Exhibit 99.3
SERIES B PREFERRED STOCK CONVERSION AND VOTING AGREEMENT
THIS SERIES B PREFERRED STOCK CONVERSION AND VOTING AGREEMENT (the
"Agreement") is made as of May 31, 2002, by and between FairMarket, Inc., a
Delaware corporation (the "Company"), and eBay Inc., a Delaware corporation (the
"Investor"). For the purposes of this Agreement, the term "Investor" includes
all transferees to whom the Investor has transferred Shares, and all such
transferees shall be treated together with the Investor for the purposes of this
Agreement as one (1) Investor.
WHEREAS, on May 17, 2002, the Company sold to the Investor, and the
Investor purchased from the Company, 952,380 shares (the "Shares") of the
Company's Series B Preferred Stock, par value $0.001 per share (the "Series B
Preferred Stock"), at a purchase price of $2.10 per Share;
WHEREAS, the rights, preferences and other terms of the Shares are set
forth in the Certificate of Designations, Preferences and Rights of a Series of
Preferred Stock creating the Series B Preferred Stock of the Company filed by
the Company with the Secretary of State of the State of Delaware on May 17, 2002
(the "Certificate of Designations"); and
WHEREAS, the Company and the Investor entered into a Voting and
Standstill Agreement dated as of May 17, 2002 (the "Voting Agreement") relating
to certain matters.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CONVERSION OF SHARES. Notwithstanding anything to the contrary
contained in the Certificate of Designations, the Investor will not convert any
or all of the Shares, whether in one or more conversions and together with all
prior conversions of any of the Shares, into more than 5,859,720 shares (the
"Threshold Amount") of common stock, $.001 par value per share (the "Common
Stock"), of the Company (with such number to be adjusted appropriately for stock
splits, stock dividends, combinations and the like), unless and until the
Company obtains the approval of holders of at least a majority of the voting
securities of the Company, present in person or by proxy at a duly called
meeting of the Company's stockholders (for which a quorum is present either in
person or by proxy pursuant to the Company's by-laws), with respect to the
issuance of shares of Common Stock above the Threshold Amount in accordance with
applicable Nasdaq rules and regulations (the "Relevant Stockholder Approval").
In the event that any adjustments to the Conversion Price (as defined in the
Certificate of Designations) occur, pursuant to the provisions of Section 7 of
the Certificate of Designations, so as to create a circumstance where any or all
of the Shares could be converted, whether in one or more
conversions and together with all previous conversions, into a number of shares
of Common Stock greater than the Threshold Amount: (a) the Company will use
commercially reasonable efforts to solicit and obtain the Relevant Stockholder
Approval (which shall include, without limitation, the Company hiring a proxy
solicitor in connection therewith) within (subject to any delay resulting from
the Securities and Exchange Commission's review of the proxy materials relating
thereto) sixty (60) days, or such longer period as the Company reasonably and in
good xxxxx xxxxx necessary after consultation with its legal advisors and the
proxy solicitor but in no event to exceed ninety (90) days, of the happening of
the final adjustment to the Conversion Price triggering the need to obtain the
Relevant Stockholder Approval; and (b) the final adjustment to the Conversion
Price triggering the need to obtain the Relevant Stockholder Approval shall be
deemed to be a "Material Adverse Effect" pursuant to the terms and provisions of
Section 5(a)(i)(2) of the Certificate of Designations.
2. VOTING OF SHARES. Notwithstanding anything to the contrary contained
in the Certificate of Designations or in the Voting Agreement, the Investor will
not vote, or attempt to vote, at any regular or special meeting of the
stockholders of the Company or at any adjournments or postponements thereof or
in any written consent executed in lieu of such a meeting of stockholders, any
Shares in any manner which would give the Shares, in the aggregate, on an as
converted to Common Stock basis or otherwise and when taken together with any
shares of Common Stock which resulted from a prior conversion of any Shares,
more than 1,626,016 votes (with such number to be adjusted appropriately for
stock splits, stock dividends, combinations and the like) at any such meeting or
with respect to any such consent.
3. ASSIGNMENT; LIMITATIONS ON TRANSFERS. The terms and provisions of
this Agreement shall bind the successors and permitted assigns of the relevant
party, whether so expressed or not, and all such terms and provisions shall
inure to the benefit of the successors and permitted assigns of the parties
hereto, whether so expressed or not. Neither the Company nor the Investor shall
be able to sell, transfer or assign any provision of this Agreement without the
prior written consent of the other party. In addition to any restrictions
contained in the Series B Preferred Stock Purchase Agreement dated as of May 17,
2002 (the "Purchase Agreement") by and between the Company and the Investor, the
Investor agrees not to sell, assign or otherwise transfer any of the Shares
except to an Affiliate (as defined in the Registration Rights Agreement dated as
of May 17, 2002 by and between the Company and the Investor) of the Investor and
provided that such Affiliate agrees in writing to be bound by the terms of this
Agreement as an Investor.
4. ENTIRE AGREEMENT. This Agreement, together with the agreements and
documents referenced herein, constitutes the full and entire understanding and
agreement among the parties hereto with respect to the subject matter hereof and
thereof, and any and all other written or oral agreements with respect to such
subject matter existing prior to or contemporaneously herewith are expressly
superseded and canceled.
5. AMENDMENTS, WAIVERS AND CONSENTS. For the purposes of this Agreement
and all agreements, documents and instruments executed pursuant hereto, except
as otherwise specifically set forth herein or therein, no course of dealing
between the Company on the one
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hand and the Investor on the other and no delay on the part of any party hereto
in exercising any rights hereunder or thereunder shall operate as a waiver of
the rights hereof or thereof. Any term or provision hereof may only be amended,
terminated or waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of the Company and the
Investor.
6. NOTICES AND DEMANDS. All notices, requests, demands and other
communications hereunder shall be given in accordance with the provisions of
Section 5.4 of the Purchase Agreement.
7. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement. In the event that any provision of
this Agreement is finally adjudicated to be unenforceable, the Company agrees to
provide written notice to The Nasdaq Stock Market, Inc., Listing Qualifications,
0000 Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000, Attn:
FairMarket, Inc. Listing Agent.
8. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument.
9. GOVERNING LAW. This Agreement shall be deemed a contract made under
the laws of the State of Delaware and all disputes, claims or controversies
arising out of this Agreement or the negotiation, validity or performance hereof
or the transactions contemplated herein, shall be construed under and governed
by the laws of such State, without giving effect to its conflicts of laws
principles.
10. 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 or the transactions contemplated
hereby 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
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process, summons, notice or document by U.S. registered mail to the respective
addresses set forth in Section 5.4 of the Purchase Agreement shall be effective
service of process for any such action, suit or proceeding brought against any
party in any such court. The parties 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.
11. 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.
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IN WITNESS WHEREOF, the undersigned have executed this Series B
Preferred Stock Conversion and Voting Agreement as of the day and year first
above written.
COMPANY:
FAIRMARKET, INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Chief Financial Officer
INVESTOR:
EBAY INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Assistant Secretary
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK CONVERSION AND VOTING AGREEMENT]
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