Exhibit 10.12
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This form of Stock Pledge Agreement is identical for all executive officers
listed below.
Officer Name:
Christos M. Cotsakos
Jerry Gramaglia
Michael Sievert
Connie M. Dotson
Leonard C. Purkis
Pamela Kramer
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E*TRADE GROUP, INC.
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STOCK PLEDGE AGREEMENT
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AGREEMENT made as of this [Date] by and between E*TRADE Group, Inc., a
Delaware corporation (the "Corporation"), and [Officer Name] ("Pledgor").
RECITALS
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A. In connection with the purchase this day of [Number of Shares] shares
of the Corporation's Common Stock (the "Purchased Shares") from the Corporation,
Pledgor has issued that certain promissory note (the "Note") dated [Date of
Secured Note] payable to the order of the Corporation in the principal amount of
[Principal Amount].
B. Such Note is secured by the Purchased Shares and other collateral upon
the terms set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Security Interest. Pledgor hereby grants the
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Corporation a security interest in, and assigns, transfers to and pledges with
the Corporation, the following securities and other property (collectively, the
"Collateral"):
(i) the Purchased Shares delivered to and deposited with
the Corporation as collateral for the Note;
(ii) any and all new, additional or different securities
or other property subsequently distributed with respect to the Purchased
Shares which are to be delivered to and deposited with the Corporation
pursuant to the requirements of Paragraph 3 of this Agreement;
(iii) any and all other property and money which is
delivered to or comes into the possession of the Corporation pursuant to
the terms of this Agreement; and
(iv) the proceeds of any sale, exchange or disposition of
the property and securities described in subparagraphs (i), (ii) or (iii)
above.
2. Warranties. Pledgor hereby warrants that Pledgor is the owner of
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the Collateral and has the right to pledge the Collateral and that the
Collateral is free from all liens, adverse claims and other security interests
(other than those created hereby).
3. Duty to Deliver. Any new, additional or different securities or
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other property (other than regular cash dividends) which may now or hereafter
become distributable with respect to the Collateral by reason of (i) any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the Common Stock as a class without the
Corporation's receipt of consideration or (ii) any merger, consolidation or
other reorganization affecting the capital structure of the Corporation shall,
upon receipt by Pledgor, be promptly delivered to and deposited with the
Corporation as part of the Collateral hereunder. Any such securities shall be
accompanied by one or more properly-endorsed stock power assignments.
4. Payment of Taxes and Other Charges. Pledgor shall pay, prior to
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the delinquency date, all taxes, liens, assessments and other charges against
the Collateral, and in the event of Pledgor's failure to do so, the Corporation
may at its election pay any or all of such taxes and other charges without
contesting the validity or legality thereof. The payments so made shall become
part of the indebtedness secured hereunder and until paid shall bear interest at
the minimum per annum rate, compounded semi-annually, required to avoid the
imputation of interest income to the Corporation and compensation income to
Pledgor under the Federal tax laws.
5. Stockholder Rights. So long as there exists no event of default
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under Paragraph 10 of this Agreement, Pledgor may exercise all stockholder
voting rights and be entitled to receive any and all regular cash dividends paid
on the Collateral and all proxy statements and other stockholder materials
pertaining to the Collateral.
6. Rights and Powers of Corporation. The Corporation may, without
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obligation to do so, exercise at any time and from time to time one or more of
the following rights and powers with respect to any or all of the Collateral:
(i) subject to the applicable limitations of Paragraph 9,
accept in its discretion other property of Pledgor in exchange for all or
part of the Collateral and release Collateral to Pledgor to the extent
necessary to effect such exchange, and in such event the other property
received in the exchange shall become part of the Collateral hereunder;
(ii) perform such acts as are necessary to preserve and
protect the Collateral and the rights, powers and remedies granted with
respect to such Collateral by this Agreement; and
(iii) transfer record ownership of the Collateral to the
Corporation or its nominee and receive, endorse and give receipt for, or
collect by legal proceedings or otherwise, dividends or other distributions
made or paid with respect to the Collateral, provided and only if there
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exists at the time an outstanding event of default under Paragraph 10 of
this Agreement. Any cash
sums which the Corporation may so receive shall be applied to the payment
of the Note and any other indebtedness secured hereunder, in such order of
application as the Corporation deems appropriate. Any remaining cash shall
be paid over to Pledgor.
Any action by the Corporation pursuant to the provisions of this
Paragraph 6 may be taken without notice to Pledgor. Expenses reasonably incurred
in connection with such action shall be payable by Pledgor and form part of the
indebtedness secured hereunder as provided in Paragraph 12.
7. Care of Collateral. The Corporation shall exercise reasonable
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care in the custody and preservation of the Collateral. However, the Corporation
shall have no obligation to (i) initiate any action with respect to, or
otherwise inform Pledgor of, any conversion, call, exchange right, preemptive
right, subscription right, purchase offer or other right or privilege relating
to or affecting the Collateral, (ii) preserve the rights of Pledgor against
adverse claims or protect the Collateral against the possibility of a decline in
market value or (iii) take any action with respect to the Collateral requested
by Pledgor unless the request is made in writing and the Corporation determines
that the requested action will not unreasonably jeopardize the value of the
Collateral as security for the Note and other indebtedness secured hereunder.
Subject to the limitations of Paragraph 9, the Corporation may at any
time release and deliver all or part of the Collateral to Pledgor, and the
receipt thereof by Pledgor shall constitute a complete and full acquittance for
the Collateral so released and delivered. The Corporation shall accordingly be
discharged from any further liability or responsibility for the Collateral, and
the released Collateral shall no longer be subject to the provisions of this
Agreement.
8. Transfer of Collateral. In connection with the transfer or
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assignment of the Note (whether by negotiation, discount or otherwise), the
Corporation may transfer all or any part of the Collateral, and the transferee
shall thereupon succeed to all the rights, powers and remedies granted the
Corporation hereunder with respect to the Collateral so transferred. Upon such
transfer, the Corporation shall be fully discharged from all liability and
responsibility for the transferred Collateral.
9. Release of Collateral. Provided all indebtedness secured
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hereunder (other than payments not yet due and payable under the Note) shall at
the time have been paid in full and there does not otherwise exist any event of
default under Paragraph 10, the Purchased Shares, together with any additional
Collateral which may hereafter be pledged and deposited hereunder, shall be
released from pledge and returned to Pledgor in accordance with the following
provisions:
(i) Upon payment or prepayment of principal under the
Note, together with payment of all accrued interest to date on the
principal amount so paid or prepaid, one or more of the Purchased Shares
held as Collateral hereunder shall (subject to the applicable limitations
of Paragraphs 9(iii) and 9(v) below) be released at the time of such
payment or prepayment. The number of
the shares to be so released shall be equal to the number obtained by
multiplying (i) the total number of Purchased Shares held under this
Agreement at the time of the payment or prepayment, by (ii) a fraction, the
numerator of which shall be the amount of the principal paid or prepaid and
the denominator of which shall be the unpaid principal balance of the Note
immediately prior to such payment or prepayment. In no event, however,
shall any fractional shares be released.
(ii) Any additional Collateral which may hereafter be
pledged and deposited with the Corporation (pursuant to the requirements of
Paragraph 3) with respect to the Purchased Shares shall be released at the
same time the particular shares of Common Stock to which the additional
Collateral relates are to be released in accordance with the applicable
provisions of Paragraph 9(i) or 9(vi).
(iii) Under no circumstances, however, shall any Purchased
Shares or any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder. In addition, in no event
shall any Purchased Shares or other Collateral be released pursuant to the
provisions of Paragraph 9(i), 9(ii) or 9(vi) if, and to the extent, the
fair market value of the Common Stock and all other Collateral which would
otherwise remain in pledge hereunder after such release were effected would
be less than the unpaid principal and accrued interest under the Note.
(iv) For all valuation purposes under this Agreement, the
fair market value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(A) If the Common Stock is at the time traded on
the Nasdaq National Market, the fair market value shall be the average of
the high and low selling prices per share of Common Stock on the date in
question, as such prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no average of
the high and low selling prices for the Common Stock on the date in
question, then the average of the high and low selling prices on the last
preceding date for which such quotation exists shall be determinative of
fair market value.
(B) If the Common Stock is at the time listed on
the American Stock Exchange or the New York Stock Exchange, then the fair
market value shall be the average of the high and low selling prices
selling prices per share of Common Stock on the date in question on the
securities exchange serving as the primary market for the Common Stock, as
such prices are officially quoted in the composite tape of transactions on
such exchange. If there is no average of the high and low selling prices of
Common Stock on such exchange on the date in question, then the fair market
value shall be the average of the high and low selling prices on the
exchange on the last preceding date for which such quotation exists.
(C) If the Common Stock is at the time neither
listed on any securities exchange nor traded on the Nasdaq National Market,
the fair market value shall be determined by the Corporation's Board of
Directors after taking into account such factors as the Board shall deem
appropriate.
(v) So long as the Collateral is in whole or in part
comprised of "margin stock" within the meaning of Section 221.2 of
Regulation U of the Federal Reserve Board, then no Collateral shall be
substituted for any Collateral under the provisions of Paragraph 6(i) or be
released under Paragraph 9(i), 9(ii) or 9(vi), unless there is compliance
with each of the following additional requirements:
(A) The substitution or release must not increase
the amount by which the indebtedness secured hereunder at the time of such
substitution or release exceeds the maximum loan value (as defined below)
of the Collateral immediately prior to such substitution or release.
(B) The substitution or release must not cause the
amount of indebtedness secured hereunder at the time of such substitution
or release to exceed the maximum loan value of the Collateral remaining
after such substitution or release is effected.
(C) For purposes of this Paragraph 9(v), the
maximum loan value of each item of Collateral shall be determined on the
day the substitution or release is to be effected and shall, in the case of
the shares of Common Stock and any additional Collateral (other than margin
stock), equal the good faith loan value thereof (as defined in Section
221.2 of Regulation U) and shall, in the case of all margin stock (other
than the Common Stock), equal fifty percent (50%) of the current market
value of such margin stock.
(vi) The Compensation Committee of the Corporation's Board
of Directors shall have the discretion, exercisable upon such terms and
conditions as the Compensation Committee deems advisable, to authorize the
release of one or more shares of Common Stock from pledge hereunder in the
event the maximum loan value of the Collateral pledged hereunder (as such
value is determined pursuant to subparagraph 9(v)(C)) should substantially
exceed the outstanding indebtedness at the time secured hereunder. Any such
release of the pledged shares of Common Stock shall, however, be effected
in compliance with the requirements of subparaphs (iii) and (v) of this
Paragraph 9.
10. Events of Default. The occurrence of one or more of the following
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events shall constitute an event of default under this Agreement:
(i) the failure of Pledgor to pay, when due under the
Note, any installment of principal or accrued interest; or
(ii) the occurrence of any other acceleration event
specified in the Note; or
(iii) the failure of Pledgor to perform any obligation
imposed upon Pledgor by reason of this Agreement; or
(iv) the breach of any warranty of Pledgor contained in
this Agreement.
Upon the occurrence of any such event of default, the Corporation may,
at its election, declare the Note and all other indebtedness secured hereunder
to become immediately due and payable and may exercise any or all of the rights
and remedies granted to a secured party under the provisions of the California
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder.
Any proceeds realized from the disposition of the Collateral pursuant
to the foregoing power of sale shall be applied first to the payment of expenses
incurred by the Corporation in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness secured hereunder.
Any surplus proceeds shall be paid over to Pledgor. However, in the event such
proceeds prove insufficient to satisfy all obligations of Pledgor under the
Note, then Pledgor shall remain personally liable for the resulting deficiency.
11. Other Remedies. The rights, powers and remedies granted to the
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Corporation pursuant to the provisions of this Agreement shall be in addition to
all rights, powers and remedies granted to the Corporation under any statute or
rule of law. Any forbearance, failure or delay by the Corporation in exercising
any right, power or remedy under this Agreement shall not be deemed to be a
waiver of such right, power or remedy. Any single or partial exercise of any
right, power or remedy under this Agreement shall not preclude the further
exercise thereof, and every right, power and remedy of the Corporation under
this Agreement shall continue in full force and effect unless such right, power
or remedy is specifically waived by an instrument executed by the Corporation.
12. Costs and Expenses. All costs and expenses (including reasonable
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attorneys fees) incurred by the Corporation in the exercise or enforcement of
any right, power or remedy granted it under this Agreement shall become part of
the indebtedness secured hereunder and shall constitute a personal liability of
Pledgor payable immediately upon demand and bearing interest until paid at the
minimum per annum rate, compounded semi-annually, required to avoid the
imputation of interest income to the Corporation and compensation income to
Pledgor under the Federal tax laws.
13. Applicable Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of California without resort to that
State's conflict-of-laws rules.
14. Successors. This Agreement shall be binding upon the Corporation
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and its successors and assigns and upon Pledgor and the executors, heirs and
legatees of Pledgor's estate.
15. Severability. If any provision of this Agreement is held to be
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invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this Agreement shall be affected thereby.
IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and
the Corporation on this [Date].
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PLEDGOR
Address: ______________________
_______________________________
AGREED TO AND ACCEPTED BY:
E*TRADE GROUP, INC.
By: _________________________
Title: ______________________
Dated: [Date]
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ______________ hereby sells, assigns and transfers
unto E*TRADE Group, Inc. (the "Corporation"),__________ (____) shares of the
Common Stock of the Corporation standing in his name on the books of the
Corporation represented by Certificate No. _____________ herewith and does
hereby irrevocably constitute and appoint ____________________ Attorney to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises.
Dated: ________________________
Signature: ___________________________
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate.