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 ofJanuary 1, 2001 (the "***Effective Date*") by and among ONSALE, Inc.,a Delaware corporation ("***Lender*"), and Jeff Sheahan and TheresaSheahan (together, "***Borrower*"). This Agreement and the Note(defined in Section 1.2) and any other documents entered into pursuant to thisAgreement or in connection with the Loan (defined in Section 1.1) arehereinafter sometimes collectively referred to as the "***LoanDocuments*."**WHEREAS, Lender and Borrower are parties to thatcertain Loan and Security Agreement dated as of November 23, 1998 (the"***Prior Agreement*"), that certain Secured Promissory Note datedNovember 23, 1998 in the aggregate principal amount of $250,000.00 (the"***Prior Note*"), and that certain Stock Pledge Agreement dated as ofNovember 23, 1998 (the "***Stock Pledge Agreement*"); and**WHEREAS, Lender and Borrower desire (i) to amend andrestate the Prior Agreement and the Prior Note and (ii) to terminate the SecondDeed of Trust (as defined below) and the Stock Pledge Agreement as set forth inthis Agreement.
**NOW, THEREFORE, in consideration of the foregoingrecitals and for other consideration, the adequacy and sufficiency of which ishereby acknowledged, the parties hereto agree as follows:
**1.	AMOUNT AND TERMS OF LOAN.

1.1	Loan. On November 23, 1998, Lender loanedBorrower the principal amount of Two Hundred Fifty Thousand Dollars($250,000.00) (the "***Loan*") for the purchase of the propertylocated at APN 215-260-004, commonly known as 127 Alta Vista Way, Danville,California 94506 (the "***Property*").**	1.2	Note. Borrower's indebtedness toLender with respect to the Loan is evidenced by the Prior Note. Lender andBorrower agree to amend and restate the Prior Note and, subject to the terms andconditions of this Agreement and from and after the Effective Date, the Loanwill be evidenced by a Full Recourse Promissory Note executed by Borrowersubstantially in the form attached as Exhibit A (the"***Note*").**1.3	Security. Borrower's indebtedness toLender 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 besecured by Borrower's pledge of certain equity securities of Lender pursuant tothe terms and conditions of the Stock Pledge Agreement. Each of Lender andBorrower agree that the Second Deed of Trust and the Stock Pledge Agreementshall be terminated as of the Effective Date. **1.4	Maturity of Loan. Subject to Section 1.5below, the outstanding principal and accrued interest due under the Loan,together with any other related fees, expenses or costs, will be immediately dueand 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 whichthe outstanding principal and accrued interest of the Loan becomes due andpayable in full under Section 2 below.**1.5	Loan Forgiveness. The outstandingprincipal and accrued interest due under the Loan will be forgiven as follows:(i) one-third of the outstanding principal and accrued interest due as ofJanuary 1, 2001 will be forgiven by Lender on such date; (ii) one-half of theoutstanding principal and accrued interest due as of January 1, 2002 will beforgiven by Lender on such date, provided that Mr. Sheahan has been continuouslyemployed by Lender from January 2, 2001 to January 1, 2002; and (iii) alloutstanding principal and accrued interest remaining due as of January 1, 2003will be forgiven by Lender on such date, provided that Mr. Sheahan has beencontinuously employed by Lender from January 2, 2002 to January 1, 2003;provided, however, that if Lender terminates Mr. Sheahan'semployment without cause, or constructively discharges Mr. Sheahan withoutcause, Lender will forgive the remaining balance of outstanding principal andaccrued interest due under the Loan and will provide Mr. Sheahan with a cashpayment to cover the federal and state income tax due with respect to theforgiveness of the Loan but Mr. Sheahan shall be liable and responsible for anytaxes due with respect to such cash payment by Lender.
**1.6	At Will Employment. Borrower is an "atwill" employee of Lender, and nothing in this Agreement or any exhibit shall beconstrued as a promise of continued employment.
**2.	DEFAULT BY BORROWER.
**2.1	Default. Borrower will be deemed to bein default under the Loan upon the occurrence of any of the following events(each an "***Event of Default*"): (i) Borrower's failure to make anypayment when due under the Loan,****which failure shall continue for aperiod of five (5) days after such due date; (ii) the termination of Mr.Sheahan's employment with Lender;****(iii) the failure of any representationor warranty in the Loan Documents to have been true, the failure of Borrower toperform any obligation under the Loan Documents, or upon any other materialbreach by Borrower of the Loan Documents; (iv) the filing regarding Borrower ofany voluntary or involuntary petition for relief under the United StatesBankruptcy Code or the initiation of any proceeding under federal law or law ofany other jurisdiction for the general relief of debtors; or (v) the executionby Borrower of an assignment for the benefit of creditors or the appointment ofa receiver, custodian, trustee or similar party to take possession of Borrower'sassets or property.**2.2	Acceleration; Remedies Upon Default.Upon the occurrence of any Event of Default, at the option of Lender, alloutstanding principal, accrued interest and other amounts due under the Loanshall become immediately due and payable without notice or demand on the part ofLender, and Lender will have, in addition to its rights and remedies under theLoan Documents, full recourse against any real, personal, tangible or intangibleassets of Borrower, and may pursue any legal or equitable remedies that areavailable to it; provided, however, that upon the termination ofMr. Sheahan's employment with Lender for cause or for Mr. Sheahan's negligence,the outstanding principal, accrued interest and other amounts due under the Loanwill become due and payable in full to Lender on the six (6) month anniversaryof 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 ofLender, which Borrower acquires pursuant to Borrower's exercise of options topurchase equity securities of Lender under Lender's 1995 Equity Incentive Planor any subsequent or similar stock option plan of Lender, or any employee stockpurchase agreement or other similar plan of Lender (collectively, the"***Shares*"), to pay such amounts due under the Loan. The rights andremedies of Lender herein provided will be cumulative and not exclusive of anyother rights or remedies provided by law or otherwise; and provided,however, that if Mr. Sheahan terminates his employment with Lendervoluntarily, the outstanding principal, accrued interest and other amounts dueunder the Loan will become due and payable in full to Lender on the secondanniversary of the date that Mr. Sheahan voluntarily terminates his employment.**3.	MISCELLANEOUS.

3.1	Entire Agreement. The Loan Documentsconstitute the entire agreement and understanding among the parties with respectto the subject matter thereof and supersedes any prior understandings oragreements of the parties with respect to such subject matter.
**3.2	Successors and Assigns. Theterms and conditions of this Agreement will inure to the benefit of and bebinding upon the respective successors and assigns of the parties, including anysubsequent holders of the Note; provided, however, that Borrowermay not assign or delegate any of its rights or obligations hereunder or underany other Loan Document or any interest herein or therein without Lender's priorwritten consent.
**3.3	Modification; Waiver. This Agreement maybe modified or amended only by a writing signed by both parties hereto. No delayor failure on the part of either party in exercising any right or remedy underthis Agreement or any other Loan Document will operate as a waiver of such rightor any other right. A waiver given on one occasion will not be construed as abar to, or as a waiver of, any right or remedy on any future occasion.
**3.4	Severability. The invalidity orunenforceability of any term or provision of this Agreement will not affect thevalidity or enforceability of any other term or provision.
**	3.5	Governing Law. This Agreementwill be governed by and construed in accordance with the internal laws of theState of California, as applied to agreements entered into solely betweenresidents of and to be performed entirely in the State of California, withoutreference to that body of law relating to conflicts of law or choice of law.

	**3.6	Arbitration.** Any dispute arisingfrom or relating to this Agreement will be submitted to mandatory, final andbinding arbitration in Santa Clara County, California, and, except as hereinspecifically stated, in accordance with the provisions of the StreamlinedArbitration Rules and Procedures of J.A.M.S./ENDISPUTE or its successor("***J.A.M.S.*") then in effect. However, in all events, thesearbitration provisions will govern over any conflicting rules that may now orhereafter be contained in the Streamlined Arbitration Rules and Procedures ofJ.A.M.S. The parties covenant that they will participate in the arbitration ingood faith. Any judgment upon the award rendered by the arbitrator may beentered in any court having jurisdiction over the subject matter thereof. Thearbitrator will have the authority to grant any equitable and legal remediesthat would be available in any judicial proceeding instituted to resolve anydispute arising from or relating to this Agreement.**3.7	Counterparts. This Agreement may beexecuted 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 ofBorrower and Lender will execute and deliver such instruments, documents orother writings as Borrower or Lender, as the case may be, may reasonably requirein order to confirm and carry out and to effectuate fully the intent and thepurposes of this Agreement or any of the other Loan Documents.
**3.9	Prior Agreement and Prior NoteSuperseded. The undersigned parties who are parties to the PriorAgreement and the Prior Note hereby amend and restate the Prior Agreement andthe Prior Note to read in its entirety as set forth in this Agreement and theNote, all with the intent and effect that the Prior Agreement and the Prior Noteshall hereby be cancelled and entirely replaced and superseded by this Agreementand the Note.

	**IN WITNESS WHEREOF**, the parties have duly executedand 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
**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, thatcertain Amended and Restated Loan and Security Agreement (the"***Agreement*") dated as of January 1, 2001, by and among theundersigned ("***Borrower*") and ONSALE, Inc., a Delaware corporation(the "***Company*"), and entirely replaces and supersedes that certainSecured Promissory Note dated November 23, 1998 in the aggregate principalamount of $250,000.00 in the favor of the Company (the "***PriorNote*"), which was cancelled pursuant to the Agreement. Unless otherwiseindicated in this Note, all capitalized terms used herein have the meaningsassigned to them in the Agreement.**1.	Obligation. For value received, Borrowerhereby promises to pay, subject to the terms and conditions of Section 1.5 ofthe Agreement, to the order of the Company on or before November 23, 2003, atthe 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) togetherwith interest compounded semi-annually on the unpaid principal at the rate offour and forty-six hundredths percent (4.46%), which rate is the minimum rateestablished pursuant to Section 1274(d) of the Internal Revenue Code of 1986, asamended, at the time the Prior Note was issued by Borrower; provided,however, that the rate at which interest will accrue on unpaid principalunder 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 underthis Note have been repaid in full. All payments hereunder shall be made inlawful tender of the United States.
**2.	Default. Borrower will be deemed to be indefault under this Note upon the occurrence of any of the following events (eachan "***Event of Default*"): (i) Borrower's failure to make any paymentwhen 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 withthe Company;****(iii) the failure of any representation or warranty in theLoan Documents to have been true, the failure of Borrower to perform anyobligation under the Loan Documents, or upon any other material breach byBorrower of the Loan Documents; (iv) the filing regarding Borrower of anyvoluntary or involuntary petition for relief under the United States BankruptcyCode or the initiation of any proceeding under federal law or law of any otherjurisdiction for the general relief of debtors; or (v) the execution by Borrowerof 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 orproperty.**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 thisNote shall become immediately due and payable without notice or demand on thepart of the Company, and the Company will have, in addition to its rights andremedies under the Loan Documents, full recourse against any real, personal,tangible or intangible assets of Borrower, and may pursue any legal or equitableremedies that are available to it; provided, however, that uponthe termination of Mr. Sheahan's employment with the Company for cause or forMr. Sheahan's negligence, all outstanding principal, accrued interest and otheramounts due under this Note shall become due and payable in full to Lender onthe 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 byBorrower of the Shares to pay such amounts due under this Note. The rights andremedies of Lender herein provided will be cumulative and not exclusive of anyother rights or remedies provided by law or otherwise; and provided,however, that if Mr. Sheahan terminates his employment with the Companyvoluntarily, the outstanding principal, accrued interest and other amounts dueunder this Note will become due and payable in full to the Company on the secondanniversary of the date that Mr. Sheahan voluntarily terminates hisemployment.
**4.	Prepayment. Borrower may prepay theoutstanding 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 paymentwill be applied to the extent of available funds from such payment in thefollowing order:  (i) first to the accrued and unpaid costs andexpenses under the Loan Documents, (ii) then to accrued but unpaidinterest, and (iii) lastly to the outstanding principal.
**5.	Assignment. This Note is freelytransferable and assignable by the Company and each subsequent holder, providedthat such transfer is made in compliance with all applicable state and federalsecurities laws. Any reference to the Company herein will be deemed to refer toany subsequent transferee of this Note at such time as such transferee holdsthis Note. Borrower may not assign or delegate this Note, whether by voluntaryassignment or transfer, operation of law or otherwise.
**6.	Governing Law; Waiver. Thevalidity, construction and performance of this Note will be governed by theinternal laws of the State of California, excluding that body of law pertainingto conflicts of law. Borrower hereby waives presentment, notice of non-payment,notice of dishonor, protest, demand and diligence.
**7.	Attorneys' Fees. If suit is broughtfor collection of this Note, Borrower agrees to pay all reasonable expenses,including attorneys' fees, incurred by the holder in connection therewithwhether or not such suit is prosecuted to judgment.
**IN WITNESS WHEREOF, Borrower has executed this Note asof 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**********************************************************************************************************