Overstock.com 2015 Annual Report Download - page 108

lending banks and must be in compliance with the covenants under the Loan Agreement; the Real Estate Loan must be brought “in balance” as defined in the
Loan Agreement, which may require us to contribute additional cash to the Project; we must have paid the final amount of our cash contribution as required
by the Loan Agreement; and if required by the Administrative Bank, an updated appraisal must show that the Project is in compliance with an 80% loan to
value ratio requirement. If the conditions to conversion are not satisfied in early 2017, all amounts outstanding under the Facility will become immediately
due and payable.
Amounts outstanding under the Real Estate Loan and the Term Loan carry an interest rate based on one-month LIBOR plus 2.00% or an Alternate
Base Rate plus 1.00%. However, we have entered into interest rate swap agreements designed to fix our interest rate on the Real Estate Loan and the Term
Loan at approximately 4.6% annually (see  in Note 2. Accounting Policies). Monthly payments of interest only will be due
and payable on the Real Estate Loan prior to conversion. Following conversion, we are required to make monthly payments of principal estimated to be $1.1
million annually plus interest, with a balloon payment of all unpaid principal (estimated to be $38.0 million) and interest on October 1, 2023. Amounts
outstanding under the Revolving Loan will carry an interest rate based on LIBOR plus 2.00% or an Alternate Base Rate plus 1.00%.
We are required to maintain compliance as of the end of each calendar quarter beginning with the quarter ending December 31, 2014 with the
following financial covenants:
• a fixed charge coverage ratio on a trailing 12-month basis of no less than 1.15 to 1.00;
• a cash flow leverage ratio on a trailing 12-month basis not greater than 3.00 to 1.00 during the Construction Phase (as defined in the Loan
Agreement);
• a cash flow leverage ratio not greater than 2.50 to 1.00 following the Construction Phase, and
• minimum liquidity of at least $50.0 million.
At December 31, 2015 we were in compliance with the financial covenants. In addition to the financial covenants described above, we are required
to comply with a number of covenants relating to the Project and our business, including covenants limiting certain indebtedness. Notwithstanding, the Loan
Agreement permits us to incur up to $20 million of additional senior-secured indebtedness for equipment financing (as described under 
below), and other senior-secured indebtedness provided that the aggregate principal amount of such other senior-secured indebtedness does
not exceed ten percent of our consolidated assets. The Loan Agreement includes customary events of default in addition to events of default relating
specifically to the Project. The Real Estate Loan and the Revolving Loan are cross-defaulted and cross-collateralized. In the event of a default, the default
rate of interest would be 2.00% above the otherwise applicable rate.
Unless it terminates earlier or is extended with the consent of the Administrative Bank and all of the Banks, the Revolving Loan facility will
terminate on October 24, 2017.
As of December 31, 2015 we had borrowed $9.5 million under the Real Estate Loan. We have not borrowed any amounts under the Revolving Loan.
Our liability under the Real Estate Loan approximates fair value.
Future principal payments on the Facility as of December 31, 2015, are as follows (in thousands):


2016
$ —
2017
1,145
2018
1,145
2019
1,145
2020
1,145
Thereafter
4,908
$ 9,488

In November 2015, we entered into a Master Lease Agreement and a Financial Covenants Rider (collectively, the “Master Lease Agreement”) with
U.S. Bank Equipment Finance, a division of U.S. Bank National Association (“Lessor”). Also in November 2015, we entered into a Schedule to the Master
Lease Agreement (the “Schedule”). Under the Master Lease
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