0.375% is payable annually on the unused portion of the $10 million portion of the facility
available for non cash-collateralized advances.
The Financing Agreement includes affirmative covenants as well as negative covenants that prohibit a variety of actions without the approval of U.S.
Bank, including, without limitation, covenants that (subject to certain exceptions) limit our ability to (a) incur or guarantee debt or enter into indemnity
agreements, (b) create or permit liens, (c) enter into any merger or consolidation or purchase or otherwise acquire all or substantially all of the assets of
another person or the assets comprising any line of business or business unit of another person, (d) except for permitted acquisitions, purchase the securities
of, create, invest in, or form any subsidiary or other entity, (e) make loans or advances, (f) purchase, acquire or redeem shares of our capital stock or other
securities, (g) change our capital structure or issue any new class of capital stock, (h) change our business objectives, purposes or operations in a manner
which could reasonably be expected to have a material adverse effect, (i) change our fiscal year, (j) enter into transactions with affiliates, (k) sell assets except
for the sale of inventory in the ordinary course of business, (l) make payments except regularly scheduled interest payments on our convertible debt or, after
the occurrence of a triggering event, repurchase, redeem, defease, or acquire our convertible debt, (m) permit judgments to be rendered against us in excess of
certain limits or having specified effects, depending in part on whether a triggering event has occurred or would occur, (n) take certain actions regarding our
receivables, and (o) take certain actions regarding our inventory.
With certain exceptions, a termination fee of up to 1.0% of the non cash-collateralized portion of the facility is payable by us if we terminate the facility
prior to its stated termination date.
At December 31, 2009, no amounts were outstanding under the Financing Agreement, and letters of credit totaling $2.6 million were issued on our behalf
and collateralized by cash balances held at U.S. Bank, which are included in Restricted cash in the accompanying consolidated balance sheets.
U.S. Bank Purchasing Card Agreement. We have a commercial purchasing card agreement (the "Purchasing Card") with U.S. Bank National
Association ("U.S. Bank"). We use the Purchasing Card for business purpose purchasing and must pay it in full each month. At December 31, 2009, $0 was
outstanding and $5.0 million was available under the Purchasing Card.
Long-term debt arrangements and interest. In November 2004, we completed an offering of $120.0 million of 3.75% Convertible Senior Notes (the
"Senior Notes"). Proceeds to us were $116.2 million, net of $3.8 million of initial purchaser's discount and debt issuance costs. The discount and debt issuance
costs are being amortized using the straight-line method which approximates the interest method. We recorded amortization of discount and debt issuance
costs related to this offering totaling $344,000, $334,000 and $331,000 during the years ended December 31, 2007, 2008 and 2009, respectively. Interest on
the Senior Notes is payable semi-annually on June 1 and December 1 of each year. The Senior Notes mature on December 1, 2011 and are unsecured and rank
equally in right of payment with all existing and future unsecured, unsubordinated debt and senior in right of payment to any existing and future subordinated
indebtedness.
The Senior Notes are convertible at any time prior to maturity into our common stock at the option of the note holders at a conversion price of $76.23 per
share or approximately 787,000 shares in aggregate (subject to adjustment in certain events, including stock splits, dividends and other distributions and
certain repurchases of our stock, as well as certain fundamental changes in the ownership of us). Beginning December 1, 2009, we have the right to redeem
the Senior Notes, in whole or in part, for cash at 100% of the principal amount plus accrued and unpaid interest. Upon the
77