SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
FAIRMARKET INC.
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(Name of Registrant as Specified In Its Charter)
Lloyd I. Miller, III
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ANNUAL MEETING OF STOCKHOLDERS OF
FAIRMARKET, INC.
PROXY STATEMENT OF
LLOYD I. MILLER, III
This proxy statement and the accompanying GREEN proxy card are being
furnished to you in connection with the solicitation of proxies by me, Mr. Lloyd
I. Miller, III, to be used at the 2003 Annual Meeting of Stockholders of
FairMarket, Inc., a Delaware corporation, and any adjournments or postponements
thereof (the "Annual Meeting"). Pursuant to this proxy statement, I am
soliciting proxies from holders of shares of FairMarket common stock to vote FOR
the election of myself, Mr. Lloyd I. Miller, III, to FairMarket's board of
directors and, if two directors are elected at the Annual Meeting, FOR the
election of Mr. Raymond L. Steele.
This proxy statement and the accompanying Green proxy card are first
being sent to stockholders on or about ___________, 2003. FairMarket has not yet
announced the time or location of the Annual Meeting. I am soliciting proxies
for use at the Annual Meeting whenever and wherever it may be held.
* * * * * * *
A proxy may be given by any person who holds shares of FairMarket
common stock on the record date set for the Annual Meeting, which will be
announced when the date of the Annual Meeting is announced. Whether or not you
plan to attend the Annual Meeting, you are urged to sign and date the enclosed
GREEN proxy card and return it in the postage-paid envelope provided. Your
latest-dated proxy is the only one that counts, so you may return the GREEN
proxy card even if you have already delivered any other proxy. Please do not
return any proxy sent to you by FairMarket. If you have already returned a white
proxy card sent to you by FairMarket, that card will be automatically revoked if
you complete and return the enclosed GREEN proxy card. It is very important that
you date your proxy.
This proxy statement is provided by Lloyd I. Miller, III.
* * * * * * *
Stockholders of FairMarket will be asked at the Annual Meeting to
consider and vote upon the election of one Class III director whose term will
expire in 2006. I am soliciting your proxy in support of the election of myself,
Mr. Lloyd I. Miller, III (the "Nominee"), and if you are asked to consider and
vote for two directors, Mr. Raymond L. Steele (together, the "Nominees"). My
solicitation of proxies is in opposition to the directors nominated for election
by FairMarket's management. I believe that if one or both of the Nominees are
elected, such
Nominee or Nominees will be able to encourage FairMarket to take steps to
increase stockholder value and to monitor closely management's progress with
respect to enhancing stockholder value. If elected, the Nominee or Nominees will
lead efforts to improve stockholders' rate of return and determine whether
stockholder value can be maximized through a sale of FairMarket or other
strategic transaction.
If you wish to vote for the Nominee, or both of the Nominees if two
directors are elected at the Annual Meeting, you may do so by completing and
returning a Green proxy card. All shares represented by Green proxy cards that
are received prior to the Annual Meeting and are not subsequently revoked will
be voted, and voted in accordance with the directions specified in the Green
proxy card. In the event no directions are specified, Green proxy cards that are
not revoked will be voted FOR the Nominee or Nominees, as the case may be.
Should either of the Nominees decline or prove unable to serve as a director at
the time of the Annual Meeting, proxies voted FOR the Nominees that are not
revoked will be voted for the nominee or nominees designated by me to fill the
vacancy. The Nominees have consented to being named in this proxy statement and
to serve if elected. As of the date this proxy statement is mailed to
stockholders, no Nominee intends to decline service as a director or will prove
unable to serve as a director.
Currently, one director is to be elected at the Annual Meeting.
However, the Company has not yet filed its proxy statement to nominate directors
for election at the Annual Meeting, and therefore I have nominated two directors
for election at the Annual Meeting. If only one director is proposed by the
Company for election at the Annual Meeting, I will amend this proxy statement so
that Lloyd I. Miller III is my sole nominee for election at the Annual Meeting.
If you vote on my GREEN proxy card, you have the opportunity to withhold
authority to vote for either of the Nominees by writing his name on the GREEN
proxy card in the space provided. There can be no assurance that any Nominee
will be elected and if one Nominee is elected, there can be no assurance that
the other Nominee will also be elected. For information regarding FairMarket's
nominee or nominees for election as directors, please refer to FairMarket's
definitive proxy statement, when it becomes available.
Any stockholder who has executed and returned a proxy, whether
solicited by FairMarket's board of directors or by me, may revoke it at any time
before the proxy is voted. A proxy may be revoked by sending a written
revocation of such proxy to me, by submitting another proxy to me with a later
date marked on it or by appearing in person at the Annual Meeting and voting.
Attendance at the meeting will not, by itself, revoke a proxy. There is no limit
on the number of times that a stockholder may revoke a proxy prior to the Annual
Meeting. Only the latest dated proxy card will be counted.
If you send written revocation of your proxy to FairMarket, I am
requesting that either the original or a copy of all revocations be sent to my
proxy solicitor at the address on the back page of this proxy statement so that
I will be aware of the revocations and can more accurately determine if and when
the requisite proxies have been received.
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REASONS FOR THE SOLICITATION
I have nominated the Nominees for election to FairMarket's board of
directors because I believe that FairMarket has shown poor operating results and
poor stock market performance since its initial public offering and needs
directors to lead efforts to enhance stockholder value, improve operating
results and determine whether stockholder value can be maximized through a sale
of FairMarket or other strategic transaction.
I believe that by electing one or both of the Nominees, stockholders
can give to FairMarket directors who are advocates of stockholder value and who
are interested in seeking ways to improve FairMarket's performance while
examining strategic alternatives to maximize stockholder value. If elected, the
Nominee or Nominees, as the case may be, would ask the board to consider
strategic alternatives and if necessary, the hiring of an investment banking
firm to study potential opportunities.
Continued Operating Losses; No Cash Distributions. FairMarket continues
to invest its available cash in unprofitable business activities in the pursuit
of a losing business strategy. Instead of returning value to its stockholders,
FairMarket continues to incur expenses to fund projects advocated by management
that only result in further operating losses. Although operating losses in the
third quarter of 2002 were not as severe as operating losses in the second
quarter of 2002, such operating losses are still unacceptable, representing
approximately 172% of FairMarket's revenue for the same period.
In its quarterly report on Form 10-Q for the quarter ended September
30, 2002, FairMarket discusses using available cash to fund acquisitions or
investments in other complementary businesses. I believe that using available
cash to fund such projects is without justification and has so far proven to be
an unsuccessful strategy. FairMarket's prolonged operating losses cast serious
doubts on the board's commitment to achieving operating cash flow breakeven and
on the possibility that FairMarket will ever be profitable.
If elected, the Nominee or Nominees would oppose transactions that are
likely to result in even poorer stock performance, and instead would advocate
the distribution of available cash to stockholders. I believe that now is the
right time for FairMarket to improve earnings per share through cash
distributions because new tax rules may provide tax relief. Distributing cash to
its stockholders would allow FairMarket to enhance shareholder value while
allowing its stockholders to take advantage of these new rules. If elected, the
Nominee or Nominees would ask the board to consider these as well as other
similar transactions that would increase the return on investment for FairMarket
stockholders.
Poor stock performance. FairMarket's common stock, as can be seen on
page 20 of last year's proxy statement, has drastically underperformed its peer
group and the Nasdaq Market Index since FairMarket's initial public offering.
According to last year's proxy statement, if you invested $100 in each of
FairMarket, the Nasdaq Market Index, FairMarket's peer group and the 100 Index
on March 14, 2000 (the date FairMarket's common stock was first publicly
traded), the rate of return would have been as follows:
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3/14/00 3/31/00 6/30/00 9/30/00 12/31/00 3/31/01 6/30/01 9/31/01 12/31/01
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FairMarket.............. $100 $46.91 $ 4.565 $ 6.70 $ 3.09 $ 2.58 $ 2.04 $ 1.86 $ 2.31
Nasdaq Market Index..... $100 $97.65 $84.91 $78.13 $52.32 $39.05 $46.03 $31.93 $41.51
Peer Group.............. $100 $76.06 $55.54 $79.79 $31.43 $15.76 $24.28 $15.49 $23.76
100 Index............... $100 $83.97 $62.29 $59.53 $30.93 $19.12 $24.09 $13.99 $19.90
Recent declines. In the last year, FairMarket's stock has decreased in
value even more. At March 11, 2003, FairMarket common stock was trading at
$1.54. Such underperformance makes a strong case for electing new directors to
conduct a review of FairMarket's strategies. If elected, the Nominee or
Nominees, as the case may be, will advocate increasing the current rate of
return through the distribution of cash to the stockholders and considering
alternative strategic transactions.
Poor market perception of management's performance. I believe that the
performance of FairMarket's common stock reflects, among other things, the
market's loss of confidence in management's ability and commitment to produce
any profits. Therefore, I believe that consuming more cash to pursue the current
business strategy will only produce further operating losses while revenues
continue to decrease and stock performance continues to decline. Available cash
should be distributed to stockholders instead of used to fund unsuccessful
business activities.
Entrenchment of management. I strongly believe that FairMarket's
financial performance is closely linked to its corporate governance policies and
procedures, and the level of management accountability those policies and
procedures impose. Certain actions by FairMarket's board of directors, such as
the adoption of the poison pill, along with certain provisions of FairMarket's
Certificate of Incorporation and Bylaws, entrench management and FairMarket's
board of directors. As a result, management's incentives to protect stockholder
value have diminished.
Strategic Alternatives. In addition to the distribution of available
cash, if elected to FairMarket's board of directors, the Nominee or Nominees, as
the case may be, would ask the board to consider such strategic alternatives as
the sale or liquidation of FairMarket. Based on FairMarket's stock performance
and operating results, I believe that a review of strategic alternatives should
be conducted, with the aim of engaging in a transaction or transactions, in
addition to cash distributions, that would produce substantially more value for
stockholders than its present stock price, if such a transaction can be
achieved.
If elected, I believe the Nominee or Nominees, as the case may be,
would be committed to act in the best interests of FairMarket's stockholders
and, subject to each Nominee's duties as a director of FairMarket, to pursue
diligently and promptly the actions described above. No assurance can be given
that the Nominee or Nominees will be successful in these efforts or that, if
successful, stockholder value will be enhanced. If elected, the Nominee or
Nominees would advocate but would have no practical ability to cause changes to
be made at FairMarket. I believe that the election of the Nominee or Nominees is
critical to stockholders interested in making FairMarket more accountable to its
stockholders.
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There is no assurance that any change in FairMarket's policies will
increase the value of FairMarket's stock. As directors, with director duties to
FairMarket and a personal financial stake in enhancing stockholder value, the
Nominee or Nominees, as the case may be, would work to increase stockholder
value.
VOTING PROCEDURES
To vote FOR the Nominee as director, or if stockholders are asked to
elect two directors, FOR the Nominees as directors, please sign and date the
enclosed GREEN proxy card and return it to my proxy solicitor in the enclosed
postage-paid envelope. Submitting a proxy will not affect your right to attend
the Annual Meeting and vote in person.
How do I vote in person if I am a record holder?
If you are a stockholder of record of FairMarket common stock on the
record date, which will be set at the time the Annual Meeting is announced, you
may attend the Annual Meeting and vote in person.
How do I vote by proxy if I am a record holder?
To vote by proxy, you should complete, sign and date the enclosed GREEN
proxy card and return it promptly in the enclosed postage-paid envelope. To be
able to vote your shares in accordance with your instructions at the Annual
Meeting, we must receive your proxy as soon as possible but in any event prior
to the meeting. You may vote your shares without submitting a proxy to us if you
vote in person or submit a proxy to the secretary of FairMarket.
What if I am not the record holder of my shares?
If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can give a proxy with respect to your shares. You
may have received either a GREEN proxy card from the record holder (which you
can complete and send directly to my proxy solicitor) or an instruction card
(which you can complete and return to the record holder to direct its voting of
your shares). If the record holder has not sent you either a GREEN proxy card or
an instruction card, you may contact the record holder directly to provide it
with instructions.
You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards or voting
instruction cards. For example, if you hold shares in more than one brokerage
account, you may receive a separate voting instruction card for each brokerage
account in which your shares are held. You should complete, sign and date and
return each GREEN proxy card and voting instruction card you receive.
You may also receive a white proxy or voting instruction card that is
being solicited by the FairMarket board of directors. We urge you to discard any
white proxy card or voting instruction cards sent to you by FairMarket. If you
have previously signed a white proxy card or voting instruction card sent by
FairMarket, we urge you to sign, date and promptly mail the enclosed GREEN proxy
card or voting instruction card for the Annual Meeting. By doing so, this will
revoke any earlier dated proxy card or voting instruction cards solicited by the
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FairMarket board of directors. It is very important that you date your proxy. It
is not necessary to contact FairMarket for your revocation to be effective.
If you need assistance, please contact my proxy solicitor by telephone
at 1-800-___________.
If you do not have record ownership of your shares and want to vote in
person at the Annual Meeting or if you are voting for someone else at the Annual
Meeting, you may obtain a document called a "legal proxy" from the record holder
of the shares or such other person and bring it to the Annual Meeting. If you
need assistance, please contact my proxy solicitor by telephone at
1-800______________.
What should I do if I receive a white proxy card from FairMarket's
management?
Proxies on the white proxy card are being solicited by FairMarket's
management. If you submit a proxy to us by signing and returning the enclosed
GREEN proxy card, do not sign or return the white proxy card or follow any
voting instructions provided by FairMarket unless you intend to change your
vote, because only your latest-dated proxy will be counted.
If you have already sent a white proxy card to FairMarket, you may
revoke it and vote for my Nominees by signing, dating and returning the enclosed
GREEN proxy card.
What if I want to revoke my proxy or change my voting instruction?
If you give a proxy, you may revoke it at any time before it is voted
on your behalf. You may do so by:
o delivering a later-dated proxy to either my proxy solicitor or
the secretary of FairMarket; or
o delivering a written notice of revocation to either my proxy
solicitor or the secretary of FairMarket; or
o voting in person at the Annual Meeting.
If you hold your shares in street name, you may change your vote by:
o submitting new voting instructions to your broker or nominee;
or
o attending the Annual Meeting and voting in person, provided
you have obtained a signed proxy from the record holder giving
you the right to vote your shares.
If you choose to revoke a proxy by giving written notice or a
later-dated proxy to the secretary of FairMarket or by submitting new voting
instructions to your broker or nominee, we would appreciate if you would assist
us in representing the interests of stockholders on an informed basis by sending
us a copy of your revocation, proxy or new voting instructions or by calling our
proxy solicitor at 1-800-____________. Remember, your latest-dated proxy is the
only one that counts.
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If I plan to attend the Annual Meeting, should I still submit a proxy?
Whether you plan to attend the Annual Meeting or not, we urge you to
submit a proxy. Returning the enclosed proxy card will not affect your right to
attend the Annual Meeting and vote.
Who can vote?
You are eligible to vote or to execute a proxy only if you owned
FairMarket common stock on the record date for the Annual Meeting, which has not
yet been set by FairMarket. Even if you sell your shares after the record date,
you will retain the right to execute a proxy in connection with the Annual
Meeting. It is important that you grant a proxy regarding shares you held on the
record date, or vote those shares in person, even if you no longer own those
shares. FairMarket will include in its preliminary proxy statement the
approximate number of shares of FairMarket common stock outstanding on the
record date for the Annual Meeting.
How many votes do I have?
With respect to each matter to be considered at the Annual Meeting, you
are entitled to one vote for each share of FairMarket common stock owned on the
record date. Based on documents publicly filed by FairMarket, FairMarket has no
outstanding voting securities other than its common stock.
How will my shares be voted?
If you give a proxy on the accompanying GREEN proxy card, your shares
will be voted as you direct. If you submit a signed GREEN proxy card to my proxy
solicitor without instructions, your shares will be voted FOR the Nominee or
Nominees, as the case may be, as directors of FairMarket. Submitting a signed
GREEN proxy card without instructions will also entitle me to vote your shares
in my discretion on adjournment and postponement of the Annual Meeting and on
matters not described in this proxy statement that I do not know, a reasonable
time before this solicitation, are to be presented at the Annual Meeting and
that properly come before the Annual Meeting or any adjournment or postponement
of the Annual Meeting. If no specification is made, such shares will be voted
FOR the Nominee or Nominees, as the case may be.
If FairMarket stockholders holding shares of FairMarket common stock in
street name do not provide voting instructions, their shares will not be voted
and will therefore be considered broker "non-votes."
Unless a proxy specifies otherwise, it will be presumed to relate to
all shares held of record on the record date by the person who submitted it.
What is a quorum and why is it necessary?
A quorum of stockholders is necessary to have a valid meeting of
FairMarket stockholders. A majority of the shares of FairMarket common stock
issued and outstanding and entitled to vote on the record date must be present
in person or by proxy at the Annual Meeting
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in order for a quorum to be established. Abstentions and broker "non-votes"
count as present for establishing the quorum described above. A broker
"non-vote" occurs on an item when a broker is not permitted to vote on that item
without instructions from the beneficial owner of the shares and no instructions
are given. Shares held by FairMarket in its treasury do not count toward the
quorum.
What vote is required to elect a director and approve each proposal and
how will votes be counted?
FairMarket currently has five directors, divided into three classes
serving staggered three-year terms. FairMarket's common stock is the only class
of security entitled to vote at the Annual Meeting. Each stockholder is entitled
to one vote for each share of common stock held of record by such stockholder as
of the close of business on the record date set for the annual meeting.
Directors are elected by a plurality of the affirmative votes cast by holders of
shares present in person, or represented by proxy, and entitled to vote at the
Annual Meeting, assuming the presence of a quorum. Abstentions and broker
"non-votes" will be included in determining whether a quorum is present at a
meeting, but will not have an effect on the outcome of a vote for directors.
Shares of common stock may not be voted cumulatively.
Can the meeting be adjourned or postponed?
FairMarket's bylaws provide that any adjournment of the FairMarket
Annual Meeting may be made at any time by the presiding officer of the meeting
if (a) no quorum exists, (b) the board of directors determines adjournment is
necessary to give stockholders more time to consider information that was not
sufficiently or timely made available to stockholders, or (c) the board of
directors determines adjournment is in the best interests of FairMarket.
How can I receive more information?
If you have any questions about giving your proxy or about our
solicitation, or if you require assistance, please call our proxy solicitor at
1-800-_________________.
PROXY SOLICITATION AND EXPENSES
Proxies may be solicited by mail, telephone, telefax, telegraph, the
Internet, e-mail, newspapers and other publications of general distribution and
in person. The persons listed in Annex A who are or may be deemed to be
participants in the solicitation may assist in the solicitation of proxies
without additional remuneration, except as otherwise set forth in this proxy
statement.
In connection with this solicitation of proxies, banks, brokers,
custodians, nominees, other institutional holders and other fiduciaries will be
asked to forward all soliciting materials to the beneficial owners of the shares
that those institutions hold of record. I will reimburse those institutions for
reasonable expenses that they incur in connection with forwarding these
materials.
I have retained a proxy solicitor to solicit proxies in connection with
the Annual Meeting. My proxy solicitor may solicit proxies from individuals,
banks, brokers custodians, nominees,
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other institutional holders and other fiduciaries and will employ approximately
50 people in its efforts. I have agreed to reimburse my proxy solicitor for its
reasonable expenses, to indemnify it against certain losses, costs and expenses
and to pay it fees in connection with the proxy solicitation. It is currently
expected that the fees payable to my proxy solicitor in connection with this
proxy solicitation will not exceed $100,000. To date, our proxy solicitor has
not received any fees for its services.
In addition to the costs related to the engagement of my proxy
solicitor, costs related to this solicitation of proxies include expenditures
for printing, postage, legal services and other related items. I am bearing the
entire expense of this proxy solicitation. Total expenditures are expected to be
approximately $150,000. Total payments of costs to date are approximately
$30,000.
The Soliciting Stockholder AND NOMINEES
Lloyd I. Miller, III (age 48) is a registered investment advisor and
has been a member of the Chicago Board of Trade since 1978 and a member of the
Chicago Stock Exchange since 1996. Mr. Miller graduated from Brown University in
1977 with a Bachelor's Degree. Mr. Miller is currently a director of Stamps.com,
American BankNote Corp, Denny's Corp. (formerly Advantica Restaurant Group) and
Aldila, Inc. Mr. Miller's principal occupation is investing assets held by Mr.
Miller on his own behalf and on behalf of his family. Mr. Miller's principal
business address is as set forth above.
Raymond L. Steele (age 68) has been a retired businessman for over nine
years. Mr. Steele has served as a director of American BankNote Corp. since
March 2001, Modernfold, Inc. since 1991 and DualStar Technologies Corporation
since 1998. Mr. Steele has previously served as a director of I.C.H.
Corporation, Video Services Corp., Orion Pictures Corporation and Emerson Radio
Corp. Prior to his retirement, Mr. Steele held various senior positions such as
Executive Vice President of Pacholder Associates, Inc. (from August 1990 until
September 1993) and Executive Advisor at the Nickert Group (from 1989 through
1990).
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Contracts, Arrangements and Understandings
Beneficial Ownership by Nominee
The following table sets forth information with respect to common stock
beneficially owned by me as of the close of business on [March 10], 2003.
Percentage figures are computed on the basis of 26,239,682 shares of common
stock outstanding as of October 30, 2002.
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Amount and
Title of Name and address nature of beneficial
class of beneficial owner ownership Percent of class
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Common Stock Lloyd I. Miller, III 3,687,988(1) 14.06%
4550 Gordon Drive
Naples, Florida 34102
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(1) As of March 10, 2003, 1,097,536 of such shares are beneficially owned
by Trust A-4; 227,505 of such shares are beneficially owned by Trust C; 456,254
of such shares are beneficially owned by MILGRAT II(G); 176,253 of such shares
are beneficially owned by Milfam I, L.P.; 979, 375 of such shares are
beneficially owned by Milfam II, L.P.; 617,165 of such shares are owned of
record by Miller directly; 21,800 of such shares are beneficially owned by
Alexandra UGMA; 21,900 of such shares are beneficially owned by Catherine Miller
GST; 9,000 of such share are beneficially owned by Dail Miller; 15,400 of such
shares are beneficially owned by Kimberley Miller GST; 15,400 of such shares are
beneficially owned by LLC; 15,000 of such shares bare beneficially owned by
Lloyd Crider GST; 10,500 of such shares are beneficially owned by Tyler UGMA;
10,500 of such share are beneficially owned by Wylie UGMA; 14,400 of such shares
are beneficially owned by Kimberley Miller. This information shall not be deemed
an admission that Lloyd I. Miller, III is the beneficial owner of any equity
securities mentioned above, other than the shares he holds of record.
YOUR VOTE IS IMPORTANT. IT WILL HELP DECIDE WHETHER THE STOCKHOLDERS
WILL HAVE AN ADEQUATE VOICE IN THE AFFAIRS OF FAIRMARKET. PLEASE MARK, SIGN AND
DATE THE ENCLOSED GREEN PROXY CARD AND RETURN IT PROMPTLY IN THE PROVIDED
POSTAGE-PAID ENVELOPE.
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Schedule 1
The following table sets forth information with respect to all
purchases and sales by the participant in this solicitation and his associates
during the past two years. Except as set forth below, the participant and his
associates have not purchased or sold securities of FairMarket within the past
two years.
FAIRMARKET INC.
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SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
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ENTITY DATE BUY/SELL
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A4 11/6/2000 500
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A4 11/6/2000 15,910
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A4 11/8/2000 8,025
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Lloyd 11/8/2000 8,025
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M-2 11/9/2000 16,078
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Lloyd 11/10/2000 8,000
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Lloyd 11/13/2000 2,200
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A4 11/14/2000 17,000
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M-2 11/14/2000 16,920
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A4 11/15/2000 5,500
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C 11/16/2000 5,000
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C 11/17/2000 8,250
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M-2 11/17/2000 8,250
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A4 11/20/2000 8,550
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A4 11/21/2000 21,700
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M-2 11/22/2000 23,600
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M-2 11/24/2000 4,000
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A4 11/27/2000 15,050
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Lloyd 11/27/2000 15,000
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C 11/28/2000 17,900
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Lloyd 11/28/2000 17,900
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A4 11/29/2000 35,900
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Lloyd 11/29/2000 35,900
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M-2 11/29/2000 35,950
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A4 11/30/2000 34,600
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Lloyd 12/1/2000 5,000
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A4 12/4/2000 8,500
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C 12/4/2000 8,600
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Lloyd 12/4/2000 8,600
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A4 12/6/2000 19,900
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Dail 12/6/2000 5,000
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M-2 12/6/2000 19,900
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A4 12/7/2000 8,000
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M-2 12/7/2000 8,000
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A4 12/8/2000 19,300
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M-2 12/8/2000 19,215
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A4 12/11/2000 17,100
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FAIRMARKET INC.
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SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
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ENTITY DATE BUY/SELL
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Alex 12/11/2000 4,400
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C 12/11/2000 17,100
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Catherine GST 12/11/2000 4,400
----------------------------------------------------------------------------------------------
A4 12/12/2000 17,343
----------------------------------------------------------------------------------------------
M-2 12/12/2000 17,300
----------------------------------------------------------------------------------------------
Kim GST 12/13/2000 3,500
----------------------------------------------------------------------------------------------
Lloyd 12/13/2000 8,100
----------------------------------------------------------------------------------------------
LLC 12/13/2000 3,500
----------------------------------------------------------------------------------------------
Kim GST 12/14/2000 3,500
----------------------------------------------------------------------------------------------
C 12/14/2000 6,400
----------------------------------------------------------------------------------------------
LLC 12/14/2000 3,500
----------------------------------------------------------------------------------------------
A4 12/15/2000 30,696
----------------------------------------------------------------------------------------------
Crider 12/15/2000 4,000
----------------------------------------------------------------------------------------------
Catherine GST 12/15/2000 3,500
----------------------------------------------------------------------------------------------
C 12/18/2000 21,200
------------------------------------------------------------------------------------------ ----
Crider 12/19/2000 6,000
----------------------------------------------------------------------------------------------
M-1 12/19/2000 24,900
----------------------------------------------------------------------------------------------
KM 12/19/2000 6,000
----------------------------------------------------------------------------------------------
A4 12/20/2000 42,496
----------------------------------------------------------------------------------------------
M-2 12/20/2000 42,500
----------------------------------------------------------------------------------------------
A4 12/21/2000 38,375
----------------------------------------------------------------------------------------------
C 12/21/2000 38,375
----------------------------------------------------------------------------------------------
A4 12/22/2000 20,000
----------------------------------------------------------------------------------------------
Lloyd 12/22/2000 20,300
----------------------------------------------------------------------------------------------
Lloyd 12/26/2000 18,230
----------------------------------------------------------------------------------------------
A4 12/27/2000 7,485
----------------------------------------------------------------------------------------------
Alex 12/27/2000 3,400
----------------------------------------------------------------------------------------------
Kim GST 12/27/2000 3,400
----------------------------------------------------------------------------------------------
LLC 12/27/2000 3,400
----------------------------------------------------------------------------------------------
KM 12/27/2000 3,400
----------------------------------------------------------------------------------------------
A4 12/28/2000 34,432
----------------------------------------------------------------------------------------------
Lloyd 12/28/2000 34,432
----------------------------------------------------------------------------------------------
Tyler 12/28/2000 3,000
----------------------------------------------------------------------------------------------
Wylie 12/28/2000 3,000
----------------------------------------------------------------------------------------------
A4 12/29/2000 25,000
----------------------------------------------------------------------------------------------
Lloyd 12/29/2000 25,000
----------------------------------------------------------------------------------------------
M-2 12/29/2000 22,719
----------------------------------------------------------------------------------------------
Tyler 1/3/2001 2,500
----------------------------------------------------------------------------------------------
Wylie 1/3/2001 2,500
----------------------------------------------------------------------------------------------
Lloyd 1/4/2001 10,000
----------------------------------------------------------------------------------------------
M-1 1/5/2001 25,500
----------------------------------------------------------------------------------------------
C 1/8/2001 15,700
----------------------------------------------------------------------------------------------
Lloyd 1/8/2001 10,000
----------------------------------------------------------------------------------------------
M-2 1/8/2001 15,650
----------------------------------------------------------------------------------------------
Lloyd 1/9/2001 5,345
----------------------------------------------------------------------------------------------
-12-
FAIRMARKET INC.
----------------------------------------------------------------------------------------------
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
----------------------------------------------------------------------------------------------
ENTITY DATE BUY/SELL
----------------------------------------------------------------------------------------------
A4 2/22/2001 15,500
----------------------------------------------------------------------------------------------
C 2/22/2001 15,450
----------------------------------------------------------------------------------------------
M-2 2/22/2001 15,500
----------------------------------------------------------------------------------------------
A4 2/23/2001 8,351
----------------------------------------------------------------------------------------------
A4 2/28/2001 13,000
----------------------------------------------------------------------------------------------
C 3/2/2001 10,206
----------------------------------------------------------------------------------------------
A4 3/5/2001 1,900
----------------------------------------------------------------------------------------------
C 3/6/2001 6,400
----------------------------------------------------------------------------------------------
C 3/7/2001 6,325
----------------------------------------------------------------------------------------------
C 3/8/2001 22,120
----------------------------------------------------------------------------------------------
C 3/9/2001 1,900
----------------------------------------------------------------------------------------------
A4 3/12/2001 4,150
----------------------------------------------------------------------------------------------
M-2 3/12/2001 4,150
----------------------------------------------------------------------------------------------
A4 3/13/2001 13,000
----------------------------------------------------------------------------------------------
C 3/14/2001 7,700
----------------------------------------------------------------------------------------------
A4 3/15/2001 10,000
----------------------------------------------------------------------------------------------
C 3/15/2001 10,300
----------------------------------------------------------------------------------------------
C 3/20/2001 2,175
----------------------------------------------------------------------------------------------
M-2 3/21/2001 63,700
----------------------------------------------------------------------------------------------
Lloyd 3/22/2001 15,100
----------------------------------------------------------------------------------------------
A4 3/23/2001 10,300
----------------------------------------------------------------------------------------------
A4 3/26/2001 9,700
----------------------------------------------------------------------------------------------
C 3/27/2001 25,000
----------------------------------------------------------------------------------------------
A4 3/28/2001 25,000
----------------------------------------------------------------------------------------------
Lloyd 3/29/2001 7,100
----------------------------------------------------------------------------------------------
A4 3/29/2001 7,100
----------------------------------------------------------------------------------------------
A4 3/29/2001 (7,100)
----------------------------------------------------------------------------------------------
M-2 3/30/2001 34,850
----------------------------------------------------------------------------------------------
A4 3/30/2001 34,850
----------------------------------------------------------------------------------------------
A-4 4/3/2001 100,000
----------------------------------------------------------------------------------------------
M-1 4/3/2001 100,000
----------------------------------------------------------------------------------------------
C 4/3/2001 100,000
----------------------------------------------------------------------------------------------
M-2 4/3/2001 100,000
----------------------------------------------------------------------------------------------
Lloyd 4/3/2001 85,600
----------------------------------------------------------------------------------------------
Tyler 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Wylie 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Alex 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Kim GST 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Milfam LLC 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Catherine GST 4/3/2001 5,000
----------------------------------------------------------------------------------------------
Crider 4/3/2001 5,000
----------------------------------------------------------------------------------------------
A-4 4/4/2001 14,800
----------------------------------------------------------------------------------------------
Lloyd 4/5/2001 4,300
----------------------------------------------------------------------------------------------
KM 4/6/2001 5,000
----------------------------------------------------------------------------------------------
M-2 4/9/2001 25,350
----------------------------------------------------------------------------------------------
-13-
FAIRMARKET INC.
----------------------------------------------------------------------------------------------
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
----------------------------------------------------------------------------------------------
ENTITY DATE BUY/SELL
----------------------------------------------------------------------------------------------
A-4 4/9/2001 25,350
----------------------------------------------------------------------------------------------
A-4 4/10/2001 9,650
----------------------------------------------------------------------------------------------
M-2 4/10/2001 9,650
----------------------------------------------------------------------------------------------
A-4 4/11/2001 27,500
----------------------------------------------------------------------------------------------
Lloyd 4/12/2001 12,100
----------------------------------------------------------------------------------------------
Lloyd 4/18/2001 3,700
----------------------------------------------------------------------------------------------
Lloyd 4/23/2001 5,700
----------------------------------------------------------------------------------------------
Lloyd 4/24/2001 22,500
----------------------------------------------------------------------------------------------
Lloyd 4/25/2001 10,100
----------------------------------------------------------------------------------------------
Lloyd 5/16/2001 9,000
----------------------------------------------------------------------------------------------
Lloyd 5/17/2001 4,900
----------------------------------------------------------------------------------------------
A-4 6/11/2001 3,200
----------------------------------------------------------------------------------------------
C 6/13/2001 20,000
----------------------------------------------------------------------------------------------
Lloyd 6/18/2001 25,000
----------------------------------------------------------------------------------------------
A-4 6/19/2001 25,000
----------------------------------------------------------------------------------------------
C 6/19/2001 25,000
----------------------------------------------------------------------------------------------
M-2 6/19/2001 25,000
----------------------------------------------------------------------------------------------
A-4 6/20/2001 11,000
----------------------------------------------------------------------------------------------
Lloyd 6/21/2001 13,000
----------------------------------------------------------------------------------------------
Dail 6/21/2001 4,000
----------------------------------------------------------------------------------------------
M-2 6/22/2001 49,600
----------------------------------------------------------------------------------------------
A-4 6/25/2001 29,800
----------------------------------------------------------------------------------------------
C 6/25/2001 29,800
----------------------------------------------------------------------------------------------
M-2 6/25/2001 29,900
----------------------------------------------------------------------------------------------
A-4 7/16/2001 19,000
----------------------------------------------------------------------------------------------
M-2 7/17/2001 16,600
----------------------------------------------------------------------------------------------
C 7/18/2001 10,000
----------------------------------------------------------------------------------------------
A-4 7/19/2001 37,175
----------------------------------------------------------------------------------------------
Lloyd 7/19/2001 37,175
----------------------------------------------------------------------------------------------
C 7/24/2001 8,600
----------------------------------------------------------------------------------------------
M-2 8/2/2001 33,200
----------------------------------------------------------------------------------------------
A-4 8/3/2001 18,000
----------------------------------------------------------------------------------------------
Lloyd 8/7/2001 18,000
----------------------------------------------------------------------------------------------
Lloyd 8/7/2001 (18,000)
----------------------------------------------------------------------------------------------
Alex 8/7/2001 9,000
----------------------------------------------------------------------------------------------
Catherine GST 8/7/2001 9,000
----------------------------------------------------------------------------------------------
M-1 8/15/2001 25,853
----------------------------------------------------------------------------------------------
M-2 8/16/2001 29,500
----------------------------------------------------------------------------------------------
A-4 8/17/2001 25,000
----------------------------------------------------------------------------------------------
M-2 8/22/2001 20,000
----------------------------------------------------------------------------------------------
A-4 8/22/2001 20,000
----------------------------------------------------------------------------------------------
C 8/22/2001 20,000
----------------------------------------------------------------------------------------------
A-4 8/29/2001 1,200
----------------------------------------------------------------------------------------------
M-2 9/4/2001 18,500
----------------------------------------------------------------------------------------------
M-2 9/5/2001 22,770
----------------------------------------------------------------------------------------------
-14-
FAIRMARKET INC.
----------------------------------------------------------------------------------------------
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
----------------------------------------------------------------------------------------------
ENTITY DATE BUY/SELL
----------------------------------------------------------------------------------------------
M-2 9/6/2001 7,300
----------------------------------------------------------------------------------------------
Lloyd 9/7/2001 3,000
----------------------------------------------------------------------------------------------
C 9/10/2001 6,086
----------------------------------------------------------------------------------------------
Lloyd 9/17/2001 12,058
----------------------------------------------------------------------------------------------
Lloyd 9/18/2001 56,000
----------------------------------------------------------------------------------------------
M-2 9/18/2001 56,223
----------------------------------------------------------------------------------------------
C 9/19/2001 25,000
----------------------------------------------------------------------------------------------
A-4 9/19/2001 25,000
----------------------------------------------------------------------------------------------
A-4 9/20/2001 3,100
----------------------------------------------------------------------------------------------
A-4 9/21/2001 1,900
----------------------------------------------------------------------------------------------
A-4 9/24/2001 26,800
----------------------------------------------------------------------------------------------
M-2 9/25/2001 9,900
----------------------------------------------------------------------------------------------
Lloyd 9/26/2001 13,000
----------------------------------------------------------------------------------------------
A-4 9/28/2001 13,800
----------------------------------------------------------------------------------------------
C 10/1/2001 95,872
----------------------------------------------------------------------------------------------
Lloyd 10/3/2001 12,700
----------------------------------------------------------------------------------------------
M-2 10/4/2001 6,000
----------------------------------------------------------------------------------------------
A-4 10/9/2001 8,600
----------------------------------------------------------------------------------------------
M-2 10/17/2001 19,700
----------------------------------------------------------------------------------------------
M-2 10/23/2001 17,300
----------------------------------------------------------------------------------------------
A-4 10/24/2001 1,100
----------------------------------------------------------------------------------------------
M2 11/5/2001 10,400
----------------------------------------------------------------------------------------------
M2 11/7/2001 5,300
----------------------------------------------------------------------------------------------
C 11/26/2001 4,900
----------------------------------------------------------------------------------------------
M2 11/27/2001 11,100
----------------------------------------------------------------------------------------------
C 11/28/2001 2,000
----------------------------------------------------------------------------------------------
C 11/30/2001 9,600
----------------------------------------------------------------------------------------------
C 12/3/2001 17,600
----------------------------------------------------------------------------------------------
C 12/4/2001 38,200
----------------------------------------------------------------------------------------------
C 12/5/2001 25,000
----------------------------------------------------------------------------------------------
Lloyd 12/6/2001 14,100
----------------------------------------------------------------------------------------------
C 12/11/2001 (683,759)
----------------------------------------------------------------------------------------------
MILGRAT II(G) 12/11/2001 683,759
----------------------------------------------------------------------------------------------
M2 12/11/2001 1,000
----------------------------------------------------------------------------------------------
M2 12/12/2001 8,800
----------------------------------------------------------------------------------------------
M2 12/13/2001 45,300
----------------------------------------------------------------------------------------------
Lloyd 12/14/2001 2,700
----------------------------------------------------------------------------------------------
A4 12/17/2001 1,300
----------------------------------------------------------------------------------------------
A4 12/18/2001 9,300
----------------------------------------------------------------------------------------------
A4 12/19/2001 11,900
----------------------------------------------------------------------------------------------
Lloyd 12/20/2001 4,800
----------------------------------------------------------------------------------------------
M2 12/21/2001 32,700
----------------------------------------------------------------------------------------------
A4 12/24/2001 3,000
----------------------------------------------------------------------------------------------
Lloyd 12/26/2001 9,500
----------------------------------------------------------------------------------------------
A4 12/28/2001 8,600
----------------------------------------------------------------------------------------------
-15-
FAIRMARKET INC.
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
ENTITY DATE BUY/SELL
--------------------------------------------------------------------------
--------------------------------------------------------------------------
A4 12/31/2001 15,580
A4 1/4/2002 3,768
Lloyd 2/7/2002 2,000
--------------------------------------------------------------------------
3,687,988
--------------------------------------------------------------------------
LEGEND
--------------------------------------------------------------------------------------------------------------------
Trust A-4 ("A4") Lloyd I. Miller, III ("Miller") is the advisor to
Trust A-4 and Trust C (the "Trusts"). Trust A-4 was
Alan Goldman, VP created pursuant to a Declaratory Judgment, signed by
PNC Bank, N.A. the Honorable Wayne F. Wilke for the Court of Common
500 PNC Center Pleas, Probate Division, Hamilton County, Ohio, on
201 East Fifth Street October 17, 1992, pursuant to which Trust A was split
Cincinnati, OH 45202 into four separate trusts. The Trusts were created
pursuant to an Amended and Restated Trust Agreement
(the "Trust Agreement"), dated September 20, 1983.
Trust C ("C") Miller was named as advisor to PNC Bank, Ohio, N.A.
(formerly The Central Trust Company, N.A., Cincinnati
Alan Goldman, VP Ohio), the trustee named in the Trust Agreement. Such
PNC Bank, N.A. appointment became effective on April 22, 1990, the
500 PNC Center date of death of Lloyd I. Miller, the grantor of the
201 East Fifth Street Trusts. All of the shares purchased by Miller as
Cincinnati, OH 45202 advisor to the Trusts were purchased by funds
generated and held by the Trusts.
--------------------------------------------------------------------------------------------------------------------
Milgrat II(G) ("MILGRAT II (G)") Pursuant to an Irrevocable Trust Agreement, dated
December 11, 2001, all of the shares purchased in
Steve Hendrickson Trust C were transferred into a grantor retained
Northern Trust Company annuity trust ("MILGRAT II (G)"). Miller is named as
50 South Lasalle Street the trustee to MILGRAT II (G).
Chicago, IL 60675
--------------------------------------------------------------------------------------------------------------------
-16-
--------------------------------------------------------------------------------------------------------------------
Milfam I, L.P. ("M-1")
Miller is the manager of Milfam LLC, an Ohio limited
Alan Goldman, VP liability company established pursuant to the
PNC Bank, N.A. Operating Agreement of Milfam LLC, dated as of
500 PNC Center December 10, 1996. Milfam LLC is the managing general
201 East Fifth Street partner of (i) Milfam I, L.P., a Georgia limited
Cincinnati, OH 45202 partnership established pursuant to the Partnership
Agreement for Milfam I, L.P., dated December 11, 1996,
Milfam II, L.P. ("M-2") and (ii) Milfam II, L.P. a Georgia limited partnership
established, pursuant to the Partnership Agreement for
Steve Hendrickson Milfam II, L.P., dated December 11, 1996. All of the
Northern Trust Company shares Miller may be deemed to beneficially own as the
50 South Lasalle Street manager of the managing general partner of Milfam II,
Chicago, IL 60675 L.P. were purchased with money contributed to Milfam
II, L.P. by its partners, or money generated and held
by Milfam II, L.P.
--------------------------------------------------------------------------------------------------------------------
Catherine Miller GST ("Catherine GST") Miller is the trustee for certain generation skipping
Lloyd Crider GST ("Crider") trusts (each a "GST") including Catherine Miller GST,
Kimberley Miller GST ("Kim GST") Lloyd Crider GST and Kimberley Miller GST. All of the
shares Mr. Miller may be deemed to beneficially own as
the trustee for the GST's were purchased with money
generated and held by the GST's.
--------------------------------------------------------------------------------------------------------------------
Alexandra UGMA ("Alex") Miller is the custodian to certain accounts created
pursuant to the Florida Uniform Gift to Minors Act
("UGMA") for Alexandra Miller. All of the shares
Miller may be deemed to beneficially own in the
Alexandra UGMA were purchased with money held by the
Alexandra UGMA.
--------------------------------------------------------------------------------------------------------------------
Dail Miller ("Dail") Dail Miller is the former wife of Miller. All of the
Tyler UGMA ("Tyler") shares Miller may be deemed to beneficially own as
Wylie UGMA ("Wylie") Dail Miller's former spouse were purchased with
personal funds held by Dail Miller. Dail Miller is the
custodian for certain UGMA accounts for the benefit of
Tyler Dulmage and Wylie Dulmage.
--------------------------------------------------------------------------------------------------------------------
LLC ("LLC") Lloyd I. Miller LLC ("LLC") is a Limited Liability
Company of which Miller has sole control. All of the
shares Miller is deemed to beneficially own in LLC
were purchased with money which was generated and held
by LLC.
--------------------------------------------------------------------------------------------------------------------
Kimberley Miller ("KM") Kimberley Miller is the former wife of Miller.
2660 Half Moon Walk
Naples, FL 34102
--------------------------------------------------------------------------------------------------------------------
Lloyd I. Miller, III ("Lloyd") Lloyd I. Miller is a registered investment advisor.
4550 Gordon Drive
Naples, FL 34102
--------------------------------------------------------------------------------------------------------------------
Except as shown in the table above, the address for each person or entity is as
follows:
Gradison McDonald
580 Walnut Street
Cincinnati, OH 45202
-17-
Annex A
Lloyd I. Miller, III
Raymond L. Steele
-18-
FORM OF PROXY
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF FAIRMARKET,
INC. BY LLOYD I. MILLER, III FOR THE ______________, 2003 ANNUAL MEETING OF
STOCKHOLDERS OF FAIRMARKET, INC.
The undersigned holder of shares of common stock, par value $.001 per
share, of FairMarket, Inc. hereby appoints Lloyd I. Miller, III as attorney and
proxy for the undersigned, with full powers of substitution and revocation, to
represent the undersigned and vote on behalf of the undersigned all shares of
common stock of FairMarket that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of FairMarket to be held at ____ local time on
_______________, 2003 at the Goodwin Procter LLP Conference Center, 53 State
Street, Boston, Massachusetts 02109, and any adjournments or postponements
thereof. The undersigned hereby acknowledges receipt of the Proxy Statement in
opposition to the Board of Directors of FairMarket and hereby instructs said
attorney and proxy to vote said shares as indicated thereon. The proxy is
authorized to vote in his discretion upon matters incident to the conduct of the
Annual Meeting and matters which Mr. Miller does not know, as of the date the
Proxy Statement is mailed to stockholders, are to be presented at the Annual
Meeting. The undersigned hereby revokes any proxy previously given.
Please complete, sign and date the reverse side of this proxy card and
return it in the enclosed envelope.
1. ELECTION OF DIRECTORS - To elect LLOYD I. MILLER III, and if two
directors are elected at the Annual Meeting, RAYMOND L. STEELE, as
directors of the Company
_____ FOR _____ WITHHOLD
_____ FOR both Nominees except as noted here:
_________________________ (insert name of Nominee for whom you wish to
WITHHOLD your vote).
To withhold authority to vote for the election of both Lloyd I. Miller,
III and Raymond L. Steele, place an X next to "Withhold". [To withhold
authority to vote for the election of one of the Nominees, place an X
next to "FOR both Nominees except as noted here" and write in the name
of the Nominee for whom you wish to withhold authority to vote for.]
2. ADJOURNMENTS AND POSTPONEMENTS OF THE ANNUAL MEETING
_____ FOR _____ AGAINST
In my discretion, the proxy is authorized to vote upon such other business as
may properly come before the meeting, or any adjournments or postponements
thereof, as provided in the proxy statement provided herewith.
Please sign exactly as your name appears hereon or on your proxy cards
previously sent to you. When shares are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by the President and other duly authorized officer. If a
partnership, please
-19-
sign in partnership name by authorized person. This proxy card votes all shares
held in all capacities.
Dated:
-----------------------------------------
-----------------------------------------
(Signature)
-----------------------------------------
(Signature, if jointly held)
Title:
-----------------------------------------
PLEASE SIGN, DATE, AND MAIL THIS PROXY CARD TODAY.