<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MARKETWATCH.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7375 94-3289801
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
825 BATTERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 733-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
J. PETER BARDWICK
CHIEF FINANCIAL OFFICER
MARKETWATCH.COM, INC.
825 BATTERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 733-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
MARK C. STEVENS, ESQ. SCOTT C. DETTMER, ESQ.
JEFFREY R. VETTER, ESQ. BROOKS STOUGH, ESQ.
SAYRE E. STEVICK, ESQ. WILLIAM A. HOLMES, ESQ.
FENWICK & WEST LLP DAVID W. KLING, ESQ.
TWO PALO ALTO SQUARE GUNDERSON DETTMER STOUGH VILLENEUVE
PALO ALTO, CALIFORNIA 94306 FRANKLIN & HACHIGIAN, LLP
(650) 494-0600 155 CONSTITUTION DRIVE
MENLO PARK, CA 94025
(650) 321-2400
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.01 par value per share........ $34,500,000 $10,177.50
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</TABLE>
(1) Estimated pursuant to Rule 457(o) solely for the purpose of calculating the
amount of the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
, 1998
SHARES
[LOGO]
COMMON STOCK
------------------
This is the initial public offering of MarketWatch.com, Inc. and we are offering
shares of our common stock. No public market currently exists for our
shares. We anticipate that the initial public offering price will be between
$ and $ per share.
We have applied to list the common stock on the Nasdaq National Market under the
symbol "MKTW."
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Public Offering Price..................................... $ $
Underwriting Discounts and Commissions.................... $ $
Proceeds to MarketWatch.com............................... $ $
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
MarketWatch.com has granted the Underwriters the right to purchase up to
additional shares to cover any over-allotments.
JOINT BOOK-RUNNING MANAGERS
<TABLE>
<S> <C>
BT ALEX. BROWN DONALDSON, LUFKIN & JENRETTE
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SALOMON SMITH BARNEY FAC/EQUITIES
</TABLE>
, 1998
<PAGE> 3
[ART]
The information on our Web site is not a part of this Prospectus.
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<PAGE> 4
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information and Financial Statements and notes thereto appearing elsewhere in
this Prospectus.
This Prospectus contains forward-looking statements. The outcome of the
events described in these forward-looking statements is subject to risks and
actual results could differ materially. The sections entitled "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" as well as those discussed elsewhere in this
Prospectus contain a discussion of some of the factors that could contribute to
these differences.
The terms the "Company" and "MarketWatch.com" refer to us and our
predecessor, Marketwatch.Com, LLC (the "LLC") and "Predecessor Business" and
"DBC Online/News Business" refer to the Online/News business of Data
Broadcasting Corporation ("DBC").
THE COMPANY
OUR BUSINESS
We are a leading Web-based provider of comprehensive, real-time business
news, financial programming and analytic tools. Our CBS.MarketWatch.com Web site
also offers several tiers of paid subscription products, personal finance
commentary and data, community features and other services designed to provide a
"one-stop-shop" for our audience's financial information needs. We carefully
design and regularly update our Web site to provide well-organized, relevant and
clear programming. Our staff of over 40 professional journalists creates
in-depth, up-to-the-minute business and financial commentary and analysis
throughout the trading day and our correspondents often appear on CBS Television
and CBS Radio News. We have important strategic relationships with our principal
stockholders, CBS Broadcasting Inc. ("CBS") and DBC. We believe that our focus
on original and authoritative content and our access to a national media
audience through our CBS relationship, combined with the interactive qualities
of the Internet, will allow us to create the preeminent brand for real-time
business news and financial programming on the Web. In September 1998, our Web
site attracted nearly 2.0 million visitors who generated more than 45 million
page views, as compared with approximately 785,000 visitors who generated more
than 38 million page views in March 1998.
OUR MARKET OPPORTUNITY
The Web has rapidly become a significant global medium, allowing content
providers to deliver information and programming in a manner not possible in
traditional broadcast and print media. Demand for comprehensive business
information and financial programming and the volume of online securities
trading have increased significantly. Traditional print media such as newspapers
and magazines cannot offer real-time data and information, and broadcasters are
limited in the depth and availability of their content. Not bound by these
limitations, we are well-positioned to exploit the significant market
opportunity that exists for a real-time business news, financial programming and
analytic tools provider.
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OUR STRATEGY
Our strategy to exploit our market opportunity includes the following:
- Build traffic and audience loyalty,
- Deliver original, authoritative and timely programming with high
editorial value,
- Leverage CBS's name recognition and resources,
- Maximize the use of DBC's data and analytic tools,
- Build and capitalize on the attractive demographics of our audience,
and
- Pursue additional revenue streams.
OUR CUSTOMERS
We believe our Web site draws users who represent an attractive demographic
group for companies that advertise and conduct business over the Internet. Since
introducing our CBS.MarketWatch.com Web site, we have successfully attracted
more than 75 advertisers across a broad range of industries, beginning with
advertisers in the financial services and technology industries and more
recently in the automotive, travel and consumer retailing industries.
OUR HISTORY
We were formed in October 1997 as a joint venture 50% owned by each of CBS
and DBC. CBS licensed us its name, logo and certain news content for us to use
in connection with the CBS.MarketWatch.com Web site through October 2002 and
upon the consummation of this offering will have agreed to provide $30 million
rate card amount of promotion and advertising to us. DBC contributed certain
assets related to our predecessor business, that it formed in October 1995, and
agreed to provide our initial funding and ongoing services, including hosting
our Web site. Our address is 825 Battery Street, San Francisco, California,
94111 and our telephone number is (415) 733-0500.
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<PAGE> 6
THE OFFERING
Common Stock offered by the Company....... shares
Common Stock to be outstanding after the
offering.................................. shares(1)
Use of proceeds........................... Repayment of debt and general
corporate purposes, including
working capital. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol.... MKTW
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
DBC ONLINE/NEWS(2) MARKETWATCH.COM
------------------------------------ -----------------------------------------
INCEPTION INCEPTION QUARTER ENDED
(OCTOBER 1, 1995) JANUARY 1, 1997 (OCTOBER 29, 1997) --------------------
THROUGH THROUGH THROUGH MARCH 31, JUNE 30,
DECEMBER 31, 1996 OCTOBER 28, 1997 DECEMBER 31, 1997 1998 1998
----------------- ---------------- ------------------ --------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 607 $ 1,172 $ 630 $ 1,176 $ 1,519
Gross profit......................... 277 643 482 996 1,156
Operating loss....................... (2,104) (1,383) (81) (759) (1,573)
Net loss............................. $(1,320) $ (943) $ (81) $ (766) $(1,587)
Basic and diluted net loss per
share(3)........................... $ (0.01) $ (0.09) $ (0.18)
Shares used to compute basic and
diluted net loss per share(3)(4)... 9,000 9,000 9,000
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------------
ACTUAL(3) AS ADJUSTED(5)
--------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash...................................................... $ 628 $
Working capital (deficit)................................. (948)
Total assets.............................................. 2,240
Advances from DBC......................................... 1,539
Total stockholders' equity (deficit)...................... (153)
</TABLE>
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(1) Based on the number of shares outstanding as of June 30, 1998 (assuming the
conversion of our business from a limited liability company into a
corporation, which is referred to as the Reorganization, had occurred prior
to that date). This number does not include: (i) 722,000 shares of Common
Stock subject to outstanding stock options on that date with a weighted
average exercise price of $6.00 per share, (ii) an aggregate of 153,750
shares of Common Stock subject to stock options granted subsequent to June
30, 1998, and (iii) an aggregate of 624,250 additional shares to be reserved
for issuance under our 1998 Equity Incentive Plan and 1998 Directors' Stock
Option Plan which will take effect when this offering is completed. See
"Capitalization," "Management -- Employee Benefit Plans" and Notes 4 and 8
of Notes to MarketWatch.com Financial Statements.
(2) Represents the results of operations of the Predecessor Business for the
periods indicated.
(3) Reflects the Reorganization as if it occurred as of the beginning of the
period indicated.
(4) See Note 2 of Notes to MarketWatch.com Financial Statements for information
concerning the number of shares used in computing net loss per share.
(5) As adjusted to reflect the sale of the shares of Common Stock at
an assumed initial public offering price of $ per share and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses. See "Use of Proceeds" and "Capitalization."
------------------------
MarketWatch, the MarketWatch logo, MarketWatch Live, MarketWatch Pro and
MarketWatch RT are some of our service marks. The CBS name and the "Eye" design
are registered trademarks of CBS. This Prospectus also includes trademarks and
trade names of other companies.
Unless otherwise specifically stated, information throughout this
Prospectus (i) does not take into account the exercise of the Underwriters'
over-allotment option, (ii) gives effect to the conversion of our business form
from a limited liability company into a corporation, and the conversion of each
0.01% membership interest of the liability company into 1,000 shares of Common
Stock, which will occur immediately prior to the closing of this offering, (iii)
gives effect to the execution of a Stockholders' Agreement among CBS, DBC and
us, an Amended and Restated License Agreement between CBS and us, an Amended and
Restated Services Agreement between DBC and us and a Revolving Credit Agreement
between DBC and us, each of which will occur immediately prior to the closing of
this offering.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this Prospectus before
deciding to invest in shares of our Common Stock.
This Prospectus also contains certain forward-looking statements that
involve risks and uncertainties. These statements relate to our future plans,
objectives, expectations and intentions. These statements may be identified by
the use of words such as "expects," "anticipates," "intends" and "plans" and
similar expressions. Our actual results could differ materially from those
discussed in these statements. Factors that could contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
Prospectus.
CBS'S OR DBC'S OWNERSHIP OF OUR SECURITIES IS NOT A RECOMMENDATION BY
EITHER COMPANY THAT INVESTORS ACQUIRE OR HOLD OUR COMMON STOCK. CBS OR DBC CAN
SELL ALL OR PART OF THEIR SHARES IN THE COMPANY AT SUCH TIME AS THEY ARE LEGALLY
PERMITTED. NEITHER CBS NOR DBC HAS ANY OBLIGATION TO SUPPLY ANY FINANCIAL
SUPPORT TO THE COMPANY BEYOND THAT REQUIRED BY THEIR CURRENT AGREEMENTS WITH US.
SEE "-- DEPENDENCE ON CBS RELATIONSHIP," "-- DEPENDENCE ON DBC RELATIONSHIP" AND
"-- SHARES ELIGIBLE FOR FUTURE SALE."
VERY LIMITED OPERATING HISTORY UNDER CURRENT BUSINESS
We have a very limited operating history. Although our Predecessor Business
has been operating since October 1995, we did not become a separate legal entity
until October 1997 when we were formed as a limited liability company and we
introduced our Web site. We depend on DBC to host our Web site and for numerous
administrative functions such as accounting and human resource services and
until May 1998, we operated out of DBC's offices in San Mateo, California. Our
business and prospects must be considered in light of the risks frequently
encountered by companies in their early stage of development, particularly
companies in the new and rapidly evolving Web advertising and information
services market. Some of these risks relate to our ability to:
- attract a larger audience to our Web site,
- increase awareness of our brand,
- strengthen audience loyalty,
- offer compelling content, whether developed by us or obtained from third
parties,
- maintain our current, and develop new, strategic relationships,
- attract a large number of advertisers from a variety of industries,
- anticipate and adapt to a changing market,
- respond to technological development or content offerings by our
competitors,
- build an operations structure to support our business, and
- attract, retain and motivate qualified personnel.
We may not be successful in addressing these risks, and if we are not
successful, our business or future financial or operating results could be
adversely affected.
UNCERTAIN PROFITABILITY
We have yet to achieve significant revenue and our ability to generate
significant revenue is uncertain. Further, in view of the rapidly evolving
nature of our business and our very limited operating history, we have little
experience forecasting our revenues. Therefore, we believe that
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period-to-period comparisons of our financial results are not necessarily
meaningful and you should not rely upon them as an indication of our future
performance.
To date, we have incurred substantial costs to create, introduce and
enhance our services, to develop content, to build brand awareness and to grow
our business. As a result, we have incurred operating losses in each fiscal
quarter since we were formed. We expect operating losses and negative cash flows
to continue for the foreseeable future as we intend to significantly increase
our operating expenses to grow our business.
We may also incur additional costs and expenses related to content
creation, technology, marketing or acquisitions of businesses and technologies
to respond to changes in our rapidly changing industry. These costs could have
an adverse effect on our future financial condition or operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; UNPREDICTABILITY OF
FUTURE REVENUE; SEASONALITY
Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside our control.
These factors include:
- the level of Web usage,
- traffic levels on our Web site, which can fluctuate significantly as a
result of business and financial news events,
- the demand for advertising on our Web site as well as on the Web in
general,
- changes in rates paid for Web advertising resulting from competition or
other factors,
- our ability to enter into or renew key agreements such as our recent
agreement with Yahoo!,
- the amount and timing of our costs related to our marketing efforts or
other initiatives,
- fees we may pay for distribution or content agreements or other costs we
incur as we expand our operations,
- new services introduced by us or our competitors,
- competitive factors,
- technical difficulties or system downtime affecting the Web generally or
the operation of our Web site, or
- economic conditions specific to the Web as well as general economic
conditions.
Therefore, our operating results for any particular quarter may not be
indicative of future operating results.
We expect our revenues to come from a mix of advertising, content
licensing, e-commerce relationships and subscription service fees. However, we
expect to be substantially dependent on advertising revenues for the foreseeable
future. Therefore, our quarterly revenues and operating results are likely to be
particularly affected by the level of our advertising revenue in each quarter.
Our operating expenses, that include product and content development costs,
general and administrative expenses, and sales and marketing expenses, are based
on our expectations of our future revenues and are relatively fixed in the short
term. If we have lower revenues, particularly advertising revenues, than we
expect, we may not be able to quickly reduce our spending in response. Our cost
structure could also change dramatically as we increasingly operate
independently from DBC. If we continue to rely on DBC for the services described
under "-- Dependence on DBC Relationship," we will be required to reimburse DBC
for its costs in providing the services. We will have little control over the
amount of these costs, which could be substantial. In addition,
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we intend to significantly increase our operating expenses to grow our business.
Any shortfall in our revenues would have a direct impact on our operating
results for a particular quarter and these fluctuations could affect the market
price of our Common Stock in a manner unrelated to our long-term operating
performance.
We believe that advertising sales in traditional media, such as television
and radio, generally are lower in the first and third calendar quarters of each
year. If our market makes the transition from an emerging to a more developed
media, seasonal and cyclical patterns in our industry may develop in the future.
Therefore, if our industry follows the same seasonal patterns as those in the
traditional media, we may experience lower advertising revenues in the first and
third calendar quarters of each year. Furthermore, traffic levels on our Web
site typically fluctuate with the occurrence of significant events in the
business and financial news, such as fluctuations in the stock markets, that
could cause changes in our audience size. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
CONTROL BY CBS AND DBC
After this offering, CBS and DBC each will own approximately % of our
outstanding Common Stock ( % if the Underwriters' over-allotment option is
exercised in full). CBS and DBC will have representatives on our Board of
Directors generally based upon the percentage of our voting securities which
they hold. CBS and DBC will each have three representatives on our Board of
Directors upon the closing of this offering. If we issue voting securities (or
securities convertible into or exchangeable for voting securities) in the future
(subject to certain limitations) CBS and DBC will each have the right to
purchase securities from us so they can maintain their percentage ownership. In
addition, if either CBS or DBC desires to transfer (subject to certain
exceptions) any shares of Common Stock held by it, the other party has a right
of first refusal to purchase all or a portion of those shares. As a result of
their share ownership and the other rights described in this Prospectus, CBS and
DBC will be able to control the management and affairs of the Company, elect a
majority of our Board of Directors and approve significant corporate
transactions. This concentration of ownership and other rights could also delay
or prevent a change in control. See "Certain Transactions," "Principal
Stockholders" and "Description of Capital Stock."
Upon the occurrence of a DBC Change of Control (defined in the
Stockholders' Agreement to be entered into among CBS, DBC and us, as the direct
or indirect acquisition by a competitor of CBS of more than 30% of the voting
power of DBC or substantially all of DBC's assets), CBS may within 60 days
either (i) purchase all of our securities held by DBC or (ii) require DBC to
place these securities in a trust which would then dispose of the securities
with a view to maximizing the sale price while disposing of such shares as
promptly as reasonably practicable. DBC would forfeit its Board representation
in either event. We cannot predict which option, if any, CBS would elect in such
an event. Although DBC has advised us that it has no present plans or intentions
to effect a DBC Change of Control, DBC could effect a DBC Change of Control at
any time in the future. See "Description of Capital Stock."
DEPENDENCE ON CBS RELATIONSHIP
We license the CBS logo, name and certain news content from CBS. The CBS
logo and name are critical to our marketing and brand building activities. We
would need to change the name of our Web site and devote substantial resources
towards building a new brand name if our Amended and Restated License Agreement
with CBS were terminated or not renewed. This agreement also has a number of
risks associated with it. CBS can require us to remove any content on our Web
site which it determines conflicts with, interferes with or is detrimental to
its reputation or business or for certain other reasons. We are also required to
conform to CBS's guidelines for the use of its trademarks. CBS has the right to
approve all materials, such as marketing materials, that include any CBS
trademarks. CBS also has control over the visual and editorial presentation of
its television
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news content on our Web site. Because of these restrictions, we may be unable to
engage in our desired marketing activities.
Our license agreement with CBS will expire on October 29, 2002 and CBS will
have no obligation to renew it. CBS will also have the right to terminate this
agreement if (i) we breach a material term or condition of the agreement, (ii)
we become insolvent or subject to bankruptcy or similar proceedings, (iii) a
competitor of CBS acquires 15% or more of our voting power, (iv) we issue voting
securities to, or actively participate in the acquisition of our voting power
by, a CBS competitor which results in such competitor directly or indirectly
owning 9% or more of our voting power or (v) we discontinue using the
MarketWatch trademark and do not establish a substitute mark acceptable to CBS.
If our agreement with CBS is terminated prior to the end of its term, our
business could be adversely affected.
CBS has agreed, subject to certain limitations, to provide us an aggregate
rate card amount of $30 million of advertising and on-air promotions during the
period from October 29, 1997 through October 29, 2002. However, the timing and
placement of these advertisements or promotions are subject to CBS's discretion
and CBS does not make guarantees to us as to the demographic composition or size
of the audience that views these advertisements or promotions. This advertising
and on-air promotion, as well as our association with the CBS brand, are
important elements of our strategy to increase our brand awareness. This
obligation will terminate if our license agreement terminates.
We may not be able to continue to attract a sufficient amount of traffic
and advertisers to our Web site without the CBS name and logo or promotion from
CBS. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business -- Strategic Relationships," "Certain
Transactions" and Note 7 of Notes to MarketWatch.com Financial Statements.
DEPENDENCE ON DBC RELATIONSHIP
DBC has provided us with substantially all of our cash funding to date as
well as accounted for a substantial portion of our revenues. DBC also currently
provides us with Web site hosting services, software programming assistance,
data feeds, communications lines, office space and related facilities, network
operations and Web site management services as well as certain administrative,
engineering and human resources services. If DBC fails to provide these services
satisfactorily, we would be required to perform these services ourselves or
obtain these services from another provider, which could cause us to incur
additional costs in replacing these services. We may not be able to replace
these services on commercially reasonable terms or if we choose to perform these
services ourselves, we may not be able to perform them adequately. During any
such transition, our services could be disrupted for an indefinite period of
time and, as a result, we could lose a substantial number of users and
advertisers. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Certain Transactions" and Note 7 of Notes to
MarketWatch.com Financial Statements.
POTENTIAL COMPETITION FROM CBS AND DBC
Although our agreements with CBS and DBC contain certain non-competition
provisions, these provisions have certain exceptions and are not exclusive
relationships. For example, CBS may license its name and logo to other Web sites
or Internet services that deliver general news, sports or entertainment, even if
these sites or services also offer financial news, so long as the delivering of
stock quotes and financial news is not their primary function and their
principal theme and format. DBC may provide hosting services to other Web sites.
DBC may also establish an advertising-supported Web site that does not have as
its primary function and its principal theme and format the delivery of
financial news and stock quotes. Either CBS or DBC may license their content to,
or invest in other Web sites or Internet services. These Web sites could compete
with our Web site. CBS and DBC might promote these other services more actively
than they promote ours. Our business
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could be adversely affected if CBS or DBC were to engage in any of these
activities or if they were to otherwise support competitive Web sites. See
"Business -- Strategic Relationships" and "Certain Transactions."
INTENSE COMPETITION
The number of Web sites competing for consumers' attention and spending has
increased and we expect it to continue to increase.
We compete for advertisers, users and content providers with the following
types of companies:
- publishers and distributors of traditional media (such as television,
radio and print), such as The Wall Street Journal, CNN and CNBC,
- general purpose consumer online services such as America Online and
Microsoft Network,
- online services or Web sites targeted to business, finance and investing
needs (such as TheStreet.com and Motley Fool), and
- Web retrieval and other Web "portal" companies (such as Excite, Inc.,
InfoSeek Corporation, Lycos, Inc., Yahoo! Inc., and Netscape
Communications Corporation). Increased competition could result in price
reductions, reduced margins or loss of market share, any of which would
adversely affect our business.
We also compete for advertisers with traditional advertising media, such as
print, radio and television. Therefore, if the Web is not perceived as an
effective advertising medium, advertisers may be reluctant to advertise on our
Web site. See "Business -- Industry Background" and "-- Competition."
NEED TO DEVELOP AND IMPLEMENT INTERNAL SYSTEMS
We have been and continue to be substantially dependent on DBC for many of
our financial, administrative and operational services and related support
functions. We may not be able to perform these financial, administrative,
operational and support functions effectively as an independent company. In
addition, we believe that we will need further improvements in these systems,
controls and procedures to manage our growth. Our future financial performance
could be adversely affected if we or DBC do not perform these functions
effectively or if we do not implement these systems, controls and procedures
successfully.
NEED TO ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS
We depend on establishing and maintaining distribution relationships with
high-traffic Web sites for a significant portion of our traffic. For example,
for the month of August 1998, a significant percentage of our traffic came from
Yahoo!. There is intense competition for placements on these sites, and we may
not be able to enter into such relationships on commercially reasonable terms or
at all. Even if we enter into distribution relationships with these Web sites,
they themselves may not attract significant numbers of users. Therefore, our
site may not receive additional users from these relationships. Moreover, we may
have to pay significant fees to establish these relationships.
Occasionally we enter into agreements with advertisers, content providers
or other high traffic Web sites that require us to exclusively feature these
parties in certain sections of our Web site. Existing and future exclusivity
arrangements may prevent us from entering into other content agreements,
advertising or sponsorship arrangements or other strategic relationships. Many
companies we may pursue for a strategic relationship also offer competing
services. As a result, these competitors may be reluctant to enter into
strategic relationships with us. Our business could be adversely affected if we
do not establish and maintain additional strategic relationships on commercially
reasonable terms or if any of our strategic relationships do not result in
increased use of our Web site.
10
<PAGE> 12
RISKS ASSOCIATED WITH WEB ADVERTISING
We expect to derive a substantial amount of our revenues from advertising
for the foreseeable future. No standards have been widely accepted to measure
the effectiveness of Web advertising. If such standards do not develop, existing
advertisers may not continue their current levels of Web advertising.
Furthermore, advertisers that have traditionally relied upon other advertising
media may be reluctant to advertise on the Web. Advertisers that already have
invested substantial resources in other advertising methods may be reluctant to
adopt a new strategy. Our business would be adversely affected if the market for
Web advertising fails to develop or develops more slowly than expected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business -- Strategy" and "-- Advertising and Sales."
Different pricing models are used to sell advertising on the Web. It is
difficult to predict which, if any, will emerge as the industry standard. This
makes it difficult to project our future advertising rates and revenues. For
example, advertising rates based on the number of "click throughs," (or user
requests for additional information made by clicking on the advertisement),
instead of rates based solely on the number of impressions, (or times an
advertisement is displayed) could adversely affect our revenues because
impression-based advertising comprises a substantial majority of our current
advertising revenues. Our advertising revenues could be adversely affected if we
are unable to adapt to new forms of Web advertising. Moreover, "filter" software
programs that limit or prevent advertising from being delivered to a Web user's
computer are available. Widespread adoption of this software could adversely
affect the commercial viability of Web advertising.
It is important to our advertisers that we accurately measure the
demographics of our user base and the delivery of advertisements on our Web
site. We depend on third parties to provide these measurement services. If they
are unable to provide these services in the future, we would be required to
perform them ourselves or obtain them from another provider. This could cause us
to incur additional costs or cause interruptions in our business during the time
we are replacing these services. We are implementing additional systems designed
to record demographic data on our users. If we do not develop these systems
successfully, we may not be able to accurately evaluate the demographic
characteristics of our users. Companies may not advertise on our Web site or may
pay less for advertising if they do not perceive our measurements or
measurements made by third parties to be reliable.
DEVELOPMENT OF DIRECT SALES FORCE
Until early 1998, we relied upon third parties to sell advertisements on
our Web site. Since that time, we created our own internal sales force. On June
30, 1998, our sales force had eight members. We depend on this sales force to
sell advertising on our Web site. This involves a number of risks:
- our sales personnel have only worked for us for a short period of time,
- our need to further increase the size of our sales force,
- our ability to hire, retain, integrate and motivate additional sales and
sales support personnel,
- the length of time it takes new sales personnel to become productive, and
- the competition we face from other companies in hiring and retaining
sales personnel.
Our business would be adversely affected if we do not develop and maintain
an effective sales force.
DEPENDENCE ON FINANCIAL INDUSTRY CUSTOMERS
Financial services companies have accounted for the substantial majority of
our advertising revenues. We will need to sell advertising to customers outside
of the financial services industry in order to increase our revenues. To date,
relatively few advertisers from industries other than the
11
<PAGE> 13
technology and financial services industries have devoted a significant portion
of their advertising budgets to Web advertising. If we do not attract
advertisers from other industries, our business could be adversely affected.
SYSTEM RISKS
Substantially all of our communications hardware and certain of our other
computer hardware operations are located at DBC's facilities in the San
Francisco Bay Area, a region susceptible to earthquakes. These systems could be
damaged by fire, floods, earthquakes, power loss, telecommunications failures,
break-ins and similar events. Our Web site could also be affected by computer
viruses, electronic break-ins or other similar disruptive problems. Our business
could be adversely affected if our systems were affected by any of these
occurrences. Our insurance policies have low coverage limits and therefore our
insurance may not adequately compensate us for any losses that may occur due to
any failures or interruptions in our systems. Although DBC has a redundant
network operations center in Salt Lake City, Utah, we do not presently have a
formal disaster recovery plan. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Year 2000 Compliance" and
"Business -- Facilities."
Our Web site must accommodate a high volume of traffic and deliver
frequently updated information. Our Web site has in the past and may in the
future experience slower response times or decreased traffic on our site for a
variety of reasons. We also depend on information providers, including DBC, to
provide information and data feeds on a timely basis. Our Web site could
experience disruptions or interruptions in service due to the failure or delay
in the transmission or receipt of this information. In addition, our users
depend on Internet service providers, online service providers and other Web
site operators for access to our Web site. Each of them has experienced
significant outages in the past, and could experience outages, delays and other
difficulties due to system failures unrelated to our systems. Moreover, the Web
infrastructure may not be able to support continued growth in its use. Any of
these problems could adversely affect our business.
DEPENDENCE ON CONTINUED GROWTH IN USE OF THE WEB
Our market is new and rapidly evolving. Our business would be adversely
affected if Web usage does not continue to grow. Web usage may be inhibited for
a number of reasons, such as: inadequate network infrastructure; security
concerns; inconsistent quality of service; and lack of availability of
cost-effective, high-speed service. If Web usage grows, the Internet
infrastructure may not be able to support the demands placed on it by this
growth or its performance and reliability may decline. In addition, Web sites
have experienced interruptions in their service as a result of outages and other
delays occurring throughout the Internet network infrastructure. If these
outages or delays frequently occur in the future, Web usage, as well as usage of
our Web site, could grow more slowly or decline.
UNCERTAIN MAINTENANCE AND STRENGTHENING OF BRAND
To be successful, we must maintain and strengthen our brand awareness. In
order to build our brand awareness, we must succeed in our marketing efforts,
provide high quality services, and benefit from our relationship with CBS. We
may need to increase our marketing budget substantially as part of our brand
building efforts. Our business could be adversely affected if our marketing
efforts are not productive or if we cannot increase our brand awareness.
DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL PERSONNEL
We are dependent on the continued service of our key personnel. We expect
that we will need to hire additional personnel in all areas. The competition for
personnel throughout our industry is intense, particularly in the San Francisco
Bay Area, where our headquarters are located. At times,
12
<PAGE> 14
we have experienced difficulties in attracting new personnel. All of our
personnel may terminate their employment at any time for any reason. We do not
maintain key person life insurance for any of our personnel. If we do not
succeed in attracting new personnel or retaining and motivating our current
personnel, our business will be adversely affected. See "Business -- Employees"
and "Management."
MANAGEMENT OF GROWTH AND EXPANSION; BRIEF TENURE OF MANAGEMENT
We are currently experiencing a period of significant expansion. We believe
that further expansion will be required both to operate as an entity independent
from DBC and in order to grow our business. This growth is likely to continue to
place a significant strain on our resources. As part of this growth, we will
have to implement new operational and financial systems and procedures and
controls to expand, train and manage our employee base and to maintain close
coordination among our technical, accounting, finance, marketing, sales and
editorial organizations. If we are unable to accomplish any of these, our
business could be adversely affected.
Several members of our senior management joined us in 1998, including our
Vice President of Advertising Sales in January, Vice President of Marketing in
May and Chief Financial Officer in June. These individuals have not previously
worked together and are becoming integrated as a management team, and there can
be no assurance that they will be able to work together effectively or
successfully manage our growth.
RISKS RELATING TO TECHNOLOGICAL CHANGE
Our market is characterized by rapidly changing technology, evolving
industry standards and frequent new product announcements. These are exacerbated
by the recent growth of the Web and the intense competition in our industry. To
be successful, we must adapt to our rapidly changing market by continually
improving the performance, features and reliability of our services. We could
also incur substantial costs if we need to modify our services or infrastructure
in order to adapt to these changes. Our business could be adversely affected if
we incurred significant costs without adequate results or cannot adapt to these
changes.
NEW AND ENHANCED SERVICES RISKS
We believe that our Web site will be more attractive to advertisers if we
have a larger audience comprised of demographically-favorable users.
Accordingly, we intend to introduce additional or enhanced services in the
future in order to retain our current users and attract new users. Our
reputation and brand name could be adversely affected if we introduce a service
that is not favorably received. We may also experience difficulties that could
delay or prevent the introduction of new services. Furthermore, these services
may contain errors that are discovered after the services are introduced. We may
need to significantly modify the design of these services on our Web site to
correct these errors. Our business could be adversely affected if we experience
difficulties in introducing new services or if these new services are not
accepted by users.
RISKS ASSOCIATED WITH ACQUISITIONS
We may make investments in complementary companies, technologies, services
or products if appropriate opportunities arise. If we buy a company, we could
have difficulty assimilating the personnel and operations of the acquired
company. If we make other types of acquisitions, assimilating the technology,
services or products into our operations could be difficult. This may cause a
disruption in our ongoing business, distract our management and other resources,
and make it difficult to maintain our standards, controls and procedures. We may
not succeed in overcoming these risks or any other problems we might encounter
in connection with any future acquisitions. In addition, we may be required to
incur debt or issue equity securities to pay for any future acquisitions.
13
<PAGE> 15
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
There are currently few laws or regulations that specifically regulate
communications or commerce on the Web. However, laws and regulations may be
adopted in the future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. For example, although it
was held unconstitutional, the Telecommunications Act of 1996 prohibited the
transmission over the Web of certain types of information and content. Other
nations, including Germany, have taken actions to restrict the free flow of
material deemed to be objectionable on the Web. In addition, several
telecommunications carriers are seeking to have telecommunications over the Web
regulated by the Federal Communications Commission (FCC) in the same manner as
other telecommunications services. In addition, the growing use of the Web has
burdened the existing telecommunications infrastructure in many areas and local
telephone carriers, such as Pacific Bell, have petitioned the FCC to regulate
Internet Service Providers and online services providers in a manner similar to
long distance telephone carriers and to impose access fees on these companies.
Moreover, it may take years to determine the extent to which existing laws
relating to issues such as property ownership, libel and personal privacy, are
applicable to the Web. Any new laws or regulations relating to the Web could
adversely affect our business.
SECURITY RISKS
A significant barrier to electronic commerce and communications over the
Web has been the need for secure transmission of confidential information. Web
usage could decline if any well-publicized compromise of security occurred. We
may incur significant costs to protect against the threat of security breaches
or to alleviate problems caused by such breaches. If a third person was able to
misappropriate our users' personal information or credit card information, we
could be subjected to claims, litigation or other potential liabilities.
LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB
Because content on our Web site is distributed to others, we may be
subjected to claims for defamation, negligence, copyright or trademark
infringement or based on other theories. These types of claims have been
brought, sometimes successfully, against online services in the past. We could
also be subjected to claims based upon the content that is accessible from our
Web site through links to other Web sites. Our insurance may not adequately
protect us against these types of claims.
INTELLECTUAL PROPERTY; POTENTIAL LITIGATION
Trademarks and other proprietary rights are important to our success and
our competitive position. We seek to protect our trademarks and other
proprietary rights, but these actions may be inadequate to protect our
trademarks and other proprietary rights or to prevent others from claiming
violations of their trademarks and other proprietary rights. We may also license
content from third parties in the future and it is possible that we could become
subject to infringement actions based upon the content licensed from these third
parties. Any of these claims, with or without merit, could subject us to costly
litigation and the diversion of our technical and management personnel. In
addition, our license agreement (as it will be amended and restated) with CBS
involves a number of risks. See "-- Dependence on CBS Relationship" and
"Business -- Intellectual Property."
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of our Amended and Restated Certificate of
Incorporation, Bylaws, other agreements and Delaware law could make it more
difficult for a third party to acquire us, even if a change in control would be
beneficial to our stockholders. See "Certain Transactions" and "Description of
Capital Stock."
14
<PAGE> 16
SHARES ELIGIBLE FOR FUTURE SALE
After this offering there will be outstanding shares of our
Common Stock ( if the Underwriters' over-allotment option is exercised in
full). Of these shares, the shares sold in the offering will be freely tradeable
except for any shares purchased by "affiliates" of the Company as defined in
Rule 144 under the Securities Act. The remaining 9,000,000 shares held by CBS
and DBC will be "restricted securities" and will become eligible for sale no
later than the first anniversary of the date our business is changed to a
corporation, subject to the volume limitations and other conditions of Rule 144
under the Securities Act. In addition, we intend to file a registration
statement on Form S-8 with the Securities and Exchange Commission within 180
days after this offering covering (i) the 624,250 shares of Common Stock
reserved for issuance under our 1998 Equity Incentive Plan and 1998 Directors
Stock Option Plan and (ii) the shares subject to outstanding options (875,750 as
of September 30, 1998). On that date, at least 188,325 shares will be subject to
immediately exercisable options (based on options outstanding on September 30,
1998). Sales of a large number of shares could have an adverse effect on the
market price for our Common Stock.
Neither CBS nor DBC has any restrictions on selling any of our securities
held by it, other than as provided in lock-up agreements with BT Alex. Brown
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation, the
Stockholders' Agreement and under applicable securities laws. In addition, CBS
and DBC can require us to register our securities they own for public sale. Any
sales by these stockholders could adversely affect the trading price of our
Common Stock. See "Management -- Director Compensation," "-- Employee Benefit
Plans," "Description of Capital Stock -- Registration Rights" and "Shares
Eligible for Future Sale."
NO PRIOR TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
There has not been a public market for our Common Stock. We cannot predict
the extent to which investor interest in MarketWatch.com will lead to the
development of a trading market or how liquid that market might become. The
initial public offering price for the shares will be determined by negotiations
between the Company and the representatives of the Underwriters and may not be
indicative of prices that will prevail in the trading market. The stock market
has experienced significant price and volume fluctuations and the market prices
of securities of technology companies, particularly Internet-related companies,
have been highly volatile. Investors may not be able to resell their shares at
or above the initial public offering price. See "Underwriting." In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against such a
company. Such litigation could result in substantial costs and a diversion of
management's attention and resources.
DILUTION
The initial public offering price of our Common Stock is substantially
higher than the net tangible book value per share of the outstanding Common
Stock immediately after this offering. Therefore, if you purchase our Common
Stock in this offering, you will incur immediate dilution of approximately
$ in the net tangible book value per share of Common Stock from the price
you pay for such Common Stock (based upon an assumed initial public offering
price of $ per share). See "Dilution."
15
<PAGE> 17
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of
Common Stock offered by the Company hereby are estimated to be approximately
$ million (approximately $ million if the Underwriters' over-allotment
option is exercised in full), at an assumed initial public offering price of
$ per share and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses. The principal purposes of this
offering are to obtain additional capital, create a public market for the
Company's Common Stock and facilitate future access by the Company to the public
capital markets.
The Company intends to use at least $5.0 million of the net proceeds of
this offering for marketing activities during 1998 and 1999 and a portion of the
net proceeds to repay all outstanding indebtedness to DBC ($1.5 million at June
30, 1998). This indebtedness matures on October 29, 2000 and bears interest at a
rate equal to the prime rate of The Chase Manhattan National Bank plus 2% (10.5%
at June 30, 1998). The Company expects to use the remainder of the net proceeds
for general corporate purposes, including working capital and other general
corporate purposes, such as expansion of sales and marketing activities and the
acquisition of content and distribution relationships. The amounts actually
expended by the Company for such working capital purposes may vary significantly
and will depend on a number of factors, including the amount of the Company's
future revenues and the other factors described under "Risk Factors."
Accordingly, the Company's management will retain broad discretion in the
allocation of the net proceeds of this offering. A portion of the net proceeds
may also be used to acquire or invest in complementary businesses, technologies,
product lines or products. The Company has no current plans, agreements or
commitments with respect to any such acquisition, and the Company is not
currently engaged in any negotiations with respect to any such transaction.
Pending such uses, the net proceeds of this offering will be invested in
short-term, interest-bearing, investment grade securities.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock and does not anticipate paying any cash dividends on its capital stock in
the foreseeable future.
16
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998 (i) on an actual basis, and (ii) as adjusted to give effect to the sale
of the shares of Common Stock offered hereby, at an assumed
initial public offering price of $ per share and after deducting the
estimated underwriting discounts and commissions and estimated offering expenses
payable by the Company and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------
AS
ACTUAL(3) ADJUSTED
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Advances from DBC(1)........................................ $ 1,539 $
-------- --------
Stockholders' equity (deficit):
Preferred Stock, $0.01 par value; 5,000,000 shares
authorized, no shares issued and outstanding actual and
as adjusted............................................ -- --
Common Stock, $0.01 par value; 30,000,000 shares
authorized, 9,000,000 shares issued and outstanding
actual; shares issued and outstanding as
adjusted(2)............................................ 90
Additional paid-in capital................................ 3,476
Deferred compensation..................................... (285)
Contribution receivable................................... (1,000)
Accumulated deficit....................................... (2,434)
-------- --------
Total stockholders' equity (deficit).............. (153)
-------- --------
Total capitalization............................ $ 1,386 $
======== ========
</TABLE>
- ---------------
(1) See Note 7 of Notes to MarketWatch.com Financial Statements for a
description of the advances from DBC.
(2) Based on the number of shares outstanding as of June 30, 1998 and giving
effect to the Reorganization as if such transaction had occurred as of such
date. Excludes (i) 722,000 shares of Common Stock then issuable upon the
exercise of options then outstanding with a weighted average exercise price
of $6.00 per share, (ii) an aggregate of 153,750 shares of Common Stock
subject to stock options granted subsequent to June 30, 1998, and (iii) an
aggregate of 624,250 additional shares to be reserved for issuance under the
Company's 1998 Equity Incentive Plan and 1998 Directors' Stock Option Plan.
See "Management -- Employee Benefit Plans" and Note 4 of Notes to
MarketWatch.com Financial Statements.
(3) Reflects the Reorganization as if such transaction had occurred as of the
inception of the LLC.
17
<PAGE> 19
DILUTION
The net tangible book value of the Company as of June 30, 1998 was
approximately $(153,000), or $(0.02) per share of Common Stock. Pro forma net
tangible book value per share represents the amount of total tangible assets
less total liabilities, divided by the pro forma shares of Common Stock
outstanding as of June 30, 1998. After giving effect to the issuance and sale of
the shares of Common Stock offered hereby (at an assumed initial
public offering price of $ per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses), the
Company's pro forma net tangible book value as of June 30, 1998 would have been
$ , or $ per share. This represents an immediate increase in pro forma
net tangible book value of $ per share to existing stockholders and an
immediate dilution of $
per share to new investors. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Net tangible book value per share at June 30, 1998........ $(0.02)
Increase in pro forma net tangible book value per share
attributable to new investors..........................
Pro forma net tangible book value per share after
offering..................................................
------
Dilution per share to new investors......................... $
======
</TABLE>
The following table summarizes, on a pro forma basis, as of June 30, 1998,
the differences between the number of shares of Common Stock purchased from the
Company, the aggregate cash consideration paid and the average price per share
paid by existing stockholders and new investors purchasing shares of Common
Stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).... 9,000,000 % $2,000,000 % $0.22
New investors...............
---------- ------ ---------- --------
Total............. 100.0% $ 100.0%
========== ====== ========== ========
</TABLE>
- ---------------
(1) Reflects the Reorganization as if it had occurred as of the inception of the
LLC.
The foregoing discussion and tables assume no exercise of any stock options
outstanding as of June 30, 1998. As of June 30, 1998, there were options
outstanding to purchase a total of 722,000 shares of Common Stock with a
weighted average exercise price of $6.00 per share. To the extent that any of
these options are exercised, there will be further dilution to new investors.
See "Risk Factors -- Dilution," "Capitalization," "Management -- Employee
Benefit Plans" and Note 4 of Notes to MarketWatch.com Financial Statements.
18
<PAGE> 20
SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to, and
should be read in conjunction with, the Financial Statements of the Company and
DBC Online/News, the respective notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this Prospectus. The selected statement of operations data of the Company
presented below for the period from inception (October 29, 1997) through
December 31, 1997, and the balance sheet data as of December 31, 1997 and June
30, 1998, are derived from financial statements of the Company that have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are included
elsewhere in this Prospectus. The selected statement of operations data of DBC
Online/News for the period from inception (October 1, 1995) through December 31,
1996 and for the period from January 1, 1997 to October 28, 1997 and the balance
sheet data as of December 31, 1996 and October 28, 1997, are derived from
financial statements of DBC Online/News, that have been audited by
PricewaterhouseCoopers LLP, independent accountants, and are included elsewhere
in this Prospectus and reflect the operations of DBC Online/News. The statement
of operations data for the quarters ended March 31, 1998 and June 30, 1998 are
derived from unaudited financial data of the Company and, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the Company's results of
operations for such periods and its financial condition as of such date. The
operating results for the quarters ended March 31, 1998 and June 30, 1998 are
not necessarily indicative of the results to be expected for any other interim
period or the year ending December 31, 1998. The financial information of DBC
Online/News included herein is not necessarily indicative of the results of
operations, financial position and cash flows of the Company had it been a
stand-alone entity at such times nor is it indicative of the results of
operations, financial position and cash flows of the Company in the future.
<TABLE>
<CAPTION>
DBC ONLINE/NEWS(1) MARKETWATCH.COM
------------------------------------ ---------------------------------------------------
INCEPTION INCEPTION
(OCTOBER 1, 1995) JANUARY 1, 1997 (OCTOBER 29, 1997) QUARTER ENDED
THROUGH THROUGH THROUGH ------------------------------
DECEMBER 31, 1996 OCTOBER 28, 1997 DECEMBER 31, 1997 MARCH 31, 1998 JUNE 30, 1998
----------------- ---------------- ------------------ -------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 607 $ 1,172 $ 630 $ 1,176 $ 1,519
Cost of revenues..................... 330 529 148 180 363
------- ------- ------- ------- -------
Gross profit........................ 277 643 482 996 1,156
------- ------- ------- ------- -------
Operating expenses...................
Product and content development..... 1,491 1,016 186 338 664
General and administrative.......... 758 943 248 533 730
Sales and marketing................. 132 67 129 884 1,335
------- ------- ------- ------- -------
Total operating expenses...... 2,381 2,026 563 1,755 2,729
------- ------- ------- ------- -------
Operating loss....................... (2,104) (1,383) (81) (759) (1,573)
Interest expense.................... (99) (181) -- (7) (14)
------- ------- ------- ------- -------
Loss before income tax benefit....... (2,203) (1,564) (81) (766) (1,587)
Income tax benefit.................. 883 621 -- -- --
------- ------- ------- ------- -------
Net loss............................. $(1,320) $ (943) $ (81) $ (766) $(1,587)
======= ======= ======= ======= =======
Basic and diluted net loss per
share(2)............................ $ (0.01) $ (0.09) $ (0.18)
======= ======= =======
Shares used to compute basic and
diluted net loss per share(2)(3).... 9,000 9,000 9,000
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DBC ONLINE/NEWS MARKETWATCH.COM
------------------------------------- --------------------------------------
DECEMBER 31, 1996 OCTOBER 28, 1997 DECEMBER 31, 1997 JUNE 30, 1998
----------------- ----------------- ----------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash............................................ $ -- $ -- $ -- $ 628
Working capital (deficit)....................... (1,502) (2,449) 139 (948)
Total assets.................................... 409 546 237 2,240
Advances from DBC............................... 1,644 2,708 -- 1,539
Total stockholders' equity (deficit)............ (1,320) (2,263) 152 (153)
</TABLE>
- ---------------
(1) Represents the results of operations of the Predecessor Business for the
periods indicated.
(2) Reflects the Reorganization as if such transaction had occurred as of the
beginning of the period indicated.
(3) See Note 2 to Notes of MarketWatch.com Financial Statements for information
concerning the number of shares used in computing net loss per share.
19
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and the Notes thereto of the Company and the Predecessor Business
which appear elsewhere in this Prospectus. The following discussion contains
forward-looking statements that reflect the Company's plans, estimates and
beliefs. The Company's actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this Prospectus, particularly in "Risk Factors."
OVERVIEW
MarketWatch.com is a leading Web-based provider of comprehensive,
real-time, business news, financial programming and analytic tools. The Company
offers real-time coverage of business and financial news and in-depth commentary
on market moving trends and events. The Company was formed as a limited
liability company in October 1997 as a successor to the Online/News Business of
DBC which began in October 1, 1995. The Predecessor Business was operated as
www.dbc.com and served stock quotes, portfolios, fundamental data and news. In
connection with the formation of the LLC, DBC contributed certain assets
associated with the Predecessor Business, $1.0 million in cash and agreed to
contribute an additional $1.0 million in cash in exchange for a 50% ownership
interest. CBS agreed to contribute, over a period of five years, advertising and
promotions in exchange for a 50% ownership interest. Pursuant to the
Reorganization, the Company will be converted into a corporation immediately
prior to the closing of this offering. See "Certain Transactions."
In connection with the formation of the LLC, the Company, CBS and DBC
entered into certain agreements. Immediately prior to the closing of this
offering, certain of these agreements will be amended and restated and the
Company, CBS and DBC will enter into additional agreements. Pursuant to the
terms of the Amended and Restated License Agreement, CBS will grant to the
Company the non-exclusive right and license to certain CBS news content and
registered trademarks including the CBS "Eye" design, until October 29, 2002,
subject to earlier termination on the occurrence of certain events. As
consideration for these rights under the Amended and Restated License Agreement,
the Company will pay CBS a royalty of (i) during 1998, (A) 8% of Gross Revenues
in excess of $1.0 million and up to and including $41.0 million and (B) 6% of
Gross Revenues in excess of $41.0 million, (ii) during 1999, (A) 8% of Gross
Revenues in excess of $500,000 and up to and including $40.5 million and (B) 6%
of Gross Revenues in excess of $40.5 million, and (iii) in subsequent years
through the termination of the Amended and Restated License Agreement on October
29, 2002, (A) 8% of Gross Revenues up to and including $40.0 million and (B) 6%
of Gross Revenues in excess of $40.0 million. Gross Revenues are defined in that
agreement as gross operating revenues of the Company, its subsidiaries and, to
the extent of dividends or other distributions received by the Company or its
subsidiaries, any entity in which the Company or its subsidiaries have an
interest, that are derived from an Internet service or Web site that (i)
provides information or services of a financial nature or (ii) uses the CBS
trademarks, excluding certain revenues attributable to DBC under the Amended and
Restated Services Agreement, certain advertising revenue and certain advertising
sales commissions. See "Risk Factors -- Dependence on CBS Relationship." Under
the terms of the Amended and Restated Services Agreement DBC will provide, if
requested by the Company, certain general services to the Company, which include
cash management, accounting services, human resources services, network
operations and hosting of the Company's Web site. Additionally, DBC will provide
the Company with computer software and equipment to support its Web site.
Charges for these hosting services and equipment usage will be based upon DBC
management's estimate of costs attributable to the operations of the Company's
Web site. DBC will also pay the Company, in exchange for real-time market feeds,
25% of net revenues earned from subscriptions to MarketWatch Live and 75% of net
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revenues earned from subscriptions to MarketWatch RT. The Amended and Restated
Services Agreement will also provide for the Company to receive between $2.50 to
$5.00 for each DBC subscriber who receives real-time quotes and news depending
on the level of service, subject to a minimum monthly payment by DBC to the
Company of $100,000.
The results of operations for the DBC Online/News Business reflect the
carve-out historical results of operations of the online and news business of
DBC. The results of operations include all revenue and costs directly
attributable to the DBC Online/News Business, including costs for facilities,
functions and services used by the business at shared sites and allocations of
costs for certain administration functions and services performed by centralized
departments within DBC. Costs have been allocated to the online business based
on DBC management's estimate of the costs attributable to its operations. Such
allocations are not necessarily indicative of the costs that would have been
incurred if the DBC Online/News Business had been a separate entity. Separate
presentation of the results of operations and cash flows for the period from
inception (October 1, 1995) through December 31, 1995 have been omitted since
such activity was immaterial to the DBC Online/News Business. Revenues and
expenses for the period from inception (October 1, 1995) through December 31,
1995 were $0 and $236,000, respectively. The Company believes that it is not
meaningful to compare the results of operations of the DBC Online/News Business
with those of MarketWatch.com because of the different business models of the
DBC Online/News Business and MarketWatch.com and the growth of MarketWatch.com
since the formation of the LLC.
The Company generates its revenues from three primary sources: the sale of
advertising on the Company's Web site; subscriptions to premium services
available through the Web site; and the sale of news to DBC for distribution to
DBC's RT customers. Advertising revenue is recognized ratably in the period the
advertising is displayed, provided that no significant Company obligations
remain and collection of the resulting receivable is probable. Company
obligations typically include guarantees of a minimum number of "impressions,"
or times that an advertisement is viewed by users of the Company's Web site. The
sponsorship agreements vary, with the Company typically generating fixed fees
for monthly access or, in certain instances, variable fees dependent upon the
number of users directed to, or number of transactions consummated at, the
sponsor's Web site by linked customers. Such amounts are recognized as revenue
in the month earned. Subscription revenue relates to customer subscriptions to
the DBC premium online services, MarketWatch RT and MarketWatch Live, which are
sold through the Company's Web site. Revenue from subscriptions is recognized
ratably over the subscription period. Deferred revenues relate to subscription
fees for which amounts have been collected but for which revenue has not been
recognized. Revenue related to the sale of news to DBC is recognized in the
month the services are provided. The Company may in the future consider entering
into barter transactions, however to date, barter revenues and expenses have not
been material.
The Company expects to incur significantly higher costs, particularly sales
and marketing costs, in the future to grow its business. As a result, the
Company expects to incur significant operating losses for the foreseeable future
and, because costs are largely fixed in the short term, the Company expects to
be vulnerable to significant fluctuations in operating losses if actual revenues
fall below anticipated levels. Furthermore, given the rapidly evolving nature of
the Company's business and its very limited operating history, the Company's
operating results are difficult to forecast and period-to-period comparison of
the Company's operating results will not be meaningful and should not be relied
upon as any indication of future performance. Due to these and other factors,
many of which are outside the Company's control, the Company's quarterly
operating results may fluctuate significantly in the future. See "Risk
Factors -- Very Limited Operating History Under Current Business," "-- Uncertain
Profitability" and "-- Potential Fluctuations in Quarterly Operating Results;
Unpredictability of Future Revenues; Seasonality."
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RESULTS OF OPERATIONS -- MARKETWATCH.COM
Net Revenues
Net revenues were $1.5 million and $1.2 million for the quarters ended June
30, 1998 and March 31, 1998, respectively and $630,000 for the period from
inception (October 29, 1997) through December 31, 1997. The increase in net
revenues during the three months ended March 31, 1998 reflects an increase in
the number of advertisers on the Company's Web site, as well as an increase in
the cost per thousand impressions, or "CPM," advertising rate earned, and the
sale of sponsorships. The increase in net revenues during the quarter ended June
30, 1998 reflects an increase in the sale of sponsorships on the Web site.
Substantially all of the Company's advertising customers purchase
advertising under short-term contracts. Customers can cease advertising on short
notice without penalty. Advertising revenues would be adversely affected if the
Company were unable to secure new advertising contracts from existing customers
or obtain new customers. The Company expects to continue to derive a substantial
majority of its net revenues from selling advertisements. Because the market for
Web advertising is intensely competitive, advertising rates could be subject to
pricing pressure in the future. If the Company is forced to reduce its
advertising rates or experiences lower CPMs or click-through advertising rates
as a result of such competition or otherwise, future revenues could be adversely
affected.
Cost of Revenues
Cost of revenues primarily consists of expenses associated with royalties,
including royalties to CBS under the Original License Agreement, communications
infrastructure and Web site hosting expenses, which currently are payable to
DBC. Infrastructure and hosting expenses paid to DBC include costs for
communication lines, depreciation and payments to DBC for real-time market
feeds. Cost of revenues were $363,000 and $180,000 for the quarters ended June
30, 1998 and March 31, 1998, respectively and $148,000 for the period from
inception (October 29, 1997) through December 31, 1997. As a percentage of net
revenues, cost of revenues were 24%, 15% and 24% for the quarters ended June 30,
1998 and March 31, 1998 and the period from inception (October 29, 1997) through
December 31, 1997, respectively. The increase in cost of revenues in absolute
dollars during the six month period ended June 30, 1998 is primarily due to
increases in fees paid for communication lines resulting from increased traffic
on the Web site. Included in cost of revenues are costs charged by DBC under the
current Services Agreement of $92,000 and $104,000 for the quarters ended June
30, 1998 and March 31, 1998, respectively and $40,000 for the period from
inception (October 29, 1997) through December 31, 1997. No payments were made to
CBS under the License Agreement for the period from inception (October 29, 1997)
through December 31, 1997 and the six months ended June 30, 1998, respectively
as the Company's advertising revenues did not exceed the threshold amount
specified in the Original License Agreement.
Operating Expenses
Since inception, operating expenses have increased significantly to reflect
the costs associated with the growth and development of the Company and its Web
site. The Company continues to be substantially dependent on DBC for many of its
financial, administrative and operational services and related support
functions. This dependence involves a number of risks. See "Risk Factors --
Dependence on DBC Relationship." The Company plans to implement independent
financial, operational and management controls, and reporting systems and
procedures to support the continued expansion of its operations. As a
consequence, the Company intends to continue to increase expenditures in all
operating areas to support its planned growth and the development of its
infrastructure.
Product and Content development. Product and content development expenses
primarily consist of employee compensation directly attributable to the support
of new product development,
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salaries for the Company's editorial staff and costs of obtaining rights to
third party content. Product and content development expenses were $664,000 and
$338,000 for the quarters ended June 30, 1998 and March 31, 1998, respectively
and $186,000 for the period from inception (October 29, 1997) through December
31, 1997. As a percentage of net revenues, product and content development
expenses were 44%, 29% and 30% for the quarter ended June 30, 1998 and March 31,
1998 and the period from inception (October 29, 1997) through December 31, 1997,
respectively. The increase in product and content development expenses in
absolute dollars is primarily the result of the hiring of additional news and
Web site development personnel in the second quarter of 1998. To date, all
product and content development costs have been expensed as incurred. The
Company believes that significant investments in product and content development
are required to remain competitive. The Company intends to increase the absolute
dollar level of product and content development expenditures in future periods
in order to further enhance the programming on the Company's Web site.
General and Administrative. General and administrative expenses consist
primarily of compensation, fees for professional services, costs charged for
facilities and services performed under the current Services Agreement by DBC,
depreciation and charges for bad debts. General and administrative expenses were
$730,000 and $533,000 for the quarters ended June 30, 1998 and March 31, 1998,
respectively, and $248,000 for the period from inception (October 29, 1997)
through December 31, 1997. As a percentage of net revenues, general and
administrative expenses were 50%, 45% and 39% for the quarters ended June 30,
1998 and March 31, 1998 and the period from inception (October 29, 1997) through
December 31, 1997, respectively. The increase in general and administrative
expenses in absolute dollars is attributable to costs associated with increased
headcount and lease expenses, and increased infrastructure costs. Included in
general and administrative expenses are costs charged by DBC under the Services
Agreement of $72,000 for each of the quarters ended June 30, 1998 and March 31,
1998, respectively and $30,000 for the period from inception (October 29, 1997)
through December 31, 1997. The Company anticipates hiring additional personnel
and incurring additional costs related to being a public company, including
directors' and officers' liability insurance, investor relations programs and
professional services fees. Accordingly, the Company intends to increase the
absolute dollar level of general and administrative expenditures in future
periods.
The Company includes in general and administrative expenses the
amortization of deferred compensation related to options granted below fair
market value. Amortization of deferred compensation was $18,000 for the six
months ended June 30, 1998. The Company intends to record deferred compensation
of approximately $1.2 million in the quarter ended September 30, 1998 for
options granted at an exercise price below fair market value of the Common
Stock. This amount, in addition to the remaining $285,000 of deferred
compensation previously recorded, will be amortized over the three year vesting
period of the options.
Sales and Marketing. Sales and marketing expenses consist primarily of
promotion and advertising provided by CBS, promotional materials, Internet
advertising costs, compensation, sales commissions and advertising commissions.
Sales and marketing expenses were $1.3 million and $884,000 for the quarters
ended June 30, 1998 and March 31, 1998, respectively, and $129,000 for the
period from inception (October 29, 1997) through December 31, 1997. As a
percentage of net revenues, sales and marketing expenses were 88%, 75% and 21%
for the quarters ended June 30, 1998 and March 31, 1998 and the period from
inception (October 29, 1997) through December 31, 1997, respectively. The
increase in sales and marketing expenses in absolute dollars is attributable to
the continued development of the Company's sales organization and increased
marketing activity to promote the Company's products and services. At inception,
the Company was substantially dependent on a third-party firm to support all
sales and marketing activity. During the first six months of 1998, the Company
transitioned substantially all sales and marketing efforts to its internal staff
and believes that an increase in the number of staff will be necessary to
achieve future revenue growth. Accordingly, the Company expects to increase its
sales staff and significantly
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increase its marketing expenditures in the future. Therefore, the Company
intends to increase the absolute dollar level of sales and marketing expenses in
future periods. For the six months ended June 30, 1998, the Company has
recognized $1.2 million of sales and marketing expenses based on the estimated
fair value of promotions and advertising provided by CBS.
Interest Expense
Interest expense consists of interest on advances from DBC and were
$14,000, $7,000 and $0 for the quarters ended June 30, 1998 and March 31, 1998
and the period from inception (October 29, 1997) through December 31, 1997,
respectively. Interest on amounts due to DBC accrues at the prime rate plus 2%.
The increase in interest expense over the periods was attributable to increases
in the advance balance.
RESULTS OF OPERATIONS -- DBC ONLINE/NEWS BUSINESS
Net Revenues
Net revenues for the period from January 1, 1997 through October 28, 1997
were $1.2 million compared to $607,000 for the period from inception (October 1,
1995) through December 31, 1996. The period from inception (October 1, 1995)
through December 31, 1996 was the first period in which the DBC made its Web
site and the MarketWatch RT online service publicly available.
Cost of Revenues
Cost of revenues for the period from January 1, 1997 through October 28,
1997 were $529,000 compared to $330,000 for the period from inception (October
1, 1995) through December 31, 1996. Cost of revenues, as a percentage of net
revenues, for the period from January 1, 1997 through October 28, 1998 were 45%
compared to 54% for the period from inception (October 1, 1995) through December
31, 1996. The decrease in cost of revenues, as a percentage of net revenues, is
primarily attributable to advertising revenues increasing while a portion of the
costs associated with providing the advertising remained relatively constant.
Included in cost of revenues are costs allocated from DBC. Allocated expenses
for the period from January 1, 1997 through October 28, 1997 were $191,000
compared to $160,000 for the period from inception (October 1, 1995) through
December 31, 1996.
Operating Expenses
Product and Content Development Expenses. Product and content development
expenses for the period from January 1, 1997 through October 28, 1997 were $1.0
million compared to $1.5 million for the period from inception (October 1, 1995)
through December 31, 1996. Product and content development, as a percentage of
net revenues, for the period from January 1, 1997 through October 28, 1997 were
87% compared to 246% for the period from inception (October 1, 1995) through
December 31, 1996. The decrease in product and content development expenses in
absolute dollars from inception (October 1, 1995) through December 31, 1996 to
the ten month period ended October 28, 1997 is due to high product and content
development costs incurred during the period from October 1995 through April
1996 in the development of the Web site and the MarketWatch RT online service.
General and Administrative. General and administrative expenses for the
period from January 1, 1997 through October 28, 1997 were $943,000 compared to
$758,000 for the period from inception (October 1, 1995) through December 31,
1996. General and administrative expenses, as a percentage of net revenues, for
the period from January 1, 1997 through October 28, 1997 were 80% compared to
125% for the period from inception (October 1, 1995) through December 31, 1996.
General and administrative expenses as a percentage of net revenues, decreased
due to costs associated with the implementation of billing systems related to
MarketWatch RT incurred during 1996. Included in general and administrative
expenses are costs allocated from DBC. Allocated
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<PAGE> 26
expenses for the period from January 1, 1997 through October 28, 1997 were
$115,000 compared to $144,000 for the period from inception (October 1, 1995)
through December 31, 1996.
Sales and Marketing. Sales and marketing expenses for the period from
January 1, 1997 through October 28, 1997 were $67,000 compared to $132,000 for
the period from inception (October 1, 1995) through December 31, 1996. Sales and
marketing, as a percentage of net revenues, for the period from January 1, 1997
through December 31, 1997 were 6% compared to 22% for the period from inception
(October 1, 1995) through December 31, 1996. Sales and marketing expenses
decreased due to a reduction in advertising costs associated with the initial
promotion of the Web site in 1997. During 1997, substantially all sales and
marketing efforts were outsourced to a third-party firm in order to reduce costs
associated with maintaining an internal staff.
Interest Expense
DBC funded the working capital requirements of the DBC Online/News Business
division based upon a centralized cash management system. Interest expense was
$181,000 and $99,000 for the period from January 1, 1997 through October 28,
1997 and the period from inception (October 1, 1995) through December 31, 1996.
Income Taxes
No benefit for federal and state income taxes is reported in the financial
statements as the Company has elected to be taxed as a partnership prior to the
merger of the limited liability company into a corporation. Therefore, for the
periods presented, the federal and state tax effects of the Company's tax losses
were recorded by the members of the LLC in their respective income tax returns.
Subsequent to the Reorganization, the Company will account for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS No. 109"). Had the Company applied the provisions of
SFAS No. 109 for the period from inception (October 29, 1997) through December
31, 1997, the deferred tax asset generated, primarily from net operating loss
carryforwards, would have been offset by a full valuation allowance.
The DBC Online/News Business has accounted for income taxes in accordance
with SFAS No. 109. The operating losses of the DBC Online/News Business were
included in the consolidated tax returns of DBC and were used to offset taxable
income. Therefore, the DBC Online/News Business has reflected a current tax
benefit related to these tax losses.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has funded its operations primarily from cash
contributed and advanced by DBC and from revenues from advertising sales. As of
June 30, 1998, the Company had a working capital deficit of $948,000.
Cash used in operating activities was $1.1 million for the six months ended
June 30, 1998 compared to $205,000 for the period from inception (October 29,
1997) through December 31, 1997. Significant uses of cash in operations include
costs associated with the formation of the Company, increased accounts
receivable balances, as well as increased sales and marketing activities to
establish and to promote the Company's products and services partially offset by
increased accounts payable balances.
Cash used in investing activities was $645,000 for the six months ended
June 30, 1998 compared to $13,000 for the period from inception (October 29,
1997) through December 31, 1997 and primarily reflect capital expenditures. Cash
from financing activities were $2.3 million for the six months ended June 30,
1998 compared to $218,000 for the period from inception (October 29, 1997)
through December 31, 1997 and primarily reflect contributions and advances from
DBC.
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Capital expenditures were $645,000 for the six months ended June 30, 1998
and $13,000 for the period from inception (October 29, 1997) through December
31, 1997. The Company's planned capital expenditures for the remainder of 1998
and 1999 are approximately $1.0 million. As of June 30, 1998, the Company had
commitments under noncancellable operating leases of $1.6 million through March
31, 2003. In addition, under the terms of the Company's agreement with Yahoo!,
the Company is committed to make payments for advertising and slotting of
$870,000 through 1999. Upon completion of the Company's initial public offering,
the minimum commitment increases from $870,000 over a twelve month period to
$1.6 million over a twelve month period, beginning upon the closing of the
Company's initial public offering. In addition, the Company is obligated to pay
Yahoo! a fee based on the amount of traffic directed to the Company's Web site.
To date, the Company continues to be substantially dependent on DBC for
almost all of its financial, administrative and operational services and related
support functions including cash management. The Company believes the
implementation of an independent accounting system, financial, operational and
management controls, and reporting systems and procedures will be necessary to
support the continued expansion of its operations. As a consequence, the Company
intends to expend capital resources to support the development of the
infrastructure.
Under the terms of the Limited Liability Company Agreement of the LLC
between CBS and DBC and, subsequently, the Credit Agreement between the Company
and DBC which will be entered into upon the closing of this offering, DBC agreed
to advance the Company up to an aggregate of $5.0 million on a revolving basis
through October 29, 2000. Borrowings bear interest at a variable rate per annum
equal to The Chase Manhattan Bank's prime rate plus 2% and are due on October
29, 2000. As of June 30, 1998, advances from DBC were $1.5 million. The Company
intends to use a portion of the net proceeds from this offering to repay all
outstanding advances from DBC. In addition, DBC is required to contribute $1.0
million to the Company in October 1998.
The Company believes that the net proceeds from this offering, together
with its current cash and cash equivalents and commitments and borrowings from
DBC will be sufficient to meet its anticipated cash needs for working capital
and capital expenditures for at least the next 12 months following the offering.
Thereafter, if cash generated from operations and borrowings under the DBC
Credit Agreement are insufficient to satisfy the Company's liquidity
requirements, the Company may need to raise additional funds through public or
private financing, strategic relationships or other arrangements. There can be
no assurance that such additional funding, if needed, will be available on terms
attractive to the Company, or at all. Strategic relationships, if necessary to
raise additional funds, may require the Company to provide distribution or
rights to certain of its technologies. The failure of the Company to raise
capital when needed could have a material adverse effect on the Company's
business, operating results and financial condition. If additional funds are
raised through the issuance of equity securities, the percentage ownership of
the Company of its then-current stockholders would be reduced. However, if CBS
or DBC elects to maintain their percentage interest in the Company pursuant to
the exercise of the Purchase Right described under "Description of Capital
Stock -- Rights of First Refusal," then CBS or DBC would not necessarily suffer
a reduction in their ownership. Furthermore, such equity securities might have
rights, preferences or privileges senior to those of the Company's Common Stock.
YEAR 2000 COMPLIANCE
The Company relies on DBC's computer and communications networks for the
operation of its Web site, and on DBC's information systems for customer
billing, accounting and administration. DBC has advised the Company that it has
substantially completed a comprehensive review of its products, information
systems and critical suppliers for year 2000 compliance, and has reported that
its computer and communications networks are year 2000 compliant. DBC is
currently installing new billing, accounting and administrative systems which
are scheduled to be fully operational during 1999 and are fully year 2000
compliant. DBC and the Company also rely on information provided electronically
by a number of outside suppliers. Based on representations received from
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suppliers and compliance testing completed and ongoing, DBC has advised the
Company that its critical suppliers are or will be compliant in all material
respects. The Company also relies on solutions provided by DoubleClick for the
delivery of its advertising and user measurement. The Company has been informed
by DoubleClick that DoubleClick's solutions are Year 2000 compliant.
Failure of third-party equipment or software to operate properly with
regard to the Year 2000 and thereafter could require the Company to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on the Company's business, results of operations and financial
condition. Furthermore, the purchasing patterns of advertisers may be affected
by Year 2000 issues as companies expend significant resources to correct their
current systems for Year 2000 compliance. These expenditures may result in
reduced funds available for Web advertising, which could have a material adverse
effect on the Company's business, results of operations and financial condition.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments
of an Enterprise and Related Information." SFAS 131 establishes new standards
for the way companies report information about operating segments in annual
financial statements. The disclosures prescribed by SFAS 131 are effective for
the year ending December 31, 1998. The Company does not expect such adoption to
have a material effect on the Notes to the Financial Statements.
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BUSINESS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in these forward-looking statements. Factors that may cause
such a difference include, but are not limited to, those discussed in "Risk
Factors." Ownership of the Company's securities by CBS or DBC should not be
viewed as a recommendation by either company to purchase the Common Stock.
THE COMPANY
The Company, through its CBS.MarketWatch.com Web site, is a leading
Web-based provider of comprehensive real-time business news, financial
programming and analytic tools. The Company also offers a wide range of other
finance-related resources, including investor subscription services and personal
finance community features, in order to provide a "one-stop-shop" for its
audience. The Company's editors carefully design and regularly update the
CBS.MarketWatch.com Web site throughout the trading day to present its
programming in a relevant, clear and well-organized manner. The Company's staff
of over 40 professional journalists creates in-depth, up-to-the-minute business
and financial commentary and analysis that is used to update the Company's Web
site throughout the trading day, and its correspondents often appear on CBS
Television and CBS Radio news programming. The Company believes that its focus
on original and authoritative content, its access to a traditional media
audience combined with the interactive qualities of the Internet, will help it
to build customer loyalty, user traffic and brand awareness. Furthermore, the
Company believes that its strategic relationships with its principal investors,
CBS and DBC, allow it to differentiate itself as the preeminent brand for
real-time business news and financial programming on the Web. In September 1998,
the CBS.MarketWatch.com Web site attracted nearly 2.0 million visitors who
generated more than 45 million page views, as compared with approximately
785,000 visitors who generated more than 38 million page views in March 1998.
INDUSTRY BACKGROUND
The Web as a New Medium
The Web has rapidly become a significant global medium for communications,
news, information and commerce. Jupiter Communications estimates that the number
of Web users worldwide will grow from approximately 85 million at the end of
1997 to approximately 250 million by the end of 2002. This growth is being
driven by a number of factors, including a growing base of PCs in the home and
workplace, improvements in network infrastructure, more convenient, faster and
inexpensive Internet access, advances in PCs and modems, increases in the
quantity and quality of content available on the Web and the overall increased
public awareness of the Web. The Web has also become an attractive medium for
advertisers, offering a level of targetability, flexibility, interactivity and
measurability not available in traditional media. Jupiter Communications
estimates that the amount of Web advertising in the U.S. will grow from $940
million in 1997 to over $7.7 billion by the year 2002. By advertising on the
Web, advertisers have the ability to gather demographic information and target
their messages to specific groups of consumers as well as to change their
advertisements frequently in response to market factors, current events and
consumer feedback. Moreover, advertisers can track more accurately the
effectiveness of their advertising messages by receiving reports of the number
of advertising "impressions" delivered to consumers, and the resulting "hit" or
"click through" rate to their Web sites.
The Web allows content providers to deliver information and programming in
a manner not possible in the traditional broadcast and print media. Although
these traditional media can have large audiences, they are generally limited to
a specific geography, can deliver only limited content or are not effective in a
real-time environment. Print media is limited by the significant time delays
involved in its production and distribution and its inability to be updated on a
real-time basis. Broadcast media is limited by the relatively small number of
available frequencies or channels, the rigidity of its schedules and its
inherent capacity constraints, with each channel or frequency
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carrying only a limited amount of information. By comparison, the Web allows
users to rapidly access, search and interact with a rich repository of content,
regardless of their location. In addition, despite the large amount of
undifferentiated information on many Web sites, users can utilize and manipulate
information more efficiently than in traditional media by conducting real-time,
customized searches.
Demand for Business News and Financial Programming
A number of trends have led to increased demand for comprehensive business
news and financial programming in all forms of media: (i) individuals are
proactively managing their money and the American public is investing an
increasing percentage of their household wealth in securities; (ii) the
emergence of online trading of financial instruments has led many investors to
rely less on traditional brokers; and (iii) U.S. companies increasingly compete
globally, requiring increased real-time knowledge of a broad range of financial
information from around the world. Business Week reports that more than 70 firms
now offer online trading, up from approximately 30 at the end of 1997, including
most of the major U.S. stockbrokers, with The Charles Schwab Corporation
reporting that 52% of its trading volume in the quarter ended June 30, 1998, was
conducted online. Forrester Research estimates that there were three million
online investing accounts at the end of 1997 and that this number will increase
to 14.4 million by 2002.
Driven by these factors, numerous traditional and online information
sources such as newspapers, magazines, broadcasters and specialized financial
Web sites are seeking to address the demand for timely and relevant financial
information. However, these companies are often unable to effectively meet
consumers' needs for high-quality, compelling and relevant, real-time business
information. Newspapers and magazines cannot offer real-time data and
information, and broadcasters are limited in the depth and availability of their
content. While there has been a proliferation of Web sites which include
financial information as part of their offerings, MarketWatch.com believes that
most sites offering such financial data suffer from a number of limitations.
Frequently, these sites do not offer high quality original content comparable to
that available from the best traditional financial media sources and do not
offer readily available tools on an organized, real-time basis. Furthermore,
these sites often offer large, undifferentiated collections of information that
require users to undertake time-consuming and multi-site searches to obtain all
of the information and tools they need.
MarketWatch.com believes that a significant opportunity exists for a
company to provide easy access to real-time business news, financial programming
and analytic tools over the Internet. By integrating high quality editorial
content with the best available financial tools and data, a Web-based service
can enable its audience to keep abreast of current business developments, track
industry and competitive trends, make informed investment decisions and manage
their financial assets. The Company believes that by assembling a loyal base of
users who actively follow business and financial news, a Web site can create a
targeted and demographically-desirable audience that is attractive to financial
and non-financial advertisers.
THE MARKETWATCH.COM SOLUTION
The Company, through its CBS.MarketWatch.com Web site, is a leading
Web-based provider of comprehensive, real-time business news, financial
programming and analytic tools. The CBS.MarketWatch.com Web site, presents
clear, original, authoritative and timely business coverage created in real-time
by its team of experienced business and financial journalists and commentators,
incorporating in-depth features and columns, market data feeds and sophisticated
analytical tools. The Company's experienced editorial staff presents its content
in a well-organized and approachable fashion, thereby enabling its audience to
keep abreast of current business developments, track competitors, make informed
investment decisions and manage their financial assets.
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The Company believes its strategic relationships with its principal
investors, CBS and DBC, allow it to differentiate itself as the preeminent brand
for real-time business news and financial programming on the Web. CBS will
provide the Company with $30 million rate card amount of television network and
radio advertising and promotion over the period from October 29, 1997, through
October 29, 2002, and will provide credibility with advertisers, its audience,
and potential business partners. DBC supplies the Company a ready-made
infrastructure for its Web site, access to multiple domestic and international
data feeds and sophisticated analytic tools. The Company believes that the
ongoing development of a "one-stop-shop" for financially-oriented programming,
news and data will help establish the CBS.MarketWatch.com Web site as one of the
premiere Web sites.
STRATEGY
The Company's objective is to create the leading branded Web site for
comprehensive real-time business news, financial programming and analytic tools.
This strategy is designed to maximize the quantity and quality of its traffic
and develop a strong and loyal community, thereby creating an audience which is
highly attractive to companies advertising and engaging in commerce over the
Internet. The Company's strategy to achieve this objective includes the
following key elements:
Build Traffic and Audience Loyalty. The Company believes that the CBS name
and logo, the advertising and promotion it receives from CBS, and its plans for
significantly increased marketing activities will provide it with increased
visibility among Web users and companies advertising and engaging in commerce
over the Internet. Additionally, the Company is aggressively pursuing
distribution relationships with high-traffic Web sites to strategically place
its programming and links to its Web site as another key element in building
traffic. For example, certain of the Company's headlines are listed on Yahoo!,
with links back to the CBS.MarketWatch.com Web site for the full story. The
Company is also seeking to build its traffic with its current national brand
building campaign in traditional and online media.
Deliver Original, Authoritative and Timely Programming with High Editorial
Value. MarketWatch.com will continue to cover the financial markets and other
areas of interest to its audience and aggressively enhance this programming by
expanding its staff of journalists, columnists and selected third-party content.
Led by two experienced business journalists, Larry Kramer and Thom Calandra, the
Company's editorial staff creates real-time, high quality news stories that
inform, educate and entertain its audience. The Company's editors continuously
update the CBS.MarketWatch.com site's "Front Page" throughout the trading day to
emphasize the most important stories of the moment. The Company believes that
the journalistic background of much of its senior management and their
commitment to providing compelling news stories offers it a significant
competitive advantage.
Leverage CBS's Name Recognition and Resources. The Company believes that
its strategic relationship with CBS helps attract users, facilitate advertising
sales and obtain interviews with high-profile personalities. MarketWatch.com
seeks to leverage this relationship and uses the CBS name and logo in its
marketing and throughout its site. The Company also benefits from the prominent
usage of its logos and its URL during CBS Television and Radio broadcasts,
including the CBS Evening News, which reaches approximately 10.2 million homes
each weeknight according to the National Nielsen Ratings for the television
season through August 1998. In addition, MarketWatch.com correspondents often
appear, and the Company's content is distributed, on the CBS Television Network
and affiliated radio news programming.
Leverage DBC's Data and Analytic Tools. MarketWatch.com's strategic
relationship with DBC provides it with access to in-depth, real-time and
historical data from all of the major U.S. securities markets as well as
sophisticated and proprietary software tools for analyzing and manipulating such
data. The Company integrates such data and analytic tools with its news content
to provide users a differentiated and effective service. DBC hosts the
CBS.MarketWatch.com Web site and provides the
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necessary engineering and network infrastructure to support the Company's
operations at DBC's marginal cost.
Build and Capitalize on Attractive Audience Demographics. The Company
believes its Web site attracts users who as a group are more affluent and better
educated than users of many other Web sites and therefore represents an
attractive medium for companies that advertise and engage in commerce over the
Internet. In order to attract new users and grow a loyal audience that appeals
to a broad range of advertisers and business partners, the Company is investing
in content, improved and expanded features and advertising and promotional
programs. The Company believes that this strategy has helped it to attract new
advertisers on the CBS.MarketWatch.com Web site including popular consumer
brands such as American Airlines, AT&T, DeBeers, Ford, Sprint, Toyota and Volvo.
Pursue Additional Revenue Streams. The Company believes it has significant
opportunities to capitalize on its audience and content offerings to create
multiple revenue streams for future growth. In addition to advertising revenues,
the Company currently offers limited subscription services for certain market
data and analyst reports and intends to offer additional subscription services,
such as exclusive news, commentary and analytic tools. The Company is also
aggressively pursuing electronic commerce opportunities through strategic and
marketing relationships with retailers and service providers focused on Web
distribution. For example, the Company believes that its focused content and
audience provides it with excellent opportunities to build strategic commerce
relationships with financial service companies, such as marketers of credit
cards, consumer and home loan companies and insurance providers. MarketWatch.com
also believes that an opportunity exists to leverage its brand and create
strategic relationships in key international markets.
THE CBS.MARKETWATCH.COM SITE
The CBS.MarketWatch.com Web site is a comprehensive business and financial
Web site providing up-to-the-minute business news, financial programming and
analytic tools. With a staff of approximately 40 professional journalists, the
Company offers real-time coverage of business and financial news and in-depth
commentary on market moving trends and events. The Company also offers a wide
range of other financial information and subscription services as well as
community features to provide a "one-stop-shop" for its audience. Recent
additions to the CBS.MarketWatch.com Web site include columns by well-known
commentators, enhanced personal portfolio tracking features, hosted chat rooms,
bulletin boards and messaging. The Company believes that offering comprehensive
business news, financial programming and analytic tools is critical to its
success as it enables the Company to increase audience loyalty and sense of
community, average usage time and repeat visits.
News and Editorial Content
The Company's front page is carefully designed and regularly updated
throughout the trading day by its journalists and editors to inform its audience
of the important stories of the moment. Unlike many of its Web-based
competitors, the Company does not rely exclusively on automatic editing and
display systems; instead it leverages its journalistic expertise to add a strong
editorial framework to its content. From the CBS.MarketWatch.com Web site's
"front page," users can access news stories, columns and headlines written by
its reporters and third parties, such as Reuters, Associated Press, Business
Wire and PR Newswire, as well as stock quotes and other business and financial
data and analytic tools. The Company's Web site also offers limited audio and
video clips of news reports that were recently broadcast on the CBS Television
Network and CBS Radio by the Company's correspondents. Users can also search a
historical database of news stories by company name and ticker symbol.
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The Company creates and publishes on its Web site real-time commentary and
analysis of business and financial news and a number of regular columns by its
experienced editorial staff. The Company's news features include real-time
headlines, stock market news and updates and coverage of technology stocks, bond
markets, initial public offerings and other areas of interest to its audience.
These features include:
<TABLE>
<CAPTION>
UPDATED THROUGHOUT UPDATED SEVERAL
EACH TRADING DAY UPDATED DAILY TIMES PER WEEK UPDATED WEEKLY
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Analysts' Changes Daily Calendar The Big Cap Bazdarich on Bonds
Bond Report Earnings Calendar Clueless Investor Cappiello's Take
Capitol Report IPO Daily Report Erdman's World Cedd Moses
Earnings Headlines Mutual Fund Center Getting Personal Elaine Garzarelli:
Earnings Surprises Press Briefing I.P.Onder IPO First Words
Futures Movers StockWatch London Calling Irwin Kellner
Headlines Weekly Calendar Screamers Legal Options
Internet Daily SoapBox Marder on Markets
Market Snapshot Telecom Report SportsBiz
Media Report
Movers & Shakers
Mutual Understanding
NewsWatch
Silicon Stocks
Software Report
Tech Report
Washington Sked
</TABLE>
To broaden its audience appeal, the Company offers other specialized
content areas targeting novice as well as sophisticated investors. These
additional areas include:
Mutual Fund Center. A mutual fund expert provides "Superstar Fund" listings
and edits the Company's mutual fund section. The Mutual Fund Center section
offers Lipper Mutual Fund Profiles and provides links to other mutual fund
listings, news headlines, quotes and charts. The Company also offers a "Fund
University" section, which provides various mutual fund educational information
and links to other mutual fund investing sites.
Personal Finance. The Company offers its Getting Personal section which
features regularly updated columns that provide its audience with information on
a range of investment alternatives and other personal finance-related topics and
creates educational programming on topics such as finance terminology and
investing options.
Tax Guide. The Company offers a seasonal online Tax Guide giving its
audience a resource tool for planning tax strategies and estimating tax bills.
The Company provides timely special features that highlight the latest changes
in tax laws and reviews and compares various tax preparation software packages.
Third-Party Products. The Company distributes products and services from
some of the leading names in research and news, such as Baseline, Hoover's,
Inc., INVESTools, Inc., Investor Communications Business Inc. and Zacks Inc. The
Company receives a portion of any revenue generated from the sale of these
products or services, however, to date, the Company has not received material
revenue from these sources. The Company's reporters and editors also use
information provided by these services in its daily news coverage.
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Data and Analytic Tools
The Company offers a variety of data and analytic tools which, together
with its other real time news and programming, are designed to provide a
"one-stop-shop" for the financial and business needs of its audience. These
include the following:
<TABLE>
- ----------------------------------------------------------------------------
DATA TOOLS
<S> <C>
- ----------------------------------------------------------------------------
US Equities Historical Charts
International Equities Technical Charts
US Options Portfolio Management
Mutual Funds Volume Alerts
Futures/Commodities Price Alerts
Foreign Exchange Stock Screener
Fixed Income
- ----------------------------------------------------------------------------
</TABLE>
Securities Price Quotes. Utilizing data gathered and packaged for online
use by DBC customers, the Company provides stock quotes from all major U.S. and
international stock markets. These quotes are offered on a minimum delay of 15
minutes in the United States in accordance with exchange rules, and of varying
periods from foreign markets. Users can also subscribe to real-time quote
services, MarketWatch RT and MarketWatch Live, through the Company's Web site.
Through its stock quote pages, its audience can link to other valuable
information about a particular company, including related MarketWatch.com news
stories, stories from other news services, summaries of SEC filings and annual
reports, summaries of analysts' information and a variety of fundamental and
technical information about its stock. The Company also provides information as
to various market and industry indices, commodity contracts and currency
exchange rates.
Portfolios. In an effort to offer the most complete and functional
portfolio tracking system on the Web, the Company offers a sophisticated
portfolio tracking service which offers a variety of features, including the
ability to: track up to 200 ticker symbols in multiple portfolios; access
portfolios from any computer with Web access; track options, mutual funds and
stocks on all major U.S. and international exchanges; monitor portfolios over a
secure connection; automatically update portfolio price views every five
minutes; monitor short and long positions; view transaction history and capital
gains reports; and download portfolio reports for use in spreadsheets, thus
providing a wider set of choices for record-keeping. The Company is also
developing additional features, such as an email alert when one of a user's
portfolio securities trades out of its normal range and end-of-the-day emails
summarizing the portfolio's activity that day. This service is offered free of
charge and users can enroll by completing a simple online registration form.
Data. The Company offers a wide variety of data on its Web site including
trading volume and dollar volume information, corporate share repurchases,
industry and customized local CBS affiliate indices, stock split information and
other data related to global and currency markets.
Analytics. The Company has developed real-time news products utilizing
proprietary analytical tools. These services typically generate thousands of
daily, real-time headlines based on individual stock activity. If, for example,
a stock exhibits unusual volume or price activity, the software generates a
real-time headline that alerts investors to that activity. The Company also
offers information relating to fixed-income securities and commodities.
Community Features
The Company believes that providing a place for its audience, financial
journalists and experts in the financial world to meet and share ideas about
investing will help increase brand awareness, motivate users to return to the
CBS.MarketWatch.com Web site frequently and encourage its
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audience to spend more time on its Web site. Additionally, because the Company
intends to integrate related news, market data and charts offered throughout its
service, community members will be able to gravitate towards others who share
their specific interests, enabling the creation of niche user groups which can
be targeted with relevant marketing campaigns and transaction opportunities. In
addition, because of the planned integration of the Company's other content with
these community features, community members will be exposed to other areas of
the site, increasing the awareness of the breadth of the Company's programming
and other services. The Company believes that the personal and interactive
nature of communicating with other people who share similar interests will help
generate an affinity for the community and increased brand loyalty to
MarketWatch.com.
Currently, the Company offers a bulletin board service where users can
discuss investments. In the fall of 1998, the Company intends to launch an array
of communication tools designed to facilitate the creation of a much larger and
more dynamic community. This suite of tools is intended to provide the Company's
audience with the means for communicating either privately, using Web-based
email and instant messaging, or in affinity group message boards and chat rooms.
In order to participate in its community features and to assist the Company to
target its advertising, users will be required to complete registration forms
and to provide demographic information about themselves.
The Company's community building efforts are centered on strengthening
audience loyalty, increasing page views across all areas of the site, and
providing opportunities for premium sponsorships, such as sponsoring moderated
chat events. Longer term, as the Company gathers more information about the
interests of its community members, it intends to offer targeted advertising in
specialized discussion groups within the community and pursue electronic
commerce relationships with the goal of entering into revenue sharing
relationships based on transactions derived from community members.
EDITORIAL
The Company maintains news bureaus in New York City, Washington D.C., San
Francisco, Los Angeles and London, England. The Company's journalists generate
between 400 and 600 finance and business-related, real-time headlines on an
average trading day. The Company has devoted additional staff to cover news from
areas of special interest to its audience, including initial public offerings,
the fixed income markets, futures and options and technology stocks. Also, the
Company intends to expand its industry-based and real-time capital markets
coverage. For example, the Company has recently added columns which cover the
telecommunications and the sports industries and has introduced a "spot news"
desk to cover the major relevant stories of the day. MarketWatch.com also
receives live media feeds from PR Newswire and Business Wire, and has access to
all major financial wires and broadcast channels. The Company works with CBS
News' global operations and presence to expand the Company's coverage of
international business and financial news. In addition to providing news
coverage for the CBS.MarketWatch.com Web site, the Company's journalists provide
financial news to CBS Television News and CBS Radio news programming. The
Company believes that by providing news reports for CBS and working with CBS
News journalists, it will have the opportunity to enhance its reputation and its
audience reach.
The Company has a staff of over 40 professional journalists (as of June 30,
1998), who are experienced editors, bureau chiefs and reporters with high
standards for reporting and editing. The Company believes its staff provides it
with a significant competitive advantage. For example, Larry Kramer, the
Company's Chief Executive Officer, was Executive Editor of the San Francisco
Examiner, and a financial reporter and Metro Editor of The Washington Post. The
Company's staff also includes Thom Calandra, the Company's Editor-in-Chief, who
has been a financial columnist for the San Francisco Examiner, the London-based,
lead markets editor for Bloomberg and Online Money Editor for USA Today, Paul
Erdman, a renowned economist and author, and Irwin Kellner, a former Chief
Economist for Manufacturers Hanover Trust Bank, as well as a number of other
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journalists who previously worked for Bloomberg, Associated Press, UPI, CBS
Radio News, Fox News Internet and Dow Jones Television. The Company believes
that it is one of the few Web-based companies which offers this level of
journalism to its audience.
ADVERTISING AND SALES
The Company is focused on providing its advertisers with a large,
demographically desirable audience. The Company believes that its Web site
attracts users who as a group are more affluent and better educated than users
of many other Web sites and therefore represents an attractive medium for
companies that advertise and engage in commerce over the Internet.
Advertisements are displayed throughout the Web site, when a user enters the
service, reviews a news story or accesses a quote or portfolio. Advertising
revenues represented 54%, 59% and 68% of the Company's net revenues for the
period from inception (October 29, 1997) through December 31, 1997 and the
quarters ended March 31, and June 30, 1998, respectively.
Prior to January 1998, the Company used a third-party service to sell
advertising on its Web site. The Company is building a direct sales force,
which, as of June 30, 1998, consisted of eight members. The Company believes
that having an internal direct sales force allows it to better understand and
meet advertisers' needs, increase its access to potential advertisers and
maintain strong relationships with its existing base of advertising clients. The
Company's in-house sales staff includes experienced Internet sales personnel as
well as those from traditional media. The staff develops and implements its
advertising strategies by creating value-added packages for advertisers from the
wide range of news columns, editorial opinions and other tools and information
on the CBS.MarketWatch.com Web site, including identifying strategic accounts
and developing presentations and promotional materials and building
relationships with advertising buyers. DoubleClick provides advertising
management and delivery services for the Company's Web site and provides
advertisers with reports describing the delivery of their advertisements. See
"Risk Factors -- Risks Associated with Web Advertising" and "-- Dependence on
Key Personnel; Need for Additional Personnel."
The Company currently derives, and expects to continue to derive, a
substantial majority of its revenue from advertising sales. The Company offers a
variety of advertising options that may be purchased individually or in packages
such as "run of site," targeted advertising and sponsorships. The Company's
current advertising options consist of:
Run of Site. Run of site rotations are banner advertisements that rotate
on a random basis throughout the CBS.MarketWatch.com Web site, appealing to
advertisers seeking to establish general brand recognition across
MarketWatch.com's audience. Run of site rotations are typically sold in
blocks of 1,000 impressions and generally are sold with a minimum of
100,000 guaranteed impressions over the life of the advertising contract.
MarketWatch.com's current rate card CPM ranges from $25 to $35 depending on
length of contract and number of impressions purchased.
Targeted Advertising. Targeted advertisements are banner advertisements
that are displayed when a MarketWatch.com user browses through specific
news and quote pages, allowing advertisers to target users based on ticker
symbols requested or by specific areas of interest by advertising on
particular columns. The Company also allows advertisers to deliver their
advertisements by region or country, time of day, frequency of use,
Internet Service Provider, type of operating system or browser. Like run of
site rotations, targeted advertisements are sold in blocks of 1,000
impressions. Due to the greater selectivity of the audience and because
users typically spend more time on news pages than on quote pages,
MarketWatch.com's current rate card CPM for targeted advertisements is
generally higher than for run of site rotations, generally ranging from $25
to $50. In order to enhance the effectiveness of its targeting, the Company
is building a database of its registered users through an email newsletter
and securities portfolio tracking service.
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Sponsorships. Sponsorships allow advertisers to gain maximum exposure on
the MarketWatch.com site by featuring "buttons" on certain pages. For
example, seven online brokerage services (Datek, DLJ Direct, First Trade,
Mr. Stock, ScoTTrade, Trading Direct and Web Street Securities) have
purchased premium sponsorship placements to gain fixed positions within the
CBS.MarketWatch.com Web site and thereby present a user with the
opportunity to move directly to the advertisers site to establish an
account or place an order. The Company offers other sponsorship
opportunities throughout its entire site. Sponsorships are typically sold
for a fixed monthly fee over the life of the contract and may include other
advertising components such as general rotation or targeted banner
advertisements.
Content Sidebars. The Company also offers fixed location bars, or
content sidebars, on selected high traffic pages to provide advertisers
with greater visibility in order to feature an advertiser's content,
information or tools. The Company typically charges premium rates for the
placement of these content sidebars. Content sidebars can also be sold as
part of a sponsorship arrangement.
Historically, the Company's advertisers have been from the technology and
financial services industry, but the Company has recently attracted advertisers
from brands outside of these industries, such as American Airlines, DeBeers,
Ford, Sprint, Toyota and Volvo. The Company believes that attracting additional
advertisers from businesses outside of the financial and technology, and
industries will be important to its future success and revenue growth. See "Risk
Factors -- Dependence on Financial Industry Customers." From November 1, 1997,
through June 30, 1998, more than 60 organizations, including the following, have
advertised on the Company's Web site:
<TABLE>
<S> <C>
American Century Investments INVESTools, Inc.
American Express Co. Microsoft Corp.
AT&T Corp. Mr. Stock
Charles Schwab & Co., Inc. Northern Telecom Limited
Datek Online, Inc. Quick & Reilly, Inc. - SureTrade
Discover Brokerage Direct Scottsdale Securities, Inc.
Donaldson, Lufkin & Scudder Investor Services, Inc.
Jenrette - PC Financial Salomon Smith Barney Inc.
E*Trade Group, Inc. Stock Genie
Fidelity Investments Stocknetwork
First USA The Future Super Stock
Ford Motor Company TheStreet.com
Hewlett Packard Trading Direct
International Business Machines Corp. Trans World Airlines, Inc.
I-Cap Wall Street Access
Invesco Funds Group WYSE Securities - Pyramid Financial
InvestIn.Com Securities Corp.
</TABLE>
STRATEGIC RELATIONSHIPS
The Company believes that its strategic relationships with its principal
investors, CBS and DBC, allow it to differentiate itself as the preeminent brand
for real-time business news and financial programming on the Web.
CBS. In connection with the formation of the Company, the Company entered
into a five-year license agreement under which the Company's Web site was
renamed "CBS.MarketWatch.com" and the Company was granted the right to use the
CBS name and logo as well as CBS Television Network news content in connection
with the CBS.MarketWatch.com Web site during this period. This agreement, as
amended and restated (the "Amended and Restated License Agreement") will expire
on October 29, 2002, subject to earlier termination upon the occurrence of
certain events. Under the terms of the Amended and Restated License Agreement,
the Company will pay CBS a
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percentage of Gross Revenues generated by the Company's Web site. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Amended and Restated License Agreement will be subject to
termination in the event (i) a competitor of CBS directly or indirectly
beneficially owns 15% or more of the Company's outstanding shares of Common
Stock or the total outstanding voting power of the Company, (ii) the Company
issues voting securities to, or actively participates in the acquisition of
voting securities of the Company to a competitor of CBS which results in such
competitor directly or indirectly beneficially owning 9% or more of the
Company's Common Stock or total voting power in the Company, (iii) the Company
discontinues using the MarketWatch mark and does not establish a substitute mark
acceptable to CBS in its sole discretion, (iv) the Company breaches a material
term or condition of the agreement, or (v) becomes insolvent or subject to
bankruptcy or similar proceedings. Notwithstanding the foregoing, the mere
acquisition by a CBS competitor of an interest in DBC that causes a DBC Change
of Control shall not be deemed to constitute the acquisition of an ownership
interest in the Company in the absence of other facts demonstrating ownership of
an interest in the Company. Subject to certain limitations, CBS will provide the
Company with an aggregate rate card amount of $30 million of network television,
radio and Internet advertising and promotion (Internet advertising will be
limited to five percent of the total promotion delivered). This advertising
obligation will be subject to termination by CBS in the event the Amended and
Restated License Agreement is terminated. See "Risk Factors -- Dependence on CBS
Relationship" and "Certain Transactions" for a description of certain material
risks associated with the Amended and Restated License Agreement.
The Company believes it will be able to increase its brand awareness by
providing financial news reports for CBS News and CBS Radio. The Company's New
York City-based bureau is located in CBS facilities and frequently works with
CBS News staff to generate stories for distribution over the CBS broadcast
networks. The Company also has two television correspondents who file daily
reports on CBS Up-to-the-Minute overnight programming and CBS Newspath, which
supplies CBS News video to CBS affiliated television stations for use in their
news programs, however there can be no assurances that these services will
continue in the future. Both correspondents also file customized daily reports
to major CBS affiliates via satellite links, and contribute to the CBS Morning
News. The Company's Editor-in-Chief, Thom Calandra, files live weekday morning
reports on KPIX-TV, the CBS owned television station in San Francisco, and files
reports with CBS in New York for CBS News. The Company's correspondents often
file reports on CBS Radio news programming, covering breaking financial stories
for the top-of-the-hour CBS Radio news report that is broadcast over several
hundred radio stations nationwide. In addition, Frank Barnako, one of the
Company's reporters, does a twice-daily version of his Internet Daily column for
use by CBS Radio affiliates. All reports delivered by the Company's
correspondents to the CBS Television and Radio Networks are branded as the
Company's reports. CBS will have three representatives to the Company's Board of
Directors upon the closing of this offering. The Company is critically dependent
on its relationship with CBS. See "Risk Factors -- Dependence on CBS
Relationship," "-- Control by CBS and DBC," "Management" and "Certain
Transactions."
Although the Amended and Restated License Agreement will contain certain
non-competition provisions, these provisions will have certain exceptions and
will not otherwise provide for an exclusive relationship. For example, CBS will
not be prohibited from licensing its name and logo to other Web sites or
Internet services that deliver general news, sports or entertainment, so long as
the delivering of stock quotes and financial news is not their primary function
and their principal theme and format. CBS will also not be prohibited from
licensing its news content to, or investing in, another Web site or Internet
service, regardless of the theme of that Web site or Internet service. As a
result, there can be no assurance that CBS will not promote, establish or
otherwise provide content for a Web site or Internet service which competes with
the Company. See "Risk Factors -- Potential Competition from CBS and DBC" and
"Certain Transactions."
DBC. Upon formation of the Company, DBC contributed the DBC Online/News
Business which had been operating as departments within DBC since October 1995.
In addition, DBC
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assigned agreements for advertising and content, portions of its award winning
Web site, dbc.com, and its related trademarks, including "MarketWatch" and the
MarketWatch.com Internet domain name. DBC currently provides delayed financial
data to the Company pursuant to the original Services Agreement for
dissemination on the Company's Web site at no charge to the Company or its
users. It also provides real-time financial data to the Company for
dissemination to subscribers of certain of the Company's subscription services
in exchange for a percentage of the subscription fee. In addition, the Services
Agreement provides that if requested by the Company DBC shall host and manage
the Company's Web site infrastructure and provide 24x7 staffing by trained
network operators. Pursuant to the Amended and Restated Services Agreement, DBC
will also provide the Company with certain general services, including cash
management, accounting services and human resources services. The Company will
reimburse DBC for its actual costs of providing these services. Under the
Amended and Restated Services Agreement, DBC will also pay the Company a monthly
per-subscriber fee for delivery of the Company's news to all DBC subscribers
with a minimum payment of $100,000 per month. Through October 29, 2002, DBC will
not be able to (i) sell advertising on a Web site that primarily disseminates or
delivers financial news and stock quotes or (ii) use the Internet to sell (or
assist any person in selling) real-time snap quotes to individual subscribers.
DBC will have three representatives on the Company's Board of Directors upon the
closing of this offering. See "Risk Factors -- Dependence on DBC Relationship,"
"-- Control by CBS and DBC," "Management" and "Certain Transactions."
Although the Stockholders' Agreement will contain certain non-competition
provisions, these provisions will have certain exceptions and will not otherwise
provide for an exclusive relationship. For example, DBC will not be prohibited
from providing data and tools or from providing hosting services to other Web
sites. DBC will also be allowed to sell advertising on any Web site that does
not have as its primary function and its principal theme and format the
delivering of comprehensive real-time or delayed stock quotations and financial
news in the English language to consumers. See "Risk Factors -- Potential
Competition from CBS and DBC" and "Certain Transactions."
MARKETING AND DISTRIBUTION
The Company seeks to establish the MarketWatch.com brand as the Web's
leading provider of business and financial information. CBS will agree to
provide the CBS.MarketWatch.com Web site with promotion and advertising with an
aggregate rate card amount of $30 million on CBS Television Network programming,
programming on CBS owned and operated television and radio stations and/or
banner advertising on CBS Web sites over the period from October 29, 1997,
through October 29, 2002. These advertising placements may take the form of 30,
15 or 10 second units (where available), scrolls of the CBS.MarketWatch.com URL,
on-air mentioning of the Company's Web site, banner advertising and/or in credit
rolls or sign-offs, with CBS having broad discretion as to the type and manner
of placement. As of June 30, 1998, CBS had delivered the Company $3.4 million
rate card amount of promotion and advertising under this commitment.
The on-air display of the MarketWatch.com logo and domain name appears on
the CBS Evening News with Dan Rather, CBS This Morning and on the news
programming of the CBS Television Network and many affiliated television
stations. The logo is usually displayed when business or financial news is
covered during the broadcast. When they occur, these promotional activities give
the Company national promotion to the over 10.2 million households who,
according to recent national Nielsen Ratings for the television season through
August 1998, watch the CBS Evening News as well as the millions of additional
viewers of other CBS News broadcasts.
The Company uses the appearance of its journalists on CBS Television and
Radio news broadcasts and on certain affiliate station broadcasts to highlight
its Web site and increase the association of its Web site with CBS. When making
such appearances, the Company's journalist is identified with the Company's
branding. The Company's Web site is also linked directly to the Web sites of CBS
and many of its affiliate television stations. Each time a user at these Web
sites clicks on
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the "Money" section he or she receives a graphic or story from the Company's Web
site or one of its correspondents and a direct link to the CBS.MarketWatch.com
Web site.
In addition to its CBS-related promotional activities, the Company
advertises on a number of heavily trafficked Web sites, such as Yahoo!, Lycos,
Excite and Alta Vista, and conducts a variety of other marketing and public
relations programs. These programs include paid advertisements in print
publications and radio broadcasts and participation in personal finance, online
journalism and Internet-related conferences. The Company intends to increase
advertising and marketing expenditures over their historical levels to continue
to build awareness with its audience. To this end, the Company has launched a
national brand building campaign and intends to make substantial expenditures to
advertise its brand and Web site in traditional and online media.
The Company has entered into a number of, and is aggressively pursuing
additional, distribution relationships to enhance its brand name recognition and
audience reach. Key distribution agreements for the Company include:
Yahoo! Inc. Yahoo! has agreed to index certain of the Company's news
headlines in the Finance section of Yahoo! with links to the
CBS.MarketWatch.com Web site for the full story. In addition, the Company
has also agreed to purchase advertising on Yahoo! over the 12 month period
following the closing of this offering. The Company also has a content
distribution agreement with Yahoo! under which the Company will provide at
no charge a version of its Market Snapshot Report on a daily basis to
registered users of the Investment Challenge fantasy investment game on
Yahoo!'s Finance section.
Universal Feature Syndicate. In May 1998, the Company entered into an
agreement with Universal Feature Syndicate under which Universal Feature
Syndicate will market certain of the Company's editorial features to
newspapers exclusively in North America and non-exclusively throughout the
world for syndication in print and electronic editions.
News Alert. In February 1998, the Company entered into an agreement with
News Alert, Inc. under which News Alert will provide certain third-party
news feed collection, databasing and display services for the Company's Web
site. In addition, News Alert may also make certain of the Company's
editorial content available as a news feed to certain of News Alert's other
customers.
Brand Label Quotes Pages. The Company also seeks to increase its
revenues and name recognition by hosting co-branded financial information
pages ("Brand Label Quotes Pages") accessible to visitors of other
companies' Web sites who wish to retrieve market quotations and financial
news. The presence of links on the Brand Label Quotes Pages to relevant
MarketWatch.com news stories also drives traffic to the CBS.MarketWatch.com
Web site. Web sites with these Brand Label Quotes Pages include Web sites
operated by American Express Financial Direct, Callaway Golf, Cigar
Aficionado, Conde Naste's cnCurrency.com, Hoover's Inc., IPO Monitor,
National Discount Broker, Proctor & Gamble, Rocky Mountain News, Muriel
Siebert & Co., SportsLine USA, and Wine Spectator, among others. Generally,
the Company may sell advertising on portions of, and receives hosting fees
for these pages. To date, revenues from these Brand Label Quotes Pages have
constituted less than 10% of the Company's aggregate revenues.
The Company believes that distribution relationships of this type are
important to its continued growth and to increase its exposure to its target
audience. MarketWatch.com intends to continue to aggressively pursue additional
distribution relationships. See "Risk Factors -- Need to Establish and Maintain
Strategic Relationships."
SUBSCRIPTION SERVICES
While substantially all of the programming available on the
CBS.MarketWatch.com Web site is currently free of charge, the Company offers
subscription-based financial data services which are
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targeted for sophisticated investors. These services are currently created and
provided by DBC under a revenue sharing arrangement. See "-- Strategic
Relationships." The Company is developing and, in the future, intends to
introduce additional subscription services, such as exclusive news, commentary
and analytic tools.
The Company also offers, for a fee, third party financial data and other
services through its site, such as Hoover's, Inc., which provides company
profiles, Zacks Inc., which provides company earnings estimates, and Baseline,
which provides company research reports. The Company receives a portion of the
revenue from the sale of these products or services through its Web site. The
Company does not currently and, in the future does not intend to, derive a
material amount of revenue from these services.
The Company acts or will act as DBC's sales agent with respect to the
following DBC services in exchange for a fee for new subscribers obtained
through the CBS.MarketWatch.com Web site:
MarketWatch RT. MarketWatch RT is a browser-based, real-time financial data
service providing on demand real-time quotes from the American and New York
Stock Exchanges and NASDAQ. The service is available for a $34.95 monthly fee
which includes non-professional exchange fees of $12.50 for those three
exchanges. Premium research from Baseline is also available through this
service. DBC pays the Company a monthly royalty for each subscriber. DBC
provides all customer and MIS support for this service. In August 1998, the
Company began marketing MarketWatch RT Wireless, a product for use with
hand-held computing devices such as Windows CE devices and Palm Pilots. In the
future, the Company does not expect to derive a material amount of revenue from
this service.
MarketWatch LIVE. MarketWatch LIVE is a Windows-based, real-time financial
data service providing "streaming" real-time quotes over the Internet from all
major US equity and futures exchanges. The base fee for this product is $79 per
month. Premium research from Baseline is also available through this service.
DBC pays the Company a monthly royalty on revenues derived from this service.
DBC provides all customer and MIS support for this service. In the future, the
Company does not expect to derive a material amount of revenue from this
service.
MarketWatch Pro. The Company intends to launch a news, commentary and
analytics subscription service during the fourth quarter of 1998. It is
anticipated that this pay service will offer real-time market commentary,
analysis of government announcements and reports, monitoring of institutional
investment patterns, transcripts of analyst conference calls, detailed U.S.
Department of Commerce reports, market alerts and other premium information. The
Company intends to offer individual subscriptions and bulk subscriptions to
institutions.
INFRASTRUCTURE, OPERATIONS AND TECHNOLOGY
Through its relationship with DBC, the Company's Web site is hosted at, and
all of its network operations are controlled from, DBC's facilities in San Mateo
and Hayward, California. DBC provides multiple Web servers which run Microsoft
Windows and Microsoft NT operating systems and use Microsoft Internet
Information Server. Internet access is maintained through multiple DS3
connections with three different tier one ISPs, UUNET, Digex and MCI. The
computer equipment used to operate the Company's Web site at DBC's facilities is
powered by multiple uninterruptible power supplies. The Company's operations are
dependent upon its ability to protect its systems against damage from fire,
earthquakes, power loss, telecommunications failure, break-ins, computer
viruses, hacker attacks and other events beyond the Company's control. DBC also
provides a redundant network operations center in Salt Lake City, Utah. See
"Risk Factors -- Dependence on DBC Relationship" and "-- System Risks."
The Company is expanding its internal development group to create new, and
enhance existing, services, tools and features. For example, this group recently
developed a database portfolio application that, among other features, allows
users to track up to 200 ticker symbols each in
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multiple portfolios and view the portfolio information through a secure
connection. The Company is also developing an advanced charting application
which is designed to provide intraday ticker and interval charts. The Company
also utilizes third-party technology for certain of its services and tools. For
example, the Company has licensed news database technology to allow users to
search for news stories from multiple third-party sources by ticker symbol,
keyword and news source. The Company has also entered in to an agreement with a
software development firm that will provide a new community application system,
with functionality such as message boards, chat and instant messaging. As of
June 30, 1998, the Company had nine personnel dedicated to its product and
content development organization, and for the six months ended June 30, 1998,
the Company's product and content development expenditures were $1.0 million.
See "Risk Factors -- Risks Relating to Technological Change."
COMPETITION
The market for Internet services and products is relatively new, intensely
competitive and rapidly changing. The number of Web sites on the Internet
competing for consumers' attention and spending has proliferated and the Company
expects that competition will continue to intensify. The Company competes,
directly and indirectly, for advertisers, viewers, members and content providers
with the following categories of companies: (i) publishers and distributors of
traditional off-line media (such as television, radio and print), including
those targeted to business, finance and investing needs, many of which have
established or may establish Web sites, such as The Wall Street Journal, CNN and
CNBC; (ii) general purpose consumer online services such as America Online and
Microsoft Network, each of which provides access to financial and
business-related content and services; (iii) online services or Web sites
targeted to business, finance and investing needs (such as TheStreet.com and
Motley Fool); and (iv) Web search and retrieval and other online services, such
as Excite, Inc., InfoSeek Corporation, Lycos, Inc., Yahoo! Inc., and other
high-traffic Web sites, such as those operated by Netscape Communications
Corporation, which offer quotes, financial news and other programming and links
to other business and finance related Web sites. The Company anticipates that
the number of its direct and indirect competitors will increase in the future.
Increased competition could result in price reductions for its advertising,
reduced margins, greater operating losses or loss of market share, any of which
would materially adversely affect the Company's business, results of operations
and financial condition.
Although the Amended and Restated License Agreement and Stockholders'
Agreement will contain non-competition provisions, these provisions will have
certain exceptions. As a result, there can be no assurance that CBS or DBC will
not promote, establish or otherwise provide content for a Web site or Internet
service which competes with the Company. See "Risk Factors -- Potential
Competition from CBS and DBC" and "Certain Transactions."
The Company believes that its programming and content compete favorably
with its competitors, as many of its competitors do not primarily provide
real-time coverage by experienced journalists. However, many of the Company's
existing competitors, as well as a number of potential new competitors, have
longer operating histories in the Web market, greater name recognition, larger
customer bases and higher amounts of user traffic and significantly greater
financial, technical and marketing resources than the Company. Such competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies, make more attractive offers to potential employees,
distribution partners, advertisers and content providers and may be able to
respond more quickly than the Company to new or emerging technologies and
changes in Web user requirements. Further, there can be no assurance that the
Company's competitors will not develop services that are equal or superior to
those of the Company or that achieve greater market acceptance than the
Company's offerings. Increased competition could also result in price
reductions, reduced margins or loss of market share, any of which could
materially adversely affect the Company's business, results of operations and
financial condition.
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The Web in general, and the Company specifically, also must compete with
traditional advertising media, such as print, radio and television, for a share
of advertisers' total advertising budgets. Therefore, to the extent that the Web
is not perceived as an effective advertising medium, advertisers may be
reluctant to devote a significant portion of their advertising budgets to Web-
based advertising. As a result, there can be no assurance that the Company will
be able to compete successfully against its current or future competitors or
that competition will not have a material adverse effect on the Company's
business, results of operations and financial condition. See "Risk
Factors -- Intense Competition."
INTELLECTUAL PROPERTY
The Company relies primarily on a combination of copyrights, trademarks,
trade secret laws, restrictions on disclosure and other methods to protect its
intellectual property and trade secrets. The Company also enters into
confidentiality agreements with its employees and consultants, and generally
controls access to and distribution of its documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use the Company's intellectual property or trade
secrets without authorization. In addition, there can be no assurance that
others will not independently develop substantially equivalent intellectual
property. There can be no assurance that the precautions taken by the Company
will prevent misappropriation or infringement of its technology. A failure by
the Company to protect its intellectual property in a meaningful manner could
have a material adverse effect on the Company's business, operating results and
financial condition. In addition, litigation may be necessary in the future to
enforce the Company's intellectual property rights, to protect the Company's
trade secrets or to determine the validity and scope of the proprietary rights
of others. Such litigation could result in substantial costs and diversion of
management and technical resources, either of which could have a material
adverse effect on the Company's business, operating results and financial
condition.
The Company will license the CBS logo, name and certain news content from
CBS pursuant to the Amended and Restated License Agreement. This license
agreement will be subject to termination in certain circumstances and also
involves a number of risks. See "Risk Factors -- Dependence on CBS
Relationship."
The Company also incorporates certain licensed third-party technology in
some of its services. In these license agreements, the licensors have generally
agreed to defend, indemnify and hold the Company harmless with respect to any
claim by a third party that the licensed software infringes any patent or other
proprietary right. There can be no assurance that the outcome of any litigation
between such licensors and a third party or between the Company and a third
party will not lead to royalty obligations of the Company for which the Company
is not indemnified or for which such indemnification is insufficient, or that
the Company will be able to obtain any additional license on commercially
reasonable terms if at all. In the future, the Company may seek to license
additional technology to incorporate in its services. There can be no assurance
that any third-party technology licenses that the Company may be required to
obtain in the future will be available to the Company on commercially reasonable
terms if at all. The loss of or inability to obtain or maintain any of these
technology licenses could result in delays in introduction of new services until
equivalent technology, if available, is identified, licensed and integrated,
which could have a material adverse effect on the Company's business, results of
operations and financial condition.
To the extent the Company licenses any of its content from third parties,
its exposure to copyright infringement actions may increase because the Company
must rely upon such third parties for information as to the origin and ownership
of such licensed content. The Company generally obtains representations as to
the origins and ownership of such licensed content and generally obtains
indemnification to cover any breach of any such representations; however, there
can be no assurance that such representations will be accurate or that such
indemnification will be sufficient to provide adequate compensation for any
breach of such representations.
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There can be no assurance that infringement or other claims will not be
asserted or prosecuted against the Company in the future or that any future
assertions or prosecutions will not materially adversely affect the Company's
business, results of operations and financial condition. Any such claims, with
or without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel or require the Company to
develop non-infringing technology or enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, if at all. In the event of a successful claim of
infringement against the Company and the failure or inability of the Company to
develop non-infringing technology or license the infringed or similar technology
on a timely basis, the Company's business, results of operations and financial
condition could be materially adversely affected. See "Risk
Factors -- Intellectual Property; Potential Litigation."
EMPLOYEES
As of June 30, 1998, there were 51 personnel dedicated full time to the
Company's business, nine of these personnel worked in product and content
development, 12 in sales and marketing, 23 in editorial and seven in
administration. Such personnel are currently on the payroll of DBC and are
provided to the Company pursuant to the current Services Agreement with DBC.
Effective as of the earlier of the effective time of this offering or January 1,
1999 such personnel will become direct employees of the Company. The Company has
never had a work stoppage and no personnel are represented under collective
bargaining agreements. The Company considers its relations with such personnel
to be good. The Company believes that its future success will depend in part on
its continued ability to attract, integrate, retain and motivate highly
qualified sales, technical, professional services and managerial personnel, and
upon the continued service of its senior management and key sales, professional
services and technical personnel. None of the Company's personnel is bound by an
employment agreement that prevents such person from terminating his or her
relationship at any time for any reason. Competition for qualified personnel is
intense, and there can be no assurance that the Company will be successful in
attracting, integrating, retaining and motivating a sufficient number of
qualified personnel to conduct its business in the future. See "Risk
Factors -- Dependence on Key Personnel; Need for Additional Personnel" and
"-- Management of Growth and Expansion; Brief Tenure of Management."
FACILITIES
The Company's principal administrative, sales, marketing and research
development facilities are located in approximately 11,000 square feet of office
space in San Francisco, California leased from CBS. See "Certain Transactions."
The Company believes that its current facilities will be adequate to meet its
needs for the foreseeable future. All of the Company's communications and
network infrastructure is hosted at DBC's facilities in the San Francisco Bay
Area, with a redundant site in Salt Lake City, Utah. Any system failure at these
locations could lead to interruptions, delays or cessations in service to users
of the CBS.MarketWatch.com Web site, which could have a material adverse effect
on the Company's business, results of operations and financial condition. See
"Risk Factors -- Dependence on DBC Relationship" and "-- System Risks."
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Larry S. Kramer......................... 48 President, Chief Executive Officer and
Director
J. Peter Bardwick....................... 39 Chief Financial Officer and Secretary
Thom Calandra........................... 42 Editor-in-Chief and Vice President of
News
William Bishop.......................... 29 Vice President of Business Development
Scot McLernon........................... 40 Vice President of Advertising Sales
Michele Chaboudy........................ 51 Vice President of Marketing
Derek Reisfield(2)...................... 35 Chairman of the Board
Alan Hirschfield(1)..................... 63 Director
Allan R. Tessler........................ 62 Director
Mark Imperiale(2)....................... 47 Director
Andrew Heyward(1)....................... 47 Director
Michael H. Jordan....................... 62 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Mr. Kramer has served as President, Chief Executive Officer and a member of
the Company's Board of Directors since October 1997. From February 1994 until
October 1997, Mr. Kramer served as Vice President for News and Sports of DBC. In
January 1991, Mr. Kramer co-founded DataSport Inc. ("DataSport"), a developer of
hand-held sports information monitors, and he served as DataSport's President
from its founding until February 1994, when DataSport was acquired by DBC. Prior
to founding DataSport, Mr. Kramer spent more than twenty years in journalism,
including serving as a financial reporter, Metro Editor and Assistant Managing
Editor of the Washington Post, and most recently serving as Executive Editor of
the San Francisco Examiner. He has been a recipient of National Press Club,
Gerald E. Leob and Associated Press Awards. During Mr. Kramer's tenures at the
Washington Post and the San Francisco Examiner, his staffs at each paper won a
Pulitzer Prize. Mr. Kramer serves as a member of the Board of Directors of
American Information Company, which conducts an auto buying service under the
name "Consumers Car Club" through its carclub.com Web site. Mr. Kramer holds a
B.S. degree in Journalism from Syracuse University and an M.B.A. degree from the
Harvard Business School.
Mr. Bardwick has served as Chief Financial Officer of the Company since
June 1998. From June 1996 until June 1998, Mr. Bardwick was Managing Director of
Star Media Capital, a Dallas, Texas-based, boutique investment bank serving the
media and broadcasting industries. From April 1993 until December 1995, Mr.
Bardwick served first as Chief Financial Officer and Executive Vice President,
and then as a consultant to The Beasley Broadcasting Group, a national radio
broadcasting company. Mr. Bardwick previously was also Vice President, Finance,
for Westwood One, Inc., a producer of nationally syndicated radio news and
entertainment programming. (Westwood One is currently affiliated with CBS, but
was not during Mr. Bardwick's employment). He was a Vice President in Corporate
Finance with Salomon Brothers Inc and was with Citicorp Investment Bank prior to
that time. Mr. Bardwick holds a B.A. degree in Political Science from the
University of Michigan and an M.B.A. degree from the University of Michigan,
Graduate School of Business.
Mr. Calandra has served as Editor-in-Chief and Vice President of News of
the Company since October 1997. He was Director of News with DBC from April 1996
until October 1997 and was a
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consultant to DBC from February 1996 until April 1996. From October 1995 until
January 1996, he served as Financial Editor with USA Today Online, the USA Today
newspaper's Web site. Mr. Calandra was employed by Bloomberg LP, a financial
news service, from January 1994 until September 1995, serving in its London
office and holding positions as the lead markets editor and European financial
columnist. From August 1988 until December 1993, he served as financial
columnist and business reporter with the San Francisco Examiner. Mr. Calandra
holds a B.A. degree in Arts from City University of New York and an M.A. degree
in English from the University of Arizona.
Mr. Bishop has served as Vice President of Business Development of the
Company since the Company's formation in October 1997. From August 1995 until
October 1997, Mr. Bishop was employed by DBC, most recently as Director of DBC
Online. From August 1993 until May 1995, Mr. Bishop attended the Johns Hopkins
University School of Advanced International Studies. Mr. Bishop holds a B.A.
degree in East Asian Studies from Middlebury College and an M.A. degree in
International Economics from John Hopkins University.
Mr. McLernon has served as Vice President of Advertising Sales of the
Company since January 1998. From March 1997 until December 1997, he served as
National Director of Advertising Sales with Quote.com, Inc., a financial news
Web site operator. Mr. McLernon was also the National Director of Internet
Strategy with Softbank Interactive Marketing, a subsidiary of Softbank Corp., a
distributor and wholesaler of software and peripheral equipment for PCs, from
March 1996 until March 1997. From June 1994 until March 1996, he served as
Account Manager with Interactive Marketing. From May 1993 until June 1994 he was
a sales consultant with Pacific Bell Interactive Services.
Ms. Chaboudy has served as Vice President of Marketing of the Company since
May 1998. From January to May 1998, she was a consultant to the Company. From
November 1997 until January 1998, she was an independent marketing consultant.
From March 1997 until November 1997, Ms. Chaboudy served as a Director,
responsible for marketing and business development, at the Wired News division
of Wired Digital Inc., a magazine publisher. From September 1996 until March
1997, she was a marketing consultant. From January 1996 until September 1996,
she served as the Senior Vice President for Marketing and Sales for World Pages
Inc., an Internet directory provider. From April 1995 until December 1995, she
was a Director of Urban & Associates, a consulting firm serving the newspaper
industry. Ms. Chaboudy served as Vice President of Marketing for the Houston
Post from May 1993 until April 1995. Ms. Chaboudy holds a B.A. degree in History
from DePauw University, an M.B.A. degree from Pepperdine University and a
Master's degree in Library & Information Sciences from Indiana University.
Mr. Reisfield has served as Chairman of the Board of the Company since
October 1997. Mr. Reisfield has served as President of the New Media Group of
CBS Broadcasting Inc. since April 1998 and has been a Vice President of Business
Development for CBS prior to that time since May 1997. From May 1996 until May
1997, he was Director of Strategic Management of Westinghouse Electric
Corporation, an industrial and media conglomerate. From June 1995 until April
1996, Mr. Reisfield held various positions at Mitchell Madison Group, LLC, a
management consulting firm, most recently as a Partner of the firm's Media and
Communications Practice. From August 1987 to June 1995, Mr. Reisfield held
various positions, most recently as a Senior Manager at McKinsey & Company, a
management consulting firm. Mr. Reisfield serves as a member of the Boards of
Directors of SportsLine USA, Inc. and Westinghouse Gulf LLC (United Arab
Emirates). Mr. Reisfield holds a B.A. degree in History from Wesleyan University
and an M.A. degree in Communications Management from the Annenberg School of
Communications at the University of Southern California.
Mr. Hirschfield has served as a member of the Company's Board of Directors
since March 1998 and as Co-Chief Executive Officer and Co-Chairman of the Board
of Directors of DBC since June 1992. Prior to joining DBC, Mr. Hirschfield
served as Managing Director of Schroder Wertheim & Co., an investment banking
firm, and as a consultant to the entertainment and media industry. He
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formerly served as Chief Executive Officer of Twentieth Century Fox Film Corp.
and Columbia Pictures Inc. from 1980 to 1985 and 1973 to 1978, respectively. Mr.
Hirschfield currently serves on the Boards of Directors of Cantel Industries,
Inc. and Chyron Corporation. Mr. Hirschfield holds a B.A. degree in Finance from
the University of Oklahoma and an M.B.A. degree from the Harvard Business
School.
Mr. Tessler has served as a member of the Company's Board of Directors
since August 1998 and as Co-Chief Executive Officer and Co-Chairman of the Board
of DBC since June 1992. Mr. Tessler also serves as the Chief Executive Officer
and Chairman of International Financial Group, Inc., a private merchant bank,
Chairman of Enhance Financial Services Group, Inc., a reinsurance and credit
enhancement insurance firm and Jackpot Enterprises, Inc., a company that
operates gaming machines in major chain stores in Nevada, and as a member of the
Boards of Directors of The Limited, Inc., Allis-Chalmers Corporation, and Rhone
Capital, LLC, and he is a Trustee of Cornell University. Mr. Tessler holds a
B.A. degree and a J.D. degree from Cornell University.
Mr. Imperiale has served as a member of the Company's Board of Directors
since October 1997. Mr. Imperiale was named President, Chief Operating Officer
and Chief Financial Officer of DBC in September 1996, having served with that
company as Executive Vice President and Chief Financial Officer since July 1994.
Mr. Imperiale was formerly Executive Vice President and Chief Financial Officer
of Ameriscribe Corporation ("Ameriscribe"), a facilities management company from
May 1992 through October 1993, when Ameriscribe was acquired by Pitney Bowes
Inc., and where he continued as a consultant through December 1993. Mr.
Imperiale spent the prior 10 years in the securities industry, with Prudential
Securities, Merrill Lynch, and First Boston Corporation. Mr. Imperiale, a
certified public accountant, worked with Arthur Young & Company from 1973 to
1983 in the public accounting field. Mr. Imperiale holds a B.A. degree and an
M.B.A. degree from Rutgers University.
Mr. Heyward has served as a member of the Company's Board of Directors
since March 1998. Mr. Heyward has served as President of CBS News since January
1996. From October 1994 until January 1996, he was Executive Producer of "CBS
Evening News with Dan Rather" and Vice President of CBS News. From February 1993
until October 1994, Mr. Heyward served as Executive Producer of the CBS News
magazine "Eye to Eye With Connie Chung." Prior to that time, he was responsible
for developing CBS's "48 Hours" series. Mr. Heyward holds a B.A. in History and
Literature from Harvard University.
Mr. Jordan has served as a member of the Company's Board of Directors since
June 1998. Mr. Jordan has served as the Chairman and Chief Executive Officer of
CBS Corporation since June 1993. Mr. Jordan currently serves on the Boards of
Directors of Aetna Inc. and Dell Computer Corporation. Mr. Jordan holds a B.S.
degree from Yale University and an M.S. degree from Princeton University.
The Company's Board of Directors (the "Board") will initially be comprised
of seven directors. Directors are elected by the stockholders of each annual
meeting of stockholders or until their successors are duly elected and
qualified. Six of the initial directors will be appointed pursuant to the
provisions of the Stockholders' Agreement described in "Certain Transactions."
Each of CBS and DBC will have the right to designate for election to the Board
three candidates, so long as it holds at least 30% of the outstanding voting
securities of the Company, two candidates, so long as it holds at least 20% but
less than 30% of the outstanding voting securities of the Company, or one
candidate, so long as it holds at least 1% of the outstanding voting securities
of the Company. If the size of the Board is increased, CBS and DBC will each
have the right to nominate a number of candidates to the Board based upon the
percentage of the Company's outstanding voting securities then held by them. So
long as the Amended and Restated License Agreement remains in effect, CBS will
also have the right to nominate at least one candidate to the Company's Board of
Directors, regardless of the number of voting securities of the Company held by
it. In addition, each of CBS and DBC will be obligated to vote the voting
securities of the Company held by it for the other
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party's designated candidates. See "Risk Factors -- Control by CBS and DBC." All
executive officers are elected by, and serve at the discretion of, the Board.
BOARD COMMITTEES
The Audit Committee has the responsibility to review audited financial
statements and accounting practices of the Company, and to consider and
recommend the employment of, and approve the fee arrangements with, independent
accountants for both audit functions and for advisory and other consulting
services. The Audit Committee is currently comprised of Messrs. Imperiale and
Reisfield. The Compensation Committee reviews and approves the compensation and
benefits for the Company's key executive officers, administers the Company's
employee benefit plans and makes recommendations to the Board regarding such
matters. The Compensation Committee is currently comprised of Messrs. Heyward
and Hirschfield.
DIRECTOR COMPENSATION
Directors are entitled to reimbursement of all reasonable out-of-pocket
expenses incurred in connection with their attendance at Board and Board
committee meetings. In October 1997, the Company granted to Mr. Kramer a
non-plan option to purchase a membership interest in the LLC, which will
represent an option to purchase 200,000 shares of its Common Stock, with an
exercise price per share of $4.00 after the Reorganization.
In September 1998, the Board adopted, subject to stockholder approval, the
1998 Directors Stock Option Plan (the "Directors Plan") and reserved a total of
50,000 shares of the Company's Common Stock for issuance thereunder. Members of
the Board who are not employees of the Company or any parent, subsidiary or
affiliate of the Company are eligible to participate in the Directors Plan.
Option grants under the Directors Plan are automatic and nondiscretionary, and
the exercise price of such options is 100% of the fair market value of the
Common Stock on the date of grant. Each eligible director who first becomes a
member of the Board on or after the effective date of the Registration Statement
of which this Prospectus forms a part (the "Effective Date") will be granted an
option to purchase 10,000 shares (an "Initial Grant") on the later of the
Effective Date or the date such director first becomes a director. At each
annual meeting of stockholders, each eligible director will automatically be
granted an additional option to purchase 2,000 shares if such director has
served continuously as a member of the Board since the date of such director's
Initial Grant or the Effective Date if such director was not eligible to receive
an Initial Grant. The term of such options is ten years, provided that they will
terminate seven months following the date the director ceases to be a director
of the Company or a consultant of the Company (12 months if the termination is
due to death or disability). All options granted under the Directors Plan will
vest as to 33 1/3% of the shares on each anniversary of the option grant date,
provided the optionee continues as a director of the Company or a consultant of
the Company. Additionally, immediately prior to the dissolution or liquidation
of the Company or a "change in control" transaction, the vesting of all options
granted pursuant to the Directors Plan will accelerate and the options will be
exercisable for a period of up to seven months following the transaction, after
which period any unexercised options will expire.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to this offering, the Company's Board did not have a compensation
committee and all compensation decisions were made by the full Board. Mr. Kramer
did not participate in Board deliberations with respect to his compensation.
Upon completion of this offering, the Compensation Committee will make all
compensation decisions. No interlocking relationship exists between the Board or
Compensation Committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past.
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EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
Pursuant to employment agreements between the Company and each of Messrs.
Kramer and Bardwick, the vesting of stock options will be accelerated upon
certain changes of control of the Company. See "Certain Transactions."
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation awarded to, earned by, or paid for services rendered to the
Predecessor Business and the Company in all capacities during the year ended
December 31, 1997, by the Company's Chief Executive Officer. No other executive
officer who held office at December 31, 1997 received total annual compensation
for services rendered to the Predecessor Business and the Company in excess of
$100,000 in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- --------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2) OPTIONS (#)(3)
--------------------------- ---------- ------- --------------- --------------
<S> <C> <C> <C> <C>
Larry S. Kramer........................ $ 167,000 $50,000 $ 4,879 200,000
President and Chief Executive Officer
</TABLE>
- ---------------
(1) Scot McLernon, who joined the Company in January 1998 as Vice President of
Advertising Sales, is compensated at an annual base salary of $95,000 and is
entitled to bonus compensation based on a percentage of the Company's
advertising and sponsorship sales. Michele Chaboudy, who joined the Company
in May 1998 as Vice President of Marketing, is compensated at an annual
salary of $100,000. Mr. Bardwick, who joined the Company in July 1998 as
Chief Financial Officer, is currently compensated at an annual rate of
$200,000. See "Certain Transactions."
(2) Represents health insurance premiums and contributions to the Data
Broadcasting Corporation 401(k) Profit Sharing Plan.
(3) All option grants were initially grants of options to purchase membership
interests in the LLC. The numbers in this column give effect to the
conversion of the LLC into a corporation, which will occur immediately prior
to the closing of this offering, as if such transaction had occurred prior
to January 1, 1997.
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<PAGE> 50
OPTION GRANTS IN FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to the Company's Chief Executive Officer during the year ended December
31, 1997. All option grants were initially grants of options to purchase
membership interests in the LLC. The numbers in this table give effect to the
Reorganization which will occur immediately prior to the closing of this
offering as if such transaction had occurred prior to January 1, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS(1) ANNUAL RATES OF
----------------------------------------------------------- STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES PERCENT OF TOTAL FOR OPTION
UNDERLYING OPTIONS GRANTED TO EXERCISE TERMS(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR(%)(3) PER SHARE(4) DATE 5% 10%
---- ---------- ------------------ ------------ ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Larry S. Kramer...... 200,000 44.8% $4.00 10/30/2007 $ $
</TABLE>
- ---------------
(1) Options granted in 1997 were granted outside of any plan. These options
become exercisable with respect to 33 1/3% of the shares subject to such
option on each anniversary of the grant date. These options have a term of
ten years. See "-- Employee Benefit Plans" for a description of the material
terms of these options. In addition to the option grants set forth in the
above table, (i) in January 1998, the Company granted to Mr. McLernon an
option to purchase 75,000 shares of Common Stock at an exercise price of
$8.00 per share, (ii) in May 1998, the Company granted to Ms. Chaboudy an
option to purchase 50,000 shares of Common Stock at an exercise price of
$11.00 per share and (iii) in July 1998, the Company granted to Mr. Bardwick
an option to purchase 100,000 shares of Common Stock at an exercise price of
$4.00 per share.
(2) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten-year term. These
numbers are calculated based on Securities and Exchange Commission
requirements and do not reflect the Company's projection or estimate of
future stock price growth. Potential realizable values are computed by (i)
multiplying the number of shares of Common Stock subject to a given option
by an assumed initial public offering price of $ per share, (ii)
assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the entire
ten-year term of the option and (iii) subtracting from that result the
aggregate option exercise price.
(3) The Company granted options to purchase an aggregate of 446,250 shares of
Common Stock to all employees during 1997.
(4) Options were generally granted at an exercise price equal to the fair market
value of the Company's Common Stock, as determined by the Board. In
determining the fair market value of the Company's Common Stock on each
grant date, the Board considered, among other things, the value of assets
contributed to the Company from DBC, the Company's absolute and relative
levels of revenues and other operating results, the state of the Company's
Web site development, increases in operating expenses, the absence of a
public trading market for the Company's securities, the intensely
competitive nature of the Company's market and the appreciation of stock
values of a number of generally comparable Internet companies. See
"-- Director Compensation," "-- Employment Contracts and Change of Control
Arrangements" and "-- Employee Benefit Plans" for a description of the
material terms of these options.
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<PAGE> 51
FISCAL YEAR-END OPTION VALUES
The following table sets forth for each of the Named Executive Officers the
number and year-end value of exercisable and unexercisable options for the year
ended December 31, 1997. All option grants were initially grants of options to
purchase membership interests in the LLC. The numbers in this table give effect
to the Reorganization which will occur immediately prior to the closing of this
offering as if such transaction had occurred during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997(1) AT DECEMBER 31, 1997(2)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry S. Kramer.................. -- 200,000 -- $
</TABLE>
- ---------------
(1) Options shown are subject to vesting as described in footnote (1) to the
option grant table above. See "-- Employee Benefit Plans" for a description
of the material terms of these options.
(2) Based on an assumed initial public offering price of $ per share, net of
exercise price, multiplied by the number of shares issuable upon exercise of
such option.
No options were exercised during 1997 by the Chief Executive Officer or any
other executive officer of the Company. No compensation intended to serve as
incentive for performance to occur over a period longer than one year was paid
pursuant to a long-term incentive plan during 1997 to the Chief Executive
Officer or any other executive officer of the Company. The Company does not have
any defined benefit or actuarial plan under which benefits are determined
primarily by final compensation and years of service with the Chief Executive
Officer or any other executive officer of the Company.
EMPLOYEE BENEFIT PLANS
Since October 1997, the Company issued options to purchase membership
interests in the LLC. In connection with the Reorganization, outstanding options
will be assumed by the Company and will represent the right to purchase shares
of Common Stock rather than membership interests of the LLC. Each option will be
converted into an option to purchase Common Stock based upon a ratio of 1,000
shares of Common Stock for each 0.01% membership interest. Shares covered by any
outstanding option that expires unexercised become available again for grant
under the 1998 Equity Incentive Plan described below. As of September 30, 1998,
options to purchase 875,750 shares of Common Stock were outstanding with a
weighted average exercise price of $6.23 per share (assuming the Reorganization
occurred as of such date). These options are subject to terms substantially
similar to those described below with respect to options to be granted under the
1998 Equity Incentive Plan described below.
1998 Equity Incentive Plan. In September 1998, the Board adopted, subject
to stockholder approval, the 1998 Equity Incentive Plan (the "Equity Incentive
Plan"). The total number of shares of Common Stock reserved for issuance
thereunder is 574,250. The Equity Incentive Plan will become effective on the
Effective Date. Shares that: (a) are subject to issuance upon exercise of an
option granted prior to adoption of the Equity Incentive Plan or under the
Equity Incentive Plan that cease to be subject to such option for any reason
other than exercise of such option; (b) have been issued pursuant to the
exercise of an option granted under the Equity Incentive Plan with respect to
which the Company's right of repurchase has not lapsed and are subsequently
repurchased by the Company; (c) are subject to an award granted pursuant to
restricted stock purchase agreements under the Equity Incentive Plan that are
forfeited or are repurchased by the Company at the original issue price; or (d)
are subject to stock bonuses granted under the Equity Incentive Plan that
otherwise terminate without shares being issued, will again be available for
grant and issuance under the Equity Incentive Plan. The Equity Incentive Plan
will terminate in September, 2008, unless sooner terminated in accordance with
the terms of the Equity Incentive Plan. The
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<PAGE> 52
Equity Incentive Plan authorizes the award of options, restricted stock awards
and stock bonuses (each an "Award"). No person will be eligible to receive more
than 400,000 shares in any calendar year pursuant to Awards under the Equity
Incentive Plan other than a new employee of the Company who will be eligible to
receive no more than 500,000 shares in the calendar year in which such employee
commences employment. The Equity Incentive Plan will be administered by the
Compensation Committee. The Compensation Committee has the authority to construe
and interpret the Equity Incentive Plan and any agreement made thereunder, grant
Awards and make all other determinations necessary or advisable for the
administration of the Equity Incentive Plan.
The Equity Incentive Plan provides for the grant of both incentive stock
options ("ISOs") that qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and nonqualified stock options ("NQSOs"). ISOs
may be granted only to employees of the Company or of a parent or subsidiary of
the Company. NQSOs (and all other Awards other than ISOs) may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any parent or subsidiary of the Company, provided
such consultants, independent contractors and advisors render bona fide services
not in connection with the offer and sale of securities in a capital-raising
transaction ("Eligible Service Providers"). The exercise price of ISOs must be
at least equal to the fair market value of the Company's Common Stock on the
date of grant. The exercise price of NQSOs must be at least equal to 85% of the
fair market value of the Company's Common Stock on the date of grant. The
maximum term of options granted under the Equity Incentive Plan is ten years.
Awards granted under the Equity Incentive Plan may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of the optionee only by the optionee (unless
otherwise determined by the Compensation Committee and set forth in the Award
agreement with respect to Awards that are not ISOs). Options granted under the
Equity Incentive Plan generally expire three months after the termination of the
optionee's service to the Company or a parent or subsidiary of the Company,
except in the case of death or disability, in which case the options generally
may be exercised up to 12 months following the date of death or termination of
service. Options will generally terminate immediately upon termination for
cause. In the event of the Company's dissolution or liquidation or a "change in
control" transaction, outstanding Awards may be assumed or substituted by the
successor corporation (if any). If a successor corporation (if any) does not
assume or substitute the Awards, the Compensation Committee has the discretion
to accelerate the vesting of the Awards prior to the effectiveness of the
transaction.
401(k) Plan. The Company participates in the Data Broadcasting Corporation
401(k) Profit Sharing Plan (the "401(k) Plan"), a defined contribution plan
intended to qualify under Section 401 of the Internal Revenue Code of 1986, as
amended. All personnel who have completed 6 consecutive months of service with
the Company are eligible to participate and may enter the 401(k) Plan as of the
first day of January, April, July or October ("Participants"). Participants may
make pre-tax contributions to the 401(k) Plan of up to 25% of their eligible
earnings, subject to a statutorily prescribed annual limit. The Company may make
matching contributions on a discretionary basis to the 401(k) Plan. Each
Participant is fully vested in his or her contributions, any Company matching
contributions, and the investment earnings thereon. Contributions by the
participants or the Company to the 401(k) Plan, and the income earned on such
contributions, are generally not taxable to the participants until withdrawn.
Contributions by the Company, if any, are generally deductible by the Company
when made. Participant and Company contributions are held in trust as required
by law. Individual Participants may direct the trustee to invest their accounts
in authorized investment alternatives. The Company had made no matching
contributions to the 401(k) Plan as of September 30, 1998. The Company intends
to implement its own 401(k) Plan after the consummation of this offering.
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<PAGE> 53
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
As permitted by the Delaware General Corporation Law (the "DGCL"), the
Company's Amended and Restated Certificate of Incorporation, includes a
provision that eliminates the personal liability of its directors for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under section 174 of the DGCL
(regarding unlawful dividends and stock purchases) or (iv) for any transaction
from which the director derived an improper personal benefit.
As permitted by the DGCL, the Company's Bylaws provide that (i) the Company
is required to indemnify its directors and officers to the fullest extent
permitted by the DGCL, subject to certain very limited exceptions, (ii) the
Company may indemnify its other employees and agents to the extent that it
indemnifies its officers and directors, unless otherwise required by law, its
Amended and Restated Certificate of Incorporation, its Bylaws or agreements,
(iii) the Company is required to advance expenses, as incurred, to its directors
and executive officers in connection with a legal proceeding to the fullest
extent permitted by the DGCL, subject to certain very limited exceptions and
(iv) the rights conferred in the Bylaws are not exclusive. In addition, the
Company intends to obtain directors' and officers' insurance providing
indemnification for certain of the Company's directors, officers and employees
for certain liabilities. The Company believes that these indemnification
provisions and agreements are necessary to attract and retain qualified
directors and officers.
Prior to the completion of this offering, the Company intends to enter into
Indemnification Agreements with each of its current directors and executive
officers to give such directors and officers additional contractual assurances
regarding the scope of the indemnification set forth in the Company's Amended
and Restated Certificate of Incorporation and Bylaws and to provide additional
procedural protections. In addition, the Company intends to obtain directors'
and officers' insurance providing indemnification for certain of the Company's
directors, officers and employees for certain liabilities. The Company believes
that these indemnification provisions and agreements are necessary to attract
and retain qualified directors and officers.
The limited liability and indemnification provisions in the Company's
Amended and Restated Certificate of Incorporation and Bylaws may discourage
stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty (including breaches resulting from grossly negligent conduct) and
may have the effect of reducing the likelihood or derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit the Company and it stockholders. Furthermore, a stockholder's
investment in the Company may be adversely affected to the extent the Company
pays the costs of settlement and damage awards against directors and officers of
the Company pursuant to the indemnification provisions in the Company's Amended
and Restated Certificate in Incorporation and Bylaws.
At present, there is no pending litigation or proceeding involving a
director, officer or employee of the Company regarding which indemnification is
sought, nor is the Company aware of any threatened litigation that may result in
claims for indemnification.
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<PAGE> 54
CERTAIN TRANSACTIONS
Since the inception of the Predecessor Business, there has not been, nor is
there currently proposed, any transaction or series of similar transactions to
which the Company or any of its subsidiaries was or is to be a party in which
the amount involved exceeded or will exceed $60,000 and in which any director,
executive officer, holder of more than 5% of the Common Stock of the Company or
any member of the immediate family of any of the foregoing persons had or will
have a direct or indirect material interest other than (i) compensation
agreements and other arrangements, which are described where required in
"Management," and (ii) the transactions described below.
The following summary description of certain agreements does not purport to
be complete and is subject to, and qualified in its entirety by, the provisions
of these agreements or forms of agreements which are included as exhibits to the
Registration Statement of which this Prospectus forms a part.
FORMATION TRANSACTIONS
On October 29, 1997, CBS and DBC entered into a limited liability company
agreement and certain related agreements relating to the formation of the LLC.
Limited Liability Company Agreement. CBS and DBC entered into a limited
liability company agreement (the "Limited Liability Company Agreement"). Each of
CBS and DBC received a 50% membership interest in the LLC in exchange for
entering into the Limited Liability Company Agreement and for their capital
contributions under the Contribution Agreement described below. DBC also agreed
to loan the LLC until October 2000, up to $5.0 million at an annual interest
rate equal to The Chase Manhattan National Bank's prime rate plus two percent.
As of June 30, 1998, the Company had borrowed $1.5 million from DBC. Interest
payments to DBC during the six months ended June 30, 1998 were $21,000. The
Limited Liability Company Agreement also contained provisions relating to, among
other things, the management of the LLC, allocations of profits and losses,
transfer restrictions and dispute resolution and covenants not to compete.
Contribution Agreement. Contemporaneously with the Limited Liability
Company Agreement, CBS, DBC and the LLC also entered into a Contribution
Agreement (the "Contribution Agreement"). Pursuant to the Contribution
Agreement, CBS agreed to provide the LLC with $50 million aggregate rate card
amount advertising and promotion (the "Advertising Commitment") over a period of
five years over the CBS Television Network, CBS owned and operated television
and radio stations or on CBS Internet sites, provided that no more than 5% of
the total advertising could be on CBS Internet sites. This commitment will be
reduced to $30 million pursuant to the Stockholders' Agreement. CBS exercised,
and still holds, substantial control over the allocation of the Advertising
Commitment. DBC contributed to the LLC all of its right, title and interest in
certain assets relating to Online/News business as well as $1.0 million in cash.
DBC also agreed to contribute an additional $1.0 million to the LLC in October
1998, which obligation will survive the conversion of the Company from a limited
liability company into a corporation.
Original Services Agreement. Contemporaneously with the Limited Liability
Company Agreement, DBC and the LLC also entered into a Services Agreement (the
"Original Services Agreement") under which DBC provided the Company with a
variety of support and hosting services. Payments by the Company to DBC for
these Services were $70,000 and $340,000 in 1997 and the six months ended June
30, 1998, respectively. DBC also agreed to pay MarketWatch.com a per subscriber
fee for users of DBC's PC-based and Quotrek subscribers of real-time quotes (the
"Subscriber Payment"). Subscriber Payments by DBC to the Company under the
Original Services Agreement were $210,000 and $627,000 in 1997 and the six
months ended June 30, 1998, respectively. From October 1997, through May 1998,
DBC also provided the Company with office space for its executive offices for no
charge. DBC also pays the Company a fee based upon net revenues from
subscriptions to MarketWatch RT and MarketWatch LIVE (the "Real-Time Fees"). DBC
paid the Company $16,000 and $77,000 in 1997 and the six months ended June 30,
1998,
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<PAGE> 55
respectively, as Real-Time Fees. This Agreement will be superseded and replaced
by the Amended and Restated Services Agreement described below.
Original License Agreement. Contemporaneously with the Limited Liability
Company Agreement, CBS and the LLC also entered into a License Agreement (the
"Original License Agreement") under which CBS granted the LLC a non-exclusive
license to utilize the CBS marks "CBS(R)" and the CBS "eye" design for use in
connection with the operation of the MarketWatch.com site. CBS also granted the
LLC a license to use current CBS Television News content related to business and
financial news on the MarketWatch.com site. The LLC paid CBS a royalty based on
amounts received for advertising on the CBS.MarketWatch.com site. There were no
payments to CBS under the Original License Agreement in 1997 and the six months
ended June 30, 1998, respectively. This agreement will be superseded and
replaced by the Amended and Restated License Agreement described below.
REORGANIZATION TRANSACTIONS
Conversion of LLC. Immediately prior to the closing of this offering, the
Company will convert its business form to a corporation. The Reorganization will
be effected by merging the LLC into the Company. In connection with the
Reorganization, the Limited Liability Company Agreement will terminate (except
for certain covenants that, by their terms, require performance after the
termination of such agreement) and each of DBC and CBS will receive 4,500,000
shares of Common Stock in exchange for their membership interests in the LLC.
Amended and Restated License Agreement. Prior to the closing of this
offering, CBS and the Company will enter into an Amended and Restated License
Agreement which will supersede and replace the Original License Agreement. Under
the Amended and Restated License Agreement, the Company will pay CBS: (i) during
1998, (A) 8% of Gross Revenues in excess of $1.0 million and up to and including
$41.0 million and (B) 6% of Gross Revenues in excess of $41.0 million, (ii)
during 1999, (A) 8% of Gross Revenues in excess of $500,000 and up to and
including $40.5 million and (B) 6% of Gross Revenues in excess of $40.5 million,
and (iii) in subsequent years through the termination of the Amended and
Restated License Agreement on October 29, 2002, (A) 8% of Gross Revenues up to
and including $40.0 million and (B) 6% of Gross Revenues in excess of $40.0
million. Gross Revenues are defined in that agreement as gross operating
revenues of the Company, its subsidiaries and, to the extent of dividends or
other distributions received by the Company or its subsidiaries, any entity in
which the Company or its subsidiaries have an interest that are derived from an
Internet service or Web site that (i) provides information or services of a
financial nature or (ii) uses the CBS trademarks, excluding certain revenues
attributable to DBC under the Amended and Restated Services Agreement, certain
advertising revenue and certain advertising sales commissions.
Under the Amended and Restated License Agreement, CBS will retain
significant editorial control over the use and presentation of CBS television
news content and the CBS logo. For example, the Company must conform to CBS's
guidelines for the use of its trademarks. CBS has the right to approve all
materials, such as marketing materials, which include any CBS trademarks and
also has control over the visual and editorial presentation of its television
news content on the CBS.MarketWatch.com Web site. As a result of these
provisions, CBS will have the ability to prevent the Company from displaying
certain types of content on the CBS.MarketWatch.com Web site and from producing
materials, such as marketing materials, which CBS does not approve. This control
by CBS could prevent the Company from engaging in desired marketing activities
or from being perceived as an independent news organization, either of which
could adversely affect the Company's brand awareness and brand name.
The terms of the Amended and Restated License Agreement will also provide
that CBS may terminate the Company's right to use the CBS name, logo and news
content in the event that a competitor of CBS directly or indirectly
beneficially owns 15% or more of the Company's outstanding Common Stock or
voting power of the Company or if the Company issues to a CBS competitor or
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<PAGE> 56
actively participates in the acquisition by a CBS competitor, in any one
transaction or any series of transactions, a number of voting securities, such
that after such issuance(s), such CBS competitor beneficially owns 9% or more of
the Company's voting securities. Notwithstanding the foregoing, the mere
acquisition by a CBS competitor of an interest in DBC that causes a DBC Change
of Control shall not be deemed to constitute the acquisition of an ownership
interest in the Company in the absence of other facts demonstrating ownership of
an interest in the Company. The Amended and Restated License Agreement will also
be subject to termination if the Company (i) breaches a material term or
condition of the Amended and Restated License Agreement, (ii) becomes insolvent
or subject to bankruptcy or similar proceedings, (iii) or discontinues using the
MarketWatch mark and does not establish a substitute mark acceptable to CBS in
its sole discretion. The Amended and Restated License Agreement will expire on
October 29, 2002.
Under the terms of the Amended and Restated License Agreement, CBS will not
be permitted to license or authorize another to license the use of the CBS logo
or name to others in connection with promoting any other Internet Service or Web
site in the U.S. that has as its primary function and its principal theme and
format the delivering of comprehensive real-time or delayed stock market
quotations and financial news in the English language to consumers, subject to
certain exceptions. However, a Web site or Internet service that delivers
general news, sports or entertainment, with a financial news segment or portion
included, will not be considered to have as its primary function or as its
principal theme and format the delivering of comprehensive real-time or delayed
stock market quotations and financial news.
If CBS were to license its name and logo to another Web site or Internet
Service that delivers general news, sports or entertainment and that also
delivers financial news, such other Web site or service could be competitive
with the Company's Web site. Also, CBS will not be prohibited from licensing its
news content to, or investing in, another Web site or Internet service,
regardless of the theme of that Web site or Internet service. See "Risk
Factors -- Potential Competition from CBS and DBC."
Amended and Restated Services Agreement. Prior to the closing of this
offering, DBC and the Company will enter into an Amended and Restated Services
Agreement (the "Amended and Restated Services Agreement") which will supersede
and replace the Original Services Agreement.
Under the Amended and Restated Services Agreement, DBC will, upon the
Company's request, (i) provide the Company with any employees needed to operate
the Company's business, (ii) handle billing and collections for the Company's
subscription products, (iii) provide computer programming and engineering
services, (iv) provide delayed commodities and stock data feeds as well as
certain other data feeds free of charge and (v) provide communications Web site
hosting services pursuant to certain performance standards, all at DBC's
out-of-pocket cost. DBC will also continue to pay the Company the Subscriber Fee
and the Real Time Fees. DBC will also grant the Company a license to use the
data and information feeds it provides to the Company and will agree to certain
network performance and hosting standards. The term of the Amended and Restated
Services Agreement will expire on October 29, 2002.
Credit Agreement. Prior to the closing of this offering, the Company and
DBC will enter into a Revolving Credit Agreement (the "Credit Agreement") in
order to evidence DBC's loan obligation under the Limited Liability Company
Agreement. Under the Credit Agreement, DBC will be obligated to loan the Company
up to $5.0 million through October 2000. Borrowings under the Credit Agreement
will be unsecured and bear interest at a rate equal to The Chase Manhattan
National Bank's prime rate plus two percent per annum and mature on October 29,
2000. The Company's previous borrowings from DBC will be included as
indebtedness outstanding under the Credit Agreement. As of June 30, 1998, the
Company had outstanding indebtedness to DBC of $1.5 million.
Stockholders' Agreement. Prior to the closing of this offering, DBC, CBS
and the Company will enter into a Stockholders' Agreement (the "Stockholders'
Agreement"). The parties will agree to
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reduce the Advertising Commitment provided for in the Contribution Agreement to
an aggregate rate card amount of $30 million during the period from October 29,
1997 through October 29, 2002 in return for a reduction in the percentage
royalty to be paid to CBS under the License Agreement. As of June 30, 1998, CBS
had delivered $3.4 million rate card amount of advertising and promotion to the
Company. This Advertising Commitment is subject to termination upon termination
of the Amended and Restated License Agreement, in which event, CBS shall make a
termination payment to the Company in the amount of $500,000 per month for each
full calendar month remaining from the termination through October 2002. The
Stockholders' Agreement will also provide that each of CBS and DBC will be
entitled to nominate up to three members to the Company's Board of Directors, so
long as it holds at 30%, two, so long as it holds at least 20% but less than
30%, or one, so long as it holds at least 1%, of the Company's outstanding
voting securities. So long as the Amended and Restated License Agreement is in
effect, CBS shall have the right to appoint at least one member to the Company's
Board of Directors, regardless of its percentage ownership of the Company's
Common Stock. If the size of the Board of Directors is increased, CBS and DBC
will each have the right to nominate a number of candidates to the Board of
Directors based upon the percentage of the Company's outstanding voting
securities then held by them.
Pursuant to the Stockholders' Agreement, each of CBS and DBC will have a
right of first refusal in the event that either party desires to sell any
securities of the Company held by it to a third party. In addition, each of CBS
and DBC will have the right to purchase from the Company additional shares of
Common Stock, other voting securities of the Company or securities convertible
into or exchangeable for such securities ("New Securities"), in the event the
Company proposes to issue New Securities in an amount, subject to certain
limitations, necessary to maintain its then current percentage ownership in the
Company, not to exceed the party's percentage ownership interest immediately
after the closing of this offering. See "Description of Capital Stock -- Rights
of First Refusal."
Under the Stockholders' Agreement DBC will agree, inter alia, that until
October 29, 2002 it will not, subject to certain exceptions, (i) authorize or
permit another to sell advertising on any other Web site that has as its primary
function and its principal theme and format the delivering of comprehensive
real-time or delayed stock quotation and financial news in the English language
to consumers or (ii) use the Internet to sell real-time snap-quotes to
individual subscribers or customers who pay a fee for such information.
In addition, under the Stockholders' Agreement, the Company will agree
through October 29, 2002 or, at such earlier time (i) as the Amended and
Restated Services Agreement has terminated, (ii) upon the occurrence of a DBC
Change of Control, or (iii) at such time as DBC shall hold less than 10% of the
Company's then-outstanding Common Stock, it will not, except through DBC, sell
any product or service that offers streaming real-time stock price quotes.
Registration Rights Agreement. CBS and DBC will have certain registration
rights with respect to their shares of Common Stock. See "Description of Capital
Stock -- Registration Rights."
OTHER RELATIONSHIPS WITH DBC
Pursuant to an August 1998 Insertion Order Form, DBC has agreed to purchase
approximately $225,000 of advertising from the Company in 1998 and approximately
$500,000 of advertising from the Company in each of 1999 and 2000. This
commitment may be terminated by DBC on 30 days' notice.
EMPLOYMENT RELATED AGREEMENTS
In October 1997, Mr. Kramer was granted an option to purchase 200,000
shares of Common Stock at an exercise price of $4.00 per share. The Company also
entered into an employment agreement with Mr. Kramer effective July 1, 1998. Mr.
Kramer's employment agreement provides for a base salary of $210,000 from the
effective date through June 30, 1999, $225,000 through June 30,
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2000, and $240,000 through June 30, 2001. Mr. Kramer is also eligible to receive
an annual bonus of up to 50% of his annual base salary. The employment agreement
has a term of three years. In the event Mr. Kramer's employment is terminated by
the Company without cause (as defined in the employment agreement) or if Mr.
Kramer resigns as a result of the constructive termination of his employment
(defined in the employment agreement as (i) a material change in Mr. Kramer's
position causing it to be of materially less stature or responsibility, (ii) a
reduction in his salary of greater than 10% without his written consent or (iii)
the relocation of his principal place of employment outside of the San Francisco
Bay Area), Mr. Kramer will be entitled to receive as severance, an amount equal
to his then current base salary, payable in twelve monthly installments. In
addition, Mr. Kramer's stock option (as described below) will vest as to
one-third of the shares of Common Stock subject to the option. In the event Mr.
Kramer's employment is terminated without cause or constructively terminated
within six months of a Change of Control (defined in the employment agreement to
include (i) the sale of substantially all of the Company's assets to an entity
other than CBS or DBC or (ii) any transaction or series of transactions that
results in any person other than CBS, DBC or other entities affiliated with the
Company, owning more than 50% of the voting power of the Company), Mr. Kramer
will be entitled to receive a lump sum payment in an amount equal to his current
base salary plus his target bonus for the then current year, which lump sum
would equal $315,000 based on Mr. Kramer's current base salary. In addition, in
such an event, Mr. Kramer's stock option will vest as to an additional one-third
of the shares of Common Stock originally subject to the option.
In July 1998, Mr. Bardwick was granted an option to purchase 100,000 shares
of Common Stock at an exercise price of $4.00 per share. The Company also
entered into an employment agreement with Mr. Bardwick effective July 1, 1998.
Mr. Bardwick's employment agreement provides for a base salary of $200,000 from
the effective date through June 30, 1999, $210,000 through June 30, 2000, and
$225,000 through June 30, 2001. Mr. Bardwick is also eligible to receive an
annual bonus of up to 50% of his annual base salary. The employment agreement
has a term of three years. In the event Mr. Bardwick's employment is terminated
by the Company without cause (as defined in the employment agreement) or if Mr.
Bardwick resigns as a result of the constructive termination of his employment
(defined in the employment agreement as (i) a material change in Mr. Bardwick's
position causing it to be of materially less stature or responsibility, (ii) a
reduction in his salary of greater than 10% without his written consent or (iii)
the relocation of his principal place of employment outside of the San Francisco
Bay Area), Mr. Bardwick will be entitled to receive as severance, an amount
equal to his then current base salary, payable in twelve monthly installments.
In addition, Mr. Bardwick's stock option (as described below) will vest as to an
additional one-third of the shares of Common Stock subject to the option. In the
event Mr. Bardwick's employment is terminated without cause or constructively
terminated within six months of a Change of Control (defined in the employment
agreement to include (i) the sale of substantially all of the Company's assets
to an entity other than CBS or DBC or (ii) any transaction or series of
transactions that results in any person other than CBS, DBC or other entities
affiliated with the Company, owning more than 50% of the voting power of the
Company), Mr. Bardwick will be entitled to receive a lump sum payment in an
amount equal to his current base salary plus his target bonus for the then
current year, which lump sum would equal $300,000 based on Mr. Bardwick's
current base salary. In addition, in such an event, Mr. Bardwick's stock option
will vest as to an additional one-third of the shares of Common Stock originally
subject to the option.
Ms. Chaboudy's employment offer letter of April 23, 1998 provides for an
initial annual base salary of $100,000. Ms. Chaboudy was also granted an option
to purchase 50,000 shares of Common Stock. This option vests as to one-third of
the shares subject to the option on each anniversary of Ms. Chaboudy's
employment start date.
Mr. McLernon's employment offer letter dated December 30, 1997 provided for
an initial base salary of $95,000. In addition, Mr. McLernon is entitled to
receive a commission in 1998 and 1999 in the amount of 3% of the Company's
advertising and sponsorship sales
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and the Company has agreed to reimburse Mr. McLernon's expenses, up to $15,000
per year, for working in San Francisco, California. The Company and Mr. McLernon
agreed to renegotiate his compensation terms at the end of 1999 based on market
conditions and the Company's operating projections. Mr. McLernon was also
granted an option to purchase 75,000 shares of Common Stock at a purchase price
of $8.00. This option vests as to one-third of the shares subject to the option
on each anniversary of Mr. McLernon's employment start date.
Mr. Calandra, the Company's Vice President of News, receives an annual base
salary of $100,000 and in October 1997, received a grant of an option to
purchase 75,000 shares of Common Stock at a purchase price of $4.00 per share.
This option vests as to one-third of the shares subject to the option on each
anniversary of its date of grant.
OFFICE LEASE
Since April 1, 1998, the Company occupied space in a CBS facility to house
its headquarters in San Francisco, California. The Company has paid CBS $19,000
for this space prior to September 1, 1998. On August 27, 1998, the Company and
CBS entered into a lease with respect to 11,500 square feet of space at the same
facility and this lease will expire in March 2003. The Company is obligated to
pay monthly rent of approximately $26,000 through the expiration date. The
Company is also obligated to pay its proportionate share of all electricity,
heating, ventilation and air conditioning costs for the leased premises.
The Company believes that the terms of each of the transactions described
above, taken as a whole, were no less favorable than the Company could have
obtained from unaffiliated third parties. All future transactions between the
Company and its officers, directors and principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 30, 1998 and
as adjusted to reflect the sale of the shares of Common Stock offered hereby by:
(i) each person who is known by the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each director of the Company, (iii) the
Company's Chief Executive Officer and (iv) all executive officers and directors
of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF COMMON STOCK
SHARES BENEFICIALLY OWNED(1)
BENEFICIALLY -------------------------------------
NAME OF BENEFICIAL OWNER OWNED BEFORE OFFERING AFTER OFFERING(2)
------------------------ ------------ --------------- ------------------
<S> <C> <C> <C>
CBS Broadcasting Inc.(3)..................... 4,500,000 50.0% %
Data Broadcasting Corporation(4)............. 4,500,000 50.0
Larry S. Kramer(5)........................... 66,667 * *
Derek Reisfield.............................. -- * *
Andrew Heyward............................... -- * *
Michael H. Jordan............................ -- * *
Alan Hirschfield............................. -- * *
Allan R. Tessler............................. -- * *
Mark Imperiale............................... -- * *
All executive officers and directors as a
group (12 persons)(6)...................... 116,667 1.3
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Percentage ownership is based on 9,000,000 shares outstanding as of
September 30, 1998 and also assumes that the conversion of the Company from
a limited liability company into a corporation (which is to occur
immediately prior to the Closing of this Offering) had occurred as of such
date. Shares of Common Stock subject to options currently exercisable or
exercisable within 60 days of September 30, 1998 are deemed outstanding for
the purpose of computing the percentage ownership of the person holding such
options but are not deemed outstanding for computing the percentage
ownership of any other person. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power
with respect to all shares beneficially owned, subject to community property
laws where applicable.
(2) Assumes the Underwriters' over-allotment option is not exercised.
(3) The address for CBS is 51 West 52nd Street, New York, New York 10019.
(4) The address for DBC is 3955 Point Eden Way, Hayward, California 94545.
(5) Represents 66,667 shares issuable upon exercise of options exercisable
within 60 days of September 30, 1998.
(6) Represents 116,667 shares issuable upon exercise of options exercisable
within 60 days of September 30, 1998.
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DESCRIPTION OF CAPITAL STOCK
Immediately following the closing of this offering, the authorized capital
stock of the Company will consist of 30,000,000 shares of Common Stock, $0.01
par value per share, and 5,000,000 shares of Preferred Stock, $0.01 par value
per share. As of September 30, 1998, assuming the conversion of the Company into
a corporation, and the simultaneous conversion of limited liability company
membership interests into shares of Common Stock, there were outstanding
9,000,000 shares of Common Stock, each with a par value of $0.01, held of record
by two stockholders, and outstanding options to purchase 875,750 shares of
Common Stock.
The following summary description of the Company's capital stock and
certain provisions of the Company's Amended and Restated Certificate of
Incorporation, Bylaws, the Stockholders' Agreement and the Registration Rights
Agreement does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Amended and Restated
Certificate of Incorporation, Bylaws, the Stockholders' Agreement and the
Registration Rights Agreement which are included as exhibits to the Registration
Statement of which this Prospectus forms a part, and by the provisions of
applicable law.
COMMON STOCK
Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, the holders of outstanding shares of Common Stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board from time to time may determine. Holders
of Common Stock are entitled to one vote for each share held on all matters
submitted to a vote of shareholders. Cumulative voting for the election of
directors is not authorized by the Company's Certificate of Incorporation, which
means that the holders of a majority of the shares voted can elect all of the
directors then standing for election. The Common Stock is not entitled to
preemptive rights and is not subject to conversion or redemption. Upon
liquidation, dissolution or winding-up of the Company, the assets legally
available for distribution to stockholders are distributable ratably among the
holders of the Common Stock and any participating Preferred Stock outstanding at
that time after payment of liquidation preferences, if any, on any outstanding
Preferred Stock and payment of other claims of creditors. Each outstanding share
of Common Stock is, and all shares of Common Stock to be outstanding upon
completion of this offering will be upon payment therefor, duly and validly
issued, fully paid and nonassessable.
PREFERRED STOCK
The Board is authorized, subject to any limitations prescribed by Delaware
law, to provide for the issuance of Preferred Stock in one or more series, to
establish from time to time the number of shares to be included in each such
series, to fix the rights, preferences and privileges of the shares of each
wholly unissued series and any qualifications, limitations or restrictions
thereon, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding), without
any further vote or action by the stockholders. The Board may authorize the
issuance of Preferred Stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes could, among
other things, adversely affect the voting power of holders of Common Stock and,
under certain circumstances, have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no current plan
to issue any shares of Preferred Stock.
REGISTRATION RIGHTS
Pursuant to a Registration Rights Agreement to be entered into prior to the
closing of this offering between the Company, CBS and DBC (the "Registration
Rights Agreement"), CBS and DBC will have certain registration rights including
certain "demand" registration rights, with respect to
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the securities of the Company held by them, their affiliates and their permitted
transferees (the "Registrable Securities") at any time after 180 days following
the date of this Prospectus. Under the Registration Rights Agreement, each of
these companies may demand that the Company file a registration statement under
the Securities Act covering all or a portion of the Registrable Securities of
CBS, DBC, their affiliates and their permitted transferees, provided that there
is a reasonably anticipated aggregate public offering price of at least $3.0
million (a "Demand Registration"). At such time as the Company is eligible to
utilize a Registration Statement on Form S-3 to register an offering of its
securities, CBS and DBC may request that the Company file a registration
statement on Form S-3, covering all or a portion of Registrable Securities of
CBS, DBC, their affiliates and their permitted transferees, provided that there
is a reasonably anticipated aggregate public offering price of at least $1.0
million (a "S-3 Registration"). During the term of this agreement, CBS and DBC
each will have the right to demand two Demand Registrations and each may also
request one S-3 Registration per year. These registration rights will be subject
to the Company's right to delay the filing of a registration statement, not more
than once in a 12-month period, for not more than 120 days for either a Demand
Registration or a S-3 Registration.
In addition, CBS and DBC will have certain "piggyback" registration rights.
If the Company proposes to register any of its Common Stock under the Securities
Act (other than pursuant to the registration rights noted above), CBS and DBC
may require the Company to include all or a portion of their Registrable
Securities in such registration; provided, however, that the managing
underwriter, if any, of any such offering has certain rights to limit the number
of Registrable Securities proposed to be included in such registration.
All registration expenses incurred in connection with the above
registration would be borne by the Company. Each of CBS and DBC would pay all
underwriting discounts, selling commissions and stock transfer taxes applicable
to the sale of its Registrable Securities.
All registration rights under the Registration Rights Agreement will
terminate with respect to CBS and DBC when such entity may sell all its shares
in a three-month period under Rule 144 promulgated under the Securities Act.
DBC CHANGE OF CONTROL
Under the terms of the Stockholders' Agreement, upon the occurrence of a
DBC Change of Control (defined in the Stockholders' Agreement as the acquisition
by a competitor of CBS of more than 30% of the outstanding Common Stock of DBC
or securities representing 30% of the voting power of DBC or substantially all
of DBC's assets at a time when DBC and its affiliates own at least 10% of the
number of shares of the Company's Common Stock that are outstanding upon the
consummation of the offering), CBS may, in its sole discretion within 45 days
after the occurrence of such DBC Change of Control, either (i) offer to purchase
(and DBC shall be obligated to sell) all of the Company's securities held by DBC
at the "fair market value" of the Company's securities as of the date of the
change of control or (ii) require DBC to place its securities of the Company in
a trust managed by an independent trustee reasonably satisfactory to CBS, which
would then dispose of the securities to persons who are not competitors of CBS
with a view to maximizing the sale price while disposing of such share as
promptly as reasonably practicable. In either event, DBC would forfeit its Board
representation. No such trustee shall, without the prior written consent of CBS,
vote any of the Company's securities held by it at any meeting of the
stockholders of the Company or otherwise. There can be no assurance that in such
event CBS would elect either such option, if any. Although DBC has advised the
Company that it has no present plans or intentions to effect a DBC Change of
Control, DBC operates in a rapidly evolving industry and there can be no
assurance that it will not effect a change in control in the future.
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RIGHTS OF FIRST REFUSAL
Pursuant to the Stockholders' Agreement, if either CBS or DBC desires to
sell any shares of Common Stock held by it to a non-affiliated third party, the
other party will have a right of first refusal (the "Right of First Refusal") to
purchase those shares from the other, on the same terms as the party proposes to
sell the shares to the third party. In the event that the other party does not
elect to exercise this right of first refusal, the party who originally proposed
to transfer the shares will have 120 days (or, in the case of a sale pursuant to
Rule 144 promulgated under the Securities Act, six weeks) to consummate the
transfer, otherwise the rights of first refusal will be reinstated.
The Stockholders' Agreement will also provide that in the event that the
Company proposes to issue voting securities or securities convertible into or
exchangeable for Common Stock or other voting securities of the Company in the
future (other than (i) issuances of up to an aggregate of 1,500,000 shares of
Common Stock with respect to incentive plans or employee stock options, or (ii)
up to an aggregate of 500,000 shares issuable for general corporate purposes),
CBS and DBC will have the right to purchase (the "Purchase Right") a number of
securities from the Company on the same terms (or, if the Company is to receive
non-cash consideration for such issuance, at a per share price equal to the
"fair market value" of such securities or non cash consideration) in an amount
necessary to maintain its percentage ownership of voting securities of the
Company, not to exceed with respect to each of CBS and DBC a percentage equal to
the percentage of the outstanding voting securities of the Company held by such
company upon the consummation of this offering (the "Initial Percentage").
However, the number of voting securities of the Company which may be purchased
by CBS and DBC pursuant to the Purchase Right in connection with the Company's
first public offering following its initial public offering (the "Follow-On
Offering"), is limited such that, if in the opinion of the underwriters of the
Follow-On Offering the public trading market for the Company's Common Stock
would be significantly adversely affected by the exercise of such Purchase
Right, CBS and DBC have the right to exercise the Purchase Right in connection
with the Follow-On Offering only to the extent required to maintain ownership of
up to 25% of the outstanding voting securities of the Company or such higher
percentage that would not, in the opinion of the underwriters of such Follow-On
Offering, significantly adversely affect such offering. Each of CBS and DBC
would then have the right in connection with the next issuance to exercise the
Purchase Right to purchase a number of additional securities in an amount
necessary to maintain its percentage ownership of the voting securities of the
Company it held immediately prior to the Follow-On Offering, not to exceed a
percentage of the outstanding voting securities of the Company equal to the
Initial Percentage.
In addition, as a result of the Purchase Right and Right of First Refusal,
both CBS and DBC will have the ability to maintain collectively, ownership in
excess of 50% of the shares of the Company's Common Stock; however, neither CBS
nor DBC are obligated to vote their shares in any manner, other than to vote for
each other's nominees to the Company's Board of Directors or otherwise act
collectively which could have the effect of delaying, deferring or preventing a
change in control of the Company or to discourage bids for the Company's Common
Stock at a premium over the market price of the Common Stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Anti-Takeover Law") regulating corporate
takeovers. The Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the Nasdaq National Market, from
engaging, under certain circumstances, in a "business combination" (which
includes a merger or sale of more than 10% of the corporation's assets) with any
"interested stockholder" (a stockholder who owns 15% or more of the
corporation's outstanding voting stock, as well as affiliates and associates of
any such persons) for three years following the date that such stockholder
became an "interested stockholder" unless (i) the transaction in which such
stockholder became an "interested stockholder" is approved by the Board of
Directors prior to the date the "interested
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stockholder" attained such status, (ii) upon consummation of the transaction
that resulted in the stockholder's becoming an "interested stockholder," the
"interested stockholder" owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding those
shares owned by (a) persons who are directors and also officers and (b) employee
stock plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer), or (iii) on or subsequent to such date the "business
combination" is approved by the Board of Directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at least
two-thirds of the outstanding voting stock that is not owned by the "interested
stockholder." Neither CBS nor DBC are subject to the restrictions imposed by the
Anti-Takeover Law on "business combinations" with the Company. A Delaware
corporation may "opt out" of the Anti-Takeover Law with an express provision in
its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from a stockholders' amendment
approved by at least a majority of the outstanding voting shares. The Company
has not "opted out" of the provisions of the Anti-Takeover Law. The statute
could prohibit or delay mergers or other takeover or change-in-control attempts
with respect to the Company and, accordingly, may discourage attempts to acquire
the Company.
The Company's Bylaws provide that any action required or permitted to be
taken by the stockholders of the Company at an annual meeting or special meeting
of stockholders may only be taken if it is properly brought before such meeting
and may not be taken by written action in lieu of a meeting. The Amended and
Restated Certificate of Incorporation and the Bylaws provide that special
meetings of the stockholders may only be called by the Chairman of the Board,
the Chief Executive Officer of the Company, the Board or by stockholders holding
at least 25% of the Company's outstanding Common Stock. Such provisions may have
the effect of delaying or preventing a change-in-control of the Company.
The Company's Amended and Restated Certificate of Incorporation and Bylaws
will provide that the Company will indemnify officers and directors against
losses that they may incur in investigations and legal proceedings resulting
from their services to the Company, which may include services in connection
with takeover defense measures. Such provisions may have the effect of
preventing changes in the management of the Company.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by the DGCL. In addition,
the Company's Amended and Restated Certificate of Incorporation and Bylaws
provide that the Company will indemnify directors and officers of the Company to
the fullest extent permitted by Delaware law. The Company intends to enter into
separate indemnification agreements with its directors and executive officers
that provide such person indemnification protection in the event the Amended and
Restated Certificate of Incorporation is subsequently amended.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is
ChaseMellon Shareholder Services, LLC. Its address is 235 Montgomery Street,
23rd Floor, San Francisco, California 94109, and its telephone number at this
location is (415) 743-1444.
LISTING
The Company has applied to list its Common Stock on the Nasdaq National
Market under the trading symbol "MKTW."
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the Common
Stock of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect prevailing market prices from time to time.
Furthermore, since no shares will be available for sale shortly after this
offering because of certain contractual and legal restrictions on resale (as
described below), sales of substantial amounts of Common Stock of the Company in
the public market after these restrictions lapse could adversely affect the
prevailing market price and the ability of the Company to raise equity capital
in the future.
Upon completion of this offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options. Of
these shares, all of the shares sold in this offering will be freely tradable
without restriction or further registration under the Securities Act, unless
such shares are purchased by "affiliates" of the Company as that term is defined
in Rule 144 under the Securities Act (the "Affiliates"). The remaining 9,000,000
shares of Common Stock held by existing stockholders are "restricted securities"
as that term is defined in Rule 144 under the Securities Act ("Restricted
Shares"). Restricted Shares may be sold in the public market only if registered
or if they qualify for an exemption from registration under Rule 144 or 701
promulgated under the Securities Act, which rules are summarized below. All
officers, directors and stockholders of the Company have agreed (the "Lock-Up
Agreement") not to offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly (or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of),
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock, for a period of 180 days after the
effective date of the Registration Statement of which this Prospectus is a part,
without the prior written consent of BT Alex. Brown and Donaldson, Lufkin &
Jenrette Securities Corporation, except in the case of certain transfers upon a
DBC Change of Control as provided in the Stockholders' Agreement. As a result of
the contractual restrictions described above and the provisions of Rule 144 and
701, the Restricted Shares will be available for sale in the public market on
the date which is one year from the date of the effectiveness of the
Reorganization, subject to the volume limitations and other conditions of Rule
144. The shares could be available for resale immediately upon the expiration of
such 180-day period in the event of a favorable interpretation by the Securities
and Exchange Commission of certain provisions of Rule 144.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner except an Affiliate) would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of: (i) 1% of the number of shares of Common Stock then outstanding
(which will equal approximately shares immediately after this
offering); or (ii) the average weekly trading volume of the Common Stock on the
Nasdaq National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an Affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years (including the holding period of any
prior owner except an Affiliate), is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144; therefore, unless otherwise restricted, "144(k)
shares" may be sold immediately upon the completion of this offering. In
general, under Rule 701 of the Securities Act as currently in effect, any
employee, consultant or advisor of the Company who purchases shares from the
Company in connection with a compensatory stock or option plan or other written
agreement is eligible to resell
64
<PAGE> 66
such shares 90 days after the effective date of this offering in reliance on
Rule 144, but without compliance with certain restrictions, including the
holding period, contained in Rule 144.
Upon completion of this offering, the holders of approximately 9,000,000
shares of Common Stock currently outstanding, or their transferees will be
entitled to certain rights with respect to the registration of such shares under
the Securities Act. See "Description of Capital Stock -- Registration Rights."
Registration of such shares under the Securities Act would result in such shares
becoming freely tradable without restriction under the Securities Act (except
for share purchase of affiliates) immediately upon the effectiveness of such
registration. Neither CBS nor DBC will have any obligation or other restrictions
on resale with respect to any securities of the Company held by it, other than
restrictions imposed by Lock-Up Agreements described above, the Right of First
Refusal and applicable securities laws. Any sales of securities of the Company
by these stockholders could have a material adverse effect on the trading price
of the Company's Common Stock.
Immediately after this offering, the Company intends to file a registration
statement under the Securities Act covering 1,500,000 shares of Common Stock
reserved for issuance under the Equity Incentive Plan and the Directors Plan and
the shares reserved for issuance upon exercise of outstanding options. As of
September 30, 1998, options to purchase 875,750 shares of Common Stock were
issued and outstanding, none of which were vested. Upon the expiration of the
Lock-Up Agreements describe above, at least 188,325 shares of Common Stock will
be subject to vested options (based on options outstanding as of September 30,
1998). Such registration statement is expected to be filed and become effective
as soon as practicable after the effective date of this offering. Accordingly,
shares registered under such registration statement will, subject to Rule 144
volume limitations applicable to Affiliates, be available for sale in the open
market immediately after the 180-day lock-up agreements expire, unless such
shares are subject to vesting restrictions with the Company or the Lock-Up
Agreements described above.
65
<PAGE> 67
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representatives BT
Alex. Brown Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Smith Barney Inc. and First Albany Corporation, have severally agreed to
purchase from the Company the following respective numbers of shares of Common
Stock at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
BT Alex. Brown Incorporated.................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Salomon Smith Barney Inc....................................
First Albany Corporation....................................
---------
Total.............................................
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.
The Company has been advised by the representatives of the Underwriters
that the Underwriters propose to offer the shares of Common Stock to the public
at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may re-allow, a
concession not in excess of $ per share to certain other dealers. After the
initial public offering, the offering price and other selling terms may be
changed by the representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it in the above table bears to , and the Company will be
obligated, pursuant to the option to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the shares are being offered.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Each of the officers, directors and stockholders of the Company have agreed
not to offer, sell, contract to sell or otherwise dispose of (or enter into any
transaction which is designed to, or could be expected to, result in the
disposition of any portion of) any Common Stock for a period of 180 days after
the effective date of the Registration Statement of which this Prospectus is a
part, without the prior written consent of BT Alex. Brown Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation, except in the case of
certain transfers upon a DBC Change of Control as provided in the Stockholders'
Agreement. Such consent may be given at any time without public notice. The
Company has entered into a similar agreement, except that it may issue, and
grant
66
<PAGE> 68
options or warrants to purchase, shares of Common Stock or any securities
convertible into, exercisable for or exchangeable for shares of Common Stock,
pursuant to the exercise of outstanding options and warrants and the Company's
issuance of options and stock granted under the existing stock and stock
purchase plans.
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiation among the Company and the
Representatives. Among the factors considered in such negotiations were
prevailing market conditions, the results of operations of the Company in recent
periods, the market capitalizations and stages of development of other companies
which the Company and the Representatives believe to be comparable to the
Company, estimates of the business potential of the Company, the present stage
of the Company's development and other factors deemed relevant.
In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the Common Stock. Specifically, the Underwriters may over-allot
shares of the Common Stock in connection with this offering, thereby creating a
short position in the Underwriters' syndicate account. Additionally, to cover
such over-allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of the Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the Underwriters, also may reclaim selling
concessions allowed to an Underwriter or dealer, if the syndicate repurchases
shares distributed by that Underwriter or dealer.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Fenwick & West LLP, Palo Alto, California. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
Menlo Park, California.
EXPERTS
The financial statements of MarketWatch.com, Inc. as of December 31, 1997
and June 30, 1998 and for the period from inception (October 29, 1997) through
December 31, 1997 and for the six months ended June 30, 1998 included in this
Prospectus have been so included in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of the DBC Online/News Business as of October 28,
1997 and December 31, 1996 and for the period from inception (October 1, 1995)
through December 31, 1996 and for the period from January 1, 1997 through
October 28, 1997 included in this Prospectus have been so included in reliance
upon the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
67
<PAGE> 69
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedule filed therewith. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedule filed therewith. Statements
contained in this Prospectus regarding the contents of any contract or any other
document to which reference is made are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement and the
exhibits and schedule filed therewith may be inspected without charge at the
public reference facilities maintained by the Commission in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New
York 10048, and copies of all or any part of the Registration Statement may be
obtained from such offices upon the payment of the fees prescribed by the
Commission. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.
68
<PAGE> 70
MARKETWATCH.COM, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheet............................................... F-3
Statement of Operations..................................... F-4
Statement of Stockholders' Equity (Deficit)................. F-5
Statement of Cash Flows..................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-17
Balance Sheet............................................... F-18
Statement of Operations and Changes in Owner's Net
Deficit................................................... F-19
Statement of Cash Flows..................................... F-20
Notes to Financial Statements............................... F-21
</TABLE>
F-1
<PAGE> 71
REPORT OF INDEPENDENT ACCOUNTANTS
The reorganization of the limited liability company into a corporation as
described in Notes 4, 5 and 8 has not been consummated at October 6, 1998. In
addition, the execution of an Amended and Restated License Agreement, an Amended
and Restated Services Agreement, a Registration Rights Agreement, and a
Revolving Credit Agreement described in Notes 1 and 8 have not been consummated
at October 6, 1998. The Company, CBS and DBC, as appropriate, have reached an
agreement in principle that all such agreements and the reorganization will
occur immediately prior to the initial public offering of Common Stock of
MarketWatch.com, Inc. When such reorganization and agreements have been
consummated, we will be able to furnish the following report:
"To the Board of Directors and Stockholders
of MarketWatch.com, Inc.
In our opinion, the accompanying balance sheet and the related
statements of operations, of stockholders' equity (deficit) and of cash
flows present fairly, in all material respects, the financial position of
MarketWatch.com, Inc. at December 31, 1997 and June 30, 1998, and the
results of its operations and its cash flows for the period from inception
(October 29, 1997) through December 31, 1997 and the six months ended June
30, 1998 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above."
PricewaterhouseCoopers LLP
San Jose, California
September 17, 1998
F-2
<PAGE> 72
MARKETWATCH.COM, INC.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
<S> <C> <C>
Current:
Cash...................................................... $ -- $ 628,000
Accounts receivable, net of allowances for doubtful
accounts of $10,000 and $120,000, respectively......... 224,000 797,000
Prepaid expenses.......................................... -- 20,000
----------- -----------
Total current assets.............................. 224,000 1,445,000
Property and equipment, net................................. 13,000 623,000
Deferred offering costs..................................... -- 172,000
----------- -----------
$ 237,000 $ 2,240,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current:
Accounts payable.......................................... $ -- $ 766,000
Accrued expenses.......................................... 75,000 75,000
Deferred revenue.......................................... 10,000 13,000
Advances from DBC......................................... -- 1,539,000
----------- -----------
Total current liabilities......................... 85,000 2,393,000
----------- -----------
Commitments (Note 6)
Stockholders' equity (deficit):
Preferred stock, $.01 par value; 5,000,000 shares
authorized, no shares issued and outstanding........... -- --
Common stock, $.01 par value; 30,000,000 shares
authorized; 9,000,000 shares issued and outstanding.... 90,000 90,000
Additional paid-in capital................................ 1,925,000 3,476,000
Deferred compensation..................................... -- (285,000)
Contribution receivable................................... (1,782,000) (1,000,000)
Accumulated deficit....................................... (81,000) (2,434,000)
----------- -----------
Total stockholders' equity (deficit).............. 152,000 (153,000)
----------- -----------
$ 237,000 $ 2,240,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 73
MARKETWATCH.COM, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 29, 1997) SIX MONTHS
THROUGH ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------------ -----------
<S> <C> <C>
Net revenues (including $210,000 and $627,000 from DBC).... $ 630,000 $ 2,695,000
Cost of revenues........................................... 148,000 543,000
---------- -----------
Gross profit............................................... 482,000 2,152,000
---------- -----------
Operating expenses:
Product and content development.......................... 186,000 1,002,000
General and administrative............................... 248,000 1,263,000
Sales and marketing...................................... 129,000 2,219,000
---------- -----------
Total operating expenses......................... 563,000 4,484,000
---------- -----------
Operating loss............................................. (81,000) (2,332,000)
Interest expense........................................... -- (21,000)
---------- -----------
Net loss................................................... $ (81,000) $(2,353,000)
========== ===========
Basic and diluted net loss per share....................... $ (0.01) $ (0.26)
========== ===========
Shares used in the calculation of basic and diluted net
loss per share........................................... 9,000,000 9,000,000
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 74
MARKETWATCH.COM, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------- PAID-IN DEFERRED CONTRIBUTION ACCUMULATED
SHARES AMOUNT CAPITAL COMPENSATION RECEIVABLE DEFICIT TOTAL
--------- ------- ---------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital contributions by
DBC and CBS........... 9,000,000 $90,000 $1,910,000 $ -- $(2,000,000) $ -- $ --
Contribution from DBC... -- -- -- -- 218,000 -- 218,000
Fair value of services
provided by DBC to the
Company............... -- -- 15,000 -- -- -- 15,000
Net loss................ -- -- -- -- -- (81,000) (81,000)
--------- ------- ---------- --------- ----------- ----------- ----------
Balance at December 31,
1997.................. 9,000,000 90,000 1,925,000 -- (1,782,000) (81,000) 152,000
Contribution from DBC... -- -- -- -- 782,000 -- 782,000
Issuance of compensatory
stock options to
employees............. -- -- 303,000 (303,000) -- -- --
Amortization of deferred
compensation.......... -- -- -- 18,000 -- -- 18,000
Fair value of services
provided by DBC to the
Company............... -- -- 50,000 -- -- -- 50,000
Fair value of services
provided by CBS to the
Company............... -- -- 1,198,000 -- -- -- 1,198,000
Net loss................ -- -- -- -- -- (2,353,000) (2,353,000)
--------- ------- ---------- --------- ----------- ----------- ----------
Balance at June 30,
1998.................. 9,000,000 $90,000 $3,476,000 $(285,000) $(1,000,000) $(2,434,000) $ (153,000)
========= ======= ========== ========= =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 75
MARKETWATCH.COM, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 29,
1997) SIX MONTHS
THROUGH ENDED
DECEMBER 31, JUNE 30,
1997 1998
-------------- -----------
<S> <C> <C>
Cash flows used in operating activities:
Net loss.................................................. $ (81,000) $(2,353,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for bad debt expense........................ 10,000 110,000
Depreciation and amortization......................... -- 53,000
Noncash charges from stockholders..................... 15,000 1,248,000
Changes in operating assets and liabilities:
Accounts receivable................................ (234,000) (683,000)
Prepaid expenses and other assets.................. -- (192,000)
Accounts payable and accrued expenses.............. 75,000 766,000
Deferred revenue................................... 10,000 3,000
---------- -----------
Net cash used in operating activities............ (205,000) (1,048,000)
---------- -----------
Cash flows used in investing activities:
Purchase of property and equipment........................ (13,000) (645,000)
---------- -----------
Cash flows provided by financing activities:
Contributions from DBC.................................... 218,000 782,000
Advances from DBC (Note 7)................................ -- 1,539,000
---------- -----------
218,000 2,321,000
---------- -----------
Net change in cash.......................................... -- 628,000
Cash at beginning of period................................. -- --
---------- -----------
Cash at end of period....................................... $ -- $ 628,000
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 76
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND NATURE OF BUSINESS:
THE COMPANY
MarketWatch.com, Inc. (the "Company"), a leading Web-based provider of
comprehensive, real-time, business news, financial programming and analytic
tools, was formed on October 29, 1997 in the state of Delaware as a limited
liability company and is jointly owned by Data Broadcasting Corporation ("DBC")
and CBS Broadcasting Inc. ("CBS") (collectively, the "Members"), with each
Member owning 50% of the Company. The operations of the Company are governed by
a limited liability company agreement dated October 29, 1997 (the "LLC
Agreement"). The Company's Web site, CBS.MarketWatch.com, delivers a wide range
of financial news and information, including real-time and delayed market prices
of stocks, bonds, options and mutual funds and original news and commentary from
financial and market analysts, economists and reporters, all of which is
available to viewers. However, certain proprietary information and real-time
market prices are available only through subscriptions to MarketWatch RT and
MarketWatch Live products. In September 1998, the Company's Board of Directors
approved the reorganization of the limited liability company into a corporation.
All share and per share data have been retroactively adjusted to reflect the
reorganization, which will take effect immediately prior to the closing of the
Company's initial public offering of Common Stock ("IPO"). (See Note 8).
In connection with the formation of the limited liability company, the
Company, CBS and DBC entered into a contribution agreement on October 29, 1997
(the "Contribution Agreement"), under which DBC is required to contribute to the
Company $1.0 million in cash upon consummation of the Contribution Agreement,
$1.0 million in cash on October 29, 1998 and DBC's existing "Online/News"
business which primarily consists of customer contracts and technology in return
for its ownership position. CBS will provide advertising and promotions over a
period of five years in return for its ownership position. The advertising and
promotions will be recorded as capital contributions at the time they are
provided based on their fair value.
In addition, CBS and the Company have entered into a license agreement
dated October 29, 1997 (the "License Agreement") where CBS, in exchange for 30%
of net advertising revenue, has granted to the Company the non-exclusive right
and license to use certain CBS news content and registered trademarks, including
the CBS "Eye" design, for five years ending October 29, 2002, subject to
termination on the occurrence of certain events. In addition to the agreements
above, the Company entered into a services agreement with DBC (the "Services
Agreement"). Under the terms of the Services Agreement, DBC charges the Company
for certain general services and the Company receives a royalty for licensing
MarketWatch RT and MarketWatch Live, respectively (See Notes 7 and 8).
Immediately prior to the closing of its IPO, the Company will enter into
Amended and Restated Services and License Agreements, a Registration Rights
Agreement and a Revolving Credit Agreement. (See Note 8).
NEED FOR FUTURE CAPITAL AND INITIAL PUBLIC OFFERING
The Company has sustained losses and negative cash flows from operations
since inception and expects these conditions to continue for the foreseeable
future. As of June 30, 1998, the Company has an accumulated deficit of
$2,434,000. The implementation of the Company's business plan is dependent on
obtaining additional financing through public or private financing, strategic
relationships or other arrangements. There can be no assurance that such
additional financing will be available on terms attractive to the Company, or at
all. Should additional financing not be available,
F-7
<PAGE> 77
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
management believes that the Company's current growth plans would be curtailed
and sufficient funds would be available from operations and financing
commitments currently in place with DBC to enable the Company to continue
operations through 1999.
In September 1998, the Board of Directors authorized the Company to proceed
with the IPO.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition
The Company generates its revenues from three primary sources: the sale of
advertising on the Company's Web site, subscriptions to premium services
available through the Web site and the sale of news to DBC.
Advertising revenue, derived from the sale of banner advertisements and
sponsorships on the Company's Web site, is recognized ratably in the period the
advertising is displayed, provided that no significant Company obligations
remain and collection of the resulting receivable is probable. Company
obligations typically include guarantees of a minimum number of "impressions,"
or times that an advertisement is viewed by users of the Company's Web site.
Additionally, certain sponsorship agreements provide links to third-party Web
sites and generate either fixed transaction fees for monthly access or variable
fees which are dependent upon the number of transactions consummated at the
third-party Web site by linked customers. Such amounts are recognized as revenue
in the month earned.
Subscription revenue relates to customer subscriptions to the DBC premium
online services, MarketWatch RT and MarketWatch Live, which provide subscribers
access to real time exchange data and premium analytical products and are sold
through the Company's Web site. Subscriptions are charged to customers' credit
cards and are billed in advance on a monthly basis. Revenue from subscriptions
is recognized ratably over the subscription period. Deferred revenues relate to
subscription fees for which amounts have been collected but for which revenue
has not been recognized.
Revenue related to the sale of news to DBC is recognized in the month the
services are provided.
Revenues from barter transactions are recognized during the period in which
the advertisements are displayed on the Company's Web site. Barter transactions
are recorded at the lower of fair value of the goods or services received or the
estimated fair value of the advertisements given. To date, barter transactions
have been insignificant.
Property and equipment
Property and equipment is recorded at cost and depreciated using the
straight-line method over its estimated useful life, ranging from three to five
years. Leasehold improvements are depreciated using the straight-line method
over the shorter of their useful lives or the remaining lease term.
Basic and diluted net loss per share
The Company computes net loss per share in accordance with the provisions
of Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provisions of SFAS 128 and SAB 98, basic and diluted net loss per share is
computed by dividing the net loss available to common stockholders for the
period by the weighted average number of common shares outstanding for the
period. The
F-8
<PAGE> 78
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
calculation of diluted net loss per share excludes shares of common stock
issuable upon exercise of employee stock options as the effect of the exercise
would be antidilutive.
Product and content development costs
Product and content development costs primarily consist of costs
attributable to the development of new products and content (including the cost
of producing the Company's news services) and costs of obtaining rights to third
party content. Product and content costs are expensed as incurred.
The Company develops software which enables users to access information on
its Web site and subscription services. Development costs incurred prior to
technological feasibility are expensed as incurred. The Company defines
establishment of technological feasibility as the completion of a working model.
Software development costs incurred subsequent to the establishment of
technological feasibility through the period of market availability of products
are capitalized. Costs eligible for capitalization have been immaterial for all
periods presented.
Promotion and advertising
Advertising costs are expensed as incurred. Promotion and advertising
services provided by CBS under the Contribution Agreement, will be recognized as
an expense and capital contribution during the period in which the services are
provided based on the fair value of such services. For the period from inception
(October 29, 1997) through December 31, 1997 promotion and advertising services
provided by CBS were not material. For the six months ended June 30, 1998,
$1,198,000 was expensed for promotion and advertising services provided by CBS.
Use of estimates in the financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements. Actual
results could differ from those estimates.
Concentrations of credit risk
Financial instruments that potentially subject the Company to a significant
concentration of credit risk consist primarily of cash and accounts receivable.
Management deposits all its cash with a single financial institution. Management
periodically performs credit evaluations of its customers' financial condition
and generally does not require collateral on accounts receivable. Most of the
Company's accounts receivable as of December 31, 1997 and June 30, 1998 are from
Internet-related businesses. As of December 31, 1997, four customers comprised
53% of gross accounts receivable. As of June 30, 1998, one customer comprised
16% of the gross accounts receivable balance. The fair value of accounts
receivable approximates cost due to their short-term nature.
Stock-based compensation
The Company accounts for its stock-based employee compensation agreements
in accordance with the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and complies with the disclosure
provisions of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation."
F-9
<PAGE> 79
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Recent accounting pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments
of an Enterprise and Related Information." SFAS 131 establishes new standards
for the way companies report information about operating segments in annual
financial statements. The disclosures prescribed by SFAS 131 are effective for
the year ending December 31, 1998. The Company does not expect such adoption to
have a material effect on the notes to the Financial Statements.
NOTE 3 -- PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ --------
<S> <C> <C>
Computers and equipment..................................... $ 9,000 $290,000
Leasehold improvements...................................... 4,000 234,000
Furniture and fixtures...................................... -- 134,000
------- --------
13,000 658,000
Less accumulated depreciation............................... -- 35,000
------- --------
Total property and equipment, net................. $13,000 $623,000
======= ========
</TABLE>
NOTE 4 -- OPTIONS:
The Members and the management committee of the LLC authorized options to
purchase membership interests in the Company may be granted to officers and
employees of the Company. The Company granted 446,250 and 275,750 options to
purchase membership interests for the period from inception (October 29, 1997)
through December 31, 1997 and for the six months ended June 30, 1998,
respectively, at exercise prices equal to the fair value of the membership
interest on the date of grant. The options generally vest over a three year
period. The weighted average exercise price for options granted at fair value
were $5.70. In addition to the options above, the Company also granted 90,000
options for the six months ended June 30, 1998 at exercise prices below the fair
value of the membership interest with a weighted average exercise price of
$8.11. The Company recorded $303,000 of deferred compensation expense
representing the difference between the deemed fair value by the Company's Board
of Directors of the common stock on the date of grant and the option exercise
price on the date of grant. This amount will be amortized over the three year
vesting period of the options. During the six months ended June 30, 1998,
$18,000 of deferred compensation was recognized as expense. The fair market
value of the membership interest is determined by the Board of Directors on the
date of grant. In determining the fair market value of the membership interest
on each grant date, the Board of Directors considered, among other things, the
value of assets contributed to the Company from DBC, the Company's absolute and
relative level of revenues and other operating results, the state of the
Company's Website development, the absence of a public trading market for the
Company's securities, the intensely competitive nature of the Company's market
and the appreciation of stock values of a number of generally comparable
Internet companies. Each option will convert into an option to purchase the
equivalent percentage of Common Stock upon the reorganization of the limited
liability company into a corporation, as discussed in Note 8. The following
table reflects the option activity restated to reflect the reorganization.
F-10
<PAGE> 80
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
----------- --------
<S> <C> <C>
Options granted for the periods from inception (October 29,
1997) through December 31, 1997........................... 446,250 $ 4.10
Options granted for the six months ended June 30, 1998...... 275,750 $ 9.09
------- ------
Options outstanding at June 30, 1998........................ 722,000 $ 6.00
======= ======
</TABLE>
At June 30, 1998, 278,000 options were available for future grant and no
options were vested.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
NUMBER CONTRACTUAL EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE
-------------- ----------- ----------- --------
<S> <C> <C> <C>
$4.00.................................................. 465,250 9.30 $ 4.00
$6.00 - $8.50.......................................... 124,250 9.49 $ 7.88
$9.50 - $13.00......................................... 132,500 9.82 $11.29
-------
722,000
=======
</TABLE>
FAIR VALUE DISCLOSURES
The Company applies APB No. 25 and related Interpretations in accounting
for its stock option plan. Had the Company's stock based compensation cost been
determined based on the minimum value at the grant date for awards under the
method prescribed by SFAS No. 123, the Company's net loss would have been
increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 29, 1997)
THROUGH SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1997 1998
------------------ --------------
<S> <C> <C>
Net loss:
As reported............................................. $ (81,000) $(2,353,000)
========= ===========
Pro forma............................................... $(118,000) $(2,521,000)
========= ===========
Net loss per share:
As reported............................................. $ (0.01) $ (0.26)
========= ===========
Pro forma............................................... $ (0.01) $ (0.28)
========= ===========
</TABLE>
The Company calculated the value of each option grant using the minimum
value method with the following assumptions: no dividend yield, weighted average
expected option term of 5 years: risk free interest rates of 5.5% to 5.7% and
5.8% to 6.4% for the period from inception (October 29, 1997) through December
31, 1997 and for the six months ended June 30, 1998, respectively.
Because the determination of fair value of all options granted after such
time as the Company becomes a public entity will include an expected volatility
factor in addition to the factors described in the preceding paragraph, the
above results may not be representative of future periods.
NOTE 5 -- INCOME TAXES:
No benefit for federal and state income taxes is reported in the financial
statements as the Company has elected to be taxed as a partnership prior to the
reorganization of the limited liability company into a Corporation, which will
take effect immediately prior to the closing of the IPO
F-11
<PAGE> 81
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Note 8). Therefore, the federal and state tax effects of the Company's results
of operations are recorded by the Members in their respective income tax
returns.
Subsequently, the Company will account for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"). Had the Company applied the provision of SFAS No. 109
for the period from inception (October 1997) through June 30, 1998, the Company
would have recorded a deferred tax asset, primarily from net operating loss
carryforwards, and a full valuation allowance. Net operating loss carryforwards
generated during the period would have been approximately $1,100,000.
NOTE 6 -- COMMITMENTS:
Beginning in April 1998, the Company subleases office space for its
corporate headquarters in San Francisco, California from CBS. Rent expense under
the sublease was $19,000 for the six months ended June 30, 1998. Future annual
minimum lease payments under the leases as of June 30, 1998 were as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1998............................................ $ 118,000
1999............................................ 322,000
2000............................................ 335,000
2001............................................ 348,000
2002............................................ 362,000
Thereafter...................................... 90,000
----------
$1,575,000
==========
</TABLE>
The Company has entered into employment agreements with two of its officers
which expire in June 2001. Such agreements provide for minimum annual salary
levels ranging from $200,000 to $240,000, as well as annual bonuses of up to 50%
of the base salary.
The Company maintains agreements with independent content providers for
certain news, stock quotes and other information. The terms of these agreements
are generally one year, with optional extension periods ranging from one to
three years. Minimum payments under these agreements for the year ending
December 31, 1998 are $60,000.
NOTE 7 -- RELATED PARTY TRANSACTIONS:
Under the LLC Agreement, DBC will advance the Company up to an aggregate of
$5,000,000 through October 29, 2000. Borrowings bear interest at a variable rate
per annum equal to The Chase Manhattan Bank's prime rate plus 2% (10.5% as of
June 30, 1998) and are repayable at such time as the Company has sufficient
cash, as determined by the Members.
F-12
<PAGE> 82
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
An analysis of the advances from DBC are as follows:
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 29, 1997) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1997 JUNE 30, 1998
------------------ -------------
<S> <C> <C>
Balance as of the beginning of the period.................. $ -- $ --
Expenses paid by DBC on behalf of the Company.............. 538,000 3,062,000
Expenses allocated by DBC to the Company................... 70,000 340,000
Royalty fees to DBC........................................ 16,000 77,000
News revenue from DBC...................................... (210,000) (627,000)
Receivables collected by DBC on behalf of the Company...... (196,000) (860,000)
Interest payable on advances from DBC...................... -- 21,000
Cash advances from DBC..................................... -- 308,000
Capital contributions...................................... (218,000) (782,000)
--------- -----------
Balance as of the end of the period........................ $ -- $ 1,539,000
========= ===========
</TABLE>
The majority of expenditures and liabilities of the Company were incurred
by DBC and directly charged to the Company. These direct charges totaled
$538,000 for the period from inception (October 29, 1997) through December 31,
1997 and $3,062,000 for the six months ended June 30, 1998. Direct charges
primarily consist of payroll and related costs, consulting, commissions and
access fees for information from various exchange markets. Additionally, under
the terms of a Services Agreement dated October 29, 1997, DBC will provide the
Company with certain general services which include cash management, accounting,
network operations and hosting of the Company's Web pages and data feeds.
Charges for these services and equipment usage are allocated based upon DBC
management's estimate of costs attributable to the operations of
MarketWatch.com. Such fees totaled $70,000 for the period from inception
(October 29, 1997) through December 31, 1997 and $340,000 for the six months
ended June 30, 1998.
The Company is required by the Services Agreement to share net revenue from
its current subscription services with DBC. The Services Agreement requires DBC
to pay the Company 25% and 75% of the Net Revenues of MarketWatch RT and
MarketWatch Live, respectively. The Services Agreement defines "Net Revenues" as
gross subscription fees collected, less various direct costs. These direct
charges included in cost of revenue and totaled $16,000 for the period from
inception (October 29, 1997) through December 31, 1997 and $77,000 for the six
months ended June 30, 1998.
The Services Agreement also provides for the Company to sell its
proprietary news and commentary to DBC in exchange for a fee based on the number
of DBC subscribers. These fees amounted to $210,000 for the period from
inception (October 29, 1997) through December 31, 1997 and $627,000 for the six
months ended June 30, 1998. For the five years ending October 29, 2002, these
fees are subject to a monthly minimum of $100,000.
DBC provides office space at various facilities to the Company. The Company
has recorded rent expense of $15,000 for the period from inception (October 29,
1997) through December 31, 1997 and $50,000 for the six months ended June 30,
1998 related to the rent provided by DBC based upon an allocation methodology
using its occupancy percentage and the rental amount paid by DBC. Management
believes the allocation methodology to be reasonable. Such amounts have been
recorded as capital contributions.
Under the License Agreement, the Company is required to pay to CBS 30% on
certain net advertising revenues, as defined, in excess of the first $1,000,000
as compensation for licensing CBS'
F-13
<PAGE> 83
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
news content and trademarks. No amounts have been accrued under the agreement
for the period from inception (October 29, 1997) through December 31, 1997 and
for the six months ended June 30, 1998.
Under the terms of the Contribution Agreement, CBS will provide advertising
and promotions over a five year period. The services will be recorded as capital
contributions at the time the services are provided based on the fair value of
such services. The Company has recorded advertising expense of $1,198,000 for
the six months ended June 30, 1998 related to services provided by CBS. Such
amounts have been recorded as capital contributions.
An executive of the Company is also a member of the Board of Directors of a
customer. For the period from inception (October 29, 1997) through December 31,
1997 $40,000 of advertising revenues were attributable to this customer. For the
six months ended June 30, 1998, no revenue was attributable to this customer.
CBS provides office space at its facility in New York to the Company in
exchange for access to certain news content. The Company has not recorded any
revenue or expense for this barter transaction for the periods presented as such
amounts are insignificant.
Under the terms of an insertion order, DBC has committed to purchase
approximately $225,000 of advertising from the Company in 1998 and approximately
$500,000 of advertising from the Company in each of 1999 and 2000. This
commitment may be terminated by DBC on 30 days' notice.
NOTE 8 -- SUBSEQUENT EVENTS:
Deferred Compensation
During the quarter ended September 30, 1998, the Company will record
approximately $1.2 million of deferred compensation related to the granting of
108,000 options at exercise prices below the deemed fair market value of the
Company's Common Stock as determined by the Board of Directors.
Content and Distribution Agreements
During August 1998, the Company entered into a license agreement with
Yahoo! Inc. whereby the Company is required to provide news headlines, make
payments for advertising and slotting of $870,000 through 1999 and remit
referral fees monthly based on the number of click-throughs to the Company's
web-site. Upon completion of the Company's IPO, the minimum commitment will
increase from $870,000 over a twelve month period to $1.6 million over a twelve
month period beginning on the first day of the month following the closing of
the IPO.
In September 1998, the Company amended its Web Site Linking and Data
Services Agreement with News Alert, Inc. Under the amended agreement, beginning
in September 1998, the Company is required to pay a minimum of $20,000 per month
over a twelve month period to News Alert, Inc. for co-branding and hosting
charges.
Corporate Reorganization
In September 1998, the Company's Board of Directors authorized the
reorganization of the limited liability company into a corporation effective
immediately prior to the IPO. Upon the consummation of the reorganization, the
corporation will be authorized to issue 30,000,000 shares of $.01 par value
Common Stock of which 9,000,000 shares will be issued to the founding Members.
F-14
<PAGE> 84
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Company will also be authorized to issue 5,000,000 shares of $.01 par value
Preferred Stock. All share and per share data have been retroactively adjusted
to reflect the reorganization.
CBS License Agreement Amendment
Immediately prior to the closing of the IPO, the Company and CBS will enter
into an Amended and Restated License Agreement (the "Amended and Restated
License") which will supersede and replace the License Agreement. Under the
Amended and Restated License, in return for the right to use the CBS name and
logo as well as the CBS Television Network news content, the Company will be
obligated to pay a royalty to CBS of: (i) during 1998, (A) 8% of Gross Revenues
in excess of $1.0 million and up to and including $41.0 million and (B) 6% of
Gross Revenues in excess of $41.0 million, (ii) during 1999, (A) 8% of Gross
Revenues in excess of $500,000 and up to and including $40.5 million and (B) 6%
of Gross Revenues in excess of $40.5 million, and (iii) in subsequent years
through the termination of the License Agreement on October 29, 2002, (A) 8% of
Gross Revenues up to and including $40.0 million and (B) 6% of Gross Revenues in
excess of $40.0 million. CBS will have the right to terminate the agreement in
certain circumstances, including breach of a material term or condition of the
agreement, insolvency, bankruptcy or other similar proceeding, discontinuance of
use of the MarketWatch logo without providing an acceptable substitute, or
acquisition or issuance of certain percentages of the Company's Common Stock or
voting power by or to a CBS competitor. In addition, CBS will retain significant
editorial control over the use and presentation of the CBS news content and the
CBS logo and has the ability to prevent the Company from displaying certain
types of content which are unacceptable to CBS. The Amended and Restated License
will expire on October 29, 2002.
The terms of the Amended and Restated License will not prohibit CBS from
licensing its name and logo to certain other Web sites or Internet services. CBS
is also not prohibited from licensing its news content to, or investing in,
another Web site or Internet service.
DBC Services Agreement Amendment
Immediately prior to the closing of the Company's IPO, the Company and DBC
will enter into an Amended and Restated Services Agreement (the "Amended
Services Agreement) which will supersede and replace the Services Agreement.
Under the Amended Services Agreement, DBC will provide the Company with hosting
services, software programming assistance, data feeds, communications lines,
office space and related facilities, network operations and Web site management
services as well as certain administrative and engineering services if requested
by the Company. The Amended Services Agreement will also provide for DBC to
grant the Company certain nonexclusive licenses to its data and information
feeds and provide for certain network Website hosting performance standards. DBC
will also pay the Company a monthly per subscriber fee ranging from $2.50 to
$5.00, subject to a monthly minimum of $100,000, for delivery of the Company's
news to all DBC subscribers. The term of the Amended Services Agreement will
expire on October 29, 2002.
Revolving Credit Agreement
Immediately prior to the closing of the Company's IPO, the Company and DBC
will enter into a Revolving Credit Agreement (the "Credit Agreement") whereby
DBC will be obligated to loan the Company up to $5.0 million through October
2000. Borrowings under the Credit Agreement will be unsecured and bear interest
at a variable rate per annum equal to The Chase Manhattan Bank's prime rate plus
2%. All previous advances under the LLC Agreement from DBC, will be included
F-15
<PAGE> 85
MARKETWATCH.COM, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
against the borrowings under the Credit Agreement. This Credit Agreement will
supercede DBC's loan obligation under the LLC Agreement described in Note 7.
Registration Rights Agreement
Immediately prior to the closing of the Company's IPO, the Company, CBS and
DBC will enter into a Registration Rights Agreement ("Registration Agreement").
CBS and DBC, and their affiliates and permitted transferees will have certain
registration rights for the securities of the Company held by them under the
Registration Agreement.
1998 Equity Incentive and Directors' Stock Option Plan
In September 1998, the Board of Directors adopted, subject to stockholder
approval, the 1998 Equity Incentive Plan (the "1998 Plan") and the 1998
Directors' Stock Option Plan (the "1998 Directors' Plan"). The 1998 Plan and
1998 Directors' Plan will become effective upon the completion of the Company's
IPO. An aggregate of 624,250 shares have been reserved for issuance under both
plans.
F-16
<PAGE> 86
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Data Broadcasting Corporation
In our opinion, the accompanying balance sheet and the related statements
of operations and changes in owner's net deficit and of cash flows present
fairly, in all material respects, the financial position of the DBC Online/News
Business, a division of Data Broadcasting Corporation, at December 31, 1996 and
October 28, 1997, and the results of its operations and its cash flows for the
period from inception (October 1, 1995) through December 31, 1996 and for the
period from January 1, 1997 through October 28, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Business' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Jose, California
June 15, 1998
F-17
<PAGE> 87
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 28,
1996 1997
------------ -----------
<S> <C> <C>
Current:
Cash...................................................... $ -- $ --
Accounts receivable, net of allowances of $4,000 and
$15,000, respectively.................................. 178,000 174,000
Prepaid expenses and other current assets................. 16,000 80,000
Deferred income taxes..................................... 33,000 106,000
----------- -----------
Total current assets.............................. 227,000 360,000
Equipment, net.............................................. 182,000 186,000
----------- -----------
$ 409,000 $ 546,000
=========== ===========
LIABILITIES AND OWNER'S NET DEFICIT
Current:
Accounts payable.......................................... $ 71,000 $ 85,000
Deferred revenue.......................................... 14,000 16,000
Advances from DBC......................................... 1,644,000 2,708,000
----------- -----------
Total liabilities................................. 1,729,000 2,809,000
Owner's net deficit......................................... (1,320,000) (2,263,000)
----------- -----------
$ 409,000 $ 546,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 88
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
STATEMENT OF OPERATIONS AND CHANGES IN OWNER'S NET DEFICIT
<TABLE>
<CAPTION>
INCEPTION JANUARY 1,
(OCTOBER 1, 1995) 1997
THROUGH THROUGH
DECEMBER 31, OCTOBER 28,
1996 1997
----------------- -----------
<S> <C> <C>
Net revenues................................................ $ 607,000 $ 1,172,000
Cost of revenues............................................ 330,000 529,000
----------- -----------
Gross profit........................................... 277,000 643,000
----------- -----------
Operating expenses:
Product and content development........................... 1,491,000 1,016,000
General and administrative................................ 758,000 943,000
Sales and marketing....................................... 132,000 67,000
----------- -----------
Total operating expenses.......................... 2,381,000 2,026,000
----------- -----------
Operating loss.............................................. (2,104,000) (1,383,000)
Interest expense............................................ (99,000) (181,000)
----------- -----------
Loss before income tax benefit.............................. (2,203,000) (1,564,000)
Income tax benefit.......................................... 883,000 621,000
----------- -----------
Net loss.................................................... (1,320,000) (943,000)
Owner's net deficit, beginning of period.................... -- (1,320,000)
----------- -----------
Owner's net deficit, end of period.......................... $(1,320,000) $(2,263,000)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 89
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
INCEPTION JANUARY 1,
(OCTOBER 1, 1995) 1997
THROUGH THROUGH
DECEMBER 31, OCTOBER 28,
1996 1997
----------------- -----------
<S> <C> <C>
Cash flows used in operating activities:
Net loss.................................................. $(1,320,000) $(943,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation......................................... 63,000 86,000
Deferred income taxes................................ (33,000) (73,000)
Changes in operating assets and liabilities:
Accounts receivable............................... (178,000) 4,000
Prepaid expenses and other current assets......... (16,000) (64,000)
Accounts payable.................................. 71,000 14,000
Deferred revenue.................................. 14,000 2,000
----------- ---------
Net cash used in operating activities............. (1,399,000) (974,000)
----------- ---------
Cash used in investing activities:
Purchase of equipment..................................... (245,000) (90,000)
----------- ---------
Cash provided by financing activities:
Advances from DBC......................................... 1,644,000 1,064,000
----------- ---------
Change in cash.............................................. -- --
Cash at beginning of period................................. -- --
----------- ---------
Cash at end of period....................................... $ -- $ --
=========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 90
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND NATURE OF BUSINESS:
The accompanying financial statements and related notes reflect the
carve-out historical results of operations and financial position of the online
and news business ("DBC Online/News" or "Business") of Data Broadcasting
Corporation ("DBC"). The Statement of Operations includes all revenues and costs
directly attributable to DBC Online/News, including costs for facilities,
functions and services used by the Business at shared sites and allocations of
costs for certain administrative functions and services performed by centralized
departments within DBC. Separate presentation of the results of operations and
of cash flows for the period from inception (October 1, 1995) through December
31, 1995 have been omitted as such activity was immaterial to the operations of
DBC Online/News. Revenues and expenses of DBC Online/News for the period from
inception (October 1, 1995) through December 31, 1995 were $0 and $236,000,
respectively.
On October 29, 1997, DBC and CBS Broadcasting Inc. ("CBS") agreed to form a
limited liability company, Marketwatch.Com, LLC ("MarketWatch") for the purpose
of providing business information over the Internet. In connection with the
formation of MarketWatch, DBC and CBS entered into several agreements, including
a Limited Liability Company Agreement (the "LLC Agreement") and a Contribution
Agreement (the "Contribution Agreement"). Under the terms of the Contribution
Agreement, DBC has contributed the rights to certain assets associated with the
Business, and $2 million in cash in exchange for a 50% ownership interest. CBS
will provide, subject to termination on the occurrence of certain events, over a
period of five years, promotion and advertising time in exchange for a 50%
ownership interest. In addition, CBS has granted to the Company, subject to
certain licensing fees, the non-exclusive right and license to certain CBS news
contents and registered trademarks including the CBS "Eye" design, for five
years. These financial statements are not necessarily indicative of results that
would have occurred if DBC Online/News had been a separate stand-alone entity
during the periods presented or of the future results of MarketWatch.
DBC Online/News provided a Web site (MarketWatch.com) that delivers a broad
range of financial news and information, including delayed market prices of
stocks, bonds, options and mutual funds and original news and commentary from
financial and market analysts, economists and reporters. DBC Online/News also
provided certain proprietary information and real-time market prices available
only through subscriptions to its MarketWatch RT online service.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION
DBC Online/News generates its revenues from two sources: the sale of
advertising on the Business' Web site and subscriptions to premium services
available through the Web site.
Advertising revenue, which is derived from the sale of advertising on the
DBC Online/News Web site, is recognized in the period the advertising is
displayed, provided that no significant DBC Online/News obligations remain and
collection of the resulting receivable is probable. DBC Online/News obligations
typically include guarantees of a minimum number of "impressions", or times that
an advertisement is viewed by users of the Web site. As of December 31, 1996 and
October 28, 1997, DBC Online/News believes that no reserve is necessary for such
obligations.
Subscription revenue relates to customer subscriptions to the Business'
premium online service, MarketWatch RT. MarketWatch RT provides subscribers
access to real time exchange data and premium analytical products through the
Business' Web site. Subscriptions are charged to custom-
F-21
<PAGE> 91
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ers' credit cards and are billed in advance on a monthly basis. Revenue from
subscriptions is recognized ratably over the subscription period. Deferred
revenues relate to subscription fees collected but for which revenue has not
been recognized.
EQUIPMENT
Equipment, which consists primarily of personal computers and general
business software for use by employees, is recorded at cost and depreciated
using the straight-line method over its estimated useful life, ranging from
three to five years. Accumulated depreciation was $63,000 and $149,000 at
December 31, 1996 and October 28, 1997, respectively.
PRODUCT AND CONTENT DEVELOPMENT COSTS
DBC Online/News develops software which enables users to access information
on its Web site and subscription service. Development costs incurred prior to
technological feasibility are expensed as incurred. DBC Online/News defines
establishment of technological feasibility as the completion of a working model.
Software development costs incurred subsequent to the establishment of
technological feasibility through the period of market availability of products
are capitalized. Costs eligible for capitalization have been immaterial for all
periods presented.
ADVERTISING
Advertising costs are expensed as incurred. Total advertising expenses were
$74,000 and $9,000 for the period from inception (October 1, 1995) through
December 31, 1996 and the period ended from January 1, 1997 through October 28,
1997, respectively.
INCOME TAXES
The taxable loss of DBC Online/News for the period from inception (October
1, 1995) through December 31, 1996 and period ended from January 1, 1997 through
October 28, 1997 was included in the DBC consolidated tax returns. Separate
income tax returns were not prepared or filed for DBC Online/News. For all
periods presented, deferred income taxes and related tax expenses have been
recorded by applying the asset and liability approach to each component of DBC
Online/New as if it were a separate taxpayer. Under this approach, deferred tax
assets and liabilities represent the expected future tax consequences of
carryforwards and temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
The current tax benefit has been determined as if DBC Online/News was a
separate taxpayer and is deemed to be receivable from DBC in the period it
arose.
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements. Actual
results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject DBC Online/News to a
significant concentration of credit risk consist primarily of accounts
receivable. Management periodically performs credit evaluations of its
customers' financial condition and generally does not require collateral on
F-22
<PAGE> 92
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accounts receivable. Most of DBC Online/News accounts receivable as of December
31, 1997 are from Internet-related business.
NOTE 3 -- RELATED PARTY:
The accompanying financial statements include costs for cash management,
accounting, legal and network operations, that were provided to the Business by
DBC, in addition to allocated costs for facility charges at shares sites,
including rent and equipment usage. Costs have been allocated to the Business
based on DBC management's estimate of the costs attributable to the operation of
DBC Online/News. Such allocations are not necessarily indicative of the costs
that would have been incurred if DBC Online/News had been a separate entity.
Charges allocated to DBC Online/News were $304,000 for the period from
inception (October 1, 1995) to December 31, 1996 and $306,000 for the period
from January 1, 1997 through October 28, 1997. Of the total charges for the
period from inception (October 1, 1995) through December 31, 1996, $160,000 and
$144,000 were included in cost of revenues and general and administrative
expenses, respectively. For the period January 1, 1997 through October 28, 1997,
allocated charges of $191,000 and $115,000 were included in cost of revenues and
general and administrative expenses, respectively.
Other expenses charged by DBC included in the Statement of Operations
represent actual costs incurred by DBC which were directly attributable to the
Business primarily include payroll and related costs, consulting, commissions,
depreciation and access fees for information from various exchange markets.
DBC funds the working capital requirements of the Business based upon a
centralized cash management system. Interest on amounts due to DBC is charged at
prime plus 2% (10.5% at October 28, 1997). An analysis of amounts due to DBC is
as follows:
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 1, 1995) JANUARY 1, 1997
THROUGH THROUGH
DECEMBER 31, OCTOBER 28,
1996 1997
----------------- ---------------
<S> <C> <C>
Balance as of the beginning of the period........... $ -- $ 1,644,000
Assets and expenses paid on behalf of the Business
by DBC............................................ 2,530,000 2,293,000
Expenses allocated to the Business by DBC........... 304,000 306,000
Interest payable on amounts owed to DBC............. 99,000 181,000
Cash received on behalf of the Business by DBC...... (439,000) (1,168,000)
Income tax benefit (Note 4)......................... (850,000) (548,000)
---------- -----------
Balance as of the end of the period................. $1,644,000 $ 2,708,000
========== ===========
</TABLE>
NOTE 4 -- INCOME TAXES:
The operating results of DBC Online/News were included in the consolidated
tax returns of DBC. The methodology for allocating tax expense to DBC
Online/News is set forth in Note 2. For all periods presented, tax losses
generated by DBC Online/News were used to reduce DBC's taxable income, and
therefore, have been reflected as a current tax benefit.
F-23
<PAGE> 93
DBC ONLINE/NEWS BUSINESS
(PREDECESSOR BUSINESS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The benefit for income taxes consists of the following:
<TABLE>
<CAPTION>
INCEPTION PERIOD FROM
(OCTOBER 1, 1995) JANUARY 1, 1997
THROUGH THROUGH
DECEMBER 31, OCTOBER 28,
1996 1997
----------------- ---------------
<S> <C> <C>
Current benefit:
Federal................................... $653,000 $426,000
State..................................... 197,000 122,000
-------- --------
850,000 548,000
Deferred benefit:
Federal................................... 25,000 57,000
State..................................... 8,000 16,000
-------- --------
33,000 73,000
-------- --------
$883,000 $621,000
======== ========
</TABLE>
The income tax rate varies from amounts computed by applying the U.S.
statutory rate to the loss before income tax benefit. The tax rates are as
follows:
<TABLE>
<CAPTION>
INCEPTION PERIOD FROM
(OCTOBER 1, 1995) JANUARY 1, 1997
THROUGH THROUGH
DECEMBER 31, OCTOBER 28,
1996 1997
----------------- ---------------
<S> <C> <C>
Statutory U.S. tax rate..................... 34.0% 34.0%
State taxes, net of federal tax benefit..... 6.1% 5.8%
Other....................................... -0.1% -0.1%
---- ----
40.0% 39.7%
==== ====
</TABLE>
The net deferred tax asset is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 28,
1996 1997
------------ -----------
<S> <C> <C>
Interest on amounts due to DBC................... $ 40,000 $112,000
Other............................................ 7,000 12,000
-------- --------
Deferred tax asset............................... 47,000 124,000
Depreciation..................................... (14,000) (18,000)
-------- --------
Net deferred tax assets.......................... $ 33,000 $106,000
======== ========
</TABLE>
F-24
<PAGE> 94
DESCRIPTION OF ARTWORK
I. Screenprint -- Snapshot of the CBS.MarketWatch.com Web site Front Page
Contains the following elements:
- Links to primary the CBS.MarketWatch.com Web site featured sections
(NewsWatch, News Index, Headlines, Market Data, Portfolios, Mutual
Funds, Primer)
- Box for entry of ticker symbols for current quotes
- Box containing current market index quotes
- Financial headlines with links to related articles
- Box to enter keywords or ticker symbols for search of news
- Links to the CBS.MarketWatch.com Web site featured sections (Company
News, Headlines, NewsWatch, StockWatch, CBS stock lists, Earnings
heads, Trading tools, Investor's Toolbox, Investor's Primer, Internet
Daily, IPO reports, Surprises, Silicon Stocks, Software Report, Movers
& Shakers, Screamers!, Mutual Funds, Newsroom roster, Letters to
editor, Editorial policy, Corrections)
- Links to the CBS.MarketWatch.com Web site "Potent investing tools"
- Links to the CBS.MarketWatch.com Web site Advertisers
II. Screen Print -- Snapshot of "Silicon Stocks" Featured Section
Contains the following elements:
- Links to Front Page, News Index, Headlines, Market Data, Portfolios,
Municipal Funds, Primer
- "Investor's Toolbox" -- Features include Quote, News, Chat, Earnings,
Fundamentals, Fund Profiles, SEC Filings, Research, Market Guide,
Hoover's, Annual Reports, Power Portfolios, Tool Descriptions,
Baseline Reports, Invest Ads, Mortgage Finder, Credit Card Finder,
Signal Onlines CBSMW online
- Article highlighting current market activities
- Links to the CBS.MarketWatch.com Web site Advertisers
III. Screenprint -- Snapshot "Investor's Primer" Featured Section
Contains the following elements:
- Mastering Markets -- Links to descriptions of various investing
concepts
- Your Big Financial Picture -- links to personal financial health
articles
- Tools of the Trade -- Links to suggested reading, interactive
calculators, charting tools and data resources
- Investing Wisely in Mutual Funds -- links to Mutual Fund articles
- Links to the CBS.MarketWatch.com Web site Advertisers
IV. Screenprint -- Snapshot of Market Data Featured Section
Contains the following elements:
- Links to Front Page, Global Markets, Market Monitor, Charting,
Portfolios, Mutual Funds, Primer
- Current market index quotes
<PAGE> 95
- Box for ticket symbol entry to obtain quotes
- Links to market news under the following categories: Market Updates,
Market Reports, Research Tools, Market Leaders, Index Charts, CMS Bond
Quotes
- The CBS.MarketWatch.com Web site Bookstore Cafe
- Links to the CBS.MarketWatch.com Web site Advertisers
V. Screenprint of Beta Z version of the CBS.MarketWatch.com Web site
Portfolio "Home", "Edit", "DJI", "Price" and "Value" pages.
<PAGE> 96
- ------------------------------------------------------
- ------------------------------------------------------
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE
OFFER OR SOLICITATION IS UNLAWFUL.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 6
Use of Proceeds.......................... 16
Dividend Policy.......................... 16
Capitalization........................... 17
Dilution................................. 18
Selected Financial Data.................. 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 20
Business................................. 28
Management............................... 44
Certain Transactions..................... 53
Principal Stockholders................... 59
Description of the Capital Stock......... 60
Shares Eligible for Future Sale.......... 64
Underwriting............................. 66
Legal Matters............................ 67
Experts.................................. 67
Additional Information................... 68
Index to Consolidated Financial
Statements............................. F-1
</TABLE>
------------------
DEALER PROSPECTUS DELIVERY OBLIGATION:
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
SHARES
[LOGO]
COMMON STOCK
-------------------
PROSPECTUS
-------------------
BT ALEX. BROWN
DONALDSON, LUFKIN & JENRETTE
SALOMON SMITH BARNEY
FAC/EQUITIES
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 97
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Registrant in connection with this offering
are as follows. All amounts other than the SEC registration fee, NASD filing fee
and Nasdaq National Market application fee are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $10,177.50
NASD filing fee............................................. 3,950
Nasdaq National Market listing fee.......................... *
Printing.................................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Road show expenses.......................................... *
Blue Sky fees and expenses.................................. *
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
----------
Total............................................. $ *
==========
</TABLE>
- ---------------
* To be filed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases) or (iv) for
any transaction from which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Bylaws of the
Registrant provide that (i) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to certain very limited exceptions, (ii) the Registrant
may indemnify its other employees and agents as set forth in the Delaware
General Corporation Law, (iii) the Registrant is required to advance expenses,
as incurred, to its directors and executive officers in connection with a legal
proceeding to the fullest extent permitted by the Delaware General Corporation
Law, subject to certain very limited exceptions and (iv) the rights conferred in
the Bylaws are not exclusive.
The Registrant intends to enter into Indemnification Agreements with each
of its directors and executive officers to give such directors and officers
additional contractual assurances regarding the scope of the indemnification set
forth in the Registrant's Amended and Restated Certificate of Incorporation and
to provide additional procedural protections. At present, there is no pending
litigation or proceeding involving a director, officer or employee of the
Registrant regarding which
II-1
<PAGE> 98
indemnification is sought, nor is the Registrant aware of any threatened
litigation that may result in claims for indemnification.
Reference is also made to Section of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities. The indemnification provision in
the Registrant's Certificate of Incorporation, Bylaws and the Indemnification
Agreements entered into between the Registrant and each of its directors and
executive officers may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act.
The Registrant, with approval by the Registrant's Board of Directors,
expects to obtain directors' and officers' liability insurance.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
<TABLE>
<CAPTION>
DOCUMENT EXHIBIT NUMBER
-------- --------------
<S> <C>
Underwriting Agreement (draft dated ,
1998)..................................................... 1.01
Form of Amended and Restated Certificate of Incorporation of
Registrant................................................ 3.02
Bylaws of Registrant........................................ 3.03
Form of Indemnity Agreement................................. 10.01
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following table sets forth information regarding all securities sold by
the Registrant and its predecessor, Marketwatch.Com, LLC since October 29, 1997,
the date of the Company's inception.
<TABLE>
<CAPTION>
AGGREGATE
DATE TITLE OF NUMBER PURCHASE FORM OF
CLASS OF PURCHASER OF SALE SECURITIES OF SHARES(1) PRICE CONSIDERATION
------------------ -------- -------------------- ------------ --------- -----------------------
<S> <C> <C> <C> <C> <C>
CBS Inc.............. 10/29/97 Membership Interests 50% (2) Advertising Commitments
Data Broadcasting
Corporation........ 10/29/97 Membership Interests 50% (3) Cash and Assigned
Assets
</TABLE>
(1) Represents percentage interests in Marketwatch.Com, LLC.
(2) In connection with the formation of Marketwatch.Com, LLC, CBS agreed to
contribute promotion and advertising with an aggregate rate card amount of
$50.0 million over a period of five years, which could not be objectively
valued as of the date of contribution. This aggregate rate card amount will
be reduced to $30.0 million upon the execution of the Amended and Restated
License Agreement.
(3) DBC contributed $1.0 million in cash and certain assets relating to its
existing "Online/News" business and also agreed to contribute $1.0 million
in cash on October 29, 1998, in exchange for its membership interests.
Upon the closing of this offering, Marketwatch.Com, LLC will be converted
into a corporation and all membership interests will be converted into Common
Stock of the Registrant. The share numbers in this table give effect to the
conversion of Marketwatch.Com, LLC into a corporation immediately prior to the
closing of this offering.
All sales were made in reliance on Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. These sales were made
without general solicitation or advertising. Each purchaser was an "accredited
investor" or a sophisticated investor with access to all relevant information
necessary to evaluate the investment who represented to the Registrant that the
shares were being acquired for investment.
II-2
<PAGE> 99
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
1.01 Underwriting Agreement (draft dated , 1998).*
2.01 Form of Merger Agreement to be entered into by
Marketwatch.Com, LLC (the "LLC") and the Registrant.
3.01 Registrant's Certificate of Incorporation.
3.02 Form of Registrant's Amended and Restated Certificate of
Incorporation to be effective upon the completion of this
offering.
3.03 Registrant's Bylaws.
4.01 Form of Specimen Stock Certificate for the Registrant's
Common Stock.
4.02 Form of Registration Rights Agreement to be entered into
among the Registrant, CBS Broadcasting Inc. (formerly known
as CBS Inc.) ("CBS") and Data Broadcasting Corporation
("DBC").
4.03 Form of Stockholders' Agreement to be entered into among the
Registrant, Marketwatch.Com, LLC, CBS and DBC.
5.01 Opinion of Fenwick & West LLP regarding legality of the
securities being registered.*
10.01 Form of Indemnity Agreement to be entered into between the
Registrant with each of its directors and executive
officers.
10.02 Limited Liability Company Agreement of Marketwatch.Com, LLC,
dated October 29, 1997, between CBS and DBC.
10.03 Contribution Agreement dated October 29, 1997 among the LLC,
CBS, and DBC.
10.04 License Agreement dated October 29, 1997 between the LLC and
CBS.
10.05 Services Agreement dated October 29, 1997 between the LLC
and DBC.
10.06 Lease dated as of August 27, 1998 between the Registrant and
CBS Corporation.
10.07 Form of Amended and Restated License Agreement to be entered
into between the Registrant and CBS.
10.08 Form of Amended and Restated Services Agreement to be
entered into between the Registrant and DBC.
10.09 Form of Revolving Credit Agreement to be entered into
between the Registrant and DBC, together with Form of
Revolving Promissory Note.
10.10 Form of Non-Plan LLC Option.
10.11 Registrant's 1998 Directors Stock Option Plan.
10.12 Registrant's 1998 Equity Incentive Plan.
10.13 Employment Agreement dated as of July 1, 1998 between the
Registrant and Lawrence Kramer.
10.14 Employment Agreement dated as of July 1, 1998 between the
Registrant and J. Peter Bardwick.
10.15 Insertion Order dated as of August 25, 1998 between DBC and
Marketwatch.Com, LLC.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01)*.
23.02 Consent of PricewaterhouseCoopers LLP.
</TABLE>
II-3
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
23.03 Consent of PricewaterhouseCoopers LLP.
24.01 Power of Attorney (see Page II-5 of the Registration
Statement).
27.01 Financial Data Schedule (EDGAR Version Only).
</TABLE>
- ---------------
* To be supplied by amendment.
(b) Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts
No financial statement schedules are provided because the information
called for is not required or is shown either in the financial statements or the
notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 101
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California, on the 13th day of October, 1998.
MARKETWATCH.COM, INC.
By: /s/ LAWRENCE KRAMER
------------------------------------
Lawrence Kramer
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Lawrence Kramer, William Bishop and J.
Peter Bardwick, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462 promulgated
under the Securities Act, and all post-effective amendments thereto, and to file
the same, with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ LAWRENCE KRAMER President, Chief Executive October 13, 1998
- ----------------------------------------------------- Officer and Director
Lawrence Kramer
PRINCIPAL FINANCIAL AND
PRINCIPAL ACCOUNTING OFFICER:
/s/ J. PETER BARDWICK Chief Financial Officer October 13, 1998
- -----------------------------------------------------
J. Peter Bardwick
DIRECTORS:
/s/ MICHAEL JORDAN Director October 13, 1998
- -----------------------------------------------------
Michael Jordan
/s/ DEREK REISFIELD Chairman of the Board October 13, 1998
- -----------------------------------------------------
Derek Reisfield
/s/ ANDREW HEYWARD Director October 13, 1998
- -----------------------------------------------------
Andrew Heyward
/s/ MARK IMPERIALE Director October 13, 1998
- -----------------------------------------------------
Mark Imperiale
/s/ ALAN HIRSCHFIELD Director October 13, 1998
- -----------------------------------------------------
Alan Hirschfield
/s/ ALLAN R. TESSLER Director October 13, 1998
- -----------------------------------------------------
Allan R. Tessler
</TABLE>
II-5
<PAGE> 102
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
MARKETWATCH
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 29, 1997) SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1997 JUNE 30, 1998
------------------ -------------
<S> <C> <C>
Balance as of the beginning of the period.................. $15,000 $ 10,000
Additions charged to statement of operations............... -- 110,000
Deductions from reserves................................... 5,000 --
Balance at end of period................................... $10,000 $120,000
</TABLE>
S-1
<PAGE> 103
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
DCB ONLINE/NEWS
<TABLE>
<CAPTION>
INCEPTION
(OCTOBER 1, 1995) JANUARY 1, 1997
THROUGH THROUGH
DECEMBER 31, 1996 OCTOBER 29, 1997
----------------- ----------------
<S> <C> <C>
Balance as of the beginning of the period................ $ -- $ 4,000
Additions charged to statement of operations............. 4,000 11,000
Deductions from reserves................................. -- --
Balance at end of period................................. $4,000 $15,000
</TABLE>
S-2
<PAGE> 104
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
1.01 Underwriting Agreement (draft dated , 1998).*
2.01 Form of Merger Agreement to be entered into by
Marketwatch.Com, LLC (the "LLC") and the Registrant.
3.01 Registrant's Certificate of Incorporation.
3.02 Form of Registrant's Amended and Restated Certificate of
Incorporation to be effective upon the completion of this
offering.
3.03 Registrant's Bylaws.
4.01 Form of Specimen Stock Certificate for the Registrant's
Common Stock.
4.02 Form of Registration Rights Agreement to be entered into
among the Registrant, CBS Broadcasting Inc. (formerly known
as CBS Inc.)("CBS") and Data Broadcasting Corporation
("DBC").
4.03 Form of Stockholders' Agreement to be entered into among the
Registrant, Marketwatch.Com, LLC, CBS and DBC.
5.01 Opinion of Fenwick & West LLP regarding legality of the
securities being registered.*
10.01 Form of Indemnity Agreement to be entered into between the
Registrant with each of its directors and executive
officers.
10.02 Limited Liability Company Agreement of Marketwatch.Com, LLC,
dated October 29, 1997, between CBS and DBC.
10.03 Contribution Agreement dated October 29, 1997 among the LLC,
CBS, and DBC.
10.04 License Agreement dated October 29, 1997 between the LLC and
CBS.
10.05 Services Agreement dated October 29, 1997 between the LLC
and DBC.
10.06 Lease dated as of August 27, 1998 between the Registrant and
CBS Corporation.
10.07 Form of Amended and Restated License Agreement to be entered
into between the Registrant and CBS.
10.08 Form of Amended and Restated Services Agreement to be
entered into between the Registrant and DBC.
10.09 Form of Revolving Credit Agreement to be entered into by the
Registrant and DBC, together with the Form of Revolving
Promissory Note.
10.10 Form of Non-Plan LLC Option.
10.11 Registrant's 1998 Directors Stock Option Plan.
10.12 Registrant's 1998 Equity Incentive Plan.
10.13 Employment Agreement dated as of July 1, 1998 between the
Registrant and Lawrence Kramer.
10.14 Employment Agreement dated as of July 1, 1998 between the
Registrant and J. Peter Bardwick.
10.15 Insertion Order dated as of August 25, 1998 between DBC and
Marketwatch.Com, LLC.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01)*.
23.02 Consent of PricewaterhouseCoopers LLP.
23.03 Consent of PricewaterhouseCoopers LLP.
24.01 Power of Attorney (see Page II-5 of the Registration
Statement).
27.01 Financial Data Schedule (EDGAR Version Only).
</TABLE>
- ---------------
* To be supplied by amendment.
<PAGE> 1
EXHIBIT 2.01
MERGER AGREEMENT
OF
MARKETWATCH.COM, LLC
WITH AND INTO
MARKETWATCH.COM, INC.
This Merger Agreement (this "AGREEMENT") is dated as of ____________,
1998 by and between Marketwatch.Com, LLC, a Delaware limited liability company
("TARGET"), and MarketWatch.com, Inc., a Delaware corporation ("ACQUIRER").
1. Merger; Effective Time. Upon the terms and subject to the conditions
hereof, in accordance with the Delaware General Corporation Law (the "DGCL") and
the Delaware Limited Liability Company Act (the "DLLCA"), Target will be merged
with and into Acquirer (the "MERGER"). Acquirer will be the surviving
corporation (hereinafter referred to sometimes as the "SURVIVING CORPORATION")
of the Merger, and the separate existence of Target shall cease. The Merger will
be effective as of the date and at such time as this Agreement and any other
documents necessary to effect the Merger in accordance with the DGCL and DLLCA
are duly filed with the Secretary of State of the State of Delaware (the time
the Merger becomes effective being referred to herein as the "EFFECTIVE TIME").
2. Exchange of Securities.
(a) Conversion of Limited Liability Company Interests. At the
Effective Time, the limited liability company interests (the "INTEREST") in
Target of each member ("MEMBER") thereof immediately prior to the Effective Time
will, by virtue of the Merger and without further action on the part of any
Member, be converted into 4,500,000 shares of fully paid and nonassessable
Common Stock, par value $0.01 per share, of Acquirer ("ACQUIRER STOCK"). At the
Effective Time, the Interests held by the two Members, shall constitute 100% of
the outstanding Interests in Target.
(b) No Securities of Acquirer Outstanding. Immediately prior
to the Effective Time, there are no outstanding securities of Acquirer.
(c) Issuance of Stock Certificates. The Interests are not
represented by certificates. Promptly following the Effective Time, Acquirer
shall issue stock certificates representing the Acquirer Stock to the holders of
the Interests that were converted by virtue of the Merger.
(d) Target Options. At the Effective Time, each holder of an
outstanding option (collectively, the "Target Options") to purchase an Interest
shall be entitled, in accordance with the terms of such option, to purchase
after the Effective Time that number of shares of Acquirer's Common Stock,
determined by multiplying the Percentage Interest (as defined in the agreement
relating to such Target Option) subject to such Target Option on the Effective
Date by 100,000, and the exercise price per share for each such Target Option
will equal the aggregate
<PAGE> 2
exercise price of the Target Option immediately prior to the Effective Time
divided by the number of shares of Acquirer's Common Stock as determined above.
If the foregoing calculation results in an assumed option being exercisable for
a fraction of a share, then the number of shares of Acquirer's Common Stock
subject to such option will be rounded down to the nearest whole number with no
cash being payable for such fractional share. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422A of the United
States Internal Revenue Code, if applicable, and all other terms of the Target
Options will otherwise be unchanged. Continuous employment with the Target will
be credited to an optionee for purposes of determining the number of shares
subject to exercise after the Effective Time.
3. Governing Documents. At the Effective Time, the Certificate of
Incorporation of Acquirer in effect immediately prior to the Effective Time
shall become the Certificate of Incorporation of the Surviving Corporation and
the Bylaws of Acquirer in effect immediately prior to the Effective Time shall
become the Bylaws of the Surviving Corporation.
4. Principal Office. The location of the principal office of Acquirer
is 825 Battery Street, San Francisco, California 94111. The location of the
principal office of Acquirer in the State of Delaware is c/o The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19805. The name of its
registered agent in Delaware is The Corporation Trust Company.
5. Directors and Officers. At the Effective Time, the directors and
officers of Acquirer immediately prior to the Effective Time shall be and become
the directors and officers (holding the same titles and positions) of the
Surviving Corporation, and after the Effective Time shall serve in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation.
6. Employee Benefit Plans. At the Effective Time, the obligations of
Target under or with respect to every plan, trust, program and benefit then in
effect or administered by Target for the benefit of the directors, officers and
employees of Target, shall become the lawful obligations of Acquirer and shall
be implemented and administered in the same manner and without interruption
until the same are amended or otherwise lawfully altered or terminated.
Effective at the Effective Time, Acquirer hereby expressly adopts and assumes
all obligations of Target under such employee benefit plans.
7. Further Assurances. After the Effective Time, Acquirer and its
officers and directors may execute and deliver such deeds, assignments,
assurances and other documents and do all other things necessary or desirable to
vest, perfect or confirm title to Target's property or rights in Acquirer and
otherwise to carry out the purposes of the Merger in the name of Target or
otherwise.
8. Approval of Merger. The Merger has been approved by the holders of
100% of the outstanding Interests in Target.
9. Assignment. Neither party hereto may assign any of its rights or
obligations hereunder without the prior written consent of the other party
hereto. This Agreement will be
2
<PAGE> 3
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10. Abandonment. At any time before the Effective Time, this Agreement
may be terminated and the Merger abandoned by the Management Committee of Target
or the Board of Directors of Acquirer, notwithstanding approval of this
Agreement by the holders of the outstanding Interests in Target and such
Management Committee and such Board of Directors.
11. Amendment. At any time before the Effective Time, this Agreement
may be amended, modified or supplemented by the Management Committee of Target
and the Board of Directors of Acquirer, notwithstanding approval of this
Agreement by the holders of the outstanding Interests in Target; provided,
however, that no such amendment, modification or supplement not approved by the
holders of the outstanding Interests in Target may materially adversely affect
the benefits intended under this Agreement for the holders of the outstanding
Interests in Target.
12. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts
entered into and to be performed wholly within the State of Delaware without
regard to principles of conflict of laws.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
MARKETWATCH.COM, INC. MARKETWATCH.COM, LLC
By:_________________________ By:____________________________
Lawrence Kramer, President and Lawrence Kramer, President and
Chief Executive Officer Chief Executive Officer
Attest Attest
By:__________________________ By:____________________________
J. Peter Bardwick, Chief Financial J. Peter Bardwick, Chief
Officer and Secretary Financial Officer and Secretary
[SIGNATURE PAGE TO MERGER AGREEMENT]
4
<PAGE> 1
EXHIBIT 3.01
CERTIFICATE OF INCORPORATION
OF
MARKETWATCH.COM, INC.
ARTICLE I
The name of the corporation is MarketWatch.com, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The
name of its registered agent at that address is The Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the
corporation has authority to issue is Thirty-five Million (35,000,000) shares,
consisting of two classes: Thirty Million (30,000,000) shares of Common Stock,
$0.01 par value per share, and Five Million (5,000,000) shares of Preferred
Stock, $0.01 par value per share.
The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for the issuance of
the shares of Preferred Stock in one or more series, and, by filing a
certificate of designation pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding). The number
of authorized shares of Preferred Stock may also be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative vote
of the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a certificate or
certificates establishing a series of Preferred Stock.
Except as otherwise expressly provided in any certificate of
designation designating any series of Preferred Stock pursuant to the foregoing
provisions of this Article IV, any new series of Preferred Stock may be
designated, fixed and determined as provided herein by the Board of Directors
without approval of the holders of Common Stock or the holders of Preferred
Stock, or any series thereof, and any such new series may have powers,
preferences and rights, including, without limitation, voting rights, dividend
rights, liquidation rights, redemption rights and conversion rights, senior to,
junior to or pari passu with the rights of the Common Stock, the Preferred
Stock, or any future class or series of Preferred Stock or Common Stock.
<PAGE> 2
ARTICLE V
The Board of Directors of the corporation shall have the power to
adopt, amend or repeal Bylaws of the corporation.
ARTICLE VI
A. Election of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.
B. Special meetings of stockholders of the corporation may be called
only by either the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there exist
any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption), the Chairman of the Board or
the Chief Executive Officer.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation or other cause may be filled (a) by the
stockholders at any meeting, (b) by a majority of the directors, although less
than a quorum, or (c) by a sole remaining director, and directors so chosen
shall hold office for a term expiring at the next annual meeting of stockholders
at which the term of office of the class to which they have been elected
expires, and until their respective successors are elected, except in the case
of the death, resignation, or removal of any director. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director.
ARTICLE VIII
A. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for breach of
fiduciary duty as a director. Without limiting the effect of the preceding
sentence, if the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation Law,
as so amended.
B. To the extent permitted by applicable law, this corporation is also
authorized to provide indemnification of (and advancement of expenses to) agents
(and any other persons to which Delaware law permits this corporation to provide
indemnification) through bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in excess
of the indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or non-statutory), with respect to actions for breach of
duty to the corporation, its stockholders, and others.
C. Neither any amendment nor repeal of any of the foregoing provisions
of this Article VIII, nor the adoption of any provision of this Certificate of
Incorporation inconsistent
2
<PAGE> 3
with this Article VIII, shall eliminate, reduce or otherwise adversely affect
any limitation on the personal liability of a director of the corporation
existing at the time of such amendment, repeal or adoption of such an
inconsistent provision.
ARTICLE IX
The name and mailing address of the incorporator is Sayre E. Stevick,
c/o Fenwick & West LLP, Two Palo Alto Square, Palo Alto, CA 94306.
The undersigned incorporator hereby acknowledges that the foregoing
certificate is his act and deed and that the facts stated herein are true.
Date: August 21, 1998
/s/ SAYRE E. STEVICK
----------------------------------------
Sayre E. Stevick, Incorporator
<PAGE> 1
EXHIBIT 3.02
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MARKETWATCH.COM, INC.
ARTICLE I
The name of the corporation is MarketWatch.com, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The
name of its registered agent at that address is The Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the
corporation has authority to issue is Thirty-five Million (35,000,000) shares,
consisting of two classes: Thirty Million (30,000,000) shares of Common Stock,
$0.01 par value per share, and Five Million (5,000,000) shares of Preferred
Stock, $0.01 par value per share.
The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for the issuance of
the shares of Preferred Stock in one or more series, and, by filing a
certificate of designation pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding). The number
of authorized shares of Preferred Stock may also be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative vote
of the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a certificate or
certificates establishing a series of Preferred Stock.
Except as otherwise expressly provided in any certificate of
designation designating any series of Preferred Stock pursuant to the foregoing
provisions of this Article IV, any new series of Preferred Stock may be
designated, fixed and determined as provided herein by the Board of Directors
without approval of the holders of Common Stock or the holders of Preferred
Stock, or any series thereof, and any such new series may have powers,
preferences and rights, including, without limitation, voting rights, dividend
rights, liquidation rights, redemption rights and conversion rights, senior to,
junior to or pari passu with the rights of the Common Stock, the Preferred
Stock, or any future class or series of Preferred Stock or Common Stock.
<PAGE> 2
ARTICLE V
The Board of Directors of the corporation shall have the power to
adopt, amend or repeal Bylaws of the corporation.
ARTICLE VI
A. Election of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.
B. Special meetings of stockholders of the corporation may be called
only by the Board of Directors pursuant to a resolution adopted by a majority of
the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such resolution
is presented to the Board for adoption), the Chairman of the Board, the Chief
Executive Officer or any holder of twenty five percent (25%) of the outstanding
Common Stock of the corporation.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation or other cause may be filled (a) by the
stockholders at any meeting, (b) by a majority of the directors, although less
than a quorum, or (c) by a sole remaining director, and directors so chosen
shall hold office for a term expiring at the next annual meeting of stockholders
at which the term of office of the class to which they have been elected
expires, and until their respective successors are elected, except in the case
of the death, resignation, or removal of any director. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director.
ARTICLE VIII
A. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for breach of
fiduciary duty as a director. Without limiting the effect of the preceding
sentence, if the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation Law,
as so amended.
B. To the extent permitted by applicable law, this corporation is also
authorized to provide indemnification of (and advancement of expenses to) agents
(and any other persons to which Delaware law permits this corporation to provide
indemnification) through bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in excess
of the indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or non-statutory), with respect to actions for breach of
duty to the corporation, its stockholders, and others.
2
<PAGE> 3
C. Neither any amendment nor repeal of any of the foregoing provisions
of this Article VIII, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article VIII, shall eliminate, reduce or
otherwise adversely affect any limitation on the personal liability of a
director of the corporation existing at the time of such amendment, repeal or
adoption of such an inconsistent provision.
ARTICLE IX
The name and mailing address of the incorporator is Sayre E. Stevick,
c/o Fenwick & West LLP, Two Palo Alto Square, Palo Alto, CA 94306.
The undersigned incorporator hereby acknowledges that the foregoing
certificate is his act and deed and that the facts stated herein are true.
Date: _____________, 1998
-----------------------------------
Sayre E. Stevick, Incorporator
3
<PAGE> 1
EXHIBIT 3.03
BYLAWS
OF
MARKETWATCH.COM, INC.
(a Delaware corporation)
As Adopted September 8, 1998
ARTICLE I
STOCKHOLDERS
Section 1.1: Annual Meetings. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place, either
within or without the State of Delaware, as the Board of Directors shall each
year fix. Any other proper business may be transacted at the annual meeting.
Section 1.2: Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
Chief Executive Officer, by a majority of the members of the Board of Directors
or any holder of at least twenty-five percent (25%) of the outstanding Common
Stock of the Corporation. Special meetings may not be called by any other person
or persons. If a special meeting of stockholders is called by any person or
persons other than by a majority of the members of the Board of Directors, then
such person or persons shall call such meeting by delivering a written request
to call such meeting to each member of the Board of Directors, and the Board of
Directors shall then determine the time, date and place of such special meeting,
which shall be held not more than one hundred twenty (120) nor less than
thirty-five (35) days after the written request to call such special meeting was
delivered to each member of the Board of Directors.
Section 1.3: Notice of Meetings. Written notice of all meetings of
stockholders shall be given stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by applicable law or the Certificate of
Incorporation of the Corporation, such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder of record entitled to vote at such meeting.
Section 1.4: Adjournments. Any meeting of stockholders may adjourn from
time to time to reconvene at the same or another place, and notice need not be
given of any such adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, then a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at
<PAGE> 2
the meeting. At the adjourned meeting the Corporation may transact any
business that might have been transacted at the original meeting.
Section 1.5: Quorum. At each meeting of stockholders the holders of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except if otherwise required by applicable law. If a quorum shall fail
to attend any meeting, the chairman of the meeting or the holders of a majority
of the shares entitled to vote who are present, in person or by proxy, at the
meeting may adjourn the meeting. Shares of the Corporation's stock belonging to
the Corporation (or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation are held,
directly or indirectly, by the Corporation), shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing shall
not limit the right of the Corporation or any other corporation to vote any
shares of the Corporation's stock held by it in a fiduciary capacity.
Section 1.6: Organization. Meetings of stockholders shall be presided
over by such person as the Board of Directors may designate, or, in the absence
of such a person, the Chief Executive Officer of the Corporation, or, in the
absence of such person, the Chairman of the Board, or, in the absence of such
person, such person as may be chosen by the holders of a majority of the shares
of stock entitled to vote who are present, in person or by proxy, at the
meeting. Such person shall be chairman of the meeting and, subject to Section
1.10 hereof, shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seems to him or her to be in order. The Secretary of the
Corporation shall act as secretary of the meeting, but in his or her absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7: Voting; Proxies. Unless otherwise provided by law or the
Certificate of Incorporation, and subject to the provisions of Section 1.8 of
these Bylaws, each stockholder shall be entitled to one (1) vote for each share
of stock held by such stockholder. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for such
stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in
any manner permitted by applicable law. Voting at meetings of stockholders need
not be by written ballot unless such is demanded at the meeting before voting
begins by a stockholder or stockholders holding shares representing at least one
percent (1%) of the votes entitled to vote at such meeting, or by such
stockholder's or stockholders' proxy; provided, however, that an election of
directors shall be by written ballot if demand is so made by any stockholder at
the meeting before voting begins. If a vote is to be taken by written ballot,
then each such ballot shall state the name of the stockholder or proxy voting
and such other information as the chairman of the meeting deems appropriate.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Unless otherwise provided by applicable law, the
Certificate of Incorporation or these Bylaws, every matter other than the
election of directors shall be decided by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote thereon that are present in
person or represented by proxy at the meeting and are voted for or against the
matter.
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<PAGE> 3
Section 1.8: Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If no record date is fixed by the Board of Directors,
then the record date shall be as provided by applicable law. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 1.9: List of Stockholders Entitled to Vote. A complete list of
stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present at the meeting.
Section 1.10: Inspectors of Elections.
(a) Applicability. Unless otherwise provided in the
Corporation's Certificate of Incorporation or required by the Delaware General
Corporation Law, the following provisions of this Section 1.10 shall apply only
if and when the Corporation has a class of voting stock that is: (i) listed on a
national securities exchange; (ii) authorized for quotation on an automated
interdealer quotation system of a registered national securities association; or
(iii) held of record by more than 2,000 stockholders; in all other cases,
observance of the provisions of this Section 1.10 shall be optional, and at the
discretion of the Corporation.
(b) Appointment. The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors of election to act at
the meeting and make a written report thereof. The Corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting shall appoint one or more inspectors to act
at the meeting.
(c) Inspector's Oath. Each inspector of election, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability.
-3-
<PAGE> 4
(d) Duties of Inspectors. At a meeting of stockholders, the
inspectors of election shall (i) ascertain the number of shares outstanding and
the voting power of each share, (ii) determine the shares represented at a
meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period of time a record of
the disposition of any challenges made to any determination by the inspectors,
and (v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(e) Opening and Closing of Polls. The date and time of the
opening and the closing of the polls for each matter upon which the stockholders
will vote at a meeting shall be announced by the inspectors at the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes thereto, shall
be accepted by the inspectors after the closing of the polls unless the Court of
Chancery upon application by a stockholder shall determine otherwise.
(f) Determinations. In determining the validity and counting
of proxies and ballots, the inspectors shall be limited to an examination of the
proxies, any envelopes submitted with those proxies, any information provided in
connection with proxies in accordance with Section 212(c)(2) of the Delaware
General Corporation Law, ballots and the regular books and records of the
Corporation, except that the inspectors may consider other reliable information
for the limited purpose of reconciling proxies and ballots submitted by or on
behalf of banks, brokers, their nominees or similar persons which represent more
votes than the holder of a proxy is authorized by the record owner to cast or
more votes than the stockholder holds of record. If the inspectors consider
other reliable information for the limited purpose permitted herein, the
inspectors at the time they make their certification of their determinations
pursuant to this Section 1.11 shall specify the precise information considered
by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
Section 1.11: Notice of Stockholder Business; Nominations.
(a) Annual Meeting of Stockholders.
(i) Nominations of persons for election to the Board
of Directors and the proposal of business to be considered by the stockholders
at an annual meeting of stockholders shall be made (A) pursuant to the notice of
such meeting, (B) by or at the direction of the Board of Directors or (C) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of the notice provided for in this Section 1.11, who is entitled to vote
at such meeting and who complies with the notice procedures set forth in this
Section 1.11.
(ii) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (C) of
subparagraph (a)(i) of this Section 1.11, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for stockholder action; provided,
however, that the provisions of this subparagraph (a)(ii) and subparagraph
(a)(iii) shall
-4-
<PAGE> 5
not apply to (A) any stockholder holding at least twenty-five percent (25%) of
the outstanding Common Stock of the Corporation or (B) any stockholder that has
an agreement with the Corporation for the nomination of a person or persons for
election to the Board of Directors. To be timely, a stockholder's notice must be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the sixtieth (60th) day nor earlier than
the close of business on the ninetieth (90th) day prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than thirty (30) days before or more
than sixty (60) days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the close of business on the
ninetieth (90th) day prior to such annual meeting and not later than the close
of business on the later of the sixtieth (60th) day prior to such annual meeting
or the close of business on the tenth (10th) day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. Such stockholder's notice shall set forth: (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (1) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, and (2) the class and number of shares of the Corporation that are owned
beneficially and held of record by such stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence
of subparagraph (a)(ii) of this Section 1.11 to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
Corporation is increased and there is no public announcement by the Corporation
naming all of the nominees for director or specifying the size of the increased
board of directors at least seventy (70) days prior to the first anniversary of
the preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at least
seventy (70) days prior to such annual meeting), a stockholder's notice required
by this Section 1.11 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary of the Corporation at the principal executive office
of the Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of such meeting.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected
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pursuant to the Corporation's notice of such meeting (i) by or at the direction
of the Board of Directors, (ii) by a stockholder holding at least twenty-five
percent (25%) of the outstanding Common Stock of the Corporation or having an
agreement with the Corporation for the nomination of a person or persons for
election to the Board of Directors, (iii) provided that the Board of Directors,
such holder of at least twenty-five percent (25%) of the outstanding Common
Stock of the Corporation or such stockholder having such an agreement has
determined that directors shall be elected at such meeting, by any other
stockholder of the Corporation who is a stockholder of record at the time of
giving of notice of the special meeting, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section
1.11. In the event the Corporation, any holder of, twenty-five percent (25%) of
the outstanding Common Stock of the Corporation or any stockholder having an
agreement with the Corporation for the nomination of a person or persons for
election to the Board of Directors calls a special meeting of stockholders for
the purpose of electing one or more directors to the Board of Directors, any
other stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the Corporation's notice of
meeting, if the stockholder's notice required by subparagraph (a)(ii) of this
Section 1.11 shall be delivered to the Secretary of the Corporation at the
principal executive offices of the Corporation not earlier than the ninetieth
(90th) day prior to such special meeting and not later than the close of
business on the later of the sixtieth (60th) day prior to such special meeting
or the tenth (10th) day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting.
(c) General.
(i) Only such persons who are nominated in accordance
with the procedures set forth in this Section 1.11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 1.11. Except as otherwise provided by law or these
bylaws, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 1.11 and, if any proposed nomination or business is not in
compliance herewith, to declare that such defective proposal or nomination shall
be disregarded.
(ii) For purposes of this Section 1.11, the term
"public announcement" shall mean disclosure in a press release reported by the
Dow Jones News Service, Associated Press or comparable national news service or
in a document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of
this Section 1.11, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth herein. Nothing in this Section 1.11 shall be
deemed to affect any rights of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1: Number; Qualifications. The Board of Directors shall
consist of one or more members. The initial number of directors shall be seven
(7), and thereafter shall be fixed from time to time by resolution of the Board
of Directors. No decrease in the authorized number of directors constituting the
Board of Directors shall shorten the term of any incumbent director. Directors
need not be stockholders of the Corporation.
Section 2.2: Election; Resignation; Removal; Vacancies. Each director
shall serve until his or her successor is elected and qualified, or until his or
her earlier resignation or removal. Any director may resign at any time upon
written notice to the Corporation. Any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors and any vacancy
occurring in the Board of Directors for any cause, and any newly created
directorship resulting from any increase in the authorized number of directors
to be elected by all stockholders having the right to vote as a single class,
may be filled by the stockholders, by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
Section 2.3: Regular Meetings. Regular meetings of the Board of
Directors may be held at such places, within or without the State of Delaware,
and at such times as the Board of Directors may from time to time determine.
Notice of regular meetings need not be given if the date, times and places
thereof are fixed by resolution of the Board of Directors.
Section 2.4: Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer or a majority of the members of the Board of Directors then in office
and may be held at any time, date or place, within or without the State of
Delaware, as the person or persons calling the meeting shall fix. Notice of the
time, date and place of such meeting shall be given, orally or in writing, by
the person or persons calling the meeting to all directors at least four (4)
days before the meeting if the notice is mailed, or at least twenty-four (24)
hours before the meeting if such notice is given by telephone, hand delivery,
facsimile or similar communication method. Unless otherwise indicated in the
notice, any and all business may be transacted at a special meeting.
Section 2.5: Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee of the Board, may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
conference telephone or similar communications equipment shall constitute
presence in person at such meeting.
Section 2.6: Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the total number of authorized directors shall
constitute a quorum for the transaction of business. Except as otherwise
provided herein or in the Certificate of
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Incorporation, or required by law, the vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 2.7: Organization. Meetings of the Board of Directors shall be
presided over by the Chief Executive Officer, or in his or her absence by the
Chairman of the Board, or in his or her absence by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8: Written Action by Directors. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
such committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or committee,
respectively.
Section 2.9: Powers. The Board of Directors may, except as otherwise
required by law or the Certificate of Incorporation, exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2.10: Compensation of Directors. Directors, as such, may
receive, pursuant to a resolution of the Board of Directors, fees and other
compensation for their services as directors, including without limitation their
services as members of committees of the Board of Directors.
ARTICLE III
COMMITTEES
Section 3.1: Committees. The Board of Directors may, by resolution
passed by a majority of the total number of authorized directors, designate one
or more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of the committee, the member or members thereof present at any meeting of
such committee who are not disqualified from voting, whether or not he, she or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in subsection (a) of Section 151 of the Delaware General Corporation
Law, fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation, or the conversion into, or
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the exchange of such shares for, shares of any other class or classes or any
other series of the same or any other class or classes of stock of the
Corporation, or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation under Sections 251 or 252 of the Delaware General
Corporation Law, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation; and unless the
resolution of the Board of Directors expressly so provides, no such committee
shall have the power or authority to declare a dividend, authorize the issuance
of stock or adopt a certificate of ownership and merger pursuant to section 253
of the Delaware General Corporation Law.
Section 3.2: Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these Bylaws.
ARTICLE IV
OFFICERS
Section 4.1: Generally. The officers of the Corporation shall consist
of a Chief Executive Officer and/or a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers, including a Chairman of the
Board of Directors, one or more Assistant Officers and/or Chief Financial
Officer, as may from time to time be appointed by the Board of Directors. All
officers shall be elected by the Board of Directors; provided, however, that the
Board of Directors may empower the Chief Executive Officer of the Corporation to
appoint officers other than the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer or the Treasurer. Each
officer shall hold office until his or her successor is elected and qualified or
until his or her earlier resignation or removal. Any number of offices may be
held by the same person. Any officer may resign at any time upon written notice
to the Corporation. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled by the Board of
Directors. The Chief Executive Officer may also give one or more employees of
the Corporation position titles that include "Vice President" without making
such persons officers of the Corporation.
Section 4.2: Chief Executive Officer. Subject to the control of the
Board of Directors and such supervisory powers, if any, as may be given by the
Board of Directors, the powers and duties of the Chief Executive Officer of the
Corporation are:
(a) To act as the general manager and, subject to the control
of the Board of Directors, to have general supervision, general management,
direction and control of the business and affairs of the Corporation and the
general supervision and direction of all of the officers, employees and agents
of the Corporation;
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(b) To preside at all meetings of the stockholders and of the
Board of Directors;
(c) To call meetings of the stockholders and of the Board of
Directors to be held at such times and, subject to the limitations prescribed by
law or by these Bylaws, at such places as he or she shall deem proper; and
(d) To affix the signature of the Corporation to all deeds,
conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and
other papers and instruments in writing which have been authorized by the Board
of Directors or which, in the judgment of the Chief Executive Officer, should be
executed on behalf of the Corporation; to sign certificates for shares of stock
of the Corporation; and, subject to the direction of the Board of Directors, to
have general charge of the property of the Corporation and to supervise and
control all officers, agents and employees of the Corporation.
Section 4.3: Chairman of the Board. The Chairman of the Board shall
have such powers and duties as provided in these bylaws and as the Board of
Directors may from time to time prescribe.
Section 4.4: President. The President shall be the Chief Executive
Officer of the Corporation unless the Board of Directors shall have designated
another officer as the Chief Executive Officer of the Corporation. Subject to
the provisions of these Bylaws and to the direction of the Board of Directors,
and subject to the supervisory powers of the Chief Executive Officer (if the
Chief Executive Officer is an officer other than the President), and subject to
such supervisory powers and authority as may be given by the Board of Directors
to the Chairman of the Board, and/or to any other officer, the President shall
have the responsibility for the general management and the control of the
business and affairs of the Corporation and the general supervision and
direction of all of the officers, employees and agents of the Corporation (other
than the Chief Executive Officer, if the Chief Executive Officer is an officer
other than the President) and shall perform all duties and have all powers that
are commonly incident to the officer of President or that are delegated to the
President by the Board of Directors.
Section 4.5: Vice President. Each Vice President shall have all such
powers and duties as are delegated to him or her by the Board of Directors or
the Chief Executive Officer. A Vice President may be designated by the Board to
perform the duties and exercise the powers of the Chief Executive Officer or the
President in the event of the Chief Executive Officer's or President's absence
or disability.
Section 4.6: Chief Financial Officer. Subject to the direction of the
Board of Directors, the Chief Executive Officer and the President, the Chief
Financial Officer shall perform all duties and have all powers that are commonly
incident to the office of chief financial officer.
Section 4.7: Treasurer. The Treasurer shall have custody of all monies
and securities of the Corporation. The Treasurer shall make such disbursements
of the funds of the Corporation as are authorized and shall render from time to
time an account of all such transactions. The Treasurer shall also perform such
other duties and have such other powers as are commonly
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incident to the office of Treasurer, or as the Board of Directors, the Chief
Executive Officer or the President may from time to time prescribe.
Section 4.8: Secretary. The Secretary shall issue or cause to be issued
all authorized notices for, and shall keep, or cause to be kept, minutes of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the corporate minute books and similar records and shall perform
such other duties and have such other powers as are commonly incident to the
office of Secretary, or as the Board of Directors, the Chief Executive Officer
or the President may from time to time prescribe.
Section 4.9: Assistant Officers. The Assistant Officers, which may
include one or more Assistant Secretaries and/or one or more Assistant
Treasurers, in general shall perform such duties as are customary or as shall be
assigned to them by resolution of the Board of Directors. If required by the
Board of Directors, the Assistant Treasurers shall respectively give bonds for
the faithful discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine.
Section 4.10: Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.
Section 4.11: Removal. Any officer of the Corporation shall serve at
the pleasure of the Board of Directors and may be removed at any time, with or
without cause, by the Board of Directors. Such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation.
ARTICLE V
STOCK
Section 5.1: Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chairman
or Vice-Chairman of the Board of Directors, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the Corporation, certifying the number of shares
owned by such stockholder in the Corporation. Any or all of the signatures on
the certificate may be a facsimile.
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate previously issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to agree
to indemnify the Corporation and/or to give the Corporation a bond sufficient to
indemnify it, against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
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Section 5.3: Other Regulations. The issue, transfer, conversion and
registration of stock certificates shall be governed by such other regulations
as the Board of Directors may establish.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification of Officers and Directors. Each person who
was or is made a party to, or is threatened to be made a party to, or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he
or she (or a person of whom he or she is the legal representative), is or was a
director or officer of the Corporation or a Predecessor (as defined below) or is
or was serving at the request of the Corporation or a Predecessor (as defined
below) as a director or officer of another corporation (including any subsidiary
of the Corporation or a Predecessor), or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by the Delaware General Corporation Law, against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes and penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators. As used herein, the term "Predecessor" means Marketwatch.Com,
LLC.
Section 6.2: Advance of Expenses. The Corporation shall pay all
expenses (including attorneys' fees) incurred by such a director or officer in
defending any such proceeding as they are incurred in advance of its final
disposition; provided, however, that if the Delaware General Corporation Law
then so requires, the payment of such expenses incurred by such a director or
officer in advance of the final disposition of such proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article VI or otherwise; and provided, further, that the Corporation shall
not be required to advance any expenses to a person against whom the Corporation
directly brings a claim, in a proceeding, alleging that such person has breached
his or her duty of loyalty to the Corporation, committed an act or omission not
in good faith or that involves intentional misconduct or a knowing violation of
law, or derived an improper personal benefit from a transaction.
Section 6.3: Non-Exclusivity of Rights. The rights conferred on any
person in this Article VI shall not be exclusive of any other right that such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaw, agreement, vote or consent of stockholders
or disinterested directors, or otherwise. Additionally, nothing in this Article
VI shall limit the ability of the Corporation, in its discretion, to indemnify
or advance expenses to persons whom the Corporation is not obligated to
indemnify or advance expenses pursuant to this Article VI.
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Section 6.4: Indemnification Contracts. The Board of Directors is
authorized to cause the Corporation to enter into indemnification contracts with
any director, officer, employee or agent of the Corporation, or any person
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing indemnification rights
to such person. Such rights may be greater than those provided in this Article
VI.
Section 6.5: Effect of Amendment. Any amendment, repeal or modification
of any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.
ARTICLE VII
NOTICES
Section 7.1: Notice. Except as otherwise specifically provided herein
or required by law, all notices required to be given pursuant to these Bylaws
shall be in writing and may in every instance be effectively given by hand
delivery (including use of a delivery service), by depositing such notice in the
mail, postage prepaid, or by sending such notice by prepaid telegram, telex,
overnight express courier, mailgram or facsimile. Any such notice shall be
addressed to the person to whom notice is to be given at such person's address
as it appears on the records of the Corporation. Each notice of a special
meeting of stockholders or directors shall specify the business to be transacted
and the purpose of such meeting. The notice shall be deemed given (i) in the
case of hand delivery, when received by the person to whom notice is to be given
or by any person accepting such notice on behalf of such person, (ii) in the
case of delivery by mail, upon deposit in the mail, (iii) in the case of
delivery by overnight express courier, on the first business day after such
notice is dispatched, and (iv) in the case of delivery via facsimile, when
dispatched.
Section 7.2: Waiver of Notice. Whenever notice is required to be given
under any provision of these Bylaws, a written waiver of notice, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.
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ARTICLE VIII
INTERESTED DIRECTORS
Section 8.1: Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof that
authorizes the contract or transaction, or solely because his, her or their
votes are counted for such purpose, if: (i) the material facts as to his, her or
their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; (ii) the material
facts as to his, her or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof, or the stockholders. Interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IX
MISCELLANEOUS
Section 9.1: Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
Section 9.2: Seal. The Board of Directors may provide for a corporate
seal, which shall have the name of the Corporation inscribed thereon and shall
otherwise be in such form as may be approved from time to time by the Board of
Directors.
Section 9.3: Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, magnetic tape,
diskettes, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 9.4: Reliance Upon Books and Records. A member of the Board of
Directors, or a member of any committee designated by the Board of Directors
shall, in the performance of his or her duties, be fully protected in relying in
good faith upon records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of
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the Corporation's officers or employees, or committees of the Board of
Directors, or by any other person as to matters the member reasonably believes
are within such other person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Corporation.
Section 9.5: Certificate of Incorporation Governs. In the event of any
conflict between the provisions of the Corporation's Certificate of
Incorporation and Bylaws, the provisions of the Certificate of Incorporation
shall govern.
Section 9.6: Severability. If any provision of these Bylaws shall be
held to be invalid, illegal, unenforceable or in conflict with the provisions of
the Corporation's Certificate of Incorporation, then such provision shall
nonetheless be enforced to the maximum extent possible consistent with such
holding and the remaining provisions of these Bylaws (including without
limitation, all portions of any section of these Bylaws containing any such
provision held to be invalid, illegal, unenforceable or in conflict with the
Certificate of Incorporation, that are not themselves invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation) shall remain
in full force and effect.
ARTICLE X
AMENDMENT
Section 10.1: Amendments. Stockholders of the Corporation holding a
majority of the Corporation's outstanding voting stock shall have the power to
adopt, amend or repeal Bylaws. To the extent provided in the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation shall
also have the power to adopt, amend or repeal Bylaws of the Corporation, except
insofar as Bylaws adopted by the stockholders shall otherwise provide.
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CERTIFICATION OF BYLAWS
OF
MARKETWATCH.COM, INC.
(A DELAWARE CORPORATION)
KNOW ALL BY THESE PRESENTS:
I, __________________, certify that I am Secretary of MarketWatch.com,
Inc. a Delaware corporation (the "Company"), that I am duly authorized to make
and deliver this certification, that the attached Bylaws are a true and correct
copy of the Bylaws of the Company in effect as of the date of this certificate.
Dated: ______, 1998
------------------------------
, Secretary
<PAGE> 17
BYLAWS
OF
MARKETWATCH.COM, INC.
A Delaware Corporation
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I - STOCKHOLDERS ..................................................................... 1
Section 1.1: Annual Meetings...................................................... 1
Section 1.2: Special Meetings..................................................... 1
Section 1.3: Notice of Meetings................................................... 1
Section 1.4: Adjournments......................................................... 1
Section 1.5: Quorum............................................................... 2
Section 1.6: Organization......................................................... 2
Section 1.7: Voting; Proxies...................................................... 2
Section 1.8: Fixing Date for Determination of Stockholders
of Record .......................................................... 3
Section 1.9: List of Stockholders Entitled to Vote................................ 3
Section 1.10: Inspectors of Elections.............................................. 3
Section 1.11: Notice of Stockholder Business; Nominations.......................... 4
ARTICLE II - BOARD OF DIRECTORS.................................................................. 6
Section 2.1: Number; Qualifications............................................... 6
Section 2.2: Election; Resignation; Removal; Vacancies............................ 7
Section 2.3: Regular Meetings..................................................... 7
Section 2.4: Special Meetings..................................................... 7
Section 2.5: Telephonic Meetings Permitted........................................ 7
</TABLE>
-i-
<PAGE> 18
BYLAWS
OF
MARKETWATCH.COM, INC.
A Delaware Corporation
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 2.6: Quorum; Vote Required for Action..................................... 7
Section 2.7: Organization......................................................... 8
Section 2.8: Written Action by Directors.......................................... 8
Section 2.9: Powers............................................................... 8
Section 2.10: Compensation of Directors............................................ 8
ARTICLE III - COMMITTEES ..................................................................... 8
Section 3.1: Committees........................................................... 8
Section 3.2: Committee Rules...................................................... 9
ARTICLE IV - OFFICERS ..................................................................... 9
Section 4.1: Generally............................................................ 9
Section 4.2: Chief Executive Officer.............................................. 9
Section 4.3: Chairman of the Board................................................ 10
Section 4.4: President............................................................ 10
Section 4.5: Vice President....................................................... 10
Section 4.6: Chief Financial Officer.............................................. 10
Section 4.7: Treasurer............................................................ 10
Section 4.8: Secretary............................................................ 11
Section 4.9: Assistant Officers................................................... 11
</TABLE>
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<PAGE> 19
BYLAWS
OF
MARKETWATCH.COM, INC.
A Delaware Corporation
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.10: Delegation of Authority.............................................. 11
Section 4.11: Removal.............................................................. 11
ARTICLE V - STOCK ..................................................................... 11
Section 5.l: Certificates......................................................... 11
Section 5.2: Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificate.......................................... 11
Section 5.3: Other Regulations.................................................... 11
ARTICLE VI - INDEMNIFICATION..................................................................... 11
Section 6.1: Indemnification of Officers and Directors............................ 11
Section 6.2: Advance of Expenses.................................................. 12
Section 6.3: Non-Exclusivity of Rights............................................ 12
Section 6.4: Indemnification Contracts............................................ 13
Section 6.5: Effect of Amendment.................................................. 13
ARTICLE VII - NOTICES ..................................................................... 13
Section 7.l: Notice............................................................... 13
Section 7.2: Waiver of Notice..................................................... 13
ARTICLE VIII - INTERESTED DIRECTORS.............................................................. 14
Section 8.1: Interested Directors; Quorum......................................... 14
</TABLE>
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<PAGE> 20
BYLAWS
OF
MARKETWATCH.COM, INC.
A Delaware Corporation
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IX - MISCELLANEOUS ..................................................................... 14
Section 9.1: Fiscal Year.......................................................... 14
Section 9.2: Seal................................................................. 14
Section 9.3: Form of Records...................................................... 14
Section 9.4: Reliance Upon Books and Records...................................... 14
Section 9.5: Certificate of Incorporation Governs................................. 15
Section 9.6: Severability......................................................... 15
ARTICLE X - AMENDMENT ..................................................................... 15
Section 10.1: Amendments........................................................... 15
</TABLE>
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<PAGE> 21
BYLAWS
OF
MARKETWATCH.COM, INC.
(a Delaware corporation)
As Adopted _____, 1998
<PAGE> 1
EXHIBIT 4.01
Common Stock Common Stock
Number Shares
MarketWatch.com, Inc.
<TABLE>
<S> <C> <C>
THIS CERTIFICATE IS TRANSFERABLE INCORPORATED UNDER THE LAWS OF SEE REVERSE FOR CERTAIN
IN NEW YORK, NY AND THE STATE OF DELAWARE DEFINITIONS AND A STATEMENT
RIDGEFIELD, NJ RELATING TO RIGHTS,
PREFERENCES, PRIVILEGES AND
RESTRICTIONS ON SHARES
</TABLE>
This Certifies that CUSIP
----------------
is the record owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE, OF
MarketWatch.com, Inc.
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
[corporate seal]
/s/ J. Peter Bardwick /s/ Larry S. Kramer
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
MarketWatch.com, Inc..
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of designation, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge at
the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN -- as tenants in common UNIF GIFT MIN ACT -- Custodian
COM -- as tenants by the ----------- ---------
TEN -- entireties (Cust) (Minor)
ENT -- as joint tenants with under Uniform Gifts to Minors
JT TEN -- right of survivorship and Act
not as tenants in common --------------------------
(State)
UNIF TRF MIN ACT -- Custodian (until age )
------ --
(Cust)
under Uniform Transfers
-------
(Minor)
to Minors and
-----------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- ------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
------------------
X
X
---------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
--------------------------------------------------
THE SIGNATURE(S) MUST BE GUARATNEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-16.
<PAGE> 1
EXHIBIT 4.02
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of October __, 1998 (the "EFFECTIVE DATE") by and between
MarketWatch.com, Inc., a Delaware corporation (the "COMPANY"), and the entities
listed on Exhibit A hereto (collectively, the "STOCKHOLDERS" and each
individually a "STOCKHOLDER").
R E C I T A L S
WHEREAS, the Company and the Stockholders have entered into that
certain Merger Agreement (the "MERGER AGREEMENT") dated as of the date hereof,
which provides, among other things, that Marketwatch.Com, LLC (the "LLC") shall
merge with and into the Company (the "MERGER") with the Company being the entity
surviving the Merger;
WHEREAS, immediately prior to the Merger, the Stockholders were the
sole members of the LLC;
WHEREAS, the Stockholders each received 4,500,000 shares of the Common
Stock of the Company, par value $0.01 per share (the "MERGER SHARES"), in
exchange for their membership interests in the LLC;
WHEREAS, as a condition to the Stockholders agreeing to enter into the
Merger Agreement, the Company has agreed to grant the Stockholders certain
registration rights with respect to the Merger Shares and other securities of
the Company which they may hold in the future;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Stockholders
hereby, intending to be legally bound by the terms hereof, agree as follows:
1. REGISTRATION RIGHTS.
1.1 Definitions. For purposes of this Agreement:
(a) Form S-3. The term "FORM S-3" means such form
under the Securities Act as is in effect on the date hereof or any successor
registration form under the Securities Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(b) Holder. The term "HOLDER" means any person owning
of record Registrable Securities that have not been sold to the public or
pursuant to Rule 144 ("RULE 144") promulgated under the Securities Act of 1933,
as amended (the "1933 ACT") or any assignee of
<PAGE> 2
record of such Registrable Securities to whom rights under this Agreement have
been duly assigned in accordance with this Agreement.
(c) Prospectus. The term "PROSPECTUS" shall mean
the prospectus included in any registration statement filed pursuant to the
provisions hereof (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the 1933
Act), as amended or supplemented by any prospectus supplement (including,
without limitation, any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
registration statement), and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(d) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (1) all of the Merger Shares, (2) any securities of the
Company subsequently acquired by a Stockholder or any entity which controls, is
controlled by, or is under common control with a Stockholder, and (3) any
securities of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement thereof excluding in all cases,
however, (i) any Registrable Securities sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with this
Agreement, or (ii) any Registrable Securities sold in a public offering pursuant
to a registration statement filed with the SEC or sold pursuant to Rule 144
except to the extent reacquired by a Stockholder or an entity which controls, is
controlled by or is under common control with a Stockholder as provided in
clause (2) above.
(e) Registrable Securities Then Outstanding. The
number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall mean the
number of Registrable Securities that are common stock of the Company and are
issued and outstanding at such time plus with respect to any Registrable
Securities issued and outstanding at such time that are not common stock of the
Company, the number of shares of common stock of the Company into which such
Registrable Securities are then or will be convertible or otherwise exchangeable
or exerciseable.
(f) Registration. The terms "REGISTER,"
"REGISTERED," and "REGISTRATION" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act, and the
declaration or ordering of effectiveness of such registration statement.
(g) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
1.2 Demand Registration.
(a) Request by Stockholder. If the Company shall
receive at any time after 180 days following the effective date of the
registration statement for the Company's initial public offering, a written
request from either Stockholder (the "INITIATING HOLDER") that the Company file
a registration statement under the 1933 Act covering the registration of
Registrable
-2-
<PAGE> 3
Securities with a reasonably anticipated aggregate price to the public of at
least three million dollars ($3,000,000) pursuant to this Section 1.2, then the
Company shall effect, as soon as practicable, and in any event use its best
efforts to effect within 60 days of such request, the registration under the
1933 Act of all Registrable Securities which the Initiating Holder requests to
be registered and included in such registration, subject only to the limitations
of this Section 1.2.
(b) Underwriting. If the Initiating Holder intends
to distribute the Registrable Securities covered by its request by means of an
underwriting, then it shall so advise the Company as a part of its request made
pursuant to this Section 1.2. The Initiating Holder shall (a) select the
managing underwriter to administer such offering after consultation with the
Company and subject to the approval of the Company, which approval shall not be
unreasonably withheld, and (b) enter into an underwriting agreement in customary
form with such managing underwriter. Notwithstanding any other provision of this
Section 1.2, if the underwriter(s) advise(s) the Company in writing that
marketing factors require a limitation of the number of Registrable Securities
which would otherwise be registered and underwritten pursuant hereto the Company
will so advise the Initiating Holder, and the number of securities that may be
included in the underwriting shall be reduced as required by the underwriter(s)
and allocated first, to the Initiating Holder, second, to the Company, third,
among all other holders of Registrable Securities and fourth, among all other
holders of securities of the Company.
(c) Maximum Number of Demand Registrations. The
Company is obligated to effect only two (2) such registrations for each
Stockholder pursuant to this Section 1.2. Only registrations in which a
Stockholder is the Initiating Holder shall count against such limit with respect
to such Stockholder. The Company shall not be deemed to have effected a
registration pursuant to this Section 1.2 unless a registration statement in
respect thereof shall have been declared effective by the SEC and remains
effective for 120 days or such earlier time until all Registrable Securities
registered under such Registration Statement have been sold (or withdrawn from
such registration at the request of the Initiating Holder).
(d) Deferral; Jurisdictional Requirements.
Notwithstanding the foregoing, if the Company shall furnish to the Initiating
Holder a certificate signed by the President or Chief Executive Officer of the
Company stating that it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 120 days
after receipt of the request of the Initiating Holder or such earlier time as
such a certificate could no longer be given in good faith; provided, however,
that the Company may not utilize this right more than once in any twelve (12)
month period.
(e) Withdrawn Request. The Initiating Holder may
withdraw a request for registration under this Section 1.2 at any time prior to
the effective date of the Registration Statement related to such registration,
provided that if such Stockholder elects to remain liable for all expenses
incurred in conjunction therewith then such withdrawn registration statement
shall not count toward the maximum number of registrations provided for in
section
-3-
<PAGE> 4
1.2(c). Notwithstanding the foregoing provisions of this Section 1.2(e),
if such withdrawal is the result of a material adverse change in the business,
assets, properties, condition (financial or otherwise), results of operations or
prospects of the Company that was unknown to such Stockholder at the time the
request for registration was made and the withdrawal of such request is made
with reasonable promptness upon learning of such material adverse change, then
such request for registration that is so withdrawn shall not count toward the
maximum number of registrations provided for in Section 1.2(c) and such Holder
shall not be liable for the expenses incurred in connection with such withdrawn
registration statement.
1.3 Piggyback Registrations.
(a) The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the 1933 Act for purposes of effecting a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements on Form S-8 or S-4 or relating
solely to any employee benefit plan or an acquisition of any entity or business)
and will afford Holders, subject to the terms and conditions set forth herein,
an opportunity to include in such registration statement all or any part of the
Registrable Securities then held by Holders. Holders shall, within twenty (20)
days after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of
Registrable Securities a Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement filed by the Company, the Holder shall
nevertheless continue to have the right to include any Registrable Securities
not included in such registration statement in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(b) Underwriting. If a registration statement with
respect to which the Company gives notice under this Section 1.3 pertains to an
underwritten offering, then the Company shall so advise Holders. In such event,
the right of Holders to have the Registrable Securities included in a
registration pursuant to this Section 1.3 shall be conditioned upon Holders'
participation in such underwriting and the inclusion of the Registrable
Securities in the underwriting to the extent provided herein. Each Holder
proposing to sell Registrable Securities in such offering shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting. Notwithstanding any other provision
of this Agreement, if the managing underwriter or underwriters determine(s) in
good faith that marketing factors require a limitation of the number of
securities to be underwritten, then the managing underwriter(s) may exclude
securities (including Registrable Securities) from the registration and the
underwriting, and the number of securities that may be included in the
registration and the underwriting shall be allocated, first, to the Company,
second, between the Holders, on a pro-rata basis based on the number of
Registrable Securities held by each such Holder and third to any other holders
of the Company's securities, provided that if the registration is a registration
pursuant to Section 1.2, the "cut-back" provisions described in the last
sentence of Section 1.2(b) shall apply. If a Holder disapproves of the terms of
any such
-4-
<PAGE> 5
underwriting, a Holder may elect to withdraw therefrom by written notice to the
Company and the managing underwriter(s), delivered at least ten (10) business
days prior to the effective date of the registration statement or if notified of
the terms thereafter, promptly after such notification. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration.
1.4 Form S-3 Registration. In case the Company shall receive from
either Stockholder a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Stockholder
or its affiliates, then the Company will:
(a) Registration. As soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Stockholder's or its affiliates' Registrable Securities as are
specified in such request, provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 1.4:
(1) if Form S-3 is not available for such
offering by the Stockholder;
(2) if the Stockholder, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than one million dollars
($1,000,000); or
(3) if the Company shall furnish to the
Stockholder a certificate signed by the President or Chief Executive Officer of
the Company stating that it would be seriously detrimental to the Company and
its stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement no more than once during any twelve month period for a
period of not more than one hundred twenty (120) days after receipt of the
request of the Stockholder under this Section 1.4 or such earlier time as such a
certificate could no longer be given in good faith. (b) Not Demand Registration.
Form S-3 registrations shall not be deemed to be demand registrations as
described in Section 1.2 above.
(c) Notwithstanding anything to the contrary herein,
the Company is obligated to effect only two (2) registrations on Form S-3 per
year and each Stockholder may request only one (1) such registration per year
pursuant to this Section 1.4.
(d) Withdrawn Request. The Stockholder requesting a
registration pursuant to this Section 1.4 may withdraw a request for
registration under this Section 1.4 at any time prior to the effective date of
the Registration Statement related to such registration, provided that if such
Holder elects to remain liable for all expenses incurred in conjunction
therewith then such withdrawn registration statement shall not count toward the
maximum number of
-5-
<PAGE> 6
registrations provided for in Section 1.4(c). Notwithstanding the foregoing
provisions of this Section 1.4(d), if such withdrawal is the result of a
material adverse change in the business, assets, properties, condition
(financial or otherwise), results of operations or prospects of the Company that
was unknown to such Holder at the time the request for registration was made and
the withdrawal of such request is made with reasonable promptness upon learning
of such material adverse change, then such a request for registration that is so
withdrawn shall not count toward the maximum number of registrations provided
for in Section 1.4(c) and such Holder shall not be liable for the expenses
incurred in connection with such withdrawn registration statement.
1.5 Obligations of the Company. Whenever required to effect
the registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities, use its best efforts to
cause such registration statement to become effective as soon as practicable and
with respect to registrations effected pursuant to Sections 1.2, 1.3 and 1.4
keep such registrations effective for up to one hundred twenty (120) days,
excluding any lock-up period, or such shorter period of time as is agreed to in
writing by the Company and each applicable Holder.
(b) For such period of time as shall be required in
connection with the transactions contemplated thereby and permitted by
applicable rules, regulations and administrative practice of the SEC (but not
for more than 120 days from the effective date thereof), file such
post-effective amendments and supplements to such registration statement as
shall be necessary so that neither such registration statement nor any related
prospectus shall contain any material misstatement or omission relative to the
Company or any of its assets or liabilities or its businesses of affairs and
will otherwise comply with all applicable federal, state and foreign securities
laws.
(c) Furnish to the Holder such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as it may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by it that are included in such registration.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions unless already subject
thereto.
(e) If requested by the underwriters for any
underwritten offering by a Holder pursuant to any registration requested under
Section 1.2 or 1.4, the Company shall enter into an underwriting agreement with
such underwriters for such offering, such agreement to be satisfactory in form
and substance to such Stockholder and to contain such representations and
warranties by the Company and such other terms and provisions (including,
without limitation,
-6-
<PAGE> 7
provisions for indemnification of such underwriters by the Company) as are
customarily contained in such underwriting agreements. The Stockholder shall be
a party to such underwriting agreement and may, at its option, require that any
or all of the representations and warranties by, and the agreements on the part
of, the Company to and for the benefit of such underwriters be made to and for
the benefit of such Stockholder and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Stockholder.
(f) Notify the Holders promptly, (i) of the time such
registration statement becomes effective or when any amendment or supplement or
prospectus forming a part of such registration statement has been filed or
becomes effective, (ii) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of a registration
statement for amendments or supplements to such registration statement or
related prospectus or for additional information, (iii) of the issuance by the
SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of a registration statement or the initiation or
threatening of any proceedings for that purpose (and the Company will use its
best efforts to prevent the issuance of any such stop order or to obtain its
withdrawal promptly if such stop order should be issued), (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event which makes any
statement made in a registration statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the registration
statement or prospectus so that, in the case of a registration statement, it
will not contain any untrue statement of a material fact required to be stated
therein or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and, at the reasonable request of a Holder, the
Company shall also promptly prepare and file with the Securities and Exchange
Commission and make available to such Holder any supplement or amendment
reasonably necessary so that neither such registration statement nor any related
prospectus shall contain any material misstatement or omission as a result of
such event (provided that the 120 day period referred to in Section 1.2, 1.3 or
1.4 shall be extended by the period from which the Company gives the notice
specified in this clause until such supplement or amendment is made available to
such Holder), and (vi) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate;
except that notice of an event or determination referred to in (v) or (vi) above
need be made only if a registration statement relating to Registrable Securities
is then in effect.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the effective date of the
Registration Statement, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering and
-7-
<PAGE> 8
reasonably satisfactory to the Holder requesting registration, and (ii) a
"comfort" letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to the Holder requesting
registration.
(h) Provide for the listing of the Registrable
Securities on the stock exchange or authorization for trading on automated
quotation system on which the Registrable Securities' class of securities are
then listed or quoted; provided however, nothing contained herein shall obligate
the Company to have listed any Registrable Securities which are of a class of
securities of the Company not then listed on a stock exchange or authorized for
trading on automated quotation system.
(i) Make available for inspection by the Holder, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other professional retained by the
Holder or such underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement.
1.6 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Sections 1.2, 1.3
or 1.4 with respect to any particular Holder that such Holder shall furnish to
the Company such information regarding such Holder, the Registrable Securities
held by it, and the intended method of disposition of such securities as shall
be required to timely effect the registration of its Registrable Securities.
1.7 Expenses. All expenses incurred in connection with a
registration pursuant to Sections 1.2, 1.3 and 1.4, including without limitation
all registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders to be selected by the
selling Stockholder(s) (but excluding underwriters' discounts and commissions),
shall be borne by the Company. Each Holder participating in a registration
pursuant to Section 1 shall bear such Holder's proportionate share (based on the
total number of shares sold in such registration other than for the account of
the Company) of all discounts, commissions or other amounts payable to
underwriters or brokers in connection with such offering.
1.8 Indemnification. In the event any registration statement
is filed by the Company:
(a) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, each officer and
director of a Holder, any agent or underwriter (as defined in the 1933 Act) for
the Holders and each person (as defined in Section 2(2) of the 1933 Act), if
any, who controls such Holder or such underwriter within the meaning of Section
15 of the 1933 Act or the Section 20 of the Securities Exchange Act of 1934,
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as amended (the "1934 ACT") or any similar federal statute then in effect,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the 1933 Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus
contained therein or in any amendments or supplements thereto;
(ii) the omission or alleged omission to state in
such registration statement, including any preliminary
prospectus or final prospectus contained therein or in any
amendments or supplements thereto, a material fact required to
be stated therein, or necessary to make the statements therein
not misleading (in the case of any preliminary prospectus or
final prospectus, in the light of the circumstances under
which they are made); or
(iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any federal or state
securities law or any rule or regulation promulgated under the
1933 Act, the 1934 Act or any federal or state securities law
in connection with the offering covered by such registration
statement;
and the Company will reimburse each Holder, each officer or director of a
Holder, and each such agent, underwriter or controlling person for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this subsection
1.8(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage or liability
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, or by such officer,
director, agent, underwriter or controlling person of such Holder; provided,
further, however, the indemnification rights provided for in this Section 1.8(a)
with respect to a registration statement shall not apply to any Holder who is
not a Stockholder, unless such Holder has included any of its Registrable
Securities in such registration statement.
(b) By Selling Holders. To the extent permitted by
law, each selling Holder, if any, will severally and not jointly indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act, as applicable, and any agent
or underwriter, against any losses, claims, damages or liabilities (joint or
several)
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to which the Company or any such director, officer, controlling person, agent or
underwriter may become subject under the 1933 Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information concerning such Holder furnished
by such Holder expressly for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person, underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action to the extent that (and only to the extent that) such
Violation occurs in reliance upon and in conformity with written information
concerning such Holder furnished by such Holder for use in connection therewith;
provided, however, that the indemnity agreement contained in this subsection
1.8(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Stockholders, which consent shall not be unreasonably withheld; and
provided further, that the total amounts payable in indemnity by a Holder under
this Section 1.8(b) in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 1.8 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.8, deliver to the indemnifying party a written notice of
the commencement of such an action and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 1.8 except to the extent that the
indemnifying party is actually prejudiced by the failure to give such notice. In
addition, the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8. The indemnification provided in this
Section 1.8 shall remain in full force and effect, regardless of any
investigation made by or on behalf of any indemnified party, and shall survive
the transfer of any Registrable Securities being registered pursuant to Section
1.2, 1.3 or 1.4.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and Holders are subject to the
limitation that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes
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<PAGE> 11
effective or in the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "FINAL PROSPECTUS"), such indemnity agreements shall not inure to
the benefit of a selling Holder (or any officer or director of a selling Holder
or any such agent, underwriter or controlling Person of a Holder) if a copy of
the Final Prospectus was timely furnished to the indemnified party, and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the 1933 Act; provided, however,
that this subparagraph (d) shall not apply with respect to any underwritten
offering.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the 1933 Act in any case in
which either (i) any Holder exercising rights under this Agreement (and/or any
officer, director, agent, underwriter or controlling person who may be
indemnified under Section 1.8(a)) makes a claim for indemnification pursuant to
this Section 1.8 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 1.8 provides for indemnification in such case, or (ii) contribution
under the 1933 Act may be required on the part of any such selling Holder
(and/or any officer, director, underwriter or controlling person who may be
indemnified under Section 1.8(b)) in circumstances for which indemnification is
provided under this Section 1.8; then, and in each such case, the Company and
such Holder (and/or such other person) will contribute to the aggregate losses,
claims, damages and expenses or liabilities to which they may be subject (after
contribution from others) in proportion to their relative fault. The relative
fault of the Company and a Holder shall be determined by reference to, among
other things, whether the untrue or alleged omission of a material fact relates
to information supplied by the Company or by such Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holders agree that it
would not be just and equitable if contribution pursuant to this Section 1.8(e)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
two immediately preceding sentences; provided however, that in no event, except
in instances of fraud by a Holder in which there is no limitation, (i) shall
such Holder be responsible for more than the portion represented by the
percentage that the public offering price of the Registrable Securities of such
Holder offered by and sold under the registration statement bears to the public
offering price of all securities offered by and sold under such registration
statement and (ii) shall such Holder be required to contribute any amount in
excess of the public offering price of all such securities offered and sold by
such Holder pursuant to such registration statement; and in any event, no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and
Holders under this Section 1.8 shall survive the completion of any offering of
Registrable Securities in a registration statement or otherwise.
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1.9 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, for so long as Holders own any Registrable Securities, the Company
agrees to:
(a) Make and keep adequate, current public
information available, as required by and defined in Rule 144, at all times;
(b) Use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the 1934 Act;
(c) So long as a Holder owns any Registrable
Security, furnish to the Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of said Rule
144, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a stockholder of the Company to sell any such securities without registration;
and
(d) Take such further action as a Holder may
reasonably request.
1.10 Termination of the Company's Obligations. The Company
shall have no obligations to register Registrable Securities (i) if all
Registrable Securities have been registered and sold pursuant to registrations
effected pursuant to this Agreement, or (ii) at such time as all outstanding
Registrable Securities may be sold within a three month period under Rule 144,
as it may be amended from time to time, including but not limited to amendments
that reduce that period of time that securities must be held before such
securities may be sold pursuant to such rule.
1.11 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it shall not, to the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities then owned by such Holder (other than to donees or
affiliates of the Holder who agree to be similarly bound) for up to (1) one
hundred eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act with respect to the
initial public offering of securities of the Company (the "IPO"), and (2) ninety
(90) days following the first underwritten public offering of securities of the
Company following the IPO; provided, however, that all executive officers and
directors of the Company then holding securities of the Company enter into
similar agreements. In order to enforce the foregoing covenant, the Company
shall have the right to place restrictive legends on the certificates
representing the shares subject to this Section and to impose stop transfer
instructions with respect to the Registrable Securities and such other shares of
stock of each Holder (and the shares or securities of every other person subject
to the foregoing restriction) until the end of such period.
1.12. Review. Each Stockholder shall have the right to require
the insertion in any registration statement filed by the Company of language, in
form and substance satisfactory
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<PAGE> 13
to the Stockholder, to the effect that the holding by the Stockholder of any
Registrable Securities is not to be construed as a recommendation by the
Stockholder of the investment quality of the securities of the Company and that
such holding does not imply that the Stockholder will assist in meeting any
future financial requirements of the Company. The Company covenants that it will
not file any registration statement under the Securities Act unless it shall
first have given notice thereof to the Stockholders. The Company further
covenants that the Stockholders shall have the right prior to filing with the
SEC, to receive copies of such registration statement and any amendment thereof
or supplement thereto and any prospectus forming a part thereof in a timely
fashion to enable them to participate in the preparation of such registration
statement, amendment, supplement or prospectus and to request the insertion
therein of material furnished in timely fashion (not to exceed ten business days
from the date of receipt of such material) in writing to the Company, which in a
Stockholder's judgment should be included therein. Notwithstanding the foregoing
provisions of this Section 1.12, the rights of a Stockholder under this Section
1.12 shall not apply if the Registrable Securities held by such Stockholder and
its affiliates are equal to or less than five percent (5%) of the total Common
Stock of the Company then outstanding.
2. ASSIGNMENT.
2.1 Assignment. Notwithstanding anything herein to the
contrary, the registration rights of a Holder under Section 1 hereof may be
assigned only to (a) an affiliate of a Holder, (b) a party who acquires from a
Holder at least fifteen percent (15%) of the shares of Common Stock that
constituted the original number of Registrable Securities (as such number may be
adjusted to reflect subdivisions, combinations and stock dividends of the
Company's Common Stock and similar events) or (c) any party who acquires
ownership or control of a Holder through a merger, consolidation, sale of assets
or similar business combination (such party is referred to as a "ASSIGNEE");
provided, however that (w) no party may be assigned any of the foregoing rights
(other than pursuant to clause (c)) until the Company is given written notice by
the assigning party at the time of such assignment stating the name and address
of the assignee and identifying the securities of the Company as to which the
rights in question are being assigned; (x) any such Assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 2, and (y) upon an
assignment or assignments pursuant to clause (b) hereof, the rights held by each
Holder under this Agreement other than the Stockholders or their permitted
assignees under clauses (a) or (c) above, may only be exercised by persons or
entities holding a majority of the Registrable Securities not held by the
Stockholders or their permitted assignees under clauses (a) or (c) above.
3. GENERAL PROVISIONS.
3.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if deposited in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
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<PAGE> 14
(a) if to the Company, at:
MarketWatch.com, Inc.
825 Battery Street
San Francisco, CA 94111
Attention: J. Peter Bardwick
Facsimile: 415/392-1972
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Mark C. Stevens
Facsimile: 650/494-1417
(b) If to a Stockholder, at such Stockholder's respective
address as set forth on Exhibit A hereto.
(c) If to any other Holder, at such Holder's respective
address as set forth in the Company's share register.
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or five days
after when deposited in the mail in the manner set forth above.
3.2 Entire Agreement. This Agreement constitutes and contains
the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
3.3 Amendment of Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company, and any Stockholder (and /or any of their
permitted successors or assigns pursuant to clauses (a) or (c) of Section 2.1)
affected by such amendment or waiver. In the event the rights of a Holder who
becomes a Holder pursuant to the provisions of clause (b) under Section 2.1
hereunder are sought to be waived, then the Holders of a majority of the
Registrable Securities owned by such Holders may waive such rights on behalf of
all of such other Holders.
3.4 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of Delaware,
excluding that body of law relating to conflict of laws.
3.5 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this
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<PAGE> 15
Agreement and the balance of this Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
3.6 Third Parties. Except as expressly provided in Section
1.8, nothing in this Agreement, express or implied, is intended to confer upon
any person, other than the parties hereto and their successors and assigns, any
rights or remedies under or by reason of this Agreement.
3.7 Successors And Assigns. Subject to the provisions of
Section 2.1, the provisions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and permitted assigns of the parties
hereto.
3.8 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
3.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
MARKETWATCH.COM, INC. HOLDERS
CBS BROADCASTING INC.
By: By:
---------------------------- -------------------------------------
Name: Name:
-------------------------- -----------------------------------
Title: Title:
------------------------- ----------------------------------
DATA BROADCASTING CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
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<PAGE> 17
EXHIBIT A
STOCKHOLDERS
CBS BROADCASTING INC.
51 WEST 52ND STREET
NEW YORK, NY 10019
ATTENTION: FREDRIC REYNOLDS
LOUIS J. BRISKMAN
FACSIMILE: 212/975-9191
212/597-4031
DATA BROADCASTING CORPORATION
3955 POINT EDEN WAY
HAYWARD, CA 94545
ATTENTION: MARK IMPERIALE
FACSIMILE: 510/266-6018
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<PAGE> 1
EXHIBIT 4.03
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (the "AGREEMENT") is made and entered into
as of October __, 1998, by and among CBS Broadcasting Inc., a New York
corporation ("CBS"), and Data Broadcasting Corporation, a Delaware corporation
("DBC") (hereinafter referred to collectively as the "STOCKHOLDERS" and each
singly as "STOCKHOLDER"), MarketWatch.com, Inc., a Delaware corporation (the
"COMPANY"), and Marketwatch.Com LLC, a Delaware limited liability company (the
"LLC").
RECITALS
WHEREAS, the parties hereto are parties to a Merger Agreement, dated as
of the date hereof, pursuant to which the LLC will be merged with and into the
Company for the purpose of operating the business of the LLC in a corporate form
(the "MERGER");
WHEREAS, as a result of the Merger, the LLC will cease to exist,
however, the parties hereto desire to enter into this Stockholders' Agreement;
WHEREAS, the parties hereto also desire to amend certain provisions of
the Contribution Agreement (the "CONTRIBUTION AGREEMENT") dated as of October
29, 1997, between the Stockholders and the LLC;
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby, intending to be legally bound by the terms
hereof, agree as follows:
1. CERTAIN DEFINITIONS.
1.1 BUSINESS. The term "BUSINESS" means, collectively the Internet-based
business and financial news and information service offered by the Company,
which includes, without limitation, the businesses conducted with the assets
contributed to the Company by DBC pursuant to the Contribution Agreement as such
businesses may be expanded or otherwise changed from time to time by the
Company.
1.2 BUSINESS DAY. The term "BUSINESS DAY" means a day that is not a
Saturday, Sunday or other day on which banking institutions in the State of New
York are authorized or required by law, regulation or executive order to be
closed.
1.3 COMMON STOCK. The term "COMMON STOCK" means the Common Stock, $0.01
par value per share of the Company.
1.4 CONVERTIBLE SECURITIES. The term "CONVERTIBLE SECURITIES" mean any
securities convertible into or exchangeable for Voting Securities or any
options, warrants or other rights exercisable to acquire Voting Securities.
<PAGE> 2
1.5 INITIAL PERCENTAGE. The term "INITIAL PERCENTAGE" means the
percentage of then Total Voting Power of the Company represented by the Voting
Securities held by a Stockholder at the time of the consummation of the
Company's initial public offering.
1.6 OFFERED SECURITIES. The term "OFFERED SECURITIES" means all
Securities proposed to be Transferred by a Stockholder or, if applicable, an
affiliate of a Stockholder.
1.7 PERSON. The term "PERSON" means any natural person, legal entity, or
other organized group of persons or entities. (All pronouns, whether personal or
impersonal, which refer to Person include natural persons and other Persons).
1.8 SECURITIES. The term "SECURITIES" shall mean Voting Securities and
Convertible Securities.
1.9 TOTAL VOTING POWER. The term "TOTAL VOTING POWER" means, at any
time, the total number of votes that may be cast in the election of directors of
the Company at any meeting of the holders of Voting Securities held at such time
for such purpose.
1.10 TRANSFER and TRANSFERRED. The terms "TRANSFER" and "TRANSFERRED"
mean and include any sale, assignment, encumbrance, hypothecation, pledge,
conveyance in trust, gift, transfer by bequest, devise or descent, or other
transfer or disposition of any kind, including but not limited to, transfers to
receivers, levying creditors, trustees or receivers in bankruptcy proceedings or
general assignments for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly, except for:
(a) any transfer of Securities by CBS or DBC to any entity
controlling, controlled by or under common control with CBS or DBC, or to any
entity that acquires CBS or DBC by purchase of stock or by merger or otherwise;
(b) any transfer of Securities by a Stockholder made: (i)
pursuant to a statutory merger or statutory consolidation of the Company with or
into another corporation or corporations; or (ii) pursuant to the winding up and
dissolution of the Company; or
(c) any transfer of Securities by a Stockholder pursuant to a
Stockholder's exercise of such Stockholder's right of first refusal hereunder.
1.11 VOTING POWER. The term "VOTING POWER" means, as to any Voting
Security at any time, the number of votes such Voting Security is entitled to
cast for directors of the Company at any meeting of the holders of Voting
Securities held at such time for such purpose.
1.12 VOTING SECURITIES. The term "VOTING SECURITIES" means the Common
Stock and any other securities issued by the Company having the power to vote in
the election of directors of the Company, including without limitation any
securities having such power only upon the occurrence of a default or any other
extraordinary contingency.
2
<PAGE> 3
2. MANDATORY TRANSFERS.
2.1 DBC CHANGE OF CONTROL. Notwithstanding anything herein to the
contrary, and absent agreement of the Stockholders to do otherwise, CBS shall
have the right (but not the obligation) in its sole discretion to purchase DBC's
Securities or require that such Securities be transferred to an independent
trustee, as provided in Section 2.2 within 60 days after a competitor of CBS has
directly or indirectly acquired beneficial ownership of more than 30% of the
outstanding shares of the common stock, or securities representing, in the
aggregate, more than 30% of the voting power, of DBC (or any person controlling
DBC), or all or substantially all of DBC's assets (a "DBC CHANGE OF CONTROL"),
at a time when DBC and its affiliates shall then own in the aggregate a number
of shares of Common Stock equal to at least ten percent (10%) of the outstanding
shares of Common Stock on the IPO Closing Date (defined below) (appropriately
adjusted to reflect any stock splits, reverse stock splits, stock dividends,
recapitalizations and other similar transactions occurring subsequent to the IPO
Closing Date), without the prior written consent of CBS (a "TRIGGERING EVENT").
The parties hereby agree that DBC may give CBS confidential written notice of
its intent to enter into an agreement which would cause a DBC Change of Control,
together with a description of the party with whom DBC intends to effect such a
transaction. CBS shall have twenty (20) days from receipt of such notice to
respond to DBC in writing as to whether it would elect to trigger the provisions
of this Section 2 with respect to such potential DBC Change of Control. If, and
only if, CBS notifies DBC in writing that it would not make such election, CBS
shall be deemed to have waived its right to trigger such mandatory transfer
provisions with respect to such potential DBC Change of Control.
2.2 TRANSFER OF SHARES. Upon the occurrence of a DBC Change of Control,
CBS may elect one of the following within 45 days after written notice from DBC
that a DBC Change of Control has occurred:
(a) (i) CBS may offer to purchase the Securities then held by
DBC and its affiliates, and DBC and its affiliates shall be required to sell to
CBS, such sale to occur no later than 10 days after DBC's receipt of CBS'
written offer to purchase such Securities, at a purchase price for the
Securities held by DBC and its affiliates equal to the Fair Market Value of the
Securities on the date of the Triggering Event.
(ii) Notwithstanding the foregoing provisions of Section
2.2(a)(i), if (y) any legal or regulatory requirements, including, without
limitation, those imposed by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended must be first satisfied prior to making such sale or (z) the
Fair Market Value must be determined according to the terms of subsection (b) of
the definition of Fair Market Value, then such sale shall be made within two
days of the satisfaction of such legal requirements or of the determination of
the Fair Market Value of the Securities, as applicable.
(iii) Upon the date that payment is made for the
Securities, DBC and its affiliates will have no further rights as a holder of
such Securities and DBC and its affiliates will forthwith cause all
certificate(s) evidencing such Securities to be surrendered to the Company or
3
<PAGE> 4
its transfer agent for cancellation and new certificates evidencing such
Securities will be promptly delivered to CBS.
(b) CBS may require DBC to transfer all Securities then held by
DBC and its affiliates to an independent trustee reasonably satisfactory to CBS,
which trustee shall then dispose of such Securities formerly held by DBC and its
affiliates to purchaser(s) that is/are not competitor(s) of CBS, subject to the
foregoing, in such a manner as such trustee shall determine with a view to
maximizing the sale price of the shares formerly held by DBC and its affiliates,
while disposing of such shares as promptly as reasonably practicable. Upon such
transfer, such trustee shall have sole voting and dispositive control over such
Securities, DBC shall no longer be entitled to appoint any DBC Designees and all
current DBC Designees shall resign from their positions as members of the
Company's Board of Directors. Unless otherwise agreed in writing by CBS, any
trustee appointed pursuant to this Section 2.2(b) shall be a bank or trust
company incorporated or otherwise organized under the laws of the United States
or a state thereof and having a combined capital and surplus of at least
$100,000,000. The provisions of Article 8 of this Agreement shall not be
applicable to such trustee. Any such trustee shall perform its duties upon
customary terms pursuant to documentation reasonably satisfactory to CBS, it
being understood and agreed that, without the prior written consent of CBS, no
such trustee shall vote any Securities held by it at any meeting of the
stockholders of the Company or otherwise.
"FAIR MARKET VALUE" of the Securities shall mean (a), for any
Security that is listed on a national securities exchange or authorized for
trading on the National Association of Securities Dealers Nasdaq Stock Market or
other automated quotation system, the average of the closing prices for the five
day period ending on the date of the Triggering Event; and (b), for any other
Security, such price as is determined by an appraiser chosen by the members of
the Company's Board of Directors who are neither employees of the Company, CBS
Designees (defined below) or DBC Designees (defined below) or otherwise
affiliated with or employed by either of CBS, DBC or one of their respective
affiliates (other than as serving as an independent member of the Company's
Board of Directors) (the "INDEPENDENT DIRECTORS"). If there are no Independent
Directors, then Fair Market Value for purposes of this Subsection (b) only,
shall be determined by a panel of appraisers, one (1) chosen by CBS, one (1)
chosen by DBC and the third to be chosen by the first two (2) appraisers. If the
appraisers cannot reach agreement within thirty (30) days of the date of the
Triggering Event, then each appraiser shall deliver its appraisal within 40 days
of the Triggering Event and the appraisal which is neither the highest nor the
lowest shall constitute the Fair Market Value. In the event either Stockholder
fails to choose an appraiser within thirty (30) days of the date of the
Triggering Event, then the appraisal of the sole appraiser shall constitute the
Fair Market Value. Each party shall bear the cost of the appraiser selected by
such Stockholder and the cost of the third appraiser shall be borne one-half by
each Stockholder. In the event either party fails to choose an appraiser, the
cost of the sole appraiser shall be borne one-half by each Stockholder.
2.3 TERMINATION PAYMENT. Upon the termination of the Amended and
Restated License dated as of the date hereof between CBS and the Company (the
"AMENDED AND RESTATED LICENSE") in accordance with its terms, CBS may elect to
terminate its advertising obligation under Section 1.04 of the Contribution
Agreement. In the event CBS elects to exercise this
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termination right, CBS shall pay to the Company a cash payment in the amount of
$500,000 times the number of full calendar months from the date of such
termination remaining until October 2002.
3. AGREEMENT NOT TO COMPETE.
3.1 AGREEMENT OF DBC NOT TO COMPETE. DBC understands that the Company
shall be entitled to protect and preserve the going concern value of the
Business to the extent permitted by law and, therefore, until October 27, 2002,
DBC shall not, and DBC shall not authorize or permit another Person to, without
the prior written consent of the Company:
(a) (i) sell advertising on an Internet Web site that has as its
primary function and as its principal theme and format the delivering of
comprehensive real-time or delayed stock quotations and financial news in the
English language to consumers or (ii) use the Internet to sell real-time
snap-quotes to individual subscribers or customers who pay a fee for such
information ("COMPETITIVE ACTIVITIES");
(b) solicit, recruit or hire any employees of the Business or
person who has worked for the Business;
(c) solicit or encourage any employee of the Business to leave
the employment of the Business; and
(d) disclose or furnish to anyone any confidential information
relating to the Business or otherwise using such confidential information for
its own benefit or the benefit of any other person.
The Company acknowledges that the maintenance and
continued operation of the dbc.com Web site by DBC shall not be considered to be
a violation of this Section 3.1 provided that dbc.com does not engage in any
Competitive Activities. In addition, this Section 3.1 shall not be deemed
breached as a result of the maintenance, operation, sale or transmission over
the Internet of DBC's existing products, including, but not limited to, Bond Vu,
BondEdge, InSite, Signal Online, and StockEdge Online.
3.2 NON-COMPETING ACTIVITIES. The Company acknowledges and agrees that
the following are either not within the express terms of the prohibitions
contained in Section 3.1 or, if so, shall nevertheless be excluded from said
prohibitions:
(a) the ownership by DBC of less than an aggregate of 5% of any
class of stock of a Person engaged, directly or indirectly, in Competitive
Activities;
(b) the ownership by DBC of less than 10% in value of any
instrument of indebtedness of a Person engaged, directly or indirectly, in
Competitive Activities;
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(c) an Internet service or Web site that delivers general news
or sports or entertainment content with a financial news segment or portion
included, will not be considered to have as its primary function or as its
principal theme and format the delivering of comprehensive real-time or delayed
stock market quotations and financial news in the English language to consumers;
(d) an Internet service or Web site will not be considered to
have as its primary function or as its principal theme and format the delivering
of comprehensive real-time or delayed stock market quotations and financial news
in the English language to consumers solely on the basis of its providing a
stock price ticker crawl line;
(e) any activity conducted by DBC and/or its Affiliates as of
October __, 1998, the execution date of this Agreement; or
(f) any Internet services in which DBC has an interest as of
October __, 1998, the execution date of this Agreement.
3.3 AGREEMENT OF THE COMPANY NOT TO COMPETE. The Company agrees that
subsequent to the date hereof through October 29, 2002 or, at such earlier time
(i) as the Amended and Restated Services Agreement has terminated, (ii) upon the
occurrence of a DBC Change of Control, or (iii) at such time as DBC shall hold
less than 10% of the then-outstanding Voting Securities, it will not, except
through DBC, sell any product or service that offers streaming real-time stock
price quotes.
3.4 ENFORCEMENT. Notwithstanding any other provision of this Agreement,
it is understood and agreed that the remedies at law would be inadequate in the
case of any breach of the covenant contained in Sections 3.1 or 3.3. Therefore,
the Company or DBC, as the case may be, shall be entitled to equitable relief,
including the remedy of specific performance, with respect to any breach or
attempted breach of such covenant.
3.5 TERMINATION. The Stockholders and the Company acknowledge that the
provisions of this Section 3 shall terminate and cease to apply in the event
that the Company is dissolved or liquidated.
4. DBC CONTRIBUTION. DBC acknowledges that as of October 29, 1997, it had
contributed $1,000,000 to the LLC. In addition, DBC shall pay to the Company on
October 29, 1998, by wire transfer of immediately available funds, to an account
specified by the Company in writing, $1,000,000.
5. ASSIGNMENT OF CONTRIBUTION AGREEMENT.
5.1 ASSIGNMENT AND ASSUMPTION. Effective immediately upon the date of
this Agreement, the LLC hereby assigns, transfers, and sets over to the Company
all of LLC's right, title, and interest in and to the Contribution Agreement and
its rights and obligations thereunder
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and the Company does hereby agree to assume and does hereby assume all of the
obligations and liabilities of LLC related to the Contribution Agreement.
5.2 CONSENT OF CBS AND DBC. Each of CBS and DBC consent to the
assignment and assumption provided for in Section 5.1 hereof.
6. AMENDMENTS TO CONTRIBUTION ARRANGEMENT.
6.1 AMENDMENTS
(a) Section 1.04 of the Contribution Agreement is hereby amended
to delete the reference to "$50 million" in the fifth line thereof and insert
"$30 million" therefor and by adding the CBS termination rights described in
Section 2.3 hereof.
(b) Exhibit B to the Contribution Agreement is deleted and
replaced in its entirety with the Amended and Restated License Agreement
attached hereto as Exhibit 5.1(b).
(c) Exhibit C to the Contribution Agreement is deleted and
replaced in its entirety with the Amended and Restated Services Agreement
attached hereto as Exhibit 5.1(c).
(d) Exhibit D to the Contribution Agreement is amended by
deleting the last sentence of paragraph 2 thereto.
6.2 FULL FORCE. Except as expressly amended hereby, the Contribution
Agreement shall remain in full force and effect, except to reflect the change of
the LLC's organization from a limited liability company to a corporation as a
result of the Merger.
7. DIRECTOR NOMINATION RIGHTS.
7.1 BOARD SIZE. The Company shall maintain a Board of Directors of at
least seven (7) members and shall use its best efforts to maintain a Board of
Directors of nine (9) members immediately after the IPO Closing Date (defined
below).
7.2 DESIGNEE. For so long as CBS continues to own a number of Voting
Securities equal to at least one percent (1%) of the Company's outstanding
Voting Securities, the Company shall provide CBS, and for so long as DBC
continues to own a number of Voting Securities equal to at least one percent
(1%) of the outstanding Voting Securities, the Company shall provide DBC, thirty
(30) days prior written notice of any Stockholder solicitation or action
relating to the election of directors. After receipt of such notice by DBC, DBC
may, and after receipt of such notice by CBS, CBS may, by written notice sent to
the Company within ten (10) days of receipt of such notice, request that the
Company nominate, and the Company shall nominate, for election to the Company's
Board of Directors (the "BOARD OF DIRECTORS"), in connection with such
Stockholder solicitation or action:
(a) one, if CBS holds a number of Voting Securities greater than
or equal to one percent (1%) but less than twenty percent (20%) of the Company's
outstanding Voting
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Securities, two, if CBS holds a number of Voting Securities greater than or
equal to twenty percent (20%) but less than thirty percent (30%) of the
Company's outstanding Voting Securities, and three, if CBS holds a number of
Voting Securities greater than or equal to thirty percent (30%) of the
outstanding Voting Securities, candidates designated in the CBS notice, who
shall be reasonably acceptable to the Company (collectively, the "CBS
DESIGNEES"); and
(b) one, if DBC holds a number of Voting Securities greater than
or equal to one percent (1%) but less than twenty percent (20%) of the Company's
outstanding Voting Securities, two, if DBC holds a number of Voting Securities
greater than or equal to twenty percent (20%) but less than thirty percent (30%)
of the outstanding Voting Securities, and three, if DBC holds a number of
Company's outstanding Voting Securities greater than or equal to thirty percent
(30%) of the Company's outstanding Voting Securities, candidates designated in
the DBC notice, who shall be reasonably acceptable to the Company (collectively,
the "DBC DESIGNEES").
In the event that CBS or DBC shall desire to appoint CBS Designees or
DBC Designees, as applicable, otherwise than in connection with a Stockholder
solicitation or action relating to the election of directors, then as soon as
practicable upon written notice from CBS or DBC, as applicable, the Company
shall appoint the CBS Designees or DBC Designees, as applicable, to the Board of
Directors.
In the event that the size of the Company's Board of Directors is
increased to a number greater than nine (9), the number of CBS and DBC Designees
shall be a number equal to the product of (A) the percentage of outstanding
Voting Securities held by such Stockholder times (B) the number of authorized
members of the Company's Board of Directors, rounded up to the nearest whole
number.
Notwithstanding the foregoing, for so long as the Amended and Restated
License remains in effect, CBS shall be entitled to select at least one CBS
Designee, regardless of the number of Voting Securities held by it.
7.3 AFFILIATES. For purposes of this Agreement, all shares held by an
affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933,
as amended (the "SECURITIES ACT")) (each, an "AFFILIATE") of CBS or DBC, will be
deemed to be owned by CBS or DBC, as applicable.
7.4 VOTING OF SHARES.
(a) The Company shall use its best efforts (i) to cause to be
voted the shares of Voting Securities for which the Company's management or the
Board of Directors holds proxies or is otherwise entitled to vote in favor of
the election of the CBS Designees and DBC Designees nominated pursuant to
Section 7.2 to this Agreement; and (ii) to cause the Board of Directors to
unanimously recommend to its stockholders to vote in favor of the CBS Designees
and the DBC Designees.
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(b) Each of CBS and DBC shall vote the shares of Voting
Securities held by it for the CBS Designees and the DBC Designees.
7.5 VACANCIES. In the event that any CBS or DBC Designee shall cease to
serve as a director of the Company for any reason, the vacancy resulting
therefrom shall be filled by another CBS Designee or DBC Designee, as
applicable.
7.6 EQUAL TREATMENT. The Company shall offer the same compensation and
shall provide rights and benefits of indemnity to each CBS Designee or DBC
Designee as are provided to other non-employee directors, provided however, that
none of the CBS Designees or DBC Designees shall be entitled to participate in
the Company's proposed 1998 Directors Stock Option Plan or any other equity
based plan.
8. RIGHT OF FIRST REFUSAL.
8.1 NOTICE. Before any Stockholder or affiliate of any Stockholder may
effect any Transfer of any Securities, such Stockholder or affiliate (the
"SELLING STOCKHOLDER") must give at the same time to the Company and the other
Stockholder a written notice signed by the Selling Stockholder (the "SELLING
STOCKHOLDER'S NOTICE") stating (a) the Selling Stockholder's bona fide intention
to transfer such Offered Securities; (b) the number of Offered Securities
proposed to be transferred to each proposed purchaser or other transferee
("PROPOSED TRANSFEREE"); (c) the name, address and relationship, if any, to the
Selling Stockholder of each Proposed Transferee; and (d) the bona fide cash
price or, in reasonable detail, other consideration, per share for which the
Selling Stockholder proposes to transfer such Offered Securities to each
Proposed Transferee (the "OFFERED PRICE") and the proposed time of payment and
other relevant terms of the proposed sale. If such Selling Stockholder desires
to effect sales into the open market pursuant to Rule 144 promulgated under the
Securities Act ("OPEN MARKET SALE"), the Selling Stockholder's Notice shall also
contain the closing price of the Securities on the date prior to the date of
such notice which price shall constitute the Offered Price. Upon the request of
the Company or the other Stockholder, the Selling Stockholder will promptly
furnish to the Company and to the other Stockholder such other information as
may be reasonably requested to establish that the offer and Proposed
Transferee(s) are bona fide. In the event that the notice provisions of this
Section 8 make it impractical or impossible to comply with the notice provisions
of Section 1 of the Registration Rights Agreement, the parties hereto agree that
the notice provisions of the Registration Rights Agreement shall be modified or
waived to the extent necessary so as to permit the operation of this Section 8
in conjunction with the provisions of Section 1 of the Registration Rights
Agreement.
8.2 STOCKHOLDERS' RIGHT OF FIRST REFUSAL. The non-Selling Stockholder
will have a right of first refusal (the "RIGHT OF FIRST REFUSAL") to purchase
any portion of the Offered Securities made available for purchase in the manner
provided in this Section 8.2 unless (a) the Offered Securities are to be sold in
a private sale to one purchaser, in which case the non-Selling Stockholder will
only be permitted to exercise its Right of First Refusal if it purchases all of
the Offered Securities, or (b) the Selling Stockholder is selling the Offered
Securities through a registered offering and the quantity of Offered Securities
that the non-Selling Stockholder
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proposes to purchase would, in the good faith opinion of the managing
underwriter, jeopardize the success of the offering. In such a circumstance, the
non-Selling Stockholder will only be permitted to purchase either all of the
Offered Securities or such Offered Securities, if any, that would not, in the
good faith opinion of the managing underwriter, jeopardize the success of such
offering. If the non-Selling Stockholder desires to purchase any or all, as
applicable, of the Offered Securities made available for purchase such
Stockholder must give written notice within the fifteen (15) day period
commencing on the date of the Selling Stockholder's Notice (the "REFUSAL
PERIOD"), to the Selling Stockholder (the "PURCHASE NOTICE") and to the Company
of such Stockholder's election to purchase the Offered Securities, and the
number of shares and type of Offered Securities that such Stockholder desires to
purchase, provided however, that in the case of a proposed Open Market Sale, the
non-Selling Stockholder must give the Purchase Notice prior to 5:00 pm. Pacific
time on the second Business Day after the non-Selling Stockholder receives the
Purchase Notice.
8.3 PURCHASE PRICE. The purchase price for the Offered Securities to be
purchased by the non-Selling Stockholder exercising its Right of First Refusal
under this Agreement will be the Offered Price, and will be payable as set forth
in Section 8.4 hereof. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration will be the Fair
Market Value of such noncash consideration.
8.4 PAYMENT. Payment of the purchase price for Offered Securities
purchased by a Stockholder exercising its Right of First Refusal will be made in
cash within ten (10) days after the date of the Purchase Notice, or if any legal
or regulatory requirements, including, without limitation, those imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, must be first satisfied
prior to making such payment, within two (2) days after the satisfaction of such
legal requirements.
8.5 RIGHTS OF STOCKHOLDER. Upon the date that payment is made for the
Offered Securities purchased by the non-Selling Stockholder pursuant to the
Right of First Refusal hereunder, the Selling Stockholder will have no further
rights as a holder of such Offered Securities and the Selling Stockholder will
forthwith cause all certificate(s) evidencing such Offered Securities to be
surrendered to the Company or its transfer agent for cancellation and new
certificates evidencing such Offered Securities will be promptly delivered to
the purchasing Stockholder.
8.6 SELLING STOCKHOLDER'S RIGHT TO TRANSFER. If the non-Selling
Stockholder has not elected pursuant to its Right of First Refusal to purchase
all or a portion, as applicable, of the Offered Securities, the Selling
Stockholder may Transfer the Offered Securities to any person named as a
Proposed Transferee in the Selling Stockholder's Notice, at the Offered Price or
at a higher price, provided that such transfer (a) is consummated within one
hundred twenty (120) days after the date of the Selling Stockholder's Notice and
(b) is in accordance with the terms and conditions of this Agreement; provided
however, that in the case of a proposed Open Market Sale, such transfers must
take place within the six (6) week period following the date of the Selling
Stockholder's Notice. If the Offered Stock is transferred in accordance with the
terms and conditions of this Agreement to a non-affiliate, then the
transferee(s) of the Offered Stock
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will thereafter hold such Offered Securities free of the Right of First Refusal
and all other restrictions imposed by this Agreement. If the Offered Securities
are not so transferred during such one hundred twenty (120) day period or such
six (6) week period, as the case may be, then the Selling Stockholder will not
transfer any of such Offered Stock without complying again in full with the
provisions of this Agreement.
8.7 CERTAIN TRANSFERS.
Notwithstanding the foregoing:
(i) If the Offered Securities will be sold by means of a
registered underwritten offering, then the Selling Stockholder's Notice need not
name any Proposed Transferee if such notice (x) states that the Offered
Securities will be sold by means of a broadly distributed offering and (y)
contains the proposed underwriter's good faith estimate of the public offering
price (the "PROPOSED PUBLIC OFFERING PRICE") based on then-current market
conditions. If the non-Selling Stockholder does not elect, pursuant to its Right
of First Refusal, to purchase all or a portion, as applicable, of the Offered
Securities at the proposed Public Offering Price, the Selling Stockholder may
transfer such Offered Securities as the non-Selling Stockholder has not elected
to so purchase at prices that are based on the prevailing market price for the
Offered Securities at the time of the sale of such Offered Securities even if
such market price is lower than the Proposed Public Offering Price.
(ii) If the Offered Securities will be sold pursuant to block
trades or other brokerage transactions, then the Selling Stockholder's Notice
need not name any Proposed Transferee nor any Offered Price. If the non-Selling
Stockholder does not elect, pursuant to its Right of First Refusal, to purchase
all of the Offered Securities on the date of the Selling Stockholder's Notice at
the closing market price for the Offered Securities on the date of the Selling
Stockholder's Notice, the Selling Stockholder may transfer such Offered
Securities at prices that are based on the prevailing market price in effect for
the Offered Securities at the time of the sale of such Offered Securities
through block trades or other brokerage transaction, even if such market price
is lower than the closing market price for such Offered Securities on the date
of the Selling Stockholder's Notice.
8.8 LEGEND. Each Stockholder understands and agrees that the Company
will cause the legend set forth below, or a legend substantially equivalent
thereto, to be placed upon any certificate(s) or other documents or instruments
evidencing ownership of Securities by the Stockholder:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RIGHTS OF FIRST REFUSAL AS SET FORTH IN A
STOCKHOLDERS' AGREEMENT DATED AS OF ________, 1998
ENTERED INTO BY THE HOLDER OF THESE SHARES, THE COMPANY
AND CERTAIN STOCKHOLDERS OF THE COMPANY. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
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THE COMPANY. SUCH RIGHT OF FIRST REFUSAL IS BINDING ON
CERTAIN TRANSFEREES OF THESE SHARES.
The Company will cause such legend to be removed upon the termination of this
Agreement.
8.9 STOCK TRANSFER INSTRUCTIONS. Each Stockholder agrees, to ensure
compliance with the restrictions referred to herein, that the Company may issue
appropriate "stop transfer" certificates or instructions and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its records.
9. PARTICIPATION RIGHTS.
9.1 NEW SECURITIES. If from time to time the percentage of the Total
Voting Power represented by the Voting Power of all Voting Securities then
owned, directly or indirectly, by a Stockholder (the "APPLICABLE PERCENTAGE")
would be reduced as a result of any issuance of Voting Securities by the Company
or could be reduced as a result of any issuance of Convertible Securities by the
Company (in either case, whether for cash, property or otherwise and, such
securities are referred to herein as "NEW SECURITIES"), the Company shall so
notify the Stockholder in writing not less than ten (10) Business Days prior to
the proposed date of any such issuance and shall offer to sell to the
Stockholder, and, if such offer is accepted in writing by (x) if such issuance
is made pursuant to an underwriting or private placement purchase agreement, the
second Business Day prior to the date of execution of any such agreement (it
being understood that the Company will give the Stockholder at least four (4)
Business Day's prior notice of such date of execution) or (y) if such issuance
is not made pursuant to such an agreement, the fifth (5th) Business Day prior to
the proposed date of such issuance, the Company shall sell to the Stockholder
that portion of the Voting Securities or Convertible Securities to be issued
which would result in such Stockholder's Applicable Percentage immediately prior
to such issuance equaling the Stockholder's Applicable Percentage in effect
immediately prior to such issuance (assuming, in the case of Convertible
Securities, the conversion, exchange or exercise at such time of all Convertible
Securities), or any lesser portion of the Voting Securities or Convertible
Securities to be issued in such issuance as may be designated by the
Stockholder, in either case at a price per share or other trading unit of such
Voting Securities or Convertible Securities, as the case may be, equal to the
price per share or other trading unit of such Voting Securities or Convertible
Securities, as the case may be, to be received by the Company in such issuance,
less any underwriting discounts and commissions (the "PURCHASE PRICE"), and
otherwise on the same terms as may be applicable to such issuance; provided,
however, that a Stockholder shall not be entitled to purchase such Voting
Securities or Convertible Securities from the Company pursuant to this Section
9.1 to the extent that such purchase would cause such Stockholder to own,
directly or indirectly, Voting Securities representing an aggregate Voting Power
in excess of a percentage of the Total Voting Power of the Company equal to the
Initial Percentage after giving effect to the proposed issuance; provided,
further, however, that the preceding provisions shall not apply to issuances of:
(a) up to an aggregate of 1,500,000 shares of the Company's
Common Stock (and/or options or warrants therefor) issued to employees,
officers, directors, contractors,
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advisors or consultants of the Company pursuant to incentive agreements or plans
approved by the Board of Directors of the Company, such number of shares being
subject to proportional adjustment to reflect subdivisions, combinations and
stock dividends affecting the number of outstanding shares of such stock; or
(b) securities offered by the Company in its initial public
offering pursuant to a registration statement filed under the Securities Act; or
(c) up to an aggregate of 500,000 shares of the Company's Common
Stock (and/or options or warrants therefor) issued or issuable to parties as
approved by the Board of Directors for any corporate purpose, including, without
limitation, for providing the Company with equipment leases, real property
leases, loans, credit lines, guaranties of indebtedness, cash price reductions
or similar financing, such number of shares being subject to proportional
adjustment to reflect subdivisions, combinations and stock dividends affecting
the number of outstanding shares of such stock.
Notwithstanding the foregoing provisions, in the event the
Company proposes to issue Voting Securities or Convertible Securities for
consideration other than cash, then, in lieu of purchasing a portion of the
Voting Securities or Convertible Securities to be issued, the Stockholder shall
be entitled to require the Company to issue to such Stockholder at a per share
price equal to the Fair Market Value of the additional Voting Securities or
Convertible Securities such that immediately after such issuance, such
Stockholder's Applicable Percentage equals such Stockholder's Applicable
Percentage in effect immediately prior to such issuance (assuming, in the case
of Convertible Securities, the conversion, exchange or exercise at such time of
all Convertible Securities to be issued in such issuance). For purposes of
calculating the Fair Market Value of such additional Voting Securities or
Convertible Securities, the term "Triggering Event" shall mean the date of the
issuance of such Voting Securities or Convertible Securities for consideration
other than cash.
9.2 ADDITIONAL LIMITATIONS ON PARTICIPATION RIGHTS.
(a) Notwithstanding the provisions of Section 9.1, (i) if the
Company proposes to issue Voting Securities or Convertible Securities pursuant
to the first underwritten public offering of the Company subsequent to its
initial public offering (the "FIRST FOLLOW-ON OFFERING") and a Stockholder would
otherwise be entitled to purchase a portion of such Voting Securities pursuant
to the provisions of Section 9.1, and (ii) if, in the opinion of the
underwriters of such First Follow-On Offering, the public trading market for the
Company's Common Stock would be significantly adversely affected if the
Stockholders exercised their participation rights contained in Section 9.1 with
respect to an amount of Voting Securities or Convertible Securities such that
after exercise of such participation right, the Applicable Percentage of such
Stockholder would be in excess of 25% (assuming, in the case of Convertible
Securities, the conversion, exchange or exercise at such time of all Convertible
Securities), then the Stockholders shall be permitted to exercise their
participation rights specified in Section 9.1 in connection with the First
Follow-On Offering only to the extent that such Stockholder's Applicable
Percentage would not exceed 25% after giving effect to the First Follow-On
Offering, or such higher
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percentage that would not, in the opinion of the underwriters of such First
Follow-On Offering, significantly adversely affect such offering.
(b) In the event that a Stockholder was unable to exercise the
participation rights set forth in Section 9.1 to the extent it would have
otherwise been able to exercise as a result of the provisions of Section 9.2(a),
then in the event the Company proposes to issue Voting Securities or Convertible
Securities subsequent to the First Follow-On Offering, such Stockholder shall be
entitled to purchase up to that portion of the Voting Securities or Convertible
Securities to be issued or to purchase from the Company up to a number of
additional Voting Securities or Convertible Securities pursuant to Section 9.1
such that the Applicable Percentage of such Stockholder immediately after such
purchase equals no more than such Stockholder's Applicable Percentage (not to
exceed such Stockholder's Initial Percentage) immediately prior to the First
Follow-On Offering (assuming, in the case of Convertible Securities, the
conversion, exchange or exercise at such time of all Convertible Securities).
9.3 FAILURE TO EXERCISE. In the event that a Stockholder fails to
exercise the participation right within such ten (10) day period, then the
Company shall have 120 days thereafter to sell the New Securities with respect
to which the Stockholder's participation rights hereunder were not exercised, at
a price and upon general terms not materially more favorable to the purchasers
thereof than specified in the Company's notice to the Stockholders. In the event
that the Company has not issued and sold the New Securities within such 120 day
period, then the Company shall not thereafter issue or sell any New Securities
without again first offering such New Securities to the Stockholders pursuant to
this Section 9.
10. SECTION 5.08 OF THE LLC AGREEMENT. Section 5.08 of the LLC's limited
liability company agreement, dated as of October 29, 1997 (the "LLC AGREEMENT"),
establishes the manner in which the Stockholders, as members of the LLC, will
treat contributions to the LLC for U.S. Federal income tax purposes. In order to
induce the Stockholders to enter into this Agreement and to consummate the
transactions identified herein, the Company agrees that it will not take any
action that contradicts or is inconsistent with such agreed treatment of
contributions to the LLC for U.S. Federal income tax purposes unless a final
determination (which shall include the execution of a Form 870-AD or successor
form) requires a different treatment.
11. TERM. This Agreement shall terminate on October 29, 2002.
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12. GENERAL PROVISIONS.
12.1 NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, as follows:
(a) if to the Company, at:
MarketWatch.com, Inc.
825 Battery Street
San Francisco, CA 94111
Attention: J. Peter Bardwick
Facsimile: 415/392-1972
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Mark C. Stevens
Facsimile: 650/494-1417
(b) If to CBS:
51 West 52nd Street
New York, NY 10019
Attention: Fredric G. Reynolds
Louis J. Briskman
Facsimile: 212/975-9191
212/597-4031
(c) If to DBC:
Data Broadcasting Corporation
3955 Point Eden Way
Hayward, CA 94545
Attention: Mark F. Imperiale
Facsimile: 510/266-6018
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or five (5)
days after being deposited in the mail in the manner set forth above.
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12.2 ENTIRE AGREEMENT. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
12.3 AMENDMENT OF RIGHTS. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the parties hereto (and/or any of their permitted successors or
assigns).
12.4 GOVERNING LAW. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Delaware, excluding that
body of law relating to conflict of laws.
12.5 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, then such provision(s) shall be
excluded form this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
12.6 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
12.7 SUCCESSOR AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of, and shall be binding upon, the successors and permitted
assigns of the parties hereto.
12.8 CAPTIONS. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
12.10 NO ASSIGNMENT. No party hereto may assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto and any attempt to do so will be void.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
DATA BROADCASTING CORPORATION CBS BROADCASTING INC.
By: By:
---------------------------------- -----------------------------------
Name: Name:
-------------------------------- ----------------------------------
Title: Title:
------------------------------- ---------------------------------
MARKETWATCH.COM, INC. MARKETWATCH.COM, LLC
By: By:
---------------------------------- -----------------------------------
Name: Name:
-------------------------------- ----------------------------------
Title: Title:
------------------------------- ---------------------------------
[SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT]
17
<PAGE> 1
EXHIBIT 10.01
MARKETWATCH.COM, INC.
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement"), dated as of September __,
1998, is made by and between MarketWatch.com, Inc., a Delaware corporation (the
"Company"), and _________________, a director and/or officer of the Company (the
"Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;
B. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
C. Section 145 of the General Corporation Law of the State of Delaware,
under which the Company is organized ("Section 145"), empowers the Company to
indemnify by agreement its officers, directors, employees and agents, and
persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 145 is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
1.1 Agent. For the purposes of this Agreement, "agent" of the Company
means any person who is or was a director or officer of the Company or a
subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign
<PAGE> 2
or domestic corporation, partnership, joint venture, trust or other enterprise
or an affiliate of the Company; or was a director or officer of a foreign or
domestic corporation which was a predecessor corporation of the Company,
including, without limitation, Marketwatch.com, Inc., a Delaware limited
liability corporation, or was a director or officer of another enterprise or
affiliate of the Company at the request of, for the convenience of, or to
represent the interests of such predecessor corporation. The term "enterprise"
includes any employee benefit plan of the Company, its subsidiaries, affiliates
and predecessor corporations.
1.2 Expenses. For purposes of this Agreement, "expenses" includes all
direct and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of expenses
under this Agreement, Section 145 or otherwise; provided, however, that expenses
shall not include any judgments, fines, ERISA excise taxes or penalties or
amounts paid in settlement of a proceeding.
1.3 Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
1.4 Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, by the Company and one or more of
its subsidiaries or by one or more of the Company's subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue to
serve as an agent of the Company, at the will of the Company (or under separate
agreement, if such agreement exists), in the capacity the Indemnitee currently
serves as an agent of the Company, faithfully and to the best of his ability, so
long as he is duly appointed or elected and qualified in accordance with the
applicable provisions of the charter documents of the Company or any subsidiary
of the Company; provided, however, that the Indemnitee may at any time and for
any reason resign from such position (subject to any contractual obligation that
the Indemnitee may have assumed apart from this Agreement), and the Company or
any subsidiary shall have no obligation under this Agreement to continue the
Indemnitee in any such position.
3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the extent
that the Board determines it to be economically reasonable, maintain a policy of
directors' and officers' liability insurance ("D&O Insurance"), on such terms
and conditions as may be approved by the Board.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee:
4.1 Third Party Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the
-2-
<PAGE> 3
Company) by reason of the fact that he is or was an agent of the Company, or by
reason of anything done or not done by him in any such capacity, against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; and
4.2 Derivative Actions. If the Indemnitee is a person who was or is a
party or is threatened to be made a party to any proceeding by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such amounts which the
Court of Chancery or such other court shall deem proper; and
4.3 Exception for Amounts Covered by Insurance. Notwithstanding the
foregoing, the Company shall not be obligated to indemnify the Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) to the extent such have been paid directly to the Indemnitee by D&O
Insurance.
5. PARTIAL INDEMNIFICATION AND CONTRIBUTION.
5.1 Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding but is not entitled, however, to indemnification for all
of the total amount thereof, then the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled to indemnification.
5.2 Contribution. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the statutory
limitations set forth in the Delaware
-3-
<PAGE> 4
General Corporation Law, then in respect of any threatened, pending or completed
proceeding in which the Company is jointly liable with the Indemnitee (or would
be if joined in such proceeding), the Company shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose and (ii) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 Advancement. Subject to Section 9 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company or by reason of anything
done or not done by him in any such capacity. The Indemnitee hereby undertakes
to promptly repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the General Corporation
Law of Delaware or otherwise. The advances to be made hereunder shall be paid by
the Company to the Indemnitee within thirty (30) days following delivery of a
written request therefor by the Indemnitee to the Company.
6.2 Exception. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not be obligated to advance any expenses to the
Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
8.3, 8.4 and 8.5 hereof, with all references therein to "indemnification" being
deemed to refer to "advancement of expenses," and the burden of proof shall be
on the Company to demonstrate clearly and convincingly that, based on the facts
known at the time, the Indemnitee acted in bad faith. The Company may not avail
itself of this Section 6.2 as to a given lawsuit if, at any time after the
occurrence of the activities or omissions that are the primary focus of the
lawsuit, the Company has undergone a change in
-4-
<PAGE> 5
control. For this purpose, a change in control shall mean a given person or
group of affiliated persons or groups increasing their beneficial ownership
interest in the Company by at least twenty (20) percentage points without
advance Board approval.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld),
upon the delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided that:
(a) the Indemnitee shall have the right to employ his own counsel in any such
proceeding at the Indemnitee's expense; (b) the Indemnitee shall have the right
to employ his own counsel in connection with any such proceeding, at the expense
of the Company, if such counsel serves in a review, observer, advice and
counseling capacity and does not otherwise materially control or participate in
the defense of such proceeding; and (c) if (i) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (ii) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of the Indemnitee's counsel shall be at
the expense of the Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of this
Agreement or in the defense of any claim, issue or matter described therein, the
Company shall indemnify the Indemnitee against expenses actually and reasonably
incurred by him in connection with the investigation, defense or appeal of such
proceeding, or such claim, issue or matter, as the case may be.
-5-
<PAGE> 6
8.2 In the event that Section 8.1 is inapplicable, or does not apply
to the entire proceeding, the Company shall nonetheless indemnify the Indemnitee
unless the Company shall prove by clear and convincing evidence to a forum
listed in Section 8.3 below that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to such indemnification.
8.3 The Indemnitee shall be entitled to select the forum in which the
validity of the Company's claim under Section 8.2 hereof that the Indemnitee is
not entitled to indemnification will be heard from among the following, except
that the Indemnitee can select a forum consisting of the stockholders of the
Company only with the approval of the Company:
(a) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;
(b) The stockholders of the Company;
(c) Legal counsel mutually agreed upon by the Indemnitee and the
Board, which counsel shall make such determination in a written opinion;
(d) A panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the last of whom is
selected by the first two arbitrators so selected; or
(e) The Court of Chancery of Delaware or other court having
jurisdiction of subject matter and the parties.
8.4 As soon as practicable, and in no event later than thirty (30)
days after the forum has been selected pursuant to Section 8.3 above, the
Company shall, at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.
8.5 If the forum selected in accordance with Section 8.3 hereof is
not a court, then after the final decision of such forum is rendered, the
Company or the Indemnitee shall have the right to apply to the Court of Chancery
of Delaware, the court in which the proceeding giving rise to the Indemnitee's
claim for indemnification is or was pending or any other court of competent
jurisdiction, for the purpose of appealing the decision of such forum, provided
that such right is executed within sixty (60) days after the final decision of
such forum is rendered. If the forum selected in accordance with Section 8.3
hereof is a court, then the rights of the Company or the Indemnitee to appeal
any decision of such court shall be governed by the applicable laws and rules
governing appeals of the decision of such court.
8.6 Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and
-6-
<PAGE> 7
against all expenses incurred by the Indemnitee in connection with any other
proceeding between the Company and the Indemnitee involving the interpretation
or enforcement of the rights of the Indemnitee under this Agreement unless a
court of competent jurisdiction finds that each of the material claims and/or
defenses of the Indemnitee in any such proceeding was frivolous or not made in
good faith.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings specifically authorized by the Board or brought to establish or
enforce a right to indemnification and/or advancement of expenses arising under
this Agreement, the charter documents of the Company or any subsidiary or any
statute or law or otherwise, but such indemnification or advancement of expenses
may be provided by the Company in specific cases if the Board finds it to be
appropriate; or
9.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder
for any amounts paid in settlement of a proceeding unless the Company consents
in advance in writing to such settlement, which consent shall not be
unreasonably withheld; or
9.3 Securities Law Actions. To indemnify the Indemnitee on account of
any suit in which judgment is rendered against the Indemnitee for an accounting
of profits made from the purchase or sale by the Indemnitee of securities of the
Company pursuant to the provisions of Section l6(b) of the Securities Exchange
Act of 1934 and amendments thereto or similar provisions of any federal, state
or local statutory law; or
9.4 Unlawful Indemnification. To indemnify the Indemnitee if a final
decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or Bylaws, the vote of the Company's stockholders
or disinterested directors, other agreements or otherwise, both as to action in
the Indemnitee's official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
-7-
<PAGE> 8
11. GENERAL PROVISIONS
11.1 Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification and advancement of expenses to the Indemnitee to the fullest
extent now or hereafter permitted by law, except as expressly limited herein.
11.2 Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
then: (a) the validity, legality and enforceability of the remaining provisions
of this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 11.1 hereof.
11.3 Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver.
11.4 Subrogation. In the event of full payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary or desirable to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.
11.5 Counterparts. This Agreement may be executed in one or more
counter-parts, which shall together constitute one agreement.
11.6 Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
11.7 Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given: (a) if
delivered by hand and receipted for by the party addressee; or (b) if mailed by
certified or registered mail, with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement or as subsequently modified by written notice.
-8-
<PAGE> 9
11.8 Governing Law. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
11.9 Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
California for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
11.10 Attorneys' Fees. In the event Indemnitee is required to bring
any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 3), the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.
MARKETWATCH.COM, INC. INDEMNITEE:
By: By:
----------------------------------- --------------------------------
Title:
--------------------------------
Address: Address:
------------------------------ ---------------------------
- -------------------------------------- -----------------------------------
<PAGE> 1
EXHIBIT 10.02
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
of
MARKETWATCH.COM, LLC
between
CBS INC.
and
DATA BROADCASTING CORPORATION
Dated as of October 29, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Definitions ................................................................................1
SECTION 1.02. Definitions Generally.......................................................................4
ARTICLE II
General Provisions
SECTION 2.01. Formation...................................................................................4
SECTION 2.02. Name .......................................................................................4
SECTION 2.03. Term .......................................................................................4
SECTION 2.04. Purpose ....................................................................................4
SECTION 2.05. Registered Office/Agent.....................................................................5
SECTION 2.06. Principal Office............................................................................5
SECTION 2.07. Members ....................................................................................5
ARTICLE III
Capital Contributions
SECTION 3.01. Initial Capital Contributions...............................................................5
SECTION 3.02. Additional Capital Contributions............................................................5
SECTION 3.03. Withdrawals, Interest and Capital Accounts..................................................5
ARTICLE IV
Distributions
SECTION 4.01. Distributions...............................................................................5
SECTION 4.02. Distributions in Kind.......................................................................5
SECTION 4.03. Tax Withholding.............................................................................6
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ARTICLE V
Allocations and Other Tax Matters
SECTION 5.01. Capital Accounts............................................................................6
SECTION 5.02. Allocation of Net Profits and Net Losses....................................................7
SECTION 5.03. Definition of Net Profits and Net Losses....................................................7
SECTION 5.04. Federal Income Tax Allocations..............................................................7
SECTION 5.05. Elections...................................................................................8
SECTION 5.06. Fiscal Year.................................................................................8
SECTION 5.07. Tax Matters Partner.........................................................................8
SECTION 5.08. Other Tax Matters...........................................................................8
ARTICLE VI
Management
SECTION 6.01. Delegation of Authority.....................................................................9
SECTION 6.02. Management Committee........................................................................9
SECTION 6.03. Employees; Officers.........................................................................11
SECTION 6.04. Business Plan...............................................................................11
SECTION 6.05. Matters Requiring the Consent of All Members................................................12
ARTICLE VII
Dispute Resolution
SECTION 7.01. Negotiation.................................................................................12
SECTION 7.02. Dispute Resolution..........................................................................12
ARTICLE VIII
Books and Records
SECTION 8.01. Books and Records...........................................................................14
SECTION 8.02. Reports to Members; Budgets.................................................................14
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ARTICLE IX
Admission of Members; Transfers
SECTION 9.01. Admission of Substitute or Additional Members...............................................15
SECTION 9.02. Restriction on Transfer.....................................................................15
SECTION 9.03. Right of First Refusal......................................................................15
ARTICLE X
Exculpation and Indemnification
SECTION 10.01. Exculpation and Indemnification.............................................................16
SECTION 10.02. Liability of the Members....................................................................17
ARTICLE XI
Dissolution, Liquidation and Transfer
SECTION 11.01. Dissolution.................................................................................17
SECTION 11.02. Liquidation.................................................................................17
SECTION 11.03. Time Limitation.............................................................................18
SECTION 11.04. Mandatory Transfers.........................................................................18
SECTION 11.05. Claims of Members...........................................................................19
ARTICLE XII
DBC Loan
SECTION 12.01. DBC Loan ...................................................................................19
ARTICLE XIII
Agreement Not To Compete
SECTION 13.01. Agreement Not To Compete....................................................................19
SECTION 13.02. Enforcement.................................................................................21
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ARTICLE XIV
Miscellaneous
SECTION 14.01. Amendments..................................................................................21
SECTION 14.02. Notices ....................................................................................21
SECTION 14.03. Counterparts................................................................................21
SECTION 14.04. Severability................................................................................21
SECTION 14.05. No Third-Party Beneficiaries................................................................22
SECTION 14.06. Governing Law...............................................................................22
SECTION 14.07. Publicity...................................................................................22
SECTION 14.08. WAIVER OF JURY TRIAL........................................................................22
SECTION 14.09. Consent to Jurisdiction.....................................................................22
SECTION 14.10. Headings ...................................................................................22
SECTION 14.11. Survival ...................................................................................22
SECTION 14.12. No Waiver...................................................................................23
SECTION 14.13. Entire Agreement............................................................................23
SECTION 14.14. Further Assurance...........................................................................23
EXHIBIT A Addresses for Notices
EXHIBIT B Management Committee
</TABLE>
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LIMITED LIABILITY COMPANY AGREEMENT dated as of October 29,
1997, between CBS INC., a New York corporation ("CBS"), and DATA BROADCASTING
CORPORATION, a Delaware corporation ("DBC").
Preliminary Statement
WHEREAS, having formed a limited liability company with the
name "Marketwatch.Com, LLC" (the "Company") under the Act (as hereinafter
defined) by the filing of a Certificate of Formation with the Secretary of State
of the State of Delaware on the date hereof, the parties hereto now desire to
enter into this Agreement to govern their rights and obligations as members
thereof;
WHEREAS, immediately following the execution and delivery of
this Agreement, CBS ad DBC are entering into the Contribution Agreement dated as
of the date hereof (the "Contribution Agreement"), among CBS, DBC and the
Company; and
WHEREAS, simultaneously with the execution and delivery of the
Contribution Agreement, CBS and the Company are entering into the License
Agreement and DBC and the Company are entering into the DBC Services Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound by the terms hereof applicable to each of them,
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. When used herein, the following
terms have the following meanings:
"Act" means the Delaware Limited Liability Company Act as in
effect from time to time, or any successor statute.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly, through one or more intermediaries, Controlling
or Controlled by or under common Control with such Person.
"Agreement" means this Limited Liability Company Agreement as
it may be amended, supplemented or otherwise modified from time to time.
"Arbitrator" has the meaning assigned to that term in Section
7.02.
"Business" means the business conducted by the Company, which
shall be the businesses conducted with the assets contributed to the Company by
DBC pursuant to the
<PAGE> 7
Contribution Agreement as such businesses may be expanded or otherwise changed
from time to time by the Company pursuant to the terms hereof.
"Business Day" means a day that is not a Saturday, Sunday or
other day on which banking institutions in the State of New York are authorized
or required by law, regulation or executive order to be closed.
"Business Plan" has the meaning assigned to that term in
Section 6.04.
"Capital Account" has the meaning assigned to that term in
Section 5.01.
"CBS" has the meaning assigned to that term in the preamble.
"CBS Competitive Activities" has the meaning assigned to that
term in Section 13.01(b).
"Certificate of Formation" means the Certificate of Formation
of the Company as filed with the Secretary of State of the State of Delaware on
the date hereof, as the same may be amended, modified or otherwise supplemented
from time to time in accordance with the terms hereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Company" has the meaning assigned to that term in the
preamble.
"Contribution Agreement" has the meaning assigned to that term
in the preamble.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or general
partnership or managing member interests, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings correlative thereto. Without
limiting the generality of the foregoing, a Person shall be deemed to Control
any other Person in which it owns, directly or indirectly, a majority of the
ownership interests or a majority of all outstanding voting stock of such
Person.
"DBC" has the meaning assigned to that term in the preamble.
"DBC Change of Control" has the meaning assigned to that term
in Section 11.04.
"DBC Competitive Activities" has the meaning assigned to that
term in Section 13.01(a)(i).
"DBC Loan" has the meaning assigned to that term in Section
12.01.
"DBC Offer" has the meaning assigned to that term in Section
11.04.
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"DBC Services Agreement" means the Services Agreement dated as
of the date hereof, among DBC and the Company.
"Definitive Documents" means this Agreement, the Contribution
Agreement, the License Agreement, the DBC Services Agreement and all other
agreements and documents contemplated by any of the foregoing , as the same may
be amended, supplemented or otherwise modified in accordance with the terms
hereof or thereof, as applicable.
"Detrimental Activities" has the meaning assigned to that term
in Section 13.01.
"Initial Capital Contributions" has the meaning assigned to
that term in Section 3.01.
"Interest" means the interest of a Member in the Company at
any particular time, including the right of such Member to any and all benefits
to which such Member may be entitled as provided in this Agreement, together
with the obligations of such Member to comply with all the terms and provisions
of this Agreement.
"License Agreement" means the License Agreement dated as of
the date hereof, among CBS and the Company.
"Management Committee" has the meaning assigned to that term
in Section 6.01.
"Member Nonrecourse Debt" means any Company liability (or
portion thereof) that is a "partner nonrecourse debt" within the meaning of
Treasury Regulation Section 1.704-2(b)(4).
"Members" means CBS and DBC and any Persons admitted as
additional or substitute Members of the Company pursuant to Section 9.01.
"Membership Percentages" means, with respect to each Member,
such Member's ownership Interest in the Company, expressed as a percentage. The
initial Membership Percentages are 50% with respect to CBS and 50% with respect
to DBC.
"Negotiation Period" has the meaning assigned to that term in
Section 7.02.
"Net Losses" has the meaning assigned to that term in Section
5.03.
"Net Profits" has the meaning assigned to that term in Section
5.03.
"Nonselling Member" has the meaning assigned to that term in
Section 9.03.
"Offer Notification" has the meaning assigned to that term in
Section 9.03.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, limited liability partnership, association,
joint-stock company, trust, unincorporated organization or other organization,
whether or not a legal entity, and any governmental authority.
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"Section 704(c) Property" means any property that is
contributed to the Company at a time when its adjusted tax basis differs from
its fair market value and any Company property that is the subject of a
revaluation pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) at a
time when its adjusted tax basis differs from its fair market value.
"Selling Member" has the meaning assigned to that term in
Section 9.03.
"Submission Date" has the meaning assigned to that term in
Section 7.02.
"Third Party Offer" has the meaning assigned to that term in
Section 9.03.
"Transfer" means, with respect to any item of property, any
direct or indirect sale, assignment, disposition of or other transfer, pledge or
encumbrance of such item, and "Transferred" has a meaning correlative to the
foregoing.
"Triggering Event" has the meaning assigned to that term in
Section 11.04.
SECTION 1.02. Definitions Generally. Definitions in this
Agreement apply equally to both the singular and plural forms of the defined
terms. The words "include" and "including" shall be deemed to be followed by the
phrase "without limitation" when such phrase does not otherwise appear. The
terms "herein", "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular section, paragraph or
subdivision. The article and section titles appear as a matter of convenience
only and shall not affect the interpretation of this Agreement. All article,
section, paragraph, clause, exhibit or schedule references not attributed to a
particular document shall be references to such parts of this Agreement.
ARTICLE II
General Provisions
SECTION 2.01. Formation. The Company has been formed as a
limited liability company pursuant to the provisions of the Act by the filing of
the Certificate of Formation with the Secretary of State of the State of
Delaware. Each member hereby adopts, confirms and ratifies the Certificate of
Formation and all acts taken in connection therewith.
SECTION 2.02. Name. The name of the Company is
"Marketwatch.Com, LLC". The Management Committee may change the name of the
Company or adopt such trade or fictitious names as it may determine with the
approval of the Members.
SECTION 2.03. Term. The term of the Company began on the date
hereof and shall continue in perpetuity or until terminated in accordance with
the terms hereof.
SECTION 2.04. Purpose. The purpose of the Company shall be to
carry on any lawful business, purpose or activity for a limited liability
company under the Act.
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SECTION 2.05. Registered Office/Agent. The registered office
of the Company in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The
name and address of the registered agent of the Company for service of process
on the Company in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
SECTION 2.06. Principal Office. The Company's principal place
of business will be at 1900 South Norfolk Street, San Mateo, CA 94403, or such
other address as the Management Committee shall specify from time to time by
written notice to the Members.
SECTION 2.07. Members. The addresses of the initial Members
are as set forth in Exhibit A attached hereto.
ARTICLE III
Capital Contributions
SECTION 3.01. Initial Capital Contributions. Pursuant to the
Contribution Agreement, each of the Members will make an initial capital
contribution (the "Initial Capital Contributions") as set forth in the
Contribution Agreement in exchange for the their respective Interests. The
Initial Capital Contributions made by each of the Members are deemed to have
equal discounted present values.
SECTION 3.02. Additional Capital Contributions. Upon request
from the Management Committee, and subject to the unanimous consent and approval
of the Members, the Members will make additional capital contributions to the
Company pro rata in accordance with their respective Membership Percentages.
SECTION 3.03. Withdrawals, Interest and Capital Accounts. No
member shall have the right to withdraw any part of its capital contribution or
to receive any distribution except in accordance with the provisions of this
Agreement. No interest shall be paid on any capital contribution to the Company
except as may be set forth in this Agreement. A member shall not have any
obligation to the Company or to any other Member to restore any negative balance
in the Capital Account of such Member.
ARTICLE IV
Distributions
SECTION 4.01. Distributions. The Company will make cash
distributions to the Members in accordance with their Membership Percentages at
such times and in such amounts as the Management Committee shall determine in
its sole discretion.
SECTION 4.02. Distributions in Kind. The Company shall not
distribute any assets in kind unless approved by all of the Members. Such
property distributions shall be distributed based upon their fair market value
in the same proportions as if cash were distributed.
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If cash and property in kind are to be distributed simultaneously, the Company
shall distribute such cash and property in kind in the same proportion to each
Member, unless otherwise agreed by the Members.
SECTION 4.03. Tax Withholding. Notwithstanding any provision
herein to the contrary, the Management Committee may take any and all actions
that it determines to be necessary or appropriate to ensure that the Company
satisfies any and all withholding and tax payment obligations under Section
1441, 1445 or 1446 of the Code or any other provision of the Code or other
applicable law. Without limiting the generality of the foregoing, the Management
Committee may withhold any amount of taxes that it determines is required to be
withheld from amounts otherwise distributable to any Member pursuant to this
Article IV; provided, however, that such amount shall be deemed to have been
distributed to such Member for purposes of applying this Agreement.
ARTICLE V
Allocations and Other Tax Matters
SECTION 5.01. Capital Accounts. (a) There shall be established
for each Member on the books of the Company an account (a "Capital Account") to
be maintained pursuant to this Agreement. The Capital Account of each Member
shall be credited with (i) the amount of all cash contributed by a Member to the
Company, (ii) the fair market value of any property contributed to the Company
(net of any liabilities secured by such property that the Company is considered
to assume or take subject to under Section 752 of the Code) and (iii) the amount
of any Net Profits (or items of income) allocated to a Member pursuant to
Section 5.02, and shall be decreased by (a) the amount of any cash distributed
to a Member by the Company, (b) the fair market value of any property
distributed to a Member by the Company (net of any liabilities secured by such
distributed property that such Member is considered to assume or take subject to
under Section 752 of the Code), (c) the amount of any expenditure of the Company
described in Section 705(a)(2)(B) of the Code (or treated as a Section
705(a)(2)(B) expenditure for purposes of Section 704(b) of the Code) that is
allocable to a Member and (d) the amount of any Net Losses (or item of loss or
deduction) allocated to a Member pursuant to Section 5.02. The Capital Accounts
of the Members shall also be adjusted appropriately for their respective shares
of any other adjustment required under Treasury Regulation Sections 1.704-1(b)
and 1.704-2.
(b) In the event that any Interest in the Company is
Transferred, the transferee of such Interest shall succeed to the pro rata
portion of the transferor's Capital Account attributable to such Interest.
(c) Upon the occurrence of any event specified in Treasury
Regulation Section 1.704-1(b) (2) (iv) (f), the Management Committee may cause
the Capital Accounts of the Members to be adjusted to reflect the fair market
value of the Company's property at such time, as provided in such regulation.
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SECTION 5.02. Allocation of Net Profits and Net Losses. (a)
Subject to Section 5.02(b), the Net Profits and Net Losses of the Company for
each taxable year shall be allocated among the Members pro rata in proportion to
their respective Membership Percentages.
(b) Notwithstanding Section 5.02(a), special allocations of
Net Profits, Net Losses or specific items of income, gain, loss or deduction may
be required for any taxable year as follows:
(i) The Company shall allocate items of Company income and
gain among the Members at such times and in such amounts as necessary
to satisfy the minimum gain chargeback requirements of Treasury
Regulation Sections 1.704-2(f) and 1.704-2(i)(4).
(ii) Any deductions attributable to Member Nonrecourse Debt
shall be allocated among the Members that bear the economic risk of
loss for such Member Nonrecourse Debt in accordance with the ratios in
which such Members share such economic risk of loss and in a manner
consistent with the requirements of Treasury Regulation Sections
1.704-2(c), 1.704-2(i)(2) and 1.704-2(j) (1).
(iii) The Company shall specially allocate Net Losses and
items of income and gain when and to the extent required to satisfy the
"qualified income offset" requirement within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii) (d).
(iv) During the taxable year in which a liquidation occurs,
the Company shall allocate Net Profits or Net Losses and any other item
allocable to such taxable year such that the balance in each Member's
Capital Account equals the amount to be distributed to that Member
pursuant to Section 11.02(b).
(v) In the event a Member's contribution to the Company causes
any Member to recognize income for Federal income tax purposes, the
entire amount of any deductions associated with such contribution shall
be allocated to the Member that recognizes income or, if more than one
Member recognizes income as a result of such contributions to the
Company, shall be allocated proportionately based upon the amount of
income so recognized by each Member.
SECTION 5.03. Definition of Net Profits and Net Losses. The
"Net Profits" or "Net Losses" of the Company, as appropriate, shall be the
taxable income or tax loss of the Company as determined for Federal income tax
purposes for a given taxable year, taking into account any separately stated
items, increased by the amount of any tax exempt income of the Company during
such taxable year and decreased by the amount of any Code Section 705(a)(2)(B)
expenditures (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(iv)(i)) of the Company during such taxable year; provided,
however, that items of income, gain, loss and deduction attributable to Section
704(c) Property shall be determined in accordance with the principles of
Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
SECTION 5.04. Federal Income Tax Allocations. Section 5.02
provides for the allocation of Net Profits and Net Losses for accounting and
Capital Account maintenance
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purposes. The Company's ordinary income and losses and capital gains and losses
as determined for Federal income tax purposes (and each item of income, gain,
loss or deduction entering into the computation thereof) shall be allocated to
the Members in the same proportions as the corresponding "book" items are
allocated pursuant to the preceding provisions of this Article V; provided,
however, that items of income, gain, loss and deduction relating to Section
704(c) Property shall be allocated in accordance with Section 704(c)(1)(A) of
the Code and the Treasury Regulations thereunder. Items described in this
Section shall neither be credited nor charged to the Members' Capital Accounts.
SECTION 5.05. Elections. (a) The Management Committee shall
cause the Company to make an election under Section 754 of the Code upon receipt
of a written request therefor from any transferee of an Interest permitted
hereunder.
(b) The Members intend that the Company be treated as a
partnership for Federal income tax purposes. Accordingly, neither the Management
Committee nor any Member shall file any election on behalf of the Company that
is inconsistent with that intent.
(c) Except as otherwise expressly provided herein, any tax
elections required or permitted to be made by the Company under the Code or
otherwise shall be made in such manner as may be reasonably determined by the
Management Committee.
SECTION 5.06. Fiscal Year. The fiscal year of the Company
shall end on the last day of December of each year.
SECTION 5.07. Tax Matters Partner. DBC, or such other Member
as shall be designated by a majority in Membership Percentage, shall be the "tax
matters partner" of the Company within the meaning of Section 6231(a)(7) of the
Code and shall act in any similar capacity under state or local tax law. The
designated Member shall keep each other Member fully informed regarding matters
for which it is responsible while acting in such capacity. The designated Member
shall perform only ministerial duties in its capacity as "tax matters partner"
and shall not take any material action in such capacity without the consent of
the Management Committee. All reasonable expenses incurred by the "tax matters
partner" while acting in such capacity shall be paid or reimbursed by the
Company.
SECTION 5.08. Other Tax Matters. The Members agree to treat
contributions made pursuant to the Contribution Agreement as governed by Section
721 of the Code, unless a final determination (which shall include the execution
of a Form 870-AD or successor form) requires a different treatment for U.S.
Federal income tax purposes. In the event that any taxing authority contests
such agreed treatment of the contributions or the treatment of any other item as
agreed to by the Members in the Definitive Documents, a Member receiving notice
of such contest from such taxing authority shall promptly give written notice of
such contest to each other Member. Such other Members may, at their own expense,
participate in the defense of such contest. The Members shall reasonably
cooperate in defending any such contest, and no Member shall settle or otherwise
compromise such a contest without the written consent of the other Members
(which shall not be unreasonably delayed or withheld). In the event of a
Member's refusal to consent to a settlement, such Member shall, to the extent
permitted by law,
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assume control of the defense of such contest, and such Member shall bear any
legal fees incurred by such Member in undertaking such defense to the extent
incurred after the assumption.
ARTICLE VI
Management
SECTION 6.01. Delegation of Authority. Except as otherwise
provided herein, each of the Members agree that the power to direct and control
the Company shall be delegated to a management committee (the "Management
Committee"). Approval or action taken by the Management Committee in accordance
with this Agreement shall constitute approval or action by the Company and shall
be binding on each Member.
SECTION 6.02. Management Committee. (a) Voting and Members.
(i) CBS shall appoint three members of the Management Committee and DBC shall
appoint three members of the Management Committee. Each member of the Management
Committee, including any alternate member designated by any Member, shall be an
employee of the Member making such appointment or an employee of the Company.
The initial members and alternative members of the Management Committee and
their respective telephone and telecopier numbers are set forth in Exhibit B.
(ii) For purposes of any approval or action taken by the
Management Committee, each member of the Management Committee shall have one
vote. Except as set forth herein, a majority vote of all of the members of the
Management Committee shall constitute action on that matter that is binding upon
the Company and the Members. In the event that the Vote of the Management
Committee is evenly divided, and the members of the Management Committee cannot
resolve such conflict by good faith negotiation within 15 days, the Management
Committee shall, by written notice to the Members, submit such issue for
resolution as set forth in Article VII hereof.
(iii) The quorum necessary for any meeting of the Management
Committee shall be those members entitled to cast all of the votes held by the
members of the Management Committee. A quorum shall be deemed not be present at
any meeting for which notice was not properly given as provided for herein,
unless the member or members as to whom such notice was not properly given
attend such meeting without protesting the lack of notice or duly execute and
deliver a written waiver of notice or a written consent to the holding of such
meeting.
(iv) Each Member shall be entitled to name an alternate member
to serve in the place of any member of the Management Committee appointed by
such Member should any such member not be able to attend a meeting or meetings
of the Management Committee. Each member or alternate member shall serve at the
request of the designating Member and may be removed as such by the designating
Member with or without cause. Each Member shall bear any cost incurred by any
member designated by it to serve on the Management Committee, and no member of
the Management Committee shall be entitled to compensation from the Company for
serving in such capacity. Each member shall notify the other Member and the
Company of the
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name, business address and business telephone and facsimile numbers of each
member and each alternate member that such Member has appointed to the
Management Committee. Each Member shall promptly notify the other Member and the
Company of any change in such Member's appointments or of any change in any such
address or number. Each appointment by a Member to the Management Committee
shall remain in effect until the Member making such appointment notifies the
Company of a change in such appointment. The resignation or removal of a member
of the Management Committee shall not invalidate any act of such member taken
before the giving of such written notice of the removal or resignation of such
member.
(v) Any action taken by a member of the Management Committee
in such member's capacity as such shall, so far as the Members are concerned, be
deemed to have been duly authorized by the Member that appointed such member;
provided, however, that any such action shall not be deemed to be an approval,
consent or agreement of such Member for any purposes of this Agreement for which
approval, consent or agreement must be separately obtained from such Member
pursuant to the terms of this Agreement.
(vi) CBS shall be entitled to appoint the Chairman of the
Management Committee.
(b) Meetings and Notices. (i) Meetings of the Management
Committee, which shall be led by the Chairman of the Management Committee, shall
be held at the principal offices of the Company or at such other place as may be
determined by the Management Committee. A meeting of the Management Committee
may be held by conference telephone or similar communications equipment by means
of which all members participating in the meeting can be heard by all other
participants. Regular meetings of the Management Committee shall be held at
least semi-annually on such dates and at such times as shall be determined by
the Management Committee. Notice of any regular meeting shall be given to each
member of the Management Committee by the Company or any Member at least five
Business Days prior to such meeting. Special meetings of the Management
Committee may be called by any Member on at least five Business Days' notice to
each member and alternate member thereof, which notice shall state the purpose
or purposes for which such meeting is being called. The failure to identify
specifically any action to be taken or business to be transacted at a special
meeting shall not invalidate any action taken or business transacted at such
special meeting.
(ii) The actions taken by the Management Committee at any
meeting, however called and noticed, shall be as valid as though taken at a
meeting duly held after regular call and notice if (but not until), either
before, at or after the meeting, the member or members as to whom it was
improperly held duly executes and delivers a written waiver of notice or a
written consent to the holding of such meeting. A vote of the Management
Committee may be taken either in a meeting of the members thereof or by
unanimous written consent without a meeting.
(iii) Unless otherwise determined by the Management Committee
with respect to any meeting of the Management Committee, any member of the
Management Committee may bring a reasonable number of nonvoting observers
(including lawyers and accountants) to any meeting of the Management Committee.
The Management Committee may establish reasonable
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rules and regulations to limit the number and participation of observers and
require them to observe confidentiality obligations.
(iv) The Management Committee may establish reasonable rules
and regulations to provide for the keeping of minutes and other internal
Management Committee governance not inconsistent with the terms of this
Agreement.
(c) Nothing in this Section shall derogate from the power of
the Members, which is absolute, to mutually agree in writing to cause the
Company to act or refrain from acting.
(d) Notwithstanding anything herein to the contrary, the
Company may enforce its rights under any agreement with any Member without such
Member's consent and without the approval of the members of the Management
Committee appointed by such Member.
SECTION 6.03. Employees; Officers. (a) General. (i) The
Management Committee shall retain and employ officers, including a Chief
Executive Officer and such other officers as shall be deemed necessary or
advisable to operate the Company; provided, however, that CBS shall be entitled
to appoint the Chairman of the Management Committee (pursuant to clause
6.01(a)(iv)) and DBC shall be entitled to appoint the Chief Executive Officer,
who shall be one of the members of the Management Committee appointed by DBC
hereunder.
(ii) The Chief Executive Officer and the Chairman of the
Management Committee shall jointly approve the appointment of all key personnel
of the Company other than the Chief Executive Officer, subject, in each case, to
the ratification of such appointments by the Management Committee. The officers
of the Company shall be subject to removal with or without cause by the
Management Committee; provided, however, that the Chief Executive Officer shall
be subject to removal without cause only by DBC, and the Chairman shall be
subject to removal without cause only by CBS.
(iii) All officers of the Company (other than the Chief
Executive Officer) shall (A) report to the Chief Executive Officer or another
officer designated by the Chief Executive Officer and (B) attend meetings of the
Management Committee as requested.
(b) The Chief Executive Officer. The Chief Executive Officer
shall be the most senior officer of the Company and shall be responsible for the
day to day operation of the Company, subject to the control of the Management
Committee. He or she shall report to the Management Committee.
SECTION 6.04. Business Plan. The Chief Executive Officer will
prepare annually a business plan for the Company which will be submitted to the
Management Committee for approval (the business plan so approved, the "Business
Plan"). If any annual update of the Business Plan is not approved as set forth
herein, then the prior Business Plan then in effect in accordance with this
Section will continue in effect.
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SECTION 6.05. Matters Requiring the Consent of All Members.
(a) Each Member shall designate one individual who shall be authorized to act on
behalf of such Member in connection with consents or approvals necessary or
appropriate pursuant to the terms of this Agreement; provided that all such acts
on behalf of a Member shall be in writing. Each Member agrees to give any
consent or approval required pursuant to the terms of this Agreement, or to
indicate that such consent or approval will not be given, within 30 days of
written request by the other Member or the Company.
(b) Each provision of this Agreement that requires the vote,
consent or approval of the Members shall require the vote, consent or approval
of each Member, notwithstanding the size of such Member's Interest in the
Company or its entitlement to allocations or distributions.
ARTICLE VII
Dispute Resolution
SECTION 7.01. Negotiation. (a) The Members shall attempt in
good faith to resolve promptly any impasse on any issue before the Management
Committee by referring such matters to negotiation between Bill Korn, Executive
Vice President, Planning and Operations of CBS, and Mark Imperiale, Chief
Operating Officer of DBC, or, in the event that either of such officers is no
longer serving in such position or a comparable senior executive position, a
senior executive of such Member designated by such member.
(b) If any Member determines in good faith that there is a
disagreement among the Members as to the need for additional capital
contributions to the Company or as to the scope of the business or activities to
be conducted by the Company or any other fundamental strategic matter relating
to the Company, such Member shall give written notice to the other Members of
such disagreement. Such disagreement shall be referred for negotiation between
Bill Korn, Executive Vice President, Planning and Operations of CBS, and Mark
Imperiale, Chief Operating Officer of DBC, or, in the event that either of such
officers is no longer serving in such position or a comparable senior executive
position, a senior executive of such Member designated by such Member. In the
event that such disagreement has not been resolved to the mutual satisfaction of
each Member within 30 days after the delivery notice of such disagreement, any
Member may give notice in writing to the other Members of its election to
trigger the mandatory transfer provisions of Section 11.04.
SECTION 7.02. Dispute Resolution. Any claim or controversy
with respect to a matter which is within the authority of the Management
Committee and which is not resolved within 15 days (the "Negotiation Period")
after the Members receive written notice of the impasse of the Management
Committee pursuant to Section 6.02(a)(ii), will, upon the request of either
Member, be resolved by arbitration as set forth below. The Members agree that
the dispute resolution procedure described in this Section 7.02 shall not apply
to any matter other than those specifically contemplated by the previous
sentence, including, without limitation, any dispute regarding the
interpretation of this Agreement, the rights and obligations of the Members
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<PAGE> 18
under this Agreement or other matters not involving the management of the
business, operations or affairs of the Company. Such arbitration shall be
conducted in accordance with the following:
(a) As promptly as practicable (and in any event within 10
days) after the expiration of the Negotiation Period, the Company shall appoint
an arbitrator from the list attached hereto as Schedule 7.02. The arbitrator
appointed shall be the first name listed on such Schedule or if such person does
not consent to serve as the arbitrator, the next such person on such Schedule
who so consents to serve (the "Arbitrator"). Notwithstanding the foregoing, in
the event that the Arbitrator so selected has already served as an arbitrator
under this Agreement, then such Arbitrator shall be disqualified if any of the
Members so elect and the next name listed on such Schedule (provided such next
person has not served in the capacity of arbitrator (as set forth above)) shall
be considered to be the "first name listed" for purposes of the selection of the
Arbitrator. The foregoing disqualification shall not occur if such disqualified
but otherwise consenting Arbitrator is the only consenting person on such
Schedule, or if all other persons on such Schedule are similarly disqualified
(i.e., have served as arbitrator an equal number of times). The Arbitrator shall
then proceed under the procedures outlined in this Section 7.02.
(b) Following the designation of the Arbitrator, the Members,
together with the Arbitrator, shall promptly undertake appropriate informal
efforts to mediate and negotiate a solution to the matter covered by the
original notice.
(c) If a negotiated solution cannot be achieved within 10
Business Days after the date on which the Arbitrator is appointed, then the
Arbitrator shall promptly notify the Members of such fact and the matter will be
resolved as set forth below.
(i) Each of the Members will submit to the Arbitrator (and
provide copies of the same to the other Member), in writing, within 5
Business Days after such notice from the Arbitrator (the date by which
both Members shall have made such submissions is referred to herein as
the "Submission Date"), its statement of facts with respect to the
disputed matter, together with its proposed resolution of the matter,
all in reasonable detail and containing such supporting materials as it
may choose to submit. The Arbitrator will resolve the dispute by
choosing one of the proposed resolutions, without modification, using
the principles set forth in subclause (ii) below to make such
determination:
(ii) In resolving the dispute, the Arbitrator shall select the
proposed resolution that it believes to be in the best interests of the
Company;
(iii) No hearings or other form of discovery shall be
conducted, provided that each Member shall make itself available to
respond to inquiries from, and provide information requested by, the
Arbitrator;
(iv) The Arbitrator shall issue a decision within 15 Business
Days after the Submission Date; and
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(v) The fees and expenses of the Arbitrator will be shared
equally between the Members. All other costs incurred by a Member in
connection with such arbitration shall be borne by the Member incurring
such cost.
(d) In connection with the enforcement of the mediation and
arbitration provisions of this Section 7.02, any agreement, decision or award
shall be final and conclusive as to any such claim.
ARTICLE VIII
Books and Records
SECTION 8.01. Books and Records. The Management Committee
shall keep or cause to be kept complete and accurate books of account and
records with respect to the Company's business. The books of the Company shall
at all times be maintained by the Management Committee. Each Member and its duly
authorized representatives shall have the right to examine and copy the
Company's books, records and documents during normal business hours. The
Company's books of account shall be kept in accordance with generally accepted
accounting principles, consistently applied. The Company's independent auditors
shall be an independent public accounting firm selected by the Management
Committee.
SECTION 8.02. Reports to Members; Budgets. (a) Within 60 days
after the end of each of the first three fiscal quarters of each year, the
Company shall prepare and mail to the Members an unaudited report setting forth:
(i) a balance sheet of the Company as of the end of such fiscal quarter and (ii)
an income statement of the Company for such fiscal quarter, comparing actual
results to the budget for such period.
(b) The Company shall use diligent efforts to prepare (or
cause to be prepared) and mail to the Members, within 120 days after the end of
each fiscal year, an audited report setting forth: (i) a balance sheet of the
Company as of the end of such fiscal year, (ii) an income statement of the
Company for such fiscal year, and (iii) a statement of such Member's Capital
Account as of the end of such fiscal year.
(c) The Company shall use reasonable efforts to prepare or
cause the Company's independent accountants to prepare and transmit to each
Member within 90 days following each calendar quarter a Federal income tax
schedule and such other tax information as may be reasonably necessary to enable
such Member to prepare its Federal, state and local income tax returns as they
relate to the Company for such fiscal year. The Company will provide estimates
of the Company's taxable income as may be reasonably requested by any Member in
writing from time to time.
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ARTICLE IX
Admission of Members; Transfers
SECTION 9.01. Admission of Substitute or Additional Members.
No substitute or additional Member shall be admitted to the Company without the
prior written approval of each of the other Members.
SECTION 9.02. Restrictions on Transfer. (a) No Member shall
Transfer its Interest in the Company except for Transfers in accordance with
Sections 9.02(b) or 11.04. Any purported Transfer of all or any part of any
Interest in the Company in violation of this Section 9.02(a) shall be null and
void ab initio and of no force or effect.
(b) The Interest of a Member in the Company may be Transferred
only in whole and not in part, may only be Transferred by a sale of such
Member's entire Interest in the Company and, other than Transfers by CBS
pursuant to the exception to the immediately succeeding sentence, may only be
transferred following the fifth anniversary of the date hereof. A Member may
Transfer its Interest only pursuant to a sale after such Member has fully
complied with the provisions of Section 9.03 with respect to such sale, except
that CBS may Transfer its Interest to any entity controlling, controlled by or
under common control with, CBS, or to any entity that acquires CBS by purchase
of stock or by merger or otherwise, or by acquiring all or substantially all of
CBS's assets, without complying with such provisions. Regardless of whether a
Transfer of an Interest in the Company is permitted hereunder, such Transfer
will not release the transferor from any liability under this Agreement, whether
arising before or after such Transfer, unless and until the transferee is
admitted as a Member of the Company in accordance with Section 9.01.
SECTION 9.03. Right of First Refusal. If at any time a Member
shall desire to Transfer its Interest in the Company to a third party, then such
Member (the "Selling Member") shall obtain a bona fide written offer from an
unaffiliated third party (a "Third Party Offer") to purchase all, but not less
than all, the Interest of the Selling Member. No Third Party Offer shall
encompass or be conditioned upon the sale of any property other than all, but
not less than all, the Interest of the Selling Member in the Company. If the
Selling Member wishes to accept a Third Party Offer, it shall give a notice (an
"Offer Notification") to the other Member (the "Nonselling Member") which shall
include a copy of the Third Party Offer and shall set forth in reasonable detail
the name and address of the proposed buyer, the identities of the proposed
buyer's business principals, the nature of the proposed buyer's and its
Affiliates' business, and the amount, terms and conditions of the sales price.
The Nonselling Member shall then have 60 days to give notice to the Selling
Member that it wishes to a acquire all, but not less than all, the Interest of
the Selling Member at the price and on the terms and conditions set forth in
such Third Party Offer; provided, however, that if any consideration to be paid
to the Selling Member pursuant to the Third Party Offer is other than cash, the
Nonselling Member shall have the option to pay either such non-cash,
consideration or the fair market value thereof in connection with exercising its
right of first refusal hereunder. Such notice from the Nonselling Member shall
state a closing date no later than the later of 90 days after the date of such
notice and the closing
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<PAGE> 21
date set forth in the Third Party Offer. If the Nonselling member (i) does not
give such notice within the 60-day period following the Offer Notification from
the Selling Member or (ii) does give such notice but fails to close the sale
within the time period stated in the immediately preceding sentence, then the
Selling Member may, no later than 120 days after the latter to occur of the
dates referred to in clauses (i) and (ii) above, sell all, but not less than
all, its Interest to the third party at the price and on terms and conditions no
less favorable to the Selling Member than those contained in the Third Party
Offer.
ARTICLE X
Exculpation and Indemnification
SECTION 10.01. Exculpation and Indemnification. (a) No Member
shall be liable to the Company or to any other Member for any losses, claims,
damages or liabilities arising from, relating to, or in connection with, this
Agreement or the business or affairs of the Company, except for any losses,
claims, damages or liabilities as are determined by final judgment of a court of
competent jurisdiction to have resulted from such Member's gross negligence,
willful misconduct or from the failure by such Member to make a capital
contribution required to be made by it pursuant to Article III.
(b) The Company shall, to the fullest extent permitted by
applicable law, indemnify and hold harmless each Member against any losses,
claims, damages or liabilities to which such Member may become subject in
connection with any matter arising from, relating to, or in connection with,
this Agreement or the business or affairs of the Company, except for any losses,
claims, damages or liabilities as are determined by final judgment of a court of
competent jurisdiction to have resulted from such Member's gross negligence,
willful misconduct or from the failure by such Member to make a capital
contribution required to be made by it pursuant to Article III. If any Member
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter arising from, relating to, or in connection with this
Agreement or the business or affairs of the Company, whether or not pending or
threatened and whether or not any Member is a party thereto, the Company will
periodically reimburse such Member for its actual legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith upon submission by such Member of paid receipts or other evidence of
such expenses satisfactory to the Company; provided, however, that such Member
shall promptly repay to the Company the amount of any such reimbursed expenses
paid to it to the extent that it shall ultimately be determined that such Member
is not entitled to be indemnified by the Company in connection with such action,
proceeding or investigation as provided in the exception contained in the
immediately preceding sentence. If for any reason (other than the gross
negligence or willful misconduct of such Member) the foregoing indemnification
is unavailable to such Member, or insufficient to hold it harmless, then the
Company shall contribute to the amount paid or payable by such member as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and such Member on the other hand or, if such allocation is not permitted
by applicable law, to reflect not only the relative benefits referred to above
but also any other relevant equitable considerations.
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(c) Notwithstanding anything else contained in this Agreement,
the reimbursement, indemnity and contribution obligations of the Company under
paragraph (b) above shall (i) be in addition to any liability that the Company
may otherwise have, (ii) extend upon the same terms and conditions to the
directors, officers, trustees, committee members, employees, stockholders,
members, partners, agents and representatives of each Member and of each
Affiliate of each Member, (iii) be binding upon and inure to the benefit of any
successors or assigns permitted under this Agreement, heirs and personal
representatives of each member and (iv) be limited to the assets of the Company.
(d) The foregoing provisions of this Section shall survive any
termination of this Agreement.
SECTION 10.02. Liability of the Members. Except as otherwise
expressly provided in the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member. Except as otherwise expressly provided in
the Act, the liability of each Member for capital contributions shall be limited
to the amount of capital contributions required to be made by such Member in
accordance with the provisions of this Agreement, but only when and to the
extent the same shall become due pursuant to the provisions of this Agreement.
In no event shall any Member enter into any agreement or instrument that would
create or purport to create personal liability on the part of any other Member
for any debts, obligations or liabilities of the Company without the prior
written consent of such other Member.
ARTICLE XI
Dissolution, Liquidation and Transfer
SECTION 11.01. Dissolution. The Company shall be dissolved and
its affairs shall be wound up upon the bankruptcy or dissolution of any Member,
unless within 90 days of such event a majority of the remaining Members
determine to continue the business of the Company.
SECTION 11.02. Liquidation. (a) Upon a dissolution pursuant to
Section 11.01, the Company's business and assets shall be liquidated in an
orderly manner. The Management Committee shall act as the liquidator to wind up
the affairs of the Company pursuant to this Agreement. If there shall be no
Management Committee, the remaining Members may approve one or more liquidators
to act as the liquidator in carrying out such liquidation. In performing its
duties, the liquidator shall be authorized to sell, distribute, exchange or
otherwise dispose of Company assets in accordance with the Act in any reasonable
manner that the liquidator shall determine to be in the best interest of the
Members.
(b) The proceeds of the liquidation of the Company shall be
distributed in the following order and priority:
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(i) first, to creditors of the Company that are not Members
(or Affiliates of Members) in order of priority as provided by law in
payment of unpaid liabilities of the Company to the extent required by
law or under agreement with such creditors;
(ii) second, to the setting of any reserves which the
liquidator reasonably deems necessary for any anticipated, contingent
or unforeseen liabilities or obligations of the Company arising out of
or in connection with the conduct of the Company's business, provided
that at the expiration of such period the balance thereof shall be
distributed in accordance with the balance of this Section 11.02(b);
(iii) third, to any Member (or Affiliate of a Member) for any
other loans or debts owing to such Member (or Affiliate) by the Company
(including reimbursement of costs or expenses incurred on behalf of the
Company in accordance with the terms hereof);
(iv) fourth, the balance, if any, pro rata to each Member in
accordance with its Membership Percentage.
SECTION 11.03. Time Limitation. Any liquidating distribution
pursuant to this Article XI (except pursuant to Section 11.02(b) (ii)) shall be
made no later than the later of (a) the end of the taxable year during which
such liquidation occurs and (b) 90 days after the date of such liquidation.
SECTION 11.04. Mandatory Transfers. (a) Not withstanding anything
herein to the contrary, and absent agreement of the Members to do otherwise, one
Member shall purchase the other Member's Interest in the Company pursuant to the
terms of Section 11.04(b) upon the earliest to occur of: (i) the mutual written
agreement by the Members to terminate the Company, (ii) CBS giving notice in
writing to DBC of its election to trigger the mandatory transfer provisions of
this Section 11.04 within 60 days after any Person has acquired ownership of
more than 30% of the outstanding shares of common stock, par value $.01 per
share or securities representing, in the aggregate, more than 30% of the voting
power, of DBC, or all or substantially all of DBC's assets, (a "DBC Change of
Control"), without the prior written consent of CBS, (iii) the entry of a decree
of judicial dissolution of the Company pursuant to Section 802 of the Act or
(iv) any Member giving notice in writing to the other Members of its election to
trigger the mandatory transfer provisions of this Section 11.04 pursuant to
Section 7.01(b) (each, a "Triggering Event"). The parties hereby agree that DBC
may give CBS confidential notice of its intent to enter into an agreement which
would cause a DBC Change of Control, together with a description of the party
with whom DBC intends to effect such a transaction. CBS shall have twenty (20)
days from receipt of such notice to respond to DBC in writing as to whether it
would elect to trigger the mandatory transfer provisions of this Section 11.04
with respect to such potential DBC Change of Control. If, and only if, CBS
notifies DBC that it would not make such election, CBS shall be deemed to have
waived its right to trigger such mandatory transfer provisions with respect to
such potential DBC Change of Control.
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(b) Upon the occurrence of a Triggering Event and (i) prior to
the first anniversary of the date hereof, DBC shall pay CBS, within 45 days of
the occurrence of such event, the sum of 50% of the aggregate rate card value of
the advertising time actually contributed by CBS to the Company pursuant to the
terms of the Contribution Agreement (such amount not to exceed $5,000,000) and
30% of the net advertising revenue of the Company prior to such Triggering Event
in exchange for CBS's Interest, and (ii) on or after the first anniversary of
the date hereof, DBC shall, within 30 days of the date of the Triggering Event,
submit in writing to CBS and the Company an offer to purchase, within 45 days
from acceptance of such offer, for cash (the "DBC Offer") all of CBS's Interest;
thereafter, CBS shall have 30 days to accept such offer by written notice to DBC
and the Company or to purchase all of DBC's Interest for: (A) 245% of the DBC
Offer, if the Triggering Event occurred on or after the first anniversary and
before the second anniversary of the date hereof, (B) 163% of the DBC Offer, if
the Triggering Event occurred on or after the second anniversary and before the
third anniversary of the date hereof and (C) 100% of the DBC Offer, if the
Triggering Event occurred on or after the third anniversary of the date hereof.
Upon the consummation of a Transfer by either Member pursuant to the above, the
other Member shall be released from all of its rights and obligations hereunder
and under the Definitive Documents and shall no longer be a Member.
SECTION 11.05. Claims of Members. The Members shall look
solely to the Company's assets for the return of their capital contributions,
and if the assets of the Company remaining after payment of or reasonable
provision for the payment of all liabilities of the Company are insufficient to
return such capital contributions, the Member shall have no recourse against the
Company or any other Member.
ARTICLE XII
DBC Loan
SECTION 12.01. DBC Loan. Until the third anniversary of the
date hereof, DBC shall provide to the Company, on an unsecured, revolving basis,
loans in amounts up to an aggregate of $5,000,000 (the "DBC Loan") to be used by
the Company in connection with the Business, including but not limited to for
working capital financing. Any loans made by DBC to the Company pursuant to this
Article XII shall bear interest at a variable rate per annum equal to the rate
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City plus 2% (but in no event higher
than the highest lawful rate), and shall be repayable by the Company from time
to time as soon as possible at such time or times as the Company shall have
sufficient cash or cash equivalents to make such payment or payments after
taking into account the cash needs of the Company.
ARTICLE XIII
Agreement Not To Compete
SECTION 13.01. Agreement Not To Compete. (a) Agreement of DBC
Not To Compete. DBC understands that the Company shall be entitled to protect
and preserve the going concern value of the Business to the extent permitted by
law and, therefore, for a period ending
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on the earlier of the fifth anniversary of the date hereof and such date on
which neither DBC or any of its wholly owned subsidiaries is a Member, DBC shall
not, and shall cause its Affiliates not to, directly or indirectly, without the
prior written consent of each other Member:
(i) (A) sell advertising on an Internet website that primarily
disseminates or delivers business or financial new or information or
(B) use the Internet to sell real time snap-quotes to institutional or
individual subscribers or customers who pay a fee for such information
("DBC Competitive Activities"), including assisting any person in any
way to do, or attempt to do, anything prohibited by this clause; and
(ii) perform any action, activity or course of conduct that is
substantially detrimental to the Business or business reputation
("Detrimental Activities"), including (A) soliciting, recruiting or
hiring any employees of the Business or persons who have worked for the
Business, (B) soliciting or encouraging any employee of the Business to
leave the employment of the Business and (C) disclosing or furnishing
to anyone any confidential information relating to the Business or
otherwise using such confidential information for its own benefit or
the benefit of any other person;
The Company acknowledges that the maintenance and continued
operation of dbc.com by DBC shall not be considered to be a violation of this
Section 13.01(a) provided that dbc.com does not engage in any DBC Competitive
Activities or Detrimental Activities.
(b) Agreement of CBS Not To Compete. CBS understands that the
Company shall be entitled to protect and preserve the going concern value of the
Business to the extent permitted by law and, therefore, for a period ending on
the earlier of the fifth anniversary of the date hereof and such date on which
neither CBS or any of its wholly owned subsidiaries is a Member, CBS shall cause
the CBS Television Network (which, for purposes of this Section 13.01(b), shall
mean the News, Sports and Entertainment Divisions of CBS Inc.) not to engage in
or establish any new on-line businesses that primarily engage in delivering
comprehensive real-time or delayed stock market quotations or financial news in
the English language over the Internet to consumers ("CBS Competitive
Activities").
(c) Sections 13.01(a) and 13.01(b) shall be deemed not
breached as a result of the ownership by CBS or DBC or any of their respective
Affiliates of:
(i) less than an aggregate of 5% of any class of stock of a
Person engaged, directly or indirectly, in CBS or DBC Competitive
Activities, respectively;
(ii) less than 10% in value of any instrument of indebtedness
of a Person engaged, directly or indirectly, in CBS or DBC Competitive
Activities, respectively;
(iii) a Person that engages, directly or indirectly, in CBS or
DBC Competitive Activities, respectively, if such CBS or DBC
Competitive Activities account for less than 10% of such Person's
consolidated annual revenues; or
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(iv) a Person that engages, directly or indirectly, in CBS or
DBC Competitive Activities, respectively, if such CBS or DBC
Competitive Activities are not the predominant business of such Person
and if CBS or DBC, or their respective Affiliates, as applicable, uses
reasonable efforts to divest the business of such Person that
constitutes a CBS or DBC Competitive Activity, as applicable, and
actually divests itself of such business within 270 days of the
acquisition thereof.
The Members and the Company acknowledge that the provisions of
this Section 13.01 shall terminate and cease to apply in the event that the
Company is dissolved or liquidated; provided, however, that the provisions of
this Section 13.01 or a successor provision mutually agreeable to CBS and DBC
shall continue to apply in the event that the Company's organization as a
limited liability company is terminated but the Business is continued by CBS and
DBC in the form of a new Person.
SECTION 13.02. Enforcement. Notwithstanding any other
provision of this Agreement, it is understood and agreed that the remedies at
law would be inadequate in the case of any breach of the covenants contained in
Sections 13.01(a) and 13.01(b). Therefore, the Company shall be entitled to
equitable relief, including the remedy of specific performance, with respect to
any breach or attempted breach of such covenants.
ARTICLE XIV
Miscellaneous
SECTION 14.01. Amendments. This Agreement and the Certificate
of Formation may be amended, supplemented or otherwise modified only by written
instrument executed by each Member.
SECTION 14.02. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent, postage prepaid, by registered, certified or express
mail or reputable overnight courier service and shall be deemed given when so
delivered by hand or, if mailed, three days after mailing (one business day in
the case of express mail or overnight courier service), at the address for such
Person set forth in Exhibit A or at such other address as such Person may
hereafter specify.
SECTION 14.03. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to each of the other parties.
SECTION 14.04. Severability. If any provision of this
Agreement (or any portion thereof) or the application of any such provision (or
any portion thereof) to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof (or the remaining portion thereof) or the application of such
provision to any other Persons or circumstances.
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SECTION 14.05. No Third-Party Beneficiaries. Except as
provided in Article X, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any Person, other than the parties hereto and
such assigns, any legal or equitable rights hereunder.
SECTION 14.06. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of laws principles of such state.
SECTION 14.07. Publicity. No advertisement, press release or
other publicity concerning this Agreement or the transactions contemplated by
this Agreement will be made or disseminated without the consent of the Members.
SECTION 14.08. WAIVER OF JURY TRIAL. THE MEMBERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 14.09. Consent to Jurisdiction. Each Member
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any Definitive Document, or
any transaction contemplated hereby or thereby. Each Member agrees to commence
any such action, suit or proceeding either in the United States District Court
for the Southern District of New York or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each Member further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Exhibit A shall
be effective service of process for any action, suit or proceeding in New York
with respect to any matters to which it has submitted to jurisdiction in this
Section 14.09. Each Member irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement, any Definitive Document or the transactions contemplated hereby and
thereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby and thereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 14.10. Headings. The headings contained in this
Agreement, in any Exhibit or Schedule hereto and in the table of contents to
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 14.11. Survival. The covenants contained in this
Agreement which, by their terms, require their performance after the expiration
or termination of this Agreement shall be enforceable notwithstanding the
expiration or other termination of this Agreement.
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SECTION 14.12. No Waiver. The failure of any Member to insist
in any one or more instances upon the strict performance of any one or more of
the agreements, terms, covenants, conditions or obligations of this Agreement,
or to exercise any right, remedy or election herein contained, shall not be
construed as a waiver or relinquishment for the future of the performance of any
one or more of said obligations of this Agreement or of the right to exercise
such election, but the same shall continue in full force and effect with respect
to any subsequent breach, act or omission, whether of a similar nature or
otherwise.
SECTION 14.13. Entire Agreement. This Agreement and the
Definitive Documents, along with the Schedules and Exhibits hereto and thereto,
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter. Neither party shall be liable or
bound to any other party in any manner by any representations, warranties or
covenants relating to such subject matter except as specifically set forth
herein or in the Definitive Documents.
SECTION 14.14. Further Assurance. Each party hereto shall
execute and deliver all such other and additional instruments and documents and
do all such other acts and things as may be necessary more fully to effectuate
the terms of this Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first above written.
CBS INC.,
by
/s/ FREDRIC G. REYNOLDS
-----------------------------------
Name: Fredric G. Reynolds
Title: Executive Vice President and
Chief Financial Officer
DATA BROADCASTING CORPORATION,
by
/s/ MARK F. IMPERIALE
-----------------------------------
Name: Mark F. Imperiale
Title: President
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EXHIBIT A
Addresses for Notices
(i) if to the Company,
c/o Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention: Larry Kramer
with a copy to CBS and DBC as set forth below;
(ii) if to CBS,
CBS Inc.
51 West 52nd Street
New York, NY 10019
Attention: Derek Reisfield
with copies to:
CBS Inc.
51 West 52nd Street
New York, NY 10019
Attention: Sanford Kryle, and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.; and
(iii) if to DBC,
Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention: Mark Imperiale
<PAGE> 31
with a copy to:
Camhy Karlinsky & Stein LLP
1740 Broadway
Sixteenth Floor
New York, NY 10019
Attention: Alan I. Annex, Esq.
2
<PAGE> 32
EXHIBIT B
Management Committee
DBC Management Committee Members:
Larry Kramer
Mark Imperiale
James Kaplan
DBC Alternate Management Committee Members:
Allan Tessler
CBS Management Committee Members:
Harry Fuller
Linda Fluger
Derek Reisfield
CBS Alternate Management Committee Members:
Tom Gentile
<PAGE> 33
Schedule 7.02
Arbitrators
1. Peter Vestal, Esq.
Law Offices of Peter Vestal
300 Montgomery Street (Suite 300)
San Francisco, CA 94104
(415) 956-2580
2. Mr. Leonard Toboroff
c/o Riddell
900 Third Avenue
New York, NY 10022
(212) 826-4300
3. Theodore A. Kury, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
(212) 909-6388
4. Mr. Robert H. Lessin
Vice Chairman
Smith Barney, Inc.
388 Greenwich Street
New York, NY 10013
(212) 816-7695
5. Robert McDowell, Esq.
9129 Old Courthouse Road
Vienna, VA
(703) 938-0128
6. Paulette Kendler, Esq.
Hutton Ingram Yuzek Gainen Carroll & Bertolotti
250 Park Avenue
New York, NY 10177
(212) 907-9600
7. Mr. Theodore MacVeagh
Bromberg & Sonstein LLP
125 Summer Street
Boston, MA 02110
(617) 661-6505
<PAGE> 34
8. Mr. Arthur Dubrof
Enhance Financial Services Inc.
335 Madison Avenue
New York, NY 10017
(212) 983-3100
9. Mr. Chris Gerard
Reynolds, Richards LLP
67 Wall Street
New York, NY 10005
10. Mr. John Castro
Merrill
1 Merrill Circle
St. Paul, MN 55108
(612) 646-4501
2
<PAGE> 1
EXHIBIT 10.03
================================================================================
CONTRIBUTION AGREEMENT
among
CBS INC.,
DATA BROADCASTING CORPORATION
and
MARKETWATCH.COM, LLC
Dated as of October 29, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
Contributions
SECTION 1.01. DBC Contribution; DBC Assets.......................................................1
SECTION 1.02. Assumption of Certain Liabilities..................................................2
SECTION 1.03. Consent of Third Parties...........................................................4
SECTION 1.04. CBC Contribution...................................................................4
ARTICLE II
The Closing
SECTION 2.01. The Closing........................................................................5
SECTION 2.02. Transactions To Be Effected at the Closing.........................................5
ARTICLE III
Representations and Warranties of DBC
SECTION 3.01. Organization, Standing and Power...................................................5
SECTION 3.02. Authority; Execution and Delivery; Enforceability..................................6
SECTION 3.03. No Conflicts; Consents.............................................................6
SECTION 3.04. Financial Statements...............................................................7
SECTION 3.05. DBC Assets.........................................................................7
SECTION 3.06. Intellectual Property..............................................................7
SECTION 3.07. Contracts..........................................................................9
SECTION 3.08. Personal Property.................................................................11
SECTION 3.09. Permits...........................................................................11
SECTION 3.10. Insurance.........................................................................12
SECTION 3.11. Sufficiency of DBC Assets.........................................................12
SECTION 3.12. Taxes.............................................................................12
SECTION 3.13. Proceedings.......................................................................13
SECTION 3.14. Benefit Plans.....................................................................13
SECTION 3.15. Absence of Changes or Events......................................................14
SECTION 3.16. Compliance with Applicable Laws...................................................14
SECTION 3.17. Transactions with Affiliates......................................................14
SECTION 3.18. Effect of Transaction.............................................................15
SECTION 3.19. Disclosure........................................................................15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE IV
Representations and Warranties of CBS
SECTION 4.01. Organization, Standing and Power..................................................15
SECTION 4.02. Authority; Execution and Delivery; Enforceability.................................15
SECTION 4.03. No Conflicts; Consents............................................................16
ARTICLE V
Covenants
SECTION 5.01. Reasonable Best Efforts...........................................................16
SECTION 5.02. Expenses; Transfer Taxes..........................................................16
SECTION 5.03. Post-Closing Cooperation..........................................................17
SECTION 5.04. Further Assurances................................................................17
SECTION 5.05. Year 2000 Compliance..............................................................17
ARTICLE VI
Indemnification
SECTION 6.01. Indemnification by DBC............................................................18
SECTION 6.02. Indemnification by CBS............................................................18
SECTION 6.03. Calculation of Losses.............................................................19
SECTION 6.04. Termination of Indemnification....................................................19
SECTION 6.05. Procedures........................................................................19
SECTION 6.06. Survival of Representations.......................................................21
ARTICLE VII
General Provisions
SECTION 7.01. Assignment........................................................................21
SECTION 7.02. No Third-Party Beneficiaries......................................................21
SECTION 7.03. Attorney Fees.....................................................................21
SECTION 7.04. Notices...........................................................................21
SECTION 7.05. Interpretation; Exhibits and Schedules; Certain Definitions.......................22
SECTION 7.06. Counterparts......................................................................23
SECTION 7.07. Entire Agreement..................................................................23
SECTION 7.08. Severability......................................................................23
SECTION 7.09. Amendments and Waivers............................................................23
SECTION 7.10. Consent to Jurisdiction...........................................................24
SECTION 7.11. Governing Law.....................................................................24
</TABLE>
ii
<PAGE> 4
CONTRIBUTION AGREEMENT (this "Agreement") dated as of
October 29, 1997, among CBS INC., a New York corporation
("CBS"), DATA BROADCASTING CORPORATION, a Delaware corporation
("DBC"), and MARKETWATCH.COM, LLC, a Delaware limited
liability company (the "Company").
WHEREAS, immediately prior to the execution and delivery of this
Agreement, CBS and DBC entered into the Limited Liability Company Agreement of
Marketwatch.Com, LLC dated as of the date hereof, in the form attached as
Exhibit A hereto (the "LLC Agreement");
WHEREAS, simultaneously herewith, CBS and the Company are entering into
the License Agreement, in the form attached as Exhibit B hereto (the "License
Agreement") and DBC and the Company are entering into the Services Agreement, in
the form attached as Exhibit C hereto (the "DBC Services Agreement"); and
WHEREAS, in connection with the execution and delivery of the LLC
Agreement, the License Agreement and the DBC Services Agreement and the
formation of the Company, each of CBS and DBC desires to receive certain
representations and warranties from the other and each of them desires to
receive certain agreements from the other.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound by the terms hereof applicable to each of them, hereby agree as
follows:
ARTICLE I
Contributions
SECTION 1.01. DBC Contribution; DBC Assets.
(a) On the terms and subject to the conditions of this
Agreement, DBC hereby sells, assigns, transfers, conveys and delivers or is
causing one or more of its subsidiaries to sell, assign, transfer, convey and
deliver to the Company, and the Company hereby acquires from DBC, or such
subsidiary, effective as of the date hereof, all the right, title and interest
of the DBC Companies (as defined below) in, to and under the DBC Assets (as
defined below), and agrees to make the cash payments to the Company required
pursuant to Section 1.01(b), in exchange for (i) a 50% membership interest in
the Company (the "DBC Interest") and (ii) the assumption of the Assumed DBC
Liabilities (as defined in Section 1.02). The contribution and acquisition of
the DBC Assets, the making of the cash payments pursuant to Section 1.01(b) and
the assumption of the Assumed DBC Liabilities is referred to in this Agreement
as the "DBC Contribution". The term "Business" means the businesses conducted by
DBC and its subsidiaries and known as DBC News and DBC On-Line, including, but
not limited to, the "Financial Markets", "Mutual Fund Center", "Trading Center",
"Stock Chat" and "MarketWatch" portions of the Internet website owned by DBC and
known as dbc.com. The term "DBC Companies" means DBC and any of its subsidiaries
that engage in the operation of
<PAGE> 5
the Business or own, lease or license and DBC Assets. The term "DBC Assets"
means the business, properties, assets, goodwill and rights of any of the DBC
Companies, of whatever kind and nature, real or personal, tangible or
intangible, that are owned, leased or licensed by any of the DBC Companies and
are set forth on Schedule 1.01.
(b) On the terms and subject to the conditions of this
Agreement, DBC hereby agrees to pay to the Company by wire transfer of
immediately available funds, to an account specified by the Company in writing,
$1,000,000 on each of the date hereof and the first anniversary of the date
hereof.
SECTION 1.02. Assumption of Certain Liabilities.
(a) On the terms and subject to the conditions of this
Agreement, the Company hereby assumes, effective as of the date hereof, and from
and after the date hereof the Company agrees to pay, perform and discharge when
due, any liability, obligation or commitment of the DBC Companies under the
contracts, leases, licenses, indentures, agreements, commitments and other
legally binding arrangements, whether oral or written ("Contracts"), listed on
Schedule 1.02 (the "DBC Contracts"), to the extent such liability, obligation or
commitment relates to the period from and after the date hereof (the "Assumed
DBC Liabilities"), other than any Excluded DBC Liabilities.
(b) Notwithstanding Section 1.02(a), or any other provision of
this Agreement or any of the other agreements and instruments executed and
delivered in connection herewith and the transactions contemplated hereby,
including, but not limited to, the License Agreement and the DBC Services
Agreement (the "Ancillary Agreements"), and regardless of any disclosure to CBS
or the Company, the Company shall not assume any Excluded DBC Liability, each of
which shall be retained and paid, performed and discharged when due by one of
the DBC Companies. The term "Excluded DBC Liability" means:
(i) any liability, obligation or commitment of any of
the DBC Companies not specifically assumed pursuant to Section 1.02(a);
(ii) any liability, obligation or commitment of any
of the DBC Companies, whether express or implied, liquidated, absolute,
accrued, contingent or otherwise, or known or unknown, arising out of
the operation or conduct by any of the DBC Companies or any of their
respective affiliates of any business other than the Business, and any
liability, obligation or commitment of any subsidiary of DBC that is
not a DBC Company, whether express or implied, liquidated, absolute,
accrued, contingent or otherwise, or known or unknown;
(iii) any liability, obligation or commitment of any
of the DBC Companies (A) arising out of any actual or alleged breach by
any of the DBC Companies of, or nonperformance by any of the DBC
Companies under, any Contract (including any DBC Contract) prior to the
date hereof or (B) accruing under any DBC Contract with respect to any
period prior to the date hereof;
2
<PAGE> 6
(iv) any liability, obligation or commitment of any
of the DBC Companies arising out of (A) any suit, action or proceeding
("Proceeding") pending or, to the knowledge of any of the DBC
Companies, threatened as of the date hereof or (B) any actual or
alleged violation by any of the DBC Companies or any of their
respective affiliates of any Applicable Law (as defined in Section
3.03) prior to the date hereof;
(v) any account payable or accrued liability of any
of the DBC Companies;
(vi) any liability, obligation or commitment for
Taxes (as defined in Section 3.12), whether or not accrued, assessed or
currently due and payable, (A) of any of the DBC Companies or (B)
relating to the operation or ownership of the Business or the assets
for any Tax period (or portion thereof) ending on or prior to the date
hereof (for purposes of this clause (vii), all real property Taxes,
personal property Taxes and similar ad valorem obligations levied with
respect to the DBC Assets for a Tax period that includes (but does not
end on) the date hereof shall be apportioned between DBC and the
Company based upon the number of days of such period included in the
Tax period prior to the date hereof and the number of days of such Tax
period after the date hereof (which period shall include the date
hereof));
(vii) except as provided in Section 5.02(b), any
liability, obligation or commitment for transfer, documentary, sales,
use, registration, value-added and other similar Taxes and related
amounts (including any penalties, interest and additions to Tax)
incurred in connection with this Agreement, the Ancillary Agreements,
the DBC Contribution and the other transactions contemplated hereby and
thereby ("Transfer Taxes");
(viii) any liability, obligation or commitment of any
of the DBC Companies arising under any DBC Benefit Plan (as defined in
Section 3.14(a));
(ix) Any liability, obligation or commitment of any
of the DBC Companies that relates to, or that arises out of, products
or services shipped or sold by or on behalf of any of the DBC Companies
on or prior to the date hereof (including claims of negligence,
personal injury, product damage, product liability, product warranties,
promotional obligations, strict liability, product recall or any other
claims (including workers' compensation, employer's liability or
otherwise)), whether such liability, obligation or commitment relates
to or arises out of accidents, injuries or losses occurring on or prior
to or after the date hereof;
(x) any liability, obligation or commitment of any of
the DBC Companies that relates to, or that arises out of, the
employment or the termination of the employment with any of the DBC
Companies of any employee or former employee of the Business (including
as a result of the transactions contemplated by this Agreement); and
(xi) any liability, obligation or commitment of any
of the DBC Companies to any of their respective affiliates.
3
<PAGE> 7
(c) The Company shall acquire the DBC Assets free and clear of
all liabilities, obligations and commitments of any of the DBC Companies, other
than the Assumed DBC Liabilities, and free and clear of all Liens (as defined in
Section 3.05), other than Permitted Liens (as defined in Section 3.05).
SECTION 1.03. Consents of Third Parties.
(a) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any asset
or any claim or right or any benefit arising under or resulting from such asset
if an attempted assignment thereof, without the consent of a third party, would
constitute a breach or other contravention of the rights of such third party,
would be ineffective with respect to any party to an agreement concerning such
asset, or would in any way adversely affect the rights of any of the DBC
Companies or, upon transfer, the Company under such asset. If any transfer or
assignment by any of the DBC Companies to, or any assumption by the Company of,
any interest in, or liability, obligation or commitment under, any asset
requires the consent of a third party, then such assignment or assumption shall
be made subject to such consent being obtained. To the extent any DBC Contract
may not be assigned to the Company by reason of the absence of any such consent,
the Company shall not be required to assume any Assumed DBC Liabilities arising
under such DBC Contract.
(b) In connection with those consents that have not been
obtained as of the date hereof, DBC and the Company hereby agree that, until any
such required consent is obtained, DBC, or one or more of its subsidiaries, as
appropriate, shall, with the reasonable and necessary cooperation of the
Company, and at the Company's direction, continue to fulfill any and all
obligations and commitments, and enforce any and all rights, of the DBC
Companies in connection with any asset, claim or right that constitutes a DBC
Asset but for which any required consent has not been obtained, and that the
Company shall be entitled to all of the economic claims, rights and benefits
under such asset, claim or right and DBC shall pay or cause to be paid to the
Company all such economic benefits as promptly as practicable following receipt
by DBC or any of its subsidiaries. To the extent, and only to the extent, a
required consent is received to the transfer of any asset, claim or right, the
Company shall be responsible for the Assumed DBC Liabilities, if any, arising
under such asset, claim or right.
SECTION 1.04. CBS Contribution. On the terms and subject to the
conditions of this Agreement, CBS will contribute to the Company, over a period
of five years and on the terms set forth in Exhibit D, advertising time with an
aggregate rate card value of $50 million calculated in accordance with the terms
set forth in Exhibit D (the "CBS Contribution" and, together with the DBC
Contribution, the "Contributions"), which contribution is deemed to have a
discounted present value equal to the discounted present value of the DBC
Contribution, in exchange for a 50% membership interest in the Company (the "CBS
Interest").
4
<PAGE> 8
ARTICLE II
The Closing
SECTION 2.01. The Closing. The closing of the Contributions (the
"Closing") is taking place at the offices of Cravath, Swaine & Moore, 825 Eighth
Avenue, New York, New York 10019, on the date hereof.
SECTION 2.02. Transactions To Be Effected at the Closing. At the
Closing:
(a) DBC is delivering (i) appropriately executed copies of
this Agreement and each Ancillary Agreement to which it is specified to be a
party, (ii) such appropriately executed bills of sale, assignments and other
instruments of transfer relating to the DBC Assets in form and substance
reasonably satisfactory to CBS and the Company and (iii) such other documents as
CBS or the Company have reasonably requested to demonstrate compliance with the
terms and provisions of this Agreement;
(b) CBS is delivering (i) appropriately executed copies of
this Agreement and each Ancillary Agreement to which it is specified to be a
party, and (ii) such other documents as DBC or the Company have reasonably
requested to demonstrate compliance with the terms and provisions of this
Agreement; and
(c) the Company is delivering (i) appropriately executed
copies of this Agreement and each Ancillary Agreement to which it is specified
to be a party, (ii) such appropriately executed assumption agreements and other
instruments of assumption providing for the assumption of the Assumed DBC
Liabilities in form and substance reasonably satisfactory to CBS and DBC and
(iii) such other documents as CBS or DBC have reasonably requested to
demonstrate compliance with the terms and provisions of this Agreement.
ARTICLE III
Representations and Warranties of DBC
DBC hereby represents and warrants to CBS and the Company, as of the
date of this Agreement, as follows:
SECTION 3.01. Organization, Standing and Power. Each of the DBC
Companies is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has full corporate power
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct the Business and its other
businesses as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually or in the
aggregate, have not had and could not reasonably be expected to have a material
adverse effect (i) on the business, assets, condition (financial or otherwise)
or results of operations or prospects of DBC and its subsidiaries, taken as a
whole, or of the Business, (ii) on the ability of DBC to perform its obligations
under this Agreement and
5
<PAGE> 9
the Ancillary Agreements or (iii) on the ability of the DBC Companies to
consummate the DBC Contribution and the other transactions contemplated hereby
and thereby (a "DBC Material Adverse Effect"). Each of the DBC Companies is duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of the DBC Assets held by it or the nature of the Business make such
qualification necessary for it to conduct the Business as currently conducted by
it or the failure to so qualify has had or could reasonably be expected to have
a DBC Material Adverse Effect. DBC has delivered to the Company true and
complete copies of the certificate of incorporation and by-laws of each of the
DBC Companies, in each case as amended through the date of this Agreement.
SECTION 3.02. Authority; Execution and Delivery; Enforceability. DBC
has full power and authority to execute this Agreement and the Ancillary
Agreements to which it is a party. Each of the DBC Companies has full power and
authority to consummate the DBC Contribution and the other transactions
contemplated hereby and thereby. The execution and delivery by DBC of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation by the DBC Companies of the DBC Contribution and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action. DBC has duly executed and delivered this Agreement
and each Ancillary Agreement to which it is a party, and this Agreement, and
each Ancillary Agreement to which it is a party, constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or equitable principles relating to or
limiting creditors' rights generally.
SECTION 3.03. No Conflicts; Consents. The execution and delivery by DBC
of this Agreement and each Ancillary Agreement to which it is a party and the
consummation of the DBC Contribution and the other transactions contemplated
hereby and thereby and compliance by DBC with the terms hereof and thereof do
not conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of DBC or any of its subsidiaries under, any provision of (i) the
certificate of incorporation or by-laws of DBC or any of its subsidiaries, (ii)
any Contract to which DBC or any of its subsidiaries is a party or by which any
of their respective properties or assets is bound or (iii) any judgment, order
or decree ("Judgment") or statute, law, ordinance, rule or regulation
("Applicable Law") applicable to DBC or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not had
and could not reasonably be expected to have a DBC Material Adverse Effect. No
consent, approval, license, permit, order or authorization ("Consent") of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required to be obtained or made by or with
respect to DBC or any of its subsidiaries in connection with (A) the execution,
delivery and performance of this Agreement or any Ancillary Agreement or the
consummation of the DBC Contribution or the other transactions contemplated
hereby and thereby or (B) the conduct by the Company of the Business following
the Closing as conducted on the date hereof.
6
<PAGE> 10
SECTION 3.04. Financial Statements.
(a) Schedule 3.04 sets forth for the Business (i) a Statement
of Assets as of June 30, 1997 (the "Year End Balance Sheet"), (ii) a Statement
of Assets as of September 30, 1997 (the "First Quarter Balance Sheet"), (iii) an
Income Statement for the twelve months ended June 30, 1997 (the "Full Year
Income Statement"), and (iv) an Income Statement for the three months ended
September 30, 1997 (the "First Quarter Income Statement"). The Year End Balance
Sheet and the Full Year Income Statement were derived from the audited
consolidated financial statements of DBC and its subsidiaries for the year ended
June 30, 1997, as audited and opined upon by Price Waterhouse LLP in their
report dated August 8, 1997. The term "Financial Statements" shall mean the Year
End Balance Sheet, the First Quarter Balance Sheet, the Full Year Income
Statement and the First Quarter Income Statement. The Financial Statements have
been prepared from the books and records of DBC and its subsidiaries relating to
the Business and fairly present the financial condition and results of
operations of the Business as of the respective dates and for the respective
periods indicated.
(b) The Business does not have any material liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
otherwise), except for items set forth in Schedule 3.04(b).
SECTION 3.05. DBC Assets. One of the DBC Companies has good and valid
title to all the DBC Assets, in each case free and clear of all mortgages,
liens, security interests, charges, easements, leases, subleases, covenants,
rights of way, options, claims, restrictions or encumbrances of any kind
(collectively, "Liens"), except (i) such as are set forth in Schedule 3.05 (all
of which shall be discharged prior to the Closing), (ii) mechanics', carriers',
workmen's, repairmen's or other like Liens arising or incurred in the ordinary
course of business, Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in the
ordinary course of business and liens for Taxes that are not due and payable or
that may thereafter be paid without penalty, and (iii) other imperfections of
title or encumbrances, if any, that do not, individually or in the aggregate,
materially impair the continued use and operation of the assets to which they
relate in the conduct of the Business as presently conducted (the Liens
described in clauses (ii) and (iii) above are referred to collectively as
"Permitted Liens").
SECTION 3.06. Intellectual Property.
(a) Schedule 3.06 sets forth a true and complete list of all
patents (including all reissues, divisions, continuations and extensions
thereof), patent applications, patent rights, trademarks, trademark
registrations, trademark applications, servicemarks, trade names, business
names, brand names, domain names, copyrights, copyright registrations and
renewals, designs, design registrations, software (together with all related
source code(s)) and all owned, used, filed by or licensed to any of the DBC
Companies and used, held for use or intended to be used in the operation or
conduct of the Business, other than unregistered designs and copyrights that,
individually and in the aggregate, are not material to the conduct of the
Business as presently conducted. With respect to all Intellectual Property
constituting DBC Assets ("Contributed
7
<PAGE> 11
Intellectual Property") that is registered or subject to an application for
registration, Schedule 3.06 sets forth a list of all jurisdictions in which such
Contributed Intellectual Property is registered or registrations applied for an
all registration and application numbers. Except as set forth in Schedule 3.06
(i) all the Contributed Intellectual Property has been duly registered in, filed
in or issued by the appropriate Governmental Entity where such registration,
filing or issuance is necessary or appropriate for the conduct of the business
as presently conducted, (ii) one or more of the DBC Companies is the sole and
exclusive owner of, and DBC has the right to use, execute, reproduce, display,
perform, modify, enhance, distribute, prepare derivative works of and
sublicense, without payment to any other person, all the Contributed
Intellectual Property and the consummation of the DBC Contribution and the other
transactions contemplated hereby does not and will not conflict with, alter or
impair any such rights, and (iii) during the past three years, none of the DBC
Companies has received any written or oral communication from any person
asserting any ownership interest in any Contributed Intellectual Property.
(b) None of the DBC Companies has granted any license of any
kind relating to any trade secrets, confidential information, inventions,
know-how, formulae, processes, procedures, research records, records of
inventions, test information, market surveys, subscriber lists and marketing
know-how of DBC constituting DBC Assets (the "Technology"), or to any
Contributed Intellectual Property or the marketing or distribution thereof,
except nonexclusive licenses to end-users in the ordinary course of business.
None of the DBC Companies is bound by or a party to any option, license or
agreement of any kind relating to the Intellectual Property of any other person
for the use of such Intellectual Property in the conduct of the Business, except
as set forth in Schedule 3.06 and except for so-called "shrink-wrap" license
agreements relating to computer software licensed in the ordinary course of the
Business. The conduct of the Business as presently conducted does not violate,
conflict with or infringe the Intellectual Property of any other person. Except
as set forth in Schedule 3.06, (i) no claims are pending or, to the knowledge of
DBC, threatened, as of the date of this Agreement against any of the DBC
Companies by any person with respect to the ownership, validity, enforceability,
effectiveness or use in the Business of any Intellectual Property and (ii)
during the past three years DBC and its affiliates have not received any written
or oral communication alleging that DBC or any of its affiliates has in the
conduct of the Business violated any rights relating to Intellectual Property of
any person.
(c) All material Technology has been maintained in confidence
in accordance with protection procedures customarily used in the industry to
protect rights of like importance. All former and current members of management
and key personnel of DBC or any of its affiliates, including all former and
current employees, agents, consultants and independent contractors who have
contributed to or participated in the conception and development of material
Technology (collectively, "Personnel") either (i) have been party to a
"work-for-hire" arrangement or agreement with any of the DBC Companies, in
accordance with all Applicable Laws, that has accorded any of the DBC Companies
full, effective, exclusive and original ownership of all tangible and intangible
property thereby arising or (ii) have executed appropriate instruments of
assignment in favor of one of the DBC Companies as assignee that have conveyed
to one of the DBC Companies full, effective and exclusive ownership of all
tangible and
8
<PAGE> 12
intangible property thereby arising. No former or current Personnel have any
claim against any of the DBC Companies in connection with such person's
involvement in the conception and development of any Technology and no such
claim has been asserted or is threatened. None of the current officers and
employees of any of the DBC Companies has any patents issued or applications
pending for any device, process, design or invention of any kind now used or
needed by any of the DBC Companies in the furtherance of the business, which
patents or applications have not been assigned to one of the DBC Companies, with
such assignment duly recorded in the United States Patent and Trademark Office.
(d) All Contributed Intellectual Property, as applicable, is
free of any "bugs" or "viruses" that could materially interfere with the
Company's use of such Intellectual Property.
SECTION 3.07. Contracts.
(a) Except as set forth in Schedule 3.07, and except for
Contracts relating solely to assets that do not constitute DBC Assets, no DBC
Company is a party to or bound by any Contract that is used, held for use or
intended for use in, or that arises out of, the operation or conduct of the
Business and that is:
(i) an employment agreement or employment Contract;
(ii) a collective bargaining agreement or other
Contract with any labor organization, union nor association;
(iii) a covenant not to compete or other covenant of
any of the DBC Companies restricting the development, manufacture,
marketing or distribution of the products and services of the Business;
(iv) a Contract with (A) any shareholder or affiliate
of DBC or (B) any current or former officer, director or employee of
DBC or any of its affiliates;
(v) a lease, sublease or similar Contract with any
person under which (A) any of the DBC Companies is lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible personal
property owned by any person or (B) any of the DBC Companies is a
lessor or sublessor of, or makes available for use by any person, any
tangible personal property owned or leased by any of the DBC Companies,
in any such case has an aggregate future liability or receivable, as
the case may be, in excess of $5,000;
(vi) (A) a continuing Contract for the future
purchase of materials, supplies or equipment, (B) a management,
service, consulting or other similar Contract or (C) an advertising
agreement or arrangement, in any such case that has an aggregate future
liability to any person in excess of $5,000;
(vii) a material license, option or other Contract
relating in whole or in part to the Contributed Intellectual Property
(including any license or other Contract
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under which any of the DBC Companies is licensee or licensor of any
Contributed Intellectual Property) or to any Technology;
(viii) (A) a Contract under which any of the DBC
Companies has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any person or (B) any
other note, bond, debenture or other evidence of indebtedness issued to
any person;
(ix) a Contract (including any so-called take-or-pay
or keepwell agreement) under which (A) any person has directly or
indirectly guaranteed indebtedness, liabilities or obligations of any
of the DBC Companies or (B) or any of the DBC Companies has directly or
indirectly guaranteed indebtedness, liabilities or obligations of any
other person (in each case other than endorsements for the purpose of
collection in the ordinary course of business);
(x) a Contract under which any of the DBC Companies
has, directly or indirectly, made any advance, loan, extension of
credit or capital contribution to, or other investment in, any person
(other than extensions of trade credit in the ordinary course of the
Business);
(xi) a Contract granting a Lien upon any DBC Asset;
(xii) a Contract providing for indemnification of any
person with respect to material liabilities relating to any current or
former business of DBC or any predecessor person;
(xiii) a Contract not made in the ordinary course of
the Business;
(xiv) a confidentiality agreement;
(xv) a Contract for the sale of any DBC Asset or the
grant of any preferential rights to purchase any DBC Asset or requiring
the consent of any party to the transfer thereof;
(xvi) a Contract for any joint venture, partnership
or similar arrangement;
(xvii) other Contract that has an aggregate future
liability to any person in excess of $5,000 and is not terminable by
one of the DBC Companies by notice of not more than 60 days for a cost
of less than $5,000; or
(xviii) a Contract other than as set forth above to
which any of the DBC Companies is a party or by which it or any of its
assets or businesses is bound or subject that is material to the
Business or the use or operation of the DBC Assets.
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(b) Except as set forth in Schedule 3.07, all DBC Contracts
are valid, binding and in full force and effect and are enforceable by the
applicable DBC Companies in accordance with their terms except as enforcement
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally or equitable principles relating to or limiting creditors'
rights generally. Except as set forth in Schedule 3.07, the applicable DBC
Companies have performed all material obligations required to be performed by
them to date under the DBC Contracts, and they are not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of DBC, no other party to any
DBC Contract is (with or without the lapse of time or the giving of notice, or
both) in breach or default in any material respect thereunder. No DBC Company
has, except as disclosed in the applicable Schedule, received any notice of the
intention of any party to terminate any DBC Contract. Complete and correct
copies of all Contracts listed in the Schedules, together with all modifications
and amendments thereto, have been delivered to CBS and the Company.
(c) Schedule 3.07 sets forth each DBC Contract with respect to
which the Consent of the other party or parties thereto is required by virtue of
the execution and delivery of this Agreement or the consummation of the DBC
Contribution to avoid the invalidity of the transfer of such Contract, the
termination thereof, a breach, violation or default thereunder or any other
change or modification to the terms thereof, each of which has been or will be
obtained.
SECTION 3.08. Personal Property. Each material item of tangible
personal property and interests therein, including all machinery, equipment,
furniture and vehicles, of any of the DBC Companies that constitute DBC Assets
(the "Personal Property") is in good working order (ordinary wear and tear
excepted), is free from any material defect and has been maintained in all
material respects in accordance with the past practice of the Business and
generally accepted industry practice, and no repairs, replacements or regularly
scheduled maintenance relating to any such item has been deferred. All leased
personal property of the Business is in all respects in the condition required
of such property by the terms of the lease applicable thereto.
SECTION 3.09. Permits.
(a) Schedule 3.09 sets forth all material certificates,
licenses, permits, authorizations and approvals ("Permits") issued or granted to
any of the DBC Companies by Governmental Entities that are necessary or
desirable for the conduct of the Business. Except as set forth in Schedule 3.09,
(i) all such Permits are validly held by one of the DBC Companies, and the
applicable DBC Companies have complied in all material respects with all terms
and conditions thereof, (ii) during the past three years, no DBC Company has
received notice of any Proceedings relating to the revocation or modification of
any such Permits the loss of which, individually or in the aggregate, has had or
could reasonably be expected to have a DBC Material Adverse Effect, and (iii)
none of such Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or the
consummation of the DBC Contribution.
(b) The applicable DBC Companies possess all material Permits
to own or hold under lease and operate the DBC Assets and to conduct the
Business as currently conducted.
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SECTION 3.10. Insurance. The DBC Companies maintain policies of fire
and casualty, liability and other forms of insurance with respect to the
Business in such amounts, with such deductibles and against such risks and
losses as are, in DBC's judgment, reasonable for the Business. The material
insurance policies maintained by the DBC Companies with respect to the Business
are listed in Schedule 3.10. All such policies are in full force and effect, all
premiums due and payable thereon have been paid, and no notice of cancellation
or termination has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of such
cancellation. To the knowledge of DBC, the Business has been conducted in a
manner so as to conform in all material respects to all applicable provisions of
such insurance policies.
SECTION 3.11. Sufficiency of DBC Assets. The DBC Assets, together with
the services to be provided by DBC under the DBC Services Agreement, are
sufficient for the conduct of the Business immediately following the Closing in
the same manner as currently conducted. There are not any assets used, held for
use or intended to be used in the operation or conduct of the Business that do
not constitute DBC Assets or which are not to be made available to the Company
pursuant to the DBC Services Agreement.
SECTION 3.12. Taxes.
(a) For purposes of this Agreement:
"Tax" means (i) any tax, governmental fee or other
like assessment or charge of any kind whatsoever (including any tax imposed
under Subtitle A of the Code and any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding tax on amounts paid, payroll,
employment, excise, severance, stamp, capital stock, occupation, property,
environmental or windfall profit tax, premium, custom, duty or other tax),
together with any interest, penalty, addition to tax or additional amount due,
imposed by any Governmental Entity (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority"), (ii) any liability for the
payment of any amount of the type described in clause (i) above as a result of a
party to this Agreement being a member of an affiliated, consolidated or
combined group with any other corporation at any time on or prior to the date
hereof and (iii) any liability of any person with respect to the payment of any
amounts of the type described in clause (i) or (ii) above as a result of any
express or implied obligation of such person to indemnify any other person.
"Code" means the Internal Revenue Code of 1986, as
amended.
(b) Except as set forth in Schedule 3.12, (i) DBC, and
any affiliated group, within the meaning of Section 1504 of the Code, of which
any of the DBC Companies is or has been a member, has filed or caused to be
filed in a timely manner (within any applicable extension periods) all material
Tax returns, reports and forms required to be filed by the Code or by applicable
state, local or foreign Tax laws, (ii) all Taxes shown to be due on such
returns, reports and forms have been timely paid in full or will be timely paid
in full by the due date
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thereof, and (iii) no material Tax Liens have been filed and no material claims
are being asserted in writing with respect to any Taxes.
(c) Except as set forth in Schedule 3.12, (i) neither DBC nor
any of its affiliates has made with respect to DBC, or the assets of the
Business, any consent under Section 341 of the Code, (ii) none of the DBC Assets
is "tax exempt use property" within the meaning of Section 168(h) of the Code,
and (iii) none of the DBC Assets is a lease made pursuant to Section 168(f)(8)
of the Internal Revenue Code of 1954.
(d) None of the DBC Companies is a "foreign person" within the
meaning of Section 1445 of the Code.
SECTION 3.13. Proceedings. Schedule 3.13 sets forth a list of all
pending Proceedings or claims with respect to which any of the DBC Companies has
been contacted in writing by counsel for the plaintiff or claimant, arising out
of the conduct of the Business or against or affecting any DBC Asset and that
(a) relate to or involve more than $5,000, (b) seek any material injunctive
relief or (c) may give rise to any legal restraint on or prohibition against the
transactions contemplated by this Agreement. Except as set forth in Schedule
3.13, none of the Proceedings or claims listed in Schedule 3.13 as to which
there is at least a reasonable possibility of adverse determination would have,
if so determined, individually or in the aggregate, a DBC Material Adverse
Effect. Except as set forth in Schedule 3.13, to the knowledge of DBC, there are
no unasserted claims of the type that would be required to be disclosed in
Schedule 3.13 if counsel for the claimant had contacted DBC that if asserted
would have at least a reasonable possibility of an adverse determination. Except
as set forth in Schedule 3.13, no DBC Company is a party or subject to or in
default under any material Judgment applicable to the conduct of the Business or
any DBC Asset or Assumed DBC Liability. Except as set forth in Schedule 3.13,
there is not any Proceeding or claim by any of the DBC Companies pending, or
which any of the DBC Companies intends to initiate, against any other Person
arising out of the conduct of the Business. Except as set forth in Schedule
3.13, to the knowledge of DBC, there is no pending or threatened investigation
of or affecting the conduct of the Business or any DBC Asset or Assumed DBC
Liability.
SECTION 3.14. Benefit Plans.
(a) Schedule 3.14 contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained or
contributed to by any of the DBC Companies for the benefit of any officers or
employees of the Business ("DBC Pension Plans") and all "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA), bonus, stock option, stock
purchase, deferred compensation plans or arrangements and other employee fringe
benefit plans maintained, or contributed to, by any of the DBC Companies for the
benefit of any officers or employees of the Business (all the foregoing,
including DBC Pension Plans, being herein called "DBC Benefit Plans"). DBC has
made available to the Company true, complete and correct copies of (i) each DBC
Benefit Plan (or, in the case of any unwritten DBC Benefit Plans, descriptions
thereof), (ii) the two most recent annual reports on Form 5500 (including all
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schedules and attachments thereto) filed with the Internal Revenue Service with
respect to each DBC Benefit Plan (if any such report was required), (iii) the
most recent summary plan description for each DBC Benefit Plan for which such a
summary plan description is required and (iv) each trust agreement, group
annuity contract or other funding and financing arrangement relating to any DBC
Benefit Plan.
(b) Each DBC Benefit Plan has been administered in all
material respects in accordance with its terms. The applicable DBC Companies and
all the DBC Benefit Plans are in compliance in all material respects with the
applicable provisions of ERISA, the Code, all other Applicable Laws and all
applicable collective bargaining agreements. Except as set forth in Schedule
3.14, all material reports, returns and similar documents with respect to the
DBC Benefit Plans required to be filed with any Governmental Entity or
distributed to any DBC Benefit Plan participant have been duly and timely filed
or distributed. Except as set forth in Schedule 3.14, there are no Proceedings
pending or, to the knowledge of DBC, threatened against or involving any DBC
Benefit Plan and there are no investigations by any Governmental Entity or other
claims (except routine claims for benefits payable in the normal operation of
the DBC Benefit Plans) pending or, to the knowledge of DBC, threatened against
or involving any DBC Benefit Plan or asserting any rights to benefits under any
DBC Benefit Plan.
(c) Except as set forth in Schedule 3.14, no employee or
former employee of the Business will become entitled to any bonus, retirement,
severance, job security or similar benefit or any enhanced benefit solely as a
result of the transactions contemplated hereby.
SECTION 3.15. Absence of Changes or Events. Except as set forth in
Schedule 3.15, since the date of the First Quarter Balance Sheet, there has not
been any material adverse change in the business, assets, condition (financial
or otherwise), results of operations or prospects of the Business, taken as a
whole. Except as set forth in Schedule 3.15, since the date of the First Quarter
Balance Sheet, DBC has caused the Business to be conducted in the ordinary
course and in substantially the same manner as previously conducted and has made
all reasonable efforts consistent with past practices to preserve the
relationships of the Business with customers, suppliers and others with whom the
Business deals.
SECTION 3.16. Compliance with Applicable Laws. Except as set forth in
Schedule 3.16, the Business is in compliance in all material respects with all
Applicable Laws, including those relating to occupational health and safety.
Except as set forth in Schedule 3.16, no DBC Company has received any written or
oral communication during the past three years from a Governmental Entity that
alleges that the Business is no in compliance in any material respect with any
Applicable Laws. No DBC Company has received any written notes that any
investigation or review by any Governmental Entity with respect to any DBC Asset
or the Business is pending or that any such investigation or review is
contemplated. This Section 3.16 does not relate to matters with respect to
Taxes, which are the subject of Section 3.12.
SECTION 3.17. Transactions with Affiliates. Except as set forth in
Schedule 3.17, none of the Contracts set forth in Schedule 3.07 between the
Business, on the one hand, and DBC or any of its affiliates, on the other hand,
will continue in effect subsequent to the Closing.
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SECTION 3.18. Effect of Transaction. Except as set forth in Schedule
3.18, no creditor, employee, client, customer or other person having a material
business relationship with the Business has informed any of the DBC Companies
that such person intends to change such relationship because of the contribution
of the Business or the consummation of any other transaction contemplated
hereby.
SECTION 3.19. Disclosure. No representation or warranty of DBC
contained in this Agreement or in any Ancillary Agreement, and no statement
contained in any document, certificate or Schedule furnished or to be furnished
by or on behalf of DBC to CBS or the Company or any of their representatives
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading or necessary in order to fully
and fairly provide the information required to be provided in any such document,
certificate or Schedule.
ARTICLE IV
Representations and Warranties of CBS
CBS hereby represents and warrants to DBC and the Company, as of the
date of this Agreement, as follows:
SECTION 4.01. Organization, Standing and Power. CBS is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has full corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals, the lack of which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on the ability of CBS to perform its
obligations under this Agreement and the Ancillary Agreements to which it is a
party or to consummate the CBS Contribution and the other transactions
contemplated hereby and thereby (a "CBS Material Adverse Effect").
SECTION 4.02. Authority; Execution and Delivery; Enforceability. CBS
has full power and authority to execute this Agreement and the Ancillary
Agreements to which it is a party and to consummate the CBS Contribution and the
other transactions contemplated hereby and thereby. The execution and delivery
by CBS of this Agreement and the Ancillary Agreements to which it is a party and
the consummation by it of the CBS Contribution and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporation action. CBS has duly executed and delivered this Agreement and each
Ancillary Agreement to which it is a party, and this Agreement and each
Ancillary Agreement to which it is a party constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms except
as enforcement may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or equitable principles relating to or
limiting creditors' rights generally.
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SECTION 4.03. No Conflicts; Consents. The execution and delivery by CBS
of this Agreement and each Ancillary Agreement to which it is a party and the
consummation of the CBS Contribution and the other transactions contemplated
hereby and thereby and compliance by CBS wit the terms hereof and thereof do not
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to loss of a material benefit
under or result in the creation of any Lien upon any of the properties or assets
of CBS or any of its subsidiaries under, any provision of (i) the certificate of
incorporation or by-laws of CBS or any of its subsidiaries, (ii) any Contract to
which CBS or any of its subsidiaries is party or by which any of their
respective properties or assets is bound or (iii) any Judgment or Applicable Law
applicable to CBS or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii) above, any such items
that, individually or in the aggregate, have not had and could not reasonably be
expected to have a CBS Material Adverse Effect. No Consent of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to CBS or any of its subsidiaries in connection with
(A) the execution, delivery and performance of this Agreement or any Ancillary
Agreement or the consummation of the CBS Contribution or the other transactions
contemplated hereby and thereby or (B) the conduct by the Company of the
Business following the Closing as conducted on the date hereof.
ARTICLE V
Covenants
SECTION 5.01. Reasonable Best Efforts. Each party shall, and shall
cause its affiliates to, use its reasonable best efforts (at its own expense) to
obtain, and to cooperate in obtaining, all consents from third parties necessary
or appropriate to permit the Contributions to be completed.
SECTION 5.02. Expenses; Transfer Taxes.
(a) Except as set forth in Section 5.02(b) below and in
Section 5.03 and 7.03, all costs and expenses incurred in connection with this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall be paid by the party incurring such expense, including all
costs and expenses incurred pursuant to Sections 1.04 and 5.01.
(b) The Company shall be responsible for and shall pay, as and
when incurred, all Transfer Taxes, documentary Taxes and filing or recording
fees and applicable to the Contributions up to a maximum aggregate amount of
$50,000; to the extent that the aggregate amount of such Taxes and fees exceeds
$50,000, the party incurring such Tax or fee shall be responsible for its
payment. Each party shall use reasonable effort to avail itself of any available
exemptions from any such Taxes or fees, and to cooperate with the other parties
in providing any information and documentation that may be necessary to obtain
such exemptions.
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SECTION 5.03. Post-Closing Cooperation.
(a) CBS, DBC and the Company shall cooperate with each other,
and shall cause their respective officers, employees, agents, auditors and
representatives to cooperate with each other, after the Closing to ensure the
orderly transition of the Business from DBC to the Company and to minimize any
disruption to the Business that might result from the transactions contemplated
hereby. After the Closing, upon reasonable written notice, CBS, DBC and the
Company shall furnish or cause to be furnished to each other and to their
respective employees, counsel, auditors and representatives access, during
normal business hours, to such information and assistance relating to the
Business (to the extent within the control of such party) as is reasonably
necessary for financial reporting and accounting matters.
(b) After the Closing, upon reasonable written notice, CBS,
DBC and the Company shall furnish or cause to be furnished to each other, as
promptly as practicable, such information and assistance relating to the DBC
Assets (including, access to books and records) and the Contributions, to the
extent within the control of such party, as is reasonably necessary for the
filing or all Tax returns, and making of any election related to Taxes, the
preparation for any audit by any Taxing Authority, and the prosecution or
defense of any claim, suit or proceeding related to any Tax return. CBS, DBC and
the Company shall cooperate with each other party in the conduct of any audit or
other proceeding relating to Taxes involving the Business.
(c) Each party shall reimburse the others for reasonable
out-of-pocket costs and expenses incurred in assisting such party pursuant to
this Section 5.03. No party shall be required by this Section 5.03 to take any
action with would unreasonably interfere wit the conduct of its business or
unreasonably disrupt its normal operations.
SECTION 5.04. Further Assurances. From time to time, as and when
requested by any party, each party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to Section 5.01),
as such other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements,
including, in the case of CBS and DBC, executing and delivering to the Company
such assignments, deeds, bills of sale, consents and other instruments as the
Company or its counsel may reasonably request as necessary or desirable for such
purpose.
SECTION 5.05. Year 2000 Compliance. Notwithstanding anything herein to
the contrary, DBC agrees to use its best efforts (at its own expense) to ensure
that all Contributed Intellectual Property, as applicable, is free of any "Year
2000 Problem" such that such Intellectual Property will not experience any
malfunctions or other usage problems in connection with the Year 2000 (and later
years) as distinct from the year 1900 through 1999, and earlier years.
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ARTICLE VI
Indemnification
SECTION 6.01. Indemnification by DBC. DBC shall indemnify each of CBS
and the Company and each of their respective affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against, and hold them harmless from, any loss, liability,
claim, damage or expense (including reasonable legal fees and expenses)
("Losses"), as incurred (payable promptly upon written request), arising from,
in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of
DBC that survives the Closing and is contained in this Agreement, in
any Ancillary Agreement or in any document delivered in connection
herewith;
(ii) any breach of any covenant of DBC contained in
this Agreement or in any Ancillary Agreement;
(iii) any Excluded DBC Liability;
(iv) the disclosure by any current or former
Personnel of any proprietary information of DBC and its affiliates;
(v) the failure to comply with statutory provisions
relating to bulk sales and transfers, if applicable; and
(vi) any fees, expenses or other payments incurred
or owed by DBC to any brokers, financial advisors or comparable other
persons retained or employed by it in connection with the transactions
contemplated by this Agreement.
SECTION 6.02. Indemnification by CBS. CBS shall indemnify each of DBC
and the Company and each of their respective affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against, and hold them harmless from, any Losses, as incurred
(payable promptly upon written request), arising from, in connection with or
otherwise with respect to:
(i) any breach of any representation or warranty of
CBS that survives the Closing and is contained in this Agreement, in
any Ancillary Agreement or in any document delivered in connection
herewith;
(ii) any breach of any covenant of CBS contained in
this Agreement or in any Ancillary Agreement;
(iii) any fees, expenses or other payments incurred
or owed by CBS to any brokers, financial advisors or comparable other
persons retained or employed by it in connection with the transactions
contemplated by this Agreement.
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SECTION 6.03. Calculation of Losses. The amount of any Loss for which
indemnification is provided under this Article VI shall be net of any amounts
actually recovered by the indemnified party under insurance policies with
respect to such Loss and shall be (i) increased to take account of any net Tax
cost incurred by the indemnified party arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss.
SECTION 6.04. Termination of Indemnification. The obligations to
indemnify and hold harmless any party, (i) pursuant to Section 6.01(i) or
6.02(i), shall terminate when the applicable representation or warranty
terminates pursuant to Section 6.06 and (ii) pursuant to the other clauses of
Section 6.01 or 6.02 shall not terminate; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basic of such claim)
pursuant to Section 6.05 to the party to be providing the indemnification.
SECTION 6.05. Procedures.
(a) In order for a party (the "indemnified party"), to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim made by any person against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the indemnifying party
in writing of the Third Party Claim promptly following receipt by such
indemnified party of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall have been
actually and materially prejudiced as a result of such failure. Thereafter, the
indemnified party shall deliver to the indemnifying party, promptly following
the indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim and not also addressed to the indemnifying party.
(b) If a Third Party Claim is made against an indemnified party shall
be entitled to participate in the defense thereof and, if it so chooses, to
assume the defense thereof with counsel selected by the indemnifying party;
provided, however, that such counsel is not reasonably objected to by the
indemnified party. Should the indemnifying party so elect to assume the defense
of a Third Party Claim, the indemnifying party shall not be liable to the
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the
19
<PAGE> 23
indemnifying party has not assumed the defense thereof. If the indemnifying
party chooses to defend or prosecute a Third Party Claim, all the indemnified
parties shall cooperate in the defense or prosecution thereof. Such cooperation
shall include the retention and (upon the indemnifying party's request) the
provision to the indemnifying party of records and information that are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the indemnifying party assumes the defense of a Third Party Claim, the
indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably withheld). If the
indemnifying party assumes the defense of a Third Party Claim, the indemnified
party shall agree to any settlement, compromise or discharge of a Third Party
Claim that the indemnifying party may recommend and that by its terms obligates
the indemnifying party may recommend and that by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnified party completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the indemnified party. Notwithstanding the foregoing, the indemnifying
party shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the fees and expenses of counsel incurred by the indemnified
party in defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the indemnified party that the indemnified party reasonably
determines, after conferring with its outside counsel, cannot be separated from
any related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the defense of the
portion relating to money damages.
(c) Other Claims. In the event any indemnified party should have a
claim against any indemnifying party under Section 6.01 or 6.02 that does not
involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the indemnified party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to such indemnified party
under Section 6.01 or 6.02, except to the extent that the indemnifying party
demonstrates that it has been materially prejudiced by such failure. If the
indemnifying party does not notify the indemnified party within 10 calendar days
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party under Section 6.01 or 6.02, such claim
specified by the indemnified party in such notice shall be conclusively deemed a
liability of the indemnifying party under Section 6.01 or 6.02 and the
indemnifying party shall pay the amount of such liability to the indemnified
party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to such claim,
as provided above, the indemnifying party and the indemnified party shall
proceed in good faith to negotiate a
20
<PAGE> 24
resolution of such dispute and, if not resolved through negotiations, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
SECTION 6.06. Survival of Representations. The representations and
warranties contained in this Agreement, in any Ancillary Agreement or in any
document delivered in connection herewith shall survive the Closing solely for
purposes of Article VI and shall terminate at the close of business five years
following the date hereof.
ARTICLE VII
General Provisions
SECTION 7.01. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by CBS, DBC or the Company
without the prior written consent of the other parties hereto; provided,
however, that CBS may assign this Agreement and its rights and obligations
hereunder to any entity controlling, controlled by or under common control with,
CBS, or to any entity that acquires CBS by purchase of stock or by merger or
otherwise, or by acquiring all or substantially all of CBS's assets, provided
that any such assignee succeeds to all of the rights and is subject to all of
the obligations of CBS under this Agreement. Any attempted assignment in
violation of this Section 7.01 shall be null and void ab initio.
SECTION 7.02. No Third-Party Beneficiaries. Except as provided in
Article VI, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
SECTION 7.03. Attorney Fees. A party in breach of this Agreement shall,
on demand, indemnify and hold harmless each other party for and against all
reasonable out-of-pocket expenses, including legal fees, incurred by such other
party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 7.04. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so delivered
by hand, or if mailed, three days after mailing (one business day in the case of
express mail or overnight courier service), as follows:
(i) if to the Company,
c/o Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention of Larry Kramer
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<PAGE> 25
with a copy to CBS and DBC as set forth below;
(ii) if to CBS,
CBS Inc.
51 West 52nd Street
New York, NY 10019
Attention of Derek Reisfield
with copies to:
CBS Inc.
51 West 52nd Street
New York, NY 10019
Attention of Sanford Kryle, and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention of Peter S. Wilson, Esq.; and
(iii) if to DBC,
Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention of Mark Imperiale
with a copy to:
Camhy Karlinsky & Stein LLP
1740 Broadway
Sixteenth Floor
New York, NY 10019
Attention of Alan I. Annex, Esq.
SECTION 7.05. Interpretation; Exhibits and Schedules; Certain
Definitions.
(a) The headings contained in this Agreement, in any Exhibit
or Schedule hereto and in the table of contents to this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set
22
<PAGE> 26
forth in full herein. Any capitalized terms used in any Schedule or Exhibit but
not otherwise defined therein, shall have the meaning as defined in this
Agreement. When a reference is made in this Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated.
(b) For all purposes hereof:
"affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person.
"including" means including, without limitation.
"person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.
"subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 7.06. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to each of the other parties.
SECTION 7.07. Entire Agreement. This Agreement and the Ancillary
Agreements, along with the Schedules and Exhibits thereto, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the Ancillary Agreements.
SECTION 7.08. Severability. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 7.09. Amendments and Waivers. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. By an instrument in writing, any two parties hereto may waive compliance
by the third party with any term or provision of this Agreement that such third
party was or is obligated to comply with or perform.
23
<PAGE> 27
SECTION 7.10. Consent to Jurisdiction. Each of CBS, DBC and the Company
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, any Ancillary Agreement or any
transaction contemplated hereby or thereby. Each of CBS, DBC and the Company
agrees to commence any such action, suit or proceeding either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
CBS, DBC and the Company further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 7.10. Each of CBS, DBC and the Company irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement, any Ancillary Agreement or the
transactions contemplated hereby and thereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District Court for
the Southern District of New York, and hereby and thereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 7.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
IN WITNESS WHEREOF, CBS, DBC and the Company have duly executed this
Agreement as of the date first written above.
CBS INC.,
by: /s/ FREDRIC A. REYNOLDS
-----------------------------------
Name: Fredric A. Reynolds
Title: Chief Financial Officer
DATA BROADCASTING CORPORATION
by: /s/ MARK F. IMPERIALE
-----------------------------------
Name: Mark F. Imperiale
Title: President
MARKETWATCH.COM, LLC.
by: /s/ DEREK R. REISFIELD
-----------------------------------
Name: Derek R. Reisfield
Title: Chairman
24
<PAGE> 28
EXHIBIT A
Form of LLC Agreement
26
<PAGE> 29
EXHIBIT B
Form of License Agreement
27
<PAGE> 30
EXHIBIT C
Form of DBC Services Agreement
28
<PAGE> 31
EXHIBIT D
CBS Contribution Terms
1. CBS shall arrange for the placement of broadcast advertising and
promotion of the website operated by the Company in the media category or type
set forth in the Advertising and Promotion placement schedule set forth below.
The rate card value of all broadcast advertising and promotion provided
hereunder shall be based upon the average paid unit price, excluding barter, for
spots purchased during the specific CBS Television Network, CBS Owned and
Operated Television Station or CBS Owned and Operated Radio Station broadcast in
which the advertising or promotion occurs. Banner advertising on CBS Internet
sites shall have a rate card price equal to the average price paid by third
parties for banner advertising (excluding barter) during the month in which such
advertising is delivered less 20%. The total rate card value of banner
advertising delivered by CBS to the Company shall not exceed 5% per year of the
total advertising delivered by CBS to the Company during such year. CBS shall
not have to make any ad placements if the exigencies of time or current or
future contractual obligations, prevent or restrict CBS from doing so.
2. CBS shall have the right to suspend and/or withdraw placement of
broadcast advertising and promotion (i) pending resolution of any claim covering
use by the Company of the tradename or trademark "Marketwatch" either alone or
in combination with any other mark and/or (ii) during such time as the Company
is enjoined from using the tradename or trademark "Marketwatch" on or in
connection with its website and has not renamed the website. The Company shall
rename its website within thirty (30) days following the issuance of any
injunction or the resolution of any claim which requires the Company to cease
using the tradename or trademark "Marketwatch" on or in connection with its
website (the "Cessation Event"), it being understood, however, that CBS shall
have the sole right and power to approve the substitute tradename and/or
trademark to be used. In the event that CBS fails to approve the substitute
tradename and/or trademark within the 30-day period prescribed, then the Members
will be deemed to have mutually agreed to terminate the Company on the 31st day
following the date of the Cessation Event as contemplated by Section 11.04(a)(i)
of the LLC Agreement.
29
<PAGE> 32
ADVERTISING AND PROMOTION - PLACEMENTS
PLACEMENT OBLIGATIONS
- - CBS will be responsible for the placement of all advertising and promotion of
the website operated by the Company
PLACEMENT POSSIBILITIES
- - CBS Television Network programming
- - CBS Owned and Operated Television and Radio Stations programming, e.g. local
news, music, sports
- - Banner Advertising on CBS Internet Sites
PLACEMENT TYPES
- 30 second units where available
- 15 second units where available
- 10 second units where available
- URL Scrolls (5 seconds)
- On-air mention (15 seconds)
- Banner ads (10 seconds)
- Credit rolls/sign-offs (5 seconds)
30
<PAGE> 33
Schedule 1.01
- --------------------------------------------------------------------------------
Assets of the Business
1. All contracts listed below (each listed contract is between Data
Broadcasting Corporation and the listed party):
- Baseline Financial Services, Inc. Agreement
Dated: January 15, 1997
- Market Guide Inc. Agreement
Dated: September 24, 1996
- WebRep Representation Agreement
Dated: January 15, 1996
- Comtex Scientific Corporation
Dated: February 16, 1996
- FRB Enterprises
Dated: May 1, 1996
- Bill Helming Consulting Services Agreement
Dated: January 31, 1996
- Joe Kropf and Sid Love Consulting Services Agreement
Dated: February 20, 1996
- Business Wire Agreement
Dated: June 10, 1997
- The Audit Bureau of Verification Services, Inc. Agreement
Dated: August 27, 1997
- USA Today Information Network Agreement
Dated: March 18, 1997
- Digital Ink (Washington Post) Agreement
Dated: June 19, 1996
- American Express Service Corporation
Dated: August 5, 1997
- Knight-Ridder New Media Agreement
Dated: October 21, 1996
- Axxes Inc. ("Financial Web") Agreement
Dated: April 9, 1996
<PAGE> 34
- John Fairfax Publications Limited (Australian Financial
Review) Agreement
- OTC Financial Network Agreement
Dated: February 12, 1996
- Wall Street Research Net (WSRN) Agreement
Dated: March 17, 1996
2. All goodwill of the Business.
3. All Intellectual Property (including, without limitation, the
copyrights and rights of copyright) and Technology of the Business
including the Intellectual Property and Technology listed below
and in Exhibit A attached hereto.
- Marketwatch.com Domain Name Registration.
(A copy of the domain registration is attached hereto as
Exhibit B).
- Wall Street Eavesdropper Service Mark Registration.
Registered: June 3, 1997
Number: 2,067,333
(A copy of the confirmation letter is attached hereto as
Exhibit C)
- DBC Online Service Mark Application. Filed: March 19, 1997
(A copy of the application letter is attached hereto as
Exhibit D)
- Marketwatch Tradename and Trademark, which are not
registered.
2
<PAGE> 35
Schedule 1.01
Exhibit A
(a) The primary asset of DBC News is the Intellectual
Property used to produce the daily DBC News report.
That includes, but is not limited to, the editorial
capabilities and techniques used to create the
following regular features and the copyrights (or
rights of copyright) in the content/graphics
embodying the regular features on the DBC Online and
MarketWatch sites:
- DBC StockWatch - a look at the day's hottest
securities by DBC Director of News Thom Calandra
in DBC's San Mateo, Calif., NewsRoom. (updated
daily)
- Market SnapShot - an in-depth look at U.S. stock,
bond, commodity and currency markets by Kevin
Marder, online editor in DBC's Los Angeles
NewsRoom. (updated five times daily)
- DBC's IPO Report - a look at the hottest stock
offerings and after-market performances of recent
IPOs by DBC News online editor/reporter Darren
Chervitz. (updated daily)
- Ponder - commentary on recent IPO offerings, from
DBC News online editor/reporter Darren Chervitz.
(updated daily)
- IPO First Words - a regular feature in which DBC
editor Chervitz interviews top officials of
companies that have just gone or are about to go
public.
- This Week's IPOs - a chart tracking all new major
public offerings.
- Aftermarket Performance - a chart tracking the
stock performance of key IPO's in the weeks and
months following their debut in the public
markets.
- Movers & Shakers - Movers and Shakers sizes up
securities whose prices are rising or falling
dramatically. David Wilkerson of the DBC NewsRoom
takes a money-making look at what's hot, what's
not. If a stock is moving up or down in a big
way, this column tells you why. (up to six times
daily)
- Futures Movers - From soybeans to palladium,
DBC's Futures Movers keeps readers abreast of
what commodity futures are moving and why. Mary
Kennedy of the DBC NewsRoom has the latest work
on what's moving the market. (daily)\
- DBC Business Headlines - the DBC NewsRoom reports
the business news and earnings reports of the day
with hundreds of financial and world headlines in
real-time each day.
3
<PAGE> 36
- DBC Daily Calendar - a look at the day's economic
and business events. (daily)
- DBC's Earnings Surprises by DBC News online
reporter Barbara Costanza is a daily look at
positive and negative earnings surprises from
U.S. companies. This screen is available to
subscribers of DBC MarketWatch, the real-time
service. A delayed text version can be seen on
DBC Online. (up to six times daily)
- Economic Forecaster - a daily look at U.S.
economic reports. This screen, complete with
forecasts, is available to subscribers of DBC
MarketWatch, a real-time service. (daily)
- DBC Software Report - a daily look at news from
the world's software developers by DBC News
online reporter Brenon Daly. (updated frequently)
- DBC Tech Report - a daily look at news from the
world' computer hardware developers and
semiconductor makers by DBC News online reporter
Binti Harvey. (updated frequently)
- Hot Heads - leading headlines from stories and
columns on DBC's financial Web sites. (daily)
- NewsWatch - the DBC NewsRoom's round-up of the
day's top stories. (throughout the day)
- DBC's Analysts' Changes - a daily look at
investment houses' upgrades and downgrades of
U.S. stocks. This screen is available to
subscribers of DBC MarketWatch, the real-time
service. (up to six times daily)
- Silicon Stocks - a look at the day's technology
stock movers by DBC News online reporter David
Wilkerson. (throughout the day)
- Wall Street Eavesdropper - a digest of the stocks
and ideas that online investment newsletters and
Internet users are talking about. (daily)
- DBC Mutual Understanding - a look at mutual fund
news form online newsletters and investment
professionals. This column is available five days
weekly.
- DBC Mutual Center - a comprehensive analysis of
mutual funds and their rankings, update daily and
including commentary from Dr. Paul B. Farrell in
his column, "Farrell on Funds." (daily)
4
<PAGE> 37
- SuperStar Funds - a proprietary ranking of top
mutual funds in several categories, based on a
scoring system that includes how funds rank on
several other evaluating services. Similar to
"consensus all-American" rankings in sports.
- Internet Daily - a digest of the day's top
Internet news. (daily)
- DBC Capital Report - a daily report of news and
analysis form the FNS newsroom in the nation's
capital in which DBC corespondents Rex Nutting
and Meg Cofer highlight news form the government
that has impact on the financial markets.
- DBC Film-Flam - a look at the world of cinema.
(weekly)
- The Clueless Investor - a look at some of the
dumbest investments you can make (every week)
- Soap Box - Soap Box is a guest column.
Contributors include investment professionals,
executives, individuals investors and just plain
folks. Contributors can send 300-word articles
and a one-line biography to [email protected]
(three times a week)
- Zapman takes an irreverent view of totally zapped
stocks and markets. The only thing Zapman! has
reverence for its profits. Zapman! is safely
anonymous (weekly).
- Moscow Report is a summary of the day's biggest
business stories from FNs International in Russia
(daily).
- The X-Pert Files - a review of advice from stock
market professionals by DBC online
editor/reporter Darren Chervitz (updated
frequently).
5
<PAGE> 38
- U.S. Treasuries, Corporate Bonds, Mortgage Bonds,
CMO Bonds are all regularly (throughout the day)
updating charts of the prices on bonds, from the
offices of Capital Management Sciences.
- There are several other features of DBC News that
update infrequently or appear irregularly.
(b) The primary asset of DBC Online is the Intellectual
Property used to allow a user to access information
on the DBC site in a timely and efficient way. It
includes, but is not limited to:
(i) THE FOLLOWING CHARTS AND GROUPINGS OF FINANCIAL
DATA MFIARE CREATED AND UPDATED THROUGHOUT THE
TRADING DAY ON THE DBC ONLINE SITE:
Market Updates
Market Monitor
Major Indexes
Dow Jones Industrial Average(TM)
Dow Jones Transportation Average(TM)
Dow Jones Utility Average(TM)
S & P 500
Industry Indexes
Industry Groups
Most Active/Gainers/Losers
New York Stock Exchange
American Stock Exchange
Nasdaq Stock Market
Options
Market Analysis
DBC NewsRoom
New Highs, Lows
The DBC Report
DBC Newsletter Network
Index Charts
The Dow Jones Industrial Average(TM)
Nasdaq Composite
S & P 100
S & P 500
AMEX Composite
6
<PAGE> 39
Research
MarketGuide Reports
Industry Features
Bank Rate Monitor
CMS Bond Quotes
U.S. Treasuries
Corporate Bonds
Mortgage Bonds
CMO Bonds
BondVu.com: Fixed Income
Resources
Financial Links
Business Phone Books
(ii) FORMATS FOR PRESENTING QUOTES,PERSONAL
PORTFOLIOS, FUNDAMENTAL DATA, CHARTS AND
NEWS-BY-TICKER
(iii) LINKS TO SEVERAL TRADING SITES FROM THE TRADING
CENTER AND FROM PULL DOWN MENUS ON MOST MARKET
DATA PAGES
(iv) TIMELINESS OF EXCHANGE DATA:
The web site includes the ability to
access information from the following
exchanges. The availability of data from each
exchange varies. Update Times codes are as
follows: R/T is real-time transmission; BAT is
batch transmission; EOD is end of day
transmission, and 30, 15, 10 is the number of
minutes the quote is delayed.
<TABLE>
<S> <C> <C> <C> <C>
NORTH AMERICA Exchange Market Update Time Market Hours
Code Watch (EST)
United States
American Stock Exchange (AMEX)
*Available RealTime on MarketWatch R/T 15 09:30-16:00
-Includes regional exchanges R/T
-No bid/ask on AMEX delayed service R/T
Chicago Board Option Exchange (CBOE) 15 08:00-15:00
</TABLE>
7
<PAGE> 40
<TABLE>
<S> <C> <C> <C> <C>
Commodity Exchange Center (CEC) 30 08:00-15:00
-Coffee, Sugar & Cocoa Exchange 30 09:00-15:15
New York Cotton Exchange 30 08:20-15:00
-New York Futures Exchange 30 08:15-16:30
Chicago Mercantile Exchange (CME) 10 08:00-15:00
-Index and Option Market 10 08:00-15:00
-International Monetary Market 10 08:00-15:00
Commodity Exchange (COMX) 30 07:30-14:15
Kansas City Board of Trade (KCBT) 10 09:30-16:15
Mid America Commodity Exchange (MIDA) 10 08:20-16:15
Minneapolis Grain Exchange (MGE) 10 10:30-14:30
NASDAQ Level 1, NMS, Level 2 Bulletin Board R/T 15 09:30-16:00
*Available Real-Time on MarketWatch
-Money Market Funds EOD 18:00
-Mutual Funds EOD 18:00
New York Mercantile Exchange (NYME) 10 08:10-15:10
New York Stock Exchange (NYSE) R/T 20 09:30-17:15
*Available Real-Time on MarketWatch
-Boston Stock Exchange R/T 20 09:30-16:00
-Chicago Stock Exchange R/T 20 09:30-16:00
-Cincinnati Stock Exchange R/T 20 09:30-16:00
-Pacific Stock Exchange R/T 20 09:30-16:00
-Philadelphia Stock Exchange R/T 20 09:30-16:00
-No bid/ask on NYSE delayed service R/T
Canada
Alberta Stock Exchange AC 15 09:30-16:00
Montreal Stock Exchange MC 15 09:30-16:00
Toronto Stock Exchange TC 15 09:30-16:00
Vancouver Stock Exchange VC 15 09:30-16:00
EUROPE
Portugal
Lisbon Stock Exchange LB BAT 07:00, 12:00 &
14:45
United Kingdom
International Petroleum Exchange (IPE) IP 10 04:15-15:15
</TABLE>
8
<PAGE> 41
<TABLE>
<S> <C> <C> <C> <C>
London Commodity Exchange (LFOX) FO 10 04:45-14:01
London Int'l Financial Fut Exchange (LIFFE) LI 10 02:00-11:15
London Metals Exchange (LME) LM 33 06:45-11:35
OTHER EUROPE
Athens Stock Exchange AN BAT 08:30
Istanbul Stock Exchange IS BAT 11:30
Luxembourg Stock Exchange LX BAT 09:30
Prague Stock Exchange PQ BAT 08:30
Warsaw Stock Exchange WS BAT 08:30
FAR EAST
Bombay Stock Exchange BY BAT 03:00
Colombo Stock Exchange CL BAT 06:00
Karachi Stock Exchange KR BAT 08:00
New Zealand Stock Exchange NZ BAT 02:15
Philippine Stock Exchange MN BAT 05:30
Seoul: Korea Stock Exchange SL BAT 05:00
Shanghai Stock Exchange SH BAT 07:00
Shenzen Stock Exchange SN BAT 07:00
Singapore Int'l Monetary Exchange SI 30 18:45-06:10
Taipei: Taiwan Stock Exchange TP BAT 03:00
LATIN AMERICA
Buenos Aires Stock Exchange BA BAT 17:30
Bogota Stock Exchange BG BAT 17:30
Caracas Stock Exchange CA BAT 17:30
Lima Stock Exchange LV BAT 20:00
Montevideo Stock Exchange MV BAT 17:30
</TABLE>
(v) ASSETS OF DBC MARKETWATCH, REAL TIME PORTION OF
DBC ONLINE INCLUDE:
Premium financial data
Vie real-time quotes for NYSE, AMEX, and NASDAQ
exchanges on demand. You also get reliable,
complete delayed data spanning futures, equity
options, and international and Canadian
exchanges. Plus, you can access foreign exchange
rates and mutual and money market fund quotes,
and bulletin board stock data.
9
<PAGE> 42
Ability to create personal portfolios
Up to six personal portfolios, each containing up
to 10 symbols, calculated in real-time. Customize
portfolios by industry, short versus long term
holdings, or actual holding versus speculative
stocks.
Enhanced historical charts
Select 90 day, 180 day, or 1 year charts of
stocks and funds. Choose from bar, line or
candlestick style charts.
Real-time financial news and commentary
Access real-time market news straight from the
DBC Newsroom. Plus, headlines from Options News
Exchange, Futures World News, and Zacks
Investment Research, in addition to top stories
from Comtex. And, expert market commentary
providing insight on topics ranging from small
cap stocks to the overall market, and everything
in between.
Company research
Extensive company research from Market Guide
Company Reports spans 8,000 companies. Plus,
receive complete fundamental data on all stocks.
Ability to Trade online
MarketWatch provides seamless access to top
online trading sites.
(vi) ASSETS OF STOCKCHAT
The functionality of the a [?] bulletin board
site allowing visitors to read strings of
messages on a variety of subjects, including
individual stocks and to post messages for others
to seen [SIC] and comment upon.
(vii) BRAND LABEL QUOTE SITES
Included in DBC online assets is the ability
to co-branding a web site with DBC Online. This
provides quality, high-traffic web sites the
opportunity to furnish their online users with
the same comprehensive, user-friendly, and timely
financial data & market news that DBC Online
offers its own customers in exchange for a
revenue split on advertising or for a monthly
fee.
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Brand Label Quote sites (or BLQs) allow
access to 15-minute delayed stock quotes
(refreshed every few minutes), a personal
portfolio that accepts up to 10 ticker symbols
and has price and valuate functions, the
extensive DBC Newsroom, up to the minute business
headlines, international data, sports data, and
more.
DBC co-brands these pages by using the logo,
background and navigation bars of the company's
web site, creating a BLQ that retains the look
and feel of the original site design. Every page
will carry both the company and the DBC logo,
making it a true co-branded site.
Examples of co-branded sites now in effect:
- USA Today
- Washington Post
- The Baltimore Sun
- Wall Street Online
- USNews & World Report
- PR Newswire
- TechWeb
- Hoover's Online
- Deloitte & Touche
- Business Wire
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EXHIBIT 10.04
TAB 4
EXHIBIT B
(Attached to and forming a part of the CONTRIBUTION AGREEMENT, dated as of
October 29, 1997, between CBS, INC., DATA BROADCASTING CORPORATION and
MARKETWATCH.COM,LLC)
- --------------------------------------------------------------------------------
LICENSE AGREEMENT
AGREEMENT made as of the 29th day of October, 1997, by and between CBS,
Inc., 51 West 52nd Street, New York, New York 10019 (herein called "CBS"), and
Marketwatch.Com, LLC, c/o Data Broadcasting Corporation, 1900 South Norfolk
Street, San Mateo, CA 94403 (herein called "MarketWatch").
1. DEFINITIONS
1.1 "CBS Competitor" means any Person, other than CBS, who/which is
engaged either directly, or indirectly through an Affiliate, in radio or
television programming or program distribution (whether free over-the-air,
cable, telephone, local, microwave, or direct broadcast satellite or otherwise)
in North America. An "Affiliate" of the Person concerned, in the preceding
sentence, means a Person that directly or indirectly (through one or more
intermediaries) controls, is controlled by, or is under common control with such
Person concerned.
1.2 "CBS Content Pages" means pages of the MarketWatch Site that
include any CBS News Content.
1.3 "CBS License Guidelines and Restrictions" or "CBS License
Guidelines" means the clearance, form, format and use restrictions and
procedures set forth in Exhibit 2 attached hereto which MarketWatch shall adhere
to in its use of CBS News Content, CBS Marks, MarketWatch Site Content on the
MarketWatch Site and on any other MarketWatch Internal Site linked from the
MarketWatch Site.
1.4 "CBS Marks" means the following CBS registered trademarks, as shown
in Exhibit 1 attached hereto: CBS(R) and the CBS "Eye" design.
1.5 "CBS News Content" means any current news Television Content
(excluding, for avoidance of doubt, any archival Content or television/radio
program outtakes) related to business and financial issues and contained in CBS
New's regularly scheduled hard news broadcasts, scheduled special events
coverage and unscheduled live breaking news coverage which CBS has the right to
license for use on the Internet. (Nothing herein shall be construed to grant
MarketWatch any rights to CBS Radio Content or any Content of CBS Cable [i.e.,
Content contained in coverage or broadcasts of the CBS Radio division of CBS
and/or CBS Cable]).
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1.6 "Content" means text, graphics, photographs, video, audio and/or
other data or information, including, without limitation, Televisions Content,
relating to any subject.
1.7 "Date and Time Network Guidelines" means the guidelines issued by
CBS which restrict any advertisement from disclosing the date and time of the
program or event advertised.
1.8 "Intellectual Property Rights" means all inventions, discoveries,
trademarks, patents, trade names, copyrights, jingles, know-how, intellectual
property, software, shop rights, licenses, developments, research data, designs,
technology, trade secrets, test procedures, processes, route lists, computer
programs, computer discs, computer tapes, literature, reports and other
confidential information, intellectual and similar intangible property rights,
whether or not patentable or copyrightable (or otherwise subject to legally
enforceable restrictions or protections against unauthorized third party usage),
and any and all applications for, registrations of and extensions, divisions,
renewals and reissuance of, any of the foregoing, and rights therein, including
without limitation (a) rights under any royalty or licensing agreements, and (b)
programming and programming rights, whether on film, tape or any other medium.
1.9 "Internet" means global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit Content that is directly or indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such Content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless otherwise.
1.10 "Internet Site" means any site or service delivering Content on or
through the Internet, including, without limitation, any on-line service such as
America Online, Compuserve, Prodigy and the Microsoft Network.
1.11 "MarketWatch Content" means any Content owned or controlled by
MarketWatch other than CBS Property (as defined in subparagraph 7.1(a)).
1.12 "MarketWatch Site" means the Internet website owned by MarketWatch
and currently existing as portions of the dbc.com website that provide stock
quotes, personal finance information and business and stock stories. The
sections of dbc.com that constitute part of the MarketWatch Site are "DBC News,"
"Finance Markets," "Mutual Fund Center," "Trading Center," "Stockchat" and
"MarketWatch".
1.13 "Net Advertising Revenues" means the gross U.S. dollar sums
actually received from the sale of advertising on the MarketWatch Site by or on
behalf of MarketWatch, less all third-party payments actually made, including,
without limitation, sales representative commissions provided that, for the
purposes of this paragraph, such sales representative commissions shall be
deemed not to exceed fifteen percent (15%) in each instance.
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1.14 "Person" means any natural person, legal entity, or other
organized group of persons or entities. (All pronouns whether personal or
impersonal, which refer to Person include natural persons and other Persons.)
1.15 "Television Content" consists of Content broadcast on television.
2. LICENSE
2.1 CBS grants to MarketWatch, during the term of this Agreement and
subject to the terms and conditions contained herein, the non-exclusive right
and license:
(a) to use, copy, publicly display, perform, distribute or
otherwise make available on or through the MarketWatch Site, the CBS News
Content, to the extent CBS has the right to so license such Content. CBS agrees
that users of the MarketWatch Site may view, access, retrieve, copy and print
only for noncommercial private use any CBS News Content distributed hereunder on
the MarketWatch Site.
(b) to use the CBS Marks in connection with MarketWatch's
operation of the MarketWatch Site.
Nothing in this Agreement grants MarketWatch ownership or other rights in or to
the CBS News Content or the CBS Marks, except in accordance and to the extent of
this license.
2.2 MarketWatch's exercise of the rights granted herein shall conform
to the restrictions or requirements set forth in the CBS License Guidelines
(attached hereto as Exhibit 2), as such License Guidelines may be amended or
revised by from time to time by CBS, to reflect any changes in the business,
practice, procedures or policies of CBS or MarketWatch.
2.3 (a) MarketWatch shall have access to all CBS News Content, and,
subject to the conditions stated in the next sentence, CBS shall deliver, at
times reasonably requested by MarketWatch, all CBS News Content in a mutually
agreed form and format (including, for avoidance of doubt, video and text, to
the extent reasonably possible). CBS shall have the right to refuse to deliver
to MarketWatch any CBS News Content if, in CBS's sole discretion, the CBS News
Content or the use contemplated, conflicts with, interferes with or is
detrimental to CBS's interests, reputation or business or might subject CBS to
unfavorable regulatory action, violate any law, infringe the rights of any
person, or subject CBS to liability for any reason.
(b) MarketWatch shall be responsible for and shall reimburse
CBS for all actual costs and expenses, above and beyond those expenses normally
incurred by CBS in the ordinary course of business, which are incurred by CBS in
preparing and/or delivering the CBS News Content in the desired form and format.
Any amounts to be paid under this paragraph 2.3(b) shall be due and payable
within 30 days of receipt of an invoice relating to such amounts. Those amounts
will also be recoupable from all monies becoming payable to MarketWatch under
this or any other Agreement or otherwise to the extent to which they have not
actually been paid or reimbursed as provided for in the preceding sentence.
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<PAGE> 4
2.4 All Content which MarketWatch intends to use on the MarketWatch
Site shall consist of business or financial-related and other content deemed
appropriate by CBS. During the term of this Agreement, Any Content displayed on
the MarketWatch Site shall be subject to any restrictions or requirements set
forth in the CBS License Guidelines. CBS shall have the right to demand the
withdrawal from the MarketWatch Site of any Content which in CBS's sole opinion
conflicts with, interferes with or is detrimental to CBS's interests, reputation
or business or which might subject CBS to unfavorable regulatory action, violate
any law, infringe the rights of any Person, or subject CBS to liability for any
reason. Upon notice from CBS to withdraw the Content concerned, MarketWatch
shall cease using any such Content on the MarketWatch Site as soon as
commercially and technically feasible, but in any event within three (3) days
after the date of CBS's notice. If MarketWatch cannot cease using such Content
within twenty-four (24) hours, MarketWatch will so notify CBS detailing why the
cessation cannot be effected within twenty-four (24) hours and when the
cessation will be effected, subject to the terms of the preceding sentence.
2.5 (a) During the term of this Agreement, MarketWatch shall, in all
instances, consult with CBS regarding (visual and editorial) presentation of the
CBS News Content on the MarketWatch Site; provided, however, that in the event
the parties cannot agree in any instance, then CBS's decision will be
conclusive. In no event shall MarketWatch distort or misrepresent any material
contained in the CBS News Content. No CBS News Content shall be used/displayed
out of context; MarketWatch shall have the right to edit and revise the CBS News
Content subject to CBS's prior approval in each instance.
(b) MarketWatch shall be solely responsible for the
engineering, production, maintenance and monitoring of all CBS News Content
which MarketWatch makes available on the MarketWatch Site.
(c) Subject to any restrictions or requirements in the CBS
License Guidelines, MarketWatch shall have the right, but not the obligation, to
correct any errors, omissions and/or inaccuracies in the transmission or
transcription of the CBS News Content identified by MarketWatch or reported to
MarketWatch by MarketWatch Site users.
(d) Notwithstanding anything to the contrary contained herein,
upon notice from CBS, MarketWatch shall cease using any CBS News Content which
(i) in CBS's sole opinion, conflicts, interferes with or is detrimental to CBS's
reputation or business or (ii) becomes subject to any third party restriction or
claim which would prohibit, limit or restrict the use thereof on the Internet.
2.6 Except as otherwise specified in this Agreement, during the term of
this Agreement, MarketWatch shall not, without CBS's prior written approval:
(a) display, perform, distribute, transmit or otherwise make
available in any media now known or hereafter developed, other than through the
MarketWatch Site, any CBS News Content, CBS Marks, or any portion thereof.
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<PAGE> 5
(b) advertise, promote or market in any media now known or
hereafter developed, including the Internet, any CBS Competitor, except that
MarketWatch may promote any CBS Competitor on/in any of its venues other than
the MarketWatch Site, to the extent that CBS would permit such advertising,
promotion or marketing on the CBS Television Network, pursuant to its Date &
Time Network Guidelines.
2.7 In the event that MarketWatch desires to use any music contained in
any CBS News Content on the MarketWatch Site, prior to such use, MarketWatch
shall (i) report to the applicable music rights society on behalf of CBS, all
titles and publishers of all such music and, (ii) secure, at its sole cost and
expense, and pay for all performing, duplication and/or recording rights
licenses, if any, necessary for the use of such music on the Internet. CBS shall
endeavor to deliver to MarketWatch accurate music cue sheets for all such music.
2.8 Upon expiration or termination of this Agreement, MarketWatch shall
immediately cease all use of the CBS Marks and any CBS News Content or Content
derived therefrom in connection with the name and operation of the MarketWatch
Site or otherwise. In connection with the above, MarketWatch shall immediately
remove or erase the CBS News Content (and any Content derived therefrom) and CBS
Marks from the MarketWatch Site as soon as commercially and technically
practicable, given customary Internet business practices, but in no event shall
any such material remain on the MarketWatch Site more than five (5) days after
expiration or CBS's notice of termination, as applicable, and at CBS's request,
MarketWatch shall furnish CBS with certified evidence of such removal or erasure
satisfactory to CBS.
3. TERM
3.1 The term of this Agreement shall begin on October 29, 1997 and
shall continue in full force and effect for a period of five (5) consecutive
years, through and including October 29, 2002, unless it is terminated earlier
in accordance with the terms and conditions contained herein.
4. TRADEMARKS
4.1 CBS shall deliver to MarketWatch a copy of each CBS Mark in the
form in which such Mark may be used by MarketWatch on the MarketWatch Site.
MarketWatch acknowledges that the CBS Marks are trademarks owned or controlled
by CBS, Inc. and that all uses by MarketWatch of such CBS Marks shall inure to
CBS's benefit. MarketWatch shall maintain CBS quality standards with respect to
its use of the CBS Marks, and otherwise use the CBS Marks subject to any
restrictions or requirements disclosed by CBS (including any
requirements/restrictions delineated in the CBS License Guidelines). All
materials bearing the CBS Marks shall be subject to CBS's prior written
approval.
4.2 MarketWatch shall not file any application in any country to
register a trademark which contains "CBS," or is the same as, similar to, or
deceptive or misleading with respect to the CBS Marks or any other CBS
trademark. If any application for registration is filed in any country by
MarketWatch in contravention of this paragraph 4.2, CBS shall have the right to
take
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<PAGE> 6
appropriate action against MarketWatch, including seeking injunctive relief, to
prohibit or otherwise restrain MarketWatch's use of the infringement party's use
of the infringing mark.
4.3 In the event that MarketWatch learns of any infringement,
threatened infringement, or passing off of the CBS's trademarks or logos
licensed for use under this Agreement, or that any Person claims or alleges that
the such trademarks or logos are liable to cause deception or confusion to the
public, then MarketWatch shall notify CBS of the particulars thereof.
4.4 Upon the expiration or termination of this Agreement, MarketWatch
shall cease all use of the CBS Marks, as soon as commercially and technically
practicable, but in any event, no later than five (5) days after expiration or
termination of this Agreement.
5. COMPENSATION
5.1 In consideration of the rights herein granted, MarketWatch shall
pay CBS thirty percent (30%) of the Net Advertising Revenues over and above the
first One Million Dollars ($1,000,000) of Net Advertising Revenues derived from
the sale of advertising on the MarketWatch Site during the term of this
Agreement.
5.2 In the event that the rights granted by CBS to MarketWatch pursuant
to this Agreement cause CBS to recognize income for federal income tax purposes
in an amount which exceeds the amount prescribed for such rights in paragraph
5.1 above (the "Excess"), then the entire amount of any deductions available to
MarketWatch solely attributable to such Excess shall be allocated by MarketWatch
to CBS.
6. ACCOUNTINGS
6.1 MarketWatch will compute Net Advertising Revenues as of each March
31, June 30, September 30 and December 31 for the prior three (3) months. Within
forty-five (45) days after the calendar quarterly period concerned, MarketWatch
will send CBS a statement covering those sums and will pay CBS and Net
Advertising Revenues due. Acceptance by CBS of any statement or payment shall
not preclude CBS from challenging the accuracy thereof.
6.2 MarketWatch will maintain accurate books and records which report
the sales of advertising on the MarketWatch Site. CBS may, at its own expenses,
examine and copy those books and records, as provided in this paragraph. CBS may
make such an examination for a particular statement within three (3) years after
the date when the other party sends the examining party the statement concerned.
(MarketWatch will be deemed conclusively to have sent CBS the statement
concerned on the date prescribed in paragraph 6.1, unless CBS notifies
MarketWatch otherwise with respect to any statement, within thirty (30) days
after that date). CBS may make those examinations only during MarketWatch's
usual business hours, and at the place where it keeps the books and records.
Such books and records shall be kept at the MarketWatch office in San Mateo,
California, unless otherwise notified. CBS will be required to notify
MarketWatch at least ten (10) days before the date of planned examination. If
CBS's
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examination has not been completed within two months from the time CBS begins
it, MarketWatch may require CBS to terminate it on seven (7) days notice to CBS
at any time.
7. RIGHTS
7.1 (a) As between CBS and MarketWatch: CBS is or shall be the
exclusive owner of and shall retain all right, title and interest to the CBS's
News Content or any Content derived therefrom, and the CBS Marks, including all
Intellectual Property Rights therein (the "CBS Property").
(b) MarketWatch is the exclusive owner of and shall retain all
right, title and interest to the MarketWatch Content or any Content derived
therefrom, the MarketWatch Site and all Intellectual Property Rights therein,
excluding the CBS Property.
(c) MarketWatch shall place a notice of copyright on each CBS
Content Page in accordance with the CBS License Guidelines. No CBS Content Page
shall contain any other copyright notice whatsoever except as provided in the
CBS License Guidelines. MarketWatch shall cooperate fully with CBS in connection
with CBS's obtaining appropriate copyright protection in the name of CBS for any
CBS Content Page.
7.2 Each party agrees to take all action and cooperate as is reasonably
necessary, at the other party's request and expense, to protect the other's
respective rights, titles, and interests specified in this Article 7, and
further agrees to execute any documents that might be necessary to perfect each
party's ownership of such rights, titles, and interests.
8. WARRANTIES; REPRESENTATIONS; INDEMNITIES
8.1 (a) CBS represents and warrants that:
(i) it has full power and authority to enter into
this Agreement.
(ii) it has sufficient right and authority to grant
to MarketWatch all licenses and rights granted by CBS
hereunder.
(iii) the CBS Marks and the use thereof as permitted
pursuant to this Agreement shall not violate any law or
infringe upon or violate any rights of any Person.
(b) MarketWatch represents and warrants that:
(i) it owns or controls all right, title, and
interest in and to the MarketWatch Site, and all Intellectual
Property Rights therein, necessary to carry out its
obligations hereunder and to grant and assign the rights and
licenses granted to CBS herein.
(ii) it is has the full power and authority to enter
into and fully perform this Agreement.
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(iii) the MarketWatch Site, any MarketWatch Site
Content and any Content developed or furnished by MarketWatch
hereunder and the use thereof shall not violate any law or
infringe upon or violate any rights of any Person.
8.2 Each party shall at all times indemnify, hold harmless and defend
the other party in accordance with the indemnification provisions (applicable to
such party) set forth in Article VI of the Contribution Agreement among CBS,
MarketWatch and Data Broadcasting Corporation dated as of October 29, 1997 (the
"Contribution Agreement").
9. REMEDIES
9.1 CBS shall have the right to terminate this Agreement if (any of the
following occurs):
(a) MarketWatch breaches any material term or condition of
this Agreement, and has failed to cure such breach. The foregoing cure period
will not apply to MarketWatch's warranties hereunder, where a specific cure
period is provided herein, to MarketWatch's obligations regarding CBS News
Content or to breaches incapable of being cured.
(b) MarketWatch: (i) becomes insolvent or unable to pay its
debts as they mature or makes an assignment for the benefit of its creditors;
(ii) is the subject of a voluntary petition in bankruptcy or any voluntary
proceeding relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing: (iii) becomes the subject of any involuntary petition
in bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors, if such
petition or proceeding is not dismissed within sixty (60) days of filing; (iv)
is liquidated or dissolved; or (v) is no longer at least 20% owned by CBS.
CBS may exercise its right to terminate pursuant to this Section 9.1 by sending
MarketWatch the appropriate notice. No exercise by CBS of its rights under this
Section 9.1 will limit CBS's remedies by reason of MarketWatch's default, CBS's
rights to exercise any other rights under this Section 9.1, or any of CBS's
other rights.
10. GENERAL
10.1 Neither party may assign this Agreement, or their respective
rights and obligations hereunder, in whole or in part without the other party's
prior written consent. Any attempt to assign this Agreement without such consent
shall be void and of no effect ab initio. Notwithstanding the foregoing, CBS may
assign this Agreement or any of its rights and obligations hereunder to any
entity controlling, controlled by or under common control with, CBS, or to any
entity that acquires CBS by purchase of stock or by merger or otherwise, or by
obtaining substantially all of CBS assets (a "CBS Assignee"), provided that any
such CBS Assignee, or any division thereof, thereafter succeeds to all of the
rights and is subject to all of the obligations of CBS under this Agreement.
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10.2 Each party hereto irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby or thereby. Each of CBS and
MarketWatch agrees to commence any such action, suit or proceeding either in the
United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of CBS and MarketWatch further agrees that service of any process,
summons, notice or documents by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any maters to which it has
submitted to jurisdiction in this Section 10.2. Each of CBS and MarketWatch
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby and thereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby and thereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
10.3 Each party shall comply in all material respects with all laws and
regulations applicable to its activities under this Agreement.
10.4 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforcability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
10.5 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to MarketWatch,
c/o Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention of Larry Kramer
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(ii) if to CBS,
CBS Inc.
51 West 52nd Street
New York, New York 10019
Attention of Derek Reisfield
with copies to:
CBS Inc.
51 West 42nd Street
New York, New York 10019
Attention of General Counsel, and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention of Peter S. Wilson, Esq.
10.6 The parties to this Agreement are independent contractors. There
is no relationship of partnership, joint venture, employment, franchise, or
agency between the parties. Neither party shall have the power to bind the other
or incur obligations on the other's behalf without the other's prior written
consent.
10.7 No failure of either party to exercise or enforce any of its
rights under this Agreement shall act as a waiver of such right.
10.8 This Agreement, along with the Exhibits hereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
10.9 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
10.10 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. By an instrument in
writing, any two parties hereto may waive compliance by the third party with any
term or provision of this Agreement that such third party was or is obligated to
comply with or perform.
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10.11 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
10.12 Except as provided in Article VI of the Contribution Agreement,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any person, other than the parties hereto ad such assigns, any legal or
equitable rights hereunder.
10.13 The headings contained in this Agreement or in any Exhibit or
Schedule hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Schedule or Exhibit but not otherwise defined therein, shall have the
meaning as defined in this Agreement. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
MarketWatch.Com, LLC CBS INC.
By: /s/ LAWRENCE S. KRAMER By: /s/ FREDRIC G. REYNOLDS
---------------------------------- ------------------------------------
Name: Lawrence S. Kramer Name: Fredric G. Reynolds
------------------------------- ----------------------------------
Title: CEO Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT 1
(Attached to and forming a part of the Agreement, made as of October 29, 1997
between CBS Inc. and MarketWatch.Com, LLC)
- --------------------------------------------------------------------------------
CBS MARKS
CBS
(EYEBALL LOGO)
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EXHIBIT 2
(Attached to and forming a part of the Agreement, made as of October 29, 1997
between CBS Inc. and MarketWatch.Com, LLC)
- --------------------------------------------------------------------------------
CBS LICENSE GUIDELINES AND RESTRICTIONS
I. GENERAL
The MarketWatch Site shall not include Content that: (i) is sexually
explicit, (ii) contains profanity or (iii) that denigrates a particular
group based on gender, race, creed, religion, sexual preference or
handicap.
II. CBS NEWS CONTENT
1. Each party shall notify the other of all errors, omissions,
and/or inaccuracies in transmission or transcription of the
CBS News Content within forty-eight (48) hours after it
becomes aware thereof.
2. If MarketWatch provides such notice, it shall specify to CBS
what action, if any, it has taken to correct the error,
omission and/or inaccuracy.
3. If CBS provides such a notice, or receives such notice, it may
specify the action to be taken by MarketWatch to correct the
error, omission and/or inaccuracy or resubmit such content.
4. All CBS News Content shall be subject to restrictions and
instructions disclosed by CBS at any time.
5. CBS shall have the right to refuse to deliver to MarketWatch
any CBS News Content if, in CBS's sole discretion, the CBS
News Content or the use contemplated, conflicts with,
interferes with or is detrimental to CBS's interests,
reputation or business or which might subject CBS to
unfavorable regulatory action, violate any law, infringe the
rights of any person, or subject CBS to liability for any
reason.
6. MarketWatch shall abide by responsible journalistic standards.
No CBS News Content shall be used/displayed out of context.
MarketWatch shall no distort or misrepresent any events,
opinions or statements contained in the CBS News Content
received by MarketWatch.
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III. TRADEMARKS
MarketWatch shall place a trademark notice to be furnished by CBS on
all items or materials utilizing CBS Marks. CBS shall provide
MarketWatch with the manner, style and placement of such notice, which
shall be deemed incorporated into this Section.
IV. CROSS-LINKS
1. MarketWatch shall not establish any links from the MarketWatch
Site to any gambling, pornographic or obscenity Content.
2. MarketWatch shall not conduct any cross promotions between the
MarketWatch Site and any Internet Site which uses or exhibits
gambling, pornographic or obscenity Content.
V. OWNERSHIP
1. MarketWatch shall place an appropriate copyright notice to be
furnished by CBS on all CBS Content Pages of the MarketWatch
Site.
2. MarketWatch and CBS shall mutually develop the procedures for
placing any third party copyright notice on any CBS Content
Page.
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EXHIBIT 10.05
EXHIBIT C
to the CONTRIBUTION' AGREEMENT dated as of October 29 1997. among CBS INC.,
DATA BROADCASTING CORPORATION and MARKETWATCH.COM.LLC
SERVICES AGREEMENT
AGREEMENT made as of the 29th Day of October, 1997, by and
between MARKETWATCH.COM.LLC, c/o Data Broadcasting Corporation, 1900 South
Norfolk Street. San Mateo, CA 94403 (herein called "MarketWatch") and DATA
BROADCASTING CORPORATION, 1900 South Norfolk Street, San Mateo, CA 94403 (herein
called "DBC").
1. DESCRIPTION
1.1 During the term of this Agreement, subject to the terms and
conditions stated herein
(a) at the request of MarketWatch, DBC Will perform the
following services for MarketWatch:
(i) subject to MarketWatch's prior approval in each
instance, DBC shall engage or employ personnel assigned to
service MarketWatch (hereinafter referred to as "MarketWatch
Employees") on a full-time or part-time basis as needed,
including the calculation and administration of employee (or
engaged personnel) compensation, benefits and/or related
payments or deductions/withholdings. MarketWatch shall have
the right to require DBC to terminate any employee (or engaged
personnel, as applicable). In connection with the foregoing
services, MarketWatch shall hold DBC harmless from liability
with respect to any personnel action involving a MarketWatch
Employee (acting solely within the scope of his or her
employment for MarketWatch), provided such personnel action is
directed by MarketWatch. (For avoidance of doubt, the
preceding sentence shall not relieve DBC of liability in its
capacity as a principal of MarketWatch.)
(ii) handle customer billing and collection for
MarketWatch subscription products and services and other
services including without limitation, real-time data service.
(iii) provide computer software programming
assistance, including, without limitation, assistance with the
operation of the on-line services (including advertising
services) offered by MarketWatch and the creation of
MarketWatch web site pages and navigation systems.
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(b) (i) At the request of MarketWatch in each instance, DBC
will license to MarketWatch, free of charge, the delayed
commodities and stock data feeds delivered from the financial
exchanges with whom DBC has existing contracts (including,
without limitation, the New York Stock Exchange; The American
Stock Exchange; The Nasdaq Stock Market. Inc.; New York
Mercantile Exchange; Chicago Board Options Exchange; Chicago
Board of Trade; MidAmerica Commodity Exchange; Commodities
Exchange Center; Chicago Mercantile Exchange; and Coffee,
Sugar & Cocoa Exchange), which feeds are currently made
available by DBC to users/subscribers of the Internet web site
currently knows as dbc.com.
(ii) DBC will provide MarketWatch with communications
lines (including at least two (2) T-3 connections to the
Internet, hardware and software to effect the required
capability to receive/transmit etc. the data feeds described
in section 1.1(b)(i) above. DBC will use its best efforts to
ensure third party provided lines will be in good working
order at all times.
(iii) In connection with the data feed described in
section 1.1(b)(i) above, DBC will provide MarketWatch with
network operations and web site management support (including,
without limitation, hosting connectivity, serving content,
serving and reporting ads and reporting content) twenty-four
hours a day seven days a week.
(c) At MarketWatch's request, DBC Will provide (from its
rented or owned office space) office space and related facilities, to the extent
available, for MarketWatch Employees; provided, however, DBC will furnish
MarketWatch with sufficient space in its San Mateo offices to conduct
MarketWatch's current operations until the current lease for DBC's San Mateo
offices expires. Such right to use such facilities shall in no way be construed
as a sublease or license by DBC of any real property but shall only be construed
as a reimbursement arrangement. The provision of space at DBC's current offices
in San Mateo shall be free of charge.
1.2 During the term of this Agreement, subject to the terms and
conditions stated herein:
(a) DBC will pay MarketWatch:
(i) Five Dollars ($5) per month per subscriber for
each DBC PC-based subscriber who receives real-time quotes and
news, and Two Dollars Fifty Cents ($2.50) per month for each
Quotrek subscriber who receives real-time quotes and news. The
payment will be a minimum of $100,000 per month.
(ii) With respect to subscribers of the real-time
market feeds described below:
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(A) twenty-five percent (25%) of the Net
Revenues earned from the real-time market feed to be
known as "MarketWatch Live"; and
(B) seventy-five percent (75%) of the Net
Revenues earned from the real-time market feed to be
known as "MarketWatch RT".
As used in section 1 2(a)(ii), the term "Net Revenues" shall
mean gross subscription fees collected less exchange fees
actually paid by DBC, credit card fees actually paid by DBC
and any applicable sales taxes billed by DBC and paid by the
subscriber concerned.
2. TERM
2.1 The term of this Agreement shall begin as of the date hereof and
shall continue in full force and effect for a period of five (5) consecutive
years, through and including October [ ], 2002, unless it is terminated earlier
in accordance with the terms and conditions contained herein.
3. COMPENSATION; OFFSET
3.1 In consideration for all grants herein made or agreed to be made
and all rights, licenses, privileges and property herein conveyed or agreed to
be conveyed, and all warranties, representations and covenants herein made by
DBC, MarketWatch agrees to pay DBC as follows:
(a) DBC's actual costs, subject, however, to the approval of
MarketWatch of the costs to be incurred, other than the costs incurred by DBC in
the ordinary course of business. in connection with:
(i) the services rendered pursuant to subparagraph
1.1 (a) and section 1.1(b)(iii); and
(ii) the provision of communications lines described
in section 1.1(b)(ii) above.
(iii) the provision of office space and related
facilities to MarketWatch personnel, it being understood that
such actual cost shall be DBC's cost per rented square foot of
space utilized by the MarketWatch personnel concerned, subject
to the next sentence. The provision of office space and
related facilities to MarketWatch personnel at DBC's current
San Mateo location, however, shall be free of charge.
3.2 In the event that DBC breaches subparagraph 1.01(b) of the
Contribution Agreement among CBS Inc., DBC and MarketWatch dated as of October
29, 1997 (the "Contribution Agreement"), then, in addition to whatever other
rights and remedies MarketWatch may have under the Contribution Agreement,
MarketWatch may offset any
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monies due and owing from DBC under the (subparagraph 1.01 (b) of the)
Contribution Agreement against monies payable (from MarketWatch) to DBC
hereunder.
3.3 In the event that the services provided by DBC pursuant to this
Agreement cause DBC to recognize income for federal income tax purposes in an
amount which exceeds the amount prescribed for such services in subparagraph
3.1(a) above (the "Excess"), then the entire amount of any deductions available
to MarketWatch solely attributable to such Excess shall be allocated by
MarketWatch to DBC.
4. WARRANTIES; REPRESENTATIONS; INDEMNITIES
4.1 (a) DBC represents and warrants that:
(i) it has full power and authority to enter into and
fully perform this Agreement.
(ii) it has sufficient right and authority to grant
to MarketWatch all licenses and rights granted or agreed to be
granted by it hereunder.
(iii) all materials and services furnished to
MarketWatch or the use thereof will not violate any applicable
lay, or violate or infringe upon the rights of any third
party.
(iv) at all times. DBC will comply with all
applicable federal, state and local laws.
(b) MarketWatch represents and warrants that it is free to
enter into and fully perform this Agreement.
4.2 (a) DBC will assume all obligations for and indemnify and hold
MarketWatch harmless from (i) malfunctions or other usage problems resulting
from or in connection with the "Year 2000 Problem" (i.e., the year 2000 (and
later years) as distinct from the years 1900 through 1999, (and earlier years)),
and (ii) "bugs", "viruses" or defects in the feeds or other software goods
provided herein, which affect the function or capabilities of such feeds or
software.
(b) Each party shall at all times indemnify, hold harmless and
defend the other party in accordance with the indemnification provisions
(applicable to such party) set forth in Article VI of the Contribution
Agreement.
5. ACCOUNTINGS
5.1 DBC will compute Net Revenues or any other transactions on which
monies are payable to MarketWatch as of each March 31, June 30, September 30 and
December 31, for the prior three (3) months. Within sixty (60) days after the
close of the calendar quarterly period concerned, DBC will send MarketWatch a
statement covering the number of subscribers who pay for the feeds described in
paragraph 1.2 during such quarterly period and will pay
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MarketWatch for any Net Revenues or other monies due (including, without
limitation, sums due in connection with the subscriptions concerned).
5.2 DBC will maintain books and records which report the sales and
maintenance of subscriptions hereunder. Any Member of MarketWatch may make an
examination of a particular statement within three (3) years after the date when
DBC sends the statement concerned. Any Member of MarketWatch may review and copy
the books and records of DBC with respect to such statement, upon reasonable
notice during normal working hours.
6. REMEDIES
6.1 MarketWatch shall have the right to terminate this Agreement if:
(a) DBC breaches any material term or condition of this
Agreement and has failed to cure such breach within ten (10) days after
MarketWatch's notice of default. The foregoing cure period will not apply to
DBC's obligations regarding the provision of delayed data feeds or to breaches
incapable of being cured;
(b) DBC: (i) becomes insolvent or unable to pay its debts as
they mature or makes an assignment for the benefit of its creditors; (ii) is the
subject of a voluntary petition in bankruptcy or any voluntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing; (iii) becomes the subject of any involuntary petition
in bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors, if such
petition or proceeding is not dismissed within sixty (60) days of filing; or
(iv) is liquidated or dissolved; or
(c) MarketWatch is dissolved.
MarketWatch may exercise its rights pursuant to this paragraph 6.1 by sending
DBC the appropriate notice. No exercise of MarketWatch's rights under this
Section 6.1 will limit MarketWatch's remedies by reason of DBC's default,
MarketWatch s rights to exercise any other right under this paragraph 6.1, or
any of MarketWatch's other rights.
7. GENERAL
7.1 Neither party may assign this Agreement, or their respective rights
and obligations hereunder, in whole or in part without the other party's prior
written consent. Any attempt to assign this Agreement without such consent shall
be void and of no effect ab initio. Notwithstanding the foregoing, MarketWatch
may have the right to assign this Agreement or any of its rights and obligations
hereunder to any entity controlling, controlled by or under common control with,
MarketWatch, or to any entity that acquires MarketWatch by purchase of stock or
by merger or otherwise, or by obtaining substantially all of MarketWatch's
assets (a '`MarketWatch Assignee"), provided that any such MarketWatch Assignee,
or any division thereof, thereafter succeeds to all of the rights and is subject
to all of the obligations of MarketWatch under this Agreement.
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7.2 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York; applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
7.3 Each party hereto irrevocably submits to the exclusive jurisdiction
of (a) the Supreme Court of the State of New York, New York County, and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby or thereby. Each of DBC and MarketWatch
agrees to commence any such action, suit or proceeding either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
DBC and MarketWatch further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York, with respect to any matters to which it has submitted to
jurisdiction in this Section 7.3. Each of DBC and MarketWatch irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby and thereby in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby and thereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
7.4 Each party shall comply in all material respects with all laws and
regulations applicable to its activities under this Agreement.
7.5 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
7.6 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to MarketWatch,
c/o Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention of Larry Kramer
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(ii) if to DBC,
Data Broadcasting Corporation
1900 South Norfolk Street
San Mateo, CA 94403
Attention of Mark Imperiale, President
with copies to:
Camhy Karlinsky & Stein LLP
1740 Broadway
Sixteenth Floor
New York, NY 10019
Attention of Alan I. Annex, Esq.
7.7 The parties to this Agreement are independent contractors. There is
no relationship of partnership, joint venture, employment, franchise, or agency
between the parties. Neither party shall have the power to bind the other or
incur obligations on the other's behalf without the other's prior written
consent.
7.8 No failure of either party to exercise or enforce any of its rights
under this Agreement shall act as a waiver of such right.
7.9 This Agreement, along with the Exhibits thereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other part, in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
7.10 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
7.11 This Agreement shall not become effective until executed by all
proposed Parties hereto.
7.12 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. By an instrument in
writing, any two parties hereto may waive compliance by the third partly with
any term or provision of this Agreement that such third party was or is
obligated to comply with or perform.
7.13 Except as provided in Article VI of the Contribution Agreement,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implies shall give or be construed to
give to any person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
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7.14 The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When a reference is made in this Agreement to a paragraph such
reference shall be to a paragraph of this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
DATA BROADCASTING CORPORATION MARKETWATCH.COM, LLC
By: /s/ MARK F. IMPERIALE By: /s/ DEREK R.. REISFIELD
------------------------------- -------------------------------
Title: President Title: Chairman
---------------------------- ----------------------------
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EXHIBIT 10.06
LEASE
THIS INDENTURE OF LEASE (hereinafter called "Lease"), made this 27th day of
August, 1997, by and between CBS CORPORATION (successor by corporate name
change to Westinghouse Electric Corporation), a Pennsylvania corporation having
its principal address at 51 West 52nd Street, New York, New York 10019
(hereinafter called "Lessor"), and CBS Marketwatch.com , LLC a Delaware Limited
Liability Company, having an address at 825 Battery Street, San Francisco,
California 94111 (hereinafter called "Lessee").
W I T N E S S E T H:
1. INDENTURE
Lessor hereby leases to Lessee and Lessee hereby hires from Lessor,
approximately 4,373 rentable square feet (the "Original Premises") and 7,240
rentable square feet (the "Additional Premises") (the "Original Premises" and
"Additional Premises" being jointly referred to as the "Premises), each as shown
on Exhibit A, attached hereto and incorporated herein by reference thereto, it
being understood that such square footage has been determined by measurements
determined by R.M.A. Architects, in the building located at 855 Battery Street,
San Francisco, California (hereinafter called "Building"), which is situated on
that certain parcel of land (hereinafter called "Office Building Area") thereto,
together with the right to use in common with the other occupants of the
Building, their invitees, customers and employees, the common areas of the
Building, as designated from time to time by Lessor, including the stairway,
elevators, if any, sidewalks, halls, toilet and public sanitary facilities,
lobby and all other general common facilities contained in the building.
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2. TERM
The Original Premises shall be leased for a term of five (5) years
(hereinafter called "Term") beginning as of April 1, 1998 and ending on March
31, 2003. The Additional Premises shall be leased for a term commencing on
September 1, 1998 and ending on March 31, 2003. If Lessor, for any reason
whatsoever, shall be unable to deliver possession of either the Original
Premises or the Additional Premises on the above mentioned commencement date for
that part of the Premises, the Lease shall not be void or voidable, nor shall
Lessor be liable to Lessee for any loss or damage resulting therefrom, but, in
that event, the Lease with regard to the applicable area shall commence upon the
date that Lessor shall tender to Lessee possession of the Premises and terminate
midnight of March 31, 2003.
3. BASE RENT
(a) Lessee shall pay to Lessor during the Term a base rent
(hereinafter called "Base Rent") for the Original Premises in the amount of
Seventeen and 50/100 Dollars ($17.50) per square foot per year for a total
annual rent of Seventy-six thousand, Five hundred Twenty-seven and 50/100
Dollars ($76,527.50). Lessee shall pay Base Rent for the Additional Premises in
the amount of Thirty-Three and 00/100 Dollars ($33.00) per square foot per year
for a total annual rent of Two hundred thirty-eight thousand Nine hundred twenty
Dollars ($238,920). All such Base Rent shall be payable in advance on or before
the first day of each month of the Term in an equal number of monthly
installments (hereinafter called the "Monthly Base Rent") of $6377.29 for the
Original Premises and $19,910.00 for the Additional Premises. If the Term for
either of the Original Premises or the Additional Premises commences on a date
other than the first day of a month, Lessee shall pay to Lessor a pro rata
portion of the Monthly Base Rent for
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such area, prorated on the basis of a thirty (30) day month, with respect to
that portion of the calendar month within the Term.
(b) Upon each anniversary of the commencement of the Lease for each
of the Original Premises and the Additional Premises, the Base Rent for such
area shall increase by four percent (4%) over the Base Rent payable for the
preceding year.
4. USE AND OCCUPANCY
Lessee shall use and occupy the premises for general office use and
reasonable other uses incidental thereto and for no other purpose.
5. COVENANT TO PAY RENT
Lessee shall pay Base Rent and any additional rent (hereinafter called
"Additional Rent") as hereinafter provided (Base Rent and Additional Rent
hereinafter collectively called "Rent") to Lessor without demand and without
counterclaim, deduction or setoff. Lessee shall pay Rent at the address set
forth hereinbelow, or as may otherwise be directed by written notice from Lessor
to Lessee.
6. COMPLIANCE WITH THE LAW
(a) Lessee shall not (i) use the Premises, (ii) permit anything to be
done in or upon the Premises, or (iii) permit the Premises to be in a condition
which shall, in any manner, conflict with any law, statute, ordinance, rule,
regulation or restriction now in force or which may hereafter be in force of any
federal, state or local government. Lessee shall comply, at
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Lessee's sole cost and expense, with all such laws, statutes, ordinances, rules,
regulations and restrictions and with the requirements of any board of fire
insurance underwriters, or any similar body now or hereafter constituted,
relating to or affecting the condition, use or occupancy of the Premises;
provided, however, that Lessee shall not hereby be under any obligation to make
any structural change in or alternation to the leased Premises, unless caused or
arising as a result of Lessee's acts or omissions or the acts or omissions of
Lessee's agents, servants, visitors or licensees, and provided further, that
Lessee shall not hereby be under any obligation to make any change to the
electrical, plumbing or HVAC systems. Lessee shall not (i) cause, maintain or
permit any public nuisance in or upon the Premises, (ii) commit or suffer to
committed any waste in or upon the Premises or (iii) engage in any activity
which shall be hazardous, on account of fire or other peril to the Premises.
(b) Lessor represents that on the commencement of the Lease, to the
best of its knowledge, the Premises will comply with all applicable laws,
ordinances, rules and regulations of governmental authorities and Lessor
warrants that during the Term it will comply with all such applicable laws,
ordinances, rules or regulations regarding the Premises and the Building except
to the extent Tenant or other tenants must comply.
7. CARE AND REPAIR OF PREMISES
(a) Lessor shall maintain and repair the common areas, the roof, the
exterior walls and glass and the structural elements of the Building, including
existing electrical, H.VA.C. or approved items in paragraph 8, ALTERATIONS,
ADDITIONS OR IMPROVEMENTS provided, however, all damage or injury to the
Building, or to the fixtures, equipment and appurtenances located therein,
whether requiring structure or nonstructural repairs, caused by or resulting
from Lessee's use or occupancy of the Premises shall be repaired
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at Lessee's sole cost and expense. Lessor and Lessor's agents, employees and
contractors shall have the right to enter the Premises at such times as Lessor
deems necessary to inspect and examine the same and to make such repairs,
additions alterations and improvements as lessor desires to make to the
Building. Lessor shall have the right to take any and all needed materials into
and through the Premises that may be required to perform such repairs,
additions, alterations and improvements without being liable to lessee, unless
done in a manner which constitutes gross negligence or willful misconduct.
Lessor shall use reasonable efforts not to interfere with the lessee's use or
occupancy of premises. Rent shall not abate during any period when Lessor shall
be performing any work in or about the Building necessitated by Lessee's
negligence, or otherwise. Lessee waives any claim or cause of action against
Lessor for damages by reason of loss or interruption to Lessee's business and
profits due to such work.
(b) Lessee shall, at Lessee's sole cost and expense, keep the
Premises in good repair and condition and replace any and all broken glass in
the Premises with glass of the same quality and size, unless such repairs are
occasioned by the Lessor's gross negligence or willful misconduct. Lessee shall
be responsible for complying with all federal, state or local laws relating to
the Premises and its use thereof, including but not limited to the Americans
with Disabilities Act ("ADA") and the Occupational Health and Safety Act
("OSHA"). Lessee shall indemnify and save Lessor harmless from and against any
loss, cost or expense in connection with damage to the Building caused by or
attributable to Lessee's failure to keep the Premises in good repair and
condition or due to Lessee's use or occupancy of the same, normal wear and tear
excepted.
(c) All alterations, additions and improvements to the Premises made
by Lessor or Lessee, whether temporary or permanent in character, shall be
Lessor's property, without compensation or payment to Lessee, and shall remain
upon the Premises at the
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termination of the Lease, unless Lessor requires the removal of such
alterations, additions or improvements by written notice to Lessee within
fifteen (15) days after the termination of the Lease. Notwithstanding the
foregoing, so long as the lease remains in effect and Lessee is not in default
hereunder, Lessee may remove all moveable personal property, business and
fixtures, furniture and equipment which is not attached to the Premises,
provided Lessee repairs any damage caused by such removal.
(d) Not later than the final day of the Term, Lessee shall, at
Lessee's sole cost and expense, remove all property which Lessee shall have the
right to remove, pursuant to paragraph (c) above, from the Premises and repair
all injury to the Building in connection with Lessee's removal of the same.
Lessee shall surrender the Premises in as good condition as the Premises were in
at the commencement of the Term, reasonable wear and tear and damage by fire,
the elements, casualty or other cause not due to the act or omission of Lessee
or Lessee's visitors or licensees excepted. All property of Lessee remaining on
the Premises after the final day of the Term shall be conclusively deemed
abandoned and may be removed by Lessor; and Lessee shall reimburse Lessor for
the cost of such removal. Lessor may store property so removed at Lessee's sole
cost, expense and risk, for a period of up to thirty (30) days.
7A. CONDITION OF THE PREMISES AND TENANT IMPROVEMENTS
(a) Lessee acknowledges that it has examined the Premises and except
as set forth in this paragraph 7A, it accepts the Premises in their as-is
condition.
(b) Lessor shall install building standard carpeting and erect
demising walls in the Original Premises and make such other improvements to the
Original Premises necessary to bring such area in compliance with ADA and other
relevant statutes and ordinances.
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Notwithstanding the foregoing, in no event will Landlord be required to pay more
than $100,168.00 for such tenant improvements to the Original Premises. The cost
of any additional work in excess of $100,168.00 shall be Tenant's
responsibility.
(c) Landlord shall reimburse Tenant up to $10.00 per rentable square
foot for tenant improvements. Such reimbursement shall be made upon presentation
of verifiable proof of payment for direct services or material for such
improvements.
(d) Notwithstanding anything to the contrary herein, any tenant
improvements performed by or on behalf of Tenant shall be subject to all of the
provisions of Section 8 of this Lease.
8. ALTERATIONS, ADDITIONS OR IMPROVEMENTS
Lessee shall have the right to make alterations, additions and
improvements to the Premises; provided, however, any alterations, additions and
improvements to the Premises shall be made subject to the following conditions;
(a) Lessor shall have the right to approve, in writing, all
alterations, additions and improvements to the Premises, which approval shall
not be unreasonably withheld or delayed.
(b) No alterations, additions or improvements shall be made which
shall impair the structural soundness or diminish the value of the Premises, the
Building or the Office Building Area.
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(c) No alterations, additions or improvements shall be undertaken
until Lessee shall have procured and paid for all required municipal and other
government permits and authorizations.
(d) All work done in connection with any alteration, addition or
improvement shall be done in a good and workmanlike manner and in compliance
with the applicable building and zoning laws, and all other laws, ordinances,
orders, rules, regulations and requirements of all federal, state and municipal
governments, and in accordance with the underwriters or any other body now or
hereafter constituted exercising similar functions; and Lessee shall procure a
certificate of occupancy, and any other certificates, if the same shall be
required by law.
(e) At all times when any alterations, additions and improvements
shall be in progress, there shall be maintained, at Lessee's or Lessee's
contractors' sole cost and expense, (i) worker's compensation insurance in
accordance with the laws of the State of California and covering all persons
employed in connection with the alteration, addition or improvement, and (ii)
general liability insurance for the mutual benefit of Lessee and Lessor,
expressly covering the hazards attributable to the alteration, addition or
improvement.
(f) Lessee shall keep the Premises free from any liens arising out
of work performed, materials furnished or obligations incurred by Lessee and
shall indemnify, save harmless and defend Lessor from and against any lien or
encumbrance arising out of any work performed or materials furnished by or at
the direction of Lessee. In the event that Lessee shall not, within ten (10)
days following the filing of any such lien, cause the same to be released of
record by payment or posting of a proper bond, Lessor shall have, in addition to
all other remedies provided herein any by law, the right, but no obligation, to
cause the same to be released by such means as Lessor shall deem proper,
including payment of the claim giving rise
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to such lien. Lessee shall pay all such sums paid by Lessor, and all reasonable
expenses incurred by Lessor in connection therewith, to Lessor on demand, with
interest at the rate of ten percent (10%) per annum. Lessor shall have the right
at all times to post and keep posted on the Premises any notices permitted or
required by law, or which Lessor shall deem proper, for the protection of Lessor
and the Premises, and any other party having an interest therein, from
mechanics' and materialmen's liens. Lessee shall give Lessor at least ten (10)
business days' prior written notice of the expected date of commencement of any
work relating to alterations, additions and improvements to the Premises.
9. ACTIVITIES INCREASING FIRE INSURANCE RATE
Lessee shall not do or permit any act or thing to be done in or to the
Premises which shall be contrary to law or which shall invalidate or be in
conflict with the fire and extended coverage policies of insurance at any time
carried by or for the benefit of Lessor with respect to the Premises or the
Building or which shall or might subject Lessor to any liability or
responsibility to any person or for property damage, nor shall Lessee keep
anything in the Premises except as now or hereafter permitted by the board of
fire insurance underwriters or other authority having jurisdiction over the
Building, and then only in such manner and such quantity so as not to increase
the rate for fire insurance applicable to the Building, nor use the Premises in
a wrongful manner which shall increase the insurance rate for the Building or
any property located therein over that in effect prior to the commencement of
the Term. Lessee shall pay all costs, expenses, fines, penalties and damages
which may be imposed upon Lessor by reason of Lessee's failure to comply with
the provisions of this paragraph; and if by reason of such failure, fire
insurance premiums shall be higher than such premiums would otherwise be, Lessee
shall reimburse Lessor, as Additional Rent, for that portion of all fire
insurance premiums thereafter paid by Lessor which shall have been charged
because of such failure by Lessee.
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10. ASSIGNMENT AND SUBLETTING
(a) Except as expressly permitted in this paragraph, Lessee shall
not, without the prior written consent of Lessor (which consent shall not be
unreasonably withheld, conditioned or unduly delayed), assign or hypothecate
this Lease or any interest herein or sublet the Premises or permit the use of
the Premises by any party other than Lessee. Any of the foregoing acts without
such consent shall be void and shall, at the option of Lessor, terminate this
Lease. This Lease shall not be assignable as to the interest of Lessee by
operation of law without the written consent of Lessor, which consent shall not
be unreasonably withheld by Lessor. Notwithstanding anything to the contrary
herein, in no event may Lessee sublease less than all of the Premises.
(b) If at any time or from time to time during the term of this
Lease, Lessee desires to sublet all of the Premises, Lessee shall give notice to
Lessor setting forth the terms of the proposed subletting. Lessor shall have the
option, exercisable by notice given to Lessee within ninety (90) days after
Lessee's notice is given, either to sublet from Lessee such space at the rental
and other terms set forth in Lessee's notice or to terminate this Lease. If
Lessor does not exercise such option, Lessee shall be free to sublet such space
to any third party, subject to the following conditions:
1. The sublease shall be on the same term set forth in the
notice given to Lessor;
2. No sublease shall be made without the prior written consent
of Lessor, which consent Lessor agrees will not unreasonably
be
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withheld as to a subletting of the entire Premises.
Notwithstanding the foregoing, consent shall be given within
(30) days.
3. No sublease shall be valid and no sublessee shall take
possession of the Premises subleased until an executed
counterpart of such sublease has been delivered to Lessor;
4. No sublessee shall have a right further to sublet; and
5. Fifty percent (50%) of any sums or other economic
consideration received by Lessee as a result of such
subletting (except rental or) other payments received which
are attributable to the amortization of the cost of
leasehold improvements, other than building standard tenant
improvements, or equal to such as are provided by Lessor to
Lessee as of the commencement date of this lease, made to
the sublet portion of the Premises by Lessee and brokerage
commissions paid by Lessee) whether denominated rentals
under the sublease or otherwise, which exceed, in the
aggregate, the total sums which Lessee is obligated to pay
Lessor under this Lease (prorated to reflect obligations
allocable to that portion of the Premises subject to such
sublease) shall be payable to Lessor without reducing any
other obligation of Lessee hereunder.
(c) Notwithstanding the provisions of subparagraphs (a) and (b)
above, Lessee may assign this Lease or sublet the Premises or any portion
thereof, without Lessor's consent and without extending any option to Lessor, to
any corporation which controls, is controlled by or is
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under common control with Lessee, or to any corporation resulting from the merge
or consolidation with Lessee, or to any person or entity which acquire all the
assets of Lessee as a going concern of the business that is being conducted on
the Premises, provided that said assignee assumes, in full, the obligations of
Lessee under this Lease. And further, that said assignee's net worth is equal to
or greater than Lessee's at the time of such assignment.
(d) Regardless of Lessor's consent, no subletting or assignment
(including but not limited to any subleasing or assignment pursuant to Section
10(c) above) shall release Lessee or Lessee's obligation or alter the primary
liability of Lessee to pay the rental and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rental by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignee of
Lessee or any successor of Lessee in the performance of any of the terms hereof,
Lessor may proceed directly against Lessee without the necessity of exhausting
remedies against such assignee or successor.
(e) In the event Lessee shall assign or sublet the Premises or
request the consent of Lessor to any assignment or subletting or if Lessee shall
request the consent of Lessor for any act that Lessee proposed to do, then
Lessee shall pay Lessor's reasonable attorneys' fees incurred in connection
therewith.
11. COMPLIANCE WITH RULES AND REGULATIONS
Lessee shall observe and comply with the Rules and Regulations
hereinafter set forth in Exhibit C, attached hereto and incorporated herein by
reference thereto, and with such further reasonable Rules and Regulations as
Lessor may prescribe, on written notice to Lessee,
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for the safety, care and cleanliness of the Building and the comfort, quiet and
convenience of the other occupants of the Building. However, nothing in the
Lease shall be construed to impose upon Lessor any duty or obligation to enforce
the Rules and Regulations or the terms, covenants and condition in any other
lease as against any other tenant; and Lessor shall not be liable to Lessee for
violations of the same by any other tenant or the servants, employees, agents,
visitors or licensees of such tenant. Lessor shall, however, to the extent
reasonably possible, enforce the rules in a reasonable and non-discriminating
manner.
Lessee shall not place a load upon any floor of the Premises exceeding
the floor load per square foot area which such floor is designed to carry and
which is allowed by law. Lessor reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installation shall be placed and maintained by Lessee at Lessee's sole cost and
expense, in a setting sufficient, in Lessor's sole judgment, to absorb and
prevent vibration, noise and annoyance.
12. CASUALTY
In the event the Building is damaged by fire or any other casualty to
such an extent that the cost of restoring the same, as reasonably estimated by
Lessor, shall be equal to or exceed twenty-five percent (25%) of the replacement
value of the Building, exclusive of foundations, as calculated immediately prior
to the occurrence of the damage, Lessor shall have the right, which shall be
exercised by written notice to Lessee no later than the sixtieth (60th) day
following such damage, to terminate the Lease. In the event the cost of
restoring the Building shall be equal to or exceed fifty percent (50%) of such
replacement value and if the Premises shall not be reasonably usable for the
purpose for which the Premises are leased hereunder, Lessee shall have the
right, which shall be exercised by written notice to Lessor no later than the
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<PAGE> 14
sixtieth (60th) day following such damage, to terminate the Lease. In the event
Lessor or Lessee elect to terminate the Lease pursuant to this paragraph, the
Lease shall terminate on the thirtieth (30th) day after said notice and Lessee
shall surrender possession of the Premises on such date. Rent shall be
apportioned as of the date of termination or, if earlier, the date on which the
Premises become unusable by Lessee by virtue of such damage; provided, however,
Lessor shall have the right to retain any and all Rent paid for periods after
the termination date to the extent that Lessee shall be liable for damage to the
Building.
If the cost of restoration, as estimated by Lessor, shall be less than
twenty-five percent (25%) of the replacement value of the Building, exclusive of
foundations, or if, despite the replacement costs, Lessor shall not elect to
terminate the Lease, Lessor shall restore the Building with reasonable
promptness, subject to delays (i) beyond Lessor's control and (ii) in making
insurance adjustments between Lessor and Lessor's insurance carrier, it being
understood that Lessor need not expend more than the insurance proceeds it
receives for such restoration. Notwithstanding the foregoing to the contrary, in
the event Lessor elects to restore the Building, Lessee shall have no right to
terminate the Lease. Lessor shall not be required to repair fixtures,
improvements, alterations and additions owned by made by or paid for by Lessee.
In the event the Premises shall be damaged by fire or any other
casualty, Lessee may abate Rent to the extent the Premises are untenantable;
provided, however, Lessee may not abate rent if damage to the Building shall be
attributable, in whole or in part, to the act or omission of Lessee or Lessee's
agents, servants, employees, visitors or licensees.
All insurance proceeds payable under insurance policies carried by
Lessor in connection with the Building shall be the sole property of Lessor, and
Lessee shall have no right, claim or interest in any proceeds payable under such
insurance policies.
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13. WAIVER OF SUBROGATION
Lessee shall obtain for the benefit of Lessor and express waiver of
subrogation from every insurance carrier issuing insurance to Lessee in
connection with Lessee's use and occupancy of the Premises. Lessee shall
indemnify and save lessor harmless from and against any loss, cost or expense
which Lessor shall suffer by reason of Lessee's failure to obtain said waiver of
subrogation.
Lessor shall obtain for the benefit of Lessee and express waiver of
subrogation from every insurance carrier issuing casualty insurance to Lessor.
Lessor shall indemnify and save lessee harmless from and against any loss, cost
or expense which Lessee shall suffer by reason of Lessor's failure to obtain
said waiver of subrogation.
14. LESSOR'S NONLIABILITY
Lessor shall not be liable, and Lessee waives all liability, for any
cause of action arising from interior damage which may be sustained by goods,
wares, merchandise or property of Lessee or Lessee's employees, invitees,
customers or any other person in or about the Premises caused by or resulting
from fire, steam, electricity, gas water or rain which may leak or flow from or
into any part of the Premises, or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning and lighting fixtures of the same, whether said damage or injury
results from conditions arising upon the Premises or upon other portions of the
Building or from other sources, provided that the same shall not be attributable
to the active negligence or willful misconduct of Lessor. Lessor shall not be
liable for any damage or injury arising from any act or omission of any other
tenant of the Building.
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Notwithstanding anything to the contrary herein, in no event shall any
shareholder, partner, officer or director of Lessor have any personal liability
arising from or relating to this Lease nor shall Lessor have any liability
hereunder greater than the value of its interest in the Building. Should Lessor
sell its interest in the Building, it shall have no liability hereunder accruing
after the closing of such sale.
15. INDEMNIFICATION OF LESSOR
(a) Lessee shall indemnify and save Lessor harmless from and against
(i) any and all liabilities, penalties, losses, damages, costs, expenses,
demands, causes of action, claims and judgments arising from or growing out of
any injury to any person, or any damage to any property, as a result of any
accident or other occurrence during the Term occasioned by the negligence or
willful misconduct of Lessee or Lessee's officers, employees, agents, servants,
subtenants, licensees, contractors, invitees and permittees, or arising from or
growing out of the use, maintenance occupancy or operation of the Premises and
(ii) all legal costs and charges, including reasonable attorneys' fees, incurred
in and about any such matters, in the defense of any action arising out of the
same or in discharging the Premises, or any part thereof, from any and all
liens, charge or judgments which may accrue or be place thereon by reason of any
act or omission of Lessee.
(b) Lessor shall indemnify and save Lessee harmless from and against
(i) any and all liabilities, penalties, losses, damages, costs, expenses,
demands, causes of action, claims and judgments arising from or growing out of
any injury to any person, or any damage to any property, as a result of any
accident or other occurrence during the Term occasioned by the negligence or
willful misconduct of Lessor or Lessor's officers, employees, agents, servants,
subtenants and contractors, or as a result of any default by lessor in
observance or performance of any terms, covenants or conditions of the lease on
the lessor's part to be observed or
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performed and (ii) all legal costs and charges, including reasonable attorneys'
fees, incurred in and about any such matters .
16. EMINENT DOMAIN
If the Building shall be taken under the power of eminent domain, or
sold by Lessor under the threat of the exercise of the power of eminent domain,
the Lease shall automatically terminate as of the date the condemning authority
takes title.
If twenty-five percent (25%) or more of the total square footage of
the Building or the Premises shall be taken under the power of eminent domain,
Lessor shall have the right to terminate the Lease upon thirty (30) days' prior
written notice to Lessee.
If fifty percent (50%) or more of the total square footage of the
Premises shall be taken under the power of eminent domain, Lessee shall have the
right to terminate the Lease upon thirty (30) days' prior written notice to
Lessor.
Lessor and Lessee shall be required to exercise their respective
rights to terminate the Lease within thirty (30) days of the taking which shall
give rise to such right.
In the event the Lease is not terminated due to any taking under the
power of eminent domain, the Lease shall remain in full force and effect,
provided the Base Rent shall be reduced in the proportion that the rentable area
taken within the Premises bears to the total rentable area of the Premises. All
awards for the taking of any part of the Premises or payment made under the
threat of the exercise of the power of eminent domain, including but not limited
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to any award for Lessee's leasehold interest, shall be the property of Lessor,
whether made as Compensation for the taking of the fee or severance damages.
Lessee shall have the right to claim and recover from the condemning
authority, but not from the Lessor nor in diminution of any award due Lessor,
such compensation as may be separately awarded or recoverable by Lessee in
Lessee's own right on account of the taking of any or all of Lessee's leasehold
improvements, furniture, fixtures and equipment; and for or on account of any
cost or loss to which the Lessee be put in removing Lessee's merchandise,
furniture, fixtures and equipment, and in locating suitable substitute premises,
or in the event of a partial taking, in modifying the remaining portion of the
Premises for its usage.
17. EVENTS OF DEFAULT
The occurrence of the following events shall constitute a default on
the part of Lessee with or without notice from Lessor:
(a) The filing of a voluntary petition in bankruptcy by Lessee, a
voluntary petition for an arrangement, a voluntary or involuntary petition for
reorganization or the filing of an involuntary petition by Lessee's creditors,
and in which case when such involuntary petition remains undischarged for a
period of thirty (30) days;
(b) The attachment, execution thereon or other judicial seizure of
all or substantially all of Lessee's assets or this leasehold and the same
remaining undismissed or undischarged for a period of thirty (30) days after the
levy thereof;
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(c) The abandonment, vacation or desertion of the Premises for more
than ten (10) days;
(d) The failure to pay Rent within five (5) business days after
notice from Lessor to Lessee that such payment shall be due; and
(e) The failure to observe or perform any of the covenants,
conditions or provisions of the Lease, other that the covenant to pay Rent,
where such failure shall continue for a period of then (10) days after notice
thereof from Lessor to Lessee; provided, however, if such default cannot be
cured solely by payment of money and more than ten (10) days are reasonably
required for a cure, Lessee shall not be in default if Lessee shall commence
such cure within said ten (10) day period and thereafter diligently prosecute
such cure to completion.
18. LESSOR'S REMEDIES
In the event of any default by Lessee, Lessor may at any time
thereafter, with or without limiting Lessor in the exercise of any right or
remedy at law or in equity which Lessor may have by reason of such default:
(a) Maintain the Lease in full force and effect and recover the Rent
and other monetary charges as such amounts become due, without terminating
Lessee's right to possession, irrespective of whether Lessee shall have
abandoned the Premises. In the event Lessor elects not to terminate the Lease,
Lessor shall have the right to attempt to relet the Premises at such Rent, upon
such conditions and for such a term, and to do all acts necessary to maintain or
preserve the Premises, as Lessor deems reasonable and necessary without being
deemed elected to terminate the Lease, including removal of all persons and
property from the Premises. In the event any
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such reletting occurs, the Lease shall terminate automatically upon the new
tenant taking possession of the Premises. In the event of such termination,
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's as default specified in the following paragraph.
(b) Terminate Lessee's right to possession by any lawful means, in
which case the Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event, Lessor shall be entitled to
recover from Lessee all damages incurred by Lessor by reason of Lessee's default
including, without limitation, the following: (i) the worth at the time of the
award of any unpaid Rent which had been earned at the time of such termination;
plus (ii) the worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided; plus (iii) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Lessee proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform Lessee's obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom. Upon any reentry, Lessor shall have the right to make any reasonable
repairs, alterations or modifications to the Premises which Lessor deems
reasonable and necessary. As used in this paragraph, the "worth at the time of
award" shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
In addition to the foregoing remedies, Lessor shall have, so long as
the Lease is not terminated, the right to remedy any default of Lessee and to
cause a receiver to be appointed to administer the Premises and new or existing
subleases.
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Each right and remedy of Lessor provided for in the Lease shall be
cumulative and shall be in addition to every right or remedy provided for in the
Lease or now or hereafter existing at law or in equity or by statute or
otherwise. The exercise of any one or more of the rights and remedies provided
for in the Lease, or now or hereafter existing at law or in equity or by statute
or otherwise, shall not preclude the simultaneous or later exercise by Lessor of
any or all other rights or remedies provided for in the Lease or now or
hereafter existing at law or in equity by statute or otherwise.
The failure of Lessor to insist upon the strict performance of any
term in the Lease or to exercise any right or remedy contingent upon a default
thereof, and the acceptance of full or partial payment of Rent during the
continuance of any such default, shall not constitute a waiver of such default
or of any such terms. Efforts by Lessor to mitigate the damages caused by
Lessee's breach of the Lease shall not be construed to be a waiver of Lessor's
right to recover damages under the Lease.
18A. LESSOR'S DEFAULT
Lessor's failure to perform or observe any of its Lease obligations
after a period of thirty (30) business days or the additional time, if any, that
is reasonably necessary to promptly and diligently cure the failure after
receiving notice from Lessee shall be a Lessor Default. The notice shall be
given in reasonable detail, the nature and extent of the failure and identigy
the Lease provision(s) containing the obligation(s). After Lessee receives
notice of a mortgagee or other lien holder's name and address, Lessee shall, if
so directed by Lessor or such mortgagee or other lien holder, provide notice as
otherwise provided in this Section to such party of any Lessor Default. Lessee
shall have the remedies provided at law for such Lessor Default, subject to the
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limitations and requirements of this Lease, provided that in no event will
Lessee have the right to self help at Lessor's expense nor will it have the
right to withhold or offset any rent, additional rent or any other payment due
under this Lease.
19. WAIVER OF COVENANTS OR CONDITIONS
No waiver of any default of breach of any covenant of either party
hereunder shall be implied from any omission by either party to take action on
account of such default if such default persists or is repeated and an express
waiver shall be operative only for the time and to the extent therein stated.
Waivers of any covenant, term or condition contained herein by either party
shall not be construed as a waiver of any subsequent breach of the same
covenant, term or condition. The consent or approval by either party to or for
any act by either party requiring further consent or approval shall not be
deemed to waive or render unnecessary consent or approval of such party to or
for any subsequent similar acts.
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20. SUBORDINATION OF LEASE
The Lease shall be subject and subordinate to (i) any underlying
leases and to any first mortgage or trust deed which may now or hereafter affect
such leases or the Office Building area and (ii) any renewals, modifications,
consolidations and replacements of said underlying leases and said first
mortgage or trust deed. No instrument or act on the part of Lessee shall be
necessary to effectuate such subordination; provided, however, Lessee shall
execute and deliver such further instruments confirming such subordination of
the Lease as may be desired by any mortgagee or beneficiary under a trust deed
and by any lessor under an underlying lease. Lessee hereby appoints as Lessee's
attorney-in-fact to execute and deliver any such instrument for Lessee. If any
underlying lease to which the Lease shall be subject terminates, Lessee shall,
on timely request, attorn to the owner of the reversion. As long as Lessee is
not in default in the payment of rental or any other covenants or conditions of
this Lease, Lease shall not be terminated and the possession of Lessee shall not
be disturbed by the holder such mortgage or by any proceedings on the debt which
any such mortgage secures, or by any person, firm or corporation whose rights
were acquired as a result of such proceedings or by virtue of a right or power
contained in any such mortgage.
21. RIGHT TO CURE LESSEE'S BREACH
If Lessee breaches any term, covenant or condition of the Lease,
Lessor may, with or without notice to Lessee cure such breach at the expense of
Lessee; and the reasonable expenses, including attorneys' fees, incurred by
Lessor in so doing shall be deemed Additional Rent payable to Lessor on demand.
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22. NOTICES
Any notice by either party to the other shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by United
States mail, duly registered or certified, with postage fully prepaid thereon as
follows:
To Lessor: CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: Real Estate Department
With a copy to: KPIX
855 Battery Street
San Francisco, California 94111
Attention: Controller
To Lessee: CBS Marketwatch.com, LLC
825 Battery Street
San Francisco, CA 94111
Attention: Chief Financial Officer
With a copy to: CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: Real Estate Department
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and to: Data Broadcasting Corp.
1900 South Norfolk Street
San Mateo, California 94443
Attention: Vice President
Notice shall be effective forty-eight (48) hours after mailing.
23. RIGHT TO INSPECT AND REPAIR
Lessor shall have the right to enter the Premises at any reasonable
time, emergencies excepted, for the purpose of inspecting or making repairs,
replacements or additions in, to, on or about the Building, as Lessor deems
necessary or desirable. Lessor may, during the progress of any work in the
Premises related to such repairs, replacements or additions, take all necessary
materials and equipment into the Premises without the same constituting an
eviction, nor shall Lessee be entitled to any abatement of Rent, except for
substantial interference with Lessee's business, while such work is in progress
or to any damages by reason of loss or interruption of business or otherwise.
Lessor shall have the right to enter the Premises at reasonable hours for the
purpose of showing the same to same to prospective purchasers or mortgagees of
the Building and, during the last six (6) months of the Term, for the purpose of
showing the same to prospective tenants. Lessee shall have no claim or cause of
action against Lessor by reason of Lessor's entry hereunder.
24. INTERRUPTION OF SERVICES OR USE
Interruption or curtailment of any service maintained in the Building
caused by strikes, mechanical difficulties, government preemption in connection
with a national
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emergency, conditions of supply and demand effected by any government emergency
or any causes beyond Lessor's control, whether similar or dissimilar to those
enumerated, shall not entitle Lessee to any claim against Lessor or to any
abatement in Rent and shall not constitute constructive or partial eviction.
25. NO OTHER REPRESENTATIONS
No representations or promises shall be binding on the parties hereto
except those representations and promises contained herein or in some future
writing signed by the party to be charged.
26. QUIET ENJOYMENT
Lessor covenants that so long as Lessee shall pay Rent and perform the
other terms, covenants and conditions of the Lease, Lessor shall have the
peaceful and quiet enjoyment of the Premises; provided, however, that nothing
herein shall be construed as requiring Lessor to enjoin, or attempt to enjoin,
any act or neglect of any other tenant of the Building unless such tenant is
claiming a right to possession of the leased Premises.
27. ESTOPPEL CERTIFICATE
Lessee shall, without charge, at any time and from time to time,
within ten (10) days after receipt of request therefore by Lessor, execute,
acknowledge and deliver to Lessor a written estoppel certificate certifying to
lessor any mortgages, assignee of a mortgagee or any purchaser of the Building,
or any other person designated by Lessor, as of the date of such estoppel
certificate, the following:
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(a) Whether or not Lessee is in possession of the Premises;
(b) Whether or not the Lease is unmodified and in full force and
effect (or if there has been a modification, that the Lease is in full force and
effect as modified and setting forth such modification);
(c) Whether or not there are then existing any setoffs or defenses
against the enforcement of any right hereunder (and, if so, specifying the same
in detail);
(d) The dates, if any, to which Rent has been paid in advance;
(e) That the Lessee has no knowledge of any then uncured defaults on
the part of Lessor under the Lease (or if Lessee had knowledge of any such
uncured defaults, specifying the same in detail);
(f) That Lessee has no knowledge of any event having occurred that
authorizes the termination of the Lease by Lessee (or if Lessee has such
knowledge, specifying the same in detail); and
(g) The address to which notices to Lessee should be sent.
Lessee's failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that the Lease is in full force and effect without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults on the part of Lessor and (iii) that not more than one (1)
month's Rent has been paid in advance.
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28. HOLDOVER TENANCY
If Lessee holds possession of the Premises after the Term, Lessee
shall become a tenant at sufferance under the provisions hereof, but at a
Monthly Base Rent of two hundred percent (200%) of the Monthly Base Rent for the
last month of the Term, payable in advance on the first day of each month.
Nothing herein shall relieve Lessee of any liability for any damages incurred by
Lessor as a result of Lessee's holding over without Lessor's consent.
29. SERVICES TO BE PROVIDED BY LESSOR
(a) Provided Lessee shall not be in default under the Lease, Lessor
shall furnish the janitorial services set forth in Exhibit D, attached hereto
and incorporated herein by reference thereto, subject to the conditions set
forth therein. Except as set forth in Exhibit D, Lessee shall pay the cost of
all services required by Lessee. Lessor shall not be liable for the failure to
furnish any of such services when such failure shall be caused by conditions
beyond the control of Lessor, including, but not limited to, acts of God,
accidents, repairs and strikes; and such failure shall not constitute an
eviction, either constructive or partial. Lessor shall not be liable, under any
circumstance, for loss of, or injury to, property however occurring, through, in
connection with or incidental to the furnishing of or failure of the services
defined in Exhibit D or for any interruption to Lessee's business.
(b) In addition to the janitorial services set forth in Exhibit D,
upon execution hereof the parties shall enter into an ancillary agreement for
the provision by Landlord to Tenant of emergency generator and other ancillary
services, all on the terms and conditions set forth in Exhibit E.
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30. ELECTRICITY
(a) Lessor shall furnish Standard Electrical Service to the Premises.
Lessor shall not be liable in any way to Lessee for any failure or defect in the
supply or character of electric energy furnished to the Premises by reason of
any requirement, act or omission of the public utility serving the Building.
Lessor shall furnish and install all lighting tubes, lamps bulbs and ballasts
required in the Premises. Lessor shall not be liable to Lessee for interruption
in or curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for abatement of rent in
full or in part.
(b) Standard Electrical Service shall, unless otherwise provided by
agreement in writing between the parties, include electric current for use of
usual office machines and equipment from 8:00 a.m. to 6:00 p.m., Monday through
Friday, excluding holidays. Heating, ventilating and air conditioning will be
provided to the space for additional periods of time upon receipt of a request
therefore received at least two (2) hours prior to the time said service is
requested. Tenant shall pay the actual cost of such additional heating,
ventilating and air conditioning currently estimated to be approximately
thirty-five dollars ($35) per hour. All installations of electrical fixtures,
appliances and equipment within the Premises shall be subject to Lessor's prior
written approval, which Lessor shall not be unreasonably withhold.
31. ADDITIONAL RENT
Lessee shall pay, in addition to Base Rent, Additional Rent to cover
Lessee's proportionate share of the increased cost to Lessor for: (i) Operating
Expenses of the Building and the Office Building Area over the Base Operating
Expenses for such areas, (ii) Utility and
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Energy Costs of the Building and the Office Building area over the Base Utility
and Energy Cost for such areas, and (iii) Real Estate Taxes of the Building and
the Office Building Area over the Base Real Estate Taxes for such areas.
(a) Operating Expenses Escalation
If the Operating Expenses for any Lease Year (including the initial
year), or proportionate part thereof, during the Term shall be greater than the
Base Operating Expense adjusted proportionately for periods less than a Lease
Year, Lessee shall pay to Lessor, as Additional Rent, Lessee's proportionate
share of all such excess over Base Operating Expenses. Operating Expenses shall
include, by way of illustration and not by way of limitation, personal property
taxes in connection with equipment and machinery used in the repair and
maintenance of the Building and the Office Building Area, management fees,
labor, including all wages and salaries, Social Security taxes, and other taxes
which may be levied against Lessor upon such wages and salaries, supplies,
repairs and maintenance, electricity for the common areas of the Building,
maintenance and service contacts, painting, wall and window washing, laundry and
towel service, tools and equipment (which are not required to be capitalized for
federal income tax purposes), fire and other insurance, trash removal, lawn
care, snow removal and all other items properly constituting direct operating
expenses according to generally accepted accounting principles, consistently
applied, but not including depreciation of the Building or equipment, interest,
income or excess profit taxes, cost of maintaining Lessor's corporate existence,
franchise taxes, any expenditures required to be capitalized for federal income
tax purposes or Office expenses, manager fees or salaries of Lessor's executive
officers. Base Operating Expenses shall be the Operating Expenses incurred by
Lessor for the period of January 1, 1998 through December 31, 1999 (hereinafter
referred to as the "Base Year").
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(b) Fuel, Utilities and Electric Cost Escalation
In the event the fuel, utility and electric expenses, including any
fuel surcharges or adjustments with respect thereto (collectively called
"Utility and Energy Costs"), incurred by Lessor for the Premises for any Lease
Year, or proportionate part thereof, during the Term shall be greater that the
Base Utility and Energy Costs incurred during the Base Year, adjusted
proportionately for periods less than a Lease Year, Lessee shall pay to Lessor,
as Addition Rent, Lessee's proportionate share of all such excess Utility and
Energy Costs.
(c) Real Estate Tax Escalation
If the Real Estate Taxes for the Building and the Office Building Area
for any Lease Year, or proportionate part thereof, during the Term shall be
greater than the Real Estate Taxes payable by Lessor during the Base Year,
adjusted proportionately for periods less than a Lease Year, Lessee shall pay to
Lessor as additional Rent Lessee's proportionate share of all such excess Real
Estate Taxes. "Real Estate Taxes" shall mean all property taxes and assessments
levied against or imposed upon the Building and the Office Building area. If due
to a future change in the method of taxation, any franchise, income or profit
tax shall be levied against Lessor in substitution for, in lieu of, or in
addition to any tax which would constitute a Real Estate Tax, such franchise,
income or profit tax shall be deemed to be a Real Estate Tax for the purposes
hereof.
(d) Lease Year
Lease Year shall mean the twelve (12) month period commencing on
January 1 and each twelve (12) month period thereafter. In the event any Lease
period is less
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than twelve (12) months, the Base Cost shall be adjusted to equal the proportion
that said period bears to the Lease Year and Lessee shall pay to Lessor, as
Additional Rent for such period, an amount equal to Lessee's proportionate share
of the excess Operating Expenses for said period over the adjusted Base Costs.
(e) Proportionate Share
Lessee's proportionate share of operating Expenses shall be Seven and
one tenth percent (07.1%), which share shall be adjusted from time to time by
Lessor to reflect the ratio of the square feet of the area rented to the Lessee
as compared to the total number of square feet of rentable area of the Building
measured from outside wall to outside wall. Lessor shall have the right to make
changes or revisions in the common areas of the Building so as to provide
addition leasing area.
(f) Payment
For each Lease Year of the Term, Lessee shall pay to Lessor in the
manner provided for herein, as Additional Rent, payable at the time of payment
of Monthly Base Rent, Lessee's share of Operating Expenses.
Prior to determination of the actual amount of Lessee's share of
Operating Expenses for any Lease Year, Lessee shall make monthly installment
payments toward such share on an estimated basis, based on Lessor's estimate of
Lessee's share for the Lease year. Lessee shall pay Lessor on the first day of
each month of each Lease Year one-twelfth (1/12th) of Lessor's estimate.
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After the end of each Lease Year during the Term, Lessor shall
determine the amount, if any, by which the Operating Expenses during the Lease
Year exceeded the Base Costs. Lessor shall provide to Lessee a statement of this
determination, including Lessee's share of Operating Expenses for the Lease
Year. Within thirty (30) days after the delivery of his statement for each Lease
Year, Lessee shall pay to Lessor any deficiency between the amount shown as
Lessee's share of Operating Expenses for the Lease Year and the estimated
payments made by Lessee toward such amount. In the event of excess estimated
payments, Lessee shall be credited with the excess toward subsequent estimated
payments.
Each expense statement provided by Lessor shall be conclusive and
binding upon Lessee unless within ninety (90) days after receipt of the expense
statement Lessee shall notify Lessor that Lessee disputes the correctness of the
expense statement, specifying the respect in which the expense statement is
claimed to be incorrect. Unless otherwise mutually agreed, any such dispute
shall be determined by arbitration in San Francisco, California, in accordance
with the rules then prevailing of the American Arbitration Association. Pending
determination of the dispute, Lessee shall pay any amount due from Lessee in
accordance with the expense statement, but such payment shall be without
prejudice to Lessee's position.
(g) Books and Records
Lessor shall maintain books of account which shall be opened to Lessee
and Lessee's authorized representatives, upon appointment with Lessor for a
reasonable time, so Lessee may determine that Operating Expenses have, in fact,
been paid or incurred.
(h) The obligating of Lessee hereunder to pay Additional Rent for the
final Lease Year of the Term shall survive the expiration of the Term.
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<PAGE> 34
32. LESSEE'S INSURANCE REQUIREMENTS
Lessee shall, at all times during the Term and at Lessee's sole cost
and expense, procure and continue in force comprehensive liability insurance,
including, but without limitation, workmen's compensation insurance, bodily
injury liability insurance and property damage liability insurance in the
following amounts:
(a) One Million Dollars ($1,000,000.00) per occurrence;
(b) One Million Dollars ($1,000,000.00) per person; and
(c) Five Hundred Thousand Dollars ($500,000.00) property damage
naming Lessor as an additional insured in the liability contract against
liability, injury or death of any person in connection with the Building and the
Office Building Area and damage or destruction to any property thereon.
The foregoing insurance shall not limit the liability of Lessee. All
insurance required under the Lease shall be with companies of generally
recognized responsibilities and credit licensed to do business in California and
reasonably satisfactory to Lessor. Such insurance shall be written in forms
satisfactory to Lessor.
Prior to the time such insurance shall be first required to be carried
by lessee, and thereafter at least fifteen (15) days prior to the expiration of
such policies, lessee shall deliver to lessor either a duplicate original of the
aforesaid policy or a certificate evidencing such insurance, provided such
certificate contains an endorsement that such insurance may not be
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canceled except upon (30) days' written notice to Lessor, together with evidence
of payment for the policy.
Upon failure at any time on the part of Lessee to procure and deliver
to lessor the policy or certificate of Insurance, as hereinabove provided, at
least fifteen (15) days prior to the expiration of the prior insurance policy or
certificate, or to pay the premium therefore, Lessor shall have the right, as
often as such failure shall occur, to procure such insurance and to pay the
premium therefore; and Lessee shall pay to Lessor, upon demand, as Additional
Rent, any sums paid for such insurance by Lessor. Payment by Lessor of such
premiums or the carrying by lessor of any such policy shall not be deemed to
waive or release the default of Lessee with respect thereto. Lessee's failure to
provide and keep in force the aforementioned insurance shall be regarded as a
default under the Lease and shall entitle Lessor to exercise any or all of the
remedies as provided in the Lease in the event of default.
33. PERSONAL PROPERTY TAXES
Lessee agrees to pay all taxes imposed on the personal property and
fixtures of Lessee and hold Lessor harmless therefrom.
34. WAIVER OF TRIAL BY JURY
The parties waive trial by jury in any action or proceeding brought in
connection the Lease or the Premises.
35. LATE CHARGE
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<PAGE> 36
Lessee hereby acknowledges that late payments by Lessee to Lessor of
Rent and other sums due under the Lease shall cause Lessor to incur expenses not
contemplated by the Lease, the exact amount of which shall be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges and late charges which may be imposed on Lessor by the
terms of any mortgage or any trust deed in connection with the Office Building
Area. Accordingly, if any installment of Rent or any other sum due under the
lease from lessee shall not be received by Lessor or Lessor's designee within
five (5) business days after such amount shall be due, such amount shall accrue
interest at the rate of ten percent (10%) per annum, which Lessee shall pay to
Lessor, as Additional Rent, upon demand.
36. BROADCASTING INTERFERENCE
Notwithstanding anything to the contrary in the Lease, Lessee warrants
that Lessee shall not do or permit any thing to be done in, on, or to the
Premises which shall interfere in any manner whatsoever with any radio or
television broadcasting, however occurring or accomplished, which Lessor
initiates, receives or relays from, in or to the Building.
If, after verbal Notice from the Building Manager, or his/her
designated representative, the interference does not cease immediately, this
will be deemed a violation of this Warranty.
In the event of a violation of the warranty in this Section 36, Lessor
shall have the right, to be exercised concurrently with, or in addition to all
other rights and remedies under the Lease and as provided by law, to immediately
terminate the Lease. If Lessor terminates the Lease due to a breach of this
warranty, Lessee shall immediately cease Lessee's use of the Premises and
surrender the same to Lessor.
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<PAGE> 37
37. PARAGRAPH HEADINGS
The paragraph headings in the Lease and the position of the provisions
herein are intended for convenience only and shall not be taken into
consideration in any construction or interpretation of the Lease or any of the
provisions of the Lease.
38. APPLICABILITY TO HEIRS AND ASSIGNS
Subject to the provisions of paragraph (10) and the rider thereto, the
provisions of the Lease shall apply to, bind and inure to the benefit of the
Lessor and Lessee, and the respective heirs, successors, legal representatives
and assigns of Lessor and Lessee. "Assigns," as applicable to Lessee, shall
include only assignments by operation of law and shall not include voluntary
assignments which are expressly prohibited by the lease. The term "Lessor" shall
mean only the owner, a mortgagee in possession, or a term lessee of the
Building. In the event of any sale of the Building or any lease thereof, or if a
mortgagee shall take possession of the Premises, the Lessor named herein shall
be and hereby is entirely freed and relieved of all covenants and obligations of
Lessor hereunder accruing thereafter, and it shall be deemed without further
agreement that the purchaser, the term lessee of the Building, or the mortgagee
in possession shall have assumed and agreed to carry out any and all covenants
and obligations of Lessor hereunder. Lessee agrees to attorn to any purchaser,
mortgagee or beneficiary at any such sale.
39. [Intentionally Deleted]
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40. ATTORNEYS' FEES
In any action or proceeding which Lessor or Lessee may be required to
prosecute to enforce their respective rights under the Lease, the unsuccessful
party therein shall pay all costs incurred by the prevailing party therein,
including reasonable attorneys' fees, and said costs and attorneys' fees shall
be made a part of the judgment in said action.
41. APPLICABLE LAW
The Lease and the rights and obligations of the parties hereto shall
be construed and enforced in accordance with the laws of the State of
California.
42. HAZARDOUS MATERIALS
Lessor has caused the building of which the Premises are a part to be
examined by consultants for asbestos and other toxic or hazardous materials. The
reports by said consultants indicate no asbestos or toxic or hazardous materials
were found in the Premises. Copies of reports will be made available to tenant
upon written request. Notwithstanding the foregoing, Lessor is not responsible
for any inaccuracies in such reports, it being understood that Lessor makes no
representation or warranty as to their completeness or accuracy. Tenant is
advised to conduct or have conducted such tests or surveys as tenant deems
appropriate to satisfy tenant as to the safety of the Premises from asbestos or
toxic or hazardous materials. Tenant shall obtain Lessors consent to specific
tests or studies to be conducted by tenant or tenants agents and Lessor shall
not unreasonably withhold such
43. SURRENDER OF PREMISES
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The voluntary or other surrender of the Lease by Lessee, or a mutual
cancellation thereof, shall not work a merger and shall, at the option of
Lessor, terminate all or any existing subleases or subtenancies or may, at the
option of Lessor, operate as an assignment to Lessor of any or all such
subleases or subtenancies.
44. BROKERAGE
Lessor and Lessee each represent that they have not dealt with any
broker in connection with this Lease and Lessor and Lessee each agree to
indemnify the other against any claims for commissions (and all damages and
costs relating thereto, including but not limited to attorney's fees) arising
from the actual or alleged acts of the indemnifying party. This representation
shall survive the expiration or termination of this Lease.
45. ENTIRE AGREEMENT
This instrument, along with any exhibits and attachments hereto, shall
constitute the entire agreement between Lessor and Lessee relative to the
Premises. This agreement and the exhibits and attachments may be altered,
amended or revoked only by an instrument in writing signed by both Lessor and
Lessee. Lessor and Lessee agree hereby agree that all prior or contemporaneous
oral agreements between and among themselves and their agents and
representatives relative to the leasing of the Premises are merged in or revoked
by this agreement.
The following exhibits are attached to the Lease and incorporated
herein by reference thereto:
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<PAGE> 40
(a) Exhibit A - Description of Premises
(b) Exhibit B - Description of Office Building Area
(c) Exhibit C - Rules and Regulations
(d) Exhibit D - Lessor's Janitorial Services
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<PAGE> 41
IN WITNESS WHEREOF, the Parties hereto have executed the Lease on the day
and year first above written. Each counterpart of this Lease duly signed by the
parties shall be deemed an original for all purposes.
"Lessor"
CBS CORPORATION
By: /s/ Elliot S. Metz
-----------------------------------------
Its: Managing Director, Corporate R.E.
----------------------------------------
By:
-----------------------------------------
Its:
----------------------------------------
"Lessee"
MARKETWATCH, LLC
By: /s/ J. Peter Bardwick
-----------------------------------------
Its: C.F.O.
----------------------------------------
By:
-----------------------------------------
Its:
----------------------------------------
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EXHIBIT B
DESCRIPTION OF OFFICE BUILDING AREA
All of the real property situated in the City, and County of San Francisco,
State of California, described as follows:
Beginning at the point of intersection of the northerly line of Broadway
and the westerly line of Battery Street; running thence westerly along the
northerly line of Broadway 137 feet and 6 inches; thence at a right angle
northerly 275 feet to the southerly line of Vallejo Street; thence at a right
angle easterly along the southerly line of Vallejo Street 137 feet and 6 inches
to the westerly line of Battery Street; thence to a right angle southerly along
said line of Batter Street 275 feet to the point of beginning.
Being a portion of 50 Vara Block No. 31.
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EXHIBIT C
RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways and other similar
areas shall not be obstructed by Lessee or used by Lessee for any purpose other
than ingress and egress to and from the Premises and for going from one part of
the Building to another part of the Building.
2. Plumbing fixtures and appliances shall be used only for the purpose
designated, and no sweeping, rubbish, rags or other unsuitable material shall be
thrown or place therein. Damage resulting to any such fixtures or appliances
from misuse by Lessee shall be paid by Lessee and Lessor shall not in any case
be responsible therefor.
3. Signs, advertisements, graphics or notices visible in or from public
corridors shall be subject to Lessor's approval. No nails, hooks or screws shall
be driven or inserted in any part of the Building except with the express
consent of Lessor.
4. Lessee shall refer contractors, contractors' representatives and
installation technicians rendering any service to Lessee to Lessor for Lessor's
supervision, approval and control before the performance of any contractual
services. This provision shall apply to all work performed in the Building,
including, but not limited to, installations of telephones, telegraph equipment,
electrical devices and attachments, and any and all installation of any nature
affecting floors, walls, woodwork, trim, windows, ceilings, equipment and any
other physical portion of the Building.
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5. Movement in or out of the building of furniture or office equipment or
dispatch or receipt by Lessee of any bulky material, merchandise or materials
which require use of elevators or stairways or movement through the Building
entrances or lobby shall be restricted to such hours as Lessor shall designate.
All such movement shall be under the supervision of Lessor and in the manner
agreed between Lessee and Lessor by prearrangement before performance. All
movement of the above listed items which shall require the use of an elevator
shall be restricted to the Building's freight elevator. Such prearrangement
initiated by Lessee shall include determination by lessor, and subject to
lessor's decision and control, as to the time, method and routing of movement
and as to limitations for safety or other concerns which may prohibit any
article, equipment or any other item from being brought into the Building.
Lessee shall assume all risks as to the damage to articles moved an injury to
persons or public engaged or not engaged in such movement, including equipment,
property and personnel of Lessor if damaged or injured as a result or act in
connection with carrying out this service for Lessee from time of entering the
Building to completion of work; Lessor shall not be liable for acts of any
persons engaged in, or any damage or loss to any of said property or persons
resulting from, any act in connection with such service performed for Lessee.
6. All damage done to the Building by bring in or taking out any property
of Lessee, or done by Lessee's property while in the Building, shall be repaired
at the expense of Lessee. Lessee shall notify Lessor when heavy equipment (such
as office safes) are to be taken in or out of the Building, and the moving shall
be done under the supervision of Lessor, after written permit from Lessor,
Persons employed to move such property must be acceptable to Lessor.
7. Corridor doors, when not in use, shall be kept closed.
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8. Lessee shall cooperate with Lessor's employees in keeping the Premises
area neat and clean. Lessee shall not employ any person for the purpose of such
cleaning other than the Building's cleaning and maintenance personnel except
with prior written approval of Lessor; and such approval shall not be
unreasonably withheld.
9. To insure orderly operation of the Building, no ice, mineral or other
eater, towels, newspapers, etc., shall be delivered to the Premises except by
persons appointed or approved by Lessor in writing.
10. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No birds or animals shall be brought into or kept in, on or
about the Premises.
11. No machinery of any kind shall be operated by Lessee on, in or about
the Premises without the prior written consent of Lessor.
12. Lessee shall comply with all requirements necessary for the security
of the Premises, including the use of service passes issued by lessor for
after-hours removal of Office equipment/packages, and signing in and/or out in
the security register located in the Building lobby after hours.
13. Lessor reserves the right to rescind any of these rules and
regulations and to make such other and further rules and regulations as in
Lessor's judgment shall, from time to time, be necessary for the safety,
protection care and cleanliness of the Building, the operation thereof, the
preservation of good order therein and the protection and comfort of the
Building's tenants and their agents, employees and invitees, which rules and
regulations, when made and written notice
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thereof given to lessee, shall be binding upon Lessee in like manner as if
originally herein prescribed.
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<PAGE> 47
EXHIBIT D
SCHEDULE OF LESSOR'S STANDARD
JANITORIAL AND CLEANING SERVICES
Lessor shall provide reasonable janitorial, cleaning and sanitation
services, Monday through Friday, after normal business hours.
Lessor shall not provide services on Saturdays, Sundays and days recognized
as holidays.
Lessor reserves the right to alter the level of such services from time to
time as determined by Lessor to be appropriate for the maintenance of the
Building; provided, however, such services shall be comparable to janitorial and
cleaning services provided in similar office buildings.
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<PAGE> 1
EXHIBIT 10.07
AMENDED AND RESTATED LICENSE AGREEMENT
This AGREEMENT made on October __, 1998, and effective as of the 29th
day of October, 1997, by and between CBS Broadcasting, Inc. (formerly known as
CBS Inc.), 51 West 52nd Street, New York, New York 10019 (herein called "CBS"),
and Marketwatch.Com, LLC, 825 Battery St., San Francisco, CA 94111 (herein
called "MarketWatch") hereby amends and restates the License Agreement entered
into between the parties as of October 29, 1997 (that was attached to and formed
a part of the CONTRIBUTION AGREEMENT, dated as of October 29, 1997, between CBS,
INC., DATA BROADCASTING CORPORATION ("DBC") and MARKETWATCH.COM,LLC).
1. DEFINITIONS
1.1 "CBS Content Pages" means pages of the MarketWatch Site that include
any CBS News Content.
1.2 "CBS License Guidelines and Restrictions" or "CBS License
Guidelines" means the clearance, form, format and use restrictions and
procedures set forth in Exhibit 2 attached hereto which MarketWatch shall adhere
to in its use of CBS News Content, CBS Marks, MarketWatch Site Content on the
MarketWatch Site.
1.3 "CBS Marks" means the following CBS registered trademarks, as shown
in Exhibit 1 attached hereto: CBS(R) and the CBS "Eye" design.
1.4 "CBS News Content" means any current news Television Content
(excluding, for avoidance of doubt, any archival Content or television/radio
program outtakes and the content to be supplied by MarketWatch to CBS in
connection with the Broadcast Personnel Agreement to be entered into between the
parties herewith) related to business and financial issues and contained in CBS
News' regularly scheduled hard news broadcasts, scheduled special events
coverage and unscheduled live breaking news coverage which CBS has the right to
license for use on the Internet. (Nothing herein shall be construed to grant
MarketWatch any rights to CBS Radio Content or any Content of CBS Cable [i.e.,
Content contained in coverage or broadcasts of the CBS Radio division of CBS
and/or CBS Cable]).
1.5 "Content" means text, graphics, photographs, video, audio and/or
other data or information, including, without limitation, Television Content,
relating to any subject.
1.6 "Core Business" means an Internet service or Web site that (i)
provides information or services of a financial nature, including without
limitation the delivery of financial news or real-time or delayed stock market
quotations to consumers, or (ii) uses the CBS Marks.
1.7 "Date and Time Network Guidelines" means the guidelines issued by
CBS which restrict any advertisement from disclosing the date and time of the
program or event advertised.
<PAGE> 2
1.8 "Intellectual Property Rights" means all inventions, discoveries,
trademarks, patents, trade names, copyrights, moral rights, jingles, know-how,
intellectual property, software, shop rights, licenses, developments, research
data, designs, technology, trade secrets, test procedures, processes, route
lists, computer programs, computer discs, computer tapes, literature, reports
and other confidential information, intellectual and similar intangible property
rights, whether or not patentable or copyrightable (or otherwise subject to
legally enforceable restrictions or protections against unauthorized third party
usage), and any and all applications for, registrations of and extensions,
divisions, renewals and reissuance of, any of the foregoing, and rights therein,
including without limitation (a) rights under any royalty or licensing
agreements, and (b) programming and programming rights, whether on film, tape or
any other medium.
1.9 "Internet" means global network of interconnected computer networks,
each using the Transmission Control Protocol/Internet Protocol and/or such other
standard network interconnection protocols as may be adopted from time to time,
which is used to transmit Content that is directly or indirectly delivered to a
computer or other digital electronic device for display to an end-user, whether
such Content is delivered through on-line browsers, off-line browsers, or
through "push" technology, electronic mail, broadband distribution, satellite,
wireless or otherwise, and any subset of such global network, such as
"intranets."
1.10 "Internet Site" means any site or service delivering Content on or
through the Internet, including, without limitation, any on-line service such as
America Online, Compuserve, Prodigy and the Microsoft Network.
1.11 "MarketWatch Content" means any Content owned or controlled by
MarketWatch other than CBS Property (as defined in subparagraph 7.1(a)).
1.12 "MarketWatch Site" means the Internet Web sites owned or controlled
by MarketWatch as of the effective date of this Agreement that provide stock
quotes, personal finance information and business, stock stories and that are
accessed via (i) the top-level domains Marketwatch.com and Stockchat.com, (ii)
the URLs http://cbs.marketwatch.newsalert.com,
http://www.marketwatch.newsalert.com and http://www.marketwatchrt.newsalert.com
(or any successor URLs), (iii) the URL http://www.dbc.com (so long as
www.dbc.com serves only as an entry point to the foregoing URLs); and (iv) any
Mirror Site.
1.13 "Mirror Site" means an Internet Site which contains the exact form
and content as the MarketWatch Site which (a) is located at a geographic
location distinct from the MarketWatch Site and (b) is created for the purpose
of improving the performance of and accessibility to the MarketWatch Site. For
purposes of clarification, a mirror site may be used only in accordance with the
preceding purposes.
1.14 "Person" means any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
1.15 "Television Content" consists of Content broadcast on television.
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<PAGE> 3
2. LICENSE
2.1 CBS grants to MarketWatch, during the term of this Agreement and
subject to the terms and conditions contained herein, the non-exclusive right
and license:
(a) to use, copy, publicly display, edit, revise, perform,
distribute or otherwise make available on or through the MarketWatch Site, the
CBS News Content, to the extent CBS has the right to so license such Content.
CBS agrees that users of the MarketWatch Site may view, access, retrieve, copy
and print only for noncommercial private use any CBS News Content distributed
hereunder on the MarketWatch Site.
(b) to use the CBS Marks, together with the MARKETWATCH mark, in
connection with MarketWatch's advertising, promotion and operation of the
MarketWatch Site.
(c) to use the CBS Marks in connection with identifying,
marketing and promoting MarketWatch Content to third-parties, provided that such
MarketWatch Content is also branded with the MARKETWATCH mark.
Nothing in this Agreement grants MarketWatch ownership or other rights in or to
the CBS News Content or the CBS Marks, except in accordance and to the extent of
this license.
2.2 MarketWatch's exercise of the rights granted herein shall conform to
the restrictions or requirements set forth in the CBS License Guidelines
(attached hereto as Exhibit 2), as such License Guidelines may be amended or
revised from time to time by CBS, in its reasonable discretion, to reflect any
changes in the business, practice, procedures or policies of CBS.
2.3 (a) MarketWatch shall have access to all CBS News Content, and,
subject to the conditions stated in the next sentence, CBS shall deliver, at
times reasonably requested by MarketWatch, all CBS News Content in a mutually
agreed form and format (including, for avoidance of doubt, video and text, to
the extent reasonably possible). CBS shall have the right to refuse to deliver
to MarketWatch any CBS News Content if, in CBS's sole discretion, the CBS News
Content or the use contemplated, conflicts with, interferes with or is
detrimental to CBS's interests, reputation or business or might subject CBS to
unfavorable regulatory action, violate any law, infringe the rights of any
person, or subject CBS to liability for any reason.
(b) MarketWatch shall be responsible for and shall reimburse CBS
for all actual costs and expenses, above and beyond those expenses normally
incurred by CBS in the ordinary course of business, which are incurred by CBS in
preparing and/or delivering the CBS News Content in the desired form and format,
and which are agreed to in advance by MarketWatch. Any amounts to be paid under
this paragraph 2.3(b) shall be due and payable within 30 days of receipt of an
invoice relating to such amounts. Those amounts will also be recoupable from all
monies becoming payable to MarketWatch under this or any other Agreement or
otherwise to the extent to which they have not actually been paid or reimbursed
as provided for in the preceding sentence.
2.4 All Content which MarketWatch intends to use on the MarketWatch Site
shall consist of business or financial-related content and other content deemed
appropriate by CBS. During the term of this Agreement, any Content displayed on
the MarketWatch Site shall be
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subject to any restrictions or requirements set forth in the CBS License
Guidelines. CBS shall have the right to demand the withdrawal from the
MarketWatch Site of any Content which in CBS's sole opinion conflicts with,
interferes with or is detrimental to CBS's interests, reputation or business or
which might subject CBS to unfavorable regulatory action, violate any law,
infringe the rights of any Person, or subject CBS to liability for any reason.
Upon notice from CBS to withdraw the Content concerned, MarketWatch shall cease
using any such Content on the MarketWatch Site as soon as commercially and
technically feasible, but in any event within three (3) days after the date of
CBS's notice. If MarketWatch cannot cease using such Content within twenty-four
(24) hours, MarketWatch will so notify CBS detailing why the cessation cannot be
effected within twenty-four (24) hours and when the cessation will be effected,
subject to the terms of the preceding sentence.
2.5 (a) During the term of this Agreement, MarketWatch shall consult
with CBS regarding the general (visual and editorial) presentation of the CBS
News Content on the MarketWatch Site; provided, however, that in the event the
parties cannot agree in any instance, then CBS's decision will be conclusive. In
no event shall MarketWatch distort or misrepresent any material contained in the
CBS News Content. No CBS News Content shall be used/displayed out of context;
MarketWatch shall have the right (subject to CBS License Guidelines) to edit and
revise the CBS News Content to meet spatial requirements provided that any such
edits or revisions shall not distort or misrepresent any events, opinions or
statements contained in the CBS News Content received by MarketWatch.
(b) MarketWatch shall be solely responsible for the engineering,
production, maintenance and monitoring of all CBS News Content which MarketWatch
makes available on the MarketWatch Site.
(c) Subject to any restrictions or requirements in the CBS
License Guidelines, MarketWatch shall have the right, but not the obligation, to
correct any errors, omissions and/or inaccuracies in the transmission or
transcription of the CBS News Content identified by MarketWatch or reported to
MarketWatch by MarketWatch Site users.
(d) Notwithstanding anything to the contrary contained herein,
upon notice from CBS, MarketWatch shall immediately cease using any CBS News
Content which (i) in CBS's sole opinion, conflicts, interferes with or is
detrimental to CBS's reputation or business or (ii) becomes subject to any third
party restriction or claim which would prohibit, limit or restrict the use
thereof on the Internet.
2.6 In the event that MarketWatch desires to use any music contained in
any CBS News Content on the MarketWatch Site, prior to such use, MarketWatch
shall (i) report to the applicable music rights society on behalf of CBS, all
titles and publishers of all such music and, (ii) secure, at its sole cost and
expense, and pay for all performing, duplication and/or recording rights
licenses, if any, necessary for the use of such music on the Internet. CBS shall
endeavor to deliver to MarketWatch accurate music cue sheets for all such music.
2.7 Upon expiration or termination of this Agreement, MarketWatch shall
cease all use of the CBS Marks as provided in Section 4.4 below, and, except as
otherwise provided in this paragraph, any CBS News Content or Content derived
therefrom in connection with the operation of the MarketWatch Site or otherwise.
In connection with the above, MarketWatch
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shall immediately remove or erase the CBS News Content (and any Content derived
therefrom) and CBS Marks from the MarketWatch Site, and from any advertising and
promotional materials, as soon as commercially and technically practicable,
given customary Internet business practices, but in no event shall any such
material remain on the MarketWatch Site more than five (5) days after expiration
or CBS's notice of termination, as applicable, and at CBS's request, MarketWatch
shall furnish CBS with certified evidence of such removal or erasure
satisfactory to CBS.
3. TERM
3.1 The term of this Agreement shall begin on October 29, 1997 and shall
continue in full force and effect for a period of five (5) consecutive years,
through and including October 29, 2002, unless it is terminated earlier in
accordance with the terms and conditions contained herein.
4. TRADEMARKS
4.1 (a) CBS shall deliver to MarketWatch a copy of each CBS Mark in the
form in which such Mark may be used by MarketWatch hereunder. Both parties
acknowledge that the CBS Marks are trademarks exclusively owned or controlled by
CBS Broadcasting Inc. and that all uses by MarketWatch of such CBS Marks shall
inure to CBS's benefit. MarketWatch shall maintain CBS quality standards with
respect to its use of the CBS Marks, and otherwise use the CBS Marks subject to
any reasonable restrictions or requirements disclosed by CBS (including any
requirements/restrictions delineated in the CBS License Guidelines).
(b) In the event that during the term of this Agreement
MarketWatch shall create any proprietary right in any CBS Marks, as a result of
the exercise by MarketWatch of any right granted to it hereunder, such
proprietary right shall immediately vest in CBS and MarketWatch shall be
authorized to use such new proprietary right as though same had specifically
been included in this Agreement.
4.2 (a) MarketWatch shall not file any application in any country to
register a trademark which contains "CBS," the CBS "eye" or any other trademark
which is the same as, similar to, or misleading with respect to the CBS Marks or
any other CBS trademark. If any application for registration is filed in any
country by MarketWatch in contravention of this paragraph 4.2, CBS shall have
the right to take appropriate action against MarketWatch, including seeking
injunctive relief, to prohibit or otherwise restrain MarketWatch's use of the
infringement party's use of the infringing mark.
(b) MarketWatch shall furnish CBS proofs of all materials
bearing any CBS Marks (including, without limitation, advertising and publicity
materials). MarketWatch will not authorize full scale production of any such
material until after obtaining CBS's written approval in each instance. Any
changes in such material shall also be subject to CBS's prior written approval.
Approval by CBS shall not relieve MarketWatch of any of its warranties or
obligations under this Agreement and all materials that bear any CBS Marks shall
strictly conform with the samples and proofs approved by CBS. Samples and
materials to be approved by CBS shall be submitted to the Associate General
Counsel, Contracts, Rights and Development, CBS Law Department and/or such other
person that may be designated in writing by CBS. The materials
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bearing the CBS Marks which are identified in Exhibit 3 attached hereto are
hereby deemed approved by CBS.
4.3 In the event that MarketWatch learns of any infringement, threatened
infringement, or passing off of the CBS's trademarks or logos licensed for use
under this Agreement, or that any Person claims or alleges that the such
trademarks or logos are liable to cause deception or confusion to the public,
then MarketWatch shall notify CBS of the particulars thereof.
4.4 Upon the expiration or termination of this Agreement, MarketWatch
shall cease all use of the CBS Marks, as soon as commercially and technically
practicable, but in any event, no later than five (5) days after expiration or
termination of this Agreement.
5. COMPENSATION
5.1 In consideration of the rights herein granted, MarketWatch shall pay
CBS a royalty computed at the applicable percentage, indicated below, of the
Gross Revenues recognized by MarketWatch during the year concerned, as follows:
(a) (i) During the 1998 calendar year:
(A) With respect to the first Forty Million
Dollars ($40,000,000) of Gross Revenues recognized over and
above the first One Million Dollars ($1,000,000) of Gross
Revenues recognized during such year: 8%.
(B) With respect to Gross Revenues recognized in
excess of Forty-One Million Dollars ($41,000,000): 6%.
(ii) During the 1999 calendar year:
(A) With respect to the first Forty Million
Dollars ($40,000,000) of Gross Revenues over and above the first
Five Hundred Thousand Dollars ($500,000) of Gross Revenues
recognized during such year: 8%.
(B) With respect to Gross Revenues recognized in
excess of Forty Million Five Hundred Thousand Dollars
($40,500,000): 6%.
(iii) During each calendar year (or portion thereof, if
applicable) subsequent to the 1999 calendar year:
(A) With respect to the first Forty Million
Dollars ($40,000,000) of Gross Revenues recognized during such
calendar year (or portion thereof, if applicable): 8%.
(B) With respect to Gross Revenues recognized in
excess of Forty Million Dollars ($40,000,000): 6%.
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(b) (i) For avoidance of doubt, for purposes of this paragraph
5.1, calculation of Gross Revenues shall be made on a calendar yearly
basis, rather than a cumulative basis.
(ii) (A) "Gross Revenues" as used in this paragraph 5.1
shall mean gross operating revenues (excluding the revenues
described in the last sentence of this paragraph 5.1(b)(ii)(A)
and in 5.1(b)(ii)(B)) of MarketWatch, its subsidiaries and, to
the extent of any dividends or other distributions paid to
MarketWatch or its subsidiaries, any Person in which MarketWatch
or any of its subsidiaries has an interest, derived from the
Core Business presented in accordance with generally accepted
accounting principles and, if applicable, based on revenues as
reported in the periodic quarterly and annual statements
required by the Securities and Exchange Commission, provided
that Gross Revenues shall not be reduced for royalties,
commissions (except as otherwise set forth in clause
5.1(b)(ii)(B) below) fees or other expenses incurred in
generating such operating revenue. If an income statement of
MarketWatch presents operating revenue net of any reductions not
allowed under this Section 5, then for purposes of this
paragraph 5.1, operating revenue as presented shall be increased
by the amount of reductions. Sources of operating revenue
include, but are not limited to, advertising, sponsorship,
partnership/commerce, subscriptions, and sales of products and
services and shall include all monetary consideration and the
fair value of all non-monetary considerations. Sources of
operating revenue shall not include: (I) revenue realized by
MarketWatch pursuant to paragraph 1.2 of the DBC Services
Agreement between DBC and MarketWatch dated as of October 27,
1997, as amended and restated on _________________ [DATE] (the
"Services Agreement") (i.e., the stated dollar portion of
subscriber fees from various DBC-owned subscriber devices
(including portable personal computers) and the stated
percentage of Net Revenues (as defined in the Services
Agreement) derived from the real-time market feeds currently
known as MarketWatch Live and MarketWatch RT); (II) revenue
realized from advertisements purchased by DBC from MarketWatch
which advertise/promote DBC on the MarketWatch Site; and (III)
revenue realized from advertisements purchased by any third
party advertising on the MarketWatch Site if and to the extent
CBS determines that revenues from such Person should be excluded
from the calculation of "Gross Revenues" under this Section 5.1.
(B) Notwithstanding anything to the contrary
contained in clause 5.1(b)(ii)(A) above, Gross Revenues may be
reduced by the amount of any sales representative commission(s)
paid by MarketWatch to any third party sales representative(s)
not affiliated with MarketWatch and in which MarketWatch has no
interest, not to exceed fifteen percent (15%) of the actual ad
price in each instance. Additionally, Gross Revenues for any
particular quarterly period shall not include revenues reported
by MarketWatch as a result of revenues recognized prior to the
effective date of the acquisition of an entity acquired by
MarketWatch and accounted for as a pooling of interest
transaction.
5.2 In the event that the rights granted by CBS to MarketWatch pursuant
to this Agreement cause CBS to recognize income for federal income tax
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purposes in an amount which exceeds the amount prescribed for such rights in
paragraph 5.1 above (the "Excess"), then the entire amount of any deductions
available to MarketWatch solely attributable to such Excess shall be allocated
by MarketWatch to CBS.
6. ACCOUNTINGS
6.1 MarketWatch will compute Gross Revenues as of each March 31, June
30, September 30 and December 31 for the prior three (3) months. Within
ninety-five (95) days after the fourth calendar quarterly period and within
forty-five (45) days after each of the first three (3) calendar quarterly
periods concerned, MarketWatch will send CBS a statement covering Gross Revenues
and will pay CBS CBS's share of Gross Revenues due. Acceptance by CBS of any
statement or payment shall not preclude CBS from challenging the accuracy
thereof.
6.2 MarketWatch will maintain accurate books and records which report
the recognition of Gross Revenues. CBS may, at its own expenses, examine and
copy those books and records, as provided in this paragraph. CBS may make such
an examination for a particular statement within three (3) years after the date
when the other party sends the examining party the statement concerned.
(MarketWatch will be deemed conclusively to have sent CBS the statement
concerned on the date prescribed in paragraph 6.1, unless CBS notifies
MarketWatch otherwise with respect to any statement, within ninety (90) days
after that date). CBS may make those examinations only during MarketWatch's
usual business hours, and at the place where it keeps the books and records.
Such books and records shall be kept at the MarketWatch office in San Francisco,
California, unless otherwise notified. CBS will be required to notify
MarketWatch at least ten (10) days before the date of planned examination. If
CBS's examination has not been completed within two months from the time CBS
begins it, MarketWatch may require CBS to terminate it on seven (7) days notice
to CBS at any time, provided that MarketWatch has cooperated with CBS in the
examination of such books and records.
7. RIGHTS
7.1 (a) As between CBS and MarketWatch: CBS is or shall be the exclusive
owner of and shall retain all right, title and interest to the CBS's News
Content or any Content derived therefrom, and the CBS Marks, including all
Intellectual Property Rights therein (the "CBS Property").
(b) MarketWatch is the exclusive owner of and shall retain all
right, title and interest to the MarketWatch Content or any Content derived
therefrom, the MarketWatch Site, MarketWatch marks, and all Intellectual
Property Rights therein, excluding the CBS Property.
(c) MarketWatch shall place a notice of copyright on each CBS
Content Page in accordance with the CBS License Guidelines. No CBS Content Page
shall contain any other copyright notice whatsoever except as provided in the
CBS License Guidelines. MarketWatch shall cooperate fully with CBS in connection
with CBS's obtaining appropriate copyright protection in the name of CBS for any
CBS Content Page.
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7.2 Each party agrees to take all action and cooperate as is reasonably
necessary, at the other party's request and expense, to protect the other's
respective rights, titles, and interests specified in this Article 7, and
further agrees to execute any documents that might be necessary to perfect each
party's ownership of such rights, titles, and interests.
7.3 (a) During the term of this Agreement, CBS shall not license nor
authorize another to license any Person other than MarketWatch the right to use
the CBS Marks in connection with promoting in the United States any Internet
service or Web site that has as its primary function and its principal theme and
format the delivering of comprehensive real-time or delayed stock market
quotations and financial news in the English language to consumers.
(b) MarketWatch acknowledges and agrees that the following are
either not within the express terms of the preceding prohibition or, if so,
shall nevertheless be excluded from said prohibition:
(1) any use of the CBS Marks by CBS, its divisions, business
units, affiliates and/or any of the following CBS related entities in connection
with any of the above Person's Internet service(s) or Web site(s) as long as
such Internet service or Web site does not have as its primary function and its
principal theme and format the delivering of comprehensive real-time or delayed
stock market quotations and financial news in the English language to consumers:
(i) the CBS Television Network;
(ii) any CBS owned and operated or affiliated standard
television station;
(iii) CBS Cable;
(iv) any CBS non-standard television network;
(v) any CBS owned or affiliated non-standard television
facilities;
(vi) the CBS Radio Network;
(vii) any CBS owned and affiliated radio station;
(viii) Westwood One, Inc.; and
(ix) any Internet services in which CBS currently has an
interest (such as CBS SportsLine);
(2) an Internet service or Web site that delivers general news,
sports or entertainment, with a financial news segment or portion included, will
not be considered to have as its primary function or as its principal theme and
format the delivering of comprehensive real-time or delayed stock market
quotations and financial news in the English language to consumers;
(3) an Internet service or Web site will not be considered to
have as its primary function or as its principal theme and format the delivering
of comprehensive real-time
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or delayed stock market quotations and financial news in the English language to
consumers solely on the basis of its providing a stock price ticker crawl line;
(4) any activity conducted by CBS and/or its affiliates as of
October __, 1998, the execution date of this Agreement;
(5) any activity conducted by a CBS Television or Radio Network
Affiliate that is not a CBS owned and operated television or radio station;
(6) any activity of Westwood One, Inc. provided that such
activity does not produce a substantial portion of revenues from an Internet
service or Web site that has as its primary function and principal theme and
format the delivering of comprehensive real-time or delayed stock market
quotations and financial news in the English language to consumers;
(7) any Internet services in which CBS has an interest as of
October __, 1998, the execution date of this Agreement;
(8) any transmission, retransmission, uplink or satellite
transponder delivery of any signal, of any nature or type, by and through CBS
Cable; and
(9) any occasional use of the CBS Marks by an Internet service
or Web site, as opposed to repeated and regular use.
8. WARRANTIES; REPRESENTATIONS; INDEMNITIES
8.1 (a) CBS represents and warrants that:
(i) it has full power and authority to enter into this
Agreement.
(ii) it has sufficient right and authority to grant to
MarketWatch all licenses and rights granted by CBS hereunder.
(iii) the CBS Marks and the use thereof as permitted
pursuant to this Agreement shall not violate any law or infringe
upon or violate any rights of any Person.
(iv) the CBS Content and the use thereof as permitted
pursuant to this Agreement shall not violate any United States
law or infringe upon or violate any rights of any Person under
any United States law.
(b) MarketWatch represents and warrants that:
(i) it owns or controls all right, title, and interest
in and to the MarketWatch Site, and all Intellectual Property
Rights therein, necessary to carry out its obligations hereunder
and to grant and assign the rights and licenses granted to CBS
herein.
(ii) it is has the full power and authority to enter
into and fully perform this Agreement.
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(iii) the MarketWatch Site, any MarketWatch Site Content
and any Content developed or furnished by MarketWatch hereunder
and the use thereof shall not violate any law or infringe upon
or violate any rights of any Person.
(iv) the MarketWatch Site will be produced, advertised,
distributed, transmitted and licensed in accordance with all
applicable federal, state, local and foreign laws and in a
manner that will not reflect adversely on CBS.
8.2 (a) Each party shall at all times indemnify, hold harmless and
defend the other party in accordance with the indemnification provisions
(applicable to such party) set forth in Article VI of the Contribution Agreement
among CBS, MarketWatch and DBC dated as of October 29, 1997 (the "Contribution
Agreement"); provided, however, that, MarketWatch agrees that neither CBS nor
any agent, subsidiary, or representative of CBS shall have any liability,
contingent or otherwise, for the truthfulness, accuracy or timeliness of the CBS
News Content, or for any decision made or action taken by MarketWatch or its
customers in reliance upon the CBS News Content except to the extent that such
liability arises from CBS's malfeasance or nonfeasance. THERE IS NO WARRANTY OF
MERCHANTABILITY NOR WARRANTY OF FITNESS FOR A PARTICULAR USE, NOR ANY IMPLIED
WARRANTY OF ANY KIND, REGARDING THE CBS NEWS CONTENT. MARKETWATCH RECOGNIZES
THAT THE ACCURACY OF THE CBS NEWS CONTENT SHOULD BE CHECKED BEFORE ITS CUSTOMERS
RELY ON IT.
(b) IN NO EVENT WILL MARKETWATCH OR CBS BE LIABLE TO
MARKETWATCH'S CUSTOMERS, EACH OTHER, OR ANY OTHER PARTY FOR ANY INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT LIMITED TO LOST
PROFITS, TRADING LOSSES, OR DAMAGES THAT RESULT FROM INCONVENIENCE, DELAY OR
LOSS OF THE USE OF THE CBS NEWS CONTENT), OR CLAIMS ARISING IN TORT (INCLUDING
NEGLIGENCE), EVEN IF MARKETWATCH OR CBS HAS BEEN ADVISED OF OR IS OTHERWISE
AWARE OF THE POSSIBILITY OF ANY OF THE FOREGOING.
(c) Neither MarketWatch nor CBS shall be liable for any loss
resulting from a cause over which such entities do not have direct control,
including but not limited to the failure of electronic or mechanical equipment
or communication lines, telephone or other interconnect problems, unauthorized
access or theft.
(d) MarketWatch agrees to indemnify and hold CBS harmless from
and against any and all claims, losses, liability, costs and expenses (including
but not limited to attorneys' fees) to the extent arising from or relating to
MarketWatch's modification of the CBS News Content, or the combination of the
CBS News Content with other information or content, and/or MarketWatch's
violation of this Agreement.
9. REMEDIES
9.1 CBS shall have the right to terminate this Agreement upon providing
written notice to MarketWatch if (any of the following occurs):
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(a) MarketWatch breaches any material term or condition of this
Agreement, and has failed to cure such breach within ten (10) days after written
notice of such breach from CBS. The foregoing cure period will not apply where a
specific cure period is provided herein, or to breaches incapable of being
cured.
(b) MarketWatch: (i) becomes insolvent or unable to pay its
debts as they mature or makes an assignment for the benefit of its creditors;
(ii) is the subject of a voluntary petition in bankruptcy or any voluntary
proceeding relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing: (iii) becomes the subject of any involuntary petition
in bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors, if such
petition or proceeding is not dismissed within sixty (60) days of filing; (iv)
is liquidated or dissolved; or (v) issues to a CBS competitor or actively
participates in the acquisition by a CBS competitor, in any one transaction or
any series of transactions, of a number of voting securities of MarketWatch such
that after such issuance or acquisition or series of issuances or acquisitions,
such CBS competitor beneficially owns, directly or indirectly, nine percent (9%)
or more of the outstanding common stock of MarketWatch or nine percent (9%) or
more of the total voting power of MarketWatch.
(c) any CBS competitor beneficially owns, directly or
indirectly, fifteen percent (15%) or more of the then-outstanding shares of
common stock of MarketWatch or fifteen percent (15%) or more of the total voting
power of MarketWatch.
(d) If MarketWatch discontinues using the "MARKETWATCH" mark
and, within a reasonable time thereafter, MarketWatch does not establish a
substitute mark acceptable to CBS in its sole discretion.
(e) Notwithstanding the foregoing, for purposes of this Section
9.1, the mere acquisition by a CBS competitor of an interest in DBC which
acquisition constitutes or triggers a "DBC Change of Control" (as defined in the
Stockholders' Agreement dated as of the date hereof among CBS, DBC and
MarketWatch) shall not be deemed to constitute the acquisition, directly or
indirectly, of, "beneficial ownership," common stock or "voting power" of
MarketWatch in the absence of other facts demonstrating "beneficial ownership"
thereof.
For purposes of this Section 9.1: (i) the term beneficial
ownership shall have the meaning set forth in Section 13(d) of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder;
(ii) the term total voting power shall mean, at any time, the total number of
votes that may be cast in the election of directors of MarketWatch at any
meeting of the holders of voting securities held at such time for such purpose;
and (iii) the term voting securities shall mean the common stock of MarketWatch
and any other securities issued by MarketWatch having the power to vote in the
election of directors of MarketWatch, including without limitation any
securities having such power only upon the occurrence of a default or any other
extraordinary contingency.
9.2 MarketWatch shall have the right to terminate this Agreement if CBS
breaches any material term or condition of this Agreement, and has failed to
cure such breach within thirty (30) days after receipt of written notice of such
breach.
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9.3 Either Party may exercise its right to terminate pursuant to this
Section 9 by sending the other party appropriate notice. No exercise by CBS of
its rights under this Section 9 will limit CBS's remedies by reason of
MarketWatch's default, CBS's rights to exercise any other rights under this
Section 9, or any of CBS's other rights. No exercise by MarketWatch of its
rights under this Section 9 will limit MarketWatch's remedies by reason of CBS's
default, MarketWatch's rights to exercise any other rights under this Section 9,
or any of Marketwatch's other rights.
10. GENERAL
10.1 Neither party may assign this Agreement, or their respective rights
and obligations hereunder, in whole or in part without the other party's prior
written consent. Any attempt to assign this Agreement without such consent shall
be void and of no effect ab initio. Notwithstanding the foregoing, (i)
MarketWatch may assign this Agreement to its successor, MarketWatch.com, Inc., a
Delaware corporation, provided that MarketWatch.com, Inc. thereafter succeeds to
all of the rights and is subject to all of the obligations of MarketWatch under
this Agreement, and (ii) CBS may assign this Agreement or any of its rights and
obligations hereunder to any entity controlling, controlled by or under common
control with, CBS, or to any entity that acquires CBS by purchase of stock or by
merger or otherwise, or by obtaining substantially all of CBS assets (a "CBS
Assignee"), provided that any such CBS Assignee, or any division thereof,
thereafter succeeds to all of the rights and is subject to all of the
obligations of CBS under this Agreement.
10.2 Each party hereto irrevocably submits to the exclusive jurisdiction
of (a) the Supreme Court of the State of New York, New York County, or (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby or thereby. Each of CBS and MarketWatch
agrees to commence any such action, suit or proceeding either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
CBS and MarketWatch further agrees that service of any process, summons, notice
or documents by U.S. registered mail to such party's respective address set
forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any maters to which it has submitted to
jurisdiction in this Section 10.2. Each of CBS and MarketWatch irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby and thereby in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby and thereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
10.3 Each party shall comply in all material respects with all laws and
regulations applicable to its activities under this Agreement.
10.4 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity,
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illegality or unenforcability shall not affect any other provision hereof (or
the remaining portion thereof) or the application of such provision to any other
Persons or circumstances.
10.5 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to MarketWatch,
MarketWatch.Com Inc.
825 Battery St.,
San Francisco, CA 94111
Attention of Larry Kramer and Peter Bardwick
(ii) if to CBS,
CBS Broadcasting Inc.
51 West 52nd Street
New York, New York 10019
Attention of Fredric G. Reynolds and
Louis J. Briskman
with copies to:
CBS Broadcasting Inc.
51 West 52nd Street
New York, New York 10019
Attention of General Counsel, and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention of Peter S. Wilson, Esq., and
Data Broadcasting Corporation
3955 Point Eden Way
Hayward, CA 94549
Attention of Mark F. Imperiale
10.6 The parties to this Agreement are independent contractors. There is
no relationship of partnership, joint venture, employment, franchise, or agency
between the parties. Neither party shall have the power to bind the other or
incur obligations on the other's behalf without the other's prior written
consent.
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10.7 No failure of either party to exercise or enforce any of its rights
under this Agreement shall act as a waiver of such right.
10.8 This Agreement, along with the Exhibits hereto, contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
10.9 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
10.10 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. By an instrument in
writing, any two parties hereto may waive compliance by the third party with any
term or provision of this Agreement that such third party was or is obligated to
comply with or perform.
10.11 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
10.12 Except as provided in Article VI of the Contribution Agreement,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns (including MarketWatch.com, Inc., the successor to MarketWatch) and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
10.13 The headings contained in this Agreement or in any Exhibit or
Schedule hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Schedule or Exhibit but not otherwise defined therein, shall have the
meaning as defined in this Agreement. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
MARKETWATCH.COM, LLC CBS BROADCASTING INC.
By: By:
------------------------------------ ---------------------------------
Name: Peter Bardwick Name:
---------------------------------- -------------------------------
Title: CFO and Secretary Title:
--------------------------------- -------------------------------
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EXHIBIT 1
(Attached to and forming a part of the Agreement, made October __, 1998, and
effective as of October 29, 1997 between CBS Broadcasting Inc. and
MarketWatch.Com, LLC)
CBS MARKS
CBS
[EYEBALL LOGO]
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EXHIBIT 2
(Attached to and forming a part of the Agreement, made October __, 1998, and
effective as of October 29, 1997 between CBS Broadcasting Inc. and
MarketWatch.Com, LLC)
CBS LICENSE GUIDELINES AND RESTRICTIONS
I. GENERAL
The MarketWatch Site shall not include Content that: (i) is sexually
explicit, (ii) contains profanity or (iii) that denigrates a particular
group based on gender, race, creed, religion, sexual preference or
handicap.
II. CBS NEWS CONTENT
1. Each party shall notify the other of all errors, omissions, and/or
inaccuracies in transmission or transcription of the CBS News Content
within forty-eight (48) hours after it becomes aware thereof.
2. If MarketWatch provides such notice, it shall specify to CBS what
action, if any, it has taken to correct the error, omission and/or
inaccuracy.
3. If CBS provides such a notice, or receives such notice, it may
specify the action to be taken by MarketWatch to correct the error,
omission and/or inaccuracy or resubmit such content.
4. All CBS News Content shall be subject to restrictions and
instructions disclosed by CBS at any time.
5. CBS shall have the right to refuse to deliver to MarketWatch any CBS
News Content if, in CBS's sole discretion, the CBS News Content or
the use contemplated, conflicts with, interferes with or is
detrimental to CBS's interests, reputation or business or which might
subject CBS to unfavorable regulatory action, violate any law,
infringe the rights of any person, or subject CBS to liability for
any reason.
6. MarketWatch shall abide by responsible journalistic standards. No CBS
News Content shall be used/displayed out of context. MarketWatch
shall no distort or misrepresent any events, opinions or statements
contained in the CBS News Content received by MarketWatch.
III. TRADEMARKS
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MarketWatch shall place a trademark notice to be furnished by CBS on all
items or materials utilizing CBS Marks. CBS shall provide MarketWatch
with the manner, style and placement of such notice, which shall be
deemed incorporated into this Section.
IV. CROSS-LINKS
1. MarketWatch shall not establish any links from the MarketWatch Site
to any gambling, pornographic or obscenity Content.
2. MarketWatch shall not conduct any cross promotions between the
MarketWatch Site and any Internet Site which uses or exhibits
gambling, pornographic or obscenity Content.
V. OWNERSHIP
1. MarketWatch shall place an appropriate copyright notice to be
furnished by CBS on all CBS Content Pages of the MarketWatch Site.
2. MarketWatch and CBS shall mutually develop the procedures for placing
any third party copyright notice on any CBS Content Page.
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EXHIBIT 3
APPROVED USAGE OF CBS MARKS
The following materials (bearing the CBS marks) are approved:
Munsingware long sleeve t-shirt
grey & black pens
white cocktail napkin
business card, subject to * below
*CBS has a colored photostat of the business card which reflects the
outer circle of the "Eye" fading into the black background. Assuming
that the fading is due to the photostatic process, then the card is
acceptable .
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EXHIBIT 10.08
AMENDED AND RESTATED
SERVICES AGREEMENT
This AGREEMENT made as of the ___th Day of October, 1998, by and between
MARKETWATCH.COM.LLC, 825 Battery Street, San Francisco, CA 94111, (herein called
"MarketWatch") and DATA BROADCASTING CORPORATION, 3955 Point Eden Way, Hayward,
CA 94545 (herein called "DBC") hereby amends and restates this Agreement entered
into between the parties as of October 29, 1997 (that was attached to and formed
a part of the CONTRIBUTION AGREEMENT, dated as of October 29, 1997 between CBS
Broadcasting, Inc. (formerly known as CBS, Inc.), DBC and MarketWatch.
1. DESCRIPTION
1.1 During the term of this Agreement, subject to the terms and
conditions stated herein
(a) at the request of MarketWatch, DBC will perform the
following services for MarketWatch:
(i) (A) subject to MarketWatch's prior approval in each
instance, DBC shall engage or employ personnel assigned to
service MarketWatch (hereinafter referred to as "MarketWatch
Employees") on a full-time or part-time basis as needed,
including the calculation and administration of employee (or
engaged personnel) compensation, benefits and/or related
payments or deductions/withholdings. MarketWatch shall have the
right to require DBC to terminate any employee (or engaged
personnel, as applicable). In connection with the foregoing
services, MarketWatch shall hold DBC harmless from liability
with respect to any personnel action involving a MarketWatch
Employee (acting solely within the scope of his or her
employment for MarketWatch), provided such personnel action is
directed by MarketWatch. (For avoidance of doubt, the preceding
sentence shall not relieve DBC of liability in its capacity as a
principal of MarketWatch.)
(B) For avoidance of any doubt, all material(s)
produced, developed, created or furnished to MarketWatch by
MarketWatch Employees, excluding the MarketWatchRT Software,
will be deemed "work(s) made for hire" for MarketWatch under the
United States Copyright Act; but in the event it is determined
that such materials in whole or in part are not "work(s) made
for hire", they will be deemed transferred to MarketWatch by
this Agreement. All such materials made or furnished to
MarketWatch by MarketWatch Employees, excluding the
MarketWatchRT Software, shall be the sole property of
MarketWatch, free from any claims by any MarketWatch Employee,
DBC or any other person, firm or entity; and MarketWatch shall
have the exclusive right to
<PAGE> 2
copyright such materials in its name as the author and owner of
them and to secure any and all renewals and extensions of such
copyright throughout the world. DBC will cause engaged personnel
to execute and deliver to MarketWatch documents reflecting that
materials developed, produced, created or furnished by such
personnel, excluding the MarketWatchRT Software, are/shall be
deemed a "work made for hire" for MarketWatch; and if any of
such material is determined not to be a "work made for hire" it
will be deemed transferred to MarketWatch.
(ii) handle customer billing and collection for MarketWatch
subscription products and services and other services including
without limitation, real-time data service.
(iii) provide computer software programming assistance,
including, without limitation, assistance with the operation of
the on-line services (including advertising services) offered by
MarketWatch and the creation of MarketWatch web site pages and
navigation systems.
(b) (i) At the request of MarketWatch in each instance, DBC will
license to MarketWatch, free of charge, the delayed commodities and stock data
feeds (the "Data Feed") delivered from the financial exchanges with whom DBC has
existing contracts (including, without limitation, the New York Stock Exchange;
The American Stock Exchange; The Nasdaq Stock Market. Inc.; New York Mercantile
Exchange; Chicago Board Options Exchange; Chicago Board of Trade; MidAmerica
Commodity Exchange; Commodities Exchange Center; Chicago Mercantile Exchange;
and Coffee, Sugar & Cocoa Exchange) (the "Data Providers"). The Data Feed is
currently made available by DBC to users/subscribers of the Internet web site
currently known as dbc.com.
(ii) DBC will provide MarketWatch with communications lines
(including at least two (2) T-3 connections to the Internet,
hardware and software to effect the required capability to
receive/transmit etc. the data feeds described in Section
1.1(b)(i) above. DBC will use its best efforts to ensure third
party provided lines will be in good working order at all times.
(iii) In connection with the data feed described in Section
1.1(b)(i) above, DBC will provide MarketWatch with network
operations and web site management support (including, without
limitation, hosting connectivity, serving content, serving and
reporting ads and reporting content) twenty-four hours a day
seven days a week.
(c) At MarketWatch's request, DBC will provide (from its rented
or owned office space) office space and related facilities, to the extent
available, for MarketWatch Employees. Such right to use such facilities shall in
no way be construed as a sublease or license by DBC of any real property but
shall only be construed as a reimbursement arrangement.
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1.2 During the term of this Agreement, subject to the terms and
conditions stated herein:
(a) DBC will pay MarketWatch:
(i) Two Dollars and Fifty Cents ($2.50) per month per subscriber
for each portable device subscriber who receives real-time
quotes and news, and Five Dollars ($5) per month per subscriber
for all other subscriber devices (including all portable
personal computers) who receive real-time quotes and news. The
payment will be a minimum of $100,000 per month.
(ii) With respect to subscribers of the real-time market feeds
described below:
(A) twenty-five percent (25%) of the Net Revenues earned
from the real-time market feed currently known as "MarketWatch
Live"; and
(B) seventy-five percent (75%) of the Net Revenues
earned from the real-time market feed currently known as
"MarketWatch RT."
As used in Section 1.2(a)(ii), the term "Net Revenues" shall
mean gross subscription fees collected less exchange fees
actually paid by DBC, credit card fees actually paid by DBC and
any applicable sales taxes billed by DBC and paid by the
subscriber concerned.
2. TERM
2.1 The term of this Agreement shall begin as of the date hereof and
shall continue in full force and effect for a period of five (5) consecutive
years, from October 29, 1997 through and including October 29, 2002, unless it
is terminated earlier in accordance with the terms and conditions contained
herein.
3. COMPENSATION; OFFSET
3.1 In consideration for all grants herein made or agreed to be made and
all rights, licenses, privileges and property herein conveyed or agreed to be
conveyed, and all warranties, representations and covenants herein made by DBC,
MarketWatch agrees to pay DBC as follows:
(a) DBC's actual costs, subject, however, to the approval of
MarketWatch of the costs to be incurred, other than the costs incurred by DBC in
the ordinary course of business. in connection with:
(i) the services rendered pursuant to Section 1.1 (a) and
Section 1.1(b)(iii); and
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(ii) the provision of communications lines described in Section
1.1(b)(ii) above.
(iii) the provision of office space and related facilities to
MarketWatch personnel, it being understood that such actual cost
shall be DBC's cost per rented square foot of space utilized by
the MarketWatch personnel concerned, subject to the next
sentence. The provision of office space and related facilities
to MarketWatch personnel at DBC's current San Mateo location,
however, shall be free of charge.
3.2 In the event that DBC breaches subparagraph 1.01(b) of the
Contribution Agreement among CBS Inc., DBC and MarketWatch dated as of October
29, 1997 (the "Contribution Agreement"), then, in addition to whatever other
rights and remedies MarketWatch may have under the Contribution Agreement,
MarketWatch may offset any monies due and owing from DBC under the (Section 1.01
(b) of the) Contribution Agreement against monies payable (from MarketWatch) to
DBC hereunder.
3.3 In the event that the services provided by DBC pursuant to this
Agreement cause DBC to recognize income for federal income tax purposes in an
amount which exceeds the amount prescribed for such services in Section 3.1(a)
above (the "Excess"), then the entire amount of any deductions available to
MarketWatch solely attributable to such Excess shall be allocated by MarketWatch
to DBC.
4. CONTENT AND DELIVERABLES
4.1 At no additional charge, DBC will grant MarketWatch a royalty-free,
worldwide, non-exclusive license to use, copy, publicly display, make derivative
works from, perform, distribute or otherwise make available on or through the
MarketWatch Site and in connection with products and services distributed from
the MarketWatch Site the following data feeds:
(a) Those feeds/services set forth in Section 1.1(b)(i) hereof;
and
(b) The following additional data feeds/services, provided that
DBC has in place a license to redistribute such data feeds/services: Fundamental
Data, Historical Data, Intraday Tick Data.
4.2 At no additional charge, DBC hereby irrevocably transfers and
assigns to MarketWatch all right, title and interest in and to all deliverables,
materials, copyrightable works, inventions, improvements, trade secrets,
trademarks, servicemarks, made, conceived or developed by DBC either alone or
with others in connection with this Agreement, and all DBC proprietary software
and technology used in connection with the services and data feeds provided
under this Agreement (collectively, the "DBC Services"), excluding DBC
proprietary software used by DBC in connection with providing MarketWatch the
MarketWatchRT data feed (the "MarketWatchRT Software").
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4.3 At no additional charge, MarketWatch hereby grants to DBC a
non-exclusive, perpetual license to use, copy, modify and make derivative works
from the DBC proprietary software and technology used by DBC in providing the
DBC Services.
4.4 "MarketWatch Site" means the Internet websites owned or controlled
by MarketWatch that provide stock quotes, personal finance information and
business, stock stories and related products and services.
5. PERFORMANCE STANDARDS AND SPECIFICATIONS
5.1 DBC will provide all DBC Services in a professional manner,
consistent with industry standards.
5.2 DBC will use its best efforts to cause all hosting and data services
to meet the Performance Specifications (attached hereto as Schedule A, and
hereby made a part of this Agreement).
5.3 In the event that DBC materially fails to meet the Up-Time
Requirements set forth in the Performance Specifications during any MarketWatch
Business Day, defined below, MarketWatch's payments for the DBC network
operations set forth in Section 1.1(a)(iii) hereof for that month shall be
reduced by a percentage equal to the hours that the DBC Services failed to meet
such Performance Specifications divided by the number of hours in the business
days for that month. A "MarketWatch Business Day" shall be considered to run
from the hours of 4AM to 8PM PST. DBC shall not be responsible for failures
caused by MarketWatch's fault, or by the actions of a non-affiliated third
party, provided that DBC has taken reasonable actions to anticipate and handle
any such failure caused by a third-party, and further provided that DBC shall
credit MarketWatch with any credits or payments received from third parties
related to such failure. DBC shall use its best efforts to ensure that all third
parties conform to the provisions hereof.
5.4 DBC shall provide, at DBC's out-of-pocket cost, a redundant hosting
center capable of providing immediate back up capability and such Internet
connectivity as reasonably requested by MarketWatch.
5.5 DBC will use its reasonable efforts to provide MarketWatch with
additional required hardware, software or communications bandwidth, and will
provide all of the foregoing to MarketWatch at DBC's cost.
6. DBC TRADEMARK
At no additional charge, DBC will grant MarketWatch a worldwide,
non-exclusive license to use the DBC trademark(s) in connection with the
marketing, promotion, and operation of the MarketWatch Site, and the
distribution of content from such Site and related products and
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services. MarketWatch's use of such trademarks shall be in accordance with DBC's
reasonable trademark usage guidelines, as such guidelines are provided to
MarketWatch in writing from time to time.
7. HOSTING SPECIFICATIONS AND TRANSITION SERVICES
7.1 DBC will, upon MarketWatch's request, provide MarketWatch with
reasonably detailed specifications for the DBC technology used in providing the
DBC Services, and for all hardware, software, firmware and system configurations
which MarketWatch will require to properly perform or have performed the
services and procedures performed by DBC. The foregoing shall be subject to any
limitations on disclosure imposed upon DBC by third party suppliers and
licensors.
7.2 Upon any termination or expiration of this Agreement, or of any of
the services provided by DBC hereunder, DBC will provide the following
assistance and deliverables:
(a) assist MarketWatch, or MarketWatch's designee, in the
configuration and installation of any hardware, software, firmware or equipment
procured by MarketWatch in connection with the DBC Services.
(b) DBC will deliver to MarketWatch or its designee, and install
on hardware and equipment designated by MarketWatch, those DBC materials and DBC
proprietary software programs necessary to provide the DBC Services.
(c) DBC will deliver to MarketWatch, and install on
MarketWatch's hardware and equipment, the current version of any MarketWatch
software then being used by DBC in connection with the DBC Services, excluding
the MarketWatch RT Software.
(d) DBC will provide appropriate training for the MarketWatch
employees or its agents or contractors who will be assuming responsibility for
operation of the DBC technology following such transition. MarketWatch will be
charged time and material, at current rates, for any training provided to
MarketWatch due to termination.
(e) DBC will assist MarketWatch, at MarketWatch's expense, in
MarketWatch's acquisition of any necessary rights to access and use any
third-party data feeds, hardware, software, documentation then being used by DBC
in connection with the DBC Services. Upon MarketWatch's request, DBC will
transfer or assign, or use its best efforts to cause to be transferred or
assigned, to MarketWatch or its designee, on mutually acceptable terms and
conditions, any contracts applicable to such data feeds, hardware, software and
documentation.
(f) MarketWatch shall have the option to buy any hardware and/or
software that DBC is utilizing to provide the DBC Services for an amount to be
negotiated in good faith by the parties.
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(g) upon termination of this Agreement, MarketWatch shall
purchase from DBC any hardware and/or software purchased and paid for by DBC
specifically at MarketWatch's request, at the then-current net book value of
such hardware and/or software, computed using generally accepted accounting
principles.
8. WARRANTIES; REPRESENTATIONS; INDEMNITIES
8.1 (a) DBC represents and warrants that:
(i) it has full power and authority to enter into and fully
perform this Agreement.
(ii) it has sufficient right and authority to grant to
MarketWatch all licenses and rights granted or agreed to be
granted by it hereunder.
(iii) all materials and services furnished to MarketWatch or the
use thereof will not violate any applicable lay, or violate or
infringe upon the rights of any third party.
(iv) at all times. DBC will comply with all applicable federal,
state and local laws.
(b) MarketWatch represents and warrants that it is free to enter
into and fully perform this Agreement.
8.2 (a) DBC will assume all obligations for and indemnify and hold
MarketWatch harmless from (i) malfunctions or other usage problems resulting
from or in connection with the "Year 2000 Problem" (i.e., the year 2000 (and
later years) as distinct from the years 1900 through 1999, (and earlier years)),
and (ii) "bugs", "viruses" or defects in the feeds or other software goods
provided herein, which affect the function or capabilities of such feeds or
software.
(b) Each party shall at all times indemnify, hold harmless and
defend the other party in accordance with the indemnification provisions
(applicable to such party) set forth in Article VI of the Contribution
Agreement; provided, however, that, MarketWatch agrees that neither DBC, nor its
Data Providers, nor any agent, subsidiary, or representative thereof shall have
any liability, contingent or otherwise, for the truthfulness, accuracy or
timeliness of the Data Feed or the truthfulness, accuracy, timeliness,
completeness or correct sequencing of the Data Feed by DBC or the Data
Providers, or for any decision made or action taken by MarketWatch or its
customers in reliance upon the Data Feed, or for interruption or delay of the
Data Feed except to the extent that such liability arises from DBC's malfeasance
or nonfeasance. THERE IS NO WARRANTY OF MERCHANTABILITY NOR WARRANTY OF FITNESS
FOR A PARTICULAR USE, NOR ANY IMPLIED WARRANTY OF ANY KIND, REGARDING THE
INFORMATION OR ANY ASPECT OF THE DATA FEED (INCLUDING BUT NOT LIMITED TO
INFORMATION ACCESS). MARKETWATCH RECOGNIZES THAT THE ACCURACY OF THE INFORMATION
SHOULD BE CHECKED BEFORE ITS
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CUSTOMERS RELY ON IT.
(c) IN NO EVENT WILL MARKETWATCH, DBC OR THE DATA PROVIDERS BE
LIABLE TO MARKETWATCH'S CUSTOMERS, EACH OTHER, OR ANY OTHER PARTY FOR ANY
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, TRADING LOSSES, OR DAMAGES THAT RESULT FROM
INCONVENIENCE, DELAY OR LOSS OF THE USE OF THE DATA FEED), OR CLAIMS ARISING IN
TORT (INCLUDING NEGLIGENCE), EVEN IF MARKETWATCH, DBC OR THE DATA PROVIDERS HAVE
BEEN ADVISED OF OR ARE OTHERWISE AWARE OF THE POSSIBILITY OF ANY OF THE
FOREGOING.
(d) Neither MarketWatch, DBC nor the Data Providers shall be
liable for any loss resulting from a cause over which such entities do not have
direct control, including but not limited to the failure of electronic or
mechanical equipment or communication lines, telephone or other interconnect
problems, unauthorized access or theft.
(e) MarketWatch agrees to indemnify and hold DBC and the Data
Providers harmless from and against any and all claims, losses, liability, costs
and expenses (including but not limited to attorneys' fees) to the extent
arising from or relating to MarketWatch's modification of the information
provided by DBC or the Data Providers or of the Data Feed, or the combination of
such information or Data Feed with other information or content, and/or
MarketWatch's violation of this Agreement.
9. ACCOUNTINGS
9.1 DBC will compute Net Revenues or any other transactions on which
monies are payable to MarketWatch as of each March 31, June 30, September 30 and
December 31, for the prior three (3) months. Within sixty (60) days after the
close of the calendar quarterly period concerned, DBC will send MarketWatch a
statement covering the number of subscribers who pay for the feeds described in
Section 1.2 during such quarterly period and will pay MarketWatch for any Net
Revenues or other monies due (including, without limitation, sums due in
connection with the subscriptions concerned).
9.2 DBC will maintain books and records which report the sales and
maintenance of subscriptions hereunder. Any Member of MarketWatch may make an
examination of a particular statement within three (3) years after the date when
DBC sends the statement concerned. Any Member of MarketWatch may review and copy
the books and records of DBC with respect to such statement, upon reasonable
notice during normal working hours.
10. REMEDIES
10.1 MarketWatch shall have the right to terminate this Agreement if:
(a) DBC breaches any material term or condition of this
Agreement and has failed to cure such breach within ten (10) days after
MarketWatch's notice of default. The
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foregoing cure period will not apply to DBC's obligations regarding the
provision of delayed data feeds or to breaches incapable of being cured;
(b) DBC: (i) becomes insolvent or unable to pay its debts as
they mature or makes an assignment for the benefit of its creditors; (ii) is the
subject of a voluntary petition in bankruptcy or any voluntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing; (iii) becomes the subject of any involuntary petition
in bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors, if such
petition or proceeding is not dismissed within sixty (60) days of filing; or
(iv) is liquidated or dissolved; or
(c) MarketWatch is dissolved.
MarketWatch may exercise its rights pursuant to this Section 10.1 by sending DBC
the appropriate notice. No exercise of MarketWatch's rights under this Section
10.1 will limit MarketWatch's remedies by reason of DBC's default, MarketWatch s
rights to exercise any other right under this Section 10.1, or any of
MarketWatch's other rights. The terms and conditions of Sections 4.3 and 7.2
shall survive any termination or expiration of this Agreement.
11. GENERAL
11.1 Neither party may assign this Agreement, or their respective rights
and obligations hereunder, in whole or in part without the other party's prior
written consent. Any attempt to assign this Agreement without such consent shall
be void and of no effect ab initio. Notwithstanding the foregoing, MarketWatch
may have the right to assign this Agreement or any of its rights and obligations
hereunder to any entity controlling, controlled by or under common control with,
MarketWatch, or to any entity that acquires MarketWatch by purchase of stock or
by merger or otherwise, or by obtaining substantially all of MarketWatch's
assets (a "MarketWatch Assignee"), provided that any such MarketWatch Assignee,
or any division thereof, thereafter succeeds to all of the rights and is subject
to all of the obligations of MarketWatch under this Agreement. In the event that
any entity acquires DBC by purchase of stock or by merger or otherwise, or by
obtaining substantially all of DBC's assets (a "DBC Assignee"), such DBC
Assignee shall succeed to all of the rights and be subject to all of the
obligations of DBC under this Agreement and MarketWatch shall be entitled to
injunctive, and other appropriate equitable relief, without the necessity of
posting a bond, to ensure DBC's and the DBC Assignee's compliance with the terms
and conditions of this Agreement.
11.2 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York; applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
11.3 Each party hereto irrevocably submits to the exclusive jurisdiction
of (a) the Supreme Court of the State of New York, New York County, and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby or thereby.
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Each of DBC and MarketWatch agrees to commence any such action, suit or
proceeding either in the United States District Court for the Southern District
of New York or if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in the Supreme Court of the State of New
York, New York County. Each of DBC and MarketWatch further agrees that service
of any process, summons, notice or document by U.S. registered mail to such
party's respective address set forth above shall be effective service of process
for any action, suit or proceeding in New York, with respect to any matters to
which it has submitted to jurisdiction in this Section 11. Each of DBC and
MarketWatch irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby and thereby in (i) the Supreme Court of the
State of New York, New York County, or (ii) the United States District Court for
the Southern District of New York, and hereby and thereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
11.4 Each party shall comply in all material respects with all laws and
regulations applicable to its activities under this Agreement.
11.5 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
11.6 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to MarketWatch,
825 Battery Street
San Francisco, CA 94111
Attention of Larry Kramer and Peter Bardwick
with copies to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention of Mark C. Stevens, Esq.
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(ii) if to DBC,
Data Broadcasting Corporation
3955 Point Eden Way
Hayward, CA 94545-3720
Attention of Mark F. Imperiale, President
with copies to:
Camhy Karlinsky & Stein LLP
1740 Broadway
Sixteenth Floor
New York, NY 10019
Attention of Alan I. Annex, Esq.
CBS Broadcasting Inc.
51 W 52nd Street
New York, NY 10019
Attention of Fredric G. Reynolds
Louis J. Briskman
11.7 The parties to this Agreement are independent contractors. There is
no relationship of partnership, joint venture, employment, franchise, or agency
between the parties. Neither party shall have the power to bind the other or
incur obligations on the other's behalf without the other's prior written
consent.
11.8 No failure of either party to exercise or enforce any of its rights
under this Agreement shall act as a waiver of such right.
11.9 This Agreement, along with the Exhibits thereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other part, in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
11.10 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to each of the other parties.
11.11 This Agreement shall not become effective until executed by all
proposed Parties hereto.
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11.12 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. By an instrument in
writing, any two parties hereto may waive compliance by the third partly with
any term or provision of this Agreement that such third party was or is
obligated to comply with or perform.
11.13 Except as provided in Article VI of the Contribution Agreement,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implies shall give or be construed to
give to any person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
11.14 The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When a reference is made in this Agreement to a Section such
reference shall be to a Section of this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
DATA BROADCASTING CORPORATION MARKETWATCH.COM, LLC
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
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<PAGE> 1
EXHIBIT 10.9
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (this "AGREEMENT") is made and entered
into effective as of October __, 1998 (the "EFFECTIVE DATE") by and between Data
Broadcasting Corporation, a Delaware corporation ("LENDER"), and
MarketWatch.com, Inc., a Delaware corporation ("BORROWER").
RECITALS
WHEREAS, Lender is a party to that certain Limited Liability Company
Agreement dated as of October 29, 1997, between CBS Inc., a New York corporation
("CBS") and Lender, with respect to Marketwatch.Com, LLC, a Delaware limited
liability company (the "LLC"), which provides, among other things, that Lender
shall provide to the LLC, on an unsecured, revolving basis, loans in amounts up
to $5,000,000 (the "REVOLVING LOAN");
WHEREAS, pursuant to the terms of that certain Agreement and Plan of
Reorganization dated as of the date hereof, LLC will merge with and into the
Borrower (the "MERGER"), with Borrower to be the entity surviving the Merger;
WHEREAS, Borrower and Lender desire that Lender's obligation to provide
the Revolving Loan shall survive the Merger;
WHEREAS, Lender desires to loan certain sums to Borrower from time to
time, and Borrower wishes to borrow certain sums from Lender, on and subject to
the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Lender and Borrower hereby, intending
to be legally bound by the terms hereof, agree as follows:
1. CERTAIN DEFINITIONS. As used herein:
1.1 BUSINESS DAY. The term "BUSINESS DAY" means any day other
than a Saturday, Sunday, or other day on which commercial banks in San
Francisco, California are authorized or required by law to close.
1.2 CREDIT PERIOD. The term "CREDIT PERIOD" means that period
of time beginning on the Effective Date and ending on October 29, 2000.
1.3 LOAN DOCUMENTS. The term "LOAN DOCUMENTS" means,
collectively, this Agreement, the Note (as defined below) executed and delivered
pursuant hereto, and any other documents executed or delivered by Borrower
pursuant to this Agreement or in connection with any Loan.
<PAGE> 2
1.4 MATURITY DATE. The term "MATURITY DATE" means that date
which is the earlier to occur of: (a) October 29, 2000; or (b) the date on which
Lender declares the entire unpaid principal amount and all accrued interest on
each outstanding Note immediately due and payable in full under Section 8.2(b).
2. AMOUNT AND TERMS OF CREDIT.
2.1 COMMITMENT TO LEND. Subject to all the terms and
conditions of this Agreement, and in reliance on the representations, warranties
and covenants of Borrower set forth in this Agreement, Lender agrees to make
loans of funds to Borrower during the Credit Period on a revolving basis (such
loans being collectively hereinafter referred to as "LOANS" and each
individually as a "LOAN"), in an aggregate cumulative total principal amount not
to exceed five million Dollars (US $5,000,000). Lender's obligation to make
Loans to Borrower under this Agreement is hereinafter referred to as the
"COMMITMENT." Notwithstanding the foregoing, Lender will not be obligated to
make a Loan to Borrower unless and until Borrower executes and delivers to
Lender a Note (as defined in Section 2.2) for the principal amount of such Loan.
In addition, Lender will not be obligated to advance any Loan to Borrower on or
after the Maturity Date, and Lender's obligation to advance any Loan to Borrower
is subject to satisfaction of all relevant terms and conditions of this
Agreement, including but not limited to the conditions precedent and other
provisions of Sections 5 (with respect to the initial Loan) and 6 (with respect
to each Loan). Notwithstanding the foregoing, Lender will not be obligated to
make a Loan to Borrower unless and until a Borrower first gives Lender written
notice of Borrower's request for a Loan hereunder that sets forth the principal
amount to the borrowed by Borrower under such requested Loan (a "LOAN NOTICE")
and the date on which such Loan is requested to be advanced, which date shall
not be sooner than five (5) Business Days following Lender's receipt of such
Loan Notice.
It is also agreed that amounts previously advanced by Lender
pursuant to Section 12.01 of the Limited Liability Company Agreement dated as of
October 29, 1997 shall be included as part of the Initial Loan.
2.2 NOTE. Borrower's indebtedness to Lender under each Loan
advanced by Lender under this Agreement will be evidenced by a separate
Promissory Note of Borrower in the form attached hereto as Exhibit "A" (the
"NOTE"). The Note will provide that interest on unpaid principal will accrue at
a rate equal to the prime rate as announced by The Chase Manhattan Bank as its
prime rate in effect at its principal office in New York City plus two percent
(2%) per annum (calculated on the basis of a 360-day year) compounded annually
(but in no event higher than the highest lawful rates).
2.3 MATURITY. Unless payment thereof is accelerated or
otherwise becomes due earlier under the terms of this Agreement (including but
not limited to the provisions of Section 8.2) or the terms of a Note the unpaid
principal amount of all Loans and all unpaid interest accrued thereon, together
with any other fees, expenses or costs incurred in connection therewith, will be
immediately due and payable to Lender in full on the Maturity Date.
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<PAGE> 3
2.4 PREPAYMENT. Borrower may at any time and from time to time
on any Business Day prepay any Loan in whole or in part in increments of U.S.
$1,000 on at least one (1) Business Day's prior written notice, or telephonic
notice promptly confirmed in writing, received by Lender no later than 10:00
a.m., Pacific Time. Each prepayment will be applied as follows: (a) first, to
the payment of interest accrued on all Loans outstanding, and (b) second, to the
extent that the amount of such prepayment exceeds the amount of all such accrued
interest, to the payment of principal on such Loan or Loans as Borrower may
designate.
3. CLOSING DATE; DELIVERY.
3.1 CLOSING DATE. The closing of the initial Loan (the
"CLOSING") will be held by mail and/or telecopy on the Effective Date (the
"CLOSING DATE"), or at such other time and place as Borrower and Lender may
mutually agree.
3.2 DELIVERY. At the Closing, Borrower will execute and
deliver to Lender the Note, duly executed by Borrower.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender that:
4.1 ORGANIZATION AND STANDING; CHARTER DOCUMENTS. Borrower is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as such is presently conducted and as proposed to be conducted. Borrower is duly
qualified to do business as a foreign corporation in good standing in any state
or jurisdiction in the United States in which it is required to be qualified to
do intrastate business as the Company's business is currently conducted, except
for jurisdictions in which failure to so qualify could not reasonably be
expected to have a material adverse effect on the business and operations of the
Company taken as a whole. True and accurate copies of the Certificate of
Incorporation (the "CHARTER") and Bylaws of Borrower, each as amended and
currently in effect, have been delivered to Lender and Lender's counsel.
4.2 AUTHORIZATION. All corporate action on the part of
Borrower and its officers, directors and stockholders that is necessary for the
authorization, execution, delivery and performance of each of the Loan Documents
by Borrower has been taken; and each of the Loan Documents, when executed and
delivered by Borrower, will constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their terms.
5. CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of Lender to
make the initial Loan under the Commitment is subject to the satisfaction (or
written waiver by Lender) of all the following conditions precedent:
5.1 REPRESENTATIONS TRUE. All representations and warranties
of Borrower contained in this Agreement and all other Loan Documents will be
true, correct and complete in all respects with the same effect as though such
representations and warranties had been made on
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<PAGE> 4
and as of the Closing; and Lender will have received a certificate executed by
the President or Chief Executive Officer of Borrower certifying the foregoing.
5.2 NOTE. Lender will have received the Note representing the
initial Loan, executed by a duly authorized officer of Borrower.
5.3 CORPORATE DOCUMENTS. Lender will have received, in form
and substance satisfactory to Lender and its counsel, a copy of the records of
all actions taken by Borrower, including all corporate resolutions of Borrower
authorizing or relating to the execution, delivery and performance of the Loan
Documents and the consummation of the transactions contemplated thereby, and a
certified copy of the Charter of Borrower.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents incident to such transactions will be in form and substance
satisfactory to Lender and Lender's counsel, and Lender will have received all
counterpart originals or certified or other copies of such documents as it may
reasonably request.
6. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of Lender to make
each Loan, including but not limited to the initial Loan, will be subject to the
satisfaction of all the following additional conditions precedent:
6.1 NO EVENT OF DEFAULT. No event will have occurred and be
continuing, and no event would result from the making of such Loan, that would
constitute an Event of Default as defined herein.
6.2 NOTE. Lender will have received the Note representing such
additional Loan, executed by a duly authorized officer of Borrower.
6.3 REPRESENTATIONS TRUE. All representations and warranties
of Borrower contained in this Agreement or in any other Loan Documents will be
true, correct and complete in all respects with the same effect as though such
representations and warranties had been made on and as of the date such Loan is
actually advanced (except to the extent such representations and warranties
specifically relate to an earlier date, in which case they will be true,
accurate and complete in all material respects as of such earlier date).
6.4 ALL AGREEMENTS PERFORMED. All agreements, obligations,
conditions and covenants set forth in this Agreement and all other Loan
Documents to be performed by Borrower through the date such Loan is advanced
will have been duly performed and complied with in all respects.
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<PAGE> 5
7. OTHER COVENANTS OF BORROWER. Borrower hereby covenants and agrees
with Lender as follows:
7.1 FINANCIAL AND OTHER INFORMATION AND INSPECTION. Except as
provided in Section 7.3, until the Termination Date, Borrower will provide to
Lender all the reports and rights described below in this Section 7.1:
(a) Annual Financial Information. As soon as
practicable after the end of each fiscal year of Borrower, but no later than one
hundred twenty (120) days thereafter, an audited consolidated balance sheet of
Borrower and its subsidiaries as at the end of such fiscal year, and
consolidated statements of income and cash flows of Borrower and its
subsidiaries for such year, prepared in accordance with generally accepted
accounting principles and setting forth in each case in comparative form the
financial statements for the previous fiscal year, all in reasonable detail and
audited and certified by independent public accountants acceptable to Lender.
(b) Quarterly Financial Information. As soon as
practicable after the end of each fiscal quarter of Borrower, and in any event
within forty-five (45) days thereafter, an unaudited consolidated balance sheet
of Borrower and its subsidiaries as at the end of such quarter and consolidated
statements of income and cash flows of Borrower and its subsidiaries for each
such quarter and for the fiscal year to date, prepared in accordance with
generally accepted accounting principles, all in reasonable detail.
(c) Inspection Rights. The right to visit and inspect
any of the properties of Borrower or any of its subsidiaries, and to discuss its
and their affairs and finances with its and their officers, all at such
reasonable times and as often as may reasonably be requested by Lender.
(d) Other Information. With reasonable promptness,
such other information and data, including, without limitation, lists of
property and accounts, budgets, agreements with insurers, forecasts, tax returns
and reports, with respect to Borrower and its subsidiaries as may from time to
time may be reasonably requested by Lender, and all such other information and
communications (including, without limitation, notices of meetings of Borrower's
shareholders) as Borrower will have supplied to its holders of any shares of its
capital stock.
7.2 TERMINATION OF COVENANTS. The covenants set forth in
Sections 7.1 and 7.2 will terminate on the earlier of: (a) the date upon which a
registration statement filed by Borrower under the Securities Act of 1933, as
amended, in connection with a firm commitment underwritten public offering of
its securities first becomes effective and the securities registered thereunder
are sold; (b) the date Borrower first becomes subject to filing reports under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; or (c)
the repayment in full of all indebtedness under all Notes, provided that Lender
is under no further obligation to make any additional Loans hereunder.
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<PAGE> 6
7.3 FURTHER ASSURANCES. In addition to the obligations and
documents which this Agreement expressly requires Borrower to execute, deliver
and perform, Borrower will execute, deliver and perform, and will cause its
subsidiaries to execute, deliver and perform, any and all further acts or
documents which Lender may reasonably require in order to carry out the purposes
of this Agreement or any of the other Loan Documents.
8. EVENTS OF DEFAULT OF BORROWER.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following
events will constitute an "EVENT OF DEFAULT":
(a) Borrower fails to pay any principal or any
accrued interest under any Note or any Loan when the same is due and payable, or
fails to pay any amount of principal or accrued interest due under any Note or
any Loan on the Maturity Date therefor, and such failure to pay is not cured by
Borrower within five (5) calendar days after Lender gives written notice of such
failure to pay to Borrower;
(b) any material representation or warranty made by
or on behalf of Borrower in this Agreement or in any other Loan Document, or any
statement or certificate that Borrower may at any time give in writing pursuant
thereto or in connection therewith is false, misleading or incomplete in any
material respect when made (or deemed to have been made);
(c) Borrower fails or neglects to perform, keep or
observe any covenant set forth in this Agreement or in any of the other Loan
Documents, and the same has not been cured within ten (10) calendar days after
Borrower becomes aware thereof;
(d) Borrower or any of its subsidiaries becomes
insolvent, or admits in writing its inability to pay its debts as they mature,
or makes an assignment for the benefit of creditors, or applies for or consents
to the appointment of a receiver, liquidator, custodian or trustee for it or for
a substantial part of its property or business, or such a receiver, liquidator,
custodian or trustee otherwise is appointed and is not discharged within thirty
(30) calendar days after such appointment; or
(e) bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors are instituted by or against Borrower or
any of its subsidiaries, or any order, judgment or decree is entered against
Borrower or any such subsidiary decreeing its dissolution or liquidation;
provided, however, with respect to an involuntary petition in bankruptcy, such
petition is not have been dismissed within thirty (30) days after the filing of
such petition.
8.2 REMEDIES OF LENDER. Upon and after the occurrence of any
Event of Default, Lender will have no further obligation to make any Loan or
Loans to Borrower, and in addition, at Lender's sole option by written notice to
Borrower, Lender take any one or more of the following actions:
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<PAGE> 7
(a) Lender may immediately terminate the Commitment
and all liabilities and obligations of Lender under this Agreement, without
affecting Lender's rights under this Agreement and the Note(s);
(b) Lender may declare the entire principal amount of
and all accrued interest on the Note(s) and all Loans to immediately be due and
payable in full, whereupon such amounts will immediately become due and payable
in full, provided that in the case of an Event of Default listed in paragraph
(d) or (e) of Section 8.1, the principal and interest will immediately become
due and payable without the requirement of any notice or other action by Lender;
and
(c) Exercise all rights and remedies granted under
the Loan Documents or otherwise available to Lender at law or in equity.
9. MISCELLANEOUS.
9.1 SURVIVAL. The representations and warranties of Borrower
contained in or made pursuant to this Agreement and all the other Loan Documents
will survive the execution and delivery of the Loan Documents.
9.2 ENTIRE AGREEMENT. This Agreement, the Note, and the
exhibits and schedules attached hereto constitute the entire agreement and
understanding among the parties with respect to the subject matter thereof and
supersede any prior understandings or agreements of the parties with respect to
such subject matter.
9.3 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties; provided, however, that neither party may
assign or delegate any of its rights or obligations hereunder or under any other
Loan Document or any interest herein or therein without the other party's prior
written consent.
9.4 NO THIRD PARTY BENEFICIARIES; CONSTRUCTION. Nothing in
this Agreement, express or implied, is intended to confer upon any third party
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. This Agreement and
its exhibits are the result of negotiations between the parties and has been
reviewed by each party hereto; accordingly, this Agreement will be deemed to be
the product of the parties hereto, and no ambiguity will be construed in favor
of or against any party.
9.5 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California as
applied to agreements entered into solely between residents of, and to be
performed entirely in, such State, without reference to that body of law
relating to conflicts of law or choice of law.
9.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed in original, but all of which
together will constitute one and the same instrument.
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<PAGE> 8
9.7 NOTICES. Any notice required or permitted under this
Agreement will be given in writing and will be deemed effectively given upon
personal delivery; upon confirmed transmission by telecopy or telex; or three
(3) days following deposit with the United States Post Office, by certified or
registered mail, postage prepaid, addressed:
To Borrower:
MarketWatch.Com, Inc.
825 Battery Street
San Francisco, CA 94111
Telephone: (415) 733-0500
Telecopier: (415) 392-1972
Attention: J. Peter Bardwick
To Lender:
Data Broadcasting Corporation
3955 Point Eden Way
Hayward, CA 94545
Telephone: (510) 266-6000
Telecopier: (510) 266-6018
Attention: Mark Imperiale
or at such other address as such party may specify by written notice given in
accordance with this Section.
9.8 MODIFICATION; WAIVER. This Agreement may be modified or
amended only by a writing signed by both parties hereto. No waiver or consent
with respect to this Agreement will be binding unless it is set forth in writing
and signed by the party against whom such waiver is asserted. No course of
dealing between Borrower and Lender will operate as a waiver or modification of
any party's rights under this Agreement or any other Loan Document. No delay or
failure on the part of either party in exercising any right or remedy under this
Agreement or any other Loan Document will operate as a waiver of such right or
any other right. A waiver given on one occasion will not be construed as a bar
to, or as a waiver of, any right or remedy on any future occasion.
9.9 RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies of
Lender herein provided will be cumulative and not exclusive of any other rights
or remedies provided by law or otherwise.
9.10 SEVERABILITY. Any invalidity, illegality or
unenforceability of any provision of this Agreement in any jurisdiction will not
invalidate or render illegal or unenforceable the remaining provisions hereof in
such jurisdiction and will not invalidate or render illegal or unenforceable
such provision in any other jurisdiction.
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<PAGE> 9
9.11 ATTORNEYS' FEES. If any party hereto commences or
maintains any action at law or in equity (including counterclaims or
cross-complaints) against the other party hereto by reason of the breach or
claimed breach of any term or provision of this Agreement or any other Loan
Document, then the prevailing party in said action will be entitled to recover
its reasonable attorney's fees and court costs incurred therein.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the Effective Date.
MARKETWATCH.COM, INC. DATA BROADCASTING CORPORATION
By:____________________________ By:________________________________
Title:_________________________ Title:_____________________________
ATTACHMENTS:
Exhibit A - Promissory Note
[SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT]
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<PAGE> 10
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
REVOLVING
PROMISSORY NOTE
San Francisco, California
$5,000,000.00 ________________, 1998
This Revolving Promissory Note (this "NOTE") is made and delivered
pursuant to that certain Revolving Credit Agreement dated as of __________, 1998
between Borrower and Lender (as such terms are defined below), as such may be
amended from time to time (the "CREDIT AGREEMENT"). Unless otherwise defined
herein, all capitalized terms used in this Note shall have the same meanings
that are given to such terms in the Credit Agreement, the terms of which are
incorporated into this Note by reference.
1. OBLIGATION. The undersigned, MarketWatch.com, Inc., a Delaware
corporation ("BORROWER") hereby promises to pay to the order of Data
Broadcasting Corporation, a Delaware corporation, ("LENDER" OR "HOLDER") on or
before October 27, 2000, at Lender's principal place of business at
____________________________________, or at such other place as Holder may
direct, the principal sum of five million Dollars ($5,000,000.00) or so much
thereof as may be advanced and outstanding, together with all interest accrued
on unpaid principal, to be computed on each advance of a Loan from the date of
its disbursement to Borrower, at a rate equal to the prime rate as announced by
The Chase Manhattan Bank as its prime rate in effect at its principal office in
New York City plus two percent (2%) per annum (calculated on the basis of a
360-day year), compounded annually. As used herein, the term "HOLDER" shall
initially mean Lender, and shall subsequently mean each person or entity to whom
this Note is duly assigned.
The outstanding unpaid principal balance of this Note at any time shall
be the total principal amounts advanced hereunder by Holder less the amounts of
payments of principal made hereon by Borrower, which balance may be endorsed
hereon from time to time by Holder
<PAGE> 11
in accordance with Section 2. Payments of interest on this Note shall be payable
on a quarterly basis, on the last business day of each calendar quarter.
2. RECORDING OF LOANS AND PAYMENTS. Holder is authorized to record on
Schedule A hereto, and on any continuation(s) of such Schedule that may be
attached to this Note: (a) the date and principal amount of each Loan advanced
by Lender under the Credit Agreement; and (b) the date and amount of each
payment or prepayment of principal and/or accrued interest of any Loan; which
recordation will constitute prima facie evidence of the accuracy of the
information so endorsed on Schedule A; provided however, that any failure to
record such information on such Schedule or continuation thereof will not in any
manner affect the obligations of Borrower to make payments of principal and
interest in accordance with the terms of this Note. Holder will promptly provide
Borrower with a copy of each recordation made by Holder on Schedule A attached
hereto.
3. PREPAYMENT. Prepayment of unpaid principal and/or interest due under
this Note may be made at any time without penalty as specified in the Credit
Agreement. Unless otherwise agreed in writing by Holder, all payments will be
made in lawful tender of the United States and will be applied (a) first, to the
payment of accrued interest, and (b) second, (to the extent that the amount of
such prepayment exceeds the amount of all such accrued interest), to the payment
of principal.
4. DEFAULT; ACCELERATION OF OBLIGATION. Borrower will be deemed to be
in default under this Note and the outstanding unpaid principal balance of this
Note, together with all interest accrued thereon, will immediately become due
and payable in full, without the need for any further action on the part of
Holder, upon the occurrence of any Event of Default (as defined in the Credit
Agreement).
5. REMEDIES ON DEFAULT; ACCELERATION. Upon any Event of Default, Holder
will have, in addition to its rights and remedies under this Note and the Credit
Agreement, full recourse against any real, personal, tangible or intangible
assets of Borrower, and may pursue any legal or equitable remedies that are
available to Holder, and may declare the entire unpaid principal amount of this
Note and all unpaid accrued interest under this Note to be immediately due and
payable in full.
6. WAIVER AND AMENDMENT. Any provision of this Note may be amended or
modified only by a writing signed by both Borrower and Holder. Except as
provided below with respect to waivers by Borrower, no waiver or consent with
respect to this Note will be binding or effective unless it is set forth in
writing and signed by the party against whom such waiver is asserted. No course
of dealing between Borrower and Holder will operate as a waiver or modification
of any party's rights or obligations under this Note. No delay or failure on the
part of either party in exercising any right or remedy under this Note will
operate as a waiver of such right or any other right. A waiver given on one
occasion will not be construed as a bar to, or as a waiver of, any right or
remedy on any future occasion.
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<PAGE> 12
7. WAIVERS OF BORROWER. Borrower hereby waives presentment, notice of
non-payment, notice of dishonor, protest, demand and diligence. This Note may be
amended only by a writing executed by Borrower and Holder.
8. GOVERNING LAW. This Note will be governed by and construed in
accordance with the internal laws of the State of California as applied to
agreements between residents thereof to be performed entirely within such State,
without reference to that body of law relating to conflict of laws or choice of
law.
9. SEVERABILITY; HEADINGS. The invalidity or unenforceability of any
term or provision of this Note will not affect the validity or enforceability of
any other term or provision hereof. The headings in this Note are for
convenience of reference only and will not alter or otherwise affect the meaning
of this Note.
10. JURISDICTION; VENUE. Borrower, by its execution of this Note,
hereby irrevocably submits to the in personam jurisdiction of the state courts
of the State of California and of the United States District Court for the
Northern District of California that are located in San Francisco, California,
for the purpose of any suit, action or other proceeding arising out of or based
upon this Note.
11. ATTORNEYS' FEES. If suit is brought for collection of this Note,
Borrower agrees to pay all reasonable expenses, including attorneys' fees,
incurred by Holder in connection therewith whether or not such suit is
prosecuted to judgment.
12. ASSIGNMENT. This Note is not assignable by Holder without the
written consent of Borrower. This Note may not be assigned or delegated by
Borrower, whether by voluntary assignment or transfer, operation of law, merger
or otherwise.
13. CREDIT AGREEMENT. This Note incorporates by reference all the
provisions of the Credit Agreement, including but not limited to all provisions
contained therein with respect to Events of Default, waivers, remedies and
covenants, and the description of the benefits, rights and obligations of each
of Borrower and Holder under the Credit Agreement.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and
year first above written.
BORROWER
MarketWatch.com, Inc. a Delaware corporation
By:________________________________________
Name:______________________________________
Title:_____________________________________
<PAGE> 13
SCHEDULE A
TO
REVOLVING PROMISSORY NOTE
OF
MARKETWATCH.COM, INC.
RECORD OF LOANS AND REPAYMENT OF LOANS
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT UNPAID
AMOUNT AMOUNT OF PRINCIPAL
OF OF INTEREST BALANCE NOTATION
DATE LOAN MADE LOAN REPAID PAID OF LOAN MADE BY
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<S> <C> <C> <C> <C> <C>
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</TABLE>
-4-
<PAGE> 1
EXHIBIT 10.10
NO.
----------------
MARKETWATCH.COM, LLC
OPTION AGREEMENT
This Option Agreement ("AGREEMENT") is made and entered into as of the date
of grant set forth below (the "DATE OF GRANT") by and between Marketwatch.Com,
LLC, a Delaware limited liability company (the "COMPANY"), and the participant
named below ("OPTIONEE"). Certain initially capitalized terms used herein have
the meaning ascribed to them in Section 10.
OPTIONEE:
--------------------------------------
SOCIAL SECURITY NUMBER:
--------------------------------------
ADDRESS:
--------------------------------------
--------------------------------------
PERCENTAGE INTEREST:
--------------------------------------
AGGREGATE EXERCISE PRICE:
--------------------------------------
DATE OF GRANT:
--------------------------------------
FIRST VESTING DATE:
--------------------------------------
EXPIRATION DATE:
--------------------------------------
(unless earlier terminated under Section 3 below)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this
"OPTION") to purchase the percentage of "Interest" (as defined in the Limited
Liability Company Agreement, dated as of October 29, 1997, as amended from time
to time (the "LLC Agreement") between CBS Inc., a New York corporation, and Data
Broadcasting Corporation, a Delaware corporation) in the Company set forth above
as Percentage Interest (the "OPTIONEE INTEREST") at the Aggregate Exercise Price
set forth above (the "AGGREGATE EXERCISE PRICE"), subject to all of the terms
and conditions of this Agreement. The Company has decided to issue options to
persons performing services for the Company to allow them to purchase Interests
(as defined in the LLC Agreement) such that if all such options were exercised
the persons exercising them would own ten percent (10%) of the total of all
Interests in the Company assuming that all such options were exercised on the
date the LLC Agreement was first executed, October 29, 1997. The term "Total
Interest" means the Company's fully-diluted equity on such date after giving
effect to such option exercises.
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Provided Optionee continues to provide
services to the Company or any Affiliate of the Company, the Option shall become
vested and
<PAGE> 2
exercisable as to portions of the Optionee Interest as follows: (a) This Option
shall not vest with respect to any of the Optionee Interest until the First
Vesting Date set forth above; (b) on the First Vesting Date the Option shall
vest as to one third of the Optionee Interest and (c) thereafter each year on
the anniversary of the First Vesting Date the Option shall vest as to an
additional one third of the Optionee Interest until this Option is vested with
respect to all of the Optionee Interest on the third vesting date.
2.2 Vesting of Options. An Optionee Interest that is vested pursuant
to the schedule set forth in Section 2.1 is a "VESTED INTEREST." An Optionee
Interest that is not vested pursuant to the schedule set forth in Section 2.1 is
an "UNVESTED INTEREST." An Unvested Interest may not be sold or otherwise
transferred by Optionee without the Company's prior written consent.
2.3 Expiration. The Option shall expire on the Expiration Date set
forth above or earlier as provided in Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. If
Optionee is Terminated for any reason, except death, Disability or for Cause,
the Option, to the extent (and only to the extent) that it would have been
exercisable by Optionee on the Termination Date, may be exercised as to some or
all of the Vested Interest by Optionee no later than three (3) months after the
Termination Date, but in any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or Optionee dies within
three (3) months of Termination occurring other than because of Optionee's
Disability or for Cause), the Option, to the extent that it is exercisable by
Optionee on the Termination Date, may be exercised by Optionee (or Optionee's
legal representative) as to some or all of the Vested Interest no later than
twelve (12) months after the Termination Date, but in any event no later than
the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause, then
the Option will expire on Optionee's Termination Date, or at such later time and
on such conditions as are determined by the Committee.
3.4 No Obligation to Employ. Nothing in this Agreement shall confer
on Optionee any right to continue in the employ of, or other relationship with,
the Company or any Affiliate of the Company, or limit in any way the right of
the Company or any Affiliate of the Company to terminate Optionee's employment
or other relationship at any time, with or without Cause.
-2-
<PAGE> 3
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Optionee (or in the case of exercise after Optionee's death or incapacity,
Optionee's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, inter alia,
Optionee's election to exercise the Option, the proportion of the Optionee
Interest being purchased (the "PURCHASED INTEREST"), any restrictions imposed on
the Optionee Interest and any representations, warranties and agreements
regarding Optionee's investment intent and access to information as may be
required by the Company to comply with applicable securities laws. If someone
other than Optionee exercises the Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise the Option.
4.2 Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise.
4.3 Limited Liabilities. The Exercise Agreement shall be accompanied
by an executed signature page of the LLC Agreement.
4.4 Payment. The Exercise Agreement shall be accompanied by full
payment of the product of (i) the Aggregate Exercise Price and (ii) the fraction
the numerator of which is the Purchased Interest and the denominator of which is
the aggregate Optionee Interest issuable pursuant to this Agreement (such
product, the "EXERCISE PRICE") in cash (by check or wire transfer), or where
permitted by law:
(a) by cancellation of indebtedness of the Company to the
Optionee;
(b) by waiver of compensation due or accrued to Optionee for
services rendered; or
(c) by any combination of the foregoing.
4.5 Tax Withholding. Prior to the receipt of the Optionee Interest
upon exercise of the Option, Optionee must pay or provide for any applicable
federal, state and local tax withholding obligations of the Company.
4.6 Acquisition of Purchased Interest. Provided that the Exercise
Agreement and payment are in form and substance satisfactory to counsel for the
Company, Optionee shall have acquired the Purchased Interest, which represents
an Interest in the Company, and shall be a member of the Company having the
rights, privileges and obligations as set forth in the LLC Agreement.
-3-
<PAGE> 4
5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of an Optionee Interest shall be subject to compliance
by the Company and Optionee with all applicable requirements of federal and
state securities laws and with all applicable requirements of any stock exchange
on which an Optionee Interest in the Company may be listed at the time of such
issuance or transfer. Optionee understands that the Company is under no
obligation to register or qualify an Optionee Interest with the SEC, any state
securities commission or any stock exchange to effect such compliance.
6. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Optionee only by Optionee or in the event of
Optionee's incapacity, by Optionee's legal representative. The terms of this
Agreement shall be binding upon the executors, administrators, successors and
assigns of Optionee.
7. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Vested Interest held by
Optionee or any transferee of such Vested Interest may be sold or otherwise
transferred (including without limitation a transfer by gift or operation of
law), the Company and/or its assignee(s) shall have an assignable right of first
refusal to purchase the Vested Interest to be sold or transferred on the terms
and conditions set forth in the Exercise Agreement (the "RIGHT OF FIRST
REFUSAL"). The Right of First Refusal will terminate when the Company's
securities become publicly traded.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of May 31,
1998 of some of the federal and California tax consequences of exercise of the
Option and disposition of the Optionee Interest. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
OPTIONEE INTEREST.
8.1 Exercise of Option. There may be a regular federal and California
income tax liability upon the exercise of the Option. Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Optionee Interest
on the date of exercise over the Exercise Price attributable to the acquisition
of such Optionee Interest. If Optionee is a current or former employee of the
Company, the Company may be required to withhold from Optionee's compensation or
collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
8.2 Disposition of Optionee Interest. The following tax consequences
may apply upon disposition of an Optionee Interest.
(a) Optionee Interest Options. If the Optionee Interest is held
for more than twelve (12) months after the date of the transfer of the Optionee
Interest pursuant to the exercise of an Option, any gain realized on disposition
of the Optionee Interest will be
-4-
<PAGE> 5
treated as mid-term capital gain or long-term capital gain, depending on how
long the Optionee Interest has been held.
(b) Withholding. The Company may be required to withhold from
the Optionee's compensation or collect from the Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
8.3 Tax Consequences of Ownership of Optionee Interest. Upon
effective exercise of an Option pursuant hereto, Optionee will become a member
of the Company. The Company is a partnership for federal income tax purposes;
accordingly, as long as Optionees are members of the Company, they will be
allocated portions of the Company's income, gain, loss, credit or deduction
pursuant to the Code, the California income tax law and the terms of the LLC
Agreement. Upon the sale or other dispostion of a Member's membership interest,
income tax treatment will be governed by the portion of the Code and the
California income tax law that apply to transactions involving partners and
partnerships. OPTIONEE SHOULD REVIEW THE LLC AGREEMENT AND CONSULT A TAX ADVISER
AS TO THE TAX CONSEQUENCES OF BECOMING A MEMBER OF THE COMPANY, PRIOR TO
EXERCISING THE OPTION.
9. PRIVILEGES OF INTEREST OWNERSHIP. Optionee shall not have any of the
rights of a member of the Company until a Membership Interest is issued to
Optionee.
10. DEFINITIONS. As used herein, the following terms have the following
meanings:
"AFFILIATE" means any entity that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, another entity, where "control" (including the terms "controlled by" and
"under common control with") means possession, direct or indirect, of the power
to cause the direction of the management and policies of the entity, whether
through the ownership of voting securities, by contract or otherwise.
"BOARD" means the Management Committee of the Company.
"CAUSE" means Termination because of (i) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or an Affiliate of the Company, the Participant's conviction for,
or guilty plea to, a felony or a crime involving moral turpitude, any willful
perpetration by the Participant of a common law fraud, (ii) the Participant's
commission of an act of personal dishonesty which involves personal profit in
connection with the Company or any other entity having a business relationship
with the Company, (iii) any material breach by the Participant of any provision
of any agreement or understanding between the Company or any Affiliate of the
Company and the Participant regarding the terms of the Participant's service as
an employee, director or consultant to the Company or an Affiliate of the
Company, including without limitation, the willful and continued failure or
refusal of the Participant to perform the material duties required of such
Participant as an employee, director or consultant of the Company or an
Affiliate of the Company, other than as a result of having a Disability, or a
breach of any applicable invention assignment and
-5-
<PAGE> 6
confidentiality agreement or similar agreement between the Company and the
Participant, (iv) Participant's disregard of the policies of the Company or any
Affiliate of the Company so as to cause loss, damage or injury to the property,
reputation or employees of the Company or an Affiliate of the Company, or (v)
any other misconduct by the Participant which is materially injurious to the
financial condition or business reputation of, or is otherwise materially
injurious to, the Company or an Affiliate of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer
this Agreement, or if no committee is appointed, the Board.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"FAIR MARKET VALUE" means, as of any date, the value of any Interest
in the Company determined as follows:
(a) if the value of the Company is then quoted on the Nasdaq
National Market, the proportion of its closing price on the
Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
(b) if the Company is publicly traded and is then listed on a
national securities exchange, the proportion of its closing
price on the date of determination on the principal national
securities exchange on which the Company is listed or
admitted to trading as reported in The Wall Street Journal;
(c) if the Company is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on
a national securities exchange, the proportion of the
average of the closing bid and asked prices on the date of
determination as reported by The Wall Street Journal (or, if
not so reported, as otherwise reported by any newspaper or
other source as the Board may determine); or
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"SEC" means the Securities and Exchange Commission.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company
or an Affiliate of the Company. A Participant will not be deemed to have ceased
to provide services in the case of (i) sick leave, (ii) military leave, or (iii)
any other leave of absence approved by the Committee, provided that such leave
is for a period of not more than ninety (90) days unless reinstatement upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing. In the case of any Participant on
(i) sick leave, (ii) military leave or (iii) an approved leave of absence, the
-6-
<PAGE> 7
Committee may make such provisions respecting suspension of vesting of the
Option while on leave from the Company as it may deem appropriate, except that
in no event may an Option be exercised after the expiration of the term set
forth in the Option Agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").
11. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior undertakings and agreements with respect to
the subject matter hereof.
13. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company at its principal corporate offices. Any notice required to be given or
delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated above or to such other address as such party may designate in
writing from time to time to the Company. All notices shall be deemed to have
been given or delivered upon personal delivery; three (3) days after deposit in
the United States mail by certified or registered mail (return receipt
requested); one (1) business day after deposit with any return receipt express
courier (prepaid); or one (1) business day after transmission by facsimile or
telecopier.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Agreement including its rights to repurchase an Optionee Interest under
Right of First Refusal. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
16. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of this
Agreement. Optionee has read and understands the terms and provisions thereof,
and accepts the Option subject to all the terms and conditions of this
Agreement. Optionee acknowledges that there may be adverse tax consequences upon
exercise of the Option or disposition of the Optionee Interest and that Optionee
should consult a tax adviser prior to such exercise or disposition.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized representative and Optionee has executed this Agreement as
of the Date of Grant.
MARKETWATCH.COM, LLC OPTIONEE
By:
--------------------------------- -----------------------------------
Larry Kramer (Signature)
-----------------------------------
(Please print name)
-----------------------------------
(Please print title)
-8-
<PAGE> 9
EXHIBIT A
EXERCISE AGREEMENT
-9-
<PAGE> 10
MARKETWATCH.COM, LLC
OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of __________,
19___ (the "EFFECTIVE DATE") by and between Marketwatch.Com, LLC, a Delaware
limited liability company (the "COMPANY"), and the purchaser named below (the
"PURCHASER"). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Option Agreement.
PARTICIPANT:
----------------------------------------------------
----------------------------------------------------
SOCIAL SECURITY NUMBER:
----------------------------------------------------
ADDRESS:
----------------------------------------------------
----------------------------------------------------
PURCHASED PERCENTAGE INTEREST:
----------------------------------------------------
EXERCISE PRICE:
----------------------------------------------------
1. EXERCISE OF OPTION.
1.1 Exercise. Pursuant to exercise of that certain option (the
"OPTION") granted to Purchaser and subject to the terms and conditions of this
Exercise Agreement, Purchaser hereby purchases from the Company, and the Company
hereby sells to Purchaser, the Percentage Interest of the Company set forth
above (the "PURCHASED INTEREST") at the Exercise Price set forth above (the
"EXERCISE PRICE").
1.2 Payment. Purchaser hereby delivers payment of the Exercise Price
in the manner permitted in the Option Agreement as follows (check and complete
as appropriate):
[ ] in cash (by check) in the amount of $____________, receipt of
which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Purchaser
in the amount of $________________;
[ ] by the waiver hereby of compensation due or accrued for
services rendered in the amount of $_________.
<PAGE> 11
2. DELIVERY.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company
(i) this Exercise Agreement (ii) a signature page to the Limited Liability
Company Agreement, dated as of October 29, 1997, as amended (the "LLC
AGREEMENT") between CBS Inc., a New York corporation, and Data Broadcasting
Corporation, a Delaware corporation, and (iii) the Exercise Price and payment or
other provision for any applicable tax obligations.
2.2 Deliveries by the Company. Upon the Company's receipt of the
Exercise Price, payment or other provision for any applicable tax obligations
and all the documents to be executed and delivered by Purchaser to the Company
under Section 2.1, Purchaser shall have acquired the Purchased Interest, which
represents an "Interest" (as defined in the LLC Agreement) in the Company, and
shall be a member of the Company having the rights, privileges and obligations
as set forth in the LLC Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the
Option Agreement and the LLC Agreement, has read and understands the terms of
the Option Agreement, the LLC Agreement and this Exercise Agreement, and agrees
to be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Purchased Interest, and that Purchaser should consult a tax advisor prior to
such exercise or disposition.
3.2 Purchase for Own Account for Investment. Purchaser is purchasing
the Purchased Interest for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Purchased Interest within the meaning of the Securities Act. Purchaser has no
present intention of selling or otherwise disposing of all or any portion of the
Purchased Interest and no one other than Purchaser has any beneficial ownership
of any of the Purchased Interest.
3.3 Access to Information. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Purchased Interest, and
Purchaser has had ample opportunity to ask questions of the Company's
representatives concerning such matters and this investment.
3.4 Understanding of Risks. Purchaser is fully aware of: (i) the
highly speculative nature of the investment in the Purchased Interest; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Purchased
Interest and the restrictions on transferability of the Purchased Interest
(e.g., that Purchaser may not be able to sell or dispose of the Purchased
Interest or use the Purchased Interest as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Purchased Interest. Purchaser is capable of
evaluating the merits and risks of this investment, has the ability to protect
Purchaser's own Purchased Interests in this transaction and is financially
capable of bearing a total loss of this investment.
3.5 No General Solicitation. At no time was Purchaser presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Purchased Interest.
4. COMPLIANCE WITH SECURITIES LAWS.
4.1 Compliance with U.S. Federal Securities Laws. Purchaser
understands and acknowledges that the Purchased Interest has not been registered
with the SEC under the Securities Act and that, notwithstanding any other
provision of the Option Agreement to the contrary, the exercise of any rights to
purchase
2
<PAGE> 12
any Purchased Interest is expressly conditioned upon compliance with the
Securities Act and all applicable state securities laws. Purchaser agrees to
cooperate with the Company to ensure compliance with such laws. The Purchased
Interest is being issued under the Securities Act pursuant to (the Company will
check the applicable box).
[ ] the exemption provided by SEC Rule 701;
[ ] the exemption provided by SEC Rule 504;
[ ] Section 4(2) of the Securities Act;
[ ] other: ____________________
4.2 Compliance with California Securities Laws. THE SALE OF THE
SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED
WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
5. RESTRICTED SECURITIES.
5.1 No Transfer Unless Registered or Exempt. Purchaser understands
that Purchaser may not transfer the Purchased Interest unless such Purchased
Interest is registered under the Securities Act or qualified under applicable
state securities laws or unless, in the opinion of counsel to the Company,
exemptions from such registration and qualification requirements are available.
Purchaser understands that only the Company may file a registration statement
with the SEC and that the Company is under no obligation to do so with respect
to the Purchased Interest. Purchaser has also been advised that exemptions from
registration and qualification may not be available or may not permit Purchaser
to transfer all or any of the Purchased Interest in the amounts or at the times
proposed by Purchaser.
6. RESTRICTIONS ON TRANSFERS.
6.1 Disposition of Purchased Interest. Purchaser hereby agrees that
Purchaser shall make no disposition of the Purchased Interest (other than as
permitted by this Exercise Agreement) unless and until:
(a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;
(b) Purchaser shall have complied with all requirements of this
Exercise Agreement applicable to the disposition of the Purchased Interest; and
(c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Purchased
Interest under the Securities Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) has been taken.
6.2 Restriction on Transfer. Purchaser shall not transfer, assign,
grant a lien or security interest in, pledge, hypothecate, encumber or otherwise
dispose of the Purchased Interest which is subject to the Right of First Refusal
(as defined herein), except as permitted by this Exercise Agreement.
6.3 Transferee Obligations. Each person (other than the Company) to
whom the Purchased Interest is transferred by means of one of the permitted
transfers specified in this Exercise Agreement must, as a condition precedent to
the validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Exercise Agreement.
3
<PAGE> 13
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of the Purchased Interest without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) after the effective date of
such registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Purchased Interest held
by Purchaser or any transferee of such Purchased Interest (either being
sometimes referred to herein as the "Holder") may be sold or otherwise
transferred (including without limitation a transfer by gift or operation of
law), the Company and/or its assignee(s) shall have an assignable right of first
refusal to purchase the Purchased Interest to be sold or transferred (the
"OFFERED INTEREST") on the terms and conditions set forth in this Section (the
"RIGHT OF FIRST REFUSAL").
8.1 Notice of Proposed Transfer. The Holder of the Offered Interest
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered Interest;
(ii) the name of each proposed bona fide purchaser or other transferee
("PROPOSED TRANSFEREE"); (iii) the proportion of the Offered Interest to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Offered Interest
(the "OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered
Interest to the Company and/or its assignee(s) at the Offered Price as provided
in this Section.
8.2 Exercise of Right of First Refusal. At any time within thirty
(30) days after the date of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all (or, with the
consent of the Holder, less than all) the Offered Interest proposed to be
transferred to any one or more of the Proposed Transferees named in the Notice,
at the purchase price determined as specified below.
8.3 Purchase Price. The purchase price for the Offered Interest
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Board.
8.4 Payment. Payment of the Offered Price will be payable, at the
option of the Company and/or its assignee(s) (as applicable), by check or by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or to such assignee, in the case of a purchase of Offered
Interest by such assignee) or by any combination thereof. The Offered Price will
be paid without interest within sixty (60) days after the Company's receipt of
the Notice, or, at the option of the Company and/or its assignee(s), in the
manner and at the time(s) set forth in the Notice.
8.5 Holder's Right to Transfer. If all of the Offered Interest
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Interest to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and provided further, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Interest in the hands of such Proposed Transferee. If
the Offered Interest described in the Notice is not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
the Purchased Interest held by the Holder may be sold or otherwise transferred.
8.6 Termination of Right of First Refusal. The Company's Right of
First Refusal will terminate when the Company's securities become publicly
traded.
9. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
4
<PAGE> 14
THE PURCHASED INTEREST. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH
ANY TAX ADVISOR PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE PURCHASED INTEREST AND THAT PURCHASER IS NOT RELYING ON THE
COMPANY FOR ANY TAX ADVICE.
10. GOVERNING LAW; SEVERABILITY. This Exercise Agreement shall be governed
by and construed in accordance with the internal laws of the State of California
as such laws are applied to agreements between California residents entered into
and to be performed entirely within California. If any provision of this
Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.
11. NOTICES. Any notice required to be given or delivered to the Company
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, three (3) days after deposit in the United States mail
by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or one (1)
business day after transmission by rapifax or telecopier.
12. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.
13. HEADINGS. The captions and headings of this Exercise Agreement are
included for ease of reference only and will be disregarded in interpreting or
construing this Exercise Agreement. All references herein to Sections will refer
to Sections of this Exercise Agreement.
14. ENTIRE AGREEMENT. The Option Agreement, the LLC Agreement and this
Exercise Agreement constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Exercise Agreement, and
supersede all prior understandings and agreements, whether oral or written,
between the parties hereto with respect to the specific subject matter hereof.
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<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in triplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date.
MARKETWATCH.COM, LLC PURCHASER
By:
------------------------------ ----------------------------------
(Signature)
- ---------------------------------- ----------------------------------
(Please print name) (Please print name)
- ---------------------------------- ----------------------------------
(Please print title)
[SIGNATURE PAGE TO MARKETWATCH.COM, LLC OPTION EXERCISE AGREEMENT]
6
<PAGE> 1
EXHIBIT 10.11
MARKETWATCH.COM, INC.
1998 DIRECTORS STOCK OPTION PLAN
As Adopted September 8, 1998
1. PURPOSE. This 1998 Directors Stock Option Plan (this "PLAN") is
established to provide equity incentives for certain nonemployee members of the
Board of Directors of MarketWatch.com, Inc. (the "Company"), who are described
in Section 6.1 below, by granting such persons options to purchase shares of
stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. After this Plan is adopted by the
Board of Directors of the Company (the "BOARD"), this Plan will become effective
on the time and date (the "EFFECTIVE DATE") on which the registration statement
filed by the Company with the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), to register the
initial public offering of the Company's Common Stock is declared effective by
the SEC. This Plan shall be approved by the stockholders of the Company,
consistent with applicable laws, within twelve (12) months after the date this
Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan shall be
non-qualified stock options ("NQSOS"). The shares of stock that may be purchased
upon exercise of Options granted under this Plan (the "SHARES") are shares of
the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "MAXIMUM NUMBER") is 50,000
Shares, subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the term
of this Plan, the Company shall reserve and keep available such number of Shares
as shall be required to satisfy the requirements of outstanding Options granted
under this Plan; provided, however that if the aggregate number of Shares
subject to outstanding Options granted under this Plan plus the aggregate number
of Shares previously issued by the Company pursuant to the exercise of Options
granted under this Plan equals or exceeds the Maximum Number, then
notwithstanding anything herein to the contrary, no further Options may be
granted under this Plan until the Maximum Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "COMMITTEE"). As used in this Plan, references to the Committee shall
mean either such Committee or the Board if no Committee has been established.
The interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of the
Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below (each
such person referred to as an "OPTIONEE"); provided, however, that
representatives of (i) venture capital funds that hold voting stock of the
Company; (ii) corporate investors holding more than 10% of the Company's voting
stock; (iii) CBS Broadcasting Inc. or its Affiliates; and (iv) Data Broadcasting
Corporation or its Affiliates shall not be eligible to be granted options under
this Plan.
<PAGE> 2
6.2 Initial Grant. Each Optionee who first becomes a member of the
Board on or after the Effective Date will automatically be granted an Option for
10,000 Shares (an "INITIAL GRANT") on the later of the Effective Date or on the
date such Optionee first becomes a member of the Board.
6.3 Succeeding Grants. At each Annual Meeting of the Company, each
Optionee will automatically be granted an Option for 2,000 Shares (a
"SUCCEEDING GRANT"), provided the Optionee is a member of the Board on such date
and has served continuously as a member of the Board since the date of such
Optionee's Initial Grant or, if such Optionee was ineligible to receive an
Initial Grant, since the Effective Date.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan shall
be evidenced by a written Stock Option Grant ("GRANT") in such form (which need
not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "START DATE" for such
Option.
(a) Initial Grants. Each Initial Grant will vest as to
thirty-three and one-third percent (33-1/3%) of the Shares on each anniversary
of the Start Date for such Initial Grant, so long as the Optionee continuously
remains a director or a consultant of the Company.
(b) Succeeding Grants. Each Succeeding Grant will vest as
thirty-three and one-third percent (33-1/3%) of the Shares on each anniversary
of the Start Date for such Succeeding Grant, so long as the Optionee
continuously remains a director or a consultant of the Company.
7.3 Exercise Price. The exercise price of an Option shall be the Fair
Market Value (as defined in Section 17.4) of the Shares, at the time that the
Option is granted.
7.4 Termination of Option. Except as provided below in this Section,
each Option shall expire ten (10) years after its Start Date (the "EXPIRATION
DATE"). The Option shall cease to vest when the Optionee ceases to be a member
of the Board or a consultant of the Company. The date on which the Optionee
ceases to be a member of the Board or a consultant of the Company shall be
referred to as the "TERMINATION Date". An Option may be exercised after the
Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to be a member
of the Board or a consultant of the Company for any reason except death of the
Optionee or disability of the Optionee (whether temporary or permanent, partial
or total, as determined by the Committee), then each Option then held by such
Optionee, to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee no later than seven (7) months after the Termination Date, but in no
event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be a member
of the Board or a consultant of the Company because of the death of the Optionee
or the disability of the Optionee (whether temporary or permanent, partial or
total, as determined by the Committee), then each Option then held by such
Optionee to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee (or the Optionee's legal representative) no later than twelve (12)
months after the Termination Date, but in no event later than the Expiration
Date.
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<PAGE> 3
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5 below,
Options shall be exercisable as they vest; provided that the Committee may
provide that such Options shall be immediately exercisable subject to repurchase
in accordance with the vesting schedule set forth in Section 7.
8.2 Notice. Options may be exercised only by delivery to the Company
of an exercise agreement in a form approved by the Committee stating the number
of Shares being purchased, the restrictions imposed on the Shares and such
representations and agreements regarding the Optionee's investment intent and
access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of an
Option may be made (a) in cash or by check; (b) by surrender of shares of Common
Stock of the Company that have been owned by the Optionee for more than six (6)
months (and which have been paid for within the meaning of SEC Rule 144 and, if
such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
exercise price of the Option; (c) by waiver of compensation due or accrued to
the Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (f) by any combination of the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon exercise
of an Option, the Optionee shall pay or make adequate provision for any federal
or state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following limitations:
(a) An Option shall not be exercisable unless such exercise is
in compliance with the Securities Act and all applicable state securities laws,
as they are in effect on the date of exercise.
(b) The Committee may specify a reasonable minimum number of
Shares that may be purchased upon any exercise of an Option, provided that such
minimum number will not prevent the Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or by the Optionee's guardian
or legal representative, unless otherwise determined by the Committee. No Option
may be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution, unless
otherwise determined by the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a stockholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
of exercise, except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial statements of the
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<PAGE> 4
Company at such time after the close of each fiscal year of the Company as they
are released by the Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or stockholders of the Company and compliance with applicable securities
laws; provided, however, that no fractional shares shall be issued upon exercise
of any Option and any resulting fractions of a Share shall be rounded up to the
nearest whole Share.
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of Shares
upon exercise of any Options shall be subject to and conditioned upon compliance
with all applicable requirements of law, including without limitation compliance
with the Securities Act, compliance with all other applicable state securities
laws and compliance with the requirements of any stock exchange or national
market system on which the Shares may be listed. The Company shall be under no
obligation to register the Shares with the SEC or to effect compliance with the
registration or qualification requirement of any state securities laws, stock
exchange or national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Options granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Optionees), (c) a merger in which the Company
is the surviving corporation but after which the stockholders of the Company
(other than any stockholder which merges (or which owns or controls another
corporation which merges) with the Company in such merger) cease to own their
shares or other equity interests in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, the vesting of all options granted pursuant to this Plan
will accelerate and the options will become exercisable in full prior to the
consummation of such event at such times and on such conditions as the Committee
determines, and must be exercised, if at all, within seven months of the
consummation of said event. Any options not exercised within such seven-month
period shall expire.
15. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan or any outstanding option, provided that the Board may not
terminate or amend the terms of any outstanding option without the consent of
the Optionee. In any case, no amendment of this Plan may adversely affect any
then outstanding Options or any unexercised portions thereof without the written
consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from time
to time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
17.1 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
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<PAGE> 5
17.2 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
17.3 "AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
17.4 "FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the Common
Stock is listed or admitted to trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date
of determination as reported in The Wall Street Journal;
(d) in the case of an Option granted on the Effective Date, the
price per share at which shares of the Company's Common Stock are initially
offered for sale to the public by the Company's underwriters in the initial
public offering of the Company's Common Stock pursuant to a registration
statement filed with the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the Committee in
good faith.
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<PAGE> 1
EXHIBIT 10.12
MARKETWATCH.COM, INC.
1998 EQUITY INCENTIVE PLAN
As Adopted September 8, 1998
1. PURPOSE. The purpose of this Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options, Restricted Stock and Stock Bonuses. Capitalized terms
not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 574,250 Shares plus Shares that are subject to: (a) issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option; (b) an Award granted hereunder but are
forfeited or are repurchased by the Company at the original issue price; and (c)
an Award that otherwise terminates without Shares being issued. In addition, any
shares that are issuable upon exercise of non-plan options granted by
Marketwatch.Com, LLC to purchase membership interests in Marketwatch.Com LLC
that expire or become unexercisable for any reason without having been exercised
in full will be available for grant and issuance under this Plan. At all times
the Company shall reserve and keep available a sufficient number of Shares as
shall be required to satisfy the requirements of all outstanding Options granted
under this Plan and all other outstanding but unvested Awards granted under this
Plan.
2.2 Adjustment of Shares. In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 400,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company), who are eligible to receive
up to a maximum of 500,000 Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
<PAGE> 2
MarketWatch.com, Inc.
1998 Equity Incentive Plan
(a) construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this
Plan;
(b) prescribe, amend and rescind rules and regulations relating
to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent
or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
2
<PAGE> 3
MarketWatch.com, Inc.
1998 Equity Incentive Plan
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no
later than three (3) months after the Termination Date (or
such shorter or longer time period not exceeding five (5)
years as may be determined by the Committee, with any
exercise beyond three (3) months after the Termination Date
deemed to be an NQSO), but in any event, no later than the
expiration date of the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three
(3) months after a Termination other than for Cause or
because of Participant's Disability), then Participant's
Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or
Participant's legal representative or authorized assignee)
no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any
such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason
other than the Participant's death or Disability, or (b)
twelve (12) months after the Termination Date when the
Termination is for Participant's death or Disability, deemed
to be an NQSO), but in any event no later than the
expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if
a Participant is terminated for Cause, neither the
Participant, the Participant's estate nor such other person
who may then hold the Option shall be entitled to exercise
any Option with respect to any Shares whatsoever, after
termination of service, whether or not after termination of
service the Participant may receive payment from the Company
or Subsidiary for vacation pay, for services rendered prior
to termination, for services rendered for the day on which
termination occurs, for salary in lieu of notice, or for any
other benefits. In making such determination, the
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Board shall give the Participant an opportunity to present
to the Board evidence on his behalf. For the purpose of this
paragraph, termination of service shall be deemed to occur
on the date when the Company dispatches notice or advice to
the Participant that his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are exercisable for
the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISO are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISO and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of
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a sale to a Ten Percent Stockholder, in which case the Purchase Price will be
100% of the Fair Market Value. Payment of the Purchase Price may be made in
accordance with Section 8 of this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.
6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number
of Shares to be awarded to the Participant. If the Stock Bonus is being earned
upon the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
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8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares);
or (2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing
interest at a rate sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code; provided, however,
that Participants who are not employees or directors of the
Company will not be entitled to purchase Shares with a
promissory note unless the note is adequately secured by
collateral other than the Shares;
(d) by waiver of compensation due or accrued to the Participant
for services rendered;
(e) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock
exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
DEALER") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to
the Company; or
(2) through a "margin" commitment from the Participant and
a NASD Dealer whereby the Participant irrevocably
elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
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9.2 Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the rights
of a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or termi-
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nated, and the Committee may cause a legend or legends referencing such
restrictions to be placed on the certificates. Any Participant who is permitted
to execute a promissory note as partial or full consideration for the purchase
of Shares under this Plan will be required to pledge and deposit with the
Company all or part of the Shares so purchased as collateral to secure the
payment of Participant's obligation to the Company under the promissory note;
provided, however, that the Committee may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the event of
(a) a dissolution or liquidation of the Company, (b) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of
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the Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions no less favorable to the
Participant. In the event such successor corporation (if any) refuses to assume
or substitute Awards, as provided above, pursuant to a transaction described in
this Subsection 18.1, such Awards will expire on such transaction at such time
and on such conditions as the Committee will determine; provided, however, that
the Committee may, in its sole discretion, provide that the vesting of any or
all Awards granted pursuant to this Plan will accelerate. If the Committee
exercises such discretion with respect to Options, such Options will become
exercisable in full prior to the consummation of such event at such time and on
such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.
18.2 Other Treatment of Awards. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 18, in the event
of the occurrence of any transaction described in Section 18.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on
the date on which the registration statement filed by the Company with the SEC
under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "EFFECTIVE DATE").
This Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Committee may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial stockholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is not obtained
within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and any
purchase of Shares issued hereunder shall be rescinded; and (d) in the event
that stockholder approval of such increase is not obtained within the time
period provided herein, all Awards granted pursuant to such increase will be
cancelled, any Shares issued pursuant to any Award granted pursuant to such
increase will be cancelled, and any purchase of Shares pursuant to such increase
will be rescinded.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.
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22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the commission of an act of theft, embezzlement, fraud,
dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means MarketWatch.com, Inc. or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the
date of determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The Wall
Street Journal;
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(d) in the case of an Award made on the Effective Date, the price per
share at which shares of the Company's Common Stock are initially
offered for sale to the public by the Company's underwriters in
the initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC under the
Securities Act; or
(e) if none of the foregoing is applicable, by the Committee in good
faith.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
"PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PERFORMANCE FACTORS" means the factors selected by the Committee from
among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"PLAN" means this MarketWatch.com, Inc. 1998 Equity Incentive Plan, as
amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section
6.
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MarketWatch.com, Inc.
1998 Equity Incentive Plan
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
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<PAGE> 1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), is entered into as of July 1,
1998 (the "COMMENCEMENT DATE"), by Marketwatch.Com, LLC (the "COMPANY") and
Lawrence S. Kramer (the "EXECUTIVE").
1. TERM OF EMPLOYMENT: The term of employment of Executive by the Company
hereunder shall commence on the Commencement Date and shall continue
thereafter on the same terms and conditions for a period of three years
unless earlier terminated pursuant to Sections 6 or 7 (such term being
hereinafter referred to as the "EMPLOYMENT PERIOD"). The Employment Period
shall be extended automatically without further action by either party as
of the third anniversary of the Commencement Date for a period of one year,
unless prior to such date the Company or the Executive shall notify the
other in writing of its or his intention not to renew the Agreement, in
which case the Agreement shall terminate at the end of the original term.
If the Employment Period is extended, it shall thereafter be referred to as
the Employment Period.
2. TITLE; DUTIES: The Executive shall serve as Chief Executive Officer of the
Company reporting to the Management Committee of the Company or similar
governing body of the Company (the "BOARD"). Executive shall perform those
duties and responsibilities inherent in such position including such duties
and responsibilities as the Board shall assign. The Executive agrees to
devote his full time and best efforts, attention and energies to the
business and interests of the Company. During the Employment Period, the
Company shall use its best efforts to continue to nominate and elect
Executive as a director, and Executive shall serve in such capacity without
additional consideration. Executive shall serve the Company faithfully and
to the best of his ability in such capacities, devoting his full business
time, attention, knowledge, energy and skills to such employment; provided,
however, the Company acknowledges that Executive may serve on the board of
directors of other companies with the prior approval of the Board.
Executive shall travel as reasonably required in connection with the
performance of his duties hereunder.
3. COMPENSATION: The Company shall pay and Executive shall accept as full
consideration for the his services hereunder, compensation consisting of
the following:
3.1 BASE SALARY. $210,000 per year base salary during the first year of
the term of this Agreement; $225,000 per year base salary during the
second year of the term of this Agreement; $240,000 per year base
salary during the third year of the term of this Agreement; and at
least $240,000 per year base salary (subject to increase by the Board)
during successive years of the term of this Agreement if the
Employment Period is extended past the original three-year term
pursuant to Section 1 hereof. "Base Salary" shall mean the base salary
provided for in this Section 3.1. Base Salary is payable in
installments in accordance with the Company's normal payroll
practices, less such deductions or withholdings as are required by
law.
<PAGE> 2
3.2 BONUS. Annual target bonus at the rate and in accordance with the
specifications on Exhibit A attached hereto.
3.3 EQUITY OPTION. (a) Executive received a grant of an option to purchase
a 2.0% Interest (as defined in the Limited Liability Company
Agreement, dated as of October 29, 1997, between CBS Inc. and Data
Broadcasting Corporation) on October 29, 1997 (the "OPTION"). Such
percentage is calculated based on the fully-diluted equity ownership
of the Company as constituted on October 29, 1997, taking into account
the issuance of options to purchase an aggregate of a ten percent
(10%) Interest in the Company to be issued to employees of the Company
or other personnel rendering substantial services to the Company
(which options include the Option).
4. BENEFITS: Subject to all applicable eligibility requirements, and legal
limitations, Executive will be able to participate in any and all 401(k),
vacation, medical, dental, life and long-term disability insurance and/or
other benefit plans which from time to time may be established for other
employees of the Company.
5. REIMBURSEMENT OF EXPENSES: The Company will reimburse Executive for all
reasonable travel, entertainment and other expenses incurred or paid by the
Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement subject to review by the
Board or its compensation committee, if applicable.
6. BENEFIT UPON TERMINATION OF EMPLOYMENT PERIOD.
6.1 DISABILITY. In the event of the permanent disability (as hereinafter
defined) of Executive during the Employment Period, the Company shall
have the right, upon written notice to Executive, to terminate
Executive's employment hereunder, effective upon the 30th calendar day
following the giving of such notice (or such later day as shall be
specified in such notice). Upon the effectiveness of such termination,
(i) the Company shall have no further obligations hereunder, except to
pay and provide, subject to applicable withholding, (A) all amounts of
Base Salary accrued, but unpaid, at the effective date of termination,
(B) Executive's target bonus, and (C) all reasonable unreimbursed
business-related expenses, (ii) Executive's Option shall immediately
vest and become exercisable to the extent of one additional year of
vesting and shall remain exercisable for the periods specified in the
Option and (iii) Executive shall have no further obligations hereunder
other than those provided for in Sections 9 and 10 hereof. All amounts
payable to Executive pursuant to this Section 6.1 shall be payable
within 30 days following the effectiveness of the termination of
Executive's employment. For purposes of this Agreement, "PERMANENT
DISABILITY" shall be defined as any physical or mental disability or
incapacity which renders Executive incapable in any material respect
of performing the services required of him in accordance with his
obligations under Section 2 for a period of 180 consecutive days, or
for 180 days in any 360 day period.
6.2 DEATH. In the event of the death of Executive during the Employment
Period, this Agreement shall automatically terminate and the Company
shall have no further obligations hereunder, except to pay and provide
to Executive's beneficiary or other
2
<PAGE> 3
legal representative, subject to applicable withholding, (i) all
amounts of Base Salary and bonus accrued but unpaid, at the date of
death, and (ii) all reasonable unreimbursed business-related expenses.
All amounts payable to Executive pursuant to this Section 6.2 shall be
payable within 30 days following the date of death.
6.3 TERMINATION WITHOUT CAUSE. In the event of the termination of
Executive's employment by the Company without Cause (as defined below)
or upon the Executive's voluntary termination of his employment for
Good Reason (as defined below), (i) all amounts of Base Salary and
bonus accrued but unpaid on the date of termination shall be paid by
the Company within 30 days following the date of termination, (ii) an
amount equal to Executive's Base Salary on the date of termination for
a period of twelve months shall be paid by the Company in twelve equal
installments, and (iii) the Option shall immediately vest and become
exercisable to the extent of one additional year of vesting and shall
remain exercisable for the periods specified in the Option.
6.4 CIRCUMSTANCES UNDER WHICH TERMINATION BENEFITS WOULD NOT BE PAID. The
Company shall only be obligated to pay the amounts of Base Salary and
bonus accrued but unpaid on the date of termination, and shall not be
obligated to pay Executive the termination benefits or continue the
option vesting described in subparagraphs 6.1 through 6.3 above if the
Employment Period is terminated for Cause or if Executive voluntarily
terminates his employment other than for Good Reason (as defined
below). For purposes of this Agreement, "CAUSE" shall be limited to:
(A) Willful failure by Executive to substantially perform his duties
hereunder, other than a failure resulting from his complete or
partial incapacity due to physical or mental illness or
impairment;
(B) A material and willful violation of a federal or state law or
regulation applicable to the business of the company or that
adversely affects the image of the Company;
(C) Commission of a willful act by Executive which constitutes gross
misconduct and is injurious to the Company; or
(D) A willful breach of a material provision of this Agreement.
6.5 CONSTRUCTIVE TERMINATION. Notwithstanding anything in Section 3 or in
this Section 6 to the contrary, for purposes of this Agreement the
Employment Period will be deemed to have been terminated and Executive
will be deemed to have Good Reason for voluntary termination of the
Employment Period ("GOOD REASON"), if there should occur:
(A) A material adverse change in Executive's position causing it to
be of materially less stature or responsibility without
Executive's written consent; provided, that, such a materially
adverse change shall not be deemed to occur if Executive is
the chief executive of the Company (or of a division of any
acquiring company
3
<PAGE> 4
immediately following a Change in Control (as defined below));
provided, further, that, if the Company undergoes a business
combination with, voting control of the Company is acquired by or
substantially all of the Company's assets are acquired by, Data
Broadcasting Corporation ("DBC") or an affiliate of DBC, such a
materially adverse change shall not be deemed to occur if
Executive is an executive officer of DBC or an affiliate of DBC,
as applicable, with duties and responsibilities comparable to the
duties and responsibilities held by Executive with the Company;
provided, further, that, if the Company undergoes a business
combination with, voting control of the Company is acquired by or
substantially all of the Company's assets are acquired by, CBS
Broadcasting Inc. or CBS Corporation (collectively, "CBS") or an
affiliate of CBS, such a materially adverse change shall not be
deemed to occur if Executive is an executive officer of CBS or an
affiliate of CBS, as applicable, with duties and responsibilities
comparable to the duties and responsibilities held by Executive
with the Company;
(B) A material reduction, without Executive's written consent, in his
level of base compensation (including base salary and fringe
benefits) by more than ten percent (10%); or
(C) A relocation of Executive's principal place of employment outside
the Bay Area without Executive's consent.
7. CHANGE IN CONTROL BENEFITS:
Should there occur a Change in Control (as defined below), then
the following provisions shall become applicable:
(A) During the period (if any) following a Change in Control that
Executive shall continue to remain employed, then the terms and provisions of
this Agreement shall continue in full force and effect, and the Option shall
continue to vest and become and remain exercisable in accordance with the terms
of the Option; or
(B) In the event of (i) a termination of the Executive's employment by the
Company or its successor other than for Cause within six (6) months after a
Change in Control or (ii) Executive voluntarily terminates his employment for
Good Reason within six (6) months after a Change in Control:
(i) The Company shall pay to Executive an amount equal to (A)
all amounts of bonus accrued to the date of termination, (B) 100% of Executive's
Base Salary for a period of one year and (C) Executive's target bonus for a
period of one year, in one lump sum amount on or before the fifth business day
following the effective date of Executive's termination; and
(ii) The unvested portion of Option held by Executive on the date
of such Change in Control shall immediately vest and become exercisable to the
extent of one additional year of vesting and the vested portions of the Option
shall remain exercisable for the periods specified in the Option.
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<PAGE> 5
For purposes of this Section 7, the term "CHANGE IN CONTROL" shall mean:
(x) The sale, lease, conveyance, liquidation or other disposition of
all or substantially all of the Company's assets as an entirety
or substantially as an entirety to any person, entity or group of
persons acting in concert other than (i) to DBC or its affiliates
or CBS or its affiliates, (ii) in the ordinary course of
business, or (iii) to a corporation formed for the purpose of
converting the Company into a corporation; or
(y) Any transaction or series of related transactions (as a result of
a tender offer, merger, consolidation or otherwise) that results
in any Person (as defined in Section 13(h)(8)(E) under the
Securities Exchange Act of 1934) becoming the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of more than 50% of the aggregate
voting power of all classes of common equity securities or
membership interests, as the case may be, of the Company, except
if such Person is (A) a subsidiary of the Company, (B) an
employee stock ownership plan for employees of the Company, (C) a
company formed to hold the Company's common equity securities or
membership interests, as the case may be, and whose shareholders
constituted, at the time such company became such holding
company, substantially all the equity owners or shareholders of
the Company, (D) either DBC, CBS and / or any of their
affiliates, or (E) a corporation formed for the purpose of
converting the Company into a corporation.
In the event that the severance and other benefits provided to Executive
pursuant to Section 6 of this Agreement (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE") and (ii) but for this Section 7, such severance and
benefits would be subject to the excise tax imposed by Section 4999 of the
Code, then Executive's severance benefits under this Section 7 shall be
payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of such
severance and other benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the
greatest amount of severance benefits under this Agreement.
Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 7 shall be made in writing by
independent public accountants agreed to by the Company and Executive (the
"ACCOUNTANTS"), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes. For purposes of making the
calculations required by this Section 7, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The
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<PAGE> 6
Company and Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section 7. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. DISPUTE RESOLUTION: The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement shall be
decided by confidential, final and binding arbitration conducted by
Judicial Arbitration and Mediation Services ("JAMS") under the
then-existing JAMS rules, rather than by litigation in court, trial by
jury, administrative proceeding, or in any other forum.
9. COOPERATION WITH THE COMPANY AFTER TERMINATION OF THE EMPLOYMENT PERIOD:
Following termination of the Employment Period by Executive, Executive
shall fully cooperate with the Company in all matters relating to the
winding up of his pending work on behalf of the Company and the orderly
transfer of any such pending work to other employees of the Company as may
be designated by the Company.
10. CONFIDENTIALITY; RETURN OF PROPERTY; NONSOLICITATION:
(a) The Executive acknowledges that during the Employment Period he will
receive confidential information from the Company and subsidiaries of
the Company and the respective clients thereof (each a "RELEVANT
ENTITY"). Accordingly, the Executive agrees that during the Employment
Period (as it may be extended from time to time) and thereafter for a
period of two years, the Executive and his affiliates shall not,
except in the performance of his obligations to the Company hereunder
or as may otherwise be approved in advance by the Company, directly or
indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has learned
by reason of his association with any Relevant Entity. Upon
termination of this Agreement, the Executive shall promptly return to
the Company any and all properties, records or papers of any Relevant
Entity, that may have been in his possession at the time of
termination, whether prepared by the Executive or others, including,
but not limited to, confidential information and keys. For purposes of
this Agreement, "confidential information" includes all data,
analyses, reports, interpretations, forecasts, documents and
information concerning a Relevant Entity and its affairs, including,
without limitation with respect to clients, products, policies,
procedures, methodologies, trade secrets and other intellectual
property, systems, personnel, confidential reports, technical
information, financial information, business transactions, business
plans, prospects or opportunities, (i) that the Company reasonably
believes are confidential or (ii) the disclosure of which could be
injurious to a Relevant Entity or beneficial to competitors of a
Relevant Entity, but shall exclude any information that (x) the
Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other
process of law, (y) is or becomes publicly available prior to the
Executive's disclosure or use of the information in a manner violative
of the second sentence of this Section 10(a), or (z) is rightfully
received by Executive without restriction or disclosure from a third
party legally entitled to possess and to disclose such
6
<PAGE> 7
information without restriction (other than information that he may
learn or has learned by reason of his association with any Relevant
Entity). For purposes of this Agreement, "affiliate" means any entity
that, directly or indirectly, is controlled by, or under common
control with, the Executive. For purposes of this definition, the
terms "controlled" and "under common control with" means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such person, whether
through the ownership of voting stock, by contract or otherwise.
(b) For a period of one (1) year following the termination of Executive's
employment with the Company for any reason, he will not, without the
Company' express written consent, either on his own behalf or on
behalf of another, solicit employees of the Company or any subsidiary
of the Company for the purpose of hiring them. General employment
advertising shall not be deemed to be a solicitation.
11. GENERAL:
11.1 INDEMNIFICATION. In the event Executive is made, or threatened to
be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a
director or officer of the Company or serves or served any other
corporation fifty percent (50%) or more owned or controlled by
the Company in any capacity at the Company' request, Executive
shall be indemnified by the Company, and the Company shall pay
Executive's related expenses when and as incurred, all to the
fullest extent permitted by law.
11.2 WAIVER. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have
waived any breach by the other party of any of the provisions of
this Agreement. Further, the waiver by either party of a
particular breach of this Agreement by the other shall neither be
construed as, nor constitute a, continuing waiver of such breach
or of other breaches by the same or any other provision of this
Agreement.
11.3 SEVERABILITY. If for any reason a court of competent jurisdiction
or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary
to conform to applicable laws or regulations, or if it cannot be
so amended without materially altering the intention of the
parties, the remainder of the Agreement shall continue in full
force and effect as if the offending provision were not contained
herein.
11.4 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing
and shall be considered effective upon personal service or upon
transmission of a facsimile or the deposit with Federal Express
or in Express Mail and addressed to the Chairman of the Board of
the Company at its principal corporate address, and to Executive
at his most recent address shown on the Company's corporate
records, or at any other address which he may specify in any
appropriate notice to the Company.
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<PAGE> 8
11.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all
of which taken together constitutes one and the same instrument
and in making proof hereof it shall not be necessary to produce
or account for more than one such counterpart.
11.6 ENTIRE AGREEMENT. The parties hereto acknowledge that each has
read this Agreement, understands it, and agrees to be bound by
its terms. The parties further agree that this Agreement shall
constitute the complete and exclusive statement of the agreement
between the parties and supersedes all proposals (oral or
written), understandings, representations, conditions, covenants,
and all other communications between the parties relating to the
subject matter hereof.
11.7 GOVERNING LAW. This Agreement shall be governed by the law of the
State of California.
11.8 ASSIGNMENT AND SUCCESSORS. The Company shall have the right to
assign its rights and obligations under this Agreement to an
entity which acquires substantially all of the assets of the
Company, whether by merger or otherwise including, without
limitation MarketWatch.com, Inc. or other corporation formed for
the purpose of converting the Company from a limited liability
company into a corporation. The rights and obligations of the
Company under this Agreement shall inure to the benefit and shall
be binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MARKETWATCH.COM, LLC
/s/ Derek Reisfield
------------------------------------
Derek Reisfield,
Chairman of the Management Committee
EXECUTIVE
/s/ Lawrence S. Kramer
------------------------------------
Lawrence S. Kramer
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<PAGE> 9
EXHIBIT A
TARGET BONUS AND SPECIFICATIONS
ANNUAL TARGET BONUS RATE: fifty percent (50%) of the then-applicable base salary
actually paid in a given year. For example, if the base salary actually paid in
the second year of the term of this Agreement is $200,000, the maximum target
bonus would be $100,000 ($200,000 multiplied by 50%) for that year.
SPECIFICATIONS: two components.
DISCRETIONARY COMPONENT: Board may decide when, and if to grant this
component. This component shall be 25% of the then-applicable base salary
actually paid in a given year.
ACHIEVEMENT OF FINANCIAL OBJECTIVES COMPONENT: Target Bonus, in the amount
payable shown below, is payable upon the Company's achievement of the
financial objectives set forth below:
<TABLE>
<CAPTION>
% of Base Salary Actually
Paid for Such Year
Payable Upon
Achievement of
Financial Objectives Financial Objectives
-------------------- --------------------
<S> <C> <C>
1st Year 25% To be determined annually by the Board
2nd Year 25% To be determined annually by the Board
3rd Year 25% To be determined annually by the Board
</TABLE>
9
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), is entered into as of July 1,
1998 (the "COMMENCEMENT DATE"), by Marketwatch.Com, LLC (the "COMPANY") and J.
Peter Bardwick (the "EXECUTIVE").
1. TERM OF EMPLOYMENT: The term of employment of Executive by the Company
hereunder shall commence on the Commencement Date and shall continue
thereafter on the same terms and conditions for a period of three years
unless earlier terminated pursuant to Sections 6 or 7 (such term being
hereinafter referred to as the "EMPLOYMENT PERIOD"). The Employment Period
shall be extended automatically without further action by either party as
of the third anniversary of the Commencement Date for a period of one year,
unless prior to such date the Company or the Executive shall notify the
other in writing of its or his intention not to renew the Agreement, in
which case the Agreement shall terminate at the end of the original term.
If the Employment Period is extended, it shall thereafter be referred to as
the Employment Period.
2. TITLE; DUTIES: The Executive shall serve as Chief Financial Officer of the
Company reporting to the Chief Executive Officer of the Company. Executive
shall perform those duties and responsibilities inherent in such position
including such duties and responsibilities as the Chief Executive Officer
shall assign. The Executive agrees to devote his full time and best
efforts, attention and energies to the business and interests of the
Company. Executive shall serve the Company faithfully and to the best of
his ability in such capacities, devoting his full business time, attention,
knowledge, energy and skills to such employment; provided, however, the
Company acknowledges that Executive may serve on the board of directors of
other companies with the prior approval of the Company's Management
Committee or similar governing body of the Company (the "Board"). Executive
shall travel as reasonably required in ----- connection with the
performance of his duties hereunder.
3. COMPENSATION: The Company shall pay and Executive shall accept as full
consideration for the his services hereunder, compensation consisting of
the following:
3.1 BASE SALARY. $200,000 per year base salary during the first year of
the term of this Agreement; $210,000 per year base salary during the
second year of the term of this Agreement; $225,000 per year base
salary during the third year of the term of this Agreement; and at
least $225,000 per year base salary (subject to increase by the Board)
during successive years of the term of this Agreement if the
Employment Period is extended past the original three-year term
pursuant to Section 1 hereof. "Base Salary" shall mean the base salary
provided for in this Section 3.1. Base Salary is payable in
installments in accordance with the Company's normal payroll
practices, less such deductions or withholdings as are required by
law.
3.2 BONUS. Annual target bonus at the rate and in accordance with the
specifications on Exhibit A attached hereto.
<PAGE> 2
3.3 EQUITY OPTION. (a) Executive received a grant of an option to purchase
a 1.0% Interest (as defined in the Limited Liability Company
Agreement, dated as of October 29, 1997, between CBS Inc. and Data
Broadcasting Corporation) on July 1, 1998 ( the "OPTION"). Such
percentage is calculated based on the fully-diluted equity ownership
of the Company as constituted on October 29, 1997, taking into account
the issuance of options to purchase an aggregate of a ten percent
(10%) Interest in the Company to be issued to employees of the Company
or other personnel rendering substantial services to the Company
(which options include the Option).
4. BENEFITS: Subject to all applicable eligibility requirements, and legal
limitations, Executive will be able to participate in any and all 401(k),
vacation, medical, dental, life and long-term disability insurance and/or
other benefit plans which from time to time may be established for other
employees of the Company.
5. REIMBURSEMENT OF EXPENSES: The Company will reimburse Executive for all
reasonable travel, entertainment and other expenses incurred or paid by the
Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement subject to review by the
Board or its compensation committee, if applicable.
6. BENEFIT UPON TERMINATION OF EMPLOYMENT PERIOD.
6.1 DISABILITY. In the event of the permanent disability (as hereinafter
defined) of Executive during the Employment Period, the Company shall
have the right, upon written notice to Executive, to terminate
Executive's employment hereunder, effective upon the 30th calendar day
following the giving of such notice (or such later day as shall be
specified in such notice). Upon the effectiveness of such termination,
(i) the Company shall have no further obligations hereunder, except to
pay and provide, subject to applicable withholding, (A) all amounts of
Base Salary accrued, but unpaid, at the effective date of termination,
(B) Executive's target bonus, and (C) all reasonable unreimbursed
business-related expenses, (ii) Executive's Option shall immediately
vest and become exercisable to the extent of one additional year of
vesting and shall remain exercisable for the periods specified in the
Option and (iii) Executive shall have no further obligations hereunder
other than those provided for in Sections 9 and 10 hereof. All amounts
payable to Executive pursuant to this Section 6.1 shall be payable
within 30 days following the effectiveness of the termination of
Executive's employment. For purposes of this Agreement, "PERMANENT
DISABILITY" shall be defined as any physical or mental disability or
incapacity which renders Executive incapable in any material respect
of performing the services required of him in accordance with his
obligations under Section 2 for a period of 180 consecutive days, or
for 180 days in any 360 day period.
6.2 DEATH. In the event of the death of Executive during the Employment
Period, this Agreement shall automatically terminate and the Company
shall have no further obligations hereunder, except to pay and provide
to Executive's beneficiary or other legal representative, subject to
applicable withholding, (i) all amounts of Base Salary and bonus
accrued but unpaid, at the date of death, and (ii) all reasonable
unreimbursed business-related expenses. All amounts payable to
Executive pursuant to this Section 6.2 shall be payable within 30 days
following the date of death.
2
<PAGE> 3
6.3 TERMINATION WITHOUT CAUSE. In the event of the termination of
Executive's employment by the Company without Cause (as defined below)
or upon the Executive's voluntary termination of his employment for
Good Reason (as defined below), (i) all amounts of Base Salary and
bonus accrued but unpaid on the date of termination shall be paid by
the Company within 30 days following the date of termination, (ii) an
amount equal to Executive's Base Salary on the date of termination for
a period of twelve months shall be paid by the Company in twelve equal
installments, and (iii) the Option shall immediately vest and become
exercisable to the extent of one additional year of vesting and shall
remain exercisable for the periods specified in the Option.
6.4 CIRCUMSTANCES UNDER WHICH TERMINATION BENEFITS WOULD NOT BE PAID. The
Company shall only be obligated to pay the amounts of Base Salary and
bonus accrued but unpaid on the date of termination, and shall not be
obligated to pay Executive the termination benefits or continue the
option vesting described in subparagraphs 6.1 through 6.3 above if the
Employment Period is terminated for Cause or if Executive voluntarily
terminates his employment other than for Good Reason (as defined
below). For purposes of this Agreement, "CAUSE" shall be limited to:
(A) Willful failure by Executive to substantially perform his duties
hereunder, other than a failure resulting from his complete or
partial incapacity due to physical or mental illness or
impairment;
(B) A material and willful violation of a federal or state law or
regulation applicable to the business of the company or that
adversely affects the image of the Company;
(C) Commission of a willful act by Executive which constitutes gross
misconduct and is injurious to the Company; or
(D) A willful breach of a material provision of this Agreement.
6.5 CONSTRUCTIVE TERMINATION. Notwithstanding anything in Section 3 or in
this Section 6 to the contrary, for purposes of this Agreement the
Employment Period will be deemed to have been terminated and Executive
will be deemed to have Good Reason for voluntary termination of the
Employment Period ("GOOD REASON"), if there should occur:
(A) A material adverse change in Executive's position causing it to
be of materially less stature or responsibility without
Executive's written consent; provided, that, such a materially
adverse change shall not be deemed to occur if Executive is the
chief financial officer or a higher ranking officer of the
Company (or of a division of any acquiring company immediately
following a Change in Control (as defined below)); provided,
further, that, if the Company undergoes a business combination
with, voting control of the Company is acquired by or
substantially all of the Company's assets are acquired by, Data
Broadcasting Corporation ("DBC") or an affiliate of DBC, such a
materially adverse change shall not be deemed to occur if
Executive is an executive officer of DBC or an affiliate of DBC,
as applicable, with duties and responsibilities comparable to the
duties and
3
<PAGE> 4
responsibilities held by Executive with the Company; provided,
further, that, if the Company undergoes a business combination
with, voting control of the Company is acquired by or
substantially all of the Company's assets are acquired by, CBS
Broadcasting Inc. or CBS Corporation (collectively, "CBS") or an
affiliate of CBS, such a materially adverse change shall not be
deemed to occur if Executive is an executive officer of CBS or an
affiliate of CBS, as applicable, with duties and responsibilities
comparable to the duties and responsibilities held by Executive
with the Company;
(B) A material reduction, without Executive's written consent, in his
level of base compensation (including base salary and fringe
benefits) by more than ten percent (10%); or
(C) A relocation of Executive's principal place of employment outside
the Bay Area without Executive's consent.
7. CHANGE IN CONTROL BENEFITS:
Should there occur a Change in Control (as defined below), then the
following provisions shall become applicable:
(A) During the period (if any) following a Change in Control that
Executive shall continue to remain employed, then the terms and provisions of
this Agreement shall continue in full force and effect, and the Option shall
continue to vest and become and remain exercisable in accordance with the terms
of the Option; or
(B) In the event of (i) a termination of the Executive's employment by the
Company or its successor other than for Cause within six (6) months after a
Change in Control or (ii) Executive voluntarily terminates his employment for
Good Reason within six (6) months after a Change in Control:
(i) The Company shall pay to Executive an amount equal to (A)
all amounts of bonus accrued to the date of termination, (B) 100% of Executive's
Base Salary for a period of one year and (C) Executive's target bonus for a
period of one year, in one lump sum amount on or before the fifth business day
following the effective date of Executive's termination; and
(ii) The unvested portion of Option held by Executive on the date
of such Change in Control shall immediately vest and become exercisable to the
extent of one additional year of vesting and the vested portions of the Option
shall remain exercisable for the periods specified in the Option.
For purposes of this Section 7, the term "CHANGE IN CONTROL" shall mean:
(x) The sale, lease, conveyance, liquidation or other disposition of
all or substantially all of the Company's assets as an entirety
or substantially as an entirety to any person, entity or group of
persons acting in concert other than (i) to DBC or its affiliates
or CBS or its affiliates, (ii) in the ordinary course of
business, or (iii) to a corporation formed for the purpose of
converting the Company into a corporation; or
4
<PAGE> 5
(y) Any transaction or series of related transactions (as a result of
a tender offer, merger, consolidation or otherwise) that results
in any Person (as defined in Section 13(h)(8)(E) under the
Securities Exchange Act of 1934) becoming the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of more than 50% of the aggregate
voting power of all classes of common equity securities or
membership interests, as the case may be, of the Company, except
if such Person is (A) a subsidiary of the Company, (B) an
employee stock ownership plan for employees of the Company, (C) a
company formed to hold the Company's common equity securities or
membership interests, as the case may be, and whose shareholders
constituted, at the time such company became such holding
company, substantially all the equity owners or shareholders of
the Company, (D) either DBC, CBS and / or any of their
affiliates, or (E) a corporation formed for the purpose of
converting the Company into a corporation.
In the event that the severance and other benefits provided to Executive
pursuant to Section 6 of this Agreement (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE") and (ii) but for this Section 7, such severance and
benefits would be subject to the excise tax imposed by Section 4999 of the
Code, then Executive's severance benefits under this Section 7 shall be
payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of such
severance and other benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the
greatest amount of severance benefits under this Agreement.
Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 7 shall be made in writing by
independent public accountants agreed to by the Company and Executive (the
"ACCOUNTANTS"), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes. For purposes of making the
calculations required by this Section 7, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and
Executive shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination
under this Section 7. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
Section 7.
8. DISPUTE RESOLUTION: The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement shall be
decided by confidential, final and binding arbitration conducted by
Judicial Arbitration and Mediation Services ("JAMS") under the
then-existing JAMS rules, rather than by litigation in court, trial by
jury, administrative proceeding, or in any other forum.
5
<PAGE> 6
9. COOPERATION WITH THE COMPANY AFTER TERMINATION OF THE EMPLOYMENT PERIOD:
Following termination of the Employment Period by Executive, Executive
shall fully cooperate with the Company in all matters relating to the
winding up of his pending work on behalf of the Company and the orderly
transfer of any such pending work to other employees of the Company as may
be designated by the Company.
10. CONFIDENTIALITY; RETURN OF PROPERTY; NONSOLICITATION:
(a) The Executive acknowledges that during the Employment Period he will
receive confidential information from the Company and subsidiaries of
the Company and the respective clients thereof (each a "RELEVANT
ENTITY"). Accordingly, the Executive agrees that during the Employment
Period (as it may be extended from time to time) and thereafter for a
period of two years, the Executive and his affiliates shall not,
except in the performance of his obligations to the Company hereunder
or as may otherwise be approved in advance by the Company, directly or
indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has learned
by reason of his association with any Relevant Entity. Upon
termination of this Agreement, the Executive shall promptly return to
the Company any and all properties, records or papers of any Relevant
Entity, that may have been in his possession at the time of
termination, whether prepared by the Executive or others, including,
but not limited to, confidential information and keys. For purposes of
this Agreement, "confidential information" includes all data,
analyses, reports, interpretations, forecasts, documents and
information concerning a Relevant Entity and its affairs, including,
without limitation with respect to clients, products, policies,
procedures, methodologies, trade secrets and other intellectual
property, systems, personnel, confidential reports, technical
information, financial information, business transactions, business
plans, prospects or opportunities, (i) that the Company reasonably
believes are confidential or (ii) the disclosure of which could be
injurious to a Relevant Entity or beneficial to competitors of a
Relevant Entity, but shall exclude any information that (x) the
Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other
process of law, (y) is or becomes publicly available prior to the
Executive's disclosure or use of the information in a manner violative
of the second sentence of this Section 10(a), or (z) is rightfully
received by Executive without restriction or disclosure from a third
party legally entitled to possess and to disclose such information
without restriction (other than information that he may learn or has
learned by reason of his association with any Relevant Entity). For
purposes of this Agreement, "affiliate" means any entity that,
directly or indirectly, is controlled by, or under common control
with, the Executive. For purposes of this definition, the terms
"controlled" and "under common control with" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of such person, whether through the
ownership of voting stock, by contract or otherwise.
(b) For a period of one (1) year following the termination of Executive's
employment with the Company for any reason, he will not, without the
Company' express written consent, either on his own behalf or on
behalf of another, solicit employees of the Company or any subsidiary
of the Company for the purpose of hiring them. General employment
6
<PAGE> 7
advertising shall not be deemed to be a solicitation.
11. GENERAL:
11.1 INDEMNIFICATION. In the event Executive is made, or threatened to be
made, a party to any legal action or proceeding, whether civil or
criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other corporation fifty
percent (50%) or more owned or controlled by the Company in any
capacity at the Company' request, Executive shall be indemnified by
the Company, and the Company shall pay Executive's related expenses
when and as incurred, all to the fullest extent permitted by law.
11.2 WAIVER. Neither party shall, by mere lapse of time, without giving
notice or taking other action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement.
Further, the waiver by either party of a particular breach of this
Agreement by the other shall neither be construed as, nor constitute
a, continuing waiver of such breach or of other breaches by the same
or any other provision of this Agreement.
11.3 SEVERABILITY. If for any reason a court of competent jurisdiction or
arbitrator finds any provision of this Agreement to be unenforceable,
the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without
materially altering the intention of the parties, the remainder of the
Agreement shall continue in full force and effect as if the offending
provision were not contained herein.
11.4 NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon transmission of a
facsimile or the deposit with Federal Express or in Express Mail and
addressed to the Chairman of the Board of the Company at its principal
corporate address, and to Executive at his most recent address shown
on the Company's corporate records, or at any other address which he
may specify in any appropriate notice to the Company.
11.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which taken together constitutes one and the same instrument and in
making proof hereof it shall not be necessary to produce or account
for more than one such counterpart.
11.6 ENTIRE AGREEMENT. The parties hereto acknowledge that each has read
this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement shall constitute the
complete and exclusive statement of the agreement between the parties
and supersedes all proposals (oral or written), understandings,
representations, conditions, covenants, and all other communications
between the parties relating to the subject matter hereof.
11.7 GOVERNING LAW. This Agreement shall be governed by the law of the
State of California.
7
<PAGE> 8
11.8 ASSIGNMENT AND SUCCESSORS. The Company shall have the right to assign
its rights and obligations under this Agreement to an entity which
acquires substantially all of the assets of the Company, whether by
merger or otherwise including, without limitation MarketWatch.com,
Inc. or other corporation formed for the purpose of converting the
Company from a limited liability company into a corporation. The
rights and obligations of the Company under this Agreement shall inure
to the benefit and shall be binding upon the successors and assigns of
the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MARKETWATCH.COM, LLC
/s/ Derek Reisfield
------------------------------------
Derek Reisfield,
Chairman of the Management Committee
EXECUTIVE
/s/ J. Peter Bardwick
------------------------------------
J. Peter Bardwick
8
<PAGE> 9
EXHIBIT A
TARGET BONUS AND SPECIFICATIONS
ANNUAL TARGET BONUS RATE: fifty percent (50%) of the then-applicable base salary
actually paid in a given year. For example, if the base salary actually paid in
the second year of the term of this Agreement is $200,000, the maximum target
bonus would be $100,000 ($200,000 multiplied by 50%) for that year.
SPECIFICATIONS: two components.
DISCRETIONARY COMPONENT: Board may decide when, and if to grant this
component. This component shall be 25% of the then-applicable base salary
actually paid in a given year.
ACHIEVEMENT OF FINANCIAL OBJECTIVES COMPONENT: Target Bonus, in the amount
payable shown below, is payable upon the Company's achievement of the
financial objectives set forth below:
<TABLE>
<CAPTION>
% of Base Salary Actually
Paid for Such Year
Payable Upon
Achievement of
Financial Objectives Financial Objectives
-------------------- --------------------
<S> <C> <C>
1st Year 25% To be determined annually by the Board
2nd Year 25% To be determined annually by the Board
3rd Year 25% To be determined annually by the Board
</TABLE>
9
<PAGE> 1
EXHIBIT 10.15
[CBS MARKETWATCH LETTERHEAD]
INSERTION ORDER FORM
BILL TO: DATA BROADCASTING CORP. DATE: AUGUST 25, 1998
ADVERTISER: Data Broadcasting Corp.
AGENCY:
STREET ADDRESS: 3955 Point Eden Way
CITY: Hayward STATE: CA ZIP: 94545
CONTACT: Mark Imperial PHONE: 510-723-3525
FAX: 510-266-6018
- --------------------------------------------------------------------------------
NAME OF AD CAMPAIGN: DATA BROADCASTING CORP.
- --------------------------------------------------------------------------------
START DATE: JULY 1, 1998 END DATE: DECEMBER 31, 2000
GUARANTEED IMPRESSIONS:
July 1998: 1 million impressions
August 1998 through December 2000; 2,777,800 impressions/month
(includes banner and cube ads)
BANNER PLACEMENT: ROS
URL TO LINK TO: http://www.dbc.com
BILL AMOUNT: July 1998: $25,000 -- CPM Rate: $25
August 1998 through December 2000; $41,667/month --
CPM Rate: $15
PAYMENT TERMS: Thirty days from invoice date (unless otherwise specified).
1. Dimensions of gif must be 468 x 60 pixels (12K maximum file size)
2. Attach advertiser's Insertion Order or contract (if applicable) 14 day
cancellation policy.
3. Advertiser reserves the right to cancel insertion order agreement with
30 days written notice.
4. For tracking information/requests, please contact Denise Moorehead at
415-733-0566.
5. SPECIAL INSTRUCTIONS: E-Mail electronic copy of gif, url, alternate text
to [email protected] or call 415-733-0566.
SPECIAL NOTES:
- -added value impressions will be given in the form of text links, buttons, cub
and banner ads
<TABLE>
<S> <C> <C> <C>
/s/ Mark F. Imperiale 10/6/98 /s/ J. Peter Bardwick 10/6/98
- ------------------------- --------- ------------------------- ---------
ADVERTISER'S SIGNATURE DATE CBSMARKETWATCH DATE
</TABLE>
PLEASE FAX BACK EXECUTED COPY TO 415-392-1972
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated September 17, 1998,
relating to the financial statements of MarketWatch.Com, Inc., which appears in
such Prospectus. We also consent to the application of such report to the
Financial Statement Schedules as of December 31, 1997 and June 30, 1998 and the
period from inception (October 29, 1997) through December 31, 1997 and the six
months ended June 30, 1998 listed under Item 16(b) of this Registration
Statement when such schedules are read in conjunction with the financial
statements referred to in our report. The audits referred to in such report also
included these schedules. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Prospectus. However, it
should be noted that PricewaterhouseCoopers LLP has not prepared or certified
such "Selected Financial Data."
PricewaterhouseCoopers LLP (no signature indicated)
San Jose, California
October 6, 1998
<PAGE> 1
EXHIBIT 23.03
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated June 15, 1998, relating
to the financial statements of DBC Online/News Business, which appears in such
Prospectus. We also consent to the application of such report to the Financial
Statement Schedules as of December 31, 1996 and October 28, 1997 and the period
from inception (October 1, 1995) through December 31, 1996 and for the period
January 1, 1997 through October 28, 1997, listed under Item 16(b) of this
Registration Statement when such schedules are read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included these schedules. We also consent to the references to us
under the headings "Experts" and "Selected Financial Data" in such Prospectus.
However, it should be noted that PricewaterhouseCoopers LLP has not prepared or
certified such "Selected Financial Data."
PricewaterhouseCoopers LLP
San Jose, California
October 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 2-MOS 6-MOS OTHER 10-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1996 DEC-31-1997
<PERIOD-START> OCT-29-1997 JAN-01-1998 OCT-01-1995 JAN-01-1997
<PERIOD-END> DEC-31-1997 JUN-30-1998 DEC-31-1996 OCT-28-1997
<CASH> 0 628 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 234 917 182 189
<ALLOWANCES> 10 120 4 15
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 0 20 227 360
<PP&E> 13 658 245 335
<DEPRECIATION> 0 35 63 149
<TOTAL-ASSETS> 237 2,240 409 546
<CURRENT-LIABILITIES> 0 2,393 1,729 2,809
<BONDS> 85 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 90 90 0 0
<OTHER-SE> 62 (243) (1,320) (2,263)
<TOTAL-LIABILITY-AND-EQUITY> 237 2,240 409 546
<SALES> 630 2,695 607 1,172
<TOTAL-REVENUES> 630 2,695 607 1,172
<CGS> 0 0 0 0
<TOTAL-COSTS> 148 543 330 529
<OTHER-EXPENSES> 563 4,484 2,381 2,026
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 21 99 181
<INCOME-PRETAX> (81) (2,353) (2,203) (1,564)
<INCOME-TAX> 0 0 883 621
<INCOME-CONTINUING> (81) (2,353) (1,320) (943)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (81) (2,353) (1,320) (943)
<EPS-PRIMARY> (0.01) (0.26) 0 0
<EPS-DILUTED> (0.01) (0.26) 0 0
</TABLE>
