EXHIBIT 10.06

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

(this "Agreement") is made and entered into effective as of January 1, 2001 (the
"Effective Date") by and among ONSALE, Inc., a Delaware corporation ("Lender"),
and Jeff Sheahan and Theresa Sheahan (together, "Borrower"). This Agreement and
the Note (defined in Section 1.2) and any other documents entered into pursuant
to this Agreement or in connection with the Loan (defined in Section 1.1) are
hereinafter sometimes collectively referred to as the "Loan Documents."

WHEREAS

, Lender and Borrower are parties to that certain Loan and Security Agreement
dated as of November 23, 1998 (the "Prior Agreement"), that certain Secured
Promissory Note dated November 23, 1998 in the aggregate principal amount of
$250,000.00 (the "Prior Note"), and that certain Stock Pledge Agreement dated as
of November 23, 1998 (the "Stock Pledge Agreement"); and

WHEREAS

, Lender and Borrower desire (i) to amend and restate the Prior Agreement and
the Prior Note and (ii) to terminate the Second Deed of Trust (as defined below)
and the Stock Pledge Agreement as set forth in this Agreement.

NOW, THEREFORE

, in consideration of the foregoing recitals and for other consideration, the
adequacy and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

1. AMOUNT AND TERMS OF LOAN.

1.1 Loan.

On November 23, 1998, Lender loaned Borrower the principal amount of Two Hundred
Fifty Thousand Dollars ($250,000.00) (the "Loan") for the purchase of the
property located at APN 215-260-004, commonly known as 127 Alta Vista Way,
Danville, California 94506 (the "Property").

1.2 Note.

Borrower's indebtedness to Lender with respect to the Loan is evidenced by the
Prior Note. Lender and Borrower agree to amend and restate the Prior Note and,
subject to the terms and conditions of this Agreement and from and after the
Effective Date, the Loan will be evidenced by a Full Recourse Promissory Note
executed by Borrower substantially in the form attached as Exhibit A (the
"Note").

1.3 Security

. Borrower's indebtedness to Lender under the Loan Documents will not be secured
by a second deed of trust (the "Second Deed of Trust") on the Property and will
not be secured by Borrower's pledge of certain equity securities of Lender
pursuant to the terms and conditions of the Stock Pledge Agreement. Each of
Lender and Borrower agree that the Second Deed of Trust and the Stock Pledge
Agreement shall be terminated as of the Effective Date.

1.4 Maturity of Loan.

Subject to Section 1.5 below, the outstanding principal and accrued interest due
under the Loan, together with any other related fees, expenses or costs, will be
immediately due and payable in full to Lender on the date (the "Maturity Date")
that is the earlier to occur of (i) November 23, 2003 and (ii) the date on which
the outstanding principal and accrued interest of the Loan becomes due and
payable in full under Section 2 below.

1.5 Loan Forgiveness.

The outstanding principal and accrued interest due under the Loan will be
forgiven as follows: (i) one-third of the outstanding principal and accrued
interest due as of January 1, 2001 will be forgiven by Lender on such date; (ii)
one-half of the outstanding principal and accrued interest due as of January 1,
2002 will be forgiven by Lender on such date, provided that Mr. Sheahan has been
continuously employed by Lender from January 2, 2001 to January 1, 2002; and
(iii) all outstanding principal and accrued interest remaining due as of January
1, 2003 will be forgiven by Lender on such date, provided that Mr. Sheahan has
been continuously employed by Lender from January 2, 2002 to January 1, 2003;
provided, however, that if Lender terminates Mr. Sheahan's employment without
cause, or constructively discharges Mr. Sheahan without cause, Lender will
forgive the remaining balance of outstanding principal and accrued interest due
under the Loan and will provide Mr. Sheahan with a cash payment to cover the
federal and state income tax due with respect to the forgiveness of the Loan but
Mr. Sheahan shall be liable and responsible for any taxes due with respect to
such cash payment by Lender.

1.6 At Will Employment.

Borrower is an "at will" employee of Lender, and nothing in this Agreement or
any exhibit shall be construed as a promise of continued employment.

2. DEFAULT BY BORROWER.

2.1 Default.

Borrower will be deemed to be in default under the Loan upon the occurrence of
any of the following events (each an "Event of Default"): (i) Borrower's failure
to make any payment when due under the Loan, which failure shall continue for a
period of five (5) days after such due date; (ii) the termination of Mr.
Sheahan's employment with Lender; (iii) the failure of any representation or
warranty in the Loan Documents to have been true, the failure of Borrower to
perform any obligation under the Loan Documents, or upon any other material
breach by Borrower of the Loan Documents; (iv) the filing regarding Borrower of
any voluntary or involuntary petition for relief under the United States
Bankruptcy Code or the initiation of any proceeding under federal law or law of
any other jurisdiction for the general relief of debtors; or (v) the execution
by Borrower of an assignment for the benefit of creditors or the appointment of
a receiver, custodian, trustee or similar party to take possession of Borrower's
assets or property.

2.2 Acceleration; Remedies Upon Default.

Upon the occurrence of any Event of Default, at the option of Lender, all
outstanding principal, accrued interest and other amounts due under the Loan
shall become immediately due and payable without notice or demand on the part of
Lender, and Lender will have, in addition to its rights and remedies under the
Loan Documents, full recourse against any real, personal, tangible or intangible
assets of Borrower, and may pursue any legal or equitable remedies that are
available to it; provided, however, that upon the termination of Mr. Sheahan's
employment with Lender for cause or for Mr. Sheahan's negligence, the
outstanding principal, accrued interest and other amounts due under the Loan
will become due and payable in full to Lender on the six (6) month anniversary
of the date of such termination by Lender, and Borrower must use fifty percent
(50%) of all proceeds from any sale by Borrower of the equity securities of
Lender, which Borrower acquires pursuant to Borrower's exercise of options to
purchase equity securities of Lender under Lender's 1995 Equity Incentive Plan
or any subsequent or similar stock option plan of Lender, or any employee stock
purchase agreement or other similar plan of Lender (collectively, the "Shares"),
to pay such amounts due under the Loan. The rights and remedies of Lender herein
provided will be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise; and provided, however, that if Mr. Sheahan
terminates his employment with Lender voluntarily, the outstanding principal,
accrued interest and other amounts due under the Loan will become due and
payable in full to Lender on the second anniversary of the date that Mr. Sheahan
voluntarily terminates his employment.

3. MISCELLANEOUS.

3.1 Entire Agreement.

The Loan Documents constitute the entire agreement and understanding among the
parties with respect to the subject matter thereof and supersedes any prior
understandings or agreements of the parties with respect to such subject matter.

3.2 Successors and Assigns.

The terms and conditions of this Agreement will inure to the benefit of and be
binding upon the respective successors and assigns of the parties, including any
subsequent holders of the Note; provided, however, that Borrower may not assign
or delegate any of its rights or obligations hereunder or under any other Loan
Document or any interest herein or therein without Lender's prior written
consent.

3.3 Modification; Waiver.

This Agreement may be modified or amended only by a writing signed by both
parties hereto. No delay or failure on the part of either party in exercising
any right or remedy under this Agreement or any other Loan Document will operate
as a waiver of such right or any other right. A waiver given on one occasion
will not be construed as a bar to, or as a waiver of, any right or remedy on any
future occasion.

3.4 Severability.

The invalidity or unenforceability of any term or provision of this Agreement
will not affect the validity or enforceability of any other term or provision.

3.5 Governing Law.

This Agreement will be governed by and construed in accordance with the internal
laws of the State of California, as applied to agreements entered into solely
between residents of and to be performed entirely in the State of California,
without reference to that body of law relating to conflicts of law or choice of
law.

3.6 Arbitration. Any dispute arising from or relating to this Agreement will be
submitted to mandatory, final and binding arbitration in Santa Clara County,
California, and, except as herein specifically stated, in accordance with the
provisions of the Streamlined Arbitration Rules and Procedures of
J.A.M.S./ENDISPUTE or its successor ("J.A.M.S.") then in effect. However, in all
events, these arbitration provisions will govern over any conflicting rules that
may now or hereafter be contained in the Streamlined Arbitration Rules and
Procedures of J.A.M.S. The parties covenant that they will participate in the
arbitration in good faith. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator will have the authority to grant any equitable
and legal remedies that would be available in any judicial proceeding instituted
to resolve any dispute arising from or relating to this Agreement.

3.7 Counterparts.

This Agreement may be executed in one or two counterparts, each of which will be
deemed an original, but together will constitute one and the same instrument.

3.8 Further Assurances.

Each of Borrower and Lender will execute and deliver such instruments, documents
or other writings as Borrower or Lender, as the case may be, may reasonably
require in order to confirm and carry out and to effectuate fully the intent and
the purposes of this Agreement or any of the other Loan Documents.

3.9 Prior Agreement and Prior Note Superseded.

The undersigned parties who are parties to the Prior Agreement and the Prior
Note hereby amend and restate the Prior Agreement and the Prior Note to read in
its entirety as set forth in this Agreement and the Note, all with the intent
and effect that the Prior Agreement and the Prior Note shall hereby be cancelled
and entirely replaced and superseded by this Agreement and the Note.

IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the Effective Date.

BORROWER:

LENDER:

ONSALE, INC.

 

/s/ Jeff Sheahan

/s/ John F. Labbett

Jeff Sheahan John Labbett

Executive Vice President and

Chief Financial Officer

/s/ Theresa Sheahan

Theresa Sheahan

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Attachment

:

Exhibit A - Full Recourse Promissory Note

 

Full Recourse Promissory Note

Palo Alto, California

 

$250,000.00 November 23, 1998

This Full Recourse Promissory Note (this "Note") is issued under, and entitled
to the benefits of, that certain Amended and Restated Loan and Security
Agreement (the "Agreement") dated as of January 1, 2001, by and among the
undersigned ("Borrower") and ONSALE, Inc., a Delaware corporation (the
"Company"), and entirely replaces and supersedes that certain Secured Promissory
Note dated November 23, 1998 in the aggregate principal amount of $250,000.00 in
the favor of the Company (the "Prior Note"), which was cancelled pursuant to the
Agreement. Unless otherwise indicated in this Note, all capitalized terms used
herein have the meanings assigned to them in the Agreement.

1. Obligation.

For value received, Borrower hereby promises to pay, subject to the terms and
conditions of Section 1.5 of the Agreement, to the order of the Company on or
before November 23, 2003, at the Company's principal place of business located
at 1350 Willow Road, #202, Menlo Park, California 94025, or at such other place
as the Company may direct, the principal sum of Two Hundred Fifty Thousand
Dollars ($250,000.00) together with interest compounded semi-annually on the
unpaid principal at the rate of four and forty-six hundredths percent (4.46%),
which rate is the minimum rate established pursuant to Section 1274(d) of the
Internal Revenue Code of 1986, as amended, at the time the Prior Note was issued
by Borrower; provided, however, that the rate at which interest will accrue on
unpaid principal under this Note will not exceed the highest rate permitted by
applicable law. Interest will continue to accrue until the date on which all
amounts owing under this Note have been repaid in full. All payments hereunder
shall be made in lawful tender of the United States.

2. Default.

Borrower will be deemed to be in default under this Note upon the occurrence of
any of the following events (each an "Event of Default"): (i) Borrower's failure
to make any payment when due under this Note, which failure shall continue for a
period of five (5) days after such due date; (ii) the termination of Mr.
Sheahan's employment with the Company; (iii) the failure of any representation
or warranty in the Loan Documents to have been true, the failure of Borrower to
perform any obligation under the Loan Documents, or upon any other material
breach by Borrower of the Loan Documents; (iv) the filing regarding Borrower of
any voluntary or involuntary petition for relief under the United States
Bankruptcy Code or the initiation of any proceeding under federal law or law of
any other jurisdiction for the general relief of debtors; or (v) the execution
by Borrower of an assignment for the benefit of creditors or the appointment of
a receiver, custodian, trustee or similar party to take possession of Borrower's
assets or property.

3. Acceleration; Remedies On Default.

Upon the occurrence of any Event of Default, at the option of the Company, all
outstanding principal, accrued interest and other amounts due under this Note
shall become immediately due and payable without notice or demand on the part of
the Company, and the Company will have, in addition to its rights and remedies
under the Loan Documents, full recourse against any real, personal, tangible or
intangible assets of Borrower, and may pursue any legal or equitable remedies
that are available to it; provided, however, that upon the termination of Mr.
Sheahan's employment with the Company for cause or for Mr. Sheahan's negligence,
all outstanding principal, accrued interest and other amounts due under this
Note shall become due and payable in full to Lender on the six (6) month
anniversary of the date of such termination by the Company, and Borrower must
use fifty percent (50%) of all proceeds from any sale by Borrower of the Shares
to pay such amounts due under this Note. The rights and remedies of Lender
herein provided will be cumulative and not exclusive of any other rights or
remedies provided by law or otherwise; and provided, however, that if Mr.
Sheahan terminates his employment with the Company voluntarily, the outstanding
principal, accrued interest and other amounts due under this Note will become
due and payable in full to the Company on the second anniversary of the date
that Mr. Sheahan voluntarily terminates his employment.

4. Prepayment.

Borrower may prepay the outstanding principal and accrued interest due under the
Loan at any time, without penalty, in whole or in part in amounts of at least
Ten Thousand Dollars ($10,000.00). Unless otherwise agreed in writing by the
Company, each payment will be applied to the extent of available funds from such
payment in the following order:  (i) first to the accrued and unpaid costs and
expenses under the Loan Documents, (ii) then to accrued but unpaid interest, and
(iii) lastly to the outstanding principal.

5. Assignment.

This Note is freely transferable and assignable by the Company and each
subsequent holder, provided that such transfer is made in compliance with all
applicable state and federal securities laws. Any reference to the Company
herein will be deemed to refer to any subsequent transferee of this Note at such
time as such transferee holds this Note. Borrower may not assign or delegate
this Note, whether by voluntary assignment or transfer, operation of law or
otherwise.

6. Governing Law; Waiver.

The validity, construction and performance of this Note will be governed by the
internal laws of the State of California, excluding that body of law pertaining
to conflicts of law. Borrower hereby waives presentment, notice of non-payment,
notice of dishonor, protest, demand and diligence.

7. Attorneys' Fees.

If suit is brought for collection of this Note, Borrower agrees to pay all
reasonable expenses, including attorneys' fees, incurred by the holder in
connection therewith whether or not such suit is prosecuted to judgment.

IN WITNESS WHEREOF

, Borrower has executed this Note as of the date and year first above written.

 

BORROWER:

/s/ Jeff Sheahan

Jeff Sheahan

/s/ Theresa Sheahan

Theresa Sheahan

 

Accepted and Acknowledged:

THE COMPANY

ONSALE, INC.

/s/ John Labbett

John Labbett

Executive Vice President and

Chief Financial Officer

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