SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
FAIRMARKET, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
305158107
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(CUSIP Number)
LLOYD I. MILLER, III,
4550 GORDON DRIVE, NAPLES, FLORIDA, 34102
(TEL) 941-962-8577
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
FEBRUARY 13, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[x].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 pages)
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The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
CUSIP NO. 305158107 PAGE 2 OF 10
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lloyd I. Miller, III 279-42-7925
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF-00**
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
2,531,052***
NUMBER OF ---------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,142,536***
EACH ---------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 2,531,052***
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10 SHARED DISPOSITIVE POWER
1,142,536***
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,673,588
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.7%
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14 TYPE OF REPORTING PERSON
IN-IA-OO**
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE RESPONSE TO ITEM 3, HEREIN.
***SEE RESPONSE TO ITEM 5(b), HEREIN.
ORIGINAL REPORT ON SCHEDULE 13D Page 3 of 10
Item 1. Security and Issuer
This statement relates to the Common Stock (the "Shares") of FairMarket,
Inc. (the"Company"). The Company has its principal executive offices at 500
Unicorn Park Drive, Woburn, Mass., 01801-3341.
Item 2. Identity and Background
This statement is filed by Lloyd I. Miller, III (the "Reporting Person"
and/or "Miller"). Miller's principal business address is 4550 Gordon Drive,
Naples, Florida 34102. Miller's principal occupation is investing assets held by
Miller on his own behalf and on behalf of his family. During the past five
years, Miller has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) and has not been a party to civil
proceedings of a judicial or administrative body of competent jurisdiction as a
result of which Miller was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws. Miller is a United States citizen.
Item 3. Source and Amount of Funds or Other Considerations
Miller is the advisor to Trust A-4 and Trust C (the "Trusts"). Trust A-4
was created pursuant to a Declaratory Judgment, signed by the Honorable Wayne F.
Wilke for the Court of Common Pleas, Probate Division, Hamilton County, Ohio, on
October 27, 1992, pursuant to which Trust A was split into four separate trusts.
The Trusts were created pursuant to an Amended and Restated Trust Agreement,
dated September 20, 1983 (the "Trust Agreement"). The Trust Agreement is hereby
attached as Exhibit 99.1. Miller was named as advisor to PNC Bank, Ohio, N.A.
(formerly The Central Trust Company, N.A., Cincinnati, Ohio), the Trustee named
in the Trust Agreement. Such appointment became effective on April 22, 1990, the
date of death of Lloyd I. Miller, the Grantor of the Trusts. All of the Shares
purchased by Miller as advisor to the Trusts were purchased by funds generated
and held by the Trusts. The purchase price for the Shares in Trust A-4 was
$1,381,672.14 and $844,127.81 for the Shares in Trust C.
Pursuant to an Irrevocable Trust Agreement, dated December 11, 2001,
attached hereto as Exhibit 99.5 (the "Irrevocable Trust Agreement"), all of the
Shares Purchased in Trust C were transferred into a grantor retained annuity
trust ("MILGRAT II (G)"). Miller is named as the Trustee to MILGRAT II (G).
Whereas the reporting person had shared dispositive and voting power for all
Shares held by Trust C, the reporting person has sole dispositive and voting
power for all Shares held by MILGRAT II (G). The Shares in Trust C were
purchased at various times and at various prices.
Miller is the manager of Milfam LLC, an Ohio limited liability company
established pursuant to the Operating Agreement of Milfam LLC (the "Operating
Agreement"), dated as of December 10, 1996. Milfam LLC is the managing general
partner of (i) Milfam I, L.P., a Georgia limited partnership established
pursuant to the Partnership Agreement for Milfam I, L.P. (the "Partnership
Agreement"), dated December 11, 1996, and (ii) Milfam II, L.P. a Georgia limited
partnership established, pursuant to the Partnership Agreement for Milfam II,
L.P. (the "Milfam II Partnership Agreement"), dated December 11, 1996. All of
the Shares Miller is deemed to beneficially own as the manager of the managing
general partner of Milfam I, L.P. were purchased with money contributed to
Milfam I, L.P. by its partners, or money generated and held by Milfam I, L.P.
All of the Shares Miller is deemed to beneficially own as the manager of the
managing general partner of Milfam II, 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. The purchase price for the Shares Miller is deemed to
beneficially own as the manager of the managing general partner of Milfam I,
L.P. was $198,019.41. The purchase price for the Shares Miller is deemed to
beneficially own as the manager of the managing general partner of Milfam II,
L.P. was $1,167,795.61. The Operating Agreement, the Partnership Agreement and
the Milfam II Partnership Agreement are hereby respectively attached as Exhibits
99.2, 99.3 and 99.4.
Page 4 of 10
All of the Shares purchased by Miller on his own behalf, were purchased
with personal funds generated and held by Miller. The purchase price for the
Shares purchased by Miller, on his own behalf was $726,146.03.
Miller is the trustee for certain generation skipping trusts (each a
"GST") including Catherine Miller GST, Lloyd Crider GST and Kimberly Miller GST
(collectively, the "GST's"). All of the Shares Miller is deemed to beneficially
own as the trustee for the GST's were purchased with money generated and held by
the GST's. The purchase price for the Shares Miller is deemed to beneficially
own as trustee of Catherine Miller GST was $25,532.00, the purchase price for
the Shares Miller is deemed to beneficially own as trustee of Lloyd Crider GST
was $19,920.40 and the purchase price for the Shares Miller is deemed to
beneficially own as trustee of Kimberly Miller GST was $19,310.92. Miller is the
custodian to certain accounts created pursuant to the Florida Uniform Gift to
Minors Act ("UGMA") for Alexandra Miller ("Alexandra UGMA"). All of the Shares
Miller is deemed to beneficially own in the Alexandra UGMA were purchased with
money held by the Alexandra UGMA. The purchase price for the Shares which Miller
is deemed to beneficially own as the custodian to the Alexandra UGMA was
$25,102.92.
Dail Miller is Miller's wife. All of the Shares Miller is deemed to
beneficially own as Dail Miller's spouse were purchased with personal funds held
by Dail Miller. The purchase price for the Shares Miller is deemed to
beneficially own as Dail Miller's spouse was $9,809.50. Dail Miller is the
custodian for certain UGMA accounts for the benefit of Tyler Dulmage ("Tyler
UGMA") and Wylie Dulmage ("Wylie UGMA" and together with Tyler UGMA, the "Dail
UGMA's"). All of the Shares Miller is deemed to beneficially own in the Dail
UGMA's were purchased with money held by the Dail UGMA's. The purchase price for
the Shares which Miller is deemed to beneficially own as the spouse of the
custodian to the Tyler UGMA was $13,137.75 and the purchase price for the Shares
Miller is deemed to beneficially own as the spouse to the custodian to the Wylie
UGMA was $13,135.75.
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. The
purchase price for the Shares held by LLC was $19,310.92.
Item 4. Purpose of the Transaction
The Shares covered by this Schedule 13D were acquired for investment
purposes. The Reporting Person filing this report now believes that (a) the
common stock of the Company is significantly undervalued, (b) steps taken by the
Company to date to enhance stockholder value have been insufficient, (c)
anti-takeover provisions adopted by the Company are detrimental to stockholders,
and (d) management of the Company must take further immediate steps to enhance
stockholder value. The Reporting Person has now decided that it would be in his
best interest, and those of other stockholders, to attempt to influence the
business strategies and operations of the Company.
The Reporting Person filing this report is examining all of his options
with respect to the possibility of taking actions that he believes will enhance
stockholder value. Such actions could include (a) requesting a list of
stockholders and information regarding the Company, (b) proposing that
management pursue a financial transaction to improve stockholder value
(including a merger, reorganization, asset sale or liquidation), and (c)
encouraging, participating in or leading a proxy contest to change the Company's
board of directors to individuals who would duly consider and, if appropriate,
vote to implement the actions discussed above. Any such actions could relate to
or result in one or more of the matters referenced to in paragraphs (a) through
(j) of Item 4 of Schedule 13D. However, it should not be assumed that the
Reporting Person will take any of the foregoing actions.
The Report Person reserves the right to change plans and take any and all
actions that the Reporting Person may deem appropriate to maximize the value of
his investments, including, among other things, (a) purchasing or otherwise
acquiring additional securities of the Company, (b) selling or otherwise
disposing of any securities of the
Page 5 of 10
Company owned by him, in each case in the open market or in privately negotiated
transactions, or (c) formulating other plans or proposals regarding the Company
or its securities to the extent deemed advisable by the Reporting Person in
light of his general investment policies, market conditions, subsequent
developments affecting the Company and the general business and future prospects
of the Company.
Item 5. Interest in Securities of the Issuer
(a) Miller is deemed to beneficially own 3,673,588 Shares (12.7% of the
outstanding Shares, based on 29,019,455 Shares outstanding pursuant to the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2001). As of the date hereof, 1,097,536 of such beneficially owned Shares are
owned of record by Trust A-4; 683,759 of such beneficially owned Shares are
owned of record by MILGRAT II (G); 176,253 Shares are owned of record by
Milfam I, L.P.; 979,375 of such beneficially owned Shares are owned of record
by Milfam II, L.P.; 617,165 of such beneficially owned Shares are owned of
record by Miller directly; 21,800 of such beneficially owned Shares are owned
of record by Alexandra UGMA; 21,900 of such beneficially owned Shares are owned
of record by Catherine Miller GST; 9,000 of such beneficially owned Shares are
owned of record by Dail Miller;15,400 of such beneficially owned Shares are
owned of record by Kimberly Miller GST; 15,400 of such beneficially owned
Shares are owned of record by LLC; 15,000 of such beneficially owned Shares are
owned of record by Lloyd Crider GST; 10,500 of such beneficially owned Shares
are owned of record by Tyler UGMA and 10,500 of such beneficially owned Shares
are owned of record by Wylie UGMA.
(b) Miller has or may be deemed to have shared voting power and shared
dispositive power for all such shares held of record by the Trusts, Dail Miller,
Lloyd Crider GST, Tyler UGMA and Wylie UGMA and sole voting power and sole
dispositive power for all such shares held of record by Milfam I, L.P., Milfam
II, L.P., Alexandra UGMA, Catherine Miller GST, Kimberly Miller GST, LLC,
MILGRAT II(G), and Miller directly (see Item 6).
(c) The following table details the purchase of shares that were
effected during the past 60 days:
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TRUST A-4
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DATE OF TRANSACTION NUMBER OF SHARES PURCHASED PRICE PER SHARE
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12/17/2001 1,300 $1.08
12/18/2001 9,300 $1.10
12/19/2001 11,900 $1.10
12/24/2001 3,000 $1.08
12/28/2001 8,600 $1.12
12/31/2001 15,580 $1.12
1/4/2002 3,768 $1.14
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LLOYD MILLER
DATE OF TRANSACTION NUMBER OF SHARES PURCHASED PRICE PER SHARE
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12/14/2001 2,700 $1.07
12/20/2001 4,800 $1.10
12/26/2001 9,500 $1.10
2/07/2002 2,000 $1.26
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Page 6 of 10
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MILFAM II, L.P.
DATE OF TRANSACTION NUMBER OF SHARES PURCHASED PRICE PER SHARE
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12/21/2001 32,700 $1.03
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(d) Persons other than the Reporting Person have the right to receive
and the power to direct the receipt of dividends from, or the proceeds from,
the sale of such securities.
(e) Not Applicable
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer
The Trust Agreement provides:
The Trustee shall not make any investments, reinvestments or changes in
investments of the assets of Trust A without first consulting with and
obtaining the advice of the advisor. The Trustee need not act in
accordance with the advice and counsel of the advisor, but if it does so,
the Trustee shall not be liable to any person for or as a result of any
action or failure to act if in accordance with such advice and counsel.
The Trustee need not obtain the advice and counsel of the advisor if the
Trustee requests such advice and counsel in writing and if the advisor
fails to reply to the Trustee within five days from the date of such
request by telephone, telegram, mail or in person.
The Operating Agreement provides:
Page 7 of 10
While Lloyd I. Miller, III serves as manager, he shall have complete
control over all of the affairs of Milfam LLC and need not seek the
consent or approval of any Member with respect to any action. The Milfam
I Partnership Agreement provides:
The General Partner shall have the full and exclusive right to manage and
control the business and affairs of Milfam I, L.P. and to make all
decisions regarding the affairs of Milfam I, L.P. In the course of such
management, the General Partner may acquire, encumber, hold title to,
pledge, sell, release or otherwise dispose of Partnership Property and
interests therein when and upon such terms as it determines to be in the
best interest of the Milfam I, L.P. The General Partner shall have all of
the rights, powers and obligations of a partner of a partnership without
limited partners, except as otherwise provided under the Act.
The Milfam II Partnership Agreement provides:
The General Partner shall have the full and exclusive right to manage and
control the business and affairs of Milfam II, L.P. and to make all
decisions regarding the affairs of Milfam II, L.P. In the course of such
management, the General Partner may acquire, encumber, hold title to,
pledge, sell, release or otherwise dispose of Partnership Property and
interest therein when and upon such terms as it determines to be in the
best interest of the Milfam II, L.P. The General Partner shall have all
of the rights, powers and obligations of a partner of a partnership
without limited partners, except as otherwise provided under the Act.
The Irrevocable Trust Agreement provides:
The Trustee shall have the power to exercise and not exercise, as the
Trustee deems reasonable, rights of ownership incident to securities
that the Trustee may hold, including rights to vote, give proxies and
execute consents, provided that a corporate Trustee shall exercise
voting rights under any securities issued by it or its affiliate only
at the written direction of the primary income beneficiary of the trust
to which such securities are allocated, the guardian or custodian (but
not the Grantor) to act for any beneficiary who is incapacitated or
incompetent.
Page 8 of 10
Item 7. Materials to be Filed as Exhibits:
Exhibit Document
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99.1 Amended and Restated Trust Agreement, dated September 20,
1983, between Lloyd I. Miller and PNC Bank, Ohio, N.A.
(formerly The Central Trust Company, N.A., Cincinnati, Ohio).
99.2 Operating Agreement of Milfam LLC, dated December 10, 1996.
99.3 Milfam I, L.P. Partnership Agreement, dated December 11, 1996.
99.4 Milfam II, L.P. Partnership Agreement, dated December 11,
1996.
99.5 Irrevocable Trust Agreement, dated December 11, 2001
Page 9 of 10
After reasonable inquiry and to the best knowledge and belief of the
undersigned, I certify that the information set forth in this statement is true,
complete and correct.
Dated: February 13, 2002
By: /s/ Lloyd I. Miller, III
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Lloyd I. Miller, III
Page 10 of 10
EXHIBIT INDEX
Exhibit Document
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EX-99.1 Amended and Restated Trust Agreement
EX-99.2 Operating Agreement of Milfam LLC
EX-99.3 Milfam I, L.P. Partnership Agreement
EX-99.4 Milfam II, L.P. Partnership Agreement
EX-99.5 Irrevocable Trust Agreement