MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding(***"MOU"*) is dated September 28, 2001 by and between: 
(1) **MARKETWATCH.COM, INC**.,incorporated under the laws of Delaware and having its principal place ofbusiness at 825 Battery Street, San Francisco, California 94111 (the***"Seller"*),
AND

(2) **PEARSON INTERNATIONAL FINANCE LTD.** incorporatedunder the laws of England & Wales and its principal office at 80 Strand,London WC2R ORL (the ***"Buyer"*),
AND

(3) **FTMARKETWATCH (EUROPE) LTD.,** incorporated underthe laws of England and Wales and having its registered office is at Number One, Southwark Bridge, London SE1 9HL, and itssuccessor-in-interest (which shall be FT.com or any other single wholly-ownedsubsidiary of the Financial Times) (the***"Company"*),
(hereinafter collectively referred to as the***"Parties"* and individually as a*"**Party"***),
WHEREAS:
Financial Times Group Limited, Pearson Internet HoldingsB.V. (
*"Pearson Internet"*) and Pearson Overseas HoldingsLimited (***"POHL"*)(collectively, ***"the FTParties"*), and Seller are parties to that certain Joint VentureAgreement dated 20 June, 2000 governing the relationship of Seller, PearsonInternet and POHL as shareholders in the Company (the ***"Joint VentureAgreement"*), 
The Seller owns 42,500 "A" shares in thecapital of the Company, amounting to 50% of the total issued and outstanding"A" shares (the 
*"Shares"*) of theCompany;
Pearson Internet owns all the remaining issued andoutstanding "A" shares of the Company.  Buyer owns all of the"B" shares of the Company.  Buyer, Pearson Internet and POHL aredirect or indirect subsidiaries of Pearson plc; 

The Seller and the Buyer have entered into discussionscontemplating the sale of the Shares by Seller to Buyer (the"
*Acquisition*") upon terms and conditions set forth in amutually acceptable Share Sale Agreement (as defined below) which will containamong other things, the terms set forth below.  
The Parties also wish to enter into separate commercialarrangements as follows: 

(i) the provision by Seller of the Transitional Services (asdefined below);

(ii) a license by Seller for the continuation of the WAT/CMSServices (as defined below) presently provided by Seller to Company; 

(iii) the consent by Seller to the assignment by Company toFT.com of Company's rights under the Big Charts MOU (as defined below),

 (collectively with the Acquisition, the"***Transactions"*),all upon terms and conditions set forth in mutually acceptable DefinitiveAgreements (as defined below) which will contain, among other things, the termsset forth below.
  F.  The Parties wish to memorialize in this MOU theirpreliminary understanding of the principal terms of the Transactions asdescribed below. 

NOW THEREFORE THE PARTIES SET FORTH THEIR PRELIMINARYUNDERSTANDING AS FOLLOWS:

1.	PURCHASE OF SHARES; CONSIDERATION.

1.1 Seller will sell, and Buyer will purchase, the Sharesfree and clear of encumbrances upon the terms of a definitive Share Sale andPurchase Agreement (the ***"Share Sale Agreement"*) to beentered into by the Parties. 
1.2  The consideration for the purchase of the Shares shallbe $1 in cash payable by Buyer to Seller at the closing of theAcquisition*.*
2.	TRANSITIONAL SERVICES 

2.1 	For the 90 day period beginning from the closing of the Acquisition(the ***"Transitional Period"*) Seller shall perform certainservices for Company as more fully described in Schedule A hereto (the***"Transitional Services"*) and upon the terms of adefinitive Transitional Services Agreement (the ***"TransitionalServices Agreement"*) to be executed concurrently with the ShareSale Agreement and to be effective as of the closing of the Acquisition. 
2.2	Buyer shall, or shall cause that Company shall, as consideration forthe Transitional Services:
pay to Seller an aggregate cash amount of $82,500 payable in three monthlyinstallments beginning with the closing of the Acquisition
*;*andassign to Seller all of Company's servers presently located in within theUnited States. 
****
3***. 	*WAT/CMS LICENSE AGREEMENT ****
3.1 	Concurrently with the execution of Share Sale Agreement, theSeller and the Company shall enter into a definitive license agreement (the***"WAT/CMS License Agreement"*), to be effective as of theclosing of Acquisition, which shall provide for the continuation of the WAT/CMSand associated publishing services presently provided by MarketWatch to Company,as more fully described on Schedule B hereto and upon the terms of theWAT/CMS License Agreement which shall, among other things, include the followingterms: 
 3.2 	The WAT/CMS License Agreement shall be for the benefit of theCompany only and shall be limited to cover no more than 15 seats and associatedadministration staff for employees of Company and those who work for the Companyor on its site(s).  The rights of the Company thereunder shall not be assignableby the Company to any company (other than its successor-in-interest).

3.3 	The initial term of the WAT/CMS License Agreement will be 18 months,at a license fee of $40,000 per month.  

3.4 	At Company's election, the initial term may be extended by a furthersix (6) months at a monthly license fee to be agreed between Company and Seller,which shall be no less than $36,000 per month and no greater than $44,000 permonth.  

3. 5	At Company's election, the WAT/CMS License Agreement may be extendedby one year at a time, up to a further two (2) more years, at a monthly licensefee to be agreed between the Parties.  

3.6	The Company may only exercise an election to extend the WAT/CMSLicense Agreement as described above by giving written notice to the Seller atleast two months prior to the expiration of the then effective term of theWATS/CMS License Agreement.  

3.6	The above license fees shall be payable monthly in advance.

4. ASSIGNMENT OF BIG CHARTS SALES MOU 

Seller will grant Company the right to assign to FT.com, all of Company'srights under the Revised Memorandum of Understanding between the Seller andCompany regarding Preliminary Licensing Strategy dated September ___, 2001 (the***"Big Charts MOU")*.  Company may exercise its right toassign the Big Charts MOU at any time during the next two (2) years by givingthe Seller at least thirty (30) days' prior written notice of assignment.Neither Company nor FT.com, as the case may be, may assign its rights under theBig Charts MOU to any other person, company or other entity. 
5. "FTMARKETWATCH" NAME

The Company will agree todiscontinue use of the "MarketWatch" name at a date agreed with theSeller, no earlier than 12/31/01, but may use  "FTMarkets" or asimilar name.

          	

 6.	TAXES.	

The Parties will reasonably co-operate with each other toagree upon a tax structure for the Transactions that is mutually satisfactory tothe Parties.  Marketwatch shall cooperate reasonably with the Company, the Buyerand the FT Parties on all tax matters, e.g. future tax filings.
** **
  7. 	ACTIONS TO BE TAKEN AFTER EXECUTION OF THIS MOU

Following the execution of this MOU the Parties will promptlynegotiate in good faith the terms of the following agreements or such similaragreements as are necessary to effect the Transactions in form and substancemutually satisfactory to the Parties and following the principles and otherterms set forth in this MOU (collectively, the ***"DefinitiveAgreements"*): The Share Sale Agreement; 

The Transitional Services Agreement; 

The WATS/CMS License Agreement; and

The assignment of the Big Charts MOU.

8.  SUBJECT TO CONTRACT; COUNTERPARTS

This MOU (including the Schedules hereto) is non-binding andcontains only the understanding upon which the Parties may proceed to theclosing and consummation of the Transactions.  Nothing express or implied herein(whether by operation of law or otherwise) shall oblige or commit any Party toproceed with the Transactions, any such obligations or commitments shall only beset forth in the terms of mutually acceptable Definitive Agreements. This MOUmay be executed in counterparts, each of which will be an original as regardsany Party whose name appears thereon and all of which together will constituteone and the same instrument.
* 

 *
IN WITNESS WHEREOF the Parties have duly executed thisMOU on the day and date written hereinabove.

 

/s/ Lawrence S. Kramer 			

FOR AND ON BEHALF OF 	MARKETWATCH.COM		

Date:  9/28/01  			

 

/s/ Gary Rinck

FOR AND ON BEHALF OF PEARSON INTERNATIONAL FINANCELTD.

Date: 10/1/01
 

/s/ Zachary R. Leonard

FOR AND ON BEHALF OF 	FTMARKETWATCH.COM (EUROPE), LTD.

Date:  10/2/01
 

 
**Schedule A - Transitional Services

The following is the schedule oftransitional services to be completed by MarketWatch.com Inc. in thetransitional period according to clause  2 of the Memorandum of Understanding.

During the transitional phase, MarketWatch.com Inc. continues to support theCompany infrastructure in its current form ensuring no loss in user experiencefor users. The transition will take place in a single weekend, date to beconfirmed. 
**	

Tear Sheets, Interactive Charting and Portfolio Migration**
1. MarketWatch.com Inc. undertakes aseamless transfer of the tearsheet, interactive charting and portfolio toolcapabilities to the existing licensing agreement held between FT.com andMarketWatch.com Inc. dated June 20, 2000). The purpose of the transition is toensure a consistent core set of functionality and user experience betweenCompany and FT.com. Company to determine the exact requirements of the transfer,though it assumes that no new functionality will be required that is not alreadyavailable either on www.FT.com or www.FTMarketWatch.com. The transfer willinclude:
**Tear Sheet:**
Upgrade of current FT.com tear sheet capability to include: 

Absolute price change

Intra-day high price

52 wk high date

52 wk low date

Chart time-frame drop down

'Add symbol to portfolio' functionality

IR button functionality

ABN AMRO Morning Notes

RNS Headlines

MLHSBC Link 

Multex Investor Link 
** 

Interactive Charting:**
Upgrade of current FT.com interactive charting function toinclude:

Multiple Sizes

Additional Lower indicators

Sponsorship position

Cookie-based  'save chart' settings functionality
**Portfolio:**
Upgrade of current FT.com Portfolio Object to include:

Chart Analyser

Asset Allocator

Stock Tracker

All FTMarketWatch News sources within the News & Research tab

Removal of the "powered by FTMarketWatch logo"

	
**Authentication**
Company User authentication transferred to the current FT.com procedure,including the use of 'FT Passport' functionality.

All current Company Tear Sheet, Interactive Charting, Portfolio andAuthentication pages to be redirected to the new components.
**User Migration**
2. MarketWatch.com Inc. undertakes to transfer all registered user data toFT.com, including migration of all Company portfolio users on to the FT.comLicensee portfolio.  FT.com will provide details sufficient to ensure smoothtransfer of user data.  For example, in the case of duplicates FT.com portfolioregistration will take precedence. The existing Company user registration pageswill be discontinued and will be transitioned to the current FT.com Passportscheme.

All transition activity must conform to the requirements of the DataProtection Policy currently in place.

Company will communicate to users all changes regarding the transition.

 
**News and publishing migration**
3. MarketWatch.com Inc.agrees to transfer the news-related pages, learn and play pages, analystresearch pages, help pages and all associated functionality currently found onFTMarketWatch.com, but not FTMarketWatch.de, to the licensing arrangement and tosupport them under this licensing agreement as laid out in clause 3  of theMemorandum of Understanding.  MarketWatch.com Inc will use all reasonablecommercial efforts to ensure that during the transfer there will be no loss inuser experience resulting from the move to the new licensing agreement and thatall current incoming and outgoing feeds are maintained.
** 

The pages include: 

Story.asp pages

Pulse.asp pages

News Centre: Headlines / Pulses / Alerts / RNS

Front Page and Sub-Section pages

Learn and Play pages

Analyst Research pages including any pages that may need specific actions toenable continued operation under the licensing arrangement

Help pages

Market Summary pages 

The Functionality includes:	

Related Stories & Most Recent 

Email a friend (continued to be provided by MarketWatch.com Inc)

Print Story

Display of Charts within stories (Note: Charts will only appear on externallylicensed content as per licensing MOU)

News Alert Headline Ticker Functionality

Note: Only functionality currently found onthe site is included in the transition and specifically excludes News Searchfunctionality.
**Other**
4. MarketWatch.com Inc to transfer all currently supported Company SMS-to-Voice capability to FT.com.

 

5. MarketWatch.com Inc to remove Company from all joint exchange approvals,such as Deutsche Boerse.

 

 MarketWatch.com will be allowed to retain the details of all registeredFTMarketWatch users at the time of transition, and may contact them subject tothe terms of the FT MarketWatch privacy policy as of September 21, 2001 and toapplicable law. 

 

7. MarketWatch.com Inc. terminates T1 line agreement.  In the event thatMarketWatch.com Inc. is unable to terminate the connection, or otherwise use itthemselves, Pearson/FT shall reimburse MarketWatch.com Inc. 50% of all ongoingfees associated with this T1 line agreement. MarketWatch.com Inc. will onlydisconnect FTMarketWatch servers when it is determined that all necessarytransitional activity has been completed, and Pearson/FT approves thedisconnection. 

 

8. MarketWatch.com Inc. to discontinue FTMarketWatch direct access to LARSsite tracking and log files and cancel Mirror database project.  MarketWatch.comInc to enable site tracking under the new content license according to currentarrangements and agrees to supply log files at the end of the day.

 

9. MarketWatch.com Inc to handle all required redirects from MarketWatch.comcontrolled domains to new licensing domains (for example, www.ftmarketwatch.ft.com). TheCompany to handle all redirects from FT controlled domains.
 

10. MarketWatch.com Inc agrees to make any changes in outgoing news feeds topartners under the "BigCharts" Licensing MOU referenced in clause 4with respect to any subsequent name change of Company, Company's urls or tradingname.

 

11. Transition work excludes current work being undertaken on thewww.FTMarketWatch site including changes in symbol lookup methodology,integration of Mutual Funds Ratings data, Integration of improved Mutual Funddata, Upgrades to RNS Feed and alerting functionality. This will continue to becharged on a man-hour basis.

 
**Schedule B - Editorial Services

The following is the schedule of services tobe provided by MarketWatch.com Inc according to the license agreement in clause3 of the Memorandum of Understanding.
**Editorial Tools**
1. MarketWatch.com Inc. agrees to licenceand to support WAT v2.01, the current system used by Company, or equivalent, toenable Company to create XML tagged content and chart insertion. MarketWatch.comInc. restricts the use of the licence to 15 seats, plus necessary operationalsupport staff and administrative personnel.

 

2. MarketWatch.com Inc. agrees to licence and to support Pulse (Market Pulse)and Headline (News Alerts) Tools, the current system used by Company, orequivalent, to enable Company to create XML tagged content. Marketwatch.com Inc.restricts the use of the licence to 15 seats, plus necessary operational supportstaff and administrative personnel.

 

3. MarketWatch.com Inc. agrees to licence the PHAT authoring technologytoenable Company to continue to edit and publish front- and sub-section pages.MarketWatch.com Inc. restricts the use of the licence to 15 seats, plusnecessary operational support staff and administrative personnel.

 

4. The technology licensed in clauses 1, 2 and 3 above is sufficient to allowCompany to continue to publish in all current language modes (English,  andGerman), with the exception that the PHAT authoring tool technology does notwork in the German language and MarketWatch.com Inc shall be under no obligationwhatsoever to modify the PHAT authoring tool technology to work in the Germanlanguage. MarketWatch.com Inc. will, as far as reasonably possible, endeavour toensure that there is no loss in publishing performance based against currentCompany publishing when the new licensing arrangement is followed.

5. MarketWatch.com Inc. agrees to all hosting, support and management of thenews database, sufficient to ensure that the news is available forredistribution as required.  

 

6. Licensing shall allow access to certain editorial administration functionscurrently available to Company including access to 'Column Editor', 'StaffEditor' and 'Story Tracking' functions.  MarketWatch.com Inc. will act as theadministrator of these functions.

 

7. Licensing includes access to all upgrades of editorial tools andfunctionality of tools outlined in Paragraphs 1, 2 and 3. 
**Support, Hosting and Feed Handling**
8. MarketWatch.com Inc. to provide 24/5support for Editorial Tools as listed in clauses 1,2 and 3 above, as today.Company to continue to provide first call facility for journalists.MarketWatch.com Inc. continues to provide on-call facility for emergencyescalation.

9. MarketWatch.com Inc. provides 24/7 Support for all Licensee ContentPages.

10. MarketWatch.com Inc continues to host all current feeds including:
*Incoming News and Data Feeds:*
FT.com

RNS (via S&P) - (to be superseded to an equivalent Q1 ' 02)

ABN AMRO - Morning Notes and Research 

Reuters.de  (MarketWatch.com will continue to host under its owncontract)

S&P Intraday 

FTID Funds Feed
* 

Outgoing Feeds - XML*
MSN.co.uk

AOL.co.uk

Excite.co.uk

Lycos.co.uk

FT.com

Moreover.comMSN.de

Lycos.de

FTD.de

Finanznachrichten.de

Factiva

Yahoo.co.uk

ILX

Dialog

World Reporter

Yahoo.de

 
*Specialist Feeds / Page Hosting*
WAP FTMW - includes quoting

FTMobile Gold Pages

AvantGo

Omnisky

AOL.co.uk Microsite  

MSN.co.uk Pages 

MSN.de

11. MarketWatch.com Inc. to provide a set of XML feed pages that allowCompany to pull custom content from the news database. All future additionaloutgoing feeds shall be covered as part of existing "BigCharts"Licensing MOU (clause 4 in Memorandum of Understanding).

All additional incoming feeds will be handled as a product enhancement andmanaged with one time development cost and ongoing monthly support cost.
** 
**Other**
12. MarketWatch.com Inc. will make changes to advertising 'tags' on thesite as required. Company continues to run the advertising operations and 'adtag' creation.

 
**Ongoing Costs**
13.Amendments which are considered non-structuralchanges or do not require the addition of new pages will be covered as part ofthe ongoing monthly fee. Amendments which require larger scale work, includingthe addition of feeds, new pages and larger structural changes, will be scopedout on a project basis and charged as a one time development cost on a man-hourbasis.**********************************************