Loan Agreement

LOAN AGREEMENT



This Loan Agreement (this "AGREEMENT") is made as of February 19, 1998 (the "EFFECTIVE DATE") by and Dennis Shepard ("BORROWER") and ONSALE, Inc. ("LENDER").



A. Lender and Borrower desire that Lender loan certain sums to Borrower (the "LOAN"), on and subject to the terms and conditions contained in this Agreement, a Secured Full Resource Promissory Note (the "NOTE") and a Stock Pledge Agreement (the "PLEDGE AGREEMENT").



NOW, THEREFORE, in consideration of the mutual promises, representations, warranties and conditions set forth in this Agreement, Lender and Borrower hereby agree as follows:



1. AMOUNT AND TERMS OF LOAN.

------------------------



1.1 LOAN. Subject to all the terms and conditions of this Agreement,

---- and in reliance on the representations, warranties and covenants of Borrower set forth in this Agreement, Lender agrees to loan Borrower the principal amount of One Hundred and Twenty-Five Thousand Dollars ($125,000) (the "LOAN"). Notwithstanding the foregoing, Lender will not be obligated to make the Loan to Borrower unless and until Borrower has executed and delivered to Lender the Note (as defined in Section 1.3) and the Pledge Agreement (as defined in Section 1.4).



1.2 MATURITY OF LOAN. The unpaid principal amount of the Loan and all

---------------- unpaid interest accrued thereon, together with any other fees, expenses or costs incurred in connection therewith, will be immediately due and payable to Lender in full on August 18, 1998 (the "MATURITY DATE").



1.3 NOTE. Borrower's indebtedness to Lender for the Loan shall be

---- evidenced by a Secured Full Recourse Promissory Note of Borrower in the form attached hereto as Exhibit A (the "NOTE"). The Note will provide that interest

--------- on the unpaid principal of the Loan will accrue at a rate of five and forty- seven hundredths percent (5.47%) semi-annually until the later of (A) the Maturity Date, or (B) such time as all amounts owing in connection with the Note have been repaid in full; provided, however, that in no event shall the interest

-------- ------- exceed the highest rate permitted under applicable law.



1.4 PLEDGE AGREEMENT. Borrower's indebtedness to Lender for the Loan

---------------- shall be secured by an interest in any shares of the Lender's Common Stock issued to Borrower pursuant to that certain Stock Option Agreement between the Company and Borrower dated as of May 12, 1997 and additional Collateral (as defined in the Pledge Agreement).



1.5 PREPAYMENT. Prepayment of unpaid principal and/or interest due

---------- under this Note may be made at any time without penalty. All payments will be made in lawful tender of the United States and will be applied (a) first, to the payment of accrued interest, and (b) second (to the extent that the amount of such prepayment exceeds the amount of all such accrued interest), to the payment of principal. Borrower agrees that the proceeds of any sale of the Lender's stock by Borrower shall be applied to the Note until such time as the Note is paid in full. Borrower further agrees that any bonus to be paid by the Lender to the Borrower shall be applied to the Note until such time as the Note has been paid in full.



1.6 AT WILL EMPLOYMENT. Borrower remains an "at will" employee of

------------------ the Lender, and nothing in this Agreement or any exhibit thereto shall be construed as a promise of continued employment.



2. CONDITIONS PRECEDENT TO LOANS. The obligation of Lender to make the

----------------------------- Loan is subject to receipt by Lender (or written waiver by Lender) of the Note and the Pledge Agreement.



3. DEFAULT. Upon and after the occurrence of any Event of Default (as

------- defined in the Note), Lender may take any or all of the actions set forth in the Note and the Pledge Agreement. All such remedies shall be cumulative



4. MISCELLANEOUS.

-------------



4.1 ENTIRE AGREEMENT. This Agreement, the Note, the Pledge Agreement

---------------- constitute the entire agreement and understanding among the parties with respect to the subject matter thereof and supersede any prior understandings or agreements of the parties with respect to such subject matter.



4.2 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.



4.3 GOVERNING LAW. The laws of the State of California (irrespective

------------- of its conflict of law principles) shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto. The parties agree that any controversy or claim arising out of or relating to this Agreement shall be litigated in a United States District Court sitting in California.



4.4 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.



4.5 SEVERABILITY. Any invalidity, illegality or unenforceability of

------------ any provision of this Agreement in any jurisdiction will not invalidate or render illegal or unenforceable the remaining provisions hereof in such jurisdiction and will not invalidate or render illegal or unenforceable such provision in any other jurisdiction.



4.6 ATTORNEYS' FEES. If any party hereto commences or maintains any

--------------- action at law or in equity (including counterclaims or cross-complaints) against the other party hereto by reason of the breach or claimed breach of any term or provision of this Agreement, then the



prevailing party in said action will be entitled to recover its reasonable attorneys' fees and court costs incurred therein.



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







BORROWER: LENDER:



ONSALE, I ...