EXHIBIT 10.14
STRATEGIC ALLIANCE AGREEMENT(1)
This Strategic Alliance Agreement (this "Agreement") is
entered into as of May 14, 2000 by and between E*TRADE Group Inc., a Delaware
corporation ("E*TRADE"), and Wit Capital Group, Inc. a Delaware corporation
("Wit"); provided, however, that the terms and conditions of this Agreement
shall not become binding or effective until the effective time of the Merger.
WHEREAS, the parties hereto are entering into an Account
Transfer Agreement (the "Account Transfer Agreement"), pursuant to which Wit
will cause Wit Capital Corporation to transfer to E*TRADE Securities, Inc. all
right, title and interest in and to the online retail brokerage accounts
maintained by Wit Group, in connection with Wit Group's agreement to no longer
engage in the online retail brokerage business; and
WHEREAS, Wit Group (as defined herein) wishes to offer, and E
Group (as defined herein) wishes for Wit Group to offer, existing and future
investment banking products and services to customers of E Group, upon the terms
and conditions hereof;
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Accounts" means those non-online brokerage accounts
maintained by Wit Group for natural persons whose individual net worth, or joint
net worth with that person's spouse, exceeds $5,000,000. As of the date of this
Agreement, Wit Group maintains approximately 300 of such accounts and hereby
covenants and agrees that it will not seek to expand this segment of its
business at any time during the term of this Agreement, and in any event shall
not at any time during the term of this Agreement maintain more than 500 of such
accounts. Wit Group shall use its reasonable efforts to cause any potential new
Accounts for natural persons to open online accounts at E Group and maintain
retail brokerage accounts with E Group.
(b) "Affiliate" of any Person means any other Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person. For purposes of this
definition, "control" (or "controlled," as the context may require) shall have
the meanings set forth in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.
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(1) Confidential treatment has been requested for the redacted portions of this
document, which are indicated by the symbol *. The confidential redacted
portions have been filed seperately with the Securities and Exchange
Commission.
(c) "Change of Control" means, with respect to any Person, (i)
the acquisition of such Person by another Person of a majority of the voting
interests in such first Person; (ii) the sale of all or substantially all of the
assets of such first Person; (iii) a merger, consolidation, or other business
combination pursuant to which the stockholders of such Person prior to the
effective date of such transaction have beneficial ownership of less than fifty
percent (50%) of the total combined voting power or economic interests of the
surviving or continuing entity immediately following such transaction; or (iv)
any other acquisition by another Person of primary control (as defined for
purposes of the above definition of Affiliate) of the first Person, including
through a proxy contest, proxy solicitation or the election or appointment of
directors nominated or designated by such other Person. For purposes of the
foregoing definition, a Person shall also include and refer separately to any
subsidiaries of such Person that taken together account for more than 50% of
such Person's broker-dealer or investment banking (including research) assets or
revenues on a consolidated basis.
(d) "Covered Issuer" means any issuer that (i) is organized in
the U.S., (ii) is not a registered or an unregistered investment company (other
than any particular registered closed-end investment company with respect to
which Wit Group is acting as an Underwriter or dealer *****, it being understood
that the foregoing exception is designed to provide exclusivity for registered
closed-end funds only on a case-by case-basis) or an investment fund, pooled
investment vehicle or trust; and (iii) is not a registered investment company or
is not an investment fund or a pooled investment vehicle managed by E Group or
Wit Group as a proprietary securities product.
(e) "Covered Offering" means the U.S. tranche of any private
placement of equity or equity derivative securities (including common stock,
preferred stock, convertible debt securities and warrants or other securities
convertible into or exchangeable for the same or other equity or equity
derivative securities) of a Covered Issuer.
(f) "Covered Securities" means all securities offered in
Covered Offerings that are allocated through Wit Group for qualified retail
investors.
(g) "E Group" means E*TRADE and/or its controlled Affiliates,
as the context may require.
(h) "Excluded Securities" means (i) securities that are
allocated by Wit Group for offering or sale to the Accounts and (ii) securities
that are allocated by Wit Group for offering or sale to employees, directors and
Affiliates of Wit Group.
(i) "Initial Public Offering" means an underwritten initial
public offering in the United States of common stock, ordinary shares, American
Depository Shares or the equivalent by whatever name, of a Covered Issuer that
is not a registered investment company or real estate investment trust, that is
offered and sold in an initial public offering in which the aggregate offering
price of the shares in the U.S. tranche without exercise of any overallotment
option exceeds $***** and is less than $*****.
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(j) "IPO Retail Shares" means Retail Securities consisting of
common stock, ordinary shares, American Depository Shares or the equivalent by
whatever name offered and sold in an Initial Public Offering.
(k) "Merger" means the merger of E*OFFERING Corp. into Wit
SoundView Corp. pursuant to the Merger Agreement.
(l) "Merger Agreement" means the Merger Agreement dated as of
May 14, 2000, by and among Wit, E*OFFERING Corp. and Wit SoundView Corporation.
(m) "NASD" means the National Association of Securities
Dealers, Inc.
(n) "Performance Breach" and "Performance Standards" shall
have the respective meanings assigned to such terms in Section 3 of this
Agreement.
(o) "Person" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization or other entity or organization.
(p) "Qualified Co-manager" means, with respect to any calendar
year, one of the ten highest ranked investment banks in the United States from
the previous calendar year, based on the total number of completed initial
public offerings in the United States (as published by Commscan or, if Commscan
ceases to publish such transaction statistics, Bloomberg, L.P. or another
nationally recognized financial research organization).
(q) "Registered Offering" means the U.S. tranche of any
initial public offering, follow-on or secondary offering or other offering of
equity or equity derivative securities (including common stock, preferred stock,
convertible debt securities and warrants or other securities convertible into or
exchangeable for the same or other equity or equity derivative securities) of a
Covered Issuer that is registered with the U.S. Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended.
(r) "Retail Securities" means all securities offered in a
Registered Offering that are allocated by Wit Grop for retail distribution,
which shall not in any event be less than 70% of the amount of "non-designated"
shares available to Wit Group in such Registered Offering; provided, however,
that any "non-designated" shares allocated by Wit Group that are Excluded
Securities shall not be deemed available to Wit Group for purposes of
determining compliance with Section 4(a) of this Agreement.
(s) "Start Date" means July 1, 2000.
(t) "Wit Group" means Wit and/or its controlled Affiliates, as
the context may require.
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2. RELATIONSHIP.
During the term of this Agreement, Wit Group, on a
non-exclusive basis (except as specifically provided in Section 3(a)(ii) below),
shall be entitled to offer securities of all kinds through E Group to customers
of E Group. E Group shall be entitled to reject any such securities at its sole
discretion; provided, however, that E Group may not offer for sale or sell any
securities being offered by Wit in an E Group rejected offering that are subject
to Wit Group's Exclusivity Right that are offered to it by another Person who is
participating in such rejected offering (an "Alternative Allocation"), provided,
further that E Group may accept an Alternative Allocation in an offering
rejected by E Group that is not subject to Wit Group's Exclusivity Right if the
relevant per unit selling concession or similar economic consideration payable
to E Group in such Alternative Allocation is greater than that which Wit Group
is prepared to pay after having been given an opportunity to match such selling
concession or other economic consideration. Beginning as early as practicable in
the course of each securities offering and placement, Wit Group shall consult
with E Group regarding E Group's interest in offering the securities to
customers of E Group. E Group shall endeavor to advise Wit Group within a
commercially reasonable time of its intention to accept or not accept any
offering. In any offering that E Group accepts that is not subject to Wit
Group's Exclusivity Right, E Group shall take from or through Wit Group a
mutually agreed upon proportion of the securities made available for
distribution by E Group hereunder for offering and sale to its customers.
3. EXCLUSIVITY.
(a) EXCLUSIVITY.
(i) WIT GROUP'S OBLIGATIONS. Subject to Section
15(a) and the provisions of this Section 3, Wit Group shall make
available for sale solely and exclusively through E Group to customers
of E Group all Retail Securities and all Covered Securities other than
Excluded Securities. Retail Securities offered through the auction
facility of Vostock shall be deemed to be offered solely and
exclusively through E Group to customers of E Group for purposes of the
preceding sentence and Section 4(a). Wit Group will coordinate and
cooperate with E Group such that an efficient and cost effective
process is established whereby all such Retail Securities and all
Covered Securities are made available to E Group for offer, sale and
delivery through E Group to customers of E Group. Wit Group and E Group
will evaluate the Vostock process to determine how best to provide
access to auctions conducted by Wit Group through Vostock with the
objective of providing a seemless interface to Vostock auctions to help
maximize the number of shares that can be distributed to E Group
customers. In addition, Wit Group and E Group will evaluate whether the
Vostock process is appropriate for initial public offerings and Wit
Group agrees that it will not use Vostock for initial public offerings
without E Group's consent.
(ii) E GROUP'S OBLIGATIONS. Subject to Section
15(b) and the provi sions of this Section 3, so long as Wit Group is in
compliance with Section 3(a)(i), a Performance Failure which results in
the termination of this provision has not occurred
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and provided that Wit Group is not then in default of any of its
material obligations under this Agreement in each Registered Offering
and in each Covered Offering, E Group shall only offer to its United
States retail customers Retail Securities and shall not offer to its
United States customers any Retail Securities in a Registered Offering
made available by any Person other than Wit Group in any Registered
Offering or Covered Offering (the "Exclusivity Right"); it being
understood that, notwithstanding anything herein to the contrary, E
Group shall be permitted to offer to its United States customers any
and all non-equity or non-equity-linked securities (such as debt
securities) and equity or equity-linked securities of companies
located outside the United States to those of its customers located
either within or outside of the United States.
(iii) DURATION OF EXCLUSIVITY RIGHT. As a result
of the foregoing and subject to the other express provisions of this
Agreement, for the first three years following the Start Date, the
Exclusivity Right shall be in existence and, upon the achievement of
the applicable Performance Standards set forth below, the Exclusivity
Right will be extended through the balance of the term hereof.
(b) PERFORMANCE STANDARDS. In order to maintain the above
Exclusivity Right, Wit Group shall be required to satisfy the following
performance requirements (the "Performance Standards") beginning with the
second anniversary of the Start Date occurs.
(i) SIZE OF ALLOCATIONS IN LEAD/CO-MANAGED IPOS.
Solely with respect to those Initial Public Offerings in which Wit
Group is a lead managing or co-managing underwriter and which are not
rejected by E Group (provided that all Initial Public Offerings which
have a Qualified Co-manager shall be deemed accepted by E Group) for
distribution to customers of E Group, the amount of IPO Retail Shares
allocated or made available for sale by E Group to its customers
(before giving effect to any over-allotment option) must in the
aggregate be (A) at least *****% of the total number of shares (before
giving effect to any over-allotment option) offered in all such Initial
Public Offerings completed during the entire ***** month-period
commencing with the ***** of the Start Date, and (B) at least *****% of
the total number of shares (before giving effect to any over-allotment
option) offered in all such Initial Public Offerings completed during
the entire***** month-period commencing with the ***** of the Start
Date.
(ii) MARKET SHARE IN LEAD/CO-MANAGED IPOS. Wit
Group must be a lead managing or co-managing underwriter of (A) at
least *****% of all Initial Public Offerings completed during the
entire *****-month period commencing with the ***** of the Start Date
(based on market share and transaction statistics as published by
Commscan or, if Commscan ceases to publish such market shares and
transaction statistics, Bloomberg, L.P. or another nationally
recognized financial research organization) and (B) at least *****% of
all Initial Public Offerings completed during the entire *****-month
period commencing with the ***** of Start Date (based on market share
and transaction statistics as published by Commscan or, if Commscan
ceases to publish
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such market shares and transaction statistics, Bloomberg, L.P. or
another nationally recognized financial research organization).
(iii) MARKET SHARE IN SYNDICATE PARTICIPATION.
After excluding all Initial Public Offerings in which Wit Group
participates as a lead managing or co-managing underwriter, Wit Group
must be an underwriter, dealer or other member of the selling group of
(A) at least *****% of all Initial Public Offerings completed during
the entire *****-month period commencing with the ***** of the Start
Date (based on market share and transaction statistics as published by
Commscan or, if Commscan ceases to publish such market share and
transaction statistics, Bloomberg, L.P. or another nationally
recognized financial research organization) (the condition set forth in
this clause (A), together with the conditions set forth in Sections
3(b)(i)(A) and 3(b)(ii)(A), being collectively referred to as the "Year
3 Standards"), and (B) at least *****% of all Initial Public Offerings
completed during the entire ***** month period commencing with the
***** of the Start Date (based on market share and transaction
statistics as published by Commscan or, if Commscan ceases to publish
such market share and transaction statistics, Bloomberg, L.P. or
another nationally recognized financial research organization) (the
condition set forth in this clause (B), together with the conditions
set forth in Sections 3(b)(i)(B) and 3(b)(ii)(B), being collectively
referred to as the "Year 4 Standards").
(c) PERFORMANCE FAILURE. In the event that Wit Group fails to
satisfy the Year 3 Standards, then Wit Group shall be in default of the
requirements for extending the Exclusivity Right up to the fourth anniversary of
the Start Date and the Exclusivity Right shall not apply after the third
anniversary of the Start Date if E Group gives notice of termination of the
Exclusivity Right to Wit Group. In the event that the Exclusivity Right is
extended up to the fourth anniversary of the Start Date but Wit Group fails to
satisfy the Year 4 Standards, then Wit Group shall be in default of the
requirements for extending the Exclusivity Right up to the fifth anniversary of
the Start Date and the Exclusivity Right shall not apply after the fourth
anniversary of the Start Date if E Group gives notice of termination of the
Exclusivity Right to Wit Group. If at any time the Exclusivity Right is no
longer in effect, Wit Group shall thereafter not be obligated to continue to
offer all Retail Securities solely and exclusively for sale to customers of E
Group through E Group. For purposes hereof, a failure by Wit Group to satisfy
either the Year 3 Standards or the Year 4 Standards shall be deemed to be a
"Performance Failure".
(d) NON-COMPETITION.
(i) At all times that the Exclusivity Right is
in effect and E Group is not then in default of any of its material
obligations under this Agreement in any manner that would permit
termination of this Agreement by Wit pursuant to Section 18(c), Wit
shall not, and shall not permit any of its subsidiaries to:
(A) enter into or engage, directly or
indirectly, in the business of operating a retail securities brokerage
business in the United States, other than with respect to the Accounts;
or
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(B) solicit retail customers, other than the
Accounts, in competition with E Group or any of its Affiliates in the
business of operating a retail securities brokerage business in the
United States.
(ii) At all times that the Exclusivity Right is
in effect and Wit Group is not then in default of any of its material
obligations under this Agreement in any manner that would permit
termination of this Agreement by E*TRADE pursuant to Section 18(c),
E*TRADE shall not, and shall not permit any of its subsidiaries to,
enter into or engage, directly or indirectly, in the investment banking
business in the United States with respect to those investment banking
activities of E Group that are restricted by the Exclusivity Right.
(iii) During the term of this Agreement and for a
period of twelve months thereafter, Wit Group will not solicit any
employee of E Group for the purpose of offering employment to such
Person and E Group will not solicit any employee of Wit Group for the
purposes of offering employment to such person. The foregoing shall not
prohibit Wit Group or E Group from offering employment to or hiring any
employee responding to a newspaper or other general solicitation.
(iv) Without limitation, the parties agree and
intend that the covenants contained in this Section 3(d) shall be
deemed to be a series of separate covenants and agreements, one for
each and every political subdivision of each jurisdiction. If, in any
judicial proceeding, a court shall refuse to enforce in such action any
of the separate covenants deemed included herein, then at the option of
the party hereto entitled to the benefit of such covenants,
wholly-unenforceable covenants or components thereof shall be deemed
eliminated from the provisions hereof for the purpose of such
proceeding to the extent necessary to permit the remaining separate
covenants to be enforced in such a proceeding. The parties intend to
have covenants enforceable to the fullest extent of the law as to
scope, time and geography.
(v) The parties agree that due to the nature of
the services and capabilities of the parties, there can be no adequate
remedy at law for any breach of the obligations of the other party
under this Section 3(d) hereunder, that any such breach by one party
may allow the other party hereto and/or third parties to unfairly
compete with the breaching party and its affiliates resulting in
irreparable harm to the other party and therefore, that upon any such
breach or any threat thereof, the other party and its affiliates shall
be entitled to appropriate equitable relief in addition to whatever
remedies it might have at law and attorneys' fees and costs of suit, in
connection with any breach, or any enforcement, of the breaching
parties obligations pursuant to this Section 3(d).
(vi) Each party acknowledges, and represents and
warrants to the other, that its covenants in this Section 3(d) are
reasonably necessary for the protection of the other party's interests
under this Agreement and are not unduly restrictive upon it or any of
its Affiliates.
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(vii) Each Party shall notify the other of any
breach or alleged breach by the other of any provision of this Section
3(d).
(e) Additional Consideration. At or prior to the Closing under
the Account Transfer Agreement, Wit Group shall issue to E*TRADE, (i) four
million twenty-five thousand nine hundred and forty-eight (4,025,948) shares
(the "Alliance Shares") of Wit common stock, par value $0.01 per share ("Common
Stock") and (ii) a warrant issued to E Group in the form attached hereto as
Annex A (the "Warrant") to purchase up to an aggregate of two million
(2,000,000) shares of Common Stock, as further consideration, together with the
transactions contemplated by the Account Transfer Agreement, for E Group
entering into the strategic alliance contemplated hereby (including the
potential extension of Exclusivity Rights) and terminating the existing Letter
of Intent referred to below. Certificates, in form reasonably satisfactory to
E*TRADE, representing the Alliance Shares shall be delivered to E*TRADE at or
prior to the Closing under the Account Transfer Agreement. The Alliance Shares
and the shares issuable upon exercise of the Warrant, in each case upon issuance
as provided herein, shall be (i) validly issued, fully paid, non-assessable and
free and clear of any liens, charges, preemptive rights or other encumbrances or
restrictions and (ii) issued in compliance with all applicable laws.
The Alliance Shares shall be subject to prohibitions on
transfer for a three-year period from the date of the Closing under the Merger
Agreement, and each certificate for such Alliance Shares shall be subject to a
restrictive legend substantially in the form set forth in Exhibit A to the
Merger Agreement providing for a thirty-six month prohibition on transfer.
4. SHARE ALLOCATION.
(a) WIT GROUP SHARE ALLOCATION. Wit Group agrees that (i) in
each and every Registered Offering that Wit Group participates in as an
underwriter, placement agent, broker-dealer, selling group member, distributor
or otherwise, the amount of Retail Securities in such offering that shall be
made available to E Group shall be ***** percent (*****%) of the total Retail
Securities (other than Excluded Securities) in such offering and (ii) in each
and every Registered Offering that Wit Group participates in as an underwriter,
placement agent, broker-dealer, selling group member, distributor or otherwise,
the amount of "non-designated" shares in such offering that shall be made
available to E Group shall be at least ***** percent (*****%) of the total of
such "non-designated" shares available to Wit Group in such offering; provided,
however, that any "non-designated" shares allocated by Wit Group that are
Excluded Securities shall not be deemed available to Wit Group for purposes of
determining compliance with the preceding percentage threshold. For purposes of
this Agreement, "non-designated" shares shall mean those shares that are not
specifically designated for allocation to institutional accounts or other
accounts by the lead managing underwriter or placement agent.
Each of the allocation requirements set forth above may only
be waived by the written approval of E Group or the member of the commitment
committee of Wit Group
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designated by E Group. E*TRADE shall be entitled to reject or not accept
participation in any equity offering at its sole discretion.
(b) E GROUP'S ALLOCATIONS IN LEAD MANAGED PUBLIC OFFERINGS.
Solely with respect to Registered Offerings in which Wit Group is the lead
managing underwriter and in which shares are not rejected by E Group for
distribution to customers of E Group, the amount of equity securities allocated
or made available to E Group in each such offering must be at least *****% of
the total amount of securities offered in each such offering.
(c) E GROUP CUSTOMER ALLOCATION. E Group shall establish
commercially reasonable criteria for the allocation to retail brokerage accounts
of securities made available by Wit Group to E Group in any offerings under this
Agreement. E Group shall undertake commercially reasonable steps to maximize
share retention of Registered Securities by its retail customers for at least
thirty (30) days, subject to applicable regulatory requirements.
(d) PRIVATE PLACEMENTS. The parties hereto shall negotiate in
good faith the terms and conditions under which Wit Group shall make available
Covered Securities for offering by E Group in private placements, and such terms
and conditions shall be evidenced in an addendum to this Agreement. Such
addendum shall include matters such as identifying which types of Covered
Offerings are appropriate or eligible for offering to qualified retail investor
customers of E Group, the methods of qualifying customers for particular Covered
Offerings, the methods for determining the amount of Covered Securities in such
offerings that should be made available to qualified retail investors, the
proportion thereof that should be made available for customers of E Group and
the compensatory arrangements for E Group's participation in Covered Offerings,
and other matters relating to such offerings. To the extent that the parties are
unable to agree upon the terms and conditions of such addendum, any such
disagreements shall be resolved by the Committee (as defined in Section 16(c)).
5. RETAIL ACCOUNT INQUIRIES; SHARE PROGRAMS.
(a) ACCOUNT INQUIRIES. Wit Group shall promptly direct to E
Group all inquiries with respect to Retail Securities or retail accounts (other
than Accounts) that Wit Group receives, either directly or indirectly.
(b) SHARE PROGRAMS. E Group shall pay to Wit Group, within 30
days following the end of each calendar quarter during the term of this
Agreement, the Program Fee described below for each new retail brokerage account
opened at E Group by a retail customer for the purpose of participating in an
"affinity" or "directed" share program, or similar such program, administered by
Wit Group, including without limitation, (i) Wit Group's electronic Affinity
Share Program ("eASP") and (ii) Wit Group's electronic Directed Share Program
("eDSP"). The "Program Fee" shall be $***** for each such new account opened at
any time prior to the first anniversary of the Merger, and shall be a mutually
agreed upon comparable amounts paid by E Group to other Persons for similar
customer account acquisitions executed by E Group over the then preceding
12-month period. E Group and Wit Group shall negotiate in good faith on an
annual basis to determine the amount of the Program Fee prior to each yearly
anniversary of the
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Merger, and the amount so determined shall be in effect thereafter until the
next succeeding anniversary of the Merger. E Group shall be entitled to reject
or not accept any such new account at its sole discretion. Notwithstanding
Section 6 hereof, Wit Group shall pay to E Group ***** percent (*****%) of the
selling concession in connection with the Retail Securities allocated to any
eASP account or eDSP account.
6. SELLING CONCESSIONS.
(a) LEAD/CO-MANAGED DEALS. Subject to the requirements of NASD
Rule 2710 (Corporate Finance Rule), in connection with all public offerings in
which Wit Group participates as a lead managing underwriter or co-managing
underwriter, E Group, on the one hand, and Wit Group, on the other hand, will
share the dealer selling concession otherwise allocable in respect of such
offerings as follows: (i) E Group will receive ***** percent (*****%) of such
concession on offerings in which the number of shares allocated or made
available for sale through E Group to its customers in connection with the
offering is ***** percent (*****%) or less of the total number of shares (before
giving effect to any over-allotment option) offered to the public in such
offering; (ii) E Group will receive ***** percent (*****%) of such concession on
offerings in which the number of shares allocated or made available for sale
through E Group to its customers in connection with the offering is greater than
***** percent (*****%), but less than *****percent (*****%), of the total number
of shares (before giving effect to any over-allotment option) offered to the
public in such offering and (iii) E Group will receive ***** percent (*****%) of
such concession on offerings in which the number of shares allocated or made
available for sale through E Group pursuant to the offering is equal to or
greater than ***** percent (*****%) of the total number of shares (before giving
effect to any over-allotment option) offered to the public in such offering.
(b) MINIMUM PAYMENTS ON CO-MANAGED DEALS. With respect to each
and every Registered Offering in which Wit Group is a co-managing underwriter,
to the extent the amount of Retail Securities allocated or made available for
sale by E Group to its customers does not in the aggregate equal at least
*****%, *****%, and *****% of the total amount of all securities offered in each
such public offering during any of the first, second or third *****-month
periods following the Start Date (the amount of securities representing such
shortfall, the "Allocation Deficiency"), Wit Group shall pay to E Group an
amount equal to the portion of the dealer selling concession which would have
been otherwise allocable under Section 6(a) above with respect to the Allocation
Deficiency. All such payments shall be made on a quarterly basis, by wire
transfer of immediately available funds to an account or accounts designated by
E Group to Wit Group, within 15 days after the end of the calendar quarter in
which the obligation to make such payments arise (or in the case of the last
quarter or portion thereof during the term of this Agreement, within 15 days
after the expiration or termination of this Agreement).
(c) OTHER EQUITY PUBLIC OFFERINGS. Subject to the requirements
of NASD Rule 2710 (Corporate Finance Rule), in connection with all Registered
Offerings in which Wit Group participates as an underwriter, dealer or a member
of the selling group, but is not a lead managing underwriter or co-managing
underwriter, E Group, on the one hand, and Wit Group, on the other hand, will
share the dealer selling concession otherwise allocable to Wit Group in
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respect of such public offerings as follows: (i) E Group will receive
*****percent (*****%) of such concession on offerings in which the number of
shares allocated or made available for sale through E Group to its customers in
connection with the offering is less than ***** (*****) shares and (ii) E Group
will receive *****percent (*****%) of such concession on offerings in which the
number of shares allocated or made available for sale through E Group to its
customers in connection with the offering is greater than ***** (*****) shares.
(d) OTHER PUBLIC OFFERINGS. Subject, where applicable, to the
requirements of NASD Rule 2710 (Corporate Finance Rule), in connection with all
other public offerings in which Wit Group participates as an underwriter, dealer
or other member of the selling group, but is not the lead managing or
co-managing underwriter, E Group and Wit Group shall negotiate the selling
concession or similar payment in connection with any such offering on a
class-by-class or case-by-case basis.
(e) TIME OF PAYMENT. The foregoing selling concession and
comparable payments shall be paid to E Group at the same time as paid to other
selling group participants, and as consistent with industry practice, except as
provided in Section 6(b) of this Agreement.
7. TRADING FLOW.
(a) LEAD MANAGED OFFERINGS. For any Registered Offering in
which Wit Group is a lead managing underwriter, E Group shall use commercially
reasonable efforts to direct all secondary market orders with respect to the
particular security offered in such offering to Wit Group, or to a broker-dealer
specified by Wit Group, for a period of ***** months from the date on which such
public offering commences trading. Wit Group shall pay to E Group a market rate
trading flow rebate (currently $***** per share, to be adjusted at least
annually to reflect adjustments to prevailing market rate) for each share so
allocated. Notwithstanding anything herein to the contrary, E Group and Wit
Group understand and agree that no provision of this Agreement shall restrict
the other, in its reasonable good faith judgment, from taking, without liability
to the other, any action required by any rule or regulation of the SEC, any
self-regulatory organization or any governmental entity to which it is subject,
or from complying with any fiduciary duties to its customers; provided that
prior to taking such action, it shall, to the extent reasonably feasible in
light of the then circumstances, notify the other in writing thereof and consult
with the other regarding the steps to be taken to ensure compliance with such
rule or regulation.
(b) CO-MANAGED OFFERINGS. For any Registered Offering in
which Wit Group is a co-managing underwriter but not a lead managing
underwriter, E Group shall use commercially reasonable efforts to direct all
secondary market orders with respect to the particular security offered in
such public offering to Wit Group, or to a broker-dealer specified by Wit
Group, for a period of 6 months from the date on which such public offering
commences trading. Notwithstanding anything herein to the contrary, E Group
and Wit Group understand and agree that no provision of this Agreement shall
restrict the other, in its reasonable good faith judgment, from taking,
without liability to the other, any action required by any rule or regulation
of the SEC, any self-regulatory organization or any governmental entity to
which it is subject, or from
11
complying with any fiduciary duties to its customers; provided that prior to
taking such action, it shall, to the extent reasonably feasible in light of
the then circumstances, notify the other in writing thereof and consult with
the other regarding the steps to be taken to ensure compliance with such rule
or regulation. Wit Group shall pay to E Group, in addition to the selling
concession paid pursuant to Section 6 hereof, an incremental *****percent
(*****%) of the selling concession that would otherwise be attributable to
such allocated securities.
8. SALES AND MARKETING; PRIORITY STATUS.
(a) GENERAL. Wit Group and E Group shall each create and
develop advertising and marketing products and materials, and shall engage in
mutually agreed upon co-branding activities, to promote the strategic alliance
between the parties. The parties hereto shall negotiate in good faith the terms
and conditions of an agreement covering advertising and marketing, web site
presentation, potential new product development and customer presentation, all
as related to the ongoing business activities between the parties contemplated
by this Agreement. Following execution of this Agreement, the parties shall
designate appropriate representatives of their organizations to engage in such
negotiations and to establish a timetable therefor; it being the intent of the
parties to enter into such agreement as soon as reasonably practicable. Wit
Group and E Group shall conduct their joint advertising and marketing activities
in coordination with and subject to the approval of the other party and in a
manner consistent with applicable NASD rules, securities regulations and other
applicable laws.
(b) APPROVALS. Any use by Wit Group of any E Group trademark,
license or tradename in any sales, marketing or advertising-related materials,
including without limitation, press releases, marketing literature, print
advertisements and commercials, must be approved by the Chief Marketing Officer
of E*TRADE or such other person as E*TRADE duly authorizes and designates to Wit
Group in writing (which approval shall not be unreasonably withheld). Any use by
E Group of any Wit Group trademark, license or tradename in any sales, marketing
or advertising-related materials, including without limitation, press releases,
marketing literature, print advertisements and commercials, must be approved by
the [Senior Vice President of Marketing] of Wit or such other person as Wit duly
authorizes and designates to E Group in writing (which approval shall not be
unreasonably withheld). Wit Group and E Group shall use commercially reasonable
efforts to implement and maintain sales support capability for the purpose of
offering and selling Wit Group's products and services to E Group's customers.
(c) PRIORITY STATUS. E Group agrees that with respect to
investment funds managed by Wit Group or one of its Affiliates, it shall provide
a priority status for such products compared to other competitor's products that
E Group is distributing at the same time.
9. ACCOUNT DATA
(a) ACCESS TO DATA. Prior to the occurrence of a Performance
Failure or any other default by Wit Group of its obligations under this
Agreement and subject to applicable law, regulatory requirements and E*TRADE's
customer privacy policies, E Group shall share demand data, trading data and
other customer account data as shall be determined by the parities
12
for all retail customer accounts to which shares are allocated form Wit Group.
Wit Group shall share such share demand data, trading data and other customer
account data as shall be determined by the parties. Any such data shall be made
available in an aggregated format such that individual account information is
not made available to the other party.
(b) PRIVACY OF CONSUMER FINANCIAL INFORMATION. Wit Group and E
Group are mindful of the interests of customers and consumers in privacy of
their financial information. Accordingly, performance of the parties obligations
under this Agreement shall be made in conformity with Regulation S-P of the SEC
and other applicable privacy regulations. The parties agree that it is their
intent in the performance of their obligations under this Agreement and in the
sharing of customer and consumer financial information to utilize the exceptions
for sharing of information afforded by sections 9, 10 and 11 of Regulation S-P
as proposed, or such similar or replacement sections as may be included in the
final regulation.
10. RESEARCH PRODUCTS
Wit Group shall provide any and all research products in
connection with the operation of the underwriting, investment banking and
financial services business of Wit Group (to a comparable extent as the written
research products provided to Wit Group's institutional clients, subject to the
last sentence of this paragraph) to E Group for the benefit and use by the
retail customers of E Group, subject to E Group's reasonable discretion and at
no cost or expense to E Group or its Affiliates or such retail customers. E
Group and Wit Group will cooperate with each other to develop promptly after the
closing of the Merger the regulatory and technological processes and mechanisms
for providing such research to retail customers of E Group at the same time as
it is provided to institutional clients of Wit Group, reflecting the parties'
intent to place retail and institutional recipients of such research products in
the same position from a time perspective. Wit Group shall cooperate with E
Group to develop such research products for the tailored use by retail
customers, making such adjustments and modifications as are reasonably
necessary. Wit Group shall not distribute any such research products to
Competitors of E Group without E*TRADE's prior written consent. "Competitors"
shall mean direct competitors in the online brokerage industry including, but
not limited to, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxx, Ameritrade and TD Waterhouse. Wit
Group shall be able to distribute its research products through all other
distribution channels and independent sources of research content; provided,
however, that in providing any such research products, Wit Group shall work with
E Group to develop differences in the delivery of content thereof in order to
provide the customers of E Group with a meaningful advantage.
11. COMMITMENT COMMITTEES.
Prior to the expiration of the Exclusivity Right and provided
that E Group is not then in default of any of its material obligations under
this Agreement, subject to appropriate confidentiality provisions, E Group shall
be entitled to participate in all meetings of Wit Group's commitment committees
and shall receive all notices and materials provided to members of such
committees at the same time as they are provided to other members of such
committees.
13
12. BOARD REPRESENTATION.
Prior to the occurrence of a Change of Control of E*TRADE and
provided that E Group is not then in default of any its material obligations
under this Agreement, and that either (a) E*TRADE continues to own at least 50%
of the sum of (i) the number of shares of Common Stock of Wit (adjusted for
stock splits and similar events) that it receives pursuant to the Merger and
(ii) the Alliance Shares it receives pursuant to the terms of this Agreement or
(b) the Exclusivity Right is then in effect; (i) E Group shall be entitled to
designate for nomination one representative of E Group reasonably acceptable to
Wit Group as a director of Wit Group (and Wit Group and its Board of Directors
shall recommend and nominate for election of, and solicit votes in favor of
election of, such nominee to the Board) and (ii) General Atlantic Partners, LLC]
shall be entitled to designate for nomination one representative of General
Atlantic Partners, LLC reasonably acceptable to Wit Group as a director of Wit
Group (and Wit Group and its Board of Directors shall recommend and nominate for
election of, and solicit votes in favor of election of, such nominee to the
Board). It shall be deemed reasonably acceptable to Wit Group for E Group and
General Atlantic Partners, LLC to designate for nomination the chief executive
officer of E Group and a managing member of General Atlantic Partners, LLC,
respectively. Wit Group shall use its reasonable best efforts to cause such
designees to be elected to its Board of Directors.
13. INTERNATIONAL ALLIANCE.
Wit Group and E Group shall use commercially reasonable
efforts to negotiate an extension of the strategic alliance contemplated by this
Agreement to the comparable activities of Wit Group and E Group in countries
other than the United States in which they now or in the future might operate.
In addition, E Group shall make a good faith effort to include Wit Group in
offerings of issuers organized outside the United States with respect to
securities offered and sold within the United States if the relevant per unit
selling concession or similar economic consideration payable to E Group (after
the potential inclusion of Wit Group in a particular offering) with respect to
its United States sales is no less than that otherwise available to E Group.
Notwithstanding the foregoing, this Agreement shall not prohibit E Group from
either directly or indirectly engaging in such transactions.
14. BUSINESS NAME.
Simultaneously with, or immediately following, the closing of
the Merger, Wit shall, and shall cause Wit SoundView Corp., as the successor to
E*OFFERING Corp. to unconditionally and irrevocably (i) forever set aside, and
permanently discontinue any and all use in and to (and shall not assign,
transfer or deliver to any third party, other than E*TRADE) the "E*OFFERING"
corporate and trade name, and the E*OFFERING logo, or any part or combination of
the "E*OFFERING" corporate and trade name, and the E*OFFERING logo, (ii) forever
set aside, and permanently discontinue any and all use in and to, (and shall not
assign, transfer or deliver to any third party, other than E*TRADE) the
E*OFFERING website address, and (iii) destroy all documents, business stationery
and cards, marketing literature, print advertisements, recordings and other
physical indicia or embodiments of the "E*OFFERING"
14
name or logo (provided that Wit Group shall be entitled to retain a copy of all
books and records necessary for tax, accounting and corporate recordkeeping for
non-commercial purposes).
15. CHANGE IN CONTROL.
(a) CHANGE IN CONTROL OF E*TRADE. In the event of any Change
in Control of E*TRADE during any period in which the Exclusivity Right is in
effect and the Person who acquires control of E*TRADE or is its successor either
does not assume the obligations of E Group under this Agreement on behalf of E
Group or its successor (all such Persons and successors collectively being
referred to as the "E Group Successor") or materially breaches such Exclusivity
Right, (i) Wit Group shall continue to have the right (on a non-exclusive basis)
to provide to E Group securities of all types for offering by E Group to its
retail customers under the terms of this Agreement for a period of two years
following such Change of Control as if the E Group Successor were E Group, but
shall no longer be obligated to offer all of its Retail Securities (other than
Excluded Securities) exclusively to customers of E Group and will no longer be
the exclusive provider of Retail Securities to customers the Successor; (ii) E
Group or the E Group Successor shall pay to Wit the E Group Liquidated Damages
Amount as liquidated damages and not as a penalty, in either (A) United States
dollars or (B), subject to the following sentence, at its option, in the same
nature, form and value as the consideration received by E*TRADE in the Change of
Control transaction, if any, and (iii) Wit shall be entitled to transfer to it,
free and clear of all liens, encumbrances and claims, title to all shares of
common stock of Wit remaining at such time in the escrow established pursuant to
Section 4.2 of the Merger Agreement. In lieu of accepting the same consideration
that E-TRADE received in such Change in Control transaction, Wit Group may elect
to receive up to that number of Wit Shares then held by E Group equal in value
to the E Group Liquidated Damages. Any consideration other than cash must be
freely transferable, free and clear of all liens, encumbrances, restrictions and
claims, so that Wit Group may immediately convert such consideration (other than
Wit Shares) into cash. Value for such consideration shall be the Closing price
for the primary trading session on the primary market for such security on the
last business day immediately preceding payment to Wit Group; PROVIDED, HOWEVER,
that the value per share of Wit Common Stock shall not be less than $10.25 (as
adjusted for stock splits and similar changes in capitalization). The option of
paying the E Group Liquidated Damages Amount in other than cash applies only
when such consideration involves fully registered and freely marketable common
or preferred stock. The "E Group Liquidated Damages Amount" means the sum of
$160,000,000, reduced by $5,000,000 at the end of each calendar month,
commencing the month in which the Merger Closing occurs and continuing until the
E group Liquidated Damages Amount equals $100,000,000.
(b) CHANGE IN CONTROL OF WIT. In the event of a Change in
Control of Wit during any period in which the exclusivity rights of E Group are
in effect and the Person who acquires control of Wit or is its successor either
does not assume the obligations of Wit Group under this Agreement on behalf of
Wit Group or its successor (all such Persons and successors collectively being
referred to as the "Wit Group Successor") or materially breaches such
Exclusivity Rights under this Agreement (i) Wit or the Wit Group Successor shall
continue to offer (on a non-exclusive basis) securities to customers of E Group
through E Group, and E Group shall no
15
longer be obligated to utilize the Wit Group Successor as its exclusive provider
of Retail Securities for offering and sale to customers; and (ii) the Wit Group
Successor shall pay to E*TRADE the Wit Group Liquidated Damages Amount as
liquidated damages and not as a penalty, in either (A) United States dollars or
(B), subject to the following sentence, at its option, in the same nature, form
and value as the consideration received by Wit in the Change in Control
transaction, if any, and (iii) E*TRADE shall be entitled to transfer to it, free
and clear of all liens, encumbrances and claims, of title to it to all shares of
Common Stock of Wit that it beneficially owns remaining at such time in the
escrow established pursuant to Section 4.2 of the Merger Agreement. Any
consideration other than cash must be freely transferable, free and clear of all
liens, encumbrances, restrictions and claims, so that E Group may immediately
convert such consideration into cash. Value for such consideration shall be the
closing price for the primary trading session on the primary market for such
security on the last business day immediately preceding payment to E Group. The
option of paying the Wit Group Liquidated Damages Amount in other than cash
applies only when such consideration involves fully registered and freely
marketable common or preferred stock. The "Wit Group Liquidated Damages Amount"
means the sum of $75,000,000, reduced by $2,083,333 at the end of each calendar
month, commencing the month in which the Merger Closing occurs and continuing
until the Wit Group Liquidated Damages Amount equals $50,000,000.
(c) Payment of the E Group Liquidated Damages Amount and the
transfer of the shares of Wit common stock referred to in Section 15(a)(iii)
shall constitute the sole and exclusive remedy of Wit with respect to any Change
in Control of E*TRADE or its subsidiaries. Payment of the Wit Group Liquidated
Damages Amount shall constitute the sole and exclusive remedy of E*TRADE with
respect to any Change in control of Wit Group or its subsidiaries. The parties
hereto expressly agree that they have arrived at the foregoing amounts as
reasonable estimates of their total damages in light of their inability to agree
on the amount of actual damages each would incur in the event of a breach or
non-assumption by the other party following a Change in Control of such other
party and their agreement that it would be extremely difficult to determine
such damages at the time in light of the consideration being paid in connection
with this Agreement, the scope of their business relationship, the exclusive
nature of a portion of their business relationship, the creation of goodwill and
the dynamic nature of the businesses they are in.
16. DISPUTE RESOLUTION.
(a) DISPUTES. If despite the use of all reasonable efforts by
Wit Group and E Group, they are unable to resolve any disagreement, dispute,
controversy or claim arising under or related to this Agreement (a "Dispute")
under or regarding this Agreement relating to the Strategic Alliance, either Wit
Group or E Group may, at any time and from time to time, provide written notice
to that effect to the other with a reasonably complete description of the nature
of the Dispute, whereupon the Chief Executive Officers of each of Wit and
E*TRADE shall themselves use all commercially reasonable efforts to reach
agreement or resolve such Dispute. If such Dispute remains unresolved after the
30th day after receipt by Wit or E*TRADE of such notice, either party may refer
such Dispute to binding arbitration pursuant to Section 16(b). In the case of a
Dispute consisting of failure to reach agreement on a Dispute, the
16
arbitrator(s) shall select from among the courses of action or inaction proposed
by each party that course of action which the arbitrator(s) believe would best
further the objective of this Agreement. In the case of a Dispute over the
interpretation of this Agreement, the arbitrator(s) shall rule in accordance
with his interpretation thereof under applicable law.
(b) ARBITRATION. All Disputes and all other disputes and
controversies of every kind and nature between the parties hereto arising out of
or in connection with this Agreement as to the construction, validity,
interpretation or meaning, performance, non-performance, enforcement,
operation, or breach, shall, after the procedures required by Section 16(a)
above, be submitted to arbitration pursuant to the following procedures in
accordance with the provisions of the NASD Code of Arbitration Procedures.
(c) DISPUTES OVER THE DETAILS OF IMPLEMENTATION. The Parties
recognize that the precise terms of the contemplated marketing agreement
referred to in Section 8(a) and the basis of exclusivity for private placements
referred to in Section 4(e) have not been determined, and that in negotiating
such terms disagreements will inevitably occur. To assure that these
disagreements do not delay or hinder the strategic alliance, the parties agree
that any disagreement over the details of negotiations of such matters shall be
decided by a committee initially consisting of Xxxxxxxx X. Xxxxxxxx, the
designee of E*TRADE, Xxxxxx X. Xxxxxxxxxx, the designee of Wit Group and Xxxxxxx
Xxxx, the designee of General Atlantic Partners, LLC (the Committee"). All
decisions of this Committee shall be by majority vote and shall be binding on
each party; provided, however, that if there is a change in the identity of the
Wit Group representative that is not consented to by the E Group representative,
then all decisions of the Committee must be unanimous. Either party may bring a
disagreement to the Committee and the Committee shall meet in person or by
telephone to resolve the disagreement within ten business days of written
notification to the members of the Committee that a dispute exists. All
decisions must be made within ten business days of such meeting.
Each party recognizes that the members of the Committee are
subject to multiple conflicts of interest, and each hereby waives such conflicts
and agrees to indemnify each member to the fullest extent permitted by Delaware
law as if such member were acting as a director of such party at all times. If
any of the designated parties resigns from or is otherwise unable to serve on
the Committee, the remaining members of the Committee shall choose a successor
from a list of three names submitted by the employer of the member that is no
longer serving, at least one of whom must be the CEO or comparable executive for
that entity.
17. SUBLEASE.
E Group and Wit shall enter into non-binding negotiations for
the possible sublease of a mutually agreed portion of the property located at
000 Xxxxxxxx, Xxx Xxxxxxxxx, XX 00000.
18. TERM; TERMINATION.
17
(a) TERM. The term of this Agreement shall remain in effect
until the fifth anniversary of the Start Date (the "Initial Termination Date"),
unless terminated earlier in accordance with the terms of this Agreement. On or
after the fourth anniversary of the closing of the Merger, the Agreement shall
be automatically renewed on a daily basis unless and until nine (9) months
notice of cancellation is provided by either party to the other party. Notice of
cancellation pursuant to the preceding sentence may be given at any time during
the term of this Agreement. To the extent that Wit Group substantially exceeds
the Performance Standards, it is the parties' mutual intention to negotiate in
good faith to extend the term of the Agreement, taking into account market
conditions and the prior operating experience under the Agreement; provided,
however, that neither party is hereby bound or obligated to enter into such an
exten sion.
(b) AUTOMATIC TERMINATION. This Agreement shall be
automatically terminated if the either the Merger Agreement or the Account
Transfer Agreement is terminated in accordance with their respective terms. In
the event of such early termination of this Agreement, the rights and
obligations of the respective parties under this Agreement shall terminate and
be of no further force or effect.
(c) TERMINATION FOR BREACH. This Agreement may be terminated
at any time by (i) Wit Group, on the one hand, or by E*TRADE on the other hand,
if there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of E Group (in the case of termination
by Wit Group) or on the part of Wit Group (in the case of termination by E
Group), which breach shall not have been cured within thirty (30) business days
following receipt by the breaching party of written notice of such breach from
the other and a determination through the last step of the dispute resolution
process taken that such party has materially breached the Agreement and has not
cured such breach or (ii) by Wit, on the one hand, or by E*TRADE on the other
hand in the event that the NASD, the Securities Exchange Commission or any other
regulatory body, places a material restriction on the business of the other that
materially limits the other's ability to perform its obligations hereunder.
19. LETTER OF INTENT.
The binding letter of intent dated January 12, 2000 between
E*OFFERING Corp. and E*TRADE (the "Letter of Intent") shall be deemed terminated
and superceded in its entirety by this Agreement upon the closing of the Merger.
Notwithstanding anything to the contrary in this Agreement, the Letter of Intent
shall remain in full force and effect until the closing of the Merger and the
performance by E Group of its obligations pursuant to the Letter of Intent shall
not be deemed to be a breach by E Group of its obligations set forth in this
Agreement, including without limitation, the exclusivity provision set forth in
Section 3 hereof.
20. RIGHT OF INSPECTION; REPORTS.
(a) RIGHT OF INSPECTION. At all reasonable times during the
term of this Agreement, E Group and Wit shall each have the right to inspect
and copy, through its duly authorized
18
representatives, books, records and accounts of the other in order to determine
compliance by the other with the terms and conditions of this Agreement.
(b) YEARLY REPORTS. During the terms of this Agreement, each
party shall deliver to the other, within thirty (30) calendar days after the end
of each calendar year, a report (a "Yearly Report") certified by its chief
financial officer of setting forth the following information:
(i) statistical data relating to the performance
by it of its agreements hereunder and, in the case of Wit during the
period after the second anniversary of the Start Date, regarding its
satisfaction of the Performance Standards;
(ii) statistical data relating to the compliance
by it with its exclusivity requirements set forth in Section 3; and
(iii) a schedule of every public offering, private
placement or other securities offering in which it or any of its
Affiliates participated in as an underwriter, placement agent,
broker-dealer, selling group member, distributor or otherwise,
including whether it acted in the capacity of lead managing or
co-managing underwriter (collectively, the "Compliance Statistics").
(c) QUARTERLY REPORTS. During the term of this Agreement, each
party shall deliver to the other within twenty (20) calendar days after the end
of each of the first three calendar quarter of each calendar year, a report (a
"Quarterly Report") certified by its chief financial officer setting forth the
Compliance Statistics.
(d) CONFIDENTIALITY OF REPORTS. Except as otherwise required
by law, by governmental or regulatory authorities, or in response to court
order, or upon the prior written consent of a party, all non-public information
included in all Yearly Reports and Quarterly Reports shall be kept confidential
by the other and its directors, officers, employees, agents and representatives,
shall not be disclosed to any other person or entity, and shall only be used for
the purposes provided herein.
21. MISCELLANEOUS.
(a) NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, one (1) day after delivery to a reputable overnight
courier service (charge prepaid) for overnight delivery to the recipient, three
(3) days after deposit with the U.S. Postal Service for mailing to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
or when transmitted by facsimile (with request for immediate confirmation or
receipt in a manner customary for communications of such type and with physical
delivery of the communication being made by one of the other means specified in
this Section as promptly as practicable thereafter to the following addresses,
respectively, or to such alternative address as either party may furnish in
writing to the other from time to time:
19
If to E*TRADE or E Group: If to Wit or Wit Group:
E*TRADE Group, Inc. Wit Capital Group, Inc.
0000 Xxxxxxxx Xxxxx 000 Xxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000 Fax: (000) 0000000
Attn: Xxxxxx X. Xxxxxxxxxx Attn: Xxxxxx Xxxxxxxx
with a copy (for legal notices) to: with a copy (for legal notices) to:
Xxxxxxx, Phleger & Xxxxxxxx LLP Wit Capital Group, Inc.
Two Embarcadero Place 826 Broadway
0000 Xxxx Xxxx Xxx Xxxx, Xxx Xxxx 00000
Palo Alto, CA 943030913 Attn: Xxxxx X. Xxxxxx, Esq.
Attn: Xxxxxx X. Mo, Esq. Fax: (000) 0000000
Fax: (000) 0000000
(b) SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
or delegated, in whole or in part, by any party hereto without the prior written
consent of the other party hereto; provided, however, that this Agreement may be
assigned to a successor or acquiring entity without such consent in the event of
a Change in Control of the assigning party. Subject to the foregoing, this
Agreement shall be binding upon the inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(c) SEVERABILITY. In the event that any provision of this
Agreement shall be declared invalid or unenforceable by a court of competent
jurisdiction in any jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent declared invalid or unenforceable without
affecting the validity or enforceability of the other provisions of this
Agreement, and the remainder of this Agreement shall remain binding on the
parties hereto.
(d) SECTION HEADINGS. Section heading in this Agreement are
inserted for convenience of reference only, and shall not affect the
interpretation of this Agreement.
(e) GOVERNING LAWS. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York
without regard to the conflicts or choice of law provisions thereof. Each of the
parties hereto irrevocably consents to the exclusive jurisdiction of any court
located within the State of California or the State of New York, in connection
with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of California or the State of New York for
such persons and waives and covenants not to assert or plead any objection that
they might otherwise have to such jurisdiction and such process.
20
(f) ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto and the documents and instruments referred to herein) contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior written or oral agreements and understandings
with respect thereto.
(g) AMENDMENTS; WAIVERS. This Agreement may not be changed,
amended, terminated, augmented, rescinded, or discharged (other than by
performance), in whole or in part, except by a writing executed by the
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or
binding unless such waiver shall be in writing and signed by the party
claimed to have given or consented thereto. Except to the extent that a party
hereto may have otherwise agreed in writing, no waiver by that party of any
condition of this Agreement or breach by the other party of any of its
obligations or representations hereunder or thereunder shall be deemed to be
a waiver of any other condition or subsequent or prior breach of the same or
any other obligation or representation by the other party, nor shall any
forbearance by the first party to seek a remedy for any noncompliance or
breach by the other party be deemed to be a waiver by the first party of its
rights and remedies with respect to such noncompliance or breach.
(h) REPRESENTATIONS AND WARRANTIES. E*TRADE hereby represents
to Wit that that all of the statements contained in Annex B to this Agreement
are true and correct as of the date of this Agreement (or, if made as of a
specified date, as of such date).
(i) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and both of which
together shall be considered one and the same Agreement.
(j) MUTUAL COOPERATION. The parties shall cooperate in good
faith and take such other commercially reasonable actions as are reasonably
necessary to effect the intents and purposes of this Agreement and the strategic
alliance contemplated hereby.
21
IN WITNESS WHEREOF, the parties hereto have caused this
Strategic Alliance Agreement to be duly executed and delivered on its behalf as
of the date first written above.
E*TRADE GROUP INC. WIT CAPITAL GROUP, INC.
By: By:
-------------------------------------- ----------------------------------
Name: Name:
Title: Title:
22
ANNEX A
FORM OF WARRANT
23
ANNEX B
REPRESENTATIONS AND WARRANTIES OF E*TRADE
Capitalized terms used in this Annex B but not otherwise defined in the
Agreement shall have the meanings set forth in the Merger Agreement.
1. AUTHORIZATION; VALIDITY OF AGREEMENT.
E*TRADE has full corporate power and authority to execute and deliver this
Agreement , and to consummate the transactions contemplated hereunder. The
execution, delivery and performance by E*TRADE of this Agreement , and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Board of Directors of E*TRADE and no other corporate action on
the part of E*TRADE is necessary to authorize the execution and delivery by
E*TRADE of this Agreement or the consummation by E*TRADE of such transactions.
This Agreement has been duly executed and delivered by E*TRADE and, assuming due
and valid authorization, execution and delivery thereof by Wit, this Agreement
is the valid and binding obligations of E*TRADE enforceable against E*TRADE in
accordance with its terms.
2. CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for the filings, permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Advisers Act, the
Exchange Act, the Securities Act, the rules and regulations of the NASD, the HSR
Act, state securities or Blue Sky laws, Delaware Law and California Law, none of
the execution, delivery or performance of this Agreement by E*TRADE, the
consummation by E*TRADE of the transactions contemplated hereby or compliance by
E*TRADE with any of the provisions hereof shall (i) conflict with or result ing
any breach of any provision of the Certificate of Incorporation, the Bylaws or
similar organizational documents of E*TRADE, (ii) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due notice or
the passage of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any material agreement or contract to which E*TRADE
is a party (the "E*TRADE Agreements"), or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to E*TRADE, any to
which E*TRADE is a party or by which any of the assets of it is bound, excluding
from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on E*TRADE and its Subsidiaries, taken as a whole. There are no
third party consents or approvals required to be obtained under any of E*TRADE
Agreements prior to the consummation of the transactions hereunder, except for
such consents and approvals the failure of which to be obtained would not,
individually or in the aggregate, have a material adverse effect on E*TRADE and
its Subsidiaries, taken as a whole.
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