STOCK PURCHASE AGREEMENT

Exhibit 10.27

 

STOCK PURCHASE AGREEMENT BY AND AMONG

 

INSTINET GROUP INCORPORATED,

 

REUTERS C LLC

 

and

 

REUTERS LIMITED

 

Dated as of February 28, 2005

 

 

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

-ii-

 

TABLE OF CONTENTS

(continued)

 

 

-iii-

 

TABLE OF CONTENTS

(continued)

 

 

-iv-

 

TABLE OF CONTENTS

 

EXHIBITS

 

 

SCHEDULES

 

 

- v -

 

TABLE OF CONTENTS

(continued)

 

 

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STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT dated as of February 28, 2005 among Instinet Group Incorporated, a corporation organized under the laws of the State of Delaware (“ Buyer ”), Reuters C LLC, a limited liability company organized under the laws of the State of Delaware (“ Seller ”), and, solely for purposes of Section 3.25 (Parent’s Due Organization, Authorization and Validity of Agreements), Section 5.8 (Non-Compete/Non-Solicitation), Section 5.11 (Transfers of Seller’s Assets) and Article IX (Indemnification) hereof, Reuters Limited, a corporation organized under the laws of England and Wales (“ Parent ”) (Buyer, Seller and Parent each a “ Party ” and, collectively, the “ Parties ”).

 

RECITALS

 

WHEREAS, Seller is a wholly-owned indirect subsidiary of Parent;

 

WHEREAS, Seller is the owner of the Company Stock, as defined below, which represents one hundred percent of the outstanding capital stock of Bridge Trading Company (the “ Company ”);

 

WHEREAS, upon the terms and subject to the conditions hereinafter set forth, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller the Company Stock.

 

NOW, THEREFORE, in consideration of the foregoing and the respective premises, mutual covenants and agreements of the Parties hereto, 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 hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1 Definitions . Unless the context shall otherwise require, terms used and not defined herein shall have the following meanings:

 

“ Adjustment Certificate ” shall have the meaning specified in Section 2.3(a).

 

“ Adjustment Threshold Range ” means, with respect to the Net Soft Dollar Adjustment, the range of amounts from and including two million six hundred twenty-five thousand dollars ($2,625,000) to and including four million three hundred seventy-five thousand dollars ($4,375,000).

 

“ Affected Employees ” shall have the meaning specified in Section 8.11.

 

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly Controlled by, Controlling or under common Control with, such Person; provided that the term “Affiliate” when applied to Buyer, shall mean only those Persons directly or indirectly Controlled by Buyer, and when applied to either Parent or Seller, shall not include Buyer and those Persons directly or indirectly Controlled by Buyer.

 

“ Agreement ” means this Stock Purchase Agreement.

 

“ 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.

 

“ Average Instinet Share Price ” means the average (rounded to the nearest 1/1,000) of the Instinet Daily Prices for the ten (10) NASDAQ trading days ending on the second trading day immediately prior to the date of determination.

 

“ best of Buyer’s knowledge ” means the actual knowledge of those individuals listed on Schedule 1.1(a).

 

“ best of Seller’s knowledge ” means the actual knowledge of those individuals listed on Schedule 1.1(b).

 

“ Business Day ” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

“ Buyer ” shall have the meaning specified in the preamble to this Agreement.

 

“ Buyer Plan ” means each Plan which is maintained, sponsored or contributed to by Buyer or any of its Subsidiaries.

 

“ Buyer SEC Documents ” shall have the meaning specified in Section 4.8.

 

“ Closing ” and “ Closing Date ” shall have the meanings specified in Article II of this Agreement.

 

“ Closing Balance Sheet ” shall have the meaning specified in Section 2.3(a).

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

 

“ Company ” shall have the meaning specified in the recitals to this Agreement.

 

“ Company Employees ” shall have the meaning specified in Section 8.1.

 

“ Company Intellectual Property ” means (i) the Company Owned Intellectual Property and (ii) the Company Licensed Intellectual Property.

 

“ Company Licensed Intellectual Property ” means all Intellectual Property other than Company Owned Intellectual Property that is used or held for use by the Company.

 

“ Company Owned Intellectual Property ” means Intellectual Property owned by the Company, including any Intellectual Property that will be owned by the Company upon execution of the Intellectual Property Transfer Agreement.

 

“ Company Plan ” shall have the meaning specified in Section 3.13(a).

 

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“ Company Stock ” shall have the meaning specified in Section 2.1.

 

“ Competing Business ” shall have the meaning specified in Section 5.8(a).

 

“ Confidential Information ” shall have the meaning specified in Section 5.3(d).

 

“ Consent ” means any consent, waiver, approval, authorization, exemption, registration, license or declaration of or by any Person or any Authority, or expiration or termination of any applicable waiting period under any Legal Requirement, required with respect to any Party in connection with (i) the execution and delivery of this Agreement or any of the Related Agreements or (ii) the consummation of any of the transactions provided for hereby or thereby.

 

“ Constituent Documents ” means, with respect to any Person, the certificate of incorporation, certificate of formation, by-laws, articles of incorporation, limited liability company agreement or other similar constituent, organizational and governing documents.

 

“ Contest ” shall have the meaning specified in Section 10.4(a).

 

“ Contracts ” means any and all written contracts and agreements, including those that are franchises, warranties, understandings, arrangements, leases of personal property, licenses of personal property, registrations, authorizations, mortgages, bonds, notes and other instruments.

 

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of securities, by contract or otherwise.

 

“ Copyrights ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Customer ” shall have the meaning specified in Section 3.19(a).

 

“ Customer Contract ” shall have the meaning specified in Section 3.7(a).

 

“ Damages ” means any and all liabilities, damages, fines, penalties, losses, costs and expenses (including costs and expenses incurred in connection with performing obligations, bonding and appellate costs, reasonable attorneys’ and accountants’ fees and disbursements or other payments in respect of such payments).

 

“ Disclosure Schedules ” means the Schedules to this Agreement.

 

“ Dollars ” and “ $ ” mean United States dollars.

 

“ Domain Names ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Easements ” means the easements and rights of way necessary to the business or operations of the Company.

 

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“ Environment ” shall mean any ambient, workplace or indoor air, surface water, drinking water, groundwater, land surface, subsurface strata, sediment, plant or animal life, natural resources, and real property and the physical buildings, structures, improvements and fixtures thereon, including without limitation the sewer, septic and waste treatment, storage and disposal systems servicing the properties.

 

“ Environmental Claim ” shall mean any written claim, investigation or notice by any Person or any Authority alleging potential Liabilities (including potential Liabilities for investigatory costs, cleanup or remediation costs, governmental or third party response costs, natural resource damages, property damage, personal injuries, or fines or penalties) arising out of, based on or resulting from (a) the presence or Release of any Hazardous Materials at any location, whether or not owned or operated by the Company, or (b) any violation of any Environmental Law.

 

“ Environmental Law ” shall mean any Legal Requirement relating to: (a) the protection of the Environment, including pollution, contamination, cleanup, preservation and reclamation of the Environment, (b) human health or safety, including occupational health and safety, to the extent, in each case, relating to the exposure of employees or third parties to any Hazardous Materials, (c) any Release or threatened Release of any Hazardous Materials, including investigation, assessment, testing, monitoring, containment, removal, remediation and cleanup of any such Release or threatened Release, (d) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport, or recycling of any Hazardous Materials and (e) the presence of Hazardous Materials in any building, physical structure or fixture.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ Excess Net Capital ” means the amount by which (i) Net Capital as of the close of business on the Closing Date, as calculated in accordance with Rule 15c3-1 of the Exchange Act applied on a basis consistent with the Company’s historical accounting practices (such historical accounting practices used to calculate Net Capital are illustrated in the computation of Net Capital as at January 31, 2005, which is set forth in Schedule 1.1(d)), exceeds (ii) the minimum net capital requirement imposed by the SEC under Rule 15c3-1 or any Self-Regulatory Organization of which the Company is a member.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Excluded Employees ” shall have the meaning specified in Section 8.1.

 

“ Exclusive Soft Dollar Amount ” shall have the meaning specified in Section 3.24.

 

“ Exclusive Soft Dollar Customers ” means, collectively, the institutions that soft ReutersStations through the Company as of the date of this Agreement, which institutions are set forth on Schedule 3.24.

 

“ Exclusivity Period ” shall have the meaning specified in Section 5.10.

 

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“ Filing ” means any filing with any Person or Authority required by any Party in connection with (i) the execution and delivery of this Agreement or any of the Related Agreements or (ii) the consummation of any of the transactions provided for hereby or thereby.

 

“ Final Net Capital ” means the Net Capital as of the close of business on the Closing Date, as agreed between the Parties pursuant to Section 2.3(d) or as determined by the Neutral Auditor pursuant to Section 2.3(e).

 

“ Final Net Soft Dollar Adjustment ” means the Net Soft Dollar Adjustment as of the close of business on the Closing Date, as agreed between the Parties pursuant to Section 2.3(d) or as determined by the Neutral Auditor pursuant to Section 2.3(e).

 

“ Final Working Capital ” means the Working Capital as of the close of business on the Closing Date, as agreed between the Parties pursuant to Section 2.3(d) or as determined by the Neutral Auditor pursuant to Section 2.3(e).

 

“ GAAP ” means United States generally accepted accounting principles as of the date of this Agreement.

 

“ Hazardous Materials ” shall mean any pollutant, contaminant, constituent, chemical, raw material, product or by-product, mold, radon, petroleum or any fraction thereof, asbestos or asbestos-containing material, polychlorinated biphenyls, any hazardous, industrial or solid waste, and any toxic, radioactive, infectious or hazardous substance, material or agent, including without limitation all substances, materials or wastes which are identified by or subject to regulation under any Environmental Law.

 

“ Historical Financial Statements ” means the audited financial statements, including balance sheets, statements of income, statements of changes in stockholder’s equity and statements of cash flows for the Company as of and for the fiscal years ended December 31, 2002, December 31, 2003 and December 31, 2004 (including the related notes and schedules thereto, and auditors’ reports thereon).

 

“ Indebtedness ” means, as to any Person, without duplication (i) all Obligations of such Person for borrowed money or for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (ii) all Obligations of such Person evidenced by a note, bond, debenture or similar instrument, (iii) all reimbursement obligations of such Person with respect to all letters of credit securing Obligations of the type described in clauses (i), (ii), (iv) and (v) of any other Person, but only to the extent of the Obligations secured, (iv) all Obligations under any interest rate and currency protection agreement (including, without limitation, any swaps, forward contracts, caps, floors, collars and similar agreements) and commodity swaps, forward contracts and similar agreements and (v) all guarantees issued in respect of Obligations described in clauses (i)-(iv) above of any other Person.

 

“ Indemnified Party ” shall have the meaning specified in Section 9.3(a).

 

“ Indemnifying Party ” shall have the meaning specified in Section 9.3(a).

 

“ In-Scope Employees ” shall have the meaning specified in Section 8.1.

 

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“ Instinet Common Stock ” shall have the meaning specified in Section 2.2.

 

“ Instinet Daily Price ” means, for any trading day, the closing sale price of Instinet Common Stock on NASDAQ on such NASDAQ trading day as reported by the Wall Street Journal .

 

“ Instinet Securities ” shall have the meaning specified in Section 5.7.

 

“ Intellectual Property ” means all intellectual property and similar proprietary rights in any jurisdiction, whether owned, used or held for use under license, whether registered or unregistered, including such rights in and to: (i) trademarks and pending trademark applications, trade dress, service marks, certification marks, logos, trade names, brand names, corporate names, and the goodwill associated with the foregoing (the “ Trademarks ”); (ii) issued patents and pending patent applications, and any and all divisions, continuations, continuations in part, reissues, continuing patent applications, reexaminations, and extensions thereof, any counterparts claiming priority therefrom (collectively, “ Patents ”); inventions, invention disclosures, discoveries and improvements, whether patentable or not; (iii) works of authorship (the “ Copyrights ”); (iv) trade secrets (including, but not limited to, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and common law), business, technical and know how information, non-public information, and confidential information and rights to limit the use or disclosure thereof by any Person (collectively, “ Trade Secrets ”); (v) computer software, data files, source and object codes, user interfaces, manuals, databases and other software-related specifications and documentation (collectively, “ Software ”); (vi) domain names and uniform resource locators (“ Domain Names ”); (vii) mask works; (viii) moral rights; and (ix) claims, causes of action and defenses relating to the enforcement of any of the foregoing.

 

“ Intellectual Property Transfer Agreement ” means that certain agreement between Seller and the Company pursuant to which Seller will transfer to the Company prior to the Closing the Intellectual Property listed on Schedule 1.1(c).

 

“ Intercompany Accounts ” means all amounts, whether financial or commercial in nature, owing from or to Parent or its Subsidiaries, on the one hand, to or from the Company, on the other hand.

 

“ IRS ” means the United States Internal Revenue Service or any successor authority.

 

“ Judgments ” means any and all judgments, orders, writs, directives, rulings, decisions, injunctions (preliminary or permanent), decrees, assessments, settlement agreements or awards of any Authority or arbitrator.

 

“ Legal Requirements ” means any and all (i) federal, territorial, state, local and foreign laws, ordinances and regulations, (ii) codes, standards, rules, regulations, requirements, orders, interpretations and criteria issued under any federal, territorial, state, local or foreign laws, ordinances or regulations, or by any Self-Regulatory Organization and (iii) Judgments.

 

“ Liabilities ” means all liabilities or obligations arising therefrom or relating thereto (whether known, unknown, absolute, contingent or otherwise).

 

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“ License Agreement ” means an agreement relating to a temporary license regarding the Company’s name brand to be granted by Reuters SA to Buyer as part of the transactions contemplated herein, in substantially the form attached hereto as Exhibit C.

 

“ Lien ” means any mortgage, adverse claim, pledge, hypothecation, charge, assignment, title deposit arrangement, encumbrance, lien, or any other security interest or similar agreement or arrangement of any kind or nature whatsoever.

 

“ Material Adverse Change ” means any change giving rise to a Material Adverse Effect.

 

“ Material Adverse Effect ” means (i) any one or more events, circumstances, conditions or changes which have, or which would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the operations, results of operations, or financial condition of the Company, or (ii) any effect that would, individually or in the aggregate, materially impair, hinder or otherwise materially and adversely affect the ability of Seller, Parent or the Company to effect the Closing or to perform any of their material obligations under this Agreement or any of the Related Agreements; provided that any events, circumstances, conditions, changes or effects resulting from (a) changes in U.S. or worldwide economic conditions generally, (b) general changes in U.S. securities markets (except to the extent that such changes have a materially disproportionate effect on the Company), (c) changes in general conditions in the brokerage and trading industries, including with respect to softing (except to the extent that such changes have a materially disproportionate effect on the Company, taken as a whole, relative to other participants in these industries), or (d) the announcement or performance of this Agreement, the Related Agreements or the transactions contemplated hereby or thereby, shall not be taken into account in determining the existence of a Material Adverse Effect.

 

“ Material Contract ” shall have the meaning specified in Section 3.7(b).

 

“ NASD ” means the National Association of Securities Dealers, Inc.

 

“ Net Capital ” means, as of the applicable date, net capital of the Company as calculated in accordance with Rule 15c3-1 of the Exchange Act applied on a basis consistent with the Company’s historical accounting practices (such historical accounting practices used to calculate Net Capital are illustrated in the computation of Net Capital as at January 31, 2005, which is set forth in Schedule 1.1(d)).

 

“ Net Soft Dollar Adjustment ” means an amount equal to the total adjustment to the Closing Balance Sheet to take account of the differences between Seller’s and Buyer’s historical accounting practices with respect to soft dollar assets and liabilities, determined in accordance with methodologies illustrated by the computation of the Net Soft Dollar Adjustment as at January 31, 2005, which is set forth in Schedule 2.3.

 

“ Neutral Auditor ” shall have the meaning specified in Section 2.3(d).

 

“ Obligations ” means, in respect of any indebtedness, any principal, interest, penalties, fees, guarantees, reimbursements and other liabilities pursuant to the terms thereof.

 

“ Occupancy Arrangements ” shall have the meaning specified in Section 3.5(b).

 

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“ Occupied Space ” shall have the meaning specified in Section 3.5(b).

 

“ Parent ” shall have the meaning specified in the preamble to this Agreement.

 

“ Parties ” shall have the meaning specified in the preamble to this Agreement.

 

“ Party ” shall have the meaning specified in the preamble to this Agreement.

 

“ Patents ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Permits ” means any and all permits, authorizations, approvals, registrations, certificates, orders, waivers, variances or other approvals and licenses relating to compliance with any Legal Requirement.

 

“ Permitted Encumbrances ” means (i) Liens for Taxes that are not yet due and payable or are being contested in good faith by appropriate proceedings, (ii) statutory or common law Liens to secure obligations to landlords, lessors or renters under leases or rental agreements confined to the premises rented, (iii) easements, encroachments and other minor imperfections of title to real property, (iv) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, vacation pay, unemployment insurance, old age pension or other social security programs mandated under applicable law, and (v) statutory or common law Liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like Liens.

 

“ Person ” means an individual or a corporation, partnership, trust, limited liability company, unincorporated organization, joint stock company, joint venture, association or other entity, or any government, or any agency or political subdivision thereof.

 

“ Plan ” means each plan, program, arrangement or agreement which is an employment, consulting, termination or deferred compensation or executive compensation, incentive bonus or other bonus, change in control, retention, termination, pension, profit-sharing, savings, retirement, stock option, stock purchase or other equity-based, severance, life, health, disability or accident, or vacation, or other employee or retiree compensation or benefit plan, program, arrangement or agreement, including any “employee benefit plan,” within the meaning of Section 3(3) of ERISA.

 

“ Post-Closing Adjustment Certificate ” shall have the meaning specified in Section 2.3(c).

 

“ Post-Closing Balance Sheet ” shall have the meaning specified in Section 2.3(c).

 

“ Post-Closing Tax Period ” shall mean any taxable period (including any portion thereof) commencing after the Closing Date.

 

“ Pre-Closing Tax Period ” shall have the meaning specified in Section 10.1.

 

“ Proceeding ” shall have the meaning specified in Section 3.8(a).

 

“ Purchase Price ” shall have the meaning specified in Section 2.2.

 

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“ Related Agreements ” means the Transition Services Agreement, in substantially the form attached hereto as Exhibit A, the St. Louis Agreement, in substantially the form attached hereto as Exhibit B and the License Agreement, in substantially the form attached hereto as Exhibit C.

 

“ Release ” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater, and surface or subsurface strata), or into or out of any property, including the movement through air, soil, surface water, groundwater or property.

 

“ Reports ” shall have the meaning specified in Section 3.20.

 

“ Restricted Business ” shall have the meaning specified in Section 5.8(a).

 

“ Reuters Entities ” means (i) Parent, (ii) Seller, (iii) Reuters Group PLC (“ Reuters Group ”), (iv) any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is, directly or indirectly, owned or controlled by Reuters Group and over which Reuters Group has, directly or indirectly, actual Control which is not restricted by fiduciary or other duties owed to any Person (other than another Reuters Entity) and (v) any wholly-owned subsidiary of Reuters Group or any other Reuters Entity.

 

“ Reuters Group ” shall have the meaning specified in the definition of “Reuters Entities” in this Section 1.1.

 

“ ReutersStations ” means the terminals currently branded as ReutersStations and previously branded as Bridge Stations.

 

“ SEC ” means the United States Securities Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Self-Regulatory Organization ” means any U.S. or foreign securities or commodities exchange, association, clearing agency or similar organization of which the relevant party is a member or that otherwise has jurisdiction over the activities of such party.

 

“ Seller ” shall have the meaning specified in the preamble to this Agreement.

 

“ Seller Plan ” means each Plan (x) which is maintained, sponsored or contributed to by Seller, the Company or any of their Affiliates or to which Seller, the Company or any of their Affiliates is a party or is obligated to contribute and (y) in which any current or former employee of the Company is eligible to participate or derive a benefit except, with respect to any such Plan for which Buyer or any of its Affiliates will not have any Liability, any such Plan that is immaterial.

 

“ Soft Dollar Restrictive Event ” means (i) the elimination of the safe harbor provision contained in Section 28(e) of the Exchange Act, which safe harbor permits investment advisers and other fiduciaries to use customer commissions in respect of trading services to pay

 

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for certain brokerage and research services (“ softing ” and such allocated amounts, “ soft dollars ”), or (ii) the issuance of an interpretive position, adoption of a rule or regulation, or other final action relating to the use of soft dollars by any U.S. Authority that has had or is reasonably likely to have a material adverse effect on the business prospects, results of operations or financial condition of the Company.

 

“ softing ” or “ soft dollars ” shall have the meaning specified in the definition of “Soft Dollar Restrictive Event” in this Section 1.1.

 

“ Software ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Special Payment ” shall have the meaning specified in Section 8.11.

 

“ St. Louis Agreement ” means an agreement relating to the occupancy by the Company of the St. Louis Facility, in substantially the form attached hereto as Exhibit B.

 

“ St. Louis Facility ” means the space described on Schedule 3.5(b), located at 788 Office Parkway, Creve Coeur, Missouri, and used by the Company pursuant to an Occupancy Arrangement with Seller.

 

“ Subsidiary ” of any Person, means, from time to time, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary or contingent voting power to elect directors of such corporation is owned by such Person directly or indirectly through Subsidiaries of such Person, and (ii) any partnership, association, joint venture, limited liability company or other entity in which such Person directly or indirectly through any Subsidiaries has more than a 50% equity interest or is a general or managing partner; provided that the term “Subsidiary” when applied to Parent or Seller shall not include Buyer or any of Buyer’s Subsidiaries or the Company.

 

“ Tax Claim ” shall have the meaning specified in Section 10.4(a).

 

“ Tax Indemnitee ” shall have the meaning specified in Section 10.3(a).

 

“ Tax Return ” means a report, return or other information (including any amendments) required to be supplied to a governmental entity with respect to Taxes.

 

“ Taxes ” means all taxes, however denominated, including any interest or penalties that may become payable in respect thereof, imposed by any federal, state, local or foreign government or any agency or political subdivision of any such government, which taxes shall include, without limiting the generality of the foregoing, all income taxes (including, but not limited to, United States federal income taxes and state income taxes), payroll and employee withholding taxes, unemployment insurance, social security, sales and use taxes, excise taxes, environmental, franchise taxes, gross receipts taxes, occupation taxes, property taxes, stamp taxes, transfer taxes, withholding taxes, and other obligations of the same or of a similar nature, whether arising before, on or after the Closing Date.

 

“ Third Party Data Provider ” shall have the meaning specified in Section 5.12.

 

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“ Third Party Personnel ” means any individual not employed by the Company, who provides, or who has provided since September 28, 2001, services to the Company pursuant to a Contract between the Company and such individual (or any management, service, consulting or similar firm) under which the Company received services at a cost in excess of fifty thousand dollars ($50,000) in any calendar year.

 

“ Trade Secrets ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Trademarks ” shall have the meaning specified in the definition of “Intellectual Property” in this Section 1.1.

 

“ Transition Services Agreement ” means an agreement relating to certain transition services to be provided by Seller to Buyer as part of the transactions contemplated herein, in substantially the form attached hereto as Exhibit A.

 

“ Uniform Trade Secrets Act ” shall mean the Uniform Trade Secrets Act promulgated by the National Conference of Commissioners on Uniform State Laws in 1979, as amended.

 

“ Unrestricted Companies ” shall have the meaning specified in Section 5.8(c).

 

“ Voluntary Bankruptcy ” means, with respect to any Person, an admission in writing by such Person of its inability to pay its debts generally or a voluntary general assignment by such Person for the benefit of creditors; the voluntary filing of any petition or answer by such Person seeking to adjudicate it bankrupt or insolvent, or voluntarily seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of such Person or its debts under any Legal Requirement relating to bankruptcy, insolvency or reorganization or relief of debtors, or voluntarily seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of its property; or corporate action taken by such Person to authorize any of the actions set forth above.

 

“ Working Capital ” means, as of the applicable date, current assets minus current liabilities of the Company, determined in accordance with GAAP applied on a basis consistent with that used to present the current assets and current liabilities in the Historical Financial Statements (such historical accounting practices used to calculate Working Capital are illustrated in the computation of Working Capital as at January 31, 2005, which is set forth in Schedule 1.1(e)).

 

1.2 Interpretation . In this Agreement and in the Schedules and Exhibits hereto:

 

(a) the Table of Contents and headings are for convenience only and shall not affect the interpretation of this Agreement;

 

(b) unless otherwise specified, references to Articles, Sections, clauses, Schedules and Exhibits are references to Articles, Sections and clauses of, and Schedules and Exhibits to, this Agreement;

 

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(c) references to any document or agreement, including this Agreement, shall be deemed to include references to such document or agreement as amended, supplemented or replaced from time to time in accordance with its terms and (where applicable) subject to compliance with the requirements set forth therein;

 

(d) references to any party to this Agreement or any other document or agreement shall include its successors and permitted assigns;

 

(e) whenever in this Agreement, a Contract or instrument is referred to as “enforceable,” such statement shall be deemed to be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to the enforcement of creditors’ rights generally and by general principles of equity;

 

(f) the words “include”, “includes” and “including” are not limiting and are deemed to be followed by the words “without limitation,” unless the context clearly requires otherwise;

 

(g) neutral pronouns and variations thereof shall be deemed to include the feminine and masculine and neuter form;

 

(h) all terms used in the singular shall be deemed to include the plural and vice versa as the context may require; and

 

(i) unless the context requires otherwise, derivative forms of any capitalized term defined herein shall have a comparable meaning to that of such term.

 

ARTICLE II

 

THE CLOSING

 

On the fifth Business Day (or such other day as the Parties may agree) after the last to be fulfilled or waived of the conditions set forth in Article VI (other than those conditions that are specified as being satisfied on the Closing Date or at the Closing) shall be fulfilled or waived, the closing of the transactions provided for in this Agreement (the “ Closing ”) shall be held (but only if all of the conditions set forth in Article VI shall have been satisfied or waived prior to or at the Closing) at the offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York, 10006 (the “ Closing Date ”). Each of the Parties hereby agrees that the following actions shall occur and be effective at and as of the Closing.

 

2.1 Acquisition and Transfer of the Company Stock . In reliance upon the representations, warranties, covenants and agreements contained herein and upon the terms and subject to the conditions hereinafter set forth, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, free and clear of all Liens, other than restrictions imposed by applicable securities laws, 1,000 shares of common stock, par value $1.00 per share, of the Company (the “ Company Stock ”), representing one hundred percent (100%) of the outstanding capital stock of the Company.

 

2.2 Purchase Price . The aggregate consideration (the “ Purchase Price ”) for the Company Stock shall be an aggregate number of shares of common stock, $0.01 par value

 

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per share, of Buyer (the “ Instinet Common Stock ”), equal to the quotient of (x) twenty-one million five hundred thousand dollars ($21,500,000) divided by (y) the Average Instinet Share Price determined as of the Closing Date.

 

2.3 Net Soft Dollar Adjustment .

 

(a) No later than five (5) Business Days prior to the Closing Date, Seller shall prepare and deliver to Buyer (x) an estimated balance sheet for the Company as of the close of business on the Closing Date, prepared in accordance with GAAP applied consistently with the Company’s historical accounting practices (such historical accounting practices are illustrated in the balance sheet as at January 31, 2005, which is set forth on Schedule 1.1(e)) (the “ Closing Balance Sheet ”), and (y) a certificate setting forth, based on such Closing Balance Sheet, the Company’s estimates of the Net Soft Dollar Adjustment, Net Capital and Working Capital, in each case as of the close of business on the Closing Date (the “ Adjustment Certificate ”). Buyer shall have two (2) Business Days to review the Closing Balance Sheet and the Adjustment Certificate and, in connection with such review, Seller shall provide Buyer with such work papers or other supporting information as Buyer may reasonably request.

 

(b) On or prior to the third Business Day after Buyer’s receipt of the Closing Balance Sheet and the Adjustment Certificate from Seller, Buyer shall deliver a written notice to Seller specifying in reasonable detail any disputed items relating to the Adjustment Certificate. If there is no dispute or if there is a dispute and Buyer and Seller cannot agree on the amount of the Net Soft Dollar Adjustment, Net Capital or Working Capital set forth in the Adjustment Certificate prior to the Closing Date, the Net Soft Dollar Adjustment, Net Capital and Working Capital for purposes of Section 6.1(k) shall be Seller’s calculation thereof, as set forth in the Adjustment Certificate.

 

(c) As soon as practicable after the Closing, but in no event later than forty-five (45) days after the Closing Date, Buyer shall prepare and deliver to Seller (x) a balance sheet of the Company as of the close of business on the Closing Date, prepared in accordance with GAAP applied consistently with the Company’s historical accounting practices (such historical accounting practices are illustrated in the balance sheet as at January 31, 2005, which is set forth on Schedule 1.1(e)) (the “ Post-Closing Balance Sheet ”) and (y) a certificate setting forth, based on such Post-Closing Balance Sheet, the Net Soft Dollar Adjustment, Net Capital and Working Capital, in each case as of the close of business on the Closing Date (the “ Post-Closing Adjustment Certificate ”). To the extent necessary, Seller shall provide Buyer with such supporting information and assistance as Buyer may reasonably request in connection with the preparation of the Post-Closing Balance Sheet and the Post-Closing Adjustment Certificate.

 

(d) Seller shall have thirty (30) days to review the Post-Closing Balance Sheet and the Post-Closing Adjustment Certificate and, in connection with such review, Buyer shall provide Seller with such work papers or other supporting information as Seller may reasonably request. On or prior to the 30th day after the receipt of the Post-Closing Adjustment Certificate, Seller shall deliver a written notice to Buyer specifying in reasonable detail any disputed items relating to the Post-Closing Adjustment Certificate. If the Seller does not notify Buyer of any such disputed items on or prior to such 30th day, the calculations set forth on the Post-Closing Adjustment Certificate shall be deemed accepted by Seller and shall be final and binding. If the Seller so notifies Buyer of any disputed items on or prior to such 30th day then: (i) any items not disputed shall be deemed accepted by Seller and shall be final and binding, and (ii) the Parties

 

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shall inform Deloitte & Touche or another mutually agreed independent, internationally-recognized accounting firm (the “ Neutral Auditor ”) of all such disputed items in connection with the Post-Closing Adjustment Certificate pursuant to Section 2.3(e).

 

(e) If the Seller notifies Buyer of any disputed items in connection with the Post-Closing Adjustment Certificate pursuant to Section 2.3(d), promptly after Buyer’s receipt of Seller’s notification, Buyer and Seller shall jointly engage the Neutral Auditor to determine the disputed items in Seller’s notification. Each of Buyer and Seller shall instruct the Neutral Auditor to use its reasonable best efforts to complete its determination within twenty (20) days of its engagement and to set forth its determination of the Final Net Soft Dollar Adjustment, Final Net Capital and Final Working Capital on a written statement delivered to each of Buyer and Seller, which determination shall be final, binding and conclusive upon the Parties. The costs, expenses and fees of the Neutral Auditor shall be borne equally by both Buyer and Seller.

 

(f) Within three (3) Business Days of (i) the Parties’ agreement on the Final Net Soft Dollar Adjustment, Final Net Capital and Final Working Capital pursuant to Section 2.3(d) or (ii) the Neutral Auditor’s delivery of the written statement setting forth its determination of the Final Net Soft Dollar Adjustment, Final Net Capital and Final Working Capital pursuant to Section 2.3(e), the applicable Party shall make the following payment, if any:

 

(i) Seller shall pay to Buyer, by wire transfer of immediately available funds to an account designated for that purpose by Buyer, an amount equal to the greater of (A) the amount, if any, by which (1) the amount of Net Capital that the Company would have been required to have as of the Closing pursuant to Section 6.1(k) based on the Final Net Soft Dollar Adjustment exceeds (2) the Final Net Capital and (B) the amount, if any, by which Final Working Capital is less than zero dollars ($0); or

 

(ii) in the event that the Final Net Soft Dollar Adjustment is below the Adjustment Threshold Range, and the Final Net Capital exceeds the amount of Net Capital that the Company would have been required to have as of the Closing pursuant to Section 6.1(k) based on the Final Net Soft Dollar Adjustment, Buyer shall pay to Seller the amount of such excess, which amount shall be payable in shares of Instinet Common Stock equal to (x) the amount payable pursuant to this paragraph (B) divided by (y) the Average Instinet Share Price determined as of the date of payment.

 

Any payments to be made by the Parties pursuant to this Section 2.3(f) shall be treated as an adjustment to the Purchase Price.

 

(g) Each Party hereby agrees that to the extent that any Damages arising from the breach of any representation or warranty under this Agreement have been compensated pursuant to the Final Net Soft Dollar Adjustment contemplated under this Section 2.3, such Party will not be entitled to any recovery pursuant to Article IX in connection with such breach.

 

2.4 Provision of ReutersStations to Buyer . On and after the Closing and until December 31, 2005, Seller shall (i) make available or otherwise provide Buyer with ten (10) ReutersStations, free of charge, for use in the training of Buyer’s trading personnel, and (ii) provide, or otherwise assist in, the training necessary of such trading personnel of Buyer in connection with the use of such ReutersStations.

 

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2.5 Closing Deliveries . At the Closing, (i) the Parties shall exchange the documents referred to in Article VI, (ii) Seller shall deliver to Buyer certificates for all of the Company Stock, duly endorsed for transfer or accompanied by duly executed stock powers, stock transfer forms or other transfer forms sufficient to convey to Buyer good title to the Company Stock free and clear of all Liens, other than restrictions imposed by applicable securities laws, (iii) the share register of the Company with Buyer registered as the new and only shareholder of the Company and (iv) Buyer shall deliver certificates for the Instinet Common Stock to be delivered as the Purchase Price issued in the name of Seller free and clear of all Liens, other than restrictions imposed by applicable securities laws.

 

2.6 Tax Consequences . It is intended that the acquisition of Company Stock provided for in this Agreement shall constitute a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement shall constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

 

Each of the representations and warranties contained in Section 3.1 through and including Section 3.24 is made only by Seller to Buyer, and each of the representations and warranties contained in Section 3.25 is made only by Parent to Buyer. Subject to the preceding sentence, Seller and Parent hereby represent and warrant to Buyer as follows:

 

3.1 Due Organization, Good Standing and Power .

 

(a) Each of Seller and the Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware.

 

(b) The Company has the requisite power and authority to own, lease and operate its assets and to conduct the business now being conducted by it and, on the Closing Date, will have the requisite power and authority to own, lease and operate its assets and to conduct the business being conducted by it on the Closing Date. Seller has all requisite power and authority to enter into this Agreement and any Related Agreement to which it is a party and to perform its obligations hereunder and thereunder. The Company has all requisite power and authority to enter into the Related Agreements to which it is a party and to perform its obligations thereunder.

 

(c) Schedule 3.1(c) lists all of the Constituent Documents of the Company, as amended to the date of this Agreement and in full force and effect as of the date of this Agreement, true, correct and complete copies of which have been made available to Buyer.

 

3.2 Authorization and Validity of Agreements . The execution, delivery and performance by Seller of this Agreement and each Related Agreement to which it is a party and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary action. The execution, delivery and performance by the Company of each Related Agreement to which it is a party and the consummation by the Company of the transactions contemplated thereby have been duly authorized and approved by all necessary corporate or other action. This Agreement has been duly executed and delivered by Seller and, assuming that this Agreement is a legal, valid and binding obligation of each of the

 

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other parties hereto, is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. Each of the Related Agreements to which Seller or the Company is a party will, upon its execution and delivery, be the legal, valid and binding obligation of such Person, enforceable against it in accordance with its terms, assuming that each of the Related Agreements to which Seller or the Company is a party will, upon its execution and delivery be a legal, valid and binding obligation of each of the other parties thereto.

 

3.3 Absence of Conflicts . The execution, delivery and performance by Seller of this Agreement and any Related Agreement to which Seller will be a party and the consummation by Seller of the transactions contemplated hereby and thereby, and the execution, delivery and performance by the Company of each Related Agreement to which it will be a party and the consummation by it of the transactions contemplated thereby, does not and will not: (i) violate any Legal Requirement applicable to any such Person, (ii) conflict with, or result in the breach of any provision of any such Person’s Constituent Documents, (iii) result in the creation of any Lien upon any of such Person’s material assets, or (iv) except as set forth on Schedule 3.3, violate, conflict with or result in the breach or termination of, or otherwise give any other Person the right to terminate, or constitute a default, event of default or an event which, with notice, lapse of time or both, would constitute a default or event of default, in each case, in a material respect, under the terms of any material Contract or material Permit to which such Person is a party or by which its properties or businesses are bound.

 

3.4 Financial Statements; Undisclosed Liability; No Material Adverse Change; Absence of Changes.

 

(a) The Historical Financial Statements, which are set forth on Schedule 3.4(a), have been prepared in accordance with GAAP, consistently applied by the Company, and in accordance with the books and records of the Company (except as may be indicated in the notes thereto). The Historical Financial Statements fairly present in all material respects the financial position of the Company as of such dates and the results of operations of the Company for such periods in accordance with GAAP.

 

(b) Except as set forth on Schedule 3.4(b), there exist no liabilities, whether known, unknown, due or to become due, absolute or contingent, of the Company, other than (i) liabilities that are reflected, reserved for or disclosed in the Historical Financial Statements for the year ended December 31, 2004 (to the extent not heretofore extinguished), (ii) liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2004, (iii) liabilities incurred pursuant to the transactions contemplated by this Agreement or the Related Agreements, (iv) liabilities of a type not required to be reflected in a balance sheet of the Company (or notes thereto) prepared in accordance with GAAP and (v) Taxes which are the responsibility of Seller pursuant to Section 10.2.

 

(c) Since December 31, 2004, there has been no Material Adverse Change.

 

(d) Since December 31, 2004 until the date of this Agreement, other than as expressly contemplated by this Agreement, the Company has conducted its business in the usual and ordinary course, consistent with past practice.

 

(e) Except as set forth on Schedule 3.4(e) or in the Historical Financial Statements for the year ended December 31, 2004, the Company has no Indebtedness.

 

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(f) As of the date of December 31, 2004, the Company’s Net Capital was no less than the minimum net capital requirement imposed by the SEC under Rule 15c3-1 or any Self-Regulatory Organization of which the Company is a member.

 

3.5 Title to Assets; Maintenance, Operation and Sufficiency of Assets .

 

(a) The Company has good and valid title to, or a valid leasehold interest in, all material assets used or operated by it, located on its premises or shown on the balance sheet of the Historical Financial Statements for the year ended December 31, 2004 or acquired since December 31, 2004, free and clear of all Liens, subject to Permitted Encumbrances and except as specified in Schedule 3.5(a).

 

(b) The Company is not the fee owner or leasehold owner of any real property. Attached hereto as Schedule 3.5(b) is a schedule of properties owned in fee or leased by Seller or its Affiliates and occupied by the Company (the “ Occupied Space ”) as of the date of this Agreement pursuant to verbal agreements (the “ Occupancy Arrangements ”), including the address of each such property, the parties to the agreements, and, with respect to the St. Louis Facility, the amount of rent or other fees paid by Company to Seller or its Affiliate, as applicable, pursuant to the applicable Occupancy Arrangement. The Company does not occupy or use any space other than the Occupied Space. To the best of Seller’s knowledge there exists no material default by the Company of its obligations under the Occupancy Arrangements.

 

(c) Since December 31, 2004 until the date of this Agreement, there has not occurred:

 

(i) any material revaluation by the Company of any of its material assets; or

 

(ii) any sale or transfer of any material assets of the Company, other than sales of products or services to customers in the ordinary course of business.

 

(d) The assets owned, used or operated by the Company are and, upon the consummation of the transactions contemplated by this Agreement and the Related Agreements, will be (together with the services and other support to be provided by Seller following the Closing pursuant to the Related Agreements), sufficient for the continued conduct of the Company’s business after the Closing in substantially the same manner as such business was conducted prior to the Closing.

 

3.6 Insurance . Schedule 3.6 sets forth as of the date of this Agreement: (i) each insurance policy under which the Company is a beneficiary, (ii) the name of the insurer with which such policy is or was carried; (iii) the annual premium payable thereunder; (iv) the amount of coverage (including the amount of any deductible) thereunder; and (v) the period of coverage thereunder. All premiums due and payable under each such policy have been duly paid to date and each such insurance policy is in full force and effect up to the full amount of coverage indicated on Schedule 3.6 and, to the best of Seller’s knowledge, is not voidable on account of any act, omission or nondisclosure on the part of the Company as of the date of this Agreement. The Company is not in material default with respect to any provision of any of such insurance policies. Except as set forth in Schedule 3.6, as of the date of this Agreement, the

 

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Company has not been refused any insurance coverage by any insurance carrier to which they have applied for insurance during the past three years.

 

3.7 Contracts .

 

(a) Seller has provided to Buyer copies of the Company’s true and complete form customer contracts for, or representative examples of addenda to third-party contracts entered into with the Company’s top three service providers in connection with, each of its business lines. The Company is not bound by any material Contract requiring it to sell or provide brokerage, research or other products or services (each, a “ Customer Contract ”) that is not substantially similar, or that is substantially more favorable to the counterparty, than the form customer contract or representative addenda for the relevant business line previously provided to the Buyer, other than as set forth on Schedule 3.7(a).

 

(b) As of the date of this Agreement, except as set forth on Schedule 3.7(b), the Company is not bound by any Material Contract. A “ Material Contract ” means (i) any Contract which contains restrictions with respect to payment of dividends or any other distribution in respect of its capital stock, partnership interests or membership interests, (ii) any Contract requiring the Company to make future capital expenditures in excess of $50,000 (either individually or in the aggregate), (iii) any Contract relating to Indebtedness of the Company, (iv) any loan or advance by the Company to, or investment by the Company in, any Person, in each case, which involves an amount in excess of $50,000, or any agreement, contract or commitment relating to the making of any such loan, advance or investment, (v) any management, service, consulting or any other similar type of Contract requiring payment of fees in excess of $50,000 per year, (vi) any Contract limiting the ability of the Company to engage in any line of business or to compete with any Person, (vii) any material warranty, guaranty or similar undertaking with respect to contractual performance extended by the Company other than in the ordinary course of business, (viii) any material Contract that cannot be terminated by the Company without liability upon less than sixty (60) days’ notice, (ix) any collective bargaining agreement with any labor union or other representative of employees, (x) any Contract that governs any joint venture, partnership or other cooperative arrangement or any other relationship involving a sharing of profits, (xi) any Contract that would result in the merger with or into or consolidation into another Person, (xii) any Contract that provides for the provision of material services to the Company by Third Party Personnel, (xiii) any Contract with any Authority, or (xiv) any material amendment, modification or supplement in respect of any of the foregoing. Except as otherwise set forth on Schedule 3.7(b), each Material Contract and each Customer Contract to which the Company is a party (including any Material Contract or Customer Contract entered into after the date hereof pursuant to Section 5.1) is in full force and effect, and there exists no material default by the Company or, to the best of Seller’s knowledge, any event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any further event or condition or any combination thereof, would become a material default by the Company thereunder.

 

(c) Prior to the date hereof, Seller has made available, or caused to be made available, to Buyer correct and complete copies of all Material Contracts listed on Schedule 3.7(b).

 

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3.8 Proceedings .

 

(a) Except as set forth in Schedule 3.8(a), there is no suit, action or legal, administrative or arbitration proceeding (including any citations, complaints, consent orders, compliance schedules or other similar enforcement orders) or any governmental investigation (each, a “ Proceeding ” and collectively, “ Proceedings ”), pending or, to the best of Seller’s knowledge, threatened, before any Authority or arbitrator against Seller or the Company (i) seeking to restrain or prohibit the execution of this Agreement or the Related Agreements or the consummation of the transactions contemplated hereby or thereby (other than any such Proceedings which are also pending or threatened against Buyer or any of its Affiliates (other than Seller or the Company), including any of their respective directors, officers or employees), or (ii) except as would not result in a Material Adverse Effect, seeking to modify, suspend, revoke, withdraw, terminate or otherwise limit any material Permit or Easement used or held by the Company.

 

(b) As of the date of this Agreement, except as set forth on Schedule 3.8(b), the Company is not (i) subject to any Judgment or (ii) a party to or, to the best of Seller’s knowledge, threatened to be made a party to any Proceedings where an adverse outcome would result in liability to the Company in excess of $50,000.

 

3.9 Compliance with Legal Requirements . Except as specified in Schedule 3.9, the Company is in compliance with all applicable material Legal Requirements. In addition, except as set forth on Schedule 3.9, to the best of Seller’s knowledge:

 

(a) as of the date of this Agreement, the Company has not in the past two years received any written notification or oral communication from any Authority (i) asserting that the Company is not in compliance in all material respects with any material Legal Requirement, or has otherwise engaged in any unlawful business practice, (ii) threatening to revoke or suspend (on a temporary or permanent basis) any material Permit of the Company issued by, or any franchise, seat or membership in, any Authority, or (iii) entering an order against the Company or requiring the Company to enter into a temporary or permanent cease and desist order, agreement or memorandum of understanding (or requiring the managers thereof to adopt any resolution or policy) that would restrict or otherwise adversely affect the ability of the Company to conduct its business as currently conducted;

 

(b) as of the date of this Agreement, there is no pending or threatened material investigation, review or disciplinary Proceeding by any Authority against the Company or any manager, officer, director or employee thereof;

 

(c) neither the Company, nor any Affiliate thereof, is subject to a “statutory disqualification” as defined in Section 3(a)(39) of the Exchange Act or a disqualification that would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of material Permits held by the Company, and there is no reasonable basis for a Proceeding or investigation, whether formal or informal, preliminary or otherwise, that is reasonably likely to result in, any such statutory disqualification, censure, limitation, suspension or revocation; and

 

(d) none of the Company nor its executive officers is required to be registered as a broker, dealer, investment adviser, investment company, securities exchange, alternative trading

 

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system, commodity trading advisor, commodity pool operator, futures commission merchant, clearing agency or transfer agent under any Legal Requirement under which it is not already so registered.

 

3.10 Permits . The Company currently holds all material Permits that are necessary for the conduct of its business as presently conducted. All such Permits are in full force and effect and the Company has, to the extent required, made all filings necessary to request the timely renewal or issuance of all Permits necessary and material to its business prior to the Closing for it to own, operate, use and maintain its assets and to conduct its business as it is currently being conducted.

 

3.11 Intellectual Property .

 

(a) Schedule 3.11(a) sets forth a complete and correct list of the following categories of the Company Owned Intellectual Property: (A) registered (including applications for registration) and material unregistered trademarks; (B) issued Patents and patent applications; (C) registered (including applications for registration) Copyrights; (D) material software other than commercially available “shrink wrap” software and other “off-the-shelf” software; and (E) domain names, in each case listing, as applicable, the registration or application number, and in the case of a registration or application, the registered owner or applicant of record, and the jurisdiction of application or registration. Schedule 3.11(a) also sets forth (i) all material agreements under which the Company uses Company Licensed Intellectual Property (other than commercial “shrink wrap” software and other “off-the-shelf” software) and (ii) all material agreements under which the Company has licensed to others the right to use Company Intellectual Property (other than commercially available “off-the-shelf” software), in each case, specifying the parties to the agreement.

 

(b) The Company Intellectual Property constitutes all of the Intellectual Property that is currently used in the business of the Company as such business is currently operated and conducted by the Company, and the Company owns, free and clear of Liens (other than any Permitted Encumbrances, but including any adverse ownership claims of consultants, contractors and employees), or otherwise possesses full, legally enforceable rights to use the Company Intellectual Property.

 

(c) The Company is currently in compliance with all Legal Requirements (including the payment of all necessary filing, examination and maintenance fees and submissions of required filings) in respect of all Company Owned Intellectual Property that is registered or for which an application to register has been filed with any Authority.

 

(d) Prior to the Closing, pursuant to the Intellectual Property Transfer Agreement, Seller and any applicable Affiliates will have assigned to the Company all their rights that relate to the creation or development of any Company Owned Intellectual Property.

 

(e) The Company has taken all reasonable steps (i) to protect and maintain the Company Owned Intellectual Property (including to preserve the confidentiality of all of the Trade Secrets that comprise any part thereof), and (ii) to preserve the confidentiality of any information owned by another party and provided to the Company on a confidential basis and to use such information only as permitted by the owner thereof. To the best of Seller’s knowledge, the Company’s rights with respect to the Company Owned Intellectual Property, including its

 

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rights to use any of the Company Intellectual Property, are valid and enforceable. To the best of Seller’s knowledge, there is not currently any pending or any threatened written assertion or claim, and there has been no such written assertion or claim, involving the Company challenging the validity or enforceability of, or contesting the Company’s rights with respect to, any of the Company Owned Intellectual Property or any agreement relating thereto. To the best of Seller’s knowledge, there is no pending or threatened written assertion or claim and there has been no such written assertion or claim contesting any of the Company’s rights with respect to any Company Licensed Intellectual Property.

 

(f) To the best of Seller’s knowledge, none of the use of any Company Intellectual Property by the Company, the conduct and operations of the business of the Company as currently conducted, or the current provision of products or services therein by the Company, infringes upon, misappropriates or violates in any way the rights of any Person (including rights in Intellectual Property). To the best of Seller’s knowledge, there is no pending or threatened, written assertion or claim, and there has been no such written assertion or claim against the Company that the Company’s use or exploitation of any Company Owned Intellectual Property, or the conduct or operation of the business of the Company as currently conducted or