<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 2000
REGISTRATION STATEMENT NO. 333-92677
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 5 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FAIRMARKET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7389 04-3351937
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
500 UNICORN PARK DRIVE
WOBURN, MA 01801
(781) 376-5600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
SCOTT T. RANDALL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FAIRMARKET, INC.
500 UNICORN PARK DRIVE
WOBURN, MA 01801
(781) 376-5600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID F. DIETZ, P.C. DANIEL S. EVANS, ESQ.
GOODWIN, PROCTER & HOAR LLP DAVID B. WALEK, ESQ.
EXCHANGE PLACE ROPES & GRAY
BOSTON, MASSACHUSETTS 02109-2881 ONE INTERNATIONAL PLACE
(617) 570-1000 BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
FAIRMARKET, INC.
EXPLANATORY NOTE
FairMarket, Inc. is filing this amendment to file Exhibits 10.14, 10.15 and
10.16 to the registration statement.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses payable by us in
connection with the offering (excluding underwriting discounts and commissions):
NATURE OF EXPENSE
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
SEC registration fee........................................ $ 16,698
NASD filing fee............................................. 6,000
Nasdaq National Market listing fee.......................... 95,000
Accounting fees and expenses................................ 350,000
Legal fees and expenses..................................... 500,000
Printing expenses........................................... 250,000
Blue sky qualification fees and expenses.................... 7,500
Transfer Agent's fee........................................ 12,000
Miscellaneous............................................... 62,802
----------
Total....................................................... $1,300,000
==========
</TABLE>
The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq National
Market fees, are in each case estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our amended and restated certificate of incorporation provides
that no director of the Company shall be personally liable to the Company or our
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to the
Company or our stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) in
respect of unlawful dividend payments or stock redemptions or repurchases, or
(4) for any transaction from which the director derived an improper personal
benefit. In addition, our amended and restated certificate of incorporation
provides that if the Delaware General Corporation Law is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Article V of our amended and restated by-laws provides for indemnification
by the Company of our officers and certain non-officer employees under certain
circumstances against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement, reasonably incurred by those persons in connection
with the defense or settlement of any threatened, pending or completed legal
proceeding in which any such person is involved by reason of the fact that such
person is or was an officer or employee of the Company if such person acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to criminal actions or
proceedings, if such person had no reasonable cause to believe his or her
conduct was unlawful.
II-1
<PAGE> 4
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since our incorporation in February 1997, we have sold and issued the
following securities:
(1) On February 20, 1997, we issued 4,000,000 shares of common stock
to Scott Randall, our founder, for an aggregate consideration of
$4,000. The issuance of securities described in this paragraph
were deemed to be exempt from registration under the Securities
Act of 1933 in reliance on Section 4(2) of the Securities Act as a
transaction by an issuer not involving a public offering.
(2) On December 31, 1997, we issued 754,603 shares of Series A
Convertible Preferred Stock to Herman Becker for an aggregate
consideration of $500,000. The issuance of securities described in
this paragraph was deemed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act
as a transaction by an issuer not involving a public offering.
(3) From December 13, 1997 to August 22, 1998, we issued a total of
1,890,000 shares of Series B Convertible Preferred Stock for an
aggregate consideration of $2,100,000 to the following persons:
John C. Becker and Cheryl L. Becker, Randall Becker, Todd H.
Becker, Byrne Defined Benefit Trust, Joanne M. Eldred, J. Scott
Hefter, F. William Helming III, Jonathan C. McKay, Noreaster
Research Partners, Naren M. Patel and Ila N. Patel, Charles R.
Puliafico, Mark and Kathleen Puliafico, Edward J. Ruggeri, Robert
& Jane Sylvester, Richard Y. Woo and Jania N. Woo, Robert and Lisa
Anders, Arthur Remillard, RKG Associates, Sam S. Pappas, Surykant
and Sarla Patel. The issuances of securities described in this
paragraph were deemed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act
as transactions by an issuer not involving a public offering.
(4) On February 25, 1999, we issued 6,168,282 shares of Series C
Convertible Preferred Stock for an aggregate consideration of
$10,572,435 to the following persons: Sierra Ventures VII, L.P.,
Sierra Ventures Associates VII, L.L.C., Greg Shlopak, East River
Ventures, L.P., Mercator Ventures Fund, Noreaster Research
Partners, Richard Y. and Jania N. Woo, John C. and Cheryl L.
Becker, Naren M. and Ila N. Patel, Mark and Kathleen Puliafico,
Charles R. Puliafico, Edward J. Ruggieri, Robert J. and Lisa H.
Anders, Arthur Remillard, Jr., Surykant and Sarla Patel, RKG
Associates, Sam S. Pappas and William A. Sahlman. The issuances of
securities described in this paragraph were deemed to be exempt
from registration under the Securities Act in reliance on Section
4(2) of the Securities Act as transactions by an issuer not
involving a public offering.
(5) On May 12, 1999, we issued two warrants to Lycos, Inc. to purchase
1,320,000 shares of common stock (the first warrant is exercisable
for 725,000 shares of common stock at an exercise price of $0.01
per share, and the second warrant is exercisable for up to 595,000
shares of common stock, at an exercise price of $1.71 per share).
The issuances of securities described in this paragraph were
deemed to be exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act as transactions by
an issuer not involving a public offering.
(6) From August 23, 1999 to September 15, 1999, we issued a total of
7,500,000 shares of Series D Convertible Preferred Stock to
Microsoft Corporation, Excite, Inc. and TicketMaster
Online-CitySearch, Inc. for aggregate cash consideration of
$31,500,000 (of which $17,500,000 is being credited against future
obligations of FairMarket to Excite). The issuances of securities
described in this paragraph were deemed to be exempt from
registration under the Securities Act in reliance
II-2
<PAGE> 5
on Section 4(2) of the Securities Act as transactions by an issuer
not involving a public offering.
(7) On August 23,1999, we issued a warrant to purchase 4,500,000
shares of common stock to Microsoft Corporation at an exercise
price of $1.71. The issuance of securities described in this
paragraph was deemed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act
as a transaction by an issuer not involving a public offering.
(8) Since our incorporation and as of December 31, 1999, we have
issued 971,725 shares of common stock and options to purchase an
aggregate of 4,764,500 shares of common stock with exercise prices
ranging from $0.01 to $7.50 per share. All sales of common stock
were made upon exercise of options or for fair market value at the
time of the sale. Since our incorporation and as of December 31,
1999, options to purchase 781,750 shares have been cancelled
without exercise. The issuances of common stock are detailed
below.
<TABLE>
<CAPTION>
NUMBER AGGREGATE
DATE PURCHASER OF SHARES CONSIDERATION
---- --------- --------- -------------
<S> <C> <C> <C>
04/26/97 Nanda Krish.................. 50,000 $50
12/01/97 Jonas Sylvester.............. 75,000 Consulting services
valued at $7,500
12/01/97 Leonard Vairo................ 30,000 Consulting services
valued at $3,000
12/01/97 Todd H. Becker............... 125,682 Consulting services
valued at $12,568.20
01/22/98 Gail Alden................... 25,000 $2,500
05/18/98 Christopher Caruso........... 18,750 $1,875
05/27/98 Mercator Ventures, LLC....... 84,500 Consulting services
valued at $8,450
05/27/98 Technology Solutions......... 150,000 Past services and release
of claims valued at
$10,000
06/08/98 Beth Ann Robinson............ 5,000 $500
06/08/98 Jay Atlas.................... 5,000 $500
06/08/98 Eric Kim..................... 5,000 $500
08/22/98 Mercator Ventures, LLC....... 50,000 Consulting services
valued at $5,000
08/22/98 Todd H. Becker............... 70,000 Consulting services
valued at $7,000
08/22/98 Collaborative................ 10,000 Consulting services
Communications, Inc. valued at $1,000
12/31/98 Collaborative................ 7,500 Consulting services
Communications, Inc. valued at $750
12/31/98 Kathy M. Boyce............... 5,000 Consulting services
valued at $500
12/31/98 Kim Sutton................... 5,000 $500
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER AGGREGATE
DATE PURCHASER OF SHARES CONSIDERATION
---- --------- --------- -------------
<S> <C> <C> <C>
12/31/98 Mercator Ventures, LLC....... 43,250 Consulting services
valued at $4,325
01/01/99 Caryl H. Hull................ 11,000 Consulting services
valued at $1,100
02/25/99 Larry Wexler................. 187,509 Consulting services
valued at $18,750.90
02/25/99 GP Shlopak, Inc.............. 26,254 Consulting services
valued at $2,625.40
02/25/99 Richard Plutzer.............. 15,000 Consulting services
valued at $3,000
05/20/99 Jennifer L. Mozeiko.......... 7,500 $750
06/01/99 William R. Watt.............. 6,250 $625
06/09/99 Jack Littman Quinn........... 5,000 $2,500
07/27/99 James Jin.................... 8,750 $875
08/04/99 William R. Watt.............. 1,562 $156.20
08/28/99 Jennifer L. Mozeiko.......... 1,564 $156.40
08/30/99 James Jin.................... 8,438 $843.80
09/08/99 Kathy M. Boyce............... 2,000 Consulting services
valued at $3,000
09/08/99 Ellen Cantillon.............. 100 $150
09/17/99 Kathleen Pitcher............. 4,375 $437.50
10/08/99 Mark Sutton.................. 34,375 $3,437.50
10/18/99 Jennifer L. Mozeiko.......... 1,875 $187.50
10/18/99 Kurt Steiner................. 8,188 $818.80
11/09/99 William R. Watt.............. 1,563 $156.30
11/10/99 Jennifer L. Mozeiko.......... 937 $93.70
11/11/99 James Jin.................... 3,750 $375
11/12/99 Kathleen Pitcher............. 3,750 $375
11/30/99 William Cornell.............. 6,250 $625
11/30/99 John Courtney................ 20,000 $2,000
12/08/99 Susan Zaney.................. 75,000 $7,500
12/14/99 Joseph Aparo................. 10,000 $1,000
12/14/99 Mark Sutton.................. 13,750 $1,375
12/15/99 Kathleen Pitcher............. 938 $93.80
12/18/99 Kurt Steiner................. 3,937 $393.70
12/28/99 Egon Zehnder................. 8,929 Consulting services
International, Inc. valued at $62,500
</TABLE>
These issuances of securities were deemed to be exempt from registration
under the Securities Act in reliance on Rule 701 under the Securities Act as
transactions pursuant to compensatory benefit plans and contracts relating to
compensation or as private placements under Section 4(2) of the Securities Act.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
II-4
<PAGE> 7
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and other instruments issued in such
transactions. All recipients either received adequate information about
FairMarket or had access, through employment or other relationships, to such
information.
There were no underwriters employed in connection with any of the
transactions set forth in this item 15.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
+ 1.1 Form of Underwriting Agreement.
+ 3.1 Amended and Restated Certificate of Incorporation of
FairMarket, Inc. (the "Company")
+ 3.2 Form of Fourth Amended and Restated Certificate of
Incorporation of the Company (to be filed with the Delaware
Secretary of State immediately prior to the effectiveness of
this registration statement)
+ 3.3 Form of Fifth Amended and Restated Certificate of
Incorporation of the Company (to be filed with the Delaware
Secretary of State immediately following the closing of this
offering)
+ 3.4 Bylaws of the Company
+ 3.5 Form of Amended and Restated Bylaws of the Company (to be
effective upon the closing of this offering)
+ 4.1 Form of Specimen Certificate for the Company's Common Stock
+ 4.2 Investors' Rights Agreement, dated February 25, 1999,
between the Company and the stockholders named therein
+ 4.3 Amendment to Investors' Rights Agreement, dated August 23,
1999, between the Company and the stockholders named therein
+ 4.4 Amendment to Investors' Rights Agreement, dated September
15, 1999, between the Company and TicketMaster
Online-CitySearch, Inc.
+ 5.1 Opinion of Goodwin, Procter & Hoar LLP regarding the
legality of the securities being registered
+10.1 Form of Indemnity Agreement entered into by the Company with
each of its directors
+10.2 Amended and Restated 1997 Stock Option Plan
+10.3 1999 Stock Option Plan
+10.4 Form of 2000 Stock Option and Incentive Plan
+10.5 Form of Employee Stock Purchase Plan
+10.6 Lease Agreement dated November 9, 1999, between DIV Unicorn,
LLC and the Company
+10.7 Sublease Agreement dated January 22, 1998, between Insignia
Solutions, Inc. and the Company
+10.8 Sublease Agreement dated April 5, 1999, between Indigo
America, Inc. and the Company
+10.9 Warrant to Purchase Common Stock between the Company and
Lycos, Inc. dated as of May 12, 1999
+10.10 Performance Warrant to Purchase Common Stock between the
Company and Lycos, Inc., dated as of May 12, 1999
</TABLE>
II-5
<PAGE> 8
<TABLE>
<C> <S>
+10.11 Warrant to Purchase Common Stock between the Company and
Microsoft Corporation, dated as of August 23, 1999
+10.12 Siteharbor Services Agreement between the Company and
NaviSite Services Corporation, dated as of October 30, 1998
+10.13 Indemnification Agreement among the Company and Sierra
Ventures VII, LP, and Sierra Ventures Associates VII, LLC,
dated February 25, 1999.
10.14 Composite Auction Services Agreement, dated July 26, 1999,
by and between the Company and Microsoft Corporation, as
amended.
10.15 Auction Services Agreement, dated August 23, 1999, by and
between the Company and Excite, Inc.
10.16 Auction Services Agreement, dated September 15, 1999, by and
between the Company and Ticketmaster Online-CitySearch.
+23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto)
+23.2 Consent of PricewaterhouseCoopers LLP
+24.1 Powers of Attorney (included on the signature pages hereto)
+27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ Previously filed.
(b) Financial Statement Schedules
All schedules have been omitted because they are not required or because
the required information is given in the financial statements or the notes to
those statements.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant
II-6
<PAGE> 9
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-7
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 5 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, on March 2, 2000.
FairMarket, Inc.
By: /s/ SCOTT T. RANDALL
-----------------------------------------------
Scott T. Randall
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ SCOTT T. RANDALL President, Chief Executive March 2, 2000
- ------------------------------------------------ Officer and Director (Principal
Scott T. Randall Executive Officer)
/s/ JOHN BELCHERS Chief Financial Officer March 2, 2000
- ------------------------------------------------ (Principal Financial Officer and
John Belchers Principal Accounting Officer)
* Director March 2, 2000
- ------------------------------------------------
Jeffrey Drazan
* Director March 2, 2000
- ------------------------------------------------
Nanda Krish
* Director March 2, 2000
- ------------------------------------------------
Richard Pallan
* By: /s/ JOHN BELCHERS
- -----------------------------------------------
John Belchers
Attorney-in-fact
</TABLE>
II-8
<PAGE> 11
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
+1.1 Form of Underwriting Agreement
+3.1 Amended and Restated Certificate of Incorporation of
FairMarket, Inc. (the "Company")
+3.2 Form of Fourth Amended and Restated Certificate of
Incorporation of the Company (to be filed with the Delaware
Secretary of State immediately prior to the effectiveness of
this registration statement)
+3.3 Form of Fifth Amended and Restated Certificate of
Incorporation of the Company (to be filed with the Delaware
Secretary of State immediately following the closing of this
offering)
+3.4 Bylaws of the Company
+3.5 Form of Amended and Restated Bylaws of the Company (to be
effective upon the closing of this offering)
+4.1 Form of Specimen Certificate for the Company's Common Stock
+4.2 Investors' Rights Agreement, dated February 25, 1999,
between the Company and the stockholders named therein
+4.3 Amendment to Investors' Rights Agreement, dated August 23,
1999, between the Company and the stockholders named therein
+4.4 Amendment to Investors' Rights Agreement, dated September
15, 1999, between the Company and TicketMaster
Online-CitySearch, Inc.
+5.1 Opinion of Goodwin, Procter & Hoar LLP regarding the
legality of the securities being registered
+10.1 Form of Indemnity Agreement entered into by the Company with
each of its directors
+10.2 Amended and Restated 1997 Stock Option Plan
+10.3 1999 Stock Option Plan
+10.4 Form of 2000 Stock Option and Incentive Plan
+10.5 Form of Employee Stock Purchase Plan
+10.6 Lease Agreement dated November 9, 1999, between DIV Unicorn,
LLC and the Company
+10.7 Sublease Agreement dated January 22, 1998, between Insignia
Solutions, Inc. and the Company
+10.8 Sublease Agreement dated April 5, 1999, between Indigo
America, Inc. and the Company
+10.9 Warrant to Purchase Common Stock between the Company and
Lycos, Inc. dated as of May 12, 1999
+10.10 Performance Warrant to Purchase Common Stock between the
Company and Lycos, Inc., dated as of May 12, 1999
+10.11 Warrant to Purchase Common Stock between the Company and
Microsoft Corporation, dated as of August 23, 1999
+10.12 Siteharbor Services Agreement between the Company and
NaviSite Services Corporation, dated as of October 30, 1998
+10.13 Indemnification Agreement among the Company and Sierra
Ventures VII, LP, and Sierra Ventures Associates VII, LLC,
dated February 25, 1999.
10.14 Composite Auction Services Agreement, dated July 26, 1999,
by and between the Company and Microsoft Corporation, as
amended.
10.15 Auction Services Agreement, dated August 23, 1999, by and
between the Company and Excite, Inc.
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.16 Auction Services Agreement, dated September 15, 1999, by and
between the Company and Ticketmaster Online-CitySearch.
+23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto)
+23.2 Consent of PricewaterhouseCoopers LLP
+24.1 Powers of Attorney (included on the signature pages hereto)
+27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ Previously filed.
<PAGE> 1
EXHIBIT 10.14
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 One Microsoft Way, Redmond, WA 98052 ("Microsoft") and
FairMarket, Inc., a Delaware corporation, with a principal place of business
located at 400 Unicorn Park Drive, Woburn, MA 01801 ("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.
1
<PAGE> 2
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 www.msn.com (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
-------
MSN.com.
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
-------
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.
<TABLE>
<CAPTION>
YEAR MINIMUM ANNUAL VISITS
---- ---------------------
<S> <C>
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
</TABLE>
(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 (Nextag.com),
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.,
Amazon.com. 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 one percent
(1.0%) 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, 75% 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: 100% of the Listing Fees charged to
Sellers for listings placed at the Private Label Auction Sites,
plus 50% of the Transaction Fees charged to Sellers for listings
placed at the Private Label Auction Sites, plus 50% 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 bill 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 100% of the auction-related advertising
revenue. Microsoft shall have sole discretion to set its own
advertising rate card.
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5.3 HOSTING FEES. Microsoft agrees to pay FairMarket the total sum of
Sixty Thousand Dollars (US$60,000) 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 75%
to Microsoft and 25% 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").
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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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<PAGE> 21
Notices to Microsoft: Notices to FairMarket:
Microsoft Corporation FairMarket, Inc.
One Microsoft Way 400 Unicorn Park Drive
Redmond, WA 98052-6399 Woburn, MA 01801
Attn.: Matt Kursch, General Manager, MSN Attn.: Scott Randall
Fax: (425) 936-7329 Fax: (781) 935-7976
Copy to: Law & Corporate Affairs Copy to: Goodwin Procter & Hoar
Fax: (425) 936-7329 Attn: David F. Dietz, P.C.
Fax: (617) 523-1231
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/ Brad Chase By /s/ Scott Randall
________________________________ _____________________________
Name Brad Chase Name Scott Randall
_____________________________ __________________________
Title Title CEO
_____________________________ __________________________
Date 7/29/99 Date 7/29/99
_____________________________ __________________________
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<PAGE> 1
EXHIBIT 10.15
CONFIDENTIAL
AUCTION SERVICES AGREEMENT
This agreement ("Agreement") is entered into as of August 23, 1999 ("Effective
Date"), by and between Excite, Inc., a wholly owned subsidiary of At Home
Corporation, a Delaware corporation located at 555 Broadway, Redwood City, CA
94063 ("Excite") and FairMarket, Inc., a Delaware corporation located at 400
Unicorn Park Drive, Woburn, Massachusetts 01801, CA 94063 ("FairMarket" or
"Auction Services Provider").
RECITALS
A. Excite maintains sites on the Internet at http://www.excite.com (the
"Excite Site"), at http://www.classifieds2000.com (the "Classifieds2000
Site") and at http://www.webcrawler.com (the "Webcrawler Site"), and owns
and/or manages related Web sites worldwide which, among other things,
allow its users to search for and access content and other sites on the
Internet. "Excite Network" shall mean the following narrowband web sites
owned and/or operated by Excite (including any narrowband versions or
upgrades thereof): Excite Site, Webcrawler Site and Classifieds2000 Site,
but shall not include Excite's business portal located at www.work.com
(including any versions, upgrades, successors or replacements thereof) or
any broadband site.
B. Auction Services Provider owns and operates a back-end auction service
("FairMarket Auction Service(s)"), which it provides to third party
internet sites. FairMarket also owns or manages a related site on the
internet at http://www.fairmarket.com ("FairMarket Site" or "Auction
Services Provider Site"). "FairMarket Network" shall mean the network of
sites of FairMarket customers for whom FairMarket hosts private label
auction services similar to the private label auction services as defined
herein.
C. Excite and Auction Services Provider wish to develop a co-branded version
of the FairMarket Auction Services, which will be developed and
maintained by Auction Services Provider on an integrated basis with the
Excite Network ("Co-Branded Site").
1. CO-BRANDED SERVICE
a) FairMarket will develop, host, and maintain, at its expense, the
Co-Branded Site in accordance with the specifications defined in
Exhibit A.
b) FairMarket will be responsible for all system operation software
costs, hardware costs and operation costs incurred in connection
with the development and operation of the Co-Branded Site. The
Co-Branded Site shall utilize the functional specifications
described in FairMarket's "Community AuctionPlace Features,
version 4.0 ", which is attached hereto as Exhibit E, and as may
be changed from time to time. The Co-Branded Site shall be
developed and maintained at no additional charge to Excite.
c) FairMarket and Excite will work together to develop and launch the
Co-Branded Site in accordance with the development schedule
detailed in Exhibit B.
d) Excite will display links to the Co-Branded Site in a variety of
locations across the Excite Network. At a minimum, Excite will
provide links from the Excite.com homepage and the toolbar of the
Excite Classifieds service. If for any reason Excite determines
that such links are no longer in its best interests, Excite may
remove the links so long as Excite provides links to the
Co-Branded Site, from the Excite Network or from other site(s)
controlled by Excite, which afford the Co-Branded Service a level
of promotion similar to or greater than that provided by the
original links. In addition, Excite may display 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 Excite Network to
relevant areas within the Co-Branded Site. Excite will have sole
discretion and control over the placement and positioning of such
links.
Excite - FairMarket Agreement
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CONFIDENTIAL
e) Excite will have sole control over the "look and feel" of the
Excite Network. Excite will have sole responsibility for providing
and maintaining, at its expense, the Excite Network and any
hardware or labor or software (including updates thereto)
reasonably necessary to maintain the Excite Network as described
herein.
2. ADVERTISING ON THE CO-BRANDED SITE
a) Excite will sell and serve (when available) all advertising on the
Co-Branded Site, including, but not limited to banner advertising
and Excite sponsorship module advertising. Excite will have the
right to sell and serve such advertising on all pages within the
Co-Branded Site. FairMarket will work with Excite, and accommodate
Excite's technical requirements, to serve dynamic targeted banners
and sponsorship placements, and create and target additional
advertising positions within the Co-Branded Site.
b) Excite will pay FairMarket, on a quarterly basis, twenty per cent
(20%) of "Net Advertising Revenue" (gross advertising revenue less
sales costs not to exceed fifteen per cent (15%)) collected from
such advertising.
c) Excite will not sell advertising on the Co-Branded Site to
FairMarket Named Competitors. "FairMarket Named Competitors" shall
include eBay and Amazon Auctions. FairMarket may add to or replace
company names on the list of FairMarket Named Competitors under
the following conditions: (i) Excite must approve any such change,
such approval not to be unreasonably withheld, (ii) the total
number of FairMarket Named Competitors does not exceed five
companies, (iii) the list may not be changed more than once per
calendar quarter and (iv) no company may be added to the list with
which Excite has a material existing advertising relationship at
the time of such intended addition.
d) As soon as reasonably possible, FairMarket will work with Excite
to enable the promotion of Excite's preferred financial services
provider on the Co-Branded Site. To the extent that the Co-Branded
Site offers buyer registration forms and/or credit card processing
service(s), such services will present Excite's preferred
financial services provider as the default credit card provider,
and in any event more prominently than it presents the names or
logos of any competing companies including, but not limited to,
credit card companies.
3. TRANSACTION REVENUE
a) "Seller(s)" shall mean a user who lists product(s) or service(s)
for sale on the FairMarket Network.
b) "Buyer(s)" shall mean a user who successfully bids for product(s)
or service(s) on the FairMarket Network.
c) "Transaction Fees" shall mean any fee charged to Sellers or Buyers
that become payable upon the consummation of a sale of a product
or service through the FairMarket Network.
d) "Listing Fees" shall mean any fee charged to a Seller for placing
any listing of products or services on the Co-Branded Site.
e) "Gross Transaction Revenue" shall mean one hundred per cent (100%)
of Listing Fees charged to Sellers on the Co-Branded Site, plus
fifty per cent (50%) of all Transaction Fees (using the Co-Branded
Site's then-current transaction fee schedule) resulting from
transactions in which the Buyer used the Co-Branded Site
(regardless of whether the Seller uses the Co-Branded Site or
another site within the FairMarket Network), plus fifty per cent
(50%) of all Transaction Fees resulting from transactions in which
a Seller used the Co-Branded Site (regardless of whether the Buyer
uses the Co-Branded Site or another site within the FairMarket
Network).
Excite - FairMarket Agreement
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CONFIDENTIAL
f) "Net Transaction Revenue" shall mean actual Gross Transaction
Revenue less returns or similar credits and credit card and other
processing costs (collectively not to exceed 2.5% of Gross
Transaction Revenue).
g) "Shared Transaction Revenue" shall mean fifty five per cent (55%)
of Net Transaction Revenue.
h) FairMarket shall determine the amount, if any, of Transaction Fees
and Listing Fees for the Co-Branded Site. FairMarket will take
into consideration current industry pricing and the competitive
environment when setting pricing, and will establish pricing
comparable to that charged by leading independent auction sites
and other leading portals. Unless expressly requested or
authorized by Excite, under no circumstances will the Transaction
Fees or Listing Fees on the Co-Branded Site be higher in aggregate
than those on any of FairMarket's other similar co-branded auction
services. Unless expressly requested and authorized by Excite,
under no circumstances after the initial launch period (not to
exceed three (3) months following the Effective Date) will the
Transaction Fees or Listing Fees on the Co-Branded Site be zero.
i) Subject to the minimum revenue guarantee described in Section 3.j.
below, FairMarket will pay Excite, on a quarterly basis, the
Shared Transaction Revenue within thirty (30) days following the
end of each quarter.
j) For contract years in which total Excite-initiated "User Visits"
(the number of sessions in the Co-Branded Site that were initiated
via links or banners on the Excite Network, as well as visits
initiated directly via a URL) exceeds the "Minimum Guaranteed
Visit" numbers below, FairMarket will pay Excite the greater of:
(i) Shared Transaction Revenue or (ii) the Minimum Revenue
Guarantee (defined below).
<TABLE>
<CAPTION>
Contract Year Minimum Revenue Guarantee Minimum Guaranteed Visits
<S> <C> <C>
Year 1 $0.8 Million 27 Million Visits
Year 2 $2.1 Million 42 Million Visits
Year 3 $4.6 Million 55 Million Visits
Year 4 $7.0 Million 75 Million Visits
Year 5 $8.4 Million 90 Million Visits
</TABLE>
k) FairMarket agrees to remit to Excite any balance due on the
Minimum Revenue Guarantee no later than 90 days following the end
of each contract year. Minimum Guarantees are viewed on a contract
year annual basis and not on a cumulative basis; for example, any
Minimum Revenue Guarantee that FairMarket paid to Excite in a
given year would never be paid back by Excite in future years,
even if FairMarket exceeded minimum payments in future years.
4. ADVERTISING ON THE EXCITE NETWORK
a) For a two-year period beginning on the Effective Date, Excite will
provide FairMarket with advertising services as defined in Exhibit
D and subject to the standard Terms and Conditions as described
therein.
b) In exchange for advertising services described in 4.a), FairMarket
will pay Excite $2.5 million per quarter, for a total of $20
million over eight quarters. Excite will invoice FairMarket for
actual advertising services delivered at the end of each calendar
quarter. The parties expect that the delivery of such advertising
and resulting Excite recognition of accrual of advertising revenue
will begin at approximately the same time as the launch of the
Co-Branded Site,
Excite - FairMarket Agreement
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CONFIDENTIAL
which is expected to be early in Q4 1999. All such fees will be
due within thirty days of invoice.
c) The parties expect that changes to the agreed-upon advertising
placements may be desirable at various points during the two-year
term of this advertising commitment. In the event that one or more
of the defined placements or services does not perform to
FairMarket's satisfaction or is no longer available on the Excite
Network, the parties will work together in good faith to replace
the insertion order describing such placement or service with an
insertion order describing a new placement or service of similar
value. FairMarket will be not be charged any penalty fees for such
changes. The parties will not make such changes more than once per
calendar quarter.
d) All banner, sponsorship and/or other promotional advertising will
refer to "Excite Auctions" and will be directed to click through
to the Co-Branded Site.
e) FairMarket will develop at its expense the creative to be used in
banner and sponsorship placement advertising. All such creative
will be utilized subject to Excite's approval, such approval not
to be unreasonably withheld.
5. PREFERRED PARTNER PROMOTION
a) During the Term (as defined in Section 6(a)), subject to the
exclusions listed in Section 5.b), 5.c) and 5.d) below, Excite
will not form a relationship with any third party company, other
than FairMarket, to provide private label or co-branded services
of the following types for the Excite Network sites: (i)
person-to-person Auction Services, (ii) merchant-to-person Auction
Services, or (iii) Classified Advertising Services for the
Auction-related Classified Categories.
b) Excite retains the option to enter into one or more relationships
with third parties to provide the following services, which may be
co-branded or private label auction services: (i) reverse
auctions, (ii) Auction Services involving rare and authenticated
goods and (iii) merchant-to-person and person-to-person auction
services for its broadband service(s). In such cases, Excite will
discuss its functionality needs with FairMarket to determine if
comparable functionality will be available from FairMarket within
the time frame required by Excite. If FairMarket develops
comparable functionality within such time frame, Excite will
consider the FairMarket offering, but is free to select either
FairMarket or a third party, although Excite agrees to view
FairMarket as the "incumbent" in such circumstances.
c) In the event that Excite wishes to offer its users co-branded
person-to-person or co-branded merchant-to-person auction services
or functionality, which are not provided by the Co-Branded Site,
Excite will notify FairMarket of its intention to provide such
services. If FairMarket is unable to provide such services within
ninety (90) days, Excite may, in its sole discretion, form one or
more relationships with any third parties for the provision of
such services.
d) The parties acknowledge that Excite has and will form
relationships with third parties for the provision of private
label or co-branded services not primarily focused on
person-to-person or merchant-to-consumer auctions. In some cases,
such private label or co-branded service(s) may include a
person-to-person or merchant-to-consumer auction component related
to the specific service or category offered. Such relationships
are not focused on person-to-person or merchant-to-person auctions
and therefore will be excluded from the restriction described in
Section 5.a.
e) FairMarket shall promote Excite's participation as a partner in
its private label program in ongoing press materials, and in
marketing collateral related to such program; provided that all
uses of Excite Marks in marketing and promotional materials shall
require the prior review and approval of Excite.
Excite - FairMarket Agreement
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CONFIDENTIAL
f) FairMarket will not develop or promote a proprietary Auction
Services or Classified Advertising Services destination site,
including any site under the FairMarket, or any other name, at any
time during the Term. All links on the FairMarket site referencing
a live auction or classifieds service shall link to the Co-Branded
Site or other FairMarket third-party partner site. Following the
first anniversary of the Effective Date, FairMarket shall have the
option to develop and promote a proprietary Auction Services or
Classified Advertising Services destination site if the total
visits to the Co-Branded Site falls below 3 million visits in any
3-month period.
g) Excite will promote the Co-Branded Site to the merchant customers
of its retail shopping service. FairMarket will use its best
efforts to relate its auction and classifieds category hierarchy,
per Excite's direction, to the category hierarchy presented in
Excite's retail shopping service, to enable Excite's merchant
customers to distribute product listings through both services via
a single or parallel data feed.
h) FairMarket, at its sole discretion, may refer its merchant
customers seeking a retail shopping distribution partnership to
the Excite Shopping Service ("ESS"). FairMarket will not promote
ESS to its merchant customers any less that it promotes any
similar third party online retail shopping service with comparable
revenue-sharing arrangements.
i) Excite shall promote Excite's participation as a partner in the
FairMarket Network in ongoing press materials for the Excite
Auctions service, and in printed marketing collateral for the
Excite Auctions service; provided that all uses of FairMarket
Marks in marketing and promotional materials shall require the
prior review and approval of FairMarket.
6. TERM
a) The Term of the Agreement shall begin on the Effective Date and
will continue for five (5) years.
b) Following the initial term, the Agreement will automatically renew
for twelve (12) month terms until cancelled in writing by either
party at least thirty (30) days prior to the end of the
then-current term. In renewal terms, neither the traffic
guarantees by Excite or revenue guarantees from FairMarket shall
apply. All other financial arrangements will carry forward unless
the parties agree otherwise prior to any renewal.
7. TERMINATION
a) Either party may terminate this Agreement if the other party
breaches any material obligation hereunder and such breach remains
uncured for thirty (30) days following the receipt of written
notice to the breaching party of the breach and the notifying
party's intention to terminate.
b) Notwithstanding the provisions set forth in 7.a) above, Excite
shall have the following termination rights:
i. In the event of three or more unplanned outages (each for a
period of fifteen (15) minutes or longer and each in a
separate 24-hour period) of the Co-Branded Site in any
thirty (30) day period, or in the event of one or more
major unplanned outage (for a period of five (5) hours or
longer) of the Co-Branded Site in any thirty (30) day
period, Excite may immediately terminate the Agreement
without notice and without a cure period.
ii. If the quality of the Co-Branded Site and FairMarket
Auction Services are not at least comparable to any other
auction service on the Internet, based on ranking by a
cross-section of third party reviewers (to be recommended
by Excite and approved by
Excite - FairMarket Agreement
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CONFIDENTIAL
FairMarket, such approval not to be unreasonably withheld)
in terms of features and functionality including user
interface, product services, accessibility and reliability
(the "Default Standard"), Excite shall notify FairMarket in
writing, and FairMarket shall use its best efforts to bring
the Co-Branded Site and FairMarket Auction Services to the
Default Standard. If Excite determines that FairMarket has
not met the Default Standard within sixty (60) days
following such notification, Excite will no longer be bound
to the placement requirements outlined in Section 1.d. or
the relationship restrictions defined in Section 5.a.
iii. In the event that any undisputed Auction Services Provider
payment to Excite remains unpaid after it is due, Excite
shall notify Auction Services Provider of such delinquency
and Excite's intention to terminate, and Auction Services
Provider shall have five (5) business days to cure, after
which, if any portion remains unpaid, Excite may
immediately terminate this Agreement without further notice
and without a cure period.
iv. During the term of the Agreement, in the event that an
Excite Named Competitor acquires FairMarket, or merges with
FairMarket or acquires control of all or substantially all
of FairMarket's assets, Excite may terminate the Agreement
by providing ninety (90) days written notice within ninety
(90) days of Excite's notification of such merger or
acquisition. Should Excite choose not to terminate the
Agreement during this period, FairMarket will continue to
provide Excite with a level of service, which is, at a
minimum, consistent with that level of service provided to
Excite up to the point of such merger or acquisition.
c) Upon termination of this Agreement, Excite and the Excite Network
shall immediately discontinue all use of the Co-Branded Site and
return to Auction Services Provider, or destroy, all intellectual
property belonging to Auction Services Provider.
d) All payments that have accrued prior to the termination or
expiration of this Agreement will be payable in full within thirty
(30) days of such termination or expiration.
e) The provisions of Section 11 (Confidentiality), Section 12
(Warranty and Indemnity), Section 13 (Limitation of Liability) and
Section 14 (Dispute Resolution) shall survive any termination or
expiration of the Agreement.
8. USAGE REPORTS AND USER DATA
a) In addition to the usage reports made available to Excite via the
Administrative Module (as defined in Exhibit A), FairMarket will
provide weekly and monthly usage reports as detailed in Exhibit C
("Usage Reports").
b) For the purpose of this Agreement, "User Data" shall mean all
information submitted by a user of the Co-Branded Site ("User") to
either party to this Agreement. "Individually Identifiable User
Data" shall mean data which can be reasonably used to identify a
specific individual such as their name, address, phone number,
etc.
c) Both parties acknowledge that any individual user of the Internet
could be a customer of Excite, Inc. and/or Auction Services
Provider through activities unrelated to this Agreement. Both
parties further acknowledge that any User Data gathered
independent of this Agreement, even for Users that utilize both
party's services, shall not be covered by this Agreement.
d) Excite shall retain all rights to any User Data obtained through
this Agreement. Excite will have full access to all User Data via
the Administrative Module (as defined in Exhibit A). Upon
expiration or termination of the Agreement, FairMarket will
provide to Excite any User Data not available to Excite at the
time of such termination or expiration; such User Data will be
provided in an electronic format to be agreed upon by the parties
and will be provided to Excite within thirty (30) days following
such termination or expiration.
Excite - FairMarket Agreement
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CONFIDENTIAL
e) During the Term, Excite hereby grants FairMarket a limited license
to aggregate and use the User Data only as follows. In the case of
User submitted listings, Excite grants FairMarket the right to
aggregate and distribute such listings across the FairMarket
Network. Excite agrees that FairMarket shall be able to utilize
aggregate information for the purposes of improving the Co-Branded
Site. FairMarket may utilize, at its sole discretion, aggregated
data from the Co-Branded Site when aggregated with data from
FairMarket's other customers.
f) Both parties agree that they will not sell, disclose, transfer, or
rent the Individually Identifiable User Data to any third party,
nor will either party use said Individually Identifiable User Data
on behalf of any third party, without the express permission of
the User. In such cases where User permission for dissemination of
Individually Identifiable User Data has been obtained, Auction
Services Provider shall use all reasonable efforts to include and
enforce within such dissemination contracts or agreements a
requirement for the inclusion of an unsubscribe feature in all
email communications generated by, or on behalf of, third party
users of said Individually Identifiable User Data.
9. SERVICE OWNERSHIP AND LICENSE
Auction Services Provider will retain all right, title and interest in
and to its service worldwide (including, but not limited to, ownership
of all copyrights and other intellectual property rights therein).
During the term of this Agreement, and subject to the terms and
conditions of this Agreement, Auction Services Provider hereby grants
to Excite a royalty-free, non-exclusive, worldwide license to use,
distribute, transmit and publicly display the Co-Branded Site in
accordance with this Agreement and to sub-license the Co-Branded Site
to Excite's wholly-owned subsidiaries or joint ventures in which Excite
participates for the sole purpose of using, distributing, transmitting
and publicly displaying the Co-Branded Site in accordance with this
Agreement.
10. TRADEMARK OWNERSHIP AND LICENSE
a) Auction Services Provider will retain all right, title and
interest in and to its trademarks, service marks and trade
names worldwide, subject to the limited license granted to
Excite hereunder.
b) Excite will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject
to the limited license granted to Auction Services Provider
hereunder.
c) Each party ("Licensor") hereby grants to the other a
non-exclusive, limited license to use Licensor's trademarks,
service marks or trade names only as specifically described in
this Agreement. All such use shall be in accordance with
Licensor's reasonable policies regarding advertising and
trademark usage, as shall be established or changed from time
to time, in each party's sole discretion.
d) Upon the expiration or termination of this Agreement, each
party will cease using the trademarks, service marks and/or
trade names of the other except:
i. As the parties may agree in writing; or
ii. To the extent permitted by applicable law.
11. CONFIDENTIALITY
a) For the purposes of this Agreement, "Confidential Information"
means information about the disclosing party's (or its
suppliers') business or activities that is proprietary and
confidential, which shall include all business, financial,
technical and other information of a party marked
Excite - FairMarket Agreement
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CONFIDENTIAL
or designated by such party as "confidential" or
"proprietary"; or information which, by the nature of the
circumstances surrounding the disclosure, ought in good faith
to be treated as confidential.
b) Confidential Information will not include information that (i)
is in or enters the public domain without breach of this
Agreement, (ii) the receiving party lawfully receives from a
third party without restriction on disclosure and without
breach of a nondisclosure obligation or (iii) the receiving
party knew prior to receiving such information from the
disclosing party or develops independently.
c) Each party agrees (i) that it will not disclose to any third
party or use any Confidential Information disclosed to it by
the other except as expressly permitted in this Agreement and
(ii) that it will take all reasonable measures to maintain the
confidentiality of all Confidential Information of the other
party in its possession or control, which will in no event be
less than the measures it uses to maintain the confidentiality
of its own information of similar importance.
d) Notwithstanding the foregoing, each party may disclose
Confidential Information (i) to the extent required by a court
of competent jurisdiction or other governmental authority or
otherwise as required by law or (ii) on a "need-to-know" basis
under an obligation of confidentiality to its legal counsel,
accountants, banks and other financing sources and their
advisors.
e) The terms and conditions of this Agreement will be deemed to
be the Confidential Information of each party and will not be
disclosed without the written consent of the other party.
12. WARRANTY AND INDEMNITY
a) Each of FairMarket and Excite warrants that it owns, or has
obtained all necessary rights to distribute and make available
as specified in this Agreement, any and all information,
service or content provided to the other party or made
available to third parties in connection with this Agreement,
including without limitation in the case of FairMarket, the
FairMarket Auction Service(s).
b) Auction Services Provider warrants that the Co-Branded Site
will comply with the description and technical specifications
as contemplated by this Agreement and all Exhibits. FairMarket
represents and warrants that the Co-Branded Site, the
FairMarket Auction Services and or any other software or
content supplied by FairMarket hereunder is designed to be
used prior to, during and after the calendar year 2000 A.D.,
and that the software will operate during each such time
period without error relating to date data.
c) Each of FairMarket and Excite will indemnify, defend and hold
harmless the other party, its affiliates, officers, directors,
employees, consultants and agents from any and all third party
claims, liability, damages and/or costs (including, but not
limited to, reasonable attorneys fees) arising from:
i) The breach of any warranty, representation or
covenant by FairMarket or Excite, as applicable, in
this Agreement; or
ii) Any claim that the Co-Branded Site or any all
information, service or content provided to Excite or
FairMarket, as applicable or made available to third
parties by FairMarket or Excite, as applicable, in
connection with this Agreement infringes or violates
any third party's copyright, patent, trade secret,
trademark, right of publicity or right of privacy or
contains any defamatory content.
Excite - FairMarket Agreement
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CONFIDENTIAL
A party seeking indemnification hereunder will promptly notify
the other party of any and all such claims and will reasonably
cooperate with such other party in the defense and/or
settlement thereof; provided that, if any settlement requires
an affirmative obligation of, results in any ongoing liability
to or prejudices or detrimentally impacts the indemnified
party in any way and such obligation, liability, prejudice or
impact can reasonably be expected to be material, then such
settlement shall require the indemnified party's written
consent (not to be unreasonably withheld or delayed) and the
indemnified party may, at its sole cost and expense, have its
own counsel in attendance at all proceedings and substantive
negotiations relating to such claim.
d) EXCEPT AS SPECIFIED IN THIS AGREEMENT, INCLUDING ALL EXHIBITS,
NEITHER PARTY MAKES ANY WARRANTY IN CONNECTION WITH THE
SUBJECT MATTER OF THIS AGREEMENT AND HEREBY SPECIFICALLY
DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE REGARDING SUCH SUBJECT MATTER.
13. LIMITATION OF LIABILITY
EXCEPT UNDER SECTION 11.c), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER
FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THE LIABILITY OF A PARTY FOR
DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER
LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE AMOUNTS ACTUALLY PAID BY
THE OTHER PARTY TO SUCH PARTY HEREUNDER.
14. DISPUTE RESOLUTION
a) The parties agree that any breach of either of the parties'
obligations regarding trademarks, service marks or trade names
and/or confidentiality would result in irreparable injury for
which there is no adequate remedy at law. Therefore, in the
event of any breach or threatened breach of a party's
obligations regarding trademarks, service marks or trade names
or confidentiality, the aggrieved party will be entitled to
seek equitable relief in addition to its other available legal
remedies in a court of competent jurisdiction. For the
purposes of this section only, the parties consent to venue in
either the state courts of the county in which Excite has its
principal place of business or the United States District
Court for the Northern District of California.
b) In the event of disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names and/or confidentiality, the
parties will first attempt to resolve the dispute(s) through
good faith negotiation. In the event that the dispute(s)
cannot be resolved through good faith negotiation, the parties
will refer the dispute(s) to a mutually acceptable mediator
for hearing in the county in which Excite has its principal
place of business.
c) In the event that disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names and/or confidentiality, cannot be
resolved through good faith negotiation and mediation, the
parties will refer the dispute(s) to the American Arbitration
Association for resolution through binding arbitration by a
single arbitrator pursuant to the American Arbitration
Association's rules applicable to commercial disputes. The
arbitration will be held in the county in which Excite has its
principal place of business.
15. GENERAL
a) Assignment. Neither party may assign this Agreement, in whole
or in part, without the other party's written consent (which
will not be unreasonably withheld), except that no such
consent
Excite - FairMarket Agreement
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CONFIDENTIAL
will be required in connection with a merger, reorganization
or sale of all, or substantially all, of such party's capital
stock or assets. Any attempt to assign this Agreement other
than as permitted above will be null and void.
b) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of
California, notwithstanding the actual state or country of
residence or incorporation of FairMarket.
c) Notice. Any notice under this Agreement will be in writing and
delivered by personal delivery, express courier, confirmed
facsimile, confirmed email or certified or registered mail,
return receipt requested, and will be deemed given upon
personal delivery, one (1) day after deposit with express
courier, upon confirmation of receipt of facsimile or email or
five (5) days after deposit in the mail. Notices will be sent
to a party at its address set forth below or such other
address as that party may specify in writing pursuant to this
Section.
d) No Agency. The parties are independent contractors and will
have no power or authority to assume or create any obligation
or responsibility on behalf of each other. This Agreement will
not be construed to create or imply any partnership, agency or
joint venture.
e) Force Majeure. Any delay in or failure of performance by
either party under this Agreement caused by any occurrence
beyond the reasonable control of such party including, but not
limited to, acts of God, power outages and governmental
restrictions will not be considered a breach of this Agreement
and such performance will be excused for the number of days
such occurrence reasonably prevents performance, but in no
case will such excuse extend beyond six (6) months.
f) Severability. In the event that any of the provisions of this
Agreement are held by to be unenforceable by a court or
arbitrator, the remaining portions of the Agreement will
remain in full force and effect.
g) Entire Agreement. This Agreement is the complete and exclusive
agreement between the parties with respect to the subject
matter hereof, superseding any prior agreements and
communications (both written and oral) regarding such subject
matter. This Agreement may only be modified, or any rights
under it waived, by a written document executed by both
parties.
Excite, Inc. FairMarket, Inc.
By: /s/ David Pine By: /s/ Scott Randall
Name: David Pine Name: Scott Randall
Title: General Counsel and Title: CEO
Secretary
Date: 8/23/99 Date: 8/23/99
Excite - FairMarket Agreement
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EXHIBIT 10.16
CONFIDENTIAL
AUCTION SERVICES AGREEMENT
This Auction Services Agreement (this "Agreement") is entered into as of
September 15, 1999 ("Effective Date"), by and between Ticketmaster
Online-CitySearch, Inc., a Delaware corporation located at 790 E. Colorado
Blvd., Suite 200, Pasadena, CA 91101 ("TMCS"), and FairMarket, Inc., a Delaware
corporation located at 400 Unicorn Park Drive, Woburn, Massachusetts 01801
("FairMarket").
RECITALS
A. FairMarket and TMCS have entered into the Stock Purchase Agreement
dated as of September 15, 1999 (the "Purchase Agreement") pursuant to which, on
the Closing Date thereunder, TMCS is purchasing from FairMarket a specified
amount of shares of FairMarket's Series D Preferred Stock.
B. TMCS owns and controls a number of websites on the Internet
(collectively, the "TMCS Sites").
C. FairMarket is in the business of designing, developing, and hosting
web sites for third parties in connection with which FairMarket provides private
label auction services ("FairMarket Auction Services").
D. TMCS and FairMarket wish to develop a number of co-branded versions
of the FairMarket Auction Services that will be developed and maintained by
FairMarket on an integrated basis with the TMCS Sites (the websites utilizing
the FairMarket Auction Services, when developed and launched, being collectively
referred to as the "Private Label Auction Sites") on the terms and conditions
set forth below.
E. The execution and delivery of this Agreement by TMCS and FairMarket
is a condition precedent to consummation of the transactions contemplated by the
Purchase Agreement to be consummated at the Closing thereunder.
NOW, THEREFORE, in consideration of the foregoing recitals, the
following covenants and promises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. CO-BRANDED PRIVATE LABEL AUCTION SERVICES
a) FairMarket will develop, host, and maintain, at its expense and
at no additional charge to TMCS, the Private Label Auction Sites
in accordance with the technical and content specifications set
forth in Exhibit A hereto and as otherwise agreed by FairMarket
and TMCS.
b) FairMarket will be responsible for all system operation software
costs, hardware costs and operation costs incurred in connection
with the development, operation and maintenance of the Private
Label Auction Sites. The Private Label Auction
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CONFIDENTIAL
Sites shall utilize the functional specifications described in
FairMarket's "Community AuctionPlace Features, version 4.0",
which is attached hereto as Exhibit C, and as may be changed from
time to time. FairMarket shall use commercially reasonable
efforts to make the Private Label Auction Sites available to
applicable users 24 hours per day, seven days per week. However,
FairMarket makes no representation that access to such sites will
be uninterrupted nor error free. TMCS shall have the right to
terminate this Agreement upon ten business days prior written
notice in the event that the server is not available at least 98%
(excluding scheduled downtime) of any calendar month, provided
that TMCS has been given prompt notice of any service outages
during such calendar month, and a reasonable opportunity to cure.
c) FairMarket and TMCS will work together to develop and launch the
Private Label Auction Sites in accordance with the schedule
detailed in Exhibit B.
d) TMCS will display prominent links to the Private Label Auction
Sites in a variety of locations across the TMCS Sites. At a
minimum, TMCS will provide links from appropriate TMCS Site
homepages, TMCS Site toolbars, and other contextually relevant
areas within the appropriate TMCS Sites.
2. ADVERTISING ON PRIVATE LABEL AUCTION SITES
a) TMCS will sell and serve all advertising on the Private Label
Auction Sites (collectively "Auction Site Advertising"). TMCS
will have the right to sell and serve all Auction Site
Advertising on all pages within the Private Label Auction Sites.
b) TMCS will pay FairMarket, on a quarterly basis within thirty (30)
days after the end of each calendar quarter, thirty per cent
(30%) of Gross Advertising Revenue collected by TMCS during such
quarter. For the purposes hereof, "Gross Advertising Revenue"
means the aggregate amount of payments actually collected by TCMS
during a specified period in respect Auction Site Advertising
sold by TMCS. In the case of websites that are owned or
controlled, directly or indirectly, by TMCS or USA Networks, Inc.
("USA"), TMCS will not run advertising for such sites without
cash compensation except to the extent that TMCS has available
inventory not purchased by third party advertisers.
c) Each quarterly payment made pursuant to Section 2(a) shall be
accompanied by an Advertising Services Revenue Statement in
respect of the prior calendar quarter. For purposes hereof,
"Advertising Services Revenue Statement" means the statement in
mutually agreed format setting for the Gross Advertising Revenue
realized during the prior calendar quarter.
d) TMCS will keep accurate records and books of account relating to
the calculation and reporting of the Gross Advertising Revenue
throughout the term of this Agreement and for at least two years
thereafter. During such period, FairMarket
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CONFIDENTIAL
shall have the right to cause an audit and/or inspection to be
made of TMCS's applicable records by an independent certified
public accountant in order to verify the Advertising Services
Revenue Statements. Except as specified herein, FairMarket shall
be responsible for all costs related to such audits. Such audits
shall be made no more often than once every twelve (12) months.
In the event that any underpayment is discovered as a result of
any such audit, TMCS shall promptly make an adjusting payment to
rectify the underpayment. If an audit reveals that TMCS has
underpaid FairMarket by ten percent (10%) or more of the amounts
due for any audited period of time, TMCS agrees, in addition to
making prompt payment to the auditing party of all amounts due to
pay the auditing party in respect of any underpayment, to pay all
reasonable costs and expenses incurred by the auditing party in
conducting such audit.
e) TMCS will not sell advertising on the Private Label Auction Sites
to "FairMarket Named Competitors". FairMarket may notify TMCS of
FairMarket Named Competitors or add to or replace company names
on the list of FairMarket Named Competitors under the following
conditions: (i) TMCS must approve any such names or changes, such
approval not to be unreasonably withheld, (ii) the total number
of FairMarket Named Competitors shall in no event exceed five
companies, and (iii) the list may not be changed more than once
per calendar quarter. The parties agree that websites featuring
online auction functionalities now or in the future owned or
controlled, directly or indirectly, by USA will be allowed to
advertise on the Private Label Auction Sites.
3. TRANSACTION REVENUE
a) "FairMarket Network" shall mean the network of all websites of
FairMarket customers for whom FairMarket hosts Private Label
Auction Services.
b) "Seller(s)" shall mean a user who lists product(s) or service(s)
for sale on the FairMarket Network.
c) "Buyer(s)" shall mean a user who successfully bids for product(s)
or service(s) on the FairMarket Network.
d) "Transaction Fees" shall mean any fee charged to Sellers or
Buyers that become payable upon the consummation of a sale of a
product or service through the FairMarket Network.
e) "Listing Fees" shall mean any fee charged to a Seller for placing
any listing of products or services on a Private Label Auction
Site.
f) "Gross Transaction Revenue" shall mean one hundred per cent
(100%) of Listing Fees charged to Sellers on each Private Label
Auction Site, plus fifty per cent (50%) of all Transaction Fees
(using such Private Label Auction Site's then-current transaction
fee schedule) resulting from transactions in which a Seller
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CONFIDENTIAL
used such Private Label Auction Site (regardless of whether the
Buyer uses such Private Label Auction Site or another site within
the FairMarket Network), plus fifty per cent (50%) of all
Transaction Fees (using such Private Label Auction Site's
then-current transaction fee schedule) resulting from
transactions in which the Buyer used such Private Label Auction
Site (regardless of whether the Seller uses such Private Label
Auction Site or another site within the FairMarket Network).
g) "Net Transaction Revenue" shall mean actual Gross Transaction
Revenue less actual returns or similar credits and credit card
and other processing costs (collectively not to exceed 5.0% of
Gross Transaction Revenue regardless of actual processing costs).
h) "Shared Transaction Revenue" shall mean seventy per cent (70%) of
Net Transaction Revenue recognized by FairMarket during a
specified period.
i) FairMarket and TMCS will jointly determine the amount, if any, of
Transaction Fees and Listing Fees for each Private Label Auction
Site. The parties will take into consideration current industry
pricing and the competitive environment when setting pricing, and
will establish pricing comparable to that charged by leading
independent auction sites and other leading portals.
j) FairMarket will pay TMCS, on a quarterly basis, the Shared
Transaction Revenue within thirty (30) days following the end of
each quarter.
k) Each quarterly payment made pursuant to Section 3(j) shall be
accompanied by an Transaction Revenue Statement in respect of the
prior calendar quarter. For purposes hereof, "Transaction Revenue
Statement" means the statement in mutually agreed format setting
for the Net Transaction Revenue recognized during the prior
calendar quarter.
l) FairMarket will keep accurate records and books of account
relating to the calculation and reporting of the Net Transaction
Revenue throughout the term of this Agreement and for at least
two years thereafter. During such period, TMCS shall have the
right to cause an audit and/or inspection to be made of
FairMarket's applicable records by an independent certified
public accountant in order to verify the Transaction Revenue
Statements. Except as specified herein, TMCS shall be responsible
for all costs related to such audits. Such audits shall be made
no more often than once every twelve (12) months. In the event
that any underpayment is discovered as a result of any such
audit, FairMarket shall promptly make an adjusting payment to
rectify the underpayment. If an audit reveals that FairMarket has
underpaid TMCS by ten percent (10%) or more of the amounts due
for any audited period of time, FairMarket agrees, in addition to
making prompt payment to the auditing party of all amounts due to
pay the auditing party in respect of any underpayment, to pay all
reasonable costs and expenses incurred by the auditing party in
conducting such audit.
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CONFIDENTIAL
4. ADVERTISING ON THE TMCS SITES AND USA NETWORK
a) In the one-year period beginning on the Effective Date, TMCS will
provide FairMarket, at no cost to FairMarket, $2 million of
advertising services on the TMCS Sites, valued at a "Most Favored
Nations" discount (the "TMCS Advertising Services"). The parties
will work together to select mutually agreeable locations for the
TMCS Advertising Services. Placement and timing of the TMCS
Advertising Services will be on an "as available" basis and may
be preempted for paid advertising or promotion, provided however
that TMCS will act in good faith and use commercially reasonable
efforts to accommodate the reasonable requests of FairMarket. The
TMCS Advertising Services will be made available only during the
one-year period beginning on the Effective Date, and following
the expiration of such one-year period TMCS shall have no further
obligation to provide any TMCS Advertising Services.
b) All advertising featured on the TMCS Websites and provided in
accordance with Section 4(a) above will refer to "CityAuction
Auctions" or such other similar wording as TMCS may use in its
discretion following consultation with FairMarket (it being
understood that, notwithstanding such consultation, the use of
such wording shall be subject to the final determination of
TMCS), and will be directed to click through to the Private Label
Auction Sites.
c) FairMarket will develop at FairMarket's expense the creative
materials to be used in the TMCS Advertising Services. All such
creative materials will be utilized subject to TMCS's approval,
such approval not to be unreasonably withheld.
d) In the one-year period beginning on the Effective Date, TMCS will
cause USA to provide to FairMarket, at no cost to FairMarket, $3
million of television and cable advertising services, valued at
"standard" discounts to USA's rate card, across the USA family of
properties. The parties will work together to select mutually
agreeable locations for the USA Advertising Services ("USA
Advertising Services"). Placement and timing of USA Advertising
Services will be on an "as available" basis and may be preempted
for paid advertising or promotion, provided however that USA will
act in good faith and use commercially reasonable efforts to
accommodate the reasonable requests of FairMarket. The USA
Advertising Services must be used during the one-year period
beginning on the Effective Date, and following the expiration of
such one-year period TMCS shall have no further obligation to
provide any TMCS Advertising Services. FairMarket will develop at
its sole expense the creative materials to be used in the USA
Advertising Services.
5. EXCLUSIVE AUCTION SERVICES PROVIDER
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CONFIDENTIAL
a) TMCS will not form a relationship with any affiliate or third
party company, other than FairMarket, to provide private label,
co-branded, or other person-to-person or merchant-to-person
online auction services for the TMCS Sites, except that the
parties agree that 1) ticket sales where TMCS is an agent and 2)
relationships with auction sites that are owned by USA or its
affiliates will be excluded from this exclusivity provision.
b) If TMCS decides to offer tickets at auction, the parties agree 1)
to use their respective best efforts to reach an agreement for
FairMarket to provide auctions services for such auctions and 2)
that FairMarket will have a right of first offer and a right to
match any offer to provide ticket auctions to TMCS.
c) TMCS will use commercially reasonable efforts to cause USA to
negotiate in good faith with FairMarket to provide FairMarket
with an opportunity to be the primary provider of auction
services for all USA Internet properties, including but not
limited to HSN.com, FirstAuction, FirstJewelry, and FirstOutlet.
d) FairMarket shall promote TMCS's participation as a partner in its
private label program in ongoing press materials, and in
marketing collateral related to such program; provided that all
uses of TMCS Marks in marketing and promotional materials shall
require the prior review and approval of TMCS. In addition, in
its sole discretion and to the extent reasonably practicable,
FairMarket shall feature TMCS on the FairMarket home page in a
manner similar to that in which other FairMarket customers are
featured.
e) TMCS shall promote TMCS's participation as a partner in the
FairMarket Network in ongoing press materials for the Private
Label Auction Sites that are launched pursuant hereto, and in
printed marketing collateral for such Private Label Auction
Sites; provided that all uses of FairMarket Marks in marketing
and promotional materials shall require the prior review and
approval of FairMarket.
6. TERM
a) The term of the Agreement shall begin on the Effective Date and
will continue for three (3) years (the "Initial Term").
b) Following the expiration of the Initial Term, and unless earlier
terminated pursuant to Section 7 hereof, this Agreement will
automatically renew at the end of the Initial Term and each
renewal term for an additional twelve (12) month term unless
cancelled in writing by either party at least thirty (30) days
prior to the end of the then-current term.
7. TERMINATION
a) Either party may terminate this Agreement if the other party
breaches any material obligation hereunder and such breach
remains uncured for thirty (30) days
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CONFIDENTIAL
following the receipt of written notice to the breaching party of
the breach and the notifying party's intention to terminate.
b) TMCS may terminate this Agreement effective upon written notice
to FairMarket following the occurrence of a Change of Control
Involving a Competitor. For purposes hereof, (x) a "Change of
Control Involving a Competitor" means (i) the sale, lease,
conveyance or other disposition of all or substantially all of
FairMarket's assets to a TMCS Competitor; or (ii) any transaction
or series of related transactions that results in any TMCS
Competitor becoming the beneficial owner, directly or indirectly,
of more than 50% of the aggregate voting power of all classes of
common equity of FairMarket; and (y) a "TMCS Competitor" means
any direct competitor of TMCS that TMCS may identify in writing
from time to time (it being understood that it is the
responsibility of FairMarket to confirm with TMCS in writing
whether a particular entity that may acquire such shares or
assets is then deemed to be a TMCS Competitor for purposes
hereof).
c) Except as set forth in the License Agreement of even date
herewith, upon termination of this Agreement, (i) TMCS and the
TMCS Sites shall immediately discontinue all use of each Private
Label Auction Site and return to FairMarket, or destroy, all
tangible materials embodying intellectual property belonging to
FairMarket, and (ii) FairMarket and the Private Label Auction
Sites will discontinue all use of the User Data and return to
TMCS, or destroy, all tangible materials embodying intellectual
property belonging to TMCS.
d) All payments that have accrued prior to the termination or
expiration of this Agreement will be payable in full within
thirty (30) days of such termination or expiration.
e) The provisions of Section 11 (Confidentiality), Section 12
(Warranty and Indemnity), Section 13 (Limitation of Liability),
Section 14 (Dispute Resolution) and Section 6(b) of Exhibit A
shall survive any termination or expiration of the Agreement.
8. USAGE REPORTS AND USER DATA
a) FairMarket will make usage reports made available to TMCS via the
Administrative Module (as defined in Exhibit A).
b) For the purpose of this Agreement, "User Data" shall mean all
information submitted by a user of any Private Label Auction Site
("User") to such Private Label Auction Site. "Individually
Identifiable User Data" shall mean User Data which can be
reasonably used to identify a specific individual such as their
name, address, phone number, etc.
c) Both parties acknowledge that any individual user of the Internet
could become a customer of TMCS and/or FairMarket through the use
of a TMCS Website or
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CONFIDENTIAL
website owned or controlled by FairMarket that is unrelated to
this Agreement. Both parties further acknowledge that any data
gathered about such Internet users unrelated to this Agreement
shall not be considered User Data.
d) TMCS shall retain all rights to any User Data. TMCS will have
full and continuous access to all User Data via the
Administrative Module (as defined in Exhibit A).
e) TMCS hereby grants FairMarket a limited license to aggregate and
use the User Data as follows: In the case of User submitted
listings, TMCS grants FairMarket the right to aggregate and
distribute such listings across the FairMarket Network. TMCS
agrees that FairMarket shall be able to utilize, at its sole
discretion, aggregated data from each Private Label Auction Site
when aggregated with data from FairMarket's other customers.
9. SERVICE OWNERSHIP AND LICENSE
a) FairMarket will retain all right, title and interest in and to
the FairMarket Auction Services worldwide (including, but not
limited to, ownership of all copyrights and other intellectual
property rights therein); provided that TMCS will retain all
right, title and interest in and to the design and look and feel
of each Private Label Auction Site (other than the Auction
Content Area) and the User Interface thereof (including, but not
limited to, ownership of all copyrights and other intellectual
property rights in such User Interface).
b) During the term of this Agreement, and subject to the terms and
conditions of this Agreement, FairMarket hereby grants to TMCS,
its affiliates and assigns a non-exclusive, non-transferable,
irrevocable, royalty-free, worldwide right and license to use,
distribute, transmit, publicly display, advertise and promote the
FairMarket Auction Services and the listing data therein in
connection with the Private Label Auction Sites and to the extent
necessary for TMCS to fulfill its obligations under this
Agreement. In addition, FairMarket grants to TMCS the right to
sub-license the FairMarket Auction Services included in each
Private Label Auction Site to TMCS's wholly-owned subsidiaries or
joint ventures in which TMCS participates for the sole purpose of
using, distributing, transmitting and publicly displaying such
Private Label Auction Site in accordance with this Agreement.
c) During the term of this Agreement, and subject to the terms and
conditions of this Agreement, TMCS hereby grants to FairMarket a
non-exclusive, non-transferable, irrevocable, royalty-free,
worldwide right and license to use, distribute, transmit and
publicly display the look and feel of each Private Label Auction
Site and the User Interface thereof in accordance with this
Agreement.
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10. TRADEMARK OWNERSHIP AND LICENSE
CONFIDENTIAL
a) FairMarket will retain all right, title and interest in and to
its trademarks, service marks and trade names worldwide, subject
to the limited license granted to TMCS hereunder.
b) TMCS will retain all right, title and interest in and to its
trademarks, service marks and trade names worldwide, subject to
the limited license granted to FairMarket hereunder.
c) Each party (each a "Licensor" as to the trademarks, service marks
and trade names licensed by it hereunder) hereby grants to the
other a non-exclusive, limited license to use Licensor's
trademarks, service marks or trade names only as specifically
described in this Agreement. All such use shall be in accordance
with Licensor's reasonable policies regarding advertising and
trademark usage, as shall be established or changed from time to
time, in each party's sole discretion.
d) Upon the expiration or termination of this Agreement, each party
will cease using the trademarks, service marks and/or trade names
of the other except:
i. As the parties may agree in writing; or
ii. To the extent permitted by applicable law.
11. CONFIDENTIALITY
a) For the purposes of this Agreement, "Confidential Information"
means information about the disclosing party's (or its
suppliers') business or activities that is proprietary and
confidential, which shall include all business, financial,
technical and other information of a party marked or designated
by such party as "confidential" or "proprietary"; or information
which, by the nature of the circumstances surrounding the
disclosure, ought in good faith to be treated as confidential.
b) Confidential Information will not include information that (i) is
in or enters the public domain without breach of this Agreement,
(ii) the receiving party lawfully receives from a third party
without restriction on disclosure and without breach of a
nondisclosure obligation or (iii) the receiving party knew prior
to receiving such information from the disclosing party or
develops independently.
c) Each party agrees (i) that it will not disclose to any third
party or use any Confidential Information disclosed to it by the
other except as expressly permitted in this Agreement and (ii)
that it will take all reasonable measures to maintain the
confidentiality of all Confidential Information of the other
party in its possession or control, which will in no event be
less than the measures it uses to maintain the confidentiality of
its own information of similar importance.
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CONFIDENTIAL
d) Notwithstanding the foregoing, each party may disclose
Confidential Information (i) to the extent required by a court of
competent jurisdiction or other governmental authority or
otherwise as required by law or (ii) on a "need-to-know" basis
under an obligation of confidentiality to its legal counsel,
accountants, banks and other financing sources and their
advisors.
e) The terms and conditions of this Agreement will be deemed to be
the Confidential Information of each party and will not be
disclosed without the written consent of the other party, except
as may be required by law.
f) The parties' obligations under this Section 11 shall survive any
termination or expiration of the Agreement.
12. WARRANTY AND INDEMNITY
a) Each of FairMarket and TMCS warrants that it owns, or has
obtained all necessary rights to distribute and make available as
specified in this Agreement, any and all information, service or
content that will be provided to the other party or made
available to third parties in connection with this Agreement,
including without limitation in the case of FairMarket, the
FairMarket Auction Services.
b) FairMarket warrants to TMCS that: (i) each Private Label Auction
Site will comply with the description and technical
specifications as contemplated by this Agreement and all
Exhibits; (ii) FairMarket will use its best efforts to ensure
that the Private Label Web Sites will be accessible on a
continuous, unlimited basis and will take measures consistent
with industry standards to ensure such access in the event of a
server crash, power outage, maintenance, service or other
interruption to the FairMarket Auction Service; and (iii) the
Private Label Auction Sites will continue to comply with all
terms, specifications and conditions hereunder, notwithstanding
the processing of dates including the years 2000 through 2100
("Year 2000 Data"), as follows: neither the Private Label Auction
Sites nor their hosting servers will freeze, cease to function,
generate incorrect data or produce incorrect results as a result
of inputting, processing, calculating, comparing, converting, or
presenting Year 2000 Data in calendar or system date; and the
Private Label Auction Sites will recognize and present dates
without ambiguity as to century in connection with sending Year
2000 Data to other automated or computerized systems.
c) Each of FairMarket and TMCS will indemnify, defend and hold
harmless the other party, and the other party's affiliates,
officers, directors, employees, consultants and agents from any
and all third party claims, liability, damages and/or costs
(including, but not limited to, reasonable attorneys' fees)
arising from:
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i. The breach of any warranty, representation or covenant by
such party, in this Agreement;
ii. Any claim that any Private Label Auction Site or any or all
information, service or content provided by such party to
the other party or made available to third parties by such
party, in connection with this Agreement infringes or
violates any third party's copyright, patent, trade secret,
trademark, right of publicity or right of privacy or
contains any defamatory content; or
iii. Any claim based on property damage or personal injury
resulting from the gross negligence or willful or reckless
misconduct of such party.
A party seeking indemnification hereunder will promptly notify
the other party of any and all such claims and will reasonably
cooperate with such other party in the defense and/or settlement
thereof; provided that, if any settlement requires an affirmative
obligation of, results in any ongoing liability to or prejudices
or detrimentally impacts the indemnified party in any way and
such obligation, liability, prejudice or impact can reasonably be
expected to be material, then such settlement shall require the
indemnified party's written consent (not to be unreasonably
withheld or delayed) and the indemnified party may, at its sole
cost and expense, have its own counsel in attendance at all
proceedings and substantive negotiations relating to such claim.
d) EXCEPT AS SPECIFIED IN THIS AGREEMENT, INCLUDING ALL EXHIBITS,
NEITHER PARTY MAKES ANY WARRANTY IN CONNECTION WITH THE SUBJECT
MATTER OF THIS AGREEMENT AND HEREBY SPECIFICALLY DISCLAIMS ANY
AND ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE REGARDING
SUCH SUBJECT MATTER.
13. LIMITATION OF LIABILITY
EXCEPT FOR THE CONFIDENTIALITY OR INDEMNIFICATION OBLIGATIONS OF EACH PARTY
UNDER THIS AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR
ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. EXCEPT FOR THE
CONFIDENTIALITY OR INDEMNIFICATION OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT, THE LIABILITY OF A PARTY FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER,
WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT
EXCEED, THE AMOUNT ACTUALLY PAID, IN CASH OR IN KIND, BY THE OTHER PARTY TO SUCH
PARTY HEREUNDER.
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14. DISPUTE RESOLUTION
a) The parties agree that any breach of either of the parties'
obligations regarding trademarks, service marks or trade names
and/or confidentiality would result in irreparable injury for
which there is no adequate remedy at law. Therefore, in the event
of any breach or threatened breach of a party's obligations
regarding trademarks, service marks or trade names or
confidentiality, the aggrieved party will be entitled to seek
equitable relief in addition to its other available legal
remedies in a court of competent jurisdiction. For the purposes
of this section only, the parties consent to venue in either the
federal or state courts of the Commonwealth of Massachusetts.
b) In the event of disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names and/or confidentiality, the parties
will first attempt to resolve the dispute(s) through good faith
negotiation. In the event that the dispute(s) cannot be resolved
through good faith negotiation, the parties will refer the
dispute(s) to a mutually acceptable mediator for hearing in
Boston, Massachusetts.
c) In the event that disputes between the parties arising from or
concerning in any manner the subject matter of this Agreement,
other than disputes arising from or concerning trademarks,
service marks or trade names and/or confidentiality, cannot be
resolved through good faith negotiation and mediation, the
parties will refer the dispute(s) to the American Arbitration
Association for resolution through binding arbitration by a
single arbitrator pursuant to the American Arbitration
Association's rules applicable to commercial disputes. The
arbitration will be held in Boston, Massachusetts.
15. GENERAL
a) Assignment. Neither party may assign this Agreement, in whole or
in part, without the other party's written consent (which will
not be unreasonably withheld), except that no such consent will
be required in connection with a merger, reorganization or sale
of all, or substantially all, of such party's capital stock or
assets or the sale of all or substantially all of that portion of
a party's business to which this Agreement pertains; in the case
of FairMarket, so long as in each case the entity purchasing such
stock or assets is not a TMCS Competitor. Any attempt to assign
this Agreement other than as permitted above will be null and
void.
b) Governing Law. This Agreement will be governed by and construed
in accordance with the internal, substantive laws of the State of
Delaware, notwithstanding the actual state of residence or
incorporation of FairMarket.
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c) Notice. Any notice under this Agreement will be in writing and
delivered by personal delivery, express courier, confirmed
facsimile, confirmed email or certified or registered mail,
return receipt requested, and will be deemed given upon personal
delivery, one (1) day after deposit with express courier, upon
confirmation of receipt of facsimile or email or five (5) days
after deposit in the mail. Notices will be sent to a party at its
address set forth below or such other address as that party may
specify in writing pursuant to this Section.
d) No Agency. The parties are independent contractors and will have
no power or authority to assume or create any obligation or
responsibility on behalf of each other. This Agreement will not
be construed to create or imply any partnership, agency or joint
venture.
e) Force Majeure. Any delay in or failure of performance by either
party under this Agreement caused by any occurrence beyond the
reasonable control of such party including, but not limited to,
acts of God, power outages and governmental restrictions will not
be considered a breach of this Agreement and such performance
will be excused for the number of days such occurrence reasonably
prevents performance, but in no case will such excuse extend
beyond six (6) months.
f) Severability. In the event that any of the provisions of this
Agreement are held by to be unenforceable by a court or
arbitrator, the remaining portions of the Agreement will remain
in full force and effect.
g) Entire Agreement. This Agreement is the complete and exclusive
agreement between the parties with respect to the subject matter
hereof, superseding any prior agreements and communications (both
written and oral) regarding such subject matter. This Agreement
may only be modified, or any rights under it waived, by a written
document executed by both parties.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Effective Date.
Ticketmaster Online-CitySearch, Inc. FairMarket, Inc.
By: /s/ Bradley K. Serwin By: /s/ Scott Randall
-------------------------------- ------------------------------
Name: Bradley K. Serwin Name: Scott Randall
------------------------------ ----------------------------
Title: V.P. Title: CEO
----------------------------- ---------------------------
Date: 9/15/99 Date: 9/15/99
------------------------------ ----------------------------
CONFIDENTIAL
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