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EXHIBIT 10.14
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED MATERIALS HAVE BEEN INDICATED WITH
ASTERISKS.
MICROSOFT AND FAIRMARKET CONFIDENTIAL
MICROSOFT CORPORATION
COMPOSITE AUCTION SERVICES AGREEMENT
This Auction Services Agreement (the "Agreement") is made and entered
into as of this 26th day of July, 1999 (the "Effective Date"), by and between
Microsoft Corporation, a Washington corporation, with a principal place of
business located at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX 00000 ("Microsoft") and
FairMarket, Inc., a Delaware corporation, with a principal place of business
located at 000 Xxxxxxx Xxxx Xxxxx, Xxxxxx, XX 00000 ("FairMarket").
RECITALS
Microsoft operates a number of web sites and wishes to offer users of
such sites access to a Microsoft-branded auction service.
FairMarket is in the business of designing, developing and hosting web
sites for third parties and wishes to create, host and support private label
auction services for Microsoft, based upon Microsoft specifications and branding
requirements.
Microsoft wishes to enter into an agreement to have FairMarket develop,
host and support key elements of a private labeled Microsoft auction service
that is accessible on various Microsoft web sites, which sites shall be
determined in Microsoft's sole discretion.
Now therefore, 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.
AGREEMENT
1. DEFINITIONS
1.1 "ADMINISTRATIVE MODULE" means that online software tool, as more
fully described in Exhibit A attached hereto and incorporated herein by
this reference, provided to Microsoft by FairMarket that allows Microsoft
to access and modify certain portions of the Private Label Auction Sites as
described in Section 2.8.
1.2 "ADVERTISING FEES" means any fees charged by Microsoft from the
sale of banner advertising and tile ad advertising.
1.3 "AFFILIATES" means those companies for whom FairMarket provides
private label auction services similar to the Private Label Auction Sites
as defined herein.
1.4 "AUCTION CONTENT AREA" means the area on a Private Label Auction
Site where the main auction and classified advertising listings and
auctions/classifieds-related merchandising occurs.
1.5 "AUCTION SERVICES" means commerce services where Buyers set the
ultimate sales price of the goods or services offered for sale on the
Private Label Auction Sites, including without limitation, auctions of all
types (e.g., traditional, Dutch, English, reverse, quick-win) and declining
price sales formats.
1.6 "BUYER" means a person purchasing items.
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1.7 "CLASSIFIED ADVERTISING SERVICES" means line listing type
advertising in the auctions/classifieds area of the Private Label Auction
Sites where Sellers set a fixed sales price for the goods or services
available for purchase online or offline.
1.8 "COMMERCIAL RELEASE DATE" means the date on which the first
Private Label Auction Site becomes commercially available to the general
public.
1.9 "END USERS" means all end users of the Private Label Auction
Sites, including without limitation, Buyers and Sellers.
1.10 "FAIRMARKET NETWORK" means the network of sites of FairMarket's
Affiliate customers for whom FairMarket hosts private label auction
services similar to the Private Label Auction Sites as defined herein.
1.11 "LISTING FEES" means any fee charged to a Seller for entering its
listings of products or services on the Private Label Auction Sites.
Listing fees include basic listing fees for participation as well as fees
for participation in Merchandising Locations.
1.12 "MERCHANDISING LOCATIONS" means areas on the Private Label
Auction Sites where Sellers can merchandise themselves as a featured
merchant or their product listings. Merchandising Locations will include
enhanced listings (e.g., bold), Featured Merchants List, Featured Merchant
Listings, Hot Listings, and navigational area Category Sponsorships.
Examples of such locations are set forth in the attached Exhibit D.
1.13 "MICROSOFT MARKS" means those Microsoft trademarks, trade names,
service marks, and/or logos, including without limitation the MSN Logo,
which Microsoft elects to use on and in connection with the Private Label
Auction Sites.
1.14 "MICROSOFT SITES" means the web sites owned and/or operated by
Microsoft (including any versions, upgrades, successors and replacements
thereof), including without limitation, those identified in Section 2.4
below.
1.15 "MSN" means Microsoft's general information portal web site
located at xxx.xxx.xxx (including any versions, upgrades, successors and
replacements thereof).
1.16 "MSN LOGO" means the MSN logo provided to FairMarket for use in
the Private Label Auction Sites or such additional or replacement logos as
Microsoft may provide from time to time under this Agreement.
1.17 "PRIVATE LABEL AUCTION SITES" means those web sites created by
FairMarket on behalf of Microsoft pursuant to this Agreement where, among
other things, End Users can buy and sell items through Auction Services and
Classified Advertising Services.
1.18 "SELLERS" means persons purchasing listings seeking to sell
items.
1.19 "SPECIFICATIONS" means those functional specifications described
in FairMarket's Community Auction Place Features, version 4.0, as such
specifications may be improved and updated from time to time. The current
version of the Specifications is attached hereto as Exhibit A and
incorporated herein by this reference.
1.20 "TERM" means the period set forth in Section 12.
1.21 "TERRITORY" means the geographic area comprising the United
States, including its possessions and territories, and Canada.
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1.22 "TRANSACTION FEES" means any fee charged by Microsoft to Sellers
or Buyers which become payable to Microsoft upon the consummation of a sale
of product or service through the Auction Services or the Classified
Advertising Services.
1.23 "USER INTERFACE" means the area where the overall site
navigation, banner advertising and look and feel associated with each
Private Label Auction Site is displayed.
1.24 All other initially capitalized terms shall have the meanings
hereinafter assigned to them.
2. FAIRMARKET RIGHTS AND OBLIGATIONS
2.1 DEVELOPMENT AND HOSTING OBLIGATIONS OF FAIRMARKET. FairMarket will
provide Microsoft with an Administrative Module for each of the Private
Label Auction Sites through which Microsoft can control the Auction
Services parameters on each such Private Label Auction Site, including user
interface, auction categories, listings and email text, as well as have
access to real-time auction reporting. Each such Administrative Module
shall be based on and in conformance with the Specifications. At
Microsoft's election and written request, during the Term FairMarket shall
provide Microsoft with the Administrative Modules to create and develop an
unlimited number of versions of the Private Label Auction Sites for
simultaneous use by Microsoft in connection with the provision of Auction
Services and Classified Advertising Services to End Users of the Microsoft
Sites in the Territory. Such versions shall be at no charge to Microsoft
except as otherwise provided herein. FairMarket shall be responsible for
all system operation software costs, hardware costs and operation costs
incurred in connection with the development and operation of the Private
Label Auction Sites. FairMarket agrees to make reasonable product
modifications, including without limitation, adding new graphics,
adding/deleting or modifying links to third-party web sites, and screen
redesigns, within 14 days of receiving any revised written request from
Microsoft during the Term.
2.2 HOSTING AND URLS. FairMarket shall host the Private Label Auction
Sites on servers owned or controlled by FairMarket, under Universal
Resource Locator(s) ("URL(s)") to be provided by Microsoft.
2.3 MODIFICATIONS. Notwithstanding anything contained in Section 2.1,
FairMarket shall ensure that Microsoft has the ability to independently
modify and tailor each Private Label Auction Site as described in Sections
2.5 and 2.8 of this Agreement.
2.4 PARTICIPATING MICROSOFT SITES. FairMarket acknowledges and agrees
that the Microsoft Sites named in List #1 below are the most likely
Microsoft Sites to incorporate Private Label Auction Services developed by
FairMarket. The parties acknowledge and agree that some of the Microsoft
Sites named in List #2 will also incorporate Private Label Auction Services
developed by FairMarket and in some cases the Microsoft Sites named in List
#1 may not.
LIST #1
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XXX.xxx.
Business Channel
Computing Central
MSN Plaza/Shopping
Womens Channel
MSN Gaming Zone
Sidewalk/Comparenet
MSN Entertainment
Web Communities
MSN Search
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LIST #2
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MSN Sports
HotMail
WebTV
LinkExchange
Encarta
Expedia
Carpoint
Microsoft Instant Messenger
MSNBC
HomeAdvisor
MoneyCentral
2.5 USER INTERFACE; CO-BRANDING. Microsoft will determine the look and
feel of the User Interfaces for each of the Private Label Auction Sites,
subject to the condition that each page of the Private Label Auction Sites
will contain "Member of the FairMarket Network" or similar mutually agreed
upon FairMarket ingredient branding. Microsoft will utilize the
Administrative Module to program all HTML code to create the User
Interface. FairMarket will use best efforts to assist Microsoft in
developing the User Interfaces for each of the Private Label Auction Sites.
To the extent that FairMarket's Administrative Module cannot be used to
create Microsoft's desired look and feel, FairMarket will use commercially
reasonable efforts to approximate the Microsoft Sites' look and feel as
closely as possible.
2.6 CONTENT; REMOVAL.
(a) FairMarket agrees to make available at no cost to Microsoft,
and except as otherwise provided in this Agreement, Microsoft agrees
to display listings and other Merchandising Listings from the
FairMarket Network in the Auction Content Area.
(b) FairMarket shall be primarily responsible for removing
auctions, classified advertising categories or items or listings if
they do not comply with generally acceptable advertising industry
standards. Examples of such types of items include, without
limitation, pornography, drugs, alcohol and racially or politically
offensive products or ads. In addition, FairMarket will work with
Microsoft to identify and establish a mutually agreed set of
additional categories or items that FairMarket will be primarily
responsible for removing.
(c) In addition, in Microsoft's sole discretion, Microsoft may
elect that the Private Label Auction Sites will not contain certain
types of classified advertising, including without limitation, real
estate classified ads, automobile classified ads, travel classifieds
ads, employment classified ads or certain auction categories or
related auction listings such as computer software, whether such
listings originated on the Private Label Auction Sites or Affiliate
sites. In addition to FairMarket's obligation identified in Section
2.6(b) above, Microsoft shall have the right, but not the obligation,
to remove auctions or classified advertising categories or items if
they do not comply with Microsoft standard advertising guidelines, or
if they are competitive to the Microsoft Sites, e.g., auto auctions
from Auto-by-Tel. FairMarket shall ensure that the Administrative
Module provides Microsoft with the ability and all necessary
functionality to remove objectionable listings from the Private Label
Auction Sites. Microsoft has the right not to include listings if it
has reason to believe any such listing might be illegal/fraudulent, or
if a Seller is a known counterfeiter, and the like.
2.7 MERCHANDISING LOCATIONS. The Private Label Auction Sites will
contain merchandising areas within the Auction Content Area where
Sellers can merchandise their listings. Certain locations have
currently been defined and are listed below; FairMarket and/or
Microsoft may develop others during the course of this Agreement. For
each Merchandising Location, the following will apply.
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(A) PRE-IDENTIFIED MERCHANDISING LOCATIONS. The following are
Merchandising Locations that currently exist and will be included
as part of the Private Label Auction Sites. (i) Featured Merchant
Listings: Appear in the main body of each category page, above
the Current Listings section; (ii) Featured Merchants: Appear in
the left or right hand menu bar; (iii) Hot Listings: Appear in
the left or right hand menu bar; (iv) Category Sponsorship:
Appear above the main body of each category and sub-category
page, contains a text link or graphic link to a category
sponsor's detailed listings on the Private Label Auction Site.
Notwithstanding the forgoing, the location of these
pre-identified Merchandising Locations on the Private Label
Auction Sites will be determined solely by Microsoft. Additional
Merchandising Locations will be added in Microsoft's sole
discretion.
(B) DISPLAY OF FAIRMARKET ITEMS IN MERCHANDISING LOCATIONS ON THE
PRIVATE LABEL AUCTION SITES:
- FairMarket shall receive 25% of the listings inventory
in the Featured Merchants List areas.
- FairMarket shall receive 25% of the listings inventory
in Featured Merchant Listings areas.
- FairMarket shall receive 25% of the listings inventory
in Hot Listings areas.
- FairMarket shall receive 25% of the listings inventory
in Category Sponsorship areas.
Microsoft has the sole right to determine the number of listings
in the Merchandising Locations. FairMarket's portion of listings
that FairMarket has the right to display will be calculated based
on the percentage allocation above, but in no event will be less
than two listings per Merchandising Location. The order in which
the items found in Merchandising Locations are displayed will be
rotated sequentially, so that all featured Merchant Listings or
Featured Merchants will appear at the top of the list an equal
number of times. In the case of Featured Merchants and Category
Sponsorship areas, FairMarket agrees to not display merchants
that are competitive to Microsoft (e.g, Travelocity, Auto-by-Tel,
etc.). Microsoft will provide FairMarket with a list of companies
that will not be displayed in the Merchandising Locations. The
list of companies will be updated periodically by Microsoft. Only
Microsoft and FairMarket, and no other FairMarket Affiliate, will
obtain inventory or have its listings appear in the Private Label
Auction Site Merchandising Locations.
(C) BILLING AND COLLECTING. For Microsoft-generated Merchandising
Listings, FairMarket will be responsible for billing and
collection of Merchandising Fees, using the same procedures as
for Listing Fees and Transaction Fees as set forth in Section
5.1(b). For purposes of this Agreement, fees charged by Microsoft
for Microsoft-generated Merchandising Listings will be considered
Listing Fees for purposes of revenue calculations and billing and
collections. For the purposes of this Agreement,
Microsoft-generated Category Sponsorships will be treated as
"Advertising Fees" and shall be treated in accordance with the
terms of Section 5.2.
2.8 ADMINISTRATIVE MODULE. FairMarket will provide Microsoft with an
Administrative Module for each of the Private Label Auction Sites
through which Microsoft can control the Auction Services parameters,
including user interface, auction categories, listings and email text,
as well as have access to real-time auction reporting. The
Administrative Module will provide Microsoft with the ability in the
Administrative Module to remove listings from the Private Label Auction
Sites that are objectionable to Microsoft, e.g., Microsoft competitive
listings. Microsoft will utilize FairMarket's Administrative Module to
program all HTML code to manage the Private Label Auction Sites.
FairMarket will provide best efforts to train and assist Microsoft
regarding the use of FairMarket's Administrative Module functionality.
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2.9 CLASSIFIEDS LISTINGS. FairMarket shall provide Microsoft with all
necessary tools and assistance to allow Microsoft to input existing
Microsoft classified ad listings into the Private Label Auctions Sites
at no cost to Microsoft. Subject to the provisions of Section 4.1, such
listings will be distributed across the FairMarket Network.
2.10 IMPLEMENTATION TIMETABLE. Within thirty (30) calendar days
immediately following the Effective Date, FairMarket will provide
Microsoft with the tools, training and hosting services that enable
Microsoft to launch up to ten (10) Private Label Auction Sites.
Additional Private Label Auction Sites will be developed per a schedule
mutually agreed upon by Microsoft and FairMarket, but in no event will
an implementation take longer than thirty (30) days from the date of
written notification by Microsoft to FairMarket of Microsoft's desire
to launch a site.
2.11 PERFORMANCE STANDARDS. FairMarket agrees to meet or exceed MSN
performance standards, attached as Exhibit C, including system
availability/down time and average response time. FairMarket agrees to
provide Microsoft with direct access to network operations support
personnel on a 24x7 basis.
2.12 DEDICATED RESOURCES. FairMarket's support of Microsoft shall
include a minimum assignment of four full-time FairMarket personnel to
work solely on the design, development, integration and support of
Auction Services into Microsoft Sites. FairMarket will designate one or
more dedicated project manager(s), account manager(s), engineer(s), as
well as identify specific operations and customer personnel to support
Microsoft.
2.13 INTEGRATION. FairMarket will make best efforts to enable its
Auction Services to be tightly integrated into the Microsoft Sites, and
once developed, Microsoft will use commercially reasonable efforts to
utilize and promote online such functionality. Such integration will
include, but not be limited to:
(A) INTEGRATION OF REGISTERED MICROSOFT PASSPORT USERS.
Microsoft can enable existing registered users to
participate in the Private Label Auction Sites without
having to reenter their username, password or other relevant
information.
(B) INTEGRATION INTO CONTEXTUAL LOCATIONS AND SEARCH
RESULTS. FairMarket will provide data files of product
listing data for integration into Microsoft's search and
directory results and other contextual locations throughout
the Microsoft Sites.
(C) INTEGRATION INTO MICROSOFT'S PERSONALIZATION FEATURES.
FairMarket will use best efforts to provide its data in a
format for integration into Microsoft's personalization
initiatives across the Microsoft Sites.
(D) INTEGRATION INTO MICROSOFT MERCHANT TOOLS. FairMarket
will use best efforts to work with Microsoft to develop
auction and classified advertising related merchant tools
that seamlessly integrate with Microsoft merchant tools and
support Microsoft advertising sales packages, as well as
Microsoft billing, operations and Private Label Auction Site
functionality. FairMarket agrees to make functionality
available to Microsoft that will enable Microsoft to create
and offer to Sellers merchant packages including discounted
listing fees and bundled merchandising.
(E) INTEGRATION INTO MICROSOFT COMMUNITY BUILDING TOOLS/WEB
COMMUNITIES. FairMarket will use best efforts to incorporate
Microsoft Community Building Tools (i.e., chat, BBS,
calendaring, etc.) on the Private Label Auction Sites.
(F) INTEGRATION INTO MICROSOFT INSTANT MESSENGER. FairMarket
will use best efforts to incorporate Microsoft Instant
Messenger functionality on the Private Label Auction Sites.
(G) INTEGRATION INTO MICROSOFT BIZTALK PRODUCT/SERVICES
CLASSIFICATION TAXONOMY. FairMarket will use best efforts to
adopt Microsoft schema for structure products. For example,
if
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for "printers" FairMarket has a number of attributes for
searching auctions, and for "printers" Microsoft has a
number of attributes for a buyer guide, these attributes
should be substantially the same.
(H) INTEGRATION INTO MICROSOFT COMMERCE SERVER AND OTHER
MICROSOFT COMMERCE SOFTWARE PRODUCTS. FairMarket will use
best efforts to work with Microsoft to develop links from
the Microsoft Commerce Server to the Private Label Auction
Sites for merchants utilizing Microsoft Commerce Server.
(I) INTEGRATION INTO THE MSN SEARCH ENGINE. FairMarket will
use best efforts to work with Microsoft to program in fifty
(50) or one hundred (100) search term result sets. Longer
term, more advanced integration may include FairMarket
working with Microsoft to automatically query the auction
database for search strings and pull back relevant results.
(J) INTEGRATION INTO MICROSOFT'S INTERNET EXPLORER.
FairMarket will use best efforts to work with Microsoft to
find ways to integrate auctions notifications (i.e.,
products meeting a user's profile becoming available for
sale, latest bid, etc.), auctions functionality and/or
auctions content with Microsoft Internet Explorer.
(K) INTEGRATION INTO MICROSOFT'S BUSINESS-TO-BUSINESS
PORTAL. FairMarket will use best efforts to work with
Microsoft to integrate auction service functionality into
the Microsoft Business to Business Portal.
(L) INTEGRATION INTO MICROSOFT'S MSN MOBILE SERVICE.
FairMarket will use best efforts to work with Microsoft to
integrate auction service functionality into MSN Mobile
service -- e.g., the FairMarket server would send the
Microsoft server an HTTP post when a user is out-bid or has
won an auction. The post would include the user ID, the
auction item name and the new bid price or final price.
Microsoft will prioritize these integration efforts. No later than ten
days immediately following the Effective Date, Microsoft and FairMarket
will mutually agree on a product development schedule to address the
timing for the efforts identified in this Section 2.13.
2.14 SITE SCREENING. FairMarket shall be primarily responsible for
screening and promptly removing problematic listings on the Private
Label Auction Sites as provided in this Agreement, including without
limitation, Section 2.6 above.
2.15 CUSTOMER SERVICE; TECHNICAL SUPPORT. At no charge to Microsoft,
FairMarket shall be solely responsible for performing email-based
customer support to End Users of all Private Label Auction Sites on a
24-hour per day, 7-day per week basis, with a maximum 24-hour response
time. All customer service will be "Microsoft branded" and will conform
to the requirements and performance standards attached hereto as
Exhibit C or as otherwise mutually agreed between the parties.
FairMarket shall provide all technical support for the Private Label
Auction Sites and customer and technical support for users of the
Private Label Auction Sites, according to the technical support and
maintenance requirements attached hereto as Exhibit B or as otherwise
mutually agreed in writing between the parties.
2.16 REPORTING.
(a) FairMarket will furnish Microsoft with monthly usage
statements showing for each month the number of auction and
classified listings by category, the number of auctions
closed, traffic to Private Label Auction Sites, the number of
page views, dollars per auction/category, and other key usage
information as reasonably requested by Microsoft in connection
with this Agreement.
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(b) FairMarket will also provide Microsoft with the number,
frequency, nature of and FairMarket response to any End User
support calls and any other support-related information and
documentation as is reasonably requested by Microsoft in
connection with this Agreement.
(c) FairMarket shall provide Microsoft with access to "real
time" online reporting functionality that will allow
Microsoft to ascertain user activity occurring at the
Private Label Auction Sites including user traffic, listing
related activity and transaction-related activity.
(d) FairMarket will track and report to Microsoft on
revenues in an identified format for each Private Label
Auction Site separately, as well as provide an aggregate
Microsoft revenue report for the same.
(e) Within 180 days immediately following the Effective
Date, FairMarket will track and report to Microsoft
aggregate cross network usage of the Microsoft provided
classified ads.
2.17 LIMITED PROMOTION OF FAIRMARKET BRANDED AUCTION SITE. Unless
otherwise mutually agreed, FairMarket shall not promote its own branded
auction site to the public. FairMarket agrees to promote instead the
FairMarket Network of sites.
2.18 FAIRMARKET PROMOTION. Subject to the provisions of Section 3.9
below, FairMarket shall promote Microsoft's participation as a
participant in the FairMarket Network in ongoing press materials and in
marketing materials related to such program; provided that all uses of
Microsoft Marks in marketing and promotional materials shall require
the prior review and approval of Microsoft as provided in Section 9.2
below.
2.19 PARTICIPATION IN MSN PROMOTIONS. At the request of Microsoft,
FairMarket shall use commercially reasonable efforts to participate in
MSN network promotions (in general, one per month) and to create
banner/tile ads that it will provide to Microsoft to be placed
throughout the Microsoft Sites to create awareness of the Auction
Services. For purposes of this Section 2.19, "participating" means
working with Microsoft to determine campaign themes and responding to
Microsoft requests on a timely basis.
2.20 MICROSOFT TECHNOLOGY ADOPTION. As a Microsoft strategic partner,
FairMarket agrees, at its sole discretion, to use commercially
reasonable efforts to adopt key Microsoft platform architectures and
technology (in addition to the Microsoft technologies outlined in
Section 2.13 above) which are being adopted by other Microsoft
strategic partners, so long as the benefits to FairMarket are
substantial or the costs to FairMarket not disproportionate to those it
would incur in connection with similar technology adoption. Microsoft
agrees to provide commercially reasonable technical assistance as
mutually agreed to FairMarket to assist in adoption and implementation
of such services.
2.21 SOFTWARE PIRACY SUPPORT MEASURES. FairMarket agrees to work with
Microsoft to develop comprehensive programs to reduce the sale of
pirated Microsoft software and other illegal, pirated, counterfeit or
unauthorized sales of other merchandise on the Private Label Auction
Sites, and will develop no less comprehensive a program on all of its
other FairMarket Network sites. Such programs may include requiring
users to post verifiable information and/or a Microsoft review cycle.
2.22 ADDITIONAL SERVICES. FairMarket agrees to develop the following
features, functions or services per the timeline below.
(A) INSURANCE/FRAUD PROTECTION SERVICE that insures Buyers and
Sellers against Auction Services-related acts of fraud (within
60 days of the Effective Date).
(B) ESCROW AND CREDIT CARD PROCESSING SERVICE that allows
auction sellers to accept credit card payments when selling
products or services (within 90 days of the Effective Date).
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(C) BASIC INTERNATIONAL FUNCTIONALITY that provides
international time zone support, international currency
support and country specific date/time formats (within 120
days of the Effective Date).
(D) ENHANCED INTERNATIONAL FUNCTIONALITY that provides
non-English language support (within 270 days of the Effective
Date).
(E) EFFECTIVE NOTICE AND TAKEDOWN PROCEDURES across entire
network (within 15 days of the Effective Date).
3. MICROSOFT RIGHTS AND OBLIGATIONS
3.1 DEVELOPMENT COOPERATION. Microsoft shall provide to FairMarket
timely and reasonable assistance and cooperation in connection with the
development and testing of the Private Label Auction Sites.
3.2 URLS. Microsoft shall, at its sole cost and expense, obtain and
maintain all rights to the URL(s), or any successor URL(s), at which
the Private Label Auction Sites are to be located.
3.3 PROMOTION OF FAIRMARKET'S SERVICE TO MICROSOFT SITES. Microsoft
shall exercise commercially reasonable efforts to make each Microsoft
Site aware of FairMarket's Auction Services, promote FairMarket as an
"incumbent" for purposes of Auction Services, and encourage each
Microsoft Site to utilize Auction Services from FairMarket. FairMarket
acknowledges that Microsoft makes no representation that any particular
number of Microsoft Sites will participate under this Agreement.
3.4 MICROSOFT AUCTION SERVICE INTEGRATION AND PROMOTION. Microsoft will
integrate links to the Auction Services area throughout the Microsoft
Sites. Such integration may include, but not be limited to, links from
home pages, links from shopping pages, inclusion in emails, links from
search results pages, links from category pages, and links from other
contextually relevant pages within the Microsoft Sites to relevant
areas within the Private Label Auction Sites. Microsoft shall have sole
control over the promotion of the Private Label Auction Sites, and the
display and placement of links to the Private Label Auction Sites on
any and all Microsoft Sites.
3.5 MICROSOFT EDITORIAL STAFF. Microsoft will use commercially
reasonable efforts to author editorial and promotional content aimed at
increasing traffic to the Private Label Auction Sites.
3.6 MICROSOFT TECHNOLOGY. Microsoft shall make available, as Microsoft
deems appropriate, Microsoft technology and technical assistance to
FairMarket at rates proportionate to those made available to other
similarly situated Microsoft strategic partners.
3.7 MICROSOFT OFFICE SPACE. Microsoft agrees to make available office
space for FairMarket dedicated personnel. Such space shall include up
to three offices on the Microsoft campus, subject to FairMarket's
compliance with Microsoft's standard terms and conditions for on-site
vendors.
3.8 MICROSOFT PROMOTION. Microsoft shall promote Microsoft's
participation as a member of the FairMarket Network in ongoing press
materials and in marketing collateral related to such program. In the
event that FairMarket wishes to promote Microsoft's participation, it
shall obtain the prior written approval of Microsoft prior to releasing
any press materials or marketing collateral related to such program.
3.9 USER TRAFFIC GUARANTEE.
(A) MINIMUM ANNUAL VISITS. Microsoft agrees to drive the
minimum number of user visits to the Private Label Auction
Sites as specified below ("Minimum Annual Visits"). For
purposes
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of this Section 3.9, a "Visit" to the Auction Content Area is
defined as a session in a Private Label Auction Site. Visits
include those instances where the user clicks on a
Microsoft-placed link, on a Microsoft Site or other site where
Microsoft has a relationship, and enters the Auction Area hosted
by FairMarket, and also includes those visits from users who have
registered for Microsoft auctions who enter the Private Label
Auction Sites directly by typing in a URL or any other means
utilized by Microsoft to access the Private Label Auction Sites.
Microsoft will not deliberately and artificially route traffic to
the Private Label Auction Sites in an effort to artificially
increase Visits.
YEAR MINIMUM ANNUAL VISITS
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Year 1 72 Million Visits
Year 2 160 Million Visits
Year 3 184 Million Visits
Year 4 203 Million Visits
Year 5 212 Million Visits
(B) PAYMENT CALCULATION.
(i) During each year of the Term (a "Year" being defined as
the one year period beginning on the Commercial Release Date
or anniversary of the Commercial Release Date and running
for one year therefrom), if the actual number of Visits for
that Year is equal to or greater than the Minimum Annual
Visits for such Year, then FairMarket shall pay Microsoft
the shortfall, if any, between the Guaranteed Minimum
Revenue and Microsoft's share (as specified in Section 5
below) of actual revenue attributable to the Private Labeled
Auction Sites ("Actual Microsoft Revenue") during such Year.
(ii) If the actual number of Visits for a given Year is
between 80% and 99.9% of the Minimum Annual Visits for such
Year, then FairMarket shall pay Microsoft the greater of its
share of Actual Microsoft Revenue during such Year or the
pro-rata portion of the Guaranteed Minimum Revenue for such
Year. By way of example, if Microsoft delivered 85% of its
traffic commitment, FairMarket would be responsible for
paying Microsoft 85% of the Guaranteed Minimum Revenue for
the applicable Year, if greater than the Actual Microsoft
Revenue for that Year.
(iii) If the actual number of Visits for a given Year is
less than 80% of the Minimum Annual Visits for such Year,
then FairMarket shall pay Microsoft its share of Actual
Microsoft Revenue during such Year.
(C) GUARANTEES NOT CUMULATIVE. For purposes of this Section 3.9,
Minimum Annual Visit guarantees are viewed on a contract Year
basis and not on a cumulative basis. By way of example, if
Microsoft did not reach 80% of the Minimum Annual Visit total in
Year 2 but then exceeded the Minimum Annual Visit total in Year
3, FairMarket would pay the Guaranteed Minimum Revenue in Year 3
and would only pay the Actual Microsoft Revenue in Year 2.
3.10 PRE-EMINENT AUCTION SERVICES PARTNER. Microsoft agrees that
FairMarket will be the pre-eminent provider of Auction Services for the
Microsoft Sites. Such Auction Services may include business to
business, business to consumer, and consumer to consumer services.
Microsoft Sites that elect to utilize FairMarket's Auction Services
shall not enter into a relationship with any company to provide
comparable auction services, private labeled or otherwise, to that of
FairMarket and will not host content or promote links or advertising to
any such company, subject to the following exceptions:
(A) SPECIALIZED AUCTION-RELATED FUNCTIONALITY. Microsoft retains
the right to work with companies that provide specialized
auction-related functionality that is not comparable to
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functionality provided by FairMarket, including but are not
limited to, high-end B2B auctions functionality (FreeLoader),
Group Buying (Mercata), Online Haggling (Xxxxxx.xxx),
Non-bidding, Buyer priced purchased (PriceLine), Credit Card
Transaction Processing Services (BillPoint), Escrow Services
(iEscrow), Sothebys (authenticated product auctions).
(B) NON-AUCTION-RELATED ADVERTISING. Microsoft retains the right
to accept non-auction related advertising from companies that
offer a portfolio of services including auctions, e.g.,
Xxxxxx.xxx. FairMarket acknowledges and agrees that Microsoft may
sell advertising that may rotate throughout the Microsoft Sites
(including auctions areas), and the restrictions set forth in
this Section 3.10 shall not apply to such "Microsoft-wide run of
site" sales. FairMarket acknowledges and agrees that certain
Microsoft Sites may have existing auction-related agreements in
place and that these pre-existing agreements cannot be supplanted
and shall remain in place until the existing contract expires or
is terminated.
(C) QUARTERLY MEETINGS. Microsoft and FairMarket personnel will
meet on a quarterly or more frequent basis, as mutually agreed,
to discuss auction-related product development plans for the
Private Label Auction Sites. In cases where Microsoft wishes to
provide specialized auction-related functionality that is not
comparable to that offered by FairMarket, Microsoft will discuss
its functionality needs with FairMarket to determine if
comparable functionality will be available from FairMarket within
the time frame required by Microsoft. If FairMarket subsequently
develops comparable functionality, Microsoft will evaluate the
relevant FairMarket product offering and determine which
provider's functionality best meets Microsoft's needs. In such
situations Microsoft agrees to consider the fact that FairMarket
is Microsoft's pre-eminent Auctions Service partner and agrees
that FairMarket's status will be considered when determining
which provider's functionality best meets Microsoft needs.
4. LISTING RIGHTS AND USER INFORMATION
4.1 LISTINGS. Microsoft has ownership rights to listings placed on the
Microsoft Sites. Microsoft shall grant FairMarket the necessary rights
to aggregate and distribute such listings across the FairMarket Network
in the Territory. Microsoft and FairMarket agree that from time to time
there may be certain circumstances where Microsoft requires the right
to retain listings exclusively on MSN. The parties anticipate that over
80% of Microsoft listings will be available to FairMarket for
distribution across the FairMarket Network. FairMarket will provide
Microsoft with the administration tools required to manage listing
distribution from the Private Label Auction Sites to the FairMarket
Network.
4.2 END USER DATA. Microsoft has the exclusive right to collect, store
and use all personal registration data provided by End Users ("End User
Data") who register on Microsoft Sites and Private Label Auction Sites.
FairMarket acknowledges that all End User individual and aggregate
information acquired through the Private Label Auction Sites shall be
solely owned by Microsoft. End User Data shall include (when available
from the Private Label Auction Sites), without limitation: an End
User's name, email address, and any other information collected which
personally identifies the End User and aggregated End User information
such as category related viewership, listings and purchase patterns and
any other demographic information associated with the Private Label
Auction Sites. Microsoft agrees that FairMarket shall be able to
utilize aggregate information for purposes of improving the Private
Label Auctions Sites, and FairMarket may utilize at its sole discretion
aggregate data from the Private Label Auction Sites when aggregated
with data from FairMarket's other customers. FairMarket agrees to
conform to all applicable Microsoft data privacy standards covering End
User Data as such may be provided by Microsoft to FairMarket from time
to time. FairMarket agrees not to share Microsoft-only aggregate data
with third parties without first obtaining written authorization from
Microsoft.
4.3 CONSENT. In addition to the foregoing, any collection, disclosure
or use of End User Data by FairMarket shall be subject to the End
Users' consent, and the business practices and End User privacy
policies of the Microsoft Site from which it is collected. The business
practices and policies of each such
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Microsoft Site presently permits, as their default, FairMarket to
grant Microsoft the rights required by this Section 4.3, unless the
End User specifically requests otherwise, and in all cases each party
shall comply with any applicable laws governing the collection,
dissemination and use thereof. "Consent" as used in this Agreement
shall mean the approval of an adult, and in the case of minor
children, the approval of the child's parent or legal guardian.
FairMarket and Microsoft shall mutually agree on the Private Label
Auction Site user interface for the collection of End User Data.
Microsoft shall have sole discretion to determine the privacy policy
for the Microsoft Sites and Private Label Auction Sites.
5. FEES; BILLING; PAYMENTS
5.1 LISTING AND TRANSACTION FEES.
(A) AUCTION SERVICES PARTICIPATION FEES. Microsoft shall have
sole discretion to determine the amount, if any, of Transaction
Fees, Listing Fees, and Microsoft Advertising Fees to be charged.
Microsoft will take into consideration input from FairMarket,
current industry pricing, the competitive environment and
FairMarket's guaranteed minimum revenue obligations when setting
pricing. Notwithstanding the foregoing, in no event shall the
Transaction Fees charged by Microsoft be less than *** percent
(***%) of the gross revenues of all transactions facilitated on
the Private Label Auction Sites.
(B) REVENUE SHARES. FairMarket will pay Microsoft, on a quarterly
basis, ***% of Gross Revenue generated during the Term by End
Users of the Private Label Auction Sites ("Achieved Revenue").
For purposes of this Agreement, "Gross Revenue" shall mean all
FairMarket collected Auction Service and Classified Advertising
Service related revenue, less returns or similar credits and
credit card and other processing costs (which returns and costs
are not to exceed 2.5% of Gross Revenue). Gross Revenue shall be
determined as follows: ***% of the Listing Fees charged to
Sellers for listings placed at the Private Label Auction Sites,
plus ***% of the Transaction Fees charged to Sellers for listings
placed at the Private Label Auction Sites, plus ***% of the
Transaction Fees (utilizing the Private Label Auction Sites'
Transaction Fee Schedule) for winning bids that occur on the
Private Label Auction Sites (including those winning bids placed
on listings that originated at the Private Label Auction Sites
and those originated elsewhere on the FairMarket Network).
(C) LISTING AND TRANSACTION FEE-RELATED BILLING AND COLLECTIONS.
Subject to Section 5.1(b), at no charge to Microsoft, FairMarket
will be solely responsible for the billing and collection of
Transaction Fees and Listing Fees. FairMarket will use its best
efforts to collect all Transaction Fees and Listing Fees,
provided that FairMarket shall have no obligation to xxxx any
Seller or Buyer for Transaction Fees or Listing Fees until the
aggregate amount of unpaid fees accrued by any such Seller or
Buyer equals or exceeds ten dollars (US$10.00).
(D) MONTHLY STATEMENTS. To the extent FairMarket is responsible
for any billing and collections under this Agreement, FairMarket
will furnish Microsoft with quarterly statements showing for each
month in each calendar quarter during the Term the Listing Fees,
Transaction Fees, Advertising Fees and/or Other Revenue (as
defined in Section 5.4) a share of which Microsoft is entitled,
and accompanied by payment to Microsoft of the amount (if any)
due and owing Microsoft in accordance with such statement and
this Agreement. Statements and payments will be sent within forty
five (45) days after the end of each respective calendar quarter,
provided that statements will be sent regardless of whether any
amounts are payable. All such statements shall be treated by
Microsoft as Confidential Information under the NDA.
5.2 ADVERTISING FEES. Microsoft shall have the exclusive right to sell,
serve and collect advertising revenue on the Private Label Auction
Sites. Microsoft will receive ***% of the auction-related advertising
revenue. Microsoft shall have sole discretion to set its own
advertising rate card.
*** This information is confidential and has been omitted and filed separately
with the Securities and Exchange Commission, pursuant to a request for
confidential treatment.
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5.3 HOSTING FEES. Microsoft agrees to pay FairMarket the total sum of
*** (US$***) per month in return for hosting services provided by
FairMarket associated with all Private Label Auction Sites hosted by
FairMarket under this Agreement. Such payment shall be due, starting on
the Effective Date and shall be paid by Microsoft pursuant to Section
5.7 below for so long as FairMarket continues to provide hosting
services under this Agreement.
5.4 OTHER REVENUE. All other auction-related service fees collected by
either party related to participation in the Private Label Auction
Sites and directly attributable to FairMarket services and
functionality, including but not limited to End User or merchant
subscription fees, End User or merchant service fees,
transaction-enabled classifieds and credit card processing service fees
(collectively, without limitation, "Other Revenue") will be split ***%
to Microsoft and ***% to FairMarket unless an alternative revenue share
is mutually agreed upon in writing. As an example of non-directly
attributable revenue, if Microsoft decides to work with a third-party
escrow service other than FairMarket, and FairMarket is not required to
perform any steps associated with integrating said service other than
providing reasonable cooperation as necessary and requested by
Microsoft, Microsoft would not be required to share revenues generated
by such escrow service with FairMarket.
5.5 MINIMUM GUARANTEED REVENUE. FairMarket guarantees minimum revenue
(the "Minimum Guaranteed Revenue) to Microsoft, which Minimum
Guaranteed Revenue (which shall be calculated by including Microsoft's
share of the Listing Fees, Transaction Fees, and Advertising Fees as
set out in Section 5.1(b) and 5.2) is projected to be a minimum of
Sixty Million Dollars (US$60,000,000) during the Term, as follows:
YEAR MINIMUM GUARANTEED REVENUE
---- --------------------------
Year 1 $ 5 Million
Year 2 $10 Million
Year 3 $10 Million
Year 4 $15 Million
Year 5 $20 Million
Total: $60 Million
5.6 SHORTFALL PAYMENT. In the event that the Actual Microsoft Revenue
accrued to Microsoft in a given Year (as such term is defined in
Section 3.9) is less than the Minimum Guaranteed Revenue above,
FairMarket agrees to remit to Microsoft the difference no later than 45
days following the end of each Year. Minimum guarantees are viewed on
an annual basis and not on a cumulative basis; for example, any
shortfall that FairMarket paid to Microsoft for a given Year would not
be paid back by Microsoft in future Years, even if FairMarket exceeded
the Minimum Guaranteed Revenue in future Years. The Minimum Guaranteed
Revenue shall apply only in the event that Microsoft meets or exceeds
the Minimum Annual Visit guarantees as described in Section 3.9, but in
any event, FairMarket shall pay no less than the allocable portion of
Actual Microsoft Revenue for any given Year.
5.7 PAYMENT TERMS.
(a) All payments due from FairMarket to Microsoft under this
Agreement shall be made by wire transfer to such account as
Microsoft may notify FairMarket from time to time (the "Microsoft
Account").
*** This information is confidential and has been omitted and filed separately
with the Securities and Exchange Commission, pursuant to a request for
confidential treatment.
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FairMarket shall pay Microsoft any such fees due within
forty-five (45) days following the (i) last day of each calendar
quarter during the Term, (ii) the last day of each Year during
the Term, or (iii) the date on which any such payment becomes
due, as applicable.
(b) All payments due from Microsoft to FairMarket under this
Agreement shall be made by wire transfer to such account or to
such account as FairMarket may notify Microsoft from time to time
(the "FairMarket Account").
Microsoft shall pay FairMarket such fees due, if any, within
forty-five (45) days following the (i) last day of each calendar
quarter during the Term, (ii) the last day of each Year during
the Term, or (iii) the date on which any such payment becomes
due, as applicable.
5.8 AUDITS
(A) BY FAIRMARKET. During the Term of this Agreement, Microsoft
agrees to keep all usual and proper records and books of account
and all usual and proper entries and other documentation relating
to all payments to be made by Microsoft to FairMarket hereunder.
During the Term and for a period of six (6) months following the
expiration or termination of this Agreement, FairMarket shall
have the right to cause an audit and/or inspection to be made of
such records of Microsoft in order to verify statements issued by
Microsoft and Microsoft's compliance with the terms of this
Agreement. Any such audit shall be conducted by an independent
certified public accountant selected by FairMarket (other than on
a contingent fee basis) and reasonably acceptable to Microsoft.
Any audit and/or inspection shall be conducted during regular
business hours at Microsoft's facilities upon at least thirty
(30) days prior written notice. Such audits shall be made no more
often than once every twelve (12) months.
(B) BY MICROSOFT. During the Term of this Agreement, FairMarket
agrees to keep all usual and proper records and books of account
and all usual and proper entries and other documentation relating
to the Gross Revenues, Actual Microsoft Revenues, Minimum
Guaranteed Revenue, Visits, all other payments to be made by
FairMarket hereunder, and all user and other reports submitted or
to be submitted by FairMarket hereunder. During the Term and for
a period of six (6) months following the expiration or
termination of this Agreement, Microsoft shall have the right to
cause an audit and/or inspection to be made of such records of
FairMarket in order to verify statements issued by FairMarket and
FairMarket's compliance with the terms of this Agreement. Any
such audit shall be conducted by an independent certified public
accountant selected by Microsoft (other than on a contingent fee
basis) and reasonably acceptable to FairMarket. Any audit and/or
inspection shall be conducted during regular business hours at
FairMarket's facilities upon at least thirty (30) days prior
written notice. Such audits shall be made no more often than once
every twelve (12) months.
5.9 COSTS. Except as expressly provided herein, all costs incurred by
any party in fulfilling any of its obligations under this Agreement
shall be borne by that party, without reimbursement from the other
party.
6. REPRESENTATIONS AND WARRANTIES; LIMITATIONS
6.1 BOTH PARTIES. Each party hereby represents and warrants as follows:
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(a) Such party is duly organized and validly existing under the
laws of the state of its incorporation and has full corporate
power and authority to enter into this Agreement and to carry out
the provisions hereof.
(b) Such party is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder.
(c) This Agreement is a legal and valid obligation binding upon
it and enforceable against it in accordance with its terms.
6.2 MICROSOFT. Microsoft further represents and warrants that all
materials provided by Microsoft for use on and in connection with the
Private Label Auction Sites do not and will not infringe the
intellectual property right of any third party, or otherwise violate
any third party's personal or proprietary rights.
6.3 FAIRMARKET. FairMarket further represents and warrants that:
(a) FairMarket shall use commercially reasonable efforts to
ensure that the Private Label Auction Sites and all listings,
content and/or material contained therein provided by FairMarket
are and at all times will be of a high quality and nature, and
that the Private Label Auction Sites and all content and/or
material contained therein provided by FairMarket will be
accurate and reliable.
(b) FairMarket will keep the Private Label Auction Sites
operational in accordance with the Private Label Auction Sites
Performance Standards set forth in Exhibit C.
(c) FairMarket shall use commercially reasonable efforts to
ensure that the Private Label Auction Sites and all listings,
content and/or material contained therein provided by FairMarket
are and will be non-defamatory. The Private Label Auction Sites
and all information and content contained therein provided by
FairMarket do not and will not infringe the intellectual property
rights of any third party, or otherwise violate any third party's
proprietary rights.
(d) FairMarket owns or controls all rights to the Private Label
Auction Sites and use of the Private Label Auction Sites by
Microsoft shall not infringe the intellectual property right of
any person.
(e) FairMarket will not use the Microsoft Marks except as
provided in this Agreement.
(f) No other person has or will have any right, title or interest
in or to all or any portion of the Private Label Auction Sites
and all information and content contained therein which would in
any way curtail, impair, diminish or derogate from any of the
rights granted to Microsoft herein, and FairMarket has not
heretofore done or permitted to be done and will not hereafter do
or authorize or permit to be done any act or thing which is
inconsistent with or curtails, impairs, diminishes, or derogates
from any right herein granted to Microsoft.
(g) The Private Label Auction Sites and all listings, content
and/or material contained therein provided by FairMarket are not
and shall not be during the Term in violation of any statutes or
regulations including without limitation any statutes or
regulations relating to auction services.
(h) All customer technical and/or support services to be provided
hereunder shall be provided in a professional manner and in
accordance with all applicable industry standards for such
services.
(i) The Private Label Auction Sites will accurately manipulate,
process, compare, display and calculate date or time data from,
into and between the twentieth and twenty-first centuries,
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including leap years, and shall not be interrupted or adversely
affected by the manipulation, processing, comparison, display or
calculation of dates from, into and between the twentieth and
twenty-first centuries, including leap years.
6.4 INSURANCE COVERAGE. Effective no later than the Effective Date and
throughout the Term, FairMarket shall procure and maintain the
following insurance coverage. Such insurance shall be in a form and
with insurers reasonably acceptable to Microsoft, and shall comply with
the following minimum requirements:
(A) COMMERCIAL GENERAL LIABILITY Insurance of the Occurrence Form
with policy limits of not less than Five Million Dollars
(US$5,000,000) combined single limit each occurrence for Bodily
Injury and Property Damage combined, and Five Million Dollars
(US$5,000,000) Personal and Advertising Injury Limit; and
(B) ERRORS & OMISSIONS LIABILITY / PROFESSIONAL LIABILITY
Insurance with policy limits of not less than Five Million
Dollars (US$5,000,000) each claim with a deductible of not more
than Twenty-Five Thousand Dollars (US$25,000.00). Such insurance
shall include coverage for infringement of proprietary rights of
any third party, including without limitation copyright and
trademark infringement as related to FairMarket's performance
under this Agreement. Throughout the term of the Agreement, the
Errors & Omissions Liability / Professional Liability Insurance
retroactive coverage date will be no later than the Effective
Date of this Agreement. Upon expiration or termination of this
Agreement, FairMarket will maintain an extended reporting period
providing that the claims first made and reported to the
insurance company within one year after the end of this Agreement
will be deemed to have been made during the policy period.
(C) EVIDENCE; CANCELLATION. Promptly upon execution of this
Agreement, FairMarket shall provide to Microsoft proof evidencing
full compliance with the insurance requirements set forth in this
Section 6.4. FairMarket shall notify Microsoft in writing at
least thirty (30) days in advance if FairMarket's insurance
coverage is to be canceled or materially altered so as to not
comply with the requirements of this Section.
6.5 FairMarket shall be solely responsible for the relationships with
third parties who purchase listings, advertising or other services from
FairMarket, and all other third parties who purchase advertising or
listing-related promotions from FairMarket, including, without
limitation, listing production, ad and promotion production, placement,
management, billing, collections and accounting.
6.6 LIMITATION. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 6, ALL
PRODUCTS OR SERVICES DELIVERED UNDER THE TERMS OF THIS AGREEMENT SHALL
BE SUBJECT TO THE TERMS OF THE LIMITED WARRANTY STATEMENT, IF ANY,
SPECIFIED BY THE DELIVERING PARTY FOR THE SPECIFIC PRODUCT OR SERVICE.
CERTAIN SOFTWARE PRODUCTS MAY BE PROVIDED TO THE OTHER PARTY "AS IS"
WITHOUT WARRANTY OR CONDITION OF ANY KIND, IF SO DESIGNATED BY THE
LICENSOR. FOR SUCH PRODUCTS, THE ENTIRE RISK AS TO THE RESULTS AND
PERFORMANCE OF SUCH SOFTWARE IS ASSUMED BY THE RECEIVING PARTY AND ITS
CUSTOMERS AND SUBLICENSEES, IF ANY. THE WARRANTIES SET FORTH IN
SECTIONS 6.1, 6.2, 6.3 AND THIS SECTION 6.6 ARE THE ONLY WARRANTIES
MADE BY THE PARTIES. EACH PARTY DISCLAIMS ANY AND ALL OTHER WARRANTIES
OR REPRESENTATION EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, AND FITNESS FOR A
PARTICULAR PURPOSE. NO PARTY WARRANTS THAT ACCESS TO OR USE OF THE
MICROSOFT SITES OR PRIVATE LABEL AUCTION SITES WILL BE UNINTERRUPTED OR
ERROR-FREE, OR THAT ANY SOFTWARE OR SERVICES WILL MEET ANY PARTICULAR
CRITERIA OF PERFORMANCE OR QUALITY. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, FAIRMARKET EXPRESSLY ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS EXPRESSLY PROVIDED HEREIN, MICROSOFT HAS NOT MADE ANY EXPRESS
OR IMPLIED
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REPRESENTATIONS, ASSURANCES AND/OR WARRANTIES REGARDING THE NUMBER OF
VISITS THAT MAY BE GENERATED UNDER THIS AGREEMENT AND THAT FAIRMARKET
HAS NOT RELIED ON ANY STATEMENTS BY MICROSOFT OR ANY THIRD PARTIES IN
RELATION THERETO IN ENTERING INTO THIS AGREEMENT.
7. MICROSOFT MARKS
The parties agree that the branding of the Private Label Auction Sites shall be
done according to the Specifications as set forth in Exhibit A. Microsoft hereby
grants to FairMarket a worldwide, nonexclusive, non-assignable, nontransferable,
royalty-free, right to use the MSN Logo (and, at Microsoft's discretion, other
Microsoft Marks) solely in conjunction with the Private Label Auction Sites in
the manner described herein or as otherwise specified by Microsoft to FairMarket
from time to time in connection with FairMarket's sales, marketing and
promotional activities of the Private Label Auction Sites. Notwithstanding the
provisions of this Section 7, FairMarket agrees that it shall not pursuant to
this Agreement or otherwise acquire any ownership of Microsoft Marks or of any
Microsoft content provided to FairMarket for inclusion in the Private Label
Auction Sites, and that all use of the Microsoft marks will inure to the benefit
of Microsoft. All rights not expressly granted herein are reserved by Microsoft.
8. CONFIDENTIALITY
Microsoft and FairMarket agree that the terms of the Microsoft Standard
Reciprocal Non-Disclosure Agreement ("NDA") dated July 26, 1999 shall be deemed
incorporated herein, and further, that all terms and conditions of this
Agreement shall be deemed Confidential Information as defined in such NDA.
9. NON-EXCLUSIVITY; PRESS RELEASES
9.1 Except as specifically stated herein, nothing in this Agreement
will be construed as restricting any party's ability to acquire,
license, develop, manufacture or distribute for itself, or have others
acquire, license, develop, manufacture or distribute for itself,
content, software, news, sites, search services, search results or the
like, which is the same or similar to that contemplated by this
Agreement, or to market, promote and distribute same in addition to
that contemplated by this Agreement.
9.2 No party will issue any press release or make any public
announcement(s) relating in any way whatsoever to this Agreement or the
relationship established by this Agreement without the express prior
written consent of the other party, which consent shall not be
unreasonably withheld. However, the parties acknowledge that this
Agreement, or portions thereof, may be required under applicable law to
be disclosed, as part of or an exhibit to a party's required public
disclosure documents. If any party is advised by its legal counsel that
such disclosure is required, it will notify the other in writing and
the parties will jointly seek confidential treatment of this Agreement
to the maximum extent reasonably possible, in documents approved by
both parties and filed with the applicable governmental or regulatory
authorities. Notwithstanding the foregoing, the parties will cooperate
to prepare a mutually agreed press release announcing the relationship,
but not the financial details, to be released prior to the Commercial
Release Date.
10. INDEMNIFICATION
10.1 OBLIGATION TO INDEMNIFY.
(A) BY EITHER PARTY. A party (the "Indemnifying Party") shall,
at its expense and the request of any other party (the
"Indemnified Party"), defend and pay any damages arising out
of or in connection with any third-party claim or action
brought against the Indemnified Party, and its successors,
affiliates, directors, officers, employees, licensees, agents
and independent contractors, to the extent it is based upon a
claim that, if true, would constitute a breach of a warranty,
representation or covenant of the Indemnifying Party set forth
in this Agreement.
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(B) BY FAIRMARKET. Provided that notice has been given as set
forth in Section 14, FairMarket shall, at its expense and the
request of Microsoft, defend and pay any damages arising out
of or in connection with any third party claim or action
brought against Microsoft, and its successors, affiliates,
directors, officers, employees, licensees, agents and
independent contractors, relating to the Private Label Auction
Sites and other services to be provided by FairMarket under
this Agreement, including without limitation, any claim
brought by an End User, Seller or Buyer (except in each case
for claims covered by Section 10.1(c)).
(C) BY MICROSOFT. Provided that notice has been given as set
forth in Section 14, Microsoft shall, at its expense and the
request of FairMarket, defend and pay any damages arising out
of or in connection with any third party claim or action
brought against FairMarket, and its successors, affiliates,
directors, officers, employees, licensees, agents and
independent contractors, relating to the use of End User
information by Microsoft.
10.2 INDEMNIFICATION PROCESS. If any action shall be brought against
either party (the "Claimant") in respect to which indemnity may be
sought from the other party (the "Indemnifying Party") pursuant to the
provisions of this Section 10, the Claimant shall promptly notify the
Indemnifying Party in writing, specifying the nature of the action and
the total monetary amount sought or other such relief as is sought
therein. The Claimant shall cooperate with the Indemnifying Party at
the Indemnifying Party's expense in all reasonable respects in
connection with the defense of any such action. The Indemnifying Party
may upon written notice to Claimant undertake to conduct all
proceedings or negotiations in connection therewith, assume the defense
thereof, and if it so undertakes, it shall also undertake all other
required steps or proceedings to settle or defend any such action,
including the employment of counsel, and payment of all expenses.
Claimant shall have the right to employ separate counsel and
participate in the defense at its own expense; provided that the
Indemnifying Party shall control the defense. In the event that the
parties materially disagree on any aspect of the defense, then the
Claimant may elect to pursue its own defense and the Indemnifying
Party's indemnification obligation shall cease. The Indemnifying Party
shall reimburse Claimant upon demand for any payments made or loss
suffered by it in connection with an indemnifiable matter at any time
after the date of written notice of such claim, based upon the judgment
of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement, approved in writing by the Indemnifying Party
(which approval shall not be unreasonably withheld, delayed or
conditioned), of claims, demands, or actions, in respect of any damages
to which the foregoing relates.
10.3 ADDITIONAL ACTIONS. In addition to the indemnification obligations
set forth in this Section 10, following notice of a claim that the
Private Label Auction Sites or any listing, content and/or material
provided by FairMarket contained therein infringe the intellectual
property or other right of any third party, FairMarket shall at its
expense procure the right to continue to use the Private Label Auction
Sites and all content and/or material contained therein provided by
FairMarket, or replace or modify the Private Label Auction Sites and/or
any content and/or material contained therein provided by FairMarket,
as applicable, to make them non-infringing. If FairMarket elects to
replace or modify the Private Label Auction Sites and/or any content
and/or material contained therein, such replacement(s) shall meet
substantially the quality and content of the materials being replaced.
If neither of the foregoing options are reasonably available to
FairMarket and the Private Label Auction Sites cannot reasonably be
maintained to Microsoft's satisfaction without such content and/or
material, then Microsoft shall have the right to terminate this
Agreement; provided, however, that FairMarket's failure to take
corrective action in accordance with this Section shall nevertheless be
considered a material breach and Microsoft shall have all rights and
remedies provided by law or this Agreement.
11. LIMITATION OF LIABILITIES
NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, ARISING OUT OF OR RELATED TO THIS
AGREEMENT INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS
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INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE, EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION SHALL NOT
APPLY TO ANY PARTY'S (A) ABILITY TO OBTAIN INJUNCTIVE OR OTHER EQUITABLE RELIEF;
(B) OBLIGATIONS UNDER SECTION 8 OR THE NDA; AND (C) INDEMNIFICATION OBLIGATIONS
AS TO THIRD PARTY CLAIMS ASSESSED AGAINST THE INDEMNIFIED PARTY IN CONNECTION
WITH INDEMNIFIED CLAIMS UNDER SECTION 10.
12. TERM AND TERMINATION
12.1 TERM. This Agreement will take effect on the Effective Date and
will continue until the fifth anniversary of the Commercial Release
Date (the "Fifth Anniversary"). Microsoft shall have the right to
extend this Agreement after the Fifth Anniversary for an additional
five-year period (the "Renewal Term"), by providing FairMarket with
notice in writing of its intent to renew no later than 120 days prior
to the Fifth Anniversary. In the Renewal Term, if any, Microsoft hereby
waives FairMarket's minimum revenue guarantees, and FairMarket hereby
waives Microsoft's user traffic guarantees. Both parties agree to
evaluate the financial implications of this Agreement prior to the
beginning of the Renewal Term and adjust the financial terms of the
renewed agreement if necessary and mutually agreed upon. If the parties
are unable to mutually agree on any adjustments to the financial terms,
they shall renew as set forth in this Agreement, except that any
renewal of this Agreement shall include Most Favored Nation pricing
from FairMarket to Microsoft and FairMarket agrees that the Microsoft
revenue share for any Renewal Term shall not be less than fifty percent
(50%) of FairMarket's Listing, Transaction and other directly
attributable FairMarket-related Revenue unless otherwise mutually
agreed in writing by both parties. For purposes of this Section 12.1,
"Most Favored Nation" pricing means revenue sharing on terms no less
favorable to Microsoft than those granted by FairMarket to other
FairMarket Network members for a comparable service.
12.2 TERMINATION FOR CAUSE. This Agreement may be terminated by either
party prior to its natural expiration if any of the following events
occurs:
(a) the other party fails to perform or comply with its
material obligations under this Agreement or any provision
hereof, including failure to pay any amount(s) due hereunder;
(b) the other party becomes insolvent or admits in writing its
inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or
(c) a petition under any bankruptcy act, receivership statute,
or the like, as they now exist, or as they may be amended, is
filed by the other party; or if such a petition is filed by
any third party, or an application for a receiver of the other
party is made by anyone and such petition or application is
not resolved favorably to such party within sixty (60) days;
or
(d) upon the circumstances described in Section 10.3 above (in
which case Microsoft shall be the non-defaulting party for
purposes of this Section 12); or
(e) either party is in material breach of Section 8.
12.3 EFFECT OF TERMINATION. Termination under Section 12.2(a) above
shall be effective thirty (30) days after written notice of termination
given by the non-defaulting party to the defaulting party, unless the
defaulting party's defaults have been cured within such thirty (30) day
period, in which case termination shall not occur. Termination under
Sections 12.2(b), 12.2(c), 12.2(d) and 12.2(e) above shall be effective
upon written notice, provided, however, that the defaulting party has
not cured any default within the thirty (30) day cure period. The
rights and remedies provided in this Section shall not be exclusive and
are in addition to any other rights and remedies provided at law, in
equity or under this Agreement. In the event that a non-defaulting
party in its discretion elects not to terminate this Agreement, such
election shall not constitute a waiver of any and all claims of that
party for such default(s). Further, the non-defaulting party
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may elect to leave this Agreement in full force and effect and to
institute legal action against the defaulting party for specific
performance and/or damages suffered by such party as a result of the
default(s).
12.4 TERMINATION WITHOUT CAUSE BY MICROSOFT. Microsoft shall have the
right to terminate this Agreement without cause at any time during the
forty-five (45) day period immediately following the Effective Date.
Such termination shall be effective immediately upon notice by
Microsoft to FairMarket. In no event shall either party be liable for
any damages or compensation of any kind related to or arising out of
Microsoft's exercise of its termination right under this Section 12.4.
12.5 RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION. Promptly
upon termination or expiration of this Agreement:
(a) Each party shall, at the other party's direction, return or
certify destruction of Confidential Information of such other
party.
(b) FairMarket shall stop making available to End Users or any
other party the Private Label Auction Sites; provided that, if
not otherwise prohibited under this Agreement or by law or order
of a competent authority, the Private Label Auction Sites shall
remain available as long as is necessary, as reasonably
determined by Microsoft, to comply with any third party
obligations.
(c) FairMarket shall immediately cease and desist from all use of
the Microsoft Marks.
(d) Both parties shall cease advertising, marketing and promoting
the Private Label Auction Sites.
(e) Both parties shall cease selling and soliciting any
advertising and listings for the Private Label Auction Sites.
(f) Within thirty (30) days immediately following termination
FairMarket shall provide Microsoft a complete report of all End
User Data in its possession.
(g) Each party shall provide reasonable assistance to the other
for such reasonable time and upon such terms and conditions as
shall be mutually agreed upon in order to assure an orderly
transition and wind down in such a manner as shall minimize
disruption to the users. The goal of the parties is to ensure a
smooth and seamless transition for the user to maintain a high
level of customer satisfaction.
12.6 SURVIVAL. Sections 4.2 (with respect to Microsoft's ownership
rights), 5.1 through 5.7 (with respect to any payments due and owing
as of the date of termination or expiration), 5.8, 6, 8, 10, 11, 12,
14 and 15 shall survive termination or expiration of this Agreement.
12.7 No party shall be liable to the other for damages of any sort
resulting solely from terminating this Agreement in accordance with
its terms.
13. INTERNATIONAL WORKSCOPE. Microsoft and FairMarket each agree to explore
expanding the Territory to include international sites (the "International
Sites"). If mutually agreed by both parties, International Sites may be added as
additional sites included in Section 2.4 of this Agreement and such
International Sites shall be covered under the terms of this Agreement, amended
as necessary and mutually agreed in writing.
14. NOTICES. All notices, authorizations, and requests required or desired to be
given or made in connection with this Agreement will be in writing, given by
certified or registered mail (return receipt requested), express air courier
(charges prepaid) or facsimile, and addressed as follows (or to such other
address as the party to receive the notice or request so designates by notice to
the other):
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Notices to Microsoft: Notices to FairMarket:
Microsoft Corporation FairMarket, Inc.
One Microsoft Way 000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000-0000 Xxxxxx, XX 00000
Attn.: Xxxx Xxxxxx, General Manager, MSN Attn.: Xxxxx Xxxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
Copy to: Law & Corporate Affairs Copy to: Xxxxxxx Procter & Xxxx
Fax: (000) 000-0000 Attn: Xxxxx X. Xxxxx, P.C.
Fax: (000) 000-0000
If a notice is given by either party by certified or registered mail, it will be
deemed received by the other party on the third business day following the date
on which it is deposited for mailing. If a notice is given by either party by
air express courier, it will be deemed received by the other party on the next
business day following the date on which it is provided to the air express
courier. If a notice is given by facsimile, it will be deemed received by the
other party upon confirmation of receipt.
15. GENERAL
15.1 GOVERNING LAW/JURISDICTION. This Agreement shall be construed in
accordance with the laws of the State of Washington, USA, without regard for its
conflict of laws rules.
15.2 ATTORNEYS' FEES. In any action or suit to enforce any right or
remedy arising out of or relating to this Agreement or to interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees, costs and other expenses.
15.3 ENTIRE AGREEMENT/WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements or communications. This
Agreement shall not be effective until signed by both parties. This Agreement
shall not be modified except by a written agreement dated subsequent to the date
of this Agreement and signed on behalf of FairMarket and Microsoft by their
respective duly authorized representatives. No waiver of any breach of any
provision of this Agreement shall constitute a waiver of any prior, concurrent
or subsequent breach of the same or any other provisions hereof, and no waiver
shall be effective unless made in writing and signed by an authorized
representative of the waiving party.
15.4 ASSIGNMENT. Neither party may assign this Agreement, or any
portion thereof (whether by merger, operation of law, sale of assets,
reorganization or otherwise), without the written consent of the other. Any
attempted assignment, sublicense, transfer, encumbrance or other disposal
without such consent shall be void and shall constitute a material default and
breach of this Agreement. Except as otherwise provided, this Agreement shall be
binding upon and inure to the benefit of the parties' successors and lawful
assigns.
15.5 SEVERABILITY. In the event that any provision of this Agreement
conflicts with governing law or if any provision is held to be null, void or
otherwise ineffective or invalid by a court of competent jurisdiction, (i) such
provision shall be deemed to be restated to reflect as nearly as possible the
original intentions of the parties in accordance with applicable law, and (ii)
the remaining terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect. This Agreement has been negotiated by the
parties and their respective counsel and will be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either party.
15.6 NO JOINT VENTURE. Neither this Agreement, nor any terms and
conditions contained herein, shall be construed as creating a partnership, joint
venture, employer-employee relationship, agency relationship or as granting a
franchise.
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15.7 SECTION HEADINGS. The section headings used in this Agreement are
intended for convenience only and shall not be deemed to affect in any manner
the meaning or intent of this Agreement or any provision hereof.
15.8 FORCE MAJEURE. The parties agree that neither of them shall have
any liability hereunder with respect to any failure of performance due
principally to the elements, acts of God, armed hostilities, failure of
communications, transportation or other critical systems, or other causes beyond
the reasonable control of such party.
In Witness Whereof, the parties have entered into this Agreement as of the
Effective Date written above.
MICROSOFT CORPORATION FAIRMARKET, INC.
("MICROSOFT") ("FAIRMARKET")
By /s/ Xxxx Xxxxx By /s/ Xxxxx Xxxxxxx
________________________________ _____________________________
Name Xxxx Xxxxx Name Xxxxx Xxxxxxx
_____________________________ __________________________
Title Title CEO
_____________________________ __________________________
Date 7/29/99 Date 7/29/99
_____________________________ __________________________
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