Joint Venture Agreement

JOINT VENTURE AGREEMENT



by and between



SOFTBANK CORP.





E*TRADE GROUP, INC.



June 3, 1998



JOINT VENTURE AGREEMENT



This JOINT VENTURE AGREEMENT ("AGREEMENT") is made as of June 3, 1998, by and between E*TRADE GROUP, INC., a Delaware corporation ("E*TRADE"), and SOFTBANK CORP., a Japanese corporation ("SOFTBANK"). E*TRADE and SOFTBANK are hereunder also referred to collectively as the "PARTIES" and individually as a "PARTY."





A. SOFTBANK is a leading provider of information and distribution services in Japan and worldwide as infrastructure for the digital information industry.



B. E*TRADE is a leading provider of Internet-based online securities trading services.



C. The Parties desire to form a joint venture to provide online securities trading services to residents of Japan on the terms and subject to the conditions set forth herein.



NOW THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:





1. DEFINITIONS



1.1 "A FFILIATE" means any Person: (a) that is controlled by, controls, or is under common control with a Party (collectively, a "CONTROLLED PERSON"); or (b) that is controlled by, controls, or under common control with any such Controlled Person, in each case f or so long as such control continues; provided,

-------- however, (i) that Affiliates of either Party shall include Persons in which such Party owns, directly or indirectly, shares repre senting at least thirty percent (30%) of the voting power represented by such Affiliates' outstanding shares, regardless of whether such control actually exists and (ii) Yahoo Inc. shall not be deemed an Affiliate of SOFTBANK or any member of the SOFTBANK Group for purposes of this Agreement. For purposes of this definition and Section 1.19, "CONTROL" shall mean the possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securiti es or other ownership interests, by contract or otherwise).



1.2 "ANNUAL PLAN" means a business operations plan detailing E*TRADE Japan's goals and procedures for personnel, technical, financial, administrative and marketing activities for E*TRADE Japan's next succeeding fiscal year, as approved each year and revised from time to time by the Board.



1.3 "ARTICLES" means the articles of incorporation of E*TRADE Japan in the form of attached Exhibit 1.3, as the same may be amended from time to time

----------- in accordance with this Agreement and the Commercial Code.



1.4 "BOARD" means the board of directors of E*TRADE Japan.





1.5 "BUSINESS" means the development and distribution of online electronic inv esting services permitting residents of Japan to place and consummate orders for securities over the internet, and to initiate and consummate such other transactions as the Parties may agree from time to time after prior consultation and review of applica ble regulatory issues.



1.6 "BUSINESS DAY" means a day on which commercial banks in the United States and Japan are generally open to conduct their regular banking business.



1.7 "CLOSING DATE" is defined in Section 3.2(a).



1.8 "COMMERCIAL CODE" means the Commercial Code of Japan, as amended and in effect from time to time.



1.9 "COMMON STOCK" means common stock of E*TRADE Japan as authorized by the Articles.



1.10 "CONFIDENTIAL INFORMATION" means all nonpublic or proprietary information disclosed by SOFTBANK, E*TRADE, E*TRADE Japan, or any of their Affiliates to any Party (whether owned by the disclosing Party or a third party to whom the disclosing Party owes a non-disclosure obligation) other than information w h ich the receiving Party can demonstrate: (i) was known to the receiving Party at the time of the disclosure by the disclosing Party; (ii) has become publicly known through no wrongful act of the receiving Party; (iii) has rightfully been received by the r eceiving Party from a third party; or (iv) has been independently developed by the receiving Party.



1.11 "CONSULTING SERVICES AGREEMENT' means the Consulting Services Agreement to be entered into between SOFTBANK and E*TRADE Japan on the Closing Date in the form of attached Exhibit 1.11, as amended from time to time.

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1.12 "DIRECTOR" means a member of the Board.



1.13 "DISCLOSING PARTY" is defined in Section 5.2.



1.14 "ETJ INTEREST" shall mean, for a Party, the percentage interest represented by the Securities then held by such Party divided by the all outstanding Securities (on an as-converted to Common Stock basis).



1.15 "E*TRADE AFFILIATES" is defined in Section 3.4(a).



1.16 "E*TRADE JAPAN" is defined in Section 3.1.



1.17 "E*TRADE SECURITIES" is defined in Section 6.2(a).



1.18 "EFFECTIVE DATE" means the date of this Agreement.



1.19 "FUND" means any investment fund controlled by SOFTBANK or any SOFTBANK Affiliate.



1.20 "KEY OFFICERS" means those E*TRADE Japan employees who are in management positions reporting directly to the President.



1.21 "LAUNCH DATE" is defined in Section 3.1.





1.22 "LICENSE AGREEMENT" shall mean the License Agreement to be entered into between E*TRADE and E*TRADE Japan on the Closing Date in the form attached hereto as Exhibit 1.22 and as amended from time to time.

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1.23 "LOAN" is defined in Section 3.3.



1.24 "PARTNERS" means such Persons as SOFTBANK deems strategically important to the success of E*TRADE Japan and proposes to include in the SOFTBANK Group pursuant to Section 3.2(a).



1.25 "PARTY" and "PARTIES" are defined in the opening paragraph of this Agreement.



1.26 "PERSON" means a natural individual, partnership, firm, corporation, or other entity or form of business association.



1.27 "PROMISSORY NOTE" means a promissory note, dated the Closing Date, made by E*TRADE in favor of SOFTBANK, and in the form of attached Exhibit 1.27.

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1.28 "PROPRIETARY INFORMATION" is as defined in the License Agreement.



1.29 "RECEIVING PARTY" is defined in Section 5.2.



1.30 "REGISTER" is defined in Section 3.3(c).



1.31 "SECURITIES" shall mean all outstanding shares of Common Stock and any other equity securities of E*TRADE Japan or instruments exercisable or exchangeable for or convertible into Common Stock or other equity securities of E*TRADE Japan.



1.32 "SECURITIES BUSINESS LICENSE" means a securities business license for the broker-dealer business under the Japan Securities and Exchange Law (Law No. 25 of 1948, as amended).



1.33 "SOFTBANK GROUP" is defined in Section 3.2(a).



1.34 "SPECIAL EXCEPTIONS LAW" means the Law Pertaining to Special Exceptions to the Commercial Code concerning Auditors of Companies (Kabushiki Kaisha).



1.35 "STATUTORY AUDITOR" means a statutory auditor (Kansa-yaku) of E*TRADE Japan with powers and duties as specified in the Commercial Code.



1.36 "TEMPORARY ACCOUNT" is defined in Section 3.2(a).



1.37 "TERM" is defined in Section 7.1.



1.38 "TRANSACTION DOCUMENTS" means this Agreement, the Articles, the License Agreement, the Consulting Services Agreement, the Promissory Note and each other agreement entered into between the Parties on or as of the Effective Date or the Closing Date, as the case may be, in connection with the transactions contemplated hereby.



2. PURPOSE OF JOINT VENTURE



The Parties hereby associate themselves in a joint venture relationship which shall have as its principal purpose the establishment and development of the Business.



3. ESTABLISHMENT AND CAPITALIZATION OF E*TRADE JAPAN



3.1 Establishment. The Parties agree that the joint venture

------------- contemplated by this Agreement shall be carried out exclusively through a newly- formed Japanese kabushiki kaisha established by the Parties pursuant to this Section 3.2 ("E*TRADE JAPAN"). E*TRADE Japan's corporate name shall be "E.TRADE Kabushiki Kaisha" in Japanese and "E*TRADE Japan K.K. " in English. The Parties shall use commercially reasonable efforts to cause E*TRADE Japan to commence commercial operations by January 10, 1999 (the "LAUNCH DATE"). Promptly following E*TRADE Japan's receipt of a broker-dealer business license pursuant to the Securities and Exchange Law (Law No. 25 of 1948, as amended), the Parties shall cooperate to cause the Articles to be amended to reflect (a) "E.TRADE SHOKEN KABUSHIKI KAISHA" as E*TRADE Japan's name in Japanese, and (b) the appropriate business purpos es of E*TRADE Japan.



3.2 Capitalization.

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(a) Initial Capitalization. E*TRADE Japan shall, as of the second

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(2nd) Business Day immediately following the Effective Date (the "CLOSING

DATE"), have authorized capital stock consisting of one class of shares

designated as Common Stock with the rights set forth in the Articles.

Fifty-four thousand (54,000) shares of Common Stock, with a par value of

(Yen)50,000 per share, shall be issued on the Closing Date. Listed in

Exhibit 3.2 are the SOFTBANK Affiliates, Funds and Partners which shall be

included as the initial SOFTBANK shareholders of E*TRADE Japan (the

"SOFTBANK GROUP"). SOFTBANK shall notify E*TRADE in writing regarding any

SOFTBANK Affiliates, Funds and Partners which SOFTBANK proposes to include

as additional SOFTBANK shareholders of E*TRADE Japan following the Closing

Date, whether in connection with a subscription for newly-issued Securities

pursuant to Section 3.4 or by way of transfer of Securities from one or

more members of the then-current SOFTBANK Group. E*TRADE shall have the

right to approve such proposed additional SOFTBANK Group members, which

approval shall not be unreasonably withheld. E*TRADE shall deliver to

SOFTBANK written confirmation of its approval of or objection to additional

proposed SOFTBANK Group members within five (5) Business Days of E*TRADE's

receipt of SOFTBANK's notice, and any such entities so approved by E*TRADE

shall be deemed to be members of the SOFTBANK Group for purposes of this

Agreement. E*TRADE Japan's initial equity shall be funded as follows: On

the Effective Date, SOFTBANK and E*TRADE shall (i) instruct their

respective banks to wire (Yen)1,566,000,000 and (Yen)1,134,000,000,

respectively, to a temporary account ("Betsudan Yokin") established by

SOFTBANK at The Fuji Bank, Limited (Tokyo headquarters), account number

3948, for purposes of incorporating E*TRADE Japan (the "TEMPORARY

ACCOUNT"), and (ii) shall exchange with each other copies of such wire

instructions. Upon written confirmation of receipt of such wire transfers

in the Temporary Account on or prior to the Closing Date (a copy of which

confirmation SOFTBANK shall deliver promptly to E*TRADE), the Parties shall

be deemed to have made, effective as of the Closing Date, and SOFTBANK

shall cause to be reflected in the documentation for E*TRADE Japan's

registration of incorporation, the following initial subscriptions for

shares of Common Stock:





(i) SOFTBANK Group Initial Subscription. The SOFTBANK Group

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

shall, collectively, subscribe for thirty-one thousand three hundred twenty

(31,320) shares of Common Stock, representing a fifty-eight percent (58%)

ETJ Interest; and



(ii) E*TRADE Purchase. E*TRADE shall subscribe for twenty-two

thousand six hundred eighty (22,680) shares of Common Stock, representing a

42% ETJ Interest.



(b) Certain Deliveries. On the Closing Date:

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(i) SOFTBANK shall (A) execute and deliver to E*TRADE the

Transaction Documents (other than this Agreement) to which SOFTBANK is a

party, (B) cause E*TRADE Japan to execute and deliver to E*TRADE the

License Agreement and the Consulting Services Agreement and (C) subject to

Section 3.3, cause to be wired to E*TRADE the Loan proceeds; and



(ii) E*TRADE shall execute and deliver to SOFTBANK and to E*TRADE

Japan the License Agreement, and execute and deliver to SOFTBANK the other

Transaction Documents (other than this Agreement) to which E*TRADE is a



(c) Acknowledgment of Agreement; Delivery of Share Certificates.

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Promptly after the Closing Date, SOFTBANK shall cause E*TRADE Japan (i) to

deliver to each Party its written acknowledgment of, and agreement to abide

by, the terms of this Agreement, and (ii) at the request of either SOFTBANK

or E*TRADE, to promptly issue and deliver to the SOFTBANK Group and to

E*TRADE share certificates representing the shares of Common Stock

subscribed for and purchased pursuant to this Section 3.2.



3.3 Loan.

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(a) In General. In order to assist E*TRADE in funding its purchase of

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Common Stock pursuant to Section 3.2, SOFTBANK hereby agrees to loan to

E*TRADE on the Closing Date, by wire transfer to such bank account as

E*TRADE shall specify in writing to SOFTBANK on or before the Effective

Date, and E*TRADE hereby agrees, to borrow from and repay to SOFTBANK,

(Yen)567,000,000 (the "LOAN"). The Loan shall be subject to E*TRADE's prior

execution and delivery to SOFTBANK of the Promissory Note and the terms of

E*TRADE's repayment of the Loan shall be governed thereby.



(b) The Register. E*TRADE shall maintain at its address referred to in

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

Section 10.2 hereof a register (the "REGISTER") for the recordation of (i)

the name and address of each Noteholder (as defined in the Promissory Note)

and (ii) the principal amount of the Loan owing to, and any Promissory Note

evidencing such Loan owned by, each Noteholder from time to time.

Notwithstanding anything to the contrary in this Agreement, E*TRADE and

each Noteholder shall treat each Person whose name is recorded in the

Register as the owner of the Loan for all purposes of this Agreement. The

Register shall be available for inspection by any Noteholder at any

reasonable time and from time to time upon reasonable prior notice.



(c) Forms. The Noteholder:

-----



(i) shall furnish to E*TRADE on or before the date of any

payment to such Noteholder by E*TRADE pursuant to the terms of the

Promissory Note an





accurate and complete original signed copy of Internal Revenue Service Form

W-8, or successor applicable form, certifying to such information as may be

requested to establish such Noteholder's legal entitlement at the date of

such certificate to an exemption from U.S. withholding tax under the

provisions of Section 881(c) of the Code with respect to payments of

interest to be made on the Loan (and deliver to E*TRADE a further copy of

such form on or before the date it expires or becomes obsolete and after

the occurrence of any event requiring a change in the most recently

provided form); and



(ii) agrees to the extent legally entitled to do so, upon

E*TRADE's reasonable request, to provide to E*TRADE (for the benefit of

E*TRADE) (A) such other forms as may be reasonably required in order to

establish the legal entitlement of such Noteholder to an exemption from

U.S. withholding tax with respect to payment of interest made on the Loan

and (B) such other supplemental forms as may at any time be required as a

result of changes to applicable law or regulations in order to confirm or

maintain in effect its entitlement to exemption from U.S. withholding tax

on any payments of interest made on the Loan; provided, however, that

--------

E*TRADE shall promptly reimburse all of such Noteholder's reasonable

out-of-pocket costs and expenses (including attorneys' fees) incurred in

connection with the performance of its obligations pursuant to this Section

3.3(c).



3.4 Additional Capital; Preemptive Right.

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



(a) Subject to Section 4, the Board may, by written notice to the

Parties pursuant to the terms hereof, setting forth the terms, conditions

and reasons for the financing, call for the Parties to subscribe for such

additional Securities as the Board may deem appropriate based on E*TRADE

Japan's capital requirements from time to time. Except as set forth in

Section 3.4(b), the SOFTBANK Group, E*TRADE and E*TRADE Securities (and

E*TRADE's other Affiliates, to the extent approved by SOFTBANK pursuant to

this Section 3.4(a), the "E*TRADE AFFILIATES") shall have the right to

purchase their respective pro rata share (which shall be equal to their

then-current respective ETJ Interests) of any new issuance of Securities

(i) proposed to be issued to the Parties pursuant to the immediately

preceding sentence, and (ii) in the event of a proposed new issuance of

Securities to any other Person, on the same terms and conditions as such

Securities are offered to any other Person. SOFTBANK and E*TRADE shall each

notify the other Party and E*TRADE Japan in writing of its decision to

participate in any such proposed new issuance of Securities within ten (10)

Business Days after receipt of the notice described in the first sentence

of this Section 3.4(a). SOFTBANK shall have the right to approve in advance

(which approval shall not be unreasonably withheld) any Affiliates of

E*TRADE which E*TRADE proposes to include as shareholders of E*TRADE Japan.

To the extent the SOFTBANK Group or E*TRADE (including E*TRADE Affiliates)

elects not to subscribe for its full pro rata share of such Securities,

SOFTBANK Group (if E*TRADE does not so subscribe) and E*TRADE (if the

SOFTBANK Group does not so subscribe) shall be entitled to purchase any of

the unsubscribed Securities. The Party electing to subscribe for any of the

unsubscribed Securities shall, together with E*TRADE Japan, effect the

closing of such subscription within thirty (30) days of its receipt of the

nonsubscribing Party's election not to subscribe for such Securities, on

the terms contained in the notice first mentioned above in this Section

3.4(a). Any subsequent proposed subscription of such Securities shall again

be subject to the Parties' preemptive rights, and shall require compliance

with the procedures, described in this Section 3.4(a).



(b) Notwithstanding Section 3.4(a), the SOFTBANK Group and E*TRADE

shall not have the right to purchase their pro rata share of new issuances





Securities issued pursuant to an E*TRADE Japan employee stock option plan

adopted by the Board in accordance with this Agreement.



3.5 Employee Stock Option Plan. The Parties agree that an employee

-------------------------- stock option plan would be beneficial to E*TRADE Japan, and accordingly shall cooperate in good faith with a view towards establi shing such a plan within twelve (12) months after the Effective Date on terms mutually agreed by the Parties. The Securities allocated to an employee stock option plan shall not, initially, represent more than a two percent (2%) ETJ Interest. Any Securiti es allocated to an employee stock option plan shall be newly-issued and accordingly shall dilute the Parties' respective ETJ Interests on a pro rata basis.



3.6 ETJ Interest. The Parties agree to implement E*TRADE Japan's

------------ capital structure ...