<PAGE>

                                                                    EXHIBIT 10.7

    [Certain confidential information has been omitted from this Exhibit 10.7
                                                                 ------------
pursuant to a confidential treatment request filed separately with the
Securities and Exchange Commission. The omitted information is indicated by the
symbol "***" at each place in this Exhibit 10.7 where the omitted information
                                   ------------
appeared in the original.]




                             [LEADERSONLINE LOGO]

December 27, 1999

Mr. Jerry Dark
Chief People Officer
E*Trade
4500 Bohannon Drive
Menlo Park, California  94025

Dear Jerry,

Thank you and your E*trade team for inviting Jim, Alice and me to present a
LeadersOnline solution for your e*Cruiting needs for ***.

Our presentation and discussions on December 16 focused on:

 .   Our end-to-end e*Cruiting solution based by the global expertise of
    Heidrick & Struggles.
 .   Developing a customized, proactive, researching, sourcing and recruitment
    campaign.  Our system will be used for candidate tracking, workflow and
    background verification.
 .   The necessity of quickly delivering a constant flow of quality DFM (Digital
    Financial Media) marketing and IT candidates.

This afternoon, 12/27/1999, your call was timely because the senior staff had
just decided in principle, to accept E*Trades terms.  I hope to fine tune a few
details in our meeting on Tuesday morning, and ensure we get final agreement so
our team can begin work immediately on Wednesday, 12/28.

The points I would like to reiterate from our conversation this afternoon
include:  1) We understand the goal is to provide E*Trade quality candidates so
you get ten (10) hires in the first 60 days to ensure a fast start  2) It's
imperative we get agreement and signatures by 12/28/99, so we can begin our
background and project foundation work immediately.  Although we will begin
building our dedicated team, research, etc. upon signing of this document, the
recruiting clock will officially begin January 14, 2000.  This means you will
begin seeing candidates in the latter part of January.


Assignment
----------

*** initially calls for the sourcing and recruiting of:
<TABLE>
<CAPTION>
     <S>                                     <C>             <C>
     Lead Web Producer                       estimate =      ***
     Senior Software Engineer                estimate =      ***
     Senior Product Manager                  estimate =      ***
     Web content Specialist                  estimate =      ***
     Web designer                            estimate =      ***
-----------------------------------------------------------------
     Total                                                   ***
</TABLE>

___________
*** Omitted pursuant to a confidential treatment request filed separately.
<PAGE>

LeadersOnline
December 20, 1999
Page 2

Professional Retainer
---------------------

Our fee is ***% of the first year's projected total salary/bonus compensation of
each candidate employed, as described in a letter of employment or by the
approved position specification.  Projected total salary/bonus compensation
includes base salary, target and sign-on bonuses and other incentive
compensation.  In working with E*Trade, we have agreed to customize a solution
that will deliver high quality services at a fee that illustrates our commitment
to a long-term partnership with E*Trade.

Term of Payment:  Performance Based
-----------------------------------

Our LeadersOnline customized performance base service will initially be focused
on talent with a potential compensation of $*** and a $*** signing bonus. This
performance based service requires a Commencement Fee that will allow for
customer Opportunity Page creation and assignment of a dedicated Client Service
Executives (CSE) team. Our Commencement Fee will be due upon execution of this
contract. Our earned performance fees will be invoiced on a monthly basis. A
performance fee is considered earned upon issuance of an offer letter.

It is acknowledged that E*Trade and LeadersOnline enter into this agreement for
a period of six (6) months.  If this project is cancelled within the thirty (30)
days, we will charge our Commencement Fee and for any offer letters issued.

The Performance Fee schedule is as follows:

Commencement fee:    $***



                                      ***



At the above figures, the potential value of this agreement over the six (6)
months is $***.  Both parties acknowledge that there may be fluctuations in
candidate compensation, the number of placements and types of positions which
may result in a change to the total value.

___________
*** Omitted pursuant to a confidential treatment request filed separately.
<PAGE>

LeadersOnline
December 20, 1999
Page 3

Expenses
--------

Should the client ask LeadersOnline to become directly involved in the candidate
evaluation, i.e., interviewing, etc., the following may apply:  LeadersOnline is
reimbursed for direct expenses.  These expenses include the direct costs of
travel, meals, hotel, etc., associated with the interviewing and selection
process and with visits to the client location.  Other expenses may include
customized marketing campaigns.

Methodology and Processes
-------------------------

Alice White, Senior Recruiter, and a dedicated team, will have overall execution
responsibility for this assignment.  Alice may be reached at (213) 237-6296 or a
voice mail message can be left at (800) 925-2312.  Alice and I will make the
introduction of our team at your earliest convenience.

Adjustments
-----------

In the course of executing this search, our fulfillment team may learn that
market conditions indicate the need to make adjustments in some area.  If this
need arises, E*Trade agrees to work with LeadersOnline in determining acceptable
solutions.  Any adjustments affecting contract terms, including fees, must be
mutually agreed upon in writing.


                                      ***


Diligence
---------

Because we focus on identifying high quality, passive job seekers, it is
imperative that identified candidates be contacted promptly.  Therefore, in
order to maintain high candidate interest levels, it will be necessary for
E*Trade to agree to make initial contact with all identified candidates within
two business days of the initial presentation.

Press Release
-------------

E*Trade agrees to allow LeadersOnline to release a mutually acceptable press
release announcing the formation of this partnership.

Acknowledgment
--------------

Please indicate your acceptance of the terms and conditions set forth by signing
and returning the enclosed copy of this letter as soon as possible.  Work will
initiate immediately upon receipt of this signed letter.  This proposal expires
December 30, 1999.

We look forward to working with you.

Regards,

___________
*** Omitted pursuant to a confidential treatment request filed separately.
<PAGE>

LeadersOnline
December 20, 1999
Page 4

Linwood L. Little
Vice President, Sales and Marketing
Heidrick & Struggles/LeadersOnline

ACCEPTED:

/s/  Jerry Dark                          12/29/99
-----------------------                  --------
Mr. Jerry Dark, Chief People Officer     Date
E*Trade

Cc:  A. Geshuri, E*Trade
     M. Strong, E*Trade
     J. Ballard, E*Trade
     J. Quandt, LeadersOnline
     A. White, LeadersOnline

<PAGE>

LeadersOnline
December 20, 1999
Page 5

                                 ATTACHMENT A
                       Suggested Performance-Based Model
                       ---------------------------------

Commencement Fee:                                 $***
The Commencement fee will be broken down as follows:
 .   Web site set-up, opportunity page design, hosting, and support for *** =
    $***

 .   Payment of the *** IT Recruiters @ $*** per *** for *** of support - total
    initial payment = $***

 .   Payment of $*** one time fee for position assessments, incumbent and
    recruiter interviews, development of filters, breakdown of required skills
    vs desired skills, ID of research, etc.


***



Total earnings for up to *** hires will be = $***
-------------------------------------------------


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Total potential earnings on the *** hire including commencement fee = $***


/s/  Jerry Dark                                 12/29/99
------------------------------------            --------
Mr. Jerry Dark, Chief People Officer            Date
E*Trade

/s/  L. Little                                  12/29/99
------------------------------------            --------
Linwood L. Little                               Date
Vice President, Sales and Marketing
Heidrick & Struggles/LeadersOnline

-------------
*** Omitted pursuant to a confidential treatment request filed separately.
<PAGE>

                     Addendum to E*Trade and LeadersOnline
                       Contract Dated December 27, 1999


March 3, 2000

Mr. Jerry Dark
Chief People Officer
E*Trade
4500 Bohannon Drive
Menlo Park, California 94025

Dear Jerry,

This memorandum sets forth our clarification of our December 27, 1999 engagement
letter and details the changes that we have mutually agreed upon.

There were two contract sessions, a consultative segment and a performance
segment. The consultative services included a needs assessment, position
evaluation, qualification/skills assessment, web site setup which details
business summary (opportunities, hiring manager, company benefits, introductions
to the CEO/CIO, and position location), opportunity page design including job
specifications, required and desirable skills, professional requirements, etc.
The consultative fee is $***. We agreed to provide these consultative services
prior to December 31st, 1999. These services were delivered to you on December
29th, and were documented in the opportunity pages and company overview. The
second contract section is the performance segment, for which specific fees are
billed upon offers being extended for placement.

We initially agreed to fulfill *** different types of positions for a total of
*** placements. In this, we agreed to timelines and a graduated fee scale
ranging from ***% of first year's total compensation in addition to a
consultative retainer of $***. Since then, E*Trade has requested to add ***
positions while keeping within the original *** placements. We need your input
on the position specifications to activate the opportunity pages for the
following:

     .    *** of the *** original positions

     .    *** of the *** new positions requests.

Currently, *** of the *** requested positions have active opportunity pages.

The December contract included a performance timeline and a graduated scale of
performance fees that ranged from *** percent to *** percent. We intend to
provide E*Trade with the flexibility to modify the position specifications as
needed.

We mutually agree to the same fee scale, with the start date based on the
activation of Opportunity pages by position type. Start dates are mutually
agreed upon by E*Trade and LeadersOnline.

Please indicate your acceptance of the terms and conditions set forth above by
signing and returning this letter as soon as possible.  We thank you for your
continued partnership.

Best regards,                                  ACCEPTED AND DATED:

Linwood L. Little                              /s/ Jerry Dark
Vice President, Client Development             --------------
LeadersOnline                                  Jerry Dark, Chief People Officer
                                               E*Trade

-------------
*** Omitted pursuant to a confidential treatment request filed separately.