Exhibit 10.1
AMENDED AND RESTATED CORPORATE AGREEMENT
THIS AMENDED AND RESTATED CORPORATE AGREEMENT (the
"Agreement") is entered into as of June 9, 2002 by and between REUTERS LIMITED,
a company organized under the laws of England and Wales ("Reuters"), and
INSTINET GROUP INCORPORATED, a Delaware corporation ("Instinet").
RECITALS
WHEREAS, Reuters and Instinet have entered into the Corporate
Agreement, dated as of May 17, 2001 (the "Existing Corporate Agreement").
WHEREAS, Instinet, Island Holding Company, Inc., a Delaware
corporation ("Island") and Instinet Merger Corporation, a Delaware corporation
and a wholly-owned subsidiary of Instinet, have entered into an Agreement and
Plan of Merger, dated as of the date hereof (as it may be amended, supplemented
or otherwise modified from time to time, the "Merger Agreement").
WHEREAS, Instinet, Reuters, Reuters C Corp., Reuters Holdings
Switzerland SA, the Island Stockholders and Xxxxxx Xxxxxx have entered into the
Island Stockholders Agreement in connection with the transactions contemplated
by the Merger Agreement.
WHEREAS, the Merger Agreement contemplates that Instinet,
Reuters (and/or one or more of its Affiliates), the Island Stockholders,
Finanzas B.V. and certain additional stockholders of Instinet, if any, party
thereto will enter into a registration rights agreement (the "Registration
Rights Agreement") setting forth certain registration rights with respect to
securities of Instinet held or to be held by the parties thereto, such
registration rights to supercede the registration rights granted to Reuters
under this Agreement for so long as the Registration Rights Agreement is in
effect.
WHEREAS, Reuters and Instinet desire to enter into this
amendment and restatement of the Existing Corporate Agreement in connection with
the transactions contemplated by the Merger Agreement, as an inducement to the
entry by Island into the Merger Agreement and to the entry by the Island
Stockholders into the Island Stockholders Agreement and in order to redefine
their agreement regarding certain corporate governance matters, certain
registration rights with respect to the Registrable Securities and certain other
matters with respect to the on-going relationship between Instinet and Reuters.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Reuters and Instinet,
for themselves and their successors and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
"Affiliate" means, with respect to a given Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to vote forty percent (40%) or more of the
securities having voting power for the election of directors (or other Persons
acting in similar capacities) of such Person or otherwise to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Reuters Directors" means at any applicable time,
those members of the Board of Directors who then fail to qualify as Nasdaq
Independent Directors due to their relationship with a Reuters Entity.
"Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Announcement Date" shall mean, with respect to any action,
event or transaction described in Section 2.4, the earliest to occur of the
taking of such action, occurrence of such event or final agreement on the terms
of any such transaction (as applicable).
"Board of Directors" means the board of directors of Instinet.
"Business Day" means any day other than a Saturday, Sunday or
any day on which banking institutions are authorized or obligated by law or
executive order to be closed in London or New York.
"Cash Equivalents" means (i) United States dollars, Japanese
Yen, Euros and British Pounds Sterling (and foreign currency exchangeable into
such currencies within 30 days), (ii) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than
thirty-six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of twelve months or less from the
date of acquisition, bankers' acceptances with maturities not exceeding twelve
months and overnight bank deposits, in each case with any domestic commercial
bank having a long term credit rating of A3 or higher from Xxxxx'x Investors
Service, Inc. or A- or higher from Standard & Poor's Corporation, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper or similar short term securities having one
of the two highest ratings obtainable from Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation and in each case maturing within twelve months
after the date of acquisition.
"Common Stock" means the common stock, par value $0.01 per
share, of Instinet, and any other class of Instinet's capital stock representing
the right to vote generally for the election of directors.
"Covered Transaction" has the meaning ascribed thereto in
Section 2.1.
"Delaware 203" means Section 203 of the Delaware General
Corporation Law, as in effect from time to time.
"Effective Time" has the meaning ascribed thereto in the
Merger Agreement.
"Exchange" has the meaning ascribed thereto in Section 2.5(a)
"Exchange Act" has the meaning ascribed thereto in Section
3.10.
"Existing Corporate Agreement" has the meaning ascribed
thereto in the preamble hereto.
"Holder" means the Reuters Entities and any Transferee.
"Holder Securities" has the meaning ascribed thereto in
Section 3.2(c).
"Holders' Representative" means Reuters or any other Holder
designated by Reuters as a Holders' Representative.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or bankers'
acceptances or representing capital lease obligations or the balance deferred
and unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing (other than letters of credit and hedging obligations) would appear as
a liability upon a balance sheet of such Person prepared in accordance with US
GAAP, as well as all Indebtedness of others secured by a lien on any asset of
such Person (whether or not such Indebtedness is assumed by such Person) and, to
the extent not otherwise included, the guarantee by such Person of any
indebtedness of any other Person. The amount of any Indebtedness outstanding as
of any date shall be (i) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Instinet" has the meaning ascribed thereto in the preamble
hereto.
"Instinet Entities" means Instinet Parent, Instinet and their
respective Subsidiaries from time to time, and "Instinet Entity" shall mean any
of the Instinet Entities; provided, however, in each case, that any such
Instinet Entity shall cease to be a "Instinet Entity" under this Agreement at
such time as such Person no longer is a Subsidiary of Instinet Parent or
Instinet, as the case may be.
"Instinet Parent" means any Person who succeeds Instinet as
the parent corporation of the Instinet Entities as a result of a corporate
reorganization, merger or otherwise.
"Instinet Securities" has the meaning ascribed thereto in
Section 3.2(c).
"Instinet Transferee" shall mean any transferee or purchaser
(together with its Affiliates) from an Instinet Entity of greater than 5% of the
Total Voting Power of Instinet other than pursuant to an underwritten offering;
provided such Person holds more than 5% of the Total Voting Power of Instinet at
the time of the registration or offering in question.
"Involuntary Registration" has the meaning ascribed thereto in
Section 2.5(c).
"Island" has the meaning ascribed thereto in the preamble
hereto.
"Island Stockholders" has the meaning ascribed thereto in the
Island Stockholders Agreement.
"Island Stockholders Agreement" means that certain
Stockholders Agreement, dated as of the date hereof, by and among Instinet Group
Incorporated, Reuters Limited, Reuters C Corp., Reuters Holdings Switzerland SA,
the Island Stockholders, and Xxxxxx Xxxxxx.
"Lower Board Threshold" has the meaning ascribed thereto in
Section 2.3(a).
"Lower Percentage" has the meaning ascribed thereto in Section
2.3(d).
"Market Capitalization" means the product of (A) the number of
shares of Common Stock outstanding on the date 30 days prior to the date the
Board of Directors authorizes the relevant Covered Transaction (or, if no such
approval is given or the relevant Instinet Entity(ies) enter into a definitive
agreement with respect to such Covered Transaction more than 60 days after such
approval, then on the date such agreement is entered into) (the "Measurement
Date"), multiplied by (B) (i) the average of the last sale price of such shares
of Common Stock on each of the thirty (30) trading days immediately preceding
the Measurement Date on The Nasdaq National Market or, if such shares are not
listed thereon, on the principal national securities exchange or automated
interdealer quotation system on which such shares are traded or (ii) if such
sale prices are unavailable or such shares are not so traded, the value of such
shares on the Measurement Date determined in accordance with agreed-upon
procedures reasonably satisfactory to each of Instinet and Reuters.
"Market Transaction" means any transaction effected on an
exchange or in the over-the-counter market (as such terms are used in Section
4(4) of the Securities Act), on an "alternative trading system" (as defined in
Regulation ATS) or directly with a "market maker" (as defined in Section
3(a)(38) of the Exchange Act).
"Material Agreement" means any written agreement, term sheet
or document, binding or not, that relates to a Covered Transaction and sets
forth or otherwise describes any of the contemplated or proposed material terms
thereof.
"Merger Agreement" has the meaning ascribed thereto in the
Recitals to this Agreement.
"Minimum Designee Amount" means 8,000,000 shares of Common
Stock, as adjusted at any time and from time to time following the date hereof
to account for any stock split, stock dividend, stock combination or similar
event.
"Net Indebtedness" means the consolidated Indebtedness of the
Instinet Entities, excluding any Indebtedness incurred in the ordinary course of
their brokerage or other similar businesses in connection with the clearing of
traded securities or obligations to securities exchanges or clearing systems,
and less consolidated cash and Cash Equivalents.
"Original Nominee Threshold" has the meaning ascribed thereto
in Section 2.3(a).
"Other Holders" has the meaning ascribed thereto in Section
3.2(d).
"Other Securities" has the meaning ascribed thereto in Section
3.1(d).
"Ownership Reduction" shall be deemed to have occurred when no
Holder, together with its Affiliates, beneficially owns 20% or more of the Total
Voting Power of Instinet.
"Permitted Acquisition" means an acquisition or series of
related acquisitions by any Instinet Entity(ies), whether by merger, stock
purchase, asset purchase or otherwise, of any business, Person or assets where
the aggregate consideration to be paid by the Instinet Entity(ies) in such
acquisition or related series of acquisitions does not exceed the lesser of (i)
20% of the Market Capitalization of Instinet or (ii) 20% of the total
consolidated revenues (calculated in accordance with US GAAP, and excluding any
extraordinary non-recurring items) of the Instinet Entities for the last four
completed fiscal quarters.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Ratio" has the meaning ascribed thereto in Section 2.3(b).
"Registrable Securities" means shares of Common Stock and any
stock or other securities into which or for which such Common Stock may
hereafter be changed, converted or exchanged and any other shares or securities
issued to Holders of such Common Stock (or such shares or other securities into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, share
exchange, merger, consolidation or similar transaction or event. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by Instinet and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any state securities or blue sky law then in effect or (iv)
they shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article III, including, without limitation, (i) the fees, disbursements and
expenses of Instinet's counsel and accountants; (ii) all expenses, including
filing fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (iii) the cost
of printing or producing any underwriting agreements and blue sky or legal
investment memoranda and any other documents in connection with the offering,
sale or delivery of the securities to be disposed of; (iv) all expenses in
connection with the qualification of the securities to be disposed of for
offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters and the Holders of securities in
connection with such qualification and in connection with any blue sky and legal
investment surveys; (v) the filing fees incident to securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the securities to be disposed of; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated interdealer
quotation system or the rating of such securities; (ix) all expenses with
respect to road shows that the Company is obligated to pay pursuant to Section
3.5(j); and (x) any other fees and disbursements of underwriters customarily
paid by the sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any (which underwriting discounts and
commissions and transfer taxes shall be borne by each selling stockholder
participating in a particular offering and, if selling securities in such
offering, Instinet, pro rata in accordance with the total amount of securities
sold in such offering by each such Person in accordance with Section 3.4).
"Registration Rights Agreement" has the meaning ascribed
thereto in the preamble hereto.
"Regulation 14C" means Regulation 14C promulgated under the
Exchange Act, or any successor rule to similar effect.
"Reuters" has the meaning ascribed thereto in the preamble
hereto.
"Reuters Audit Committee" means the audit committee of the
Reuters Parent Board of Directors.
"Reuters Director" shall mean (i) any director designated by
Reuters in accordance with the provisions of Section 2.3 and (ii) any director
of Instinet who at such time as Reuters Entities cease to beneficially own a
majority of the Total Voting Power of Instinet is a director or officer of
Reuters.
"Reuters Entities" means the Reuters Parent and Subsidiaries
of the Reuters Parent (other than Subsidiaries that constitute Instinet
Entities) from time to time, and "Reuters Entity" shall mean any of the Reuters
Entities; provided, however, in each case, that any Reuters Entity shall cease
to be a "Reuters Entity" under this Agreement at such time as such Person no
longer is a Subsidiary of the Reuters Parent.
"Reuters Parent" means the ultimate parent entity from time to
time, of Reuters, which is currently Reuters Group PLC.
"Reuters Trust Principles" has the meaning used in the
Memorandum of Association of Reuters Founders Share Company Limited, a company
organized under the laws of England and Wales.
"Rule 144" means Rule 144 (or any successor rule to similar
effect) promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Section 3.2 Notice" shall have the meaning ascribed thereto
in Section 3.2(a).
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.
"Selling Holder" has the meaning ascribed thereto in Section
3.5(e).
"Shelf Registration Statement" has the meaning ascribed
thereto in Section 3.3(a).
"Subsidiary" means, as to any Person, any corporation,
association, partnership, joint venture or other business entity of which a
majority of the voting power of capital stock or other voting ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is owned or
controlled, directly or indirectly, by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. "Subsidiary," when used
with respect to Reuters or Instinet, shall also include any other entity
affiliated with Reuters or Instinet, as the case may be, that Reuters and
Instinet may hereafter agree in writing shall be treated as a "Subsidiary" of
such Person for the purposes of this Agreement.
"Total Voting Power of Instinet" shall mean the total number
of votes which may be cast in the election of members of the Board of Directors
by all holders of Common Stock.
"Transferee" shall mean any of (i) the transferee of all or
any portion of the Common Stock or other Registrable Securities held by any
Reuters Entity or (ii) the subsequent transferee of all or any portion of the
Common Stock or other Registrable Securities held by any Transferee; provided
that no Transferee shall be entitled to any benefits of a Transferee hereunder
unless such Transferee executes an instrument substantially in the form provided
as Exhibit A, attached hereto.
"UK GAAP" means generally accepted accounting principles in
the United Kingdom as have been approved by a significant segment of the U.K.
accounting profession from time to time and as applied by Reuters in its public
financial statements.
"US GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entities as have been approved by a significant segment
of the accounting profession, which are in effect from time to time, and with
respect to Instinet, consistent with Instinet's public financial statements
filed with the SEC.
1.2. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and references
to the parties shall mean the parties to this Agreement.
ARTICLE II
CERTAIN GOVERNANCE MATTERS
2.1. Definition of Covered Transaction. For purposes of this
Agreement, a "Covered Transaction" shall mean any of the following actions:
(a) The issuance of equity securities or securities
convertible into, exchangeable for, or options or rights to acquire any equity
securities (except for securities issued pursuant to any of Instinet's employee
stock option, restricted stock award or employee benefits plans or in a
Permitted Acquisition) in excess of (i), in any one-year period (commencing on
the date after the Reuters Entities beneficially own less than a majority of the
Total Voting Power of Instinet), 10% of the capital stock of Instinet or Total
Voting Power of Instinet outstanding on the last day of the calendar month
immediately prior to such one-year period, or (ii), in any three-year period
(commencing on the date after the Reuters Entities beneficially own less than a
majority of the Total Voting Power of Instinet), 20% of the capital stock of
Instinet or Total Voting Power of Instinet outstanding on the last day of the
calendar month immediately prior to such three-year period; provided, that in
calculating any such amounts of capital stock of Instinet, or Total Voting Power
of Instinet above, such calculation shall also include shares issued pursuant to
any of Instinet's employee stock option, restricted stock award or employee
benefit plans during the relevant period on a weighted average basis;
(b) Any acquisition by any Instinet Entity whether by merger,
stock acquisition, asset purchase or otherwise of any business, Person or assets
by any Instinet Entity other than a Permitted Acquisition; or
(c) A sale or other disposition or series of related sales or
dispositions by any Instinet Entity(ies), whether by merger, stock disposition,
asset sale or otherwise, of any business, Person or assets where the aggregate
consideration to be received by the Instinet Entity(ies) in such sale or
disposition or related series of sales or dispositions exceeds the lesser of (i)
20% of the Market Capitalization of Instinet or (ii) 20% of the total
consolidated revenues (calculated in accordance with US GAAP and excluding any
extraordinary non-recurring items) of the Instinet Entities for the last four
completed fiscal quarters.
2.2. Corporate Action Regarding Covered Transactions. (a) So
long as Reuters Entities beneficially own no less than 35% and no more than 50%
of the Total Voting Power of Instinet, Instinet agrees, and agrees to cause each
Instinet Entity, not to execute any Material Agreement or complete a Covered
Transaction, unless such Covered Transaction has been first submitted to Reuters
for its approval and Reuters has approved such Covered Transaction in writing in
accordance with the provisions of Section 2.2 (b) below.
(b) Any request for Reuters's approval of a Covered
Transaction shall be submitted in writing to Reuters by notice which shall (i)
describe the Covered Transaction in reasonable detail, and include reasonably
sufficient information (including such information as is given or will be given
to the Board of Directors), for Reuters to make a determination pursuant to this
Section 2.2 and (ii) indicate that such notice is a formal request for Reuters's
approval pursuant to this Section 2.2(b) and state the last date by which
Reuters may respond to such request in accordance with the provisions of this
Section 2.2(b). Instinet shall promptly provide Reuters with all information
requested by Reuters which is in the possession of, or reasonably obtainable by,
Instinet and relates to the Covered Transaction. Reuters shall in good faith use
its commercially reasonable efforts to respond to such request as expeditiously
as possible, but shall in no event respond later than ten Business Days after
receipt of such notice (or such later date as Instinet and Reuters shall agree).
Such request for Reuters's approval will be deemed approved by Reuters unless
Reuters refuses such approval (in its sole discretion) in writing within such
ten Business Day period.
2.3. Seats on Board of Directors. (a) So long as Reuters
Entities beneficially own shares of Instinet's stock representing at least the
Minimum Designee Amount, but having less than a majority of the Total Voting
Power of Instinet, in connection with any election of directors of Instinet
Reuters shall have the right to designate, and Instinet shall cause the
nomination of, (x) if Reuters Entities beneficially own less than 10% of the
Total Voting Power of Instinet, one director and (y) if Reuters Entities
beneficially own 10% or more of the Total Voting Power of Instinet (the
"Original Nominee Threshold"), such number of directors of Instinet such that
after such election (assuming all such Reuters designees are elected to the
Board of Directors), the number of Reuters Directors will be equal to the
product of (1) the Total Voting Power of Instinet beneficially owned by the
Reuters Entities multiplied by (2) the total number of members on the Board of
Directors, rounded to the nearest whole number; provided that in no event shall
the number of Reuters Directors nominated pursuant to this provision constitute
(i) 50% or more of the members of the Board of Directors or (ii) less than one
member of the Board of Directors. Notwithstanding the foregoing, if Instinet
grants any other Person at any time or from time to time the right to nominate a
director or directors based on a lesser percentage of the Total Voting Power of
Instinet (the "Lower Board Threshold") than the Original Nominee Threshold,
Reuters shall have the right to designate, and Instinet shall cause the
nomination of, an equal number of members of the Board of Directors as such
other Person (subject to the limitations and conditions imposed on such other
Person's right, applied consistently to Reuters) so long as it beneficially owns
shares of Common Stock representing an amount of capital stock greater than or
equal to the Lower Board Threshold, provided that Reuters shall not be entitled
to appoint additional directors pursuant to this provision solely because of the
appointment of Additional Island Directors (as defined in the Island
Stockholders Agreement) pursuant to Section 2.2(a)(ii) of the Island
Stockholders Agreement. So long as Reuters Entities beneficially own shares of
Instinet's stock having a majority of the Total Voting Power of Instinet, in
connection with any election of directors of Instinet Reuters shall have the
right to designate, and Instinet shall cause the nomination of, such number of
directors of Instinet as Reuters shall elect to designate, subject to the
provisions of the Island Stockholders Agreement, the certificate of
incorporation and bylaws of Instinet and any requirements of applicable law or
requirements of any stock exchange or inter-dealer quotation system on which the
Common Stock is listed or quoted. If a vacancy occurs or exists on the Board of
Directors at any time, including but not limited to a vacancy because of the
death, disability, retirement, resignation or removal of any director for cause
or otherwise, and the vacant position was held by a Reuters Director, and
Reuters is otherwise entitled pursuant to this Section 2.3(a) to designate an
individual to fill such directorship, then Reuters shall have the sole right to
designate an individual to fill such vacancy, and, subject to the fiduciary
duties of directors, the Board of Directors shall elect such nominee to fill
such vacancy. At any time and from time to time when Reuters Entities
beneficially own shares of Instinet's stock representing at least the Minimum
Designee Amount (or, if applicable, the Lower Board Threshold), but having less
than a majority of the Total Voting Power of Instinet and Reuters has not
designated the full number of directors to which it is entitled pursuant to this
Section 2.3(a), (xx) to the extent permitted by law, Instinet shall use its
commercially reasonable efforts to solicit from its stockholders proxies in
order to effectuate, if necessary, any amendment of its certificate of
incorporation and/or bylaws to ensure that there are a sufficient number of
authorized directors permitted under its certificate of incorporation and bylaws
to allow Reuters to designate the full number of directors to which it is
entitled pursuant to this Section 2.3(a) and (yy) Reuters may propose that the
Board of Directors be expanded to provide for the addition of up to the maximum
incremental number of directors designated by Reuters to which Reuters is
entitled pursuant to this Section 2.3(a), taking into account such expansion of
the Board of Directors, based on the Total Voting Power of Instinet beneficially
owned by the Reuters Entities at such time, and, subject to the provisions of
the certificate of incorporation and bylaws of Instinet, the Board of Directors
shall so expand the size of the Board of Directors and elect such additional
designees of Reuters to fill such newly created vacancies. To the extent
consistent with the provisions of Instinet's certificate of incorporation, any
such additional designees shall be elected to the class of directors that has
the longest possible term of office as of the time of election. At any time and
from time to time when Reuters Entities beneficially own shares of Instinet's
stock having a majority of the Total Voting Power of Instinet, Reuters may
propose that the Board of Directors be expanded to provide for the addition of
such number of directors designated by Reuters as Reuters shall elect, and the
Board of Directors, subject to the provisions of the certificate of
incorporation and bylaws of Instinet, shall so expand the size of the Board of
Directors and elect such additional designees of Reuters to fill such newly
created vacancies. To the extent consistent with the provisions of Instinet's
certificate of incorporation, any such additional designees shall be elected to
the class of directors that has the longest possible term of office as of the
time of election. To the extent permitted by law, Instinet shall use its
commercially reasonable efforts to solicit from the stockholders of Instinet
eligible to vote for the election of directors proxies in favor of the nominees
designated by Reuters in accordance with this Section 2.3(a).
(b) If at any time the total number of directors of Instinet
is increased or decreased, the number of directors that Reuters shall have the
right to designate pursuant to Section 2.3(a) above, shall as promptly as
practicable be increased or decreased so that the adjusted ratio of Reuters
Directors to total directors is not less than the ratio of Reuters Directors
(determined immediately prior to such increase in accordance with the provisions
of Section 2.3(a)) to the total number of directors of Instinet immediately
prior to such increase or decrease, as the case may be (the "Ratio"). In such
event, Reuters and Instinet shall take such steps consistent with the provisions
of Section 2.3(a) to effectuate this increase or decrease of Reuters Directors
in relation to the Ratio as rapidly as reasonably possible.
(c) If, upon the occurrence of the Trigger Date and from time
to time thereafter upon any reduction in the percentage of the Total Voting
Power of Instinet represented by shares of Instinet stock beneficially owned by
the Reuters Entities, the number of Affiliated Reuters Directors exceeds the
number of directors which Reuters is then entitled to designate pursuant to
Section 2.3(a), taking into account such reduction, Reuters shall cause that
number of Affiliated Reuters Directors that are in excess of such permitted
number of designees to immediately offer to tender to the Board of Directors
his, her or their resignations, provided that Reuters may elect from which
Affiliated Reuters Directors to request such resignation(s). If such
resignation(s) is requested by vote of a majority of the members of the Board of
Directors (other than Affiliated Reuters Directors), each Affiliated Reuters
Director who offered such resignation and whose resignation is so requested
shall immediately tender such resignation as provided in the certificate of
incorporation and bylaws of Instinet. In the event that any such Affiliated
Reuters Director fails to deliver his or her resignation as required pursuant to
this Section 2.3(c), Instinet shall be entitled to take all necessary and
appropriate action to cause such Affiliated Reuters Director to be removed and
Reuters shall cooperate fully therewith.
(d) At the request of Reuters, Instinet shall (x) use its best
efforts to cause a special meeting of stockholders to be held proposing the
removal of any Reuters Director provided, that if in the reasonable good faith
determination by the Board of Directors it is materially detrimental to do so,
then Instinet may delay calling such special meeting; provided that Instinet
will cause such meeting to be held within 135 days of such request by Reuters
and (y) to the extent permitted by law, use its commercially reasonable efforts
to solicit from stockholders of Instinet eligible to vote for the election of
directors proxies to remove such specified Reuters Directors.
(e) For so long as the Reuters Entities beneficially own
shares of Instinet's stock having at least 25% of the Total Voting Power of
Instinet, subject to the fiduciary duties of the directors, Reuters Directors
shall be nominated to serve on each committee of the Board of Directors (other
than any committee (i) whose membership is specified in the Island Stockholders
Agreement (in which case Reuters Directors shall be entitled to be nominated to
serve on such committee to the extent provided in the Island Stockholders
Agreement) or (ii) required by law or requirement of any applicable
self-regulatory organization or any stock exchange or inter-dealer quotation
system on which the Common Stock is listed or quoted to consist solely of
independent directors but only to the extent a sufficient number of Reuters
Directors do not qualify as independent directors; provided that such lesser
number of Reuters Directors that do qualify as independent directors shall be
appointed to such committee; and provided further that no Reuters Director shall
serve on a committee to the extent such individual would be prohibited from so
serving by any such applicable law or requirement) so that after such
appointment(s), the ratio of Reuters Directors who are members of such committee
to the total number of members of such committee is not less than the Ratio,
provided, however, that for so long as the Reuters Entities are entitled to
designate at least two directors, at least one Reuters Director shall be
nominated to serve on each committee of the Board of Directors (other than any
committee required by law or requirement of any applicable self-regulatory
organization or any stock exchange or inter-dealer quotation system on which the
Common Stock is listed or quoted to consist solely of independent directors but
only to the extent that no Reuters Director qualifies as an independent
director; and provided further that no Reuters Director shall serve on a
committee to the extent such individual would be prohibited from so serving by
any such applicable law or requirement). Notwithstanding the foregoing, if
Instinet grants any other Person at any time or from time to time the right to
nominate a director or directors to serve on any committee(s) of the Board of
Directors at a percentage less than 25% of the Total Voting Power of Instinet
(the "Lower Percentage"), Reuters shall have the right to appoint an equal
number of Reuters Directors to serve on such committee(s) as such other Person
(subject to the same limitations and conditions as such other Person's right,
applied consistently to Reuters) so long as the Reuters Entities beneficially
own an amount of Instinet stock having at least the same amount of the Total
Voting Power of Instinet as the Lower Percentage. For so long as (i) Reuters
beneficially owns shares of Instinet's stock having at least 10% but less than
the Lower Percentage of the Total Voting Power of Instinet and (ii) there is at
least one Reuters Director, any such Reuters Director shall be permitted to
observe the proceedings of (but shall not be a member of) any committee of the
Board of Directors. Notwithstanding the foregoing, if Instinet grants any other
Person at any time or from time to time the right to appoint a director or
directors to observe the proceedings of any committee(s) of the Board of
Directors at a percentage less than 10% of the Total Voting Power of Instinet,
Reuters shall have the right to appoint an equal number of Reuters Directors to
observe such proceedings as such other Person (subject to the same limitations
and conditions as such other Person's right, applied consistently to Reuters) so
long as the Reuters Entities beneficially own an amount of Instinet stock having
at least the same amount of the Total Voting Power of Instinet as such lesser
percentage.
(f) Nothing in this Section 2.3 shall limit or restrict the
Reuters Entities from voting or otherwise exercising their rights with respect
to the shares of capital stock of Instinet held by them, including acting by
written consent, to the fullest extent permitted under Instinet's certificate of
incorporation and bylaws and Delaware law.
2.4. Dilution. (a) (i) For so long as the Reuters Entities
beneficially own more than 51% of the Total Voting Power of Instinet or during a
period immediately following a decrease in ownership by Reuters Entities below
51% of the Total Voting Power of Instinet, until the date which is 21 days
following the later to occur of the date on which Instinet provides written
notice to Reuters of such decrease in ownership and the date on which Instinet
publicly discloses all material information regarding any action, event or
transaction referred to in this Section 2.4 and any other information as would
be required for Reuters to purchase shares of Common Stock in a Market
Transaction in compliance with all applicable securities laws, Instinet shall
not voluntarily take any action without Reuters's prior written consent which
directly or indirectly causes or could reasonably be expected to cause the
Reuters Entities to own less than 51% of the Total Voting Power of Instinet or
less than 51% of Instinet's capital stock or, during any such period described
above, causes further dilution of the ownership of Reuters Entities.
(ii) For so long as the Reuters Entities beneficially own more
than 51% of the Total Voting Power of Instinet, if Instinet becomes
aware of any event (x) that has caused the Reuters Entities to own
less than 51% of Instinet's capital stock or less than 51% of the
Total Voting Power of Instinet or (y) which could reasonably be
expected to cause the Reuters Entities to own less than 53% of the
Total Voting Power of Instinet or less than 53% of Instinet's
capital stock (or such lesser percentage as Reuters may from time
to time designate, but in any event no less than a majority), such
as receipt of an option holder's or warrant holder's notice to
exercise such option(s) or warrant(s), Instinet shall immediately
notify Reuters thereof.
(iii) Following any date on which the Reuters Entities shall
cease to own at least 51% of Instinet's capital stock, Reuters
shall give notice to Instinet, as promptly as practicable following
any such determination, if Reuters has determined that it does not
intend to maintain, or if necessary increase, its ownership of
Common Stock so that Reuters Entities will own at least a majority
of the then-outstanding shares of Common Stock.
(b) In connection with any action, event or transaction
referred to in this Section 2.4, Instinet shall publicly disclose, as soon as
practicable following the Announcement Date of such action or event, all
material information regarding such action, event or transaction and any other
information as would be required for Reuters to purchase shares of Common Stock
in a Market Transaction in compliance with all applicable securities laws;
provided, however, that (i) if Instinet determines, in the good faith judgment
of the Board of Directors, that such disclosure of material non-public
information would be materially detrimental to Instinet or would materially
interfere with any material financing, acquisition, corporate reorganization or
merger or other transaction involving Instinet and any of its Subsidiaries and
the Board of Directors concludes, as a result of such disclosure or
interference, that it is in the best interests of Instinet to defer such
disclosure at such time, and (ii) Instinet shall furnish to Reuters a
certificate signed by the chief executive officer of Instinet stating that in
the good faith judgment of the Board of Directors, such disclosure would be
materially detrimental to Instinet and that it is, therefore, in the best
interests of Instinet to defer such disclosure, then Instinet shall have the
right to defer such disclosure, provided that such deferral, together with any
other deferral or suspension of its obligations under this Section 2.4(b), shall
not be effected more than twice in any twelve-month period or for a period of
more than one hundred and twenty (120) days, in the aggregate, for all such
deferrals over such twelve-month period.
2.5. Exchange Registration. (a) Subject to clause (b) below,
Instinet agrees that it will not, without Reuters's prior written consent, file
or prosecute, or permit any of its Subsidiaries to file or prosecute, an
application for registration as a national securities exchange under the
Exchange Act (an "Exchange") if (i) at such time Reuters, directly or indirectly
owns more than 30% of the Total Voting Power of Instinet and (ii) such
registration would result in any material limitation or restriction on Reuters's
direct or indirect ownership of equity interests in Instinet or on Reuters's
ability to exercise, directly or indirectly to the fullest extent its voting or
other rights relating to such equity interests. For the purposes hereof,
"Subsidiary" means any entity in which Instinet owns, directly or indirectly, a
majority of the outstanding equity interests.
(b) The prohibition set forth in clause (a) shall not apply in
the event of an Involuntary Registration, as defined below. In the event that
Instinet intends to file or prosecute an Involuntary Registration of Instinet or
any of its Subsidiaries and (i) at such time Reuters owns more than 30% of the
Total Voting Power in Instinet and (ii) such registration would result in any
material limitation or restriction on Reuters's ownership of equity interests in
Instinet or on Reuters's ability to exercise to the fullest extent its voting or
other rights relating to such equity interests, then (x) Instinet shall provide
Reuters prompt written notice of such intention and (y) Reuters and Instinet
shall work together in good faith to, and Instinet will take all commercially
reasonable actions which may be requested by Reuters to, mitigate the effect of
any such limitations or restrictions and put Reuters as nearly as possible in
the same position with respect to such equity interests (other than as they
relate to the operational or regulatory functions of any affiliated Exchange)
before such registration, including as appropriate entering into discussions
with the SEC, making changes in Instinet's structure and/or operations, and/or
modifying Reuters's then-existing rights and entitlements; provided that
Instinet shall not be required to take any action which would materially
adversely affect any material part of the business of Instinet and its
Subsidiaries (taken as a whole) or Instinet's consolidated financial condition
or results of operations.
(c) "Involuntary Registration" shall mean any prospective
registration of Instinet or any of its Subsidiaries that results from any
notice, demand, request or other communication from the SEC or its staff
indicating that the SEC or its staff has determined that Instinet or such
Subsidiary is required to register as an Exchange or would be required to
curtail or modify in any material respect the scope or character of its business
as an alternative to such registration or in order to avoid such registration.
2.6. Acknowledgment of Reuters Trust Principles. Instinet
acknowledges that so long as Reuters Entities beneficially own a majority of the
Total Voting Power of Instinet, Instinet will, and will cause each of the other
Instinet Entities to, adhere to the Reuters Trust Principles.
2.7. Transfer of Instinet (Schweiz) AG. Notwithstanding any
other provision contained herein, Instinet shall not transfer or dispose of any
interests in Instinet (Schweiz) AG, or take any other action which under Swiss
law or otherwise would require notification or action, until Reuters has
received written notification of such intention and subsequently confirms that
all necessary or required action has been taken by Instinet. Instinet hereby
agrees to indemnify and hold Reuters harmless from and against any and all
losses, liabilities, costs (including reasonable attorneys' fees and
disbursements) claims and damages arising out of, based upon or relating to a
breach of its obligations in the immediately preceding sentence.
ARTICLE III
REGISTRATION RIGHTS
3.1. Demand Registration - Registrable Securities. (a) Upon
written notice provided at any time from any Holders' Representative requesting
that Instinet effect the registration under the Securities Act of any or all of
the Registrable Securities held by the Holders, which notice shall specify the
number of such Registrable Securities to be registered and the intended method
or methods of disposition of such Registrable Securities, Instinet shall use its
commercially reasonable efforts to effect the registration under the Securities
Act and applicable state securities laws of such Registrable Securities for
disposition in accordance with the intended method or methods of disposition
stated in such request; provided that:
(i) with respect to any registration statement filed, or to be
filed, pursuant to this Section 3.1, (A) if Instinet determines in
the good faith judgment of the Board of Directors, such
registration would cause Instinet to disclose material non-public
information which disclosure would be materially detrimental to
Instinet or would materially interfere with any material financing,
acquisition, corporate reorganization or merger or other
transaction involving Instinet and any of its Subsidiaries and the
Board of Directors concludes, as a result of such potential
disclosure or interference, that it is in the best interests of
Instinet to defer the filing of such registration statement at such
time, and (B) Instinet shall furnish to such Holders'
Representative a certificate signed by the chief executive officer
of Instinet stating that in the good faith judgment of the Board of
Directors it would be materially detrimental to Instinet for such
registration statement to be filed in the near future and that it
is, therefore, in the best interests of Instinet to defer the
filing of such registration statement, then Instinet shall have the
right to defer such filing, provided that such deferral, together
with any other deferral or suspension of its obligations under
Section 3.1 or
Section 3.3, shall not be effected more than twice in any
twelve-month period or for a period of more than one hundred and
twenty (120) days, in the aggregate, for all such deferrals or
suspensions over such twelve-month period;
(ii) after an Ownership Reduction, the Holders of Registrable
Securities may collectively exercise their rights under this
Section 3.1 through a Holders' Representative on not more than
three occasions (it being acknowledged that prior to any Ownership
Reduction, there shall be no limit to the number of occasions on
which such Holders may exercise such rights; provided, that each
Transferee of 10% or less of the Total Voting Power of Instinet
shall be entitled to only one demand right hereunder through a
Holders' Representative);
(iii) except as otherwise provided herein, the Holders of
Registrable Securities shall not have the right to exercise
registration rights pursuant to this Section 3.1 within the 90-day
period following the registration and sale of Registrable
Securities effected pursuant to a prior exercise of the
registration rights provided in this Section 3.1;
(iv) Instinet will not be required to take any action pursuant
to this Section 3.1 if the Registrable Securities are registered at
the time of such demand under an effective Shelf Registration
Statement; and
(v) the estimated market value of the Registrable Securities
to be registered pursuant to this Section 3.1, together with any
Registrable Securities to be registered pursuant to Section 3.2, at
the time such demand is made is at least $60 million.
(b) Notwithstanding any other provision of this Agreement, a
registration requested by a Holders' Representative of Registrable Securities
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it has
become effective, (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the related
registration statement or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived other than by reason of some act
or omission by such Holder of Registrable Securities.
(c) In the event that any registration pursuant to this
Section 3.1 shall involve, in whole or in part, an underwritten offering, the
Holders of a majority of the Registrable Securities to be registered shall have
the right to designate an underwriter or underwriters in accordance with the
provisions of the following two sentences. No later than ten Business Days
following its receipt of notice by the Holders' Representative pursuant to
Section 3.1(a), Instinet shall deliver to the Holders' Representative in writing
a list (the "List") of at least five internationally recognized investment
banking firms ranked in the top ten in the past year for equity underwritings by
Thomson Financial Securities Data (or such similar ranking service if such
ranking service ceases to exist other than by reason of merger, reorganization
or consolidation or other acquisition). The Holders of a majority of the
Registrable Securities to be registered shall select from the List an
underwriter or underwriters (the "Holders' Underwriters") and notify Instinet in
writing of its selection of the Holders' Underwriters no later than ten Business
Days following receipt by it of the List.
(d) Instinet shall have the right to cause the registration of
additional equity securities for sale for the account of any Instinet Entity,
any existing or former directors, officers or employees of the Instinet Entities
or any other stockholder of Instinet who is contractually entitled to include
its shares in such registration in any registration of Registrable Securities
requested by the Holders' Representative pursuant to paragraph (a) above;
provided, however, that if such Holders are advised in writing (with a copy to
Instinet) by the lead Holders' Underwriters that, in such firm's good faith
view, all or a part of such Registrable Securities cannot be sold and the
inclusion of all or a part of such additional equity securities in such
registration would be likely to have an adverse effect on the price, timing or
distribution of the offering and sale of the Registrable Securities then
contemplated by any Holder, the registration of such additional equity
securities or part thereof shall not be permitted but only to the extent such
additional equity securities would be likely to have such adverse effect. The
Holders of the Registrable Securities to be offered may require that any such
additional equity securities be included in the offering proposed by such
Holders on the same conditions as the Registrable Securities that are included
therein. In the event that the number of Registrable Securities requested to be
included in a registration statement by the Holders thereof exceeds the number
which, in the good faith view of such investment banking firm, can be sold
without adversely affecting the price, timing, distribution or sale of
securities in the offering, the number shall be allocated pro rata among the
requesting Holders on the basis of the relative number of Registrable Securities
then held by each such Holder (provided that any number in excess of a Holder's
request may be reallocated among the remaining requesting Holders in a like
manner).
3.2. Piggyback Registration (a) In the event that Instinet at
any time proposes or is required to register any of its Common Stock (including
pursuant to Sections 3.1 or 3.3 hereof), any other of its equity securities or
securities convertible into or exchangeable for its equity securities
(collectively, the "Other Securities") under the Securities Act, whether or not
for sale for its own account, in a manner that would permit registration of
Registrable Securities for sale for cash to the public under the Securities Act,
it shall at each such time give prompt written notice (the "Section 3.2 Notice")
to each Holder of Registrable Securities of its intention to do so and of the
rights of such Holder under this Section 3.2. Subject to the terms and
conditions hereof, such Section 3.2 Notice shall offer each such Holder the
opportunity to include in such registration statement such number of Registrable
Securities as such Holder may request. Upon the written request of any such
Holder made within 15 Business Days after the receipt of the Section 3.2 Notice
(which request shall specify the number of Registrable Securities intended to be
disposed of), Instinet shall use its best efforts to effect, in connection with
the registration of the Other Securities, the registration under the Securities
Act of all Registrable Securities which Instinet has been so requested to
register, to the extent required to permit the disposition (in accordance with
such intended method of disposition thereof) of the Registrable Securities so
requested to be registered; provided, that:
(b) if, at any time after giving such Section 3.2 Notice of
its intention to register any Other Securities and prior to the effective date
of the registration statement filed in connection with such registration,
Instinet shall determine for any reason not to register the Other Securities,
Instinet may, at its election (subject to any other obligations it may have in
connection therewith), give written notice of such determination to such Holders
and thereupon Instinet shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of a Holder of Registrable
Securities immediately to request that such registration be effected as a
registration under Section 3.1 or Section 3.3 to the extent permitted
thereunder;
(c) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten registration on behalf of Instinet,
and the lead underwriter or managing underwriter advises Instinet in writing
that, in such firm's good faith view, all or a part of such Other Securities and
Registrable Securities cannot be sold and the inclusion of all or a part of such
Other Securities and Registrable Securities in such registration would be likely
to have an adverse effect upon the price, timing or distribution of the offering
and sale of the Other Securities and Registrable Securities then contemplated,
Instinet shall include in such registration: (i) first, all Other Securities
Instinet proposes to sell for its own account ("Instinet Securities"), (ii)
second, all (A) Other Securities proposed to be sold on behalf of any
stockholder of Instinet who beneficially owns a greater number of shares of
Common Stock than the Reuters Entities beneficially own and (B) Registrable
Securities held by Holders that are requested to be included in such
registration (Registrable Securities that are so held being sometimes referred
to herein as "Holder Securities") in excess of the number of Instinet Securities
to be sold in such offering pursuant to clause (i) above which, in the good
faith view of such investment banking firm, can be sold without adversely
affecting such offering (and (x) if such number is less than the full number of
such Other Securities and Holder Securities, such number shall be allocated pro
rata among holders of such Other Securities (other than Instinet Securities) and
Holders of Registrable Securities on the basis of the number of securities
requested to be included therein by each such holder) and (y) in the event that
such investment banking firm advises that less than all of such Holder
Securities may be included in such offering, such Holders may withdraw their
request for registration of their Registrable Securities under this Section 3.2
and 90 days subsequent to the effective date of the registration statement for
the registration of such Other Securities and/or remaining Holder Securities
request that such registration be effected as a registration under Section 3.1
or Section 3.3 to the extent permitted thereunder); and (iii) third, up to the
full number of the Other Securities (other than those registered pursuant to
clauses (i) and (ii) above), if any, in excess of the number of Other Securities
and Registrable Securities to be sold in such offering pursuant to clauses (i)
and (ii) above which, in the good faith view of such investment banking firm,
can be so sold without so adversely affecting such offering;
(d) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten secondary registration on behalf of
holders (other than Instinet) of Other Securities (the "Other Holders"), and the
lead underwriter or managing underwriter advises Instinet in writing that in
their good faith view, all or a part of such additional securities cannot be
sold and the inclusion of such additional securities in such registration would
be likely to have an adverse effect on the price, timing or distribution of the
offering and sale of the Other Securities and Registrable Securities then
contemplated, Instinet shall include in such registration (i) first, (A) Other
Securities sought to be included therein by the Other Holders pursuant to the
exercise of their demand registration rights, and (B) the number of Holder
Securities sought to be included in such registration (and if such number is
less than the full number of such Other Securities and Holder Securities, such
number shall be allocated 66.67% among the holders of such Other Securities and
33.33% among the Holders of such Holder Securities (provided that (x) if such
number of securities allocated to the Holders is less than the full number of
Registrable Securities requested to be included, such number shall be allocated
pro rata among Holders of Registrable Securities on the basis of the number of
Registrable Securities then held by each such Holder (unless otherwise agreed by
the Holders) and (y) any number of securities in excess of the request of the
holders of Other Securities pursuant to clause (A) above shall be reallocated
among the requesting Holders in a like manner); provided that in the event that
less than all of such Holder Securities may be included in such offering, any
Holder may withdraw its request for registration of its Registrable Securities
under this Section 3.2 and 90 days subsequent to the effective date of the
registration statement for the registration of such Other Securities and/or
remaining Holder Securities request that such registration be effected as a
registration under Section 3.1 or Section 3.3 to the extent permitted
thereunder, and (ii) second, up to the full number of the Other Securities
(other than Other Securities registered pursuant to clause (i)), if any, in
excess of the number of Other Securities and Registrable Securities to be sold
in such offering pursuant to clause (i) above which, in the good faith view of
such investment banking firm, can be sold without so adversely affecting such
offering;
(e) Instinet shall not be required to effect any registration
of Registrable Securities under this Section 3.2 incidental to the registration
of any of its securities on Forms S-4 or S-8 (or any similar or successor form
thereto in connection with mergers, acquisitions, exchange offers, subscription
offers, dividend reinvestment plans or stock option or other executive or
employee benefit or compensation plans) (or any other form that would not be
available for registration of Registrable Securities); and
(f) no registration of Registrable Securities effected under
this Section 3.2 shall relieve Instinet of its obligation to effect a
registration of Registrable Securities pursuant to Section 3.1 or Section 3.3
(except as otherwise provided in Section 3.1 or Section 3.3).
3.3. Form S-3/Shelf Registration. (a) Instinet shall use all
reasonable efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms. After Instinet has qualified for the use of Form S-3,
in addition to the rights contained in the foregoing provisions of this Article
III, the Holders of Registrable Securities, shall have the right at any time,
and from time to time, to request that Instinet prepare and file with the SEC a
"shelf" registration statement (the "Shelf Registration Statement") on the
appropriate form for an offering to be made, covering all or part of the
Registrable Securities, on a continuous or delayed basis pursuant to Rule 415
under the Securities Act (or any successor rule or similar provision then in
effect) in the manner or manners designated by the Holders of the Registrable
Securities participating in such offering (including, without limitation, one or
more underwritten offerings). Instinet shall use all reasonable efforts to have
the Shelf Registration Statement declared effective by the SEC as soon as
practicable after such request is made and to keep such Shelf Registration
Statement continuously effective and free of material misstatements or omissions
(including the preparation and filing of any amendments and supplements
necessary for that purpose) until the earlier of (i) the date on which all
Holders have consummated the sale of all of such Holders' Registrable Securities
registered under the Shelf Registration Statement or (ii) two years from the
date the Shelf Registration Statement first became effective. Notwithstanding
any other provision contained herein, there shall be no limitation on the number
of registrations on Form S-3 that may be requested and obtained by Holders
pursuant to this Section 3.3.
(b) With respect to any Shelf Registration Statement filed, or
to be filed, pursuant to this Section 3.3, (i) if Instinet determines in the
good faith judgment of the Board of Directors, such registration would cause
Instinet to disclose material non-public information which disclosure would be
materially detrimental to Instinet or would materially interfere with any
material financing, acquisition, corporate reorganization or merger or other
transaction involving Instinet and any of its Subsidiaries and the Board of
Directors concludes, as a result of such potential disclosure or interference,
that it is in the best interests of Instinet to defer the filing of such Shelf
Registration Statement at such time, and (ii) Instinet shall furnish to the
Holders' Representative a certificate signed by the chief executive officer of
Instinet stating that in the good faith judgment of the Board of Directors, it
would be materially detrimental to Instinet for such Shelf Registration
Statement to be filed in the near future and that it is, therefore, in the best
interests of Instinet to defer the filing of such Shelf Registration Statement,
then Instinet shall have the right to defer such filing, provided that such
deferral, together with any other deferral or suspension of its obligations
under Section 3.1 or Section 3.3, shall not be effected more than twice in any
twelve-month period or for a period of more than one hundred and twenty (120)
days, in the aggregate, for all such deferrals or suspensions over such
twelve-month period.
(c) Instinet agrees, if necessary, to supplement or amend the
Shelf Registration Statement, as required by the rules, regulations or
instructions applicable to the registration form used by Instinet for such Shelf
Registration Statement or by the Securities Act or as otherwise required by this
Agreement, and shall use its all reasonable efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after filing.
(d) A registration will not be deemed to have been effected
pursuant to a Shelf Registration Statement unless the Shelf Registration
Statement with respect thereto has been declared effective by the SEC and
Instinet has complied in all material respects with its obligations under this
Agreement with respect thereto; provided, however, that if after the Shelf
Registration Statement has been declared effective, the offering of Registrable
Securities pursuant to such Shelf Registration Statement is interfered with by
any stop order, injunction, or other order or requirement of the SEC or any
other governmental agency or court, such Shelf Registration Statement will be
deemed not to have been effective during the period of such interference until
the offering of Registrable Securities pursuant to such Shelf Registration
Statement may legally resume.
(e) (i) If Instinet determines in the good faith judgment of
the Board of Directors, the availability of the Shelf Registration Statement for
use would cause Instinet to disclose material non-public information which
disclosure would be materially detrimental to Instinet or would materially
interfere with any material financing, acquisition, corporate reorganization or
merger or other transaction involving Instinet and any of its Subsidiaries and
the Board of Directors concludes, as a result of such potential disclosure or
interference, that it is in the best interests of Instinet to suspend the use of
such Shelf Registration Statement at such time, and (ii) Instinet shall furnish
to each Holder a certificate signed by the chief executive officer of Instinet
stating that in the good faith judgment of the Board of Directors, it would be
materially detrimental to Instinet for such Shelf Registration Statement to be
available for use in the near future and that it is, therefore, in the best
interests of Instinet to suspend the use of such Shelf Registration Statement,
then Instinet shall have the right to suspend the use of such Shelf Registration
Statement, provided that such suspension, together with any other suspension or
deferral of its obligations under Section 3.1 or Section 3.3, shall not be
effected more than twice in any twelve-month period or for a period of more than
one hundred and twenty (120) days, in the aggregate, for all such suspensions or
deferrals over such twelve-month period.
(f) In the event that any registration pursuant to this
Section 3.3 shall involve, in whole or in part, an underwritten offering, the
Holders of a majority of the aggregate number of the Registrable Securities to
be registered shall have the right to designate an underwriter or underwriters
from the List, which List shall be delivered to the Holders' Representative as
promptly as practicable upon determination that an underwritten offering will be
conducted. The Holders of a majority of the aggregate number of the Registrable
Securities shall notify Instinet in writing of their selection of the Holders'
Underwriters as promptly as practicable following receipt of the List.
3.4. Expenses. Except as provided herein, Instinet shall pay
all Registration Expenses with respect to a particular offering (or proposed
offering). Except as provided herein, each Holder and Instinet shall be
responsible for its own fees and expenses of counsel and financial advisors and
internal administrative and similar costs, as well as their pro rata share of
underwriters' commissions and discounts, which shall not constitute Registration
Expenses.
3.5. Registration and Qualification. If and whenever Instinet
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.1, 3.2 or 3.3, Instinet shall as
promptly as practicable:
(a) prepare, file and use its reasonable best efforts to cause
to become effective a registration statement under the Securities Act relating
to the Registrable Securities to be offered;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities until the earlier of (A) such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition set forth in such registration statement and (B)
the expiration of six months (or two years in the case of a registration
pursuant to Section 3.3) after such registration statement becomes effective;
provided, that such six-month or two-year period shall be extended for such
number of days that equals the number of days elapsing from (x) the date the
written notice contemplated by paragraph (f) below is given by Instinet to (y)
the date on which Instinet delivers to the Holders of Registrable Securities the
supplement or amendment contemplated by paragraph (f) below;
(c) furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities such number of conformed copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Registrable
Securities or such underwriter may reasonably request, and upon request a copy
of any and all transmittal letters or other correspondence to or received from,
the SEC or any other governmental agency or self-regulatory body or other body
having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;
(d) use its commercially reasonable efforts to register or
qualify all Registrable Securities covered by such registration statement under
the securities or blue sky laws of such U.S. jurisdictions as the Holders of
such Registrable Securities or any underwriter to such Registrable Securities
shall request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and do any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such registration
statement; provided, that Instinet shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any such
jurisdiction wherein it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) (i) use its best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling Holder")
and to any underwriter of such Registrable Securities an opinion of counsel for
Instinet addressed to each Selling Holder and dated the date of the closing
under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement), (ii) use
its best efforts to furnish to each Selling Holder a "cold comfort" and
"bring-down" letter addressed to each Selling Holder and any underwriter of such
Registrable Securities and signed by the independent public accountants who have
audited the financial statements of Instinet included in such registration
statement, in each such case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of securities
and such other matters as the Selling Holders may reasonably request and, in the
case of such accountants' letter, with respect to events subsequent to the date
of such financial statements and (iii) cause such authorized officers of
Instinet to execute customary certificates as may be requested by the Selling
Holders or any underwriter of such Registrable Securities;
(f) notify the Selling Holders in writing (i) at any time when
a prospectus relating to a registration pursuant to Sections 3.1, 3.2 or 3.3 is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) of any request by the SEC or any other regulatory body
or other body having jurisdiction for any amendment of or supplement to any
registration statement or other document relating to such offering, and in
either such case, at the request of the Selling Holders prepare and furnish to
the Selling Holders a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(g) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange and automated interdealer
quotation system on which similar securities issued by Instinet are then listed;
(h) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration;
(i) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make available to each
seller of Registrable Securities, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(j) to the extent reasonably requested by the lead or managing
underwriters, send appropriate officers of Instinet to attend any "road shows"
scheduled in connection with any such registration, with all out-of-pocket costs
and expense incurred by Instinet or such officers in connection with such
attendance to be paid by Instinet; provided that in connection with offerings
made pursuant to Sections 3.1 and 3.3, Instinet shall only be obligated to pay
such road show expenses in connection with a total of four such offerings; and
(k) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Sections 3.1, 3.2 or 3.3 unlegended certificates representing ownership of
the Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters (it being understood that
any Reuters Entity and any Transferee would agree to use their commercially
reasonable efforts to arrange for delivery to the Depository Trust Company).
3.6. Conversion of Other Securities, Etc. In the event that
any Holder offers any options, rights, warrants or other securities issued by it
or any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 3.1, 3.2 and 3.3.
3.7. Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Article III, Instinet shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties by Instinet and such other
terms and provisions as are customarily contained in underwriting agreements of
Instinet to the extent relevant and as are customarily contained in underwriting
agreements generally with respect to secondary distributions to the extent
relevant, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
3.8, and agreements as to the provision of opinions of counsel and accountants'
letters to the effect and to the extent provided in Section 3.5(e). The Selling
Holders on whose behalf the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement and the
representations and warranties by, and the other agreements on the part of,
Instinet to and for the benefit of such underwriters, shall also be made to and
for the benefit of such Selling Holders. Such underwriting agreement shall also
contain such representations and warranties by such Selling Holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, when relevant, including,
without limitation, indemnification and contribution provisions substantially to
the effect and to the extent provided in Section 3.8.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article III, Instinet shall give the Selling Holders of
such Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Instinet with its
officers and the independent public accountants who have certified the financial
statements of Instinet as shall be necessary, in the opinion of such Holders and
such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
3.8. Indemnification and Contribution. (a) In the case of each
offering of Registrable Securities made pursuant to this Article III, Instinet
agrees to indemnify and hold harmless, to the extent permitted by law, each
Selling Holder, each underwriter of Registrable Securities so offered and each
Person, if any, who controls any of the foregoing Persons within the meaning of
the Securities Act, the Affiliates of each of the foregoing, and the officers,
directors, employees and agents of each of the foregoing, against any and all
losses, liabilities, costs (including reasonable attorney's fees and
disbursements), claims and damages, joint or several, to which they or any of
them may become subject, under the Securities Act or otherwise, including any
amount paid in settlement of any litigation commenced or threatened, insofar as
such losses, liabilities, costs, claims and damages (or actions or proceedings
in respect thereof, whether or not such indemnified Person is a party thereto)
arise out of or are based upon any untrue statement by Instinet or alleged
untrue statement by Instinet of a material fact contained in the registration
statement (or in any preliminary or final prospectus included therein) or in any
offering memorandum or other offering document relating to the offering and sale
of such Registrable Securities prepared by Instinet or at its direction, or any
amendment thereof or supplement thereto, or in any document incorporated by
reference therein, or any omission by Instinet or alleged omission by Instinet
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however that Instinet
shall not be liable to any Person in any such case to the extent that any such
loss, liability, cost, claim or damage arises out of or relates to any untrue
statement or alleged untrue statement, or any omission, if such statement or
omission shall have been made in reliance upon and in conformity with
information relating to such Person, another holder of securities included in
such registration statement or underwriter furnished to Instinet by or on behalf
of such Person, other holder or underwriter specifically for use in the
registration statement (or in any preliminary or final prospectus included
therein), offering memorandum or other offering document, or any amendment
thereof or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any Selling
Holder, any other holder or any underwriter and shall survive the transfer of
such securities. The foregoing indemnity agreement is in addition to any
liability that Instinet may otherwise have to each Selling Holder, other holder
or underwriter of the Registrable Securities or any controlling person of the
foregoing and the officers, directors, Affiliates, employees and agents of each
of the foregoing. Each Selling Holder, each underwriter of Registrable
Securities so offered and each Person, if any, who controls any of the foregoing
Persons within the meaning of the Securities Act, the Affiliates of each of the
foregoing, and the officers, directors, employees and agents of each of the
foregoing shall not enter into any settlement of any litigation commenced or
threatened without the prior written consent of Instinet (such consent not to be
unreasonably withheld) unless Instinet has failed to assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified party.
(b) In the case of each offering made pursuant to this
Agreement, each Selling Holder, by exercising its registration rights hereunder,
agrees to indemnify and hold harmless, and to cause each underwriter of
Registrable Securities included in such offering (in the same manner and to the
same extent as set forth in Section 3.8(a)) to agree to indemnify and hold
harmless, Instinet, each other underwriter who participates in such offering,
each other Selling Holder or other holder with securities included in such
offering and in the case of an underwriter, such Selling Holder or other holder,
and each Person, if any, who controls any of the foregoing within the meaning of
the Securities Act and the officers, directors, Affiliates, employees and agents
of each of the foregoing, against any and all losses, liabilities, costs
(including reasonable attorney's fees and disbursements), claims and damages to
which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, insofar as such losses, liabilities, costs, claims and damages
(or actions or proceedings in respect thereof, whether or not such indemnified
Person is a party thereto) arise out of or are based upon any untrue statement
or alleged untrue statement by such Selling Holder or underwriter, as the case
may be, of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or in any offering memorandum
or other offering document relating to the offering and sale of such Registrable
Securities prepared by Instinet or at its direction, or any amendment thereof or
supplement thereto, or any omission by such Selling Holder or underwriter, as
the case may be, or alleged omission by such Selling Holder or underwriter, as
the case may be, of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that such untrue statement of a material fact is contained in, or such
material fact is omitted from information relating to such Selling Holder or
underwriter, as the case may be, furnished to Instinet by or on behalf of such
Selling Holder or underwriter, as the case may be, specifically for use in such
registration statement (or in any preliminary or final prospectus included
therein), offering memorandum or other offering document, or any amendment
thereof or supplement thereto. The foregoing indemnity is in addition to any
liability which such Selling Holder or underwriter, as the case may be, may
otherwise have to Instinet, or controlling persons and the officers, directors,
Affiliates, employees and agents of each of the foregoing.
(c) Each party entitled to indemnification under this Section
3.8 shall give notice to the party required to provide indemnification promptly
after such indemnified party has actual knowledge that a claim is to be made
against the indemnified party as to which indemnity may be sought, and shall
permit the indemnifying party to assume the defense of such claim or litigation
resulting therefrom and any related settlement and settlement negotiations,
subject to the limitations on settlement set forth below; provided, that counsel
for the indemnifying party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the indemnified party
(whose approval shall not unreasonably be withheld), and the indemnified party
may participate in such defense at such party's expense; and provided, further,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section
3.8, to the extent such failure is not materially prejudicial. Notwithstanding
the foregoing, an indemnified party shall have the right to retain separate
counsel, with the reasonable fees and expenses of such counsel being paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel or if the indemnifying party has failed to assume
the defense of such action (provided that in no event shall the indemnifying
party be responsible for the fees and costs of more than one such additional
counsel for all indemnified parties). No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, reasonably satisfactory to the
indemnified party, from all liability in respect to such claim or litigation.
Each indemnified party shall furnish such information regarding itself or the
claim in question as an indemnifying party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(d) If the indemnification provided for in this Section 3.8
shall for any reason be unavailable (other than in accordance with its terms) to
an indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage in
such proportion as shall be appropriate to reflect (i) the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other hand or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, the relative benefits and the relative fault of the
indemnifying party on the one hand and the indemnified party on the other with
respect to the statements or omissions which resulted in such loss, liability,
cost, claim or damage as well as any other relevant equitable considerations.
The relative benefits received by the indemnifying party and the indemnified
party shall be deemed to be in the same respective proportion as the net
proceeds (before deducting expenses) of the offering received by such party (or,
in the case of an underwriter, such underwriter's discounts and commissions)
bear to the aggregate offering price of the Registrable Securities or Other
Securities. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified party on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any indemnified party's stock ownership in Instinet. The amount
paid or payable by an indemnified party as a result of the loss, cost, claim,
damage or liability, or action in respect thereof, referred to above in this
paragraph (d) shall be deemed to include, for purposes of this paragraph (d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified
in the preceding paragraphs of this Section 3.8 (with appropriate modifications)
shall be given by Instinet, the Selling Holders and underwriters with respect to
any required registration or other qualification of securities under any state
law or regulation or governmental authority.
(f) The obligations of the parties under this Section 3.8
shall be in addition to any liability which any party may otherwise have to any
other party.
3.9. Information by Holder. Each Holder shall furnish to
Instinet such information regarding such Holder and the distribution proposed by
such Holder as Instinet may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Article III.
3.10. Rule 144 and Form S-3. Instinet shall use all reasonable
efforts to ensure that the conditions to the availability of Rule 144 set forth
in paragraph (c) thereof shall be satisfied. Instinet agrees to use all
reasonable efforts to file with the SEC in a timely manner all reports and other
documents required of Instinet under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), at any time after it has
become subject to such reporting requirements. Upon the request of any Holder of
Registrable Securities and for so long as such information is a necessary
element of such Holders' ability to avail itself of Rule 144, Instinet will
deliver to such Holder (i) a written statement as to whether it has complied
with such requirements and (ii) a copy of the most recent annual or quarterly
report of Instinet, and such other reports and documents so filed as a Holder
may reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration. Instinet
further agrees to use its reasonable efforts to cause all conditions to the
availability of Form S-3 (or any successor form) under the Securities Act of the
filing of registration statements under this Agreement to be met as soon as
practicable.
3.11. Holders' Priority. The Holders may exercise their rights
under Article III in such priority as they shall agree upon among themselves.
3.12. Holdback Agreement. (a) If any registration pursuant to
this Article III shall be in connection with an underwritten public offering of
Registrable Securities, each Holder of more than 5% of the Total Voting Power of
Instinet at the time of such registration or offering agrees not to effect any
public sale or distribution, including any sale under Rule 144, of any equity
security of Instinet or any security convertible into or exchangeable or
exercisable for any equity security of Instinet, (otherwise than through the
registered public offering then being made), within 7 days prior to or 90 days
(or such lesser period as the lead or managing underwriters may permit) after
the effective date of the registration statement (or the commencement of the
offering to the public of such Registrable Securities in the case of Rule 415
offerings); provided that each such Holder shall only be bound so long as (i)
each Instinet Transferee and (ii) each director and executive officer of
Instinet is similarly bound. Instinet hereby also agrees to be subject to the
restrictions set forth in the preceding sentence; provided, that, Instinet shall
not be so restricted from effecting any public sale or distribution of any
security in connection with any merger, acquisition, exchange offer,
subscription offer, dividend reinvestment plan or stock option or other
executive or employee benefit or compensation plan.
(b) Instinet agrees to require each Instinet Transferee to
agree not to effect any public sale or distribution, including any sale under
Rule 144, of any equity security of Instinet or any security convertible into or
exchangeable or exercisable for any equity security of Instinet (otherwise than
through the registered public offering then being made), within 7 days prior to
or 90 days (or such lesser period as the lead or managing underwriters may
permit) after the effective date of the registration statement (or the
commencement of the offering to the public of such Registrable Securities in the
case of Rule 415 offerings) for any registration pursuant to this Article III
made in connection with an underwritten public offering of Registrable
Securities.
3.13. Termination of Registration Rights. The right of any
Holder to request registration pursuant to Article III shall be suspended on
such date when all shares of Registrable Securities held or entitled to be held
by such Holder may be sold pursuant to Rule 144(k) under the Securities Act;
provided that in order for such rights to terminate with respect to such Holder,
such Holder shall have received an opinion of counsel (which such counsel shall
be satisfactory to such Holder) confirming that all shares of Registrable
Securities held or entitled to be held by such Holder may be sold pursuant to
Rule 144(k). Instinet shall pay all expenses with respect to the opinion
referred to in this Section 3.13.
3.14. Suspension of Registration Rights. The provisions of
this Article III shall be suspended, and no rights of Reuters pursuant to this
Article III may be exercised, for so long as the Registration Rights Agreement
is in effect.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
4.1. No Violations. Instinet covenants and agrees that it will
not, and will cause the Instinet Entities not to, take any action or enter into
any commitment or agreement which may reasonably be anticipated to result, with
or without notice and with or without lapse of time or otherwise, in a
contravention of any stock exchange rule or similar requirement applicable to
any Reuters Entity (of which Instinet has knowledge of or has otherwise been
made aware by Reuters). Reuters covenants and agrees that it will not, and will
cause the Reuters Entities not to, take any action or enter into any commitment
or agreement which may reasonably be anticipated to result, with or without
notice and with or without lapse of time or otherwise, in a contravention of any
stock exchange (or inter-dealer quotation system) rule or similar requirement
applicable to any Instinet Entity (of which Reuters has knowledge or has
otherwise been made aware of by Instinet).
4.2. Regulatory Requirements. Subject to the terms and
conditions hereof, Instinet agrees, and agrees to cause each Instinet Entity,
and Reuters agrees, and agrees to cause each Reuters Entity, to use their
commercially reasonable efforts to promptly take, or cause to be promptly taken,
or to refrain or cause to refrain from, as applicable, all action and to do, or
cause to be done, all things necessary, on their respective parts, to assist
each other in obtaining all governmental licenses, permits, consents, approvals,
authorizations, qualifications and orders and to permit each other to be in
compliance with all legal and regulatory requirements (of which such party has
knowledge or has otherwise been made aware of by the other party hereto) as are
reasonably necessary in connection with the operation of their respective
businesses. Instinet shall promptly furnish, and shall cause each Instinet
Entity to furnish, Reuters with such information and assistance as Reuters may
reasonably request in connection with the preparation of any necessary filings
or submissions by any Reuters Entity to any governmental or regulatory agency or
stock exchange or as otherwise necessary to comply with law or regulation,
including, without limitation, any filings necessary under the provisions of the
HSR Act, the Securities Act, the Exchange Act or any rules or regulations of the
European Union or pursuant to the requirements of the London Stock Exchange.
Reuters shall furnish, and shall cause each Reuters Entity to furnish, Instinet
with such information and assistance as Instinet may reasonably request in
connection with the preparation of any necessary filings or submissions by any
Instinet Entity to any governmental or regulatory agency or stock exchange (or
inter-dealer quotation system) or as otherwise necessary to comply with law or
regulation, including, without limitation, any filings necessary under the
provisions of the HSR Act, the Securities Act, the Exchange Act or any rules or
regulations of the European Union.
4.3. Delaware 203. So long as the Reuters Entities or any
Transferee and its Affiliates beneficially own 15% or more of the Total Voting
Power of Instinet, Instinet hereby agrees not to amend its Certificate of
Incorporation to "opt-in" to Delaware 203 without the prior written consent of
Reuters or such Transferee. At any time within three years of the date the
Reuters Entities cease to beneficially own at least 15% of the Total Voting
Power of Instinet, Reuters shall vote all of the Common Stock held by Reuters
Entities in favor of any amendment (which is approved by the Board of Directors)
to Instinet's Certificate of Incorporation that proposes to "opt-in" to Delaware
203.
4.4. Limitation on Incurrence of Indebtedness. So long as the
Reuters Entities beneficially own a majority of the Total Voting Power of
Instinet, Instinet hereby agrees not to incur (after giving pro forma effect to
such incurrence) in excess of an aggregate of $400 million of Net Indebtedness
outstanding at any one time without Reuters's prior written consent.
4.5. Information Statements. (a) In the event that any action
taken by any Reuters Entity or Entities pursuant to a written consent of
stockholders is subject to the requirements of Regulation 14C, Instinet shall,
(i) as promptly as practicable, take all actions required in order to comply
with Regulation 14C, including without limitation preparing an information
statement on Schedule 14C or any successor form (which information statement,
and any amendments or supplements thereto, shall be subject to the review and
consent, not to be unreasonably withheld, of the applicable Reuters Entities)
and complying with all filing and mailing requirements with respect to such
information statement and (ii) execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable to make
such action effective as soon as practicable. Without limiting the foregoing, if
an information statement is required to be filed with the SEC pursuant to any
such action by any Reuters Entity, Instinet shall use its reasonable best
efforts to file such information statement as promptly as practicable after the
date on which the applicable Reuters Entity or Entities provides notice to
Instinet of such action. Instinet and Reuters shall cooperate with each other in
connection with the preparation of any such information statement, and Reuters
shall furnish all information concerning it and any other applicable Reuters
Entities as Instinet may reasonably request in connection therewith.
4.6. Certain Charter and Bylaw Amendments. During the term of
this Agreement, Instinet shall not amend or modify any provision of the
certificate of incorporation or bylaws of Instinet in any way that prevents the
Holders from exercising their rights under this Agreement.
ARTICLE V
INFORMATION RIGHTS
5.1. Financial Information. (a) So long as the Reuters
Entities beneficially own a majority of the Total Voting Power of Instinet,
Instinet shall deliver to the Reuters Parent:
(i) for each fiscal month, (x) a balance sheet of Instinet and
its consolidated Subsidiaries (including amounts owed by or owing
to the Reuters Entities) as of the end of such fiscal month
prepared on generally the same basis as is prepared by Instinet and
submitted to the Reuters Parent on the date hereof, together
with the related statements of stockholders' equity and the related
income statements for Instinet and its consolidated Subsidiaries
for such fiscal month and for the year to date, and broken out by
each division or segment of Instinet for which Instinet provides
separate financial information, if any, on a basis consistent with
the basis Instinet reports to the Reuters Parent on the date
hereof; provided that Instinet may reasonably change such reporting
practices if written notice of such change is provided to Reuters,
(all of the foregoing financial statements, collectively, the
"Financial Statements") and (y) the information set forth in
Schedule 5.1(a) hereto; and
(ii) for each fiscal year, half-year and, if and when the
Reuters Parent begins to publicly report its financial statements quarterly,
each fiscal quarter, (A) draft Financial Statements and supporting information
consistent with the Reuters Parent's accounting practices and policies (together
with such information as is required by the Reuters Parent's accounting
practices and policies as in effect from time to time in order to comply with UK
GAAP or UK legal requirements) of Instinet and its consolidated Subsidiaries as
of the last day of such fiscal year half-year or quarter, as the case may be,
(or such other period as may be required by the Reuters Parent for public
reporting purposes), together with a reconciliation thereof to US GAAP, (B) for
year-end only audited US GAAP Financial Statements of Instinet and its
consolidated Subsidiaries (reported on by Instinet's primary outside auditor who
shall be an internationally recognized accounting firm) as of the last day of
such fiscal year (or such other period as may be required by the Reuters Parent
for public reporting purposes), together with a reconciliation thereof to UK
GAAP, (together with such information as is required by the Reuters Parent's
accounting practices and policies from time to time in order to comply with UK
GAAP or UK legal requirements) and (C) commentary on key features of performance
and comparisons of prior corresponding periods.
(b) So long as the Reuters Entities beneficially own 20% or
more of the Total Voting Power of Instinet (or if the Reuters Parent is
otherwise required to treat Instinet as an "associate" under UK GAAP), Instinet
shall deliver to the Reuters Parent:
(i) for each fiscal quarter, (A) Financial Statements for such
fiscal quarter and for the year to date, together with a
reconciliation thereof to UK GAAP, (B) commentary on key features
of performance and comparisons of prior corresponding periods and
(C) the information set forth in Schedule 5.1(b)(i) hereto;
(ii) for each fiscal year, half-year and, if and when the
Reuters Parent begins to publicly report its financial statements
quarterly, each fiscal quarter, (A) draft Financial Statements and
supporting information of Instinet and its consolidated
Subsidiaries as of the last day of such fiscal year, half-year or
quarter, as the case may be, together with a reconciliation thereof
to UK GAAP, (B) audited year-end only Financial Statements of
Instinet and its consolidated Subsidiaries, together with a
reconciliation thereof to UK GAAP, reported on by Instinet's
primary outside auditor who shall be an internationally recognized
accounting firm and (C) commentary on key features of performance
and comparisons of prior corresponding periods.
(c) Instinet shall use all reasonable efforts consistent with
past practices, and in consultation with the Reuters Parent, to prepare and
submit (i) all Financial Statements and related financial information pursuant
to Section 5.1(a), in accordance with the Reuters Parent accounting policies and
practices (as may reasonably change from time to time) and (ii) all Financial
Statements and related financial information pursuant to Section 5.1(b) in
accordance with US GAAP, in each case except as otherwise set forth herein. The
Reuters Parent shall provide Instinet with such assistance as is reasonably
necessary, consistent with past practice, to assist Instinet in ensuring that
such financial information is prepared in accordance with the Reuters Parent's
accounting practices and policies in order to comply with UK GAAP and UK legal
requirements. Instinet shall provide the Reuters Parent with reasonable access
to such employees of the Instinet Entities as is reasonably necessary to
understand and evaluate the information required to be submitted to the Reuters
Parent by Instinet pursuant to Sections 5.1 (a) and (b).
(d) (i) So long as the Reuters Entities beneficially own a
majority of the Total Voting Power of Instinet and except as otherwise expressly
provided, the information required by Section 5.1(a) shall be delivered to the
Reuters Parent within the timeframes required by the Reuters Parent's internal
and external accounting and reporting practices as in effect on the date hereof
or as may be reasonably modified by the Reuters Parent subject to Instinet's
consent, which consent shall not be unreasonably withheld. Instinet shall use
commercially reasonable efforts to provide all information to the Reuters Parent
pursuant to this Section 5.1 in a format reasonably consistent with the format
of the Reuters Parent public financial statements as in effect from time to
time. Instinet shall cooperate with the Reuters Parent in connection with the
preparation of the financial information required by the Reuters Parent, and
shall make financial officers and managers available, upon reasonable notice and
at reasonable times, to discuss and review with the Reuters Parent and its
independent accountants the financial information provided to the Reuters Parent
pursuant to this Section 5.1(d)(i).
(ii) So long as the Reuters Entities beneficially own at
least 20% or more but less than 50% of the Total Voting Power of
Instinet and except as otherwise expressly provided, Instinet shall
use reasonable commercial efforts to deliver, the information
required by Section 5.1(b) to the Reuters Parent within the
timeframes required by the Reuters Parent's internal and external
accounting and reporting practices as in effect on the date hereof
or as may be reasonably modified by the Reuters Parent subject to
Instinet's consent, which consent shall not be unreasonably
withheld. Instinet shall cooperate with Reuters in connection with
the preparation of the financial information required by Reuters,
and shall make financial officers and managers available, upon
reasonable notice and at reasonable times, to discuss and review
with Reuters and its independent accountants the financial
information provided to Reuters pursuant to this Section
5.1(d)(ii).
(e) So long as Instinet is required to deliver information
pursuant to Section 5.1(a),
(i) Instinet and the Reuters Parent shall coordinate the
public release and disclosure of their public financial information
including, but not limited to, (A) earnings releases and trading
statements, (B) quarterly and annual reports and (C) restatement of
earnings, so that all public disclosure of material new financial
information of either which includes or is included in information
of the other shall be made on the same day and, as far as
practicably possible, at the same time, and provided that if either
is unprepared to make its own release or disclose on the scheduled
day through no fault of the other, the other may proceed with its
release or disclosure as previously contemplated provided, further,
that the provisions of this subsection (e)(i) shall not apply to
either party, if in the reasonable judgment of the releasing party,
it is required by law, market practice or regulation to release
information on a basis inconsistent with the other party's
schedule;
(ii) Instinet shall provide the Reuters Parent with drafts of
Instinet's public quarterly, annual and other filings, disclosures
and reports that contain financial information and/or discussion
and the Reuters Parent shall provide Instinet with drafts of the
sections of the Reuters Parent's public quarterly, annual and other
filings, disclosures and reports that contain financial information
and/or discussion that relates to Instinet, in each case
sufficiently in advance of filing to permit the recipient to review
such materials to ensure consistency with similar information to be
included in its own materials; and
(iii) So long as the Reuters Entities beneficially own a
majority of the Total Voting Power of Instinet, Instinet shall not
change its fiscal year without the prior written consent of
Reuters.
5.2. Annual Business Plan and Budget. So long as the Reuters
Entities beneficially own a majority of the Total Voting Power of Instinet,
Instinet shall, consistent with past practice and in accordance with reporting
timetables agreed to by the parties hereto, (A) prepare and submit to the
Reuters Parent a profit forecast for the upcoming three fiscal years including
(i) business forecasts and (ii) details of assumptions used, (B) provide the
Reuters Parent a copy of the budget for the upcoming fiscal year and in
accordance with the Reuters Parent's reporting timetable as may be changed from
time to time subject to Instinet's consent, which such consent shall not be
unreasonably withheld, including monthly projections of capital, profits and
losses, manpower and cash flow (collectively the "Annual Budget"), (C) provide
an updated quarterly outlook of information provided under clause (B) above for
current and upcoming financial year in accordance with existing timetables
(collectively the "Outlook") and (D) provide half-yearly tax forecasts
consistent with past practice. Notwithstanding the foregoing, so long as the
Reuters Entities beneficially own at least 20% or more of the Total Voting Power
of Instinet, Instinet shall provide the Reuters Parent with an Annual Budget of
profits or losses with quarterly updated Outlooks of profits or losses in
accordance with reporting timetables agreed to by the parties hereto.
5.3. Audit Rights. To the extent that the Reuters Audit
Committee is required by law or stock exchange requirements to audit, or cause
to audit, any of the affairs of any Instinet Entity, Instinet shall allow on
reasonable notice, the Reuters Audit Committee or its representatives to audit
the affairs of Instinet, including (i) having access to (and take copies of) the
records of the Instinet Entities (and the working papers of its accountants);
(ii) having access to the premises of any Instinet Entity and to have the
ability to consult and discuss matters with the auditors, advisors and
management of any Instinet Entity (during normal office hours) and (iii)
procuring that each Instinet Entity shall, co-operate fully with the Reuters
Audit Committee and its representatives in relation to this process. In
addition, Instinet shall use all reasonable efforts to allow the independent
accountants of Reuters to audit the working papers of and to assist in any
review undertaken by Instinet's independent accountants. The Reuters Audit
Committee shall coordinate its efforts in good faith with, and work with and
through, the Audit Committee of the Instinet board of directors and the Instinet
internal audit department to accomplish such objectives.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Reuters represents and warrants as follows:
(a) Status and Authority. Reuters is a company duly organized
and validly existing under the laws of England and Wales. The execution and
delivery by Reuters of this Agreement and the performance of its obligations
hereunder have been duly authorized by all necessary corporate action on the
part of Reuters, and this Agreement has been duly executed and delivered by the
duly authorized officers of Reuters and constitutes the valid, legal and binding
obligation of Reuters.
(b) No Conflicts.
(i) The execution, delivery and performance of this Agreement
by Reuters will not result in (A) any conflict with the charter
documents of any Reuters Entity, (B) any material breach or
violation of or default under any statute, law, rule, regulation,
judgment, decree, order or any material mortgage, deed of trust,
indenture, agreement or any other instrument to which any Reuters
Entity is a party or by which any of their respective material
properties or assets are bound, or (C) the creation or imposition
of any lien, charge, pledge or encumbrance thereon, except for such
breaches, violations or defaults and such liens, charges, pledges
or encumbrances as would not, individually or in the aggregate,
have a material adverse effect on Reuters's business or adversely
affect the ability of Reuters's to perform its obligations
hereunder.
(ii) No consent, approval or authorization of or filing with
any governmental authority is required with respect to Reuters in
connection with the execution and delivery of this Agreement, and
the performance by Reuters of its obligations hereunder.
(c) No Litigation. There no judicial or administrative
actions, proceedings or investigations pending or, to the best knowledge or
Reuters, threatened, which question the validity of this Agreement or any action
taken or to be taken by Reuters in connection herewith.
6.2. Instinet represents and warrants as follows:
(a) Status and Authority. Instinet is a company duly
organized, validly existing in good standing under the laws of Delaware. The
execution and delivery by Instinet of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary corporate
action on the part of Instinet, and this Agreement has been duly executed and
delivered by the duly authorized officers of Instinet and constitutes the valid,
legal and binding obligation of Instinet.
(b) No Conflicts.
(i) The execution, delivery and performance of this Agreement
by Instinet will not result in (A) any conflict with the charter
documents of any Instinet Entity, (B) any material breach or
violation of or default under any statute, law, rule, regulation,
judgment, decree, order or any material mortgage, deed of trust,
indenture, agreement or any other instrument to which any Instinet
Entity is a party or by which any of their respective material
properties or assets are bound, or (C) the creation or imposition
of any lien, charge, pledge or encumbrance thereon, except for such
breaches, violations or defaults and such liens, charges, pledges
or encumbrances as would not, individually or in the aggregate,
have a material adverse effect on Instinet's business or adversely
affect the ability of Instinet to perform its obligations
hereunder.
(ii) No consent, approval or authorization of or filing with
any governmental authority is required with respect to Instinet in
connection with the execution and delivery of this Agreement, and
the performance by Instinet of its obligations hereunder.
(c) No Litigation. There are no judicial or administrative
actions, proceedings or investigations pending or to the best knowledge of
Instinet, threatened, which question the validity of this Agreement or any
action taken or to be taken by Instinet in connection herewith.
ARTICLE VII
MISCELLANEOUS
7.1. Subsidiaries. Reuters agrees and acknowledges that
Reuters shall be responsible for the performance by each Reuters Entity of the
obligations hereunder applicable to such Reuters Entity. Instinet agrees and
acknowledges that Instinet shall be responsible for the performance by each
Instinet Entity of the obligations hereunder applicable to such Instinet Entity.
7.2. Amendments. This Agreement may be amended, supplemented
or otherwise modified only by a writing duly executed by or on behalf of each of
the parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
7.3. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other than
those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect to the fullest extent permitted by law and
shall not be affected thereby, unless such a construction would be unreasonable.
7.4. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail, postage prepaid, return receipt requested or (c) by facsimile or other
generally accepted means of electronic transmission (provided that a copy of any
notice delivered pursuant to this clause (c) shall also be sent pursuant to
clause (a) or (b)) above, addressed as follows:
(a) if to Instinet, to:
Instinet Group Incorporated
Three Times Square
10th Floor
Attention: General Counsel
Telecopy No.: 000-000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: 212-225-3999
(b) If to Reuters, to:
Reuters Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
XX0X 0XX
Attention: General Counsel
Telecopy No.: 011-44-207-542-5896
with a copy to:
Reuters America Inc.
The Reuters Building
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy No: 000-000-0000
and to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: 000-000-0000
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties; provided, however, that all notices and other
communications required or permitted hereunder regarding any Covered Transaction
shall be delivered only to Instinet Group Incorporated and Reuters Limited (with
a copy to Reuters America Inc.).
7.5. Further Assurances. Reuters and Instinet shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other action as may be reasonably necessary or
advisable to carry out their obligations under this Agreement and under any
exhibit, document or other instrument delivered pursuant hereto.
7.6. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
7.7. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
7.8. Successors. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. Except as set forth in Section 7.11, nothing
contained in this Agreement, express or implied, is intended to confer upon any
other Person or entity any benefits, rights or remedies.
7.9. Jurisdiction; Specific Performance. The parties to this
Agreement agree that jurisdiction and venue in any action brought by any party
hereto pursuant to this Amendment shall properly lie and shall be brought in any
federal or state court located in the Borough of Manhattan, City and State of
New York. By execution and delivery of this Agreement, each party hereto
irrevocably submits to the jurisdiction of such courts for itself or herself and
in respect of its or her property with respect to such action. The parties
hereto irrevocably agree that venue would be proper in such court, and hereby
irrevocably waive any objection that such court is an improper or inconvenient
forum for the resolution of such action. The parties hereto acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.
7.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original instrument,
but all of which together shall constitute but one and the same agreement.
7.11. Assignment. (a) Neither this Agreement nor any right or
obligation hereunder is assignable in whole or in part by any party without the
prior written consent of the other party hereto. Notwithstanding the foregoing,
Reuters may transfer its rights and obligations under Section 2.3 (in whole or
in part), Article III (in whole or in part), Sections 4.1 and 4.2 (in whole),
Section 4.3 (in whole and in part) and/or Article V (in whole) to any Transferee
(and any Transferee may transfer such rights and obligations to any subsequent
Transferee) without the prior written consent of Instinet; provided that a
Transferee of less than a majority of the Total Voting Power of Instinet may
receive only those rights and obligations thereunder as to which Reuters would
be entitled to as a holder of such percentage interest or as are specified
herein.
(b) Any assignment pursuant to paragraph (a) of this Section
7.11 shall be effective upon receipt by Instinet of (i) written notice from the
transferring Holder stating the name and address of any Transferee and
identifying the number of shares of Common Stock with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (ii) a written agreement in substantially the form attached
as Exhibit A hereto from such Transferee to be bound by the applicable terms of
this Agreement.
7.12. Effectiveness. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall become effective only at the
Effective Time (as defined in the Merger Agreement). In the event that the
Effective Time does not occur, the Existing Corporate Agreement shall remain in
full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
REUTERS LIMITED
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Attorney in Fact
INSTINET GROUP INCORPORATED
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
EXHIBIT A
JOINDER
By execution of this Joinder, the undersigned agrees to become
a party to that certain Amended and Restated Corporate Agreement, dated as of
June 9, 2002 (the "Agreement"), between Reuters Limited and Instinet Group
Incorporated. By execution of this Joinder, the undersigned shall have all the
rights, and shall observe all the obligations specified in Section 7.11 of the
Agreement and to have made on the date hereof all representations and warranties
set forth in Section 6.1 of the Agreement, modified, if necessary, to reflect
the nature of the undersigned as a trust, estate or other entity.
Name:
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Address for Notices: With Copies to:
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Signature:
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Date:
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