SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Lloyd I. Miller, III
--------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
2003 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 ("FairMarket", or the "Company"), 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 (1) to vote FOR the election of myself, Mr. Lloyd I.
Miller, III, to FairMarket's board of directors and, if two directors are to be
elected at the Annual Meeting, FOR the election of Mr. Raymond L. Steele to the
FairMarket board, and (2) granting discretionary authority to vote on any
proposal to adjourn or postpone the Annual Meeting.
This proxy statement and the accompanying GREEN proxy card are first
being sent to stockholders on or about April [28], 2003. FairMarket has not yet
announced the time and location of the Annual Meeting ; however, last year's
annual meeting was held on June 27, 2002. I am soliciting proxies for use at the
Annual Meeting whenever and wherever it may be held. When FairMarket announces
the date and time for the Annual Meeting, and the record date for determining
stockholders entitled to vote at the Annual Meeting, I will supplement this
proxy statement to include that information.
* * * * * * *
A PROXY MAY BE GIVEN BY ANY PERSON WHO HOLDS SHARES OF FAIRMARKET
COMMON STOCK ON THE RECORD DATE TO BE SET BY FAIRMARKET FOR THE ANNUAL MEETING .
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.
IF YOU HAVE ANY QUESTIONS, OR NEED ASSISTANCE IN VOTING, PLEASE CONTACT
THE FIRM ASSISTING ME IN THE SOLICITATION OF PROXIES:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
CALL TOLL-FREE: (800) 322-2885
* * * * * * *
ELECTION OF DIRECTORS
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, after the date of this Proxy
Statement, 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 director or 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 to be 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 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. If either
of the Nominees declines or proves 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
-2-
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 previously shown in 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.
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 provide FairMarket with 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 2002
were not as severe as operating losses in 2001, such operating losses are still
unacceptable, representing approximately 387% of FairMarket's revenue for the
same period.
In its annual report on Form 10- K for the year ended December 31, 2002
(the "2002 10-K"), 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 likelihood of FairMarket achieving operating
cash flow breakeven and on the possibility that FairMarket will ever be
profitable unless substantial changes are made.
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
-3-
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 48 of the 2002 10-K, has drastically underperformed its peer group and the
Nasdaq Market Index since FairMarket's initial public offering. According to the
2002 10-K, if you invested $100 in each of FairMarket, the Nasdaq Market Index,
RDG Internet and the 100 Index on March 14, 2000 (the date FairMarket's common
stock was first publicly traded), the cumulative total stockholder returns would
have been as follows:
[LINE GRAPH]
3/14/00 12/00 12/01 12/02
------- ------- ------- --------
FairMarket, Inc. $100.00 $ 8.82 $ 6.59 $ 9.47
Nasdaq Stock Market (U.S.) $100.00 $52.49 $41.65 $28.79
JP Morgan H&Q Internet 100 $100.00 $32.28 $20.77
RDG Internet $100.00 $56.25 $34.74 $22.91
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
-4-
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. Stockholders should ask themselves whether these measures
have been of benefit to stockholders.
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.
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.
ADJOURNMENT OR POSTPONEMENT OF ANNUAL MEETING
In order to permit proxies that have been timely received by me to be
voted at my discretion either for or against any proposal for adjournment or
postponement of the Annual Meeting that may be submitted to a stockholder vote,
I am requesting your specific grant of such discretionary authority.
If proxies sufficient to elect one or both of the Nominees at the
Annual Meeting have been timely received, I intend to use this discretionary
authority to vote against any adjournment or postponement which might be
proposed by FairMarket's management or others. If proxies in sufficient number
to elect at least one Nominee have not been timely received, I may propose an
-5-
adjournment of the Annual Meeting to permit further solicitation of proxies, and
will vote for the adjournment, if further solicitation then appears reasonably
likely to produce a sufficient number of additional proxies to result in
election of the Nominee or Nominees, as the case may be.
VOTING PROCEDURES
To vote FOR the Nominee as director, or if stockholders are asked to
elect two directors, FOR the Nominees as directors, and to grant discretionary
authority to vote on any proposal to adjourn or postpone the Annual Meeting,
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 date is
determined, 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
-6-
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 1-800-322-2885.
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
1-800-322-2885.
WHAT SHOULD I DO IF I RECEIVE A WHITE PROXY CARD FROM FAIRMARKET'S
MANAGEMENT?
Proxies on a white proxy card will be 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:
- delivering a later-dated proxy to either my proxy solicitor or
the secretary of FairMarket; or
- delivering a written notice of revocation to either my proxy
solicitor or the secretary of FairMarket; or
- voting in person at the Annual Meeting.
If you hold your shares in street name, you may change your vote by:
- submitting new voting instructions to your broker or nominee;
or
- 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 1-800-322-2885. REMEMBER, YOUR LATEST-DATED PROXY IS THE ONLY
ONE THAT COUNTS.
-7-
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
been announced yet 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 am not aware 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
-8-
entitled to vote on the record date must be present in person or by proxy at the
Annual Meeting 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. Unless a higher vote is
required by law, other proposals may be adopted by the vote of a majority of the
votes properly cast for and against the matter. 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 or
any other proposal. 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 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
1-800-322-2885.
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 (collectively, the "Participants" and each, a "Participant") 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.
-9-
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, 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. If the nominee or nominees are
elected to the FairMarket board, I intend to seek reimbursement from the Company
of all or such portion of these expenses. Unless otherwise required by law, I do
not currently intend to submit the question of reimbursement of the expenses of
this solicitation to a stockholder vote. Total expenditures are expected to be
approximately $ 175,000. Total payments of costs to date are approximately
$30,000.
CERTAIN INFORMATION CONCERNING THE NOMINEES AND PARTICIPANTS
Information concerning the Nominees and each Participant is set forth
below and in the Annex and Schedule to this proxy statement and was provided by
that person.
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 below.
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). Mr. Steele's principal business address is set forth below.
-10-
CONTRACTS, ARRANGEMENTS AND UNDERSTANDINGS
BENEFICIAL OWNERSHIP BY PARTICIPANTS
The following table sets forth information with respect to common stock
beneficially owned by the Participants as of the close of business on April 23,
2003. Percentage figures are computed on the basis of 26,653,361 shares of
common stock outstanding as of March 18, 2003.
Amount and
Title of Name and address nature of beneficial
class of beneficial owner ownership Percent of class
------------ ------------------- -------------------- ----------------
Common Stock Lloyd I. Miller, III 3,687,988(1) 13.84%
4550 Gordon Drive
Naples, Florida 34102
Common Stock Raymond L. Steele 0 0
4150 Las Palmas Way
Sarasota, Florida 34238
(1) As of April 23, 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.
Except as set forth in this proxy statement (including the Schedule
hereto), none of the Participants in this solicitation, or any of their
respective associates: (i) directly or indirectly beneficially owns any Common
Stock or any securities of FairMarket; (ii) has had any relationship with
FairMarket in any capacity other than as a stockholder, or is or has been a
party to any transactions, or series of similar transactions, or was indebted to
FairMarket during the past year with respect to any Common Stock or securities
of FairMarket; or (iii) knows of any transactions during the past year,
currently proposed transactions, or series of similar transactions, to which
FairMarket or any of its subsidiaries was or is to be a party, in which the
amount involved exceeds $60,000 and in which any of them or their respective
affiliates had, or
-11-
will have, a direct or indirect material interest. In addition, other than as
set forth in this proxy statement (including the Schedule hereto), there are no
contracts, arrangements or understandings entered into by any Participant in
this solicitation or any of their respective associates within the past year
with any person with respect to any of FairMarket's securities, including, but
not limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.
Except as set forth in this proxy statement (including the Schedule
hereto), none of the Participants in this solicitation, or any of their
respective associates, has entered into any agreement or understanding with an
person with respect to (i) any future employment by FairMarket or its affiliates
or (ii) any future transactions to which FairMarket or any of its affiliates
will or may be party.
OTHER MATTERS AND ADDITIONAL INFORMATION
I have omitted from this proxy statement certain disclosure required by
applicable law that is required to be included in FairMarket's definitive proxy
statement. This disclosure includes, among other things, biographical
information on FairMarket's directors and executive officers, information
concerning executive compensation, information on audit services and fees of
auditors and procedures for nominating directors for election to the FairMarket
board and submitting proposals for inclusion in FairMarket's proxy statement at
the next annual meeting. Stockholders should refer to the FairMarket's
definitive proxy statement in order to review this disclosure.
The information concerning FairMarket contained in this proxy statement
and the Schedule attached to it has been taken from, or is based upon, publicly
available information.
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.
-12-
SCHEDULE 1
The following table sets forth information with respect to all
purchases and sales by each Participant in this solicitation and his associates
during the past two years. Except as set forth below, the Participants and their
associates have not purchased or sold securities of FairMarket within the past
two years.
FAIRMARKET INC.
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
ENTITY DATE BUY/SELL
------ ---- --------
A4 11/6/2000 500
A4 11/6/2000 15,910
A4 11/8/2000 8,025
Lloyd 11/8/2000 8,025
M-2 11/9/2000 16,078
Lloyd 11/10/2000 8,000
Lloyd 11/13/2000 2,200
A4 11/14/2000 17,000
M-2 11/14/2000 16,920
A4 11/15/2000 5,500
C 11/16/2000 5,000
C 11/17/2000 8,250
M-2 11/17/2000 8,250
A4 11/20/2000 8,550
A4 11/21/2000 21,700
M-2 11/22/2000 23,600
M-2 11/24/2000 4,000
A4 11/27/2000 15,050
Lloyd 11/27/2000 15,000
C 11/28/2000 17,900
Lloyd 11/28/2000 17,900
A4 11/29/2000 35,900
Lloyd 11/29/2000 35,900
M-2 11/29/2000 35,950
A4 11/30/2000 34,600
Lloyd 12/1/2000 5,000
A4 12/4/2000 8,500
C 12/4/2000 8,600
Lloyd 12/4/2000 8,600
A4 12/6/2000 19,900
Dail 12/6/2000 5,000
M-2 12/6/2000 19,900
A4 12/7/2000 8,000
M-2 12/7/2000 8,000
A4 12/8/2000 19,300
M-2 12/8/2000 19,215
A4 12/11/2000 17,100
-13-
FAIRMARKET INC.
SEE LEGEND BELOW FOR EXPLANATION OF ENTITIES
ENTITY DATE BUY/SELL
------ ---- --------
Alex 12/11/2000 4,400
C 12/11/2000 17,100
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
-14-
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
-15-
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
-16-
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
-17-
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
Milfam I, L.P. ("M-1") Miller is the manager of Milfam LLC, an Ohio limited
liability company established pursuant to the
Alan Goldman, VP Operating Agreement of Milfam LLC, dated as of
PNC Bank, N.A. December 10, 1996. Milfam LLC is the managing general
500 PNC Center partner of (i) Milfam I, L.P., a Georgia limited
201 East Fifth Street partnership established pursuant to the Partnership
Cincinnati, OH 45202 Agreement for Milfam I, L.P., dated December 11, 1996,
and (ii) Milfam II, L.P. a Georgia limited partnership
Milfam II, L.P. ("M-2") established, pursuant to the Partnership Agreement for
Milfam II, L.P., dated December 11, 1996. All of the
Steve Hendrickson shares Miller may be deemed to beneficially own as the
Northern Trust Company manager of the managing general partner of Milfam II,
50 South Lasalle Street L.P. were purchased with money contributed to Milfam
Chicago, IL 60675 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
-18-
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
-19-
ANNEX A
Lloyd I. Miller, III
Raymond L. Steele
-20-
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 , 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 2003 Annual Meeting
of Stockholders of FairMarket and any adjournments or postponements thereof (the
"Annual Meeting"). 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. IF
NO CHOICE IS SPECIFIED AS TO A MATTER IN THIS PROXY, THE PROXY WILL BE VOTED FOR
THE NOMINEE OR NOMINEES AS DIRECTOR AND FOR THE GRANT OF DISCRETIONARY AUTHORITY
TO VOTE FOR OR AGAINST ADJOURNMENTS OR POSTPONEMENTS. 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. ANY
PROXY THAT IS EXECUTED IN A MANNER THAT DOES NOT WITHHOLD AUTHORITY TO
VOTE FOR A NOMINEE WILL BE VOTED FOR SUCH NOMINEE.
2. ADJOURNMENTS AND POSTPONEMENTS OF THE ANNUAL MEETING - to grant
discretionary authority to vote for or against adjournments or
postponements of the Annual Meeting.
_____ FOR _____ AGAINST _____ ABSTAIN
-21-
In the discretion of the proxy, 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 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.
-22-