Overstock.com,Inc. (NASDAQ:OSTK) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
As previously reported, on October 24, 2014, Overstock.com, Inc., a Delaware corporation (“Overstock”), and its wholly owned subsidiary O.Com Land LLC, a Utah limited liability company (“O.Com Land”), entered into a syndicated senior secured credit facility (the “Facility”) with U.S. Bank National Association as Administrative Bank (the “Administrative Bank”), and as Lead Arranger and a Bank, and the other Banks from time to time party thereto (collectively, the “Banks”). The Facility is governed by a Loan Agreement dated as of October 24, 2014 by and between Overstock, O.Com Land, the Administrative Bank and the Banks (the “Loan Agreement”) and collateral and other agreements relating to the Loan Agreement.
The Loan Agreement provided for an aggregate credit amount of $55,760,000, consisting of (i) a senior secured real estate loan of $45,760,000 (the “Real Estate Loan”) to be used to finance the development and construction of a facility in Salt Lake City to serve as our corporate headquarters (the “Project”), and (ii) a $10,000,000 senior secured revolving credit facility for working capital and capital expenditures.
The Real Estate Loan provided financing for the construction of the Project and was designed to convert on or about January 1, 2017, subject to potential extensions, into an approximately 6.75-year term loan due October 1, 2023 (the “Term Loan”).
The conditions to conversion have been satisfied, and the Real Estate Loan converted into the Term Loan effective January 1, 2017. In connection with the conversion, O.Com Land executed and delivered two term notes dated January 1, 2017 representing the Term Loan indebtedness (the “Term Notes”), all as contemplated by the Loan Agreement and as described in the Form 8-K Overstock filed on October 28, 2014, as amended by the Form 8-K/A Overstock filed on December 18, 2014 (together, the “Original Form 8-K”). The form of the Term Notes was filed as an exhibit to the Original Form 8-K, and copies of the executed Term Notes (payable to the order of U.S. Bank National Association and Compass Bank, respectively) are filed herewith. The aggregate principal amount of the Term Notes is $45,760,000. Monthly payments of principal in the aggregate amount of $93,695 plus interest will be due under the Term Notes beginning February 1, 2017 through September 1, 2023, with balloon payments due October 2, 2023 in the aggregate principal amount of $38,264,400 plus all then accrued unpaid interest and any other monetary obligations then due under the Loan Agreement.
Events of Default under the Loan Agreement include, among others, the following (with capitalized terms not otherwise defined herein having the meanings ascribed to them in the Loan Agreement):
1. We default in any payment of principal under the Facility, without any grace period or opportunity to cure, or we default in any payment of interest under the Facility and the default remains uncured for a period of five days after the payment became due;
2. We default in any payment of fees or other amounts payable to Administrative Bank or Banks under the Loan Agreement or under any other Loan Document (as defined in the Loan Agreement) other than as set forth in 1. above, and such default continues unremedied for a period of ten days after notice from Administrative Bank;
3. We default in the performance of any of our obligations under any of the following provisions of the Loan Agreement: Section 5.9 (insurance coverage), Section 5.10 (transferring, conveying or encumbering the Project), Section 5.21 (requirement that we maintain all Project-related accounts with U.S. Bank), Section 5.22 (prohibition of certain payments, loans and other actions by O.Com Land), Section 5.24 (financial covenants), Section 5.25 (compliance with the Patriot Act, anti-terrorism and money laundering laws), Section 5.27 (entering into any lease on the Project except for the lease to Overstock), Section 5.32 (limitation of senior-secured indebtedness consisting of interest-bearing debt for borrowed money or financed assets), Section 5.33 (certain limitations on mergers, consolidations, liquidations or dissolutions applicable to Overstock and its subsidiaries), and Section 5.34 (limitations on sales of certain assets);
4. Except for specified defaults for which we would have a shorter cure period or no cure period at all, and except for defaults described elsewhere in this summary, but subject to potential opportunities to cure certain defaults under certain circumstances, we default in the performance or observance of any agreement, covenant or condition under the Loan Agreement or any other Loan Document, and such default continues unremedied for a period of 30 days after notice from Administrative Bank;
