Document:

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                                                                   EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

                  This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as
of this 20th day of September, 2002 by and between Instinet Group Incorporated,
a Delaware corporation (together with any successor thereto, the "Company"), and
Edward J. Nicoll ("Executive").

                                  WITNESSETH:

                  WHEREAS, Executive is currently employed by Datek Online
Holdings Corp ("Datek") as its Chief Executive Officer and is simultaneously
employed by Island Holding Company, Inc. (or any successor thereto, "Island")
and is serving as the Chairman of the Board of Directors of Island, in each
case, pursuant to the terms of the Amended and Restated Employment Agreement
between Executive and Datek, dated as of October 15, 1999 (the "Datek
Employment Agreement");

                  WHEREAS, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of June 9, 2002, among the Company, Instinet
Merger Corporation, a wholly owned subsidiary of the Company ("Merger Sub"),
and Island, Merger Sub and Island will merge (the "Merger") and the surviving
corporation to the Merger will become a direct wholly owned subsidiary of the
Company;

                  WHEREAS, in connection with the execution of the Merger
Agreement, the Company and Executive entered into a letter agreement, dated as
of June 9, 2002 (together with Exhibit A thereto, the "Letter Agreement"),
which, among other things, provides that Executive will assume the position of
Chief Executive Officer of the Company, commencing on the date that includes
the effective time of the Merger (the "Closing Date"), sets forth the principal
terms of Executive's employment with the Company and provides that the Company
and Executive will enter into a definitive agreement setting forth such
principal terms;

                  WHEREAS, the Company desires to secure the exclusive services
of Executive on the terms and conditions set forth in this Agreement and
Executive desires to accept such employment, on such terms and conditions, in
each case, commencing on the Closing Date;

                  WHEREAS, each of the Company and Executive agrees that
Executive will have a prominent role in the management of the business, and the
development of the goodwill, of the Company and its Affiliates (as defined
below), and will establish and develop relations and contacts with the
principal customers and suppliers of the Company and its Affiliates in the
United States, Europe and Asia (collectively, the "Restricted Territory"), all
of which constitute valuable goodwill of, and could be used by Executive to
compete unfairly with, the Company and its Affiliates; and

                  WHEREAS, (i) in the course of his employment with the
Company, Executive will obtain confidential and proprietary information and
trade secrets concerning the business and operations of the Company and its
Affiliates in the Restricted Territory that could be used to compete unfairly
with the Company and its Affiliates; (ii) Executive will create and develop
certain work products, inventions and other intellectual property which
constitute an essential

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portion of the property of the Company and its Affiliates, (iii) the covenants
and restrictions contained in Sections 8 through 14, inclusive, are intended to
protect the legitimate interests of the Company and its Affiliates in their
respective goodwill, trade secrets and other confidential and proprietary
information and intellectual property; and (iv) Executive desires to be bound
by such covenants and restrictions.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and promises contained herein and for other good and valuable
consideration, the Company and Executive hereby agree as follows:

                  l.       Agreement to Employ; Effective Date of Agreement.
Upon the terms and subject to the conditions of this Agreement and subject to
consummation of the Merger, the Company hereby employs Executive effective as
of the Closing Date, and Executive hereby accepts such employment with the
Company effective as of such date.

                  2.       Term; Position and Responsibilities.

                  (a)      Term of Employment. Unless Executive's employment
shall sooner terminate pursuant to Section 7, the Company shall employ
Executive on the terms and subject to the conditions of this Agreement for a
term commencing on the Closing Date and ending on the three year anniversary of
the Closing Date (the "Initial Term"). Effective upon the expiration of the
Initial Term and of each Additional Term (as defined below), Executive's
employment hereunder shall be deemed to be automatically extended, upon the
same terms and conditions, for an additional period of one year (each, an
"Additional Term"), in each such case, commencing upon the expiration of the
Initial Term or the then current Additional Term, as the case may be, unless
the Company or Executive shall have given notice, at least 6 months prior to
the expiration of the Initial Term or such Additional Term, of its or his
intention not to extend the Employment Period (as defined below) hereunder. Any
such notice of nonextension delivered by the Company to Executive shall be
deemed a termination of Executive's employment by the Company Without Cause as
of (i) the last day of the Initial Term or then current Additional Term, as the
case may be, or (ii) any earlier date specified by the Company in such notice,
provided that such earlier date is not less than 30 days after the date such
notice is delivered. Any such notice of nonextension delivered by Executive to
the Company shall be deemed a termination of Executive's employment by
Executive without Good Reason as of the last day of the Initial Term or then
current Additional Term, as the case may be. The period during which Executive
is employed by the Company pursuant to this Agreement shall be referred to as
the "Employment Period."

                  (b)      Position and Responsibilities. During the Employment
Period, Executive shall serve as Chief Executive Officer of the Company,
reporting directly to the Board of Directors of the Company (the "Board"), and
shall have such duties and responsibilities as are customarily assigned to
individuals serving in such position, including, without limitation, the
authority to hire, fire and determine the compensation of senior executives and
other key employees of the Company in accordance with the corporate governance
principals and procedures of the Company and the Compensation Committee of the
Board (the "Compensation Committee"), and such other duties consistent with
Executive's title and position as the Board specifies from time to time.
Executive shall devote all of his skill, knowledge, commercial

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efforts and working time to the conscientious and faithful performance of his
duties and responsibilities for the Company (except for (i) vacation time as
provided by Company policy and absence for sickness or similar disability and
(ii) to the extent that it does not interfere with the performance of
Executive's duties hereunder, (A) such reasonable time as may be devoted to the
fulfillment of Executive's civic responsibilities and, subject to the prior
written approval of the Compensation Committee (which approval, in the case of
the Compensation Committee's consideration of those directorships held by
Executive immediately prior to the date of the Merger Agreement, will not be
unreasonably withheld) and to compliance with the provisions of Sections 8
through 14, inclusive, service on boards of directors of other corporations and
entities and (B) such reasonable time as may be necessary from time to time for
personal financial matters).

                  Effective on the Closing Date, Executive shall become a
member of the Board. Thereafter, during the Employment Period, the Company
shall use its reasonable best efforts to cause Executive to be nominated and
re-elected to serve as a member of the Board at each annual meeting of the
shareholders of the Company at which Executive's election will be subject to a
shareholder vote.

                  3.       Base Salary. As compensation for the services to be
performed by Executive during the Employment Period, the Company shall pay
Executive a base salary at an annualized rate of $600,000, payable in
installments on the Company's regular payroll dates. The Compensation Committee
shall review Executive's base salary for increase annually during the period of
his employment hereunder and, in its sole discretion, may adjust such base
salary upward from time to time based upon such factors as the Compensation
Committee shall consider relevant. The annual base salary payable to Executive
under this Section 3 shall hereinafter be referred to as the "Base Salary".

                  4.       Incentive Compensation and Equity Arrangements.

                  (a)      Annual Incentive Bonus. During the Employment Period
and subject to the review and approval of the Compensation Committee, Executive
shall be eligible to participate in the annual bonus program maintained by the
Company for its senior executives (the "Annual Bonus Plan"). Provided that,
except to the extent expressly provided otherwise in Section 7(f), Executive's
employment with the Company has not terminated prior to the last day of the
fiscal year of the Company in respect of which the applicable Bonus is payable,
Executive shall have the opportunity to receive an annual bonus (the "Bonus")
under the Annual Bonus Plan, which may be paid in cash, restricted stock,
options or other non-cash compensation, in an amount to be determined by the
Compensation Committee based on the achievement by the Company of such
performance objectives as may be established from time to time by the
Compensation Committee or other committee of the Board; provided that:

                           (i) for the portion of calendar year 2002
         commencing on January 1, 2002 and ending on the Closing Date (the
         "Pre-Closing Period"), Executive shall be entitled to an annual bonus
         payable by Island in such amount as shall be determined by the
         Compensation Committee of the Board of Directors of Island, provided
         that the amount of such bonus shall not exceed the product of (x)
         $500,000, multiplied by (y) a fraction, the numerator of which is
         equal to the number of days in the Pre-Closing Period and the

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         denominator of which is 365, such bonus to be payable in cash, as
         soon as reasonably practicable following the Closing Date;

                           (ii) for the portion of calendar year 2002
         commencing on the Closing Date and ending on December 31, 2002 (the
         "Post-Closing Period"):

                                    (A) Executive's target Bonus (the "2002
                  Target Bonus") shall equal the product of (x) $2 million,
                  multiplied by (y) a fraction, the numerator of which is equal
                  to the number of days in the Post-Closing Period and the
                  denominator of which is 365 and shall be payable to Executive
                  (assuming his continued employment through at least December
                  31, 2002) if the Compensation Committee determines that the
                  Company has achieved 100% of the performance objectives for
                  the Post-Closing Period relating to the integration of the
                  businesses of the Company and Island established by the
                  Compensation Committee;

                                    (B) Executive shall be entitled to a
                  minimum Bonus (the "Minimum 2002 Bonus") equal to 50% of the
                  2002 Target Bonus (assuming such continued employment
                  through at least December 31, 2002);

                                    (C) subject to clause (D), the Minimum 2002
                  Bonus and any portion of the 2002 Target Bonus that is
                  payable in excess of the Minimum 2002 Bonus will be paid in
                  cash; and

                                    (D) on or prior to the Closing Date,
                  Executive may elect, in a written instrument submitted to the
                  Company, to receive up to 50% of the Minimum 2002 Bonus, net
                  of applicable withholding taxes, in a number of shares of
                  common stock of the Company (the "Common Stock") equal to the
                  quotient of (x) dollar amount of the Minimum 2002 Bonus to be
                  paid in such shares, divided by (y) the closing price per
                  share of Common Stock on September 23, 2002, as reported on
                  the New York Stock Exchange (the "September 23rd Share
                  Price").

                           (iii) for calendar year 2003, Executive's target
         Bonus shall equal $2 million and shall be payable to Executive
         (assuming his continued employment through at least the end of the 2003
         fiscal year and otherwise in accordance with the terms of this
         Agreement and the Annual Bonus Plan) if the Compensation Committee
         determines that the Company has achieved 100% of the performance
         objectives relating to the integration of the businesses of the Company
         and Island and any other financial performance targets established by
         the Compensation Committee for such calendar year after consultation
         with Executive.

                  (b)      Option Grants. (i) In General. During the Employment
Period, Executive shall be eligible to participate in the Instinet 2000 Stock
Option Plan (as the same may be amended and in effect from time to time, the
"2000 Option Plan") and any subsequent stock option plan maintained by the
Company for its senior executives, in all such cases, at a level commensurate
with Executive's title and position with the Company, provided that Executive
shall be entitled to receive an annual grant of options for calendar year 2003
in accordance with Section 4(b)(iii) below. The terms and conditions of all
options to purchase shares of Common

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Stock granted to Executive under the 2000 Option Plan or under any subsequent
stock option plan maintained by the Company or its Affiliates (collectively,
the "Options"), including the grant, vesting, exercise, payment and all other
terms of such Options, shall be governed by the terms of the stock option plan
under which such Options are granted, as such plan or plans may be amended and
in effect from time to time, except the terms "cause," "good reason," "without
cause" and "disability" shall have the respective meanings assigned to such
terms herein for all purposes of any Options granted to Executive under the
Option Plan or under any such subsequent stock option plan.

                  (ii)     Special Retention Grant. Effective as of the Closing
Date and subject to consummation of the Merger and Executive's commencement of
employment with the Company pursuant to this Agreement, Executive shall receive
a one-time grant of options (the "Retention Options") to purchase 575,000
shares of Common Stock (which number shall not be subject to adjustment in
respect of any dividend which may be declared or paid by the Company with a
record date on or prior to the Closing Date)(1), at an exercise price per share
equal to the September 23rd Share Price, as determined in accordance with the
2000 Option Plan. Subject to Executive's continued employment from the Closing
Date to the applicable vesting date specified herein, 25% of the Retention
Options will become vested on the eighteen month anniversary of the Closing
Date and the remaining 75% of the Retention Options will become vested in
thirty-six equal increments, on each monthly anniversary of the Closing Date
thereafter, commencing with the nineteen calendar month anniversary of the
Closing Date. All other terms and conditions of the Retention Options will
subject to and governed by the terms and provisions of the 2000 Option Plan.

                  (iii)    2003 Annual Option Grant. Subject to Executive's
continued employment through the applicable date of grant, Executive will be
eligible to receive an annual grant under the 2000 Option Plan for calendar
year 2003 of options (the "2003 Annual Options") to purchase 300,000 shares of
Common Stock (which number shall not be subject to adjustment in respect of any
dividend which may be declared or paid by the Company with a record date on or
prior to the Closing Date), at an exercise price per share equal to the
reported closing selling price per share of Common Stock on the NASDAQ National
Market on the last trading prior to the date of grant, as determined in
accordance with the 2000 Option Plan. The 2003 Annual Options will be granted
to Executive on the date that annual awards under the 2000 Option Plan are
granted to the Company's other senior executives, currently anticipated to be
in February of 2003. Subject to Executive's continued employment from the date
of grant to the applicable vesting date specified herein, 25% of the 2003
Annual Options will become vested on the first anniversary of the date of grant
and the remaining 75% of the 2003 Annual Options will become vested in
thirty-six equal increments, on each monthly anniversary of the date of grant
thereafter, commencing with the thirteen calendar month anniversary of the date
of grant. All other terms and conditions of the 2003 Annual Options will
subject to and governed by the terms and provisions of the 2000 Option Plan.

---------------------------
(1) Note that the number of option shares to be granted at the closing and in
'03 has been established after giving effect to the extraordinary cash dividend
to be declared prior to the Closing Date and the exercise price will be
determined based on the market price for the Common Stock after the record
date, which will also reflect the effects of the dividend.

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                  (c)      Island Equity Awards. On the date hereof, Executive
holds (i) options to purchase 50,000 shares of Class A common stock of Island
(the "Island Options") that were granted to Executive pursuant to the terms of
the Island ECN 2001 Stock Incentive Plan (as the same may be amended and in
effect from time to time, the "Island Incentive Plan") and the related grant
agreements evidencing such Island Options and listed on Schedule A attached
hereto (collectively, the "Island Grant Agreements") and (ii) stock
appreciation rights with respect to 136,790 shares of Class A common stock of
Island (the "Island SARs" and, together with the Island Options, the "Island
Equity Awards") that were granted to Executive pursuant to The Datek Online
Holdings Corp. 2001 Special Island Stock Appreciation Right Plan (the "Datek
SAR Plan") and the related grant agreements evidencing such Island SARs and
listed on Schedule B attached hereto (collectively, the "Datek SAR Grant
Agreements" and, together with the Island Incentive Plan, the Island Grant
Agreements and the Datek SAR Plan, the "Island Award Documents"). Pursuant to
the terms of the Merger Agreement, at the Effective Time of the Merger (as
defined in the Merger Agreement), all of Executive's Island Equity Awards that
are then outstanding will be converted into and constitute an option (with
respect to Island Options) or stock appreciation right (with respect to Island
SARs) to purchase or with respect to, as the case may be, a number of shares of
Common Stock, at an exercise or base price per share, in each case determined
in accordance with the Merger Agreement, on the same terms and conditions as
were applicable to the corresponding Island Equity Award immediately prior to
the Effective Time, except as specifically provided below in this Section 4(c).

                  Executive hereby acknowledges and confirms that, pursuant to
the Letter Agreement, Executive has waived any and all rights he may have or
have had to the accelerated vesting and/or exercisability of any of the Island
Equity Awards as provided in the Letter Agreement, all of the relevant terms and
conditions of which are incorporated herein by reference as if fully set forth
herein. Executive hereby further acknowledges and agrees that the terms or
phrases "cause," "good reason," "without cause" and "disability," as used in any
of the Island Award Documents (or similar terms used in such agreements) shall
have the respective meanings assigned to such terms herein for all purposes of
such Island Award Documents and (ii) in the event of any termination of
Executive's employment, including any such termination for good reason or
without cause, as so defined, Executive's rights, if any, in respect of the
vesting and/or exercisability of any then outstanding Island Equity Awards will
be governed exclusively by the provisions of the Letter Agreement and Section
7(f)(i) herein.

                  (d)      Lock-Up. During the period commencing on the date
hereof and ending the eighteen month anniversary of the Closing Date (the
"Holding Period"), Executive shall not be permitted to and shall not, directly
or indirectly, sell, transfer, pledge, assign, alienate, hypothecate or
otherwise dispose of or encumber all or any portion of any shares of Common
Stock beneficially owned by Executive, including without limitation by gift,
operation of law or otherwise, other than (i) in the event that, during the
Holding Period, Executive exercises any Options or Island Equity Awards that
are options to purchase Common Stock, Executive shall be permitted to sell a
number of shares of Common Stock having an aggregate market value at the time
of such sale equal to the aggregate Federal, state and local income and
employment taxes incurred and payable by Executive as a result of such exercise
of options, (ii) by will or by the laws of descent and distribution to the
estate of Executive upon Executive's death or (iii) following any termination
of Executive's employment with the Company Without Cause (as defined below) or,
subject to the prior written consent of the Compensation Committee, which

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may be given or withheld in its absolute discretion, following a resignation by
Executive from employment with the Company for Good Reason (as defined below).
Any purported or attempted transfer of any shares of Common Stock in violation
of this Section 4(d) or otherwise shall be null and void.

                  During the Holding Period, any stock certificates or other
documents evidencing any shares of Common Stock beneficially owned by Executive
shall be held in the custody of the Secretary of the Company, provided that,
upon the written request of Executive, the Company shall issue and deliver to
Executive a stock certificate for any shares of Common Stock Executive is
permitted to sell or transfer in accordance with and under the circumstances
described in clause (i), (ii) or (iii) of the forgoing paragraph, free and clear
of all restrictions. The Company may deliver stop transfer instructions with
respect to the shares of Common Stock subject to restrictions on transfer
pursuant to this Agreement to implement such restrictions and may cause any
stock certificates or other documents representing such shares to bear
appropriate legends on the face thereof during the Holding Period. Executive
shall cooperate with the Company with respect to the delivery of the applicable
shares of Common Stock to the custody of the Company and the application of any
legend on the applicable share certificates or other documents. Notwithstanding
the foregoing custody arrangement, during the Holding Period Executive shall
retain all of the rights of a stockholder with respect to such shares of Common
Stock, including voting and dividend rights. Upon the expiration of the Holding
Period, the Company shall issue and deliver to Executive a stock certificate for
such shares of Common Stock, free and clear of all restrictions hereunder and
without the legends referred to in this paragraph.

                  5.       Employee Benefits. During the Employment Period,
Executive shall be eligible to participate in the employee benefit plans and
programs maintained by the Company from time to time in which senior executives
of the Company are eligible to participate, including to the extent maintained
by the Company life, medical, dental, accidental and disability insurance plans
and profit sharing, pension, retirement, deferred compensation and savings
plans, in accordance with the terms and conditions thereof as in effect from
time to time. The benefits referred to in this Section 5 shall be provided to
Executive on a basis that is commensurate with Executive's position and duties
with the Company.

                  6.       Perquisites and Expenses.

                  (a)      General. During the Employment Period, Executive
shall be eligible to participate in all special benefit or perquisite programs
of the Company generally available from time to time to senior executives of
the Company, on the terms and conditions thereof as in effect from time to
time.

                  (b)      Business Travel, Lodging, etc. During the Employment
Period, the Company shall reimburse Executive for reasonable travel, lodging,
meal and other reasonable expenses incurred by him in connection with the
performance of his duties and responsibilities hereunder upon submission of
evidence, satisfactory to the Company, of the incurrence and purpose of each
such expense and otherwise in accordance with the terms and conditions of the
Company's business expense reimbursement policy applicable to its senior
executives as in effect from time to time.

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                  (c)      Vacation. During the Employment Period, Executive
shall be entitled to paid vacation on an annualized basis in the amount
provided by Company policy.

                  7.       Termination of Employment.

                  (a)      Termination Due to Death or Disability. Executive's
employment may be terminated by the Company due to Executive's Disability (as
defined below). A "Disability" termination shall occur if, because of
Executive's physical or mental incapacity, Executive has been unable for a
period of 180 consecutive days or a non-consecutive period of four months in
any twelve consecutive month period to perform his material duties hereunder
and thereafter the Company gives notice of termination to Executive as a result
thereof prior to Executive's return to full time performance of his material
duties hereunder. If there is disagreement between the parties as to
Executive's Disability, a determination thereof shall be made by a physician
chosen by Executive and reasonably acceptable to the Company. In the event that
Executive's employment hereunder terminates due to his death or is terminated
by the Company due to Executive's Disability, no termination benefits shall be
payable to or in respect of Executive except as provided in Section 7(f) (ii).

                  (b)      Termination by the Company for Cause. Executive's
employment may be terminated by the Company for Cause (as defined in the 2000
Option Plan). In the event of a termination of Executive's employment by the
Company for Cause, no termination benefits shall be payable to or in respect of
Executive except as provided in Section 7(f)(ii).

                  (c)      Termination Without Cause. Executive's employment
may be terminated by the Company Without Cause (as defined below). In the event
of a termination of Executive's employment by the Company Without Cause, no
termination benefits shall be payable to or in respect of Executive except as
provided in Section 7(f)(i). For purposes of this Agreement, a termination
"Without Cause" shall mean a termination of Executive's employment by the
Company other than due to Executive's death or Disability as described in
Section 7(a) and other than for Cause as described in Section 7(b).

                  (d)      Termination by Executive. Executive may terminate
his employment for any reason, including for Good Reason (as defined below). In
the event of a termination of Executive's employment by Executive other than
for Good Reason, no termination benefits shall be payable to or in respect of
Executive except as provided in Section 7(f)(ii) and in the event of a
termination of Executive's employment by Executive for Good Reason, no
termination benefits shall be payable to or in respect of Executive except as
provided in Section 7(f)(i). For purposes of this Agreement, a termination of
employment by Executive for "Good Reason" shall mean a termination by Executive
of his employment with the Company within 30 days following the occurrence,
without Executive's consent, of any of the following events: (i) a material
diminution in the Executive's position or operational duties, authority or
responsibilities for the Company; (ii) a material decrease in the Executive's
base pay, fees, incentive compensation opportunities, and/or employee benefits
and prerequisites; or (iii) a requirement that the Executive relocate his or
her primary place of employment or service by more that 30 miles; provided that
the Executive shall have given the Company notice of the event or events
constituting Good Reason and the Company shall have failed to cure such event
or events within 10 business days after receipt of such notice.

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                  (e)      Notice of Termination; Date of Termination.

                  (i) Notice of Termination. Any termination by the Company
pursuant to Section 7(a), 7(b) or 7(c), or by Executive pursuant to Section
7(d), shall be communicated by a written Notice of Termination addressed to the
other party to this Agreement. A "Notice of Termination" shall mean a notice
stating that Executive or the Company, as the case may be, is electing to
terminate Executive's employment with the Company, stating the proposed
effective date of such termination, indicating the specific provision of this
Section 7 under which such termination is being effected and, if applicable,
setting forth in reasonable detail the circumstances claimed to provide the
basis for such termination.

                  (ii) Date of Termination. The term "Date of Termination"
shall mean (i) if Executive's employment is terminated by his death, the date
of his death, (ii) if Executive's employment is terminated by the Company for
Cause, the date on which Notice of Termination is given or, if later, the
effective date of termination specified in such Notice of Termination, and
(iii) except as provided in clause (iv), if Executive's employment is
terminated by the Company Without Cause, due to Executive's Disability or by
Executive for any reason, the date specified in the applicable Notice of
Termination, provided that such date shall not be less than 30 days nor more
than 60 days after the date on which Notice of Termination is given and (iv) if
Executive's employment terminates pursuant to Section 2(a) in connection with
the delivery by either party of a notice of nonrenewal, the applicable date
determined in accordance with Section 2(a). The Employment Period shall expire
on the Date of Termination.

                  (f)      Payments Upon Certain Terminations.

                  (i)      In the event of a termination of Executive's
employment by the Company Without Cause or a termination by Executive of his
employment for Good Reason during the Employment Period, the Company shall pay
to Executive (or, following his death, to Executive's estate) within 30 days of
the Date of Termination his (x) full Base Salary through the Date of
Termination, (y) reimbursement for any unreimbursed business expenses incurred
by Executive prior to the Date of Termination that are subject to reimbursement
pursuant to Section 6(b) and (z) payment for vacation time accrued as of the
Date of Termination but unused (such amounts under clauses (x), (y) and (z),
collectively the "Accrued Obligations"). In addition, in the event of any such
termination of Executive's employment; provided Executive executes and delivers
to the Company a Release and Discharge of Claims substantially in the form
previously provided to Executive in connection with the execution of this
Agreement, Executive (or, following his death, Executive's estate) shall be
entitled to the following payments and benefits:

                  (A)      continued payments of the Base Salary, payable in
         installments in accordance with the Company's regular payroll policies,
         for the period beginning on the Date of Termination and ending on the
         eighteen month anniversary of the Date of Termination (the "Severance
         Period");

                  (B)      a portion of Executive's Bonus for the fiscal year
         of the Company that includes the Date of Termination, such portion to
         equal the product (such product, the "Pro Rata Bonus") of (1) the
         Bonus that would have been payable to Executive for such year had he
         remained employed for the entire fiscal year and had Executive and the

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         Company each achieved (but not exceeded) the target performance
         objectives for such year established by the Board or a committee
         thereof, multiplied by (2) a fraction, the numerator of which is
         equal to the number of days in such fiscal year that precede the Date
         of Termination and the denominator of which is equal to 365, such
         amount to be payable to Executive within five business days following
         the date (the "Bonus Payment Date") annual bonuses for such fiscal
         year are actually paid by the Company to its active executives;

                  (C)      payment of an amount equal to 150% of the Average
         Annual Bonus (as defined below) within 10 days following the Date of
         Termination;

                  (D)      continued coverage during the Severance Period under
         the Company's medical and dental insurance plans referred to in
         Section 5 (the "Continued Benefits") for Executive and his eligible
         dependents participating in such plans immediately prior to the Date
         of Termination, subject to timely payment by Executive of all
         premiums, contributions and other co-payments required to be paid by
         active senior executives of the Company under the terms of such plans
         as in effect from time to time;

                  (E)      with respect to any Options and Islands Equity
         Awards held by Executive immediately prior to the Date of
         Termination, (1) those Options and Island Equity Awards that have not
         become vested prior to the Date of Termination and that would, based
         solely on Executive's continued employment, have become vested during
         the Severance Period but for Executive's termination of employment,
         shall continue to vest and become exercisable in accordance with
         their respective terms during the Severance Period as though
         Executive had continued to be employed by the Company for such
         period, (2) all other Options and Island Equity Awards that have not
         become vested prior to the Date of Termination shall expire on the
         Date of Termination and (3) to the extent vested, outstanding Options
         and Island Equity Awards shall be exercisable during the Severance
         Period and for the period following the expiration of the Severance
         Period ending on the earlier of (x) the normal expiration date of the
         applicable Option or Island Equity Award, (y) the 30th day following
         the expiration of the Severance Period and (z) any later date
         provided in clause (ii) of Section II(a) of the Letter Agreement with
         respect to the Island Equity Awards specifically referenced therein;
         and

                  (F)      the Holding Period shall expire solely on the
         conditions and to the extent provided in Section 4(d) hereof.

                  The term "Average Annual Bonus" means the average of the
annual cash Bonuses plus the value, as determined by the Board, as of the date
of grant of any non-cash Bonuses paid to Executive under the Annual Incentive
Bonus Plan for each of the three complete fiscal years of the Company ending
immediately prior to the Date of Termination during which Executive was
employed by the Company or, if Executive has been employed by the Company for
an aggregate period of less than three fiscal years, the average of such annual
Bonuses paid to Executive by the Company under the Annual Incentive Bonus Plan
for Executive's period of employment, except that in the event of a termination
by the Company Without Cause or a termination by Executive of his employment
for Good Reason as of a Date of Termination prior to January 1, 2004, the term
"Average Annual Bonus" shall mean an amount equal to $2 million.

                                       10

<PAGE>

                  Executive shall not have a duty to mitigate the costs to the
Company under this Section 7 (f) (i), nor shall any payments from the Company
to Executive of Base Salary, Average Annual Bonus and Pro Rata Bonus be
reduced, offset or canceled by any compensation or fees earned by (whether or
not paid currently) or offered to Executive during the Severance Period by a
subsequent employer or other Person (as defined below) for which Executive
performs services, including but not limited to consulting services. The
foregoing notwithstanding, should Executive receive health and medical benefits
coverage by a subsequent employer during the Severance Period, all similar
health and medical benefits coverage provided by the Company to Executive shall
immediately terminate.

                  (ii)     If Executive's employment shall terminate upon his
death or Disability or if the Company shall terminate Executive's employment
for Cause or Executive shall terminate his employment without Good Reason in
any such case during the Employment Period, the Company shall pay to Executive
(or, in the event of Executive's death, to his estate) the Accrued Obligations
within 30 days following the Date of Termination. In addition, if Executive's
employment shall terminate upon his death or Disability during the Employment
Period, the Company shall pay to Executive (or, in the event of Executive's
death, to his estate) the Pro Rata Bonus, if any, in one lump sum within five
business days following the Bonus Payment Date for the fiscal year of the
Company that includes the Date of Termination.

                  (iii)    Except as specifically set forth in this Section
7(f), no benefits payable to Executive under any otherwise applicable plan,
policy, program or practice of the Company or its Affiliates in which Executive
was a participant during his employment with the Company or its Affiliates
shall be limited by this Section 7(f), provided that Executive shall not be
entitled to receive any payments or benefits under any such plan, policy,
program or practice providing any bonus or incentive compensation or severance
compensation or benefits (and the provisions of this Section 7(f) shall
supersede the provisions of any such plan, policy, program or practice).

                  (g)      Resignation upon Termination. Effective as of any
Date of Termination under this Section 7 or otherwise as of the date of
Executive's termination of employment with the Company, Executive shall resign,
in writing, from all Board memberships and other positions then held by him, or
to which he has been appointed, designated or nominated, with the Company and
its Affiliates.

                  8.       Unauthorized Disclosure. During the period of
Executive's employment with the Company and following any termination of such
employment, without the prior written consent of the Board or its authorized
representative, except to the extent required by an order of a court having
jurisdiction or under subpoena from an appropriate government agency, in which
event, Executive shall use reasonable efforts to consult with the Board prior
to responding to any such order or subpoena, and except as required in the
appropriate performance of his duties hereunder, Executive shall not disclose
any confidential or proprietary trade secrets, customer lists, drawings,
designs, programs, software, protocols, information regarding product
development, marketing plans, sales plans, manufacturing plans, management
organization information (including but not limited to data and other
information relating to members of the Board of Directors of the Company or any
of its Affiliates or to management of the Company or any of its Affiliates),
operating policies or manuals, business plans, financial records, packaging
design or other financial, commercial, business or technical information (a)
relating to the

                                       11

<PAGE>

Company or any of its Affiliates or (b) that the Company or any of its
Affiliates may receive belonging to suppliers, customers or others who do
business with the Company or any of its Affiliates (collectively, "Confidential
Information") to any third person unless such Confidential Information has been
previously disclosed to the public or is in the public domain (other than by
reason of Executive's breach of this Section 8).

                  9.       Non-Competition. During the period of Executive's
employment with the Company and the period of (a) 18 months after the Date of
Termination in the event of termination of Executive's employment by the
Company without Cause or by Executive for Good Reason, or (b) 12 months after
the Date of Termination in the event of termination of Executive's employment
for any other reason (such periods, collectively, the "Restriction Period"),
Executive shall not, directly or indirectly, become employed by, engage in
business with, serve as an agent or consultant to, or become a partner, member,
principal, stockholder or other owner of, any Person that competes anywhere in
the Restricted Territory, with the Business (as defined below); provided
however, that the foregoing shall not prohibit Executive from (i) holding five
percent (5%) or less of an interest in the equity or debt securities of any
publicly traded company; (ii) after the Employment Term, working for a
competing entity in a noncompeting division or subsidiary or (iii) engaging in
any activity with the prior written approval of the Board.

                  10.      Non-Solicitation of Employees. During the
Restriction Period, Executive shall not, directly or indirectly, for his own
account or for the account of any other Person, anywhere in the Restricted
Territory, (i) solicit for employment, employ or otherwise interfere with the
relationship of the Company or any of its Affiliates with any natural person
throughout the world (x) who is or was employed by or otherwise engaged to
perform services for the Company or any of its Affiliates at any time during
which Executive was employed by the Company (in the case of any such activity
by Executive during the period of Executive's employment with the Company) or
(y) who is or was employed by or otherwise engaged to perform services for the
Company or any of its Affiliates at any time during the six-month period
preceding such solicitation, employment or interference (in the case of any
such activity by Executive after the date of Executive's termination of
employment), other than any such solicitation or employment on behalf of the
Company or its Affiliates during Executive's employment with the Company, or
(ii) induce any employee of the Company or its Affiliates who is a member of
management to engage in any activity which Executive is prohibited from
engaging in under any of Sections 8, 9, 10 or 11 or to terminate his employment
with the Company. For purposes of this Section 10 and Section 11, the terms
"solicit" and "solicitation" mean any communication of any kind whatsoever,
regardless of by whom initiated, inviting, encouraging or requesting any person
or entity to take or refrain from taking any action.

                  11.      Non-Solicitation of Customers. During the
Restriction Period, Executive shall not, directly or indirectly, for his own
account or for the account of any other Person, anywhere in the Restricted
Territory, solicit or otherwise attempt to establish any business relationship
of a nature that is competitive with the business or relationship of the
Company or any of its Affiliates with any Person (x) which is or was a customer
or client of the Company or any of its Affiliates at any time during which
Executive was employed by the Company (in the case of any such activity by
Executive during the period of Executive's employment with the Company) or (y)
which is or was a customer or client of the Company or any of its Affiliates at

                                       12

<PAGE>

any time during the twelve-month period preceding the Date of Termination (in
the case of any such activity by Executive after the date of Executive's
termination of employment), other than any such solicitation on behalf of the
Company or any of its Affiliates during Executive's employment with the Company.

                  12.      Return of Documents. In the event of the termination
of Executive's employment for any reason, Executive shall deliver to the
Company all of the property of the Company and its Affiliates and the
non-personal documents and data of any nature and in whatever medium of each of
the Company and its Affiliates, and he shall not take with him any such
property, documents or data or any reproduction thereof, or any documents
containing or pertaining to any Confidential Information.

                  13.      Work Product. Executive agrees to disclose in
confidence to the Company any and all inventions, improvements, designs,
original works of authorship, formulas, processes, computer software programs,
databases and trade secrets (including, but not limited to, market information
and marketing designs, proposals and concepts) (all taken together, the
"Developments") that Executive makes, conceives, first reduces to practice, or
creates, either alone or jointly with others while Executive is employed by the
Company and that: (a) result from any work performed by Executive for the
Company, whether or not in the normal course of Executive's duties or during
normal business hours; (b) reasonably relate to the actual or anticipated
business, services, products, research or development of Executive; or (c) are
developed with the use of the Company time, equipment, supplies or facilities.
Executive must promptly disclose Developments to the Company whether or not
such Developments are patentable, copyrightable or protectible as trade
secrets. Executive understands and agrees that all Developments shall be the
sole and exclusive property of the Company and shall constitute "work made for
hire" (as that term is defined under Section 101 of the U.S. Copyright Act, 17
U.S.C. Section 101) with the Company being the person for whom the work was
prepared and that all intellectual property rights therein shall be the sole
and exclusive property of the Company, and that in the event that any such
Development is deemed not to be a "work made for hire," Executive hereby
irrevocably assigns, transfers and conveys to the Company, exclusively and
perpetually, all right, title and interest which Executive may have or acquire
in and to such Development throughout the world, including without limitation
any copyrights and patents, and the right to secure registrations, renewals,
reissues, and extensions thereof. Executive agrees to sign any documents and to
do all things necessary, without additional compensation, whether during
Executive's employment or after, to assist the Company to register, perfect,
maintain and/or enforce the Company's rights in any Development, including
without limitation any patent, copyright, trade secret or other right or
interest.

                  14.      Injunctive Relief with Respect to Covenants; Forum,
Venue and Jurisdiction. Executive acknowledges and agrees that the covenants,
obligations and agreements of Executive contained in Sections 8, 9, 10, 11, 12
and 13 relate to special, unique and extraordinary matters and that a violation
of any of the terms of such covenants, obligations or agreements will cause the
Company irreparable injury for which adequate remedies are not available at
law. Therefore, Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) as a court of competent jurisdiction may deem
necessary or appropriate to restrain Executive from committing any violation of
such covenants, obligations or agreements. These injunctive

                                       13

<PAGE>

remedies are cumulative and in addition to any other rights and remedies the
Company may have. The Company and Executive hereby irrevocably submit to the
exclusive jurisdiction of the courts of New York, and the Federal courts of the
United States of America, in each case located in New York City in respect of
the injunctive remedies set forth in this Section 14 and the interpretation and
enforcement of Sections 8, 9, 10, 11, 12, 13 and 14 insofar as such
interpretation and enforcement relate to any request or application for
injunctive relief in accordance with the provisions of this Section 15, and the
parties hereto hereby irrevocably agree that (a) the sole and exclusive
appropriate venue for any suit or proceeding relating solely to such injunctive
relief shall be in such a court, (b) all claims with respect to any request or
application for such injunctive relief shall be heard and determined
exclusively in such a court, (c) any such court shall have exclusive
jurisdiction over the person of such parties and over the subject matter of any
dispute relating to any request or application for such injunctive relief, and
(d) each hereby waives any and all objections and defenses based on forum,
venue or personal or subject matter jurisdiction as they may relate to an
application for such injunctive relief in a suit or proceeding brought before
such a court in accordance with the provisions of this Section 14. All disputes
not relating to any request or application for injunctive relief in accordance
with this Section 14 shall be resolved by arbitration in accordance with
Section 17(b).

                  Notwithstanding any other provision hereof, the Company's
obligations to pay Executive any amount or provide Executive with any benefit or
right pursuant to Section 7(f) is subject to Executive's compliance with his
obligations under Sections 8 through 14, inclusive, and in the event that
Executive fails in any material respect to comply with any such obligations, the
Company's obligations to make any additional payments or provide any additional
benefits or other rights or entitlements to Executive pursuant to any provision
of this Agreement shall immediately cease and Executive shall be required to
immediately repay to the Company all amounts theretofore paid to Executive
pursuant to Section 7(f).

                  15.      Assumption of Agreement. The Company shall require
any Successor thereto, by agreement in form and substance reasonably
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same terms as
Executive would be entitled hereunder if the Company had terminated Executive's
employment Without Cause as described in Section 7, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

                  16.      Indemnification. The Company agrees both during and
after the Employment Term to indemnify Executive to the fullest extent
permitted by its Certificate of Incorporation against actions or inactions of
Executive during the Employment Term as an officer, director or employee of the
Company or any of its Subsidiaries or Affiliates or as a fiduciary of any
benefit plan of any of the foregoing. The Company also agrees to provide
Executive with directors and officers insurance coverage both during and, with
regard to matters occurring during the Employment Term after the Employment
Term. Such coverage shall be at a level at least equal to the level being
maintained at such time for the then current officers and directors or, if then
being maintained at a higher level with regard to any prior period activities

                                       14

<PAGE>

for officers or directors during such prior period, such higher amount with
regard to Executive's activities during such prior period.

                  17.      Entire Agreement; Survival of Letter Agreement.
(a) Entire Agreement. This Agreement (including the Schedules hereto), together
with the Surviving Provisions of the Letter Agreement (as defined below),
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof. All prior correspondence and proposals (including but
not limited to summaries of proposed terms) and all prior promises,
representations, understandings, arrangements and agreements relating to such
subject matter (including but not limited to those made to or with Executive by
any other Person and those contained in any prior employment, consulting or
similar agreement entered into by Executive and the Company or any predecessor
thereto or Affiliate thereof) are merged herein and superseded hereby, other
than the Surviving Provisions of the Letter Agreement.

                  (b)      Survival of Letter Agreement. From and after the
date hereof, all of the Surviving Provisions of the Letter Agreement shall
continue in full force and effect in accordance with their terms and shall be
deemed incorporated herein by reference as if fully set forth herein. For
purposes hereof, the term "Surviving Provisions of the Letter Agreement" shall
mean all of the terms and provisions of the Letter Agreement, other than
Section III of the Letter Agreement and Exhibit A to the Letter Agreement.

                  18.      Miscellaneous.

                  (a)      Binding Effect; Assignment. This Agreement shall be
binding on and inure to the benefit of the Company and its successors and
permitted assigns. This Agreement shall also be binding on and inure to the
benefit of Executive and his heirs, executors, administrators and legal
representatives. This Agreement shall not be assignable by any party hereto
without the prior written consent of the other parties hereto, except as
provided pursuant to this Section 18(a). The Company may effect such an
assignment without prior written approval of Executive upon the transfer of all
or substantially all of its business and/or assets (by whatever means), provided
that the Successor to the Company shall expressly assume and agree to perform
this Agreement in accordance with the provisions of Section 15.

                  (b)      Arbitration. Any dispute or controversy arising
under or in connection with this Agreement (except in connection with any
request or application for injunctive relief in accordance with Section 14)
shall be resolved by binding arbitration. The arbitration shall be held in New
York City and, except to the extent inconsistent with this Agreement, shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect at the time of the arbitration, and
otherwise in accordance with principles which would be applied by a court of
law or equity. The arbitrator shall be acceptable to both the Company and
Executive. If the parties cannot agree on an acceptable arbitrator, the dispute
shall be heard by a panel of three arbitrators, one appointed by the Company,
one appointed by Executive, and the third appointed by the other two
arbitrators. All expenses of arbitration shall be borne by the party who incurs
the expense, or, in the case of joint expenses, by both parties in equal
portions.

                                       15

<PAGE>

                  (c)      Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
reference to principles of conflicts of laws.

                  (d)      Taxes. The Company may withhold from any payments
made under this Agreement all applicable taxes, including but not limited to
income, employment and social insurance taxes, as shall be required by law.

                  (e)      Amendments. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Board or a Person authorized thereby and is agreed to in
writing by Executive. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.

                  (f)      Severability. In the event that any one or more of
the provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

                  (g)      Notices. Any notice or other communication required
or permitted to be delivered under this Agreement shall be (i) in writing, (ii)
delivered personally, by courier service or by certified or registered mail,
first-class postage prepaid and return receipt requested, (iii) deemed to have
been received on the date of delivery or, if so mailed, on the third business
day after the mailing thereof, and (iv) addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in accordance
with the terms hereof):

                  (A)      If to the Company, to it at:

                           Office of the General Counsel
                           Instinet Group Incorporated
                           3 Times Square
                           New York, New York 10036
                           Attention:  Paul Merolla
                           Telephone:  212-310-7548
                           Facsimile:  646-223-9017

                  (B)      if to Executive, to him at his residential address
                           as currently on file with the Company.

                  (h)      Voluntary Agreement; No Conflicts. Executive
represents that he is entering into this Agreement voluntarily and that
Executive's employment hereunder and compliance with the terms and conditions
of this Agreement will not conflict with or result in the breach by Executive
of any agreement to which he is a party or by which he or his properties or
assets may be bound.

                                       16

<PAGE>

                  (i)      Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

                  (j)      Headings. The section and other headings contained
in this Agreement are for the convenience of the parties only and are not
intended to be a part hereof or to affect the meaning or interpretation hereof.

                  (k)      Certain Definitions.

                  "Affiliate": with respect to any Person, means any other
Person that, directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with the first Person,
including but not limited to a Subsidiary of the first Person, a Person of which
the first Person is a Subsidiary, or another Subsidiary of a Person of which the
first Person is also a Subsidiary.

                  "Business": means the creation and delivery of transactional
products and products related to the financial services sector and brokerage
services related thereto delivered largely, but not exclusively, through
advanced technology, that permit or aid the Company's customers to invest in,
purchase and sell securities (whether fixed income or equity, both during normal
market hours and after hours), and any and all other businesses that after the
date hereof, and from time to time during the Employment Period, are material
with respect to the Company's and its Affiliates' businesses.

                  "Control": with respect to any Person, means the possession,
directly or indirectly, severally or jointly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee or
executor, or otherwise.

                  "Person":  any natural person, firm, partnership, limited
liability company, association, corporation, company, trust, business trust,
governmental authority or other entity.

                  "Subsidiary": with respect to any Person, each corporation or
other Person in which the first Person owns or Controls, directly or indirectly,
capital stock or other ownership interests representing 50% or more of the
combined voting power of the outstanding voting stock or other ownership
interests of such corporation or other Person.

                  "Successor": of a Person means a Person that succeeds to the
first Person's assets and liabilities by merger, liquidation, dissolution or
otherwise by operation of law, or a Person to which all or substantially all the
assets and/or business of the first Person are transferred.

                                       17

<PAGE>

                  IN WITNESS WHEREOF, the Company has duly executed this
Agreement by its authorized representatives, and Executive has hereunto set his
hand, in each case effective as of the date first above written.

                                INSTINET GROUP INCORPORATED

                                By: /s/ Mark D. Nienstedt
                                    ------------------------------------
                                    Name:  Mark D. Nienstedt
                                    Title: Acting President and CEO

                                Executive:

                                /s/ Edward J. Nicoll
                                ---------------------------------------
                                    Name:  Edward J. Nicoll

                                       18<PAGE>

                                                                   EXHIBIT 10.6

WITHOUT PREJUDICE & SUBJECT TO CONTRACT

THIS AGREEMENT is made on the 7th day of October, 2002

BETWEEN:

(1)      INSTINET GROUP INCORPORATED, a Delaware Corporation (the "US Employer")

(2)      INSTINET GLOBAL SERVICES LIMITED of Commodity Quay East Smithfield
         London E1W 1AZ (the "UK Employer"); and

(3)      PETER FENICHEL whose address is 23 Margaretta Terrace London SW3 5NV
         (the "Executive")

WHEREAS:

(A)      The Executive was employed by the US Employer under the terms of an
         Employment Agreement made with the Employer's predecessor company dated
         2 April 2001 governed by the laws of the State of New York ;

(B)      The Executive's role was global but he had his base in, was paid from
         and was tax resident in the United Kingdom, working at the premises of
         the UK Employer, such that the laws of England and Wales in relation to
         his employment might also be applicable; and

(C)      This Agreement (the "Agreement") is a Compromise Agreement under the
         laws of England and Wales and the conditions regulating Compromise
         Agreements under the Employment Rights Act 1996 (as amended), the Sex
         Discrimination Act 1975 (as amended) and the Race Relations Act 1976
         (as amended) are satisfied in relation to this Agreement; and

<PAGE>

(D)      This Agreement also serves as a release, as set out below, in relation
         to all claims the Executive might have in relation to any Federal,
         State or local law applicable in the United States (including all
         claims under New York law).

NOW IT IS HEREBY AGREED as follows:

TERMINATION OF EMPLOYMENT

1.       The parties agree that:

         (a)      The Executive's employment with the US Employer (and for the
                  avoidance of doubt, all of its Associated Companies,
                  including, without limitation, the UK Employer) terminated at
                  midnight on 30 June 2002 (the "Termination Date");

         (b)      The Executive's Form P45 shall be made up to the Termination
                  Date and issued to him accordingly;

         (c)      The Executive acknowledges and confirms that all the Accrued
                  Obligations (as defined at Clause 7(f)(i) of the Employment
                  Agreement) have been met in full, and that there are no
                  outstanding salary, business expenses or accrued holiday pay
                  sums owing to the Executive.

SEPARATION PAYMENTS AND BENEFITS

2.       In consideration of, and as compensation for, the termination of the
         Executive's employment on the Termination Date and the Executive's
         agreement to give the undertakings set out at Clause 10 of this
         Agreement, the US Employer agrees to provide the sums and benefits
         set out in this clause to the Executive or to the Executive's estate
         (in circumstances where any payments provided for under this
         agreement are outstanding at the date of the Executive's death). The
         sums and benefits to be provided to the Executive under this
         Agreement are in place of, and not in addition to, payments the
         Executive would otherwise be entitled to pursuant to any policy or
         practice of the Instinet Group. All payments due to the Executive
         under this Agreement are set out as gross amounts, and, since a Form
         P45 will have been issued

                                       2

<PAGE>

         to the Executive prior to their payment, unless otherwise stated,
         basic rate tax of 22% shall be deducted from such payments at source,
         on the understanding that the Executive confirms and warrants that he
         shall be responsible for all further tax, employee's national
         insurance and any Federal, State and local tax withholdings under US
         law, and in this regard, the Executive gives the undertaking set out
         at paragraph 10(i) below:

(a)      SEVERANCE PAYMENTS

         The Executive will be entitled to receive severance payments for the
         two year period immediately following the Termination Date (the
         "Severance Period") at the rate of L240,000 per annum in equal
         monthly instalments payable on the 15th day of each month consistent
         with the UK Employer's normal pay-roll practices the first such payment
         to be made on the execution of this Agreement (with any appropriate
         backdating) and the last to be made on 15 June 2004. The severance
         payments will be paid in to the Executive's nominated bank account in
         the UK by credit transfer in pounds sterling. The Executive confirms
         and warrants that the payment of these sums will fulfil the US
         Employer's obligations under Clause 7(f)(i)(A) of the Employment
         Agreement;

(b)      2002 PRO-RATA BONUS

         The Executive is entitled to receive US$446,301 as a pro rata bonus for
         the calendar year of 2002. This payment will be made within 30 days of
         the date of this Agreement. It will be paid in US dollars by credit
         transfer into a US dollar bank account in the UK nominated by the
         Executive. The Executive confirms and warrants that the payment of
         these sums will fulfil the US Employer's obligations under Clause
         7(f)(i)(B) of the Employment Agreement;

(c)      200% OF AVERAGE ANNUAL BONUS

         The Executive is entitled to receive two equal payments of US$635,500;
         the first in February 2003, and the second in February 2004. These sums
         shall be paid in US dollars to a US dollar bank account in the UK
         nominated by the Executive. The

                                       3

<PAGE>

         Executive confirms and warrants that the payment of these sums will
         fulfil the US Employer's obligations under Clause 7(f)(i)(C) of the
         Employment Agreement;

(d)      MEDICAL AND HEALTH INSURANCE

         The Executive is entitled to remain in his current medical plan or
         similar plan providing comparable benefits as far as is reasonably
         practicable to those which the Executive currently enjoys for the
         Severance Period at the US Employer's expense. The UK Employer agrees
         to provide at its expense, cover in respect of total and permanent
         disability for the Severance Period which is substantially equivalent
         in all material respects to the cover enjoyed by the Executive during
         his employment. The Executive confirms that he will undertake all
         necessary steps to facilitate the provision of such cover, including
         making himself available for medicals and providing relevant
         information both to the UK Employer and any third party broker or
         insurer or their representatives or health professionals. The Executive
         confirms and warrants that the provision of these benefits will fulfil
         the US Employer's obligations under Clause 7(f)(i)(D) of the Employment
         Agreement;

(e)      COMPANY CAR

         The UK Employer shall pay to the relevant lease company the outstanding
         balance of the lease on the Executive's company car as at the
         Termination Date (the Lease Value), registration number W742 YGK and
         shall procure that title to the company car above is transferred to him
         as soon as reasonably practicable after the date of this Agreement and
         that documentation is delivered to the Executive as soon as reasonably
         practicable following the confirmation that the Lease Value has been
         paid by the UK Employer to the lease company. It is agreed that the
         taxable value of this benefit is the Lease Value to be settled by the
         UK Employer, which is agreed in the sum of L27,207.98. It is
         understood by the UK Employer that it may provide this benefit to the
         Executive tax free as this value appears to fall within the exemption
         on tax of up to L30,000 allowed by Section 148 of the Income &
         Corporation Taxes Act 1998. The Executive is however given no guarantee
         in this regard and the Executive therefore confirms that his
         undertaking at Clause 10(i) below applies;

                                       4

<PAGE>

(f)      ACCOUNTANCY FEES

         The Executive is entitled to contributions towards his accountancy fees
         for his US and/or UK tax returns of up to L5,000 plus VAT in
         aggregate, provided that such accountancy fees are incurred by the
         Executive in relation to the period prior to the Termination Date, and
         the relevant accountant's invoice or invoices are submitted to the
         Executive prior to the end of 2002;

(g)      Legal Fees

         The UK Employer shall make a contribution to the Executive's legal fees
         incurred in connection with the termination of his employment and the
         negotiation of this Agreement up to a maximum of L20,000 plus VAT
         within 30 days of receiving directly from the Executive's solicitors an
         original invoice addressed to the Executive but marked payable by the
         UK Employer.

EXECUTIVE'S CONFIRMATIONS

3.       The Executive confirms and agrees that:

         (a)      he will be responsible for all legal fees incurred by him; and

         (b)      that, save as provided for in this Agreement, all payments and
                  benefits (including any non-contractual items) shall cease
                  with effect from the Termination Date.

EXIT FORMS

4.       The US Employer confirms that the filing of the relevant exit form in
         respect of the Executive for NASD has been completed. The UK Employer
         also confirms that the filing of the UK FSA Form has already been
         processed.

REUTERS OPTION SCHEMES

                                       5

<PAGE>

5.       (a)      Subject at all times to, and in accordance with, the Rules
                  of the Reuters International Savings Related Share Option
                  Scheme 2000 (SAYE Number 18), the Executive may continue to
                  contribute to that Scheme up to 30 December 2002, if he so
                  chooses. The Executive must also exercise his options in
                  accordance with the Scheme Rules by 30 December 2002. After
                  that time, for further contributions may be made to the
                  qualifying plan and any options not exercised will be forfeit;

         (b)      The Executive is entitled to exercise his Options granted in
                  the year 2000 under the Reuters Employee Share Ownership Trust
                  Number 1 at any time during the period up to 30 December 2002
                  subject at all times to, and in accordance with, the rules of
                  the relevant scheme.

RESTRICTED STOCK UNITS

6.       It is confirmed that the 8,235 Restricted Stock Units of the Executive
         will vest in full on 20 March 2003. All entitlements and options of the
         Executive in relation to these Restricted Stock Units will operate
         strictly in accordance with the rules of the relevant scheme.

INSTINET 2000 STOCK OPTION PLAN

7.       (a)      It is confirmed, subject always to the rules of the Plan and
                  the relevant Option Agreements, that the Executive has 60 days
                  from the Termination Date to exercise his vested options
                  granted under the Instinet 2000 Stock Option Plan in 2000.
                  Unvested options lapsed on the Termination Date;

         (b)      It is confirmed that the Executive's options granted under the
                  Instinet 2000 Stock Option Plan in 2001 continue to vest
                  during the Severance Period in the manner set out in the rules
                  of the Plan and the relevant Option Agreements. At the end of
                  the Severance Period, the Executive will, subject always to
                  the rule of the Plan and the relevant Option Agreements, have
                  30 days to exercise those options which have vested by that
                  date, at all times in accordance with the rules of the Plan
                  and the relevant Option Agreements.

                                       6

<PAGE>

PENSION

8.       The UK Employer will procure that the Reuters Pensions Administrator
         will produce a letter to the Executive confirming his options in
         relation to his rights under the Reuters defined benefit Retirement
         Plan and the Reuters unfunded unapproved Plan ("UURBS") as soon as
         reasonably practicable after the execution of this Agreement. The UK
         Employer shall remain bound by the terms of the Unfunded Unapproved
         Retirement Benefits Deed between the Executive and the UK Employer
         dated 16 July 1999 in accordance with the terms of the Deed insofar
         as it refers to unfunded unapproved retirement benefits and on the
         basis that the Executive's employment terminated on the Termination
         Date. For the avoidance of doubt, the UK Employer will not be obliged
         to continue any life cover under the Reuters Unapproved Life
         Assurance Scheme (RULAS) or any other life cover.

THE UK EMPLOYER AND US EMPLOYER'S OBLIGATIONS

9.1      The UK Employer and the US Employer agree and undertake with the
         Executive:

         (a)      that they will not, at any time disclose or communicate to any
                  third party the terms of this Agreement, and/or any
                  information whatsoever relating to the circumstances giving
                  rise to the making of this Agreement. This provision does
                  not preclude the UK Employer and the US Employer from
                  disclosing such terms, such facts and/or any such
                  information in obedience to an order of a Court or Tribunal
                  or competent jurisdiction or as otherwise required or
                  permitted by law or by virtue of any regulatory obligation
                  or subject to the same terms as to confidentiality as are
                  contained in this paragraph to their professional advisers
                  and/or the Inland Revenue or its US equivalent; and

         (b)      that they will not make or publish any statements (orally or
                  in writing) which could, or which reasonably could be expected
                  to, lower the reputation of the Executive.

                                       7

<PAGE>

9.2      The UK Employer and the US Employer each confirm that, to their present
         knowledge, without having undertaken any specific research, they are
         not aware of any claim of any kind that they might have, or that any
         Associated Company has, outstanding against the Executive. The UK
         Employer and the US Employer also confirm that, subject always to the
         terms of such cover, its Directors and Officers' Insurance cover is in
         place in respect of all and any actions by the Executive in the course
         of his duties as a director or officer of any of the companies in The
         Instinet Group up to and including the Termination Date.

FULL AND FINAL SETTLEMENT

10.      The Executive agrees and undertakes with the UK Employer and the US
         Employer as follows:

         (a)      That by entering into this Agreement, he accepts the payments
                  and benefits to be conferred on him hereunder in full and
                  complete satisfaction and final settlement of all and any
                  claims or rights of action whether arising under the laws of
                  England and Wales (whether by common law, statute or
                  otherwise), the law of the European Union, and the laws of
                  the United States (including the laws of the State of New
                  York and, without limitation, any Federal, State and local
                  fair employment practice laws, workers compensation law and
                  any other employment relations statute, executive order, law
                  or ordinance in the United States, including, but not
                  limited to Title VII of the Civil Rights Act 1964, as
                  amended, the Age Discrimination in Employment Act 1967, as
                  amended, the Rehabilitation Act 1973, as amended, the Family
                  and Medical Leave Act, the Americans with Disabilities Act
                  1990, as amended and the Civil Rights Acts of 1866 and 1871)
                  and except as otherwise expressly set out in this Agreement,
                  any other duty and/or other employment-related obligation,
                  including any claims arising from his Employment Agreement,
                  tort, tortious course of conduct, contract, obligations of
                  "good faith", public policy, statute, common law, equity and
                  all claims for wages and benefits, monetary and equitable
                  relief, punitive compensatory relief and legal
                  representative's fees and costs, which the Executive may
                  have against the UK Employer, the US Employer or any of its
                  Associated Companies arising out of or in connection

                                       8

<PAGE>

                  with the Executive's employment and/or its termination, but
                  excluding the following claims:

                  (i)      any claim in connection with the enforcement of this
                           Agreement;

                  (ii)     any claim to exercise any stock option, RSU or share
                           option in accordance with the relevant scheme rules;

                  (iii)    any claim in respect of accrued pension rights; and

                  (iv)     any claim in respect of personal injury of which the
                           Executive is not aware and could not reasonably be
                           aware as of the date of this Agreement.

         (b)      That he shall refrain from instituting or continuing any
                  proceedings against the US Employer, the UK Employer or any of
                  the its or their Associated Companies or any of their present
                  or former directors, officers, workers, agents or employees
                  before an Employment Tribunal and/or Court or similar forum in
                  respect of any claim set out at Clause 10(a) above and any
                  further claim arising out of or in connection with the
                  Executive's employment with the US Employer, the UK Employer
                  and/or its termination;

         (c)      that he has complied with his obligations under Clause 12 of
                  the Employment Agreement and that, without prejudice to
                  that, he has returned to the UK Employer all property which
                  is in his possession or custody or under his control
                  belonging to the UK or US Employer or any of their
                  Associated Companies and all property belonging to third
                  parties which is in the Executive's possession or custody
                  under the Executive's control by virtue of his employment,
                  including but not limited to, the Executive's palm pilot,
                  security pass, corporate credit card, keys and any papers,
                  documents or information (stored electronically or
                  otherwise) which relate in any way to the UK or US Employer
                  or any of their Associated Companies but will exclude the
                  Executive's mobile phone, laptop and printer, title to which
                  is transferred to the Executive as of the Termination Date.
                  The Executive further undertakes

                                       9

<PAGE>

                  with the UK and US Employers that the Executive will not
                  retain copies of such property and that the Executive will
                  act in good faith in returning all such property to the UK
                  Employer;

         (d)      that he will not at any time after the Termination Date
                  represent himself as being employed by or connected with the
                  UK and US Employer or any of their Associated Companies;

         (e)      that he will not, without the prior written consent of the UK
                  or US Employer, at any time:

                  (i)      disclose or communicate to any third party (including
                           employees of the UK or US Employer and any of their
                           Associated Companies); or

                  (ii)     otherwise cause or enable any third party (including
                           employees of the UK or US Employer and any of their
                           Associated Companies) to become aware of the terms of
                           this Agreement, and/or any information whatsoever
                           relating to the circumstances giving rise to the
                           making of this Agreement.

                  This provision does not preclude the Executive from disclosing
                  such terms, such facts and/or any such information in
                  obedience to an order of a Court or Tribunal of competent
                  jurisdiction or as otherwise required or permitted by law or
                  subject to the same terms as to confidentiality as are
                  contained in this paragraph to the Executive's professional
                  advisers and/or the Executive's immediate family and/or the
                  Inland Revenue or its US equivalent;

         (f)      That he will not make or publish any statements (orally or in
                  writing) which could, or which reasonably could be expected
                  to, lower the reputation of the UK Employer, the US Employer
                  (together the "Main Companies") or any of their Associated
                  Companies and any of their present or former officers,
                  directors, agents, workers or employees in the eyes of any
                  third party (together the "Associated Parties"), save that
                  this obligation of the Executive expires on

                                       10

<PAGE>

                  30 June 2004 in respect of the Associated Parties and on 30
                  June 2007 in respect of the Main Companies;

         (g)      That he has abided and will continue to abide by all those
                  obligations implied by law, and without prejudice to those,
                  all those express obligations which continue to apply
                  notwithstanding the termination of his employment,
                  particularly, but without limitation, as set out in Clauses
                  8, 9, 10, 11, 12, 13 of the Employment Agreement and that the
                  US Employer is entitled to seek and obtain the full range of
                  appropriate remedies in the case of any breach of the above
                  obligations by the Executive;

         (h)      That he resigns, with effect from the Termination Date, from
                  all Board memberships in the Instinet Group and other
                  positions then held by him with the US Employer, the UK
                  Employer and all their Associated Companies and will complete
                  separate letters of resignation in relation to each Board
                  membership at set out in draft at Appendix One to this
                  Agreement;

         (i)      That in the event of any of the payments or benefits made or
                  provided to the Executive hereunder being assessed to income
                  tax and/or employee national insurance contributions or any
                  other tax or withholding deduction, beyond such deductions
                  which have already been made as set out in the Agreement
                  above ("Further Deductions"), that the Executive will
                  himself be personally liable for such Further Deductions, and
                  the Executive hereby indemnifies the US Employer, the UK
                  Employer and their Associated Companies in respect thereof;

         (j)      To give effect to Clause 10(a) above (but subject to the
                  exclusions in that Clause), the Executive hereby releases and
                  discharges the US Employer, the UK Employer and all of their
                  Associated Companies, and waives all and any rights of any
                  kind and description that he has or may have against the US
                  Employer, the UK Employer and their Associated Companies as
                  of the date of this Agreement in respect of his employment
                  and its termination and his resignation as a director or any
                  other matter including, but not limited to, any asserted and
                  unasserted claims arising from any of the matters set out at
                  Clause

                                       11

<PAGE>

                  10(a) above. In this regard, the Executive, the US Employer
                  and the UK Employer wish for the purposes of English and
                  Welsh law to enter into a Compromise Agreement under which
                  the Executive wishes to compromise all of the following
                  claims which he has already intimated that he may have
                  against the US Employer, the UK Employer or any of its
                  Associated Companies or any of its or their present or former
                  directors, officers, workers, agents or employees, namely:

                  (a)      any claim in relation to wages under part II of the
                           Employment Rights Act 1996;

                  (b)      any claim in relation to a redundancy payment under
                           part XI of the Employment Rights Act 1996;

                  (c)      any claim for unfair dismissal under the Employment
                           Rights Act 1996;

                  (d)      any claim under the Sex Discrimination Act 1975;

                  (e)      any claim under the Race Relations Act 1976;

                  and the Executive agrees to refrain from instituting or
                  continuing any such Tribunal or Court claims against the US
                  Employer, the UK Employer and any of their Associated
                  Companies. For the avoidance of doubt, such claims are to be
                  treated as "particular proceedings" within the terms of
                  Section 203(3)(b) of the Employment Rights Act 1996 and
                  "particular complaints" for the purposes of Section 72(4A)(b)
                  of the Race Relations Act 1976 and Section 77(4A)(b) of the
                  Sex Discrimination Act 1975 (together referred to as the
                  Acts, which expression shall include all Regulations made
                  under them and all modifications or amendments). The
                  Executive warrants that there are no other claims of any
                  kind outstanding against the US Employer, the UK Employer or
                  any of their Associated Companies.

         (k)      The Executive warrants he has received independent legal
                  advice as to the terms and effect of this Agreement in
                  accordance with the provisions of the

                                       12

<PAGE>

                  Acts, from a relevant independent adviser, namely Sean Lavin
                  of MacFarlanes Solicitors (the Adviser) who is a solicitor of
                  the Supreme Court, holding a current practising certificate
                  and whose firm has professional indemnity cover for the risk
                  of a claim by the Executive in respect of any loss arising in
                  consequence of such advice. The Executive will procure that
                  the Adviser completes the Adviser's Certificate at Appendix
                  Two to this Agreement. It is agreed that on receipt of the
                  completed certificate by the UK Employer's representative,
                  the conditions relating to Compromise Agreements under the
                  Acts will have been satisfied.

DEFINITION

11.      For the purposes of this Agreement, "Associated Company" means a
         company which is from time-to-time a "subsidiary" or a "holding
         company" (and those expressions shall have the meanings assigned to
         them respectively by Section 736 of the Companies Act 1985 as amended
         prior to the date hereof) of the US Employer or, as the case may be,
         of the UK Employer, or a subsidiary (other than the US Employer or the
         UK Employer) of a holding company of the US Employer or the UK
         Employer respectively. "The Instinet Group" means any company which
         falls within the above definition, including, for the avoidance of
         doubt, the US Employer and the UK Employer.

NO ADMISSION OF LIABILITY

12.      This Agreement is made, and the consideration set out in this
         Agreement above, is given without any admission of liability
         whatsoever by the US Employer, the UK Employer or any of their
         Associated Companies.

                                       13

<PAGE>

EXECUTIVE'S BREACH OF THIS AGREEMENT

13.      The Executive agrees that, without limiting the US and UK Employer's
         remedies in any way, should he reasonably be in fundamental breach of
         any of his obligations under this Agreement, the US and UK Employers
         shall be entitled immediately to cease all outstanding payments and
         benefits due to the Executive pursuant to this Agreement without
         waiver of or prejudice to any of the waivers and/or releases entered
         into by the Executive in this Agreement and without waiver of or
         prejudice to any claim which the US and/or the UK Employer may have
         against the Executive in respect of the fundamental breach of the
         Executive referred to above.

GOVERNING LAW

14.      The terms of this Agreement shall be governed by the laws of the State
         of New York, except those provisions relating purely to the laws of
         England and Wales, which shall be governed by the law of England and
         Wales.

ENTIRE AGREEMENT

15.      The terms of this Agreement constitute the entire understanding
         between the Executive, the UK Employer and the US Employer and
         supersede all, if any, subsisting agreements, arrangements or
         understandings, written or oral, relating to the termination of the
         Executive's employment and any such agreements, arrangements or
         understandings shall be deemed to have been terminated by mutual
         consent.

                                       14

<PAGE>

RIGHTS OF THIRD PARTIES

16.      For the purposes of the laws of England and Wales, the Contracts
         (Rights of Third Parties) Act 1999 shall apply to this Agreement such
         that it is agreed that any Associated Company shall be entitled to
         enforce the benefits of the Executive's obligations under this
         Agreement. The parties agree that this Agreement can be rescinded,
         varied and/or terminated by mutual agreement between them in writing
         without the agreement of any Associated Company even if such recision,
         variation or termination effects the benefits conferred on such
         Associated Company.

OPEN AGREEMENT

17.      Notwithstanding that this Agreement is marked "without prejudice and
         subject to contract" it shall, when signed by the Executive, the
         Executive's independent legal adviser and on behalf of the US Employer
         and the UK Employer, become open and binding.

EXECUTION

18.      (a)      The Executive acknowledges that he has had a reasonable and
                  adequate opportunity from his receipt of this document to
                  review it.

         (b)      Following his signing of the Agreement, the Executive has the
                  right to revoke the Agreement at any time within seven (7)
                  calendar days of his signing it, not including the date of
                  his signing (the "Revocation Period"). Notice of Revocation
                  shall be given in writing and sent by overnight mail no later
                  than the seventh day following the date the Executive signs
                  this Agreement to Russell Brimelow of 61 Brook Street London
                  W1K 4BL. If the Executive does not revoke the Agreement, this
                  Agreement shall be deemed to be effective and to be
                  enforceable as of the date of this Agreement. If the
                  Executive gives Notice of Revocation during the Revocation
                  Period in the manner specified above, this Agreement shall
                  become null and void and all rights and claims of the parties
                  which would have existed, but for the execution of this
                  Agreement shall be restored.

                                       15

<PAGE>

STATEMENT BY THE EXECUTIVE WHO IS SIGNING BELOW: THE US AND UK COMPANY HAS
ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE PROVISIONS OF THIS
RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY TO CONSULT WITH MY
PERSONAL TAX, FINANCIAL AND LEGAL ADVISERS PRIOR TO EXECUTING THIS DOCUMENT,
AND I INTEND TO BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE
THIS RELEASE WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL
NOT BECOME ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN (7) DAY PERIOD HAS EXPIRED.

                                             PETER FENICHEL

                                     Signed: /s/ Peter Fenichel
                                             ----------------------------------

THIS IS A RELEASE. READ CAREFULLY BEFORE SIGNING.

IN WITNESS WHEREOF this Agreement has been signed by or on behalf of the
parties hereto the day and year first before written

Signed by PETER FENICHEL   )
in the presence of :       )

Witness signature :

Name              :

Address           :

Occupation        :

Signed by Paul A. Merolla      )
                               )
for and on behalf of:          )
INSTINET GROUP INCORPORATED

Witness signature :

Name              :

Address           :

Occupation        :

                                       16

<PAGE>

Signed by Leslie Brady            )
                                  )
for and on behalf of:             )
INSTINET GLOBAL SERVICES LIMITED

Witness signature :

Name              :

Address           :

Occupation        :

                                       17

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