EXHIBIT 10.4

ARTICLE ONE

I. PURPOSE OF THE PLAN

This 1996 Stock Incentive Plan is intended to promote the interests of E*TRADE Group, Inc., a Delaware corporation, by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into three separate equity programs:

- the Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock,

- the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary), and

- the Automatic Option Grant Program under which eligible non-employee Board members shall automatically receive option grants at periodic intervals to purchase shares of Common Stock.

B. The provisions of Articles One and Five shall apply to all equity programs under the Plan and shall govern the interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. Prior to the Section 12 Registration Date, the Discretionary Option Grant and Stock Issuance Programs shall be administered by the Board. Beginning with the Section 12 Registration Date, the Primary Committee shall have sole and exclusive authority

to administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders. No non-employee Board member shall be eligible to serve on the Primary Committee if such individual has, during the twelve
(12)-month period immediately preceding the date of his or her appointment to the Committee or (if shorter) the period commencing with the Section 12(g) Registration Date and ending with the date of his or her appointment to the Primary Committee, received an option grant or direct stock issuance under the Plan or any other stock option, stock appreciation, stock bonus or other stock plan of the Corporation (or any Parent or Subsidiary), other than pursuant to the Automatic Option Grant Program.

B. Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board's discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons. The members of the Secondary Committee may be Board members who are Associates eligible to receive discretionary option grants or direct stock issuances under the Plan or any other stock option, stock appreciation, stock bonus or other stock plan of the Corporation (or any Parent or Subsidiary).

C. Members of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.

D. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or any option or stock issuance thereunder.

E. Service on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan.

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F. Administration of the Automatic Option Grant Program shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to any option grants or stock issuances made under those programs.

IV. ELIGIBILITY

A. The persons eligible to participate in the Discretionary Option Grant and Stock Issuance Programs are as follows:

(i) Associates,

(ii) non-employee members of the Board (other than those serving as members of the Primary Committee) or the board of directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive option grants, the time or times when such option grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration for such shares.

C. The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program.

D. The individuals who shall be eligible to participate in the Automatic Option Grant Program shall be limited to (i) those individuals serving as non-employee Board members on the Underwriting Date who have not previously received a stock option grant from the Corporation, (ii) those individuals who first become non-employee Board members after the Underwriting Date, whether through appointment by the Board or election by the Corporation's stockholders, and (iii) those individuals who continue to serve as non-employee Board members at one or more Annual Stockholders Meetings held after the Underwriting Date. A non-employee Board member who has previously been in the

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employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to receive an option grant under the Automatic Option Grant Program at the time he or she first becomes a non-employee Board member, but shall be eligible to receive periodic option grants under the Automatic Option Grant Program while he or she continues to serve as a non-employee Board member.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed 9,994,120 shares. Such authorized share reserve is comprised of (i) the shares subject to the outstanding options under the Predecessor Plan which will be incorporated into the Plan/1/, plus (ii) an additional increase of 4,000,000 shares authorized by the Board but subject to stockholder approval prior to the
Section 12 Registration Date.

B. No one person participating in the Plan may receive options, separately exercisable stock appreciation rights and direct stock issuances for more than 500,000 shares of Common Stock in the aggregate per calendar year, beginning with the 1996 calendar year.

C. Shares of Common Stock subject to outstanding options (including options incorporated into this Plan from the Predecessor Plan) shall be available for subsequent issuance under the Plan to the extent those options expire or terminate for any reason prior to exercise in full. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation, at the original issue price paid per share, pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan. However, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the gross number of shares for which the option is exercised or which vest under the stock issuance, and not by the net number of shares of Common Stock issued to the holder of such option or stock issuance.

D. If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt

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of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances under this Plan per calendar year, (iii) the number and/or class of securities for which grants are subsequently to be made under the Automatic Option Grant Program to new and continuing non-employee Board members, (iv) the number and/or class of securities and the exercise price per share in effect under each outstanding option under the Plan and (v) the number and/or class of securities and price per share in effect under each outstanding option incorporated into this Plan from the Predecessor Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.

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ARTICLE TWO

I. OPTION TERMS

1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Five and the documents evidencing the option, be payable in one or more of the forms specified below:

(i) cash or check made payable to the Corporation,

(ii) shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

(iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to (a) a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

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1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

(i) Any option outstanding at the time of the Optionee's cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.

(ii) Any option exercisable in whole or in part by the Optionee at the time of death may be subsequently exercised by the personal representative of the Optionee's estate or by the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution.

(iii) Should the Optionee's Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to be outstanding.

(iv) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee's cessation of Service, terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for vested shares.

2. The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i) extend the period of time for which the option is to remain exercisable following the Optionee's cessation of Service from the limited exercise period otherwise in effect for that option to such greater

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period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or

(ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee's cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.

II. INCENTIVE OPTIONS

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III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each outstanding option shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, an outstanding option shall not so accelerate if and to the extent: (i) such option is, in connection with the Corporate Transaction, either to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof), (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such option or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be final, binding and conclusive.

B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

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C. Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

G. The portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded.

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To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Qualified Option under the Federal tax laws.

H. The outstanding options shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Discretionary Option Grant Program (including outstanding options incorporated from the Predecessor Plan) and to grant in substitution new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new grant date.

V. STOCK APPRECIATION RIGHTS

A. The Plan Administrator shall have full power and authority to grant to selected Optionees tandem stock appreciation rights and/or limited stock appreciation rights.

B. The following terms shall govern the grant and exercise of tandem stock appreciation rights:

(i) One or more Optionees may be granted the right, exercisable upon such terms as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (a) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (b) the aggregate exercise price payable for such shares.

(ii) No such option surrender shall be effective unless it is approved by the Plan Administrator. If the surrender is so approved, then the distribution to which the Optionee shall be entitled may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

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C. The following terms shall govern the grant and exercise of limited stock appreciation rights:

(i) One or more Section 16 Insiders may be granted limited stock appreciation rights with respect to their outstanding options.

(ii) Upon the occurrence of a Hostile Take-Over, each individual holding one or more options with such a limited stock appreciation right in effect for at least six (6) months shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile Take-Over) to surrender each such option to the Corporation, to the extent the option is at the time exercisable for vested shares of Common Stock. In return for the surrendered option, the Optionee shall receive a cash distribution from the Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common Stock which are at the time vested under each surrendered option (or surrendered portion thereof) over (B) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the option surrender date.

(iii) Neither the approval of the Plan Administrator nor the consent of the Board shall be required in connection with such option surrender and cash distribution.

(iv) The balance of the option (if any) shall continue in full force and effect in accordance with the documents evidencing such option.

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ARTICLE THREE

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

1. The purchase price per share shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date.

2. Subject to the provisions of Section I of Article Seven, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the Corporation (or any Parent or Subsidiary).

1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant's period of Service or upon attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program, namely:

(i) the Service period to be completed by the Participant or the performance objectives to be attained,

(ii) the number of installments in which the shares are to vest,

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(iii) the interval or intervals (if any) which are to lapse between installments, and

(iv) the effect which death, Permanent Disability or other event designated by the Plan Administrator is to have upon the vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement.

2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant's unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant's interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant's purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to the surrendered shares.

5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the cessation of the Participant's Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time,

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whether before or after the Participant's cessation of Service or the attainment or non-attainment of the applicable performance objectives.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. All of the Corporation's outstanding repurchase/cancellation rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent
(i) those repurchase/cancellation rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's repurchase/cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase/cancellation rights are assigned to the successor corporation (or parent thereof).

C. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's repurchase/cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

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ARTICLE FOUR

I. OPTION TERMS

1. Each individual serving as a non-employee Board member on the Underwriting Date shall automatically be granted at that time a Non-Statutory Option to purchase 20,000 shares of Common Stock, provided that individual has not previously been in the employ of the Corporation or any Parent or Subsidiary and has not previously received a stock option grant from the Corporation.

2. Each individual who is first elected or appointed as a non- employee Board member at any time after the Underwriting Date shall automatically be granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase 20,000 shares of Common Stock, provided that individual has not previously been in the employ of the Corporation or any Parent or Subsidiary.

3. On the date of each Annual Stockholders Meeting held after the Underwriting Date, each individual who is to continue to serve as an Eligible Director, whether or not that individual is standing for re-election to the Board at that particular Annual Meeting, shall automatically be granted a Non-Statutory Option to purchase 5,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months. There shall be no limit on the number of such 5,000-share option grants any one Eligible Director may receive over his or her period of Board service, and non-employee Board members who have previously been in the employ of the Corporation (or any Parent or Subsidiary) or who have otherwise received a stock option grant from the Corporation prior to the Underwriting Date shall be eligible to receive one or more such annual option grants over their period of continued Board service.

1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

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(i) The Optionee (or, in the event of Optionee's death, the personal representative of the Optionee's estate or the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution) shall have a twelve
(12)-month period following the date of such cessation of Board service in which to exercise each such option.

(ii) During the twelve (12)-month exercise period, the option may not be exercised in the aggregate for more than the number of vested shares of Common Stock for which the option is exercisable at the time of the Optionee's cessation of Board service.

(iii) Should the Optionee cease to serve as a Board member by reason of death or Permanent Disability, then all shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for all or any portion of those shares as fully-vested shares of Common Stock.

(iv) In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the twelve (12)- month exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee's cessation of Board service for any

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reason other than death or Permanent Disability, terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for vested shares.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

A. In the event of any Corporate Transaction, the shares of Common Stock at the time subject to each outstanding option but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for all or any portion of those shares as fully- vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, each automatic option grant shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

B. In connection with any Change in Control, the shares of Common Stock at the time subject to each outstanding option but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Change in Control, become fully exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for all or any portion of those shares as fully-vested shares of Common Stock. Each such option shall remain exercisable for such fully-vested option shares until the expiration or sooner termination of the option term or the surrender of the option in connection with a Hostile Take-Over.

C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each automatic option held by him or her for a period of at least six (6) months. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. No approval or consent of the Board or any Plan Administrator shall be required in connection with such option surrender and cash distribution.

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E. The grant of options under the Automatic Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

III. AMENDMENT OF THE AUTOMATIC OPTION GRANT PROGRAM

The provisions of this Automatic Option Grant Program, together with the option grants outstanding thereunder, may not be amended at intervals more frequently than once every six (6) months, other than to the extent necessary to comply with applicable Federal income tax laws and regulations.

IV. REMAINING TERMS

The remaining terms of each option granted under the Automatic Option Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program.

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ARTICLE FIVE

I. FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

II. TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of Common Stock upon the exercise of options or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options or unvested shares of Common Stock under the Plan (other than the options granted or the shares issued under the Automatic Option Grant Program) with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options or the vesting of their shares. Such right may be provided to any such holder in either or both of the following formats:

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III. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective with respect to the Discretionary Option Grant and the Stock Issuance Programs immediately upon the Plan Effective Date. The Automatic Option Grant Program shall become effective on the Underwriting Date. Options may be granted under the Discretionary Option Grant Program at any time on or after the Plan Effective Date, and the initial options under the Automatic Option Grant Program shall be made on the Underwriting Date to each Eligible Director at that time. However, no options granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation's stockholders. If such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date, then all options previously granted under this Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan.

B. The Plan shall serve as the successor to the Predecessor Plan, and no further option grants or direct stock issuances shall be made under the Predecessor Plan after the Section 12(g) Registration Date. All options outstanding under the Predecessor Plan on the Section 12(g) Registration Date shall be incorporated into the Plan at that time and shall be treated as outstanding options under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents evidencing such option, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such incorporated options with respect to their acquisition of shares of Common Stock.

C. One or more provisions of the Plan, including (without limitation) the option/vesting acceleration provisions of Article Two relating to Corporate Transactions and Changes in Control, may, in the Plan Administrator's discretion, be extended to one or more options incorporated from the Predecessor Plan which do not otherwise contain such provisions.

IV. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, (i) no such amendment or modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or

21.

the Participant consents to such amendment or modification and (ii) any amendment made to the Automatic Option Grant Program (or any stock option or stock issuances outstanding thereunder) shall be in compliance with the applicable limitations of those programs. In addition, the Board shall not, without the approval of the Corporation's stockholders, (i) materially increase the maximum number of shares issuable under the Plan or the maximum number of shares for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances in the aggregate under this Plan during any one calendar year, except for permissible adjustments in the event of certain changes in the Corporation's capitalization,
(ii) materially modify the eligibility requirements for participation or (iii) materially increase the benefits accruing to participants.

B. Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

V. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

VI. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any stock option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under the Stock Issuance Program shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the stock options granted under it and the shares of Common Stock issued pursuant to it.

22.

B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person's Service at any time for any reason, with or without cause.

23.

The following definitions shall be in effect under the Plan:

(i) the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders to accept, or

(ii) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

A-1.

(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii) the sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation.

(i) If the Common Stock is at the time traded on the Nasdaq National Market, then 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 or any successor system. If there are no high or low selling prices for the Common Stock on the date in question, then the Fair Market Value shall be the average of the high and low selling prices on the last preceding date for which such quotations exist.

(ii) If the Common Stock is at the time listed on any Stock Exchange, then 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 on the

A-2.

Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such prices are officially quoted in the composite tape of transactions on such exchange. If there are no high and low selling prices for the Common Stock on the date in question, then the Fair Market Value shall be the average of the high and low selling prices on the last preceding date for which such quotations exist.

(iii) For purposes of any option grants made on the Underwriting Date, the Fair Market Value shall be deemed to be equal to the price per share at which the Common Stock is to be sold in the initial public offering pursuant to the Underwriting Agreement.

(iv) For purposes of any option grants made prior to the Underwriting Date, the Fair Market Value shall be determined by the Plan Administrator, after taking into account such factors as it deems appropriate.

(ii) more than fifty percent (50%) of the securities so acquired are accepted from persons other than Section 16 Insiders.

(i) such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or

(ii) such individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her level of responsibility, (B) a reduction in his or her level of

A-3.

compensation (including base salary, fringe benefits and participation in any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without the individual's consent.

A-4.

A-5.

EXHIBIT 10.9

I. PURPOSE OF THE PLAN

This Stock Purchase Plan is intended to promote the interests of E*TRADE Group, Inc. by providing eligible associates with the opportunity to acquire a proprietary interest in the Corporation through participation in a payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

II. ADMINISTRATION OF THE PLAN

The Plan Administrator shall have full authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the Plan as it may deem necessary in order to comply with the requirements of Code Section 423. Decisions of the Plan Administrator shall be final and binding on all parties having an interest in the Plan.

III. STOCK SUBJECT TO PLAN

A. The stock purchasable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares of Common Stock purchased on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed Six Hundred Fifty Thousand (650,000) shares.

B. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and class of securities issuable under the Plan, (ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date and (iii) the number and class of securities and the price per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement of benefits thereunder.

IV. OFFERING PERIODS

A. Shares of Common Stock shall be offered for purchase under the Plan through a series of successive offering periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated.

B. Each offering period shall be of such duration (not to exceed twenty-four (24) months) as determined by the Plan Administrator prior to the start date. The initial offering period shall commence at the Effective Time and terminate on the last business day in July 1998. The next offering period shall commence on the first business day in August 1998, and subsequent offering periods shall commence as designated by the Plan Administrator.

C. Each offering period shall be comprised of a series of one or more successive Purchase Intervals. Purchase Intervals shall run from the first business day in February each year to the last business day in July of the same year and from the first business day in August each year to the last business day in January of the following year. Accordingly, the first Purchase Interval in effect under the initial offering period shall commence at the Effective Time and terminate on the last business day in January 1997.

D. Should the Fair Market Value per share of Common Stock on any Purchase Date within an offering period be less than the Fair Market Value per share of Common Stock on the start date of that offering period, then that offering period shall automatically terminate immediately after the purchase of shares of Common Stock on such Purchase Date, and a new offering period shall commence on the next business day following such Purchase Date. The new offering period shall have a duration of twenty four (24) months, unless a shorter duration is established by the Plan Administrator within five (5) business days following the start date of that offering period.

V. ELIGIBILITY

A. Each individual who is an Eligible Associate on the start date of any offering period under the Plan may enter that offering period on such start date or on any subsequent Semi-Annual Entry Date within that offering period, provided he or she remains an Eligible Associate.

B. Each individual who first becomes an Eligible Associate after the start date of an offering period may enter that offering period on any subsequent Semi-Annual Entry Date within that offering period on which he or she is an Eligible Associate.

C. The date an individual enters an offering period shall be designated his or her Entry Date for purposes of that offering period.

D. To participate in the Plan for a particular offering period, the Eligible Associate must complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization) and file such forms with the Plan Administrator (or its designate) on or before his or her scheduled Entry Date.

2.

VI. PAYROLL DEDUCTIONS

A. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock during an offering period may be any multiple of one percent (1%) of the Base Salary paid to the Participant during each Purchase Interval within that offering period, up to a maximum of ten percent (10%). The deduction rate so authorized shall continue in effect throughout the offering period, except to the extent such rate is changed in accordance with the following guidelines:

(i) The Participant may, at any time during the offering period, reduce his or her rate of payroll deduction to become effective as soon as possible after filing the appropriate form with the Plan Administrator. The Participant may not, however, effect more than one (1) such reduction per Purchase Interval.

(ii) The Participant may, prior to the commencement of any new Purchase Interval within the offering period, increase the rate of his or her payroll deduction by filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the ten percent (10%) maximum) shall become effective on the start date of the first Purchase Interval following the filing of such form.

B. Payroll deductions shall begin on the first pay day following the Participant's Entry Date into the offering period and shall (unless sooner terminated by the Participant) continue through the pay day ending with or immediately prior to the last day of that offering period. The amounts so collected shall be credited to the Participant's book account under the Plan, but no interest shall be paid on the balance from time to time outstanding in such account. The amounts collected from the Participant shall not be held in any segregated account or trust fund and may be commingled with the general assets of the Corporation and used for general corporate purposes.

C. Payroll deductions shall automatically cease upon the termination of the Participant's purchase right in accordance with the provisions of the Plan.

D. The Participant's acquisition of Common Stock under the Plan on any Purchase Date shall neither limit nor require the Participant's acquisition of Common Stock on any subsequent Purchase Date, whether within the same or a different offering period.

VII. PURCHASE RIGHTS

3.

installments over the remainder of such offering period, upon the terms set forth below. The Participant shall execute a stock purchase agreement embodying such terms and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem advisable.

Under no circumstances shall purchase rights be granted under the Plan to any Eligible Associate if such individual would, immediately after the grant, own (within the meaning of Code Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Corporation or any Corporate Affiliate.

4.

(i) A Participant may, at any time prior to the next scheduled Purchase Date in the offering period, terminate his or her outstanding purchase right by filing the appropriate form with the Plan Administrator (or its designate), and no further payroll deductions shall be collected from the Participant with respect to the terminated purchase right. Any payroll deductions collected during the Purchase Interval in which such termination occurs shall, at the Participant's election, be immediately refunded or held for the purchase of shares on the next Purchase Date. If no such election is made at the time such purchase right is terminated, then the payroll deductions collected with respect to the terminated right shall be refunded as soon as possible.

(ii) The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the offering period for which the terminated purchase right was granted. In order to resume participation in any subsequent offering period, such individual must re- enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before his or her scheduled Entry Date into that offering period.

(iii) Should the Participant cease to remain an Eligible Associate for any reason (including death, disability or change in status) while his or her purchase right remains outstanding, then that purchase right shall immediately terminate, and all of the Participant's payroll deductions for the Purchase Interval in which the purchase right so terminates shall be immediately refunded. However, should the Participant cease to remain in active service by reason of an approved unpaid leave of absence, then the Participant shall have the right, exercisable up until the last business day of the Purchase Interval in which such leave commences, to (a) withdraw all the payroll deductions collected to date on his or her behalf for that Purchase Interval or (b) have such funds held for the purchase of shares on his or her behalf on the next scheduled Purchase Date. In no event, however, shall any further payroll deductions be collected on the Participant's behalf during such leave. Upon the Participant's return to active service, his or her payroll deductions under the Plan shall automatically resume at the rate in effect at the time the leave began, unless the Participant withdraws from the Plan prior to his or her return.

5.

The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction, and Participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights prior to the effective date of the Corporate Transaction.

VIII. ACCRUAL LIMITATIONS

A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value per share on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding.

6.

B. For purposes of applying such accrual limitations to the purchase rights granted under the Plan, the following provisions shall be in effect:

(i) The right to acquire Common Stock under each outstanding purchase right shall accrue in a series of installments on each successive Purchase Date during the offering period on which such right remains outstanding.

(ii) No right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Common Stock under one (1) or more other purchase rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock (determined on the basis of the Fair Market Value per share on the date or dates of grant) for each calendar year such rights were at any time outstanding.

C. If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular Purchase Interval, then the payroll deductions which the Participant made during that Purchase Interval with respect to such purchase right shall be promptly refunded.

D. In the event there is any conflict between the provisions of this Article and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be controlling.

IX. EFFECTIVE DATE AND TERM OF THE PLAN

7.

available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (iii) the date on which all purchase rights are exercised in connection with a Corporate Transaction. No further purchase rights shall be granted or exercised, and no further payroll deductions shall be collected, under the Plan following such termination.

X. AMENDMENT OF THE PLAN

The Board may alter, amend, suspend or discontinue the Plan at any time to become effective immediately following the close of any Purchase Interval. However, the Board may not, without the approval of the Corporation's stockholders, (i) materially increase the number of shares of Common Stock issuable under the Plan or the maximum number of shares purchasable per Participant on any one Purchase Date, except for permissible adjustments in the event of certain changes in the Corporation's capitalization, (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares of Common Stock purchasable under the Plan or (iii) materially increase the benefits accruing to Participants under the Plan or materially modify the requirements for eligibility to participate in the Plan.

XI. GENERAL PROVISIONS

A. All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation.

B. Nothing in the Plan shall confer upon the Participant any right to continue in the employ of the Corporation or any Corporate Affiliate for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Corporate Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person's employment at any time for any reason, with or without cause.

C. The provisions of the Plan shall be governed by the laws of the State of California without resort to that State's conflict-of-laws rules.

8.

E*TRADE Group, Inc. E*TRADE Securities, Inc.

The following definitions shall be in effect under the Plan:

(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Corporation in complete liquidation or dissolution of the Corporation.

A-1.

(i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(iii) For purposes of the initial offering period which begins at the Effective Time, the Fair Market Value shall be deemed to be equal to the price per share at which the Common Stock is sold in the initial public offering pursuant to the Underwriting Agreement.

A-2.

EXHIBIT 10.12

LEASE

BY AND BETWEEN

PROSPECT GREEN PARTNERS,
a California Joint Venture

as "Landlord"

AND

E*TRADE GROUP, INC.,
a California corporation

as "Tenant"

                                                                            Page
                                                                            ----
1.     TERMS AND DEFINITIONS; SCHEDULES....................................   1
       --------------------------------

2.     PREMISES............................................................   6
       --------

4.     IMPROVEMENTS BY LANDLORD; POSSESSION................................  23
       ------------------------------------

5.     PROJECT SERVICES....................................................  24
       ----------------

6.     TENANT'S COVENANTS..................................................  26
       ------------------

7.     LANDLORD'S RESERVED RIGHTS..........................................  37
       --------------------------

8.     CASUALTY AND UNTENANTABILITY........................................  38
       ----------------------------

9.     CONDEMNATION........................................................  42
       ------------

10.    INDEMNITY, SUBROGATION AND WAIVER...................................  43
       ----------------------------------------

11.    TENANT'S DEFAULT AND LANDLORD'S REMEDIES............................  45
       ----------------------------------------

12.    TERMINATION.........................................................  49
       ----------------------------------------

13.    MISCELLANEOUS.......................................................  51
       ----------------------------------------

Schedule 1      Description of the Premises
                 and Floor Plan

Schedule 2      Rules and Regulations

Schedule 3      Prospect Green Business Park Common
                 Area Charges

Schedule 4      Intentionally Deleted

Schedule 5      Work Letter Agreement

Schedule 5-A    Construction Schedule

Schedule 6      Certificate of Acceptance

Schedule 7      Base Rent and Management Fee

Schedule 8      Parking

This Lease is made the 21st day of June, 1996, by and between PROSPECT GREEN PARTNERS, a California Joint Venture ("Landlord"), and E*TRADE GROUP, INC., a California corporation ("Tenant") on the terms, covenants and conditions set forth below.

1.1.2 "Building" shall mean the two-story office building located at 10951 White Rock Road, Rancho Cordova, California, 95670.

1.1.3 "Project" shall mean, collectively, (i) the Building; (ii) the parcel of real property on which the Building is situated (the "Land"); (iii) the other improvements on the Land, including, without limitation, a parking lot, driveways, lighting and landscaping, which Building, Land and other improvements are commonly known as Prospect Green II, in the multi-building project known as Prospect Green Business Park, Rancho Cordova, California; and
(iv) the pro rata share attributed to Prospect Green II for the common area charges of Prospect Green Business Park (which charges are more particularly described in Schedule 3 attached) and which pro rata share is thirty-five and 54/100 percent (35.54%)(but which share shall be reduced as and when additional buildings are developed in Prospect Green Business Park).

1.1.4 "Tenant's Square Footage" shall mean the total Rentable square footage in the Leased Premises for which Base Rent shall be payable, and shall, for the first twelve (12) months of the Lease Term, consist of only that area of the Leased Premises which has been built-out by Tenant in accordance with Schedule 5 attached and shown as Areas 1A, 1B and 2 on the drawing attached herto as Schedule 1 (the "Initial Space"), but to be not less than Thirty-five Thousand (35,000) Rentable square feet (which Rentable square footage number represents approximately Thirty-one Thousand Nine Hundred Ninety-two (31,992) Useable square feet). Such number is subject to change in accordance with Subparagraph 2.4 below, dealing with Tenant's Expansion Obligation and Tenant's Accelerated Timing Option, the final result of which obligation shall be that as of not later than the commencement of the thirteenth (13th) month of the Lease Term, Tenant's Square Footage shall equal the Total Rentable Square Footage of the Building. The actual Rentable area will be calculated by Landlord's representative (and certified by Tenant upon execution, pursuant to Subparagraph 4.2 hereof, of the Certificate of Acceptance in form attached as Schedule 6) using the method for determining Rentable Area as set forth in the "Method for Measuring Floor Area in Office Buildings," published by the Building Owners and Managers Association International, approved July 31, 1980 ("BOMA Method"). "Total Rentable Square Footage of the Building" shall mean the actual Rentable area of the Building using the BOMA Method, consisting of Seventy Thousand and Sixty-five (70,065) Rentable square feet. The Total Rentable Square Footage of the Building may be adjusted pursuant to Subparagraph 7.1(c) below. Landlord shall certify to Tenant, using

the "as built" plan of Landlord's architects, the actual Total Rentable Square Footage of the Building and Tenant's Square Footage.

1.1.5 "Lease Commencement Date" shall mean June 24, 1996. "Lease Expiration Date" shall mean June 23, 2006. "Lease Term" shall mean the one hundred twenty (120) month period between Lease Commencement Date and Lease Expiration Date.

1.1.6 "Renewal Options" shall mean Tenant's right to renew this Lease for two (2) additional successive periods of sixty (60) months each. Each such sixty (60) month period shall constitute a "Renewal Term", and shall be entered into on the terms and conditions set forth in Subparagraph 2.3 below. In addition to the Renewal Options, which are exercisable at Tenant's election, Tenant shall have certain obligations to extend the term of this Lease in the event that Tenant exercises its rights under that certain Annex Expansion Option entered into by and between Landlord and Tenant of even date herewith, as more particularly described in Subparagraph 2.5 below.

1.1.7 "Base Rent" shall refer to the basic rental payments payable by Tenant to Landlord pursuant to Schedule 7 attached, and initially shall mean One and 17/100 Dollars ($1.17) per square foot of Tenant's Square Footage per month or approximately Forty Thousand Nine Hundred Fifty and No/100 Dollars ($40,950) per month for the Initial Space, and shall be adjusted as set forth on Schedule 7 attached hereto. An "Adjustment Date" is a date on which Base Rent shall be adjusted as provided in Schedule 7.

1.1.8 "Tenant's Share" shall mean one hundred percent (100%). "Additional Operating Costs" shall mean those Operating Costs (as defined in Subparagraph 3.4 below) which are not paid directly by Tenant to the supplier, vendor or provider thereof, in accordance with the terms hereof, but which shall be reimbursed by Tenant to Landlord as set forth in Section 3 below.

1.1.9 "Security Deposit" shall mean an amount equal to the amount of the first installment of Base Rent due and payable hereunder or approximately Forty Thousand Nine Hundred Fifty and no/100 Dollars ($40,950). The Security Deposit shall be tendered by Tenant upon execution of this Lease and shall be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease. If there occurs an uncured Event of Default (as defined in Subparagraph 11.1 below), Landlord may (but shall not be obligated to) retain, use or apply such Security Deposit for the payment of Rent or any other sum in default, or for payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer by reason of Tenant's default. In any such event, then, upon written notice from Landlord, Tenant shall deposit with Landlord sufficient cash to restore the Security Deposit to its original sum, and Tenant's failure to do so within ten
(10) days after the effective date of such written notice shall constitute an Event of Default.

1.1.10 "Permitted Purpose" means that Tenant may use the Leased Premises for general office and computer operations and any lawful purpose incidental thereto. Landlord hereby acknowledges

that such purpose is permitted under the development agreement currently applicable to the Project.

1.1.11 "Permitted Parking" shall mean four (4) parking spaces provided to Tenant for each one thousand (1,000) Rentable square feet of the Leased Premises, or two hundred eighty (280) spaces. Landlord agrees that, despite the phased build-out of the Leased Premises, Tenant shall be entitled to use of all of the parking spaces allocated to the Building, effective as of the Lease Commencement Date. Tenant's Permitted Parking shall be on the terms and conditions set forth in Schedule 8. Landlord reserves the right to reduce the number of parking spaces allocated to Tenant due to the adoption of any local ordinance or regulation imposing air quality/auto emissions restrictions upon employers of more then forty (40) employees.

1.1.12 "Managing Agent" shall mean Lankford & Associates, Inc., 3100 Zinfandel Drive, Suite 160, Rancho Cordova, California 95670, or any other agent specified in writing by Landlord pursuant to the provisions for Notice in this Lease.

1.1.13 Landlord's mailing address: 3100 Zinfandel Drive, Suite 160, Rancho Cordova, California 95670.

1.1.14 Tenant's mailing address: Four Embarcadero Place, 2400 Geng Road, Palo Alto, California 94303-3317, with a copy to the Leased Premises.

(a) Schedule 1: Description of Leased Premises and Floor Plan.
(b) Schedule 2: Rules and Regulations.
(c) Schedule 3: Prospect Green Business Park Common Area Charges.
(d) Schedule 4: Intentionally Deleted.
(e) Schedule 5: Work Letter Agreement.
(f) Schedule 5-A: Construction Schedule.
(g) Schedule 6: Certificate of Acceptance.
(h) Schedule 7: Base Rent and Management Fee
(i) Schedule 8: Parking.

occupancy to the Lease Commencement Date, Base Rent in the amount of the first installment of Base Rent due and payable by Tenant. A prorated monthly installment shall be paid for the fraction of the month if Tenant's occupancy of the Leased Premises commences on any day other than the first (1st) day of the month. If Tenant shall occupy the Leased Premises prior to the Lease Commencement Date, all covenants and conditions of this Lease shall be binding on the parties commencing upon the date of such prior occupancy.

such Lease Term shall not constitute a waiver by Landlord of the requirement that Tenant timely exercise the Renewal Option in writing.

tenant improvements; provided that such allowance shall be paid in periodic advances at the direction of Landlord, during the course of construction of the tenant improvements for the Secondary Space (as hereinafter provided) or, if construction has not yet commenced on the first day of the thirteenth month of hte Lease Term, then such funds shall be placed in an interest-bearing escrow account designated by Landlord, with instructions that they shall be released only upon the signature of Landlord, following verification of invoices for improvements performed to or for the benefit of the Secondary Space. In the event that not all of such funds are utilized by Tenant for improvements to the Secondary Space, the excess shall be returned to Landlord, along with all interest accrued on said escrowed funds from the date of deposit to the date of withdrawl. Notwithstanding the fact that Tenant shall be responsible for construction of the tenant improvements to the Initial Space in accordance with Schedule 5 attached, Tenant shall be responsible for constuction of the improvements to the Secondary Space but will enter into an agreement with Landlord (as a part of the Work Letter to be executed by and between the parties in connection with the build-out of such Secondary Space, as described in Subparagraph 2.4.2 below) whereby Landlord as owner of the Project shall perform such work for a fee. Such agreement with Landlord shall be on the following basic economic terms: (i) Landlord shall receive a fee of five percent (5%) (of the total cost of the work to be performed), and Landlord's general conditions shall be four percent (4%); (ii) Landlord shall competitively bid all major trades and will permit Tenant to review and approve such bids (which approval shall not be unreasonably

withheld or delayed); and (iii) Tenant shall be responsible for all increases in the cost of the work caused by overruns, change orders, and other causes beyond the reasonable control of Landlord.

form of Schedule 5 attached, covering Leasehold Improvements to be performed in such space, which are mutually agreeable to Landlord and Tenant, and including the terms on which Landlord shall construct such improvements, as described above. The Expansion Commencement Date shall be the earlier to occur of (i) Tenant's actual conduct of business in such space, or (ii) the date of Substantial Completion of such space, as determined in accordance with the Work Letter Agreement executed by the parties in connection with such space, as provided above, but in no event later that the first day of the thirteenth
(13th) month, of the Lease Term. Tenant's obligation for payment of Base Rent for the entire Building shall begin on such date regardless of whether Substantial Completion has yet been achieved, and regardless of whether Tenant has delivered written notice of its desire to build out such space.

Lease Term of this Lease shall and must be automatically extended to be co- terminous with the lease to be entered into by the parties for such annex building. Such extended period shall be referred to herein as the "Annex Extension Period" and shall be on the same terms and conditions as this Lease; provided that the Base Rent for such Annex Extension Period shall be increased to ninety-five percent (95%) of Fair Market Rental in accordance with the procedure for determining Fair Market Rental set forth in Subparagraph 3.3 below. Such increase shall be calculated as of that date on which the Lease Term would have expired had the Annex Expansion Option not been exercised by Tenant; provided, however, that notwithstanding such Fair Market Rental calculation, in no event shall Base Rent for such Annex Expansion Period be less than the Base Rent in effect as of the effective date of such calculation.

Tenant shall pay all Rent, without deduction or set off, to Landlord or Managing Agent at a place specified by Landlord.

building which is situated along the Interstate Highway 50 corridor between Watt Avenue and Sunrise Boulevard, in Sacramento County, California, would accept at arm's length, giving appropriate consideration to annual rental rate per square foot, types of escalation clauses, abatement provisions reflecting free rent and/or no rent during a lease term, brokerage commissions, if any, length of lease term, size and location of premises, building standard work letter and/or tenant improvement allowances, and other generally applicable terms and conditions of tenancy.

(a) The Fair Market Rental shall be determined by Landlord and Tenant within thirty (30) days after Landlord receives Tenant's Notice of Exercise. If the parties are unable to agree on such Rental, they shall select an appraiser within ten (10) days after the expiration of such thirty (30) days following the Notice of Exercise. If they are unable to select a single appraiser, each party shall select its own appraiser within ten (10) days thereafter, and the two (2) appraisers shall meet promptly and attempt to determine the Fair Market Rental. If the two (2) appraisers are able to agree, within thirty (30) days after their selection, on a Fair Market Rental that varies five percent (5%) or less (among the two (2) appraisers), their values shall be averaged to arrive at Fair Market Rental. If the two (2) appraisers are unable to agree, within thirty (30) days after their selection, on a Fair Market Rental that varies five percent (5%) or less (as among the two (2) appraisers), the two (2) appraisers shall select a third (3rd) appraiser within ten (10) days following expiration of the thirty (30) days. The third (3rd) appraiser shall in all

events be a person who has not previously acted in any capacity for either Landlord or Tenant. If the two (2) appraisers are unable to agree on a third
(3rd) appraiser (or if either party should within the time specified fail to appoint its appraiser), then either party, upon written application with ten
(10) days' prior written notice to the other, may request such appointment be made by the then presiding judge of the Superior Court of the County of Sacramento acting pursuant to Code of Civil Procedure Section 1281.6.

(b) The determination of a majority of the appraisers shall be binding upon the parties and shall be made not later than thirty (30) days following selection of the third (3rd) appraiser. If a majority of the appraisers are unable to set the Fair Market Rental within the stipulated period of time, the three (3) appraisals shall be added together and their totals divided by three (3); the resulting quotient shall be such Rental; provided, however, if the low appraisal and/or the high appraisal are/is more than seven percent (7%) lower and/or higher than the middle appraisal, the low and/or high appraisal shall be disregarded. If only one (1) appraisal is disregarded, the remaining two (2) appraisals shall be added together and their total divided by two (2); the resulting quotient shall be the Fair Market Rental. If both the low appraisal and the high appraisal are disregarded, the middle appraisal shall be the Fair Market Rental. Each party shall bear the cost of the appraisers selected by it; the expenses of the third (3rd) appraiser shall be borne one- half (1/2) by Landlord and one-half (1/2) by Tenant.

or expenses (with the exception of certain maintenance costs specifically provided in Subparagraph 5.1.2.1 below) of any nature whatsoever in connection with the ownership and operation of the Project. Each of the foregoing costs and charges to be paid by Tenant shall be part of Operating Costs as hereinafter defined, and shall be paid in one of three ways, as follows: (1) directly by Tenant to the supplier, vendor or provider thereof ("Tenant's Direct Costs");
(2) monthly payment from Tenant to Landlord of Tenant's Share - in this case, one hundred percent (100%) - of certain of the Additional Operating Costs, calculated by Landlord on an annual basis and billed 1/12 per month ("Monthly Additional Operating Costs"); and (3) Additional Operating Costs payable upon demand from Landlord to Tenant ("Demand Additional Operating Costs"). The Operating Costs are defined below, along with a more specific description of the manner of payment of the same, as follows:

3 attached); insurance premiums and (to the extent used) deductibles for all insurance being carried by Landlord against the Project or its operation; maintenance, repairs and replacements; refurbishing and repainting; cleaning, janitorial and other services, equipment, tools, materials and supplies; air conditioning, heating and elevator service; property management fees in the amounts set forth on Schedule 7 attached; security; resurfacing and restripping of walks, drives and parking areas; signs, directories and markers; exterior cleaning of the Building; landscaping; and snow and rubbish removal. Operating Costs shall not include expenses for legal services, real estate brokerage and leasing commissions, Landlord's net income taxes, income tax accounting, interest, depreciation, general corporate overhead, or capital improvements to the Building or Project except for capital improvements installed for the purpose of reducing or controlling expenses (and, in such case, to the extent of such savings or reduction in expenses; provided, however, that Landlord's statement as to such reduction or savings shall be presumed contolling on the issue and Tenant shall have the burden of disproving such statement), or required by any governmental or other authority having jurisdiction over the Project, which shall be amortized by Landlord in accordance with Generally Accepted Accounting Principles. In computing Additional Operating Costs for purposes of Subparagraph 3.4.2 below, Landlord's estimate of Operating Costs shall be used, and for purposes of Subparagraph 3.4.3 below, Landlord's actual Operating Costs for any calendar year shall be used.

(i) all real property taxes and assessments (including debt service on amortizing bonds);

(ii) insurance premiums and deductibles (to the extent used);

(iii) fees and other charges (such as traffic, parking or air quality mitigation charges and child care fees) imposed by governmental authorities having or asserting jurisdiction over the Project; and

(iv) any and all taxes payable (a) upon, measured by or reasonably attributable to the cost or value of Tenant's equipment,

fixtures and other personal property located in the Leased Premises or by the cost or value of any leasehold improvements made in or to the Leased Premises by Tenant, regardless of whether title to such improvements is in Tenant or Landlord; (b) upon or measured by the monthly Rental payable hereunder, including, without limitation, any gross receipts tax or excise tax, unless paid as an Operating Cost; (c) upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Leased Premises or any portion thereof; and (d) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Leased Premises.

Each of the foregoing shall be additional Rent hereunder and, unless this Lease provides otherwise, shall be due and payable not later than thirty (30) days after demand therefor.

(i) janitorial services for the Leased Premises in accordance with specifications (both as to frequency and scope of service) commensurate with similar class A buildings in the same

vacinity as the Building and approved by Landlord in its reasonable discretion;

(ii) electrical, gas, water and other utility charges for provision of light, general electrical power and water supplied to the Leased Premises (including sewer and waste removal), which shall be separately metered and billed to Tenant, at Tenant's sole cost and expense;

(iii) telephone installation and service supplied to the Leased Premises;

(iv) routine, periodic elevator maintenance service and HVAC systems service in accordance with specifications (both as to scope and frequency) commensurate with similar Class A buildings in the vacinity of the Building, and approved by Landlord in its reasonable discretion; and

(v) routine, periodic pest control service in accordance with specifications (both as to frequency and scope of service) commensurate with similar Class A buildings in the vacinity of the Building, and approved by Landlord in its reasonable discretion. If the foregoing costs are not timely paid by Tenant and Landlord is required to pay them, they shall be additional Rent hereunder. Should Tenant fail to provide adequate janitorial, pest control, elevator or HVAC systems services and/or timely pay for such services or those utility charges separately billed to Tenant, then, in addition to Landlord's remedies hereunder for an Event of Default by Tenant, Landlord shall have the right to assume responsibility for such costs (including the right to make arrangements for janitorial, pest control, elevator and/or HVAC

systems services to the Leased Premises) and to charge Tenant for the same.

possible following the establishment of the Lease Commencement Date in accordance with the terms of this subparagraph 4.2, Tenant shall execute and deliver to Landlord a letter in the form attached as Schedule 6, acknowledging the Lease Commencement Date and certifying that the Leasehold Improvements have been substantially completed and that Tenant has examined and accepted the Leased Premises. Tenant hereby authorizes an officer of Tenant who receives the keys, cardkeys, or other security devices to the Leased Premises on behalf of Tenant to execute and deliver such letter in Tenant's name. If Tenant fails to deliver such letter, Tenant shall conclusively be deemed to have made such acknowledgment and certification effective as of the date of Substantial Completion, as certified by Landlord's architect, in accordance with Schedule 5 attached.

the tenant improvements), including, without limitation, those portions of the systems lying outside the Building. All of the foregoing shall be at the expense of Landlord unless the need for such maintenance and/or repair is caused in part or in whole by the act, neglect fault or omission of any duty of Tenant, its agents, employees or invitees, in which case Tenant shall pay Landlord the reasonable cost of such maintenance and/or repairs, within twenty (20) days following Landlord's demand therefor. Landlord shall also maintain the parking area and the other portions of the Land, including the landscaped portions thereof; however, the cost of such maintenance shall be included by Landlord as an Operating Cost for purposes of computing Additional Operating Costs as provided in Subparagraph 3.4 above.

preventative maintenance services on the HVAC Equipment and the elevator, and Landlord shall be entitled to reasonably approve the nature and extent of such maintenance services. All of the foregoing shall be at the cost and expense of Tenant unless the need for such repair and/or maintenance is caused in whole or in part by the act, neglect, fault or omission of any duty by Landlord, its agents, employees or invitees, in which case Landlord shall to Tenant the reasonable cost of the same within twenty (20) days of Landlord' approval of such costs.

Green Business Park, of which the Project is a part) and all building, zoning, fire and other governmental laws, ordinances, rules or regulations applicable to the Leased Premises and all requirements of the carriers of insurance covering the Project. Landlord shall provide Tenant with a copy of any notice it receives from an insurance carrier pertaining to the Leased Premises insofar as such notice sets forth an alleged failure to meet the carrier's requirements, and Tenant shall have ten (10) days thereafter to remedy any failure to so comply; provided, however, that such compliance shall not increase Tenant's insurance requirements hereunder.

(b) Tenant further agrees to defend, indemnify and hold harmless Landlord, or any partner, officer or director of Landlord, against any and all claims, demands, liabilities, costs and expenses (including without limitation reasonable attorneys' fees and expenses, expert witness fees and post-judgment collection costs) which Landlord may sustain at any time as a result of, arising out of, or in any way connected with a breach of Subparagraph
6.1.3(a). Additionally, Tenant agrees to cease the activity which amounts to such breach immediately upon receipt of written notice from Landlord or any regulatory or governmental agency that, such activity is in violation of any governmental laws, ordinances, regulations or rules. Tenant shall give notice to Landlord of any hazardous substances that come to be located on the Leased Premises pursuant to Health & Safety Code section 25359.7.

shall prompty notify Tenant in accordance with the terms hereof. Any such alterations or improvements by Tenant shall be done in a good and workmanlike manner, at Tenant's expense, by a licensed contractor reasonably approved by Landlord in conformity with plans and specifications reviewed by Landlord. Tenant shall obtain all necessary governmental approvals and permits. On any alterations or improvements requiring Landlord's prior written approval, at Landlord's option, Tenant shall contract with Landlord for the construction of such alterations or improvements, but only if Landlord's price for such work is the lowest of the qualified written bids submitted to Tenant in a competitive bid process. In the case of any alterations, whether or not Landlord's approval is required hereunder, Tenant shall give Landlord no less than ten (10) business days' notice prior to commencement of construction of any kind so that Landlord may post a notice of nonresponsibility on the Leased Premises.

amount prescribed by applicable California statute then in effect as security for the lien being discharged.

Project, providing bodily injury, broad form property damage with a maximum One Thousand Dollar ($1,000.00) deductible, unless otherwise approved by Landlord, as follows:

(a) One Million Dollars ($1,000,000) with respect to bodily injury or death to any one (1) person;

(b) Three Million Dollars ($3,000,000) with respect to bodily injury or death arising out of any one (1) occurrence;

(c) One Million Dollars ($1,000,000) with respect to property damage or other loss arising out of any one (1) occurrence;

(d) Fire and extended casualty insurance covering Tenant's trade fixtures, merchandise and other personal property in an amount not less than one hundred percent (100%) of their actual replacement cost or highest insurable value;

(e) Workers' compensation insurance in at least the statutory amounts; and

(f) Business interruption insurance equal to all Rent and other sums due hereunder for a period of not less than twelve (12) months. Should Tenant be unable to procure such business interruption insurance at a resonable cost, then Landlord shall be entitled to procure comparable coverage and include the cost thereof as an Operating Cost.

which is determined to be adequate by Landlord in the exercise of reasonable business judgment.

Leased Premises, a certificate or certificates evidencing such insurance.

the majority of the outstanding voting stock of a corporate Tenant, or by change in ownership of a controlling partnership interest in a partnership Tenant, shall constitute an assignment for purposes of this Paragraph.

assignee or subtenant, the terms of the proposed assignment or subletting, the nature of the proposed subtenant's or assignee's business, and such information as to the assignee's or subtenant's financial responsibility and general reputation as Landlord may reasonably require. Landlord may also consider the amount of square feet of the Leased Premises proposed to be subleased and the number of employees the subtenant anticipates it will utilize the subleased premises.

direct Lease with any prospective sublessee or assignee. Such fifteen (15) day period shall commence upon Tenant's delivery to Landlord of written notice of the terms of the proposed assignment or sublease and financial statements for the proposed assignee or sublessee. If Landlord exercises its right to cancel this Lease, Tenant shall surrender possession of all, or the applicable portion, of the Leased Premises which is the subject of this right to cancel, as the case may be, not later than the date on which the proposed sublease or assignment term would commence. If this lease is cancelled as to a portion of the Premises only, the Rent after the date of cancellation shall be reduced proportionately on a square footage basis.

as noted, (b) the amount, if any, of Prepaid Rent and Deposit paid by Tenant to Landlord (and not returned to Tenant), (c) the nature and kind of concessions, rental or otherwise, if any, which Tenant has received or is entitled to receive, (d) that Landlord has performed all of its obligations due to be performed under this Lease and that there are no defenses, counterclaims, deductions or offsets outstanding or other excuses for Tenant's performance under this Lease as of such date, and (e) any other fact reasonably requested by Landlord or such proposed lender or purchaser. Should Tenant fail to deliver such estoppel certificate within such ten (10)-day period, then (i) the truth of the statements in the document submitted to Tenant for execution shall be conclusively presumed, and (ii) Landlord shall have the right, at its option, to immediately declare an Event of Default and pursue all remedies provided under Subparagraph 11.2 below.

replant, subdivide or make other changes in the legal status of the land underlying the Leased Premises, the Building or the Project as Landlord shall deem appropriate in its sole discretion; provided such changes do not materially interfere with Tenant's use of the Leased Premises for the Permitted Purpose;
(b) enter the Leased Premises at reasonable times following twenty-four (24) hours' prior notice to Tenant (or such shorter period as is reasonable under the circumstances, giving Tenant sufficient opportunity to arrange for a representative of Tenant to accompany Landlord), and at any time in the event of an emergency, to inspect, alter or repair the Leased Premises or the Building and to perform any acts related to the safety, protection, reletting, sale or improvement of the Leased Premises or the Building; (c) add to or take away from the Project any building or portion thereof, in which event Total Square Footage of the Building shall be adjusted accordingly; (d) install and maintain signs on and in the Building and the Project; and (e) make such rules and regulations as, in the reasonable judgment of Landlord, may be needed from time to time for the safety of the tenants, the care and cleanliness of the Leased Premises, the Building and the Project and the preservation of good order therein.

they were prior to the destruction; provided that Tenant shall assign to Landlord all insurance proceeds applicable to personal property and/or improvements for which Landlord shall have such restoration responsibility.

hereunder, then Tenant shall be responsible for payment of one hundred percent (100%) of all costs incurred by Landlord in connection with such restoration (including, without limitation, all financing costs), until such time as the amount incurred by Landlord is equal to ten percent (10%) of the replacement cost of the Building, after which Landlord shall be responsible for payment of all additional costs. All such amounts payable by Tenant shall be amortized by Landlord and reimbursed by Tenant to Landlord over the shorter of (i) the useful life of such restored improvements, or (ii) the remainder of the Lease Term or Renewal Term then in effect.

the date of the casualty until the Leased Premises are ready for occupancy by Tenant. If part of the Leased Premises are untenantable, and this Lease is not terminated, then as of the date of the casualty, Rent shall be prorated on a per diem basis and partially abated in accordance with the part of the Leased Premises which is usable by Tenant until the damaged part is ready for Tenant's occupancy. Notwithstanding the foregoing, if any damage was proximately caused by an act or omission of Tenant, its employees, agents, contractors, licensees or invitees, then, in such event, Tenant agrees that (i) Rent shall not abate or be diminished during the term of this Lease; (ii) Tenant shall have no right to terminate this Lease in any case; and (iii) Tenant shall reimburse Landlord the full cost of any repair and restoration, such sums to be Additional Rent hereunder. Furthermore, in no case shall Landlord have any obligation to repair and/or restore any improvements, alterations or additions made by or on behalf of Tenant which are not improvements paid for by Landlord pursuant to any work letter agreement entered into by the parties pursuant to this Lease.

Term or Renewal Tterm then in effect, for an additional period of three (3) years, on terms reasonably acceptable to both parties.

Landlord, except to the extent such damage is caused by Landlord's gross negligence or willful misconduct. The foregoing waiver shall inure only to the benefit of Landlord and its agents, and the exception to such waiver for Landlord's gross negligence or willful misconduct shall inure only to the benefit of Tenant and its agents and to no other party.

Lease. Tenant will not seek recourse against the individual partners, shareholders, directors, officers, employees or agents of Landlord or any of their personal assets for such satisfaction. Notwithstanding any other provisions contained herein, Landlord shall not be liable to Tenant, its contractors, agents or employees for any consequential damages or damages for loss of profits, except and only to the extent of any amounts recovered by Landlord from third parties which is directly attributed to and designated as compensation for such consequential damages or lost profits of Tenant, which amounts shall also be limited to Landlord's interest in the Leased Premises.

Tenant of such violation or failure; (c) make a general assignment for the benefit of its creditors or file a petition for bankruptcy or other reorganization, liquidation, dissolution or similar relief; (d) have a proceeding filed against Tenant seeking any relief mentioned in (c) above which is not discharged within ninety (90) days thereafter; (e) have a trustee, receiver or liquidator appointed for Tenant or a substantial part of its property; (f) abandon or vacate the Leased Premises for more than six (6) consecutive months; or (g) default under any other space lease within the Building or Project.

No act by Landlord allowed by this Paragraph shall terminate this Lease unless Landlord notifies Tenant that Landlord elects to terminate this Lease. After Tenant's Default and for as long as Landlord does not terminate Tenant's right to possession of the Leased Premises, if Tenant obtains Landlord's consent Tenant shall have the right to assign or sublet its interest in this Lease, but Tenant shall not be released from liability.

(a) The worth, at the time of the award, of the unpaid Rent that had been earned at the time of termination of this Lease;

(b) The worth, at the time of the award, of the amount by which the unpaid Rent that would have been earned after the date of termination of this Lease until the time of the award exceeds the amount of the loss of Rent that Tenant proves could have been reasonably avoided;

(c) The worth, at the time of the award, of the amount by which the unpaid Rent for the balance of the term after the time of the award exceeds the amount of the loss of Rent that Tenant proves could have been reasonably avoided;

(d) Any other amount, and court costs, necessary to compensate Landlord for all detriment proximately caused by Tenant's Default, including, without limitation, any unamortized brokerage commissions attributable to this Lease, or any unamortized costs of tenant improvements as set forth on Schedule 5 attached hereto.

"The worth, at the time of the award," as used in Subparagraph (a) and
(b) of this Subparagraph 11.2.2 is to be computed by allowing interest at the maximum rate allowed by applicable usury law at that time. "The worth, at the time of the award," as referred to in Subparagraph (c) of this Subparagraph 11.2.2 is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%).

without any liability to Tenant, and further may charge the cost of any such disposition to Tenant.

timely vacate, shall commence on the date specified in such sixty (60) day notice.

the fullest extent permitted by law, the same as if such stricken term never had been contained herein.

In the event of any transfer in lieu of foreclosure or termination of a lease in which Landlord is lessee or the foreclosure of any Superior Instrument, or sale of the Property pursuant to any Superior Instrument, Tenant shall attorn to such

purchaser, transferee or lessor and recognize such party as landlord under this Lease. The agreement of Tenant to attorn contained in the immediately preceding sentence shall survive any such foreclosure sale, termination of Landlord's interest, or transfer.

by both parties. Failure to exercise any right in one or more instance shall not be construed as a waiver of the right to strict performance or as an amendment to or modification of this Lease.

"Unavoidable delay" shall mean any and all delay beyond Landlord's reasonable control, including without limitation, delays caused by Tenant; governmental restrictions, regulations, controls, preemptions or delays; orders of civil, military or

naval authorities; strikes, labor disputes, lock-outs, shortages of labor or materials or reasonable substitutes therefor;

Acts of God; fire, earthquake, floods, explosions or other casualties; extreme weather conditions or other actions of the elements; enemy action, civil commotion, riot or insurrection.

biphenyls or other hazardous substances. (As used in this Section 13.13, the term "hazardous substances" shall mean those substances included within the definition of "hazardous substances," "hazardous materials," "toxic substances" or "solid waste" under applicable local, state or federal law (the "Environmental Laws") or which are now regulated under the Environmental Laws, including, without limitation, asbestos. Landlord hereby agrees to indemnify and hold Tenant harmless from and against any claims, demands, actions, liabilities and expenses incurred by Tenant as a direct result of Landlord's willful breach of the foregoing representation and warranty.

13.16.1 Tenant anticipates that it shall install a special security system for the Leased Premises. The parties shall coordinate the access under such system and Landlord's rights hereunder to enter into the Leased Premises in the event of after-hours and/or emergency access requirements.

13.16.2 Landlord and Tenant shall address Tenant's need for special electrical systems during the process of approval of the Leasehold Improvements provided by Schedule 5 attached.

13.16.3 Tenant's preliminary plans for the Leased Premises include an emergency generator and a diesel storage tank, each of which is hereby approved by Landlord subject to Tenant's obtaining all necessary governmental permits and approvals, and subject to Landlord's approval of the final placement/location of the same.

SUBMISSION OF THIS INSTRUMENT FOR EXAMINATION OR SIGNATURE BY TENANT DOES NOT CONSTITUTE A RESERVATION OF OR OPTION FOR LEASE, AND IT IS NOT EFFECTIVE AS A LEASE OR OTHERWISE UNTIL EXECUTION AND DELIVERY BY BOTH LANDLORD AND TENANT.

This Lease is executed as of the 21st day of June, 1996.

LANDLORD:

PROSPECT GREEN PARTNERS, a
California Joint Venture

By: L&T PROSPECT PARTNERS, L.P., a
California limited partnership,
Managing Venturer

By: LANKFORD & ASSOCIATES, INC.,
a Colorado corporation,
General Partner

By: /s/ David S. Taylor
    ---------------------------
David S. Taylor,
Executive Vice President

TENANT:

E*TRADE GROUP, INC.,
a California corporation

By: /s/ Kathy Levinson
    ----------------------------
    Kathy Levinson,
    Senior Vice President


By: /s/ Stephens Richards
    --------------------------------
    Stephens Richards,
    Senior Vice President and
    Chief Financial Office

Where Tenant is a corporation, this Lease shall be signed by a President or Vice President and Secretary or Assistant Secretary of Tenant. Any other signatories shall require a certified corporate resolution.

SCHEDULE 1

The Leased Premises is the entire Building, the floor plans for which are as shown on the drawing attached hereto as a part of Schedule 1; however, for purposes of calculating Base Rent, the Leased Premises shall initially consist of the areas shown as Areas 1A, 1B and 2 on the drawing attached hereto, the Rentable square footage of which shall be calculated as provided in Subparagraph 1.1 of this Lease. The foregoing calculation notwithstanding, the initial square footage for purposes of determining Base Rent shall be not less than thirty-five thousand (35,000) Rentable square feet. Effective as of the thirteenth (13th) month of the Lease Term, for purposes of determining Base Rent, the Leased Premises shall, whether or not Tenant has built-out all of the Building, be deemed to be the entire Rentable square footage of the Building, or seventy thousand sixty-five (70,065) Rentable square feet, which shall be the addition of the areas shown as areas 3 and 4 on the drawing attached hereto as a part of Schedule 1.

[ARTWORK OF PHASE 1B, PHASE 2, PHASE 3, PHASE 4]

SCHEDULE 2

Except as otherwise provided in any provision of the Lease, as provided in Subparagraph 1.2, the following Rules and Regulations shall apply:

1. The sidewalks, entrances, halls, corridors, elevators and stairways of the Building and Project shall not be obstructed or used as a waiting or lounging place by Tenants, and their agents, servants, employees, invitees, licensees and visitors.

2. In case of invasion, riot, public excitement or other commotion, Landlord reserves the right to prevent access to the Building during the continuance of same. Landlord shall in no case be liable for damages for the admission or exclusion of any person to or from the Building.

3. Tenant shall not alter any lock, or install new or additional locks or bolts on any door without the prior written approval of Landlord. In the event of such alteration or installation approved by Landlord, the Tenant making such alteration shall supply Landlord with a key for any such lock or bolt. Each Tenant, upon the expiration or termination of its tenancy, shall deliver to Landlord all keys and access cards in any such Tenant's possession for all locks and bolts in the Building.

4. Intentionally Deleted.

5. No iron safe or other heavy or bulky object shall be delivered to or removed from the Building, except by experienced safe men, movers or riggers approved in writing by Landlord. There shall not be used in any space, or in the public halls of the Building, either by Tenant or by jobbers or others, in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires.

6. The walls, partitions, skylights, windows, doors and transoms that reflect or admit light into passageways or into any other part of the Building shall not be covered or obstructed.

7. The toilet rooms, toilets, urinals, wash bowls and water apparatus shall not be used for any purposes other than for those for which they were constructed or installed, and no sweepings, rubbish, chemicals, or other unsuitable substances shall be thrown or placed therein. The expense of any breakage, stoppage or damage resulting from violation(s) of this rule shall be borne by Tenant.

8. No sign, name, placard, advertisement or notice shall be inscribed, painted or affixed by Tenant on any part of the Building or Project without the prior written approval of Landlord. All signs or letterings on doors, or otherwise approved by Landlord shall be inscribed, painted or affixed at the sole cost and expense of the Tenant, by a person approved by Landlord.

2-1

9. No signalling, telegraphic or telephonic instruments or devices, or other wires, instruments or devices, shall be installed without the prior written approval of Landlord. Such installations, and the boring or cutting for wires, shall be made at the sole cost and expense of the Tenant and under control and direction of Landlord. Landlord retains, in all cases, the right to require (i) the installation and use of such electrical protecting devices that prevent the transmission of excessive currents of electricity into or through the Building, (ii) the changing of wires and of their installation and arrangement underground or otherwise as Landlord may direct, and (iii) compliance on the part of all using or seeking access to such wires with such rules as Landlord may establish relating thereto. All such wires must be clearly tagged at the distribution boards and junction boxes and elsewhere in the Building, with the purpose for which said wires are used, and the name of the company operating same.

10. Tenant, their agents, servants or employees, shall not (a) go on the roof of the Building, (b) use any additional method of heating or air conditioning in the Leased Premises, (c) bring in or keep in or about the Leased Premises any vehicles or animals of any kind, (e) install any radio or television antenna or any other devise or item on the roof, exterior walls, windows or window sills of the Building (except in connection with the Tenant Improvements approved by Landlord), (f) place objects against glass partitions, doors or windows which would be unsightly from the exterior of the Building, (g) use any Leased Premises: (1) for lodging or sleeping, (2) for a kitchen an/or cooking area, except in compliance with all applicable law and all insurance policies applicable to the Leased Premises), (3) for any manufacturing, storage or sale of merchandise or property of any kind; and (h) cause or permit unusual or objectionable odor to be produced or permeate from the Leased Premises, including, without limitation, duplicating or printing equipment fumes. Tenant, its agents, servants and employees, invitees, licensees, or visitors shall not permit the operation of any musical or sound producing instruments or device which may be heard outside the Leased Premises, Building or garage facility, or which may emit electrical waves which will impair radio or television broadcast or reception from or into the Building. Landlord acknowledges and agrees that Tenant shall be entitled to operate a cafeteria for the use of its employees and business guests.

11. Tenants shall not store or use in any Leased Premises any (a) other, naphtha, phosphorous, benzol, gasoline, benzine, petroleum, crude or refined earth or coal oils, flashlight power, kerosene or camphene, (b) any other flammable, combustible, explosive or illuminating fluid, gas or material of any kind, and (c) any other fluid, gas or material of any kind having an offensive odor, without the prior written consent of Landlord.

12. No canvassing, soliciting, distribution of hand bills or other written material, or peddling shall be permitted in the Building or the Project, and Tenants shall reasonably cooperate with Landlord in prevention and elimination of same.

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13. Tenant shall give Landlord prompt notice of all accidents to or defects in air conditioning equipment, plumbing, electrical facilities or any part of appurtenances of Leased Premises.

14. Intentionally Deleted.

15. No curtains, blinds, shades, screens, awnings or other coverings or projections of any nature shall be attached to or hung in, or used in connection with any door, window or wall of the Building without the prior written consent of the Landlord, which consent shall not be unreasonably withheld or delayed.

16. Landlord shall have the right to prohibit any advertising by Tenant at the Project which, in Landlord's opinion, tends to impair the reputation of Landlord or of the Building, or its desirability as an office building for prospective tenants who require the highest standards of integrity and respectability, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

17. Wherever the word "Tenant" occurs, it is understood and agreed that it shall also mean Tenant's associates, employees, agents and any other person entering the Building or Leased Premises under the express or implied invitation of Tenant. Tenant shall cooperate with Landlord to assure compliance by all such parties with rules and regulations.

18. Landlord reserves the right to make reasonable amendments, modifications and additions to the rules and regulations heretofore set forth, and to make additional reasonable rules and regulations, as in Landlord's sole judgement may from time to time be needed for the safety, care, cleanliness and preservation of good order of the Building.

19. Tenant shall not do anything in the Leased Premises, or bring or keep anything herein, which will in any way increase or tend to increase the risk of fire or rate of insurance, or which shall conflict with the Regulations of the Fire Department or the fire laws or with any insurance policy on the Building or any part thereof, or with any rules or ordinances established by Municipal Authority.

20. The requirements of Tenant will be attended to only upon application at Landlord's office. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instruction from Landlord, and no employee will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.

21. Landlord shall have the right, exercisable without notice and without liability to Tenant, to change the name and the street address of the Building which the Premises are a part. Landlord will pay for all reasonable costs incurred by Tenant as a result of changing the street address of the Building unless the change is requested by an authorized governmental agency.

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22. No Tenant shall obtain for use upon the Leased Premises ice, drinking water, towel or other similar service or accept barbering or bootblacking services on the Leased Premises, except from persons authorized by Landlord and at the hours and under regulations fixed by Landlord. Notwithstanding the foregoing, Tenant shall have the right to provide bottled water service of its choice.

LANDLORD:

PROSPECT GREEN PARTNERS, a
California Joint Venture

By: L&T PROSPECT PARTNERS, L.P., a
California limited partnership,
Managing Venturer

By: LANKFORD & ASSOCIATES, INC.,
a Colorado corporation,
General Partner

                                     By: /s/  David S. Taylor
                                         ---------------------------
                                         David S. Taylor,
                                         Executive Vice President
WITNESS:

TENANT:

E*TRADE GROUP, INC.,
a California corporation

WITNESS:

__________________________       By:  /s/ Kathy Levinson
                                    -----------------------------
                                    Kathy Levinson,
__________________________          Senior Vice President



                                 By:  /s/ Stephen Richards
                                    -----------------------------
                                    Stephen Richards,
                                    Senior Vice President and
                                    Chief Financial Office


                                      2-4

SCHEDULE 3

The common area charges for Prospect Green Business Park are comprised of all costs relating to the common green and grove areas (including the amphitheater), located in the area shown on the drawing attached hereto as a part of Schedule 3 (the "Common Area"), as follows: landscaping; utilities (including, without limitation, water for irrigation and electricity for outdoor lighting); maintenance, repair and refurbishment of the walkways, sidewalks, amphitheater, light fixtures and poles, and misting/fogging machines and apparatuses; rubbish and snow removal; insurance (and deductibles, to the extent utilized), real property taxes and assessments; equipment, tools, materials and supplies; maintenance, repair and refurbishment of signs and markers; fees imposed by governmental authorities having or asserting jurisdiction; administrative fees incurred in operation and management of the Common Area; and any other costs incurred in connection with the Common Area.

Tenant shall be deemed to have accepted as correct Landlord's annual notice of Common Area charges (given by Landlord in accordance with Section 3.4 of the attached Lease) unless, within ten (10) days following Tenant's receipt thereof, Tenant shall notify Landlord (in accordance with the terms of the attached Lease) of Tenant's desire to conduct an audit of the records supporting such statement. Thereafter, Landlord and Tenant shall arrange a time, during regular business hours, (within thirty (30) days following Tenant's said notice to Landlord), at Landlord's (or Managing Agent's) office when Tenant may cause an impartial, reputable certified public accountant (or other impartial professional auditor or comparable individual or entity whose expertise includes the audit contemplated hereby) who is reasonably acceptable to Landlord) to audit the accounts and records supporting the annual statement in question (which shall be restricted to records for Common Area charges, should such statement include other matters). Such audit shall be restricted (a) to verification that (i) such books and records are being maintained in accordance with GAAP and (ii) the statements delivered to Tenant were prepared in accordance with the terms of this Lease, and (b) to only the time period covered by such statement (unless a problem is found, and then earlier years can be reviewed as to that problem only). Tenant shall not be entitled to make photocopies of any account ledgers or back-up documentation. Landlord's employees shall cooperate with Tenant in providing books and records for on- premises review; provided that such audit shall not exceed one (1) business day in duration. The cost of such audit shall be borne by Tenant. Tenant shall, during the pendency of such audit, pay the amounts specified in such statement. Tenant hereby covenants to hold in confidence all information obtained from any such audit. Should Tenant have any questions or concerns following such audit, the parties shall meet and confer within a reasonable period of time and attempt to resolve such concerns.

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[ARTWORK OF PROSPECT GREEN II]

SCHEDULE 4

4-1

SCHEDULE 5

PROSPECT GREEN BUSINESS PARK

Sacramento, California

Date: June 21, 1996

E*TRADE GROUP, INC.
Four Embarcadero Center
2400 Geng Road
Palo Alto, California 94303-3317

Attention: Mr. Robert Clegg

Re: Suite 100, 10951 White Rock Road, Rancho Cordova, CA

Ladies and Gentlemen:

You (referred to as "Tenant"), and we (referred to as "Landlord") are executing, simultaneously with this Work Letter Agreement, a written lease (the "Lease") pertaining to the space referred to above (the "Leased Premises"). This Work Letter Agreement is attached to the Lease as Schedule 5 and made a part hereof.

To induce Tenant and Landlord, each, to enter into the Lease (which is hereby incorporated by reference to the extent that the provisions of this Work Letter Agreement may apply thereto) and in consideration of the mutual covenants hereinafter contained, Landlord and Tenant mutually agree as follows:

1.1 "Base Tenant Improvements" means the Building Standard and other mutually agreed upon Tenant Improvements (as defined in paragraph 1.2 below) items set forth in Exhibit I attached which are supplied, installed and finished by Tenant (in accordance with the construction schedule attached hereto as Schedule 5-A), and which shall be paid for by Landlord as provided for in paragraph 2.3 below. Landlord shall be responsible for payment of the maximum amount of Twenty-eight and No/100 Dollars ($28.00) per Useable square foot of Tenant's Square Footage for construction of the Base Tenant Improvements (the Tenant Improvement Allowance). For the purposes hereof, Useable square footage shall be determined in accordance with the BOMA method.

5-1

1.2 "Building Standard" means the quantity and quality of materials, finishing and workmanship specified by Tenant and approved by Landlord for the Building, as set forth on Exhibit I attached hereto and made a part hereof.

1.3 "Construction Documents" means the construction drawings, plans and specifications referred to in paragraphs 2.2 and 2.3 below, to be attached.

1.4 "Extraordinary Tenant Improvements" means any work Tenant requests that it be permitted to do, or requests Landlord to do in connection with the Leased Premises, the cost of which is in excess of the Tenant Improvement Allowance.

1.5 "Leasehold Improvements" means the aggregate of Base Tenant Improvements, as contemplated by the Construction Documents, and Extraordinary Tenant Improvements, if any.

1.6 "Substantial Completion" means that the Leasehold Improvements have been substantially completed according to the Construction Documents, except for items which will not materially affect the use of the Leased Premises and which customarily are deemed to be "punchlist work", as certified by Landlord's architect.

2.1 Tenant shall prepare and submit to Landlord for its approval a preliminary floor plan for the Leased Premises, a copy of which shall be attached to the Lease as part of Schedule 5-A (the "Preliminary Plan") in accordance with the Construction Schedule attached as Schedule 5-A. Tenant shall complete the Base Tenant Improvements in accordance with the Building Standard, but Landlord, its agents, contractors and employees shall have the ongoing, unfettered right to supervise all work being done by or for the the benefit of Tenant in the Building. Tenant shall provide Landlord with a written estimate of the cost of completing the Base Tenant Improvements according to the Preliminary Plan (the "Estimate"). The Estimate represents Tenant's good faith estimate of the cost of completing the Base Tenant Improvements. Landlord shall have no liability if the Final Cost (as such term is defined in paragraph 2.3 below) of the Base Tenant Improvements is greater than the Estimate.

2.2 Tenant shall, within the timeframes set forth on the Construction Schedule attached as Schedule 5-A, cause the Consultants (defined below) to prepare and submit to Landlord for approval or disapproval all drawings, plans and specifications necessary to construct the Leasehold Improvements. The following companies shall prepare the drawings, plans and specifications which are to comprise the Construction Documents:

Architectural: Columbus Architecture

Engineering: KPFF Engineering

5-2

Electrical: Nutter Electric

Mechanical: AIRCO Mechanical

(collectively, the "Consultants"). All such consultants shall be acceptable to Landlord in its reasonable discretion; and (iii) neither Tenant, nor such consultant shall arrange or conduct any meetings (relevant to the Leased Premises or the Tenant Improvements) with any governmental agencies having jurisdiction over the Building without first notifying Landlord, and Landlord shall have the absolute right to participate in all such meetings. The fees and expenses of the Consultants for preparing the initial drawings, plans and specifications which are to comprise the Construction Documents shall be included in the Final Cost (defined in paragraph 2.3 below) and allocated accordingly between Base Tenant Improvements and Extraordinary Tenant Improvements.

2.3 Upon Landlord's approval of the final form of the drawings, plans and specifications in accordance with the timeframes set forth on Schedule 5-A attached,, which when approved by Landlord shall constitute the Construction Documents, Tenant shall cause to be prepared an analysis of the cost of construction of the Leasehold Improvements according to the Construction Documents (the "Final Cost"). An analysis of the cost of Extraordinary Tenant Improvements shall be submitted to Landlord for its approval. That portion of the Final Cost attributable to the Base Tenant Improvements shall be paid for by Landlord (the "Landlord's Share") and that portion of the Final Cost attributable to the construction of the Extraordinary Tenant Improvements shall be paid for by Tenant (the "Tenant's Share"). Within ten (10) business days of receipt of the statement of Final Cost, Landlord shall either approve or disapprove the portion thereof attributed to Base Tenant Improvements, the sole basis for disapproval of which shall be as to items representing a change in specification or a change in cost from the original documents and estimates approved by Landlord. However, if Landlord requires additional information regarding the Final Cost, Tenant shall promptly supply same and Landlord shall have a reasonable additional time period, not to exceed an additional five (5) business days to approve the Final Cost. If Landlord does not approve the Final Cost attributed to the Base Tenant Improvements, it shall promptly notify Tenant thereof; in which case Tenant and Landlord shall use their best efforts to amend the Construction Documents in a manner satisfactory to each. Tenant acknowledges that Landlord's sole obligation is to pay the costs attributable to the construction of the Base Tenant Improvements, and Tenant shall pay all other costs of the construction of the Leasehold Improvements as the Tenant's Share. If the Construction Documents require the construction or installation of additional improvements beyond those regularly provided by Landlord in the core of the building in which the Leased Premises are located (including, without limitation, extra sprinklers, fire hose cabinets and other safety devices), Tenant agrees to pay all costs and expenses arising from the construction and installation of such additional improvements. All costs attributable to changes and variations from the Construction Documents (including, without limitation, fees and expenses of the

5-3

Consultants and any increased costs of construction) shall be paid by Tenant. Notwithstanding anything herein to the contrary, in no event shall Landlord be obligated to advance any of the Tenant Improvement Allowance until such time as Tenant has provided adequate conditional lien waivers or other documentation reasonably requested by Landlord to insure that neither the Building nor the Project is or shall be the subject of a lien claim.

3.1 The following provisions shall apply to the construction of the Leasehold Improvements:

(a) All work involved in the completion of the Leasehold \ Improvements shall be carried out by Tenant and its agents and contractors under the supervision of Landlord (which supervision shall be at no cost to Tenant). Tenant shall cooperate with Landlord and its agents and contractors to promote the efficient and expeditious completion of the Leasehold Improvements; and

/s/                        /s/
----------------------     ----------------------
       Tenant                    Landlord

(b) Tenant agrees to construct the Base Tenant Improvements in accordance with the Construction Documents, and in compliance with all the applicable provisions of this Work Letter Agreement and the Lease, including, the covenant to keep the Project free from all liens and encumbrances.

3.2 If Tenant requests any changes in the Leasehold Improvements from the work as reflected in the Construction Documents, each such change must receive the prior written approval of Landlord, and Tenant shall bear the cost resulting from such changes.

3.3 Tenant shall have no authority to commence construction of any work in the Leased Premises until (a) Landlord has approved the construction of the Base Tenant Improvements as required by the provisions hereof, and (b) Landlord shall have received evidence of Tenant's ability to pay Tenant's Share, such evidence to be in form reasonably acceptable to Landlord.

4.1 Tenant shall notify Landlord when it believes that Substantial Completion has been achieved, and thereafter the Lease Commencement Date shall be established as set forth in the Lease. Notwithstanding anything to the contrary contained in the Lease or this Work Letter Agreement, the Lease Commencement Date shall not be extended for any delay in Substantial Completion to the extent that such delay is caused by any act or omission attributable to Tenant, including without limitation:

5-4

(a) Tenant's request for any Extraordinary Tenant Improvements or for any changes in the work that is reflected in the final plans and specifications for such Improvements;

(b) Tenant's failure to furnish promptly, information concerning Tenant's requirements pertaining to construction of the Base Tenant Improvements or any other information requested by the Consultants necessary or useful to prepare the initial drawings, plans and specifications which are to comprise the Construction Documents;

(c) Tenant's failure to approve the initial drawings, plans and specifications, which are to comprise the Construction Documents within five (5) days of receipt of said Construction Documents;

(d) Tenant's request for any changes in the Leasehold Improvements from the work as reflected in the Construction Documents.

4.2 In any event, Rent payable under the Lease shall not abate by reason of any delay, expense or other burden arising out of or incurred in connection with the design or construction of the Leasehold Improvements to the extent that such delay, expense or other burden is caused by any act or omission attributable to Tenant (including, without limitation, the acts and omissions referred to in subparagraphs (a) through (d) of paragraph 4.1 above).

5.1 Landlord hereby grants Tenant and Tenant's agents or independent contractors license to enter the Leased Premises prior to the scheduled Lease Commencement Date in order that Tenant may (i) perform the work contemplated by this Work Letter Agreement; and (ii) do other work as may be required by Tenant to make the Leased Premises ready for Tenant's use and occupancy, including training employees; provided that such prior occupancy is in accordance with approvals by the County of Sacramento. As a condition to all such prior entry, Tenant and Tenant's agents, contractors, workmen, mechanics, suppliers and invitees shall not interfere with Landlord and its agents or with other tenants and occupants of the Building or the Project. If at any time such entry shall cause or threaten to cause disharmony or interference, or shall be in violation of any regulations, permits or approvals of the County of Sacramento, Landlord, in its sole discretion, shall have the right to withdraw and cancel such license upon notice to Tenant. Tenant agrees that any such entry into the Leased Premises shall be deemed to be under all of the terms, covenants, conditions and provisions of the Lease, except the covenant to pay periodic Rent. Tenant further agrees that, to the extent permitted by law, Landlord and its principals shall not be liable in any way for any injury or death to any person or persons, loss or damage to any of the Leasehold Improvements or installations made in the Leased Premises or loss or damage to

5-5

property placed therein or thereabout, the same being at Tenant's sole risk.

5.2 In addition to any other conditions or limitations on such license to enter the Leased Premises prior to the Lease Commencement Date, Tenant expressly agrees that none of its agents, contractors, workmen, mechanics, suppliers or invitees shall enter the Leased Premises prior to the Lease Commencement Date unless and until each of them shall furnish Landlord with satisfactory evidence of insurance coverage, financial responsibility and appropriate written releases of mechanic's or materialmen's lien claims.

6.1 Except as may be provided in the Lease and as herein expressly set forth with respect to the Leasehold Improvements, Landlord has no agreement with Tenant and has no obligation to do any work with respect to the Leased Premises. Any other work in the Leased Premises which may be permitted by Landlord pursuant to the terms and conditions of the Lease, including any alterations or improvements as contemplated by Subparagraph 6.1.4 of the Lease, shall be done at Tenant's sole cost and expense and in accordance with the terms and conditions of the Lease.

6.2 This Work Letter Agreement shall not be deemed applicable to:
(i) any additional space added to the original Leased Premises at any time, whether by the exercise of any options under the Lease or otherwise, or (ii) any portion of the original Leased Premises or any additions thereto in the event of a renewal or extension of the original Lease Term, whether by exercise of any options under the Lease or any amendment or supplement thereto. The construction of any additions or improvements to the Leased Premises not contemplated by this Work Letter Agreement shall be effected pursuant to a separate work letter agreement, in the form then being used by Landlord and specifically addressing the allo cations of costs relating to such construction.

6.3 Any person signing this Work Letter Agreement on behalf of Tenant warrants and represents he/she has authority to do so.

6.4 This Work Letter Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

5-6

If the foregoing correctly sets forth our understanding, kindly acknowledge your approval in the space provided below for that purpose and return to us two signed counterparts of this Work Letter Agreement.

Very truly yours,

PROSPECT GREEN PARTNERS, a
California Joint Venture

By: L&T PROSPECT PARTNERS, L.P., a
California limited partnership,
Managing Venturer

By: LANKFORD & ASSOCIATES, INC.,
a Colorado corporation,
General Partner

By: /s/ David S. Taylor
   -----------------------------------
   David S. Taylor,
   Executive Vice President

Agreed to and accepted the 21st day of June, 1996.

E*TRADE GROUP, INC.,
a California corporation

    By: /s/ Kathy Levinson
        -----------------------------
        Kathy Levinson,
        Senior Vice President


By: /s/ Stephen Richards
    -----------------------------
    Stephen Richards,
    Senior Vice President and
    Chief Financial Officer


     5-7

5-8

2 x 2 recessed grid acoustic tile or equal.

5-9

A.  Design Development:
    ------------------

    1.  Preparation of Construction Documents (Tenant)           4/1/96

    2.  Preparation of Statement of Final Cost (Tenant)          5/1/96

    3.  Approval of Construction Documents and
        Final Cost (Tenant and Landlord)                         5/15/96

B.  Construction:
    -------------

    1.  Submit Application for Tenant Improvement                4/18/96
        Permit

    2.  Commence Construction                                    4/22/96

    3.  Commence Tenant's Fixturing                              6/13/96

    4.  Substantial Completion of Construction                   6/18/96

    5.  Tenant Move-In                                           6/18/96

5A-1

SCHEDULE 6

TENANT: ______________________________________

LOCATION: SUITE ______, PROSPECT GREEN II, PROSPECT GREEN BUSINESS PARK

This letter is to certify that:

1. The above referenced space has been accepted by the Tenant for possession.

2. The subject space is substantially complete in accordance with the plans and specifications used in construction of the demised premises.

3. The subject space can now be used for intended purposes.

Commencement Date    ____________________, 19__.

Expiration Date      ____________________, 19__.

Tenant's Total
Square Footage       ____________________________

Executed this ____day of _______________, 19__.

"Tenant"

By:________________________________

Its:_____________________________

By:________________________________

Its:_____________________________

6-1

      Period                     Monthly *                  Annual *
      ------
Initial Term (Months)            Base Rent               Management Fee
- ---------------------            ---------               --------------

  1 - 24                           $1.17                     $0.33

 25 - 60                           $1.22                     $0.344

 61 - 120                          $1.27                     $0.358

* Per Tenant's Total Rentable Square Feet

7-1

SCHEDULE 8

Landlord hereby grants to Tenant a license to the use during the term of this Lease the space described in Subparagraph 1.1.11. Tenant agrees to comply with such reasonable rules and regulations as may be made by Landlord from time to time in order to insure the proper operation of the parking facilities. Tenant agrees not to overburden the parking facilities and agrees to cooperate with Landlord and other tenants in the use of parking facilities. Landlord reserves the right in its sole discretion to determine whether parking facilities are becoming crowded, and in such event, to allocate specific parking spaces among Tenant and other tenants or to take such other steps necessary to correct such condition, including but not limited to policing and towing, and if Tenant, its agents, officers, employees, contractors, licensees or invitees are deemed by Landlord to be contributing to such condition, to charge to Tenant as Rent that portion of the cost thereof which Landlord reasonably determines to be caused thereby. Landlord may, in its sole discretion, change the location and nature of the reserved parking spaces available to Tenant, if any, provided that after such change, there shall be available to Tenant approximately the same number of reserved spaces as available before such change. Each of Tenant's non-reserved spaces shall be provided at no cost to Tenant.

Tenant acknowledges that a Sacramento County air quality ordinance is pending and, when adopted would require Tenant to encourage on auto emissions reduction by Tenant's employees, and may cause a reduction in the number of parking spaces available to Tenant. Landlord shall provide a transportation manager to assist Tenant in developing a transportation management plan to comply with such ordinance.

TENANT:                          LANDLORD:
E*TRADE GROUP, INC.              PROSPECT GREEN PARTNERS, a
                                 California Joint Venture
By: /s/ Kathy Levinson
   --------------------------
   Kathy Levinson
   Senior Vice President         By: L&T PROSPECT PARTNERS, L.P.,
                                     a California limited
                                     partnership, Managing
                                     Venturer
By: /s/ Stephen Richards
   --------------------------
   Stephen Richards,
   Senior Vice President and
   Chief Financial Officer       By: LANKFORD & ASSOCIATES, INC.,
                                     a Colorado corporation,
                                     General Partner

                                     By: /s/ David S.Taylor
                                         --------------------------
                                         David S. Taylor,
                                         Executive Vice President

EXHIBIT A

SITE PLAN SHOWING ANNEX PROPERTY AND PROSPECT GREEN II

ANNEX EXPANSION OPTION

This ANNEX EXPANSION OPTION (this "Option"), is entered into as of the 21st day of June, 1996, by and between PROSPECT GREEN PARTNERS, a California joint venture ("Landlord") and E*TRADE GROUP, INC., a California corporation ("Tenant").

RECITALS

A. Landlord currently owns that certain real property labelled as the "Annex Parcel" on the site plan attached hereto as Exhibit A and made a part hereof for all purposes, and described as Lot 2 of that certain Lot Line Adjustment recorded December 26, 1995, in Book 95-12-26, Page 471, of the Official Records of Sacramento County, California (the "Annex Property").

B. Contemporaneously with the execution of this Option, Landlord and Tenant have entered into a lease (the "PGII Lease") whereby Landlord has agreed to lease to Tenant and Tenant has agreed to lease from Landlord a portion of the building known as Prospect Green II which is situated on that certain real property adjacent to the Annex Property and labelled as the "PG II Parcel" on Exhibit A attached hereto.

C. Tenant desires to obtain the right to negotiate for future development of the Annex Property for purposes of meeting Tenant's future needs for additional office space not available in Prospect Green II, and Landlord is willing to afford Tenant such right, on the terms and conditions set forth below.

AGREEMENT

In consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. So long as Tenant is not in default under the terms and conditions of the PGII Lease, Landlord hereby agrees to negotiate in good faith to make available the Annex Property for Tenant's future expansion needs, on the following terms and conditions:

including, without limitation, (i) a tenant improvement allowance in the maximum amount of twenty-eight and no/100 per Useable square foot of area in the building to be constructed on the Annex Property (the "Annex Building") and (ii) a term of ten (10) years; provided, however, that initial Base Rent shall be equal to an eleven percent (11%) return on the cost to Landlord to develop the Annex Building, not to exceed One and 18/100 Dollars ($1.18) per Rentable square foot per month (on a standard triple net basis), and such rental rate shall be adjusted upward during the term to reflect then prevailing market adjustments.

Letter of Intent. In addition, the Additional Premises Lease shall contain substantially the same terms and conditions as provided in this Lease, including without limitation, the representations and warranties as to environmental matters. If Tenant fails to timely deliver the Notice of Exercise, Landlord shall have the right to develop and lease the Annex Property to another party, subject to the Annex First Right of Refusal described below.

with such transferee. If such lease is not consummated, the provisions of the foregoing Annex First Right of Refusal shall again apply to any proposed lease of the Annex Property. If Tenant exercises its rights hereunder and delivers a notice of acceptance but fails to complete the lease of the Annex Property solely due to Tenant's default, then Tenant's rights under the Annex First Right of Refusal shall terminate.

be recoverable separately from and in addition to any other amount included in such judgment.

IN WITNESS WHEREOF, the Parties have executed this Option as of the date first above written.

"LANDLORD"

PROSPECT GREEN PARTNERS,
a California joint venture

By: L&T PROSPECT PARTNERS, L.P.,
a California limited partnership,
Managing Venturer

By: Lankford & Associates, Inc.,
a colorado corporation,
Managing General Partner

By: /s/ David S. Taylor
    -------------------------
    David S. Taylor,
    Executive Vice President

"TENANT"

E*TRADE GROUP, INC.,
a California corporation

By: /s/ Kathy Levinson
    ----------------------
    Kathy Levinson,
    Senior Vice President


By: /s/ Stephen Richards
    ----------------------
    Stephen Richards,
    Senior Vice President and

    Chief Financial Officer

If to Executive;               Mr. Christos M. Cotsakos
                               Old Port Cove Lake Point Tower
                               Unit 2053
                               100 Lakeshore Drive
                               North Palm Beach, Florida 33408

If to Company:                 The Board of Directors
                               Four Embarcadero Place
                               2400 Geng Road
                               Palo Alto, California 94303

                          By:  /s/ William A Porter
                             --------------------------------------
                             William A Porter, Founder and Chairman

Attest:

/s/ Christos M. Cotsakos
--------------------------------------
 Christos M. Cotsakos

  Cancellation Date                           Charge
  -----------------                           ------

within   [*]   the Conversion Date              [*]

on or after the   [*]
of the Conversion Date                           [*]

on or after the   [*]
of the Conversion Date                           [*]

on or after the   [*]
of the Conversion Date                           [*]

on or after the   [*]
of the Conversion Date                           [*]

on or after the   [*]
of the Conversion Date                           [*]

on or after the   [*]                            [*]

no later than   [*]     the following day.

               5.   Confirms print file will be available by  [*]     on
each trade day.

By: ________________________________________     _________________
                   Signature                            Date

    ________________________________________
                     Print

    _________________________________________
                     Title

By: ________________________________________     _________________
                   Signature                            Date

    ________________________________________
                     Print

    _________________________________________
                     Title

                 [*]            of                           Charge
           daily trades for the month                        per trade

                                                             $[*]
                                                             $[*]
                 [*]                                         $[*]
                                                             $[*]
                                                             $[*]
                                                             $[*]


4.   MINIMUM MONTHLY TRADE PROCESSING
     --------------------------------
     CHARGE
     ------

     Minimum monthly charge for BETAHOST trade
     processing service.

5.   MONEY MARKET SWEEP ACCOUNTS
     ---------------------------

     Monthly charge per account, coded for money market
     sweep processing, with a money balance.

     Monthly minimum charge

6.   IRA ACCOUNTS
     ------------
     Monthly charge per IRA account, with Subscriber
     as Custodian or an external Custodian, carrying
     a money balance or security position.

7.   SHAREHOLDER ACCOUNTING
     ----------------------

     Monthly charge per account processed through
     shareholder accounting module.
     Monthly minimum charge

8.   MUTUAL FUND NETWORKING

     Monthly charge per position per account
     Monthly minimum charge

Monthly charge
using the optional BETA OTC Trading System (does not          $[*]
include NASDAQ Level 1, INSTINET, and other                   $[*]
third party charges).                                         $[*]

Monthly communication support charges (includes
INSTINET communications and other third party
communications).                                              $[*]

Monthly charge for triangulated connection (2 T-1 lines)   $[*]
of BETA's Communications Network service to Subscriber's
headquarters location.

Monthly charge for a single T-l connection to
Subscriber's $ back-up data center.                        $[*]

Monthly charge per 9.6 kbps communication line connected   $[*]
to the BETA Communication Network at any location other
than Subscriber's headquarters or back-up data center.

Non-recurring charge for installation of a data            $[*]
communications line in a given location.

Dial backup service:

   Monthly service charge for each 9.6 kbps line in a      $[*]
   location that has dial backup capability. This
   service is optional. Subscriber is responsible for
   providing lines for dial backup service.

Programming charges for CSF Statement       $ see  "Programming"
development                                    below

CSF Software: Statement formatting monthly
charges, per customer statement page.       $[*]

Dial-Up Service Charge

Programming and Non-Standard Processing and
Communications Charges

and facilities at the following rates:

Programming                          $[*]
Computer Processing                  $[*]
Tape File Preparation                $[*]
Standard File Transmission/Upload    $[*]
Special File Transmissions           $[*]

      REMIC Customer                                        Charge per
      Positions                                             Position

                                                            $[*]
                                                            $[*]
                                                            $[*]

15.   DECONVERSION CHARGES
      --------------------
      Charges for service bureau           [*]    per of Subscriber initial

BETA SYSTEMS INC.                             E*TRADE SECURITIES, INC.

By: ___________________________               By: ____________________________

Title:_________________________               Title: _________________________

Date:__________________________               Date: __________________________

By:   /s/ William A. Porter
   -------------------------------
   Name:  William A. Porter
   Title: President

By:   /s/ William E. Ford
   -------------------------------
   Name:  William E. Ford
   Title: A General Partner

By:   /s/ William E. Ford
   -------------------------------
   Name:  William E. Ford
   Title: A General Partner

Purchaser                 Preferred Stock   Purchase Price
- ---------                 ---------------   --------------

GAP LP                         87,742         $10,792,266

GAP Coinvestment               12,258           1,507,734

                                      Shares of
Purchaser                          Preferred Stock   Purchase Price
- --------------------------------   ---------------   --------------

GAP LP                                       6,267       $  877,380

GAP Coinvestment                               876          122,640

Braddock                                     7,143        1,000,020

Christos M. Cotsakos, as                     1,000          140,000
Custodian for Suzanne R.
Cotsakos under the California
Uniform Transfer to Minors
Act

Christos M. Cotsakos and                     3,300          462,000
Hannah B. Cotsakos, as
Trustees for the benefit of the
Cotsakos Revocable Trust
under Agreement Dated
September 3, 1987

Christos M. Cotsakos,                        1,750          245,000
Smith Barney Inc.,
Rollover Custodian
IRA Acct #60264445-10-254

                                                                            Page
                                                                            ----
ARTICLE 1 DEFINITIONS.......................................................   1
              1.1    Definitions............................................   1
              1.2    Accounting Terms; Financial Statements.................   4
              1.3    Knowledge of the Company...............................   4

ARTICLE 2 PURCHASE AND SALE OF PREFERRED STOCK..............................   4
              2.1    Purchase and Sale of Preferred Stock...................   4
              2.2    Closing................................................   4

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.... ................   5
              3.1   Corporate Existence and Power...........................   5
              3.2   Corporate Authorization; No Contravention...............   5
              3.3   Governmental Authorization; Third Party Consents........   5
              3.4   Binding Effect..........................................   5
              3.5   Litigation..............................................   5
              3.6   Compliance with Laws....................................   6
              3.7   Capitalization..........................................   6
              3.8   No Default or Breach....................................   7
              3.9   Financial Statements....................................   7
              3.10  No Material Adverse Change; Ordinary Course of Business.   7
              3.11  Investment Company......................................   7
              3.12  Private Offering........................................   7
              3.13  Title to Assets.........................................   7
              3.14  Intellectual Property...................................   7
              3.15  Liabilities.............................................   8
              3.16  Broker's, Finder's or Similar Fees......................   8
              3.17  Disclosure in this Agreement and Other Documents........   8


ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................   8
              4.1   Existence and Power.....................................   8
              4.2   Authorization; No Contravention.........................   8
              4.3   Governmental Authorization; Third Party Consents........   8
              4.4   Binding Effect..........................................   8
              4.5   Purchase Entirely for Own Account.......................   9
              4.6   Restricted Securities...................................   9
              4.7   Further Limitations on Disposition......................   9
              4.8   Disclosure of Information...............................   9
              4.9   Investment Experience...................................   9
              4.10  Legends.................................................   9
              4.11  Broker's, Finder's or Similar Fees......................  10
              4.12  Nature of Transaction...................................  10

ARTICLE 5 BLUE SKY..........................................................  10
              5.1   Corporate Securities Law................................  10


                                      i.

                                                                            Page
                                                                            ----

ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE............  11
              6.1   Secretary's Certificate.................................  11
              6.2   Certificate.............................................  11
              6.3   Documents...............................................  11
              6.4   Stockholders Agreement Supplement and Amendment.........  11
              6.5   Restated Articles of Incorporation......................  11
              6.6   Consents and Approvals..................................  11

ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO CLOSE....... .....  12
              7.1   Restated Articles of Incorporation......................  12
              7.2   Purchaser's Certificate.................................  12
              7.3   Stockholders Agreement Supplement and Amendment.........  12
              7.4   California Qualification................................  12

ARTICLE 8 INDEMNIFICATION...................................................  12
              8.1   Indemnification of Purchaser............................  12
              8.2   Indemnification of the Company..........................  13
              8.3   Notification............................................  13

ARTICLE 9 AFFIRMATIVE COVENANTS.............................................  14
              9.1   Preservation of Corporate Existence.....................  14
              9.2   Financial Statements and Other Information..............  14
              9.3   Inspection..............................................  14
              9.4   Back-Ups of Computer Software...........................  15
              9.5   Books and Records.......................................  15
              9.6   Conversion of Preferred Stock...........................  15

ARTICLE 10 MISCELLANEOUS....................................................  15
              10.1  Lock-Up Period..........................................  15
              10.2  Survival of Representations and Warranties..............  15
              10.3  Notices.................................................  15
              10.4  Successors and Assigns..................................  16
              10.5  Amendment and Waiver....................................  16
              10.6  Counterparts............................................  17
              10.7  Headings................................................  17
              10.8  Governing Law...........................................  17
              10.9  Severability............................................  17
              10.10 Entire Agreement........................................  17
              10.11 Fees....................................................  17
              10.12 Further Assurances......................................  17

                                      ii.

   Stockholder                         Number of Shares
   -----------                         ----------------

William A. Porter                           63,704

Bernard A. Newcomb                          50,804

By /s/ Christos Cotsakos             /s/ George Hayter
   -------------------------         ---------------------------
   Name: Christos Cotsakos           George Hayter
   Title:


                                       4.

                                                            NINE MONTHS ENDED
                                 YEARS ENDED SEPTEMBER 30,       JUNE 30,
                                 -------------------------- ------------------
                                   1993     1994     1995     1995     1996
                                 -------- -------- -------- -------- ---------
                                   (in thousands, except per share amounts)
Weighted average shares
 outstanding...................    15,099   15,226   15,741   15,776    15,530
Series A convertible preferred
 stock.........................       --       --       --       --        --
Options and warrants granted
 prior to June 7, 1995 (on a
 treasury stock basis).........     3,076    2,458    2,239    1,173     3,274
Securities issued after June 7,
 1995, in accordance with Staff
 Accounting Bulletin 83:
  Series A convertible
   preferred...................     4,882    4,882    4,882    4,882     6,000
  Series B convertible
   preferred...................       961      961      961      961       961
  Series C convertible
   preferred...................
  Stock options................     2,785    2,785    2,785    2,785     2,785
                                 -------- -------- -------- -------- ---------
Shares used to compute per
 share data....................    26,803   26,312   26,608   25,577    28,550
                                 ======== ======== ======== ======== =========
Net income (loss)..............  $     99 $    785 $  2,581 $  2,150 $  (1,334)
                                 ======== ======== ======== ======== =========
Net income (loss) per share....  $    --  $    .03 $    .10 $    .08 $    (.05)
                                 ======== ======== ======== ======== =========