Note Secured By Deed Of Trust

TRADE GROUP, INC.


NOTE SECURED BY DEED OF TRUST
-----------------------------


$4,000,000.00 March 17, 2000
Menlo Park, California


FOR VALUE RECEIVED, Theodore J. Theophilos (the "Maker") promises to pay to the order of E*TRADE Group, Inc. (the ``Corporation''), at its corporate offices at 4500 Bohannon Drive, Menlo Park, CA 94025, the principal sum of Four Million Dollars ($4,000,000.00), together with all accrued interest thereon (the "Loan"), upon the terms and conditions specified below.


1. Interest. No interest shall accrue on the unpaid balance
-------- outstanding under this Note during the first 36 months of the Loan. Commencing on April 1, 2003, interest shall accrue on the unpaid balance outstanding from time to time under this Note at six and eight tenths percent (6.8%), compounded annually. All computations of interest shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder the amount of interest computed on the basis provided for in this Note, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any other document executed in connection herewith, would exceed the amount of such interest computed on the basis of the Highest Lawful Rate (as defined below), the Maker shall not be obligated to pay, and the Corporation shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any such period the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate. As used herein, "Highest Lawful Rate" means the maximum non-usurious rate of interest, as in effect from time to time, which may be charged, contracted for, reserved, received or collected by the Corporation in connection with this Note under applicable law.


2. Principal. The entire principal balance of this Note, together with
--------- all accrued and unpaid interest, shall become due and payable in one lump sum on March 17, 2005.


3. Payment. All payments of principal and interest on the Loan shall
------- be made without offset or deduction and shall be made in immediately available lawful tender of the United States and shall be applied first to the payment of all accrued and unpaid interest and then to the payment of principal. Prepayment of the principal balance of this Note, together with all accrued and unpaid interest, may be made in whole or in part at any time without penalty. Whenever any payment hereunder shall be stated to be due, or whenever any interest payment date or any other date specified hereunder would otherwise occur, on a day other than a Business Day (as defined below), then such payment shall be made, and such interest payment date or other date shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest hereunder. As used herein, "Business Day" means a day (i) other than Saturday or Sunday, and (ii) on which commercial banks are open for business in San Francisco, California.


4. Representations and Warranties. The Maker represents and warrants
------------------------------ to the Corporation that this Note does not contravene any contractual or judicial restriction binding on or affecting the Maker and that this Note is the legal, valid and binding obligation of the Maker enforceable against him in accordance with its terms.


5. Notice. The Maker agrees to notify the Corporation of the
------ incurrence of any other indebtedness secured by the Collateral (as defined below) prior to the incurrence thereof.


6. Events of Acceleration. The entire unpaid principal balance of this
---------------------- Note, together with all accrued and unpaid interest, shall become immediately due and payable prior to the specified due date of this Note upon the occurrence of one or more of the following events:


a. the failure to make any payment of principal, interest or any other amount payable hereunder when due under this Note or the breach of any other condition, obligation or covenant under this Note;


b. the breach of any representation or covenant under the Deed of Trust (as defined below);


c. the filing of a petition by or against the Maker under any provision of the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time, or under any similar law relating to bankruptcy, insolvency or other relief for debtors and the continuation of such petition without dismissal for a period of thirty (30) days or more; or appointment of a receiver, trustee, custodian or liquidator of or for all or any part of the assets or property of the Maker; or the insolvency of the Maker; or the making of a general assignment for the benefit of creditors by the Maker;


d. The Maker's death or incapacity;


e. any of the documents relating to the Collateral after delivery thereof shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or the Maker or any other person shall contest in any manner the validity or enforceability thereof, or the Maker or any other person shall deny that it has any further liability or obligation thereunder; or any of the documents relating to the Collateral for any reason, except to the extent permitted by the terms thereof, shall cease to create a valid and perfected first priority lien in any of the Collateral purported to be covered thereby;


f. the incurrence by the Maker of any other indebtedness secured by the Collateral which has not been consented to by the Corporation;


g. the expiration of the two (2)-month period following the date the Maker ceases for any reason to remain in the Corporation's employ;


h. an acquisition of the Corporation (whether by merger or acquisition of all or substantially all of the Corporation's assets or outstanding voting stock) for consideration payable in cash or freely-tradable securities; provided, however, that if the Pooling of Interest Method, as described in Accounting Principles Board Opinion No. 16, is used to account for the acquisition for financial reporting purposes, acceleration shall not occur prior to the end of the


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sixty (60)-day period immediately following the end of the applicable restriction period required under Accounting Series Release Numbers 130 and 135; or


i. the occurrence of any event of default under the Deed of Trust securing this Note or any obligation secured thereby.


7. Special Acceleration Event. In the event that the Maker sells
-------------------------- any shares of the common stock of the Corporation, the unpaid principal balance of this Note shall become immediately due and payable to the extent of one hundred percent (100%) of the after-tax proceeds realized upon such sale, and the Maker shall promptly deliver those after-tax proceeds to the Company to the extent necessary to satisfy the accelerated balance of this Note.


8. Late Fee; Default.
-----------------


a. If any payment hereunder is not paid on or before the fifth (5th) business day of the month during which any such payment first became due and payable, Maker shall pay to Corporation a reasonable late or administrative charge in the amount of five percent (5%) of the amount so unpaid.


b. Upon and after the occurrence of a default hereunder or any other agreement or instrument evidencing, governing or securing this Loan (an "Event of Default"), the Loan shall bear interest, payable upon demand, at the lessor of twelve percent (12%) or the maximum rate allowed by law (the "Default Rate").


c. If any interest payment hereunder is not paid on of before the fifth (5th) business day of the month during which such payment first became due and payable, any interest so unpaid shall bear interest from the first day of the month during which such payment first became due and payable until paid at the Default Rate. Interest on the amount of interest so unpaid shall be compounded monthly and shall be payable upon demand.


d. Maker and Corporation agree that the actual damages and costs sustained by Corporation due to the failure to make timely payments would be extremely difficult to measure and that the charges specified herein represent a reasonably estimate by Maker and Corporation of a fair average compensation for such damages and costs. Such charges shall be paid by Maker without prejudice to the right of Corporation to collect any other amounts provided to be paid under this Note or any other agreement or, with respect to late payments, to declare an Event of Default.


9. Employment. For purposes of applying the provisions of this Note,
---------- the Maker shall be considered to remain in the Corporation's employ for so long as the Maker renders services as a full-time employee of the Corporation, any successor entity or one or more of the Corporation's fifty percent (50%)-or-more owned (directly or indirectly) subsidiaries.


10. Use of Proceeds; Security. The proceeds of the loan evidenced by
------------------------- this Note shall be applied solely to the payment of the purchase price of Maker's principal residence in the San Francisco Bay Area. The obligations of Maker under this Note shall be secured by a mortgage security interest in such home (the "Collateral"), which security interest shall be more


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specifically described by a deed of trust on such home to be executed by the Maker in favor of the Corporation immediately upon completion of the purchase of such home (the "Deed of Trust"), in substantially the same form as the deed of trust attached hereto as Exhibit A. The Maker shall remain personally liable for payment of this Note, and any other assets of the Maker, in addition to the Collateral, may be applied to the satisfaction of the Maker's obligations hereunder.


11. Collection. The Maker agrees to pay on demand all the losses,
---------- costs, and expenses (including, without limitation, attorneys' fees and disbursements) which the Corporation incurs in connection with enforcement or attempted enforcement of this Note, or the protection or preservation of the Corporation's rights under this Note, whether by judicial proceedings or otherwise. Such costs and expenses include, without limitation, those incurred in connection with any workout or refinancing, or any bankruptcy, insolvency, liquidation or similar proceedings.


12. Waiver. A waiver of any term of this Note, the Deed of Trust or
------ of any of the obligations secured thereby must be made in writing and signed by a duly-authorized officer of the Corporation and any such waiver shall be limited to its express terms. No delay by the Corporation in acting with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or failure of a condition under this Note, the Deed of Trust or the obligations secured thereby. No single or partial exercise of any power under this Note shall preclude any other or further exercise of such power or exercise of any other power. The Maker waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon, notice of interest on interest and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note. T ...