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EXECUTION COPY
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (the "Agreement") is entered into
as of July 31, 2000 by and between Reuters Holdings Switzerland SA, a
corporation organized under the laws of Switzerland (the "Subscriber") and
Instinet Group LLC, a limited liability company organized under the laws of
Delaware (the "Company") and (each, a "Party" and, collectively, the "Parties").
WHEREAS, the Company has authorized the issue and sale to the
Subscriber of 10,064,564 Shares of Common Stock of the Company (as such term is
defined in the Company's Limited Liability Company Operating Agreement (the
"Operating Agreement")) (the "Units");
WHEREAS, subject to the terms and conditions hereof, the
Company shall issue and sell to the Subscriber, and the Subscriber shall
subscribe to and purchase from the Company, the Units, for $167,300,000 (the
"Purchase Price");
WHEREAS, the net proceeds from the sale of the Units will be
used by the Company for general corporate purposes including, without
limitation, to fund certain of its subsidiaries for maintenance of net capital
requirements imposed on such subsidiaries by Rule 15c3-1 of the Exchange Act (as
defined below);
WHEREAS, Instinet Corporation, a Delaware corporation
("Instinet"), is contributing to the Company Instinet's business and
substantially all of Instinet's assets and liabilities pursuant to an Asset
Contribution Agreement dated the date hereof (the "Contribution");
WHEREAS, both Instinet and Subscriber are indirect,
wholly-owned subsidiaries of Reuters Group PLC; and
WHEREAS, the Purchase Price represents an amount of cash and
cash equivalents that form part of the Instinet business but are being retained
by Instinet in connection with the Contribution.
NOW, THEREFORE, in consideration of the foregoing and the
respective premises, mutual covenants and agreements of the Parties, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereof, the Parties agree
as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions. For the purpose of this Agreement the
following terms shall have the following meanings:
"Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Authority or any arbitration or mediation
tribunal.
"Adjusted Units" has the meaning set forth in Section 2.3(b).
"Aggregate IGL Concluded Value" has the meaning set forth in
Section 2.3(a).
"Authority" means any governmental, judicial, legislative,
executive, administrative, or regulatory authority of the United States, or of
any state, local or foreign government, or any government of any possession or
territory of the United States, or any subdivision, agency, commission, office
or authority of any of the foregoing, or any Self-Regulatory Organization.
"Concluded Value" has the meaning set forth by Xxxxxxxx Xxxxx
Xxxxxx & Xxxxx in their report dated as of April 30, 2000.
"Contribution" has the meaning set forth in the preamble.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder from time to time.
"Instinet" has the meaning set forth in the preamble.
"Instinet Business" means the business as conducted by
Instinet and its subsidiaries on the date hereof.
"Liabilities" means any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, indemnities
and similar obligations, exonerations, covenants, contracts, controversies,
agreements, promises, doings, omissions, variances, guarantees, make whole
agreements and similar obligations, and other liabilities, including all
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened or contemplated Actions), order or consent decree of any Authority or
any award of any arbitrator or mediator of any kind, and
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those arising under any contract, commitment or undertaking, including those
arising under this Agreement, in each case, whether or not recorded or reflected
or required to be recorded or reflected on the books and records or financial
statements of any Person.
"Operating Agreement" has the meaning set forth in the
preamble.
"Person" means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any Authority.
"Report" has the meaning set forth in Section 2.3.
"Self-Regulatory Organization" has the meaning set forth in
section 3(a)(26) of the Exchange Act.
"Shares of Common Stock" has the meaning set forth in the
Operating Agreement.
ARTICLE II
UNITS PURCHASE
2.1 Payment for Units. Concurrently with the execution of this
Agreement, the Subscriber is paying the Purchase Price to the Company.
2.2 Issuance of the Units. Concurrently with the execution of
this Agreement, the Company is issuing the Units to the Subscriber (the
"Subscription"). Schedule A and Schedule B of the Operating Agreement will be
amended to reflect the issuance.
2.3 Post-Closing Adjustment. (a) The Parties acknowledge that
the number of Units to be issued to the Subscriber in exchange for the Purchase
Price is to represent a percentage of the aggregate Shares of Common Stock of
the Company outstanding following the Subscription and the Contribution equal to
the percentage of the value of the Instinet Business represented on the date
hereof by the Purchase Price. The Parties further acknowledge that for the
purposes of the closing under this Agreement, the value of the Instinet Business
has been estimated based on the value of such business as of April 30, 2000. As
soon as practicable after the date hereof, and in any event no later than thirty
(30) days following the date hereof, the Company shall cause Xxxxxxxx Xxxxx
Xxxxxx & Xxxxx (or such other company agreed upon by both Parties) to prepare a
valuation summary (the "Report") setting forth the Concluded Value of the
Instinet Business on the date hereof (the "Aggregate IGL Concluded Value"). The
Report shall include, among other things, the percentage of the Aggregate IGL
Concluded Value represented by the Purchase Price.
(b) As soon as practicable following the delivery of the
Report, the number of Units issued to the Subscriber hereunder shall be adjusted
up or down such that the Units represent a percentage of the outstanding Shares
of Common Stock of the Company equal to the percentage that $167,300,000
represents of the Aggregate IGL Concluded Value (the "Adjusted
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Units"). The number of Units issued on the date hereof pursuant to this
Agreement shall be deemed to be the number of Adjusted Units.
ARTICLE III
MISCELLANEOUS
3.1 Documents Relating to Transfer of Units. In furtherance of
the subscription of the Units, simultaneously with the execution and delivery
hereof, or as promptly as practicable thereafter, the Subscriber and the Company
shall each execute and deliver such bills of sale and stock powers and other
instruments of transfer, conveyance, assignment and assumption as and to the
extent necessary to evidence the Subscription.
3.2 Further Assurances. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the Parties shall
use its reasonable best efforts from the date hereof to take, or cause to be
taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable laws, regulations and agreements
to consummate and make effective the transactions contemplated by this
Agreement.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification By Company. The Company shall indemnify,
defend and hold harmless the Subscriber and its directors, officers and
employees, and each of the heirs, executors, successors and assigns of any of
the foregoing, from and against any and all Liabilities relating to, arising out
of or resulting from the breach of any representation, warranty, covenant or
agreement by the Company contained in this Agreement.
4.2 Indemnification By Subscriber. The Subscriber shall
indemnify, defend and hold harmless the Company and its directors, officers and
employees, and each of the heirs, executors, successors and assigns of any of
the foregoing, from and against any and all Liabilities relating to, arising out
of or resulting from the breach of any representation, warranty, covenant or
agreement by the Subscriber contained in this Agreement.
4.3 Consequential Damages. Except as provided in the following
sentence, in no event shall any indemnity pursuant to Section 4.1 or Section 4.2
include any incidental, consequential, indirect, special or punitive damages.
However, any indemnity pursuant to Section 4.1 or Section 4.2 shall include any
such incidental, consequential, indirect, special or punitive damages recovered
by any third party pursuant to a claim against an Indemnified Party (as defined
below).
4.4 Defense of Claims. All rights of a Party to
indemnification under this Article IV shall be asserted and resolved as follows:
(a) Promptly after receipt by a Party entitled to
indemnification under Section 4.1 or Section 4.2 (an "Indemnified Party") of
notice of any pending or threatened claim, such Indemnified Party shall give
notice to the Party to whom the Indemnified Party is entitled to
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look for indemnification (the "Indemnifying Party") of the commencement thereof;
provided that the failure so to notify the Indemnifying Party shall not relieve
it of any liability that it may have to the Indemnified Party hereunder, except
to the extent that the Indemnifying Party demonstrates that it is actually
prejudiced thereby.
(b) In case any claim shall be brought against an Indemnified
Party and it shall give notice to the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate therein and, if
it so desires, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party and, after notice from the Indemnifying
Party to the Indemnified Party of its election to assume the defense thereof,
except as provided below the Indemnifying Party shall not be liable to such
Indemnified Party under this Article IV for any fees of other counsel or any
other expenses, in each case subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of
investigation. Notwithstanding an Indemnifying Party's election to assume the
defense of a claim, the Indemnified Party shall have the right to employ
separate counsel and to participate in the defense of such claim, and the
Indemnifying Party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the Indemnifying Party to
represent the Indemnified Party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
claim include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to assume the defense of such claim on the Indemnified
Party's behalf), (iii) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party within a reasonable time after notice of the institution of such claim, or
(iv) the Indemnifying Party shall authorize the Indemnified Party to employ
separate counsel at the Indemnifying Party's expense. If an Indemnifying Party
assumes the defense of a claim, no compromise or settlement thereof may be
effected by the Indemnifying Party without the Indemnified Party's written
consent unless (i) there is no finding or admission of any violation of law and
no effect on any other claims that may be made against the Indemnified Party and
(ii) the sole relief provided is monetary damages that are to be paid in full by
the Indemnifying Party.
(c) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder which does not involve a claim being
asserted by a third party, the Indemnified Party shall as promptly as is
practical notify the Indemnifying Party of such claim, describing such claim,
the amount thereof (if known) and the method of computation of the amount of the
claim, all with reasonable particularity. The failure to give any such notice
shall not relieve the Indemnifying Party of its obligations hereunder except to
the extent that such failure results in actual prejudice to the Indemnifying
Party. Upon the giving of such written notice as aforesaid, the Indemnified
Party shall have the right to commence legal proceedings for the enforcement of
its rights under Section 4.1 or Section 4.2.
4.5 Survival of Indemnities. The rights and obligations of
each the Parties under this Article IV shall survive the closing of the
transactions contemplated hereby and the sale or other transfer by any Party of
any assets or businesses or the assignment by it of any Liabilities.
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ARTICLE V
MISCELLANEOUS
5.1 Counterparts; Entire Agreement; Corporate Power.
(a) This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Party.
(b) This Agreement contains the entire agreement between the
Parties with respect to the subject matter hereof, supersede all previous
agreements, negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter and there are no agreements or
understandings between the Parties other than those set forth or referred to
herein or therein.
(c) Each of the Subscriber and the Company represents on
behalf of itself as follows:
(i) such Person has the requisite corporate or other
power and authority and has taken all corporate or other action necessary in
order to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; and
(ii) this Agreement has been duly executed and
delivered by it and constitutes a valid and binding agreement of it enforceable
in accordance with the terms thereof.
5.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
IRRESPECTIVE OF THE CHOICE OF LAWS PRINCIPLES OF THE STATE OF NEW YORK, AS TO
ALL MATTERS, INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT,
ENFORCEABILITY, PERFORMANCE AND REMEDIES.
5.3 Submission to Jurisdiction. Each Party hereby irrevocably
agrees that any legal action or proceeding against it arising out of this
Agreement or the transactions contemplated hereby shall be brought only in the
Supreme Court of the State of New York in and for the County of New York or the
U.S. District Court for the Southern District of New York, preserving, however,
all rights of removal to a federal court under 28 U.S.C. Section 1441.
5.4 Assignability. Except as set forth in this Agreement, this
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and assigns; provided, however, that no Party
hereto may assign its respective rights or delegate its respective obligations
under this Agreement without the express prior written consent of the other
Party hereto.
5.5 Third Party Beneficiaries. Except as provided in Section
5.4, the provisions of this Agreement are solely for the benefit of the Parties
and are not intended to confer upon any Person except the Parties any rights or
remedies hereunder. There are no third
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party beneficiaries of this Agreement and this Agreement shall not provide any
third person with any remedy, claim, liability, reimbursement, claim of action
or other right in excess of those existing without reference to this Agreement.
5.6 Notices. Any and all notices or other communications
permitted or required to be delivered or given under this Agreement shall be in
writing and signed by the Party giving such notice or other communication and
shall be sent by telecopy or similar means of simultaneous transmission and
receipt or shall be delivered personally, or sent by registered or certified
mail, postage prepaid and addressed as follows:
If to the Subscriber, to: Reuters Holdings Switzerland SA
000 Xxxxx xx Xxxxxx
0000 Xxxxxxxx-Xxxxxxxxx, Xxxxxx
Xxxxxxxxxxx
Attn: Xxx Xxxxxxxx
Fax: 00-00-000-0000
If to the Company, to: Instinet Group LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
In the case of personal delivery, the date of personal delivery or, in the case
of telecopy or similar means of simultaneous transmission and receipt, the date
of transmission or, in the case of mailing, the date of receipt, as the case may
be, shall be the date of the delivery or giving of such notice. Any Party may,
by notice to the other Party, change the address to which such notices are to be
given.
5.7 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any Party. Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to effect the original intent of
the Parties.
5.8 Expenses. Except as provided in Article IV, each of the
Parties shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
5.9 Waivers of Default. Waiver by any Party of any default by
the other Party of any provision of this Agreement shall not be deemed a waiver
by the waiving Party of any subsequent or other default, nor shall it prejudice
the rights of the other Party.
5.10 Amendments. No provisions of this Agreement shall be
deemed waived, amended, supplemented or modified by any Party, unless such
waiver, amendment, supplement
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or modification is in writing and signed by the authorized representative of the
Party against whom it is sought to enforce such waiver, amendment, supplement or
modification.
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SIGNATURES
IN WITNESS WHEREOF, this Agreement is hereby executed as of
the date first written above.
Reuters Holdings Switzerland SA
By: __________________________________
Name: Xxx Xxxxxxxx
Title: Director
Instinet Group LLC
By: __________________________________
Name:
Title:
