Overstock.com 8-K 2005
Washington, D.C. 20549
to Section 13 or 15(d) of
December 12, 2005
Date of Report (date of earliest event reported)
(Exact name of Registrant as specified in its charter)
6350 South 3000 East
Salt Lake City, Utah 84121
(Address of principal executive offices)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On December 12, 2005 Overstock.com, Inc. (the Company) entered into a Loan and Security Agreement (the Agreement) with Wells Fargo Retail Finance, LLC and related security agreements and other agreements described in the Agreement.
The Agreement provides for advances to the Company and for the issuance of letters of credit for its account of up to an aggregate maximum of $40 million. The Company has the right to increase the aggregate maximum amount available under the facility to up to $50 million during the first two years of the facility. The amount actually available to the Company may be less and may vary from time to time, depending on, among other factors, the amount of its eligible inventory. The Companys obligations under the Agreement and all related agreements are secured by all or substantially all of the Companys and its subsidiaries assets. The Companys obligations under the Agreement are cross-collateralized with its obligations under its $30 million credit facility with Wells Fargo Bank, National Association. The term of the Agreement is three years, expiring on December 12, 2008. The Agreement contains standard default provisions.
Advances under the Agreement bear interest at either (a) the rate announced, from time to time, within Wells Fargo Bank, National Association at its principal office in San Fransisco as its prime rateor (b) a rate based on LIBOR plus a varying percentage between 1.25% and 1.75%; however, the annual interest rate on advances under the Agreement will be at least 3.50%. The Agreement includes affirmative covenants as well as negative covenants that prohibit a variety of actions without the lenders approval, including covenants that limit the Companys ability to (a) incur or guarantee debt, (b) create liens, (c) enter into any merger, recapitalization or similar transaction or purchase all or substantially all of the assets or stock of another person, (d) sell assets, (e) change its name or the name of any of its subsidiaries, (f) make certain changes to its business, (g) optionally prepay, acquire or refinance indebtedness, (h) consign inventory, (i) pay dividends on, or purchase, acquire or redeem shares of, its capital stock, (j) change its method of accounting, (k) make investments, (l) enter into transactions with affiliates, or (m) store any of its inventory or equipment with third parties.
Wells Fargo Retail Finance, LLC is an affiliate of Wells Fargo Bank, National Association. The Company has a $30 million credit facility with Wells Fargo Bank, National Association, which it uses for seasonal borrowings and to procure letters of credit from time to time. Wells Fargo Bank, National Association or its affiliates also provide other commercial services to the Company, such as trustee services on the Companys 3.75% Senior Convertible Notes. Certain of the Companys officers and directors also have banking and other commercial relationships with Wells Fargo Bank, National Association or its affiliates.
The Loan and Security Agreement and the related Revolving Credit Note are filed as Exhibits 10.1 and 10.2 respectively, to this Current Report on Form 8-K, and reference is hereby made to such documents for a more complete description of the terms of the facility.
The information contained in Item 1.01 is incorporated herein by reference.
Certain statements contained in this Form 8-K include statements that are forward-looking statements. There are risks that the Company faces that could cause actual results to be materially different from those that may be set forth in forward-looking statements made by the Company. There also may be additional risks that the Company does not presently know or that it currently believes are immaterial which could also impair its business and results of operations. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additional information regarding factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 and in the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.