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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made and
entered into as of April 28, 1999 (the "AGREEMENT DATE") by and among
XxxxxxXxxxx.xxx, Inc., a Delaware corporation ("MARKETWATCH"); Big Dog
Acquisition Corp., a Minnesota corporation that is a wholly-owned subsidiary of
MarketWatch ("SUB"); BigCharts Inc., a Minnesota corporation ("CHARTS"); Xxxxxx
X. Xxxxxxxxx; Verticality BigCharts Investment, LLC, a Delaware Limited
Liability Company ("VERTICALITY"); Wyncrest Capital, Inc.; Xxxxx X. Xxxxxxxx;
Xxxxx Xxxxxxxxxxx; Xxxxx Xxxxxx; Xxxxx Xxxxx; Xxxxxx Xxxxxxxxx and Xxxxx
Xxxxxxxx.
RECITALS
A. The parties intend that, subject to the terms and conditions of
this Agreement, Sub will be merged with and into Charts in a reverse triangular
merger, with Charts to be the surviving corporation of such merger, all pursuant
to the terms and conditions of this Agreement and applicable law. The parties
also intend for such merger to be treated as a "reorganization" under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and to be
treated as a "purchase" transaction for accounting purposes.
B. Upon the effectiveness of such merger, (i) the common stock of
Charts that is outstanding immediately prior to the effectiveness of the merger
will be converted into shares of the common stock of MarketWatch, (ii) the
employee stock options to purchase shares of Charts' common stock granted under
the Charts Option Plan (as defined in Article 1 below) that are outstanding
immediately prior to the effectiveness of the Merger will be assumed by
MarketWatch and converted into options to purchase shares of the common stock of
MarketWatch and (iii) Sub will be merged with and into Charts, all as provided
in this Agreement.
NOW, THEREFORE, in consideration of the above-recited facts and the
mutual promises, covenants and conditions contained herein, the parties hereby
agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms will have the meanings
set forth below:
1.1 "CAPITAL CHANGES" shall have the meaning set forth in Section
2.3.
1.2 "CHARTS ANCILLARY AGREEMENTS" means, collectively, the Escrow
Agreement, the Registration Rights Agreement, each Noncompetition Agreement,
each Employment Agreement, each Voting Agreement, the Articles of Merger, each
certificate to be delivered by Charts or an officer or officers of Charts at the
Closing pursuant to Article 9 of this Agreement, and each other agreement (other
than this Agreement) which Charts is to enter into as a party thereto pursuant
to this Agreement.
1.3 "CHARTS ARTICLES" means the Articles of Incorporation of Charts
in effect immediately prior to the Effective Time.
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1.4 "CHARTS COMMON STOCK" means Charts' Common Stock, par value
$0.01 per share.
1.5 "CHARTS DISSENTING SHARES" means any shares of any capital stock
of Charts that (i) are outstanding immediately prior to the Effective Time and
(ii) with respect to which "dissenters' rights" within the meaning of Section
302A.471 of the MBCA have been duly and properly exercised and perfected in
connection with the Merger in compliance with Section 302A.473 of the MBCA.
1.6 "CHARTS OPTIONS" means options to purchase shares of Charts
Common Stock granted by Charts to Charts employees under Charts' 1995 Stock Plan
(the "CHARTS OPTION PLAN").
1.7 "CHARTS OPTIONS OUTSTANDING" means the total number of shares of
Charts Common Stock that are subject to or potentially issuable (without regard
to vesting) under all Charts Options that are issued and outstanding immediately
prior to the Effective Time.
1.8 "CHARTS OTHER SECURITIES" means, collectively: (a) any warrant,
option, right or other security (in each case other than any Charts Option or
Charts Warrant) that entitles the holder thereof to purchase or otherwise
acquire from Charts any shares of the capital stock of Charts (collectively,
"CHARTS STOCK RIGHTS"); (b) any note, evidence of indebtedness, stock or other
security issued by Charts that is convertible into or exchangeable for any
shares of the capital stock of Charts or any Charts Stock Rights ("CHARTS
CONVERTIBLE SECURITY"); and (c) any warrant, option, right, note, evidence of
indebtedness, stock or other security that entitles the holder thereof to
purchase or otherwise acquire from Charts any Charts Stock Rights or any Charts
Convertible Security. The term "Charts Other Securities" does not include any
Charts Options, Charts Warrants, or any securities issued or granted by any
person or entity other than Charts.
1.9 "CHARTS SHAREHOLDERS" means, collectively, those persons (each
being individually referred to herein as a "CHARTS SHAREHOLDER") who,
immediately prior to the Effective Time, hold the shares of Charts Common Stock
that are outstanding immediately prior to the Effective Time; provided, however,
that for purposes of Sections 2.4 and 7.2.1 and Article 11 of this Agreement,
the term "Charts Shareholders" means only those Charts Shareholders (as defined
above in this Section) who are issued shares of MarketWatch Common Stock in the
Merger pursuant to Section 2.1.2 of this Agreement and excludes holders of
Charts Dissenting Shares who are not issued shares of MarketWatch Common Stock
in the Merger pursuant to Section 2.1.2 of this Agreement.
1.10 "CHARTS SHAREHOLDERS' VOTE" means the meeting of Charts
shareholders to be called and held by Charts in order to seek the Charts
shareholders' approval of the Merger, this Agreement and the transactions
contemplated by this Agreement.
1.11 "CHARTS WEBSITE" means all websites or other sites accessed via
the Internet or any other electronic network (including without limitation any
cable-based network or private network), that are, in whole or in part, owned or
operated by Charts, either as of the Agreement Date, the Closing Date or anytime
in the past, including without limitation that certain website currently
accessible at the URL address "xxxx://xxx.xxxxxxxxx.xxx" (the "HOME CHARTS
WEBSITE"); provided, however, that with respect to any such website or site that
is not owned by Charts but on which Charts content is displayed, the term
"Charts Website" shall mean and refer
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only to that portion of such website or site that contains the content directly
or indirectly provided by Charts.
1.12 The "CODE" means the Internal Revenue Code of 1986, as amended.
1.13 The "COMMON STOCK AMOUNT PER SHARE" is the amount of (a) six
million dollars ($6,000,000) less (i) any amount paid in respect of Charts
Dissenting Shares and less (ii) any amount payable to any financial advisor set
forth in Schedule 3.18 in the Charts Disclosure Letter (defined below), divided
by (b) the Common Stock Equivalents Outstanding.
1.14 The "COMMON STOCK CONVERSION NUMBER" is the number obtained by
dividing (a) the MarketWatch Merger Shares by (b) the Common Stock Equivalents
Outstanding.
1.15 "COMMON STOCK EQUIVALENTS OUTSTANDING" means that number of
shares of Charts Common Stock that is equal to the sum of (a) the total number
of shares of Charts Common Stock that are issued and outstanding immediately
prior to the Effective Time less any Charts Dissenting Shares; plus (b) the
Charts Options Outstanding (as defined above); plus (c) the total number of
shares of Charts Common Stock ultimately issuable upon the conversion or
exchange of all Charts Warrants and Charts Other Securities that are issued and
outstanding immediately prior to the Effective Time.
1.16 "DGCL" means the Delaware General Corporation Law.
1.17 "EFFECTIVE TIME" means the date and time on which the Merger
first becomes legally effective under the laws of the State of Minnesota as a
result of the filing with the Minnesota Secretary of State of Articles of Merger
between Sub and Charts in substantially the form of Exhibit A (the "ARTICLES OF
MERGER") and any required officers' certificates.
1.18 "EMPLOYMENT AGREEMENT" shall mean each of those certain
Employment Agreements dated of even date herewith by and among MarketWatch,
Charts and each of Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxx and Xxxxx X. Xxxxxxxxxxx
attached hereto as Exhibits B 1-3.
1.19 "ESCROW AGREEMENT" shall have the meaning set forth in Section
2.4.
1.20 "INITIAL UNLOCKED SHARES" means the shares of MarketWatch Common
Stock received in the Merger by a Principal Shareholder (or subject to
MarketWatch Options received in the Merger by a Principal Shareholder), which
are deemed to be Unlocked Shares immediately at the Effective Time pursuant to
Section 2.6, as adjusted for any Capital Changes or any dividends or other
payments made with respect to such Initial Unlocked Shares.
1.21 "HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act, as amended.
1.22 "KNOWLEDGE," when used with reference to a party, means the
collective knowledge, of those officers, directors and employees of such party.
1.23 "MARKETWATCH ANCILLARY AGREEMENTS" means, collectively, the
Registration Rights Agreement, the Escrow Agreement, each Employment Agreement,
each Noncompetition
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Agreement, each certificate to be delivered by MarketWatch or an officer or
officers of MarketWatch at the Closing pursuant to Article 8 of this Agreement
and each agreement (other than this Agreement) which MarketWatch is to enter
into as a party thereto pursuant to this Agreement.
1.24 "MARKETWATCH COMMON STOCK" means MarketWatch's Common Stock,
$0.01 par value per share.
1.25 "MARKETWATCH CLOSING PRICE PER SHARE" means the average of the
closing sale prices of MarketWatch Common Stock as quoted on the Nasdaq National
Market on each of the five trading days ending on the Closing Date, as reported
in the Wall Street Journal.
1.26 "MARKETWATCH SUBSEQUENT PRICE PER SHARE" means the average of
the closing sale prices of MarketWatch Common Stock as quoted on the Nasdaq
National Market on each of the five trading days ending on the date of a payment
for Damages pursuant to Section 11, as reported in the Wall Street Journal.
1.27 "MARKETWATCH MERGER SHARES" means 2,175,000 shares of
MarketWatch Common Stock.
1.28 "MATERIAL ADVERSE CHANGE" when used with reference to any entity
or group of entities, means a material adverse change to such entity or group of
entities which would have a Material Adverse Effect other than: (a) a change
arising or resulting, directly or indirectly, from general industry, economic or
stock market conditions; or (b) a change that is proximately caused by the
public announcement of, and the response or reaction of customers, vendors,
licensors, investors or employees of such entity or group of entities to, this
Agreement, the Merger or any of the transactions contemplated by this Agreement;
or (c) a change arising from an act or omission of another party to this
Agreement (or an affiliate of such party) and not from an act or omission of
such entity or group of entities; provided, however, that with respect to
MarketWatch, a reduction in the market price of MarketWatch Common Stock shall
not, in and of itself, constitute a Material Adverse Change with respect to
MarketWatch.
1.29 "MATERIAL ADVERSE EFFECT" when used with reference to any entity
or group of related entities, means any event, change or effect that is
materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, operations or results of operations of such
entity and its subsidiaries, taken as a whole.
1.30 "MBCA" means the Minnesota Business Corporation Act.
1.31 "MERGER" means the statutory merger of Sub with and into Charts
to be effected pursuant to this Agreement.
1.32 "NONCOMPETITION AGREEMENT" shall mean each of those certain
Noncompetition Agreements dated of even date herewith by and among MarketWatch,
Charts and each of Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxx and Xxxxx X. Xxxxxxxxxxx
attached hereto as Exhibits C 1-3.
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1.33 "PRINCIPAL SHAREHOLDERS" means, collectively, Xxxxxx X.
Xxxxxxxxx, Wyncrest Capital, Inc., Xxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxxxxx, Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxx.
1.34 "SUB ANCILLARY AGREEMENTS" means, collectively, the Articles of
Merger, each certificate to be delivered by Sub or an officer or officers of Sub
at the Closing pursuant to Article 8 of this Agreement and each agreement (other
than this Agreement) which Sub is to enter into as a party thereto pursuant to
this Agreement.
Other capitalized terms defined elsewhere in this Agreement and not
defined in this Article 1 will have the meanings assigned to such terms in this
Agreement.
ARTICLE 2
PLAN OF REORGANIZATION
2.1 The Merger. Subject to the terms and conditions of this
Agreement, Sub will be merged with and into Charts pursuant to this Agreement in
accordance with applicable provisions of the laws of the State of Minnesota as
follows:
2.1.1 Conversion of Sub Stock. At the Effective Time, each
share of the Common Stock of Sub that is issued and outstanding immediately
prior to the Effective Time will, by virtue of the Merger and without the need
for any further action on the part of the holder thereof, be converted into and
become one (1) share of Charts Common Stock that is issued and outstanding
immediately after the Effective Time, and the shares of Charts Common Stock into
which the shares of Sub Common Stock are so converted in the Merger will be the
only shares of capital stock of Charts that are issued and outstanding
immediately after the Effective Time.
2.1.2 Conversion of Charts Stock. At the Effective Time
(subject to the provisions of Section 2.1.4 regarding the payment of cash in
lieu of fractional shares of MarketWatch Common Stock and regarding the rounding
of fractional cents) each share of Charts Common Stock that is issued and
outstanding immediately prior to the Effective Time (other than any Charts
Dissenting Shares as provided in Section 2.1.3) will, by virtue of the Merger,
and without the need for any further action on the part of the holder thereof,
be converted into (i) a number of shares of MarketWatch Common Stock that is
equal to the Common Stock Conversion Number and (ii) the right to receive an
amount equal to the Common Stock Amount Per Share;
2.1.3 Charts Dissenting Shares. Subject to the provisions of
Sections 9.8 and 9.9, Holders of Charts Dissenting Shares (if any) will be
entitled to their appraisal rights under 302A.471 of the MBCA with respect to
such Charts Dissenting Shares, and such Charts Dissenting Shares will not be
converted into shares of MarketWatch Common Stock in the Merger; provided,
however, that shares of the capital stock of Charts that are outstanding
immediately prior to the Effective Time of the Merger and with respect to which
dissenting shareholders' rights of appraisal under the MBCA have not been
properly perfected will, when such dissenting shareholders' rights can no longer
be legally exercised under the MBCA, be converted into MarketWatch Common Stock
and cash as provided in Section 2.1.2.
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2.1.4 Fractional Shares. No fractional shares of MarketWatch
Common Stock will be issued in connection with the Merger. In lieu thereof, each
holder of Charts Common Stock who would otherwise be entitled to receive a
fraction of a share of MarketWatch Common Stock pursuant to Section 2.1.2,
computed after aggregating all shares of MarketWatch Common Stock to be received
by such holder pursuant to Section 2.1.2, will instead receive from MarketWatch,
within ten (10) business days after the Effective Time, an amount of cash
(rounded to the nearest whole cent) equal to the product obtained by multiplying
(i) the MarketWatch Closing Price Per Share (as adjusted to reflect any Capital
Change (as defined in Section 2.3 below) of MarketWatch) by (ii) the fraction of
a share of MarketWatch Common Stock that such holder would otherwise be entitled
to receive.
The total number of shares of MarketWatch Common Stock to be issued in
the Merger shall not exceed 2,175,000 shares (adjusted for Capital Changes) and
the aggregate Common Stock Amount Per Share payable to Charts stockholders shall
not exceed six million dollars ($6,000,000).
2.2 Assumption of Charts Options and Charts Warrants; Charts Other
Securities.
2.2.1 Charts Options. Each Charts Option that is outstanding
immediately prior to the Effective Time will, by virtue of the Merger and at the
Effective Time and without the need for any further action on the part of any
holder thereof, be assumed by MarketWatch and converted into an option (a
"MARKETWATCH OPTION") to purchase that number of shares of MarketWatch Common
Stock determined by multiplying the number of shares of Charts Common Stock that
are subject to such Charts Option immediately prior to the Effective Time by the
Common Stock Conversion Number, at an exercise price per share of MarketWatch
Common Stock equal to the exercise price per share of Charts Common Stock that
was in effect for such Charts Option immediately prior to the Effective Time
divided by the Common Stock Conversion Number, with the resulting exercise price
being rounded up to the nearest whole cent; provided, however, that if the
foregoing calculation would result in an assumed and converted Charts Option
being converted into an MarketWatch Option that, after aggregating all the
shares of MarketWatch Common Stock issuable upon the exercise of such
MarketWatch Option, would be exercisable for a fraction of a share of
MarketWatch Common Stock, then the number of shares of MarketWatch Common Stock
subject to such MarketWatch Option will be rounded to the nearest whole number
of shares of MarketWatch Common Stock. The terms, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the Code
(if applicable) or as a nonqualified stock option, and all other terms and
conditions of each Charts Option (including without limitation the provisions of
the Charts Option Plan that contains part of the terms and conditions of such
Charts Option) that is converted into an MarketWatch Option in the Merger will
(except as otherwise expressly provided in the terms of such Charts Options), to
the extent permitted by law and otherwise reasonably practicable, be unchanged
and continue in effect after the Effective Time of the Merger. To the extent
that the terms of a Charts Option provide that the pre-Merger employment service
of the holder of such Charts Option with Charts is credited to such holder for
purposes of applying any vesting schedule contained in such Charts Option, such
holder's pre-Merger employment service with Charts will also be credited to such
holder for purposes of applying any vesting schedule contained in the
MarketWatch Option issued to such holder upon the conversion of such Charts
Option in the Merger in order to determine the number of shares of MarketWatch
Common Stock that are exercisable under such MarketWatch Option at any point in
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time. This Section 2.2.1 is intended to meet the requirements of Section 424(a)
of the Code and shall be interpreted consistent with such intent.
A Charts Option which is converted into a MarketWatch Option pursuant to
the provisions of this Section 2.2.1 shall become immediately exercisable,
subject to the provisions of Section 2.6.3, in the event that the employment of
such holder by MarketWatch or Charts is terminated for other than "Cause" or if
such holder terminates his or her employment for "Good Reason" or upon a "Change
of Control." For purposes of this Agreement: CAUSE means:
(a) Willful and repeated failure by such employee to carry
out the lawful instructions of the Board of Directors
after being notified of such failure, other than a
failure resulting from his complete or partial
incapacity due to physical or mental illness or
impairment;
(b) Indictment or a violation of a federal or state law or
regulation which indictment or violation is for a crime
which is a felony under federal or state law, or any
violation of state or federal securities laws involving
securities of MarketWatch which would result in a civil
penalty being imposed by the U.S. Securities and
Exchange Commission or similar state securities law
authority; or
(c) An act of personal dishonesty that would result in
employee's personal enrichment at the expense of
MarketWatch or Charts;
GOOD REASON means (i) any reduction in such employee's base salary from
the base salary then in effect as of March 31, 1999 or (ii) a relocation of such
employee's principal place of employment more than 50 miles from Minneapolis,
Minnesota without such holder's consent; and
CHANGE OF CONTROL means:
(x) the sale, lease, conveyance, liquidation or other
disposition of all or substantially all of Charts' or
MarketWatch'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 any affiliates of
Charts or MarketWatch, including, without limitation,
Data Broadcasting Corporation ("DBC"), CBS, Inc. ("CBS")
or any of their affiliates, (ii) in the ordinary course
of business; 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) other than MarketWatch or Sub 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 of
Charts or MarketWatch, except if such Person is (A) a
subsidiary of Charts or MarketWatch, (B) an employee
stock ownership plan for employees of Charts or
MarketWatch, (C) a company formed to
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hold Charts' or MarketWatch's common equity securities
and whose shareholders constituted, at the time such
company became such holding company, substantially all
the equity owners or shareholders of Charts or
MarketWatch, or (D) DBC, CBS and/or any of their
affiliates.
2.2.2 Charts Warrants. Each warrant to purchase shares of
Charts capital stock (a "CHARTS WARRANT") that is outstanding immediately prior
to the Effective Time will, by virtue of the Merger and at the Effective Time
and without the need for any further action on the part of any holder thereof,
be assumed by MarketWatch and converted into a warrant (a "MARKETWATCH WARRANT")
to purchase that number of shares of MarketWatch Common Stock determined by
multiplying the number of shares of Charts Common Stock that are subject to such
Charts Warrant immediately prior to the Effective Time by the Common Stock
Conversion Number, at an exercise price per share of MarketWatch Common Stock
equal to the exercise price per share of Charts Common Stock that was in effect
for such Charts Warrant immediately prior to the Effective Time divided by the
Common Stock Conversion Number. If the foregoing calculation results in a
MarketWatch Warrant being exercisable for a fraction of a share of MarketWatch
Common Stock, then the number of shares of MarketWatch Common Stock subject to
such MarketWatch Warrant shall be rounded down to the nearest whole number with
no cash being payable for such fractional share. If a MarketWatch Warrant is
exercisable for a per share exercise price that includes a fraction of a cent,
the exercise price shall be rounded down to the nearest whole cent. All terms
and conditions of each Charts Warrant that is converted into a MarketWatch
Warrant in the Merger will, to the extent permitted by law and otherwise
reasonably practicable, be unchanged and continue in effect after the Effective
Time of the Merger.
2.2.3 Charts Other Securities. Prior to the Merger, Charts
will cause all outstanding Charts Other Securities, if any, to have been validly
terminated or exercised in full and thereby converted into shares of Charts
Common Stock in accordance with their current terms and conditions, so that no
Charts Other Securities will be outstanding immediately prior to the Effective
Time.
2.3 Adjustments for Capital Changes. Notwithstanding the provisions
of Section 2.1 or Section 2.2, if at any time after the Agreement Date and prior
to the Effective Time, MarketWatch recapitalizes, either through a subdivision
(or stock split) of any of its outstanding shares of MarketWatch Common Stock
into a greater number of such shares, or a combination (or reverse stock split)
of any of its outstanding shares of MarketWatch Common Stock into a lesser
number of such shares, or reorganizes, reclassifies or otherwise changes its
outstanding shares of MarketWatch Common Stock into the same or a different
number of shares of other classes or series of MarketWatch stock (other than
through a subdivision or combination of shares provided for in the preceding
clause), or declares a dividend on its outstanding shares that is payable in
shares of MarketWatch Common Stock or in shares or securities convertible into,
or exercisable or exchangeable for, shares of MarketWatch Common Stock without
the payment of any consideration therefor (each, a "CAPITAL CHANGE"), then the
number of shares of MarketWatch Common Stock into which each outstanding share
of Charts Common Stock is converted in the Merger, the number of shares of
MarketWatch Common Stock issuable under, and the exercise price per share of
MarketWatch Common Stock of each MarketWatch Option and MarketWatch Warrant
issued in the Merger under Section 2.2, will each be proportionally and
equitably adjusted to reflect such Capital Change.
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2.4 Escrow.
2.4.1 Escrow of Shares for Indemnification; Escrow Agreement.
At the Closing of the Merger, MarketWatch will withhold from the shares of
MarketWatch Common Stock to be issued to Charts Shareholders in the Merger
pursuant to Section 2.1.2, a number of such shares of MarketWatch Common Stock
that is equal to ten percent (10%) of the MarketWatch Merger Shares, and the
number of such shares withheld from each Charts Shareholder shall be rounded
down to the nearest whole number of such shares (such withheld shares of
MarketWatch Common Stock being hereinafter referred to as the "ESCROW SHARES")
and will deliver certificates representing such Escrow Shares to State Street
Bank and Trust Company, N.A. or a similar institution reasonably acceptable to
Charts, as escrow agent (the "ESCROW AGENT"), and the Charts Shareholders will
deliver to the Escrow Agent related stock transfer powers executed by the
applicable Charts Shareholders (with medallion signature guarantees if requested
by the Escrow Agent), to be held by the Escrow Agent as security for the Charts
Shareholders' indemnification obligations under Article 11 and pursuant to the
provisions of an escrow agreement in substantially the form of Exhibit D (the
"ESCROW AGREEMENT") to be entered into at the Closing by MarketWatch, the Escrow
Agent, and the Escrow Representative (as defined below). The Escrow Shares will
be withheld from each Charts Shareholder pro rata in the same proportion as the
total number of shares of MarketWatch Common Stock issuable to such Charts
Shareholder under Section 2.1.2 bears to the total number of shares of
MarketWatch Common Stock issued to all Charts Shareholders under Section 2.1.2.
The Escrow Shares will be represented by stock certificates issued in the names
of each of the Charts Shareholders in proportion to their respective interests
in the Escrow Shares and will be held by the Escrow Agent during that time
period commencing on the Effective Time and ending on the first (1st)
anniversary of the Effective Time or on such later date as may be provided in
the Escrow Agreement (such time period being hereafter called the "ESCROW
PERIOD").
2.4.2 Effect of Charts Shareholder Approval Regarding Escrow
Shares; Escrow Representative. By their approval of the Merger, the Charts
Shareholders will be conclusively deemed to have consented to, approved and
agreed to be bound by: (i) the indemnification provisions of Article 11; (ii)
the Escrow Agreement; (iii) the appointment of Xxxxxx X. Xxxxxxxxx as the
representative of Charts Shareholders (the "ESCROW REPRESENTATIVE") under the
Escrow Agreement and as the attorney-in-fact and agent for and on behalf of each
Charts Shareholder as provided in the Escrow Agreement; and (iv) the taking by
the Escrow Representative of any and all actions and the making of any decisions
required or permitted to be taken by the Escrow Representative under this
Agreement and/or the Escrow Agreement, including, without limitation, the
exercise of the power to: (a) authorize delivery to MarketWatch of Escrow Shares
in satisfaction of indemnity claims by MarketWatch or any other Indemnified
Person (as defined herein) pursuant to Article 11 and/or the Escrow Agreement;
(b) agree to, negotiate, enter into settlements and compromises of, demand
arbitration of, and comply with orders of courts and awards of arbitrators with
respect to, such claims; (c) arbitrate, resolve, settle or compromise any claim
for indemnity made pursuant to Article 11; and (d) take all actions necessary in
the judgment of the Escrow Representative for the accomplishment of the
foregoing. The Escrow Representative will have authority and power to act on
behalf of each Charts Shareholder with respect to the Escrow Agreement and the
disposition, settlement or other handling of all claims under Article 11 hereof
or governed by the Escrow Agreement, and all rights or obligations arising
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under the Escrow Agreement so long as all Charts Shareholders are treated in the
same manner. The Charts Shareholders will be bound by all actions taken and
documents executed by the Escrow Representative in connection with the Escrow
Agreement, and MarketWatch will be entitled to rely on any action or decision of
the Escrow Representative. In performing the functions specified in this
Agreement and the Escrow Agreement, the Escrow Representative will not be liable
to any Charts Shareholder in the absence of gross negligence or willful
misconduct on the part of the Escrow Representative. Any out-of-pocket costs and
expenses reasonably incurred by the Escrow Representative in connection with
actions taken by the Escrow Representative pursuant to the terms of the Escrow
Agreement (including without limitation the hiring of legal counsel and the
incurring of legal fees and costs) will be paid by the Charts Shareholders to
the Escrow Representative pro rata in proportion to their respective percentage
interests in the Escrow Shares.
2.5 Effects of the Merger. At and upon the Effective Time of the
Merger:
(a) the separate existence of Sub will cease and Sub will be
merged with and into Charts, and Charts will be the surviving corporation of the
Merger (sometimes hereinafter referred to as the "SURVIVING CORPORATION")
pursuant to the terms of this Agreement, the Agreement of Merger and the
Articles of Merger;
(b) the Articles of Incorporation of Charts will be the
Articles of Incorporation of the Surviving Corporation immediately after the
Effective Time;
(c) the Bylaws of Charts will be the Bylaws of the Surviving
Corporation immediately after the Effective Time;
(d) each share of Charts Common Stock that is issued and
outstanding immediately prior to the Effective Time will be converted into
MarketWatch Common Stock as provided in Section 2.1.2 and the right to receive
the Common Stock Amount Per Share, and each Charts Option that is outstanding
immediately prior to the Effective Time, will be converted into a MarketWatch
Option, in each case, as provided in this Article 2;
(e) each share of Sub Common Stock that is outstanding
immediately prior to the Effective Time will be converted into one (1) share of
Charts Common Stock as provided in Section 2.1.1;
(f) the officers of the Surviving Corporation immediately
after the Effective Time will be the individuals who are officers of Sub
immediately prior to the Effective Time.
(g) the members of the Board of Directors of the Surviving
Corporation immediately after the Effective Time will be the individuals who are
the members of the Board of Directors of Sub immediately prior to the Effective
Time; and
(h) the Merger will, from and after the Effective Time, have
all of the effects provided by applicable law.
2.6 Private Placement of MarketWatch Common Stock.
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2.6.1 Securities Laws Issues. MarketWatch shall issue the
shares of MarketWatch Common Stock to be issued to the Charts Shareholders in
the Merger pursuant to Section 2.1.2 pursuant to an exemption or exemptions from
registration under Section 4(2) of the 1933 Act and/or Regulation D promulgated
under the 1933 Act, the exemption from the "blue sky" laws qualification under
Minnesota Statutes Section 80A.15, subd. 2(h) and exemptions from the
qualification or registration requirements of all other applicable state "blue
sky" securities laws. Charts and MarketWatch shall jointly prepare an
information statement or proxy statement (which must be acceptable to
MarketWatch) to be provided to Charts' shareholders in connection with the
consideration of the approval of the Merger by Charts' shareholders and the
offering and issuance of shares of MarketWatch Common Stock to Charts'
shareholders in the Merger (the "INFORMATION STATEMENT"). MarketWatch and Charts
shall comply with all applicable provisions of, and rules under, the 1933 Act in
connection with offering and issuance of shares of MarketWatch common stock in
the Merger. As a condition precedent to receiving any share certificates for
shares of MarketWatch Common Stock issued in the Merger as contemplated by
Article 7 and Article 9, each Charts Shareholder shall execute and deliver to
MarketWatch an Investment Representation Letter in the form and substance of
Exhibit E attached hereto (the "INVESTMENT REPRESENTATION LETTER") as well as a
Purchaser Questionnaire in the form and substance of Exhibit F attached hereto
(the "PURCHASER QUESTIONNAIRE").
2.6.2 Registration Rights. At the Closing, MarketWatch and
each Charts Shareholder who receives shares of MarketWatch Common Stock in the
Merger pursuant to Section 2.1.2 will also enter into a Registration Rights
Agreement with MarketWatch in substantially the form of Exhibit G attached
hereto (the "REGISTRATION RIGHTS AGREEMENT"), under which each Charts
Shareholder who executes and delivers such Registration Rights Agreement will be
granted certain registration rights under the 1933 Act, solely with respect to
shares of MarketWatch Common Stock issued under Section 2.1.2 of this Agreement,
on the terms, and subject to the conditions and limitations, of such
Registration Rights Agreement.
2.6.3 Lockup of Merger Shares; Market Standoff.
(a) Each Principal Shareholder hereby agrees that it
shall not pledge, sell, assign or otherwise transfer, including by operation of
law or otherwise, or dispose of any Locked Shares. Shares of MarketWatch Common
Stock received in the Merger that are locked pursuant to the schedule set forth
herein are "LOCKED SHARES." Shares of MarketWatch Common Stock received in the
Merger that are unlocked pursuant to the schedule set forth herein are "UNLOCKED
SHARES." At the Effective Time, all shares of MarketWatch Common Stock received
by a Charts Shareholder will be Locked Shares.
(i) with respect to each Charts Employee
Shareholder who is not a Principal Shareholder, ten percent (10%) of the
shares of MarketWatch Common Stock received in the Merger (based upon
such Charts Shareholder's stock and stock option or warrant ownership
set forth in Schedules 3.4.1 and 3.4.2, and as adjusted for Capital
Changes) by such Charts Employee Shareholder will be Unlocked Shares
immediately at the Effective Time, one-half (1/2) of the remaining
shares of MarketWatch Common Stock received in the Merger (based upon
such Charts Shareholder's stock and stock option or warrant ownership
set forth in Schedules 3.4.1 and 3.4.2, and as adjusted for Capital
Changes) by such Charts Employee Shareholder will become Unlocked Shares
on the first
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(1st) year anniversary of the Closing Date, and all shares of
MarketWatch Common Stock received in the Merger by such Charts Employee
Shareholder will become Unlocked Shares on the second (2nd) year
anniversary of the Closing Date.
(ii) with respect to each Charts Employee
Shareholder who is a Principal Shareholder, ten percent (10%) of the
shares of MarketWatch Common Stock received in the Merger (based upon
such Charts Shareholder's stock and stock option or warrant ownership
set forth in Schedules 3.4.1 and 3.4.2, and as adjusted for Capital
Changes) by such Charts Employee Shareholder who is Principal
Shareholder will be Unlocked Shares immediately at the Effective Time,
and on each one year anniversary of the Closing Date, one-third (1/3rd)
of the remaining shares of MarketWatch Common Stock received in the
Merger (based upon such Charts Shareholder's stock and stock option or
warrant ownership set forth in Schedules 3.4.1 and 3.4.2, and as
adjusted for Capital Changes) by such Charts Employee Shareholder who is
a Principal Shareholder will become Unlocked Shares.
(iii) with respect to each Charts Non-Employee
Shareholder, ten percent (10%) of the shares of MarketWatch Common Stock
received in the Merger (based upon such Charts Shareholder's stock and
stock option or warrant ownership set forth in Schedules 3.4.1 and
3.4.2, and as adjusted for Capital Changes) by such Charts Non-Employee
Shareholder will be Unlocked Shares immediately at the Effective Time,
one-third (1/3rd) of the remaining shares of MarketWatch Common Stock
received in the Merger (based upon such Charts Shareholder's stock and
stock option or warrant ownership set forth in Schedules 3.4.1 and
3.4.2, and as adjusted for Capital Changes) by such Charts Non-Employee
Shareholder will become Unlocked Shares on each of the 180-day, 270-day
and one year anniversary of the Closing Date. If the application of the
foregoing percentages causes a fractional share, such share shall be
rounded up to the nearest whole share. As used herein, a "CHARTS
EMPLOYEE SHAREHOLDER" means a Charts Shareholder that is an employee of
Charts on the Closing Date, it being understood that a Charts
Shareholder who is only a director of BigCharts and not otherwise
employed by BigCharts shall not be a Charts Employee Shareholder, and a
"CHARTS NON-EMPLOYEE SHAREHOLDER") means a Charts Shareholder that is
not an employee of Charts on the Closing Date.
(b) Shares subject to a MarketWatch Option or a
MarketWatch Warrant shall be subject to the provisions of this Section 2.6 and
such shares shall be included in the number of shares of MarketWatch Common
Stock received in the Merger for the purposes of calculating Locked Shares and
Unlocked Shares.
(c) Notwithstanding anything to the contrary in
subsection (a) above, each Charts Shareholder hereby agrees that it shall not
sell or otherwise transfer or dispose of any shares of MarketWatch Common Stock
received in the Merger or other shares of stock of MarketWatch then owned by
such Charts Shareholder (other than to donees or partners of the such Charts
Shareholder who agree to be similarly bound) for up to ninety (90) days
following the effective date of any registration statement of MarketWatch filed
under the 1933 Act with respect to an underwritten public offering of its
securities excluding shares included in such registration.
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(d) In order to enforce the foregoing covenant,
MarketWatch shall place restrictive legends on the certificates representing the
Merger Shares and have the right to impose stop transfer instructions with
respect to the Merger Shares and such other shares of stock of each Charts
Shareholder (and the shares or securities of every other person subject to the
foregoing restriction).
2.7 Tax-Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Section 368(a) of the Code. However, neither
Charts nor MarketWatch makes any representation or warranty to the other or to
any holder of Charts securities regarding the tax treatment of the Merger or
whether the Merger will qualify as a tax-free plan of reorganization under the
Code. Charts and MarketWatch each acknowledges that it is relying on its own tax
advisors in connection with the Merger and the other transactions contemplated
by this Agreement. MarketWatch and Charts each agree not to knowingly take any
action on or prior to the Effective Time with the intent of causing the Merger
not to qualify as a reorganization under Section 368(a) of the Code.
2.8 Further Assurances. If, at any time before or after the
Effective Time, MarketWatch believes or is advised that any further instruments,
deeds, assignments or assurances are reasonably necessary or desirable to
consummate the Merger or to carry out the purposes and intent of this Agreement
at or after the Effective Time, then MarketWatch, the Surviving Corporation and
their respective officers and directors may execute and deliver all such proper
deeds, assignments, instruments and assurances and do all other things necessary
or desirable to consummate the Merger and to carry out the purposes and intent
of this Agreement, in the name of Charts or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CHARTS
Each of Charts and the Principal Shareholders represents and warrants to
MarketWatch that, except as set forth in the letter addressed to MarketWatch
from Charts and dated as of the Agreement Date (including all schedules thereto)
which has been delivered by Charts to MarketWatch concurrently with the parties'
execution of this Agreement (the "CHARTS DISCLOSURE LETTER"), each of the
following representations, warranties and statements in this Article 3 is true
and correct as of the Agreement Date (and for all purposes of this Agreement
(including without limitation Articles 9 and 11), the statements contained in
the Charts Disclosure Letter and its schedules shall also be deemed to be
representations and warranties made and given by Charts and the Principal
Shareholders under Article 3 of this Agreement):
3.1 Organization and Good Standing. Charts is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota. Charts has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to transact business, and is in good
standing, in each jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect on Charts. Charts has delivered to MarketWatch
true and correct copies of the currently effective Articles of Incorporation and
Bylaws or other charter documents, as applicable, of
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Charts, each as amended to date. Charts is not in violation of its Articles of
Incorporation, Bylaws or other charter documents.
3.2 Subsidiaries. Except as expressly disclosed in Schedule 3.2 of
the Charts Disclosure Letter, Charts does not have any subsidiary or any equity
or ownership interest, whether direct or indirect, in any corporation,
partnership, limited liability company, joint venture or other business entity.
3.3 Power, Authorization and Validity.
3.3.1 Power and Authority. Each of Charts, each Principal
Shareholder who is not an individual and Verticality, has all requisite
corporate or other power and authority to enter into, execute, deliver, and
perform its obligations under, this Agreement and all Charts Ancillary
Agreements, and (subject to the approval of this Agreement and the Merger by
Charts' shareholders) to consummate the Merger. The execution, delivery and
performance by Charts and the Charts Shareholders who are not individuals of
this Agreement and each of the Charts Ancillary Agreements have been duly and
validly approved and authorized by all necessary corporate or other action on
the part of Charts' and the Charts Shareholders' Board of Directors or similar
governing body in compliance with applicable law (including without limitation
the MBCA) and Charts' Articles of Incorporation and Bylaws, each as amended.
3.3.2 No Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other governmental authority (each, a
"GOVERNMENTAL AUTHORITY"), or any other person or entity, governmental or
otherwise, is necessary or required to be made or obtained by Charts, the
Principal Shareholders or Verticality to enable Charts, the Principal
Shareholders or Verticality, as the case may be, to lawfully execute and
deliver, enter into, and to perform its obligations under, this Agreement and
each of the Charts Ancillary Agreements or to consummate the Merger, except for:
(a) the approval of this Agreement and the Merger by the shareholders of Charts
in compliance with the requirements of applicable law (including without
limitation the MBCA) and Charts' Articles of Incorporation and Bylaws, each as
amended; and (b) the filing of the Articles of Merger with the Minnesota
Secretary of State and any such further documents as may be required under the
MBCA to effect the Merger.
3.3.3 Enforceability. This Agreement and each of the Charts
Ancillary Agreements are, or when executed by Charts, the Principal Shareholders
or Verticality, as the case may be, will be, valid and binding obligations of
Charts, the Principal Shareholders or Verticality, as the case may be,
enforceable against Charts, the Principal Shareholders and Verticality, the
other Charts Shareholders and holders of Charts Options and Charts Warrants in
accordance with their respective terms, subject only to the effect of (a)
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and (b) rules of law and equity governing specific performance,
injunctive relief and other equitable remedies.
3.4 Capitalization of Charts.
3.4.1 Stock. The authorized capital stock of Charts consists
entirely of: (i) 10,000,000 shares of Common Stock, no par value, of which a
total of 4,146,878 shares are
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issued and outstanding and (ii) 3,000,000 shares of Preferred Stock, no par
value, all of which are undesignated and unissued; and except as expressly
described above in this Section 3.4.1, no other shares of any capital stock of
Charts are authorized, issued or outstanding. No fractional shares of Charts
Common Stock are issued or outstanding and Charts holds no treasury shares.
As of the Closing Date, there will have been no change in the
authorized and outstanding capital stock of Charts as represented in the
foregoing sentences of this Section 3.4.1, other than the following changes if
made in compliance with this Agreement: the issuance of shares of Charts Common
Stock pursuant to the exercise of Charts Options represented as being
outstanding on the Agreement Date in Section 3.4.2 or pursuant to the exercise
or conversion of any Charts Other Securities represented as being outstanding on
the Agreement Date in Section 3.4.2.
All issued and outstanding shares of Charts' capital stock have
been duly authorized and validly issued, are fully paid and nonassessable, are
not subject to any claim, lien, preemptive right, right of first refusal,
co-sale right, right of first offer or right of rescission, and have been
offered, issued, sold and delivered by Charts in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of all applicable federal and state securities laws. A list of all of the record
holders of Charts' outstanding capital stock, and the total number of shares of
Charts Common Stock owned by each such holder is set forth in Schedule 3.4.1 to
the Charts Disclosure Letter. No shareholder of Charts owes Charts any money or
other consideration representing any part of the purchase price of any
outstanding shares of Charts' capital stock, including without limitation any
money due under a promissory note payable to Charts. Charts has no liability to
any shareholder for any dividends that have been declared or accrued.
All shares of Charts Common Stock held by the Charts Shareholders are
owned of record by the Charts Shareholders, each Principal Shareholder and
Verticality, and to the knowledge of Charts each Charts Shareholder which is not
a Principal Shareholder or Verticality, has good and marketable title to shares
of Charts Common Stock owned by such Principal Shareholder, Verticality or
Charts Shareholder, as the case may be, and Charts has not received any notice
that any Charts Shareholder which is not a Principal Shareholder or Verticality
does not hold the Charts Common Stock reflected as being held by him, her or it
on Schedule 3.4.1 to the Charts Disclosure Letter, free and clear of all liens,
claims and encumbrances, agreements, voting trusts, proxies and other
arrangements or restrictions of any kind whatsoever.
3.4.2 Options, Warrants or Rights. Except for (a) Charts
Options to purchase an aggregate total of 1,547,986 shares of Charts Common
Stock that are outstanding on the Agreement Date (all of which Charts Options
were granted under the Charts Option Plan) and (b) Charts Other Securities
disclosed in Schedule 3.4.2, there are no options, warrants, convertible
securities or other securities, calls, commitments, conversion privileges,
preemptive rights, rights of first refusal, rights of first offer or other
rights or agreements outstanding to purchase or otherwise acquire (whether
directly or indirectly) from Charts any shares of Charts' authorized but
unissued capital stock or any securities convertible into or exchangeable for
any shares of Charts' capital stock or obligating Charts to grant, issue,
extend, or enter into any such option, warrant, convertible security or other
security, call, commitment, conversion privilege, preemptive right, right of
first refusal, right of first offer or other right or agreement. No person or
entity holds, or
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has any option, warrant or other right to acquire, any issued and outstanding
shares of the capital stock of Charts from any Principal Shareholder, or to the
knowledge of Charts, any holder of shares of the capital stock of Charts.
A total of 1,500,000 shares of Charts Common Stock are reserved
for issuance under the Charts Option Plan. As of the Agreement Date, a total of
1,547,986 shares of Charts Common Stock are potentially issuable upon the
exercise of all options granted under the Charts Option Plan that are
outstanding on the Agreement Date. Attached as Schedule 3.4.2 to the Charts
Disclosure Letter is (i) a true and complete list of all holders of all Charts
Options that are outstanding on the Agreement Date, the number of Charts Options
held by each such holder, the exercise price and vesting schedule of each Charts
Option held by each such person, and the name of the Charts option plan under
which each such option was granted, and (ii) a true and complete list of all
holders of all Charts Other Securities (other than holders of Charts Options),
if any, that are outstanding on the Agreement Date, the number, class and series
of the shares subject to each such Charts Other Security held by each such
holder, the exercise or conversion price and (if applicable) vesting schedule of
each Charts Other Security. The Charts Option Plan and any change in (a) the
number of shares reserved under the Charts Option Plan or (b) the eligible
participants under the Charts Option Plan have each been duly and validly
approved by Charts' Board of Directors and by Charts' shareholders, and with
respect to the Charts Option Plan (or any such change) such shareholder approval
was obtained within one (1) year of the date on which the Charts Option Plan (or
such change) was approved by Charts' Board of Directors.
3.4.3 No Voting Arrangements or Registration Rights. There are
no voting agreements, voting trusts, proxies, preemptive rights, rights of first
refusal, rights of first offer or other restrictions (other than normal
restrictions on transfer under applicable federal and state securities laws)
applicable to any of Charts' outstanding stock or other securities or to the
conversion of any shares of Charts' capital stock in the Merger pursuant to any
agreement or obligation to which Charts, Verticality or a Principal Shareholder
is a party or is bound except for the Voting Agreements (and related Irrevocable
Proxies referred to in Section 3.22). Charts is not aware of any other similar
agreement or obligation binding on or affecting Charts Shareholders who are not
Principal Shareholders or Verticality. Charts is not under any obligation to
register under the 1933 Act any of its presently outstanding shares of stock or
other securities or any stock or other securities that may be subsequently
issued.
3.5 No Conflict. Neither the negotiation, execution and delivery of
this Agreement or any of the Charts Ancillary Agreements by Charts, Verticality
or the Principal Shareholders, nor the consummation of the Merger or the
performance by Charts, Verticality or the Principal Shareholders of its or their
obligations under this Agreement or any Charts Ancillary Agreement, has or will
(with or without notice or lapse of time, or both) result in a termination,
breach, impairment or violation of (i) any provision of the Articles of
Incorporation or Bylaws or other charter documents (including, without
limitation, any limited liability company agreement) of Charts, Verticality or
the Principal Shareholders, as currently in effect; or (ii) any federal, state,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to Charts, Verticality or the Principal Shareholders or any of their
respective assets or properties. Neither the negotiation, execution and delivery
of this Agreement or any of the Charts Ancillary Agreements by Charts,
Verticality or the Principal Shareholders, nor the consummation of the Merger or
the performance by Charts, Verticality or the Principal Shareholders of its or
their obligations under
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this Agreement or any Charts Ancillary Agreement, has or will (with or without
notice or lapse of time, or both) result in a termination, breach, impairment or
violation of any instrument, agreement, contract, undertaking, understanding,
letter of intent, memorandum of understanding or commitment (whether verbal or
in writing) or confidentiality agreement to which Charts, Verticality or the
Principal Shareholders is a party or by which Charts, Verticality or the
Principal Shareholders or any of their respective assets or properties are
bound, which termination, breach, impairment or violation: (i) would have a
Material Adverse Effect on Charts; or (ii) prevent the consummation of the
transactions contemplated by this Agreement. Neither Charts', Verticality's or
the Principal Shareholders' entering into this Agreement nor the consummation of
the Merger will give rise to, or trigger the application of, any rights of any
third party related to Charts' or the Principal Shareholders' actions or arising
under an agreement to which Charts or any Principal Shareholder is a party or is
bound that would come into effect upon the effectiveness of the Merger and would
(i) be adverse to the financial condition or business interests of Charts or
(ii) impair the value of any of Charts' assets or properties in any material
respect. The consummation of the Merger by Charts or the Principal Shareholders
will not require the consent, release, waiver or approval of any third party
(other than any consent, release, waiver or approval that is set forth in
clauses (a) through (d) of Section 3.3.2).
3.6 Litigation. There is no action, claim, suit, arbitration,
mediation, proceeding, claim or investigation pending against Charts or against
any officer, director, or to the best of Charts' knowledge, any employee of
Charts in their capacity as such or relating to their employment, services or
relationship with Charts, before any court, administrative agency or arbitrator,
nor, to the best of Charts' knowledge, has any such action, suit, proceeding,
arbitration, mediation, claim or investigation been threatened. There is no
judgment, decree, injunction, rule or order of any governmental entity or
agency, court or arbitrator outstanding against Charts. Charts is not aware of
any facts that would form a basis of a claim against Charts or MarketWatch based
upon: (a) Charts', Verticality's or the Principal Shareholders' negotiating or
entering into this Agreement or any Charts Ancillary Agreement or consummating
the Merger or any of the transactions contemplated by this Agreement or any
Charts Ancillary Agreement; (b) any confidentiality or similar agreement entered
into by Charts; (c) any claim that Charts has agreed to sell or dispose all or
any substantial portion of its assets or business to any party other than
MarketWatch, whether by way of merger, consolidation, sale of assets or
otherwise; (d) any wrongful failure by Charts to issue any of its stock or other
securities to any party; (e) ownership or rights to ownership of any shares of
Charts Common Stock, Charts Options or Charts Other Securities; (f) any rights
as a shareholder of Charts, including any option or preemptive rights or rights
to notice or to vote; or (g) any rights under any agreement among Charts and its
shareholders.
3.7 Taxes.
3.7.1 Charts has timely filed all federal, state, local and
foreign tax returns required to be filed, has timely paid all taxes required to
be paid in respect of all periods for which returns have been filed, has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the periods subsequent to the periods covered by its most recent
applicable tax returns (which accrual or reserve as of the Balance Sheet Date
(as defined in Section 3.8 below) is fully reflected on the Balance Sheet (as
defined in Section 3.8 below) and in any more recent balance sheet of Charts
provided by Charts to MarketWatch on or before the Agreement Date), has made all
necessary estimated tax payments, and has no material liability for taxes in
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excess of the amount so paid or accruals or reserves so established. Charts is
not delinquent in the payment of any tax or in the filing of any tax returns,
and no deficiencies for any tax have been threatened, claimed, proposed or
assessed against Charts, or any of the officers, employees or agents of Charts
in their capacity as such. Charts has not received any notification that any
material issues have been raised by (or are currently pending) before the
Internal Revenue Service or any other taxing authority (including but not
limited to any sales or use tax authority) regarding Charts and no tax return of
Charts has ever been audited by the Internal Revenue Service or any state or
local taxing agency or authority. No tax liens have been filed against any
assets of Charts. Charts has not filed any election under Section 341(f) of the
Code. Charts has withheld with respect to each of its employees and, to Charts'
knowledge, independent contractors, all taxes, including but not limited to
federal and state income taxes, FICA, Medicare, FUTA and other taxes, required
to be withheld, and paid such withheld amounts to the appropriate tax authority
within the time prescribed by law.
3.7.2 For the purposes of this Section, the terms "TAX" and
"TAXES" include all federal, state, local and foreign income, alternative or
add-on minimum income, gains, franchise, excise, property, property transfer,
sales, use, employment, license, payroll (including without limitation any
income taxes or other taxes or required withholdings on income or receipts of
employees or others that are required to be withheld and paid by Charts), ad
valorem, documentary, stamp, withholding, occupation, recording, value added or
transfer taxes, governmental charges, fees, customs duties, levies or
assessments (whether payable directly or by withholding), and, with respect to
any such taxes, any estimated tax, interest, fines and penalties or additions to
tax and interest on such fines, penalties and additions to tax.
3.8 Charts Financial Statements.
(a) Schedule 3.8 to the Charts Disclosure Letter includes
(i) Charts' audited balance sheet as of December 31, 1998, and Charts' audited
statement of operations, statement of cash flows and statement of changes in
shareholders' equity for the year ended December 31, 1998, and (ii) Charts'
unaudited balance sheet as of March 31, 1999 (the "BALANCE SHEET", and such
date, the "BALANCE SHEET DATE"), and Charts' unaudited statements of operations
for the three (3) month period ended March 31, 1999 (all such financial
statements of Charts and the notes thereto are hereinafter collectively referred
to as the "CHARTS FINANCIAL STATEMENTS"). The Charts Financial Statements (a)
are derived from and in accordance with the books and records of Charts, (b)
fairly present the financial condition of Charts at the dates therein indicated
and the results of operations for the periods therein specified and (c) have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods except (solely with respect to
any unaudited financial statements included in the Charts Financial Statements)
for the absence of notes to such unaudited financial statements and except that
Charts' unaudited financial statements are subject to normal and recurring
year-end audit adjustments. Charts has no material debt, liability or obligation
of any nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, except for (i) those shown on the Balance Sheet, and (ii)
those that have been incurred after the Balance Sheet Date in the ordinary
course of Charts' business, and (iii) those that have been incurred after the
Balance Sheet Date that are not material in amount, either individually or
collectively. To Charts' knowledge, all reserves
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established by Charts and set forth in or reflected in the Balance Sheet
(including, but not limited to, reserves for any material loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975)) were reasonably
adequate as of the Balance Sheet Date. On the Closing Date, Charts current
assets shall exceed its current liabilities.
(b) Charts is not engaged in manufacturing (within the
meaning of the HSR Act) and Charts' Total Assets (as defined below) (i) were
less than Ten Million Dollars ($10,000,000) on the Balance Sheet and on the date
of the last regularly prepared balance sheet of Charts prepared on or prior to
the Agreement Date (the "LAST DATE") and (ii) will not equal or exceed Ten
Million Dollars ($10,000,000) at any time during the time period commencing on
the Last Date and ending on the earlier to occur of (a) the Effective Time or
(b) the date on which this Agreement is terminated in accordance with the
provisions of Article 10. As used herein, the term "CHARTS' TOTAL ASSETS" means
Charts' total assets as determined in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods.
3.9 Title to Properties. Charts has good and marketable title to all
of its assets and properties (including but not limited to those shown on the
Balance Sheet), free and clear of all mortgages, deeds of trust, security
interests, pledges, liens, title retention devices, collateral assignments,
claims, charges, restrictions or other encumbrances of any kind other than (i)
liens for current taxes that are not yet due and payable, (ii) statutory
mechanics', materialmens' and similar liens imposed by operation of law for
obligations incurred by Charts in the ordinary course of its business that are
not material in amount and are not currently due and payable. The machinery,
vehicles, equipment (including without limitation computers and web servers) and
other tangible personal property owned or leased by Charts or used in its
business, considered collectively, are in reasonably good condition and repair,
normal wear and tear excepted. Any real or personal property held by Charts is
held by Charts under a currently effective written lease and Charts is not in
breach of such lease and it has no knowledge that the lessor is in breach of
such lease. Such leases afford peaceful and undisturbed leasehold possession of
the real or personal property that is the subject of the lease. Charts is not in
violation of any zoning, building, safety or environmental ordinance, regulation
or requirement or other law or regulation applicable to the operation of its
owned or leased properties, which violation would have a Material Adverse Effect
on Charts nor has Charts received any written notice from any Governmental
Authority of any violation of law with which it has not complied which violation
would have a Material Adverse Effect on Charts. Charts owns no real property.
3.10 Absence of Certain Changes. Since the Balance Sheet Date, there
has not been with respect to Charts any:
(a) Material Adverse Change in Charts;
(b) amendment to, or change in, the Articles of
Incorporation or Bylaws of Charts;
(c) incurrence, creation or assumption by Charts of (i) any
mortgage, deed of trust, security interest, pledge, title retention device or
collateral assignment, (ii) any claim, lien, charge, restriction or other
encumbrance of any kind on any of the assets or properties of Charts
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any obligation or liability other than customer licenses and other obligations
or liabilities incurred in the ordinary course of Charts' business, or (iii) any
indebtedness for borrowed money in excess of $10,000;
(d) offer, issuance or sale of any debt or equity securities
of Charts, or any options, warrants or other rights to acquire from Charts,
directly or indirectly, any debt or equity securities of Charts (other than the
grant of Charts Options under the Charts Option Plan in the ordinary course of
Charts' business, generally consistent with its past practices, where such
Charts Options have an exercise price equal to the fair market value of Charts
Common Stock, as determined in good faith by Charts' Board of Directors as of
the date such Charts Option is granted, and the right to exercise such Charts
Options vests on a vesting schedule consistent with Charts' past vesting
practices, except that, with respect to such Charts Options granted after the
Agreement Date, the vesting of such Charts Options shall not accelerate at any
time by reason of the Merger or this Agreement);
(e) payment or discharge by Charts of any security interest,
lien, claim, or encumbrance of any kind on any asset or property of Charts, or
the payment or discharge of any liability that was not either shown on the
Balance Sheet or incurred in the ordinary course of Charts' business after the
Balance Sheet Date in an amount not in excess of $25,000 for any single
liability to a particular creditor;
(f) purchase, license, sale, assignment or other disposition
or transfer (or any agreement or other arrangement for the purchase, license,
sale, assignment or other disposition or transfer) of any of the assets,
properties or goodwill of Charts other than customer licenses incurred in the
ordinary course of its business;
(g) damage, destruction or loss of any property or asset,
whether or not covered by insurance, having (or likely with the passage of time
to have) a Material Adverse Effect on Charts;
(h) declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock of
Charts, any split, combination or recapitalization of the capital stock of
Charts or any direct or indirect redemption, purchase or other acquisition of
any capital stock of Charts or any change in any rights, preferences, privileges
or restrictions of any outstanding security of Charts;
(i) change or increase in the compensation payable or to
become payable to any of the officers, directors, or employees of Charts, or any
bonus or pension, insurance or other benefit payment or arrangement (including
without limitation stock awards, stock option grants, stock appreciation rights
or stock option grants) made to or with any of such officers, employees or
agents except in connection with normal employee salary or performance reviews
or otherwise in the ordinary course of Charts' business;
(j) obligation or liability incurred by Charts to any of its
officers, directors or shareholders except for normal and customary compensation
and expense allowances payable to directors, officers and employee-shareholders
of Charts in accordance with written contractual
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commitments in existence on the Agreement Date or payable in the ordinary course
of Charts' business;
(k) making by Charts of any loan, advance or capital
contribution to, or any investment in, any officer, director or shareholder of
Charts or any firm or business enterprise in which any such person had a direct
or indirect material interest at the time of such loan, advance, capital
contribution or investment;
(l) entering into, amendment of, relinquishment, termination
or non-renewal by Charts of any material contract, lease, transaction,
commitment or other material right or obligation other than in the ordinary
course of its business;
(m) assertion by any advertiser(s), subscriber(s) and/or
customer(s) of Charts of any complaint regarding Charts' services or products
which, if substantiated, would be likely to have a Material Adverse Effect on
Charts' business;
(n) material change in the policies under which Charts
extends discounts, credits or warranties to customers or otherwise deals with
its customers;
(o) entering into by Charts of any transaction, contract or
agreement that by its terms requires or contemplates a current and/or future
financial commitment, expense (inclusive of overhead expense) or obligation on
the part of Charts involving in excess of $25,000 or that is not entered into in
the ordinary course of Charts' business, or the conduct of any business or
operations other than in the ordinary course of Charts' business;
(p) any license, transfer or grant of a right under any
Charts IP Rights (as defined in Section 3.13 below), other than those licensed,
transferred or granted in the ordinary course of Charts' business;
(q) any grant of exclusive promotion or sponsorship with
respect to any portion of the Charts Website; or
(r) any agreement made by Charts to provide exclusive
services to any person or entity or not to engage in any business activity.
3.11 Contracts and Commitments/Licenses and Permits. Schedule 3.11 to
the Charts Disclosure Letter sets forth a list, arranged by the subsections
below, of each of the following (i) written or oral contracts, agreements,
commitments or other instruments to which Charts is a party or to which Charts
or any of its assets or properties is bound and (ii) licenses and permits held
by Charts:
(a) any website hosting, website linking, content or data
sharing, data feed, information exchange, advertising, distribution, fee
sharing, lead or customer referral, commerce, co-branding, framing, service,
order or transaction processing or similar agreement relating to any aspect or
element of the Charts Website;
(b) any distributor, OEM (Original Equipment Manufacturer),
VAR (Value Added Reseller), sales representative or similar agreement under
which any third party is
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authorized to sell, sublicense, lease, distribute, market or take orders for,
any product, services or technology of Charts;
(c) any continuing contract for the future purchase, sale,
license, provision or manufacture of products, material, supplies, equipment or
services requiring payment to or from Charts in an amount in excess of $25,000
per annum;
(d) any contract or commitment in which Charts has granted
or received most favored customer pricing provisions or exclusive marketing or
on-line distribution rights relating to any product or service, group of
products or services, market or geographic territory;
(e) any contract providing for the development of software,
website content or other technology or intellectual property for Charts, or the
license of any software, website content or other technology or intellectual
property to Charts, which software, website content or other technology or
intellectual property is used or incorporated (or is contemplated by Charts to
be used or incorporated) (i) in connection with any aspect or element of the
Charts Website; (ii) in any product currently sold, licensed, leased,
distributed or marketed by Charts or (iii) to provide any service currently
provided or marketed by Charts (other than off-the-shelf software generally
available to the public at retail);
(f) any joint venture or partnership contract or agreement
or other agreement which has involved or is reasonably expected to involve a
sharing of profits, expenses or losses with any other party;
(g) any contract or commitment for or relating to the
employment of any officer, employee or consultant of Charts or any other type of
contract or understanding with any officer, employee or consultant of Charts
that is not immediately terminable by Charts without cost or other liability;
(h) any indenture, mortgage, trust deed, promissory note,
loan agreement, security agreement, guarantee or other agreement or commitment
for the borrowing of money, for a line of credit or for a leasing transaction of
a type required to be capitalized in accordance with Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board;
(i) any lease or other agreement under which Charts is
lessee of or holds or operates any items of tangible personal property or real
property owned by any third party and under which payments to such third party
exceed $25,000 per annum;
(j) any agreement or arrangement for the sale, licensing or
leasing of any assets, properties, products, services or rights having a value
in excess of $25,000;
(k) any agreement that restricts Charts from engaging in any
aspect of its business, from participating or competing in any line of business
or market or that restricts Charts from engaging in any business in any market
or geographic area;
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(l) any instrument, contract, license or other agreement
governing any Charts IP Right (as defined in Section 3.13) to which Charts is a
party (collectively, the "CHARTS IP RIGHTS AGREEMENTS");
(m) any agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of Charts or any options, warrants or other rights to
purchase or otherwise acquire any such shares of stock, other securities or
options, warrants or other rights therefor (or, in the case of any Charts
Option, the Charts Option Plan, as such may be amended, and the forms of Charts
Option agreements used by Charts thereunder);
(n) consulting or similar agreement under which Charts
provides any advice or services to a third party for an annual compensation to
Charts of $25,000 per year or more;
(o) any contract with or commitment to any labor union;
(p) any contract or arrangement under which Charts has made
any commitment to develop any website content, software or new technology, to
deliver any software currently under development or to enhance or customize any
software;
(q) any consulting, development or similar agreement under
which Charts currently provides or will provide any custom software development,
training, documentation, personnel placements, advice, consulting service or
other products or services to a customer of Charts;
(r) any contract for the current or future sale, provision
or manufacture of products (including computer software), material or supplies
from Charts or in which Charts has granted or received distribution rights, most
favored customer pricing provisions or exclusive marketing rights relating to
any product or services, group of products or services or territory;
(s) any other agreement, contract, commitment or instrument
that is material to the business of Charts or that involves a future commitment
by Charts in excess of $25,000; and
(t) any Governmental Permit (as defined in Section 3.14.4).
A true and complete copy of each agreement or document required
by subsections (a) through (s) of this Section to be listed on Schedule 3.11 to
the Charts Disclosure Letter (such agreements and documents being hereinafter
collectively referred to as the "CHARTS MATERIAL AGREEMENTS") and a copy of each
Governmental Permit required by subsection (t) of this Section to be listed on
Schedule 3.11 to the Charts Disclosure Letter, has been delivered to
MarketWatch's counsel.
3.12 No Breach or Default; No Consent Required; No Restrictions.
Charts is not in material breach or violation of, or in default under: (a) any
Charts Material Agreement; or (b) any other contract or agreement (whether
written or oral) binding on Charts or to which Charts is a party, the breach,
violation or default of which by Charts could reasonably be expected to result
in any liability that would have a Material Adverse Effect on Charts (a
"SIGNIFICANT AGREEMENT"). Charts does not have any material liability for
renegotiation of government contracts or
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subcontracts, if any. Except as set forth in Schedule 3.12 to the Charts
Disclosure Letter, no consent or approval of any third party is required to
ensure that, following the Effective Time, any Charts Material Agreement will
continue to be in full force and effect without any breach or violation thereof
caused by virtue of the Merger or by any other transaction called for by this
Agreement or any Charts Ancillary Agreement. Charts is not a party to, and no
asset or property of Charts is bound or affected by, any judgment, injunction,
order, decree, contract, covenant or agreement (non-competition or otherwise)
that restricts or prohibits (or purports to restrict or prohibit) Charts from
freely engaging in any business now conducted by it or from competing anywhere
in the world (including without limitation any contracts, covenants or
agreements restricting the geographic area in which Charts may sell, license,
market, distribute or support any products or technology or provide services, or
restricting the markets, customers or industries that Charts may address in
operating its businesses), or includes any grants by Charts of exclusive
licenses. No event has occurred, and no circumstance or condition exists,
including, without limitation, the consummation of the Merger, that (with or
without notice or lapse of time) would (a) result in a violation or breach of
any of the provisions of any Charts Material Agreement, (b) give any third party
(i) the right to declare a default or exercise any remedy under any Charts
Material Agreement, (ii) the right to a rebate, chargeback, penalty or change in
delivery schedule under any Charts Material Agreement, (iii) the right to
accelerate the maturity or performance of any obligation of Charts under any
Charts Material Agreement, or (iv) the right to cancel, terminate or modify any
Charts Material Agreement, except in each such case for such defaults,
acceleration rights, termination rights and other rights that have not had and
would not have a Material Adverse Effect on Charts. Charts has not received any
written notice or other communication, nor, to Charts' knowledge, any other
notice or communication, regarding any asserted violation or breach by Charts or
the other party thereto of, or default by Charts or the other party thereto
under, any Charts Material Agreement or any Significant Agreement.
3.13 Intellectual Property.
3.13.1 Charts owns or has the valid right or license to make,
use, possess, sell, reproduce, distribute, prepare derivative works of, publicly
display or license, all Intellectual Property (as defined below) necessary or
required for the conduct of the business of Charts as presently conducted,
including without limitation, the operation of the Charts Website (such
Intellectual Property being hereinafter collectively referred to as the "CHARTS
IP RIGHTS"), and such rights to use, possess, sell or license are sufficient for
such conduct of such business. As used herein, the term "INTELLECTUAL PROPERTY"
means, collectively, all U.S. industrial and intellectual property rights,
including, without limitation, patents, patent applications, patent rights,
trademarks, trademark registrations and applications therefor, trade dress
rights, trade names, service marks, service xxxx registrations and applications
therefor, Internet domain names, Internet and World Wide Web URLs or addresses,
copyrights, copyright registrations and applications therefor, mask work rights,
mask work registrations and applications therefor, franchises, licenses,
inventions, trade secrets, know-how, customer lists, supplier lists, proprietary
processes and formulae, software source code and object code, algorithms, net
lists, architectures, structures, screen displays, layouts, inventions,
development tools, designs, blueprints, specifications, technical drawings (or
similar information in electronic format) and all documentation and media
constituting, describing or relating to the foregoing, including, without
limitation, manuals, programmers' notes, memoranda and records.
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3.13.2 Neither the execution, delivery and performance of this
Agreement, the Delaware Certificate of Merger, the Minnesota Certificate of
Merger or the consummation of the Merger and the other transactions contemplated
hereby and/or by Charts Ancillary Agreements will materially impair the right of
Charts or the Surviving Corporation to use, possess, sell or license any Charts
IP Right or portion thereof. There are no royalties, honoraria, fees or other
payments payable by Charts to any third person by reason of the ownership, use,
possession, license, sale, marketing, advertising or disposition of any Charts
IP Rights by Charts.
3.13.3 Neither the manufacture, marketing, license, sale,
furnishing or intended use of any product or service (including without
limitation any service offered to users of the Charts Website) currently
licensed, utilized, sold, provided or furnished by Charts violates any license
or agreement between Charts and any third party or infringes or misappropriates
any Intellectual Property Right of any other party; and there is no pending or,
to the knowledge of Charts, threatened claim or litigation contesting the
validity, ownership or right of Charts to use, possess, sell, market, advertise,
license or dispose of any Charts IP Right nor, to the knowledge of Charts, is
there any valid basis for any such claim, nor has Charts received any notice
asserting that any Charts IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, nor, to the knowledge of Charts, is there any valid basis for any such
assertion.
3.13.4 To Charts' knowledge, no employee, consultant or
independent contractor of Charts or any subsidiary of Charts: (a) is in
violation of any term or covenant of any employment contract, patent disclosure
agreement, invention assignment agreement, non-disclosure agreement,
noncompetition agreement or any other contract or agreement with any other party
by virtue of such employee's, consultant's, or independent contractor's being
employed by, or performing services for, Charts or such subsidiary or using
trade secrets or proprietary information of others, or that would have a
Material Adverse Effect on Charts; or (b) has developed any technology, software
or other copyrightable, patentable, or otherwise proprietary work for Charts
that is subject to any agreement under which such employee, consultant or
independent contractor has assigned or otherwise granted to any third party any
rights (including without limitation Intellectual Property) in or to such
technology, software or other copyrightable, patentable or otherwise proprietary
work or any Intellectual Property related thereto. To Charts' knowledge, the
employment of any employee of Charts or any subsidiary of Charts or the use by
Charts or any subsidiary of Charts of the services of any consultant or
independent contractor does not subject Charts or any such subsidiary to any
liability to any third party.
3.13.5 Charts has taken reasonably necessary and appropriate
steps to protect, preserve and maintain the secrecy and confidentiality of the
Charts IP Rights and all Charts' ownership interests and proprietary rights
therein. All officers, employees and consultants of Charts having access to
confidential information of Charts, its customers or business partners, have
executed and delivered to Charts an agreement regarding the protection of such
proprietary information; and copies of the form of all such agreements have been
delivered to MarketWatch's counsel. To the best of Charts' knowledge, no current
or former employee, officer, director, consultant or independent contractor of
Charts or of any subsidiary of Charts has any right, license or property or
ownership interest whatsoever in or with respect to any Charts IP Rights.
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3.13.6 Schedule 3.13.6 to the Charts Disclosure Letter contains
a complete list of (i) all registrations of any patents, copyrights, mask works,
trademarks, service marks, Internet domain names or Internet or World Wide Web
URLs or addresses with any governmental or quasi-governmental authority or other
body; (ii) all applications, registrations, filings and other formal actions
made or taken pursuant to federal, state and foreign laws by Charts to secure,
perfect or protect its interest in Charts IP Rights, including, without
limitation, all patent applications, copyright applications, and applications
for registration of trademarks and service marks, (iii) all unregistered
copyrights, trademarks and service marks. All trademarks, service marks,
Internet domain names, Internet or World Wide Web URLs or addresses and
copyrights held by Charts are valid, enforceable and subsisting.
3.13.7 Schedule 3.13.7 to the Charts Disclosure Letter contains
a complete list of (i) all licenses, sublicenses and other agreements as to
which Charts is a party and pursuant to which any person or entity is authorized
to use any Charts IP Rights, and (ii) all licenses, sublicenses and other
agreements as to which Charts is a party and pursuant to which Charts is
authorized to use any third party patents, trademarks, Internet domain names,
Internet or World Wide Web URLs or addresses, or copyrights and which are
material to the business of Charts taken as a whole, including but not limited
to software ("THIRD PARTY IP RIGHTS") which would be infringed by, or are
incorporated in, or form a part of, any product or service sold, licensed,
distributed, provided or marketed by Charts.
3.13.8 Neither Charts, nor any other party acting on its
behalf, has disclosed or delivered to any party, or permitted the disclosure or
delivery to any escrow agent or other party, of any Charts Source Code (as
defined below). No event has occurred, and no circumstance or condition exists,
that will, or would reasonably be expected to, result in the disclosure or
delivery to any party of any Charts Source Code (as defined below). Schedule
3.13.8 of the Charts Disclosure Letter identifies each contract, agreement and
instrument (whether written or oral) pursuant to which Charts has deposited, or
is or may be required to deposit, with an escrowholder or any other party, any
Charts Source Code and further describes whether the execution of this Agreement
or the consummation of the Merger or any of the other transactions contemplated
hereby, in and of itself, would reasonably be expected to result in the release
from escrow of any Charts Source Code. As used in this Section 3.13.8, "CHARTS
SOURCE CODE" means, collectively, any software source code, or any material
portion or aspect of the software source code, or any material proprietary
information or algorithm contained in or relating to any software source code,
of any Charts IP Rights or any other product marketed by Charts.
3.13.9 To Charts' knowledge, there is no material unauthorized
use, disclosure, infringement or misappropriation of any Charts IP Rights or any
Intellectual Property Right of Charts by any third party, including any employee
or former employee of Charts. Charts has not agreed to indemnify any person for
any infringement of any Intellectual Property of any third party by any product
or service that has been sold, licensed, leased, supplied, marketed,
distributed, or provided by Charts, except as provided in customer licenses
entered into in the ordinary course of Charts' business.
3.13.10 To Charts' knowledge, all software developed by Charts
and licensed by Charts to customers and all other products manufactured, sold,
licensed, leased or delivered by Charts to customers and all services provided
by Charts to customers on or prior to the Closing
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Date conform in all material respects to applicable contractual commitments,
express and implied warranties, product specifications and product documentation
and to any representations provided to customers and Charts has no material
liability (and, Charts is not aware of any facts that would form a basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Charts giving rise to any liability that
could have a Material Adverse Effect on Charts) for replacement or repair
thereof or other damages in connection therewith in excess of any reserves
therefor reflected on the Balance Sheet. During the six (6) month period ended
on March 31, 1999, Charts has not received notice from customers of any service
claims with respect to its customer licenses that were materially greater than
the amount of the same type of claims experienced for the six (6) month period
ended September 30, 1998. Since the Balance Sheet Date, Charts has not had any
of its customer licenses terminated prior to their initial term except for
terminations consistent with its past history and that would not result in a
reversal of any material amount of revenue recognized by Charts on any of its
financial statements.
3.13.11 All of the software developed, licensed and/or marketed
or distributed by Charts or owned or developed by Charts and utilized in
connection with the Charts Website or Charts' business is Year 2000 Compliant
(as defined below), except for (a) minor display errors that do not materially
affect the performance of the Charts Website or any services provided to its
customers, and (b) commercially available software used for administrative
functions and not in connection with the Charts Website or customer
implementations and data provided by third parties under content provider
agreements and with respect to such commercially available software and data
content providers Charts has no knowledge that such software or data sources are
not Year 2000 Compliant. "YEAR 2000 COMPLIANT" means, as applied to software,
that: (i) such software will operate and correctly store, represent and process
(including sort) all dates (including single and multi-century formulas and leap
year calculations), such that errors will not occur when the date being used is
in the Year 2000, or in a year preceding or following the Year 2000; (ii) such
software has been written and tested to support numeric and date transitions
from the twentieth century to the twenty-first century, and back (including
without limitation all calculations, aging, reporting, printing, displays,
reversals, disaster and vital records recoveries) without error, corruption or
impact to current and/or future operations; and (iii) such software will
function without error or interruption related to any date information,
specifically including errors or interruptions from functions which may involve
date information from more than one century.
3.14 Compliance with Laws.
3.14.1 Charts has complied, and is in compliance with all
applicable federal, state, local or foreign laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to its assets, properties, and business (and any regulations
promulgated thereunder) (collectively, "APPLICABLE LAW") except for such
noncompliance as would not have a Material Adverse Effect.
3.14.2 The Charts Website has at all times made all consumer
disclosures required by Applicable Law and none of the disclosures made to
consumers in the Charts Website have been inaccurate, misleading or deceptive in
any material respect.
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3.14.3 Charts has at all times been in compliance with
Applicable Laws relating to the privacy of users of the Charts Website in all
material respects.
3.14.4 Charts holds all permits, licenses and approvals from,
and has made all filings with, government (and quasi-governmental) agencies and
authorities, that are necessary for Charts to hold in order to own and operate
the Charts Website and to conduct its present business without any violation of
Applicable Law that would adversely affect Charts' ability to own and operate
the Charts Website and to conduct its present business in any material respect
("GOVERNMENTAL PERMITS") and all such Governmental Permits are in full force and
effect. Charts has not received any notice or other communication from any
Governmental Authority (or quasi-governmental authority) regarding (a) any
actual or possible violation of law or any Governmental Permit or any failure to
comply with any term or requirement of any Governmental Permit, or (b) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Permit.
3.15 Certain Transactions and Agreements. None of the officers,
directors, employees Principal Shareholders or any Charts Shareholder holding in
excess of 5% of the outstanding capital stock of Charts which is not a Principal
Shareholder, nor any member of their immediate families, has any direct or
indirect ownership interest in any firm or corporation that competes with, or
does business with, or has any contractual arrangement with, Charts (except with
respect to any interest in less than one percent (1%) of the stock of any
corporation whose stock is publicly traded). To Charts' knowledge, none of said
officers, directors, employees or shareholders or any member of their immediate
families, is a party to, or otherwise directly or indirectly interested in, any
contract or informal arrangement with Charts, except for normal compensation for
services as an officer, director or employee thereof that have been disclosed to
MarketWatch and except for agreements related to the purchase of the stock of
Charts by, or the grant of Charts Options to, such persons. To Charts'
knowledge, none of said officers, directors, employees, shareholders or family
members has any interest in any property, real or personal, tangible or
intangible (including but not limited to any Charts IP Rights or any other
Intellectual Property) that is used in, or that pertains to, the business of
Charts, except for the normal rights of a shareholder.
3.16 Employees, ERISA and Other Compliance.
3.16.1 Charts is in compliance in all respects with all
applicable laws, agreements and contracts relating to employment, employment
practices, immigration, wages, hours, and terms and conditions of employment,
including, but not limited to, employee compensation matters except for such
noncompliance as would not have a Material Adverse Effect on Charts. A list of
all employees, officers and consultants of Charts and their current title and/or
job description and compensation is set forth on Schedule 3.16.1 to the Charts
Disclosure Letter. Charts does not have any employment contracts or consulting
agreements or contracts with a professional employer organization or other
entity which provides employee benefits to individuals that provide services to
Charts currently in effect that are not terminable at will (other than
agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
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3.16.2 Charts (i) is not, nor has ever been, subject to a union
organizing effort, (ii) is not subject to any collective bargaining agreement
with respect to any of its employees, (iii) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization or (iv) has no current labor disputes. Charts has good
labor relations, and has no knowledge of any facts indicating that the
consummation of the Merger or any of the other transactions contemplated hereby
will have a material adverse effect on such labor relations, and has no
knowledge that any of its key employees intends to leave their employ. To the
best of Charts' knowledge, all of the employees of Charts are legally permitted
to be employed by Charts in the United States of America in their current job
capacities.
3.16.3 Charts has no pension plan which constitutes, or has
since the enactment of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") constituted, a "multiemployer plan" as defined in Section
3(37) of ERISA. No pension plan of Charts is subject to Title IV of ERISA.
3.16.4 (a) Schedule 3.16.4 to the Charts Disclosure Letter
lists each employment, severance or other similar contract, arrangement or
policy, each "employee benefit plan" as defined in Section 3(3) of ERISA and
each plan or arrangement providing for insurance coverage (including any
self-insured arrangements), workers' benefits, vacation benefits, severance
benefits, disability benefits, death benefits, hospitalization benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which is entered into, maintained or
contributed to by Charts (or are provided to individuals who provide services to
Charts pursuant to a contract with a professional employer organization or other
similar organization) and covers any current or former service provider or any
current or former employees of Charts. Such contracts, plans and arrangements as
are described in this Section 3.16.4 are hereinafter collectively referred to as
"CHARTS BENEFIT ARRANGEMENTS." Schedule 3.16.4 indicates, with respect to each
particular Charts Benefit Arrangement, whether such Charts Benefit Arrangement
is provided pursuant to a contract with a professional employer organization or
other similar arrangement. No person who has participated or is participating in
any Charts Benefit Arrangement will be required to recognize income for U.S.
federal tax purposes due to the fact that: (i) such Charts Benefit Arrangement
was or is provided pursuant to a contract with a professional employer
organization or other similar arrangement; or (ii) such Charts Benefit
Arrangement was or is provided by Charts; or (iii) that such person is receiving
such benefit by virtue of being an employee of any business, firm or entity
other than Charts.
(b) Each Charts Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Charts Benefit Arrangement.
(c) Charts has delivered to MarketWatch or its
counsel a complete and correct copy and description of each Charts Benefit
Arrangement.
(d) Charts is not obligated by the provisions of
ERISA or the Code to file any annual report (Form 5500) for each Charts Benefit
Arrangement that is an "employee benefit plan" as defined under ERISA.
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(e) Charts has never been a participant in any
"prohibited transaction", within the meaning of Section 406 of ERISA with
respect to any employee pension benefit plan (as defined in Section 3(2) of
ERISA) which Charts sponsors as employer or in which Charts participates as an
employer, which was not otherwise exempt pursuant to Section 408 of ERISA
(including any individual exemption granted under Section 408(a) of ERISA), or
which could result in an excise tax under the Code.
(f) All contributions due from Charts with respect
to any of Charts Benefit Arrangements have been made or have been accrued on
Charts' financial statements, (including without limitation the Charts Financial
Statements) and no further contributions will be due or will have accrued
thereunder as of the Closing Date.
(g) All individuals who, pursuant to the terms of
any Charts Benefit Arrangement, are entitled to participate in any such Charts
Benefit Arrangement, are currently participating in such Charts Benefit
Arrangement or have been offered an opportunity to do so.
3.16.5 There has been no amendment to, written interpretation
or announcement (whether or not written) by Charts relating to, or change in
employee participation or coverage under, any Charts Benefit Arrangement that
would increase materially the expense of maintaining such Charts Benefit
Arrangement above the level of the expense incurred in respect thereof for
Charts' fiscal year ended December 31, 1997. Each Charts Benefit Arrangement may
be terminated effective immediately, and any benefits distributed thereunder,
without additional liability for premium or other payments (other than benefit
payments in the normal course of administration) and without causing
liquidation, surrender or any other fees or charges to be imposed on the Charts
Benefit Arrangement, Charts, or any participant or beneficiary of the
terminating Charts Benefit Arrangement.
3.16.6 The group health plans (as defined in Section 4980B(g)
of the Code) that benefit employees of Charts are in compliance, in all material
respects, with the continuation coverage requirements of Section 4980B of the
Code as such requirements affect Charts and its employees. As of the Closing
Date, there will be no material outstanding, uncorrected violations under the
Consolidation Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
with respect to any of Charts Benefit Arrangements, covered employees, or
qualified beneficiaries that could result in a Material Adverse Effect on
Charts, or in a Material Adverse Effect on MarketWatch after the Effective Time.
3.16.7 No benefit payable or which may become payable by Charts
pursuant to any Charts Benefit Arrangement or as a result of or arising under
this Agreement or the Agreement of Merger will constitute an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code) which is subject to the
imposition of an excise Tax under Section 4999 of the Code or which would not be
deductible by reason of Section 280G of the Code. Charts is not a party to any:
(a) agreement with any officer or other key employee of Charts (i) the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Charts in the nature of the Merger or any
of the other transactions contemplated by this Agreement, the Agreement of
Merger or any Charts Ancillary Agreement, (ii) providing any term of employment
or compensation guarantee, or (iii) providing severance benefits or other
benefits after the termination of employment of such employee regardless of the
reason for such
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termination of employment; or (b) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of the Merger or any of
the other transactions contemplated by this Agreement, the Certificate of Merger
or any Charts Ancillary Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, the Certificate of Merger or any Charts Ancillary Agreement.
3.16.8 Charts has paid all wages, salaries and other amounts
due to any person from Charts and has complied with all applicable minimum wage
laws.
3.17 Corporate Documents. Charts has made available to MarketWatch
for examination all documents and information listed in the Charts Disclosure
Letter or in any schedule thereto or in any other exhibit or schedule called for
by this Agreement which have been requested by MarketWatch's legal counsel,
including, without limitation, the following: (a) copies of Charts' Articles of
Incorporation and Bylaws as currently in effect; (b) Charts' Minute Book
containing all records of all proceedings, consents, actions, and meetings of
Charts' shareholders, board of directors and any committees thereof; (c) Charts'
stock ledger and journal reflecting all stock issuances and transfers; (d) all
permits, orders, and consents issued by, and filings by Charts with, any
regulatory agency with respect to Charts, and all applications for such permits,
orders, and consents; and (e) all the Charts Material Agreements.
3.18 No Brokers. Charts is not obligated for the payment of any fees
or expenses of any investment banker, broker, finder or similar party in
connection with the origin, negotiation or execution of this Agreement or the
Agreement of Merger or in connection with the Merger or any other transaction
contemplated hereby or thereby.
3.19 Books and Records.
3.19.1 The books, records and accounts of Charts (a) are in all
material respects true and correct, (b) have been maintained in accordance with
reasonable business practices and customary internal controls procedures on a
basis consistent with prior years, and (c) accurately and fairly reflect the
transactions and dispositions of the assets of Charts.
3.19.2 Charts maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (a) transactions are
executed in accordance with management's general or specific authorization; (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity with generally accepted accounting principles or any
other criteria applicable to such statements, and (ii) to maintain
accountability for assets; and (c) the amount recorded for assets on the books
and records of Charts is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.20 Insurance. Charts has maintained, and now maintains, policies of
insurance and bonds of the type and in amounts that are reasonably adequate and
are customarily carried by persons conducting businesses or owning assets
similar in type and size to those of Charts, including without limitation all
legally required workers' compensation insurance and errors and
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omissions, casualty, fire and general liability insurance. There is no material
claim pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been timely
paid and Charts are otherwise in compliance in all material respects with the
terms of such policies and bonds. Charts has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies. All policies of insurance now held by Charts are set forth in Schedule
3.20 to Charts Disclosure Letter, together with the name of the insurer under
each policy, the type of policy, the policy coverage amount and any applicable
deductible.
3.21 Environmental Matters.
3.21.1 Charts is in compliance in all respects with all
applicable Environmental Laws (as defined below), which compliance includes the
possession by Charts of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, except for such noncompliance as would not have a Material
Adverse Effect on Charts. Charts has not received any written notice or
communication or, to the best of its knowledge, other communication, whether
from a governmental body, citizens' group, employee or otherwise, that alleges
that Charts is not in compliance with any Environmental Law, and, to Charts'
knowledge, there are no circumstances that may prevent or interfere with the
compliance by Charts with any current Environmental Law following the Effective
Time. To Charts' knowledge, no current or prior owner of any property leased or
controlled by Charts has received any notice or other communication (in writing
or otherwise), whether from a government body, citizens' group, employee or
otherwise, that alleges that such current or prior owner or Charts is not in
compliance with any Environmental Law. All governmental authorizations currently
held by Charts pursuant to any Environmental Law (if any) are identified in
Schedule 3.21 of the Charts Disclosure Letter.
3.21.2 For purposes of this Section 3.21: (i) "ENVIRONMENTAL
LAW" means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "MATERIAL OF ENVIRONMENTAL CONCERN" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law or that is otherwise a danger to health, reproduction or the
environment.
3.22 Voting Agreement; Irrevocable Proxies. The persons and/or
entities set forth on Schedule 3.22 to the Charts Disclosure Letter have agreed
in writing to vote for approval of this Agreement and the Merger (and to vote
against proposals conflicting or inconsistent with this Agreement and the
Merger) pursuant to voting agreements attached hereto as Exhibits H 1-6 ("VOTING
AGREEMENTS") and pursuant to Irrevocable Proxies in the form attached as Exhibit
A thereto ("IRREVOCABLE PROXIES").
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3.23 Vote Required. The affirmative vote of the holders of a majority
of the shares of Charts Common Stock that are issued and outstanding on the
Record Date (as defined below) is the only vote of the holders of any of the
shares of Charts' capital stock necessary to approve this Agreement, the Merger,
the Minnesota Certificate of Merger, the Escrow Agreement, the Charts Ancillary
Agreements and the other transactions contemplated by this Agreement and the
Charts Ancillary Agreements. As used in this Section 3.23, the term "RECORD
DATE" means the record date for determining those shareholders of Charts who are
entitled to vote in the Charts Shareholders' Vote under applicable law and
Charts' Articles of Incorporation and Bylaws.
3.24 Board Approval. The Board of Directors of Charts has unanimously
(i) approved this Agreement, the Certificate of Merger, if any, and the Merger,
(ii) determined that the Merger is in the best interests of the shareholders of
Charts and is on terms that are fair to such shareholders and (iii) voted to
submit this Agreement, the Agreement of Merger, the Merger and the transactions
contemplated by this Agreement to the vote and approval of Charts' shareholders.
3.25 No Existing Discussions. Neither Charts nor any director,
officer, shareholder, employee or agent of Charts is engaged, directly or
indirectly, in any discussions or negotiations with any third party relating to
effecting any Alternative Transaction (as defined in Section 5.10) or in
violation of any agreement to which Charts or its assets are bound relating to
any Alternative Transaction.
3.26 Not a Broker. Charts is not a "broker" (as defined in the
Securities Exchange Act of 1934, as amended (the "1934 ACT")), and is not, and
would not be, required to register as a "broker" as a result of its business as
now conducted or as proposed to be conducted, and is not otherwise subject to
regulation under the 1934 Act as a result of its business as now conducted or as
proposed to be conducted.
3.27 Disclosure.
(a) Neither this Agreement, its exhibits and schedules and
the Charts Disclosure Letter, nor any of the certificates or documents to be
delivered by Charts to MarketWatch under this Agreement, taken together,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not misleading
and which omission or misstatement is of a material fact, the existence of which
would have a Material Adverse Effect on Charts other than: (a) a change arising
or resulting, directly or indirectly, from general industry, economic or stock
market conditions; (b) a change that is proximately caused by the public
announcement of, and the response or reaction of customers, vendors, licensors,
investors or employees of charts to this Agreement, the Merger or any of the
transactions contemplated by this Agreement; or (c) a change arising from an act
or omission of MarketWatch or Sub.
(b) None of the information supplied or to be supplied by or
on behalf of Charts for inclusion in the Information Statement will, as of the
date such Information Statement is first sent to the shareholders of Charts,
contains any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; provided, that Charts shall not be responsible for any statement,
information or omission relating to MarketWatch or any
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other information supplied or to be supplied by or on behalf of MarketWatch for
inclusion in the Information Statement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MARKETWATCH AND SUB
MarketWatch and Sub hereby represent and warrant to Charts that, except
as set forth in the letter addressed to Charts from MarketWatch and dated as of
the Agreement Date (including all schedules thereto) which has been delivered by
MarketWatch to Charts concurrently herewith (the "MARKETWATCH DISCLOSURE
LETTER"), each of the following representations, warranties and statements in
this Article 4 is true and correct as of the Agreement Date and will be true and
correct on and as of the Closing Date (and for all purposes of this Agreement
(including without limitation Article 8), the statements contained in the
MarketWatch Disclosure Letter and its schedules shall also be deemed to be
representations and warranties made and given by MarketWatch under Article 4 of
this Agreement):
4.1 Organization and Good Standing. MarketWatch is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota, and has the
corporate power and authority to own, operate and lease its properties and to
carry on its business. MarketWatch owns all of the issued and outstanding stock
of Sub.
4.2 Power, Authorization and Validity.
4.2.1 Power and Authority. MarketWatch has all requisite
corporate power, capacity and authority to enter into, execute, deliver and
perform its obligations under, this Agreement and all the MarketWatch Ancillary
Agreements and to issue the shares of MarketWatch Common Stock and MarketWatch
Options in the Merger in accordance with this Agreement. The execution, delivery
and performance of this Agreement and each of the MarketWatch Ancillary
Agreements by MarketWatch have been duly and validly approved and authorized by
all necessary corporate action of MarketWatch's Board of Directors in compliance
with applicable law (including without limitation the Delaware General
Corporation Law) and MarketWatch's Certificate of Incorporation and Bylaws, each
as amended. Sub has all requisite corporate power, capacity and authority to
execute, deliver and perform its obligations under, this Agreement and all the
Sub Ancillary Agreements and to consummate the Merger. The execution, delivery
and performance of this Agreement and each of the Sub Ancillary Agreements by
Sub have been duly and validly approved and authorized by all necessary
corporate action of Sub in compliance with applicable law (including without
limitation the MBCA) and Sub's Articles of Incorporation and Bylaws, each as
amended.
4.2.2 No Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other Governmental Authority or any other
person or entity, governmental or otherwise, is necessary or required to be made
or obtained by MarketWatch or Sub to enable MarketWatch and Sub to lawfully
execute and deliver, enter into, and to perform their respective obligations
under, this
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Agreement, the MarketWatch Ancillary Agreements or the Sub Ancillary Agreements,
respectively, and for Sub to consummate the Merger, except for: (a) the filing
of the Articles of Merger with the Minnesota Secretary of State and any such
further documents as may be required under the MBCA to effect the Merger; (b)
the filing by MarketWatch with the SEC or any state securities law authorities
of any notices or filings required in connection with the exemptions from the
registration or qualification requirements of the 1933 Act and/or applicable
state securities laws which MarketWatch relies on in issuing shares of
MarketWatch Common Stock pursuant to this Agreement; (c) the filing by
MarketWatch of such reports and information with the SEC under the 1934 Act and
the rules and regulations promulgated by the SEC thereunder, as may be required
in connection with this Agreement, the Merger and the other transactions
contemplated by this Agreement; (d) the filing by MarketWatch with the SEC of
the registration statement to be filed by MarketWatch pursuant to the
Registration Rights Agreement; (e) such other filings, if any, as may be
required in order for MarketWatch to comply with applicable federal and state
securities laws; and (f) such other filings as may be required by the Nasdaq
Stock Market with respect to the Merger and the other transactions contemplated
by this Agreement, and the issuance of the shares of MarketWatch Common Stock
and the MarketWatch Options to be issued by MarketWatch in the Merger.
4.2.3 Enforceability. This Agreement and each of the
MarketWatch Ancillary Agreements are, or when executed by MarketWatch will be,
valid and binding obligations of MarketWatch, enforceable against MarketWatch in
accordance with their respective terms, subject only to the effect of (a)
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and (b) rules of law and equity governing specific performance,
injunctive relief and other equitable remedies. This Agreement and each of the
Sub Ancillary Agreements are, or when executed by Sub will be, valid and binding
obligations of Sub, enforceable against Sub in accordance with their respective
terms, subject only to the effect of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally and (b) rules of law and equity
governing specific performance, injunctive relief and other equitable remedies.
4.3 Capitalization of MarketWatch.
4.3.1 Stock. The authorized capital stock of MarketWatch
consists entirely of: (i) 30,000,000 shares of Common Stock, $0.01 par value per
share and (ii) 5,000,000 shares of Preferred Stock, $0.01 par value, all of
which shares are undesignated. Except as expressly described above in this
Section 4.3.1, no other shares of any capital stock of MarketWatch are
authorized. At the close of business on April 28, 1999, 12,163,916 shares of
MarketWatch Common Stock were issued and outstanding and as of such date no
other shares of the capital stock of MarketWatch were issued or outstanding. As
of the Agreement Date, no shares of MarketWatch Preferred Stock were issued and
outstanding. As of the Agreement Date, the authorized capital stock of Sub
consists of 1,000 shares of Common Stock, $0.00001 par value per share, all of
which shares are validly issued and outstanding, all of which shares have been
fully paid and non-assessable and are owned by MarketWatch.
4.3.2 Options. As of April 28, 1999, an aggregate of 1,159,000
shares of MarketWatch Common Stock were reserved for future issuance pursuant to
stock options granted by MarketWatch and outstanding on April 28, 1999, and an
additional 339,584 shares of MarketWatch Common Stock were reserved and
available for the grant of future stock options
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under all MarketWatch's stock option or equity incentive plans. Except for the
above-mentioned options to purchase shares of MarketWatch Common Stock, and
except as provided in the Stockholders' Agreement among MarketWatch, CBS Inc.
and Data Broadcasting Corporation, there were no options, warrants, convertible
securities or other securities, calls, commitments, conversion privileges
outstanding to purchase or otherwise acquire (whether directly or indirectly)
from MarketWatch any shares of MarketWatch's authorized but unissued capital
stock or any securities convertible into or exchangeable for any shares of
MarketWatch's capital stock.
4.4 No Conflict. Neither the negotiation, execution and delivery of
this Agreement or any of the MarketWatch Ancillary Agreements or Sub Ancillary
Agreements by MarketWatch or Sub, nor the performance by MarketWatch or Sub of
their respective obligations under this Agreement or any MarketWatch Ancillary
Agreement or Sub Ancillary Agreement, respectively, nor the consummation of the
Merger or any of the transactions contemplated hereby or thereby, has or will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of: (i) any provision of the
Certificate of Incorporation or Bylaws or other charter documents of MarketWatch
or Sub as currently in effect; (ii) any federal, state, local or foreign
judgment, writ, decree, order, statute, rule or regulation applicable to
MarketWatch or Sub or any of their respective assets or properties; or (iii) any
instrument, agreement or contract to which MarketWatch or any of its
subsidiaries is a party or by which MarketWatch or any of its subsidiaries or
any of their respective assets or properties are bound that has been filed by
the SEC as an exhibit to MarketWatch's annual report on Form 10-K for its fiscal
year ended December 31, 1998 (the "1998 MARKETWATCH 10-K").
4.5 Validity of Shares. The shares of MarketWatch Common Stock to be
issued pursuant to the Merger will, when issued: (a) be duly authorized, validly
issued, fully paid and non-assessable, and (b) be free and clear of any liens
and encumbrances created by MarketWatch except for applicable restrictions on
transfer imposed by applicable securities laws, including those imposed by
Regulation D or Section 4(2) of the 1933 Act and Rule 144 promulgated under the
1933 Act, and under applicable "blue sky" state securities laws and under any
Investment Representation Letter to be executed pursuant to this Agreement.
4.6 No Brokers. MarketWatch is not obligated for the payment of any
fees or expenses of any investment banker, broker, finder or similar party in
connection with the origin, negotiation or execution of this Agreement or the
Agreement of Merger or in connection with any transaction contemplated hereby or
thereby for which Charts or its shareholders will incur any liability.
4.7 Litigation. There is no action, claim, suit, arbitration,
mediation, proceeding, claim or investigation pending against MarketWatch or any
of its subsidiaries (or to MarketWatch's knowledge, against any officer,
director or employee of MarketWatch or any of its subsidiaries in their capacity
as such or relating to their employment, services or relationship with
MarketWatch or such subsidiary) before any court, administrative agency or
arbitrator that, if determined adversely to MarketWatch or such subsidiary (or
any such officer, director, employee or agent) would have a Material Adverse
Effect on MarketWatch, or that could prevent, enjoin or materially alter or
delay the consummation of the Merger or any other material transaction
contemplated by this Agreement, nor, to MarketWatch's knowledge, has any such
action, suit, proceeding, arbitration, mediation, claim or investigation been
threatened.
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4.8 Information Statement. None of the information supplied or to be
supplied by or on behalf of MarketWatch that relates to MarketWatch for
inclusion in the Information Statement to be provided to the shareholders of
Charts in connection with the Charts Shareholders' Vote will, as of the date
such Information Statement is first provided to the shareholders of Charts in
connection with the Charts Shareholders' Vote (provided MarketWatch has first
had an opportunity to review such Information Statement before it is provided to
Charts' shareholders), contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading; provided, that MarketWatch shall not be responsible
for any statement, information or omission relating to Charts or any other
information supplied or to be supplied by or on behalf of Charts that is
included in the Information Statement
4.9 SEC Filings. MarketWatch has made available to Charts accurate
and complete copies of the 1998 MarketWatch 10-K and all reports filed by
MarketWatch with the SEC under Section 13 or 15(d) of the 1934 Act after the
MarketWatch 10-K Filing Date and on or before the Agreement Date and any
definitive proxy statement filed by MarketWatch with the SEC after the 10-K
Filing Date and on or before the Agreement Date (the 1998 MarketWatch 10-K and
any such reports or definitive proxy statement being collectively hereinafter
referred to as the "MARKETWATCH SEC DOCUMENTS"). As of the time it was filed
with the SEC (or, if amended or superseded by a subsequent filing prior to the
Agreement Date, then on the date of such subsequent filing), none of the
MarketWatch SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
4.10 No Material Adverse Change. Since the 10-K Filing Date there has
not been any Material Adverse Change (as defined in Article 1) in the financial
condition, properties, assets, liabilities, business, results of operations,
operations of MarketWatch and its subsidiaries, taken as a whole (where, for
purposes of this Section 4.10, the parties agree that a decrease in the market
price of MarketWatch Common Stock shall not, of itself, constitute a Material
Adverse Change of the type described in this Section 4.10). The parties also
agree that operating losses experienced by MarketWatch shall not of themselves
constitute a Material Adverse Change of the type described in this Section 4.10.
ARTICLE 5
COVENANTS OF CHARTS
During the time period from the Agreement Date until the earlier to
occur of (i) the Effective Time or (ii) the termination of this Agreement in
accordance with Article 10, Charts covenants and agrees with MarketWatch as
follows:
5.1 Advice of Changes. Charts will promptly advise MarketWatch in
writing (a) of any event occurring subsequent to the Agreement Date of which
Charts becomes aware that would render any representation or warranty of Charts
contained in Article 3 of this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect and (b)
of any Material Adverse Change of which Charts becomes aware. Charts will
deliver to MarketWatch within fifteen (15) days after the end of each monthly
accounting period ending after
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the Agreement Date and before the Closing Date, an unaudited balance sheet and
statement of operations, which financial statements will be prepared in the
ordinary course of Charts' business, consistent with its past practices, and in
accordance with Charts' books and records and generally accepted accounting
principles. Charts will immediately advise MarketWatch if Charts' Total Assets
(as defined in Section 3.8) equal or exceed (or are at any time likely to equal
or exceed) Ten Million Dollars ($10,000,000) at any time prior to the earlier to
occur of (i) the termination of this Agreement in accordance with Article 10 or
(ii) the Effective Time.
5.2 Maintenance of Business. Charts will use its commercially
reasonable best efforts to carry on and preserve its business and its
relationships with customers, advertisers, suppliers, employees, users of the
Charts Website and others with whom Charts has contractual relations in
substantially the same manner as it has prior to the Agreement Date. If Charts
becomes aware of a material deterioration in the relationship with any customer,
supplier or key employee, it will promptly bring such information to the
attention of Charts in writing and, if requested by MarketWatch, will exert its
best efforts to restore the relationship.
5.3 Conduct of Business. Charts will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course. Charts will not, without the prior written consent and approval (which
may be given verbally to be promptly followed by written confirmation) of the
President or Chief Financial Officer of MarketWatch:
(a) borrow or lend any money, other than reasonable and
normal advances to employees for bona fide travel expenses that are incurred in
the ordinary course of Charts' business;
(b) enter into any material transaction or agreement or take
any other material action not in the ordinary course of Charts' business;
(c) grant any (i) lien or security interest, or (ii) other
encumbrance on any of its assets (other than liens or security interests granted
to MarketWatch) other than in the ordinary course of its business and which are
not in the aggregate material in amount or effect;
(d) sell, transfer or dispose of any of its assets except in
the ordinary course of Charts' business;
(e) enter into any lease or contract for the purchase or
sale of any property, whether real or personal, tangible or intangible;
(f) pay any bonus, increased salary or special remuneration
to any officer, director, employee or consultant (except for normal salary
increases consistent with Charts' past practices and not to exceed 5% of such
officer's, employee's or consultant's base annual compensation, and except
pursuant to existing arrangements previously disclosed to and approved in
writing by MarketWatch) or enter into any new employment or consulting agreement
with any such person;
(g) change any of its accounting methods except to the
extent required by generally accepted accounting principles or applicable law;
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(h) declare, set aside or pay any cash or stock dividend or
other distribution in respect of its capital stock, redeem, repurchase or
otherwise acquire any of its capital stock or other securities (except for the
repurchase of stock from employees, directors, consultants or contractors of
Charts in connection with the termination of their services with Charts at the
original purchase price of such stock), pay or distribute any cash or property
to any shareholder or security holder of Charts or make any other cash payment
to any shareholder or security holder of Charts that is unusual, extraordinary,
or not made in the ordinary course of Charts' business;
(i) amend or terminate any contract, agreement or license to
which Charts is a party except those amended or terminated in the ordinary
course of Charts' business which are not material in amount or effect and except
for such amendments or terminations as are contemplated by this Agreement;
(j) guarantee or act as a surety for any obligation of any
third party;
(k) settle, waive or release any material right or claim
except in the ordinary course of Charts' business;
(l) issue, sell, create or authorize any shares of its
capital stock of any class or series or any other of its securities, or issue,
grant or create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of its capital stock or
securities ultimately exchangeable for, or convertible into, shares of its
capital stock; provided, however, that notwithstanding the foregoing, (a) Charts
may issue shares of Charts Common Stock issuable upon the exercise of Charts
Options that are outstanding on the Agreement Date in accordance with their
terms as now in effect and (b) Charts may grant initial stock options from
shares reserved for issuance under the Charts Option Plan as described in
Section 3.4.2 to newly hired Charts employees under the Charts Option Plan in
the ordinary course of Charts' business where such Charts Options have an
exercise price equal to the fair market value of Charts Common Stock as of the
date such Charts Option is granted, and the right to exercise such Charts
Options vests on a vesting schedule consistent with past vesting practices,
except that, with respect to such Charts Options granted after the Agreement
Date, the vesting of such Charts Options shall not accelerate at any time by
reason of the Merger or this Agreement);
(m) subdivide or split or combine or reverse split the
outstanding shares of its capital stock of any class or series or enter into any
recapitalization affecting the number of outstanding shares of its capital stock
of any class or series or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or acquire, or
enter into any other business combination with, any corporation, partnership,
limited liability company or any other entity or enter into any negotiations,
discussions or agreement for such purpose;
(o) purchase or otherwise acquire any securities of or make
any investment in any third party;
(p) amend its Articles of Incorporation or Bylaws except as
expressly contemplated by this Agreement;
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(q) license any of its technology or Intellectual Property,
or acquire any Intellectual Property (or any license thereto) from any third
party except for any such license obtained in the ordinary course of Charts'
business;
(r) grant any exclusive advertising or sponsorship rights
with respect to the Charts website to any person or enter into any other
agreement with any person or entity purporting to grant exclusive rights;
(s) change any insurance coverage in a manner materially
adverse to Charts or that materially increases the insurance premium payable for
such insurance;
(t) agree to any audit assessment by any tax authority or
file any federal or state income or franchise tax return unless copies of such
returns have first been delivered to MarketWatch for its review a reasonable
time prior to filing;
(u) modify or change the exercise or conversion rights or
exercise or purchase prices of any capital stock of Charts, any Charts stock
options, warrants or Charts Other Securities, or accelerate or otherwise modify
(i) the right to exercise any option, warrant or other right to purchase any
capital stock or other securities of Charts or (ii) the vesting or release of
any shares of capital stock or other securities of Charts from any repurchase
options or rights of refusal held by Charts or any other party or any other
restrictions unless such accelerations/modifications are expressly required and
mandated by the terms of a formal written agreement or plan that was entered
into prior to March 31, 1999; or
(v) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(u).
5.4 Information for Private Placement Exemptions. Charts shall use
its diligent efforts to assist MarketWatch in obtaining and verifying the
accuracy of all information from Charts' security holders deemed reasonably
necessary by MarketWatch and its counsel to establish the availability of an
exemption or exemptions from registration under Section 4(2) of the 1933 Act
and/or Regulation D promulgated under the 1933 Act and the exemption from
qualification under Minnesota Statutes Section 80A.15, subd. 2(h) and exemptions
from the qualification/registration requirements of applicable state "blue sky"
securities laws for the issuance of MarketWatch Common Stock and any other
MarketWatch securities to Charts security holders in connection with the Merger.
5.5 Approval of Charts' Shareholders.
(a) Charts shall hold the Charts Shareholders' Vote at the
earliest practicable date to submit this Agreement, the Merger, and any related
agreements or transactions for the consideration and approval of the
shareholders of Charts. Such Charts Shareholders' Vote shall be called, held and
conducted, and any proxies or written consents shall be solicited, in compliance
with Charts' Articles of Incorporation and Bylaws, both as amended, and
applicable law. Charts will not put any proposal up for the vote of its
shareholders (as part of the Charts Shareholders' Vote or otherwise) other than
the proposal to approve this Agreement and the Merger, without obtaining
MarketWatch's prior written consent to do so, which consent will not be
unreasonably
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withheld, consistent with the provisions, purposes and intent of this Agreement.
Concurrently with the execution of this Agreement, Charts will cause the persons
and entities listed on Schedule 3.22 to the Charts Disclosure Letter to execute
Voting Agreements and Irrevocable Proxies in favor of the Merger.
(b) Subject to Section (c) below: (i) the Board of Directors
of Charts shall unanimously recommend that the Charts' shareholders vote in
favor of and adopt and approve this Agreement and approve the Merger at the
Charts Shareholders' Vote; (ii) the Information Statement shall include a
statement to the effect that the Board of Directors of Charts has unanimously
recommended that Charts' shareholders vote in favor of and adopt and approve
this Agreement and the Merger at the Charts Shareholders' Vote; and (iii)
neither the Board of Directors of Charts nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in
a manner adverse to MarketWatch, the unanimous recommendation of the Board of
Directors of Charts that the Charts' shareholders vote in favor of and adopt and
approve this Agreement and the Merger. For purposes of this Agreement, said
recommendation of the Board of Directors shall be deemed to have been modified
in a manner adverse to MarketWatch if said recommendation shall no longer be
unanimous, provided that, for all purposes of this Agreement, an action by any
Board of Directors or committee thereof shall be unanimous if each member of
such Board of Directors or committee has approved such action other than (i) any
such member who has appropriately abstained from voting on such matter because
of an actual or potential conflict of interest and (ii) any such member who is
unable to vote in connection with such action as a result of death or
disability.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Charts from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to Charts, (ii) Charts shall have provided written notice
to MarketWatch (a "NOTICE OF SUPERIOR OFFER") advising MarketWatch that Charts
has received a Superior Offer, specifying the material terms and conditions of
such Superior Offer and identifying the person or entity making such Superior
Offer, (iii) MarketWatch shall not have, within five (5) business days of
MarketWatch's receipt of the Notice of Superior Offer, made an offer that the
Charts Board of Directors by a majority vote determines in its good faith
judgment (based on the written advice of its financial adviser) to be at least
as favorable to the Charts' shareholders as such Superior Proposal (it being
agreed that the Charts' Board of Directors shall convene a meeting to consider
any such offer by MarketWatch promptly following the receipt thereof), (iv) the
Board of Directors of Charts concludes in good faith, after consultation with
its outside counsel, that, in light of such Superior Offer, the withholding,
withdrawal, amendment or modification of such recommendation is required in
order for the Board of Directors of Charts to comply with its fiduciary
obligations to the Charts' shareholders under applicable law and (v) Charts
shall not have violated any of the restrictions set forth in Section 5.10 or
this Section 5.5. Charts shall provide MarketWatch with at least three business
days prior notice (or such lesser prior notice as provided to the members of
Chart's Board of Directors but in no event less than twenty-four hours) of any
meeting of Chart's Board of Directors at which the Charts' Board of Directors is
reasonably expected to consider any Alternative Transaction (as defined in
Section 5.10 below). Subject to applicable laws, nothing contained in this
Section 5.5 shall limit Chart's obligation to hold and convene the Charts
Shareholders' Vote (regardless of whether the unanimous recommendation of the
Board of
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Directors of Charts shall have been withdrawn, amended or
modified). For purposes of this Agreement, "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (1) a merger or consolidation involving Charts
pursuant to which the shareholders of Charts immediately preceding such
transaction hold less than 40% of the equity interest in the surviving or
resulting entity of such transaction or (ii) the acquisition by any person or
group (including by way of a tender offer or any exchange offer or a two-step
transaction involving a tender offer followed with reasonable promptness by a
cash-out merger involving Charts), directly or indirectly, of ownership of 100%
of the then outstanding shares of capital stock of Charts, on terms that the
Board of Directors of Charts determines, in its reasonable judgment (based on
the written advice of its financial adviser) to be more favorable to the Charts'
shareholders than the terms of the Merger; provided, however, that any such
offer shall not be deemed to be a "Superior Offer" if any financing required to
consummate the transaction contemplated by such offer is not committed and is
not likely in the reasonable judgment of the Charts' Board of Directors (based
on the advice of its financial adviser) to be obtained by such third party on a
timely basis.
5.6 Information Statement. Charts will cause the Information
Statement to be sent to the shareholders of Charts in connection with the Charts
Shareholders' Vote to be delivered to each shareholder of Charts within a
reasonable time (and at least fourteen (14) calendar days) prior to the taking
of Charts Shareholders' Vote and in all cases within any time period required by
Charts' Articles of Incorporation and Bylaws, each as amended, and/or required
by applicable law. Charts will be solely responsible for any statement,
information or omission in the Information Statement to be sent to the
shareholders of Charts in connection with the Charts Shareholders' Vote, and
information supplied or to be supplied by or on behalf of Charts that relates to
Charts in the Information Statement to be provided to the shareholders of Charts
in connection with the Charts Shareholders' Vote will, as of the date such
Information Statement is first provided to the shareholders of Charts, conform
to the representation made by Charts in Section 3.26; provided, however, that
Charts shall not be responsible for (and MarketWatch shall be responsible for)
any statement, information or omission (including without limitation information
relating to MarketWatch) that was expressly supplied by MarketWatch for use in
the Information Statement that is contained in the Information Statement, so
long as such statement or information is not changed from the form in which it
was provided by MarketWatch to Charts for inclusion in the Information Statement
(unless MarketWatch expressly approves such change in writing in conformity with
MarketWatch's representation in Section 4.8).
5.7 Regulatory Approvals. Charts will promptly execute and file, or
join in the execution and filing, of any application, notification or any other
document that may be necessary in order to obtain the authorization, approval or
consent of any Governmental Authority, whether federal, state, local or foreign,
which may be reasonably required, or which MarketWatch may reasonably request,
in connection with the consummation of the Merger or any other transactions
contemplated by this Agreement or any Charts Ancillary Agreement. Charts will
use its best efforts to obtain, and to cooperate with MarketWatch to promptly
obtain, all such authorizations, approvals and consents.
5.8 Necessary Consents. Charts will use its commercially reasonable
best efforts to promptly obtain such written consents and authorizations of
third parties, give notices to third parties and take such other actions as may
be necessary in addition to those set forth in the
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foregoing Sections of this Article 5 in order to effect the consummation of the
Merger and the other transactions contemplated by this Agreement and to enable
MarketWatch to carry on Charts' business immediately after the Effective Time.
5.9 Litigation. Charts will notify MarketWatch in writing promptly
after learning of any claim, action, suit, arbitration, mediation, proceeding or
investigation by or before any court, arbitrator or arbitration panel, board or
governmental agency, initiated by or against it, or known by it to be threatened
against Charts or any of their officers, directors, employees or shareholders in
their capacity as such.
5.10 No Other Negotiations. During the time period commencing on the
Agreement Date and ending on the earlier to occur of (a) termination of this
Agreement in accordance with the provisions of Article 10 or (b) the Effective
Time, Charts will not, and Charts will not authorize, encourage or permit any
officer, director, employee, shareholder, affiliate or agent of Charts or any
subsidiary of Charts or any other person on Charts' or their behalf to, directly
or indirectly: (i) solicit, initiate, encourage or induce the making, submission
or announcement of, any offer or proposal from any party concerning any
Alternative Transaction (as defined below) or take any other action that could
reasonably be expected to lead to an Alternative Transaction or a proposal
therefor; (ii) consider any inquiry, offer or proposal received from any party
concerning any Alternative Transaction; (iii) furnish any information regarding
Charts to any person or entity in connection with or in response to any inquiry,
offer or proposal for or regarding any Alternative Transaction; (iv) participate
in any discussions or negotiations with any person or entity for the purpose of
considering or pursuing any Alternative Transaction; (v) otherwise cooperate
with, facilitate or encourage any effort or attempt by any person or entity
(other than MarketWatch) to effect any Alternative Transaction; or (vi) execute,
enter into or become bound by any letter of intent, agreement, commitment or
understanding between Charts and any third party that is related to, provides
for or concerns any Alternative Transaction, provided, however, that after
receipt of an unsolicited, written, bona fide Acquisition Proposal that the
Board of Directors of Charts reasonably concludes may constitute a Superior
Offer, Charts may discuss such Superior Offer the sole purpose of which is to
elicit clarifications as to the material terms of the Acquisition Proposal so as
to enable the Board of Directors of Charts to make a determination whether such
Acquisition Proposal is in fact a Superior Offer (it being agreed that any
discussions with such party shall be limited to the purpose of clarifying the
material terms of such Acquisition Proposal and neither Charts nor its Board of
Directors shall negotiate any terms of such proposal nor solicit or encourage
any new Acquisition Proposal or any change to the Acquisition Proposal, and it
being further agreed that Charts shall provide MarketWatch with a copy of any
correspondence delivered pursuant to this Section 5.10 at least 24 hours prior
to sending such correspondence to any third party). Charts will immediately
cease any and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding two sentences by any officer, director, employee or
shareholder of Charts or any investment banker, attorney or other advisor or
representative of Charts shall be deemed to be a breach of this Section 5.10 by
Charts.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by MarketWatch) relating to
any Alternative Transaction. As used herein, the term "ALTERNATIVE TRANSACTION"
means any commitment, agreement or transaction
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involving or providing for (a) the possible disposition of all or any
substantial portion of Charts' business, assets or capital stock, whether by way
of merger, consolidation, sale of assets, sale of stock, stock exchange, tender
offer and/or any other form of business combination or (b) any initial public
offering of capital stock or other securities of Charts pursuant to a
registration statement filed under the 1933 Act.
In addition to the obligations of the Company set forth in paragraph (a)
of this Section 5.10, the Company as promptly as practicable shall advise
MarketWatch orally and in writing of any Acquisition Proposal or any request for
non-public information or inquiry which Charts reasonably believes would lead to
an Acquisition Proposal or to any Acquisition Transaction, the material terms
and conditions of such Acquisition Proposal, request or inquiry, and the
identity of the person or group making any such Acquisition Proposal, request or
inquiry. Charts will keep MarketWatch informed as promptly as practicable in all
material respects of the status and details (including material amendments or
proposed material amendments) of any such Acquisition Proposal, request or
inquiry.
5.11 Access to Information. From the Agreement Date until the
Closing, Charts will allow MarketWatch and its agents access to the files,
books, records, technology, contracts, personnel and offices of Charts,
including, without limitation, any and all information relating to Charts'
taxes, commitments, contracts, leases, licenses, and real, personal and
intangible property and financial condition. Charts will cause its accountants
to cooperate with MarketWatch and its agents in making available all financial
information reasonably requested by MarketWatch, including without limitation
the right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
5.12 Satisfaction of Conditions Precedent. Charts will use its
commercially reasonable best efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in Articles 8 and 9, and Charts will
use its diligent efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with this Agreement.
5.13 Blue Sky Laws. Charts will use its best efforts to assist
MarketWatch to the extent necessary to comply with the securities and "blue sky"
laws of all jurisdictions which are applicable in connection with the Merger.
5.14 Charts Dissenting Shares. As promptly as practicable after the
date of Charts Shareholders' Vote and prior to the Closing Date, Charts will
furnish MarketWatch with the name and address of each holder (or potential
holder) of any Charts Dissenting Shares (if any) and the number of Charts
Dissenting Shares (or potential Charts Dissenting Shares) owned by each such
holder.
5.15 Termination of Registration and Voting Rights. All registration
rights agreements and voting agreements and proxies applicable to or affecting
any outstanding shares or other securities of Charts (other than the Voting
Agreements and the related Irrevocable Proxies referred to in Section 3.22) will
be terminated and canceled by no later than immediately prior to the Effective
Time.
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5.16 Termination of Charts Benefit Arrangements. Upon the request of
MarketWatch, Charts shall terminate any Charts Benefit Arrangements immediately
prior to the Effective Time as well as any agreements with a professional
employer organization or other entity with which Charts contracts that provides
individuals who provide services to Charts with employee benefits. In
particular, and without limiting the provisions of the preceding sentence,
Charts hereby agrees to terminate the Charts 401(K) plan effective immediately
prior to the Effective Time.
5.17 Exercise of Charts Other Securities. Charts shall use its best
efforts to cause each and every holder of any Charts Other Security to exercise
or convert each such Charts Other Security in full in accordance with its terms
prior to the Effective Time so that no Charts Other Securities are outstanding
immediately prior to the Effective Time; provided that Charts will not be
required to incur any material expenditure in order to comply with its
obligations under this Section.
5.18 Bank Accounts and Insurance. As soon as practicable after the
Agreement Date, Charts shall deliver to MarketWatch a true and complete written
list of (a) the names and locations of all banks, trusts, companies, savings and
loan associations and other financial institutions at which Charts maintains
deposit account or other accounts of any nature, the names of all persons then
authorized to draw on, or make withdrawals from, such accounts and the amount of
any funds then on deposit therein and the amount of debt, if any, owing thereto
by the Company; and (b) all insurance policies held by Charts, together with the
name of the insurer under each policy, the policy coverage amount and next
renewal date.
5.19 Stockholder Approval. Charts shall use its best efforts to have
this Agreement approved by such percentage of Charts' outstanding voting
securities as is required by the terms of Section 280G(b)(5)(B) of the Code to
avoid the treatment of any payment or benefit under any contract, agreement or
other arrangement, including those entered into in connection with this
Agreement, the Merger and the transactions contemplated hereby, as a parachute
payment under the federal tax laws, and to cause such stockholder approval to
have been obtained in a manner which satisfies all applicable requirements of
Section 280(G)(b)(5)(B) of the Code and the proposed Treasury Regulations
thereunder, including (without limitation) Q-7 of Section 1.280G-1 of such
proposed regulations.
5.20 Amendments to Employee Stock Option Agreements. Charts will use
its best efforts to obtain from each holder of a Charts Option a waiver, which
waiver shall not require the payment of additional cash or the grant of
additional stock options, of any terms providing for the acceleration of the
vesting or exercisability of such Charts Option in connection with the Merger
(such provisions are referred to herein as "ACCELERATION PROVISIONS").
ARTICLE 6
MARKETWATCH COVENANTS
During the time period from the Agreement Date until the earlier to
occur of (i) the Effective Time or (ii) the termination of this Agreement in
accordance with Article 10, MarketWatch covenants and agrees with Charts as
follows:
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6.1 Advice of Changes. MarketWatch will promptly advise Charts in
writing of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of MarketWatch or Sub contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
to be untrue or inaccurate in any material respect.
6.2 Regulatory Approvals. MarketWatch will promptly execute and
file, or join in the execution and filing, of any application, notification or
other document that may be necessary in order to obtain the authorization,
approval or consent of any Governmental Authority, federal, state, local or
foreign, which may be reasonably required, in connection with the consummation
of the Merger and the other transactions contemplated by this Agreement and the
MarketWatch Ancillary Agreements and Sub Ancillary Agreements in accordance with
the terms of this Agreement. MarketWatch will use diligent efforts to obtain all
such authorizations, approvals and consents.
6.3 Necessary Consents. MarketWatch will use its best efforts to
promptly obtain such written consents and authorizations of third parties, give
notices to third parties and take such other actions as may be necessary in
addition to those set forth in the foregoing Sections of this Article 6 in order
to effect the consummation of the Merger and the other transactions contemplated
by this Agreement.
6.4 Access to Information. At Charts' request, appropriate
MarketWatch executive officers will meet with Charts executive officers to
provide due diligence information to Charts executive officers, subject to the
compliance by Charts and such Charts executive officers with MarketWatch's
xxxxxxx xxxxxxx policies.
6.5 Satisfaction of Conditions Precedent. MarketWatch will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Articles 8 and 9, and MarketWatch will use its best
efforts to cause the transactions contemplated by this Agreement to be
consummated in accordance with this Agreement.
6.6 Advice of Certain Litigation. MarketWatch will notify Charts in
writing promptly after learning of any claim, action, suit, arbitration,
mediation, proceeding or investigation by or before any court, arbitrator or
arbitration panel, board or governmental agency, initiated by or against
MarketWatch, or known by MarketWatch to be threatened against Charts or any of
their officers, directors, employees or shareholders in their capacity as such,
if such claim, action, suit arbitration, mediation, proceeding or investigation
(i) relates to this Agreement or the Merger or (ii) that if determined adversely
would reasonably be expected to have a Material Adverse Effect on MarketWatch.
6.7 Benefit Plans. Provided that Charts terminates any Charts
Benefit Arrangement and any contract pursuant to which individuals who provide
services to Charts are provided employee benefits at MarketWatch's request as
provided in Section 5.16, MarketWatch shall provide the same or a comparable
benefit or plan to each employee of Charts as is provided by MarketWatch to
MarketWatch's employees who are similarly situated (it being understood that
this Section shall not obligate MarketWatch to grant stock options to purchase
any particular number of shares of MarketWatch Common Stock or other equity
securities to any employee of Charts). The MarketWatch benefit plans will, to
the extent permitted by applicable law, give full
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credit for each participant's period of service with Charts prior to the
Effective Time for all purposes for which past service credit is recognized
under MarketWatch's benefit plans as in effect immediately prior to the
Effective Time.
ARTICLE 7
CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as
provided in Article 10 below, the closing of the transactions to consummate the
Merger (the "CLOSING") will take place at the offices of Fenwick & West LLP, Two
Xxxx Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 at 10:00 a.m., Pacific Standard
Time on the day on which all conditions to the Closing shall have been satisfied
or waived, or on such other day as MarketWatch and Charts may mutually agree on
(the "CLOSING DATE"). Concurrently with the Closing, the Agreement of Merger (or
a Certificate of Merger) will be filed with the Delaware Secretary of State, and
the Agreement of Merger (and related officers' certificates) will be filed with
the Minnesota Secretary of State.
7.2 Exchange of Certificates.
7.2.1 At the Closing or as soon thereafter as reasonably
practicable, each Charts Shareholder will surrender the certificate(s) for such
shares (each a "CHARTS CERTIFICATE"), duly endorsed to MarketWatch for
cancellation as of the Effective Time together with the agreement and
acknowledgment contemplated by the second sentence of Section 2.4.2 (the
"ACKNOWLEDGMENT") executed by such holder. Promptly after the Effective Time and
subject to the receipt by MarketWatch or its transfer agent of such Charts
Certificates (or, in the case of a Charts Certificate that is lost or otherwise
missing, either or both of the following documents, in the discretion of
MarketWatch and/or its transfer agent; (a) a lost certificate insurance bond
insuring MarketWatch against loss arising from such lost or missing Charts
Certificate and/or (b) a lost certificate indemnity agreement executed by the
holder of such lost or missing Charts Certificate in favor of MarketWatch and
its transfer agent, each in form and substance reasonably acceptable to
MarketWatch and its transfer agent) and the Acknowledgment executed by such
holder, MarketWatch or its transfer agent will issue to each tendering holder of
a Charts Certificate a certificate for the number of shares of MarketWatch
Common Stock (an "MARKETWATCH CERTIFICATE") to which such holder is entitled
pursuant to Section 2.1.2 (less the Escrow Shares of such holder that are to be
withheld and placed in escrow pursuant to Section 2.4 and the Escrow Agreement)
and MarketWatch or its transfer agent will pay by check to each tendering holder
cash in the amounts payable to such holder in accordance with the provisions of
Sections 2.1.2 and 2.1.4. At or about the Closing Date, MarketWatch will deliver
the MarketWatch Certificates representing the Escrow Shares to the Escrow Agent
pursuant to the Escrow Agreement. Each Charts Shareholder shall execute and
deliver stock power (with medallion signature guarantees if requested by the
Escrow Agent) for the MarketWatch Certificates escrowed as described above.
7.2.2 No MarketWatch Certificates for shares of MarketWatch
Common Stock issued pursuant to Section 2.1.2 and no cash payable under Section
2.1.2 or Section 2.1.4, and no dividends or distributions payable to holders of
record of MarketWatch Common Stock after the Effective Time, will be paid to the
holder of any unsurrendered Charts Certificate unless and until the holder of
such unsurrendered Charts Certificate surrenders such Charts Certificate to
MarketWatch as provided above (or, in the case of a Charts Certificate that is
lost or otherwise
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missing, either or both of the following documents, in the discretion of
MarketWatch and/or its transfer agent; (a) a lost certificate insurance bond
insuring MarketWatch against loss arising from such lost or missing Charts
Certificate and/or (b) a lost certificate indemnity agreement executed by the
holder of such lost or missing Charts Certificate in favor of MarketWatch and
its transfer agent, each in form and substance reasonably acceptable to
MarketWatch and its transfer agent) together with the Acknowledgment executed by
the former Charts shareholder. Subject to the effect, if any, of applicable
escheat and other laws, following surrender of any Charts Certificate, there
will be delivered to the person entitled thereto, without interest, the amount
of any dividends and distributions theretofor paid with respect to MarketWatch
Common Stock so withheld as of any date subsequent to the Effective Time and
prior to such date of delivery.
7.2.3 After the Effective Time there will be no further
registration of transfers on the stock transfer books of Charts or its transfer
agent of any shares of capital stock of Charts that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Charts Certificates
are presented for any reason, they will be canceled and exchanged as provided in
this Section 7.2.
7.2.4 Until Charts Certificates representing shares of Charts
Common Stock that are outstanding immediately prior to the Effective Time are
surrendered pursuant to Section 7.2.1 above, such Charts Certificates will be
deemed, for all purposes, to evidence ownership of the number of shares of
MarketWatch Common Stock and cash consideration into which such shares of Charts
Common Stock will have been converted pursuant to Section 2.1.2.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF CHARTS
Charts' obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by Charts, but only in a writing signed by
Charts):
8.1 Accuracy of Representations and Warranties. The representations
and warranties of MarketWatch and Sub set forth in Article 4 (as qualified by
the MarketWatch Disclosure Letter) or set forth in the MarketWatch Disclosure
Letter (a) that are qualified as to materiality in Article 4 will be true and
correct and (b) that are not qualified as to materiality in Article 4 shall be
true and correct in all material respects, in each case on and as of the Closing
with the same force and effect as if they had been made at the Closing Date
(except for any such representations or warranties that, by their terms, speak
only as of a specific date or dates, in which case such representations and
warranties shall be true and correct on and as of such specified date or dates),
and Charts will have received a certificate to such effect executed by an
executive officer of MarketWatch.
8.2 Covenants. MarketWatch will have performed and complied in all
material respects with all of its covenants contained in Article 6 that are to
be performed on or before the Closing (to the extent that such covenants require
performance by MarketWatch on or before the Closing), and Charts will have
received a certificate to such effect signed by an executive officer of
MarketWatch.
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8.3 Requisite Approvals. The Merger and this Agreement shall have
been duly and validly approved and adopted by Charts' shareholders, in
accordance with applicable law and Charts' Articles of Incorporation and Bylaws.
The principal terms of this Agreement and the issuance of shares of MarketWatch
Common Stock in the Merger and the grant of MarketWatch Options upon conversion
of Charts Options in the Merger will have been duly and validly approved and
adopted by MarketWatch's Board of Directors in accordance with applicable law
and MarketWatch's Certificate of Incorporation and Bylaws. The principal terms
of this Agreement will have been approved and adopted by Sub's Board of
Directors and sole stockholder in accordance with applicable law and Sub's
Certificate of Incorporation and Bylaws.
8.4 Compliance with Law; No Legal Restraints; No Litigation. No
litigation or proceeding will be threatened or pending for the purpose or with
the probable effect of enjoining or preventing the consummation of the Merger or
any of the other material transactions contemplated by this Agreement. There
will not be issued or enacted or adopted, or threatened in writing by any
Governmental Authority, any order, decree, temporary, preliminary or permanent
injunction, legislative enactment, statute, regulation, action or proceeding, or
any judgment or ruling by any court, arbitrator or Governmental Authority, that,
directly or indirectly, challenges, threatens, prohibits, enjoins, restrains,
suspends, delays, conditions or renders illegal or imposes limitations on (or
involves a challenge, threat to, or a prohibition, injunction, restraint,
suspension, delay or illegality of, or to impose limitations on) the Merger or
any other material transaction contemplated by this Agreement.
8.5 Government Consents. There will have been obtained at or prior
to the Closing Date such permits or authorizations, and there will have been
taken all such other actions by any regulatory authority having jurisdiction
over the parties and the actions herein proposed to be taken, as may be required
to lawfully consummate the Merger, including but not limited to requirements
under applicable federal and state securities laws.
8.6 Registration Rights Agreement. MarketWatch shall have executed
and delivered the Registration Rights Agreement.
8.7 Escrow Agreement. Charts will have received a copy of the Escrow
Agreement in the form of Exhibit D executed by MarketWatch and the Escrow Agent.
8.8 Opinion of MarketWatch's Counsel. Charts will have received from
Fenwick & West LLP, counsel to MarketWatch, an opinion substantially in the form
of Exhibit I.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF MARKETWATCH
The obligations of MarketWatch hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by MarketWatch, but only in a writing
signed by MarketWatch):
9.1 Accuracy of Representations and Warranties. The representations
and warranties of Charts set forth in Article 3 (as qualified by the Charts
Disclosure Letter) or set forth in the Charts Disclosure Letter (a) that are
qualified as to materiality in Article 3 will be true and correct and
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(b) that are not qualified as to materiality in Article 3 shall be true and
correct in all material respects, in each case on and as of the Closing with the
same force and effect as if they had been made at the Closing Date (except for
any such representations or warranties that, by their terms, speak only as of a
specific date or dates, in which case such representations and warranties shall
be true and correct on and as of such specified date or dates), and MarketWatch
will have received a certificate to such effect executed by an executive officer
of Charts.
9.2 Covenants. Charts will have performed and complied in all
material respects with all of its covenants contained in Article 5 on or before
the Closing, and MarketWatch will have received a certificate to such effect
signed by Charts' President and Chief Financial Officer.
9.3 No Material Adverse Change. There will not have been any
Material Adverse Change (as defined in Article 1) in the financial condition,
properties, assets, liabilities, business, results of operations or operations
of Charts and MarketWatch will have received a certificate to such effect signed
by Charts' President and Chief Financial Officer.
9.4 No Litigation; No Legal Restraints. No suit, action, litigation
or proceeding will be threatened or pending: (a) for the purpose, or with the
probable effect of, obtaining a Restraining Order, or otherwise restraining,
enjoining, preventing the consummation of, or challenging, delaying, suspending,
rendering or declaring illegal, or imposing limitations on, the Merger or any
material transaction contemplated by this Agreement, the Agreement of Merger,
any MarketWatch Ancillary Agreement, any Charts Ancillary Agreement, any Sub
Ancillary Agreement; (b) for the purpose, or with the probable effect of,
challenging or restraining the right of MarketWatch, Charts or any subsidiary of
MarketWatch or Charts to own, retain, use or operate any of their products,
properties or assets on or after consummation of the Merger or seeking a
disposition or divestiture of any such products, properties or assets on or
after consummation of the Merger; or (c) which could be reasonably expected to
have a Material Adverse Effect on Charts. There will not be issued, outstanding,
enacted, adopted or in effect any Restraining Order. As used herein, a
"RESTRAINING ORDER" means (a) any temporary, preliminary or permanent injunction
or restraining order or any other similar order, judgment, ruling, award or
decree (including but not limited to any decree of specific performance) of any
court, arbitrator or Governmental Authority or (b) any statute, law or
regulation enacted or promulgated by any Governmental Authority, that, in either
case, restrains, enjoins, prevents the consummation of, or challenges, delays,
suspends, or renders or declares illegal, or imposes limitations on (i) the
Merger or any other material transaction contemplated by this Agreement, any
MarketWatch Ancillary Agreement, any Charts Ancillary Agreement or any Sub
Ancillary Agreement, or (ii) challenges or restrains the right of MarketWatch,
Charts or any subsidiary of MarketWatch or Charts to own, retain, use or operate
any of their products, properties or assets on or after consummation of the
Merger or seeks a disposition or divestiture of any such products, properties or
assets on or after consummation of the Merger.
9.5 Government Consents. There will have been obtained at or prior
to the Closing Date such permits or authorizations, and there will have been
taken all such other actions, as may be required to consummate the Merger by any
governmental or regulatory authority having jurisdiction over the parties and
the actions herein proposed to be taken.
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9.6 Opinion of Counsel. MarketWatch will have received from Xxxxxx &
Xxxxxxx LLP, counsel to Charts, an opinion substantially in the form of Exhibit
J.
9.7 Consents. MarketWatch will have received duly executed copies of
all material third-party consents, approvals, assignments, waivers,
authorizations or other certificates that are in form and substance reasonably
satisfactory to MarketWatch and are referenced on Schedule 3.12 to the Charts
Disclosure Letter.
9.8 Requisite Approvals. This Agreement, the Merger and Charts
Ancillary Agreements will have been duly and validly approved and adopted, as
required by applicable law and Charts' Articles of Incorporation and Bylaws, by
(a) Charts' Board of Directors, and (b) a majority of the shares of Charts
Common Stock that are issued and outstanding on the Record Date (as defined in
Section 3.23).
9.9 Limits on Dissenting Shares. No more than two percent (2%) of
the outstanding shares of Charts Common Stock taken together will (a) not have
affirmatively voted in favor of the Merger and the Agreement and (b) accordingly
be eligible to exercise or perfect any statutory appraisal rights of dissenting
shareholders under applicable law.
9.10 Escrow Agreement. MarketWatch will have received a copy of the
Escrow Agreement in the form of Exhibit D executed by the Escrow Agent and the
Representative.
9.11 Registration Rights Agreement; Investment Representation
Letters; Exemptions Available. MarketWatch: (a) shall have received an executed
counterpart of the Registration Rights Agreement and an Investment
Representation Letter executed by each Charts Shareholder who, immediately prior
to the Effective Time, owns any shares of Charts Common Stock, as constituted on
the Agreement Date (unless all of such Charts Shareholder's shares of Charts
Common Stock are Charts Dissenting Shares); (b) shall be reasonably satisfied
that there are not more than thirty-five (35) Charts Shareholders (both on the
Record Date and as of immediately prior to the Effective Time) who are not
"accredited investors" within the meaning of Regulation D promulgated under the
1933 Act; or who do not have a "purchaser representative" as contemplated by,
and who meets all the criteria of, Rule 501 of Regulation D promulgated under
the 1933 Act and (c) shall be reasonably satisfied that the issuance of shares
of MarketWatch Common Stock pursuant to Section 2.1.2 above is exempt from the
registration requirements of the 1933 Act by virtue of the exemptions provided
by Section 4(2) of the 1933 Act and/or Regulation D under the 1933 Act and any
exemptions from the registration and/or qualification requirements of applicable
state "blue sky" securities laws.
9.12 Resignation of Directors. The directors of Charts in office
immediately prior to the Closing Date (other than any such director who is
designated in Section 2.5(g) to be a director of Charts immediately after the
Effective Time) will have resigned as directors of the Surviving Corporation in
writing effective as of the Effective Time.
9.13 No Charts Other Securities. All Charts Other Securities, if any,
will have been validly terminated or exercised in full and thereby converted
into shares of Charts Common Stock in accordance with their current terms and
conditions, so that no Charts Other Securities will be outstanding immediately
prior to the Effective Time.
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9.14 Agreement to Offset. MarketWatch shall have received the written
agreement of each holder of Charts Common Stock that shall have any outstanding
debt or liability to Charts that any amounts payable to such holder hereunder
may be reduced by the amount of such debt or liability outstanding at the
Effective Time (including any interest accrued pursuant to the terms of such
debt or liability).
9.15 Termination of Charts Benefit Arrangements. Pursuant to Section
5.16, Charts shall have duly and effectively terminated such Charts Benefit
Arrangements as MarketWatch shall have requested Charts to terminate in writing
pursuant to documentation that is reasonably satisfactory in form and substance
to MarketWatch.
9.16 Employee Invention Assignments. MarketWatch shall have received
from each current employee of Charts, a fully executed copy of an Employee
Invention Assignment Agreement in the form of Exhibit K.
9.17 Share Transfer. Immediately prior to the Effective Time and
subsequent to the Charts Shareholder Vote, Xxxxx Xxxxx, Xxxxxx Xxxxxxxxx and
Xxxxx Xxxxxxxx shall collectively be the record owners of at least 369,047
shares of Charts Common Stock, as adjusted for Capital Changes.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by the mutual written agreement of
MarketWatch and Charts.
10.2 Unilateral Termination.
10.2.1 Either MarketWatch or Charts, by giving written notice
to the other, may terminate this Agreement if a court of competent jurisdiction
or other Governmental Authority shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger.
10.2.2 Either MarketWatch or Charts, by giving written notice
to the other, may terminate this Agreement if the Merger shall not have been
consummated by midnight Pacific Daylight Time on July 31, 1999; provided,
however, that the right to terminate this Agreement pursuant to this Section
10.2.2 shall not be available to any party whose failure to perform in any
material respect any of its obligations or covenants under this Agreement
results in the failure of any condition set forth in Article 8 or Article 9 or
if the failure of such condition results from facts or circumstances that
constitute a material breach of a representation or warranty made under this
Agreement by such party, if the other party has performed in all material
respects its obligations under this Agreement and if the representations and
warranties of such other party to this Agreement are true and correct in all
material respects as of the Termination Date.
10.2.3 Either MarketWatch or Charts may terminate this
Agreement at any time prior to the Closing if the other has committed (or, in
the case of a termination by Charts, Sub has committed) a material breach of (a)
any of its representations and warranties under Article 3 or Article 4 of this
Agreement, as applicable; or (b) any of its covenants under Article 5 or Article
6
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of this Agreement, as applicable, and has not cured such material breach within
thirty (30) days after the party seeking to terminate this Agreement has given
the other party written notice of the material breach and its intention to
terminate this Agreement pursuant to this Section 10.2.3 (or, if such thirty
(30) day cure period would extend past the Termination Date, by the Termination
Date).
10.2.4 MarketWatch, by giving written notice to Charts at any
time prior to the adoption and approval of this Agreement and the Merger by the
required vote of the Shareholders of Charts, may terminate this Agreement if a
Triggering Event (as defined below) shall have occurred.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall
be deemed to have occurred if: (1) the Board of Directors of Charts or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to MarketWatch its unanimous recommendation in
favor of, the adoption and approval of the Agreement or the approval of the
Merger; (ii) Charts shall have failed to include in the Information Statement
the unanimous recommendation of the Board of Directors of Charts in favor of the
adoption and approval of the Agreement and the approval of the Merger; (iii) the
Board of Directors of Charts fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within ten (10) days after MarketWatch requests in writing that such
recommendation be reaffirmed; or (iv) the Board of Directors of Charts or any
committee thereof shall have approved or recommended any Acquisition Proposals.
10.3 No Liability for Termination. Termination of this Agreement by a
party (the "TERMINATING Party") in accordance with the provisions of this
Section 10 will not give rise to any obligation or liability (a) on the part of
the Terminating Party on account of such termination or (b) to any party hereto
who has not committed a breach of this Agreement.
10.4 Survival. The parties' obligations to bear their own fees and
expenses with respect to this Agreement as provided in Section 12.7 shall
survive the termination of this Agreement in accordance with the provisions of
this Article 10.
10.5 Termination Fee. If, this Agreement (i) was not terminated
pursuant to Section 10.1 or (ii) was not terminated by MarketWatch pursuant to
Section 10.2.1 or 10.2.2, and at any time after the Agreement Date until
September 30, 1999, there is a consolidation or merger of Charts with or into
any third party, or a sale, conveyance, or other disposition of all or
substantially all of Charts' property or business to a third party, or Charts
effectuates a transaction or series of transactions in which more than 50% of
the voting power of Charts is disposed of, then Charts shall pay to MarketWatch
(by wire transfer or cashier's check) a nonrefundable fee of five million
dollars ($5,000,000) within ten (10) days of the effective date of such
consolidation, merger, sale, conveyance, disposition or effectuation.
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ARTICLE 11
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AND REMEDIES, CONTINUING COVENANTS
11.1 Survival of Representations. All representations, warranties and
covenants of Charts contained in this Agreement will remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
MarketWatch, until that date (the "ESCROW RELEASE DATE") which is the earlier of
(i) the termination of this Agreement or (ii) the first (1st) anniversary of the
Effective Time, whereupon such representations, warranties and covenants will
expire; provided, however, that notwithstanding the foregoing, MarketWatch may
seek recovery of (i) Special Damages (as defined below) at any time prior to the
expiration of the applicable statute of limitations for the claim which seeks
recovery of such Special Damages and (ii) Damages (as defined below) resulting
from (A) any breach of the representations and warranties in clause (iii) of
Section 3.13.6 as such representations and warranties relate to the "BigCharts"
name, (B) Charts' failure to have the valid right to exclusively use, possess,
sell, reproduce, publicly display or license the "BigCharts" name, or (C) claims
that the "BigCharts" name infringes or misappropriates the Intellectual Property
Right of any other party ("TRADEMARK DAMAGES"), which right to seek
indemnification hereunder will remain operative and in full force and effect
until the second (2nd) anniversary of the Effective Time.
11.2 Agreement to Indemnify. Subject to the provisions of Sections
11.3 and 11.4 below, (i) the Charts Shareholders who are not Principal
Shareholders will (solely to the extent of their Escrow Shares for claims made
under Section 11.2(a)) and (ii) the Principal Shareholders will, severally and
not jointly indemnify and hold harmless MarketWatch and the Surviving
Corporation and their respective officers, directors, agents, stockholders and
employees, and each person, if any, who controls or may control MarketWatch or
the Surviving Corporation within the meaning of the 1933 Act or the 1934 Act
(each hereinafter referred to individually as an "INDEMNIFIED PERSON" and
collectively as "INDEMNIFIED PERSONS"), from and against any and all claims,
demands, suits, actions, causes of actions, losses, costs, damages, liabilities
and expenses including, without limitation, reasonable attorneys' fees, other
professionals' and experts' reasonable fees and court or arbitration costs
(hereinafter collectively referred to as "DAMAGES"), directly or indirectly
incurred, resulting or and arising out of:
(a) any inaccuracy, misrepresentation, breach of, or default
in, any of the representations, warranties or covenants given or made by Charts,
Verticality or the Principal Shareholders in this Agreement, in the Charts
Disclosure Letter, or in any certificate delivered by or on behalf of Charts,
Verticality or the Principal Shareholders or an officer of Charts pursuant to
any provision of Article 9 (if such inaccuracy, misrepresentation, breach or
default existed at the Closing Date);
(b) any failure of a Principal Shareholder to have good,
valid and marketable title to the issued and outstanding shares of Charts Common
Stock held (or asserted to have been held) by such Principal Shareholder, free
and clear of all liens, claims and encumbrances, or Verticality or a Principal
Shareholder, to have the full right, capacity and authority to vote such
person's shares of stock of Charts stock in favor of this Agreement, the Merger
or any other transaction contemplated by this Agreement; or
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(c) any Trademark Damages.
Except with respect to claims arising from Special Damages (as
defined below) and Trademark Damages, which claims may be raised after the
Escrow Release Date, any claim of indemnity made by an Indemnified Person under
this Section 11.2 must be raised in a writing delivered to the Escrow Agent by
no later than the Escrow Release Date, and, if raised by such date, such claim
shall survive the Escrow Release Date until final resolution of such claim. Any
claim of indemnity arising from Trademark Damages made by an Indemnified Person
after the Escrow Release Date under this Section 11.2 must be raised in a
writing delivered to each of the Principal Shareholders no later than the second
(2nd) anniversary of the Closing Date, and if raised by such date, such claim
shall survive the second (2nd) anniversary of the Closing Date until final
resolution of such claim.
MarketWatch shall indemnify and hold harmless any Principal
Shareholder from and against any Damages arising out of performance of Charts'
obligations set forth in Section 5.20, provided, however, that MarketWatch shall
not be required to indemnify any such person for willful misconduct that
constitutes fraud.
Notwithstanding anything in this Agreement to the contrary, the
Sellers shall not be obligated to indemnify the Indemnified Persons with respect
to any Damages to the extent of any proceeds received in connection with such
Damages by any Indemnified Person, and MarketWatch undertakes to use
commercially reasonable efforts to pursue claims for insurance under the
policies set forth in Schedule 3.20, provided, however, no Indemnified Person
shall have any obligation to institute proceedings against any insurance
carrier.
11.3 Limitations and Exceptions to Indemnification.
11.3.1 As used herein, "SPECIAL DAMAGES" means Damages
resulting from (a) any fraudulent conduct occurring prior to the Effective Time
on the part of Charts or any officer, director, employee or agent, or
shareholder of Charts, (b) any failure of a Principal Shareholder to have good,
valid and marketable title to any issued and outstanding shares of Charts Common
Stock held (or asserted to have been held) by such Principal Shareholder, free
and clear of all liens, claims and encumbrances, or have the full right,
capacity and authority to vote such person's shares of Charts Common Stock in
favor of this Agreement, the Merger and the other transactions contemplated by
this Agreement or (c) any breach of the representations and warranties in
Sections 3.7.
Nothing contained in Section 11.3.1 or elsewhere in this
Agreement shall limit or restrict any rights of MarketWatch or any other
Indemnified Person against (a) any Charts Shareholder or any other person with
respect to any fraudulent conduct, act or omission by such Charts Shareholder or
such other person, or (b) any Charts Shareholder, with respect to the failure of
such Charts Shareholder to have good, valid and marketable title to any issued
and outstanding shares of Charts Common Stock held (or asserted in the Charts
Disclosure Letter to have been held) by such Charts Shareholder, free and clear
of all liens, claims and encumbrances, or to have the full right, capacity and
authority to vote such person's shares of stock of Charts Common Stock in favor
of this Agreement, the Merger or any other transaction contemplated by this
Agreement.
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11.3.2 In seeking indemnification from a Charts Shareholder
which is not a Principal Shareholder, the Indemnified Persons will exercise
their remedies solely with respect to the escrow shares and any other assets
deposited in escrow pursuant to the Escrow Agreement and no Charts Shareholder
who is not a Principal Shareholder will otherwise have any liability to an
Indemnified Person under Section 11.2(a) of this Agreement. The maximum
liability for a Principal Shareholder under Section 11 shall be limited to the
product of (A) sum of (i) the number of shares of MarketWatch Common Stock
received by him, her or it in the Merger in exchange for his, her or its
securities of Charts and (ii) the number of shares of MarketWatch Common Stock
subject to Charts Options, Charts Warrants or Charts Other Securities held by
him, her or it and exchanged or assumed in connection with the Merger times (B)
the MarketWatch Per Share Price. In seeking indemnification from a Principal
Shareholder, the Indemnified Persons will exercise their remedies solely with
respect to (i) the escrow shares and any other assets deposited in escrow
pursuant to the Escrow Agreement, (2) the Indemnity Shares including any
dividends, distributions or other payments made with respect to such Indemnity
Shares and/or (3) the aggregate cash proceeds to such Principal Shareholder
resulting from the sale of any Indemnity Shares, after taking into account any
taxes payable with respect to the sale of such Indemnity Shares ("INDEMNITY
PROCEEDS").
As used herein, "INDEMNITY SHARES" means the number of shares of
MarketWatch Common Stock received by a Principal Shareholder in the Merger plus
the number of shares of MarketWatch Common Stock subject to Charts Options,
Charts Warrants or Charts Other Securities held by him, her or it and exchanged
or assumed in connection with the Merger less the Initial Unlocked Shares, as
adjusted for any Capital Changes. The Indemnity Shares shall not include any
shares subject to MarketWatch Options held by a Principal Shareholder which
options are unvested and subsequently canceled as a result of termination of a
Principal Shareholder's employment pursuant to the terms of such Principal
Shareholder's Employment Agreement and related stock option agreement.
11.3.3 The indemnification provided for in Section 11.2 shall
not apply unless and until the aggregate cumulative Damages for which one or
more Indemnified Persons have sought indemnification under this Section,
exclusive of legal fees, exceeds two hundred fifty thousand dollars ($250,000)
(the "BASKET") and then the indemnification shall extend to the amount of such
cumulative Damages in excess of one hundred thousand dollars ($100,000).
11.4 Indemnification Procedures.
11.4.1 Promptly after MarketWatch becomes aware of the
existence of any potential claim by or in respect of a third party (a "THIRD
PARTY CLAIM") for indemnity from the Principal Shareholders or the other Charts
Shareholders (the "INDEMNITORS") under Section 11.2, MarketWatch will notify the
Principal Shareholders and, if such notice is delivered during the Escrow
Period, the Representative, of such potential claim in accordance with the
Escrow Agreement (including in any case copies of any summons, complaint or
other pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). The
failure of MarketWatch to give, or delay by MarketWatch in giving, such notice
will not affect any rights or remedies of an Indemnified Person hereunder with
respect to indemnification for Damages except to the extent Indemnitors' ability
to defend the claim is prejudiced thereby.
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11.4.2 Any Indemnitor will have the right to defend at its own
cost the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Person so long as (A) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (B) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Person, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Person, provided, however, that
in such instance, the Indemnified Persons will not consent to the entry of any
judgment or enter into any settlement with respect thereto without the prior
written consent of the Principal Shareholders (not to be unreasonably withheld),
and (C) the Indemnitor conducts the defense of the Third Party Claim actively
and diligently with counsel conducting such defense that is reasonably
acceptable to the Indemnified Persons.
11.4.3 So long as the Indemnitor is conducting the defense of
the Third Party Claim in accordance with Section 11.4.2 above, (A) the
Indemnified Person may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Person will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Principal Shareholders (not to be withheld unreasonably), and (C)
the Indemnitors will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Person (not to be withheld unreasonably).
11.4.4 In the event any of the conditions in Section 11.4.2
above is or becomes unsatisfied, however, the Indemnified Person may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to (subject to the provisions of clause (B) of Section 11.4.2), the
Third Party Claim in any manner it reasonably may deem appropriate provided,
however, the Indemnified Person shall consult with Principal Shareholders in
connection with any such entry of judgment or settlement, and (B) the
Indemnitors will remain responsible for any Damages the Indemnified Person may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section 11.
11.5 Notice and Payment of Claims. Any claim for Damages will be
resolved as follows:
11.5.1. Uncontested Claims. In the event that, within ten (10)
calendar days after the notice containing a statement of the claimed Damages is
sent to the Principal Shareholders and, if applicable, the Escrow Agent pursuant
to Section 11.4, and the Principal Shareholders or the Representative do not
contest such Damages in writing to MarketWatch and the Escrow Agent, if such
notice is delivered during the Escrow Period (an "UNCONTESTED CLAIM"), (i) the
Escrow Agent will immediately instruct MarketWatch's transfer agent to transfer
to MarketWatch (promptly after any cancellation and reissuance of share
certificates for Escrow Shares by MarketWatch's transfer agent that is necessary
for transfer agent to effect such transfer) for cancellation and forfeiture that
number of Escrow Shares having a value (determined pursuant to Section 11.5.3)
equal to the amount of Damages specified in the notice, which canceled Escrow
Shares will be taken from and forfeited by the Charts Shareholders pro rata in
proportion to their respective percentage interests in the Escrow Shares as set
forth in an attachment to the Escrow Agreement, (ii) if there no longer remain
any Escrow Shares, the Principal Shareholders shall surrender to MarketWatch
that number of Indemnity Shares having a value (determined pursuant
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to Section 11.5.3) equal to the equal to such Principal Shareholder's pro rata
share of the Damages specified in the notice, subject to the Principal
Shareholders election to pay cash in lieu of forfeiting such Indemnity Shares
set forth in Section 11.5.3, or (iii) if there no longer remain any Escrow
Shares or Indemnity Shares, an amount of Indemnity Proceeds equal to such
Principal Shareholder's pro rata share of the Damages specified in the notice.
11.5.2. Contested Claims. In the event that the Principal
Shareholders or, if applicable, the Representative, give MarketWatch and, if
applicable, Escrow Agent written notice contesting all or any portion of a
notice (a "CONTESTED CLAIM") within the ten (10) day period specified in Section
11.5.1 then: (i) such Contested Claim will be resolved prior to the expiration
of the Escrow Period or as soon thereafter as is possible, by either (A) a
written settlement agreement executed by MarketWatch, the Principal Shareholders
and, if the notice is delivered prior to the Escrow Release Date, the
Representative or (B) in the absence of such a written settlement agreement, by
binding arbitration between MarketWatch, the Principal Shareholders and, if the
notice is delivered prior to the Escrow Release Date, the Representative in
accordance with the terms and provisions of Section 12.1. Any portion of the
notice that is not contested will be resolved as an Uncontested Claim in
accordance with Section 11.5.1.
11.5.3. Determination of Payment. Any amount of Damages incurred
by the Indemnified Persons and owed to the Indemnified Persons on account of a
claim for Damages, determined pursuant to the foregoing provisions of this
Section 11.5, will be payable to the Indemnified Persons (i) first, out of the
Escrow Shares (or the cash proceeds thereof) then held by Escrow Agent, and the
forfeited Escrow Shares will be taken from and forfeited by the Charts
Shareholders pro rata in proportion to their respective percentage interests in
the Escrow Shares (or cash proceeds thereof) as set forth on an attachment to
the Escrow Agreement and (ii) second, out of the Indemnity Shares and any
Indemnity Proceeds; provided that in lieu of forfeiture of such Escrow Shares or
Indemnity Shares, a Charts Shareholder or Principal Shareholder may elect to pay
cash to the Indemnified Persons or, if applicable, the Escrow Agent, in an
amount equal to the value of the Indemnity Shares or, if applicable, the Escrow
Shares, which would have been forfeited on account of such claim for Damages.
For purposes of determining the number of Indemnity Shares shall be reduced, or
if applicable, Escrow Shares to be distributed to a Charts Shareholder paying
cash in satisfaction of claims for Damages hereunder, such shares shall be
deemed to have a per share value equal to the MarketWatch Closing Price Per
Share. Other than with respect to valuation of Indemnity Shares or, if
applicable, Escrow Shares, to be distributed to a Charts Shareholder on account
of cash payments described above, for purposes of this Agreement, Indemnity
Shares, or if applicable, Escrow Shares, will be deemed to have a per share
value equal to the greater of (i) the MarketWatch Closing Price Per Share, or
(ii) the MarketWatch Subsequent Price Per Share, as adjusted to reflect any
Capital Change (the "SETTLEMENT PRICE"). The number of Indemnity Shares or, if
applicable, Escrow Shares, to be forfeited by Charts Shareholders and
transferred to MarketWatch in satisfaction of a claim for Damages will be the
amount of such Damages divided by the Settlement Price.
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ARTICLE 12
MISCELLANEOUS
12.1 Governing Law; Dispute Resolution. The internal laws of the
State of Delaware (irrespective of its choice of law principles) will govern the
validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
Any dispute hereunder ("DISPUTE") shall be settled by arbitration in San
Francisco County, California, and, except as herein specifically stated, in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA RULES") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now or
hereafter be contained in the AAA Rules. Any judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in any judicial proceeding instituted
to resolve a Dispute.
12.1.1 Compensation of Arbitrator. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon his
or her rate of compensation.
12.1.2 Selection of Arbitrator. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Delaware contract law; provided,
however, that such lawyers cannot work for a firm then performing services for
either party, that each party will have the opportunity to make such reasonable
objection to any of the arbitrators listed as such party may wish and that the
American Arbitration Association will select the arbitrator from the list of
arbitrators as to whom neither party makes any such objection. In the event that
the foregoing procedure is not followed, each party will choose one person from
the list of arbitrators provided by the American Arbitration Association
(provided that such person does not have a conflict of interest), and the two
persons so selected will select from the list provided by the American
Arbitration Association the person who will act as the arbitrator.
12.1.3 Payment of Costs. MarketWatch and the Charts
Shareholders will bear the expense of deposits and advances required by the
arbitrator in equal proportions, but either party may advance such amounts,
subject to recovery as an addition or offset to any award. The arbitrator will
award to the prevailing party, as determined by the arbitrator, all costs, fees
and expenses related to the arbitration, including reasonable fees and expenses
of attorneys, accountants and other professionals incurred by the prevailing
party.
12.1.4 Burden of Proof. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
12.1.5 Award. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
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12.1.6 Terms of Arbitration. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
12.1.7 Exclusive Remedy. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any Dispute arising out of this Agreement.
12.2 Assignment; Binding Upon Successors and Assigns. 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 binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, then the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
12.4 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. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all parties reflected hereon as signatories.
12.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party hereunder will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.
12.6 Amendment and Waivers. Any term or provision of this Agreement
may be amended only by the written consent of MarketWatch, Charts and the
Principal Shareholders. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound by such waiver.
The waiver by a party of any breach hereof or default in the performance hereof
will not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto as
provided in this Section at any time before or after approval of this Agreement
by the shareholders of Charts, but, after such approval, no amendment will be
made which by applicable law requires the further approval of the shareholders
of Charts without obtaining such further approval. At any time prior to the
Effective Time, each of Charts and MarketWatch, by action taken by its Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other; (ii) waive any
inaccuracies in the representations and warranties made to it contained herein
or in any document delivered pursuant hereto; and (iii) waive compliance with
any of the agreements or conditions for its benefit contained herein. No such
waiver or extension
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will be effective unless signed in writing by the party against whom such waiver
or extension is asserted. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
12.7 Expenses. Each party will bear its respective legal, auditors'
and investment bankers' and financial advisors' fees and other expenses incurred
with respect to this Agreement, the Merger and the transactions contemplated
hereby.
12.8 Attorneys' Fees. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including without limitation, costs, expenses and fees
on any appeal). The prevailing party will be entitled to recover its costs of
suit, regardless of whether such suit proceeds to final judgment.
12.9 Notices. All notices and other communications required or
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by nationally recognized express courier
service. Such notices and other communications will be effective upon receipt if
hand delivered or sent by telecopier, five (5) days after mailing if sent by
mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section:
If to MarketWatch:
XxxxxxXxxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: J. Xxxxx Xxxxxxxx, Chief Financial Officer
Fax Number: (000) 000-0000
with a copy to:
Fenwick & West, LLP
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Charts:
BigCharts, Inc.
000 Xxxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax Number: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Fax Number: (000) 000-0000
if to the Principal Shareholders:
At the address and facsimile number indicated on the signature
page of this Agreement
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 12.9.
12.10 Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole.
12.11 No Partnership. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other party. No party will hold itself out as having any authority or
relationship in contravention of this Section.
12.12 Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
12.13 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
12.14 Public Announcement. Upon execution of this Agreement,
MarketWatch and Charts will issue a press release approved by both parties
announcing the Merger. Thereafter, MarketWatch may issue such press releases,
provided that MarketWatch will provide BigCharts
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with a reasonable opportunity to review any such press release, and make such
other disclosures regarding the Merger, as it determines are required under
applicable securities laws or regulatory rules. Prior to the publication of such
initial and mutually agreed press release, neither party will make any public
announcement relating to this Agreement or the transactions contemplated hereby
(except as may be required by law) and Charts will use its reasonable efforts to
prevent any trading in MarketWatch Common Stock by its officers, directors,
employees, shareholders and agents. Neither MarketWatch nor Charts will make any
disclosures regarding this Agreement or the Merger that would jeopardize
MarketWatch's ability to timely and lawfully issue the shares of MarketWatch
Common Stock in the Merger pursuant to the exemptions described in Section 2.6.
12.15 Confidentiality. Charts and MarketWatch each recognize that they
have received and will receive confidential information concerning the other
during the course of the Merger negotiations and preparations. Accordingly,
Charts and MarketWatch each agree (a) to use its respective best efforts to
prevent the unauthorized disclosure of any confidential information concerning
the other that was or is disclosed during the course of such negotiations and
preparations, and is clearly designated in writing as confidential at the time
of disclosure, and (b) to not make use of or permit to be used any such
confidential information other than for the purpose of effectuating the Merger
and related transactions. The obligations of this section will not apply to
information that (i) is or becomes part of the public domain, (ii) is disclosed
by the disclosing party to third parties without restrictions on disclosure,
(iii) is received by the receiving party from a third party without breach of a
nondisclosure obligation to the other party or (iv) is required to be disclosed
by law. If this Agreement is terminated, all copies of documents containing
confidential information shall be returned by the receiving party to the
disclosing party.
12.16 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXXXXXXX.XXX, INC. BIGCHARTS, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- ---------------------------------
Title: Xxxxx X. Xxxxxx, CEO Title: Xxxxxx X. Xxxxxxxxx, President
and CEO
BIG DOG ACQUISITION CORP. PRINCIPAL SHAREHOLDERS
By: /s/ J. Xxxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- --------------------------------------
Title: J. Xxxxx Xxxxxxxx, President Xxxxxx X. Xxxxxxxxx
Address:
0000 Xxxxxx Xxxxxx Xxxxx
--------------------------------------
Xxxxxx
Xxxxxxxxxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
65
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx
Address:
000 X. Xxxxx Xxxxxx, #00X
--------------------------------------
Xxxxxx
Xxxxxxxxxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
66
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
Address:
0000 Xxxxxx Xxxx
--------------------------------------
Xxxxxx
Xxxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
67
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx
Address:
00000 Xx. Xxxxx Xxxx
--------------------------------------
Xxxxxx
Xxxx Xxxxxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
68
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
VERTICALITY BIGCHARTS INVESTMENT, LLC
By: /s/ Xxxxx Xxxxx
----------------------------------
Xxxxx Xxxxx
Title: Managing Member
--------------------------------
Address:
000 Xxxxxxxxxx Xxxx., Xxxxx 0000
--------------------------------------
Street
Jersey City, NJ 07310
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
69
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
WYNCREST CAPITAL, INC.
/s/ Xxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxxx
Title: President
--------------------------------------
Address:
000 Xxxxxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxx 0000
--------------------------------------------
Street
Xxxxxxxxxxx, XX 00000
--------------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
70
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Xxxxx Xxxxx
--------------------------------------
Xxxxx Xxxxx
Address:
000 Xxxxxxxxxx Xxxx., Xxxxx 0000
--------------------------------------
Street
Jersey City, NJ 07310
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxx
Address:
0000 Xxxx Xxxxxx
--------------------------------------
Xxxxxx
Xxx Xxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
72
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCIPAL SHAREHOLDERS
/s/ Hadar Pedhazur
--------------------------------------
Hadar Pedhazur
Address:
00 Xxxxxxx Xxxx Xxxx S.
--------------------------------------
Street
Briar Xxxxx Xxxxx, XX 00000
--------------------------------------
City, State and Zip Code
Facsimile: (000) 000-0000
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
73
LIST OF EXHIBITS
Exhibit A Articles of Merger
Exhibits B 1-3 Employment Agreements
Exhibits C 1-3 Noncompetition Agreements
Exhibit D Escrow Agreement
Exhibit E Investment Representation Letter
Exhibit F Purchaser Questionnaire
Exhibit G Registration Rights Agreement
Exhibits H 1-6 Voting Agreements
Exhibit I Form of Opinion of Counsel to MarketWatch
Exhibit J Form of Opinion of Counsel to BigCharts
Exhibit K Form of Employee Invention Assignment Agreement
