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 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 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 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 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 consent of 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 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 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]
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: Xxxxxxxx X. Xxxxxxxxxx
Title: Chief Legal Affairs Officer
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Cruttenden Partners LLC
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Member
/s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxxxxxx Xxxxxxxxxx
---------------------------------------
Xxxxxxxxxxx Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxxx
GAP Coinvestment Partners II LP
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: A General Partner
General Atlantic Partners 61 LP
By: General Atlantic Partners LLC,
its general partner
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: A Managing Member
New Enterprise Associates 9 L.P.
By: NEA Partners 9, L.P.,
its general partner
By: /s/ Xxxxxx X. XxXxxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: General Partner
NEA Ventures 2000 L.P.
By: /s/ Xxxxxxxxxx Xxxxx
----------------------------------
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/ X.X. Xxxx
----------------------------------
Name: X.X. Xxxx
Title: General Partner
Softbank Technology Ventures V L.P.
By: SBTV LLC
By:
----------------------------------
Name:
Title:
Softbank Technology Advisors Fund V L.P.
By: SBTV LLC
By:
----------------------------------
Name:
Title:
Softbank Technology Entrepreneurs Fund V
L.P.
By: SBTV LLC
By:
----------------------------------
Name:
Title:
ACKNOWLEDGED:
E*OFFERING, Inc.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
Title: President
Wit Capital Group, Inc.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Co-President
Wit Soundview Corporation
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Co-President
EXHIBIT A
SHAREHOLDERS AND ALLOCATION SCHEDULE
Escrow Shares Merger Shares
Reallocated to E*TRADE Reallocated to E*TRADE
Shareholder Name (Participation Shares) (Reallocation Shares)
---------------- ---------------------- ---------------------
Xxxxxx X. Xxxxxxxxxx 61,847 93,073
Cruttenden Partners LLC 17,303 26,040
Xxxxx Xxxxxx 46,719 70,307
Xxxxxxxxxxx Xxxxxxxxxx 6,106 9,188
Xxxxxxx Xxxxxxxxx 71,686 107,878
General Atlantic Coinvestment
Partners II LP 64,038 96,367
General Atlantic Partners 61 LP 296,806 446,659
New Enterprise Associates 9 L.P. 70,935 106,749
NEA Ventures 2000 L.P. 71 107
Battery Ventures V L.P. 21,302 32,057
Crosspoint Venture Partners 2000 21,302 32,057
Softbank Technology Ventures V
L.P. 114,196 171,852
Softbank Technology Ventures
Advisors Fund V L.P. 3,042 4,578
Softbank Technology Ventures
Entrepreneurs Fund V L.P. 2,052 3,088
TOTAL 797,405 1,200,000
Note: The above figures are based on the Preliminary Allocation Schedule. At the
time of closing, the above figures will be revised to reflect the Final
Allocation Schedule, PROVIDED, HOWEVER, that in no event shall the Participation
Shares exceed 800,000 in the aggregate.
