EXHIBIT 99.3
EXECUTION VERSION
STANDSTILL AND VOTING AGREEMENT
This AGREEMENT, dated as of May 17, 2002 (the "Agreement"), is by and
between FairMarket, Inc., a Delaware corporation ("FairMarket"), and eBay Inc.,
a Delaware corporation (the "Investor").
WHEREAS, FairMarket and the Investor are simultaneously entering into a
certain Series B Preferred Stock Purchase Agreement date as of the date hereof
(the "Purchase Agreement"), whereby the Investor has agreed to purchase 952,380
shares (the "Shares") of Series B Preferred Stock, $.001 par value per share
(the "Preferred Stock") of FairMarket which is, among other things, convertible
into shares of common stock, $.001 par value per share (the "Common Stock"), of
FairMarket.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINED TERMS.
For purposes of this Agreement, the term "Affiliate" and "Associate"
shall have the respective meanings set forth in Rule 12b-2 promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). For purposes of this Agreement, the
terms "beneficial owner" and "beneficially own" shall have the same meanings as
set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act except
that a person shall also be deemed to be the beneficial owner of all shares of
Preferred Stock and/or Common Stock which such person has the right to acquire
pursuant to the exercise of any rights in connection with any securities or any
agreement, regardless of when such rights may be exercised and whether they are
conditional. The term Shares shall also include any shares of Common Stock that
the Investor may receive or does receive upon the conversion of the Shares
pursuant to their terms.
SECTION 2. VOTING.
(a) 2002 ANNUAL MEETING. The Investor shall cause all shares of
Preferred Stock and Common Stock beneficially owned by it, and/or its Affiliates
or Associates, as of the record date for the 2002 annual meeting of stockholders
of FairMarket, to be present for quorum purposes and to be voted in favor of (i)
FairMarket's nominees for directors at such annual meeting or at any
adjournments or postponements thereof, and (ii) FairMarket's proposals at such
meeting or any adjournments or postponements thereof.
(b) OTHER MEETINGS. During the Standstill Period (as defined below),
the Investor shall cause all shares of Preferred Stock and Common Stock
beneficially owned by it, and/or its Affiliates or Associates, as of the record
date for any other meeting of stockholders of
FairMarket, to be present for quorum purposes and to be voted in favor of (i)
FairMarket's nominees for directors at such meeting or at any adjournments or
postponements thereof, and (ii) FairMarket's proposals at such meeting or any
adjournments or postponements thereof.
(c) FURTHER ASSURANCES. The Investor further agree to take all action
necessary to carry out the intention of this Section 2, including, without
limitation, delivering to FairMarket executed proxies naming the proxies
appointed by FairMarket for all shares of Preferred Stock and Common Stock
beneficially owned by the Investor and/or its Affiliates or Associates as of the
record dates for the aforementioned meetings of stockholders.
SECTION 3. ACQUISITION OF STOCK.
Investor covenants and agrees that, from and after the date hereof and
until the expiration of the Standstill Period, neither it nor any of its
Affiliates or Associates will, without the prior written consent of FairMarket
specifically expressed in a vote adopted by the Board of Directors of FairMarket
(the "Board"), directly or indirectly, purchase or cause to be purchased or
otherwise acquire or agree to acquire, or become or agree to become the
beneficial owner of, any other securities (other than the Shares) issued by
FairMarket, or any securities convertible into or exchangeable for Common Stock
or any other equity securities of FairMarket, if in any such case immediately
after the taking of such action Investor and its Affiliates and Associates
would, in the aggregate, beneficially own more than 14.9% of the then
outstanding shares of Common Stock.
SECTION 4. STANDSTILL ARRANGEMENTS.
Investor agrees that, during the period from the date of this Agreement
until June 1, 2003 (the "Standstill Period"), neither it nor any of its
Affiliates or Associates will, without the written consent of FairMarket,
directly or indirectly, solicit, request, advise, assist or encourage others to:
(a) solicit proxies or written consents of stockholders with respect to
Preferred Stock and/or Common Stock under any circumstances, or make, or in any
way participate in, any "solicitation" of any "proxy" to vote any shares of
Preferred Stock and/or Common Stock, or become a "participant" in any contested
solicitation for the election of directors with respect to FairMarket (as such
terms are defined or used in Rules 14a-1 and Item 4 of Schedule 14A under the
Exchange Act), or seek to advise or influence any person with respect to the
voting, holding or disposition of any shares of Preferred Stock and/or Common
Stock;
(b) seek to call, or to request the call of, a special meeting of the
stockholders of FairMarket, or seek to make, or make, a stockholder proposal at
any meeting of the stockholders of FairMarket, or seek to make, or make, any
nomination for election of a director to the Board or make a request for a list
of FairMarket's stockholders;
(c) commence or announce any intention to commence any tender offer for
any shares of Common Stock, or file with or send to the SEC a Schedule 13D or
any amendments to any Schedule 13D under the Exchange Act with respect to the
Common Stock to reflect changes to the disclosures set forth therein and
exhibits filed therewith, except to the extent such filing is solely to report
one or a combination of (i) purchases of Common Stock permitted by this
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Agreement, or (ii) dispositions of Common Stock (including dispositions that
reduce the Investor' beneficial ownership below 5%). In addition, the Investor
may file a Schedule 13D to comply with amendments after the date hereof to
Section 13(d) of the Exchange Act, to the rules promulgated thereunder, or to
the SEC's interpretation of either of the foregoing (it being understood that
nothing contained in this Section 4(c) shall be deemed to permit any action or
disclosure that is otherwise prohibited by this Agreement);
(d) make a proposal or bid with respect to, or announce any intention
or desire to make, or publicly make or disclose, cause to be made or disclosed
publicly, any proposal or bid with respect to, the acquisition of any
substantial portion of the assets of FairMarket or of all or any portion of the
outstanding Common Stock, or any merger, consolidation, other business
combination, restructuring, recapitalization, liquidation or other extraordinary
transaction involving FairMarket, or arrange for or in any way participate in
the financing of or for any transaction referred to above; or
(e) publicly disclose, or cause or facilitate the public disclosure
(including by disclosure to any journalist or other representative of media) of,
any request, or otherwise seek (in any manner that would require public
disclosure by any of the Investor or its Affiliates or Associates), to obtain
any waiver or consent under, or any amendment of, any provision of this
Agreement.
SECTION 5. PRESS RELEASES AND OTHER PUBLIC STATEMENTS.
During the Standstill Period, the Investor agrees, subject to the
requirements of applicable federal securities laws, to provide to FairMarket an
opportunity to review and comment on any press release, public filing, or letter
to FairMarket's stockholders containing statements about FairMarket, prior to
its public release.
SECTION 6. REMEDIES.
(a) Each party hereto hereby acknowledges and agrees that irreparable
harm would occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to specific relief
hereunder, including, without limitation, an injunction or injunctions to
prevent and enjoin breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any state or federal court in
the State of Delaware, in addition to any other remedy to which they may be
entitled at law or in equity. Any requirements for the securing or posting of
any bond with such remedy are hereby waived.
(b) The parties hereto agree that any actions, suits or proceedings
arising out of or relating to this Agreement, the transactions contemplated
hereby or any document referred to herein shall be brought solely and
exclusively in the courts of the State of Delaware and/or the courts of The
United States of America located in the State of Delaware (and the parties agree
not to commence any action, suit or proceeding relating thereto except in such
courts), and further agree that service of any process, summons, notice or
document by U.S. registered mail to the respective addresses set forth in
Section 10 hereof shall be effective service of process for any such action,
suit or proceeding brought against any party in any such court. The parties
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irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby, in the courts of the State of Delaware or The United States
of America located in the State of Delaware, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in
any inconvenient forum.
SECTION 7. FALL AWAY PROVISION.
Notwithstanding anything to the contrary contained in this Agreement,
if, at any time during the Standstill Period, a third party that is not the
Investor nor an Affiliate nor an Associate of the Investor (a) commences a
tender offer for at least fifty percent (50%) of the outstanding capital stock
of FairMarket, (b) commences a proxy contest with respect to election of any
directors of FairMarket, or (c) enters into an agreement with FairMarket
contemplating the acquisition (by way of merger, tender offer or otherwise) of
at least fifty percent (50%) of the outstanding capital stock of FairMarket or
all or substantially all of FairMarket's assets, then (in any such cases) the
restrictions and obligations set forth in Section 2(a)(ii), Section 2(b)(ii),
Section 3 and Section 4 shall immediately terminate and cease to be of any
further force or effect.
SECTION 8. INDEMNIFICATION.
(a) Subject to Section 8(d) below, FairMarket hereby agrees to hold
harmless and indemnify the Investor, the Investors' direct and indirect
subsidiaries, affiliated entities and corporations, and each of their partners,
officers, directors, employees, stockholders, agents, and representatives
(collectively, referred to as the "Investor Indemnitees") against any and all
damages, judgments, fines, amounts paid in settlements, reasonable expenses
(including reasonable attorneys' fees), or any other amounts that an Investor
Indemnitee incurs as a result of any claim or claims made against it in
connection with any threatened, pending or completed action, suit, arbitration,
investigation or other proceeding arising out of, or relating to the Investor's
actions in connection with its complying with its obligations under Section 2 of
this Agreement; provided, however, that no Investor Indemnitee shall be entitled
to be held harmless or indemnified by FairMarket for acts, conduct or omissions
as to which there has been a final adjudication that such Investor Indemnitee
engaged in intentional misconduct, gross negligence or in knowing and culpable
violation of the law.
(b) Subject to Section 8(d) below, FairMarket shall, promptly following
request therefor, pay for all reasonable expenses incurred by an Investor
Indemnitee in connection with any threatened, pending or completed action, suit,
arbitration, investigation or other proceeding arising out of, or relating to,
the Investor's actions in connection with its complying with its obligations
under Section 2 of this Agreement, provided, however, that FairMarket shall not
pay for the expenses of any Investor Indemnitee in connection with acts, conduct
or omissions as to which there has been a final adjudication that such Investor
Indemnitee engaged in intentional misconduct, gross negligence or in knowing and
culpable violation of the law.
(c) FairMarket shall control the defense of any such action and, at its
discretion, may enter into a stipulation of discontinuance or settlement
thereof; provided that FairMarket may not
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discontinue any action or settle any claim in a manner that does not
unconditionally release the Investor without the Investor's prior written
approval. The Investor shall, at FairMarket's expense and reasonable request,
cooperate with FairMarket in any such defense and shall make available to
FairMarket at FairMarket's expense all those persons, documents (excluding
attorney/client or attorney work product materials) reasonably required by
FairMarket in the defense of any such action. The Investor may, at its expense,
assist in such defense.
(d) Notwithstanding anything to the contrary contained herein, the
maximum liability of FairMarket pursuant to the terms and provisions of this
Section 8 shall not exceed an aggregate of $2,000,000.
SECTION 9. ENTIRE AGREEMENT.
This Agreement and the Purchase Agreement (and the agreements and
documents referenced therein) contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and this Agreement may be
amended only by an agreement in writing executed by the parties hereto.
SECTION 10. NOTICES.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and sent by U.S. registered
mail, return receipt requested:
if to FairMarket: FairMarket, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer or
President
with a copy to: Xxxxxxx Procter LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Xxxxx X. Xxxxx, P.C.
Xxxxxx X. Xxxxxx, Xx., P.C.
if to the Investor: eBay Inc.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
with a copy to: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
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SECTION 11. LAW GOVERNING.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to any
conflict of laws provisions thereof.
SECTION 12. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 13. NO PRESUMPTION AGAINST DRAFTSMAN.
Each of the undersigned parties hereby acknowledges the undersigned
parties fully negotiated the terms of this Agreement, that each such party had
an equal opportunity to influence the drafting of the language contained in this
Agreement and that there shall be no presumption against any such party on the
ground that such party was responsible for preparing this Agreement or any part
hereof.
SECTION 14. ENFORCEABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. It is hereby stipulated and declared to be the
intention of the parties that the parties would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable. In addition, the
parties agree to use their best efforts to agree upon and substitute a valid and
enforceable term, provision, covenant or restriction for any such that is held
invalid, void or unenforceable by a court of competent jurisdiction.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused the same to be executed by its duly authorized
representative as of the date first above written.
FAIRMARKET, INC.
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: President and Chief Executive
Officer
eBay Inc.
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President of Legal
Affairs and General Counsel
