eTrade 2000 Annual Report Download - page 251

EXHIBIT 10.39
E*TRADE GROUP, INC.
MANAGEMENT CONTINUITY AGREEMENT
June 9, 1999
Mitchell H. Caplan
Dear Mitchell:
We are pleased to offer you the position of President and Chief Executive Officer. This letter, if accepted, sets forth the terms of your
employment with E*TRADE Group, Inc. (hereafter “ E*TRADE” or the “Company”), following the Closing. As used in this
agreement, “E*TRADE” and “Company” refer to E*TRADE Group, Inc. and each of its subsidiaries including, after the Closing,
Telebanc Financial Corporation. As a full-time employee, you would receive an annual base salary of $250,000, paid biweekly, less all
applicable deductions. All Telebanc Financial Corporation (“TFC”) and its subsidiaries’ employee benefits will continue uninterrupted
until E*TRADE transitions your benefits coverage from TFC benefits to E*TRADE benefits. The transition to E*TRADE benefits is
expected to occur during the first few months after the Closing. The Company wants to make this transition as smooth as possible .
Following the transition, you will be eligible to participate in Company-sponsored benefits on the same basis as other full-time
E*TRADE employees.
This offer is contingent on the occurrence of the Closing of E*TRADE’ s acquisition (the “Acquisition”) of TFC and, if you accept this
offer, it would take effect as of that Closing Date. The remaining terms of your employment would be as follows:
Bonus Participation
You will be eligible to receive a Closing Period Bonus within thirty (30) days of the Closing Date equal to a pro-rata portion of the
TFC bonus you received for the 1998 calendar year (or the annualized equivalent if you were employed for less than one (1) full year
by TFC during 1998) which is $250,000 (the “1998 Bonus Amount”). The amount of the Closing Period Bonus for which you will be
eligible will be equal to the 1998 Bonus Amount times a fraction, the numerator of which will be the number of days in 1999 up until
the Closing and the denominator of which will be 365. You will earn this Closing Period Bonus if TFC meets its performance
objectives, as previously agreed to by TFC and E*TRADE, for the period January1, 1999 through the Closing Date. The determination
as to whether you have met the performance objectives sufficient to receive the Closing Period Bonus will be made by the President of
TFC, Mitch Caplan. The C losing Period Bonus will be paid no later than thirty (30) days after the Closing Date.
You will be eligible to receive a bonus not less than the 1998 Bonus upon your completion of twelve (12) months of continuous
service to E*TRADE following the Closing (the “Term”), but only if E*TRADE pays a Team Quality Incentive (“TQI”) bonus either
the period running from October1, 1999 through March31, 2000 or April1, 2000 through September30, 2000 (the “Term Bonus”). If
you voluntarily resign your employment, except for “Good Reason,” you will not earn or be paid any Term Bonus. If your employment
is terminated by E*TRADE during the Term without “Cause,” or in the event you resign for “Good Reason,” then you will be paid a
pro-rata share of the Term Bonus for the period measured from the Closing until the date of the termination of your employment. This
payment will be made on the date of termination. If your employment is terminated by E*TRADE during the Te rm for “Cause,” then
you will not earn or be paid any Term Bonus.
If your employment continues beyond the Term, you would then be eligible to participate in the E*TRADE TQI Bonus Program
subject to the same terms and conditions applicable to other E*TRADE employees.
Stock Options
E*TRADE will recommend to the Company’ s Board of Directors (the “Board”) that at the next meeting in which the Board grants
stock options you be granted an option to purchase 50,000 shares of the Company’ s common stock at an exercise price per share equal
to the fair market value of the Company’ s common stock on the effective date of the grant. This stock option grant would be
contingent on you executing E*TRADE’ s standard stock option
agreement, and will be subject to the E*TRADE 1996 Stock Incentive Plan. Your stock option would be subject to a one year cliff
vesting date, and will vest at 25% per year over a four (4) year period, pursuant to the E*TRADE Plan and your stock option
agreement.
Term of Employment
You commit to remaining employed by E*TRADE for a period of twelve (12) months following the Closing Date (the “Term”).
However, you will be permitted to resign your employment with “Good Reason” without being deemed to have breached this
Agreement. A resignation for “Good Reason” will occur if you resign your employment within thirty (30) days after the occurrence of
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