EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT  AGREEMENT (this "Agreement"),  made and entered into as of
October 1, 2000, by and between NETWOLVES  CORPORATION,  a New York corporation,
with its principal office located at 200 Broadhollow  Road,  Melville,  New York
11747 (together with its successors and assigns  permitted under this Agreement,
"NetWolves")  and WALTER M.  GROTEKE  ("Groteke"),  amends and  restates  in its
entirety  the  original  agreement  made and  entered  into as of June 15,  2000
between NetWolves and Groteke ("Prior  Agreement"),  except for warrants awarded
under the prior agreement which shall remain in full force and effect.

                                   WITNESSETH:

     WHEREAS,  NetWolves  has  determined  that it is in the best  interests  of
NetWolves and its stockholders to continue to employ Groteke and to set forth in
this Agreement the obligations and duties of both NetWolves and Groteke; and

     WHEREAS,  NetWolves  wishes to assure itself of the services of Groteke for
the period  hereinafter  provided,  and  Groteke is  willing to be  employed  by
NetWolves  for said  period,  upon the terms  and  conditions  provided  in this
Agreement;

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
contained herein and for other good and valuable  consideration,  the receipt of
which is mutually  acknowledged,  NetWolves and Groteke  (individually a "Party"
and together the "Parties") agree as follows:

     DEFINITIONS.

     (a)  "Beneficiary"  shall  mean the  person  or  persons  named by  Groteke
pursuant  to Section 16 below or, in the event that no such  person is named who
survives Groteke, his estate.

     (b) "Board" shall mean the Board of Directors of NetWolves.

     (c) "Cause" shall mean:

          (i)  Groteke's  conviction  of a  felony  involving  an act or acts of
     dishonesty  on his part and  resulting  or intended  to result  directly or
     indirectly in gain or personal enrichment at the expense of NetWolves;

          (ii)  willful  and  continued   failure  of  Groteke  to  perform  his
     obligations  under  this  Agreement,  resulting  in  demonstrable  material
     economic harm to NetWolves, or
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          (iii) a material breach by Groteke of the provisions of Sections 13 or
     14 below to the demonstrable and material detriment of NetWolves.

     Notwithstanding  the  foregoing,  in no event  shall  Groteke's  failure to
perform the duties associated with his position caused by his mental or physical
disability constitute Cause for his termination.

     For purposes of this Section  1(c), no act or failure to act on the part of
Groteke shall be considered  "willful" unless it is done, or omitted to be done,
by him in bad faith or without reasonable belief that his action or omission was
in the best  interests  of  NetWolves.  Any act or  failure  to act  based  upon
authority given pursuant to a resolution  adopted by the Board or based upon the
advice of counsel for NetWolves  shall be  conclusively  presumed to be done, or
omitted  to be done,  by  Groteke  in good  faith and in the best  interests  of
NetWolves.

     (d) "Change in Control"  shall mean the  occurrence of any of the following
events:

          (i) the  acquisition  by any  individual,  entity or group (within the
     meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange Act of
     1934 as amended (the "Exchange  Act") (a "Person") of beneficial  ownership
     (within the meaning of Rule 13d-3  promulgated  under the Exchange  Act) of
     voting securities of NetWolves when such acquisition  causes such Person to
     own 30 percent or more of the combined voting power of the then outstanding
     voting  securities of NetWolves  entitled to vote generally in the election
     of directors (the  "Outstanding  NetWolves Voting  Securities");  provided,
     however,   that  for  purposes  of  this   subsection  (i),  the  following
     acquisitions shall not be deemed to result in a Change of Control:  (A) any
     acquisition directly from NetWolves,  (B) any acquisition by NetWolves, (C)
     any acquisition by any employee  benefit plan (or related trust)  sponsored
     or  maintained by NetWolves or any  corporation  controlled by NetWolves or
     (D) any  acquisition  pursuant to a transaction  that complies with clauses
     (A), (B) and (C) of subsection (iii) below; and provided,  further, that if
     any Person's  beneficial  ownership  of the  Outstanding  NetWolves  Voting
     Securities  reaches or  exceeds  30  percent  as a result of a  transaction
     described in clause (A) or (B) above, and such Person subsequently acquires
     beneficial  ownership of additional  voting  securities of NetWolves,  such
     subsequent  acquisition shall be treated as an acquisition that causes such
     Person  to own 30  percent  or more  of the  Outstanding  NetWolves  Voting
     Securities; or

          (ii) individuals who, as of the date hereof, constitute the Board (the
     "Incumbent  Board")  cease for any reason to constitute at least a majority
     of the Board;  provided,  however,  that any individual becoming a director
     subsequent to the date hereof whose election, or nomination for election by
     NetWolves'  stockholders,  was approved by a vote of at least a majority of
     the directors then  comprising  the Incumbent  Board shall be considered as
     though such individual were a member of the Incumbent  Board, but excluding

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     for this purpose any such  individual  whose  initial  assumption of office
     occurs as a result of an actual or threatened election contest with respect
     to the  election  or removal of  directors  or other  actual or  threatened
     solicitation  of proxies or consents by or on behalf of a Person other than
     the Board; or

          (iii)  consummation of a  reorganization,  merger or  consolidation or
     sale or other  disposition  of all or  subsequently  all of the  assets  of
     NetWolves  or the  acquisition  of  assets  of  another  entity  ("Business
     Combination");  excluding, however, such a Business Combination pursuant to
     which (A) all or substantially all of the individuals and entities who were
     the  beneficial  owners  of the  Outstanding  NetWolves  Voting  Securities
     immediately prior to such Business  Combination  beneficially own, directly
     or indirectly, more than 60 percent of, respectively,  the then outstanding
     shares  of  common  stock  and  the  combined  voting  power  of  the  then
     outstanding voting securities entitled to vote generally in the election of
     directors,  as the case may be,  of the  corporation  resulting  from  such
     Business Combination (including,  without limitation, a corporation that as
     a result of such transaction owns NetWolves or all or substantially  all of
     NetWolves'  assets either directly or through one or more  subsidiaries) in
     substantially the same proportions as their ownership, immediately prior to
     such Business  Combination of the Outstanding  NetWolves Voting Securities,
     (B) no Person  (excluding  any employee  benefit plan (or related trust) of
     NetWolves or such  corporation  resulting  from such Business  Combination)
     beneficially  owns,  directly  or  indirectly,   30  percent  or  more  of,
     respectively,   the  then  outstanding   shares  of  common  stock  of  the
     corporation resulting from such Business Combination or the combined voting
     power of the then outstanding  voting securities of such corporation except
     to the extent that such ownership existed prior to the Business Combination
     and (C) at least a majority of the members of the board of directors of the
     corporation  resulting from such Business  Combination  were members of the
     Incumbent Board at the time of the execution of the initial  agreement,  or
     of the action of the Board, providing for such Business Combination; or

          (iv)  approval  by  the   stockholders  of  NetWolves  of  a  complete
     liquidation or dissolution of the Company.

     (e) "Code"  shall mean the Internal  Revenue Code of 1986,  as amended from
time to time.

     (f) "Committee" shall mean the Compensation Committee of the Board.

     (g)  "Disability"  shall  mean the  illness  or other  mental  or  physical
disability of Groteke, as determined by a physician  acceptable to NetWolves and
Groteke,  resulting in his failure  during the  Employment  Term, (i) to perform
substantially  his applicable  material duties under this Agreement for a period
of nine  consecutive  months and (ii) to return to the performance of his duties
within 30 days after receiving written notice of termination.

     (h)  "Employment  Term"  shall mean the period  specified  in Section  2(b)
below.
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     (i) "Fiscal  Year" shall mean the 12-month  period  beginning on July 1 and
ending on the next  subsequent  June 30, or such  other  12-month  period as may
constitute NetWolves's fiscal year at any time hereafter.

     (j) "Good  Reason"  shall  mean,  at any time during the  Employment  Term,
without Groteke's prior written consent or his acquiescence:

          (i) reduction in his then current Salary;

          (ii)  diminution,  reduction or other  adverse  change in the bonus or
     incentive compensation  opportunities available to Groteke (with respect to
     the level of bonus opportunities,  the applicable  performance criteria and
     otherwise the manner in which bonuses are determined) in the aggregate from
     those  available  as of the date hereof in  accordance  with  Section  4(a)
     below;

          (iii) NetWolves's  failure to pay Groteke any amounts otherwise vested
     and due him hereunder or under any plan or policy of NetWolves;

          (iv)  diminution  of  Groteke's  titles,   position,   authorities  or
     responsibilities, including not serving on the Board;

          (v) assignment to Groteke of duties  incompatible with his position of
     Chief Executive Officer;

          (vi)  termination  by  Groteke  of  his  employment  within  one  year
     following a Change in Control other than (a) by mutual  agreement,  (b) for
     Cause or (c) by reason of Retirement, death or Disability;

          (vii)  imposition  of a  requirement  that  Groteke  report other than
     directly to the full Board;

          (viii) a material  breach of the  Agreement by  NetWolves  that is not
     cured within 10 business days after written notification by Groteke of such
     breach; or

          (ix)  relocation of NetWolves'  corporate  headquarters  to a location
     more than 50 miles from the location first above described or 50 miles from
     the current location of Netwolves' Tampa, Florida facility.

     (k) "Salary" shall mean the annual salary  provided for in Section 3 below,
as adjusted from time to time.

     (l) "Spouse" shall mean, during the Term of Employment, the woman who as of
any relevant date is legally married to Groteke.

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<PAGE>
     (m)  "Subsidiary"  shall  mean any  corporation  of which  NetWolves  owns,
directly or indirectly, more than 50 percent of its voting stock.


2. EMPLOYMENT TERM, POSITIONS AND DUTIES.

     (a) Employment of Groteke.  NetWolves  hereby  continues to employ Groteke,
and Groteke hereby accepts continued employment with NetWolves, in the positions
and with the duties  and  responsibilities  set forth  below and upon such other
terms and conditions as are hereinafter stated. Groteke shall render services to
NetWolves  principally at NetWolves's  corporate  headquarters,  but he shall do
such  traveling on behalf of NetWolves  as shall be  reasonably  required in the
course  of the  performance  of his  duties  hereunder,  including  to its Tampa
facility.

     (b) Employment  Term. The Employment Term shall commence on the date hereof
and shall terminate on December 31, 2005.

     (c) Titles and Duties.

          (i) Until the date of termination of his employment hereunder, Groteke
     shall be employed as Chief Executive Officer,  reporting to the full Board.
     In his  capacity  as  Chief  Executive  Officer,  Groteke  shall  have  the
     customary  powers,  responsibilities  and  authorities  of chief  executive
     officers  of  corporations  of the  size,  type  and  nature  of  NetWolves
     including, without limitation,  authority, in conjunction with the Board as
     appropriate, to hire and terminate other employees of NetWolves.

          (ii) During the Employment Term, NetWolves shall uses its best efforts
     to secure the  election  of  Groteke  to the Board and to the  chairmanship
     thereof.  During the  Employment  Term,  if the Board forms an executive or
     similar committee, Groteke shall serve thereon.

     (d) Time and Effort.

          (i) Groteke agrees to devote his best efforts and abilities,  and such
     of his business  time and  attention  as is  reasonably  necessary,  to the
     affairs of NetWolves in order to carry out his duties and  responsibilities
     under this Agreement.

          (ii)  Notwithstanding  the foregoing,  nothing shall preclude  Groteke
     from  (A)  serving  on  the  boards  of  a   reasonable   number  of  trade
     associations, charitable organizations and/or businesses not in competition
     with NetWolves, (B) engaging in charitable activities and community affairs
     and (C) managing his personal investments and affairs;  provided,  however,
     that,  such  activities  do  not  materially   interfere  with  the  proper
     performance of his duties and  responsibilities  specified in Section 2 (c)
     above.

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<PAGE>
     3. SALARY.

     (a) Initial Salary.  Groteke shall receive from NetWolves a Salary, payable
in accordance  with the regular  payroll  practices of  NetWolves,  in a minimum
amount of $275,000.

     (b)  Cost-of-Living  Increase.  During the Employment Term Groteke's Salary
shall be increased  semiannually  by an amount equal to the increase in the cost
of living for the immediately  preceding calendar half-year,  as reported in the
"Consumer  Price  Index,  New York and  Northeastern  New  Jersey,  All  Items,"
published by the United States  Department of Labor,  Bureau of Labor Statistics
(or, if such index is no longer published,  a successor or comparable index that
is  published).  Such amount shall be calculated and paid to Groteke in a single
sum on or before  the first day of the second  month  following  the  applicable
calendar  half year,  and  thereafter  his Salary shall be deemed to include the
amount of any such increase.  The first calculation and payment shall be made on
or before  February 1, 2000 with  respect to the period  October 1, 2000 through
December  31, 2000.  If Groteke's  employment  shall  terminate  during any such
six-month  period,  the  cost-of-living  increase  provided in this Section 3(b)
shall be prorated accordingly.

     (c) Salary Increase. Any amount to which Groteke's Salary is increased,  as
provided in Section 3(b) above or  otherwise,  shall not  thereafter  be reduced
without his consent, and the term "Salary" as used in this Agreement shall refer
to his Salary as thus increased.

     4. BONUSES.

     Groteke  shall  be  eligible  to  receive  additional  bonuses  during  the
Employment Term. NetWolves Corporation shall determine,  in its discretion,  the
occasion for payment, and the amount, of any such bonus.

     5. LONG-TERM INCENTIVE.

     During the  Employment  Term,  Groteke shall be eligible for an award under
any long- term  incentive  compensation  plan  established  by NetWolves for the
benefit of Groteke or, in the absence  thereof,  under any such plan established
for the benefit of members of the senior management of NetWolves.

     6. EQUITY OPPORTUNITY.

     During the Employment Term,  Groteke shall be eligible to receive grants of
options  to  purchase  shares  of  NetWolves's  stock  and  awards  of shares of
NetWolves's stock,  either or both as determined by the Committee,  under and in
accordance  with the terms of applicable  plans of NetWolves and related  option
and award agreements. It is the intention of NetWolves to grant stock options to
Groteke during the Employment Term.

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<PAGE>
    7.   EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.

     During  the   Employment   Term,   Groteke  shall  be  entitled  to  prompt
reimbursement by NetWolves for all reasonable out-of-pocket expenses incurred by
him in performing  services  under this  Agreement,  upon his submission of such
accounts and records as may be reasonably required by NetWolves.

     8. PERQUISITES.

     During the  Employment  Term,  NetWolves  shall  provide  Groteke  with the
following perquisites:

     (a) an office of a size and with  furnishings and other  appointments,  and
exclusive  personal  secretarial  and other  assistance,  at least equal to that
provided to Groteke by NetWolves as of the date hereof; and

     (b) the use of an  automobile  and payment of related  expenses on the same
terms as in effect on the date hereof or, if more favorable to Groteke,  as made
available  generally to other executive officers of NetWolves and its affiliates
at any time thereafter.

     9. EMPLOYEE BENEFIT PLANS.

     (a)  General.  During the  Employment  Term,  Groteke  shall be entitled to
participate  in all  employee  benefit  plans and  programs  made  available  to
NetWolves's  senior executives or to its employees  generally,  as such plans or
programs  may be in effect  from time to time,  including,  without  limitation,
pension and other retirement plans,  profit-sharing  plans,  savings and similar
plans,  group life  insurance,  accidental  death and  dismemberment  insurance,
travel accident insurance,  hospitalization insurance, surgical insurance, major
and excess major medical insurance,  dental insurance,  short-term and long-term
disability insurance,  sick leave (including salary continuation  arrangements),
holidays, vacation (not less than four weeks in any calendar year) and any other
employee  benefit plans or programs that may be sponsored by NetWolves from time
to time,  including  plans  that  supplement  the  above-listed  types of plans,
whether funded or unfunded.

     (b) Medical Care  Reimbursement and Insurance.  During the Employment Term,
NetWolves  shall  reimburse  Groteke  for 100  percent of any  medical  expenses
incurred  by him for  himself,  his  Spouse,  or  immediate  family that are not
reimbursed  by  insurance  or   otherwise,   offset  by  any  amounts  that  are
reimbursable  by Medicare if Groteke and his Spouse and immediate  family,  when
eligible,  elect to be covered by Medicare.  NetWolves shall provide Groteke and
his  Spouse  and  immediate  family  during his  lifetime  with  hospitalization
insurance,  surgical  insurance,  major and excess major  medical  insurance and
dental insurance in accordance with the most favorable plans, policies, programs
and  practices of NetWolves and its  Subsidiaries  made  available  generally to
other senior  executive  officers of NetWolves and its Subsidiaries as in effect
from time to time.

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<PAGE>
     (c) Life  Insurance  Benefit.  In  addition  to the  group  life  insurance
available  to  employees  generally,  NetWolves  shall  provide  Groteke with an
individual  permanent  life  insurance  benefit in an initial amount of not less
than  approximately  $5 million,  the terms and conditions of such benefit to be
more fully  described in an insurance  ownership  agreement  between Groteke and
NetWolves.

     (d) Disability  Benefit. In consideration of the benefit payable to Groteke
in the event of termination of his employment due to Disability,  as provided in
Section 10(d) below,  NetWolves  shall not be obligated to provide  Groteke with
long-term disability insurance. If NetWolves elects to provide Groteke with such
insurance,  he shall be the owner of any individual  policies obtained and shall
pay the premiums  thereon;  provided,  however,  that NetWolves  shall reimburse
Groteke for any premiums that he pays.

     10. TERMINATION OF EMPLOYMENT.

     (a) Voluntary Termination and Termination by Mutual Agreement.  Groteke may
terminate his employment voluntarily at any time. If he does so, his entitlement
shall be the same as if NetWolves had terminated  his employment for Cause.  The
Parties may terminate this Agreement by mutual agreement at any time. If they do
so, Groteke's entitlements shall be as the Parties mutually agree.

     (b) General.  Notwithstanding anything to the contrary herein, in the event
of  termination  of  Groteke's  employment  under  this  Agreement,  he  or  his
Beneficiary,  as the case may be,  shall be entitled to receive (in  addition to
payments and benefits under, and except as specifically provided in, subsections
(c) through (i) below, as applicable):

          (i) his Salary through the date of termination;

          (ii) any unused vacation from prior years;

          (iii) any bonus awarded but not yet paid to him;

          (iv) any other compensation or benefits,  including without limitation
     long- term incentive  compensation  described in Section 5 above,  benefits
     under  equity  grants and awards  described in Section 6 above and employee
     benefits under plans described in Section 9 above, that have vested through
     the date of  termination  or to which he may then be entitled in accordance
     with the applicable terms and conditions of each grant, award or plan; and

          (v)  reimbursement  in accordance  with Sections 9(a) and (b) above of
     any  business  and  medical  expenses  incurred by Groteke or his Spouse or
     immediate  family,  as applicable,  through the date of termination but not
     yet paid to him.

     (c)  Termination  due to Death.  In the event that Groteke's  employment is
terminated due to his death, his Beneficiary  shall be entitled,  in addition to
the compensation and benefits  specified in Section 10(b), to his Salary payable
for the  remainder  of the  Employment  Term at the rate in  effect  immediately
before such termination.

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     (d) Termination due to Disability. In the event of Disability, NetWolves or
Groteke  may  terminate  Groteke's   employment.   If  Groteke's  employment  is
terminated  due  to  Disability,  he  shall  be  entitled,  in  addition  to the
compensation and benefits  specified in Section 10(b), to his Salary payable for
the remainder of the Employment  Term at the rate in effect  immediately  before
such  termination,  offset by any long-term  disability  insurance  benefit that
NetWolves may have elected to provide for him.

     (e) Termination by NetWolves for Cause.  NetWolves may terminate  Groteke's
employment hereunder for Cause only upon written notice to Groteke not less than
30 days prior to any  intended  termination,  which  notice  shall  specify  the
grounds for such  termination in reasonable  detail.  Cause shall in no event be
deemed to exist except upon a finding  reflected  in a resolution  approved by a
majority  (excluding  Groteke) of the members of the Board (whose findings shall
not be binding  upon or entitled to any  deference by any court,  arbitrator  or
other  decision-maker  ruling on this  Agreement)  at a meeting of which Groteke
shall have been given proper notice and at which Groteke (and his counsel) shall
have a reasonable  opportunity  to present his case. In the event that Groteke's
employment  is  terminated  for  Cause,   he  shall  be  entitled  only  to  the
compensation and benefits specified in Section 10(b).

     (f) Termination Without Cause or by Groteke for Good Reason.

          (i)  Termination  without  Cause shall mean  termination  of Groteke's
     employment  by NetWolves and shall  exclude  termination  (A) due to death,
     Disability or Cause, (B) by Groteke  voluntarily or (C) by mutual agreement
     of Groteke and NetWolves.  NetWolves  shall provide  Groteke 15 days' prior
     written  notice of  termination  by it without  Cause,  and  Groteke  shall
     provide NetWolves 15 days' prior written notice of his termination for Good
     Reason.

          (ii) In the event of termination by NetWolves of Groteke's  employment
     without  Cause or of  termination  by  Groteke of his  employment  for Good
     Reason, he shall be entitled,  in addition to the compensation and benefits
     specified in Section 10(b), to:

               (A) his Salary,  payable for the remainder of the Employment Term
          at the rate in effect immediately before such termination;

               (B) annual  bonuses  for the  remainder  of the  Employment  Term
          (including a prorated  bonus for any partial Fiscal Year) equal to the
          average of the three highest annual bonuses  awarded to him during the
          ten Fiscal  Years  preceding  the  Fiscal  Year of  termination,  such
          bonuses to be paid at the same time annual  bonuses are regularly paid
          by NetWolves to Groteke;

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               (C)  continued  medical  reimbursement  for the  remainder of the
          Employment Term and thereafter the lifetime medical benefits described
          in Section 9(b) above;

               (D)  continued  participation  in all employee  benefit  plans or
          programs available to NetWolves  employees  generally in which Groteke
          was  participating  on the date of termination of his employment until
          the end of the Employment Term; provided; however, that (x) if Groteke
          is precluded from continuing his participation in any employee benefit
          plan or program as  provided  in this clause (E), he shall be entitled
          to the after-tax economic equivalent of the benefits under the plan or
          program  in which he is  unable  to  participate  until the end of the
          Employment  Term,  and  (y) the  economic  equivalent  of any  benefit
          foregone  shall be deemed to be the  lowest  cost that  Groteke  would
          incur in obtaining such benefit on an individual basis; and

               (E)  other  benefits  in  accordance  with  applicable  plans and
          programs of the Company.

          (iii) Prior written consent by Groteke to any of the events  described
     in  Section  1(k)  above  shall be  deemed a waiver  by him of his right to
     terminate  for Good Reason under this Section 10(f) solely by reason of the
     events set forth in such waiver.

     (g) Voluntary Termination by Groteke. Groteke shall have the right, upon 60
days' prior written notice, voluntarily to terminate his employment without Good
Reason,  in which event his employment shall cease and the Employment Term shall
terminate  as of the date  stated in such  notice,  and he shall be  entitled to
receive  compensation and benefits as if NetWolves had terminated his employment
for Cause, as provided in Section 10(e).

     (h) Change in Control.  Notwithstanding  anything  to the  contrary in this
Section 10,  termination  of Groteke's  employment  within the  one-year  period
following a Change in Control for any reason other than Cause, Retirement, death
or  Disability,  shall be  governed by Section  10(g).  In the event of any such
termination,   Groteke  shall  be  entitled  to  compensation  and  benefits  in
accordance with the provisions of Section 10(f)(ii).

     11. NO DUTY TO MITIGATE.

     Groteke  shall not be  required  to  mitigate  damages or the amount of any
payment  provided  for under this  Agreement  by  seeking  other  employment  or
otherwise,  nor will any  payment  hereunder  be  subject to offset in the event
Groteke does receive compensation for services from any other source.

     12. PARACHUTES.

     (a)  Application.  If all, or any portion,  of the payments  provided under
this Agreement,  and/or any other payments and benefits that Groteke receives or
is entitled to receive from  NetWolves or a Subsidiary,  whether or not under an

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existing plan, arrangement or other agreement,  constitutes an excess "parachute
payment"  within the meaning of Section 280G(b) of the Code (each such parachute
payment, a "Parachute  Payment") and will result in the imposition on Groteke of
an excise tax under  Section  4999 of the Code,  then,  in addition to any other
benefits to which Groteke is entitled under this Agreement,  NetWolves shall pay
him an amount in cash  equal to the sum of the  excise  taxes  payable by him by
reason of receiving Parachute Payments,  plus the amount necessary to put him in
the same after-tax position (taking into account any and all applicable federal,
state and local excise, income or other taxes at the highest possible applicable
rates on such  Parachute  Payments  (including  without  limitation any payments
under this  Section 12) as if no excise  taxes had been  imposed with respect to
Parachute Payments (the "Parachute Gross-up").

     (b)  Computation.  The amount of any payment under this Section 12 shall be
computed by a certified public accounting firm of national  reputation  selected
by NetWolves  and  acceptable to Groteke.  If NetWolves or Groteke  disputes the
computation  rendered  by  such  accounting  firm,  NetWolves  shall  select  an
alternative  certified public accounting firm of national  reputation to perform
the applicable  computation.  If the two accounting  firms cannot agree upon the
computations,  Groteke and  NetWolves  shall jointly  appoint a third  certified
public accounting firm of national  reputation within 10 calendar days after the
two  conflicting  computations  have been rendered.  Such third  accounting firm
shall be asked to  determine  within 30  calendar  days the  computation  of the
Parachute  Gross-up  to  be  paid  to  Groteke,   and  payments  shall  be  made
accordingly.

     (c)  Payment.  In any event,  NetWolves  shall pay to Groteke or pay on his
behalf the  Parachute  Gross-up  as computed by the  accounting  firm  initially
selected  by  Groteke  by the time any taxes  payable  by him as a result of the
Parachute Payments become due, with Groteke agreeing to return the excess amount
of such payment over the final  computation  rendered from the process described
in Section 12(b).  Groteke and NetWolves shall provide the accounting firms with
all information  that any of them reasonably deems necessary in order to compute
the  Parachute  Gross-up.  The cost and  expenses  of all the  accounting  firms
retained  to  perform  the  computations  described  above  shall  be  borne  by
NetWolves.

     In the event that the Internal  Revenue  Service  ("IRS") or the accounting
firm  computing the Parachute  Gross-up  finally  determines  that the amount of
excise taxes thereon  initially  paid was  insufficient  to discharge  Groteke's
excise tax liability,  NetWolves shall make additional payments to him as may be
necessary to reimburse him for discharging the full liability.

     Groteke  shall  apply to the IRS for a refund of any excise  taxes paid and
remit to  NetWolves  the amount of any such refund that he  receives.  NetWolves
shall reimburse Groteke for his expenses in seeking a refund of excise taxes and
for any  interest and  penalties  imposed on excise taxes that he is required to
pay.

                                       11
<PAGE>
     13. CONFIDENTIAL INFORMATION.

     (a) General.

          (i) Groteke  understands and hereby  acknowledges  that as a result of
     his employment  with NetWolves he will  necessarily  become informed of and
     have access to certain valuable and  confidential  information of NetWolves
     and any of its  Subsidiaries,  joint  ventures and  affiliates,  including,
     without  limitation,  inventions,  trade  secrets,  technical  information,
     computer   software  and  programs,   know-how  and  plans   ("Confidential
     Information"),  and that any such Confidential Information,  even though it
     may be  developed  or  otherwise  acquired  by  Groteke,  is the  exclusive
     property of  NetWolves  to be held by him in trust  solely for  NetWolves's
     benefit.

          (ii)  Accordingly,  Groteke hereby agrees that,  during the Employment
     Term and  subsequent  to both, he shall not, and shall not cause others to,
     use, reveal, report, publish, transfer or otherwise disclose to any person,
     corporation  or other entity any  Confidential  Information  without  prior
     written  consent  of the  Board,  except to (A)  responsible  officers  and
     employees of NetWolves or (B) responsible  persons who are in a contractual
     or fiduciary  relationship  with NetWolves or who need such information for
     purposes in the interest of NetWolves.  Notwithstanding, the foregoing, the
     prohibitions  of this  clause  (ii)  shall  not  apply to any  Confidential
     Information  that  becomes  of  general  public  knowledge  other than from
     Groteke or is required  to be  divulged  by court  order or  administrative
     process.

     (b) Return of Documents.  Upon termination of his employment with NetWolves
for any reason, Groteke shall promptly deliver to NetWolves all plans, drawings,
manuals,  letters,  notes,  notebooks,  reports,  computer  programs  and copies
thereof and all other materials,  including without limitation those of a secret
or confidential  nature,  relating to NetWolves's  business that are then in his
possession or control.

     (c)  Remedies  and  Sanctions.  In the event that Groteke is found to be in
violation of Section 13(a) or (b) above,  NetWolves  shall be entitled to relief
as provided in Section 15 below.

     14. NONCOMPETITION/NONSOLICITATION.

     (a)  Prohibitions.  During the Employment Term,  Groteke shall not, without
prior written  authorization of the Board,  directly or indirectly,  through any
other individual or entity:

          (i) become on officer or  employee  of, or render any  service to, any
     direct competitor of NetWolves;

          (ii) solicit or induce any  customer of NetWolves to cease  purchasing
     goods or services from  NetWolves or to become a customer of any competitor

                                       12
<PAGE>
     of  NetWolves;  or

          (iii)  solicit or induce any employee of NetWolves to become  employed
     by any competitor of NetWolves.

     (b)  Remedies  and  Sanctions.  In the event that Groteke is found to be in
violation  of Section  14(a)  above,  NetWolves  shall be  entitled to relief as
provided in Section 15 below.

     (c) Exceptions.  Notwithstanding  anything to the contrary in Section 14(a)
above, its provisions shall not:

          (i) apply if NetWolves  terminates  Groteke's employment without Cause
     or Groteke  terminates his employment for Good Reason,  each as provided in
     Section 10(f) above;

          (ii) be construed as preventing  Groteke from  investing his assets in
     any business that is not a direct competitor of NetWolves; or


     15. REMEDIES/SANCTIONS.

     Groteke acknowledges that the services he is to render under this Agreement
are of a unique and  special  nature,  the loss of which  cannot  reasonably  or
adequately be compensated for in monetary damages,  and that irreparable  injury
and damage may result to NetWolves in the event of any breach of this  Agreement
or  default  by  Groteke.  Because  of the  unique  nature  of the  Confidential
Information  and the  importance of the  prohibitions  against  competition  and
solicitation, Groteke further acknowledges and agrees that NetWolves will suffer
irreparable harm if he fails to comply with his obligations  under Section 13(a)
or (b)  above  or  Section  14(a)  above  and  that  monetary  damages  would be
inadequate to compensate  NetWolves  for any such breach.  Accordingly,  Groteke
agrees that, in addition to any other remedies available to either Party at law,
in equity or otherwise,  NetWolves will be entitled to seek injunctive relief or
specific  performance to enforce the terms,  or prevent or remedy the violation,
of any provisions of this Agreement.

     16. BENEFICIARIES/REFERENCES.

     Groteke  shall be entitled to select (and change,  to the extent  permitted
under  any  applicable  law) a  beneficiary  or  beneficiaries  to  receive  any
compensation  or benefit  payable  under this  Agreement  following his death by
giving NetWolves written notice thereof.  In the event of Groteke's death, or of
a judicial  determination  of his  incompetence,  reference in this Agreement to
Groteke shall be deemed to refer, as appropriate, to his beneficiary,  estate or
other legal representative.

                                       13

<PAGE>
     17. WITHHOLDING TAXES.

     All payments to Groteke or his  Beneficiary  under this Agreement  shall be
subject to withholding on account of federal,  state and local taxes as required
by law.

     18. INDEMNIFICATION AND LIABILITY INSURANCE.

     Nothing herein is intended to limit NetWolves's indemnification of Groteke,
and NetWolves shall indemnify him to the fullest extent  permitted by applicable
law consistent with NetWolves's  Certificate of Incorporation  and By-Laws as in
effect at the beginning of the  Employment  Term,  with respect to any action or
failure to act on his part  while he is an  officer,  director  or  employee  of
NetWolves or any Subsidiary.  NetWolves shall cause Groteke to be covered at all
times by directors' and officers' liability insurance on terms no less favorable
than the directors' and officers' liability insurance maintained by NetWolves in
effect on the date  hereof in terms of coverage  and  amounts.  NetWolves  shall
continue to  indemnify  Groteke as provided  above and maintain  such  liability
insurance  coverage for him after the Employment Term for any claims that may be
made  against  him with  respect  to his  service  as a  director  or officer of
NetWolves or a consultant to NetWolves.

     19. EFFECT OF AGREEMENT ON OTHER BENEFITS.

     The existence of this  Agreement  shall not prohibit or restrict  Groteke's
entitlement to participate  fully in  compensation,  employee  benefit and other
plans of NetWolves in which senior executives are eligible to participate.

     20. ASSIGNABILITY; BINDING NATURE.

     This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
Parties and their  respective  successors,  heirs (in the case of  Groteke)  and
assigns.  No rights or  obligations  of NetWolves  under this  Agreement  may be
assigned  or  transferred  by  NetWolves  except  pursuant  to (a) a  merger  or
consolidation  in which  NetWolves is not the  continuing  entity or (b) sale or
liquidation  of all or  substantially  all of the assets of NetWolves,  provided
that the  surviving  entity or assignee or transferee is the successor to all or
substantially  all of the  assets  of  NetWolves  and such  surviving  entity or
assignee  or  transferee  assumes  the  liabilities,  obligations  and duties of
NetWolves under this Agreement, either contractually or as a matter of law.

     NetWolves  further  agrees  that,  in the  event  of a sale  of  assets  or
liquidation  as  described  in the  preceding  sentence,  it shall  use its best
efforts  to have such  assignee  or  transferee  expressly  agree to assume  the
liabilities,  obligations and duties of NetWolves hereunder;  provided, however,
that  notwithstanding  such  assumption,   NetWolves  shall  remain  liable  and
responsible for  fulfillment of the terms and conditions of this Agreement;  and
provided, further, that in no event shall such assignment and assumption of this
Agreement adversely affect Groteke's right upon a Change in Control, as provided

                                       14
<PAGE>

in Section 10(i) above. No rights or obligations of Groteke under this Agreement
may be assigned or transferred by him.

     21. REPRESENTATIONS.

     The  Parties  respectively   represent  and  warrant  that  each  is  fully
authorized and empowered to enter into this  Agreement and that the  performance
of its or his  obligations,  as the case may be, under this  Agreement  will not
violate  any  agreement  between  such  Party  and  any  other  person,  firm or
organization.  NetWolves  represents  and warrants that this  Agreement has been
duly  authorized by all  necessary  corporate  action and is valid,  binding and
enforceable in accordance with its terms.

     22. ENTIRE AGREEMENT.

     Except to the extent otherwise provided herein, this Agreement contains the
entire  understanding and agreement  between the Parties  concerning the subject
matter hereof and  supersedes  any prior  agreements,  whether  written or oral,
between the Parties  concerning  the subject matter  hereof,  including  without
limitation  the Prior  Agreement.  Payments  and  benefits  provided  under this
Agreement  are in lieu of any  payments or other  benefits  under any  severance
program or policy of NetWolves to which Groteke would otherwise be entitled.

     23. AMENDMENT OR WAIVER.

     No  provision in this  Agreement  may be amended  unless such  amendment is
agreed to in writing  and signed by both  Groteke and an  authorized  officer of
NetWolves.  No waiver by either  Party of any  breach by the other  Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent  time.  Any waiver must be in writing and
signed by the Party to be charged  with the waiver.  No delay by either Party in
exercising  any right,  power or privilege  hereunder  shall operate as a waiver
thereof.

     24. SEVERABILITY.

     In the event  that any  provision  or portion  of this  Agreement  shall be
determined to be invalid or unenforceable  for any reason,  in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.

     25. SURVIVAL.

     The respective  rights and  obligations of the Parties under this Agreement
shall survive any termination of Groteke's employment with NetWolves.

                                       15
<PAGE>
     26. GOVERNING LAW/JURISDICTION.

     This  Agreement  shall be  governed by and  construed  and  interpreted  in
accordance  with  the laws of New  York,  without  reference  to  principles  of
conflict of laws.

     27. COSTS OF DISPUTES.

     NetWolves  shall pay, at least monthly,  all costs and expenses,  including
attorneys' fees and disbursements, of Groteke in connection with any proceeding,
whether or not instituted by NetWolves or Groteke,  relating to any provision of
this Agreement, including but not limited to the interpretation,  enforcement or
reasonableness  thereof;  provided,  however,  that, if Groteke  instituted  the
proceeding and the judge or other  decision-maker  presiding over the proceeding
affirmatively finds that his claims were frivolous or were made in bad faith, he
shall pay his own costs and  expenses  and,  if  applicable,  return any amounts
theretofore  paid to him or on his behalf  under this  Section  27.  Pending the
outcome of any  proceeding,  NetWolves  shall pay Groteke all amounts due to him
without regard to the dispute; provided, however, that if NetWolves shall be the
prevailing party in such a proceeding,  Groteke shall promptly repay all amounts
that he received during pendency of the proceeding.

     28. NOTICES.

     Any notice given to either Party shall be in writing and shall be deemed to
have been given when delivered either personally,  by fax, by overnight delivery
service  (such as Federal  Express)  or sent by  certified  or  registered  mail
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the  address  indicated  below or to such  changed  address  as the Party may
subsequently give notice of.

     If to NetWolves or the Board:

    NetWolves Corporation
    200 Broad Hollow Road, Suite 207
    Melville, New York  11747
    Attention:  Mr. Peter C. Castle
    FAX:  (631) 393-5016

  With a copy to:

    Blau, Kramer, Wactlar & Lieberman, P. C.
    100 Jericho Quadrangle
    Suite 225
    Jericho, New York  11753
    Attn:  David H. Lieberman, Esq.

                                       16
<PAGE>
If to Groteke:

    Walter M. Groteke
    The Knolls
    16 The Glen
    Glen Head, New York  11530

     29. HEADINGS.

     The  headings  of  the  sections   contained  in  this  Agreement  are  for
convenience  only and shall not be deemed to control  or affect  the  meaning or
construction of any provision of this Agreement.

     30. COUNTERPARTS.

     This  Agreement  may be  executed  in  counterparts,  each of which when so
executed and delivered shall be an original,  but all such counterparts together
shall constitute one and the same instrument.

     IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of the
date first written above.

                                                NETWOLVES CORPORATION


                                            By: /s/
                                                Peter C. Castle
                                                Vice President-Finance



                                                /s/
                                                Walter M. Groteke
                                                Employee

                                       17