Research And Analytics Asset Purchase Agreement

EXECUTION COPY


ASSET PURCHASE AGREEMENT


BETWEEN


REUTERS AMERICA INC.


AND


INSTINET GROUP INCORPORATED


DATED


DECEMBER 18, 2001
TABLE OF CONTENTS


Page
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ARTICLE I


THE CLOSING


1.1 Purchase and Sale of the Assets....................................... 1 1.2 Assumption of Liabilities............................................. 3 1.3 Consideration......................................................... 3 1.4 Closing Date Payments................................................. 3 1.5 Payments; Ledger...................................................... 4 1.6 Payment Dispute Resolution............................................ 5 1.7 Closing Deliveries.................................................... 6 1.8 Allocation of Purchase Price.......................................... 6 1.9 Further Assurances.................................................... 6


ARTICLE II


REPRESENTATIONS AND WARRANTIES OF THE SELLER


2.1 Organization.......................................................... 7 2.2 Authority; Enforceability............................................. 7 2.3 No Breach............................................................. 7 2.4 Financial Statements.................................................. 7 2.5 Consents.............................................................. 8 2.6 Actions and Proceedings............................................... 8 2.7 Title to Property; Sufficiency........................................ 8 2.8 Intellectual Property................................................. 8 2.9 Compliance with Legal Requirements.................................... 9 2.10 Employment Matters.................................................... 9 2.11 Contracts............................................................. 10


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF THE PURCHASER


3.1 Organization; Authority and Enforceability............................ 10 3.2 No Breach............................................................. 10 3.3 Consents.............................................................. 11


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ARTICLE IV


COVENANTS


4.1 Employee Matters...................................................... 11 4.2 Ancillary Agreements.................................................. 12 4.3 Account Receivables................................................... 12 4.4 Certain Customer Arrangements......................................... 13 4.5 Insurance Claims...................................................... 13 4.6 Taxes................................................................. 13 4.7 Migration............................................................. 13


ARTICLE V


PRE-CLOSING COVENANTS AND OTHER AGREEMENTS


5.1 Conduct of the Business Pending the Closing........................... 13 5.2 Public Announcements; Communications with Customers................... 14 5.3 Third Party Consents.................................................. 14 5.4 Further Actions....................................................... 14 5.5 Proprietary Information............................................... 15


ARTICLE VI


CONDITIONS PRECEDENT


6.1 Conditions Precedent to the Obligations of the Parties................ 15


ARTICLE VII


TERMINATION


7.1 General............................................................... 16 7.2 No Liabilities in Event of Termination................................ 16


ARTICLE VIII


INDEMNIFICATION


8.1 Indemnification by the Seller......................................... 17 8.2 Indemnification by the Purchaser...................................... 17 8.3 Method of Asserting Claims............................................ 17 8.4 Survival.............................................................. 19 8.5 Method of Satisfying Claims........................................... 19 8.6 Limitation of Liability............................................... 19 8.7 Sole and Exclusive Remedy............................................. 19 8.8 Consequential Damages................................................. 20


ii 8.9 Coordination of Indemnification Rights................................ 20


ARTICLE IX


MISCELLANEOUS


9.1 Costs and Expenses.................................................... 20 9.2 Notices............................................................... 20 9.3 Entire Agreement...................................................... 21 9.4 Governing Law......................................................... 21 9.5 No Third Party Rights; Assignment..................................... 21 9.6 Waivers and Amendments................................................ 22 9.7 Additional Definitions................................................ 22 9.8 Resolution of Disputes; Consent to Jurisdiction....................... 23 9.9 Counterparts.......................................................... 23 9.10 Bulk Sales............................................................ 23 9.11 Disclosure Schedule................................................... 23


SCHEDULES


1.1(a)(i) Equipment 1.1(a)(ii) Contracts 1.1(a)(iv) Intellectual Property 1.1(b) Excluded Assets 1.2 Assumed Liabilities 1.4 Pre-Closing Expenses 2.1 Organization 2.2 Authority; Enforceability 2.3 No Breach 2.4 Pro Forma Financial Information 2.5 Consents 2.6 Actions and Proceedings 2.7 Title to Property 2.8 Intellectual Property 2.9 Permits 2.10 Seller Plans 2.11 Contracts 3.1 Organization; Authority and Enforceability 3.2 No Breach 3.3 Consents 4.1 Transferred Employees


Exhibits


A Form of Mutual Services Agreement B Form of Intellectual Property License


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ASSET PURCHASE AGREEMENT (this "Agreement"), dated December 18, 2001, between INSTINET GROUP INCORPORATED, a Delaware corporation (the "Seller") and REUTERS AMERICA INC., a Delaware corporation (the "Purchaser") (each of the Purchaser and the Seller, are individually referred to herein as a "Party" and collectively referred to herein as the "Parties").


WHEREAS, on September 28, 2001, certain affiliates of the Parties entered into an agreement whereby (1) the Seller agreed to sell to the Purchaser, and the Purchaser agreed to purchase from the Seller, effective as of September 28, 2001 (the "Effective Date"), the assets, rights, claims and contracts used by the Seller in the business of development, sales, marketing, support and distribution of the U.S. equity market research/real-time financial market data platform currently marketed by Seller as the "Research and Analytics" ("R&A") product (the "Business") and (2) the Purchaser agreed to assume certain liabilities and obligations of the Business effective as of the Effective Date, in the case of each of clause (1) and (2) as more fully set forth herein;


WHEREAS, the Purchaser and the Seller agreed to provide certain services related to the Business to each other; and


WHEREAS, the Purchaser and the Seller agreed to memorialize their agreements in definitive documentation, consisting of this Asset Purchase Agreement and the ancillary agreements attached hereto or referred to herein.


NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:


ARTICLE I


THE CLOSING


On the date hereof, 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 the Closing) at the offices of the Seller, Three Times Square, New York, New York 10036, or at such other place or on such other date as may be agreed to in writing by the Seller and the Purchaser (the "Closing Date"). The Closing may occur by facsimile counterparts. Each of the Parties hereby agrees that the following actions shall occur simultaneously at the Closing and shall be effective as of the Effective Date.


1.1 Purchase and Sale of the Assets. (a) Upon the terms set forth in this Agreement, the Seller shall sell, transfer, convey, assign and deliver, or cause to be sold, transferred, conveyed, assigned and delivered, to Reuters Research & Analytics, LLC, a Delaware limited liability company ("Reuters R&A") or such other affiliate of the Purchaser as directed by the Purchaser, and the Purchaser shall cause to be purchased, acquired and accepted, from the Seller, all right, title and interest, free and clear of all Liens, other than Permitted Liens (as defined in Section 9.7), in the following properties, assets, rights, claims and contracts, but excluding the Excluded Assets (as defined in Section 1.1(b)) (the "Assets"):
(i) all of the computer hardware, machinery, equipment and tangible
personal property listed on Schedule 1.1(a)(i) (the "Equipment");


(ii) all rights in and under the contracts, agreements, licenses or
other arrangements, in each case, relating to the Business to the extent
such contracts, agreements, licenses or other arrangements relate to the
Business and arising, accruing or payable from and after the Effective
Date, including those rights relating to contracts, agreements, licenses,
other arrangements and account receivables listed on Schedule 1.1(a)(ii)
(the "Contracts") and all rights to receive payment for products and
services sold (billed and unbilled) and to receive goods and services
purchased pursuant to such Contracts and to assert claims and take other
actions in respect of breaches or other violations thereof;


(iii) to the extent not covered in (ii) above, all accounts
receivable relating exclusively to the Business arising or accruing from
and after the Effective Date;


(iv) all trade secrets and confidential and proprietary business
information, whether patentable or nonpatentable and whether or not
reduced to practice, know-how, research and development information,
published and unpublished works of authorship, whether copyrightable or
not, copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions
thereof, inventions, know-how, patents, patent applications, registrations
and applications for patent registrations, including divisions,
continuations, continuations-in-part and renewal applications, and
including renewals, extensions and reissues, software, source code,
manuals, instructions, existing software development in progress, data and
information, trademarks, trade, fictitious and assumed names, product and
brand names, service marks, Internet domain names, logos, symbols, trade
dress, and other indicia of origin, all applications and registrations for
all of the foregoing, and all goodwill associated therewith and symbolized
thereby, including all extensions, modifications and renewals of same and
all other intellectual property assets, including the goodwill associated
therewith, in each case developed for or used exclusively in the Business
and owned by the Seller or any of its subsidiaries, and all other
proprietary rights relating to any of the foregoing (including remedies
against infringements, misappropriations or other violations thereof and
rights of protection of interest thereon under the laws of all
jurisdictions) and copies and tangible embodiments thereof (collectively,
the "Intellectual Property Assets"), including, without limitation, those
intellectual property assets listed on Schedule 1.1(a)(iv);


(v) copies of all books of account, records, files and invoices,
including files relating to the Transferred Employees (as defined in
Section 4.1(a) below), accounting records, sales and sales promotional
data, advertising materials, customer lists, cost and pricing information,
supplier lists, business plans, catalogs, quality control records and
manuals, research and development files, patent disclosures,
correspondence and any other corporate records and operating data used in
connection with the Business, wherever located;


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(vi) all permits, authorizations, approvals, registrations and
licenses granted by or obtained from any governmental, administrative or
regulatory authority (each a "Permit" and collectively, the "Permits")
that are listed on Schedule 2.9; and


(vii) all claims, prepayments, refunds, causes of action, chooses in
action, rights of recovery, rights of set off and rights of recoupment
related exclusively to the Business arising, accruing or paid from and
after the Effective Date.


(b) The Assets shall not include those assets listed on Schedule 1.1(b) (the "Excluded Assets").


1.2 Assumption of Liabilities. (a) Upon the terms and subject to the conditions of this Agreement, Reuters R&A shall assume, from and after the Effective Date, the liabilities, obligations and commitments ("Liabilities") set forth on Schedule 1.2, (collectively, the "Assumed Liabilities"). Notwithstanding the foregoing, the Assumed Liabilities shall not include Liabilities related to the collection of sales tax in connection with the sale of the R&A product arising prior to the date the Seller ceases to provide billing and collection services to the Purchaser under the Mutual Services Agreement.


(b) Neither the Purchaser nor Reuters R&A shall assume, or shall be responsible for the payment, performance or discharge of any Liabilities (whether known or unknown, absolute or contingent, liquidated or unliquidated or due or to become due and whether claims with respect thereto are asserted before or after the Closing) of the Seller, including any Liabilities arising under contracts or agreements which are not listed on Schedule 1.1(a)(ii) and any Liabilities relating to the collection of sales taxes referred to Section 1.2(a) above, other than the Assumed Liabilities (such Liabilities being hereinafter referred to as the "Retained Liabilities").


1.3 Consideration. (a) The Purchaser shall pay, or cause to be paid, to the Seller $7,867,665 (the "Purchase Price Consideration") for the Assets. The Purchase Price Consideration shall be payable pursuant to Section 1.5 below.


(b) The Parties agree that the Purchase Price is exclusive of any sales tax payable with respect to the transfer of the Assets contemplated herein (the "Transfer Taxes"). After the Closing, the Purchaser shall pay to the Seller all such Transfer Taxes within the time specified for the payment of such Transfer Taxes under applicable Law.


1.4 Post-Closing Payments. Within thirty (30) days after the Closing, the Seller shall deliver to the Purchaser a net revenue statement (the "Net Revenue Statement") reflecting the net cash revenues (revenues earned and collected, less expenses as set forth on Schedule 1.4) of the Business during the period commencing on the Effective Date and ending as of the Closing Date (the "Net Revenue"). If the Net Revenue, as determined on the Net Revenue Statement, is a positive amount, the Purchaser shall enter such Net Revenue as a credit payable to the Purchaser on the Ledger (as defined in Section 1.5(a) below). If the Net Revenue, as determined on the Net Revenue Statement, is a negative amount, the Purchaser shall enter such Net Revenue as a credit payable to the Seller on the Ledger. Any payment of Net Revenue pursuant to this Section 1.4, any payment of Transfer Taxes pursuant to Section 1.3(b) of this


3 Agreement and any payments pursuant to Sections 4.1(a) (Pre-Closing Expenses relating to Business Employees), 4.1(c) (Bonuses), 4.3 (Accounts Receivable) and 4.5 (Insurance Claims) of this Agreement and Sections 4(a) (to the extent such payments are for applicable statutory sales or value-added taxes), 4(b)(i) (Non-Recurring Fixed Costs relating to Customer Support Services), 4(c) (Support Fees) and 4(d) (Costs related to the lease of the Kansas Development Center) of the Mutual Services Agreement are collectively the "Cash Payments".


1.5 Payments; Ledger.


(a) In order to facilitate (i) the Cash Payments and (ii) the various payments to be made in credits pursuant to Sections 1.3(a) (Purchase Price Consideration) of this Agreement and Sections 4(a) (Customer Support Fees, other than any applicable statutory sales tax or value-added taxes payable thereunder) of the Mutual Services Agreement (collectively, the "Credit-Based Payments"), the Purchaser shall prepare and administer a ledger (the "Ledger") reflecting all Cash Payments and Credit-Based Payments to be made by the Purchaser to the Seller and by the Seller to the Purchaser, during the period commencing on the Closing Date and ending on the eighteen month anniversary of the Closing in accordance with this Section 1.5.


(b) At the Closing, the Purchaser shall enter the Purchase Price Consideration as a credit payable to the Seller in the Ledger. After the Closing, if a Credit-Based Payment is owed to the Seller by the Purchaser, the Purchaser shall, within two (2) days of receiving notice that such payment is owed by means of an invoice, enter the Credit-Based Payment as a credit payable to the Seller in the Ledger. If a Credit-Based Payment is owed to the Purchaser by the Seller, the Purchaser shall, within two (2) days of delivering notice to the Seller that such payment is owed by means of an invoice, enter the Credit-Based Payment as a credit payable to the Purchaser in the Ledger.


(c) At the Closing, the Purchaser shall enter in the Ledger the Cash Payments referred to in Section 1.7(d) below and shall indicate that such Cash Payments were paid to the Seller at the Closing. After the Closing, if a Cash Payment is owed to the Seller by the Purchaser, the Purchaser shall, within two (2) days of receiving notice that such payment is owed by the means of an invoice or, in respect of the Net Revenue, by means of the Net Revenue Statement, enter the Cash Payment as a credit payable to the Seller in the Ledger. If a Cash Payment is owed to the Purchaser by the Seller, the Purchaser shall, within two (2) days of delivering notice to the Seller that such payment is owed by means of an invoice or, in respect of the Net Revenue by the means of the Net Revenue Statement, enter the Cash Payment as a credit payable to the Purchaser in the Ledger.


(d) At the end of every fiscal quarter thereafter until the later of (i) the eighteen (18) month anniversary of the Closing and (ii) the end of the fiscal quarter in which the last Cash Payment is incurred, the Purchaser shall prepare and deliver to the Seller within fifteen (15) Business Days of the end of each such fiscal quarter (and no sooner than ten (10) Business Days after the end of each fiscal quarter) a quarterly net balance statement (the "Quarterly Ledger Balance Statement"). The Credit-Based Payments invoiced and payable each fiscal quarter shall be netted against each other, resulting in a quarterly net credit balance reflecting the


4 quarterly net amount owed or owing by the Purchaser and the Seller (the "Net Credit Amounts"). The Cash Payments invoiced and payable each fiscal quarter after the Closing shall be netted against each other, resulting in a quarterly net cash balance reflecting the quarterly net cash amount owed or owing by the Purchaser and the Seller (the "Net Cash Amounts").


(e) At the end of the period commencing on the date of the Closing and ending on the eighteen month anniversary of the Closing, the Purchaser shall prepare and deliver to the Seller a final Quarterly Ledger Balance Statement (the "Final Ledger Statement"). If the Final Ledger Statement reflects that the Net Credit Amount payable to the Purchaser is less than the Net Credit Amount payable to the Seller, the Purchaser shall pay to the Seller, in cash within five (5) Business Days of the delivery of the Final Ledger Statement, an amount equal to such deficiency, pursuant to wire or other payment instructions provided by the Seller. If the Final Ledger Statement reflects that the Net Credit Amount payable to the Seller is less than the Net Credit Amount payable to the Purchaser, the Seller shall pay to the Purchaser, in cash within five (5) Business Days of the delivery of the Final Ledger Statement, an amount equal to such deficiency, pursuant to wire or other payment instructions provided by the Purchaser.


(f) If the Quarterly Ledger Balance Statement (including for purposes of this Section 1.5(f), the Final Ledger Statement) reflects that the Net Cash Amount payable to the Purchaser is less than the Net Cash Amount payable to the Seller, the Purchaser shall pay to the Seller an amount equal to such deficiency in cash within five (5) Business Days of the delivery of the Quarterly Ledger Statement pursuant to wire or other payment instructions provided by the Seller. If the Quarterly Ledger Balance Statement reflects that the Net Cash Amount payable to the Seller is less than the Net Cash Amount payable to the Purchaser, the Seller shall pay to the Purchaser an amount equal to such deficiency in cash within five (5) Business Days of the delivery of the Quarterly Ledger Balance Statement pursuant to wire or other payment instructions provided by the Purchaser.


(g) The Purchaser and the Seller agree that the Purchaser may designate Reuters R&A or another affiliate of the Purchaser to prepare and maintain the Ledger in accordance with this Section 1.5.


1.6 Payment Dispute Resolution. If there is a dispute between the Seller and the Purchaser regarding the Credit-Based Payments, the Quarterly Ledger Balance Statement, the Net Revenue Statement, the Final Ledger Statement and/or the Cash Payments, the Seller and/or the Purchaser, as applicable, shall furnish to the other Party reasonable documentation to substantiate such disputed Credit-Based Payment, Quarterly Ledger Balance Statement, Net Revenue Statement, Final Ledger Statement and/or Cash Payment. Upon delivery of such documentation, the Parties shall cooperate and use their best efforts to resolve such dispute among themselves, but if they do not reach a final resolution within sixty (60) Business Days of the initiation of such dispute, the Purchaser and the Seller shall select an accounting firm mutually acceptable to the Parties to resolve the dispute. If the use of an accounting firm becomes necessary to resolve a dispute, the Purchaser and the Seller shall share the fees and expenses incurred. Any dispute which is not resolved within six (6) months of the


5 commencement of discussions between the Purchaser and the Seller may then be submitted to the courts within the State of New York pursuant to Section 9.8(b).


1.7 Closing Deliveries. At the Closing:


(a) The Seller shall deliver to the Purchaser the various certificates, instruments and documents which are deliverable by the Seller pursuant to Section 6.1(e) and the Seller shall deliver to the Purchaser and Reuters R&A a duly executed bill of sale (the "Bill of Sale") and such other instruments of conveyance as the Purchaser and Reuters R&A may reasonably request in order to effect the sale, transfer, conveyance and assignment to Reuters R&A of valid ownership of the Assets, in each case in a form reasonably satisfactory to the Purchaser and Reuters R&A. The Seller shall also deliver to Reuters R&A, or otherwise put the Purchaser in possession or control of, all of the Assets of a tangible nature.


(b) The Purchaser shall deliver to the Seller (i) the various certificates, instruments and documents which are deliverable by the Purchaser pursuant to Section 6.1(e) and (ii) a true and correct copy of the Ledger, after entering the Purchase Price Consideration as a credit payable to the Seller and the Cash Payments referred to in Section 1.7(d) and indicating that such Cash Payments were paid to the Seller at the Closing. The Purchaser and Reuters R&A shall deliver a duly executed instrument of assumption of liabilities (the "Assumption Agreement") and such other instruments as the Seller may reasonably request in order to effect the assumption by Reuters R&A of the Assumed Liabilities, in a form reasonably satisfactory to the Seller.


(c) The Purchaser and the Seller shall execute and deliver the Mutual Services Agreement attached hereto as Exhibit A (the "Mutual Services Agreement") and the Purchaser and the Seller shall execute and deliver the Technology and Trademark Cross-License attached hereto as Exhibit B (the "Intellectual Property License," and together with the Mutual Services Agreement, the "Ancillary Agreements").


(d) The Purchaser shall pay to the Seller any Cash Payments expressly contemplated to be paid at the Closing pursuant to Section 4.1(a) of this Agreement and Section 4(d) of the Mutual Services Agreement.


(e) The Purchaser, Reuters R&A and the Seller shall execute and deliver to each other a cross-receipt evidencing the transactions referred to above.


1.8 Allocation of Purchase Price. The Purchase Price will be allocated among the Assets as set forth on Schedule 1.1(a)(i).


1.9 Further Assurances. At any time and from time to time after the Closing, and upon request by either the Purchaser or the Seller, as the case may be, and without further consideration, each Party shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment, confirmation, and assumption and take such other action, as each Party may with commercial reasonableness request to more effectively transfer, convey and assign to the Purchaser, and to confirm the Purchaser's title to, all of the Assets, to put the Purchaser in actual possession and operating control thereof, to transfer convey ...