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

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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

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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);

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(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

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(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 Definitions: 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 breach, if
curable, is not cured within thirty (30) days following written notice of such
breach from the Company.

 

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(b) “Change in Control” shall mean the occurrence of any of the following
events:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the total combined
voting power represented by the Company’s then outstanding voting securities;

(ii) the Company is party to a merger or consolidation which results in the
holders of the voting securities of the Company outstanding immediately prior
thereto failing to retain immediately after such merger or consolidation direct
or indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the securities entitled to vote generally in the
election of directors of the Company or the surviving entity outstanding
immediately after such merger or consolidation;

(iii) a change in the composition of the Board occurring within a period of
twenty-four (24) consecutive months, as a result of which fewer than a majority
of the directors are Incumbent Directors;

(iv) effectiveness of an agreement for the sale, lease or disposition by the
Company of all or substantially all of the Company’s assets; or

(v) a liquidation or dissolution of the Company.

The Incumbent Directors shall have the right to determine whether multiple sales
or exchanges of the voting stock of the Company, which, in the aggregate, would
result in a Change of Control, are related, and its determination shall be
final, binding and conclusive.

(c) “Change in Control Period” shall mean the period commencing on the earlier
of: (i) sixty (60) days prior to the date of consummation of the Change in
Control; (ii) the date of the first public announcement of a definitive
agreement that would result in a Change in Control (even though still subject to
approval by the Company’s stockholders and other conditions and contingencies);
or (iii) the date of the public announcement of a tender offer that is not
approved by the Incumbent Directors and ending on the two year anniversary date
of the consummation of the Change in Control.

(d) “Good Reason” shall mean any of the following conditions:

(i) a decrease in Executive’s Base Salary and/or a decrease in Executive’s
Target Bonus (as a multiple of Executive’s Base Salary) under the Performance
Bonus Plan or employee benefits;

(ii) a material, adverse change in Executive’s title, authority,
responsibilities or duties, as measured against Executive’s title, authority,
responsibilities or

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duties immediately prior to such change. For purposes of this subsection, in
addition to any other change in title, authority, responsibilities or duties,
the following changes shall constitute an event of “Good Reason”; (i) an
individual who held a position in an independent, publicly held company prior to
the Change in Control holds a position in a subsidiary company following the
Change in Control; and (ii) an individual who reported directly to the COO, CEO
or Board of Directors of a publicly held company prior to the Change in Control
reports to an individual or entity that is not, respectively, the COO, CEO or
Board of Directors of a publicly held company.

(iii) the relocation of Executive’s principle workplace to a location greater
than fifty (50) miles from the prior workplace;

(iv) any material breach by the Company of any provision of this Agreement,
which breach is not cured within thirty (30) days following written notice of
such breach from Executive;

(v) any failure of the Company to obtain the assumption of this Agreement by any
successor or assign of the Company and to produce a written confirmation of that
assumption after written request by Executive; or

(vi) any purported termination of Executive’s employment for “material breach of
contract” which is purportedly effected without providing the “cure” period, if
applicable, described in Section 6(a)(vi), above.

(e) “Incumbent Directors” shall mean members of the Board who either (i) are
members of the Board as of the date hereof, or (ii) are elected, or nominated
for election, to the Board with the affirmative vote of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of members of the
Board).

(f) “Involuntary Termination” shall mean the occurrence of either of the
following:

(i) termination by the Company of Executive’s employment with the Company for
any reason other than Cause; or

(ii) Executive’s resignation from employment for Good Reason within six
(6) months following the occurrence of the event constituting Good Reason.

For the purposes of any determination regarding the existence of Good Reason
hereunder, any claim by Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Board that Good Reason does not
exist, and the Board, acting in good faith within thirty days of receipt of a
resignation letter from Executive, affirms such determination by a vote of not
less than two-thirds of its entire membership, In the event that the Board
disagrees with Executive’s purported Good Reason, the matter shall be submitted
to arbitration as provided

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in Section 11, below. The effective date of any Involuntary Termination shall be
the date of notification to the Executive of the termination of employment by
the Company or the date of notification to the Company of the resignation from
employment by the Executive for Good Reason.

(h) “Release” shall mean a general release of all known and unknown claims
against the Company and its affiliates and their stockholders, directors,
officers, Employees, agents, successors and assigns in substantially the form
attached hereto as Exhibit A.

7. Employee Inventions and Proprietary Rights Assignment Agreement; Insider
Trading Policy: Executive agrees to abide by the terms and conditions of the
Company’s standard Employee Inventions and Proprietary Rights Assignment
Agreement and the Company’s Insider Trading Policy, as it may be amended from
time to tine.

8. Agreement Not To Compete Unfairly; Return of Company Property: Executive
agrees that in the event of his termination at any time and for any reason, he
shall not use any confidential or proprietary information of the Company to
compete with the Company in any way. Upon termination of employment for any
reason, Executive shall immediately deliver to the Company all documents,
property, and other records of the Company or any affiliate of the Company, and
all copies thereof, within Executive’s possession, custody or control.

9. Non-Solicitation: Executive agrees that for a period of one year after the
date of the termination of his employment for any reason, he shall not, either
directly or indirectly, solicit the services, or attempt to solicit the
services, of any employee of the Company to any other person or entity, provided
the foregoing shall not be violated by serving as a referral or by general
advertising not specifically targeted at employees of the Company.

10. Indemnification: The Company shall indemnify and hold harmless the Executive
to the fullest extent permitted by law against any claims, suits, judgements or
expenses (including advancement of legal fee) arising from any action or
inaction with regard to Executive’s position with the Company and any affiliates
and any fiduciary position taken at the request of the Company. This provision
shall continue to apply after termination of Executive’s employment with regard
to acts or inacts prior thereto.

The Company shall cover Executive both during and, to the extent liability
continues to exist after employment under any directors and officers insurance
policy it maintains at the same level and basis as it covers other officers and
directors for actions or inactions while employed as and officer or director of
the Company and its affiliates and any fiduciary position taken at the request
of the Company.

11. Dispute Resolution: In the event of any dispute or claim relating to or
arising out of this Agreement (including, but not limited to, any claims of
breach of contract, wrongful termination or age, sex, race or other
discrimination), Executive and the Company agree that all such disputes shall be
fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in New York, New York in accordance with its National

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Employment Dispute Resolution rules and that such award may be entered in any
court of competent jurisdiction. The parties acknowledge that by accepting this
arbitration provision Executive is waiving any right to a jury trial in the
event of such dispute. In connection with any such arbitration, the Company
shall bear all costs not otherwise born by a plaintiff in a court proceeding.

12. Attorneys’ Fees: The prevailing party, as determined by the arbitrator, may
be entitled to recover from the losing party its attorneys’ fees and costs
incurred in any action brought to enforce any right arising out of this
Agreement, provided that the Executive shall not be liable for the Company’s
fees unless the arbitrator determines that the Executive’s overall position was
frivolous or taken in bad faith and further provided that the Company shall not
be required to pay Executive’s fees unless an arbitrator determines that,
considering all the facts and circumstances, such an award is fair and
equitable.

The Company will pay the reasonable attorneys’ fees incurred in the negotiation
and preparation of this Agreement.

13. General.

(a) Successors and Assigns: The provisions of this Agreement shall inure to the
benefit of and be binding upon the Company, Executive and each and all of their
respective heirs, legal representatives, successors and assigns. The duties,
responsibilities and obligations of Executive under this Agreement shall be
personal and not assignable or delegable by Executive in ay manner whatsoever to
any person, corporation, partnership, firm, company, joint venture or other
entity. Executive may not assign, transfer, convey, mortgage, pledge or in any
other manner encumber the compensation or other benefits to be received by him
or any rights which be may have pursuant to the terms and provisions of this
Agreement. The Company may only assign this Agreement together with all or
substantially all of the assets of the Company.

(b) Amendments; Waiver: No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer of the Company. No
waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

(c) Notices: Any notices to be given pursuant to this Agreement by either party
to the other party may be effected by personal delivery or by overnight delivery
with receipt requested. Mailed notices shall be addressed to the parties at the
addresses stated below, but each party may change its or his address by written
notice to the other in accordance with this Paragraph.

Mailed notices to Executive shall be addressed to him on the last address shown
on the Company’s records.

 

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Mailed notices to the Company shall be addressed as follows:

E*TRADE Financial Corporation

671 North Glebe Road

Arlington, VA 22203

Attention: General Counsel

(d) Entire Agreement: This Agreement constitutes the entire employment agreement
between Executive and the Company regarding the terms and conditions of his
employment, with the exception of (i) the offer letter between the Company and
the Executive dated May 28, 2004; (ii) the agreement described in Section 7 and
(iii) any stock option, restricted stock or other Company stock-based award
agreements between Executive and the Company. This Agreement (including the
documents described in (i), (ii) and (iii) herein) supersedes all prior
negotiations, representations or agreements between Executive and the Company,
whether written or oral, concerning Executive’s employment by the Company.

(e) Withholding Taxes: All payments made under this Agreement shall be subject
to reduction to reflect taxes required to be withheld by law.

(f) Counterparts: This Agreement may be executed by the Company and Executive in
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.

(g) Headings: Each and all of the headings contained in this Agreement are for
reference purposes only and shall not in any manner whatsoever affect the
construction or interpretation of this Agreement or be deemed a part of this
Agreement for any purpose whatsoever.

(h) Savings Provision: To the extent that any provision of this Agreement or any
paragraph, term, provision, sentence, phrase, clause or word of this Agreement
shall be found to be illegal or unenforceable for any reason, such paragraph,
term, provision, sentence, phrase, clause or word shall be modified or deleted
in such a manner as to make this Agreement, as so modified, legal and
enforceable under applicable laws. The remainder of this Agreement shall
continue in full force and effect.

(i) Construction: The language of this Agreement and of each and every
paragraph, term and provision of this Agreement shall, in all cases, for any and
all purposes, and in any and all circumstances whatsoever be construed as a
whole, according to its fair meaning, not strictly for or against Executive or
the Company, and with no regard whatsoever to the identity or status of any
person or persons who drafted all or any portion of this Agreement.

(j) Further Assurances: From time to time, at the Company’s request and without
further consideration, Executive shall, at the Company’s expense, execute and
deliver such additional documents and take all such further action as reasonably
requested by the Company to be necessary or desirable to make effective, in the
most expeditious manner possible, the terms of this Agreement.

 

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(k) Governing Law: Executive and the Company agree that this Agreement shall be
interpreted in accordance with and governed by the laws of the State of New
York.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
years written below.

 

      E*TRADE Financial Corporation

Date:

 

 

    By:  

/s/ Mitchell H. Caplan

        Mitchell H. Caplan         Its: Chief Executive Officer Date:  

6/1/04

   

/s/ Nick Utton

     

Nick Utton

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CONFIDENTIAL SEPARATION AGREEMENT

AND GENERAL RELEASE OF CLAIMS

1. This Agreement is between Nick Utton (“Executive”) and E*TRADE Financial
Corporation (the “Company) and is effective as of the eighth day following its
execution by Associate (the “Effective Date”). The parties hereby agree that
Associate’s employment with the Company shall terminate effective
                             (the “Separation Date”).

2. In exchange for the release of claims set forth below, the Company agrees to
provide Associate with the following benefits:

a. Within ten (10) business days following the later: the Separation Date or;
(ii) the last day following Executive’s execution of the Release or on which
Executive may revoke such Release under its terms, the Company will pay
Associate a lump sum payment equivalent to                             .

On the Separation Date, Executive will be paid for all wage and accrued but
unused vacation earned through the Separation Date. Executive will continue to
participate in the Company’s group health insurance plans through the final day
of the month in which the Separation Date occurs, thereafter, Executive will be
permitted to participate in such plans in accordance with federal COBRA law.
Executive understands and acknowledges that he shall be entitled to no benefits
from the Company other than (i) those expressly set forth in this agreement, and
(ii) any rights under any Company health, retirement welfare, bonus or other
benefit plan, including but not limited to any equity compensation rights that
are vested as of the Separation Date (which rights shall continue to be governed
by the agreement applicable to each grant [including any vesting provisions as
provided in the employment agreement between the Company and Executive (the
“Employment Agreement”]). Executive understands and acknowledges that he shall
be entitled to no benefits from the Company other than those expressly set forth
in this paragraph with the exception of any rights to indemnification as
provided in the Company’s by-laws, insurance policies and section 10 of the
Employment Agreement.

3. In exchange for the benefits described in paragraph 2, above, Executive and
his successors and assigns his release and absolutely discharge the Company and
its subsidiaries and other affiliated entities, its shareholders, directors,
Executives, agents, attorneys, legal successors and assigns of and from any and
all claims, actions and causes of action, whether now known or unknown, which
Executive now has, or at any other time had, or shall or may have against the
Company based upon or arising out of any matter, cause, fact, thing, act or
omission whatsoever occurring or existing at any time to and including the date
hereof, including, but not limited to, any claims of wrongful discharge or age,
sex, race, national origin, physical or mental disability, medical condition
sexual orientation or other discrimination under the federal Age Discrimination
in Employment Act, the federal Americans with Disabilities Act, the federal
Civil Rights Act of 1964, as amended, the federal Sarbanes-Oxley Act of 2002,
the New York Human Rights Act, the New York Labor Code or any other federal,
state or local law.

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5. Executive acknowledges and agrees that he shall continue to be bound by and
comply with the terms of any confidentiality or proprietary rights agreement
between Associate and the Company, including the Executive Agreement re:
Proprietary Rights and Arbitration of Employment Disputes.

6. Executive agrees that he shall not directly or indirectly disclose any of the
terms of this Agreement to anyone other than his immediate family or counsel,
except as such disclosure may be required for accounting or tax reporting
purposes or as otherwise may be required by law, or if this agreement becomes
publicly filed.

7. Executive agrees that any dispute relating to or arising out of Executive’s
employment with the Company, this agreement or the Employment Agreement
(including, but not limited to, any claims of breach of contract, wrongful
termination or age, sex, race or other discrimination), shall be fully and
finally resolved as described in Sections 11 and 12 of the Employment Agreement.

8. This Agreement, the confidentiality agreement referred to in paragraph 5,
above, and any agreement concerning any stock options issued to Executive,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior negotiations and agreements, whether
written or oral. This Agreement may not be altered or amended except by a
written document signed by Executive and the Company.

EXECUTIVE UNDERSTANDS THAT HE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO SIGNING
THIS AGREEMENT AND THAT HE IS GIVING UP ANY LEGAL CLAIMS HE HAS AGAINST THE
COMPANY BY SIGNING THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES THAT HE MAY HAVE UP TO
21 DAYS TO CONSIDER THIS AGREEMENT AND THAT HE MAY REVOKE THIS AGREEMENT AT ANY
TIME DURING THE SEVEN DAYS FOLLOWING HIS EXECUTION OF THE AGREEMENT. ASSOCIATE
IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR
THE BENEFITS DESCRIBED IN PARAGRAPH 2.

 

Dated: 6/1/,2004  

/s/ Nick Utton

 

Nick Utton

Dated:                     , 200       E*TRADE Financial Corporation.  

 

  By:   Russ Elmer   Its:   General Counsel