Parties: - Reuters (including its affiliates and designees holding Registrable Securities) (the "Group R Stockholders"). - Certain Island stockholders who are entering into the Stockholders Agreement ("Group M1 Stockholders"). - Finanzas and Advent...
EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT TERM SHEET
Parties: - Reuters (including its affiliates and
designees holding Registrable Securities)
(the "Group R Stockholders").
- Certain Island stockholders who are entering
into the Stockholders Agreement ("Group M1
Stockholders").
- Finanzas and Advent ("Group M2
Stockholders").
- The holders of registration rights granted
by Instinet (the "Company") in connection
with its acquisition of ProTrader ("Group PT
Stockholders").
"Stockholders" refers collectively to the Group R
Stockholders, the Group M1 Stockholders, the Group M2
Stockholders, the Group PT Stockholders and any other
Group of Stockholders added pursuant to "Other"
below.
Each Group will be required to have a Group
Representative; provided that each of Finanzas and
Advent will be entitled to appoint its own
representative.
Shares Issued in the Shares of the Company's stock issued in the merger
Merger: will be issued pursuant to a Registration Statement
on Form S-4.
Shares Subject to the Shares subject to the Registration Rights Agreement
Registration Rights ("Registrable Securities") shall be (i) with respect
Agreement: to Group R Stockholders, all shares of Common Stock
(or Common Stock equivalents) held by Group R
Stockholders (and their affiliates), (ii) with
respect to Group M1 and Group M2 Stockholders, shares
of Common Stock received in connection with the
Merger, (iii) with respect to the Group PT
Stockholders, shares of Common Stock received in the
ProTrader acquisition and (iv) with respect to Groups
of Stockholders added pursuant to "Other" below, the
shares of Common Stock received by them in the
transaction in which they receive registration
rights.
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Demand Registration Certain Stockholders will have the right collectively
Rights: to make demand registrations over a period of 6
years. With certain exceptions described below,
generally all Stockholders may include Registrable
Securities in any demand, and if cutbacks are
necessary due to the amount that the underwriters
believe can be sold, such cutbacks will be allocated
in the manner described below.
If, as a result of piggyback rights and underwriter
cutbacks, the Group of Shareholders initiating a
demand is ultimately not entitled to include at least
75% of the Registrable Securities it initially
requested in the registration, the demand will not be
attributed to the initiating Group of Stockholders
but will instead be attributed to the Group of
Stockholders who include the largest number of
Registrable Securities in the offering. Groups making
a demand must include:
(i) in the case of Group PT Stockholders, no less
than $10 million of share value in the aggregate;
(ii) in the case of Group M1 Stockholders no less
than $25 million of share value in the aggregate; and
(iii) in the case of Group R Stockholders, no less
than $60 million of share value in the aggregate.
Shelf registrations made pursuant to a demand (a
"Shelf Demand") will have a life of (x) in the case
of Shelf Demands made by Group R Stockholders, 12
months and (y) in the case of any other Group of
Stockholders, 6 months.
Demands may be triggered as follows: Group R
Stockholders
1. Group R Stockholders would have an
unlimited number of demands,
including ▇▇▇▇▇ ▇▇▇▇▇▇▇. Demands
may be triggered by the Group R
Stockholders, subject to the
minimum offering size set forth
above and the following conditions.
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2. No demand may be triggered by the
Group R Stockholders during the
first twelve months without the
consent of the holders of a
majority of the Registrable
Securities held by the Group M1
Stockholders and the consent of the
Company.
3. The Group R Stockholders may not
trigger 2 demands in a row within a
12 month period without the consent
of the Company.
4. All Stockholders may participate in
any demand triggered by the Group R
Stockholders with cutbacks
described below.
5. No limit on Group R Stockholder
demands on Form S-1 (Form S-1 to be
used only if the Company is not S-3
eligible).
Group M1 Stockholders
6. The Group M1 Stockholders will have
a total of 6 demands, 2 of which
could be ▇▇▇▇▇ ▇▇▇▇▇▇▇. Demands may
be triggered by any Group M1
Stockholder, subject to the minimum
offering size set forth above and
the following conditions.
7. No demand may be triggered by the
Group M1 Stockholders during the
first twelve months without the
consent of the holders of a
majority of the Registrable
Securities held by the Group R
Stockholders and the consent of the
Company.
8. No Group M1 Stockholder (together
with its affiliates) may trigger 2
demands in a row within a 12 month
period without the consent of the
Company.
9. All Stockholders may participate in
any demand triggered by Group M1
Stockholders with cutbacks
described below.
10. No more than two Group M1
Stockholder demands may be on Form
S-1 (Form S-1 to be used only if
the Company is not S-3 eligible).
Group M2 Stockholders
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11. Group M2 Stockholders may not
exercise demands.
12. Group M2 Stockholders may
participate in any registered
offering subject to cutbacks as
described below.
Group PT Stockholders
13. Group PT Stockholders would have an
aggregate number of demands equal
to the number of demands they have
remaining under their current
registration rights agreement at
the time the new registration
rights agreement is entered into.
Demands may be triggered by any
Group PT Stockholder, subject to
the following conditions.
14. If the Group PT Stockholders have
more than 1 demand, no Group PT
Stockholder (together with its
affiliates) may trigger two demands
in a row within a twelve month
period without the consent of the
Company.
15. All Stockholders may participate in
any demand triggered by the Group
PT Stockholders, with cutbacks
allocated as set forth below.
16. Group PT Stockholders may exercise
one Shelf Demand (if not used prior
to the date of the new registration
rights agreement), but only if it
is requested by holders
representing a majority of the
total number of Registrable
Securities then held by the Group
PT Stockholders.
17. All Group PT Stockholder demands
may be on Form S-1 (Form S-1 to be
used only if the Company is not S-3
eligible).
Piggyback Registration For a period of 6 years, the Stockholders
Rights: will have piggyback registration rights with
respect to any registered offering made by
the Company or otherwise.
Underwriter Cutbacks: In the event that there are cutbacks in the
total number of shares in an offering,
shares will be included in the following
priority:
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- For a demand exercised by the Group
PT Stockholders, first priority
will be allocated among the
Stockholders, with the Group PT
Stockholders allocated 66 2/3% of
the offering and other Groups of
Stockholders allocated to 33 1/3%
of the offering as set forth below.
Second priority will be allocated
to the Company.
- For a demand exercised by any other
Group of Stockholders, first
priority will allocated among all
Stockholders choosing to
participate therein as set forth
below. Second priority will be to
the Company.
- For a registration on behalf of the
Company, the first priority will be
the Company. Second priority will
be to Stockholders as set forth
below.
Cutback Allocation When any cutback needs to be allocated among
the Stockholders (or any Group of
Stockholders), such portion shall be
allocated among such Stockholders (or Group
of Stockholders) irrespective of the Group
of Stockholders making a demand, pro rata
based on the number of Registrable
Securities that each Stockholder requests be
included in the registration statement;
provided that the Groups of Stockholders
described in "Other" below will not be
entitled to more than 1/3 the Registrable
Securities in a registration (other than a
registration pursuant to their demand) in
which cutbacks apply.
Delay and Suspension; The Company will be entitled to delay the
Spacing of Demands: filing of a registration statement, or delay
or suspend its effectiveness, if necessary
to avoid material adverse disclosure;
provided that the Company shall not be
entitled to delay filing or delay or suspend
the effectiveness of registrations for more
than an aggregate of 120 days in any twelve
month period. No new demand for registration
may be made prior to the 90th day following
the termination of effectiveness of the
previous registration statement.
Underwriter Lockups: All Stockholders holding more than 1% of the
outstanding Shares of Common Stock and the
Company will agree to not sell in the market
for 7 days prior to and 90 days following an
underwritten offering to the public made by
the Company or pursuant to the demand rights
of the Stockholders, to the extent requested
by the underwriters.
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Selection In any demand registration that is
of Underwriter: underwritten, the underwriter shall be
selected jointly by the two Stockholders
with the largest number of shares requested
to be sold from a list proposed by the
Company 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.
Expenses: Customary registration expenses will be
borne by the Company, including the expenses
of one counsel on behalf of the selling
Stockholders.
Amendments: Amendments may be effected with the consent
of holders of a majority of the Registrable
Securities held by each Group of
Stockholders affected by the amendment,
consenting separately as a Group; provided,
that amendments which specifically,
disproportionately and adversely affect any
one Stockholder will require the consent of
that Stockholder.
Withdrawals Rights: At any time, any Stockholder may elect to
withdraw from the Agreement and no longer be
subject to the obligations of the Agreement
or have rights (including demand rights)
under the Agreement from that date forward;
provided that a withdrawal may not be made
during the period (i) that the Company is
effecting an underwritten registered primary
offering of its shares or (ii) that the
Stockholders are effecting an underwritten
registered secondary offering of their
shares pursuant to demand registration
rights (commencing upon the filing of a
notice exercising demand rights).
Other: New Groups of Stockholders may be added
consisting of persons receiving registration
rights in connection with any future
issuance by the Company of with a
transaction value of at least $75 million in
connection with future acquisitions or other
transactions. Such Groups of Stockholders
will be allocated up to a pro rata number of
demand rights based on the aggregate
transaction value of the stock received by
them to the aggregate transaction value of
the stock received by the Group M1
Stockholders. The threshold for the exercise
of such a group of a demand right will be
1/10th of the transaction value of the
shares issued to them in the transaction in
which they receive registration rights.
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If Datek is issued shares in the Merger, the
parties will negotiate in good faith to make
appropriate adjustments to the terms set
forth in this term sheet to take into
account the addition of Datek as a party to
the registration rights agreement.
The Stockholders will receive the benefit of
the terms of any future registration rights
granted to any third party, which are
superior to the rights provided in the
agreement (it being acknowledged that the
rights described above for new Groups of
Stockholders are not superior rights).
A Stockholder may assign registration rights
to a transferee of shares held by the
Stockholder.
The Company will keep current on its
required filings under securities laws as
necessary to permit the Stockholders to sell
their Registrable Securities pursuant to
Rules 144 and/or 145 of the Securities Act.
The existing registration rights agreements
between the Company and Reuters shall be
suspended, and replaced with the rights
under the agreement described in this term
sheet, for so long as this agreement is in
effect. If the PT Stockholders elect to join
this Agreement, the existing registration
rights agreement among the Company and the
PT Stockholders will be terminated and
superseded by the agreement described in
this term sheet.
Other customary terms will apply.
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