Share Reallocation & Escrow Participation Agreement

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
-------------------------- 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 a ...