EXHIBIT 10.1
AMENDMENT NO. 2
TO
AUCTION SERVICES AGREEMENT
AND
TERMINATION OF WARRANT AND WARRANT AGREEMENT
This Amendment No. 2 to Auction Services Agreement and Termination of Warrant
and Warrant Agreement (this "Amendment No. 2") is made and entered into as of
this 29th day of June, 2001 (the "Effective Date"), between Microsoft
Corporation, a Washington corporation with its principal place of business
located at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX 00000 ("Microsoft") and FairMarket,
Inc., a Delaware corporation with its principal place of business located at 000
Xxxxxxx Xxxx Xxxxx, Xxxxxx, XX 00000 ("FairMarket").
RECITALS
A. Microsoft operates a number of web sites and currently offers users
of such sites access to a Microsoft-branded version of FairMarket's auction
service, while FairMarket is in the business of developing, hosting and
maintaining web sites for third parties utilizing its auction or other services.
B. Microsoft and FairMarket previously entered into an Auction Services
Agreement dated as of August 23, 1999 (as amended, the "Auction Services
Agreement"), under the terms of which FairMarket was to implement, host and
support key elements of a private labeled version of FairMarket's auction
service accessible on various Microsoft web sites described in the Auction
Services Agreement, which sites were to be determined in Microsoft's sole
discretion, and based upon Microsoft branding and other requirements.
C. Concurrently with the Auction Services Agreement, Microsoft and
FairMarket entered into a Warrant to Purchase Common Stock dated August 23,
1999, entitling Microsoft to purchase up to 4,5000,000 shares of the common
stock, par value $.001 per share, of FairMarket (the "Warrant"), under the terms
and conditions set forth in the Warrant, issued pursuant to a Warrant Agreement
dated August 20, 1999 between the parties (the "Warrant Agreement"). A copy of
the Warrant is attached as Exhibit A and incorporated into this Amendment No. 2
by this reference.
D. Microsoft and FairMarket now wish to amend the Auction Services
Agreement and to cancel and terminate the Warrant and the Warrant Agreement as
set forth below.
AGREEMENT
In consideration of the mutual promises and covenants contained herein,
the receipt and sufficiency of which is hereby acknowledged, Microsoft and
FairMarket agree as follows:
1. TERMINATION OF WARRANT AND WARRANT AGREEMENT; MUTUAL RELEASE.
1.1 TERMINATION. The Warrant and the Warrant Agreement are hereby
cancelled and terminated and the parties agree that the parties shall have no
further rights or obligations under the Warrant or the Warrant Agreement.
Microsoft will return the voided Warrant to FairMarket, together with such other
documents as may be reasonably required by FairMarket to effect a valid
cancellation and termination of the Warrant, as soon as practicable after the
Effective Date.
1.2 MUTUAL RELEASE. Microsoft and FairMarket, on behalf of themselves,
their current and former representatives, heirs, executors, attorneys,
accountants, agents, insurers, officers, shareholders, directors, employees,
subsidiaries, affiliates, divisions, predecessors, successors and assigns, and
each of the foregoing, hereby fully and forever release and discharge each other
and their current and former representatives, heirs, executors, attorneys,
agents, officers, shareholders, directors, employees, subsidiaries, affiliates,
divisions, successors and assigns, and each of the foregoing, of and from any
and all manner of actions, claims or causes of action, in law or at equity or
otherwise, suits, debts, liens, contracts, agreements, promises, obligations,
liabilities, demands, losses, damages, costs and expenses (including without
limitation court costs and attorneys' fees), which they may have against each
other at the time of the execution of this Amendment arising out of, or in
connection with, or relating directly or indirectly to, the Warrant or the
Warrant Agreement, whether known or unknown, whether described herein or not.
2. AMENDMENTS TO AUCTION SERVICES AGREEMENT.
2.1 DELETION OF PROVISIONS. Sections 3.9 (User Traffic Guarantee), 3.10
(Pre-eminent Auction Services Partner), 5.5 (Minimum Guaranteed Revenue) and 5.6
(Shortfall Payment) of the Auction Services Agreement are hereby deleted in
their entirety.
2.2 TERMINATION WITHOUT CAUSE BY MICROSOFT. From and after the date
that the parties mutually agree in writing upon the form of definitive new
agreement described in the next sentence, Microsoft shall have the right to
terminate the Auction Services Agreement without cause at any time with ninety
(90) days prior written notice to FairMarket. The parties agree to negotiate in
good faith, as promptly as reasonably practicable following the Effective Date,
a definitive new agreement (a) regarding the matters contemplated by the
Confidential Term Sheet between the parties dated June 29, 2001 and (b) that
would signed by the parties, take effect and supersede the Auction Services
Agreement upon any exercise by Microsoft of the termination without cause rights
under the first sentence of this Section 2.2.
3. PUBLIC ANNOUNCEMENT. Microsoft acknowledges that FairMarket intends to
publicly announce the existence and terms of this Amendment No. 2 and that
FairMarket may be required to file this Amendment No. 2 as an exhibit to a
report filed by it under the Securities Exchange Act of 1934, as amended, in
accordance with the rules and regulations under such Act (or, if applicable,
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations thereunder) or the rules of the Nasdaq. Microsoft hereby consents to
(a) such filing and (b) such public announcement provided that FairMarket
provides Microsoft with a reasonable opportunity to review the text of such
announcement regarding the existence and terms of this Amendment in advance of
its issuance.
4. FULL FORCE AND EFFECT; EFFECT ON UK AMENDMENT. The parties have signed
this Amendment as of the dates indicated below. Any terms and conditions of the
Auction Services Agreement not amended herein shall remain in full force and
effect, and in the event of inconsistencies between the Auction Services
Agreement and this Amendment No. 2, the terms and conditions of this Amendment
No. 2 will control. Notwithstanding the foregoing, the parties acknowledge and
agree that the terms of this Amendment shall not affect the terms of the
FairMarket UK Amendment No. 1 dated as of August 15, 2000 between the parties,
the terms of which shall continue in full force and effect without giving effect
to the changes to the Auction Services Agreement otherwise effected by this
Amendment, provided that Section 2.1 of this Amendment SHALL also apply to such
FairMarket UK Amendment. This Amendment No. 2 is not binding until executed by
both parties.
IN WITNESS WHEREOF the parties intending to be legally bound have duly executed
this Amendment as of the date set out above
MICROSOFT CORPORATION FAIRMARKET, INC.
("MICROSOFT") ("FAIRMARKET")
By /s/ Xxxxxxx Xxxx By /s/ Xxxxx Xxxxx
---------------- ---------------
Name Xxxxxxx Xxxx Name Xxxxx Xxxxx
------------ -----------
Title Vice President Title Chief Financial Officer
-------------- -----------------------
Date 6/29/01 Date 6/29/01
------- -------
-2-
