Document:

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                                                                 EXHIBIT 10.5

                                     FORM OF

                                FAIRMARKET, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

         The purpose of the FairMarket, Inc. Employee Stock Purchase Plan (the
"Plan") is to provide eligible employees of FairMarket, Inc. (the "Company")
with opportunities to purchase shares of the Company's common stock, par value
$0.001 per share (the "Common Stock"). ________________ shares of Common Stock
in the aggregate have been approved and reserved for this purpose. The Plan is
intended to constitute an "employee stock purchase plan" within the meaning of
Section 423(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
and shall be interpreted in accordance with that intent.

         1. Administration. The Plan will be administered by the person or
persons (the "Administrator") appointed by the Company's Board of Directors (the
"Board") for such purpose. The Administrator has authority to make rules and
regulations for the administration of the Plan, and its interpretations and
decisions with regard thereto shall be final and conclusive. No member of the
Board or individual exercising administrative authority with respect to the Plan
shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted hereunder.

         2. Offerings. The Company will make one or more offerings to eligible
employees to purchase Common Stock under the Plan ("Offerings"). The initial
Offering will begin on the first day of the Company's Initial Public Offering
and will end on the following _________ (the "Initial Offering"). Thereafter,
unless otherwise determined by the Administrator, an
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Offering will begin on the first business day occurring on or after each
____________ and ________ and will end on the last business day occurring on or
before the following ________ and __________, respectively. The Administrator
may, in its discretion, designate a different period for any Offering, provided
that no Offering shall exceed six months in duration or overlap any other
Offering.

         3. Eligibility. All employees of the Company (including employees who
are also directors of the Company) and all employees of each Designated
Subsidiary (as defined in Section 11) are eligible to participate in any one or
more of the Offerings under the Plan, provided that as of the first day of the
applicable Offering (the "Offering Date") they are customarily employed by the
Company or a Designated Subsidiary for more than 20 hours a week.

         4. Participation. An employee eligible on any Offering Date may
participate in such Offering by submitting an enrollment form to his appropriate
payroll location at least 15 business days before the Offering Date (or by such
other deadline as shall be established for the Offering). The form will (a)
state a whole percentage to be deducted from his Compensation (as defined in
Section 11) per pay period, (b) authorize the purchase of Common Stock for him
in each Offering in accordance with the terms of the Plan and (c) specify the
exact name or names in which shares of Common Stock purchased for him are to be
issued pursuant to Section 10. An employee who does not enroll in accordance
with these procedures will be deemed to have waived his right to participate.
Unless an employee files a new enrollment form or withdraws from the Plan, his
deductions and purchases will

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continue at the same percentage of Compensation for future Offerings, provided
he remains eligible. Notwithstanding the foregoing, participation in the Plan
will neither be permitted nor be denied contrary to the requirements of the
Code.

         5. Employee Contributions. Each eligible employee may authorize payroll
deductions at a minimum of one percent (1%) up to a maximum of ten percent (10%)
of his Compensation for each pay period. The Company will maintain book accounts
showing the amount of payroll deductions made by each participating employee for
each Offering. No interest will accrue or be paid on payroll deductions.

         6. Deduction Changes. Except as may be determined by the Administrator
in advance of an Offering, an employee may not increase or decrease his payroll
deduction during any Offering, but may increase or decrease his payroll
deduction with respect to the next Offering (subject to the limitations of
Section 5) by filing a new enrollment form at least 15 business days before the
next Offering Date (or by such other deadline as shall be established for the
Offering). The Administrator may, in advance of any Offering, establish rules
permitting an employee to increase, decrease or terminate his payroll deduction
during an Offering.

         7. Withdrawal. An employee may withdraw from participation in the Plan
by delivering a written notice of withdrawal to his appropriate payroll
location. The employee's withdrawal will be effective as of the next business
day. Following an employee's withdrawal, the Company will promptly refund to him
his entire account balance under the Plan (after payment for any Common Stock
purchased before the effective date of withdrawal). Partial

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withdrawals are not permitted. The employee may not begin participation again
during the remainder of the Offering, but may enroll in a subsequent Offering in
accordance with Section 4.

         8. Grant of Options. On each Offering Date, the Company will grant to
each eligible employee who is then a participant in the Plan an option
("Option") to purchase on the last day of such Offering (the "Exercise Date"),
at the Option Price hereinafter provided for, (a) a number of shares of Common
Stock, which number shall not exceed the number of whole shares which is less
than or equal to $12,500 divided by the closing price per share of Common Stock
on the Offering Date, or (b) such other lesser maximum number of shares as shall
have been established by the Administrator in advance of the Offering.
Notwithstanding the foregoing, on the Offering Date for the Initial Offering,
the Company will grant to each eligible employee who is then a participant in
the Plan an Option to purchase on the Exercise Date, at the Option Price
hereinafter provided for, a number of shares of Common Stock, which number shall
not exceed the number of whole shares which is less than or equal to $25,000
divided by the "Price to the Public" (or equivalent) set forth on the cover page
for the final prospectus relating to the Company's Initial Public Offering. The
purchase price for each share purchased under each Option (the "Option Price")
will be 85% of the Fair Market Value of the Common Stock on the Offering Date or
the Exercise Date, whichever is less.

         Notwithstanding the foregoing, no employee may be granted an option
hereunder if such employee, immediately after the option was granted, would be
treated as owning stock possessing five percent (5%) or more of the total
combined voting power or value of all classes

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of stock of the Company or any Parent or Subsidiary (as defined in Section 11).
For purposes of the preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply in determining the stock ownership of an employee, and
all stock which the employee has a contractual right to purchase shall be
treated as stock owned by the employee. In addition, no employee may be granted
an Option which permits his rights to purchase stock under the Plan, and any
other employee stock purchase plan of the Company and its Parents and
Subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value
of such stock (determined on the option grant date or dates) for each calendar
year in which the Option is outstanding at any time. The purpose of the
limitation in the preceding sentence is to comply with Section 423(b)(8) of the
Code.

         9. Exercise of Option and Purchase of Shares. Each employee who
continues to be a participant in the Plan on the Exercise Date shall be deemed
to have exercised his Option on such date and shall acquire from the Company
such number of whole shares of Common Stock reserved for the purpose of the Plan
as his accumulated payroll deductions on such date will purchase at the Option
Price, subject to any other limitations contained in the Plan. Any amount
remaining in an employee's account at the end of an Offering solely by reason of
the inability to purchase a fractional share will be carried forward to the next
Offering; any other balance remaining in an employee's account at the end of an
Offering will be refunded to the employee promptly.

         10. Issuance of Certificates. Certificates representing shares of
Common Stock purchased under the Plan may be issued only in the name of the
employee, in the name of the

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employee and another person of legal age as joint tenants with rights of
survivorship, or in the name of a broker authorized by the employee to be his,
or their, nominee for such purpose.

         11.      Definitions.

         The term "Compensation" means the amount of base pay, prior to salary
reduction pursuant to either Section 125 or 401(k) of the Code, but excluding
overtime, commissions, incentive or bonus awards, allowances and reimbursements
for expenses such as relocation allowances or travel expenses, income or gains
on the exercise of Company stock options, and similar items.

         The term "Designated Subsidiary" means any present or future Subsidiary
(as defined below) that has been designated by the Board to participate in the
Plan. The Board may so designate any Subsidiary, or revoke any such designation,
at any time and from time to time, either before or after the Plan is approved
by the stockholders.

         The term "Fair Market Value of the Common Stock" on any given date
means the fair market value of the Common Stock determined in good faith by the
Administrator; provided, however, that if the Common Stock is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), NASDAQ National System or national securities exchange, the
determination shall be made by reference to market quotations. If there are no
market quotations for such date, the determination shall be made by reference to
the last date preceding such date for which there are market quotations.
Notwithstanding the foregoing, if the date for which Fair Market Value of the
Common Stock is determined is the first day when trading prices for the Common
Stock are reported on

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NASDAQ or on a national securities exchange, the Fair Market Value of the Common
Stock shall be the "Price to the Public" (or equivalent) set forth on the cover
page for the final prospectus relating to the Company's Initial Public Offering.

         The term "Initial Public Offering" means the consummation of the first
fully underwritten, firm commitment public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, other than
on Forms S-4 or S-8 or their then equivalents, covering the offer and sale by
the Company of its Common Stock.

         The term "Parent" means a "parent corporation" with respect to the
Company, as defined in Section 424(e) of the Code.

         The term "Subsidiary" means a "subsidiary corporation" with respect to
the Company, as defined in Section 424(f) of the Code.

         12. Rights on Termination of Employment. If a participating employee's
employment terminates for any reason before the Exercise Date for any Offering,
no payroll deduction will be taken from any pay due and owing to the employee
and the balance in his account will be paid to him or, in the case of his death,
to his designated beneficiary as if he had withdrawn from the Plan under Section
7. An employee will be deemed to have terminated employment, for this purpose,
if the corporation that employs him, having been a Designated Subsidiary, ceases
to be a Subsidiary, or if the employee is transferred to any corporation other
than the Company or a Designated Subsidiary.

         13. Special Rules. Notwithstanding anything herein to the contrary, the
Administrator may adopt special rules applicable to the employees of a
particular Designated

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Subsidiary, whenever the Administrator determines that such rules are necessary
or appropriate for the implementation of the Plan in a jurisdiction where such
Designated Subsidiary has employees; provided that such rules are consistent
with the requirements of Section 423(b) of the Code. Such special rules may
include (by way of example, but not by way of limitation) the establishment of a
method for employees of a given Designated Subsidiary to fund the purchase of
shares other than by payroll deduction, if the payroll deduction method is
prohibited by local law or is otherwise impracticable. Any special rules
established pursuant to this Section 13 shall, to the extent possible, result in
the employees subject to such rules having substantially the same rights as
other participants in the Plan.

         14. Optionees Not Stockholders. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a holder
of the shares of Common Stock covered by an Option under the Plan until such
shares have been purchased by and issued to him.

         15. Rights Not Transferable. Rights under the Plan are not transferable
by a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.

         16. Application of Funds. All funds received or held by the Company
under the Plan may be combined with other corporate funds and may be used for
any corporate purpose.

         17. Adjustment in Case of Changes Affecting Common Stock. In the event
of a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for the Plan, and the
share limitation set forth in

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Section 8, shall be increased proportionately, and such other adjustment shall
be made as may be deemed equitable by the Administrator. In the event of any
other change affecting the Common Stock, such adjustment shall be made as may be
deemed equitable by the Administrator to give proper effect to such event.

         18. Amendment of the Plan. The Board may at any time, and from time to
time, amend the Plan in any respect, except that without the approval, within 12
months of such Board action, by the stockholders, no amendment shall be made
increasing the number of shares approved for the Plan or making any other change
that would require stockholder approval in order for the Plan, as amended, to
qualify as an "employee stock purchase plan" under Section 423(b) of the Code.

         19. Insufficient Shares. If the total number of shares of Common Stock
that would otherwise be purchased on any Exercise Date plus the number of shares
purchased under previous Offerings under the Plan exceeds the maximum number of
shares issuable under the Plan, the shares then available shall be apportioned
among participants in proportion to the amount of payroll deductions accumulated
on behalf of each participant that would otherwise be used to purchase Common
Stock on such Exercise Date.

         20. Termination of the Plan. The Plan may be terminated at any time by
the Board. Upon termination of the Plan, all amounts in the accounts of
participating employees shall be promptly refunded.

         21. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under the Plan is subject to obtaining all governmental
approvals required in

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connection with the authorization, issuance, or sale of such stock.

         The Plan shall be governed by Delaware law except to the extent that
such law is preempted by federal law.

         22. Issuance of Shares. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.

         23. Tax Withholding. Participation in the Plan is subject to any
minimum required tax withholding on income of the participant in connection with
the Plan. Each employee agrees, by entering the Plan, that the Company and its
Subsidiaries shall have the right to deduct any such taxes from any payment of
any kind otherwise due to the employee, including shares issuable under the
Plan.

         24. Notification Upon Sale of Shares. Each employee agrees, by entering
the Plan, to give the Company prompt notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased.

         25. Effective Date and Approval of Shareholders. The Plan shall take
effect on the first day of the Company's Initial Public Offering, subject to
approval by the holders of a majority of the votes cast at a meeting of
stockholders at which a quorum is present or by written consent of stockholders.

                                       10<PAGE>   1
                                                                    Exhibit 10.9

                                     WARRANT

                                FAIRMARKET, INC.

                        WARRANT TO PURCHASE COMMON STOCK

     This certifies that, for value received, Microsoft Corporation is entitled
to subscribe for and purchase that number of fully paid and nonassessable shares
of Common Stock of FairMarket, Inc. set forth in Section 2 hereof, or such other
number of shares as may be determined pursuant to an adjustment in accordance
with Section 5 hereof, at the price per share set forth in Section 2, subject to
adjustment from time to time pursuant to Section 5 hereof and subject to the
provisions and upon the terms and conditions set forth herein.

     1.   DEFINITIONS. As used herein, the following terms have the following
meanings:

     "Common Stock" means the common stock, par value $.001 per share, of the
Company.

     "Company" means FairMarket, Inc.

     "Holder" means Microsoft Corporation.

     "Total Purchasable Shares" means 4,500,000 shares of Common Stock.

     2.   TERM OF WARRANT; NUMBER OF SHARES; WARRANT PRICE. This Warrant is
exercisable, at the option of the Holder, subject to adjustment as provided
below and in accordance with Section 5 hereof, only as follows:

          (a)  At any time after the issuance hereof and before the earlier of
the Termination Date or the Expiration Date (each as hereinafter defined), this
Warrant may be exercised for an aggregate number of shares of Common Stock less
than or equal to the Total Purchasable Shares (subject to adjustments made
pursuant to Section 5 hereof).

          (b)  The price paid per share (the "Warrant Price") shall initially be
$1.71 and shall be subject to adjustment as provided in Section 5 hereof.

     3.   METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT; PUBLIC OFFERING;
SALE.

          (a)  This Warrant may be exercised by the Holder by the surrender of
this Warrant (with the notice of exercise form attached hereto as EXHIBIT A duly
executed) at the principal office of the Company together with payment to the
Company of an amount equal to the then applicable Warrant Price multiplied by
the number of

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shares of Common Stock then being purchased (the "Purchase Price"). As an
alternative to paying the Purchase Price in cash, the Holder may deliver to the
Company a properly executed exercise notice and shall be entitled to receive
upon exercise a number of shares of Common Stock equal to the number of shares
of Common Stock for which the Warrant is being exercised minus a number of
shares of Common Stock having an aggregate Fair Market Value (calculated
pursuant to the following paragraph) equal to the Purchase Price.

     For purposes of the above paragraph, (i) if the Company has not registered
the Common Stock under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), then the "Fair Market Value" of a share of Common
Stock is intended to be the pro rata portion represented by such share with
respect to the value of the Company as a going concern, without application of
any premium for control or any discount for lack of control or lack of
liquidity, and shall be determined by the Board of Directors of the Company in
good faith. In the event of a dispute as to Fair Market Value, the parties shall
exercise reasonable efforts in seeking to reach agreement as to the Fair Market
Value of the Common Stock. In the absence of such agreement, such Fair Market
Value shall be determined by arbitration under the Commercial Arbitration Rules
of the American Arbitration Association in Boston, Massachusetts before a single
arbitrator selected by mutual agreement of the parties or, if the parties do not
agree, by designation of the American Arbitration Association. The expenses of
the arbitration shall be divided equally between the parties. The results of any
such arbitration shall be final and binding on the parties; and (ii) if the
Company has registered the Common Stock under Section 12 of the Exchange Act,
then the "Fair Market Value" of a share of Common Stock shall be the average of
the reported closing prices of the Common Stock on the exchange or market on
which the Common Stock is listed or traded for the ten trading days immediately
preceding the date of exercise of this Warrant.

          (b)  The Company agrees that the shares of Common Stock so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of the rights represented by this Warrant, certificates for the shares
of Common Stock so purchased shall be delivered to the Holder within three (3)
days thereafter. Partial exercise of this Warrant is permitted and upon any such
partial exercise, unless this Warrant has expired or terminated, a new Warrant
representing the portion of the shares of Common Stock, if any, with respect to
which this Warrant shall not then have been exercised, shall also be issued to
the Holder hereof within the three (3) day period referred to in the preceding
sentence.

          (c)  Upon receipt by the Holder of written notice from the Company of
the existence of an agreement or arrangement for any transaction or series of
transactions involving: (a) the sale, transfer, conveyance, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the consolidated assets or properties of the Company and
its subsidiaries taken as

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a whole to one more persons or entities who are not affiliates of the Company,
or (b) the sale, transfer, conveyance, exchange or other disposition (including,
without limitation, by merger or consolidation) of all or substantially all of
the Common Stock of the Company to one or more persons or entities who are not
affiliates of the Company (a "Sale Transaction"), the Holder shall have the
right to exercise the Warrant up to and including the date immediately preceding
the date of the closing of such Sale Transaction (the "Termination Date"). If
the closing of such Sale Transaction occurs, the Warrant shall terminate and be
of no further force and effect as of the Termination Date.

     In connection with a public offering (a "Public Offering") of the Company's
Common Stock pursuant to a registration statement filed under the Securities Act
of 1933, as amended (the "Securities Act"), the Warrant shall terminate on the
earlier of (i) two years after the consummation of the Public Offering, (ii)
thirty (30) days after the Company has sent written notice to the Holder that
the initial public offering price of the Common Stock equalled or exceeded
$25.00 per share, or (iii) after the consummation of the Public Offering, thirty
(30) days after the Company has sent written notice to the Holder that the
reported closing price of the Common Stock on the exchange or market on which
the Common Stock is listed or traded equalled or exceeded $25.00 for twenty
consecutive trading days.

     Unless earlier terminated as provided above, the Warrant shall terminate
and be of no further force and effect on July __, 2004.

     4.   STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable and free from all taxes, liens and
charges imposed by the Company with respect to the issue thereof. During the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and reserved for the purpose of the
issuance upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.

     5.   ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The Warrant Price
and the number of shares of Common Stock purchasable upon exercise of the rights
represented by this Warrant shall be subject to adjustment from time to time, as
follows:

          (a)  In the event the Company shall at any time or from time to time
while this Warrant is outstanding, (i) pay a dividend or make a distribution in
respect of the Common Stock in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, in each case whether by
reclassification of shares, recapitalization of the Company (including a
recapitalization effected by a merger or consolidation) or otherwise, the
Warrant Price in effect immediately prior to such action shall be adjusted by
multiplying such Warrant Price by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before

<PAGE>   4

such event, and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Section 5(a) shall be given effect upon payment of such a dividend or
distribution as of the record date for the determination of shareholders
entitled to receive such dividend or distribution (on a retroactive basis) and
in the case of a subdivision or combination shall become effective immediately
as of the effective date thereof.

          (b)  Upon each adjustment in the Warrant Price pursuant to this
Section 5, the number of shares of Common Stock purchasable hereunder shall be
adjusted, to the next larger whole share, to the product obtained by multiplying
the number of shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction (i) the numerator of which shall be the Warrant
Price immediately prior to such adjustment and (ii) the denominator of which
shall be the Warrant Price immediately thereafter.

          (c)  Whenever an adjustment to the Warrant Price is required pursuant
to this Section 5, the Company shall forthwith place on file with the Secretary
of the Company a statement signed by an officer of the Company stating the
adjusted Warrant Price determined as provided herein and the number of shares of
Common Stock purchasable upon exercise of this Warrant. Such statement shall set
forth in reasonable detail such facts as shall be necessary to show the reason
and the manner of computing such adjustment. Promptly after such adjustment, the
Company shall mail a notice thereof to the Holder at the address specified in
Section 7(c) hereof.

          (d)  No fractional shares of Common Stock will be issued in connection
with any exercise hereunder, but in lieu of such fractional shares the number of
shares to be issued shall be rounded to the next highest number.

     6.   COMPLIANCE WITH SECURITIES ACT. The Holder of this Warrant, by
acceptance hereof, agrees that the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that it will not offer,
sell or otherwise dispose of any shares of Common Stock to be issued upon
exercise of this Warrant except under circumstances which will not result in a
violation of the Securities Act. Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing that the shares of Common
Stock so purchased are being acquired for investment and not with a view toward
distribution or resale. All shares of Common Stock issued upon exercise of this
Warrant (unless registered under the Securities Act) shall be stamped or
imprinted with a legend substantially in the following form:

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
          ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
          SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
          WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
          AN OPINION OF COUNSEL

<PAGE>   5

          FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
          REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY APPLICABLE
          STATE SECURITIES LAW.

     7.   MISCELLANEOUS.

          (a)  REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, on surrender and cancellation of this Warrant, the Company,
at its expense, will execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor.

          (b)  NOTICE OF CAPITAL CHANGES; PUBLIC OFFERING. In case:

               (i)  the Company shall declare any dividend or distribution
     payable to the holders of shares of its Common Stock;

               (ii) there shall be any capital reorganization or
     reclassification of the capital stock of the Company, or Sale Transaction;

               (iii) there shall be a voluntary or involuntary dissolution,
     liquidation or winding up of the Company; or

               (iv) the Company shall file a registration statement under the
     Securities Act in connection with a Public Offering;

then, in any one or more of said cases, the Company shall give the Holder of
this Warrant written notice, in the manner set forth in Section 7(c) below, of
the date on which a record shall be taken for such dividend or distribution or
for determining shareholders entitled to vote upon such Sale Transaction,
dissolution, liquidation, or winding up and of the date when any such
transaction shall take place, as the case may be. Such written notice shall be
given at least twenty (20) days prior to the closing of the transaction in
question and not less than ten (10) days prior to the record date in respect
thereof or, in the case of subsection (iv), promptly after the filing of such
registration statement. In addition, in the case of a Sale Transaction, such
notice shall recite that the Warrant will terminate in accordance with the
provisions contained in Section 3(c) of this Warrant.

          (c)  NOTICE. Any notice to be given to either party under this Warrant
shall be in writing and shall be deemed to have been given upon delivery in hand
or when sent by overnight mail, postage prepaid, addressed, if to the Company,
at its principal office and, if to the Holder hereof, at its address as set
forth in the Company's books and records or at such other address as the Holder
hereof may have provided to the Company in writing.

<PAGE>   6

          (d)  WARRANT AGREEMENT. This Warrant is issued pursuant to, and is
subject to the terms and conditions of, a Warrant Agreement between the Company
and the Holder of even date herewith.

          (e)  GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.

          (f)  AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the Holder.

          (g)  Counterparts. This Warrant may be executed in multiple
counterparts, all of which together shall constitute one instrument.

          (h)  NO IMPAIRMENT. The Company will not by amendment to its
Certificate of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be reasonably
necessary or appropriate in order to protect the rights of the Holder.

          (i)  TRANSFERABILITY. This Warrant is non-transferable.

                                  [END OF TEXT]

<PAGE>   7

     This Warrant has been executed as of August 23, 1999.

                                                FAIRMARKET, INC.

                                                By: /s/ Scott Randall
                                                    ____________________________
                                                    President

Accepted as of August 23, 1999:

MICROSOFT CORPORATION

By: /s/ Robert Eschelman
    ___________________________
    Title: Assistant Secretary

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