EXHIBIT 10.1.4
JOINT VENTURE AGREEMENT
BY AND AMONG
ITG INTERNATIONAL LIMITED,
SOCIETE GENERALE,
INVESTMENT TECHNOLOGY GROUP SG LIMITED,
INVESTMENT TECHNOLOGY GROUP LIMITED,
AND
INVESTMENT TECHNOLOGY GROUP EUROPE LIMITED
DATED AS OF NOVEMBER 17, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.3 Interpretation and Construction of This Agreement. . . . . . . . . . . . . . 13
ARTICLE 2
FORMATION AND OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Principal Executive Offices and Other Offices. . . . . . . . . . . . . . . . 14
2.3 Purpose of Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3
CAPITALIZATION OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Authorized Capital; Initial Subscriptions. . . . . . . . . . . . . . . . . . 15
3.2 Contributions to the Company . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Initial Capital Contributions of the Venturers . . . . . . . . . . . . . . . 15
3.4 Additional Capital Contributions of the Venturers. . . . . . . . . . . . . . 16
3.5 Failure to Make Additional Capital Contributions . . . . . . . . . . . . . . 17
3.6 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Pre-emptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.8 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Business Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Preparation of Approved Annual Budget. . . . . . . . . . . . . . . . . . . . 20
3.11 Approved Annual Budget for Initial Financial Year. . . . . . . . . . . . . . 21
ARTICLE 4
OPERATIVE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VENTURERS. . . . . . . . . . . . . . . . . . . . . . 21
5.1 Representations and Warranties of ITGI . . . . . . . . . . . . . . . . . . . 21
5.2 Representations and Warranties of SG . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6
CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Commitment of Venturers to the Joint Venture . . . . . . . . . . . . . . . . 25
6.3 Effect of Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Notice of Venturer Change of Control . . . . . . . . . . . . . . . . . . . . 25
6.5 Election to Treat Companies as Partnerships. . . . . . . . . . . . . . . . . 25
ARTICLE 7
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Composition of the Boards. . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Responsibilities of the Company Board. . . . . . . . . . . . . . . . . . . . 26
7.3 Certain Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7 Management of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Composition and Responsibilities of the Founders Committee . . . . . . . . . 30
8.2 Composition and Responsibilities of the Executive Committee. . . . . . . . . 31
8.3 Composition and Responsibilities of the Management Committee . . . . . . . . 32
8.4 Composition and Responsibilities of the Compensation and Audit Committee . . 33
ARTICLE 9
GOVERNANCE PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Meetings; Quorum; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Removal; Resignation; Vacancies. . . . . . . . . . . . . . . . . . . . . . . 35
9.3 No Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 10
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 11
DEADLOCKS 38
11.1 Deadlocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 12
TRANSFERS OF VENTURE INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.1 General Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Permitted Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.3 Right of First Refusal.. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.4 Venturer Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.6 Closing of Purchase of Venture Interests . . . . . . . . . . . . . . . . . . 43
ARTICLE 13
FINANCIAL AND ACCOUNTING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.1 Books and Records; Financial Year. . . . . . . . . . . . . . . . . . . . . . 44
13.2 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.3 Right of Inspection of Books . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.5 Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 14
OTHER ACTIVITIES BY THE VENTURERS;
EXPANSION OF TERRITORY; CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . 45
14.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.2 Non-Competition Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 46
14.3 Non-Competition Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.4 Expansion of Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.5 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 15
TERM AND TERMINATION DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.1 Term of JV Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.2 Termination of Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . 48
15.3 Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.4 Termination Upon Default, Etc. . . . . . . . . . . . . . . . . . . . . . . . 49
15.5 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
15.6 Termination by Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 16
POST TERMINATION PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
16.1 Consequences of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 50
16.2 Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
16.3 Transition Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 17
NEGOTIATIONS; ARBITRATION; SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . 52
17.1 Negotiations; Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 18
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.2 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
18.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.8 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
18.9 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 57
18.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
18.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
18.12 Disclaimer of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
18.13 Relationship of the Parties. . . . . . . . . . . . . . . . . . . . . . . . . 57
18.14 Fiduciary Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
Exhibit A - Clearing Agreement
Exhibits B,
C and D - Employment Agreements
Exhibit E - ITG License Agreement
Exhibit F - POSIT License Agreement
Exhibit G - Service Agreement
SCHEDULES
Schedule 1.1 - Reference Value
Schedule 3.1 - Loans
Schedule 3.9 - Business Plan
Schedule 7.5 - List of Officers
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT (this "Agreement"), is made and entered
into as of this 17th day of November, 1998 by and among ITG International
Limited, a company organized under the laws of Ireland ("ITGI"), Societe
Generale, a company organized under the laws of France ("SG"; and together with
ITGI, sometimes referred to herein collectively as the "Venturers" and
individually as a "Venturer"), Investment Technology Group SG Limited, a company
organized under the laws of Ireland (the "Company"), Investment Technology Group
Limited, a company organized under the laws of Ireland ("ITGL"), and Investment
Technology Group Europe Limited, a company organized under the laws of Ireland
("ITGE"; and together with the Venturers, the Company and ITGL, sometimes
referred to herein collectively, as the "Parties" and individually as a
"Party").
W I T N E S E T H
WHEREAS, certain affiliates of ITGI operate brokerage businesses
primarily in the United States and co-own and have co-developed an electronic
trading system commonly referred to as "POSIT" or "Portfolio System for
Institutional Traders," used by financial institutions and other brokerage
customers outside of European markets and comprised of a core system to which
such customers submit, directly and confidentially, buy and sell orders and
related systems for matching such orders and executing residual trades
(collectively, the "POSIT System");
WHEREAS, SG and certain of its affiliates operate brokerage and
banking businesses throughout Europe and have access to various institutional
brokerage customers who may potentially be interested in utilizing a POSIT
System developed to match buy and sell orders in European equity securities
(hereinafter referred to, as "EuroPOSIT");
WHEREAS, it is anticipated that with the advent of the European
Monetary Union many European markets will in the near future become, or be
viewed as, a single European market and the Venturers share an objective of
establishing EuroPOSIT as a recognized brokerage service within such single
European market;
WHEREAS, the Venturers have heretofore formed the
JV Companies for the purpose of developing and exploiting EuroPOSIT for use in
such European market; and
WHEREAS, in connection therewith, the Venturers desire to make
certain contributions to the Company of working capital, to provide for the
management of the Company and for certain restrictions on the transferability of
their respective Equity Interests in the Company, among other things, all in
furtherance of the objectives set forth above and subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements contained herein, the Parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context otherwise requires:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by, or is under common Control with, such Person. The JV Companies
shall not be deemed Affiliates of the Venturers or their Affiliates for purposes
of this Agreement.
"Agreement" shall mean this Joint Venture Agreement made between ITGI,
SG, the Company, ITGL and ITGE, as same may be amended from time to time.
"Americas" shall mean North America, South America and Central America
and the countries, territories and possessions located in the Caribbean region.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including common law), rules,
regulations, ordinances or codes of any Governmental Authority, and (ii) orders,
decisions, injunctions, judgments, awards and decrees of any Governmental
Authority.
"Applicable Rate" shall mean, during any period during
which interest is due and payable, the rate of interest per annum then being
charged with respect to the then outstanding Senior Debt of the Company;
PROVIDED, HOWEVER, if no such Senior Debt is then outstanding, "Applicable Rate"
shall mean, (i) in the case of a Reference Value calculation, the then current
sterling one-year London Inter-bank Offered Rate and (ii) in all other cases,
the then current sterling one-month London Inter-bank Offered Rate.
"Approval" shall mean any consent, approval, license, permit or
authorization.
"Authorized Investments" shall mean, at any time, (i) any time deposit,
certificate of deposit or bankers acceptance, maturing not more than one year
after such time, maintained with or issued or guaranteed by either (a) a
commercial banking institution (including U.S. branches of foreign banking
institutions) that is a member of the Federal Reserve System and has assets of
not less than $1,000,000,000, or (b) a European Union commercial banking
institution with assets of not less than $1,000,000,000, (ii) exchequer bills,
government gilts and other U.S. or European Union government or local authority
guaranteed securities, maturing not more than one year after such time or (iii)
commercial paper, maturing not more than nine months after the date of issue,
which is issued by a corporation (other than an Affiliate of a Venturer)
organized under the laws of any state of the United States, the District of
Columbia or any country in the European Union and rated at least AAA by Standard
& Poor's or the equivalent rating by Moody's rating services; PROVIDED, HOWEVER,
an Authorized Investment must be denominated in the Euro, Pounds Sterling or the
U.S. Dollar.
"Bankruptcy" shall mean, with respect to any Person, (i) the
commencement, under any bankruptcy, reorganization, arrangement, adjustment of
debt, relief of debtors, appointment of examiner, dissolution, insolvency or
liquidation or similar Applicable Law of any jurisdiction, whether now or
hereafter in effect, by such Person of a case or proceeding seeking (A) the
entry as to such Person of an order of relief, (B) such Person's own bankruptcy,
liquidation, reorganization, rehabilitation or composition or adjustment of
debts, or (C) a suspension or moratorium of payments, (ii) the commencement
against such Person of any case or proceeding of the type described in clause
(i) of this definition which remains undismissed for a period of 30
days; (iii) the appointment of a custodian, trustee, administrator or similar
official under any Applicable Law described in clause (i) of this definition
with respect to such Person, or the taking charge by such custodian, trustee,
administrator or similar official, of all or any substantial part of the
property of such Person; (iv) any adjudication that such Person is insolvent or
bankrupt; (v) the entering of any order of relief in, or other order approving,
any case or proceeding of the type described in clause (i) of this definition;
(vi) the making by such Person of a general assignment for the benefit of its
creditors; (vii) the failure by such Person to pay, or the statement by such
Person that it is unable to pay or shall be unable or deemed unable to pay its
debts generally as they become due under Applicable Law; (viii) the calling by
such Person of a meeting of its creditors with a view to arranging a composition
or adjustment of its debts; or (ix) any indication by such Person, either by an
act or failure to act, of its consent to, approval of or acquiescence in any of
the actions, orders or events described in the foregoing clauses of this
definition.
"BARRA" shall mean BARRA Inc., a company organized under the laws of the
State of California, U.S.A.
"Business Day" shall mean any day on which commercial banks in each of
the cities of New York, New York, London, England, Dublin, Ireland and Paris,
France are normally open for the conduct of commercial banking business.
"Business Plan" shall mean the Business Plan referred to in Section 3.9
and implemented as provided herein.
"Clearing Agreement" shall mean the Clearing Agreement dated as of July
3, 1998 between ITGL and Pershing Limited, a true and correct copy of which is
attached hereto as EXHIBIT A.
"Committees" shall mean, collectively, the Audit Committee and the
Compensation Committee and such other committee or sub-committee as may be
formed from time to time by any of the JV Boards.
"Competing Services" shall mean, (i) the JV Business described in clause
(a) of Section 2.3 and (ii) any services substantially similar to such JV
Business, PROVIDED, HOWEVER, nothing herein shall preclude either of the
Venturers from conducting any business activity which is
being conducted by it on the date of this Agreement, or is derived from the
business activity being conducted by it on the date of this Agreement and is not
substantially similar to such JV Business.
"Constituent Documents" shall mean the charters, bylaws, memorandum or
articles of association, or such other similar documents as may be required or
otherwise entered into in connection with the formation of the JV Companies
pursuant to Section 2.1(a).
"Contract" shall mean any loan or credit agreement, note, bond,
indenture, mortgage, deed of trust, lease, franchise, contract, or other
agreement, obligation, instrument or binding commitment of any nature.
"Control" (including, with its correlative meanings, "Controlled by" and
"under common Control with") shall mean, with respect to any Person, any of the
following: (i) ownership, directly or indirectly, by such Person of equity
securities entitling it to exercise in the aggregate more than fifty percent
(50%) of the voting power of the Equity Share Capital of the entity in question,
or (ii) the possession by such Person of the power, directly or indirectly, (A)
to elect a majority of the board of directors (or equivalent governing body) of
the entity in question; or (B) to direct or cause the direction of the
management and policies of or with respect to the entity in question, whether
through ownership of securities, by Contract or otherwise.
"Distribution" shall mean any distribution by the Company by means of
any dividend payment, whether in cash, shares, other Equity Interests or
otherwise, any payment or application of any of its assets to purchase, redeem
or otherwise retire Equity Interests held by a Venturer, any distribution by way
of reduction of capital, partial liquidation or otherwise in respect of any such
Equity Interests held by such Venturer or any interest or other payment in
respect of, or any repayment, repurchase or redemption of, Subordinated Debt of
the Company or any Subsidiary of the Company held by or on behalf of a Venturer.
"Employment Agreements" shall mean, collectively, the (i) Employment
Agreement dated as of November 17, 1998 between ITGE and Alasdair Haynes, (ii)
Employment Agreement dated as of November 17, 1998 between ITGL and Malcom
Robertson and (iii) Employment Agreement dated as of November 17, 1998 between
ITGE and Adrian Collins, true and correct copies of which are attached hereto as
EXHIBITS B, C AND D, respectively.
"Equity Interest" shall mean in relation to the JV Companies "Equity
Share Capital" as such term is defined at Section 155 of the Irish Companies Act
1963, or any rights, entitlement or option to convert into, subscribe for or
otherwise acquire any Equity Share Capital.
"Equity Share Capital" in relation to the JV Companies shall have the
meaning ascribed to such term at Clause 155 of the Irish Companies Act 1963.
"Financial Year" shall mean the period commencing January 1 in any year
and ending on December 31 in such year, except that the first Financial Year
with respect to each JV Company formed pursuant to Article 2 hereof, shall
commence on the date of its formation and end on December 31, 1999.
"Governmental Approval" shall mean any consent, approval, authorization,
waiver, grant, concession, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any
Governmental Authority.
"Governmental Authority" shall mean any federation, nation, state,
sovereign or government, any federal, supranational, regional, state or local
political subdivision, any governmental or administrative body, instrumentality,
department or agency, any self regulatory organization (as defined by Section 8
of the Financial Services Act of 1986 of the United Kingdom) or any court,
administrative hearing body, commission or other similar dispute resolving panel
or body, and any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of a government to which any party hereto
or any JV Company is subject.
"Indebtedness" shall mean, without duplication, all (i) obligations for
borrowed money or other extensions of credit, whether secured or unsecured and
whether absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees issued
on behalf of any Person and all obligations for the deferred purchase price of
property,
including finance leases and hire purchase agreements, (ii) obligations
evidenced by bonds, notes, debentures or other similar instruments, (iii)
obligations secured by any mortgage, pledge, security interest or other lien on
property owned or acquired by the Company or its Subsidiaries, (iv) capital
lease obligations, sale-leaseback or similar obligations and (v) all guarantees,
endorsements or other contingent or surety obligations (other than endorsement
of instruments for collection in the ordinary course of business) with respect
to obligations of others, including, without limitation, any obligation to
furnish funds, directly or indirectly (whether by virtue of partnership
arrangements, commission agreements, or otherwise), through the purchase of
goods, supplies or services or by way of Ordinary Shares purchase, capital
contribution, advance or loan.
"Injunction" shall mean any preliminary, temporary, interim or final
injunction, temporary restraining order or other court ordered legal prohibition
or equitable remedy requiring or prohibiting action.
"Invest or Participate" (including, with its correlative meanings,
"Investment or Participation", "Invested or Participated" and "Investing or
Participating"), as it relates to a Party or any of its Affiliates, shall mean,
with respect to any other Person that Offers Competing Services, directly or
indirectly through an Affiliate, (a) to acquire, as a principal, partner,
shareholder, beneficial owner or in any similar capacity, any ownership interest
in such Person or (b) by contract or otherwise to manage, operate or finance
such Person, or to participate in the management, operation or financing of such
Person, or to act as agent, representative, consultant or in any similar
capacity for such Person, or to use the name of such Person, or permit the use
of the name of such Party or its Affiliate by such Person, to the extent that
any of such activities described in this clause (b) are related to such
Competing Services.
"ITGI License Agreement" shall mean the ITGI License Agreement dated as
of November 17, 1998 among ITGI and the Company, a true and correct copy of
which is attached hereto as EXHIBIT E.
"Irish GAAP" shall mean generally accepted accounting principles as in
effect from time to time in Ireland.
"Joint Venture" shall mean the JV Companies and the rights and
obligations of the Parties and their Affiliates under this Agreement and the
other Operative Agreements.
"JV Boards" shall mean, collectively, the Company Board and the Boards
of Directors of each Subsidiary of the Company.
"JV Companies" shall mean, collectively, the Company, ITGL, ITGE and
their respective Subsidiaries, if any, that may hereafter be formed.
"Judgment" shall mean any judgment, order, judicial decree or arbitral
award.
"Major Competitor" shall mean a Person or any Affiliate of such Person
which materially competes for business through a business substantially similar
to that operated by the Joint Venture, or a Person which has taken substantial
steps to become such a competitor.
"Material Non-Monetary Default" shall mean a breach by a Venturer of any
of the terms or provisions of Sections 14.2, 14.3 or 14.5 of this Agreement,
which breach is not cured by such Venturer within thirty (30) days after written
notice hereof is furnished to such Venturer by the other Venturer.
"Non-Share Capital" shall mean Additional Capital Contributions made
pursuant to Section 3.4 hereof which the Company has not determined to treat as
either Equity Share Capital or Subordinated Debt.
"Offer" (including, with its correlative meanings, "Offering" or
"Offered") shall mean, with respect to electronic brokerage related products and
services, directly or indirectly, offering, producing, providing, selling,
promoting, distributing or marketing such product or service.
"Operative Agreements" shall mean this Agreement, POSIT License
Agreement, Service Agreements, Clearing Agreement, ITGI License Agreement and
the Employment Agreements.
"Party" or "Parties" shall have the respective meanings ascribed to such
terms in the first paragraph hereof.
"Percentage Interest" with respect to any Person's investment in another
Person, shall mean such Person's
equity interest therein (whether voting or non-voting) expressed as a percentage
of the total outstanding Equity Share Capital of such other Person (whether
voting or non-voting).
"Permitted Affiliate" shall mean a Subsidiary of a Venturer, no minority
interest in which is owned or held or the benefits of which are in any way
enjoyed, directly or indirectly, by any Person engaged in a Competing Business.
"Permitted Lien" shall mean: (i) materialmen=s, mechanics=, carriers=,
workmen=s, repairmen=s or other like liens arising in the ordinary course of
business for amounts not yet due or which are being contested in good faith by
appropriate proceedings, (ii) liens for current taxes not yet due or any taxes
being contested in good faith by appropriate proceedings, (iii) liens to secure
performance of statutory obligations, (iv) any lien securing any purchase money
indebtedness incurred in the ordinary course of business and (v) liens of
lessors under Leases.
"Person" shall mean an individual or a partnership, an association, a
joint venture, a corporation, a business or a trust or other entity organized
under any Applicable Law, an unincorporated organization or any Governmental
Authority.
"POSIT License Agreement" shall mean the POSIT License Agreement dated
as of November 17, 1998 between POSIT JV, a California limited purpose
partnership, and the Company, a true and correct copy of which is attached
hereto as EXHIBIT H.
"Proceeding" shall mean any action, litigation, suit, proceeding or
formal investigation or review of any nature, civil, criminal, regulatory or
otherwise, before any Governmental Authority.
"Public Offering" shall mean (i) any BONA FIDE public offering of equity
securities (or securities exchangeable for or convertible into equity
securities) of the Company pursuant to an effective registration statement under
the Securities Act or any other Applicable Law or any other offering which
results in such securities being listed for trading on any national or
provincial securities exchange in the Territory or the United States or included
for trading in any national market system or otherwise available for trading on
the Amsterdam Stock Exchange, the Brussels Stock
Exchange, the London Stock Exchange, the Luxembourg Stock Exchange, EASDAQ or
any other major international securities exchange, or (ii) any offer of equity
securities (or securities exchangeable for or convertible into equity
securities) of a Person made in reliance on Rule 144A under the Securities Act.
"Reference Value" shall mean the Reference Value determined pursuant to
the procedures set forth on SCHEDULE 1.1 attached hereto.
"Schedule of Capital Calls" shall mean the Schedule of Capital Calls
attached to the Business Plan as Appendix 19.
"Securities Act" shall mean the United States Securities Act of 1933, or
any similar United States Federal statute, and the rules and regulations of the
U.S. Securities and Exchange Commission thereunder, all as the same shall be in
effect from time to time.
"Security Interest" shall mean any debenture, mortgage, pledge, security
interest, adverse claim, encumbrance, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof, the
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or similar filing pursuant to Applicable Law of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of any obligation.
"Senior Debt" of any Person shall mean indebtedness of such Person
ranking senior in right of payment and in liquidation to any other Indebtedness
of such Person.
"Service Agreements" shall mean, collectively, (i) Service Agreement to
be dated as of November 17, 1998 among the JV Companies and ITG, (ii) Service
Agreement to be dated as of November 17, 1998 among the JV Companies and SG, and
(iii) Service Agreement dated as of October 6, 1998 between ITGL and ITGE, a
true and correct copy of which is attached hereto as EXHIBIT G.
"Stop Loss", in the case of any Venturer, shall mean Capital Calls in
excess of the sum of: (i) the amount contributed by a Venturer pursuant to
Section 3.3 and
(ii) fifty percent (50%) of the maximum amount referred to in clause (i) of
Section 3.4(a).
"Subordinated Debt" of any Person shall mean Indebtedness of such Person
ranking junior in right of payment and in liquidation to any other Indebtedness
of such Person.
"Subsidiary" shall mean, with respect to any Person (the "Parent"), any
other Person in which the Parent, one or more direct or indirect Subsidiaries of
the Parent, or the Parent and one or more if its direct or indirect Subsidiaries
(i) have the ability, through ownership of securities individually or as a
group, ordinarily, in the absence of contingencies, to elect a majority of the
directors (or individuals performing similar functions) of such other Person,
and (ii) own more than fifty percent (50%) of the Equity Share Capital. The JV
Companies will not be deemed Subsidiaries of the Venturers or their Affiliates
for purposes of this Agreement.
"Territory" shall mean the countries of Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom and such
other countries and territories thereof as the Venturers shall mutually agree in
writing after the date hereof to add as a Territory pursuant to Section 14.4;
PROVIDED, HOWEVER, that in no event shall the Americas, Japan, Australia, New
Zealand or Canada be a Territory (collectively, the "Excluded Territories").
"Third Party Approval" shall mean the approval of any Person other than
a Governmental Authority or a JV Company.
"Transfer" shall mean any transfer, directly or indirectly,
conditionally, contingently, voluntarily or involuntarily, whether or not for
value, by operation of law or otherwise, including any sale, pledge, security
interest or encumbrance, assignment, gift, merger, combination or other
transaction or the entering into any agreement, arrangement, undertaking or
action which results or may result in any of the foregoing.
"Venture Interest", in the case of any Venturer, shall mean the Equity
Interests in the Company held by the Venturer and any Subordinated Indebtedness
owed by the Company to the Venturer.
"Venturer Change of Control", with respect to a Venturer, shall mean the
acquisition by any Person or group of Persons acting in concert, directly or
indirectly, of equity securities of such Venturer (or such Venturer's Parent)
entitling it or them to exercise in the aggregate thirty percent (30%) or more
of the voting power of such Venturer (or such Venturer's Parent).
"Venturer Subordinated Debt" shall mean Subordinated Debt of the Company
owing to one of its Venturers that is subordinated to any other Indebtedness of
the Company other than other Subordinated Debt of the Company owing to one of
its Venturers.
"Wholly-Owned" shall mean, when used to designate the ownership interest
of any Person in an entity, that such Person owns directly or indirectly all of
Equity Share Capital and voting power of such entity, other than any DE MINIMIS
ownership in such entity as required by Applicable Law.
1.2 ADDITIONAL DEFINITIONS.
Additional Capital Contributions Section 3.4
Approved Annual Budget Section 3.10
Audit Committee Section 8.4
Bona Fide Offer Section 12.3(a)
Business Section 1.3
Capital Call Section 3.4(a)
Capital Call Notice Section 3.4(b)
Capital Call Period Section 3.4(b)
Class A Voting Ordinary Shares Section 3.1
Class B Non-Voting Ordinary Shares Section 3.1
Company Affiliate Section 10.1(a)
Company Board Section 7.1
Compensation Committee Section 8.4
Control Call Notice Date Section 12.4(b)
Control Put Notice Date Section 12.4(a)
Cure Period Section 3.5(a)
Deadlock Section 11.1(b)
Defaulting Venturer Section 3.5(a)
Default Termination Value Section 15.4
Development Phase Schedule 1.1(a)(i)
Distributable Cash Section 3.8
Executive Committee Section 8.2(a)
Formative Phase Schedule 1.1(a)(ii)
Founders Committee Section 8.1(a)
Funding Breach Section 3.5(a)
Funding Default Section 3.5(b)
Initial Profit Year Section 3.8
ITGE Board Section 7.1(b)
ITGL Board Section 7.1(b)
JV Business Section 2.3
Listed Phase Schedule 1.1(a)(iii)
Management Committee Section 8.3(a)
Mature Phase Schedule 1.1(a)(iv)
Non-Defaulting Venturer Section 3.5(b)
Non-Transferring Party Section 12.6
Offeree Section 12.3(a)
Offered Interest Section 12.3(a)
Ordinary Shares Section 3.1
Profit Year Section 3.8
Proposed Transferee Section 12.3(a)
Resolution Section 11.1(d)
Resolution Call Notice Date Section 11.1(f)
Resolution Put Notice Date Section 11.1(e)
Seller Section 12.3(a)
Senior Officers Section 17.1(a)
Specified Court Section 17.1(d)
Termination Conditions Section 15.2
Termination Notice Section 15.2
Third Party Arbitrator Section 11.1(d)
Transferring Party Section 12.6
Transition Plan Section 16.3
Venturer Resolution Section 11.1(d)
Written Offer Section 12.3(a)
1.3 INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT. The
definitions in Section 1.1 and 1.2 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." All reference herein to Articles, Sections,
Exhibits and Schedules shall be deemed to be references to Articles and Sections
of, and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. The table of contents and the headings of the Articles and
Sections are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
Unless the context shall otherwise require any reference to any agreement or
other instrument or statute or regulation
is to such agreement, instrument or statute or regulation as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any replacement provision). Any reference in this Agreement to a "day" or a
number of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given, on the next Business Day. In the
event of a conflict between any provision of a Constituent Document and any
provision of this Agreement, this Agreement shall prevail.
ARTICLE 2
FORMATION AND OFFICES
2.1 FORMATION.
(a) It is the Venturers' intent to operate the Joint Venture
in a holding company structure with the business and operations of the Joint
Venture to be conducted through ITGL and ITGE, and, accordingly, the Venturers
have heretofore caused the formation of (i) the Company under the name
"Investment Technology Group SG Limited" as a company under the laws of Ireland,
(ii) ITGL under the name "Investment Technology Group Limited" as a company
under the laws of Ireland and as the Wholly-Owned Subsidiary of the Company and
(iii) ITGE under the name "Investment Technology Group Europe Limited" as a
company under the laws of Ireland and as the Wholly-Owned Subsidiary of ITGL.
From and after the date hereof, the Venturers shall take such action as may be
necessary and appropriate so that the Constituent Documents shall incorporate
the terms and conditions of this Agreement to the extent practicable and
customary in the jurisdiction of formation of the Company and each of the other
JV Companies.
(b) Except as otherwise provided herein, each of the
Venturers shall own fifty percent (50%) of the voting Equity Interests of the
Company.
2.2 PRINCIPAL EXECUTIVE OFFICES AND OTHER OFFICES. It is the
intention of the Venturers that the JV Companies maintain offices that are
separate from the Venturers' respective offices, at such location or locations
as the
Company Board shall determine from time to time. The principal executive
offices of ITGL and ITGE will initially be located at Dublin Exchange
Facility, IFSC, 2nd Floor, Custom House Docks, Dublin 1, Ireland. The U.K.
branch of ITGE will also initially maintain offices at River Plate House,
7-11 Finsbury Circus, London, England. The Company will be initially located
at Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890.
2.3 PURPOSE OF JOINT VENTURE. The sole purpose and the nature of
the business (the "JV Business") to be conducted and promoted by the Joint
Venture are (a) to develop and exploit EuroPOSIT in the Territory in
accordance with the Operative Agreements, (b) to operate brokerage operations
in the Territory, and (c) to engage in any and all activities necessary,
advisable, convenient or incidental to the foregoing. Unless otherwise
approved by the Venturers, the activities of the JV Companies shall be
limited to the activities set forth in the Operative Agreements, Business
Plan and the Constituent Documents and the JV Companies shall not conduct any
other business operations whatsoever.
ARTICLE 3
CAPITALIZATION OF THE COMPANY
3.1 AUTHORIZED CAPITAL; INITIAL SUBSCRIPTIONS. The Venturers
shall cause the Constituent Documents of the Company to provide that (A)(i)
the authorized Equity Share Capital of the Company shall consist of
50,000,000 Ordinary Shares of which 45,000,000 shares shall be designated
Class A Voting Ordinary Shares (the "Class A Voting Ordinary Shares"), having
one vote per share and (ii) 5,000,000 shares shall be designated Class B
Non-Voting Ordinary Shares (the "Class B Non-Voting Ordinary Shares"; and
together with the Class A Voting Ordinary Shares, the "Ordinary Shares"),
having no voting rights and (B) no Ordinary Shares will entitle the holder
thereof to any preferences upon Distributions by the Company by way of
dividends or otherwise. It is the intention of the Venturers that the Class
B Non-Voting Ordinary Shares will be reserved for issuance (i) to the
Venturers upon the making of Additional Capital Contributions pursuant to
Sections 3.4 and 3.5 and (ii) in connection with performance based incentive
compensation for management and other personnel of the JV Companies.
(b) As of the date hereof, ITG and SG have advanced certain sums
to ITGL in the form of loans as set forth in Schedule 3.1.
3.2 CONTRIBUTIONS TO THE COMPANY. Except as otherwise expressly
provided in this Agreement, no Venturer shall be required to make any
contributions to the capital of the Companies or subscribe for additional
shares of the equity securities of the JV Companies.
3.3 INITIAL CAPITAL CONTRIBUTIONS OF THE VENTURERS. On or prior
to the November 30 1998, each Venturer shall have made initial capital
contributions to the Company consisting of GBL2,900,000 in exchange for
50,000 Class A Voting Ordinary Shares and GBL2,850,000 Non-Share Capital.
3.4 ADDITIONAL CAPITAL CONTRIBUTIONS OF THE VENTURERS.
(a) From and after the date hereof, the Company may require
(each such requirement, a "Capital Call") each Venturer to make additional
cash capital contributions ("Additional Capital Contributions") to the
Company (i) of up to an aggregate of GBL2,100,000, in such increments and at
such times as contemplated by the Schedule of Capital Calls, or as may
otherwise be approved by the Company Board, and (ii) in such amounts and at
such times as may be set forth in Approved Annual Budgets, it being
understood that the Venturer's Additional Capital Contributions shall be made
in GB Pounds Sterling by wire transfer of immediately available funds and,
except as otherwise provided in Section 3.5, each Venturer's Additional
Capital Contributions shall be made in equal amounts.
(b) If the Company determines to make a Capital Call, the
Company shall send to each Venturer a notice thereof (a "Capital Call Notice"),
which shall set forth, among other things, (i) the amount of the Additional
Capital Contribution to be made by each of the Venturers, (ii) the period (the
"Capital Call Period") within which such Additional Capital Contribution shall
be made, which period shall not end less than ten (10) Business Days after the
date on which such Capital Call Notice is given, and (iii) its determination as
to whether such Additional Capital Contribution will be in the form of
Equity Share Capital, Non-Share Capital or Subordinated Debt. Upon receipt
of Additional Capital Contributions in the form of Equity Share Capital from
a Venturer, the Company shall issue to such Venturer shares of Class B
Non-Voting Ordinary Shares based on the per share value of the Ordinary
Shares as determined by the Company Board at the time of the Capital Call.
Upon receipt of Additional Capital Contributions in the form of Subordinated
Debt from a Venturer, the Company shall issue to such Venturer a promissory
note evidencing such indebtedness having such terms and provisions (including
maturity, interest rate and events of default) as determined by the Company
Board at the time of the Capital Call. Any Additional Capital Contributions
in the form of Non-Share Capital received from a Venturer shall be recorded
in the books and records of the Company but the Company shall not issue any
certificate or other instrument to such Venturer in respect thereof.
3.5 FAILURE TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) Following the expiration of a Capital Call Period, the
Company shall promptly notify each Venturer of the failure by any Venturer (a
"Defaulting Venturer") to make its respective Additional Capital Contribution
pursuant to the Capital Call Notice (such failure to make an Additional
Capital Contribution is referred to herein as a "Funding Breach"). The
Defaulting Venturer shall have thirty (30) days (the "Cure Period") from the
date of notice of the Funding Breach to cure such Funding Breach by
delivering to the Company the Additional Capital Contribution required under
the Capital Call Notice together with interest thereon calculated at the
Applicable Rate from the date of the Funding Breach to and including the date
of payment. If the Funding Breach is so cured, the Defaulting Venturer shall
be entitled to receive, and the Company shall issue to the Defaulting
Venturer, the Class B Non-Voting Shares, promissory note evidencing
Subordinated Debt or credit on the Company's books and records for Non-share
Capital to which the Defaulting Venturer would have otherwise been entitled
to receive under Section 3.4(b) upon the making of the applicable Capital
Call.
(b) If a Defaulting Venturer shall fail to deliver its
Additional Capital Contribution together with interest thereon as provided in
Section 3.5(a) within the Cure Period, then a funding default (a "Funding
Default") shall have occurred and all rights of the Defaulting Venturer to make
an Additional Capital Contribution pursuant to such Capital Call shall cease
and, for a period of ninety (90) days after the occurrence of the Funding
Default, the
non-defaulting Venturer (the "Non-Defaulting Venturer") shall have the option
to provide all or any part of the Defaulting Venturer's Additional Capital
Contribution to the Company without payment of any interest. Upon receipt of
an Additional Capital Contribution pursuant to this Section 3.5(b) by a
Non-Defaulting Venturer, the Non-Defaulting Venturer shall be entitled to
receive, and the Company shall issue to the Non-Defaulting Venturer, a number
of Class B Non-Voting Shares as would reflect the additional Equity Interest
to which such Non-Defaulting Venturer would be entitled (with any excess of
the amount contributed over the number of Class B Non-Voting Shares so issued
to be credited to a share premium account). To the extent that the issuance
of such shares results in any adjustment of the Percentage Interests, the
governance rights of the Venturers under this Agreement shall not be affected.
3.6 LOANS. (a) Except as provided in Section 3.4 or 3.6(c), no
Venturer shall be obligated to loan funds to any JV Company. Loans by a
Venturer to the Company shall not be considered capital contributions. The
amount of any such loans shall be a debt of the Company owed to such Venturer
in accordance with the terms and conditions upon which such loans are made.
(b) With the prior written consent of the other Venturer, a
Venturer may (but shal not be obligated to) guarantee a loan made to the JV
Companies. If a Venturer guarantees a loan made to any JV Company and it is
required to make payment pursuant to such guarantee to the maker of the loan,
then the amounts so paid to the maker of the loan shall be treated as a loan
by such Venturer to the JV Company repayable on demand and not as an
Additional Capital Contribution. In the event that only one of the Venturers
provides such a guarantee, the other Venturer hereby agrees to indemnify the
Venturer who provides such guarantee for fifty percent (50%) of any amounts
paid under such guarantee and for fifty percent (50%) of any other costs,
liabilities or expenses incurred in respect thereof.
(c) It is the intention of the Venturers that the JV
Companies be financed in a manner that enables the JV Companies to have a
Debt to Equity ratio that enables them to fulfill any regulatory capital
requirements imposed on the JV Business under the Applicable Laws of any
Territory in which the JV Companies are conducting or intend to conduct JV
Business. To the extent necessary to maintain such regulatory capital
requirements, the Venturers may in
their discretion loan such funds as may be necessary to the JV Companies,
each Venturer shall participate in such loans on a PRO RATA basis based on
its Percentage Interest at the time such loans are made and, as necessary,
the Venturers shall enter into intercreditor agreements to ensure that such
loans shall be subordinate in right of payment to any Senior Debt of the JV
Companies from time to time.
3.7 PRE-EMPTIVE RIGHTS. The Company shall not issue any equity
securities or any warrant, option or other security convertible into or
exercisable for such equity securities of the Company (other than any
issuance of shares of Class A Voting Ordinary Shares as described in Section
3.1(b) and any shares of Class B Non-Voting Ordinary Shares as contemplated
by Sections 3.1(a), 3.4 and 3.5), or enter into any agreement in respect of
such issuance, unless the issuance has been approved as required by this
Agreement and pursuant to which the Company offers to each of the Venturers
the right to participate proportionately according to the Percentage Interest
of such Venturer, as of the date of such proposed issuance, on the same terms
and conditions, unless otherwise approved by the Executive Committee. Any
right granted pursuant to the preceding sentence shall be exercised by
written notice to the Company given within thirty (30) days after delivery to
each Venturer of written notice of such proposed issuance. If any Venturer
fails to respond to the Company within the 30-day notice period, such failure
shall be deemed to be the rejection of the right of such Venturer to
participate in the purchase of the equity of the Company to be issued. At
any time within ninety (90) days following the date the Company has received
notice (or deemed rejection) from each Venturer accepting or rejecting its
right to participate, the Company may carry out the proposed issuance. The
provisions of this Section 3.7 shall not apply to an issuance of Equity Share
Capital of the Company or any other Equity Interest in the Company, including
without limitation any warrant, option or security convertible into or
exercisable for such Equity Share Capital in connection with a Public
Offering, an acquisition completed in the ordinary course of the JV Business
or an employee benefit plan or incentive compensation plan.
3.8 DISTRIBUTIONS. Unless the Venturers mutually otherwise agree
in writing to permit Distributions at an earlier time or on a different
basis, the Venturers shall, and shall cause their representatives on the
Company Board, to take all such action so that the Company shall not make any
Distributions until such time as profits as accumulated
since the formation of the Company are in excess of losses as accumulated
since the formation of the Company as reflected in the annual consolidated
financial statements prepared for the Company and the Subsidiaries for the
Financial Year then ended (the first such Financial Year being hereinafter
referred to as an "Initial Profit Year" and each such subsequent Financial
Year being hereinafter referred to as a "Profit Year"). Thereupon, the
Venturers shall cause their representatives on the Company Board, to take all
such action so that "Distributable Cash" held by the Company, unless
otherwise determined by the Company Board, shall be distributed as
Distributions to the Venturers in accordance with their respective Percentage
Interests at least semi-annually in respect of the preceding six-month
period; PROVIDED, HOWEVER, that all fees then payable under the Service
Agreements shall have been paid, as required thereunder prior to any
Distribution to the Venturers pursuant to this Section. Unless otherwise
approved by the Company Board, all Distributions to Venturers shall be in
cash in GB Pounds Sterling. Distributable Cash shall mean seventy percent
(70%) of the amount by which cash and cash equivalents (less the Company=s
debt proceeds and contributions to capital, less, amounts specified in the
Approved Annual Budget to serve as a source of funds for capital expenditures
and, less, required amounts needed pursuant to Applicable Law to ensure that
the Company has sufficient regulatory capital) as shown in the Company=s
quarterly consolidated statement of cash flows as of the end of the relevant
fiscal quarter exceeds the cash and cash equivalents as shown in the
Company=s consolidated statement of cash flows as of the end of the preceding
fiscal quarter (after taking into account any Distributions as of the end of
such preceding fiscal quarter). The Company shall cause its Subsidiaries to
make Distributions to the Company to the extent necessary to facilitate the
making of Distributions by the Company as contemplated by this Section 3.8,
subject to mandatory provisions of Applicable Law. In no event shall the
Company or its Subsidiaries make Distributions in excess of amounts permitted
under Applicable Law.
3.9 BUSINESS PLAN. In furtherance of the Joint Venture, the
Venturers have established the Business Plan which sets forth the manner in
which the JV Business is to be conducted by the JV Companies during the
5-year period beginning on the date hereof and embodies the overall business
strategy for the Joint Venture until such time as
it may be amended or modified upon the approval of the Company Board. A true
and correct copy of the Business Plan on the date hereof is attached hereto
as SCHEDULE 3.9.
3.10 PREPARATION OF APPROVED ANNUAL BUDGET. The Executive
Committee shall prepare for presentation by the chief executive officer of
the Company to the Company Board on or before October 31 in each year
beginning October 31, 1999, an annual budget for the Company and its
Subsidiaries setting forth in reasonable detail the proposed and projected
operating revenues and expenses for the Company and its Subsidiaries for the
year beginning the following January 1. Upon approval of such proposed annual
budget by the Company Board (with such changes, if any, as the Company Board
may determine), each annual budget shall constitute an "Approved Annual
Budget" for purposes hereof.
3.11 APPROVED ANNUAL BUDGET FOR INITIAL FINANCIAL YEAR.
Notwithstanding anything to the contrary contained in Section 3.10, a true
and correct copy of the Approved Annual Budget for the initial Financial Year
of the Company and its Subsidiaries is set out in the document attached at
SCHEDULE 3.9.
ARTICLE 4
OPERATIVE AGREEMENTS
4.1 OPERATIVE AGREEMENTS. On or prior to the date hereof, each of
the Venturers has and has caused its Affiliates insofar as within its power,
to enter into each of the following Operative Agreements, to which such
Venturer or its Affiliates, as the case may be, are parties:
(i) POSIT License Agreement;
(ii) Service Agreements;
(iii) Clearing Agreement;
(iv) ITGI License Agreement; and
(v) Employment Agreements.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VENTURERS
5.1 REPRESENTATIONS AND WARRANTIES OF ITGI. ITGI represents and
warrants to SG as follows:
(a) ORGANIZATION AND STANDING. ITGI is a limited liability
company validly incorporated and subsisting under the law of the jurisdiction
of its incorporation and has all requisite corporate power and corporate
authority necessary to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted.
(b) DUE AUTHORIZATION. ITGI has all requisite corporate
power and corporate authority to enter into and perform its obligations under
this Agreement and to consummate the transactions to be consummated by it
hereunder. ITGI has all requisite corporate power and corporate authority to
enter into and perform its obligations under the other Operative Agreements
to which it is a party and to consummate the transactions to be consummated
thereby by it. The execution, delivery and performance by ITGI of the
Operative Agreements to which it is a party have been duly authorized by all
necessary corporate action on the part of ITGI. This Agreement has been, and
the other Operative Agreements to which ITGI is a party have been, duly
executed and delivered by it. This Agreement constitutes, and the other
Operative Agreements to which ITGI is a party constitute, legal, valid and
binding obligations of ITGI, enforceable against it in accordance with their
respective terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject to the effect of general principles of equity,
including, without limitation, the possible unavailability of specific
performance or injunctive relief regardless of whether considered in a
proceeding in equity or at law.
(c) NO CONFLICTS. The execution, delivery and performance
by ITGI of this Agreement does not, and the execution, delivery and
performance by ITGI of the other Operative Agreements to which it is a party
and the compliance with the terms of the Operative Agreements to which it is
a party will not conflict with, result in any violation of or default (with
or without notice or lapse of time or both) under, give rise to a right of
termination, cancellation or acceleration of any obligation (in each case by
any third party) or to the loss of any benefit under, or result in or require
the creation, imposition or extension
of any Security Interest upon any of its properties or assets under (i) any
provision of its Certificate of Incorporation or by-laws or similar
constituent documents, or (ii) any Judgment, Injunction, Applicable Law or
Contract to which it is a party or by which it or any of its properties is
bound. To the knowledge of ITGI, no Third Party Approval and no Governmental
Approval is required to be obtained or made by ITGI in connection with the
execution, delivery and performance of this Agreement, the other Operative
Agreements to which it is a party, and the transactions contemplated hereby
and thereby.
(d) BROKERS OR FINDERS. No Person is or will be entitled
to any broker's or finder's fee, or any other commission or similar fee in
connection with any of the transactions contemplated hereby as a result of
any action taken by or on behalf of ITGI.
(e) LITIGATION. There is no Proceeding pending or, to the
knowledge of ITGI, threatened against ITGI reasonably likely to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby.
5.2 REPRESENTATIONS AND WARRANTIES OF SG. SG represents and
warrants to ITGI as follows:
(a) ORGANIZATION AND STANDING. SG is a corporation duly
organized, validly existing and in good standing under the law of the
jurisdiction of its incorporation and has all requisite corporate power and
corporate authority necessary to enable it to own, lease or otherwise hold
its properties and assets and to carry on its business as presently conducted.
(b) DUE AUTHORIZATION. SG has all requisite corporate
power and corporate authority to enter into and perform its obligations under
this Agreement and to consummate the transactions to be consummated by it
hereunder. SG has all requisite corporate power and corporate authority to
enter into and perform its obligations under the other Operative Agreements
to which it is a party and to consummate the transactions to be consummated
thereby by it. The execution, delivery and performance by SG of the
Operative Agreements to which it is a party have been duly authorized by all
necessary corporate action on the part of SG. This Agreement has been, and
the other Operative Agreements to which SG is a party have been,
duly executed and delivered by it. This Agreement constitutes, and the other
Operative Agreements to which SG is a party constitute, legal, valid and
binding obligations of SG, enforceable against it in accordance with their
respective terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject to the effect of general principles of equity,
including, without limitation, the possible unavailability of specific
performance or injunctive relief regardless of whether considered in a
proceeding in equity or at law.
(c) NO CONFLICTS. The execution, delivery and performance
by SG of this Agreement does not, and the execution, delivery and performance
by SG of the other Operative Agreements to which it is a party and the
compliance with the terms of the Operative Agreements to which it is a party
will not conflict with, result in any violation of or default (with or
without notice or lapse of time or both) under, give rise to a right of
termination, cancellation or acceleration of any obligation (in each case by
any third party) or to the loss of any benefit under, or result in or require
the creation, imposition or extension of any Security Interest upon any of
its properties or assets under (i) any provision of its Certificate of
Incorporation or by-laws or similar constituent documents, or (ii) any
Judgment, Injunction, Applicable Law or Contract to which it is a party or by
which it or any of its properties is bound. To the knowledge of SG, no Third
Party Approval and no Governmental Approval is required to be obtained or
made by ITGI in connection with the execution, delivery and performance of
this Agreement, the other Operative Agreements to which it is a party, and
the transactions contemplated hereby and thereby.
(d) BROKERS OR FINDERS. No Person is or will be entitled
to any broker's or finder's fee, or any other commission or similar fee in
connection with any of the transactions contemplated hereby as a result of
any action taken by or on behalf of SG.
(e) LITIGATION. There is no Proceeding pending or, to the
knowledge of SG, threatened against SG reasonably likely to restrain, enjoin
or otherwise prevent the consummation of the transactions contemplated hereby.
(f) NON-COMPETE. As of the date of this Agreement, neither
SG nor any of its Affiliates conducts any
business activity which is the same as or substantially similar to the JV
Business as described in clause (a) of Section 2.3.
ARTICLE 6
CERTAIN COVENANTS
6.1 FURTHER ASSURANCES. From and after the date hereof, each of
the Parties shall use its reasonable efforts to do or cause to be done, and
to cause its Affiliates to do or cause to be done, such further acts and
things and deliver or cause to be delivered to each other Party or its
designees such additional agreements and instruments as such Party or its
designees may reasonably require or deem advisable to carry into effect the
purpose of the Operative Agreements or to better assure and confirm unto such
Party or its designees its rights, powers and remedies hereunder and
thereunder.
6.2 COMMITMENT OF VENTURERS TO THE JOINT VENTURE.
Each of ITGI and SG agrees that it will (i) ensure that its
relevant personnel are equally and fully committed to the success of the
Joint Venture, (ii) devote sufficient resources so that it can comply fully
with obligations under the Operative Agreements to which it is a party, and
(iii) fulfill its obligations under this Agreement and any other Operative
Agreements to which it is a party.
6.3 EFFECT OF APPLICABLE LAW. If any provision contained in any
Operative Agreement relating to a JV Company is inconsistent with or
prohibited by the Applicable Laws of the jurisdiction in which such JV
Company is formed, the Parties agree to take all reasonable steps necessary
to modify such provision in a manner which is as similar as possible in terms
and effect as the original provision and which preserves substantially the
intended purpose of the original provision, but which is not inconsistent
with or prohibited by, the Applicable Laws of the jurisdiction in which such
JV Company is formed.
6.4 NOTICE OF VENTURER CHANGE OF CONTROL. If a Venturer Change of
Control occurs or is likely to occur with respect to a Venturer, subject to
Applicable Law, such Venturer shall promptly give prior written notice to the
other Venturer of such Venturer Change of Control.
6.5 ELECTION TO TREAT COMPANIES AS PARTNERSHIPS. The Venturers
agree to join in, and agree to cause any Subsidiaries to join in, an election
to treat each of the Company, ITGL and ITGE as a partnership for U.S. tax
purposes under Section 7701 of the Code and Section 301.7701-3 of the
Treasury Regulations.
ARTICLE 7
MANAGEMENT
7.1 COMPOSITION OF THE BOARDS. (a) The board of directors of
the Company (the "Company Board") shall consist of: (i) six (6) voting
representatives, and (ii) additional non-voting representatives consisting of
any members of the Executive Committee that are not otherwise serving as a
voting representative on the Company Board. ITGI shall be entitled to
designate three (3) such voting representatives to the Company Board, one of
which will be the chief executive officer or chairman of ITGI, Inc. SG shall
be entitled to designate three (3) such voting representatives, one of which
will be the chief executive officer or chairman of SG Securities (London)
Ltd. In each election of representatives, each Venturer shall vote its
Equity Share Capital in the Company to effect the election of the nominees so
designated (including the election of the non-voting representatives who
consist of the members of the Executive Committee). Each of the Venturers
agree to cause its designated representatives on the Company Board to act in
accordance with the Business Plan.
(b) The board of directors of ITGL (the "ITGL Board") and
ITGE (the "ITGE Board") shall each consist of: (i) six (6) voting
representatives, and (ii) two (2) additional non-voting representatives who
must reside in Ireland. ITGI shall be entitled to designate three (3) such
voting representatives and one (1) such non-voting representative to each of
the ITGL and ITGE Board, one of which will be the chief executive officer or
chairman of ITG, Inc. SG shall be entitled to designate three (3) such
voting representatives and one (1) such non-voting representative, one of
which will be the chief executive officer or chairman of SG Securities
(London) Ltd. In each election of representatives, each Venturer shall vote
its Equity Interests in the Company to effect the election of the nominees so
designated.
(c) Each of the Venturers shall appoint one of
its voting representatives (or in his absence, an alternate) on each of the
JV Boards to serve as a co-chairman, each of whom shall chair meetings of the
respective JV Board on an alternating basis.
(d) Subject to Applicable Law, the JV Boards shall operate
in accordance with the general governance provisions contained in Article 9.
7.2 RESPONSIBILITIES OF THE COMPANY BOARD. The Company Board
shall be responsible for the management of the business and affairs of the
Company. Without limiting the generality of the foregoing, the Company shall
and shall procure that each JV Company shall not take any action with respect
to the following matters without the affirmative vote of the Company Board:
(i) action by the Company or any of its Subsidiaries which
(A) is outside the ordinary course of business operations of the Company or
any such Subsidiary and (B) has not been reflected in an Approved Annual
Budget;
(ii) incurrence of any Indebtedness or the making of any
capital expenditure by the Company or any of its Subsidiaries in excess of
GBL100,000 in any case, or in the aggregate in any Financial Year, except as
contemplated by the Approved Annual Budget and except, in the case of
Indebtedness, for endorsements for collection or deposits in the ordinary
course of business;
(iii) mortgage, pledge or the granting of any other Security
Interest with respect to the assets of the Company and its Subsidiaries,
except purchase money mortgages in the ordinary course of business and other
Permitted Liens;
(iv) making of any loans or the agreement to make any loans
by the Company or any of its Subsidiaries or the guarantee by any of them of
any Indebtedness of any other Person in excess of GBL100,000, in any
case, or in the aggregate in any Financial Year;
(v) entering into any transaction, directly or indirectly
(including, without limitation, any purchase, sale, lease, investment, loan,
service or management agreement or other transaction) with either Venturer or
any of their respective Affiliates involving the receipt or expenditure by
the Company and any of its Subsidiaries of more than GBL100,000, in any case,
or in the aggregate in any Financial Year, except as expressly contemplated
by this Agreement or any of the other Operative Agreements or as specified in
the Approved Annual Budget for such Financial Year or the Business Plan;
(vi) declaration, setting aside, or payment of Distributions
by the Company or any of its Subsidiaries or any redemptions, purchase or
other acquisition of the equity securities of the Company or any of its
Subsidiaries;
(vii) any amendment of the Constituent Documents;
(viii) any issuance, transfer, pledge or sale of equity
securities by the Company, including, without limitation, capital stock,
options, warrants or similar instruments, except as specifically provided in
this Agreement;
(ix) entering into or conducting any business other than the
JV Business;
(x) any appointment or change in the Company's independent
auditors;
(xi) approval of any material amendment or modification of
the Business Plan;
(xii) approval of any annual budget or any material
amendment or modification of any Approved Annual Budget;
(xiii) except as expressly provided herein with respect to the
Founders Committee, the Executive Committee, the Audit Committee and the
Compensation Committee, establishment of any committee of the Company Board
and the delegation of powers thereto, it being expressly understood that any
such committee shall at all time have an equal number of voting
representatives designated by each of the Venturers;
(xiv) appointment of the board of directors of any Subsidiary;
(xv) (A) any acquisition by the Company or any of its
Subsidiaries (in one or a series of related transactions) of, or any
investment by the Company or any of its Subsidiaries (in one or a series of
related transactions) in, assets or properties of any Person other than a
Wholly-Owned Subsidiary (whether by acquiring shares or other equity
securities, partnership interests or evidences of Indebtedness of any Person,
by contributing to the capital of any Person, by making a loan, advance or
other extension of credit to any other Person) in any case if the purchase
price or amount to be invested in more than GBL100,000, or (B) the investment
of cash included in the working capital of the Company in other than
Authorized Investments;
(xvi) any sale, assignment or transfer of any assets or
properties of the Company in any Financial Year in excess of GBL100,000 in
the case of any particular asset or property or in the aggregate in the case
of a group of similar assets or properties except for such sales, assignments
or transfers in the ordinary course of business; and
(xvii) approval of any quarterly, semi-annual or annual
financial statements of the Company and its Subsidiaries.
7.3 CERTAIN RESTRICTIONS. Anything herein to the contrary
notwithstanding, in no event shall the Company Board approve any of the
following matters without the prior written consent of each Venturer:
(i) any amendment of the Constituent Documents of the
Company;
(ii) any sale or other transfer (in one or a series of
related transactions) of substantially all of the assets and properties of
the Joint Venture;
(iii) whether, directly or indirectly, by operation of law or
otherwise, any merger with, consolidation with, acquisition of all or
substantially all of the assets or capital stock of, or other combination
with, any Person; or
(iv) the winding-up or dissolution of any JV Company except
as otherwise provided in Section 15.6.
7.4 LANGUAGE. The proceedings of meetings of the board of
directors of each of the JV Companies shall be conducted in the English
language. The formal minutes of meetings of the board of directors of each
of the JV Companies shall be maintained in the English language. The Company
shall ensure that all senior management of the JV Companies will have a good
working knowledge of English.
7.5 OFFICERS. The principal officers of the Company shall consist
of a Director and a Secretary. The principal officers of the ITGL shall
consist of a chief executive officer, deputy chairman and chief operating
officer. The Company Board shall also have the power to appoint such other
officers as it deems appropriate and delegate such powers to such officers as
shall not be inconsistent with this Agreement, the Business Plan, Applicable
Law and the Constituent Documents of the Company and ITGL, which may include
a finance director, head of sales trading, head of settlements and head of
technology. As of the date hereof, the initial slates of officers of the
Company and ITGL shall
be as set forth on SCHEDULE 7.5 attached hereto.
7.6 COMPENSATION. It is the intent of the Venturers that
compensation and other forms of remuneration for employees and officers of
the JV Companies, including incentive bonus plans, share participation
schemes, pension plans and employee benefits plans, medical insurance,
vacation and other benefit plans shall be consistent with the guidelines
outlined in the Business Plan and, to the extent practicable, shall
participate in the benefit plans offered by SG Securities (London), Ltd. with
the costs of such participation being borne by the Company.
7.7 MANAGEMENT OF SUBSIDIARIES. The general provisions of
Sections 7.1, 7.3, 7.4, 7.5 and 7.6 shall, to the extent practicable, govern
the management of each Subsidiary of the Company including ITGL and ITGE.
ARTICLE 8
COMMITTEES
8.1 COMPOSITION AND RESPONSIBILITIES OF THE FOUNDERS COMMITTEE.
(a) The Venturers hereby constitute, effective on the date
hereof, a founders committee (the "Founders Committee") consisting of two
voting representatives designated by each Venturer. The voting
representatives designated by ITGI shall at all times be senior ranking
officers of ITG, Inc. or its Affiliates and the voting representatives
designated by SG shall at all times be senior ranking officers of SG
Securities (London) Ltd. or its Affiliates. As of the date hereof, the
voting representatives of the Founders Committee designated by ITGI are
Raymond L. Killian Jr. and Howard C. Naphtali and the voting representatives
designated by SG are Hugh Hughes and Yves Tuloup.
(b) The Founders Committee will be responsible for (i)
resolving Deadlocks and (ii) any other matter assigned to the Founders
Committee pursuant to the terms of this Agreement or any other Operative
Agreement.
(c) Consistent with Section 8.1(b), the Parties agree and
shall give instructions to their respective representatives on the Founders
Committee, that the purpose of the Founders Committee is not to engage in
the management of the JV Companies, which management shall be effected in
accordance with the Business Plan by the respective JV Boards, the Committees
and the management of each of the JV Companies without referring, unless
required pursuant to this Agreement or the other Operative Agreements, such
matters to the Founders Committee.
(d) The Founders Committee shall not operate in accordance
with the general governance provisions contained in Article 9 and, following
formation, the Founders Committee shall develop its own procedural guidelines
for governance, including, without limitation, guidelines for the appointment
of a chairman or co-chairmen thereof. The Founders Committee shall not meet
in Ireland.
8.2 COMPOSITION AND RESPONSIBILITIES OF THE EXECUTIVE COMMITTEE.
(a) ITGL shall constitute, effective on the date hereof or
as soon thereafter as reasonably practicable, an executive committee of ITGL
(the "Executive Committee") consisting of the chief executive officer, deputy
chairman and chief operating officer of ITGL.
(b) The Parties agree that the purpose of the Executive
Committee is to establish and resolve matters of policy and not to engage in
the management of ITGL.
(c) The Executive Committee shall not operate in accordance
with the general governance provisions contained in Article 9 and, following
formation, the Executive Committee shall develop its own procedural
guidelines for governance, including, without limitation, guidelines for
appointment of a chairman or co-chairmen thereof.
8.3 COMPOSITION AND RESPONSIBILITIES OF THE MANAGEMENT COMMITTEE.
(a) From and after the date hereof, ITGE shall constitute a
management committee of ITGE (the "Management Committee") consisting of all
of the respective senior and mid-level managers and department heads of ITGE
including, without limitation, the chief executive officer, chief operating
officer, head of technology, head of operations, deputy chairman, head of
sales trading and finance director of ITGE, and such other non-managerial
members as the Management Committee may appoint from time to time to serve
thereon.
(b) The Management Committee shall have the authority and
responsibility to run the day-to-day operations of ITGE subject at all times
to the direction and control of ITGE. It is the intention of the Venturers
that, in the event that ITGE in the future has more than one Subsidiary,
there may be established more than one Management Committee or sub-committee
so that authority and responsibility to run the day-to-day operations of each
Subsidiary, or of groups of several Subsidiaries, may be appropriately
delegated.
(c) The Management Committee shall not be operated in
accordance with the general governance provisions contained in Article 9 and
the Management Committee (and any such sub-committee thereof) will, when
constituted, establish governance procedures; PROVIDED, HOWEVER, that such
governance procedures shall follow the following guidelines:
(i) the members shall establish a regular weekly meeting
schedule except that any non-managerial level member thereof will only be
required to attend meetings on a monthly basis; and
(ii) the chief executive officer or, if such officer is not
present at a meeting, the next most senior officer of the JV Companies in
attendance shall act as chairman and preside over any such meetings.
8.4 COMPOSITION AND RESPONSIBILITIES OF THE COMPENSATION AND AUDIT
COMMITTEE. The ITGL Board shall establish a Compensation Committee (the
"Compensation Committee") and an Audit Committee (the "Audit Committee") each
composed of two members who also serve on the ITGL Board, one of whom will be
selected by the voting representatives serving on the Company Board that were
designated by ITGI and the other of whom will be selected by the voting
representatives serving on the Company Board that were designated by SG;
PROVIDED, HOWEVER, that the members of the Audit Committee must not be
Affiliates of either Venturer.
The Compensation and Audit Committees shall have
such authority as may be delegated to them from time to time by the ITGL
Board with respect to compensation and financial matters, respectively.
ARTICLE 9
GOVERNANCE PROVISIONS
9.1 MEETINGS; QUORUM; NOTICE.
(a) The chairman (including any then acting alternating
co-chairman) of each of the JV Boards shall prepare or direct the preparation
of the agenda for, and preside over, meetings of the JV Board on which he
serves as chairman. The chairman shall deliver such agenda to each
representative on the JV Board on which he serves as chairman at least two
Business Days prior to giving of notice of a regular or special meeting and
any representative on such JV Board may add items to such agenda.
(b) The Venturers anticipate that a regular meeting of each
of the JV Boards shall be held at least once every six months. The Company
Board shall not meet in Ireland and any meetings of the ITGL or ITGE Board
shall take place in Ireland. Special meetings of any JV Board may be called
by any voting representative on such JV Board and shall be held at such place
as may be determined by such JV Board; PROVIDED, HOWEVER, special meetings of
the Company Board shall not take place in Ireland and any special meetings of
the ITGL or ITGE Board shall take place in Ireland. Written notice of the
time and place of each regular and special meeting of any JV Board shall be
given by or at the direction of the chairman or co-chairman, as the case may
be, of such JV Board to each representative on such JV Board, in the case of
a regular meeting, at least ten Business Days, and in the case of a special
meeting, at least two Business Days, before such meeting. Whenever notice is
required to be given to any representative on any JV Board, such notice shall
specify the agenda for such meeting and, to the extent appropriate, shall be
accompanied by supporting documentation. The required notice to any
representative may be waived by such representative in writing. Attendance
by a representative at a meeting shall constitute a waiver of any required
notice of such meeting by such representative, except when such
representative attends such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any
business because the meeting is not properly called or convened.
(c) Except as expressly provided in this Agreement, the
presence of at least one voting representative designated by each of ITGI and SG
to serve on such JV Board shall be required to constitute a quorum for the
transaction of any business by any JV Board. Each Party shall use its
reasonable efforts to ensure the existence of a quorum at any duly convened
meeting of any JV Board. Except as expressly provided in this Agreement, no
action shall be taken by any JV Board with respect to any matter without the
affirmative vote of all of the voting representatives on such JV Board present
at a duly constituted meeting and no action shall be taken by the JV Boards with
respect to any matter without the affirmative vote of a majority of the voting
representatives of such Board present at a duly constituted meeting. If fewer
than all of the voting representatives designated to such JV Board by a given
Venturer are present at a meeting, to the extent permitted by Applicable Law,
each representative or representatives of a Venturer present at such meeting
shall be entitled to vote the entire voting power held by all voting
representatives designated by such Venturer. If more than one voting
representative appointed by a given Venturer is present at a meeting, to the
extent permitted by Applicable Law, such representatives shall vote such
Venturer's entire voting power in the same manner.
(d) While the Venturers intend that their representatives on
each of the JV Boards shall attend meetings of such JV Boards in person, the
Venturers acknowledge that representatives may from time to time be prevented
from doing so due to various circumstances. Representatives on each JV Board
may, therefore to the extent permitted by Applicable Law, participate in a
meeting of such Board by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 9.1(d) shall
constitute presence in person at such meeting, except where a representative
participates in the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not properly called or convened.
(e) To the extent permitted by Applicable Law, any action
required or permitted to be taken at a meeting of
any JV Board may be taken without a meeting if a written consent, setting forth
the action so taken, is signed by all the voting representatives on such JV
Board and filed with the minutes of the proceedings of such Board. Such consent
shall have the same force and effect as a unanimous affirmative vote of the
representatives on such JV Board.
9.2 REMOVAL; RESIGNATION; VACANCIES. A Venturer's designated
representatives on each JV Board shall hold office at the pleasure of such
Venturer which designated them. Any such Venturer may at any time, by written
notice to the other Venturer and the applicable JV Board, remove (with or
without cause) its representative on such JV Board and designate a new
representative. Subject to Applicable Law, no representative may be removed
except by the Venturer designating the same. Any representative on any JV Board
may resign at any time by giving written notice to the Venturer which appointed
such representative and to such JV Board. Such resignation shall take effect on
the date shown on or specified in such notice or, if such notice is not dated
and the date of resignation is not specified in such notice, on the date of the
receipt of such notice by the applicable JV Board. No acceptance of such
resignation shall be necessary to make it effective. Any vacancy on any JV
Board shall be filled only by the Venturer whose representative has caused the
vacancy, by giving written notice to such Body and to each other Venturer, and
each of the Venturers agree, as necessary, to vote, or to cause its designated
representatives on such JV Board to vote, for any Person so nominated by the
Venturer or other Person whose representative has caused such vacancy.
9.3 NO REMUNERATION. Unless the Venturers otherwise agree, no
person shall be entitled to any fee, remuneration or compensation in connection
with his service as a representative on or as a member of any JV Board.
Notwithstanding the foregoing, the two non-executive, non-voting directors of
ITGL and ITGE who are residents of Ireland shall be paid an attendance fee of
Punt ,1,000 per meeting.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION.
(a) To the fullest extent permitted under Applicable Law, the
JV Companies shall indemnify and hold harmless, or cause its Subsidiaries to
indemnify and hold harmless, each of their respective Affiliates and all
officers, directors and shareholders (including the Venturers) of such
Affiliates, and each director and officer of any JV Company and any Person
serving in any similar capacity for another Person (including any JV Board)
affiliated with the JV Companies at the request of the Company or any of its
Subsidiaries (solely for purposes of this Section 10.1, each of the foregoing
Persons being referred to as, a "Company Affiliate"), from and against any and
all losses, claims, demands, costs, damages, liabilities, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which a Company Affiliate may be involved, or threatened to be involved, as a
party or otherwise, arising out of or incidental to the business of the Joint
Venture, regardless of whether a Company Affiliate continues to be a Company
Affiliate, at the time any such liability or expense is paid or incurred, if (i)
the Company Affiliate acted in good faith and in a manner it or he reasonably
believed to be in, or not opposed to, the interests of the JV Companies and,
with respect to any criminal proceeding, had no reason to believe its or his
conduct was unlawful, and (ii) the Company Affiliate's conduct did not
constitute actual fraud, gross negligence or willful or wanton misconduct. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE, or its equivalent, shall not, in
and of itself, create a presumption or otherwise constitute evidence that the
Company Affiliate acted in a manner contrary to that specified in (i) or (ii)
above.
(b) Expenses (including reasonable legal fees and expenses)
incurred in defending any proceeding subject to subsection (a) of this Section
10.1 shall be paid by the JV Companies in advance of the final disposition of
such proceeding upon receipt of a written affirmation by the Company Affiliate
of his or its good faith belief that he or it has met the standard of conduct
necessary for indemnification under this Section 10.1 and a written undertaking
(which need not be secured) by or on behalf of the Company Affiliate to repay
such amount if it shall ultimately be determined, by a court of competent
jurisdiction or otherwise, that the Company Affiliate is not entitled to be
indemnified by the Company as authorized hereunder.
(c) The indemnification provided by this Section 10.1 shall
be in addition to any other rights to which each Company Affiliate may be
entitled under any agreement or vote of a JV Board by the vote of
representatives that are disinterested and unaffiliated with such Company
Affiliate, as a matter of law or otherwise, both as to action in the Company
Affiliate's capacity as a Company Affiliate or as a Person serving at the
request of a JV Company and shall continue as to a Company Affiliate who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns, administrators and personal representatives of such Company
Affiliate.
(d) The JV Companies shall purchase and maintain directors
and officers insurance or, similar coverage, for its directors and its officers
in such amounts and with such deductibles or self-insured retentions as are
customary for Persons engaged in businesses similar in size and type to those
engaged in by the Joint Venture.
(e) Any indemnification hereunder shall be satisfied only out
of the assets of the JV Companies and the Venturers shall not be subject to
personal liability by reason of these indemnification provisions.
(f) A Company Affiliate shall not be denied indemnification
in whole or in part under this Section 10.1 because the Company Affiliate had an
interest in the transaction with respect to which the indemnification applies if
the transaction was otherwise permitted by the terms of this Agreement and all
material facts relating to such Company Affiliate's interest were adequately
disclosed to the appropriate JV Board at the time the transaction was
consummated.
(g) The provisions of this Section 10.1 are for the benefit
of the Company Affiliates and the heirs, successors, assigns, administrators and
personal representatives of the Company Affiliates and shall not be deemed to
create any rights for the benefit of any other Persons.
(h) Any repeal or amendment of any provisions of this Section
10.1 shall be prospective only and shall not
adversely affect any Company Affiliate's right existing at the time of such
repeal or amendment.
ARTICLE 11
DEADLOCKS
11.1 DEADLOCKS.
(a) The parties agree that all Deadlocks on the Company
Board, the ITGL Board or the ITGE Board shall be resolved in accordance with
this Article 11.
(b) A deadlock (a "Deadlock") shall be deemed to have
occurred upon the failure of the Company Board, the ITGL Board or the ITGE
Board, as the case may be, to reach a decision with respect to any of the
following matters after a vote has been taken by the requisite voting
representatives on the Company Board, the ITGL Board or the ITGE Board, as the
case may be,:
(i) approval of any annual budget;
(ii) approval of a Capital Call in excess of the Stop Loss;
(iii) approval of financings (debt or equity);
(iv) approval of any acquisition or disposition in excess of
GB,1,000,000;
(v) approval of any material change in the purpose and
strategic direction of the JV Business from that set
forth in the Business Plan; or
(vi) decisions relating to the hiring, firing or compensation
of the chief executive officer of the Company.
(c) If a Deadlock occurs on the Company Board, the ITGL Board
or the ITGE Board, as the case may be, any voting representative on the Company
Board, the ITGL Board or the ITGE Board, as the case may be, within twenty (20)
days of the vote which give rise to such Deadlock, by written notice to the
other voting representatives on such board, and to the Founders Committee, refer
the Deadlock for
resolution pursuant to Section 11.1(d). If no such voting representative
refers such Deadlock to the Founders Committee for resolution within such
20-day period, no further action shall be taken by the Company Board, the
ITGL Board or the ITGE Board, as the case may be, with respect to the
proposal which gave rise to such Deadlock, but such proposal may be presented
at a subsequent meeting of such board and any resulting Deadlock shall again
be resolved in accordance with this Section 11.1(c).
(d) If a Deadlock is referred to the Founders Committee for
resolution, the Founders Committee shall have thirty (30) days to consider
and attempt to resolve such Deadlock. If the Deadlock cannot be resolved by
the Founders Committee within such 30-day period, the Founders Committee
shall designate either (i) any voting representative serving on the Company
Board, the ITGL Board or the ITGE Board, as the case may be, that is not an
Affiliate of either Venturer or (ii) another person that is not an Affiliate
of either Venturer and is qualified to act as an arbitrator with respect to
the particular proposal that is the subject of the Deadlock (such
representative or other person being herein referred to as, the "Third Party
Arbitrator"). Such Third Party Arbitrator shall arbitrate the subject of the
Deadlock in accordance with the rules of the International Chamber of
Commerce (the "ICC") in effect on the date hereof and shall have thirty (30)
days from his designation to recommend a course of action with respect to
such Deadlock by sending written notices setting forth such course of action
to the Company Board, the ITGL Board or the ITGE Board, as the case may be,
and the Venturers (the "Resolution"). Unless during the 10-Business Day
period following receipt of such notice the Venturers mutually agree upon a
different course of action than the Resolution (in which event such different
course of action shall for purposes of this Agreement be referred to as the
"Venturer Resolution"), the Resolution or the Venturer Resolution, as the
case may be, shall be final and binding on the Parties and the Venturers
shall cause their voting representatives on the Company Board, the ITGL Board
or the ITGE Board, as the case may be, to take action accordingly.
(e) If there has been no Venturer Resolution and ITGI has
not delivered a notice to SG pursuant to Section 11.1(f), following receipt
of the notice of Resolution pursuant to Section 11.1(d), SG shall have the
right at any time within a period of thirty (30) days from receipt thereof,
by written notice to ITGI, to require ITGI
to purchase all, but not less than all, of its Venture Interest for a cash
price equal to one hundred-fifty percent (150%) of the applicable Reference
Value. Such right shall be exercised by delivery of a written notice by SG
to ITGI within such 30-day period. The date of such notice is referred to
herein as the "Resolution Put Notice Date". Promptly following the
Resolution Put Notice Date, the Venturers shall commence determining the
Reference Value as set forth on SCHEDULE 1.1.
(f) If there has been no Venturer Resolution and SG has not
delivered a notice to ITGI pursuant to Section 11.1(e), following receipt of
the notice of Resolution pursuant to Section 11.1(d), ITGI shall have the
right at any time within a period of thirty (30) days commencing from the
receipt thereof, by written notice to SG, to require SG to sell all, but not
less than all, of its Venture Interest for a cash price equal to one
hundred-fifty percent (150%) of the applicable Reference Value. Such right
shall be exercised by delivery of a written notice by ITGI to SG within such
30-day period. The date of such notice is referred to herein as the
"Resolution Call Notice Date." Promptly following the Resolution Call Notice
Date, the Venturers shall commence determining the Reference Value as set
forth on SCHEDULE 1.1.
(g) The closing of a purchase and sale pursuant to Section
11.1(e) or 11.1(f) shall occur in accordance with Sections 12.5 and 12.6.
ARTICLE 12
TRANSFERS OF VENTURE INTERESTS
12.1 GENERAL RESTRICTIONS. No Venturer may Transfer all or any
part of such Venturer's Venture Interest, except as provided in this
Agreement. Any purported Transfer of a Venturer's Venture Interest or a
portion thereof in violation of the terms of this Agreement shall be null and
void and of no effect. Any permitted transferee desiring to make a further
Transfer shall become subject to all the provisions of this Article 12 to the
same extent and in the same manner as any Venturer desiring to make any
Transfer.
12.2 PERMITTED TRANSFEREES. Notwithstanding the provisions of
Sections 12.3 and 12.4, each Venturer shall have the right to Transfer, by a
written instrument, all or any part of its Venture Interest to a Permitted
Affiliate;
PROVIDED, HOWEVER, that such transfer is not materially financially
detrimental to the JV Companies and that such Permitted Affiliate shall
execute an instrument in form and substance reasonably satisfactory to the
Company Board accepting and adopting the terms and provisions of this
Agreement and the other Operative Agreements to which the transferor is a
party and shall pay all reasonable expenses of the Company in connection with
such Transfer, it being understood that upon such Transfer the transferor
shall remain obligated under the Operative Agreements unless the Company
Board otherwise agrees.
12.3 RIGHT OF FIRST REFUSAL.
(a) If any Venturer (the "Seller") desires to Transfer all,
and not less than all, of its Venture Interest (the "Offered Interest")
pursuant to a bona fide offer (the "Bona Fide Offer") from a third party (the
"Proposed Transferee"), other than a transferee permitted by Section 12.2, it
shall submit a written offer (the "Written Offer") to Transfer such Venture
Interest (collectively, the "Offered Interest") to the other Venturer (the
"Offeree") on terms and conditions, including price, not less favorable to
the Offeree than those on which the Seller proposes to Transfer such Offered
Interest to the Proposed Transferee. The Written Offer shall disclose the
identity of the Proposed Transferee, the Person or Persons, if any, that
Control such Proposed Transferee, the Offered Interest proposed to be
Transferred, the total number of Ordinary Shares and principal amount of any
Subordinated Debt owned by the Seller, the terms and conditions, including
price, of the proposed Transfer, and any other material facts relating to the
proposed Transfer. The Written Offer shall further state that the Offeree
may acquire, in accordance with the provisions of this Agreement, all of the
Offered Interest for the price and upon the other terms and conditions,
including deferred payment (if applicable), set forth therein.
(b) The Offeree shall be permitted to confirm that the Bona
Fide Offer is firm and subject only to conditions that could reasonably be
expected to be satisfied, by (i) review of the documents involved in such
Bona Fide Offer and (ii) requiring that the Proposed Transferee submit
evidence reasonably satisfactory to the Offeree of any financing for such
purchase.
(c) (i) If the Offeree elects to purchase the
Offered Interest at the price offered by the Proposed Transferee, the Offeree
shall communicate in writing its election to purchase to the Seller, which
communication shall be delivered to the Seller within 30 days of the date the
Written Offer was made. Such communication shall, when taken in conjunction
with the Written Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of the Offered Interest.
(ii) The closing of the sale and purchase of the
Offered Interest to the Offeree shall occur in accordance with Sections 12.5
and 12.6.
(iii) If the Offeree does not elect to so purchase
the Offered Interest, the Seller may sell the entire Offered Interest to the
Proposed Transferee within 90 days following the expiration of the thirty
(30) day period referred to in Section 12.3(c), upon terms that are no more
favorable to the Proposed Transferee than those set forth in the Written
Offer. For purposes of the preceding sentence, a purchase price that is less
than ninety-five percent (95%) of the purchase price set forth in the Written
Offer will be deemed more favorable to the Proposed Transferee. If the
Proposed Transferee does not carry out its purchase within said 90-day
period, or else withdraws its offer or introduces any changes thereto, the
Offered Interests may not be sold, assigned or transferred unless previously
offered to the Venturers once again pursuant to this Section 12.3.
12.4 VENTURER CHANGE OF CONTROL
(a) SG shall have the right at any time within sixty (60)
days after the later of (i) the occurrence of a Venturer Change of Control or
(ii) the giving of notice of such Venturer Change of Control pursuant to
Section 6.4, by written notice to ITGI (the date of such notice is referred
to herein as the "Control Put Notice Date"), to require ITGI to purchase all,
but not less than all, of its Venture Interest for a cash price equal to the
Reference Value. Promptly following the Control Put Notice Date, the
Venturers shall commence determining the Reference Value as set forth on
SCHEDULE 1.1.
(b) ITGI shall have the right at any time within sixty (60)
days after the later of (i) the occurrence of a Venturer Change of Control or
(ii) the giving of notice
of a Venturer Change of Control pursuant to Section 6.4, by written notice to
SG (the date of such notice is referred to herein as the "Control Call Notice
Date"), to require SG to sell all, but not less than all, of its Venture
Interest for a cash price equal to the applicable Reference Value. Promptly
following the Control Call Notice Date, the Venturers shall commence
determining the Reference Value as set forth on SCHEDULE 1.1.
(c) The closing of a purchase and sale pursuant to Section
12.4(a) or 12.4(b) shall occur in accordance with Sections 12.5 and 12.6.
12.5 GOVERNMENTAL APPROVALS. Each of the Parties shall use all
reasonable commercial efforts to obtain all Governmental Approvals required
to effect any purchase and sale of Venture Interests pursuant to Sections
11.1(e), 11.1(f), 12.3(c)(ii), 12.4(a) or 12.4(b). If the required
Governmental Approvals have not been received at the time any such closing is
scheduled to occur, the contemplated transfer shall be deferred and made
conditional until such time as the required Governmental Approvals have been
obtained.
12.6 CLOSING OF PURCHASE OF VENTURE INTERESTS. Unless the
Venturers otherwise agree, the closing of any purchase and sale of Venture
Interests pursuant to Sections 11.1(e), 11.1(f), 12.3(c)(ii), 12.4(a) or
12.4(b) shall occur at the Company's principal executive office within sixty
(60) days after the applicable notice of purchase and sale has been
furnished. At such closing, (i) the Venturer transferring such Venture
Interests (the "Transferring Party") shall transfer, assign and deliver to
the Person purchasing such Venture Interests (the "Non-Transferring Party")
the certificates or other documents evidencing the Venture Interests being
purchased, duly endorsed for transfer, together with such assignments
separate from any such certificate and other documents or instruments
reasonably required by counsel for the Non-Transferring Party to consummate
such purchase, and (ii) the Non-Transferring Party shall pay the purchase
price in cash in GB Pounds Sterling. In addition, at the closing of such
purchase and sale, (A) the Transferring Party shall deliver to the
Non-Transferring Party an executed, written representation, in form and
substance reasonably satisfactory to legal counsel for the Non-Transferring
party, that the Transferring Party owns the Venture Interests free and clear
of all Security Interests and that upon the delivery of the Venture
Interests, the Transferring Party shall have transferred all of its right,
title and interest in the Venture Interests, and (B) the Non-Transferring
Party shall deliver to the Transferring party such investment representations
as may be reasonably required to comply with applicable securities laws.
ARTICLE 13
FINANCIAL AND ACCOUNTING MATTERS
13.1 BOOKS AND RECORDS; FINANCIAL YEAR. The Company shall, and
shall cause its Subsidiaries to, to the extent permitted by Applicable Law,
keep its accounts and financial and cost records in GB Pounds Sterling in
English. The fiscal year of the Joint Venture and each of the JV Companies
shall be the Financial Year.
13.2 FINANCIAL INFORMATION. The Company shall prepare in
accordance with Irish GAAP (i) not later than sixty (60) days after the end
of each Financial Year audited financial statements in English of the Company
and its Subsidiaries, and (ii) not later than thirty (30) days after the end
of each fiscal quarter (other than the final quarter of a Financial Year),
unaudited financial statements in English of the Company and its Subsidiaries
and shall also cause the Company to provide on a timely basis all statements
in English necessary for each Venturer to prepare its tax returns as they
relate to such Venturer=s interest in the Company.
13.3 RIGHT OF INSPECTION OF BOOKS. Each JV Company shall keep
full, complete and accurate books of account, record and information with
respect to its affairs and the same shall be maintained at the principal
office of the JV Company. Entries shall be made in such books of account and
records of all such matters, transactions and things as are usually written
and entered in books of account and records kept by Persons engaged in
businesses similar to the business of the JV Company or required by
Applicable Law. Each Venturer shall have the right, acting reasonably and in
coordination with the JV Companies= auditors and accounting personnel and, to
the extent practicable, the other Venturer, to audit, examine, and make
copies of or extracts from the books of account and records of the Company
and its Subsidiaries at all reasonable times during usual business hours.
Such right may be exercised through any agent or
employee of such Venturer designated in writing by it or by an independent
certified accountant designated in writing by such Venturer. Each Venturer
shall bear all expenses incurred in any examination made for such Venturer's
account.
13.4 ACCOUNTING PRINCIPLES. Unless otherwise agreed by the
Venturers, the accounts and records of the Company and its Subsidiaries shall
be maintained in accordance with Irish GAAP.
13.5 AUDITORS. The auditors of the Company, ITGL and ITGE shall be
an internationally recognized auditing firm nominated by the Company Board
and approved by the Venturers. Such firm shall be KPMG Peat Marwick LLP
until changed by a vote of the Venturers. All audit reports and reports to
management on internal controls and procedures prepared by such auditing firm
shall be made available to the Company Board and each Venturer.
ARTICLE 14
OTHER ACTIVITIES BY THE VENTURERS;
EXPANSION OF TERRITORY; CONFIDENTIALITY
14.1 IN GENERAL. The Venturers acknowledge that to support their
intention to make the Joint Venture the principal embodiment of the JV
Business of the Venturers and to protect adequately their interests in the JV
Companies, it is necessary and essential that the Venturers enter into and
adhere to the covenants contained in this Article 14.
14.2 NON-COMPETITION OBLIGATIONS.
(a) From and after the date hereof and until a date twelve
(12) months following the termination of the JV Companies pursuant to the
terms of this Agreement, except as otherwise expressly provided in Section
14.3 or as provided in Section 12 of the POSIT License Agreement and until a
date twelve (12) months following the termination of the JV Companies
pursuant to the terms of this Agreement, no Venturer or any of its Affiliates
shall:
(i) Offer Competing Services; or
(ii) Invest or Participate in any Person that Offers Competing
Services; or
(iii) Except as required by Applicable Law, no senior officer
or member of the board of directors of a Venturer shall
serve as senior officer or member of a board of
directors, managing board or similar governing body of
a Major Competitor of the JV Companies.
(b) In the event that the ITGI License Agreement is
terminated by ITGI in accordance with Section 8(a)(iv) of the ITGI License
Agreement, the non-compete obligations set forth in Section 14.2(a) above
shall cease to apply.
14.3 NON-COMPETITION EXCEPTIONS. Except as expressly set forth in
this Section 14.3, nothing in this Article 14 shall be construed to prohibit
any of the following activities by a Venturer or any of its Affiliates after
the date hereof.
(a) INVESTMENTS. The acquisition or ownership by a
Venturer (directly or indirectly through an Affiliate) (other than where such
acquisition or ownership is held by such Venturer solely as a trustee or
nominee for an unaffiliated third party) of a Person or an Equity Interest in
such a Person through merger, consolidation, purchase of stock or assets or
otherwise, if the annual consolidated gross revenues attributable to
Competing Services of such Person do not exceed five percent (5%) of the
annual consolidated gross revenues of such Person as set forth in the most
recently available audited financial statements of such Person as of the date
of execution of the definitive agreement providing for such acquisition.
(b) FIVE PERCENT INVESTMENTS. The acquisition or ownership
by a Venturer (directly or indirectly through an Affiliate) of any securities
of a publicly held Person engaged in Competing Services, if such securities
(i) were not acquired directly from such Person in a private placement or
similar transaction, (ii) do not represent more than five percent (5%) of the
aggregate voting power of the outstanding equity securities of such Person
(other than where such acquisition or ownership is held by such Venturer
solely as a trustee or nominee for an unaffiliated third
party) (assuming the conversion, exercise or exchange of all such securities
held by such Venturer or its Affiliate that are convertible, exercisable or
exchangeable into or for voting securities), and (iii) in the case of debt
securities, entitle the holder thereof to receive only interest or other
returns that are not based on the value or results of operations of such
Person.
(c) INVESTMENT FUNDS. The acquisition or ownership
(directly or indirectly thorough an Affiliate) by a Venturer of an ownership
interest in an investment fund or plan (including pension and retirement
plans) investing on behalf of the employees or retirees of such Venturer or
its Affiliates or the continued sponsorship by such Venturer (or Affiliate)
thereof; provided that no investment by any such fund or plan has the purpose
or effect of changing or influencing the Control of any Person that Offers
Competing Services.
14.4 EXPANSION OF TERRITORY. Each of the Venturers acknowledges
that the JV Business shall only be conducted in connection with equity
securities traded on securities exchanges located within the Territory and
that the countries and regions comprising the Territory can only be changed
by mutual agreement in writing by the Venturers. The foregoing
notwithstanding, in the event any Venturer contemplates Offering Competing
Services in any country or region in South Africa, Turkey or Asia that is not
part of an Excluded Territory, such Venturer shall first consult with the
other Venturer with respect to expanding the Territory to include such
country or region.
14.5 CONFIDENTIALITY. Each Venturer shall use, and shall cause its
Affiliates, employees and agents to use, their respective reasonable best
efforts to ensure that the terms of this Agreement, the other Operative
Agreements (including all Exhibits and Schedules hereto and thereto) and
confidential proprietary information concerning the other Venturer, the JV
Business and affairs of the Company and its Subsidiaries are not disclosed to
third parties unless the other Venturer shall have consented to such
disclosure in writing; PROVIDED, HOWEVER, that such information may be
disclosed to third parties to the extent reasonably required to accomplish
any proposed transfer under Article 12, as necessary in connection with any
private offering of securities of a Venturer or any of its Affiliates, if the
Person to which the information is disclosed agrees in writing to keep such
information
confidential, as necessary in connection with any Public Offering of
securities of a Venturer or any of its Affiliates (and related reporting
obligations occasioned thereby), and as required by law.
ARTICLE 15
TERM AND TERMINATION DEFAULT
15.1 TERM OF JV COMPANIES. Each JV Company shall continue without
interruption until it is dissolved and terminated pursuant to the terms of
this Agreement, the Constituent Documents and Applicable Law.
15.2 TERMINATION OF JOINT VENTURE. The following shall be
"Termination Conditions" with respects to the Joint Venture:
(a) a Funding Breach with respect to a Capital Call (in
which case the non-defaulting Venturer may deliver a written notice (a)
"Termination Notice") in accordance with Section 15.3;
(b) a Material Non-Monetary Default (in which case the
non-defaulting Venturer may deliver a Termination Notice in accordance with
Section 15.3);
(c) the Bankruptcy of a Venturer (in which case the
non-bankrupt Venturer may deliver a Termination Notice in accordance with
Section 15.3);
(d) the termination of the POSIT License (in which case any
Venturer may deliver a Termination Notice in accordance with Section 15.3); or
(e) written mutual consent of the Venturers (in which case
any Venturer may deliver a Termination Notice in accordance with Section
15.3).
15.3 TERMINATION NOTICE.
(a) If a Termination Condition occurs, a Party entitled to
deliver a Termination Notice pursuant to Section 15.2 may give such
Termination Notice to the other Parties and to the Executive Committee within
60 days following the date upon which such Party becomes aware of the
occurrence of the Termination Condition. If any Venturer delivers a
Termination Notice, the other Venturer shall be precluded
from delivering a subsequent Termination Notice.
(b) Each Venturer acknowledges and agrees that (i) it shall
not challenge the validity of any provision of this Article 15 in any
Proceeding and (ii) each Venturer shall have a right to seek specific
performance of each provision of this Article 15.
15.4 TERMINATION UPON DEFAULT, ETC. In the case of a Termination
Condition under Section 15.2(a), (b) or (c), the non-defaulting Venturer
delivering the Termination Notice shall have the right to exercise its option
to purchase all but not less than all, of the Venture Interest of the
defaulting Venturer at eighty percent (80%) of the defaulting Venturer's
investment to date plus interest on amounts invested from time to time at the
Applicable Rate (the "Default Termination Value") by delivering a written
notice of exercise within sixty (60) days following the occurrence of any
such Termination Condition. This reduction to eighty percent (80%) of the
investment to date plus interest on amounts invested from time to time at the
Applicable Rate is agreed by both parties as a reasonable pre-estimate by way
of liquidated damages of the likely loss, direct and indirect, which would be
incurred by the non-defaulting Venturer in consequence of a Termination
Condition arising under Section 15.2 (a) (b) or (c) hereof in relation to the
defaulting Venturer, this assessment taking into account the financial and
other commitments made by both Venturers under this Agreement in relation to
the establishment and proposed long term operation of the Joint Venture.
Such written notice shall constitute an offer by the non-defaulting Venturer
to purchase the Venture Interests of the defaulting Venturer at a price equal
to the Default Termination Value, and the defaulting Venturer hereby accepts
any such offer by the non-defaulting Venturer. If the non-defaulting
Venturer fails to deliver such written notice of such exercise within said
60-day period, it will be deemed to have elected not to purchase the Venture
Interest of the defaulting Venturer. In the event that non-defaulting
Venturers purchases the Venture Interest of the defaulting Venturers pursuant
to this Section 15.4, the purchase price for the Venture Interest shall be an
amount payable in cash in GB Pounds Sterling.
15.5 CLOSING. Each of the Parties shall use its reasonable efforts
to obtain all Governmental Approvals required to effect the purchase and sale
of Venture Interests, pursuant to Section 15.4. Unless the Parties
have failed to receive all required Governmental Approvals, the closing of
the purchase of a Venture Interest pursuant to this Article 15 shall be held
at the offices of the purchasing Venturer within ten (10) days after the
final determination of the purchase price to be paid to the selling Venturer.
If in spite of the Venturers' efforts in this regard, the required
Governmental Approvals have not been received at the time the closing is
scheduled to occur, the closing shall be postponed until such date as the
Venturers shall have obtained the required Governmental Approvals; provided
that, if such Governmental Approvals are not obtained prior to the first
anniversary of the date on which such closing is postponed, at the request of
any Venturer, the Venturers shall negotiate in good faith to provide for the
termination of the Joint Venture pursuant to such mutually agreeable terms
and conditions as will permit the Venturers to obtain all Governmental
Approvals required for the termination of the Joint Venture, and as will have
substantially the same economic consequences to the Venturers as the
transaction contemplated by Section 15.4. At the closing, the purchasing
Venturer and the selling Venturer shall make the deliveries specified in
Section 12.6.
15.6 TERMINATION BY DISSOLUTION. In the case of a Termination
Condition under Section 15.2(d) or (e) upon delivery of a Termination Notice,
the Venturers shall proceed to dissolve the Joint Venture by the Venturers
causing their representatives on the JV Boards to proceed with the winding up
of the affairs and liquidation of the JV Companies through the sale of their
respective assets and properties. Notwithstanding the foregoing, in the
event that a Venturer fails to give a Termination Notice within the time
period set forth in Section 15.3, such Venturer shall be deemed to have
waived its right to dissolve, with respect to the event or events which gave
rise to such right to dissolve.
ARTICLE 16
POST TERMINATION PROVISIONS
16.1 CONSEQUENCES OF TERMINATION. Upon the transfer by at least
one Venturer of its entire Venture Interest in accordance with this Agreement
(other than a transfer pursuant to Section 12.2), this Agreement and the
other Operative Agreements shall forthwith cease to have effect as between
such Party and the other Parties, and all further obligations of such Party
(and its Affiliates) to such other Parties (and their Affiliates) and of such
other Parties (and their Affiliates) to such Party (and its Affiliates) shall
terminate with this Agreement and the other Operative Agreements without
further liability, except that:
(a) such transfer shall not constitute a waiver of any
rights that any Party (or any of its Affiliates) may have by reason of a
breach of this Agreement or any other Operative Agreement, subject to any
limitations thereon in this Agreement or the other Operative Agreements;
(b) the provisions of this Article 16, Article 10, Article
14, other than Section 14.4, and Article 18, other than Sections 18.8 and
18.10 of this Agreement shall continue in full force and effect; and
(c) The rights and obligations of the Parties (and their
Affiliates) under the Service Agreements shall continue in full force and
effect for a period of six months from such transfer; and
(d) the rights and obligations of the Parties (and their
Affiliates) under the Operative Agreements, other than the Service
Agreements, shall continue in full force and effect to the extent provided in
the Transition Plan.
16.2 NON-SOLICITATION. Anything herein to the contrary
notwithstanding, upon the Transfer by SG of all of its Venture Interest in
accordance with this Agreement, for a period commencing on the date of such
Transfer and ending on the first anniversary of such Transfer, SG shall not,
and shall cause its Affiliates not to, induce or attempt to influence any
employees of the JV Companies or any of their Affiliates to terminate such
employee's employment therewith.
16.3 TRANSITION PLAN. The Parties agree to negotiate
in good faith to develop a plan (the "Transition Plan") which will govern the
rights and obligations of the parties under the Operative Agreements
following an event described in Section 16.1 and which will ensure that the
successor to the JV Business shall continue to supply services to its
customers without disruption. Each of the Parties agrees to cause its
Affiliates and, insofar as within its control, the JV Companies, to comply
with the provisions of the Transition Plan.
ARTICLE 17
NEGOTIATIONS; ARBITRATION; SUBMISSION TO JURISDICTION
17.1 NEGOTIATIONS; ARBITRATION. (a) In the event of any dispute,
controversy or claim (other than a Deadlock) arising out of or relating to
this Agreement, or the performance, breach, termination, or invalidity
hereof, such dispute, controversy or claim shall be the subject of an attempt
at an amicable solution, for which purpose any party shall give notice to the
other parties, giving a concise description of the matter in question and the
position of such party in respect thereof and proposing a meeting among the
chief executive officers, executive managing directors or their designees
(the "Senior Officers") of the ultimate parent companies of the Venturers in
The City of Dublin (or such other place as they may agree) with the purpose
of resolving the dispute, controversy or claim.
(b) In the event such a meeting is called, the meeting
shall take place within ten (10) Business Days of its being requested.
Unless the parties otherwise agree, if such meeting does not take place
within such ten (10) Business Days or if within ten (10) Business Days after
such meeting the Senior Officers have not resolved such matter, then the
matter shall be settled by arbitration in accordance with the rules of the
ICC in effect on the date hereof. The arbitration shall be the sole and
exclusive forum for resolution of the dispute, controversy or claim, and the
award shall be final and binding. Judgment thereon may be entered by any
court having jurisdiction. The number of arbitrators shall be three (or such
other number as shall be stipulated by the most recent then existing Rules of
the ICC), each of whom shall be disinterested in the dispute, controversy or
claim and shall be impartial and independent of any party. Each Venturer
(and its Affiliates, as applicable) and Venturer (and its Affiliates, as
applicable) shall appoint one arbitrator, and the two so appointed shall
choose a third arbitrator. If the arbitrators chosen by the Venturers cannot
agree on the choice of the third arbitrator within a period of thirty (30)
days after both of them have been appointed, then the third arbitrator shall
be appointed by the ICC. The parties and the appointing authority may
appoint from among the nationals of any country, whether or not a party is a
national of that country. The place of arbitration shall be The City of
Dublin, Ireland. The arbitration shall be conducted in the English language
and any foreign-language documents presented at such arbitration shall be
accompanied by an English translation thereof. The arbitrators shall state
the reasons upon which the award is based. The arbitrators shall apply the
laws of Ireland without regard to the principles of conflicts of laws.
(c) Any matter expressed in this Agreement to be a matter
for review, collaboration, consultation, consent, decision, agreement or vote
by the parties or any of them shall not, in the event of failure of decision
or agreement, constitute a dispute or difference to be referred to or settled
by arbitration proceedings.
(d) Each of the parties hereby submits to the exclusive
jurisdiction of the Irish Courts (the "Specified Court") in any action, suit
or proceeding with respect to the enforcement of the arbitration provisions
of this Agreement and the non-exclusive jurisdiction of such court with
respect to the enforcement of any award thereunder. Each party irrevocably
appoints the agent for service specified opposite its name on the signature
pages hereof as its authorized agent in the city of Dublin, Ireland upon
which process may be served in any related proceeding, and agrees that
service of process upon such agent, and written notice of said service to
such party, by the person serving the same to the address so provided, shall
be deemed in every respect effective service of process upon such party in
any such action, suit or proceeding. Each party further agrees to take any
and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for the duration of this
Agreement.
ARTICLE 18
MISCELLANEOUS
18.1 NOTICES. Except as expressly provided herein, notices and
other communications provided for herein shall be in writing in the English
language and shall be delivered
by hand or courier service, mailed or sent by telex, facsimile, graphic
scanning or other telegraphic communications equipment of the sending Party,
as follows:
If to ITGI, to:
ITG International Limited
c/o KPMG Peat Marwick LLP
P.O. Box HM906
Hamilton HMDX
Bermuda
Attn: Claudio Satasi
with a copy to:
ITG, Inc.
380 Madison Avenue, 4th Floor
New York, New York 10017
U.S.A.
Attn: General Counsel
Tel: (212) 588-4000
Fax: (212) 444-6345
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
U.S.A.
Attn: David E. Zeltner, Esq.
Tel: (212) 310-8220
Fax: (212) 310-8007
with a copy to:
MHC Corporate Secretarial Services Limited,
at its registered office for the time being
in Dublin, Ireland
Attn: David O'Donnell
Tel: 353 1 6611788
Fax: 353 1 6611431
If to SG, to:
Tour Societe Generale
92972 Paris - La Defense Cedex
France
Attn: Yves Tuloup
Tel: 33 1 4213 7388
Fax: 33 1 4213 7390
Attn: Pierre Teniere
Tel: 33 1 4213 2136
Fax: 33 1 4213 6925
with a copy to:
Societe Generale Securities (London) Ltd.
Exchange House
Primrose Street
London EC2
Attn: Hugh Hughes / Nigel Brahams
Tel: 44 171 762 4444
Fax: 44 171 762 4555
with a copy to:
Goodbody Secretarial Limited at its registered office
for the time being in Dublin, Ireland
Attn: James Dudley
Tel: 353 1 661 3311
Fax: 353 1 661 3278
or to such other address or attention of such other Person as such Party shall
advise the other Parties in writing. All notices and other communications given
to the Parties hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt. Communications sent by
telex, facsimile, graphic scanning or other telegraphic communications equipment
shall be deemed to have been received when confirmation of their delivery is
received by the sender.
18.2 APPLICABLE LAW. The validity, construction and performance of
this Agreement shall be governed by and construed in accordance with the law of
Ireland, regardless of the laws that might otherwise govern under applicable
principles of conflicts or choice of law.
18.3 SEVERABILITY. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, the Parties agree that such provision
will be enforced to the maximum extent permissible so as to effect the intent of
the Parties, and the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby. If necessary to effect the intent of the Parties, the
Parties will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
reflects such intent.
18.4 AMENDMENTS. This Agreement may be modified only by a written
amendment signed by all of the parties to this Agreement.
18.5 WAIVER. The waiver by a Party of any instance of any other
Party's non-compliance with any obligation or responsibility herein shall be in
writing and signed by the waiving Party and shall not be deemed a waiver of
other instances of such other Party's non-compliance.
18.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts shall have been signed by
each Party and delivered to the other Parties.
18.7 ENTIRE AGREEMENT. The provisions of this Agreement set forth the
entire agreement and understanding among the Parties as to the subject matter
hereof and supersede all prior agreements, oral or written, and all other prior
communications between the Parties relating to the subject matter and those
written agreements executed and delivered contemporaneously herewith.
18.8 NO ASSIGNMENT. (a) Except as specifically provided herein, no
Party shall, directly or indirectly, assign this Agreement or any of its rights
or obligations hereunder without the prior written consent of the other Parties.
(b) Any attempted assignment of this Agreement in violation
of this Section 18.8 shall be void and of no effect.
(c) This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Parties and their respective successors and
permitted assigns.
18.9 NO THIRD-PARTY BENEFICIARIES. Except for the provisions of
Article 10 hereof, this Agreement is for the sole benefit of the Parties and
their permitted assigns, and
nothing herein express or implied shall give or be construed to give to any
Person, other than the Parties and such assigns, any legal or equitable
rights hereunder.
18.10 PUBLICITY. The Parties shall use reasonable efforts to consult
in good faith with each other with a view to agreeing upon any press release or
public announcement relating to the transactions contemplated hereby or by the
other Operative Agreements prior to the consummation thereof.
18.11 CONSTRUCTION. This Agreement has been negotiated by the Parties
and their respective counsel and shall be fairly interpreted in accordance with
its terms and without any strict construction in favor of or against any of the
Parties.
18.12 DISCLAIMER OF AGENCY. Except for provisions herein expressly
authorizing one Party to act for another, this Agreement shall not constitute
any Party as a legal representative or agent of any other Party, nor shall a
Party have the right or authority to assume, create or incur any liability or
any obligation of any kind, express or implied, against or in the name or on
behalf of any other Party or any of its Affiliates or the Joint Venture or any
of the JV Companies unless otherwise expressly permitted by such Party.
18.13 RELATIONSHIP OF THE PARTIES. The relationship among the Parties
shall not be that of partners and nothing herein contained shall be deemed to
constitute a partnership among them.
18.14 FIDUCIARY DUTIES. Subject to Applicable Law, no Party or any of
its Affiliates nor any officer, director, employee or former employee of any
Party or its Affiliate shall have any obligation, or be liable, to any Party,
the Joint Venture or any JV Company for exercising any of the rights of such
Party or such Affiliate under this Agreement or any other Operative Agreement to
which it is or will be a party, for exercising or failing to exercise its rights
as a shareholder of any JV Company or for breach of any fiduciary or other
similar duty to any Party, the Joint Venture or any JV Company by reason of such
conduct, other than a breach of any Operative Agreement.
IN WITNESS WHEREOF, each of the Parties has cause its respective duly
authorized officers to execute this
Agreement as of the day and year first above written.
ITG International Limited
By: /s/ Howard C. Naphtali
-------------------------------
Name: Howard C. Naphtali
Title: President
Societe Generale
By: /s/ H. L. Hughes
-------------------------------
Name: H. L. Hughes
Title: Authorized Signatory
Investment Technology Group SG Limited
By: /s/ H. L. Hughes
-------------------------------
Name: H. L. Hughes
Title: President
Investment Technology Group Limited
By: /s/ Alasdair Haynes
-------------------------------
Name: Alasdair Haynes
Title: CEO
Investment Technology Group
Europe Limited
By: /s/ Adrian Collins
-------------------------------
Name: Adrian Collins
Title: Deputy Chairman
November 17, 1998
GUARANTEE BY INVESTMENT TECHNOLOGY GROUP, INC.
To Societe Generale, Investment Technology Group SG Limited, Investment
Technology Group Limited and Investment Technology Group Europe Limited
(collectively, the "Guaranteed Parties")
1. In consideration of the Guaranteed Parties entering into a Joint Venture
Agreement (the "Agreement") by and among the Guaranteed Parties and ITG
International Limited ("ITGI"), dated as of November 17, 1998,
Investment Technology Group, Inc. ("Guarantor"), the corporate parent of
ITGI, unconditionally and irrevocably, as a primary and continuing
obligation, guarantees to the Guaranteed Parties, the proper and
punctual performance by ITGI of all of ITGI's obligations under the
Agreement and undertakes to pay on demand, all amounts whatsoever owing
by ITGI under the Agreement.
2. This guarantee is a continuing guarantee and will remain in force until
all the obligations (actual or contingent) of ITGI under the Agreement
have been discharged in full.
3. The Guarantor shall not, without first obtaining the Guaranteed Parties'
written consent, act in a liquidation or winding up of ITGI in
competition with the Guaranteed Parties for any amount whatsoever owing
by ITGI pursuant to the Agreement.
4. All amounts payable hereunder shall be paid in full without any
deduction or withholding whatsoever (whether in respect of set-off,
counterclaim, duties, taxes or charges) unless such deduction or
withholding is required by law, in which event the Guarantor shall pay
under the Agreement an additional amount so that the net amount received
by the Guaranteed Parties will equal the full amount which the
Guaranteed Parties would have received had such amount been paid
directly by ITGI.
5. The Guarantor acknowledges that it has represented to
the Guaranteed Parties and hereby warrants, that it has full power and
authority to enter into this Guarantee, that it has taken all necessary
corporate or other actions to authorize the same, and that as executed,
this Guarantee (and the performance of all its obligations herein
contained) does not and will not constitute a breach of any law or
governmental regulation or order to which the Guarantor is subject, or
any agreement by which the Guarantor is bound, and is and will be valid,
binding and enforceable in accordance with its terms.
6. Terms defined in the Agreement shall bear the same meanings when used
herein.
7. Any notice or demand herein shall be in writing in the English language
and shall be delivered by hand or courier service, mailed or sent by
facsimile, as follows:
Investment Technology Group, Inc.
380 Madison Avenue, 4th Floor
New York, New York 10017
United States
Attn: General Counsel
Fax: 212-444-6345
or to such other address or attention of such other person as the
Guarantor shall advise the Guaranteed Parties in writing. All notices
and demands given or served in accordance with the provisions of this
Guarantee shall be deemed to have been given on the date of receipt.
Communications sent by facsimile shall be deemed to have been received
when confirmation of delivery is received by the sender.
8. The validity, construction and performance of this Guarantee shall be
governed by and construed in accordance with the laws of Ireland
regardless of the laws that might otherwise govern under applicable
principles of conflicts or choice of law.
Investment Technology Group, Inc.
By: /s/ Raymond L. Killian, Jr.
---------------------------------------
Name: Raymond L. Killian, Jr.
Title: Chairman