SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 14, 2002
Instinet Group Incorporated
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-32717 13-4134098
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
3 Times Square, New York, New York 10036
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 212-310-9500
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
On June 9, 2002, Instinet Group Incorporated, a Delaware corporation
("Instinet"), Daiquiri Merger Corporation, a Delaware corporation and a wholly
owned subsidiary of Instinet ("Merger Sub"), and Island Holding Company, Inc., a
Delaware corporation ("Island"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"). The Merger Agreement provides for Merger Sub to merge
(the "Merger") with and into Island, the parent company of Island ECN. As a
result of the Merger, Island would become a wholly owned subsidiary of Instinet.
Completion of the Merger is subject to customary closing conditions, including
regulatory approvals.
Instinet expects to pay a $1.00 per share cash dividend to Instinet stockholders
of record as of a date prior to closing of the Merger. Under the terms of the
Merger, based on the $7.05 closing price of Instinet common stock on June 7,
2002 and after adjusting for the dividend, Instinet would issue approximately 77
million shares to Island's existing stockholders. In addition, Island options
and warrants would be converted into options and warrants to purchase
approximately 9 million shares of Instinet with an aggregate exercise price of
approximately $13 million. The amount of Instinet shares actually issued to
Island's stockholders will depend on Instinet's share price and the exercise of
any Island options and warrants prior to closing. However, the total number of
Instinet shares to be issued in respect of Island's outstanding shares, options
and warrants will remain relatively constant at approximately 86 million shares,
regardless of Instinet's share price. Based on the terms described above,
Island's existing stockholders would own approximately 25% of the outstanding
Instinet stock on a fully-diluted basis following the merger. The foregoing
description of the Merger Agreement is qualified in its entirety by reference to
the Merger Agreement, a copy of which is included as Exhibit 2.1 hereto and is
incorporated by reference herein.
In connection with the execution of the Merger Agreement, Reuters Limited
("Reuters") and Instinet entered into an Amended and Restated Corporate
Agreement, dated as of June 9, 2002, which will only become effective upon
completion of the Merger. A copy of the Amended and Restated Corporate Agreement
is included as Exhibit 10.1 hereto and is incorporated by reference herein.
In connection with the execution of the Merger Agreement, Instinet, Reuters and
Datek Online Holdings ("Datek") entered into a Stockholders Agreement, dated as
of June 9, 2002 providing for certain rights and obligations of Reuters and
Datek following the Merger. A copy of the Datek Stockholders Agreement is
included as Exhibit 10.2 hereto and is incorporated by reference herein.
In connection with the execution of the Merger Agreement, Instinet, Reuters,
Reuters C Corporation, Reuters Holdings Switzerland (together with Reuters and
Reuters C Corporation, the "Reuters Entities") and certain Island stockholders
entered into a Stockholders Agreement, dated as of June 9, 2002 (the "Island
Stockholders Agreement"), which sets out rights and obligations of Instinet, the
Reuters Entities and certain holders of Island stock who will receive Instinet
common stock in the Merger. Among other things, the Island Stockholders
Agreement provides that certain holders of Island stock who receive Instinet
common stock in the Merger will be entitled to nominate three directors to the
Instinet board of directors following the Merger. The foregoing description of
the Island Stockholders Agreement is qualified by reference to the Island
Stockholders Agreement, a copy of which is included as Exhibit 10.3 hereto and
is incorporated by reference herein.
In connection with the execution of the Merger Agreement, Island, certain Island
stockholders and Instinet entered into a Voting Agreement, dated as of June 9,
2002 (the "Island Voting Agreement") pursuant to which, among other things, such
Island stockholders agreed to vote in favor of the Merger. The foregoing
description of the Island Voting Agreement is qualified by reference to the
Island Voting Agreement, a copy of which is included as Exhibit 10.4 hereto and
is incorporated by reference herein.
In connection with the execution of the Merger Agreement, the Reuters Entities,
Island and Instinet entered into a Voting Agreement, dated as of June 9, 2002
(the "Reuters Voting Agreement") pursuant to which, among other things, the
Reuters Entities agreed to consent to the issuance of Instinet common stock in
the Merger and to the adoption of an Amended and Restated Certificate of
Incorporation of Instinet, to take effect only upon consummation of the Merger.
The foregoing description of the Reuters Voting Agreement is qualified by
reference to the Reuters Voting Agreement, a copy of which is included as
Exhibit 10.5 hereto and is incorporated by reference herein.
In connection with the execution of the Merger Agreement, Datek and Instinet
entered into a Voting Agreement, dated as of June 9, 2002 (the "Datek Voting
Agreement") pursuant to which, among other things, Datek agreed to vote in favor
of the Merger. The foregoing description of the Datek Voting Agreement is
qualified by reference to the Datek Voting Agreement, a copy of which is
included as Exhibit 10.6 hereto and is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Number Description
2.1 Agreement and Plan of Merger, dated as of June 9, 2002,
among Instinet Group Incorporated, Daiquiri Merger
Corporation and Island Holding Company, Inc. The Company's
Amended and Restated By-laws and Amended and Restated
Certificate of Incorporation are included as exhibits.
10.1 Amended and Restated Corporate Agreement, dated as June 9,
2002, by and between Reuters Limited and Instinet Group
Incorporated.
10.2 Datek Stockholders Agreement, dated as of June 9, 2002 by
and between Instinet Group Incorporated, Reuters Limited,
and Datek Online Holdings Corp.
10.3 Stockholders Agreement, dated as of June 9, 2002, by and
among Instinet Group Incorporated, Reuters Limited, Reuters
C Corporation, Reuters Holdings Switzerland SA, the Island
Stockholders, and Edward Nicoll.
10.4 Voting Agreement, dated as of June 9, 2002, by and among,
Island Holding Company, Inc., the stockholders of Island
Holding Company, Inc., and Instinet Group Incorporated.
10.5 Voting Agreement, dated as of June 9, 2002, by and among
Reuters Limited, Reuters C Corp and Reuters Holdings
Switzerland SA, Island Holding Company, Inc., and Instinet
Group Incorporated.
10.6 Voting Agreement, dated as of June 9, 2002, by and between
Datek Online Holdings Corp. and Instinet Group Incorporated.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
INSTINET GROUP INCORPORATED
Registrant
Date: June 14, 2002
By:
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Mark Nienstedt
Acting President and Chief
Executive Officer, and Chief
Financial Officer, and Director
Exhibit Index
Number Description
2.1 Agreement and Plan of Merger, dated as of June 9, 2002,
among Instinet Group Incorporated, Daiquiri Merger
Corporation and Island Holding Company, Inc.
10.1 Amended and Restated Corporate Agreement, dated as June 9,
2002, by and between Reuters Limited and Instinet Group
Incorporated.
10.2 Datek Stockholders Agreement, dated as of June 9, 2002 by
and between Instinet Group Incorporated, Reuters Limited,
and Datek Online Holdings Corp.
10.3 Stockholders Agreement, dated as of June 9, 2002, by and
among Instinet Group Incorporated, Reuters Limited, Reuters
C Corporation, Reuters Holdings Switzerland SA, the Island
Stockholders, and Edward Nicoll.
10.4 Voting Agreement, dated as of June 9, 2002, by and among,
Island Holding Company, Inc., the stockholders of Island
Holding Company, Inc., and Instinet Group Incorporated.
10.5 Voting Agreement, dated as of June 9, 2002, by and among
Reuters Limited, Reuters C Corp and Reuters Holdings
Switzerland SA, Island Holding Company, Inc., and Instinet
Group Incorporated.
10.6 Voting Agreement, dated as of June 9, 2002, by and between
Datek Online Holdings Corp. and Instinet Group Incorporated.