eTrade 2000 Annual Report Download

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-K
______________ [x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the Fiscal Year Ended September 30, 2000.
or [] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the Transition Period from __________ to __________.
1-11921
(Commission file number)
______________
E*TRADE Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2844166
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4500 Bohannon Drive, Menlo Park, CA 94025
(Address of principal executive offices and zip code)
(650) 331-6000
(Registrant’ s telephone number, including area code)
______________
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of each class
Common Stock—$0.01 par value
______________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’ s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
As of November 6, 2000, the aggregate market value of voting stock, comprised of the registrant’ s common stock and shares
exchangeable into common stock, held by nonaffiliates of the registrant was approximately $3,364,633,000 (based upon the closing
price for shares of the registrant’ s common stock as reported by the National Market System of the National Association of Securities
Dealers Regulation Automated Quotation System on that date). Shares of common stock held by each officer, director, and holder of
5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination for other purposes.
2002. EDGAR Online, Inc.

Table of contents

  • Page 1
    ... 6, 2000, the aggregate market value of voting stock, comprised of the registrant' s common stock and shares exchangeable into common stock, held by nonaffiliates of the registrant was approximately $3,364,633,000 (based upon the closing price for shares of the registrant' s common stock as reported...

  • Page 2
    ... stock. DOCUMENTS INCORPORATED BY REFERENCE Definitive Proxy Statement relating to the Company' s Annual Meeting of Shareowners, to be held December 21, 2000, to be filed hereafter (incorporated into Part III hereof). E*TRADE Group, Inc. Form 10-K Annual Report For the Fiscal Year ended September...

  • Page 3
    ... portfolio to offer separate account management services for those investors who are looking for private management of their money. 3 In January 2000, we completed our acquisition of Telebanc, now ETFC. ETFC is the holding company of E*TRADE Bank, formerly Telebank, an Internet-based, federally...

  • Page 4
    ... addition to the E*TRADE Zone, a service center located in the SuperTarget store in Roswell, Georgia, offering guests access to integrated banking, brokerage and investment planning services, and our 540 Madison Avenue, New York location, expected to open in the second quarter of 2001, will enhance...

  • Page 5
    ... available 24 hours a day, 7 days a week. Customers have access to current account information regardless of which gateway they are using. We expanded our services significantly during fiscal 2000 5 with several important new offerings, including wireless access to quotes and trading, pre-open...

  • Page 6
    ... purchase, cost basis, current price and current market value. The system automatically calculates unrealized profits and losses for each asset held. Detailed account balance and transaction information includes cash and money market fund balances, buying power, net market portfolio value, dividends...

  • Page 7
    ... allows E*TRADE Securities to retain customer free credit balances and securities for use in margin lending activities subject to Securities and Exchange Commission ("SEC") and National Association of Securities Dealers Regulation, Inc. ("NASDR") rules. E*TRADE Securities has an agreement with BETA...

  • Page 8
    ... orders, subject to certain size limitations, are executed at the Best Bid/Offer, Inside Market or better at the time of receipt by the market-maker. All transaction and portfolio records are automatically updated to reflect trading activity. Buy and sell orders placed when the markets are closed...

  • Page 9
    ... premium rates to national averages. Additionally, we seek to provide superior customer service through highly trained customer service representatives located in our call centers, which are open 24 hours a day, 7 days a week. In May 2000, we completed our acquisition of CCS, now E*TRADE Access, the...

  • Page 10
    ... trust residential mortgages, home equity lines of credit, automobile loans and loans secured by savings deposits totaling $4.3 million, or 0.11%, of our total gross loan portfolio at September 30, 2000. 11 The following table presents information concerning our banking loan portfolio, in dollar...

  • Page 11
    ...Commercial Mixed-use Land Total real estate loans Consumer and other loans: Home equity lines of credit and second mortgage loans Lease financing Other(1) Total consumer andotherloans Total loans Deduct: Discounts and deferred fees on loans Allowance for loan losses Other Total Loans receivable, net...

  • Page 12
    ... acquisition with Direct Financial Corporation (''DFC' ' ). The following table shows our loan, purchase, sale, and repayment activity during the periods indicated including loans acquired through business combinations. Years Ended September 30, 2000 1999 (in thousands) 1998 Loans receivable-net at...

  • Page 13
    ... mortgage, small business, small farm, or consumer loans to retail customers. Satisfaction of a wholesale bank' s responsibilities under the CRA is measured by various criteria including the number and amount of community development loans, qualified investments, or community development services...

  • Page 14
    Commercial Land Home equity lines of credit and second mortgage loans Other Total TDRs Total of non-accrual loans and TDRs REO: One- to four-family Valuation allowance for REO Total REO, net Total non-performing assets, net Total non-performing assets, net, as a percentage of total bank assets Total...

  • Page 15
    ..., commercial, consumer, etc.-and a range of expected loss ratios is applied to each type of loan. Expected loss ratios range between 15 basis points and 300 basis points depending upon asset type, loan-to-value ratio and current market and economic conditions. The expected loss ratios are based on...

  • Page 16
    ..., 1999, 1998, 1997 and 1996, totaling $391,000, $406,000, $449,000, $510,000 and $579,000, respectively, related to non-performing loans. The following table shows the activity in our allowance for loan losses during the periods indicated. Years Ended September 30, 2000 1999 1998 (in thousands) 1997...

  • Page 17
    ... (depreciation) of trading assets. 18 The following table shows the scheduled maturities, carrying values, and current yields for our portfolio of mortgage-backed securities, both available-for-sale and trading, at September 30, 2000. After One But Within Five Years Balance Weighted Due Yield...

  • Page 18
    ... available-for-sale investment securities listed above, we have an investment in the stock of the Federal Home Loan Bank ("FHLB") of Atlanta. The stock is recorded on our books at cost, which approximates fair value. The balance of FHLB stock was $83.3 million and $29.4 million at September 30, 2000...

  • Page 19
    ... 30, 2000, our outstanding advances from the FHLB of Atlanta totaled $1.6 billion at interest rates ranging from 4.58% to 6.96% and at a weighted average rate of 6.47%. We also borrow funds by selling securities to nationally recognized investment banking firms under agreements to repurchase...

  • Page 20
    ... offering foreign investors online retail brokerage services and the business activities of TIR and VERSUS, which offer financial services to institutional investors. We are actively pursuing a global expansion strategy that leverages our internationally recognized brand name, award-winning Web site...

  • Page 21
    ... products and services including online stock and options trading as well as comprehensive market information provided by Reuters, Big Charts and local news vendors. In some cases, subsidiaries offer mutual funds, access to IPOs, and banking capabilities. During fiscal 2001, we intend to upgrade and...

  • Page 22
    ... several services free of charge, such as a state-of-the-art proprietary screening tool, and a wide spectrum of research, including risk measures, portfolio information, historical charts and online prospectuses. Mutual fund orders received by 4:00 p.m. EST result in purchases at the net asset value...

  • Page 23
    ... high value products and services, providing E*TRADE customers with a more personalized, integrated customer solution in meeting individual financial objectives. In the mutual fund and investment product business, we are executing on this strategy by continuing to enhance and market the mutual fund...

  • Page 24
    ... established online investors by providing additional value to those customers who seek a breadth of product offerings. In addition to the direct retail customer base, BSG provides products and services directly to both public and private companies with stock purchase and stock option plans. Clients...

  • Page 25
    ...is expected to deliver high-value customers. Trans World Airlines ("TWA"). E*TRADE' s alliance with TWA is expected to begin in November 2000 with tiered mileage offers mailed and emailed to their customer base. Hotels Hilton HHonors. We have entered into a co-marketing agreement with Hilton HHonors...

  • Page 26
    ... additional information, and complete an account application online. In fiscal 2000 we transitioned from the "Telebank' ' brand to "E*TRADE Bank." We believe that linking our high-value integrated financial products, superior customer service and "anytime, anywhere, anyway" convenience to the well...

  • Page 27
    ... services that allow customers to open and monitor investment accounts and to place orders for equity, option, mutual fund and fixed income transactions. Our core technology is based on our proprietary Stateless Architecture. The architecture provides the key drivers of our techno-business strategy...

  • Page 28
    ... payment, account transfers, transaction reporting, and account statements. Global Technology Having evolved our domestic Stateless Architecture into a high availability, high scalability architecture for international use, E*TRADE International launched services in four new countries during fiscal...

  • Page 29
    ...their own pace in a self-directed environment. The Knowledge Center -Launched in late fiscal 1999, the Knowledge Center provides self-directed investors with valuable general investing information on subjects, such as stocks, bonds, options, mutual funds, and market centers. 2002. EDGAR Online, Inc.

  • Page 30
    ... our services beyond online domestic retail brokerage offerings to include banking, global cross-border trading, mutual fund offerings, and institutional investing, the number of competitors in these varied market spaces will also increase. We face direct competition from full commission brokerage...

  • Page 31
    ... Financial Officer Chief International Officer Chief Strategic Investment Officer Chief Banking Officer Chief Service Quality Officer Chief Asset Gathering Officer Chief Strategy and Content Development Officer Chief Technology Officer Chief Brokerage Officer Chief Internal Audit and Privacy Officer...

  • Page 32
    ... Community Relations Officer and Assistant Corporate Secretary Jerry D. Gramaglia became the president and chief operating officer of E*TRADE Group, Inc. in May 2000. Prior to joining the Company in June 1998 as chief sales and marketing officer, Mr.Gramaglia was vice president of marketing for...

  • Page 33
    ... J. Theophilos is the chief legal affairs officer of E*TRADE Group, Inc., as well as the Company' s corporate secretary. Mr.Theophilos joined E*TRADE in December 1999. Formerly, Mr.Theophilos was the executive vice president of corporate development and legal affairs at True North Communications...

  • Page 34
    ... communications and business practices regarding our ability to timely execute and confirm transactions through our online brokerage services were false and deceptive. Plaintiff seeks unspecified damages based on causes of action for breach of contract and violation of New York consumer protection...

  • Page 35
    ...table shows the closing high and low sale prices of the Company' s common stock as reported by the NASDAQ National Market for the periods indicated. High Low Fiscal 1999: First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2000: First Quarter Second Quarter Third Quarter Fourth Quarter...

  • Page 36
    ... payable in common stock, which was based on the fair market value of the common stock at the time the dividend was paid. The total preferred stock dividend recorded in fiscal 1998 was $2.1 million. The Company currently intends to retain all of its earnings, if any, for use in its business and does...

  • Page 37
    ... FINANCIAL DATA Years Ended September 30, Consolidated Statement Of Operations Data*: Gross revenues Net revenues Operating income (loss) Gain on sale of investments Income (loss) before cumulative effect of accounting change and extraordinary loss** Net income (loss) Income (loss) per share...

  • Page 38
    ... update any forward-looking statement that may be made from time to time by or on behalf of E*TRADE. Overview E*TRADE is a global leader in online personal financial services offering value-added investing, banking, research and educational tools, premium customer service and a proprietary Stateless...

  • Page 39
    ...years presented (dollars in thousands except cost per new account and average commission per domestic transaction): Percentage Change Years Ended September 30, 2000 1999 1998 2000 versus 1999 1999 versus 1998 Active domestic brokerage accounts Active banking accounts Active global and institutional...

  • Page 40
    ... volumes, net new active bank and brokerage customer accounts and total assets/deposits in customer accounts. Gross revenues consist principally of commission revenues from domestic retail brokerage transactions, payments for order flow, interest income, institutional transaction execution fees...

  • Page 41
    ... on credit extended to customers to finance their purchases of securities on margin and fees on customer assets invested in money market accounts. Interest expense from brokerage-related activities is comprised of interest paid to customers on certain credit balances, interest paid to banks and...

  • Page 42
    ...) Average Yield/Cost Average Balance Fiscal 1998 Interest Inc./Exp. Average Yield/Cost Interest-earning banking assets: Loans receivable, net Interest bearing deposits Mortgage-backed and related available-for-sale securities Available-for-sale investment securities Investment in FHLB stock Trading...

  • Page 43
    ...) Volume Fiscal 1999 vs. Fiscal 1998 Increase (Decrease) Due To Rate Total Interest earning banking assets: Loans receivable, net Interest bearing deposits Mortgage-backed and related available-for-sale securities Available-for-sale investment securities Investment in FHLB stock Trading securities...

  • Page 44
    ... change information for the years ended September 30, 2000, 1999 and 1998 (dollars in thousands): Percentage Change Years Ended September 30, 2000 vs. 1999 2000 1999 1998 1999 vs. 1998 Cost of services Cost of services as a percentage of net revenues Operating expenses: Selling and marketing...

  • Page 45
    ...entities, several of which have subsequently gone public. These investments have been classified as available-for-sale under the provisions of Statement of Financial Accounting Standard ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities . 48 2002. EDGAR Online, Inc.

  • Page 46
    ... banking services and products; the pace of development of the market for online commerce; changes in trading volume in securities markets; trends in the securities and banking markets; domestic and international regulation of the brokerage and banking industries; changes in interest rates; changes...

  • Page 47
    ...a changing interest rate environment. Typically, time deposit accounts and accounts that maintain a relatively high balance provide a relatively stable source of funding. At September 30, 2000, our average retail banking account balance was approximately $16,000, and our banking customers maintained...

  • Page 48
    ...quickly introduce new products and services that satisfy changing customer needs." Cash used in operating activities, net of effects from acquisitions and net of the effects of realized gains on the sale of available-for-sale securities of $220.1 million, was $332.6 million in fiscal 2000. Cash used...

  • Page 49
    ...cumulative effect of a change in accounting principle, and a $6.2 million decrease, net of tax, in shareowners' equity in our financial statements for the quarter ending December 31, 2000. In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and...

  • Page 50
    ... expand their product lines. Commercial banks and other financial institutions have become more competitive with our brokerage operations by offering their customers certain corporate and individual financial services traditionally provided by securities firms. The current trend toward consolidation...

  • Page 51
    ... in our ability to protect information which could seriously harm our business. Our inability to retain key customers could reduce our profitability A significant portion of our transaction revenue is derived from sales to our Power E*TRADE customers. Market conditions over which we have no...

  • Page 52
    ... mortgage-backed securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. In addition, changes in market interest rates could reduce the value of the Bank' s financial assets. Fixed-rate investments, mortgage-backed and related securities and mortgage loans...

  • Page 53
    ... in managing the effects of changes in interest rates, our financial condition and results of operations could suffer. The increased risk of charge-offs due to the Bank's asset diversification could reduce our profitability As the Bank diversifies its investment portfolio towards new higher...

  • Page 54
    ...E*TRADE Bank, is a provider of Internet banking services. This represents a new line of business for us. No assurance can be given that we will be able to effectively manage ETFC' s operations or integrate them with our own in order to realize synergies from the 57 acquisition. The Bank holds a loan...

  • Page 55
    ... condition and operating results. Any failure to maintain our relationships with strategic partners or to make effective investments could harm our business We have established a number of strategic relationships with online and Internet service providers, as well as software and information service...

  • Page 56
    ... aspects of the securities business, including: sales methods; trading practices among broker-dealers; execution of customers' orders; use and safekeeping of customers' funds and securities; capital structure; record keeping; advertising; conduct of directors, officers and employees; and supervision...

  • Page 57
    ...may include investing activities, marketing and the financing of customer account balances. Also, our ability to withdraw capital from brokerage subsidiaries could be restricted, which in turn could limit our ability to pay dividends, repay debt and redeem or purchase shares of our outstanding stock...

  • Page 58
    ...and the Bank. All marketing activities by E*TRADE Securities are regulated by the NASDR, and all marketing materials must be reviewed by an E*TRADE Securities Series 24 licensed principal prior to release. The NASDR has in the past asked us to revise certain marketing materials. We are currently the...

  • Page 59
    ...of good business opportunities and that may be burdensome to comply with Upon the completion of our acquisition of ETFC and its subsidiary, the Bank, on January 12, 2000, we became subject to regulation as a savings and loan holding company. As a result, we are required to file periodic reports with...

  • Page 60
    ... market value of our equity investments in other companies, including through existing or future private investment funds managed by us; 64 fluctuations in interest rates, which will impact our investment and loan portfolios; changes in trading volume in securities markets; the success of, or costs...

  • Page 61
    ... on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to fund our business growth plans. In addition, if funds are available, the result of our issuing securities could dilute the value of shares of our common stock and cause the market price to...

  • Page 62
    ... agreements, certificates of deposit, and commercial paper. Money market funds do not have maturity dates and do not present a material market risk. The other financial instruments are fixed rate investments with short maturities and do not present a material interest rate risk. 2002. EDGAR Online...

  • Page 63
    ... risk and communicating risk limits in connection with our asset/liability management activities and trading. Our strategies are intended to stabilize our net interest margin and our exposure to market risk under a variety of changes in interest rates. By actively managing the maturities of our...

  • Page 64
    ...Years Interest-earning banking assets: Loans receivable, net Mortgage-backed securities, available-for-sale and trading Investment securities, available-for-sale and FHLB stock Federal funds sold and interest bearing deposits Total interest-earning banking assets Non-interest-earning banking assets...

  • Page 65
    ... FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Pag e Independent Auditors' Report Report of Independent Public Accountants Consolidated Balance Sheets as of September 30, 2000 and 1999 Consolidated Statements of Operations for the Years Ended September...

  • Page 66
    ... statements, effective January 1, 1999, E*TRADE Financial Corporation and subsidiaries changed its method of accounting for start-up activities in accordance with Statement of Position 98-5, Reporting on the Costs of Start-up Activities . /s/ Arthur Andersen LLP Vienna, Virginia October 13, 2000...

  • Page 67
    ... per share amounts) Years Ended September 30, 2000 1999 1998 Revenues: Transaction revenues Interest income Global and institutional Other Gross revenues Interest expense Provision for loan losses Net revenues Cost of services Operating expenses: Selling and marketing Technology development General...

  • Page 68
    ... Unrealized gain on available-for-sale securities Foreign currency translation Tax expense on other comprehensive income items Total comprehensive income Issuance of common stock, net of issuance costs Exercise of stock options, including tax benefit Associate Stock Purchase Plan Conversion of ETFC...

  • Page 69
    ... available-for-sale securities Foreign currency translation Tax expense on other comprehensive income items Total comprehensive income Adjustment for ETFC earnings Issuance of common stock in public offering-ETFC / VERSUS Options issued to consultants Exercise of stock options, including tax benefit...

  • Page 70
    ... Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired (used) in business acquisitions, net Net increase in loans receivable, net of loans received in business acquisition Restricted deposits Purchase of mortgage-backed securities, available-for-sale...

  • Page 71
    ... E*TRADE Capital Markets, Inc. ("ETCM"). The Bank is a federally chartered savings bank that provides deposit accounts insured by the Federal Deposit Insurance Corporation ("FDIC") to customers nationwide. ETCM is a funds manager and registered broker-dealer. The consolidated financial statements of...

  • Page 72
    ...debt securities, options and, payments from 78 other broker-dealers for order flow. TIR provides certain institutional customers with market research and other information under arrangements whereby TIR receives minimum annual commissions. Direct costs arising from these arrangements are expensed as...

  • Page 73
    ...) per share as required under Statement of Financial Accounting Standard ("SFAS") No. 123, Accounting for Stock-Based Compensation . Changes in Accounting Principle- In April 1998, the American Institute of Certified Public Accountants issued SOP 98-5, Reporting on the Cost of Start-up Activities...

  • Page 74
    ... held-to-maturity. Available-for-sale securities represent a portfolio of equity securities, commercial paper, municipal bonds, certificates of deposit, corporate bonds, U.S. Government obligations, asset-backed securities and money market funds. Unrealized gains and losses, net of tax, are computed...

  • Page 75
    ... effect of a change in accounting principle, and a $6.2 million decrease, net of tax, in shareowners' equity in the Company' s financial statements for the quarter ending December 31, 2000. In September 2000, the FASB issued SFAS No. 140 , Accounting for Transfers and Servicing of Financial Assets...

  • Page 76
    ... financial statements. 3. BUSINESS COMBINATIONS Poolings of Interests VERSUS On August 28, 2000, the Company completed the acquisition of VERSUS, a Canadian-based provider of electronic securities trading services for institutional and retail investors and owner of the E*TRADE Canada license...

  • Page 77
    ... Limited On August 31, 1999, the Company acquired TIR an international financial services company offering global multi-currency securities execution and settlement services and a leader in providing independent research to institutional investors. The Company issued 4,488,000 shares of common stock...

  • Page 78
    ....2 6,039,940 shares of common stock issued Bank holding company for Metropolitan Bank for savings Direct Financial Corporation 8/98 $ 4.0 $ 22.3 Cash Regional savings and loan holding company _____ (1)In September 2000, the Company announced the sale of its investment in CPR E*TRADE and no longer...

  • Page 79
    ...-customer funds pending completion of securities transactions. The Company pays interest on certain customer and non-customer credit balances. 5. MORTGAGE-BACKED SECURITIES Mortgage-backed securities represent participating interests in pools of long-term first mortgage loans originated and serviced...

  • Page 80
    ... and adjusting the price to reflect differences between the two securities, such as credit risk, liquidity, term, coupon, payment characteristics and other information. The amortized cost basis and estimated fair values of available-for-sale mortgage-backed securities at September 30, 2000 and 1999...

  • Page 81
    ... of non-performing loans, those delinquent greater than 90 days, at September 30, 2000 and 1999 (in thousands): September 30, 2000 1999 First mortgage loans: Secured by one- to four-family residences Secured by commercial real estate Home equity lines of credit and second mortgage loans Other Total...

  • Page 82
    ... that full payment will be collected. For the years ended September 30, 2000 and 1999, the Company had no restructured loans. 7. INVESTMENTS Investments are comprised of trading and available-for-sale debt and equity securities, as defined under the provisions of SFAS No. 115, Accounting for Certain...

  • Page 83
    ... receives an annual management fee of 1.75% of the total committed capital. The management fee is paid in its entirety to the Company and is used to offset the costs and expenses of its corporate development/strategic investment group. In addition, to the extent that the Fund generates profits, 20...

  • Page 84
    ... receives an annual management fee of 1.75% of the total committed capital. The mana gement fee is paid entirely to the Company and used to offset the costs and expenses of the Company' s corporate development/strategic investment group. In addition, to the extent that Fund II generates profits, 25...

  • Page 85
    loans receivable are recorded in other assets. During fiscal 2000, a wholly-owned subsidiary of the Company purchased a residential property that it leases to one of its executive officers with an option to buy. Rental income recorded in fiscal 2000 related to this property was not significant. ...

  • Page 86
    ... adjust daily to the Federal Funds Rate or quarterly or semi-annually to the London InterBank Offering Rate ("LIBOR") rate. In 2000 and 1999, the advances were collateralized by a specific lien on mortgage loans in accordance with an "Advances, Specific Collateral Pledge and Security Agreement" with...

  • Page 87
    ... Company' s shareowners' equity. 12. NOTES PAYABLE AND SHORT-TERM FUNDING The principal source of financing for E*TRADE Securities' margin lending activity is cash balances in customers' accounts and financing obtained from other broker-dealers through E*TRADE Securities' stock loan program. E*TRADE...

  • Page 88
    change in control or other defined redemption event. The Company used $145.0 million of the net proceeds to repay the outstanding balance on a line of credit in February 2000. Debt issuance costs of $19.1 million are included in other assets and are being amortized to corporate interest expense over...

  • Page 89
    .... The net proceeds were used for general corporate purposes, including to fund the Bank operations and the creation and expansion of its financial service and product operations. In May 1999, ETFC purchased $1.0 million face amount of TCT I trust preferred securities on the open market at a price of...

  • Page 90
    ... stock at an exercise price equal to the fair market value of those shares on the grant date. The Salary Investment Option Grant Program and the Director Fee Option Grant Program have each been activated for the first time to allow for the granting of such options in calendar year 2001. The Company...

  • Page 91
    ... granted below fair market value. Such options were immediately vested. Accordingly, the Company recorded expense of $4.9 million for the estimated fair value of these options. The weighted average fair value and the weighted average exercise price of these option grants in fiscal 2000 were $13.55...

  • Page 92
    ...lower of the fair market value of the common stock at the beginning of the two-year offering period or the end of each of the six-month purchase periods. At September 30, 2000, 905,989 shares were available for purchase under the Purchase Plan. 99 Additional Stock Plan Information In accordance with...

  • Page 93
    ... to active employees, based on the proportion of debt service paid in the year. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares in the balance sheet. As shares are released from collateral, the Company reports compensation expense equal to the current market price...

  • Page 94
    ...) per share because the options' exercise price was greater than the average market price of the Company' s common stock for the following years stated, and therefore, the effect would be anti-dilutive (in thousands, except exercise price data): September 30, 2000 1999 1998 Options excluded from...

  • Page 95
    ... minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the institution' s category. The Bank' s actual capital amounts and ratios are presented in...

  • Page 96
    ... purpose of its business. The Company has entered into employment agreements with several of its key executive officers. These employment agreements provide for annual base salary compensation, stock option acceleration and severance payments in the event of termination of 2002. EDGAR Online, Inc.

  • Page 97
    ...are reported at fair market value as freestanding derivatives. Of these derivatives, $1.9 billion notional, were undesignated as of September 30, 2000. The Company' s customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company extends credit to...

  • Page 98
    ... two securities, such as credit risk, liquidity, term coupon, payment characteristics, and other information. Loans receivable- For certain residential mortgage loans, fair value is estimated using quoted market prices for similar types of products. The fair value of certain other types of loans is...

  • Page 99
    ... 2) banking, 3) global and institutional, and 4) asset gathering and other. Domestic retail brokerage is comprised of the activities of the Company' s wholly-owned subsidiary, E*TRADE Securities, which offers domestic retail brokerage services online, by touch-tone telephone, and direct modem access...

  • Page 100
    ... amounts as reported in the consolidated financial statements. Domestic Retail Brokerage & Other Banking Global and Institutional Total (in thousands) Year Ended September 30, 2000: Interest-net of interest expense Non-interest revenue-net of provision for loan losses Net revenues Operating...

  • Page 101
    ... STATEMENTS OF OPERATIONS (in thousands) Years Ended September 30, 2000 1999 1998 Revenues: Management fees from subsidiaries Other Net revenues Cost of services Operating expenses: Selling and marketing Technology development General and administrative Amortization of goodwill Acquisition-related...

  • Page 102
    ... CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment Purchase of investments Proceeds from sale/maturity of investments Cash used in business acquisitions, net of cash acquired Advances to other subsidiaries Restricted deposits Other Net cash used in investing activities CASH...

  • Page 103
    ... th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter 4 th Quarter 3 rd Quarter Fiscal 1999 2 nd Quarter 1 st Quarter(1) E*TRADE Group (as previously reported: Net revenues Cost of services Gain (loss) on sale of investments and venture funds Income (loss) before cumulative effect of accounting change...

  • Page 104
    ...Item 8. Consolidated Financial Statements and Supplementary Data" (b)Reports on Form 8-K On July 18, 2000, the Company filed a Current Report on Form 8-K to report the announcement of an agreement to acquire VERSUS Technologies, Inc., a Canadian based provider of electronic securities. In connection...

  • Page 105
    ... to the Exchangeable Shares of EGI Canada Corporation (incorporated by reference to Exhibit 4.1 of the Company' s Registration Statement on Form S-3, Registration Statement No. 333-41628). 4.4 Indenture, dated February 1, 2000, by and between the Company and The Bank of New York. (incorporated by...

  • Page 106
    ... (Incorporated by reference to Exhibit 10.6 of the Company' s Form 10-Q/A filed on April 17, 2000). *10.30 E*TRADE Ventures II, LLC, Limited Liability Company Operating Agreement. 10.31 E*TRADE eCommerce Fund II, L.P., Limited Partnership Agreement (Incorporated by reference to Exhibit 10.7 of the...

  • Page 107
    ... of Independent Public Accountants. *27.1 Financial Data Schedule for the fiscal year ended September 30, 2000 _____ * Filed herewith 116 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed...

  • Page 108
    ..., E*TRADE Group, Inc. has caused this Fourth Amended and Restated Certificate of Incorporation to be executed by its President and attested to by its Secretary this 25th day of June, 1999. E*TRADE GROUP, INC. By: /s/ Christos M. Cotsakos Christos M. Cotsakos President ATTEST: 2002. EDGAR Online...

  • Page 109
    ... have to convert such shares into or exchange such shares for shares of stock of the Corporation, and the terms and conditions, including price and rate of exchange of such conversion or exchange; and the redemption rights (including sinking fund provisions), if any, for shares of such series; and...

  • Page 110
    ..., the "Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified by law or in any agreement with any national securities exchange or otherwise. 2. The term "Business Combination" as used in this...

  • Page 111
    ... Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) constituting not less than five percent of the total assets of the Corporation, as reported in the consolidated balance sheet of the Corporation as of the end of the most recent quarter with respect...

  • Page 112
    ... Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. 5. "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange...

  • Page 113
    ... is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. 1.5 Voting List . The officer who has charge of the stock ledger of the corporation shall prepare, at least 10 days before every meeting...

  • Page 114
    2002. EDGAR Online, Inc.

  • Page 115
    ...their base salary invested each year in special option grants, the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered...

  • Page 116
    ... Park, CA 94025 Attn: Vice President of Corporate Services Approximately forty-six thousand two hundred fifty-five (46,255) rentable square feet of space in the Building, as more particularly shown on Exhibit A attached hereto. That certain office building located within the Project, commonly known...

  • Page 117
    ...STANDARD BUSINESS LEASE (this "Lease"), dated as of this 18th day of August , 1998 (the "Effective Date"), is entered into by and between MENLOOAKSPARTNERS , L.P., a Delaware limited partnership ("Landlord"), and E*Trade Group, Inc., a Delaware corporation ("Tenant"), on the terms and conditions set...

  • Page 118
    ...the Phase or the Project; (e) Services . To install, use, maintain, repair, replace, restore or relocate public or private facilities for communications and utilities on or under the Building, Phase and/or Project; and (f) Other . To perform such other acts and make such other changes in, to or with...

  • Page 119
    ... available to Landlord under this Lease or at law. 4.6. Security Deposit. Upon executing this Lease, Tenant shall deliver to Landlord cash (the "Security Deposit") in the amount specified as the Security Deposit in the Basic Lease Information. The Security Deposit shall secure the performance...

  • Page 120
    ... the Term. 5.3. Limitation. Nothing contained in this Lease shall require Tenant to pay any franchise, estate, inheritance, succession or transfer tax of Landlord, or any income, profits or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time...

  • Page 121
    ... legal liability or bailee customers insur ance for the full replacement cost of such property; (e) Business Insurance . Business insurance in an amount not less than the annual Base Rent and Additional Rent payable by Tenant hereunder for the then current calendar year, and (f) Additional Insurance...

  • Page 122
    ... of the Premises, the conduct of Tenant' s business or any activity, work or things done, permitted or suffered by Tenant in or about the Premises, (ii) any breach or default in the performance of any obligation on Tenant' s part to be performed under the terms of this Lease, and/or (iii) any acts...

  • Page 123
    ...share of Operating Expenses payable for the current calendar year will vary from Landlord' s estimate, Landlord may give notice to Tenant of Landlord' s revised estimate for the calendar year, and subsequent payments by Tenant for the calendar year shall be based on the revised estimate. 7.6. Annual...

  • Page 124
    ...additional utilities, heating, air conditioning, trash removal and/or cleaning services to Tenant beyond such standard services related to the operation and management similar business office parks located in Menlo Park/Palo Alto areas, or at times other than during Business Hours (as defined in the...

  • Page 125
    ... any lender or mortgagee as a result of Tenant' s failure to perform its obligations under this Section 8 or Sections 9 or 11.2, and any fees, penalties, loss, costs, expenses or liabilities whether paid or accrued by Landlord as a result of Landlord' s failure to timely deliver all or a portion of...

  • Page 126
    ...(as set forth in the Basic Lease Information) and for no other use whatsoever without the prior written consent of Landlord. Tenant, at Tenant' s sole cost and expense, shall comply with all of the requirements of any recorded covenants, conditions and restrictions, and any requirements of municipal...

  • Page 127
    ... review of all permits, reports, plans and other documents, the costs of which shall be reimbursed by Tenant to Landlord on demand. Tenant shall pay to Landlord on demand the all costs incurred by Landlord in performing Tenant' s obligations under this Section 11. Landlord shall 2002. EDGAR Online...

  • Page 128
    ..., members, directors, officers, shareholders, employees and agents from all Environmental Losses and all other claims, actions, losses, damages, liabilities, costs and expenses of every kind, including attorneys' , experts' and consultants' fees and costs, that are incurred at any time and arising...

  • Page 129
    ... account of any and all costs which Tenant might incur in moving Tenant' s merchandise, furniture, fixtures, leasehold improvements and equipment to a new location. 13.5. Temporary Condemnation. If the whole or any part of the Premises shall be Condemned for any temporary public or quasi-public use...

  • Page 130
    ...cost and expense, to remove all of Tenant' s personal property from the Premises and store Tenant' s personal property on Tenant' s behalf. Landlord shall have the right to recover from Tenant: (1) the worth at the time... upon the strict performance of any term hereof or to exercise any right or remedy ...

  • Page 131
    ... of commercial office property located in Menlo Park or Palo Alto, or a sublandlord in connection with a sublease of office space in Menlo Park or Palo Alto, or the subtenant purchases goods or services from sublandlord or an affiliate of sublandlord for an amount in excess of the fair market value...

  • Page 132
    .... If Tenant is a non-publicly traded corporation, the transfer (as a consequence of a single transaction or any number of separate transactions) of fifty percent (50%) or more or of a controlling interest or the beneficial ownership interest of the voting stock of Tenant issued and outstanding as of...

  • Page 133
    ...return receipt requested; personal delivery; electronic mail (e.g., facsimile); or any commercial overnight courier service (e.g., FedEx); and sent to the appropriate address indicated in the Basic Lease Information or at such other place or places as either Landlord or Tenant may, from time to time...

  • Page 134
    ... any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation, attorneys' fees and costs) with respect to any leasing commission or equivalent compensation alleged to be owing on account of Tenant' s dealings with any real estate broker or...

  • Page 135
    ...such services. 19.18. Financial Statements. Within ten (10) days after Landlord' s written request, Tenant shall deliver to Landlord Tenant' s most current quarterly and annual financial statements audited by Tenant' s certified public accountant or, if audited financial statements are not available...

  • Page 136
    ... deliver possession of the Premises to Tenant within one (1) business day after the Effective Date, in a broom clean condition with all building systems in working order and the roof in water-tight condition." Section 4.4 : On page 3, line 1, in place of the deleted language, insert "within three...

  • Page 137
    ... Landlord' s obligation to return the Security Deposit to Tenant in accordance with the terms of this Lease." Section 5.6 : At the end of this Section, insert "Landlord shall furnish Tenant with copies of tax bills for the prior calendar year within ten (10) days after Tenant' s written request...

  • Page 138
    ...(with the term "Prime Rate" defined as the reference rate (or its equivalent) announced publicly in San Francisco, California, from time to time by Wells Fargo Bank, N.A. or, if Wells Fargo Bank, N.A. ceased to exist, the largest bank, in terms of assets, headquartered in California)". At the end of...

  • Page 139
    ... during regular business hours at the offices of Landlord or the offices of Landlord' s designated agent and must be completed within one hundred fifty (150) days after Tenant receives the applicable year end statement. The person or entity performing the audit or review of Landlord' s books and...

  • Page 140
    ..., insert "upon three (3) business days prior written". On page 10, line 11, after the word "Term,", insert "and Tenant fails to perform such obligations within three (3) business days after written notice to Tenant,". Section 8.4 : On page 10, line 1, after the word "times", insert "after prior...

  • Page 141
    ...' s repair or restoration work. Tenant shall exercise its right to terminate this Lease pursuant to subsection (i) above, if at all, by written notice to Landlord within thirty (30) days after Landlord notifies Tenant of Landlord' s estimate of the time required to complete the repair or restoration...

  • Page 142
    ... not interfere with Landlord' s repair or restoration work." At the end of this Section, insert "Notwithstanding the foregoing, if Landlord elects to terminate this Lease as a result of there being insufficient insurance proceeds to pay for all of the costs of the repair or restoration, Tenant shall...

  • Page 143
    ..." means the power to direct the management of such entity through voting...line 1, in place of the deleted number, insert "ten (10) business". On page 17, line 3, after the word "sublet", insert "if the term of such sublet is for greater than five (5) years or ends during the last year of the Term...

  • Page 144
    ... Section. 16.1 : On page 20, line 9, after the number "ten (10)", insert "business". Section 16.3 : At the end of this Section, insert "Tenant' s obligations under this Lease are conditioned upon Tenant' s receipt of an executed nondisturbance agreement from all current mortgagees (as of the date of...

  • Page 145
    ... allowance or inducement and (iii) the monthly Base Rent for the first year of the First Extension Term shall be the greater of (A) the "Initial Fair Market Rent" prevailing at the commencement of the First Extension Term or (B) the monthly Base Rent in effect at the end 2002. EDGAR Online, Inc.

  • Page 146
    ... Base Rent in effect at the end of the First Extension Term. The Base Rent due during the Second Extension Term shall be increased annually by the Average Annual Percentage, if any. (c) Real Estate Commission . Tenant shall be responsible for all brokerage costs and/or finder' s fees associated...

  • Page 147
    ...and the 4500 Bohannon Lease, and (iii) Tenant has a financial net worth of at least Five Hundred Million Dollars ($500,000,000.00) at the time Tenant exercises its Expansion Option or otherwise delivers to Landlord the additional security deposit required pursuant to Section 26.6 below, Tenant shall...

  • Page 148
    ... Security Deposit to Tenant or credit the Additional Security Deposit against the next installment of Rent due under this Lease. (b) Additional Remedy . If Tenant' s financial net worth falls below Five Hundred Million Dollars ($500,000.000.00) at any time after Tenant exercises its Expansion Option...

  • Page 149
    ... Brill, Jr. Its: President "Tenant" E*TRADE GROUP, INC ., a Delaware corporation By: /s/: Len Purkis Name: Len Purkis Its: EVP & CFO By: /s/: Kathy Levinson Name: Kathy Levinson Its: President & COO Exhibit A [FLOORPLAN APPEARS HERE] Exhibit B LEGAL DESCRIPTION That certain real property situated...

  • Page 150
    ...for Landlord' s review and approval. Landlord shall approve or disapprove of the Preliminary Plans by written notice to Tenant within five (5) business days after Landlord' s receipt of the Preliminary Plans. Landlord shall not unreasonably withhold its approval of the Preliminary Plans. If Landlord...

  • Page 151
    ... (3) business days after Landlord' s receipt thereof, the change order shall be deemed to have been approved by Landlord. Tenant shall be responsible for all additional costs attributable to changes to the Approved Working Drawings, including, without limitation, additional architectural fees and...

  • Page 152
    ... and suppliers that have performed work or supplied materials in connection with the Tenant Improvement Work. 5. Default . Tenant' s failure to timely commence or complete the Tenant Improvement Work or to comply with any of the other terms or conditions of this Work Letter shall constitute an...

  • Page 153
    ..., costs or expenses (including claims for workers' compensation, attorneys' fees and costs) based on personal injury or property damage caused in, or contract claims (including, but not limited to claims for breach of warranty) arising from the performance of the Tenant Improvement Work. Tenant...

  • Page 154
    ... and Landlord' s review and approval or disapproval of the Generator Plans. 13.3 Parking . If the number of parking spaces in the Project are at any time reduced due to the location of the Generator or Tenant' s installation of the Generator, Tenant' s right to use a portion of the available parking...

  • Page 155
    ... Existing variable volume system, or package units, with economizer cycle. Building standard, semi recessed pendant heads designed for normal office use (light hazard), chrome or white escutcheon. Location shown on space plan. Throughout u.o.n. Throughout u.o.n. MENLO OAKS CORPORATE CENTER GENERAL...

  • Page 156
    ... occurred on _____, 1998; (3)The Term will expire on _____; and (4)Tenant has accepted and is currently in possession of the Premises. IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this _____ day of Tenant" E*TRADE GROUP, INC., a Delaware corporation B y : Name: Its: By : Name...

  • Page 157
    ... p.m., Monday through Friday (holidays excepted). The hours during which the Building is open may be different than the Business Hours for the Building. 11.Tenant and Tenant' s employees, agents, invitees, etc., shall not use more than Tenant' s allocated share of the Building parking as provided in...

  • Page 158
    ... right, exercisable without notice or without liability to Tenant, to change the name and address of the...use of water. 23.Tenant shall coordinate with RIDES and SAMSTRANS In making carpool, vanpool and transit information available to employees. Tenant shall establish an on-site location for the sale...

  • Page 159
    ... limited partnership ("Landlord"), and E*TRADE GROUP, INC. , a Delaware corporation ("Tenant"). THE PARTIES ENTER INTO THIS AMENDMENT based upon the following facts, understandings and intentions: A. Landlord and Tenant are parties to that certain Menlo Oaks Corporate Center Standard Business...

  • Page 160
    ... Space will become available for lease to Tenant prior to August 31, 2000, Landlord shall notify Tenant in writing of the date on which Landlord expects to deliver the Expansion Space to Tenant. 2. Definitions . Effective as of the Expansion Space Delivery Date, the following terms contained in the...

  • Page 161
    ... month in which the Expansion Space Rent Commencement Date or the end of the Term occurs shall be prorated on a per diem basis, based on the number of days in such calendar month. 5. Tenant's Project Percentage Share . Effective as of the Expansion Space Delivery Date, Tenant' s Project Percentage...

  • Page 162
    ... full force and effect. To the extent of any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment shall control. IN WITNESS WHEREOF , the parties hereto have executed this Amendment as of the day and year first above written. 2002. EDGAR Online, Inc.

  • Page 163
    ... By /s/ J.Marty Brill, Jr. : J. Marty Brill, Jr. President "Tenant" E*TRADE GROUP, INC. a Delaware corporation By: /s/ Raymond Johnson Name: Raymond E. Johnson Its: VP Facilities By: /s/ L.C. Purkis Name:L.C. Purkis Its:CFO EXHIBIT A PHASE II That certain real property situated in the City of...

  • Page 164
    E*TRADE GROUP, INC., a Delaware corporation ("Tenant"), and MENLO OAKS PARTNERS, L.P., a Delaware limited partnership ("Landlord"), entered into that certain Menlo Oaks Corporate Center Standard Business Lease ( Bohannon Drive) dated , , as amended (the "Lease"). Capitalized terms used herein and ...

  • Page 165
    ... of the Term, Tenant shall commence the Modification Work within ten (10) days after Landlord approves the Modification Work Plans and complete the Modification Work within ninety (90) days after the termination of the Lease. 3. Additional Deposit . Within ten (10) days after the execution of this...

  • Page 166
    ...terms of this Letter Agreement. Payment of the draft shall be made in the manner agreed upon by the issuing bank, but Tenant hereby consents to such payment in the manner as Landlord may designate in the draft. e. Return of Additional Deposit . Provided and on the condition that Tenant has performed...

  • Page 167
    ... the Lease, the terms contained in this Letter Agreement shall control. E*Trade Group, Inc. Attn: Mr. Robert Clegg January 18, 1999 Page 4 Except as modified hereby, the Lease is unmodified and in full force and effect. Please execute this Letter Agreement in the space below (and return the same to...

  • Page 168
    ... s review and approval of such system to be specified in the Modification Work Plans, and which shall be installed with a uniform and level grid, as if all of such areas were finished with the ceiling system at the time of Tenant' s construction activities. The finishes, including but not limited to...

  • Page 169
    ... Park, CA 94025 Attn: Vice President of Corporate Services Approximately sixty-two thousand nine hundred twenty (62,920) rentable square feet of space in the Building, as more particularly shown on Exhibit A attached hereto. That certain office building located within the Project, commonly known...

  • Page 170
    Project: Term: Commencement Date: Base Rent (Initial): Security Deposit: Tenant' s Building Percentage Share: Tenant' s Phase Percentage Share: Tenant' s Project Percentage Share: Default Percentage: Permitted Use: Business Hours: Non-Exclusive Parking: That certain business office park located in...

  • Page 171
    ...fixtures servicing the Building). 1.3. Commencement Date. The term ...number of rentable square feet identified in the Basic Lease Information. 1.12. Tenant's Building Percentage Share. The term "Tenant' s Building Percentage Share... to use the Common Areas, for the Term. 2.2. Condition Upon Delivery...

  • Page 172
    ... C . Landlord and Tenant shall each perform such work in accordance with the terms and conditions contained therein. 3. TERM 3.1. Commencement of Term. The term of this Lease (the "Term") shall be for the period of time specified in the Basic Lease Information unless sooner terminated as hereinafter...

  • Page 173
    ... the Term. 5.3. Limitation. Nothing contained in this Lease shall require Tenant to pay any franchise, estate, inheritance, succession or transfer tax of Landlord, or any income, profits or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time...

  • Page 174
    ... year. If at any time it appears to Landlord that Tenant' s share of Impositions payable for the current calendar year will vary from Landlord' s estimate, Landlord may give notice to Tenant of Landlord' s revised estimate for the year, and subsequent payments by Tenant for the year shall be based...

  • Page 175
    ... legal liability or bailee customers insur ance for the full replacement cost of such property; (e) Business Insurance . Business insurance in an amount not less than the annual Base Rent and Additional Rent payable by Tenant hereunder for the then current calendar year; and (f) Additional Insurance...

  • Page 176
    ... month until ten (10) days after Landlord not ifies Tenant of the estimated amount of Tenant' s share of Operating Expenses for the ensuing calendar year. If at any time it appears to Landlord that Tenant' s share of Operating Expenses payable for the current calendar year will vary from Landlord...

  • Page 177
    ...additional utilities, heating, air conditioning, trash removal and/or cleaning services to Tenant beyond such standard services related to the operation and management similar business office parks located in Menlo Park/Palo Alto areas, or at times other than during Business Hours (as defined in the...

  • Page 178
    ... any lender or mortgagee as a result of Tenant' s failure to perform its obligations under this Section 8 or Sections 9 or 11.2, and any fees, penalties, loss, costs, expenses or liabilities whether paid or accrued by Landlord as a result of Landlord' s failure to timely deliver all or a portion of...

  • Page 179
    ...(as set forth in the Basic Lease Information) and for no other use whatsoever without the prior written consent of Landlord. Tenant, at Tenant' s sole cost and expense, shall comply with all of the requirements of any recorded covenants, conditions and restrictions, and any requirements of municipal...

  • Page 180
    ... mean all present and future federal, state and local laws, ordinances, orders, permits, licenses, approvals, authorizations and other requirements of any kind applicable to Hazardous Materials. (c) Environmental Losses . The term "Environmental Losses" shall mean all costs and expenses, damages...

  • Page 181
    ..., members, directors, officers, shareholders, employees and agents from all Environmental Losses and all other claims, actions, losses, damages, liabilities, costs and expenses of every kind, including attorneys' , experts' and consultants' fees and costs, that are incurred at any time and arising...

  • Page 182
    ... account of any and all costs which Tenant might incur in moving Tenant' s merchandise, furniture, fixtures, leasehold improvements and equipment to a new location. 13.5. Temporary Condemnation. If the whole or any part of the Premises shall be Condemned for any temporary public or quasi-public use...

  • Page 183
    ... shall have the right, at Tenant' s sole cost and expense, to remove all of Tenant' s personal property from the Premises and store Tenant' s personal property on Tenant' s behalf. Landlord shall have the right to recover from Tenant: (1) the worth at the time of award of unpaid Rent and other sums...

  • Page 184
    ... "Transfer Effective Date") and a copy of the proposed form of assignment or sublease; and (iv) such financial information, including financial statements, and other information as Landlord may reasonably request concerning the proposed assignee or subtenant. 15.3. Landlord's Election. At any time...

  • Page 185
    ... of commercial office property located in Menlo Park or Palo Alto, or a sublandlord in connection with a sublease of office space in Menlo Park or Palo Alto, or the subtenant purchases goods or services from sublandlord or an affiliate of sublandlord for an amount in excess of the fair market value...

  • Page 186
    ...return receipt requested; personal delivery; electronic mail (e.g., facsimile); or any commercial overnight courier service (e.g., FedEx); and sent to the appropriate address indicated in the Basic Lease Information or at such other place or places as either Landlord or Tenant may, from time to time...

  • Page 187
    ...an offer to lease, or a reservation of or option for leasing the Premises. This document shall become effective and binding only upon execution and delivery hereof by Landlord and Tenant. No act or omission of any employee or agent of Landlord or of Landlord' s broker or agent shall alter, change or...

  • Page 188
    ...such services. 19.18. Financial Statements. Within ten (10) days after Landlord' s written request, Tenant shall deliver to Landlord Tenant' s most current quarterly and annual financial statements audited by Tenant' s certified public accountant or, if audited financial statements are not available...

  • Page 189
    ... deliver possession of the Premises to Tenant within one (1) business day after the Effective Date, in a broom clean condition with all building systems in working order and the roof in water-tight condition." Section 4.4: On page 3, line 1, in place of the deleted language, insert "within three...

  • Page 190
    ... of tax bills for the prior calendar year within ten (10) days after Tenant' s written request." Section 6.1: On page 5, line 9, after the word "action", insert "coveting the Building, the Tenant Improvements and all other improvements made by Tenant to the Premises (if available at commercially...

  • Page 191
    ...(with the term "Prime Rate" defined as the reference rate (or its equivalent) announced publicly in San Francisco, California, from time to time by Wells Fargo Bank, N.A. or, if Wells Fargo Bank, N.A. ceased to exist, the largest bank, in terms of assets, headquartered in California)". At the end of...

  • Page 192
    ... during regular business hours at the offices of Landlord or the offices of Landlord' s designated agent and must be completed within one hundred fifty (150) days after Tenant receives the applicable year end statement. The person or entity performing the audit or review of Landlord' s books and...

  • Page 193
    ... insert "upon three (3) business days prior written". On page 10, line 11, after the word "Term,", insert "and Tenant fails to perform such obligations within three (3) business days after written notice to Tenant,". Section 8.4: On page 10, line 1, after the word "times", insert "after prior notice...

  • Page 194
    ...' s repair or restoration work. Tenant shall exercise its right to terminate this Lease pursuant to subsection (i) above, if at all, by written notice to Landlord within thirty (30) days after Landlord notifies Tenant of Landlord' s estimate of the time required to complete the repair or restoration...

  • Page 195
    ... not interfere with Landlord' s repair or restoration work." At the end of this Section, insert "Notwithstanding the foregoing, if Landlord elects to terminate this Lease as a result of there being insufficient insurance proceeds to pay for all of the costs of the repair or restoration, Tenant shall...

  • Page 196
    ... consideration paid to Tenant (prior to determining Landlord' s share of any excess rent or other consideration) the total amount of (i) any attorneys' fees and brokerage commissions paid by Tenant in connection with the assignment or sublease and (ii) the cost of installing 2002. EDGAR Online, Inc...

  • Page 197
    ...." Section. 16.1: On page 20, line 9, after the number "ten (10)", insert "business". Section 16.3: At the end of this Section, insert "Tenant' s obligations under this Lease are conditioned upon Tenant' s receipt of an executed nondisturbance agreement from all current mortgagees (as of the date of...

  • Page 198
    ... Base Rent in effect at the end of the original Term. The Base Rent due during the First Extension Term shall be increased annually by the Average Annual Percentage (defined below), if any. (b) Second Extension Term . If Tenant exercises its extension option for the Second Extension Term, the Term...

  • Page 199
    ... Base Rent in effect at the end of the First Extension Term. The Base Rent due during the Second Extension Term shall be increased annually by the Average Annual Percentage, if any. (c) Real Estate Commission . Tenant shall be responsible for all brokerage costs and/or finder' s fees associated...

  • Page 200
    ...4200 Bohannon Lease, and (iii) Tenant has a financial net worth of at least Five Hundred Million Dollars ($500,000,000.00) at the time Tenant exercises its First Expansion Option, or Tenant otherwise delivers to Landlord the additional security deposit required pursuant to Section 26.3 below, Tenant...

  • Page 201
    ... 4400 Bohannon Expansion Option Space, and (v) Tenant has a financial net worth of at least Seven Hundred Million Dollars ($700,000,000.00) at the time Tenant exercises its Second Expansion Option, or Tenant otherwise delivers to Landlord the additional security deposit required pursuant to Section...

  • Page 202
    ... to Tenant or credit the FEOS Additional Security Deposit against the next installment of Rent due under this Lease. (2) Additional Remedy . If Tenant' s financial net worth falls below Five Hundred Million Dollars ($500,000,000.00) at any time after Tenant exercises its First Expansion Option, but...

  • Page 203
    ... Tenant or credit the SEOS Additional Security Deposit against the next installment of Rent due under this Lease. (2) Additional Remedy . If Tenant' s financial net worth falls below Second Hundred Million Dollars ($700,000,000.00) at any time after Tenant exercises its Second Expansion Option, but...

  • Page 204
    ...:JC Blakely 2.Landlord' s Work. Tenant' s Work. 3.1 Tenant Improvements . Tenant shall arrange for the construction of certain general purpose office improvements (the "Tenant Improvements") in the Premises. The Tenant Improvements shall be subject to Landlord' s prior written approval (as provided...

  • Page 205
    ... to Tenant' s request for approval or disapproval of the Working Drawings within the time periods provided for above, such approval shal l be deemed to have been given. 3.4.3 Changes . Tenant, at its sole cost and expense, shall make all changes to the Approved Working Drawings that are required by...

  • Page 206
    ... (3) business days after Landlord' s receipt thereof, the change order shall be deemed to have been approved by Landlord. Tenant shall be responsible for all additional costs attributable to changes to the Approved Working Drawings, including, without limitation, additional architectural fees and...

  • Page 207
    ..., costs or expenses (including claims for workers' compensation, attorneys' fees and costs) based on personal injury or property damage caused in, or contract claims (including, but not limited to claims for breach of warranty) arising from the performance of the Tenant Improvement Work. Tenant...

  • Page 208
    ... to Landlord' s review and approval of Tenant' s plans and specifications for the HVAC system or unit (to be included as part of Tenant' s Preliminary Plans and Working Drawings). Landlord, by written notice to Tenant, may require Tenant to remove the HVAC system or unit at the end of the Term and...

  • Page 209
    ...9. 10. Window Covering Vinyl Tiles Throughout u.o.n. As indicated on plans. 11. Electrical Power 12. Telephone/Data Duplex power receptacles: Wall mounted Typical Office Conference Room Open Office Area- Ceiling J-Box or base feed to electrified furniture partition. Combination telephone and...

  • Page 210
    ... Date occurred on , 1998; (3)The Term will expire on ; and (4)Tenant has accepted and is currently in possession of the Premises. IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this day of , . "Tenant" E*TRADE GROUP, INC., a Delaware corporation B y : Name: Its: By : Name: Its...

  • Page 211
    ... p.m., Monday through Friday (holidays excepted). The hours during which the Building is open may be different than the Business Hours for the Building. 11.Tenant and Tenant' s employees, agents, invitees, etc., shall not use more than Tenant' s allocated share of the Building parking as provided in...

  • Page 212
    ... right, exercisable without notice or without liability to Tenant, to change the name and address of the...use of water. 23.Tenant shall coordinate with RIDES and SAMTRANS in making carpool, vanpool and transit information available to employees. Tenant shall establish an on-site location for the sale...

  • Page 213
    ... (Revised April 22, 1987) (Revised March 22, 1988) MENLO OAKS CORPORATE CENTER On-Building Signage criteria 1."on building signs" shall be limited to a maximum of two signs per building and shall be limited to one per elevation. 2.Signage will be restricted to company logo or the spelling out of the...

  • Page 214
    ... limited partnership ("Landlord"), and E*TRADE GROUP, INC., a Delaware corporation ("Tenant"). THE PARTIES ENTER INTO THIS AMENDMENT based upon the following facts, understandings and intentions: A.Landlord and Tenant previously entered into that certain Menlo Oaks Corporate Center Standard Business...

  • Page 215
    ... in which the First Increment Rent Commencement Date or the end of the Term occurs shall be prorated on a per diem basis, based on the number of days in such calendar month. 1.4. Tenant' s Share . Effective as of the First Increment Effective Date, the percentages listed below shall be adjusted as...

  • Page 216
    ... Effective Date), the First Increment Expansion Space and the Second Increment Expansion Space. 2.2.2. Tenant' s Building Percentage Share . The term "Tenant' s Building Percentage Share" as used in the Lease shall mean (i) one hundred percent with respect to Operating Expenses and other costs...

  • Page 217
    ... in which the Second Increment Rent Commencement Date or the end of the Term occurs shall be prorated on a per diem basis, based on the number of days in such calendar month. 2.3. Tenant' s Share . Effective as of the Second Increment Effective Date, the percentages listed below shall be adjusted as...

  • Page 218
    ...Its: Vice President, Corp Resources January 18, 1999 VIA FACSIMILE E*Trade Group, Inc. 2400 Geng Road Palo Alto, CA 94303 Attn: Mr.Robert Clegg Re: Lease of 4500 Bohannon Drive, Menlo Park, California Dear Robert: Reference is made to that certain Menlo Oaks Corporate Center Standard Business Lease...

  • Page 219
    ...terms of this Letter Agreement. Payment of the draft shall be made in the manner agreed upon by the issuing bank, but Tenant hereby consents to such payment in the manner as Landlord may designate in the draft. e. Return of Additional Deposit . Provided and on the condition that Tenant has performed...

  • Page 220
    ... elect not to perform the Modification Work and retain for Landlord' s account all or a portion of the Additional Deposit in an amount equal to the estimated cost of performing the Modification Work, as reasonably determined by Landlord. If the cost of completing the Modification Work or exceeds the...

  • Page 221
    ...Harrington Its: Vice President/Secretary AGREED AND ACCEPTED: E*TRADE GROUP, INC., a Delaware corporation By:/s/ Robert Clegg Name: Robert Clegg Its: Vice President By:/s/ Len Purkis Name: Len Purkis Its: Chief Financial Officer EXHIBIT 1 PRELIMINARY PLANS The term "Preliminary Plans" shall refer...

  • Page 222
    ... s review and approval of such system to be specified in the Modification Work Plans, and which shall be installed with a uniform and level grid, as if all of such areas were finished with the ceiling system at the time of Tenant' s construction activities. The finishes, including but not limited to...

  • Page 223
    EXHIBIT 10.30 E*Trade Ventures II, LLC A Delaware Limited Liability Company LIMITED LIABILITY COMPANY OPERATING AGREEMENT June 16, 2000 TABLE OF CONTENTS ARTICLE I NAME, PURPOSE AND PRINCIPAL OFFICE OF COMPANY Page 1 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. Name Agreement Purpose; Powers Registered ...

  • Page 224
    ...4 ARTICLE IV MANAGEMENT, DUTIES AND RESTRICTIONS 4 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. Management Conversion of Status as Managing Member Liability of Members to the Company and the Other Members Restrictions on the Members Additional Restrictions on Non-Managing Members Officers 4 5 5 5 5 5 ARTICLE...

  • Page 225
    ... AND REPORTS 12 12.1. 12.2. 12.3. 12.4. Tax Accounting and Reports Valuation of Securities and Other Assets Owned by the Company Supervision; Inspection of Books Confidentiality 1 2 1 2 1 2 1 2 ARTICLE XIII OTHER PROVISIONS 1 9 13.1. Execution and Filing of Documents 2002. EDGAR Online, Inc...

  • Page 226
    ... other name as the Managing Members may, in their discretion, determine. E*Trade hereby grants the Company the right, at no cost, to use the "E*Trade" name for the term of the Company as set forth in Article II hereof. 1.2 . Agreement. In consideration of the mutual covenants herein contained and...

  • Page 227
    ..., as well as in rights, warrants and options to purchase securities; (2)to make and perform all contracts and engage in all activities and transactions necessary or advisable to carry out the purposes of the Company, including, without limitation, the purchase, sale, transfer, pledge and exercise of...

  • Page 228
    ...(n) Fiscal Quarter . This term shall have the meaning ascribed to it in Paragraph6.2(c). (o) Fiscal Year . This term shall have the meaning ascribed to it in Paragraph6.2(d). (p) Management Fee . The management fee receivable by the Company from the Fund. (q) Net Income or Net Loss . This term shall...

  • Page 229
    ... and power of the Managing Members to deal with them in the best interests of the Company, including the right to substitute other Securities of equivalent value. (b)In the event of the withdrawal of any Member pursuant hereto, the Percentage Interests and Capital Accounts of the withdrawing Member...

  • Page 230
    ... the Company and the Fund. (e)To loan money to any of the Members upon such terms and conditions as the Managing Members may prescribe. (f)To deposit or hold Securities and other assets of the Company in the Company' s name or in such street or nominee names as may be determined from time to time by...

  • Page 231
    ... with the terms hereof in order to fund the Company' s capital commitment to the Fund. ExhibitA shall be amended from time to time to reflect any changes to the Capital Commitments and Percentage Interests of the Members. (a)The Managing Members shall provide at least twelve(12) business days' prior...

  • Page 232
    ...(3)The Book Values of all Company assets shall be adjusted to equal their respective fair market values, as determined by the Managing Members, and the amount of such adjustment shall be treated as Net Income or Net Loss and allocated to the Capital Accounts of the Members, as of the following times...

  • Page 233
    ... percent(100%). (g) Sale or Exchange . A sale, exchange, liquidation or similar transaction, event or condition with respect to any assets (except realizations of purchase discounts on commercial paper, certificates of deposit or other money-market instruments) of the Company of the type that would...

  • Page 234
    ...than expenses directly attributable to the Company' s investment in the Fund or the Company' s Carry, as determined by the Managing Members, in their discretion. Notwithstanding the foregoing, if there is a change in control of E*Trade, the Managing Members may, in their discretion, allocate any Net...

  • Page 235
    ... Book Value of any Securities (or other assets) distributed shall be allocated to the Capital Accounts of the Members as Net Income or Net Loss pursuant to ArticleVI. (c)Securities distributed in kind pursuant to this Paragraph8.3 shall be subject to such conditions and restrictions as the Managing...

  • Page 236
    ... fair market value of Securities. (1)Securities not subject to investment letter or other similar restrictions on free marketability: (A)If traded on one(1) or more securities exchanges ortraded on NASDAQ, the value of each Security shall be deemed to be the Security' s closing price as reported in...

  • Page 237
    ... shall be made to reflect the effect of the restrictions on transfer. (3)The value of the Company' s interest in the Fund shall be the fair market value of the Company' s interest in the Securities (and other assets) of the Fund. (4)If the Managing Members in good faith determine that, because of...

  • Page 238
    ... (a)reasonable fees, costs, and expenses paid in connection with or resulting from any claim, action or demand against the Managing Members, their Affiliates or any agent thereof, the Company or their agents that arise out of or in any way relate to the Company, its properties, business or affairs...

  • Page 239
    ... TMP and his agents and save and hold them harmless from and in respect to all (i)reasonable fees, costs and expenses in connection with or resulting from any claim, action or demand against the TMP, the Managing Members or the Company that arise out of or in any way relate to the TMP' s status as...

  • Page 240
    ...property to the Company for federal income tax purposes and its initial Book Value. (c)In the event the Book Value of any Company asset is adjusted pursuant to the terms of this Agreement, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any...

  • Page 241
    ... them). A-1 Exhibit 10.38 E*TRADE GROUP, INC. NOTE SECURED BY DEED OF TRUST $1,600,000.00 February 28, 2000 Menlo Park, California FOR VALUE RECEIVED , DENNIS LUNDIEN ("Maker") promises to pay to the order of E*TRADE Group, Inc, ("Corporation"), at its corporate offices at 4500 Bohannon Drive...

  • Page 242
    ... Opinion No. 16, is used to account for the acquisition for financial reporting purposes, acceleration shall not occur prior to the end of the sixty (60)-day period immediately following the end of the applicable restriction period required under Accounting Series Release Numbers 130 and 135; or...

  • Page 243
    ... . From the date of this Note until the day on which this Note is secured by the Collateral, if Maker sells any shares of the common stock of Corporation acquired through the exercise of one or more employee stock options, the unpaid principal balance of this Note shall become immediately due and...

  • Page 244
    ...limited to its express terms. No delay by Corporation in acting with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or failure of a condition under this Note, the Deed of Trust or the obligations secured thereby. No single or partial exercise...

  • Page 245
    ... whose address is , to CHICAGO TITLE COMPANY, a California corporation ("Trustee"), for the benefit of E*TRADE GROUP, INC., a Delaware corporation ("Beneficiary"). Trustor irrevocably grants, transfers and assigns to Trustee in trust, with power of sale that certain property located in , California...

  • Page 246
    ..., may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of (in the following order of priority): all sums owing under the terms hereof or...

  • Page 247
    ..., requests that a copy of any notice of default and any notice of sale hereunder be mailed to him or her at his or her address hereinbefore set forth. (12)This Deed of Trust is further subject to the terms and conditions set forth in Addendum to this Deed of Trust attached hereto and incorporated...

  • Page 248
    ...certain Deed of Trust With Assignment of Rents (the "Deed of Trust") dated February , 2000 executed by and , as Trustor, to CHICAGO TITLE COMPANY, a California corporation, as Trustee, for the benefit and security of E*TRADE GROUP, INC., a Delaware corporation, as Beneficiary. Capitalized terms used...

  • Page 249
    ...evidenced by that certain Note Secured by Deed of Trust (the "Note") of even date herewith from Trustor to Beneficiary, within five (5) days of the date so provided for therein; e. The failure by Trustor to perform or comply with any other material obligation, covenant or condition contained in this...

  • Page 250
    ... the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Signature of Notary STATE OF CALIFORNIA ) COUNTY OF ) On , 2000 before me, , Notary Public, personally appeared , personally known to me (or proved to me on the...

  • Page 251
    ...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...

  • Page 252
    E*TRADE GROUP, INC. /s/ Jerry A. Dark Jerry A. Dark Vice President, Associates and Work Environment I agree to the terms and conditions in this offer. Dated: May 31, 1999 /s/ Mitchell H. Caplan Signature 2002. EDGAR Online, Inc.

  • Page 253
    ... 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...

  • Page 254
    .... a.Business unit financial performance i.Includes budget management ii.Performance over revenue targets b.Key business initiatives i.Includes performance compared with growth targets for sales, volumes by geography/line of business/function ii.Customer growth and retention 2002. EDGAR Online, Inc...

  • Page 255
    ...key, high-impact positions. 3. Project Leadership : Degree to which employee takes an active and effective role in identified projects. (Note: all existing projects will be reviewed and new projects may be jointly identified by Chief Executive Officer-TIR and President-E*TRADE International. The new...

  • Page 256
    ... 10.41 EMPLOYMENT AGREEMENT This Agreement is made effective this 1st day of June, 2000 (the "Effective Date"), by and between E*TRADE Group, Inc., a Delaware corporation ("Company"), and Jerry Gramaglia ("Executive"). BACKGROUND Executive is serving as President and Chief Operating Officer of the...

  • Page 257
    ... all legal fees and expenses which such party may reasonably incur as a result of any legal proceeding relating to the validity, enforceability, or breach of, or liability under, any provision of this Agreement or any guarantee of performance (including as a result of any contest by Executive about...

  • Page 258
    ... this 1st day of October, 2000 (the "Effective Date"), by and between E*TRADE GROUP, INC., a Delaware corporation ("Company"), and CHRISTOSM. COTSAKOS, ("Executive"). BACKGROUND Executive, Chairman of the Board and Chief Executive Officer of Company, began his service with the Company pursuant to...

  • Page 259
    ... all legal fees and expenses which such party may reasonably incur as a result of any legal proceeding relating to the validity, enforceability, or breach of, or liability under, any provision of this Agreement or any guarantee of performance (including as a result of any contest by Executive about...

  • Page 260
    ... COMPUTATION OF RATIO OF EARNINGS Years Ended September 30, 2000 1999 1998 (dollars in thousands) 1997 1996 Statement of Earnings to Fixed Charges Fixed Charges: Interest expense Amortization of debt issuance costs Estimated interest within rental expense Preference securities dividend requirement...

  • Page 261
    ... E*TRADE Securities, Inc. E*TRADE Capital, Inc. E*TRADE Asset Management, Inc. E*TRADE Business Solutions Group, Inc. E*TRADE International Ltd. E*TRADE Global Ltd. E*TRADE Asia Limited ClearStation, Inc. TradePlus Brokerage, Inc. Confluent, Inc. E*TRADE Online Ventures, Inc. E*TRADE International...

  • Page 262
    ... THE FINANCIAL STATEMENTS INCLUDED IN THIS REGISTRATION STATEMENT FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000 PERIOD TYPE PERIOD START FISCAL YEAR END PERIOD END CASH 12 MOS Oct 01 1999 Sep 30 2000 Sep 30 2000 175,443 2002. EDGAR Online, Inc...

  • Page 263
    ... OWNED PP&E TOTAL ASSETS SHORT TERM PAYABLES REPOS SOLD SECURITIES LOANED INSTRUMENTS SOLD LONG TERM PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY TRADING REVENUE INTEREST DIVIDENDS COMMISSIONS INVESTMENT BANKING REVENUES FEE REVENUE INTEREST EXPENSE COMPENSATION INCOME...