eTrade 2000 Annual Report Download - page 253

EXHIBIT 10.40
MODEL MANAGEMENT CONTINUITY AGREEMENT
[ FOR UNITED STATES EMPLOYEES]
E*TRADE GROUP, INC.
July 7, 1999
Jarrett Lilien
Dear Jarrett:
We are pleased to offer you the position of CEO—TIR. 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 defined in the Exchange Agreement). As
a full-time employee, you would receive an annual base salary of $200,000.00, paid biweekly, less all applicable deductions.
All TIR (Holdings) LTD (“TIR”) employee benefits will continue uninterrupted until E*TRADE transitions your benefits coverage
from TIR benefits to E*TRADE benefits. You will be offered E*TRADE’ s standard Company-sponsored benefits which will ensure
that you receive benefits consistent with and comparable to those offered similarly situated E*TRADE employees. You will, in
particular, participate in E*TRADE’ s existing paid time off plan and will be eligible to accrue paid time off based on your prior years
of service with TIR. It is E*TRADE’ s intention to transition your benefits coverage from TIR benefits to E*TRADE benefits during
the first few months after the Closing. The Company wants to make this transition as smooth as possible.
Commencement Date
This offer is contingent on the occurrence of the closing of E*TRADE’ s acquisition (the “Acquisition”) of TIR, and, if you accept this
offer, it would take effect as of that Closing Date.
Bonus Participation
Upon achievement of the mutually agreed-upon operating milestones ending in fiscal years 2000 and 2001, as set out in Exhibit “A”
hereto, you will be entitled to participate in a special bonus pool set aside for TIR Executive Committee members in lieu of the Team
Quality Incentive (“TQI”) Bonus Program. Milestone factors for the special bonus pool shall be equally weighted among three
categories of performance including the following: (1) individual performance; (2) integration; and (3) project leadership. Such
bonuses shall be payable in two installments in October and April of each applicable fiscal year. The management of TIR may
recommend individual allocations of bonus amounts from such bonus pool; however, E*TRADE shall make the final determinations of
eligibility and bonus awards. The TIR special bonus program will terminate at the end of E*TRADE’ s fiscal year 2001, and you will
no l onger be eligible for any further bonus payments under that plan. Beginning in E*TRADE’ s fiscal year 2002, that is, September 1,
2001, you will be eligible to participate in the E*TRADE bonus program, subject to the same terms and conditions applicable to other
similarly situated E*TRADE employees.
Stock Options
Your existing and outstanding stock options with TIR have been assumed by E*TRADE in accordance with your Stock Option
Assumption Agreement. In addition, at the Closing you will be granted an option to purchase 20,000 shares of E*TRADE common
stock under the Company’ s 1996 Stock Incentive Plan. The per-share exercise price of the option will be equal to the per-share fair
market value of the common stock on the Closing Date, as determined by the E*TRADE Board of Directors. The option will be
evidenced by E*TRADE’ s standard stock option agreement. So long as you continue in service with E*TRADE, the option will vest
and become exercisable with respect to twenty-five percent (25%) of the option shares on the one-year anniversary of your
employment start
date and with respect to the balance at 25% upon each anniversary of the Closing Date until the fourth anniversary of the Closing Date.
Term of Employment
You commit to remaining employed by E*TRADE for a period of three (3) years following the Closing Date (the “Term”).
Nevertheless, E*TRADE may terminate your employment at any time for any reason, during the Term, with or without cause, by
giving written notice of such termination. Similarly, you may resign your employment for “Good Reason,” as defined in this
Agreement, without being deemed to have breached this Agreement. In addition, if E*TRADE wishes to terminate your employment
for any reason within three (3) years after the Closing Date, it must obtain the written approval of the Chief Executive Officer—TIR,
the President—TIR, the President of E*TRADE International and E*TRADE’ s Vice President, Associates and Work Environment
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