Document:

<PAGE>   1
                                                                     Exhibit 4.2

                               CORPORATE AGREEMENT

                 THIS CORPORATE AGREEMENT (the "Agreement") is entered into as
of May 17, 2001 by and between REUTERS LIMITED, a company organized under the
laws of England and Wales ("Reuters"), and INSTINET GROUP INCORPORATED, a
Delaware corporation ("Instinet").

                                    RECITALS

                  WHEREAS, the parties are contemplating the possibility that
Instinet will issue shares of common stock in an initial public offering (the
"Initial Public Offering") registered under the Securities Act.

                  WHEREAS, the parties desire to enter into this Agreement to
set forth their agreement regarding certain corporate governance matters,
certain registration rights with respect to the Registrable Securities and
certain other matters with respect to the on-going relationship between Instinet
and Reuters.

                                   AGREEMENTS

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Reuters and Instinet,
for themselves and their successors and assigns, hereby agree as follows:

ARTICLE I
                                   DEFINITIONS

                 1.1. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:

                  "Affiliate" means, with respect to a given Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to vote forty percent (40%) or more of the
securities having voting power for the election of directors (or other Persons
acting in similar capacities) of such Person or otherwise to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement may be amended and supplemented from time to time in
accordance with its terms.

                  "Board of Directors" means the board of directors of Instinet.

                                       1
<PAGE>   2

                  "Business Day" means any day other than a Saturday, Sunday or
any day on which banking institutions are authorized or obligated by law or
executive order to be closed in London or New York.

                  "Cash Equivalents" means (i) United States dollars, Japanese
Yen, Euros and British Pounds Sterling (and foreign currency exchangeable into
such currencies within 30 days), (ii) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than
thirty-six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of twelve months or less from the
date of acquisition, bankers' acceptances with maturities not exceeding twelve
months and overnight bank deposits, in each case with any domestic commercial
bank having a long term credit rating of A3 or higher from Moody's Investors
Service, Inc. or A- or higher from Standard & Poor's Corporation, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper or similar short term securities having one
of the two highest ratings obtainable from Moody's Investors Service, Inc. or
Standard & Poor's Corporation and in each case maturing within twelve months
after the date of acquisition.

                  "Common Stock" means the common stock, par value $0.01 per
share, of Instinet, and any other class of Instinet's capital stock representing
the right to vote generally for the election of directors.

                 "Covered Transaction" has the meaning ascribed thereto in
Section 2.1.

                  "Delaware 203" means Section 203 of the Delaware General
Corporation Law, as in effect from time to time.

                 "Exchange Act" has the meaning ascribed thereto in Section
3.10.

                 "Holder" means the Reuters Entities and any Transferee.

                 "Holder Securities" has the meaning ascribed thereto in Section
3.2(c)

                 "Holders' Representative" means Reuters or any other Holder
designated by Reuters as a Holders' Representative.

                 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.

                  "Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or bankers'
acceptances or representing capital lease obligations or the balance deferred
and unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing (other than letters of

                                       2
<PAGE>   3
credit and hedging obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with US GAAP, as well as all Indebtedness
of others secured by a lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.

                  "Initial Public Offering" has the meaning ascribed thereto in
the recitals hereto.

                  "Initial Public Offering Date" means the date of completion of
the initial sale of Common Stock in the Initial Public Offering.

                  "Instinet" has the meaning ascribed thereto in the preamble
hereto.

                  "Instinet Entities" means Instinet Parent, Instinet and their
respective Subsidiaries from time to time, and "Instinet Entity" shall mean any
of the Instinet Entities; provided, however, in each case, that any such
Instinet Entity shall cease to be an "Instinet Entity" under this Agreement at
such time as such Person no longer is a Subsidiary of Instinet Parent or
Instinet, as the case may be.

                  "Instinet Parent" means any Person who succeeds Instinet as
the parent corporation of the Instinet Entities as a result of a corporate
reorganization, merger or otherwise.

                  "Instinet Securities" has the meaning ascribed thereto in
Section 3.2(c).

                  "Instinet Transferee" shall mean any transferee or purchaser
(together with its Affiliates) from an Instinet Entity of greater than 5% of the
Total Voting Power of Instinet other than pursuant to an underwritten offering;
provided such Person holds more than 5% of the Total Voting Power of Instinet at
the time of the registration or offering in question.

                   "Lower Threshold" has the meaning ascribed thereto in Section
2.3(a).

                  "Market Capitalization" means the product of (A) the number of
shares of Common Stock outstanding on the date 30 days prior to the date the
Board of Directors authorizes the relevant Covered Transaction (or, if no such
approval is given or the relevant Instinet Entity(ies) enter into a definitive
agreement with respect to such Covered Transaction more than 60 days after such
approval, then on the date such agreement is entered into) (the "Measurement
Date"), multiplied by (B) (i) the average of the last sale price of such shares
of Common Stock on each of the thirty (30) trading days immediately preceding
the Measurement Date on The Nasdaq National Market or, if such shares are not
listed thereon, on the principal national securities exchange or automated
interdealer quotation system on which such shares are traded or (ii) if such
sale prices are unavailable or such shares are not so traded, the value of such
shares on the Measurement Date determined in accordance with agreed-upon
procedures reasonably satisfactory to each of Instinet and Reuters.

                                       3
<PAGE>   4

                  "Material Agreement" means any written agreement, term sheet
or document, binding or not, that relates to a Covered Transaction and sets
forth or otherwise describes any of the contemplated or proposed material terms
thereof.

                  "Net Indebtedness" means the consolidated Indebtedness of the
Instinet Entities, excluding (i) the Note dated the date hereof in the amount of
US$49.0 million between Instinet Corporation and Fleet Street Finance Inc. and
(ii) any Indebtedness incurred in the ordinary course of their brokerage or
other similar businesses in connection with the clearing of traded securities or
obligations to securities exchanges or clearing systems, and less consolidated
cash and Cash Equivalents.

                  "Nominee Threshold" has the meaning ascribed thereto in
Section 2.3(a).

                  "Other Holders" has the meaning ascribed thereto in Section
3.2(d).

                  "Other Securities" has the meaning ascribed thereto in Section
3.2(a).

                  "Ownership Reduction" shall be deemed to have occurred when no
Holder, together with its Affiliates, beneficially owns 20% or more of the Total
Voting Power of Instinet.

                  "Permitted Acquisition" means an acquisition or series of
related acquisitions by any Instinet Entity(ies), whether by merger, stock
purchase, asset purchase or otherwise, of any business, Person or assets where
the aggregate consideration to be paid by the Instinet Entity(ies) in such
acquisition or related series of acquisitions does not exceed the lesser of (i)
20% of the Market Capitalization of Instinet or (ii) 20% of the total
consolidated revenues (calculated in accordance with US GAAP, and excluding any
extraordinary non-recurring items) of the Instinet Entities for the last four
completed fiscal quarters.

                  "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.

                  "Ratio" has the meaning ascribed thereto in Section 2.3(b).

                  "Registrable Securities" means shares of Common Stock and any
stock or other securities into which or for which such Common Stock may
hereafter be changed, converted or exchanged and any other shares or securities
issued to Holders of such Common Stock (or such shares or other securities into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, share
exchange, merger, consolidation or similar transaction or event. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by Instinet and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act

                                       4
<PAGE>   5
or any state securities or blue sky law then in effect or (iv) they shall have
ceased to be outstanding.

                  "Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article III, including, without limitation, (i) the fees, disbursements and
expenses of Instinet's counsel and accountants; (ii) all expenses, including
filing fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (iii) the cost
of printing or producing any underwriting agreements and blue sky or legal
investment memoranda and any other documents in connection with the offering,
sale or delivery of the securities to be disposed of; (iv) all expenses in
connection with the qualification of the securities to be disposed of for
offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters or the Holders of securities in
connection with such qualification and in connection with any blue sky and legal
investment surveys; (v) the filing fees incident to securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the securities to be disposed of; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated interdealer
quotation system or the rating of such securities; (ix) all expenses with
respect to road shows that the Company is obligated to pay pursuant to Section
3.5(j); and (x) any other fees and disbursements of underwriters customarily
paid by the sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any (which underwriting discounts and
commissions and transfer taxes shall be borne by each selling stockholder
participating in a particular offering and, if selling securities in such
offering, Instinet, pro rata in accordance with the total amount of securities
sold in such offering by each such Person in accordance with Section 3.4).

                  "Reuters" has the meaning ascribed thereto in the preamble
hereto.

                  "Reuters Audit Committee" means the audit committee of the
Reuters Parent Board of Directors.

                  "Reuters Director" shall mean (i) any director designated by
Reuters in accordance with the provisions of Section 2.3 and (ii) any director
of Instinet who at such time as Reuters Entities cease to beneficially more than
50% of the Total Voting Power of Instinet is a director or officer of Reuters.

                  "Reuters Entities" means the Reuters Parent and Subsidiaries
of the Reuters Parent (other than Subsidiaries that constitute Instinet
Entities) from time to time, and "Reuters Entity" shall mean any of the Reuters
Entities; provided, however, in each case, that any Reuters Entity shall cease
to be a "Reuters Entity" under this Agreement at such time as such Person no
longer is a Subsidiary of the Reuters Parent.

                  "Reuters Parent" means the ultimate parent entity from time to
time, of Reuters, which is currently Reuters Group PLC.

                                       5
<PAGE>   6

                  "Reuters Trust Principles" has the meaning used in the
Memorandum of Association of Reuters Founders Share Company Limited, a company
organized under the laws of England and Wales.

                  "Rule 144" means Rule 144 (or any successor rule to similar
effect) promulgated under the Securities Act.

                  "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.

                 "SEC" means the United States Securities and Exchange
Commission.

                  "Section 3.2 Notice" shall have the meaning ascribed thereto
in Section 3.2(a).

                  "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.

                  "Selling Holder" has the meaning ascribed thereto in Section
3.5(e).

                  "Shelf Registration Statement" has the meaning ascribed
thereto in Section 3.3(a).

                  "Subsidiary" means, as to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting power of capital stock or other voting ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is owned or
controlled, directly or indirectly, by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. "Subsidiary," when used
with respect to Reuters or Instinet, shall also include any other entity
affiliated with Reuters or Instinet, as the case may be, that Reuters and
Instinet may hereafter agree in writing shall be treated as a "Subsidiary" of
such Person for the purposes of this Agreement.

                  "3 Times Square Arrangements" shall mean (i) that certain
Agreement of Lease, dated February 18, 1998, between 3 Times Square Associates,
LLC ("3 Times Square Associates"), as landlord, and Reuters C Corp. ("Reuters
C"), as tenant, as amended by First Amendment of Lease, dated as of June 30,
1998, Second Amendment of Lease, dated as of July 1, 1998, Third Amendment of
Lease, dated as of March 31, 2000, and Fourth Amendment of Lease, dated as of
November 28, 2000, as the same may hereafter from time to time be amended,
modified, extended, renewed or supplemented; (ii) that certain Sublease, to be
entered into between Reuters C, as sublessor and Instinet Global Holdings, Inc.
("Instinet Global Holdings"), as sublessee; (iii) the documentation executed in
connection with the transaction entered into by Reuters America Inc. ("Reuters
America") with the New York City Industrial Development Agency ("IDA") relating
to 3 Times Square, including, without limitation, that certain Project
Agreement, dated as of April 1, 1998, between the IDA, Reuters America and
Reuters America Holdings, Inc., as guarantor; (iv) that certain Benefits
Allocation Agreement, to be entered into between Reuters America and Instinet
Global Holdings; and (v) all other agreements and contracts pertaining to the
development, operation, management and construction of 3 Times Square to which
any Reuters Entity is a party, including without limitation, that certain Site 3

                                       6
<PAGE>   7
Leasehold Purchase and Sale Agreement by and between Three Times Square Center
Partners, L.P. , as seller and 3 Times Square Associates, as buyer.

                  "Total Voting Power of Instinet" shall mean the total number
of votes which may be cast in the election of members of the Board of Directors
by all holders of Common Stock.

                  "Transferee" shall mean any of (i) the transferee of all or
any portion of the Common Stock or other Registrable Securities held by any
Reuters Entity or (ii) the subsequent transferee of all or any portion of the
Common Stock or other Registrable Securities held by any Transferee; provided
that no Transferee shall be entitled to any benefits of a Transferee hereunder
unless such Transferee executes an instrument substantially in the form provided
as Exhibit A, attached hereto.

                  "UK GAAP" means generally accepted accounting principles in
the United Kingdom as have been approved by a significant segment of the U.K.
accounting profession from time to time and as applied by Reuters in its public
financial statements.

                  "US GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entities as have been approved by a significant segment
of the accounting profession, which are in effect from time to time, and with
respect to Instinet, consistent with Instinet's public financial statements
filed with the SEC.

                 1.2. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and references
to the parties shall mean the parties to this Agreement.

                                   ARTICLE II
                           CERTAIN GOVERNANCE MATTERS

                 2.1. Definition of Covered Transaction. For purposes of this
Agreement, a "Covered Transaction" shall mean any of the following actions:

                 (a) The issuance of equity securities or securities convertible
into, exchangeable for, or options or rights to acquire any equity securities
(except for securities issued pursuant to any of Instinet's employee stock
option or employee benefits plans or in a Permitted Acquisition) in excess of
(i), in any one-year period (commencing on the date after the Reuters Entities
beneficially own 50% or less of the Total Voting Power of Instinet), 10% of the
capital stock of Instinet or Total Voting Power of Instinet outstanding on the
last day of the calendar month immediately prior to such one-year period, or
(ii), in any three-year period (commencing on the date after the Reuters
Entities beneficially own 50% or less of the Total Voting Power of Instinet),
20% of the capital stock of Instinet or Total Voting Power of Instinet
outstanding on the last day of the calendar month immediately prior to such
three-year period; provided, that in calculating any such amounts of capital
stock of Instinet, or Total Voting Power of Instinet above, such calculation
shall also include shares issued pursuant to any of Instinet's employee

                                       7
<PAGE>   8
stock option, restricted stock award or employee benefit plans during the
relevant period on a weighted average basis;

                 (b) Any acquisition by any Instinet Entity whether by merger,
stock acquisition, asset purchase or otherwise of any business, Person or assets
by any Instinet Entity other than a Permitted Acquisition; or

                 (c) A sale or other disposition or series of related sales or
dispositions by any Instinet Entity(ies), whether by merger, stock disposition,
asset sale or otherwise, of any business, Person or assets where the aggregate
consideration to be received by the Instinet Entity(ies) in such sale or
disposition or related series of sales or dispositions exceeds the lesser of (i)
20% of the Market Capitalization of Instinet or (ii) 20% of the total
consolidated revenues (calculated in accordance with US GAAP and excluding any
extraordinary non-recurring items) of the Instinet Entities for the last four
completed fiscal quarters.

                 2.2. Corporate Action Regarding Covered Transactions. (a) So
long as Reuters Entities beneficially own no less than 35% and no more than 50%
of the Total Voting Power of Instinet, Instinet agrees, and agrees to cause each
Instinet Entity, not to execute any Material Agreement or complete a Covered
Transaction, unless such Covered Transaction has been first submitted to Reuters
for its approval and Reuters has approved such Covered Transaction in writing in
accordance with the provisions of Section 2.2 (b) below.

                 (b) Any request for Reuters' approval of a Covered Transaction
shall be submitted in writing to Reuters by notice which shall (i) describe the
Covered Transaction in reasonable detail, and include reasonably sufficient
information (including such information as is given or will be given to the
Board of Directors), for Reuters to make a determination pursuant to this
Section 2.2 and (ii) indicate that such notice is a formal request for Reuters
approval pursuant to this Section 2.2(b) and state the last date by which
Reuters may respond to such request in accordance with the provisions of this
Section 2.2(b). Instinet shall promptly provide Reuters with all information
requested by Reuters which is in the possession of, or reasonably obtainable by,
Instinet and relates to the Covered Transaction. Reuters shall in good faith use
its commercially reasonable efforts to respond to such request as expeditiously
as possible, but shall in no event respond later than ten Business Days after
receipt of such notice (or such later date as Instinet and Reuters shall agree).
Such request for Reuters' approval will be deemed approved by Reuters unless
Reuters refuses such approval (in its sole discretion) in writing within such
ten Business Day period.

                 2.3. Seats on Board of Directors. (a) So long as Reuters
Entities beneficially own shares of Instinet's stock having at least 10% (the
"Nominee Threshold") but less than 50% of the Total Voting Power of Instinet, in
connection with any election of directors of Instinet Reuters shall have the
right to designate and Instinet shall cause the nomination of such number of
directors of Instinet such that after such election (assuming all such Reuters
designees are elected to the Board of Directors), the number of Reuters
Directors will be equal to the product of (1) the Total Voting Power of Instinet
beneficially owned by the Reuters Entities multiplied by (2) the total number of
members on the Board of Directors, rounded to the nearest whole number; provided
that in no event shall the number of Reuters Directors nominated pursuant to

                                       8
<PAGE>   9
this provision constitute (i) 50% or more of the members of the Board of
Directors or (ii) less than one member of the Board of Directors.
Notwithstanding the foregoing, if Instinet grants any other Person at any time
or from time to time the right to nominate a director or directors based on a
lesser percentage of the Total Voting Power of Instinet (the "Lower Threshold")
than the Nominee Threshold, Reuters shall have the right to designate an equal
number of members of the Board of Directors as such other Person so long as it
beneficially owns an amount of capital stock greater than or equal to the Lower
Threshold. If a vacancy occurs or exists on the Board of Directors at any time,
including but not limited to a vacancy because of the death, disability,
retirement, resignation or removal of any director for cause or otherwise, and
the vacant position was held by a Reuters Director, then Reuters shall have the
sole right to designate an individual to fill such vacancy, and, subject to the
fiduciary duties of directors, the Board of Directors shall elect such nominee
to fill such vacancy. To the extent permitted by law, Instinet shall use its
commercially reasonable efforts to solicit from the stockholders of Instinet
eligible to vote for the election of directors proxies in favor of the nominees
designated by the Board of Directors in accordance with this Section 2.3(a).

                 (b) If at any time the total number of directors of Instinet is
increased or decreased, the number of directors that Reuters shall have the
right to designate pursuant to Section 2.3(a) above, shall as promptly as
practicable be increased or decreased so that the adjusted ratio of Reuters
Directors to total directors is not less than the ratio of Reuters Directors
(determined immediately prior to such increase in accordance with the provisions
of Section 2.3(a)) to the total number of directors of Instinet immediately
prior to such increase or decrease, as the case may be (the "Ratio"). In such
event, Reuters and Instinet shall take such steps consistent with the provisions
of Section 2.3(a) to effectuate this increase or decrease of Reuters Directors
in relation to the Ratio as rapidly as reasonably possible.

                 (c) At the request of Reuters, Instinet shall (x) use its best
efforts to cause a special meeting of stockholders to be held proposing the
removal of any Reuters Director provided, that if in the reasonable good faith
determination by the Board of Directors it is materially detrimental to do so,
then Instinet may delay calling such special meeting; provided that Instinet
will cause such meeting to be held within 135 days of such request by Reuters
and (y) use its best efforts to solicit from stockholders of Instinet eligible
to vote for the election of directors proxies to remove such specified Reuters
Directors.

                 (d) For so long as the Reuters Entities beneficially own shares
of Instinet's stock having at least 25% of the Total Voting Power of Instinet,
subject to the fiduciary duties of the directors, Reuters Directors shall be
nominated to serve on each committee of the Board of Directors (other than any
committee required by law or stock exchange requirement to consist solely of
independent directors but only to the extent a sufficient number of Reuters
Directors do not qualify as independent directors; provided that such lesser
number of Reuters Directors that do qualify as independent directors shall be
appointed to such committee) so that after such appointment(s), the ratio of
Reuters Directors who are members of such committee to the total number of
members of such committee is not less than the Ratio. Notwithstanding the
foregoing, if Instinet grants any other Person at any time or from time to time
the right to nominate a director or directors to serve on any committee(s) of
the Board of Directors at a percentage less than 25% of the Total Voting Power
of Instinet (the "Lower Percentage"),

                                       9
<PAGE>   10
Reuters shall have the right to appoint an equal number of Reuter Directors to
serve on such committee(s) as such other Person so long as the Reuters Entities
beneficially own an amount of Instinet stock having at least the same amount of
the Total Voting Power of Instinet as the Lower Percentage. For so long as (i)
Reuters beneficially owns shares of Instinet's stock having at least 10% but
less than the Lower Percentage of the Total Voting Power of Instinet and (ii)
there is at least one Reuters Director, any such Reuters Director shall be
permitted to observe the proceedings of (but shall not be a member of) any
committee of the Board of Directors. Notwithstanding the foregoing, if Instinet
grants any other Person at any time or from time to time the right to appoint a
director or directors to observe the proceedings of any committee(s) of the
Board of Directors at a percentage less than 10% of the Total Voting Power of
Instinet, Reuters shall have the right to appoint an equal number of Reuters
Directors to observe such proceedings as such other Person so long as the
Reuters Entities beneficially own an amount of Instinet stock having at least
the same amount of the Total Voting Power of Instinet as such lesser percentage.

                 2.4. Dilution. For so long as the Reuters Entities beneficially
own more than 51% of the Total Voting Power of Instinet, Instinet shall not take
any action without Reuters prior consent which directly or indirectly causes or
could cause the Reuters Entities to own less than 51% of the Total Voting Power
of Instinet or less than 51% of Instinet's capital stock unless Reuters
concludes in writing, in its reasonable judgment following discussions with
Instinet and the lessor, that such action would not result in a material adverse
consequence to the Reuters Entities under the 3 Times Square Arrangements.

                 2.5. Acknowledgment of Reuters Trust Principles. Instinet
acknowledges that so long as Reuters Entities beneficially own more than 50% of
the Total Voting Power of Instinet, Instinet will, and will cause each of the
other Instinet Entities to, adhere to the Reuters Trust Principles.

                 2.6. Transfer of Instinet (Schweiz) AG. Notwithstanding any
other provision contained herein, Instinet shall not transfer or dispose of any
interests in Instinet (Schweiz) AG, or take any other action which under Swiss
law or otherwise would require notification or action, until Reuters has
received written notification of such intention and subsequently confirms that
all necessary or required action has been taken by Instinet. Instinet hereby
agrees to indemnify and hold Reuters harmless from and against any and all
losses, liabilities, costs (including reasonable attorneys' fees and
disbursements) claims and damages arising out of, based upon or relating to a
breach of its obligations in the immediately preceding sentence.

                                  ARTICLE III
                               REGISTRATION RIGHTS

                 3.1. Demand Registration - Registrable Securities. (a) Upon
written notice provided at any time after the Initial Public Offering Date from
any Holders' Representative requesting that Instinet effect the registration
under the Securities Act of any or all of the Registrable Securities held by the
Holders, which notice shall specify the number of such Registrable Securities to
be registered and the intended method or methods of disposition of such
Registrable Securities, Instinet shall use its commercially reasonable efforts
to effect the

                                       10
<PAGE>   11

registration under the Securities Act and applicable state securities laws of
such Registrable Securities for disposition in accordance with the intended
method or methods of disposition stated in such request; provided that:

                 (i) with respect to any registration statement filed, or to be
        filed, pursuant to this Section 3.1, (A) if Instinet determines in the
        good faith judgment of the Board of Directors, such registration would
        cause Instinet to disclose material non-public information which
        disclosure would be materially detrimental to Instinet or would
        materially interfere with any material financing, acquisition, corporate
        reorganization or merger or other transaction involving Instinet and any
        of its Subsidiaries and the Board of Directors concludes, as a result of
        such potential disclosure or interference, that it is in the best
        interests of Instinet to defer the filing of such registration statement
        at such time, and (B) Instinet shall furnish to such Holders'
        Representative a certificate signed by the chief executive officer of
        Instinet stating that in the good faith judgment of the Board of
        Directors it would be materially detrimental to Instinet for such
        registration statement to be filed in the near future and that it is,
        therefore, in the best interests of Instinet to defer the filing of such
        registration statement, then Instinet shall have the right to defer such
        filing, provided that such deferral, together with any other deferral or
        suspension of its obligations under Section 3.1 or Section 3.3, shall
        not be effected more than twice in any twelve-month period or for a
        period of more than one hundred and twenty (120) days, in the aggregate,
        for all such deferrals or suspensions over such twelve-month period;

                 (ii) after an Ownership Reduction, the Holders of Registrable
        Securities may collectively exercise their rights under this Section 3.1
        through a Holders' Representative on not more than three occasions (it
        being acknowledged that prior to any Ownership Reduction, there shall be
        no limit to the number of occasions on which such Holders may exercise
        such rights; provided, that each Transferee of 10% or less of the Total
        Voting Power of Instinet shall be entitled to only one demand right
        hereunder through a Holders' Representative);

                 (iii) except as otherwise provided herein, the Holders of
        Registrable Securities shall not have the right to exercise registration
        rights pursuant to this Section 3.1 within the 90-day period following
        the registration and sale of Registrable Securities effected pursuant to
        a prior exercise of the registration rights provided in this Section
        3.1;

                 (iv) Instinet will not be required to take any action pursuant
        to this Section 3.1 if the Registrable Securities are registered at the
        time of such demand under an effective Shelf Registration Statement; and

                 (v) the estimated market value of the Registrable Securities to
        be registered pursuant to this Section 3.1, together with any
        Registrable Securities to be registered pursuant to Section 3.2, at the
        time such demand is made is at least $60 million.

                 (b) Notwithstanding any other provision of this Agreement, a
registration requested by a Holders' Representative of Registrable Securities
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it has
become effective, (ii) if after it has become effective such

                                       11
<PAGE>   12
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason
other than a misrepresentation or an omission by such Holder and, as a result
thereof, the Registrable Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement or (iii) if the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied or waived other than by
reason of some act or omission by such Holder of Registrable Securities.

                 (c) In the event that any registration pursuant to this Section
3.1 shall involve, in whole or in part, an underwritten offering, the Holders of
a majority of the Registrable Securities to be registered shall have the right
to designate an underwriter or underwriters in accordance with the provisions of
the following two sentences. No later than ten Business Days following its
receipt of notice by the Holders' Representative pursuant to Section 3.1(a),
Instinet shall deliver to the Holders' Representative in writing a list (the
"List") of at least five internationally recognized investment banking firms
ranked in the top ten in the past year for equity underwritings by Thomson
Financial Securities Data (or such similar ranking service if such ranking
service ceases to exist other than by reason of merger, reorganization or
consolidation or other acquisition). A majority of the Registrable Securities to
be registered shall select from the List an underwriter or underwriters (the
"Holders' Underwriters") and notify Instinet in writing of its selection of the
Holders' Underwriters no later than ten Business Days following receipt by it of
the List.

                 (d) Instinet shall have the right to cause the registration of
additional equity securities for sale for the account of any Instinet Entity,
any existing or former directors, officers or employees of the Instinet Entities
or any other stockholder of Instinet who is contractually entitled to include
its shares in such registration in any registration of Registrable Securities
requested by the Holders' Representative pursuant to paragraph (a) above;
provided, however, that if such Holders are advised in writing (with a copy to
Instinet) by the lead Holders' Underwriters that, in such firm's good faith
view, all or a part of such Registrable Securities cannot be sold and the
inclusion of all or a part of such additional equity securities in such
registration would be likely to have an adverse effect on the price, timing or
distribution of the offering and sale of the Registrable Securities then
contemplated by any Holder, the registration of such additional equity
securities or part thereof shall not be permitted but only to the extent such
additional equity securities would be likely to have such adverse effect. The
Holders of the Registrable Securities to be offered may require that any such
additional equity securities be included in the offering proposed by such
Holders on the same conditions as the Registrable Securities that are included
therein. In the event that the number of Registrable Securities requested to be
included in a registration statement by the Holders thereof exceeds the number
which, in the good faith view of such investment banking firm, can be sold
without adversely affecting the price, timing, distribution or sale of
securities in the offering, the number shall be allocated pro rata among the
requesting Holders on the basis of the relative number of Registrable Securities
then held by each such Holder (provided that any number in excess of a Holder's
request may be reallocated among the remaining requesting Holders in a like
manner).

                                       12
<PAGE>   13

                 3.2. Piggyback Registration (a) In the event that Instinet at
any time after the Initial Public Offering Date proposes or is required to
register any of its Common Stock (including pursuant to Sections 3.1 or 3.3
hereof), any other of its equity securities or securities convertible into or
exchangeable for its equity securities (collectively, the "Other Securities")
under the Securities Act, whether or not for sale for its own account, in a
manner that would permit registration of Registrable Securities for sale for
cash to the public under the Securities Act, it shall at each such time give
prompt written notice (the "Section 3.2 Notice") to each Holder of Registrable
Securities of its intention to do so and of the rights of such Holder under this
Section 3.2. Subject to the terms and conditions hereof, such Section 3.2 Notice
shall offer each such Holder the opportunity to include in such registration
statement such number of Registrable Securities as such Holder may request. Upon
the written request of any such Holder made within 15 business days after the
receipt of the Section 3.2 Notice (which request shall specify the number of
Registrable Securities intended to be disposed of), Instinet shall use its best
efforts to effect, in connection with the registration of the Other Securities,
the registration under the Securities Act of all Registrable Securities which
Instinet has been so requested to register, to the extent required to permit the
disposition (in accordance with such intended method of disposition thereof) of
the Registrable Securities so requested to be registered; provided, that:

                 (b) if, at any time after giving such Section 3.2 Notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, Instinet
shall determine for any reason not to register the Other Securities, Instinet
may, at its election (subject to any other obligations it may have in connection
therewith), give written notice of such determination to such Holders and
thereupon Instinet shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of a Holder of Registrable
Securities immediately to request that such registration be effected as a
registration under Section 3.1 or Section 3.3 to the extent permitted
thereunder;

                 (c) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten registration on behalf of Instinet,
and the lead underwriter or managing underwriter advises Instinet in writing
that, in such firm's good faith view, all or a part of such Other Securities and
Registrable Securities cannot be sold and the inclusion of all or a part of such
Other Securities and Registrable Securities in such registration would be likely
to have an adverse effect upon the price, timing or distribution of the offering
and sale of the Other Securities and Registrable Securities then contemplated,
Instinet shall include in such registration: (i) first, all Other Securities
Instinet proposes to sell for its own account ("Instinet Securities"), (ii)
second, all (A) Other Securities proposed to be sold on behalf of any
stockholder of Instinet who beneficially owns a greater number of shares of
Common Stock than the Reuters Entities beneficially own and (B) Registrable
Securities held by Holders that are requested to be included in such
registration (Registrable Securities that are so held being sometimes referred
to herein as "Holder Securities") in excess of the number of Other Securities to
be sold in such offering pursuant to clause (i) above which, in the good faith
view of such investment banking firm, can be sold without adversely affecting
such offering (and (x) if such number is less than the full number of such Other
Securities and Holder Securities, such number shall be allocated pro rata among
holders of such Other Securities (other than Instinet Securities)

                                       13
<PAGE>   14
and Holders of Registrable Securities on the basis of the number of securities
requested to be included therein by each such holder) and (y) in the event that
such investment banking firm advises that less than all of such Holder
Securities may be included in such offering, such Holders may withdraw their
request for registration of their Registrable Securities under this Section 3.2
and 90 days subsequent to the effective date of the registration statement for
the registration of such Other Securities and/or remaining Holder Securities
request that such registration be effected as a registration under Section 3.1
or Section 3.3 to the extent permitted thereunder); and (iii) third, up to the
full number of the Other Securities (other than those registered pursuant to
clauses (i) and (ii) above), if any, in excess of the number of Other Securities
and Registrable Securities to be sold in such offering pursuant to clauses (i)
and (ii) above which, in the good faith view of such investment banking firm,
can be so sold without so adversely affecting such offering;

                 (d) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten secondary registration on behalf of
holders (other than Instinet) of Other Securities (the "Other Holders"), and the
lead underwriter or managing underwriter advises Instinet in writing that in
their good faith view, all or a part of such additional securities cannot be
sold and the inclusion of such additional securities in such registration would
be likely to have an adverse effect on the price, timing or distribution of the
offering and sale of the Other Securities and Registrable Securities then
contemplated, Instinet shall include in such registration (i) first, (A) Other
Securities sought to be included therein by the Other Holders pursuant to the
exercise of their demand registration rights, and (B) the number of Holder
Securities sought to be included in such registration (and if such number is
less than the full number of such Other Securities and Holder Securities, such
number shall be allocated 66.67% among the holders of such Other Securities and
33.33% among the Holders of such Holder Securities (provided that (x) if such
number of securities allocated to the Holders is less than the full number of
Registrable Securities requested to be included, such number shall be allocated
pro rata among Holders of Registrable Securities on the basis of the number of
Registrable Securities then held by each such Holder (unless other agreed by the
Holders) and (y) any number of securities in excess of the request of the
holders of Other Securities pursuant to clause (A) above shall be reallocated
among the requesting Holders in a like manner); provided that in the event that
less than all of such Holder Securities may be included in such offering, any
Holder may withdraw its request for registration of its Registrable Securities
under this Section 3.2 and 90 days subsequent to the effective date of the
registration statement for the registration of such Other Securities and/or
remaining Holder Securities request that such registration be effected as a
registration under Section 3.1 or Section 3.3 to the extent permitted
thereunder, and (ii) second, up to the full number of the Other Securities
(other than Other Securities registered pursuant to clause (i)), if any, in
excess of the number of Other Securities and Registrable Securities to be sold
in such offering pursuant to clause (i) above which, in the good faith view of
such investment banking firm, can be sold without so adversely affecting such
offering;

                 (e) Instinet shall not be required to effect any registration
of Registrable Securities under this Section 3.2 incidental to the registration
of any of its securities on Forms S-4 or S-8 (or any similar or successor form
thereto in connection with mergers, acquisitions, exchange offers, subscription
offers, dividend reinvestment plans or stock option or other

                                       14
<PAGE>   15
executive or employee benefit or compensation plans) (or any other form that
would not be available for registration of Registrable Securities); and

                 (f) no registration of Registrable Securities effected under
this Section 3.2 shall relieve Instinet of its obligation to effect a
registration of Registrable Securities pursuant to Section 3.1 or Section 3.3
(except as otherwise provided in Section 3.1 or Section 3.3).

                 3.3. Form S-3/Shelf Registration. (a) Instinet shall use all
reasonable efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms. After Instinet has qualified for the use of Form S-3,
in addition to the rights contained in the foregoing provisions of this Article
III, the Holders of Registrable Securities, shall have the right at any time,
and from time to time, to request that Instinet prepare and file with the SEC a
"shelf" registration statement (the "Shelf Registration Statement") on the
appropriate form for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act (or any successor rule or similar
provision then in effect) covering all or part of the Registrable Securities.
Instinet shall use all reasonable efforts to have the Shelf Registration
Statement declared effective by the SEC as soon as practicable after such
request is made and to keep such Shelf Registration Statement continuously
effective and free of material misstatements or omissions (including the
preparation and filing of any amendments and supplements necessary for that
purpose) until the earlier of (i) the date on which all Holders have consummated
the sale of all of such Holders' Registrable Securities registered under the
Shelf Registration Statement or (ii) two years from the date the Shelf
Registration Statement first became effective. Notwithstanding any other
provision contained herein, there shall be no limitation on the number of
registrations on Form S-3 that may be requested and obtained by Holders pursuant
to this Section 3.3.

                 (b) With respect to any Shelf Registration Statement filed, or
to be filed, pursuant to this Section 3.3, (i) if Instinet determines in the
good faith judgment of the Board of Directors, such registration would cause
Instinet to disclose material non-public information which disclosure would be
materially detrimental to Instinet or would materially interfere with any
material financing, acquisition, corporate reorganization or merger or other
transaction involving Instinet and any of its Subsidiaries and the Board of
Directors concludes, as a result of such potential disclosure or interference,
that it is in the best interests of Instinet to defer the filing of such Shelf
Registration Statement at such time, and (ii) Instinet shall furnish to such
Holders' Representative a certificate signed by the chief executive officer of
Instinet stating that in the good faith judgment of the Board of Directors, it
would be materially detrimental to Instinet for such Shelf Registration
Statement to be filed in the near future and that it is, therefore, in the best
interests of Instinet to defer the filing of such Shelf Registration Statement,
then Instinet shall have the right to defer such filing, provided that such
deferral, together with any other deferral or suspension of its obligations
under Section 3.1 or Section 3.3, shall not be effected more than twice in any
twelve-month period or for a period of more than one hundred and twenty (120)
days, in the aggregate, for all such deferrals or suspensions over such
twelve-month period.

                 (c) Instinet agrees, if necessary, to supplement or amend the
Shelf Registration Statement, as required by the rules, regulations or
instructions applicable to the registration form used by Instinet for such Shelf
Registration Statement or by the Securities Act or as otherwise

                                       15
<PAGE>   16
required by this Agreement, and shall use its all reasonable efforts to have
such supplements and amendments declared effective, if required, as soon as
practicable after filing.

                 (d) A registration will not be deemed to have been effected
pursuant to a Shelf Registration Statement unless the Shelf Registration
Statement with respect thereto has been declared effective by the SEC and
Instinet has complied in all material respects with its obligations under this
Agreement with respect thereto; provided, however, that if after the Shelf
Registration Statement has been declared effective, the offering of Registrable
Securities pursuant to such Shelf Registration Statement is interfered with by
any stop order, injunction, or other order or requirement of the SEC or any
other governmental agency or court, such Shelf Registration Statement will be
deemed not to have been effective during the period of such interference until
the offering of Registrable Securities pursuant to such Shelf Registration
Statement may legally resume.

                 (e) (i) If Instinet determines in the good faith judgment of
the Board of Directors, the availability of the Shelf Registration Statement for
use would cause Instinet to disclose material non-public information which
disclosure would be materially detrimental to Instinet or would materially
interfere with any material financing, acquisition, corporate reorganization or
merger or other transaction involving Instinet and any of its Subsidiaries and
the Board of Directors concludes, as a result of such potential disclosure or
interference, that it is in the best interests of Instinet to suspend the use of
such Shelf Registration Statement at such time, and (ii) Instinet shall furnish
to each Holder a certificate signed by the chief executive officer of Instinet
stating that in the good faith judgment of the Board of Directors, it would be
materially detrimental to Instinet for such Shelf Registration Statement to be
available for use in the near future and that it is, therefore, in the best
interests of Instinet to suspend the use of such Shelf Registration Statement,
then Instinet shall have the right to suspend the use of such Shelf Registration
Statement, provided that such suspension, together with any other suspension or
deferral of its obligations under Section 3.1 or Section 3.3, shall not be
effected more than twice in any twelve-month period or for a period of more than
one hundred and twenty (120) days, in the aggregate, for all such suspensions or
deferrals over such twelve-month period.

                 3.4. Expenses. Except as provided herein, Instinet shall pay
all Registration Expenses with respect to a particular offering (or proposed
offering). Except as provided herein, each Holder and Instinet shall be
responsible for its own fees and expenses of counsel and financial advisors and
internal administrative and similar costs, as well as their pro rata share of
underwriters' commissions and discounts, which shall not constitute Registration
Expenses.

                 3.5. Registration and Qualification. If and whenever Instinet
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.1, 3.2 or 3.3, Instinet shall as
promptly as practicable:

                 (a) prepare, file and use its reasonable best efforts to cause
to become effective a registration statement under the Securities Act relating
to the Registrable Securities to be offered;

                 (b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act

                                       16
<PAGE>   17
with respect to the disposition of all Registrable Securities until the earlier
of (A) such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition set forth in such
registration statement and (B) the expiration of six months (or two years in the
case of a registration pursuant to Section 3.3) after such registration
statement becomes effective; provided, that such six-month or two-year period
shall be extended for such number of days that equals the number of days
elapsing from (x) the date the written notice contemplated by paragraph (f)
below is given by Instinet to (y) the date on which Instinet delivers to the
Holders of Registrable Securities the supplement or amendment contemplated by
paragraph (f) below;

                 (c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Registrable
Securities or such underwriter may reasonably request, and upon request a copy
of any and all transmittal letters or other correspondence to or received from,
the SEC or any other governmental agency or self-regulatory body or other body
having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;

                 (d) use its commercially reasonable efforts to register or
qualify all Registrable Securities covered by such registration statement under
the securities or blue sky laws of such U.S. jurisdictions as the Holders of
such Registrable Securities or any underwriter to such Registrable Securities
shall request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and do any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such registration
statement; provided, that Instinet shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any such
jurisdiction wherein it is not so qualified or to consent to general service of
process in any such jurisdiction;

                 (e) (i) use its best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling Holder")
and to any underwriter of such Registrable Securities an opinion of counsel for
Instinet addressed to each Selling Holder and dated the date of the closing
under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement), (ii) use
its best efforts to furnish to each Selling Holder a "cold comfort" and
"bring-down" letter addressed to each Selling Holder and any underwriter of such
Registrable Securities and signed by the independent public accountants who have
audited the financial statements of Instinet included in such registration
statement, in each such case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of securities
and such other matters as the Selling Holders may reasonably

                                       17
<PAGE>   18
request and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements and (iii) cause such
authorized officers of Instinet to execute customary certificates as may be
requested by the Selling Holders or any underwriter of such Registrable
Securities;

                 (f) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant to
Sections 3.1, 3.2 or 3.3 is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) of any request by the SEC or any
other regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;

                 (g) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange and automated interdealer
quotation system on which similar securities issued by Instinet are then listed;

                 (h) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration;

                 (i) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make available to each
seller of Registrable Securities, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;

                 (j) to the extent reasonably requested by the lead or managing
underwriters, send appropriate officers of Instinet to attend any "road shows"
scheduled in connection with any such registration, with all out-of-pocket costs
and expense incurred by Instinet or such officers in connection with such
attendance to be paid by Instinet; provided that in connection with offerings
made pursuant to Sections 3.1 and 3.3, Instinet shall only be obligated to pay
such road show expenses in connection with a total of four such offerings; and

                 (k) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Sections 3.1, 3.2 or 3.3 unlegended certificates representing ownership of
the Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters (it being

                                       18
<PAGE>   19

understood that any Reuters Entity and any Transferee would agree to use their
commercially reasonable efforts to arrange for delivery to the Depository Trust
Company).

                 3.6. Conversion of Other Securities, Etc. In the event that any
Holder offers any options, rights, warrants or other securities issued by it or
any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 3.1, 3.2 and 3.3.

                 3.7. Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Article III, Instinet shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties by Instinet and such other
terms and provisions as are customarily contained in underwriting agreements of
Instinet to the extent relevant and as are customarily contained in underwriting
agreements generally with respect to secondary distributions to the extent
relevant, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
3.8, and agreements as to the provision of opinions of counsel and accountants'
letters to the effect and to the extent provided in Section 3.5(e). The Selling
Holders on whose behalf the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement and the
representations and warranties by, and the other agreements on the part of,
Instinet to and for the benefit of such underwriters, shall also be made to and
for the benefit of such Selling Holders. Such underwriting agreement shall also
contain such representations and warranties by such Selling Holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, when relevant, including,
without limitation, indemnification and contribution provisions substantially to
the effect and to the extent provided in Section 3.8.

                 (b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article III, Instinet shall give the Selling Holders of
such Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Instinet with its
officers and the independent public accountants who have certified the financial
statements of Instinet as shall be necessary, in the opinion of such Holders and
such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.

                 3.8. Indemnification and Contribution. (a) In the case of each
offering of Registrable Securities made pursuant to this Article III, Instinet
agrees to indemnify and hold harmless, to the extent permitted by law, each
Selling Holder, each underwriter of Registrable Securities so offered and each
Person, if any, who controls any of the foregoing Persons within the meaning of
the Securities Act, the Affiliates of each of the foregoing, and the officers,
directors, employees and agents of each of the foregoing, against any and all
losses, liabilities, costs (including reasonable attorney's fees and
disbursements), claims and damages, joint or several, to which they or any of
them may become subject, under the Securities Act or otherwise, including any
amount paid in settlement of any litigation commenced or threatened, insofar as

                                       19
<PAGE>   20

such losses, liabilities, costs, claims and damages (or actions or proceedings
in respect thereof, whether or not such indemnified Person is a party thereto)
arise out of or are based upon any untrue statement by Instinet or alleged
untrue statement by Instinet of a material fact contained in the registration
statement (or in any preliminary or final prospectus included therein) or in any
offering memorandum or other offering document relating to the offering and sale
of such Registrable Securities prepared by Instinet or at its direction, or any
amendment thereof or supplement thereto, or in any document incorporated by
reference therein, or any omission by Instinet or alleged omission by Instinet
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however that Instinet
shall not be liable to any Person in any such case to the extent that any such
loss, liability, cost, claim or damage arises out of or relates to any untrue
statement or alleged untrue statement, or any omission, if such statement or
omission shall have been made in reliance upon and in conformity with
information relating to such Person, another holder of securities included in
such registration statement or underwriter furnished to Instinet by or on behalf
of such Person, other holder or underwriter specifically for use in the
registration statement (or in any preliminary or final prospectus included
therein), offering memorandum or other offering document, or any amendment
thereof or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any Selling
Holder, any other holder or any underwriter and shall survive the transfer of
such securities. The foregoing indemnity agreement is in addition to any
liability that Instinet may otherwise have to each Selling Holder, other holder
or underwriter of the Registrable Securities or any controlling person of the
foregoing and the officers, directors, Affiliates, employees and agents of each
of the foregoing. Each Selling Holder, each underwriter of Registrable
Securities so offered and each Person, if any, who controls any of the foregoing
Persons within the meaning of the Securities Act, the Affiliates of each of the
foregoing, and the officers, directors, employees and agents of each of the
foregoing shall not enter into any settlement of any litigation commenced or
threatened without the prior written consent of Instinet (such consent not to be
unreasonably withheld) unless Instinet has failed to assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified party.

                 (b) In the case of each offering made pursuant to this
Agreement, each Selling Holder, by exercising its registration rights hereunder,
agrees to indemnify and hold harmless, and to cause each underwriter of
Registrable Securities included in such offering (in the same manner and to the
same extent as set forth in Section 3.8(a)) to agree to indemnify and hold
harmless, Instinet, each other underwriter who participates in such offering,
each other Selling Holder or other holder with securities included in such
offering and in the case of an underwriter, such Selling Holder or other holder,
and each Person, if any, who controls any of the foregoing within the meaning of
the Securities Act and the officers, directors, Affiliates, employees and agents
of each of the foregoing, against any and all losses, liabilities, costs
(including reasonable attorney's fees and disbursements), claims and damages to
which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, insofar as such losses, liabilities, costs, claims and damages
(or actions or proceedings in respect thereof, whether or not such indemnified
Person is a party thereto) arise out of or are based upon any untrue statement
or alleged untrue statement by such Selling Holder or underwriter, as the case
may be, of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or in any

                                       20
<PAGE>   21

offering memorandum or other offering document relating to the offering and sale
of such Registrable Securities prepared by Instinet or at its direction, or any
amendment thereof or supplement thereto, or any omission by such Selling Holder
or underwriter, as the case may be, or alleged omission by such Selling Holder
or underwriter, as the case may be, of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that such untrue statement of a material fact is
contained in, or such material fact is omitted from information relating to such
Selling Holder or underwriter, as the case may be, furnished to Instinet by or
on behalf of such Selling Holder or underwriter, as the case may be,
specifically for use in such registration statement (or in any preliminary or
final prospectus included therein), offering memorandum or other offering
document, or any amendment thereof or supplement thereto. The foregoing
indemnity is in addition to any liability which such Selling Holder or
underwriter, as the case may be, may otherwise have to Instinet, or controlling
persons and the officers, directors, Affiliates, employees and agents of each of
the foregoing.

                 (c) Each party entitled to indemnification under this Section
3.8 shall give notice to the party required to provide indemnification promptly
after such indemnified party has actual knowledge that a claim is to be made
against the indemnified party as to which indemnity may be sought, and shall
permit the indemnifying party to assume the defense of such claim or litigation
resulting therefrom and any related settlement and settlement negotiations,
subject to the limitations on settlement set forth below; provided, that counsel
for the indemnifying party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the indemnified party
(whose approval shall not unreasonably be withheld), and the indemnified party
may participate in such defense at such party's expense; and provided, further,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section
3.8, to the extent such failure is not materially prejudicial. Notwithstanding
the foregoing, an indemnified party shall have the right to retain separate
counsel, with the reasonable fees and expenses of such counsel being paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel or if the indemnifying party has failed to assume
the defense of such action (provided that in no event shall the indemnifying
party be responsible for the fees and costs of more than one such additional
counsel for all indemnified parties). No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, reasonably satisfactory to the
indemnified party, from all liability in respect to such claim or litigation.
Each indemnified party shall furnish such information regarding itself or the
claim in question as an indemnifying party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.

                 (d) If the indemnification provided for in this Section 3.8
shall for any reason be unavailable (other than in accordance with its terms) to
an indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such

                                       21
<PAGE>   22
indemnified party as a result of such loss, liability, cost, claim or damage in
such proportion as shall be appropriate to reflect (i) the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other hand or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, the relative benefits and the relative fault of the
indemnifying party on the one hand and the indemnified party on the other with
respect to the statements or omissions which resulted in such loss, liability,
cost, claim or damage as well as any other relevant equitable considerations.
The relative benefits received by the indemnifying party and the indemnified
party shall be deemed to be in the same respective proportion as the net
proceeds (before deducting expenses) of the offering received by such party (or,
in the case of an underwriter, such underwriter's discounts and commissions)
bear to the aggregate offering price of the Registrable Securities or Other
Securities. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified party on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any indemnified party's stock ownership in Instinet. The amount
paid or payable by an indemnified party as a result of the loss, cost, claim,
damage or liability, or action in respect thereof, referred to above in this
paragraph (d) shall be deemed to include, for purposes of this paragraph (d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.

                 (e) Indemnification and contribution similar to that specified
in the preceding paragraphs of this Section 3.8 (with appropriate modifications)
shall be given by Instinet, the Selling Holders and underwriters with respect to
any required registration or other qualification of securities under any state
law or regulation or governmental authority.

                 (f) The obligations of the parties under this Section 3.8 shall
be in addition to any liability which any party may otherwise have to any other
party.

                 3.9. Information by Holder. Each Holder shall furnish to
Instinet such information regarding such Holder and the distribution proposed by
such Holder as Instinet may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Article III.

                 3.10. Rule 144 and Form S-3. Commencing 90 days after the
Initial Public Offering Date, Instinet shall use all reasonable efforts to
ensure that the conditions to the availability of Rule 144 set forth in
paragraph (c) thereof shall be satisfied. Instinet agrees to use all reasonable
efforts to file with the SEC in a timely manner all reports and other documents
required of Instinet under the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), at any time after it has become subject
to such reporting requirements. Upon the request of any Holder of Registrable
Securities and for so long as such information is a necessary element of such
Holders' ability to avail itself of Rule 144, Instinet will deliver to such
Holder (i) a written statement as to whether it has complied with such

                                       22
<PAGE>   23
requirements and (ii) a copy of the most recent annual or quarterly report of
Instinet, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration. Instinet
further agrees to use its reasonable efforts to cause all conditions to the
availability of Form S-3 (or any successor form) under the Securities Act of the
filing of registration statements under this Agreement to be met as soon as
practicable after the Initial Public Offering Date.

                 3.11. Holders' Priority. The Holders may exercise their rights
under Article III in such priority as they shall agree upon among themselves.

                 3.12. Holdback Agreement. (a) If any registration pursuant to
this Article III shall be in connection with an underwritten public offering of
Registrable Securities, each Holder of more than 5% of the Total Voting Power of
Instinet at the time of such registration or offering agrees not to effect any
public sale or distribution, including any sale under Rule 144, of any equity
security of Instinet or any security convertible into or exchangeable or
exercisable for any equity security of Instinet, (otherwise than through the
registered public offering then being made), within 7 days prior to or 90 days
(or such lesser period as the lead or managing underwriters may permit) after
the effective date of the registration statement (or the commencement of the
offering to the public of such Registrable Securities in the case of Rule 415
offerings); provided that each such Holder shall only be bound so long as (i)
each Instinet Transferee and (ii) each director and executive officer of
Instinet is similarly bound. Instinet hereby also agrees to be subject to the
restrictions set forth in the preceding sentence; provided, that, Instinet shall
not be so restricted from effecting any public sale or distribution of any
security in connection with any merger, acquisition, exchange offer,
subscription offer, dividend reinvestment plan or stock option or other
executive or employee benefit or compensation plan.

                 (b) Instinet agrees to require each Instinet Transferee to
agree not to effect any public sale or distribution, including any sale under
Rule 144, of any equity security of Instinet or any security convertible into or
exchangeable or exercisable for any equity security of Instinet (otherwise than
through the registered public offering then being made), within 7 days prior to
or 90 days (or such lesser period as the lead or managing underwriters may
permit) after the effective date of the registration statement (or the
commencement of the offering to the public of such Registrable Securities in the
case of Rule 415 offerings) for any registration pursuant to this Article III
made in connection with an underwritten public offering of Registrable
Securities.

                 3.13. Termination of Registration Rights. The right of any
Holder to request registration pursuant to Sections 3.1 or 3.3 shall be
suspended on such date when all shares of Registrable Securities held or
entitled to be held by such Holder may be sold pursuant to Rule 144(k) under the
Securities Act; provided that in order for such rights to terminate with respect
to such Holder, such Holder shall have received an opinion of counsel (which
such counsel shall be satisfactory to such Holder) confirming that all shares of
Registrable Securities held or entitled to be held by such Holder may be sold
pursuant to Rule 144(k). Instinet shall pay all expenses with respect to the
opinion referred to in this Section 3.13.

                                   ARTICLE IV
                         CERTAIN COVENANT AND AGREEMENTS

                                       23
<PAGE>   24

                 4.1. No Violations. Instinet covenants and agrees that it will
not, and will cause the Instinet Entities not to, take any action or enter into
any commitment or agreement which may reasonably be anticipated to result, with
or without notice and with or without lapse of time or otherwise, in a
contravention of any stock exchange rule or similar requirement applicable to
any Reuters Entity (of which Instinet has knowledge of or has otherwise been
made aware by Reuters). Reuters covenants and agrees that it will not, and will
cause the Reuters Entities not to, take any action or enter into any commitment
or agreement which may reasonably be anticipated to result, with or without
notice and with or without lapse of time or otherwise, in a contravention of any
stock exchange rule or similar requirement applicable to any Instinet Entity (of
which Reuters has knowledge or has otherwise been made aware of by Instinet).

                 4.2. Regulatory Requirements. Subject to the terms and
conditions hereof, Instinet agrees, and agrees to cause each Instinet Entity,
and Reuters agrees, and agrees to cause each Reuters Entity, to use their
commercially reasonable efforts to promptly take, or cause to be promptly taken,
or to refrain or cause to refrain from, as applicable, all action and to do, or
cause to be done, all things necessary, on their respective parts, to assist
each other in obtaining all governmental licenses, permits, consents, approvals,
authorizations, qualifications and orders and to permit each other to be in
compliance with all legal and regulatory requirements (of which such party has
knowledge or has otherwise been made aware of by the other party hereto) as are
reasonably necessary in connection with the operation of their respective
businesses. Instinet shall promptly furnish, and shall cause each Instinet
Entity to furnish, Reuters with such information and assistance as Reuters may
reasonably request in connection with the preparation of any necessary filings
or submissions by any Reuters Entity to any governmental or regulatory agency or
stock exchange or as otherwise necessary to comply with law or regulation,
including, without limitation, any filings necessary under the provisions of the
HSR Act, the Securities Act, the Exchange Act or any rules or regulations of the
European Union or pursuant to the requirements of the London Stock Exchange.
Reuters shall furnish, and shall cause each Reuters Entity to furnish, Instinet
with such information and assistance as Instinet may reasonably request in
connection with the preparation of any necessary filings or submissions by any
Instinet Entity to any governmental or regulatory agency or stock exchange or as
otherwise necessary to comply with law or regulation, including, without
limitation, any filings necessary under the provisions of the HSR Act, the
Securities Act, the Exchange Act or any rules or regulations of the European
Union.

                 4.3. Fees and Expenses. Instinet hereby agrees to pay promptly
upon request the fees and reasonable out-of-pocket expenses of the financial
advisors of Reuters in connection with Instinet's Initial Public Offering.

                 4.4. Delaware 203. So long as the Reuters Entities or any
Transferee and its Affiliates beneficially own 15% or more of the Total Voting
Power of Instinet, Instinet hereby agrees not to amend its Certificate of
Incorporation to "opt-in" to Delaware 203 without the prior written consent of
Reuters or such Transferee. At any time within three years of the date the
Reuters Entities cease to beneficially own at least 15% of the Total Voting
Power of Instinet, Reuters shall vote all of the Common Stock held by Reuters
Entities in favor of any amendment (which is approved by the Board of Directors)
to Instinet's Certificate of Incorporation that proposes to "opt-in" to Delaware
203.

                                       24
<PAGE>   25

                 4.5. Limitation on Incurrence of Indebtedness. So long as the
Reuters Entities beneficially own more than 50% of the Total Voting Power of
Instinet, Instinet hereby agrees not to incur (after giving pro forma effect to
such incurrence) in excess of an aggregate of $400 million of Net Indebtedness
outstanding at any one time without Reuters' prior written consent.

                                   ARTICLE V
                               INFORMATION RIGHTS

                 5.1. Financial Information. (a). So long as the Reuters
Entities beneficially own 50% or more of the Total Voting Power of Instinet,
Instinet shall deliver to the Reuters Parent:

                           (i) for each fiscal month, (x) a balance sheet of
                  Instinet and its consolidated Subsidiaries (including amounts
                  owed by or owing to the Reuters Entities) as of the end of
                  such fiscal month prepared on generally the same basis as is
                  prepared by Instinet and submitted to the Reuters Parent on
                  the date hereof, together with the related statements of
                  stockholders' equity and the related income statements for
                  Instinet and its consolidated Subsidiaries for such fiscal
                  month and for the year to date, and broken out by each
                  division or segment of Instinet for which Instinet provides
                  separate financial information, if any, on a basis consistent
                  with the basis Instinet reports to the Reuters Parent on the
                  date hereof; provided that Instinet may reasonably change such
                  reporting practices if written notice of such change is
                  provided to Reuters, (all of the foregoing financial
                  statements, collectively, the "Financial Statements") and (y)
                  the information set forth in Schedule 5.1(a) hereto; and

                           (ii) for each fiscal year, half-year and, if and when
                  the Reuters Parent begins to publicly report its financial
                  statements quarterly, each fiscal quarter, (A) draft Financial
                  Statements and supporting information consistent with the
                  Reuters Parent's accounting practices and policies (together
                  with such information as is required by the Reuters Parent's
                  accounting practices and policies as in effect from time to
                  time in order to comply with UK GAAP or UK legal requirements)
                  of Instinet and its consolidated Subsidiaries as of the last
                  day of such fiscal year half-year or quarter, as the case may
                  be, (or such other period as may be required by the Reuters
                  Parent for public reporting purposes), together with a
                  reconciliation thereof to US GAAP, (B) for year-end only
                  audited US GAAP Financial Statements of Instinet and its
                  consolidated Subsidiaries (reported on by Instinet's primary
                  outside auditor who shall be an internationally recognized
                  accounting firm) as of the last day of such fiscal year (or
                  such other period as may be required by the Reuters Parent for
                  public reporting purposes), together with a reconciliation
                  thereof to UK GAAP, (together with such information as is
                  required by the Reuters Parent's accounting practices and
                  policies from time to time in order to comply with UK GAAP or
                  UK legal requirements) and (C) commentary on key features of
                  performance and comparisons of prior corresponding periods.

                                       25
<PAGE>   26

                 (b) So long as the Reuters Entities beneficially own 20% or
more of the Total Voting Power of Instinet (or if the Reuters Parent is
otherwise required to treat Instinet as an "associate" under UK GAAP), Instinet
shall deliver to the Reuters Parent:

                 (i) for each fiscal quarter, (A) Financial Statements for such
        fiscal quarter and for the year to date, together with a reconciliation
        thereof to UK GAAP, (B) commentary on key features of performance and
        comparisons of prior corresponding periods and (C) the information set
        forth in Schedule 5.1(b)(i) hereto;

                 (ii) for each fiscal year, half-year and, if and when the
        Reuters Parent begins to publicly report its financial statements
        quarterly, each fiscal quarter, (A) draft Financial Statements and
        supporting information of Instinet and its consolidated Subsidiaries as
        of the last day of such fiscal year, half-year or quarter, as the case
        may be, together with a reconciliation thereof to UK GAAP, (B) audited
        year-end only Financial Statements of Instinet and its consolidated
        Subsidiaries, together with a reconciliation thereof to UK GAAP,
        reported on by Instinet's primary outside auditor who shall be an
        internationally recognized accounting firm and (C) commentary on key
        features of performance and comparisons of prior corresponding periods.

                 (c) Instinet shall use all reasonable efforts consistent with
past practices, and in consultation with the Reuters Parent, to prepare and
submit (i) all Financial Statements and related financial information pursuant
to Section 5.1(a), in accordance with the Reuters Parent accounting policies and
practices (as may reasonably change from time to time) and (ii) all Financial
Statements and related financial information pursuant to Section 5.1(b) in
accordance with US GAAP, in each case except as otherwise set forth herein. The
Reuters Parent shall provide Instinet with such assistance as is reasonably
necessary, consistent with past practice, to assist Instinet in ensuring that
such financial information is prepared in accordance with the Reuters Parent's
accounting practices and policies in order to comply with UK GAAP and UK legal
requirements. Instinet shall provide the Reuters Parent with reasonable access
to such employees of the Instinet Entities as is reasonably necessary to
understand and evaluate the information required to be submitted to the Reuters
Parent by Instinet pursuant to Sections 5.1 (a) and (b).

                 (d) (i) So long as the Reuters Entities beneficially own 50% or
more of the Total Voting Power of Instinet and except as otherwise expressly
provided, the information required by Section 5.1(a) shall be delivered to the
Reuters Parent within the timeframes required by the Reuters Parent's internal
and external accounting and reporting practices as in effect on the date hereof
or as may be reasonably modified by the Reuters Parent subject to Instinet's
consent, which consent shall not be unreasonably withheld. Instinet shall use
commercially reasonable efforts to provide all information to the Reuters Parent
pursuant to this Section 5.1 in a format reasonably consistent with the format
of the Reuters Parent public financial statements as in effect from time to
time. Instinet shall cooperate with the Reuters Parent in connection with the
preparation of the financial information required by the Reuters Parent, and
shall make financial officers and managers available, upon reasonable notice and
at reasonable times, to discuss and review with the Reuters Parent and its
independent accountants the financial information provided to the Reuters Parent
pursuant to this Section 5.1(d)(i).

                                       26
<PAGE>   27

              (ii) So long as the Reuters Entities beneficially own at least 20%
         or more but less than 50% of the Total Voting Power of Instinet and
         except as otherwise expressly provided, Instinet shall use reasonable
         commercial efforts to deliver, the information required by Section
         5.1(b) to the Reuters Parent within the timeframes required by the
         Reuters Parent's internal and external accounting and reporting
         practices as in effect on the date hereof or as may be reasonably
         modified by the Reuters Parent subject to Instinet's consent, which
         consent shall not be unreasonably withheld. Instinet shall cooperate
         with Reuters in connection with the preparation of the financial
         information required by Reuters, and shall make financial officers and
         managers available, upon reasonable notice and at reasonable times, to
         discuss and review with Reuters and its independent accountants the
         financial information provided to Reuters pursuant to this Section
         5.1(d)(ii).

                 (e) So long as Instinet is required to deliver information
pursuant to Section 5.1(a),

                 (i) Instinet and the Reuters Parent shall coordinate the public
        release and disclosure of their public financial information including,
        but not limited to, (A) earnings releases and trading statements, (B)
        quarterly and annual reports and (C) restatement of earnings, so that
        all public disclosure of material new financial information of either
        which includes or is included in information of the other shall be made
        on the same day and, as far as practicably possible, at the same time,
        and provided that if either is unprepared to make its own release or
        disclose on the scheduled day through no fault of the other, the other
        may proceed with its release or disclosure as previously contemplated
        provided, further, that the provisions of this subsection (e)(i) shall
        not apply to either party, if in the reasonable judgment of the
        releasing party, it is required by law, market practice or regulation to
        release information on a basis inconsistent with the other party's
        schedule;

                 (ii) Instinet shall provide the Reuters Parent with drafts of
        Instinet's public quarterly, annual and other filings, disclosures and
        reports that contain financial information and/or discussion and the
        Reuters Parent shall provide Instinet with drafts of the sections of the
        Reuters Parent's public quarterly, annual and other filings, disclosures
        and reports that contain financial information and/or discussion that
        relates to Instinet, in each case sufficiently in advance of filing to
        permit the recipient to review such materials to ensure consistency with
        similar information to be included in its own materials; and

                 (iii) So long as the Reuters Entities beneficially own 50% or
        more of the Total Voting Power of Instinet, Instinet shall not change
        its fiscal year without the prior written consent of Reuters.

                 5.2. Annual Business Plan and Budget. So long as the Reuters
Entities beneficially own 50% or more of the Total Voting Power of Instinet,
Instinet shall, consistent with past practice and in accordance with reporting
timetables agreed to by the parties hereto, (A) prepare and submit to the
Reuters Parent a profit forecast for the upcoming three fiscal years including
(i) business forecasts and (ii) details of assumptions used, (B) provide the
Reuters

                                       27
<PAGE>   28
Parent a copy of the budget for the upcoming fiscal year and in accordance with
the Reuters Parent's reporting timetable as may be changed from time to time
subject to Instinet's consent, which such consent shall not be unreasonably
withheld, including monthly projections of capital, profits and losses, manpower
and cash flow (collectively the "Annual Budget"), (C) provide an updated
quarterly outlook of information provided under clause (B) above for current and
upcoming financial year in accordance with existing timetables (collectively the
"Outlook") and (D) provide half-yearly tax forecasts consistent with past
practice. Notwithstanding the foregoing, so long as the Reuters Entities
beneficially own at least 20% or more of the Total Voting Power of Instinet,
Instinet shall provide the Reuters Parent with an Annual Budget of profits or
losses with quarterly updated Outlooks of profits or losses in accordance with
reporting timetables agreed to by the parties hereto.

                 5.3. Audit Rights. To the extent that the Reuters Audit
Committee is required by law or stock exchange requirements to audit, or cause
to audit, any of the affairs of any Instinet Entity, Instinet shall allow on
reasonable notice, the Reuters Audit Committee or its representatives to audit
the affairs of Instinet, including (i) having access to (and take copies of) the
records of the Instinet Entities (and the working papers of its accountants);
(ii) having access to the premises of any Instinet Entity and to have the
ability to consult and discuss matters with the auditors, advisors and
management of any Instinet Entity (during normal office hours) and (iii)
procuring that each Instinet Entity shall, co-operate fully with the Reuters
Audit Committee and its representatives in relation to this process. In
addition, Instinet shall use all reasonable efforts to allow the independent
accountants of Reuters to audit the working papers of and to assist in any
review undertaken by Instinet's independent accountants. The Reuters Audit
Committee shall coordinate its efforts in good faith with, and work with and
through, the Audit Committee of the Instinet board of directors and the Instinet
internal audit department to accomplish such objectives.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

                 6.1. Reuters represents and warrants as follows:

                 (a) Status and Authority. Reuters is a company duly organized
and validly existing under the laws of England and Wales. The execution and
delivery by Reuters of this Agreement and the performance of its obligations
hereunder have been duly authorized by all necessary corporate action on the
part of Reuters, and this Agreement has been duly executed and delivered by the
duly authorized officers of Reuters and constitutes the valid, legal and binding
obligation of Reuters.

                 (b) No Conflicts.

                 (i) The execution, delivery and performance of this Agreement
        by Reuters will not result in (A) any conflict with the charter
        documents of any Reuters Entity, (B) any material breach or violation of
        or default under any statute, law, rule, regulation, judgment, decree,
        order or any material mortgage, deed of trust, indenture, agreement or
        any other instrument to which any Reuters Entity is a party or by which
        any of their respective material properties or assets are bound, or (C)
        the creation or imposition of any

                                       28
<PAGE>   29
         lien, charge, pledge or encumbrance thereon, except for such breaches,
         violations or defaults and such liens, charges, pledges or encumbrances
         as would not, individually or in the aggregate, have a material adverse
         effect on Reuters' business or adversely affect the ability of Reuters'
         to perform its obligations hereunder.

                 (ii) No consent, approval or authorization of or filing with
        any governmental authority is required with respect to Reuters in
        connection with the execution and delivery of this Agreement, and the
        performance by Reuters of its obligations hereunder.

         (c) No Litigation. There no judicial or administrative actions,
proceedings or investigations pending or, to the best knowledge or Reuters,
threatened, which question the validity of this Agreement or any action taken or
to be taken by Reuters in connection herewith.

         6.2. Instinet represents and warrants as follows:

         (a) Status and Authority. Instinet is a company duly organized, validly
existing in good standing under the laws of Delaware. The execution and delivery
by Instinet of this Agreement and the performance of its obligations hereunder
have been duly authorized by all necessary corporate action on the part of
Instinet, and this Agreement has been duly executed and delivered by the duly
authorized officers of Instinet and constitutes the valid, legal and binding
obligation of Instinet.

         (b) No Conflicts.

                 (i) The execution, delivery and performance of this Agreement
        by Instinet will not result in (A) any conflict with the charter
        documents of any Instinet Entity (B) any material breach or violation of
        or default under any statute, law, rule, regulation, judgment, decree,
        order or any material mortgage, deed of trust, indenture, agreement or
        any other instrument to which any Instinet Entity is a party or by which
        any of their respective material properties or assets are bound, or (C)
        the creation or imposition of any lien, charge, pledge or encumbrance
        thereon, except for such breaches, violations or defaults and such
        liens, charges, pledges or encumbrances as would not, individually or in
        the aggregate, have a material adverse effect on Instinet's business or
        adversely affect the ability of Instinet to perform its obligations
        hereunder.

                 (ii) No consent, approval or authorization of or filing with
        any governmental authority is required with respect to Instinet in
        connection with the execution and delivery of this Agreement, and the
        performance by Instinet of its obligations hereunder.

         (c) No Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or to the best knowledge of Instinet,
threatened, which question the validity of this Agreement or any action taken or
to be taken by Instinet in connection herewith.

                                       29
<PAGE>   30

                                  ARTICLE VII
                                  MISCELLANEOUS

         7.1. Subsidiaries. Reuters agrees and acknowledges that Reuters shall
be responsible for the performance by each Reuters Entity of the obligations
hereunder applicable to such Reuters Entity. Instinet agrees and acknowledges
that Instinet shall be responsible for the performance by each Instinet Entity
of the obligations hereunder applicable to such Instinet Entity.

         7.2. Amendments. This Agreement may be amended, supplemented or
otherwise modified only by a writing duly executed by or on behalf each of the
parties hereto. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.

         7.3. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other than
those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect to the fullest extent permitted by law and
shall not be affected thereby, unless such a construction would be unreasonable.

         7.4. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail, postage prepaid, return receipt requested or (c) by facsimile or other
generally accepted means of electronic transmission (provided that a copy of any
notice delivered pursuant to this clause (c) shall also be sent pursuant to
clause (a) or (b)) above, addressed as follows:

                  (a)      if to Instinet, to:

                           Instinet Group Incorporated
                           Three Times Square
                           10th Floor
                           Attention:  General Counsel
                           Telecopy No.:  646-223-9017

                           with a copy to:

                           Cleary, Gottlieb, Steen & Hamilton
                           One Liberty Plaza
                           New York, N.Y.  10006

                                       30
<PAGE>   31

                           Attention:  Alan L. Beller, Esq.
                           Telecopy No.:  212-225-3999

                  (b)      If to Reuters, to:

                           Reuters Limited
                           85 Fleet Street
                           London England
                           EC4B 4AJ
                           Attention:  General Counsel
                           Telecopy No.:  011-44-207-542-5896

                           with a copy to:

                           Reuters America Inc.
                           The Reuters Building
                           3 Times Square
                           New York, New York  10036
                           Attention:  General Counsel
                           Telecopy No:  646-223-4250

                           and to:

                           Simpson Thacher & Bartlett
                           425 Lexington Avenue
                           New York, New York  10017
                           Attention: Vince Pagano, Esq.
                           Telecopy No.:  212-455-2502

or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties; provided, however, that all notices and other
communications required or permitted hereunder regarding any Covered Transaction
shall be delivered only to Instinet Group Incorporated and Reuters Limited (with
a copy to Reuters America Inc.).

         7.5. Further Assurances. Reuters and Instinet shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other action as may be reasonably necessary or
advisable to carry out their obligations under this Agreement and under any
exhibit, document or other instrument delivered pursuant hereto.

         7.6. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.

         7.7. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.

         7.8. Successors. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as set

                                       31
<PAGE>   32
forth in Section 7.11, nothing contained in this Agreement, express or implied,
is intended to confer upon any other Person or entity any benefits, rights or
remedies.

         7.9. Jurisdiction; Specific Performance. The parties to this Agreement
agree that jurisdiction and venue in any action brought by any party hereto
pursuant to this Amendment shall properly lie and shall be brought in any
federal or state court located in the Borough of Manhattan, City and State of
New York. By execution and delivery of this Agreement, each party hereto
irrevocably submits to the jurisdiction of such courts for itself or herself and
in respect of its or her property with respect to such action. The parties
hereto irrevocably agree that venue would be proper in such court, and hereby
irrevocably waive any objection that such court is an improper or inconvenient
forum for the resolution of such action. The parties hereto acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.

         7.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same agreement.

         7.11. Assignment. Neither this Agreement nor any right or obligation
hereunder is assignable in whole or in part by any party without the prior
written consent of the other party hereto. Notwithstanding the foregoing, (a)
Reuters may transfer its rights and obligations under Section 2.3 (in whole or
in part), Article III (in whole or in part), Sections 4.1 and 4.2 (in whole),
Section 4.4 (in whole and in part) and Article V (in whole) to any Transferee
(and any Transferee may transfer such rights and obligations to any subsequent
Transferee) without the prior written consent of Instinet; provided that a
Transferee of less than a majority of the Total Voting Power of Instinet may
receive only those rights and obligations thereunder as to which Reuters would
be entitled to as a holder of such percentage interest or as are specified
herein.

         (b) Any assignment pursuant to paragraph (a) of this Section 7.11 shall
be effective upon receipt by Instinet of (i) written notice from the
transferring Holder stating the name and address of any Transferee and
identifying the number of Registrable Securities with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (ii) a written agreement in substantially the form attached
as Exhibit A hereto from such Transferee to be bound by the applicable terms of
this Agreement.

         7.12. Effective Only Following Completion of Initial Public Offering.
Neither this Agreement nor any right or obligation hereunder shall be binding on
the parties hereto and enforceable against them in accordance with the terms
thereof unless and until the Initial Public Offering is complete.

                                       32
<PAGE>   33

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.

                                  REUTERS LIMITED

                                  By: /s/  Thomas Glocer
                                      ------------------------------------------
                                       Name:  Thomas Glocer
                                       Title:    Chief Executive Designate

                                  INSTINET GROUP INCORPORATED

                                  By: /s/  Paul Merolla
                                      -----------------------------------------
                                       Name:  Paul Merolla
                                       Title: Senior V.P. & General Counsel

                                       33<PAGE>   1
                                                                     Exhibit 4.3

                           INSTINET GROUP INCORPORATED

                                       and

                          MELLON INVESTOR SERVICES LLC,

                                  Rights Agent

                                Rights Agreement

                            Dated as of May 15, 2001
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                                           Page
-------                                                                                                           ----

<S>     <C>                                                                                                       <C>
Section 1.        Certain Definitions...........................................................................   1

Section 2.        Appointment of Rights Agent...................................................................   5

Section 3.        Issuance of Rights Certificates...............................................................   6

Section 4.        Form of Rights Certificates...................................................................   7

Section 5.        Countersignature and Registration.............................................................   8

Section 6.        Transfer, Split-Up, Combination and Exchange of Rights Certificates;
                  Mutilated, Destroyed, Lost or Stolen Rights Certificates......................................   9

Section 7.        Exercise of Rights; Purchase Price; Expiration Date of Rights.................................   9

Section 8.        Cancellation of Rights Certificates...........................................................  11

Section 9.        Reservation and Availability of Capital Stock.................................................  11

Section 10.       Preferred Stock Record Date...................................................................  13

Section 11.       Adjustment of Purchase Price, Number and Kind of Shares or Number
                  of Rights.....................................................................................  13

Section 12.       Certificate of Adjusted Purchase Price or Number of Shares....................................  20

Section 13.       Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
                  Earning Power.................................................................................  21

Section 14.       Fractional Rights and Fractional Shares.......................................................  23

Section 15.       Rights of Action..............................................................................  24

Section 16.       Agreement of Rights Holders...................................................................  25

Section 17.       Rights Certificate Holder Not Deemed a Stockholder............................................  25

Section 18.       Concerning the Rights Agent...................................................................  26

Section 19.       Merger or Consolidation or Change of Name of Rights Agent.....................................  26

Section 20.       Duties of Rights Agent........................................................................  27

Section 21.       Change of Rights Agent........................................................................  29

Section 22.       Issuance of New Rights Certificates...........................................................  30

Section 23.       Redemption and Termination....................................................................  30

Section 24.       Exchange......................................................................................  31

Section 25.       Notice of Certain Events......................................................................  32

Section 26.       Notices.......................................................................................  33

Section 27.       Supplements and Amendments....................................................................  34

Section 28.       Successors....................................................................................  34
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<CAPTION>
<S>                                                                                                               <C>
Section 29.       Determinations and Actions by the Board, etc..................................................  34

Section 30.       Benefits of this Agreement....................................................................  35

Section 31.       Severability..................................................................................  35

Section 32.       Governing Law.................................................................................  35

Section 33.       Counterparts..................................................................................  35

Section 34.       Descriptive Headings..........................................................................  35
</TABLE>

EXHIBITS
Exhibit A -- Form of Certificate of Designation, Preferences and Rights
Exhibit B -- Form of Rights Certificates
Exhibit C -- Form of Summary of Rights

                                       ii
<PAGE>   4
                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT, dated as of May 15, 2001 (the "Agreement"), between
Instinet Group Incorporated, a Delaware corporation (the "Company"), and Mellon
Investor Services LLC, a New Jersey limited liability company (the "Rights
Agent").

                              W I T N E S S E T H

         WHEREAS, on May 10, 2001, the Board of Directors of the Company (the
"Board") authorized the issuance and distribution of one Right (as hereinafter
defined) for each share of Common Stock, par value $0.01 per share, outstanding
at the close of business on the date of this Agreement (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the earliest of the Close
of Business on the Distribution Date, the Redemption Date and the Close of
Business on the Final Expiration Date (as such terms are hereinafter defined)
each Right initially representing the right to purchase one one-hundredth of a
share of Series A Junior Participating Preferred Stock of the Company (the
"Preferred Stock") having the rights, powers and preferences set forth in the
form of Certificate of Designation, Preferences and Rights attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth
(the "Rights"); provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after the Distribution Date
and prior to the earlier of the Redemption Date and the Close of Business on the
Final Expiration Date in accordance with the provisions of Section 22 of the
Agreement;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:

         (a) "Acquiring Person" shall mean any Person who or which, together
with all Associates and Affiliates of such Person, shall be the Beneficial Owner
of 15%, but shall not include (i) any Exempted Entity, (ii) the Company, (iii)
any Subsidiary of the Company, (iv) any employee benefit plan of the Company, or
of any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan, or
(v) any Person who becomes the Beneficial Owner of fifteen percent (15%) or more
of the shares of Common Stock then outstanding as a result of a reduction in the
number of shares of Common Stock outstanding due to the repurchase of shares of
Common Stock by the Company unless and until such Person, after becoming aware
that such Person has become the Beneficial Owner of fifteen percent (15%) or
more of the then outstanding shares of Common Stock, acquires beneficial
ownership of additional shares of Common Stock representing one percent (1%) or
more of the shares of Common Stock then outstanding, or (vi) any such Person who
has reported or is required to report such ownership (but less than 20%) on
Schedule 13G under the Securities and Exchange Act of 1934, as amended and in
effect on the date of the Agreement (the "Exchange Act") (or any comparable or
successor report) or on Schedule 13D
<PAGE>   5
under the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to or reserve the right to control or influence
the management or policies of the Company or engage in any of the actions
specified in Item 4 of such schedule (other than the disposition of the Common
Stock) and, within 10 Business Days of being requested by the Company to advise
it regarding the same, certifies to the Company that such Person acquired shares
of Common Stock in excess of 14.9% inadvertently or without knowledge of the
terms of the Rights and who, together with all Associates and Affiliates,
thereafter does not acquire additional shares of Common Stock while the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding;
provided, however, that if the Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10-Business-Day period.

         (b) "Act" shall mean the Securities Act of 1933.

         (c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.

         (d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

         (e) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:

         (i) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, (B) securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event (as hereinafter defined), or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date (as hereinafter defined)
or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;

         (ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the

                                       2
<PAGE>   6
General Rules and Regulations under the Exchange Act, and (B) is not reportable
by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

         (iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (d)
shall cause a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition, and then only if such securities continue to be owned by such
Person at such expiration of forty days. Notwithstanding anything in this
definition of Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial Ownership of the
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.

         (f) "Board" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.

         (g) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

         (h) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.

         (i) "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.

         (j) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

         (k) "Common Stock Holding Company" shall mean a Non-Reuters Exempted
Entity that owns less than 35% of the then outstanding Common Stock or a
Non-Reuters Exempted Entity Transferee that (1) shall not have ceased to be an
Exempted Entity by virtue of Section 1(t)(y), and (2) beneficially owns Common
Stock that represents 66 2/3% or more of the total assets of such Non-Reuters
Exempted Entity or such Non-Reuters Exempted Entity Transferee.

         (l) "Company" shall have the meaning set forth in the parties clause at
the beginning of this Agreement, as it may be modified by Section 13(a) hereof.

                                       3
<PAGE>   7
         (m) "Current Market Price" shall have the meaning set forth in Section
11(d)(i) hereof.

         (n) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (o) "Deemed Share Transfer" shall mean the direct or indirect
acquisition of a Common Stock Holding Company by another Person or group of
Persons who or which is not an Affiliate of such Common Stock Holding Company
prior to such acquisition (an "Acquiring Non-Exempted Entity") by means of a
transaction or series of transactions (including, without limitation, any
reorganization, merger or consolidation, whether of such Common Stock Holding
Company with or into any Acquiring Non-Exempted Entity or of any Acquiring
Non-Exempted Entity with or into such Common Stock Holding Company) in which an
Acquiring Non-Exempted Entity acquires Beneficial Ownership of more than 50% of
the voting power of a Common Stock Holding Company or such surviving Person.

         (p) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.

         (q) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.

         (r) "Exchange Act" shall mean the Securities and Exchange Act of 1934.

         (s) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.

         (t) "Exempted Entity" shall mean: (1) any Reuters Entity, (2) any
transferee of any Reuters Entity that acquires directly from any such Reuters
Entity fifteen percent (15%) or more of the then outstanding Common Stock (a
"Non-Reuters Exempted Entity"), (3) any transferee of any Non-Reuters Exempted
Entity that acquires directly from any Non-Reuters Exempted Entity thirty-five
percent (35%) or more of the then outstanding Common Stock (a "Non-Reuters
Exempted Entity Transferee") and (4) any Person who or which is the Beneficial
Owner of Common Stock beneficially owned by an Exempted Entity; provided,
however, that (x) no Reuters Entity shall have the right to create more than two
Non-Reuters Exempted Entities for purposes of this Agreement at any time after
Reuters shall beneficially own less than a majority of the then outstanding
Common Stock, (y) any Reuters Entity, any Non-Reuters Exempted Entity and any
Non-Reuters Exempted Entity Transferee shall cease to be an Exempted Entity as
of the date that such Reuters Entity, Non-Reuters Exempted Entity or Non-Reuters
Exempted Entity Transferee ceases to beneficially own fifteen percent (15%) or
more of the shares of the then outstanding Common Stock and (z) for purposes of
this definition, if a Common Stock Holding Company shall undergo a Deemed Share
Transfer, then such Common Stock Holding Company, including the Acquiring
Non-Exempted Entity, shall not be deemed to be an Exempted Entity unless such
Person was an Exempted Entity immediately prior to the occurrence of such Deemed
Share Transfer.

         (u) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.

                                       4
<PAGE>   8
         (v) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.

         (w) "NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.

         (x) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company or other entity.

         (y) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company, and,
to the extent that there are not a sufficient number of shares of Series A
Junior Participating Preferred Stock authorized to permit the full exercise of
the Rights, any other series of preferred stock of the Company designated for
such purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.

         (z) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.

         (aa) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.

         (bb) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.

         (cc) "Redemption Date" shall have the meaning set forth in Section
23(b) hereof.

         (dd) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.

         (ee) "Reuters Entity" shall mean Reuters Group PLC, a United Kingdom
public limited company, or any Subsidiary thereof, except for the Company and
its Subsidiaries.

         (ff) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.

         (gg) "Rights Agent" shall have the meaning set forth in the parties
clause at the beginning of this Agreement.

         (hh) "Rights Certificate" shall have the meaning set forth in Section
3(a) hereof.

         (ii) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.

         (jj) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.

         (kk) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.

                                       5
<PAGE>   9
         (ll) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.

         (mm) "Stock Acquisition Date" shall mean the earlier of the date of (i)
the first date of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed or amended pursuant to Section
13(d) under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such or (ii) the public disclosure of facts by the
Company or an Acquiring Person indicating that a Person has become such.

         (nn) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.

         (oo) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (pp) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.

         (qq) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.

         (rr) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable upon ten days written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise and shall in no event be liable for
the acts or omissions of, any such co-rights agent.

         Section 3. Issuance of Rights Certificates.

         (a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock Acquisition Date, or (ii) the close of business on
the tenth Business Day (or such later date as may be determined by action of the
Board prior to such time as any Person becomes an Acquiring Person) after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would become an Acquiring Person (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the

                                       6
<PAGE>   10
underlying shares of Common Stock (including a transfer to the Company). The
Company shall promptly notify the Rights Agent of the occurrence of a
Distribution Date and request its transfer agent to provide to the Rights Agent
a shareholder list together with all other relevant information. As soon as
practicable after the Rights Agent is notified of the Distribution Date and
receives such notice, list and information from the Company, the Rights Agent
will, at the Company's expense, send by first-class, insured, postage-prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the records of the
Company, one or more right certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. The failure to
mail a Rights Certificate shall not affect the legality or validity of the
Rights.

         (b) The Company will send, as promptly as practicable following the
Record Date, a copy of a Summary of Rights, in the form attached hereto as
Exhibit C (the "Summary of Rights") by first-class, postage-prepaid mail, to
each record holder of Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company and will
make the Summary of Rights available to any holder of Rights who may so request
from time to time prior to the Expiration Date. With respect to certificates for
the Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached thereto
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Close of Business on the
Distribution Date (or the earlier of the Redemption Date or the Close of
Business on the Final Expiration Date), the surrender for transfer of any
certificates representing shares of Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with such shares of Common
Stock.

         (c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury) on
or after the Record Date but prior to the earliest of the Close of Business on
the Distribution Date, the Redemption Date or the Close of Business on the Final
Expiration Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following
legend:

                  This certificate also evidences and entitles the holder hereof
         to certain Rights as set forth in the Rights Agreement between Instinet
         Group Incorporated (the "Company") and the Rights Agent thereunder, as
         it may from time to time be amended or supplemented in accordance with
         its terms (the "Rights Agreement"), the terms of which are hereby
         incorporated herein by reference and a copy of which is on file at the
         principal offices of the Company. Under certain circumstances, as set
         forth in the Rights

                                       7
<PAGE>   11
         Agreement, such Rights will be evidenced by separate certificates and
         will no longer be evidenced by this certificate. The Company will mail
         to the holder of this certificate a copy of the Rights Agreement, as in
         effect on the date of mailing, without charge, promptly after receipt
         of a written request therefor. Under certain circumstances set forth in
         the Rights Agreement, Rights issued to, or held by, any Person who is,
         was or becomes an Acquiring Person or any Affiliate or Associate
         thereof (as such terms are defined in the Rights Agreement), whether
         currently held by or on behalf of such Person or by any subsequent
         holder, may become null and void.

                  With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.

         Section 4. Form of Rights Certificates.

         (a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The Rights Certificates
shall be in machine printable format and in a form reasonably satisfactory to
the Rights Agent. Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever distributed, shall be dated as of the Record
Date, show the date of counter signature, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price set forth therein
(such exercise price per one one-hundredth of a share, the "Purchase Price"),
but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as provided
herein.

         (b) Any Rights Certificate issued pursuant to Section 3(a), Section
11(i) or Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part of a plan,
continuing agreement, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and provided that the
Company shall have notified the Rights Agent that this

                                       8
<PAGE>   12
Section 4(b) applies, any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:

                  The Rights represented by this Rights Certificate are or were
         beneficially owned by a Person who was or became an Acquiring Person or
         an Affiliate or Associate of an Acquiring Person (as such terms are
         defined in the Rights Agreement). Accordingly, this Rights Certificate
         and the Rights represented hereby may become null and void in the
         circumstances specified in Section 7(e) of the Rights Agreement.

                  The Company shall supply the Rights Agent with such legended
Rights Certificates.

         Section 5. Countersignature and Registration.

         (a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

         (b) Following the Distribution Date and receipt by the Rights Agent of
all reasonably necessary information, the Rights Agent will keep, or cause to be
kept, at its principal office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

         Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

         (a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates (other than Rights Certificates representing Rights
that may have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Rights Certificate or

                                       9
<PAGE>   13
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitles such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b), Section
7(e), Section 14 hereof and Section 24 hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates. The Rights Agent shall have no duty or obligation to take
any action under any Section of this Agreement which requires the payment by a
holder of Rights of applicable taxes and governmental charges unless and until
the Rights Agent is satisfied that all such taxes and/or charges have been paid.

         (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's or the
Right's Agent's request, and reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate, if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

         Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.

         (a) Subject to Section 7(e) hereof, at any time after the Distribution
Date the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c),
Section 11(a)(ii) and Section 23(a) hereof) in whole or in part upon surrender
of the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent at
the principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-hundredths of a share (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) 5:00 P.M., New York City time, on
May 15, 2011, or such later date as may be established by the Board prior to the
expiration of the Rights (such date, as it may be extended by the Board, the
("Final Expiration Date"); (ii) the time at which the right to exercise

                                       10
<PAGE>   14
the Rights terminates pursuant to Section 23 hereof; or (iii) the time at which
the right to exercise the Rights terminates pursuant to Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the "Expiration
Date").

         (b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $60, and
shall be subject to adjustment from time to time as provided in Section 11 and
Section 13(a) hereof and shall be payable in accordance with paragraph (c)
below.

         (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-hundredth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable tax or charge, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-hundredths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of shares of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of a
share of Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or, upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the event that
the Company is obligated to issue other securities (including Common Stock) of
the Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when necessary to comply with this Agreement. The Company
reserves the right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.

         (d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.

                                       11
<PAGE>   15
         (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board has
determined is part of a plan, continuing agreement, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall notify the
Rights Agent when this Section 7(e) applies and should use all reasonable
efforts to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but neither the Company nor the Rights Agent shall
have any liability to any holder of Rights Certificates or any other Person as a
result of the Company's failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder. The
Rights Agent will endeavor to comply with the provisions hereof to the extent it
has received instructions from the Company concerning such matters.

         (f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Associates or Affiliates
thereof as the Company or the Rights Agent shall reasonably request.

         Section 8. Cancellation of Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer, split-up, combination or
exchange shall, if surrendered to the Company or any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company.

         Section 9. Reservation and Availability of Capital Stock.

         (a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number

                                       12
<PAGE>   16
of shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in this Agreement
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights.

         (b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

         (c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension has been rescinded.
In addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may by issuing a public
announcement temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. The Company shall
promptly provide the Rights Agent with copies of such announcements.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law, or a registration statement shall not have
been declared effective. The Rights Agent may assume that any Right exercised is
permitted to be exercised under applicable law and shall have no liability for
acting in reliance upon such assumption.

         (d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.

                                       13
<PAGE>   17
         (e) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of
one one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax or charge shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax or charge is due.

         Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable taxes and charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

         Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.

         (a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record

                                       14
<PAGE>   18
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.

         (ii) In the event any Person shall become an Acquiring Person, then,
promptly following the occurrence of such event, proper provision shall be made
so that each holder of a Right (except as provided below and in Section 7(e)
hereof) shall thereafter have the right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of one one-hundredths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the "Adjustment Shares").

         (iii) In the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of Incorporation, but which are not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights, are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the Preferred Stock,
which the Board has deemed to have essentially the same value or economic rights
as shares of Common Stock (such shares of preferred stock being referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value equal
to the Current Value (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board based upon the
advice of a nationally recognized investment banking firm selected by the Board;
provided, however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date
on which the Company's right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"),

                                       15
<PAGE>   19
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i) the Current
Value over (ii) the Purchase Price. If the Board determines in good faith that
it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is herein
called the "Substitution Period"). To the extent that action is to be taken
pursuant to the first and/or third sentences of this Section 11(a)(iii), the
Company (1) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek such shareholder approval for such authorization of additional
shares and/or to decide the appropriate form of distribution to be made pursuant
to such first sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect, in each case
with simultaneous written notice to the Rights Agent. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall be the Current
Market Price per share of the Common Stock on the Section 11(a)(ii) Trigger Date
and the per share or per unit value of any Common Stock Equivalent shall be
deemed to equal the Current Market Price per share of the Common Stock on such
date.

         (b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Shares of Preferred Stock owned by or held for the account of the

                                       16
<PAGE>   20
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

         (c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or evidences of indebtedness, or of
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock, and the denominator of which shall be
such Current Market Price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.

         (d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the Current Market
Price per share of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to and not including such date, and
for purposes of computations made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following and not including such
date; provided, however, that in the event that the Current Market Price per
share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification shall not have occurred
prior to the commencement of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if the shares of Common Stock are listed or admitted to trading on the New
York Stock Exchange, the closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting

                                       17
<PAGE>   21
system or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading, or, if on any such date the shares of Common Stock are not
quoted by any such organizations, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, Current Market
Price per share shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.

         (ii) For the purpose of any computation hereunder, the Current Market
Price per share of Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in clause (i) of this Section 11(d) (other than
the last sentence thereof). If the Current Market Price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the Current Market Price per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the
Current Market Price of a Unit shall be equal to the Current Market Price of one
share of Preferred Stock divided by 100.

         (e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.

         (f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to

                                       18
<PAGE>   22
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.

         (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.

         (h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

         (i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement (with prompt written notice thereof to the Rights
Agent) of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment
to be made, and shall promptly give the Rights Agent a copy of such
announcement. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted

                                       19
<PAGE>   23
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.

         (j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredth of a share which were expressed in the
initial Rights Certificates issued hereunder.

         (k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-hundredths of a share
of Preferred Stock at such adjusted Purchase Price.

         (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date the
number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.

         (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.

         (n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries

                                       20
<PAGE>   24
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.

         (o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.

         (p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Record Date and prior to the
Distribution Date (i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares
of Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts and computations accounting for
such adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such certificate,
and (c) if a Distribution Date has occurred, mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 27 hereof (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock). The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall have no
duty with respect to and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.

         Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power.

         (a) In the event that, at any time after a Person becomes an Acquiring
Person, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other

                                       21
<PAGE>   25
Person (other than (i) an Exempted Entity or a (ii) Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or merger,
(y) any Person (other than (i) an Exempted Entity or (ii) a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
assets, cash flow or earning power aggregating more than 50% of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons (other than (i) an Exempted Entity or the Company or (ii)
any Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.

         (b) "Principal Party" shall mean:

         (i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of

                                       22
<PAGE>   26
Common Stock of the Company are converted in such merger or consolidation, and
if no securities are so issued, the Person that is the other party to such
merger or consolidation; and

         (ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets, cash flow or earning power transferred pursuant
to such transaction or transactions; provided, however, that in any such case
described in the foregoing clause (i) or (ii) of this Section 13(b) (1) if the
Common Stock of such Person is not at such time and has not been continuously
over the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, "Principal
Party" shall refer to such other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stocks
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.

         (c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will

         (i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and

         (ii) take such all such other action as may be necessary to enable the
Principal Party to issue the securities purchasable upon exercise of the Rights,
including but not limited to the registration or qualification of such
securities under all requisite securities laws of jurisdictions of the various
states and the listing of such securities on such exchanges and trading markets
as may be necessary or appropriate; and

         (iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).

         (d) The Rights Agent may rely and be fully protected in relying upon a
certificate of the Company stating that the provisions of this Section 13 have
been fulfilled.

                                       23
<PAGE>   27
Notwithstanding anything in this Agreement to the contrary, the prior written
consent of the Rights Agent must be obtained in connection with any supplemental
agreement which alters the rights or duties of the Rights Agent, which consent
shall not be unreasonably withheld.

         Section 14. Fractional Rights and Fractional Shares.

         (a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if the Rights are listed or admitted to trading on the
New York Stock Exchange, the closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system or, if the
Rights are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or, if on any such date the Rights are
not quoted by any such organizations, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good
faith by the Board shall be used.

         (b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.

         (c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For purposes of this

                                       24
<PAGE>   28
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.

         (d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.

         (e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.

         Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

         Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same onsents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:

         (a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;

         (b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;

                                       25
<PAGE>   29
         (c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and

         (d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree, judgment or ruling (whether
interlocutory or final) lifted or otherwise overturned as soon as possible.

         Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.

         Section 18. Concerning the Rights Agent.

         (a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the preparation, delivery, execution, amendment
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction) for any action taken, suffered or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim (whether asserted by the Company or any holder of Rights) of
liability in the premises. The costs

                                       26
<PAGE>   30
and expenses incurred by the Rights Agent in enforcing this right of
indemnification shall be paid by the Company unless it is determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction that the Rights Agent is not entitled to indemnification due to the
Rights Agent's gross negligence, bad faith or willful misconduct, in which case
the costs and expenses of the Company incurred in defending this claim for
indemnification shall be paid by the Rights Agent. The provisions of this
Section 18 and Section 20 below shall survive the termination of this Agreement,
the exercise or expiration of the Rights and the resignation or removal of the
Rights Agent.

         (b) The Rights Agent shall be authorized and protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons. The
Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent shall be
fully protected and shall incur no liability for failing to take any action in
connection therewith unless and until it has received such notice.

         (c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect, incidental,
punitive or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of the loss or damage and regardless of the form of the action.

         Section 19. Merger or Consolidation or Change of Name of Rights Agent.

         (a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
but only if such Person would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

         (b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates

                                       27
<PAGE>   31
so countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

         Section 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:

         (a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent, and
the Rights Agent shall incur no liability for or in respect of, any action
taken, suffered or omitted by it in accordance with such opinion.

         (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken, suffered or omitted to be taken by it under the provisions of this
Agreement in reliance upon such certificate.

         (c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Any liability of the Rights Agent under this Rights Agreement
will be limited to the amount of fees paid by the Company to the Rights Agent.

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.

         (e) The Rights Agent shall not be under any responsibility or have any
liability in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e)) or any adjustment

                                       28
<PAGE>   32
required under the provisions of Section 11, Section 13 or Section 24 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after the Rights' Agent's actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable, nor shall the Rights Agent
be responsible for the legality of the terms hereof in its capacity as an
administrative agent.

         (f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

         (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and such instruction shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted to be taken by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
these instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless such officer
shall have consented in writing to any earlier date) unless prior to taking any
such action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted or unless the Rights Agent shall
have acted with gross negligence or willful misconduct.

         (h) The Rights Agent and any stockholder, director, Affiliate, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person.

         (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any

                                       29
<PAGE>   33
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction) in the
selection and continued employment thereof.

         (j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it reasonably believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.

         (k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.

         (l) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.

         (m) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer or the
Rights Certificates.

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail. Any successor to the Rights Agent that so resigns will send
notice to the registered holders of the Rights Certificates by first-class mail
if such resignation occurs after the Distribution Date. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail. Any successor to the Rights Agent so removed will
send notice to the holders of Rights Certificates by registered or certified
mail if such removal occurs after the Distribution Date. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of sixty (60) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company, at the expense of the Company), then the Rights
Agent or any registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person organized and doing business under the laws of the United
States or of

                                       30
<PAGE>   34
the State of New York or of any other state of the United States, in good
standing, having an office in the State of New York, which is authorized under
such laws to exercise corporate trust or stock transfer or shareholder services
powers and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000 or (b) an affiliate of a Person
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and, if
such appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.

         Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
forms as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchaseable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Stock following the Distribution Date and
prior to the earlier of the Redemption Date and the Close of Business on the
Final Expiration Date, the Company may with respect to shares of Common Stock so
issued or sold pursuant to (i) the exercise of stock options, (ii) under any
employee plan or arrangement, (iii) upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company or (iv) a contractual
obligation of the Company, in each case existing prior to the Distribution Date,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale.

         Section 23. Redemption and Termination.

         (a) The Board may, at its option, at any time prior to the earlier of
(i) such time as any Person becomes an Acquiring Person, or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market
Price, as defined in Section 11(d)(i) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board.

         (b) Immediately upon the time of the effectiveness of the redemption of
the Rights pursuant to paragraph (a) of this Section 23 or such earlier time as
may be determined by the Board ordering the redemption of the Rights, although
not earlier than the time of such action

                                       31
<PAGE>   35
(such time the "Redemption Date"), evidence of which shall have been filed with
the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock; provided, however, that the failure to
give or any defect in any such notice shall not affect the validity of such
redemption. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.

         Section 24. Exchange.

         (a) The Board may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 7(e) hereof) for Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Stock for or pursuant to
the terms of any such plan), together with all Associates or Affiliates of such
Person, becomes the Beneficial Owner of a majority of the Common Stock then
outstanding.

         (b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of the holders of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice (with prompt notice thereof to the Rights Agent) of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to the Rights Agent and all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.

         (c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Equivalent Preferred Stock, as such
term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial

                                       32
<PAGE>   36
rate of one one-hundredth of a share of Preferred Stock (or Equivalent Preferred
Stock) for each share of Common Stock, as appropriately adjusted to reflect
stock splits, stock dividends and other similar transactions after the date
hereof.

         (d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.

         (e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the registered holders of the Rights Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.

         Section 25. Notice of Certain Events.

         (a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of more than 50% of the assets, cash flow or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and to each holder of a Rights Certificate in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of

                                       33
<PAGE>   37
the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock whichever shall be the earlier.

         (b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate and to the
Rights Agent, to the extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing by
the Company with the Rights Agent) or by facsimile or other generally accepted
means of electronic transmission as follows:

                  Instinet Group Incorporated
                  Three Times Square
                  10th Floor
                  New York, New York 10036
                  Attention: General Counsel
                  Telecopy No.:  (646) 223-9017

                  with a copy to:

                  Alan L. Beller
                  Cleary, Gottlieb, Steen & Hamilton
                  One Liberty Plaza
                  New York, NY  10006
                  Telecopy No.:  (212) 225-3999

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing by the Rights Agent with the Company) or by facsimile
transmission as follows:

                  Mellon Investor Services LLC
                  44 Wall Street Street, 6th Floor
                  New York, NY 10005
                  Attention: Vice President
                  Telecopy No.:  (917) 320-6318

                  with a copy to:

                                       34
<PAGE>   38
                  Mellon Investor Services LLC
                  85 Challenger Road
                  Ridgefield Park, NJ 07660
                  Attention: General Counsel
                  Telecopy No.:  (201) 296-4004

         Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage pre-paid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.

         Section 27. Supplements and Amendments. Subject to the Corporate
Agreement dated as of May 15, 2001 and except as provided in the other
provisions of this Section 27, for so long as the Rights are then redeemable,
the Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
in any respect without the approval of any holders of the Rights. At any time
when the Rights are no longer redeemable, except as provided in the other
provisions of this Section 27, the Company may, and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights; provided that no such supplement or amendment may (a)
adversely affect the interests of the holders of the Rights as such (other than
an Acquiring Person and its Affiliates and Associates), (b) cause the Rights
again to be redeemable or (c) cause the Agreement again to become amendable
other than in accordance with this sentence. Notwithstanding anything contained
in this Agreement to the contrary, (i) no supplement or amendment shall be made
which changes the Redemption Price and (ii) no supplement or amendment that
changes the rights of any Exempted Entity contained in Sections 1(a), 1(k) and
1(t) of this Agreement and related provisions thereto (other than the addition
of other Persons as Exempted Entities) will be effective against such Exempted
Entity without its prior written consent, which consent shall not be
unreasonably withheld. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the supplement or amendment is in
compliance with the terms of this Section 27, and provided that such supplement
or amendment does not change or affect the rights, duties, liabilities or
obligations of the Rights Agent, the Rights Agent shall execute such supplement
or amendment, provided that any supplement or amendment that does not change or
affect the rights, duties, liabilities or obligations of the Rights Agent shall
become effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent.

         Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 29. Determinations and Actions by the Board, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board shall have the exclusive power and authority to

                                       35
<PAGE>   39
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board, or
any of the directors on the Board to any liability to the holders of the Rights.
The Rights Agent shall always be entitled to assume that the Company's Board
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).

         Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated (with
prompt notice to the Rights Agent) and shall not expire until the Close of
Business on the tenth Business Day following the date of such determination by
the Board. Without limiting the foregoing, if any provision requiring a specific
group of Directors of the Company to act is held to by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board in accordance with applicable law
and the Company's Certificate of Incorporation and By-laws.

         Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
state.

                                       36
<PAGE>   40
         Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

         Section 34. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                                       37
<PAGE>   41
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                       INSTINET GROUP INCORPORATED

                                       By /s/ Paul A. Merolla
                                       -------------------------------------
                                       Name: Paul A. Merolla
                                       Title: Secretary and General Counsel

                                       MELLON INVESTOR SERVICES LLC

                                       By /s/ Beverly A. Verrico
                                       -------------------------------------
                                       Name:  Beverly A. Verrico
                                       Title: Vice President

                                       38

<PAGE>   42
                                                                       EXHIBIT A

                      [Form of Certificate of Designation]

                                     FORM OF
               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
                OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF

                           INSTINET GROUP INCORPORATED

             Pursuant to Section 151 of the General Corporation Law
                            of the State of Delaware

         Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 1,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series A Junior Participating
Preferred Stock to a number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Junior Participating Preferred Stock.

         Section 2. Dividends and Distributions.

         (A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock,
par value $0.01 per share, of the Corporation (the "Common stock"), or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the
Corporation shall at any time (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence
<PAGE>   43

shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

         (B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.

         (C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.

         Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:

         (A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
<PAGE>   44

         (B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.

         (C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) directors.

         (ii) During any default period, such voting right of the holders of
     Series A Junior Participating Preferred Stock may be exercised initially at
     a special meeting called pursuant to subparagraph (iii) of this Section
     3(C) or at any annual meeting of stockholders, and thereafter at annual
     meetings of stockholders, provided that neither such voting right nor the
     right of the holders of any other series of Preferred Stock, if any, to
     increase, in certain cases, the authorized number of directors shall be
     exercised unless the holders of ten percent (10%) in number of shares of
     Preferred Stock outstanding shall be present in person or by proxy. The
     absence of a quorum of the holders of Common Stock shall not affect the
     exercise by the holders of Preferred Stock of such voting right. At any
     meeting at which the holders of Preferred Stock shall exercise such voting
     right initially during an existing default period, they shall have the
     right, voting as a class, to elect directors to fill such vacancies, if
     any, in the Board of Directors as may then exist up to two (2) directors
     or, if such right is exercised at an annual meeting, to elect two (2)
     directors. If the number which may be so elected at any special meeting
     does not amount to the required number, the holders of the Preferred Stock
     shall have the right to make such increase in the number of directors as
     shall be necessary to permit the election by them of the required number.
     After the holders of the Preferred Stock shall have exercised their right
     to elect directors in any default period and during the continuance of such
     period, the number of directors shall not be increased or decreased except
     by vote of the holders of Preferred Stock as herein provided or pursuant to
     the rights of any equity securities ranking senior to or pari passu with
     the Series A Junior Participating Preferred Stock.

         (iii) Unless the holders of Preferred Stock shall, during an existing
     default period, have previously exercised their right to elect directors,
     the Board of Directors may order, or any stockholder or stock holders
     owning in the aggregate not less than ten percent (10%) of the total number
     of shares of Preferred Stock outstanding, irrespective of series, may
     request, the calling of a special meeting of the holders of Preferred
     Stock, which meeting shall thereupon be called by the President, a
     Vice-President or the Secretary of the Corporation. Notice of such meeting
     and of any annual meeting at which holders of Preferred Stock are entitled
     to vote pursuant to this Paragraph (C)(iii) shall be given to each holder
     of record of Preferred Stock by mailing a copy of such notice to him
<PAGE>   45
     at his last address as the same appears on the books of the
     Corporation. Such meeting shall be called for a time not earlier than 20
     days and not later than 60 days after such order or request or in default
     of the calling of such meeting within 60 days after such order or request,
     such meeting may be called on similar notice by any stockholder or
     stockholders owning in the aggregate not less than ten percent (10%) of the
     total number of shares of Preferred Stock outstanding. Notwithstanding the
     provisions of this Paragraph (C)(iii), no such special meeting shall be
     called during the period within 60 days immediately preceding the date
     fixed for the next annual meeting of the stockholders.

         (iv) In any default period, the holders of Common Stock, and other
     classes of stock of the Corporation if applicable, shall continue to be
     entitled to elect the whole number of directors until the holders of
     Preferred Stock shall have exercised their right to elect two (2) directors
     voting as a class, after the exercise of which right (x) the directors so
     elected by the holders of Preferred Stock shall continue in office until
     their successors shall have been elected by such holders or until the
     expiration of the default period, and (y) any vacancy in the Board of
     Directors may (except as provided in Paragraph (C)(ii) of this Section 3)
     be filled by vote of a majority of the remaining directors thereto fore
     elected by the holders of the class of stock which elected the director
     whose office shall have become vacant. References in this Paragraph (C) to
     directors elected by the holders of a particular class of stock shall
     include directors elected by such directors to fill vacancies as provided
     in clause (y) of the foregoing sentence. (v) Immediately upon the
     expiration of a default period, (x) the right of the holders of Preferred
     Stock as a class to elect directors shall cease, (y) the term of any
     directors elected by the holders of Preferred Stock as a class shall
     terminate, and (z) the number of directors shall be such number as may be
     provided for in the amended and restated certificate of incorporation or
     by-laws irrespective of any increase made pursuant to the provisions of
     Paragraph (C)(ii) of this Section 3 (such number being subject, however, to
     change thereafter in any manner provided by law or in the amended and
     restated certificate of incorporation or by-laws). Any vacancies in the
     Board of Directors effected by the provisions of clauses (y) and (z) in the
     preceding sentence may be filled by a majority of the remaining directors.

         (D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.

         Section 4. Certain Restrictions.

         (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not

         (i) declare or pay dividends on, make any other distributions on, or
     redeem or purchase or otherwise acquire for consideration any shares of
     stock ranking junior (either
<PAGE>   46
     as to dividends or upon liquidation, dissolution or winding up) to the
     Series A Junior Participating Preferred Stock;

         (ii) declare or pay dividends on or make any other distributions on any
     shares of stock ranking on a parity (either as to dividends or upon
     liquidation, dissolution or winding up) with the Series A Junior
     Participating Preferred Stock, except dividends paid ratably on the Series
     A Junior Participating Preferred Stock and all such parity stock on which
     dividends are payable or in arrears in proportion to the total amounts to
     which the holders of all such shares are then entitled;

         (iii) redeem or purchase or otherwise acquire for consideration shares
     of any stock ranking on a parity (either as to dividends or upon
     liquidation, dissolution or winding up) with the Series A Junior
     Participating Preferred Stock, provided that the Corporation may at any
     time redeem, purchase or otherwise acquire shares of any such parity stock
     in exchange for shares of any stock of the Corporation ranking junior
     (either as to dividends or upon dissolution, liquidation or winding up) to
     the Series A Junior Participating Preferred Stock; or

         (iv) purchase or otherwise acquire for consideration any shares of
     Series A Junior Participating Preferred Stock, except in accordance with a
     purchase offer made in writing or by publication (as determined by the
     Board of Directors) to all holders of such shares upon such terms as the
     Board of Directors, after consideration of the respective annual dividend
     rates and other relative rights and preferences of the respective series
     and classes, shall determine in good faith will result in fair and
     equitable treatment among the respective series or classes.

         (B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

         Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.

         Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received an amount equal to $1.00 per share of Series A Participating
Preferred Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions
<PAGE>   47
shall be made to the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph (C) below to reflect
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Preferred Stock and Common Stock, on a per share basis, respectively.

         (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.

         (C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

         Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
<PAGE>   48

         Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.

         Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide other wise.

         Section 10. Amendment. At any time when any shares of Series A Junior
Participating Preferred Stock are outstanding, neither the Amended and Restated
Certificate of Incorporation of the Corporation nor this Certificate of
Designation shall be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of [a majority two-thirds] or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.

         Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.

                  IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this _____day of ________, 2001.

                                                          Chairman of the Board:

<PAGE>   49

                                                                       Exhibit B

                          [FORM OF RIGHTS CERTIFICATE]

Certificate                                                No. R-________ Rights

NOT EXERCISABLE AFTER MAY 15, 2011 UNLESS EXTENDED PRIOR THERETO BY THE BOARD OF
DIRECTORS OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.]1

                                Right Certificate

                           INSTINET GROUP INCORPORATED

                  This certifies that, ______________ or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 15, 2001 (the "Rights Agreement"), between
Instinet Group Incorporated, a Delaware corporation (the "Company"), and Mellon
Investor Services, a New Jersey limited liability company (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Right Agreement) and prior to 5:00 P.M. (New York time)
on May 15, 2011 (unless such date is extended prior thereto by the Board of
Directors) at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-hundredth of a fully paid,
non-assessable share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $60 per one
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of May 15, 2001, based on the Preferred Stock
as constituted at such date. The Company reserves the right to require prior to
the occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole

1        The portion of the legend in brackets shall be inserted only if
         applicable and shall replace the preceding sentence.
<PAGE>   50

shares of Preferred Stock will be issued. Upon the occurrence of a Section
11(a)(ii) Event (as such term is defined in the Right Agreement), if the Rights
evidenced by this Right Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.

                  As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities, which may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.

                  This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the principal
office of the Rights Agent and are also available upon written request to the
Company.

                  This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-hundredths
of a share of Preferred Stock as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.

                  Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right or may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately upon
the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than
Rights which are not subject to such exchange) will terminate and the Rights
will only enable holders to receive the shares issuable upon such exchange.

                  No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided
<PAGE>   51
in the Rights Agreement. The Company, at its election, may require that a number
of Rights be exercised so that only whole shares of Preferred Stock would be
issued.

                  No holder of this Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give consent to or withhold consent from any corporate
action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.

                  This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.

                  WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.

Dated as of ___________, ____

ATTEST:                                  INSTINET GROUP INCORPORATED

                                         By
--------------------------------           ------------------------------------
Secretary                                  Title:

Countersigned:

MELLON INVESTOR SERVICES LLC

By
--------------------------------
    Authorized Signature

<PAGE>   52

                  [FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate.)

         FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto ____________________________________________________________

                  (Please print name and address of transferee)

this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Rights Certificate on the books of the within named
Company, with full power of substitution.

Dated:  __________________, _____

                                                  ______________________________
                                                  Signature
Signature Guaranteed:

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

         (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);

         (2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.

Dated:  __________________, _____

                                                  ______________________________
                                                  Signature
Signature Guaranteed:

<PAGE>   53

                                     NOTICE

                  The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

<PAGE>   54

                          FORM OF ELECTION TO PURCHASE

              (To be executed if holder desires to exercise Rights
                     represented by the Rights Certificate.)

To:      INSTINET GROUP INCORPORATED

                  The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the shares
of Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:

Please insert social security
or other identifying number

                         (Please print name and address)

                  If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

                         (Please print name and address)

Dated:  __________________, _____

                                                  ______________________________
                                                  Signature
Signature Guaranteed:

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

         (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or
<PAGE>   55
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

         (2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.

Dated:  __________________, _____

                                                  ______________________________
                                                  Signature
Signature Guaranteed:

<PAGE>   56
                                     NOTICE

                  The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE>   57

                                                                       Exhibit C

                          SUMMARY OF RIGHTS TO PURCHASE
                                 PREFERRED STOCK

                  On ______, 2001, the Board of Directors of Instinet Group
Incorporated (the "Company") declared a dividend distribution of one Right for
each outstanding share of Company Common Stock to stockholders of record at the
close of business on May 15, 2001 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the "Series A Preferred Stock") at a Purchase
Price of $60 per Unit, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Mellon Investor Services, as Rights Agent.

                  Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in the
Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock other than as a result of repurchases of
stock by the Company or certain inadvertent actions by institutional or certain
other stockholders or (ii) 10 business days (or such later date as may be
determined by action of the Board prior to such time as any Person becomes an
Acquiring Person the Board shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person. Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued. The rights agreement excludes Reuters Group PLC, a United Kingdom
public limited company and its majority-owned subsidiaries, as well as
transferees of at least 15% of our then outstanding common stock from Reuters
and its majority-owned subsidiaries and certain transferees of transferees, from
being considered acquiring persons until Reuters (or those specified
transferees) first cease to beneficially own 15% or more of our common stock
then outstanding. The rights plan also generally exempts persons who may be
deemed to beneficially own shares of Instinet due to their ownership of shares
of Reuters or its majority-owned subsidiaries, as well as certain persons who
may be deemed to beneficially own shares of Instinet due to their ownership of
shares of transferees of at least 15% of our then outstanding common stock from
Reuters and its majority-owned subsidiaries and certain transferees of
transferees.
<PAGE>   58

                  The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. (New York time) on May 15, 2011, unless such date is
extended or the Rights are earlier redeemed or exchanged by the Company as
described below.

                  As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.

                  In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders, after
receiving advice from one or more investment banking firms (a "Qualified
Offer"), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the occurrence of
the event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.

                  For example, at an exercise price of $60 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to purchase
$120 worth of Common Stock (or other consideration, as noted above) for $60.
Assuming that the Common Stock had a per share value of $12.50 at such time, the
holder of each valid Right would be entitled to purchase 9.6 shares of Common
Stock (without taking into account payment of cash in lieu of fractional shares)
for $60.

                  In the event that, at any time following the time that a
Person became an Acquiring Person, (i) the Company engages in a merger or other
business combination transaction in which the Company is not the surviving
corporation (other than with an entity which acquired the shares pursuant to a
Qualified Offer), (ii) the Company engages in a merger or other business
combination transaction in which the Company is the surviving corporation and
the Common Stock of the Company is changed or exchanged, or (iii) 50% or more of
the Company's assets, cash flow or earning power is sold or transferred, each
holder of a Right (other than any such transactions with certain exempt persons)
(except Rights which have previously been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right.

                  At any time after a person becomes an Acquiring Person and
prior to the acquisition by a person or group of a majority of the outstanding
Common Stock, the Board may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-hundredth of a share of Preferred
Stock (or of a share of a class or series of the Company's
<PAGE>   59
preferred stock having equivalent rights, preferences and privileges), per Right
(subject to adjustment).

                  At any time until a Person becomes and Acquiring Person, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (payable in cash, Common Stock or other consideration deemed appropriate
by the Board of Directors). Immediately upon the time of the effectiveness of
the redemption of the Rights (or such earlier time as may be determined by the
Board of Directors in the action ordering redemption of the Rights), the Rights
will terminate and the only right of the holders of Rights will be to receive
the $.01 redemption price. Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.

                  The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as any person becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the
Rights (other than the Acquiring Person and its Affiliates and Associates).

                  A copy of the form of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form S-1 dated May 11, 2001.

                  A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}]]