Exhibit 10.39
EMPLOYMENT AGREEMENT
This Employment Agreement is made
and entered into by and between E*TRADE Financial Corporation (the
“Company”) and Nick Utton (“Executive”) as
of June 21, 2004.
(a) Position and Duties :
Executive shall be employed by the Company as its Chief Marketing
Officer reporting to the Company President and Chief Operating
Officer. As its Chief Marketing Officer, Executive agrees to devote
his full business time, allergy and skill to his duties at the
Company. Executive’s duties and authority shall include au
those duties and authority customarily performed by the Chief
Marketing Officer. During the term of Executive’s employment,
Executive shall be permitted to manage his personal investments, be
involved in charitable and professional activities and serve on
boards of directors of for-profit entities, provided that the Board
of Directors of the Company (the “Board’) has approved
such for-profit board service in writing, and only as such
activities do not adversely affect the performance of
Executive’s duties to the Company under this Agreement. Tithe
Board requests Executive to resign from such board position at any
time, Executive shall resign immediately (subject to his fiduciary
obligations).
2. Term of Employment :
Executive’s employment with the Company will be for no
specified term, and may be terminated by Executive or the Company
at any time with or without cause. Upon the termination of
Executives employment for any reason, either Executive nor the
Company shall have any further obligation or liability under this
Agreement to the other, except as set forth below.
3. Compensation : Executive
shall be compensated by the Company for his services as
follows:
(a) Base Salary : As Chief
Marketing Officer, Executive shall be paid 4 monthly Base Salary of
$37,500.00 ($450,00 on an annualized basis), subject to applicable
withholding, in accordance with the Company’s normal payroll
procedures. Executive’s salary shall be reviewed on at least
an annual basis and maybe increased as appropriate. In the event of
such an increase, that amount shall become Executive’s Base
salary. However Executive acknowledges that the Board of Directors
may modify the compensation structure generally applicable to all
of the Company’s senior executives so that Base Salary is
reduced but the Target Born’s (as defined below) is
increased. Such a modification will not be considered prohibited by
this provision nor will such a modification constitute an event of
Good Reason (as defined below),
(b) Benefits : Executive
shall have the right, on the same basis as other senior executives
of the Company, to participate in and to receive benefits under any
of the Company’s employee benefit and equity plans, as such
plans may be modified from time to time.
(c) Performance Bonus :
Executive shall have the opportunity to earn a performance bonus in
accordance with the Company’s Performance Bonus Plan may be
modified over time, Pursuant to the Performance Bonus Plan,
Executive will have a
target bonus for meeting established performance
objectives, The target bonus at the level of meeting these
objectives (and not performing at a higher or lower threshold)
shall be expressed as a multiple of Executive’s Base Salary
(the “Target Bonus”). Executive’s Target Bonus
will be one times Executive’s Base Salary, and at the
“exceeds” and “substantially exceeds”
levels, Executive will be eligible for a bonus payment equivalent
to two times Base Salary. For the first year of employment,
Executive will receive a guaranteed bonus payment of $550,000. This
guaranteed payment will be for the first year only, thereafter, any
bonus payment will be made only if performance criteria set forth
in the bonus program are met.
4. Equity Compensation Grants
: All equity compensation grants (including stock options and
restricted stock) shall be governed by the terms of a stock option
or restricted stock agreement setting forth the terms and
conditions of the grant. Notwithstanding any other provision to the
contrary contained in any agreement evidencing any current or
future stock option, restricted stock award or other Company
stock-based award granted to Executive (and to the extent that such
provisions are not already contained in such agreements precisely
as set forth hereunder), each such agreement shall incorporate this
Agreement by reference and shall be deemed to include each of the
additional provisions set forth below. The rights provided by this
Section 4 shall he in addition to any rights granted to
Executive under any such agreement.
(a) Acceleration of Equity
Compensation Vesting Upon Non-Assumption . In the event of a
Charge In Control, each Company stock option and restricted stock
award granted to Executive, to the extent then outstanding, shall
become fully vested and exercisable immediately prior to but
conditioned upon the consummation of the Change in Control, except
to the extent that the surviving, continuing, successor, or
purchasing entity or parent thereof, as the case may be (the
“Acquiror”), (A) assumes or continues in effect
the Company’s rights and obligations under such option,
(B) substitutes for such option a substantially equivalent
option for the Acquiror’s stock or (C) replaces such
option or restricted stock award with a cash incentive program
pursuant to which Executive is to be paid for each share of the
Company’s common stock subject to such option or award
immediately prior to the consummation of the Change in Control and
in accordance with the same vesting schedule applicable to such
option or restricted stock award (including any subsequent
acceleration of vesting determined under any other Section of this
Agreement) an amount equal to the excess of the fair market value
of the consideration paid by the Acquiror for each share of the
common stock of the Company outstanding immediately prior to the
consummation of the Change in Control over the per share exercise
price of such option.
(b) Acceleration of Equity
Compensation Grant Vesting Upon Involuntary Termination During a
Change in Control Period . If Executive’s employment with
the Company terminates as a result of an Involuntary Termination
occurring during the Change in Control Period, then (A) each
Company stock option granted to Executive, to the extent then
outstanding, shall become fully vested and exercisable in full as
of the later of the date of Executive’s termination of
employment or the last day following Executive’s execution of
the Release on which Executive may revoke such Release under its
terms and shall remain exercisable in full until the first to occur
of the expiration of a period of three months following the date on
which Executive’s employment terminated or the expiration of
such option’s term and (B) each
restricted stock and other Company stock-based
award ranted to Executive then outstanding shall, as of the later
of Executive’s termination of employment or the last day
following Executive’s execution of the Release on which
Executive may revoke such Release under its terms, become fully
vested and cease to be subject to forfeiture.
(c) Acceleration of Equity
Compensation Grant Vesting Upon Death . If Executive’s
employment with the Company terminates due to Executive’s
death, then (A) each Company stock option granted to
Executive, to the extent then outstanding, shall become fully
vested and exercisable in full as of the date of Executive’s
death and (B) each restricted stock and other Company
stock-based award granted to Executive then outstanding shall, as
of the date of Executive’s death, become fully vested and
cease to be subject to forfeiture. The equity grants shall be
exercisable by the estate of the Executive in accordance with the
time periods and procedures set forth in the Company’s
standard option agreement.
5. Effect of Termination of
Employment .
(a) Voluntary Termination Death
or Disability . In the event of Executive’s voluntary
termination from employment with the Company (other than for Good
Reason), or in the event that Executive’s employment
terminates as a result of his death or disability, Executive shall
be entitled to no compensation or benefits from the Company other
than those earned under Section 3 through the date of his
termination (including any bonus that has been earned but not yet
paid) and, in the case of each stock option, restricted stock award
or other Company stock-based award granted to Executive, the extent
to which such awards are vested through the date of his termination
or by consequence of death.
(b) Termination for Cause :
If Executive’s employment is terminated by the Company for
Cause, Executive shall be entitled to no compensation or benefits
from the Company other than those earned under Section 3
through the date of his termination and, in the case of each stock
option, restricted stock award or other Company stock-based award
granted to Executive, the extent to which such awards are vested
through the date of his termination. In the event that the Company
terminates Executive’s employment for Cause, the Company
shall provide written notice to Executive of that fact (specifying
the basis therefor) prior to, or concurrently with, the termination
of employment. Failure to provide proper written notice that the
Company contends that the termination is for Cause shall constitute
a waiver of any contention that the termination was for Cause, and
the termination shall be irrebuttably presumed to be an Involuntary
Termination.
(c) Involuntary Termination
During Change in Control Period : If: (A) a Change in
Control Period begins; and (B) Executive’s employment with
the Company terminates as a result of an Involuntary Termination
occurring during the Change in Control Period, then, in addition to
any other benefits described in this Agreement, Executive shall
receive the following:
(i) all compensation and benefits
earned under Section 3 through the date of Executive’s
termination of employment, including any bonus that has been earned
but not yet paid plus a pro-rata share of the Target Bonus
(presuming performance at the “meets expectations”
level and no greater);
(ii) a lump sum payment equivalent
to two years Base Salary (as it was in effect immediately prior to
the Change in Control); and
(iii) a lump sum payment equivalent
to two year’s Target Bonus under the Performance Bonus Plan
in effect immediately prior to the year in which the Change in
Control occurs, with the payment equivalent to the amount that
would be paid if all performance targets were met (and not
exceeded).
The amount payable to Executive
under subsections (ii) and (iii), above, shall be paid to
Executive in a lump sum within ten (10) business days
following the later of Executive’s termination of employment
or the last day following Executive’s execution of the
Release or on which Executive may revoke such Release under its
terms.
(d) Equalization Payment :
If: (A) a Change in Control Period begins on or before
December 31, 2004; and (B) Executive’s employment
with the Company terminates as a result of an Involuntary
Termination occurring during the Change in Control Period, then, in
addition to the benefits described in subsection (c) or
(d) above, the Company will also pay Executive a tax
equalization payment, which shall be in an amount which, when added
to the other amounts payable, will place Executive in the same
after-tax position as if the excise tax penalty of
Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), or any successor statue of similar
import, did not apply to any of the amounts payable under this
Section 5 including any amount paid under this subsection
(c) or (d). The amount of this tax equalization payment shall
be determined by Company’s independent accountants and shall
be payable to Executive at the same time as the other severance
payments under this Section 5. The Compensation Committee of
the Board of Directors will review the appropriateness of any such
payment for each calendar year beginning on or after
January 1, 2005 and will determine whether to maintain this
provision by resolution adopted on or before December 31 of the
preceding year. In the event no such resolution is adopted, there
will be no equalization payment.
(e) Involuntary Termination in
the Absence of Change in Control : In the event that
Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason prior to the beginning
of, or following the end of, a Change in Control Period then
Executive shall receive the following benefits:
(i) all compensation and benefits
earned under Section 3 through the date of Executive’s
termination of employment, including any bonus that has been earned
but not yet paid plus a pro-rata share of the Target Bonus
(presuming performance at the “meets expectations”
level and no greater); and
(ii) a lump sum payment equivalent
to one year’s Base Salary; and
(iii) a lump sum payment equivalent
to one year’s Target Bonus under the Company’s
Performance Bonus Plan as it is in effect at the time of the
Involuntary Termination.
The amount payable to Executive
under subsection (ii) above shall be paid to Executive in a
lump sum within ten (10) business days following the later of
Executive’s termination of employment or the last day
following Executive’s execution of the Release or on which
Executive may revoke such Release under its terms.
(e) Resignation from
Positions : In the event that Executive’s employment with
the Company is terminated for any reason, on the effective date of
the termination Executive shall simultaneously resign from each
position he holds on the Board and/or the board of directors of any
of the Company’s affiliated entities and any position
Executive holds as an officer of the Company or any of the
Company’s affiliated entities.
6. Certain Definition s: For
the purposes of this Agreement, the following capitalized terms
shall have the meanings set forth below:
(a) “ Cause ”
shall mean any of the following:
(i) Executive’s theft,
dishonesty, willful misconduct, breach of fiduciary duty for
personal profit, or material falsification of any employment or
Company records;
(ii) Executive’s willful
violation of any law, rule, or regulation of a regulatory or
self-regulatory organization involving fraud, dishonesty or moral
turpitude (other than traffic violations or similar offenses) or
final cease-and-desist order or commission of an act that involves
moral turpitude;
(iii) Executive’s intentional
refusal to perform stated duties after written notice;
(iv) Executive’s intentional
or reckless improper disclosure of the Company’s confidential
or proprietary information;
(v) any material breach by Executive
of the Company’s Code of Professional Conduct, which breach
shall be deemed “material” if it results from an
intentional act by Executive, has a material detrimental effect on
the Company’s reputation or business and is of a type that
normally would result in a “cause” termination within
the Company (regardless of whether there are specific incidents of
precedent for such termination); or
(vi) any material breach by
Executive of this Agreement, which
