E*TRADE Financial Corporation

Deferred Compensation Plan

Amended and Restated

Effective January 1, 2009

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TABLE OF CONTENTS

 

     Page

Purpose

   1

ARTICLE 1 Selection, Enrollment, Eligibility

   1

1.1 Selection by Committee

   1

1.2 Enrollment Requirements

   1

1.3 Termination of Participation

   1

ARTICLE 2 Deferral Elections and Payment of Deferred Amounts

   2

2.1 Deferral Elections.

   2

2.2 Minimum Deferrals

   2

2.3 Withholding of Annual Deferral Amounts.

   3

2.4 FICA and Other Taxes

   3

2.5 Permitted Changes to Deferral Elections

   3

ARTICLE 3 Deferral Accounts

   4

3.1 Deferral Accounts.

   4

3.2 Vesting.

   4

3.3 Investment Elections

   4

ARTICLE 4 Distributions

   6

4.1 Distribution Event

   6

4.2 Manner and Timing of Payment.

   6

4.3 Permitted Accelerations of Payment

   8

4.4 Payment Delays.

   9

4.5 Suspension Not Allowed

   10

4.6 Tax Withholding.

   10

ARTICLE 5 Beneficiary Designation

   10

5.1 Beneficiary

   10

5.2 Beneficiary Designation; Change; Spousal Consent.

   10

5.3 Acknowledgment.

   10

5.4 No Beneficiary Designation

   10

ARTICLE 6 Amendment or Termination

   11

6.1 Amendment or Termination

   11

6.2 Effect of Payment.

   11

 

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ARTICLE 7 Administration

   11

7.1 Committee Duties.

   11

7.2 Administration Upon Change In Control

   11

7.3 Agents.

   12

7.4 Binding Effect of Decisions

   12

7.5 Indemnity of Committee

   12

7.6 Employer Information

   12

ARTICLE 8 Claims Procedures

   12

8.1 Presentation of Claim

   13

8.2 Notification of Decision

   13

8.3 Review of a Denied Claim

   13

8.4 Decision on Review.

   13

8.5 Legal Action

   14

ARTICLE 9 Trust

   14

9.1 Establishment of the Trust.

   14

9.2 Interrelationship of the Plan and the Trust

   14

9.3 Investment of Trust Assets

   14

9.4 Distributions from the Trust

   14

ARTICLE 10 Miscellaneous

   14

10.1 Status of Plan.

   14

10.2 Unsecured General Creditor.

   15

10.3 Employer’s Liability

   15

10.4 Nonassignability.

   15

10.5 Not a Contract of Employment

   15

10.6 Coordination with Other Benefits

   15

10.7 Furnishing Information.

   15

10.8 Terms.

   16

10.9 Captions.

   16

10.10 Governing Law.

   16

10.11 Notice

   16

10.12 Successors

   16

10.13 Spouse’s Interest

   16

10.14 Validity.

   16

10.15 Code Section 409A Compliance

   16

10.16 Incompetent

   17

10.17 Insurance

   17

10.18 Legal Fees to Enforce Rights after Change in Control

   17

ARTICLE 11 Definitions

   18

 

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E*TRADE FINANCIAL CORPORATION

DEFERRED COMPENSATION PLAN

Amended and Restated Effective January 1, 2009

Purpose

The purpose of this Plan is to provide deferred compensation to a select group
of management and highly compensated Employees who contribute materially to the
continued growth, development and future business success of E*TRADE Financial
Corporation, a Delaware corporation, and its affiliates, if any, that sponsor
this Plan. This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.

ARTICLE 1

Selection, Enrollment, Eligibility

 

1.1 Selection by Committee. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees of the Employers, as
determined by the Committee in its sole discretion.

 

1.2 Enrollment Requirements. As a condition to participation, each selected
Employee shall complete, execute and return to the Committee within 30 days
after he is selected to participate in the Plan forms that the Committee may
require from time to time, including an Election Form and a Beneficiary
Designation Form. In addition, the Committee shall establish from time to time
such other enrollment requirements as it determines in its sole discretion are
necessary. If an Employee fails to meet all such requirements within the period
required, that Employee shall not be eligible to participate in the Plan until
the first day of the Plan Year following the delivery to, and acceptance by, the
Committee of the required documents.

 

1.3 Termination of Participation. If the Committee determines in good faith that
a Participant no longer qualifies as a member of a select group of management or
highly compensated employees, as membership in such group is determined in
accordance with sections 201(2), 30l(a)(3) and 401(a)(1) of ERISA, Participant’s
active participation in the Plan shall end on the last day of the Plan Year
during which the Participant’s membership status changed. In the event that a
Participant is no longer eligible to defer compensation under this Plan, the
Participant’s Deferral Account shall be governed by the terms of this Plan until
the Participant’s Deferral Account is paid in full.

 

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ARTICLE 2

Deferral Elections and Payment of Deferred Amounts

 

2.1 Deferral Elections.

 

  (a) Annual Deferral Elections. For each Plan Year, the Participant may elect
to defer compensation by filing with the Committee, in accordance with rules,
procedures and forms specified by the Committee, (i) an irrevocable election to
defer all or a portion of Base Annual Salary, Bonus or Commissions and (ii) an
election regarding the time and form of distribution of the Annual Deferral
Amount. Deferral elections are effective on a calendar year basis, must be filed
with the Committee and become irrevocable no later than the date specified by
the Committee but in any event before the beginning of the Plan Year to which
the elections relate, and must specify the time and form of distribution
selected by the Participant.

 

  (b) Special Rule for Initial Participation. Within 30 days after the date an
individual first becomes eligible to participate in the Plan, the individual may
elect to defer compensation by filing with the Committee, in accordance with
rules, procedures and forms specified by the Committee, (i) an irrevocable
election to defer all or a portion of Base Annual Salary, Bonus or Commissions
to be paid for services to be performed after the election, and (ii) an election
regarding the time and form of distribution of the Annual Deferral Amount. For
the Participant’s elections to be valid, the forms required by the Committee
must be completed and signed by the Participant, timely delivered to the
Committee, and accepted by the Committee.

 

       This election relating to initial participation in the Plan is available
only to Participants that are not participants in any other elective account
balance plan subject to Code section 409A maintained by a Related Company. If an
Employee whose participation in the Plan is terminated again becomes eligible to
defer compensation as a Participant in this Plan, that Employee may file an
election pursuant to this Section 2.1(b) only if the Employee was ineligible to
defer compensation in this Plan and all other Related Company elective account
balance plans, within the meaning of Code section 409A, for the 24 months
preceding the date on which the Participant again became eligible to participate
in this Plan.

 

2.2 Minimum Deferrals.

 

  (a) Base Annual Salary, Bonus and Commissions. A Participant wishing to elect
deferrals for a Plan Year must elect to defer the following minimum amounts:

 

Deferral

   Minimum Amount

Base Annual Salary

   $2,000

Bonus

   $2,000

 

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Commissions

   $2,000

 

  If a Participant elects to defer less than the stated minimum amounts, or if
no election is filed, the amount deferred shall be zero.

 

  (b) Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, the minimum Base
Annual Salary deferral shall be an amount equal to the minimum set forth above,
multiplied by a fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which is 12.

 

2.3 Withholding of Annual Deferral Amounts. The Committee will withhold the
Annual Deferral Amount not later than the end of the calendar year during which
the Company would otherwise have paid the amounts to the Participant but for the
Participant’s deferral election. The Base Annual Salary portion of the Deferral
Amount shall not be withheld during any period in which the Participant is on an
unpaid leave of absence.

 

2.4 FICA and Other Taxes. For each Plan Year in which an Annual Deferral Amount
is being withheld with respect to a Participant, the Participant’s Employer(s)
shall, in a manner determined by the Employer(s), withhold from that portion of
the Participant’s Base Annual Salary, Bonus and Commissions that are not being
deferred the Participant’s share of FICA and other employment or state, local,
and foreign taxes on such Annual Deferral Amount. To the extent permitted by
Code section 409A and Treasury Regulations sections 1.409A- 3(j)(4)(vi) and
(xi), the Committee may reduce the Annual Deferral Amount to the extent
necessary to pay FICA and other employment, state, local and foreign taxes in
compliance with this Section.

 

2.5 Permitted Changes to Deferral Elections.

 

  (a)

Cancellation of Deferral Election due to Disability. The Committee may, in its
sole discretion, cancel a Participant’s deferral election if the Participant is
determined to be disabled. Solely for purposes of this Section, a Participant
shall be disabled if the Participant is suffering from any medically
determinable physical or mental impairment resulting in the Participant’s
inability to perform the duties of his position or any substantially similar
position, where such impairment can be expected to result in death or can be
expected to last for a continuous period of six (6) months. The Participant’s
election must be cancelled in the year that the Participant incurs a disability,
or, if later, the 15th day of the third month following the date the Participant
incurs a disability.

 

       The Participant may elect to defer an Annual Deferral Amount for the Plan
Year following his return to employment or service and for every Plan Year
thereafter while a Participant in the Plan; provided the Participant’s deferral
elections are otherwise allowed and an Election Form is delivered to, and
accepted by, the Committee for each such election in accordance with the Plan.

 

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  (b) Cancellation of Deferral Election due to Unforeseeable Emergency. If a
Participant experiences an Unforeseeable Emergency during a Plan Year, the
Participant may submit to the Committee a written request to cancel deferrals of
Base Salary for the Plan Year to satisfy the Unforeseeable Emergency. If the
Committee approves the Participant’s request to cancel deferrals of Base Salary,
then effective as of the date the request is approved the Committee shall cancel
the Participant’s deferral election relating to Base Salary for the remainder of
the Plan Year.

 

       If the Committee approves the Participant’s request for a distribution in
accordance with Section 4.2(a)(v), then effective as of the date the request is
approved the Committee shall cancel the Participant’s deferral elections for the
remainder of the Plan Year.

 

       A Participant whose deferral elections are canceled during a Plan Year in
accordance with this section may elect to defer compensation for the following
Plan Year; provided, however, if required to comply with Treasury Regulation
section 1.401(k)-1(d)(3), the Participant may not elect to defer any amounts
attributable to periods less than six months from the date on which the
Participant receives a distribution on account of an Unforeseeable Emergency.

ARTICLE 3

Deferral Accounts

 

3.1 Deferral Accounts. For record-keeping purposes only, separate accounts shall
be maintained for each Participant to reflect his or her Deferral Account.
Separate sub-accounts shall be maintained to the extent necessary to properly
reflect the Participant’s investment elections as described below.

 

3.2 Vesting. A Participant shall at all times be 100% vested in his Deferral
Account.

 

3.3 Investment Elections. In accordance with, and subject to, the rules and
procedures that are established from time-to-time by the Committee, in its sole
discretion, amounts shall be credited or debited to a Participant’s Deferral
Account in accordance with the following rules:

 

  (a) Measurement Funds. The Committee, in its sole discretion, will select
funds (the “Measurement Funds”) from which Participants may select to determine
gains and losses which will be credited (or debited) to Participant’s Deferral
Accounts. Measurement Funds will be communicated to Participants in the
enrollment materials or in periodic notices.

 

       As necessary, the Committee may, in its sole discretion, discontinue,
substitute or add a Measurement Fund. Each such action will take effect as of
the first day of the calendar quarter that follows by thirty (30) days the day
on which the Committee gives Participants advance written notice of such change.

 

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  (b) Election of Measurement Funds. The Participant may elect one or more
Measurement Funds for the purpose of crediting and debiting amounts to his
Deferral Account. A Participant, in connection with his initial deferral
election, shall elect, on the Election Form, one or more Measurement Fund(s) to
be used to determine the additional amounts to be credited (or, in the event of
losses, debited) to his Deferral Account for the first calendar quarter or
portion thereof in which the Participant commences participation in the Plan and
continuing thereafter for each subsequent calendar quarter in which the
Participant participates in the Plan, unless changed in accordance with the next
sentence. Commencing with the first business day that follows the Participant’s
commencement of participation in the Plan and continuing thereafter for each
subsequent business day in which the Participant participates in the Plan, the
Participant may (but is not required to) elect, by submitting an Election Form
to the Committee that is accepted by the Committee, to add or delete one or more
Measurement Fund(s) to be used to determine the additional amounts to be
credited (or, in the event of losses, debited) to his Deferral Account, or to
change the portion of his Deferral Account allocated to each previously or newly
elected Measurement Fund. If an election is filed in accordance with the
previous sentence, it shall apply to the next business day and continue
thereafter for each subsequent day in which the Participant participates in the
Plan, unless changed in accordance with the previous sentence.

 

  (c) Proportionate Allocation. In any election relating to Measurement Funds,
the Participant shall specify on the Election Form, in increments of one
percentage point (1%), the percentage of his Deferral Account to be allocated to
a Measurement Fund (as if the Participant was investing a portion of his
Deferral Account in that Measurement Fund).

 

  (d) Crediting or Debiting Method. The performance of each elected Measurement
Fund (either positive or negative) will be based on the performance of the
Measurement Funds themselves. A Participant’s Deferral Account shall be credited
or debited on a daily basis based on the performance of each Measurement Fund
selected by the Participant, as determined by the Committee in its sole
discretion, as though (i) a Participant’s Deferral Account were invested in the
Measurement Fund(s) selected by the Participant, in the percentages applicable
to such business day at the closing price on such date;

 

       (ii) the portion of the Annual Deferral Amount that was actually deferred
during any day was invested in the Measurement Fund(s) selected by the
Participant no later than the close of business on the first business day after
the day on which such amounts are actually deferred from the Participant’s
Annual Base Salary at the closing price on such date; and (iii) any distribution
paid to a Participant that decreases such Participant’s Deferral Account ceased
being invested in the Measurement Fund(s), in the percentages applicable to such
day, no earlier than one business day prior to the distribution, at the closing
price on such date.

 

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  (e) No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used
for measurement purposes only, and a Participant’s election of any such
Measurement Fund, the allocation to his Deferral Account thereto, the
calculation of additional amounts and the crediting or debiting of such amounts
to a Participant’s Deferral Account shall not be considered or construed in any
manner as an actual investment of his or her Deferral Account in any such
Measurement Fund. In the event that the Company or the Trustee (as that term is
defined in the Trust), in its own discretion, decides to invest funds in any or
all of the Measurement Funds, no Participant shall have any rights in, or to
such investments themselves. Without limiting the foregoing, a Participant’s
Deferral Account shall at all times be a bookkeeping entry only and shall not
represent any investment on his behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of the Company.

ARTICLE 4

Distributions

 

4.1 Distribution Event. Subject to the Deduction Limitation, payment of a
Participant’s Deferral Account shall commence upon the Distribution Event
elected by the Participant on an Election Form. Any distribution that complies
with Article 4 shall be deemed for all purposes to comply with the Plan
requirements regarding the time and form of distributions.

 

4.2 Manner and Timing of Payment.

 

  (a) Distribution Events. A Participant’s Deferral Account shall be distributed
upon the first to occur of the following Distribution Events:

 

  (i) Fixed Distribution Date. To the extent a Fixed Distribution Date is
provided as a Distribution Event on the Election Form and in the event a
Participant elected a Fixed Distribution Date with respect to the Annual
Deferral Amount for any Plan Year, the portion of the Deferral Account
attributable to that Annual Deferral Amount shall be distributed in a single
lump sum.

 

  (ii)

Separation from Service prior to attaining age fifty-five (55) and five
(5) Years of Service. Upon Separation from Service prior to attaining age fifty-
five (55) and five (5) Years of Service: (A) if the balance in a Participant’s
Deferral Account at the time of the Separation from Service is $100,000 or more,
the Participant’s Deferral Account shall be distributed in accordance with the
Payment Option elected by the Participant, or if the Participant did not timely
elect a Payment Option, in three (3) substantially equal annual installments;
and (B) if the balance in a Participant’s Deferral Account at the time of the
Separation from Service

 

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is less than $100,000, the Participant’s Deferral Account shall be distributed
in a single lump sum.

 

  (iii) Separation from Service on or after attaining age fifty-five (55) and
five (5) Years of Service. In the event of a Participant’s Separation from
Service on or after attaining age fifty-five (55) and five (5) Years of Service,
a Participant’s Deferral Account shall be distributed in accordance with the
Payment Option elected by the Participant at the time of the deferral election.
If a Participant does not elect a Payment Option in a timely manner, the
Participant’s Deferral Account shall be distributed in a single lump sum
payment.

 

  (iv) Disability. In the event of a Participant’s Disability, a Participant’s
Deferral Account shall be distributed in a single lump sum.

 

  (v) Unforeseeable Emergency. A Participant may submit a written request for a
distribution on account of an Unforeseeable Emergency. Upon approval by the
Committee of a Participant’s request, the Participant’s Deferral Account, or
that portion of a Participant’s Deferral Account deemed necessary by the
Committee to satisfy the Unforeseeable Emergency (such amount to be determined
in a manner consistent with Treasury Regulations section 1.409A- 3(i)(3)) plus
amounts necessary to pay taxes reasonably anticipated because of the
distribution, shall be distributed in a single lump sum.

 

  (vi) Death. In the event of a Participant’s death, a Participant’s Deferral
Account shall be paid to the Participant’s Beneficiary in a lump sum.

 

  (b)

Timing. Payment of a Participant’s Deferral Account shall commence during the
year that includes the Payment Date. With respect to distributions in
installments, each annual installment shall be paid during the year in which the
installment is due. If the Payment Date relating to an Unforeseeable Emergency
occurs on or after October 1 of a Plan Year, the distribution may, to the extent
permitted by Code section 409A, commence on or before the 15th day of the third
calendar month following the date on which the Committee approved the
Participant’s request for an Unforeseeable Emergency distribution; provided,
however, the Participant will not be permitted, directly or indirectly, to
designate the taxable year of the distribution.

 

  (c)

Distributions to Specified Employees. Notwithstanding anything to the contrary
in the Plan, if a Participant becomes entitled to a distribution on account of a
Separation from Service and is a Specified Employee on the date of the
Separation from Service, to the extent required by Code section
409A(a)(2)(B)(i), distributions shall not commence until the later of the
Payment Date or the expiration of the six- month period beginning on the date of
Participant’s Separation from Service, except in the event of the Participant’s
death. Payments to which a Specified Employee would otherwise be entitled

 

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during this six-month period shall be accumulated and paid, together with
earnings that have accrued during this six-month delay, during the seventh month
following the date of the Participant’s Separation from Service, or, if earlier,
the date of the Participant’s death.

 

  (d) Subsequent Changes in Manner of Payment. A Participant may elect to change
the Payment Date, the Payment Option or the Fixed Distribution Date or any
combination thereof by filing a new Election Form with the Committee provided
that: (i) the Participant elects at least twelve (12) months prior to the date
on which payment is otherwise scheduled to commence; (ii) the new election does
not take effect for at least twelve (12) months; and (iii) with respect to
changes applicable to distributions on a Fixed Distribution Date or upon
Separation from Service, the payment that is the subject of the election must be
deferred for a period of at least five years from the date the payment would
otherwise have been paid, or in the case of installment payments, five years
from the date the installments were scheduled to commence. For purposes of this
Section, distributions are considered to commence on the Payment Date.

Any election in accordance with this Section shall be irrevocable on the date it
is filed with the Committee unless subsequently changed pursuant to this
Section.

 

  (e)

Death Prior to Complete Distribution. If a Participant dies after the
commencement of payment of Participant’s Deferral Account but before the
Deferral Account is paid in full, the unpaid remaining balance in Participant’s
Deferral Account shall be paid to the Participant’s Beneficiary in a lump sum
during the year in which the Participant died, or if later, to the extent
permitted by Code section 409A, on or before the 15th day of the third calendar
month following the Participant’s death.

 

4.3 Permitted Accelerations of Payment.

 

  (a)

Distribution in the Event of Taxation. If, for any reason, all or any portion of
a Participant’s Deferral Account becomes taxable to the Participant because of a
violation of Code section 409A prior to receipt, a Participant may file a
written request with the Committee before a Change in Control, or the trustee of
the Trust after a Change in Control, for a distribution of that portion of his
Deferral Account that has become taxable. Upon the grant of such a request,
which grant shall not be unreasonably withheld (and, after a Change in Control,
shall be granted), the Participant shall receive a distribution equal to the
taxable portion of his Deferral Account (which amount shall not exceed the
unpaid balance in Participant’s Deferral Account). If the request is granted,
the tax liability distribution shall be paid between the date on which the
Participant’s request is approved and the end of the Plan Year during which the
approval occurred, or, if later, to the extent permitted by Code section 409A,
the 15th day of the third calendar month following the date on which the
Participant’s

 

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request is approved. Such a distribution shall affect and reduce the
Participant’s Deferral Account.

 

  (b) Domestic Relations Order. The Committee is authorized, in its sole
discretion, to satisfy any payments to an individual other than the Participant
with amounts from the Participant’s Deferral Account to the extent necessary to
comply with a domestic relations order, as defined in Code section 414(p)(1)(B).
Unless otherwise specified in the domestic relations order, payments will occur
at the time and in the form specified by this Plan and the Participant’s
elections.

 

  (c) Compliance with Ethics Laws or Conflicts of Interests Laws. The Committee
is authorized, in its sole discretion, to accelerate the time or schedule of a
payment to the extent necessary to avoid the violation of any applicable
Federal, state, local, or foreign ethics law or conflicts of interest law as
provided in Treasury Regulation section 1.409A-3(j)(4)(iii)(B).

 

  (d) Small Accounts. The Committee may, in its sole discretion, distribute in a
single lump sum the Participant’s Elective Deferral Account provided: (i) the
payment results in the payment of the Participant’s entire interest in the Plan
and all other arrangements required to be aggregated with the Plan under Code
Section 409A (generally other arrangements providing for nonqualified elective
deferrals), (ii) the total payments do not exceed the applicable dollar limit
under Code Section 402(g)(1)(B) and (iii) Participant has not elected to defer
any amounts into the Plan for at least two (2) consecutive Plan Years. The
Committee shall notify the Participant in writing if the Committee exercises its
discretion pursuant to this Section.

 

  (e) Settlement of a Bona Fide Dispute. The Committee is authorized, in its
sole discretion, to accelerate the time or schedule of a payment as part of a
settlement of a bona fide dispute between the Participant and the Employer over
the Participant’s right to a payment provided that the payment relates only to
the deferred compensation in dispute and the Employer is not experiencing a
downturn in financial health.

 

  (f) Settlement of Debt. The Committee is authorized, in its sole discretion,
to accelerate the time or schedule of a payment to satisfy an ordinary debt owed
by the Participant to the Employer at the time the debt becomes due as provided
in Treasury Regulation section 1.409A-3(j)(4)(xiii).

 

4.4 Payment Delays. The Committee is authorized, in its sole discretion, to
delay payment to a Participant:

 

  (a) If the payment would jeopardize the Employer’s ability to continue as a
going concern;

 

  (b) If the payment is subject to the Deduction Limitation;

 

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  (c) If the payment would violate Federal securities or other applicable laws;
and

 

  (d) If calculation of the payment is not administratively practicable due to
events beyond the control of the Participant.

 

4.5 Suspension Not Allowed. If a Participant whose distributions have commenced
becomes eligible to defer compensation as a Participant in any plan subject to
Code section 409A maintained by a Related Company, distribution of the
Participant’s Deferral Account may not be suspended.

 

4.6 Tax Withholding. The Participant’s Employer(s), or the trustee of the Trust,
shall withhold from any payments to a Participant under this Plan all federal,
state and local income, employment and other taxes required to be withheld by
the Employer(s), or the trustee of the Trust, in connection with such payments,
in amounts and in a manner to be determined in the sole discretion of the
Employer(s) and the trustee of the Trust.

ARTICLE 5

Beneficiary Designation

 

5.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his Beneficiary(ies) (both primary as well as contingent) to receive
any distributions payable pursuant to the Plan to a beneficiary upon the death
of a Participant. The Beneficiary designated under this Plan may be the same as,
or different from, the Beneficiary designation under any other plan of an
Employer in which the Participant participates.

 

5.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his Beneficiary by completing and signing the Beneficiary Designation
Form, and returning it to the Committee or its designated agent. A Participant
shall have the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation Form and the
Committee’s rules and procedures, as in effect from time-to-time. If the
Participant names someone other than his spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by that
Participant’s spouse and returned to the Committee. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary designations
previously filed shall be canceled. The Committee shall be entitled to rely on
the last Beneficiary Designation Form filed by the Participant and accepted by
the Committee prior to his death.

 

5.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee
or its designated agent.

 

5.4

No Beneficiary Designation. If a Participant fails to designate a Beneficiary
or, if all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant’s Deferral Account, then the
Participant’s designated Beneficiary shall be deemed to be his surviving spouse.
If the Participant has no surviving spouse, the

 

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Participant’s Deferral Account shall be payable to the executor or personal
representative of the Participant’s estate.

ARTICLE 6

Amendment or Termination

 

6.1 Amendment or Termination. The Company may amend or terminate the Plan at any
time; provided, however, that no amendment or termination shall adversely affect
any Participant or Beneficiary who has become entitled to a distribution as of
the date of amendment or termination. Notwithstanding anything herein to the
contrary, to the extent consistent with Code section 409A, the Board may
terminate the Plan and distribute to each Participant the Participant’s Deferral
Account in a lump sum; provided that all distributions (a) commence no earlier
than the date that is twelve (12) months following the termination date (or any
earlier date that would comply with Code section 409A) and (b) are completed by
the date that is twenty-four (24) months following the termination date (or any
later date that would comply with Code section 409A). In addition, payments may
be accelerated upon termination of the Plan only if, to the extent required
under Code section 409A, (i) all other nonqualified deferred compensation
elective account balance plans (within the meaning of Code section 409A) in
which any Participant participates are terminated along with the Plan, and
(ii) for 3 years following the date of termination the Company does not adopt
any new arrangement that constitutes an elective account balance plan (within
the meaning of Code section 409A).

 

6.2 Effect of Payment. The full payment of the Deferral Account shall completely
discharge all obligations to a Participant and his designated Beneficiaries
under this Plan.

ARTICLE 7

Administration

 

7.1 Committee Duties. This Plan shall be administered by a Committee which shall
consist of the Board, or such committee as the Board shall appoint. Members of
the Committee may be Participants under this Plan. The Committee shall also have
the discretion and authority to (i) promulgate, amend, interpret, and enforce
all appropriate rules and regulations for the administration of this Plan and;
(ii) decide or resolve any and all questions including interpretations of this
Plan, as may arise in connection with the Plan. Any individual serving on the
Committee who is a Participant shall not vote or act on any matter relating
solely to himself or herself. The Committee shall be entitled to rely on
information furnished by a Participant or the Company.

 

7.2 Administration Upon Change In Control. For purposes of this Plan, the
Company shall be the “Administrator” at all times prior to the occurrence of a
Change in Control. Upon and after the occurrence of a Change in Control, the
“Administrator” shall be an independent third party selected by the Trustee and
approved by the individual who, immediately prior to such event, was the
Company’s Chief Executive Officer or, if not so

 

11

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identified, the Company’s highest ranking officer (the “Ex-CEO”). The
Administrator shall have the discretionary power to determine all questions
arising in connection with the administration of the Plan and the interpretation
of the Plan and Trust including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of a Change in
Control, the Administrator shall have no power to direct the investment of Plan
or Trust assets or select any investment manager or custodial firm for the Plan
or Trust. Upon and after the occurrence of a Change in Control, the Company
must: (1) pay all reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney’s fees and expenses arising
in connection with the performance of the Administrator hereunder, except with
respect to matters resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply full and timely
information to the Administrator on all matters relating to the Plan, the Trust,
the Participants and their Beneficiaries, the Deferral Accounts of the
Participants, the date of circumstances of the Participants’ Separation from
Service, Disability or death, and such other pertinent information as the
Administrator may reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) by the Trustee
only with the approval of the Ex-CEO. Upon and after a Change in Control, the
Administrator may not be terminated by the Company.

 

7.3 Agents. In the administration of this Plan, the Committee may, from
time-to-time, employ agents and delegate to them such administrative duties as
it sees fit (including acting through a duly appointed representative) and may
from time-to-time consult with counsel who may be counsel to any Employer.

 

7.4 Binding Effect of Decisions. The decision or action of the Committee with
respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.

 

7.5 Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, any Employee to whom the duties of the Committee may
be delegated, against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this Plan,
except in the case of willful misconduct by the Committee, any of its members,
or any such Employee.

 

7.6 Employer Information. To enable the Committee to perform its functions, each
Employer shall supply full and timely information to the Committee on all
matters relating to the compensation of its Participants, the date and
circumstances of the Participant’s death, Disability or Separation from Service,
and other pertinent information as the Committee may reasonably require.

ARTICLE 8

Claims Procedures

 

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8.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If
such a claim relates to the contents of a notice received by the Claimant, the
claim must be filed within 60 days after such notice was received by the
Claimant. All other claims must be filed within 90 days of the date on which the
event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.

 

8.2 Notification of Decision. The Committee shall consider a Claimant’s claim
within a reasonable time, and shall notify the Claimant in writing:

 

  (a) That the claim has been allowed in full; or

 

  (b) That the Committee has reached a conclusion contrary, in whole or in part,
to the Claimant’s requested determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:

 

  (i) The specific reason(s) for the denial of the claim, or any part of it;

 

  (ii) Specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

 

  (iii) A description of any additional material or information necessary for
the Claimant to perfect the claim, and an explanation of why such material or
information is necessary; and

 

  (iv) An explanation of the claim review procedure.

 

8.3 Review of a Denied Claim. Within 60 days after receiving a notice from the
Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Committee a written
request for a review of the denial of the claim. Thereafter, but not later than
30 days after the review procedure began, the Claimant (or the Claimant’s duly
authorized representative):

 

  (a) May review pertinent documents;

 

  (b) May submit written comments or other documents; and/or

 

  (c) May request a hearing, which the Committee, in its sole discretion, may
grant.

 

8.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written request for
review of the denial, unless a hearing is held or other special circumstances
require additional time, in which case the Committee’s decision must be rendered
within 120 days after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:

 

13

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  (a) Specific reasons for the decision;

 

  (b) Specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and

 

  (c) Such other matters as the Committee deems relevant.

 

8.5 Legal Action. A Claimant’s compliance with the foregoing provisions of this
Article is a mandatory prerequisite to a Claimant’s right to commence any legal
action with respect to any claim relating to this Plan.

ARTICLE 9

Trust

 

9.1 Establishment of the Trust. The Company shall establish the Trust, and each
Employer shall at least annually transfer over to the Trust such assets as the
Employer determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with respect
to the Annual Deferral Amounts for such Employer’s Participants for all periods
prior to the transfer, as well as any debits and credits to the Participants’
Deferral Accounts for all periods prior to the transfer, taking into
consideration the value of the assets in the trust at the time of the transfer.

 

9.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
shall govern the rights of a Participant to receive distributions pursuant to
the Plan. The provisions of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to carry out its
obligations under the Plan.

 

9.3 Investment of Trust Assets. The trustee of the Trust shall be authorized,
upon written instructions received from the Committee, or investment manager
appointed by the Committee, to invest and reinvest the assets of the Trust in
accordance with the applicable Trust Agreement, including the disposition of
stock and reinvestment of the proceeds in one or more investment vehicles
designated by the Committee.

 

9.4 Distributions from the Trust. Each Employer’s obligations pursuant to the
Plan may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer’s obligations under
this Plan.

ARTICLE 10

Miscellaneous

 

10.1

Status of Plan. The Plan is intended to be a plan that is not qualified within
the meaning of Code section 401(a) and that “is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a
select group of management or

 

14

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highly compensated employee” within the meaning of ERISA sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted to the
extent possible in a manner consistent with that intent.

 

10.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. Any and all of an Employer’s
assets shall be, and remain, the general, unpledged unrestricted assets of the
Employer. An Employer’s obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.

 

10.3 Employer’s Liability. An Employer’s liability for the distribution of a
Participant’s Deferral Account shall be defined only by the Plan. An Employer
shall have no obligation to a Participant except as expressly provided in the
Plan.

 

10.4 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise,
except as provided in Section 4.3(b).

 

10.5 Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between any Related Company
and the Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice, unless expressly
provided in a written employment agreement. Nothing in this Plan shall be deemed
to give a Participant the right to be retained in the service of any Related
Company as an Employee or to interfere with the right of any Related Company to
discipline or discharge the Participant at any time.

 

10.6 Coordination with Other Benefits. The Plan benefits provided for a
Participant and Participant’s Beneficiary are in addition to any other benefits
available to such Participant under any other plan or program for employees of
the Participant’s Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided.

 

10.7 Furnishing Information. A Participant or his Beneficiary will cooperate
with the Committee by furnishing any and all information requested by the
Committee and take such other actions as may be requested in order to facilitate
the administration of the Plan and the distributions hereunder, including but
not limited to taking such physical examinations as the Committee may deem
necessary.

 

15

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10.8 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

 

10.9 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

 

10.10 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of New
York without regard to its conflicts of laws principles.

 

10.11 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

E*TRADE Financial Corporation

Vice President, Compensation & Benefits

671 N. Glebe Road

Arlington, VA 22203

Such notice shall be deemed given as of the date of delivery or, if delivery is
by mail, as of the date shown on the postmark on the receipt for registration or
certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

 

10.12 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant’s Employer and its successors and assigns and the
Participant and the Participant’s designated Beneficiaries.

 

10.13 Spouse’s Interest. The interest in the Deferral Account hereunder of a
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse’s will, nor shall such interest
pass under the laws of intestate succession.

 

10.14 Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.

 

10.15

Code Section 409A Compliance. The Plan is intended to be a nonqualified deferred
compensation plan within the meaning of Code section 409A and shall be
interpreted to meet the requirements of Code section 409A, the Treasury
Regulations thereunder, and

 

16

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any additional guidance provided by the Treasury Department or Internal Revenue
Service (“collectively, Code section 409A”). To the extent that any provision of
the Plan would cause a conflict with the requirements of Code section 409A, or
would cause the administration of the Plan to fail to satisfy Code section 409A,
such provision shall be deemed null and void to the extent permitted by
applicable law. Nothing herein shall be construed as a guarantee of any
particular tax treatment to a Participant.

 

10.16 Incompetent. If the Committee determines in its discretion that a
distribution under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person’s property, the Committee may direct such distribution to be paid to the
guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of
minority, incompetence, incapacity or guardianship, as it may deem appropriate
prior to distribution of a payment. Any distribution shall be a payment for the
account of the Participant and the Participant’s Beneficiary, as the case may
be, and shall be a complete discharge of any liability for such payment amount.

 

10.17 Insurance. The Employers, on their own behalf or on behalf of the trustee
of the Trust, and, in their sole discretion, may apply for and procure insurance
on the life of the Participant, in such amounts and in such forms as the Trust
may choose. The Employers or the trustee of the Trust, as the case may be, shall
be the sole owner and beneficiary of any such insurance. The Participant shall
have no interest whatsoever in any such policy or policies, and at the request
of the Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the insurance
company or companies to whom the Employers have applied for insurance.

 

10.18

Legal Fees to Enforce Rights after Change in Control. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the Board or
the board of directors of a Participant’s Employer (which might then be composed
of new members) or a shareholder of the Company or the Participant’s Employer,
or of any successor corporation might then cause or attempt to cause the
Company, the Participant’s Employer or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the Company
or the Participant’s Employer to institute, or may institute, litigation seeking
to deny Participants amounts deferred pursuant to the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any Participant that the
Company, the Participant’s Employer or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement thereunder
or, if the Company, such Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any Participant
distributions intended to be provided, then the Company and the Participant’s
Employer irrevocably authorize such Participant to retain counsel of his choice
at the expense of the Company and the Participant’s Employer (who shall be
jointly and severally liable) to represent such Participant in connection with
the initiation or defense of any litigation or other legal action, whether by or
against the Company, the Participant’s Employer or any director, officer,
shareholder or other person

 

17

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affiliated with the Company, the Participant’s Employer or any successor thereto
in any jurisdiction.

ARTICLE 11

Definitions

Whenever the following words or phrases are used in this Plan, with the first
letter capitalized, they shall have the meanings specified below.

 

11.1 “Annual Deferral Amount” shall mean that portion of a Participant’s Base
Annual Salary, Bonus and Commissions that a Participant elects to have, and is
deferred, for any one Plan Year.

 

11.2 “Base Annual Salary” shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such calendar
year, excluding bonuses, overtime, fringe benefits, stock options, relocation
expenses, incentive payments, non- monetary awards, Commissions and other fees,
automobile and other allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the Employee’s gross
income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred, or contributed by, the Participant pursuant
to all qualified or non-qualified plans of any Employer and shall be calculated
to include amounts not otherwise included in the Participant’s gross income
under Code sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts will be
included in compensation only to the extent that, had there been no such plan,
the amount would have been payable in cash to the Employee.

 

11.3 “Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance this Plan, that are entitled to receive
distributions under this Plan upon the death of a Participant.

 

11.4 “Beneficiary Designation Form” shall mean the form established from
time-to-time by the Committee that a Participant completes, signs and returns to
the Committee to designate one or more Beneficiaries.

 

11.5 “Board” shall mean the board of directors of the Company.

 

11.6 “Bonus” shall mean any compensation, in addition to Base Annual Salary
relating to services performed during any calendar year, whether or not paid in
such calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, payable to a Participant as an Employee under any Employer’s
Bonus and cash incentive plans, including any bonuses paid semi-annually based
on commissions paid to a Related Company, and excluding stock options.

 

11.7 “Change in Control” shall mean the first to occur of any of the following
events:

 

18

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  (a) Any “person” (as that term is used in Section 13 and 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”)) becomes the beneficial owner
(as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the Company’s capital stock
entitled to vote in the election of directors;

 

  (b) During any period of not more than two consecutive years, not including
any period prior to the adoption of this Plan, individuals who, at the beginning
of such period constitute the board of directors of the Company, and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (a), (c),
(d) or (e) of this definition) whose election by the board of directors, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least three-fourths (3/4ths) of the directors then still in office, who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;

 

  (c) The shareholders of the Company approve any consolidation or merger of the
Company, other than a consolidation or merger of the Company in which the
holders of the common stock of the Company immediately prior to the
consolidation or merger hold more than fifty percent (50%) of the common stock
of the surviving corporation immediately after the consolidation or merger;

 

  (d) The shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or

 

  (e) The shareholders of the Company approve the sale or transfer of all, or
substantially all, of the assets of the Company to parties that are not within a
“controlled group of corporations” (as defined in Code section 1563) in which
the Company is a member.

 

11.8 “Claimant” shall have the meaning set forth in Section 7.1.

 

11.9 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time- to-time.

 

11.10

“Commissions” shall mean, for a Participant, the cash compensation directly
relating to sales performance during any calendar year, whether or not paid in
such calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding salary, bonuses (including discretionary bonuses based
in whole or in part on sales commissions), overtime, fringe benefits, stock
options, relocation expenses, incentive payments, non- monetary awards,
directors fees and other fees, automobile and other allowances paid to a
Participant for employment services rendered (whether or not such allowances are
included in the Employee’s gross income). Commissions shall be calculated before
reduction for compensation voluntarily deferred, or

 

19

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contributed by, the Participant pursuant to all qualified or non-qualified plans
of any Employer and shall be calculated to include amounts not otherwise
included in the Participant’s gross income under Code sections 125, 402(e)(3),
402(h), or 403(b) pursuant to plans established by any Employer; provided,
however, that all such amounts will be included in compensation only to the
extent that, had there been no such plan, the amount would have been payable in
cash to the Employee.

 

11.11 “Committee” shall mean the committee described in Article 7.

 

11.12 “Company” shall mean E*TRADE Financial Corporation, a Delaware
corporation, and any successor to all, or substantially all, of the Company’s
assets or business.

 

11.13 “Deduction Limitation” shall mean the following described limitation on a
distribution that may otherwise be distributable to a Participant pursuant to
the provisions of this Plan. If an Employer reasonably anticipates that its
deduction with respect to a payment under the Plan to a Participant would not be
permitted due to the application of Code section 162(m), the Employer may delay
the payment to Participant provided that the payment is distributed either
(i) during the Participant’s first taxable year in which the Employer reasonably
anticipates, or should reasonably anticipate, that if the payment is distributed
during such year, the deduction of the payment will not be limited by Code
section 162(m) or (ii) during the period beginning with the date of the
Participant’s Separation from Service and ending on the later of the last day of
the taxable year of the Employer in which the Participant separates from service
or the 15th day of the third month following the Participant’s Separation from
Service.

 

11.14 “Deferral Account” shall mean (i) the sum of all of a Participant’s Annual
Deferral Amounts, plus (ii) amounts credited in accordance with all the
applicable crediting provisions of this Plan that relate to the Participant’s
Deferral Account, less (iii) all distributions to the Participant, or his
Beneficiary, pursuant to this Plan that relate to his Deferral Account.

 

11.15 “Disability” shall mean a physical or mental condition in which the
Participant is:

 

  (a) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months;

 

  (b) by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than 3 months under the Employer’s
accident and health plan;

 

  (c) determined to be totally disabled by the Social Security Administration;
or

 

20

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  (d) disabled pursuant to an Employer-sponsored disability insurance
arrangement provided that the definition of disability applied under such
disability insurance program complies with the foregoing definition of
Disability.

 

11.16 “Distribution Event” shall mean the earliest of the (i) Participant’s
Separation from Service; (ii) Participant’s Disability; (iii) Committee’s
determination regarding the occurrence of an Unforeseeable Emergency;
(iv) Participant’s death; or (v) if elected by the Participant at the time of
the deferral election, the Fixed Distribution Date.

 

11.17 “Election Form” shall mean the form established from time-to-time by the
Committee that a Participant completes, signs and returns to the Committee.

 

11.18 “Employee” shall mean a person who is a common law employee of any Related
Company.

 

11.19 “Employer(s)” shall mean the Company and any Related Company (now in
existence or hereafter formed or acquired) that have been selected by the Board
to participate in the Plan and have adopted the Plan as a sponsor.

 

11.20 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time-to-time.

 

11.21 “Fixed Distribution Date” shall mean the Participant’s election to receive
payment of an Annual Deferral Amount on a Payment Date that is at least two
years after the end of the Plan Year during which the compensation would have
been paid to the Participant but for the Participant’s deferral election.

 

11.22 “Measurement Funds” shall have the meaning set forth in Section 3.3(a).

 

11.23 “Participant” shall mean any Employee (i) who is selected to participate
in the Plan, (ii) who elects to participate in the Plan, (iii) who completes an
Election Form and a Beneficiary Designation Form, (iv) whose completed Election
Form and Beneficiary Designation Form are accepted by the Committee, and (v) who
commences participation in the Plan. A spouse or former spouse of a Participant
shall not be treated as a Participant in the Plan or have a Deferral Account
under the Plan, even if he or she has an interest in the Participant’s Deferral
Account as a result of applicable law or property settlements resulting from
legal separation or divorce.

 

11.24 “Payment Date” shall mean the January 1 following the Distribution Event
or 60 days after the date the Committee approves payment in the event of an
Unforeseeable Emergency.

 

11.25 “Payment Option” shall mean,

 

  (a) with respect to a Separation from Service prior to attaining age
fifty-five (55) and five (5) Years of Service, either a single lump sum payment
or three (3) substantially equal annual installments and,

 

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  (b) with respect to a Separation from Service on or after attaining age
fifty-five (55) and five (5) Years of Service, either a single lump sum payment
or substantially equal annual installments over a period of five (5), ten
(10) or fifteen (15) years.

 

11.26 “Plan” shall mean the Company’s Deferred Compensation Plan, which shall be
evidenced by this instrument, as amended from time-to-time.

 

11.27 “Plan Year” shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year.

 

11.28 “Related Company” shall mean the Company and all persons with whom the
Company would be considered a single employer under Code section 414(b)
(employees of controlled group of corporations), and all persons with whom such
person would be considered a single employer under Code section 414(c)
(employees of partnerships, proprietorships, etc., under common control);
provided that in applying Code sections 1563(a)(1), (2), and (3) for purposes of
determining a controlled group of corporations under Code section 414(b), the
language “at least 50 percent” is used instead of “at least 80 percent” each
place it appears in Code sections 1563(a)(1), (2), and (3), and in applying
Treasury Regulation section 1.414(c)-2 for purposes of determining trades or
businesses (whether or not incorporated) that are under common control for
purposes of Code section 414(c), “at least 50 percent” is used instead of “at
least 80 percent” each place it appears in Treasury Regulation section
1.414(c)-2.

 

11.29

“Separation from Service” shall mean that the Participant terminates employment
within the meaning of Treasury Regulation section 1.409A-1(h) and other
applicable guidance with all Related Companies. Whether a termination of
employment has occurred is determined under the facts and circumstances, and a
termination of employment shall occur if all Related Companies and the
Participant reasonably anticipate that no further services shall be performed
after a certain date or that the level of bona fide services the Participant
shall perform after such date (as an employee or an independent contractor)
shall permanently decrease to no more than 20 percent of the average level of
bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Related Companies if the Participant has been providing
services to the Related Companies less than 36 months). A Participant shall not
be considered to separate from service during a bona fide leave of absence for
less than six (6) months or longer if the Participant retains a right to
reemployment with the any Related Company by contract or statute. With respect
to disability leave, a Participant shall not be considered to separate from
service for 29 months unless the Participant otherwise terminates employment or
is terminated by all Related Companies. For purposes of determining whether a
Separation from Service has occurred on account of a disability, a Participant
shall be disabled if the Participant is suffering from any medically
determinable physical or mental impairment resulting in the Participant’s
inability to perform the duties of his position

 

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or any substantially similar position, if such impairment can be expected to
result in death or can be expected to last for a continuous period of 6 months.

 

11.30 “Specified Employee” shall mean any Participant determined by the
Committee to be a “key employee” as defined in Code section 416(i) of any
Related Company. On each December 31, the Committee shall identify Specified
Employees using the definition of “compensation” provided in Treasury Regulation
section 1.415(c)-2(a) in accordance with Treasury Regulation section
1.409A-1(i)(2). All Participants so identified shall be Specified Employees for
the twelve (12) month period beginning on the next April 1.

 

11.31 “Trust” shall mean one or more trusts established pursuant to that certain
Master Trust Agreement, dated as of January 1, 2001 between the Company and the
trustee named therein, as amended from time-to-time.

 

11.32 “Unforeseeable Emergency” shall mean an unanticipated emergency that is
caused by an event beyond the control of the Participant that would result in
severe financial hardship to the Participant resulting from (i) an illness or
accident of the Participant or the Participant’s spouse, the Participant’s
beneficiary, or the Participant’s dependent (as defined in Code section 152,
without regard to Code sections 152(b)(1), (b)(2), and (d)(1)(B)), (ii) a loss
of the Participant’s property due to casualty, or (iii) such other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, all as determined in the sole discretion
of the Committee.

 

11.33 “Years of Service” shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of this
definition, a year of employment shall be a 365 day period (or 366 day period in
the case of a leap year) that, for the first year of employment, commences on
the Employee’s date of hiring and that, for any subsequent year, commences on an
anniversary of that hiring date. Any partial year of employment shall not be
counted.

 

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IN WITNESS WHEREOF, the Company has caused this amended and restated Plan to be
executed by a duly authorized officer on December 30, 2008, effective as of
January 1, 2009.

 

E*TRADE Financial Corporation, a Delaware corporation By:   /s/ Bruce Nolop
Title:   Chief Financial Officer

 

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