Exhibit 10.1
RELATIONSHIP AGREEMENT
This Relationship Agreement ("AGREEMENT") is entered into as of the 20th
day of August 2001 by and between E*TRADE Group Inc., a Delaware corporation
(which together with its controlled Affiliates, as defined below, shall
hereinafter be referred to as "E GROUP"), and SoundView Technology Group, Inc.,
a Delaware corporation formerly known as Wit SoundView Group, Inc. (which
together with its controlled Affiliates, as defined below, shall hereinafter be
referred to as "WIT GROUP"). Wit Group and E Group are referred to herein as the
"PARTIES," and each of them individually as a "PARTY."
WHEREAS the Parties have entered into a termination agreement (the
"TERMINATION AGREEMENT") concurrently with this Agreement to terminate certain
of their rights and obligations under that certain Amended and Restated
Strategic Alliance Agreement, dated as of September 26, 2000;
WHEREAS the Parties hereby desire to initiate a new business relationship
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:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used herein, the terms below shall have
the following meanings:
(i) "AFFILIATE" means, with respect to any Party, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Party. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
(ii) "BLENDED RATE" is defined in Section 3.01.
(iii) "EFFECTIVE DATE" means August 20, 2001.
(iv) "EXCLUDED SECURITIES" means securities that are allocated by Wit
Group for offering or sale to employees, directors and Affiliates of Wit Group.
(v) "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 an issuer that is not a
registered investment company or real estate investment trust.
(vi) "MARKET CENTER" means market makers in securities, electronic
communication networks relating to securities, securities exchanges or other
securities trading markets other than Wit Group.
(vii) "NASD" means National Association of Securities Dealers.
(viii) "PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization or other entity or organization.
(ix) "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 an issuer that is
registered with the SEC pursuant to the Securities Act of 1933, as amended.
(x) "RETAIL SECURITIES" means all securities offered in a Registered
Offering that are allocated by Wit Group for retail distribution.
(xi) "SEC" means the U.S. Securities and Exchange Commission.
(xii) "SELECTED SECURITIES" is defined in Section 3.01.
ARTICLE 2
SHARE ALLOCATION
SECTION 2.01. RELATIONSHIP. During the Term (as defined herein) of this
Agreement, Wit Group, on a non-exclusive basis, shall be entitled to offer
equity securities through E Group to customers of E Group, and E Group shall be
entitled to determine in its sole and absolute discretion whether to accept or
not accept any such securities offered; provided, however, that if in the case
of a Registered Offering in which Wit Group is the lead manager or co-managing
underwriter, E Group rejects such securities, it shall not offer or sell any
securities so offered by Wit Group unless the relevant per unit selling
concession or similar consideration payable to E Group by any party other than
Wit Group 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. If E Group decides to accept any offering, E Group shall take from or
through Wit Group a mutually agreed upon number of the securities made available
by Wit Group for distribution by E Group hereunder for offering and sale to its
customers.
Section 2.02. WIT GROUP SHARE ALLOCATION. Wit Group agrees that in each
and every Registered Offering for which Wit Group is a lead managing or
co-managing underwriter, the amount of Retail Securities in such offering that
shall be made available to E Group shall be at least one hundred thousand
(100,000) shares (other than Excluded Securities) in the case of a Registered
Offering in which Wit Group is the lead manager and seventy five thousand
(75,000) shares (other than Excluded Securities) in the case of a Registered
Offering in which Wit Group is a co-managing underwriter; PROVIDED, HOWEVER,
that E Group shall be entitled to accept or not accept participation in any
equity offering in its sole and absolute discretion.
In the event that: (i) Wit Group offers a Registered Offering to E Group
in which Wit Group is the lead managing or co-managing underwriter and the
amount of Retail Securities allocated to E Group is less than the minimum amount
of one hundred thousand (100,000) shares in the case of a Registered Offering in
which Wit Group is the lead manager and seventy five thousand (75,000) shares
(other than Excluded Securities) in the case of a Registered Offering in which
Wit Group is a co-managing underwriter; and (ii) E Group decides to accept these
Retail Securities, then within thirty days following the closing of the
Registered Offering Wit Group shall pay E Group an amount equal to the selling
concessions to which E Group would have been entitled based on the applicable
share allocation.
Section 2.03. SELLING CONCESSION. In each Registered Offering in which
Wit Group is the lead managing or co-managing underwriter, Wit Group will pay to
E Group fifty percent (50%) of the full selling concession paid to Wit Group in
relation to the number of shares allocated through E Group to its retail
customers in connection to the offering. This amount shall not be offset by any
costs associated with the Registered Offering.
SECTION 2.04. 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 Retail Securities by its retail customers for at least thirty
(30) days, subject to applicable regulatory requirements.
ARTICLE 3
TRADING FLOWS
SECTION 3.01. MARKET MAKING. On a quarterly basis, Wit Group will provide
to E Group a list of 75 securities for which Wit Group acts as market maker and
E Group will select 50 of those securities in which it may direct order flow
(the "SELECTED SECURITIES")
and it will direct to Wit Group all of its order flow in such Selected
Securities. Wit Group shall pay to E Group a trading flow rebate based on the
shares directed to Wit Group pursuant to this Section 3.01 (currently $0.0025
per share for Wit Group (the "BLENDED RATE")). The Parties agree to review the
Blended Rate at least quarterly and to negotiate in good faith adjustments to
the Blended Rate to ensure that the Blended Rate remains competitive with the
highest trading flow rebate or other consideration received by E Group for
similar types and sizes of orders from the two Market Centers to which E Group
routes the largest and second largest number of secondary market orders for
execution during the immediately preceding quarter. In the event that prevailing
practices change so that E Group is required, in accordance with such prevailing
practice, to pay an execution or other fee to a Market Center for the execution
of its customer orders, the Blended Rate shall be determined in the same manner,
that is, the amount paid by E Group (or the average amount paid and received by
E Group) to or from the Market Centers to which E Group routes the largest and
second largest number of secondary market orders for execution during the
immediately preceding quarter, and E Group agrees to pay Wit Group the lowest
fee so determined as the Blended Rate for that quarter. Notwithstanding anything
herein to the contrary, E Group and Wit Group understand and agree that (i) no
provision of this Agreement shall restrict either Party, in its reasonable good
faith judgment, from taking, without liability to the other Party, 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, including the duty of best execution; and
(ii) in the event that E Group is or becomes a market maker in one or more of
the Selected Securities (including by internalizing its own order flow), E Group
shall have no further obligation to direct order flow to Wit Group for such
Selected Security or Selected Securities.
SECTION 3.02. SELF-DIRECTED AND CORRESPONDENT ORDERS. The phrase
"secondary market orders" as used in this Article 3, shall not include (i)
orders self-directed by E Group customers utilizing E Group's direct access
services or (ii) orders placed by customers of third parties unaffiliated with E
Group who introduce orders to E Group pursuant to a correspondent clearing
arrangement between such third parties and E Group if E Group receives direction
by the correspondent to place such order through a Market Center.
ARTICLE 4
BUSINESS NAME
In connection with that certain Agreement and Plan of Merger by and among
Wit Capital Group, Inc., Wit SoundView Corporation and E*OFFERING Corp. dated as
of May 15, 2000, as amended, Wit Group shall cause Wit SoundView Corporation, 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 Group or
an Affiliate of E Group) 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
Group or an Affiliate of E Group) the E*OFFERING website address, and (iii)
destroy all documents, business stationery and cards, marketing literature,
print advertisements, recordings and other physical indicia and embodiments of
the "E*OFFERING" name or logo (provided that Wit Group shall be entitled to
retain copies of all books and records and other such marketing literature or
other documents containing the physical indicia and embodiment of the E*OFFERING
name or logo pursuant to applicable regulatory requirements or as necessary for
tax, accounting and corporate, securities and other applicable law record
keeping for non-commercial purposes).
ARTICLE 5
TERM; TERMINATION
SECTION 5.01. TERM; TERMINATION.
(a) This Agreement shall remain in effect through January 1, 2004 (the
"INITIAL TERM"), unless terminated earlier in accordance with the terms of this
Agreement. Thereafter, this Agreement shall renew for additional successive one
(1) year renewal terms (each a "RENEWAL TERM") if the Parties so agree in
writing at least thirty (30) days prior to the expiration of the Initial Term or
then-current Renewal Term (the Initial Term and Renewal Terms being,
collectively, the "TERM").
(b) Following the Initial Term, either Party may terminate this Agreement
at any time, for any reason or no reason, upon forty-five (45) days' prior
written notice.
SECTION 5.02. TERMINATION FOR BREACH. This Agreement may be terminated at
any time by (a) Wit Group, on the one hand, or by E Group, on the other hand, if
there shall have been a material breach of any of the 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 such breaching Party has not cured such breach or (ii) by Wit Group, on the
one hand, or E Group, on the other hand, in the event that the NASD, the SEC or
any other regulatory body places a material restriction on the business of the
other Party that materially limits the other Party's ability to perform its
obligations hereunder.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. 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
transactions contemplated hereby.
SECTION 6.02. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned,
in whole or in part, by any Party hereto without the prior written consent of
the other Party hereto. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and assigns.
SECTION 6.03. NO RESTRICTIONS ON FUTURE TRANSACTIONS. Nothing in this
Agreement shall restrict either Party from entering into future arrangements or
transactions, including exclusive arrangements with third parties, in areas
covered by this Agreement so long as the obligations of the Party entering into
such future transactions do not affect or conflict or interfere with such
Party's obligations under this Relationship Agreement or the rights of the other
Party under this Relationship Agreement.
SECTION 6.04. SEVERABILITY. The Parties hereto agree that if any provision
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, such provisions shall be valid and enforceable to the
maximum degree permitted and the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any way.
SECTION 6.05. ARBITRATION. All 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 be
submitted to arbitration in accordance with the provisions of the NASD Code of
Arbitration Procedures.
SECTION 6.06. GOVERNING LAW. 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.
SECTION 6.07. ENTIRE AGREEMENT. This Agreement 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.
SECTION 6.08. 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 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 provision of this Agreement or breach by
the other Party of any of its obligations or representations hereunder shall be
deemed to be a waiver of any other provision or subsequent or prior breach of
the same or any other obligation or representation by the other Party, nor shall
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.
SECTION 6.09. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first written above.
SOUNDVIEW TECHNOLOGY GROUP, INC.
--------------------------------
By:
Title:
E*TRADE GROUP, INC.
--------------------------------
By:
Title:
