EXHIBIT 10.4
SHARE REALLOCATION AND
ESCROW PARTICIPATION AGREEMENT
This SHARE REALLOCATION AND ESCROW PARTICIPATION AGREEMENT (this
"Agreement") is entered into as of September 30, 2000, by and among E*TRADE
Group, Inc., a Delaware corporation ("E*TRADE"), and the shareholders of
E*OFFERING Corp., a California corporation ( the "Company") listed on Exhibit A
hereto (the "Shareholders"). Capitalized terms used and not otherwise defined in
this Agreement shall have the respective meanings assigned to such terms in the
Agreement and Plan of Merger, dated as of May 15, 2000, as amended pursuant to
the Amendment Agreement dated as of September 26, 2000 (as so amended, the
"Merger Agreement"), by and among Wit SoundView Group, Inc. (formerly Wit
Capital Group, Inc., the "Parent"), Wit SoundView Corporation ("Wit") and the
Company.
RECITALS
WHEREAS, pursuant to the Merger Agreement, an Escrow Fund consisting
of ten percent (10%) of the Parent Shares issued thereunder will be established
to compensate Indemnified Persons for certain Damages;
WHEREAS, in order to facilitate the transactions contemplated by the
Merger Agreement, E*TRADE has agreed to certain amendments to its Strategic
Alliance Agreement dated May 15, 2000 (the "Alliance Agreement"), with the
Parent; and
WHEREAS, in order to induce E*TRADE to enter into such amendments, the
Shareholders desire to cause certain of their Escrow Shares to be deposited into
the Escrow Fund in lieu of Parent Shares issuable to E*TRADE in the Merger which
would otherwise be deposited into the Escrow Fund under the current terms of the
Merger Agreement, and to adjust their beneficial interests in the Escrow Fund
accordingly. In addition, the parties hereto further desire to adjust the Final
Allocation Schedule in order to reallocate the Parent Shares to be received as
part of the Aggregate Consideration in the Merger.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for E*TRADE's agreement to certain amendments to the Alliance
Agreement, the parties hereto agree as follows:
1. Escrow Allocation Schedule. Notwithstanding anything to the
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contrary in the Merger Agreement, the Final Allocation Schedule of Parent Shares
to be deposited into the Escrow Fund shall be adjusted at the Effective Time so
as to not include any Parent Shares beneficially owned by E*TRADE or affiliates
controlled, in whole or in part, by E*TRADE. The number of Parent Shares
beneficially owned by E*TRADE and such affiliates that would otherwise be
included on the Final Allocation Schedule and contributed into the Escrow Fund
as Escrow Shares pursuant to the terms of the Merger Agreement shall instead be
comprised, in the aggregate, of an equal number (not to exceed 800,000) of
Parent Shares (the "Participation Shares") beneficially owned by the
Shareholders listed on Exhibit A hereto. At the Effective Time, the
Participation Shares shall be allocated to, and contributed and deposited in
escrow on behalf of, each Shareholder on a pro rata basis in the proportion
which the number of Parent Shares issued to
each such Shareholder bears to the total number of Parent Shares issued to all
of the Shareholders in the Merger, and by way of illustration such allocation
according to the Preliminary Allocation Schedule under the Merger Agreement is
set forth on the Allocation Schedule attached hereto as Exhibit A. For the
avoidance of confusion, the parties will inform the Exchange Agent and the
Escrow Agent of the substitution of the Participation Shares as Escrow Shares in
lieu of Parent Shares issuable to E*TRADE in the Merger, as well as the
beneficial ownership interests of the Shareholders in the Participation Shares,
promptly following the Effective Time of the Merger, based upon the final number
of Parent Shares issued to each Shareholder as set forth on the Final Allocation
Schedule. Following the deposit of the Participation Shares into the Escrow Fund
as provided hereunder, the Shareholders will continue to have all right, title
and interest in and to their Participation Shares, subject to the terms of the
Merger Agreement and the Escrow Agreement.
2. Reallocation Schedule. Notwithstanding anything to the contrary
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in the Merger Agreement, the Final Allocation Schedule shall be adjusted at the
Effective Time so as to provide that 1,200,000 Parent Shares that would
otherwise be allocated on the Final Allocation Schedule to the Shareholders
pursuant to the terms of the Merger Agreement, shall instead be allocated to
E*TRADE in accordance with the terms of this Agreement (the "Reallocation
Shares"). At the Effective Time, the Reallocation Shares shall be allocated from
and on behalf of each Shareholder on a pro rata basis in the proportion which
the number of Parent Shares issued to each such Shareholder bears to the total
number of Parent Shares issued to all of the Shareholders in the Merger, and
such allocation is set forth on the Allocation Schedule attached hereto as
Exhibit A. Notwithstanding anything herein to the contrary, the foregoing
reallocation of Parent Shares shall not affect or be taken into account in
determining the number of Escrow Shares deposited in the Escrow Fund for the
account of any particular Shareholder, it being understood that ten percent
(10%) of the total number of Parent Shares issuable to each Shareholder before
giving effect to the reallocation of Reallocation Shares (i.e. assuming solely
for such purposes no such reallocation) shall be so deposited into the Escrow
Fund for the account of such Shareholder. For the avoidance of confusion, the
parties will inform the Exchange Agent and the Escrow Agent of the
redistribution of the Reallocation Shares from the Shareholders to E*TRADE
promptly following the Effective Time of the Merger. Following the distribution
of the Reallocation Shares to E*TRADE as provided hereunder, E*TRADE will have
all right, title and interest in and to the Reallocation Shares.
3. Further Assurances. Each of the parties hereto shall enter into
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such other instruments and documents, and take such further actions, as are
reasonably necessary to effect the purposes of this Agreement.
4. Acknowledgment. Each of the parties hereto acknowledges and
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agrees that each other party has given them the opportunity to seek, and has
recommended that such parties obtain, independent legal advice with respect to
the subject matter of this Agreement. Further, each of the parties hereto hereby
represent and warrant to each of the other parties that such party has sought
such independent legal advice or has knowingly waived such advice.
5. Assignment. No party may, without the prior express written
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consent of
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each other party, assign this Agreement in whole or in part. This Agreement
shall be binding upon and inure to the benefit of the respective permitted
successors and assigns of the parties hereto, and may only be amended or
modified pursuant to a written instrument executed by each of the parties
hereto.
6. Governing Law; Jurisdiction. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Delaware (other than
the conflicts of law principles thereof). Each of the parties hereto irrevocably
consents to the exclusive jurisdiction of any court located within the State of
Delaware, 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 Delaware for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
7. Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their behalf as of the date first written above.
E*TRADE Group, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx Nimentz
Title: Chief Legal Affairs Officer
/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Cruttenden Partners LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Member
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
/s/ Xxxxxxxxxxx Xxxxxxxxxx
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Xxxxxxxxxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
GAP Coinvestment Partners II LP
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: A General Partner
General Atlantic Partners 61 LP
By: General Atlantic Partners LLC,
its general partner
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: A Managing Member
New Enterprise Associates 9 L.P.
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: General Partner
NEA Ventures 2000 L.P.
By: /s/ Xxxxxxxxxx Xxxxx
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Name: Xxxxxxxxxx Xxxxx
Title: Vice President
Battery Ventures V L.P.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Member Manager
Crosspoint Venture Partners 2000
By: /s/ R.A. Hope
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Name: R.A. Hope
Title: General Partner
Softbank Technology Ventures V L.P.
By: SBTV LLC
By: /s/ D. Xxx Xxxxxxx
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Name: D. Xxx Xxxxxxx
Title:
Softbank Technology Advisors Fund V L.P.
By: SBTV LLC
By: /s/ D. Xxx Xxxxxxx
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Name: D. Xxx Xxxxxxx
Title:
Softbank Technology Entrepreneurs Fund V
L.P.
By: SBTV LLC
By: /s/ D. Xxx Xxxxxxx
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Name: D. Xxx Xxxxxxx
Title:
ACKNOWLEDGED:
E*OFFERING, Inc.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: President
Wit Capital Group, Inc.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Co-President
Wit Soundview Corporation
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Co-President
