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Wednesday, June 29, 2011 California Affiliate Termination Notice

June 29, 2011

Dear California Affiliate:

We regret to inform you that due to the impending passage of the 2011-2012 California State Budget which includes various affiliate nexus provisions, we must sever all relationships with our California Affiliates, effective today, June 29, 2011. We will rescind this termination if the Governor vetoes the 2011-2012 California State Budget.

Portions of the 2011-2012 California State Budget contain unconstitutional language which attempts to force out-of-state retailers to collect and remit sales tax on California sales because of the retailer's use of California-based affiliate advertising services. Rather than undergo the substantial burden of these unconstitutional obligations in states that have such laws, we have instead made the business decision to terminate affiliate advertising services in those states, now including the state of California. Any money due you based on your advertising services prior to termination will be paid in the normal course of business through June 29, 2011.

Overstock regrets that it has been put in this position, and we regret any adverse impact you may experience owing to enactment of this law.


Jonathan E. Johnson III
President, Inc.

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