Document:

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EXHIBIT 10.41

THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE  "SECURITIES  ACT"),  OR ANY  STATE  SECURITIES  LAW AND  MAY NOT BE  SOLD,
TRANSFERRED OR OTHERWISE  DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER  APPLICABLE STATE SECURITIES LAWS OR A.B. WATLEY GROUP INC. SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT  REGISTRATION OF SUCH  SECURITIES  UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE  STATE SECURITIES LAWS
IS NOT REQUIRED.

                             A.B. WATLEY GROUP INC.
                             ----------------------

                   SENIOR SUBORDINATED DEMAND PROMISSORY NOTE
                   ------------------------------------------

U.S. $2,500,000                                             NEW YORK, NEW YORK

                                                             AUGUST 30, 2001

     FOR VALUE RECEIVED,  ON DEMAND, the undersigned,  A.B. Watley Group Inc., a
Delaware corporation (the "COMPANY"), hereby promises to pay to the order of SDS
Merchant Fund, L.P. or any future  permitted holder of this promissory note (the
"PAYEE"),  at the  principal  office of the Payee set forth  herein,  or at such
other place as the holder may designate in writing to the Company, the principal
sum of up to TWO MILLION FIVE HUNDRED  THOUSAND  DOLLARS (U.S.  $2,500,000),  or
such other amount as may be outstanding hereunder, together with all accrued but
unpaid interest,  in such coin or currency of the United States of America as at
the time shall be legal  tender for the payment of public and private  debts and
in immediately  available funds, as provided in this senior  subordinated demand
promissory note (the "NOTE").

     1. DEFINITION OF SENIOR DEBT. The term "SENIOR DEBT" shall mean and consist
of all present  indebtedness for borrowed money of the Company  (contingently or
otherwise), to banks, insurance companies and similar institutional lenders (all
such  lenders,   the  "LENDERS")  and  any  extension,   replacement,   removal,
restatement or refinancing thereof.

     2.   SUBORDINATION.

          (a) The payment of any and all of the principal amount of and interest
on  this  Note  (and  all  other  obligations  hereunder)  is  hereby  expressly
subordinated and made junior to the payment of the principal amount,  redemption
premium,  if any, all interest and any other  amounts due on the Senior Debt, to
the extent and in the manner set forth herein.

          (b) Until the Senior Debt shall have been  indefeasibly  paid in full,
the Company shall not make,  and the Payee shall not receive,  accept or retain,
any direct or indirect payment or reduction  (whether by way of loan, set-off or
otherwise) in respect of the  principal and interest of this Note,  whether this
Note shall have  become  payable at maturity or by  acceleration  or  otherwise;

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PROVIDED, HOWEVER, that, subject to the provisions of subsection (c) hereof, the
Company may make,  and the Payee may  receive,  accept and  retain,  payments of
principal and interest  permitted under Section 4 of this Note,  unless,  if, on
the date  such  payment  would  (but for the terms  hereof)  be  payable  to and
received by the Payee  pursuant to this Note,  (i) a default under the documents
evidencing  the Senior Debt shall have  occurred,  shall be continuing and shall
not have been  specifically  waived in writing by the  Lenders,  or the  Lenders
shall have  declared  the Senior Debt or any portion  thereof due and payable in
full on the basis of the occurrence of such default,  or (ii) such default shall
not be continuing on any such payment date,  but the Lenders shall have declared
all or any  portion of the Senior  Debt due and  payable in full on the basis of
the  occurrence  of such  default  and such  acceleration  shall  not have  been
specifically rescinded in writing by the Lenders.

          (c) In the  event  of (i) any  insolvency,  bankruptcy,  receivership,
custodianship,  liquidation, reorganization,  readjustment of debt, arrangement,
composition,   assignment  for  the  benefit  of  creditors,  or  other  similar
proceeding  relative  to the  Company,  or (ii)  any  proceeding  for  voluntary
liquidation, dissolution or other winding up or bankruptcy proceedings, then and
in any such event:

               (A) All of the Senior Debt shall first be paid in full before any
          payment or distribution of any character, whether in cash, securities,
          obligations or other property, shall be made in respect of this Note;

               (B) Any payment or  distribution  of any  character,  which would
          otherwise  (but for the terms  hereof) be payable  or  deliverable  in
          respect of this Note  (including  any payment or  distribution  of any
          other  indebtedness  of the Company being  subordinated to this Note),
          shall  be  paid  or  delivered   directly  to  the  Lenders  or  their
          representative,  until all of the Senior  Debt shall have been paid in
          full,  and the  Payee or any other  holder  of this  Note  irrevocably
          authorizes, empowers and directs all receivers,  custodians, trustees,
          liquidators,  conservators  and others having  authority to effect all
          such payments and deliveries;

               (C) The Payee or any other holder of this Note shall  execute and
          deliver  to the  Lenders  or their  representative  all  such  further
          instruments  confirming the authorization referred to in the foregoing
          clause (B), and shall take all such other  actions as may be requested
          by the Lenders or their  representative in order to enable the Lenders
          or their  representative  to  enforce  any and all  claims  upon or in
          respect of this Note and to collect  and give any and all  payments or
          distributions  which may be payable or deliverable at any time upon or
          with respect to this Note.

          (d) If,  notwithstanding  the  provisions of this Note, any payment or
distribution of any character (whether in cash, securities, obligations or other
property) or any security shall be received by the Payee in contravention of the
terms of this Note, and before all Senior Debt shall have been paid in full, and
PROVIDED  that the Payee has actual  knowledge of the  foregoing,  such payment,
distribution  or security  shall not be commingled  with any asset of the Payee,

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shall be held in trust for the benefit  of, and shall be paid over or  delivered
and transferred to, the Lenders or their representative,  for application to the
payment of all Senior Debt remaining unpaid,  until all of the Senior Debt shall
have been paid in full.

          (e) This Note,  without  further  reference,  shall pass to and may be
relied on and  enforced by any  transferee  or  subsequent  holder of the Senior
Debt.

          (f) Except to the extent provided in this Note that the debt evidenced
by this Note may not  become  due and  payable  or be paid and the Payee may not
exercise rights with respect thereto,  nothing contained herein shall impair, as
between the Company and the Payee, the obligation of the Company to pay to Payee
the  principal of this Note,  and interest  thereon,  as and when the same shall
become due and payable in accordance with the terms hereof, or prevent the Payee
upon default with respect to this Note, from  exercising all rights,  powers and
remedies  otherwise  provided  herein or by  applicable  law, all subject to the
rights of the holders of Senior Debt hereunder.  Upon any distribution of assets
of the Company referred to in the provisions hereof, the Payee shall be entitled
to rely upon any order or decree made by any court of competent  jurisdiction in
which such dissolution,  winding up,  liquidation or reorganization  proceedings
are pending or a certificate of the liquidating trustee or agent or other person
making any  distribution  to the Payee,  for the  purpose  of  ascertaining  the
persons entitled to participate in such distribution,  the holders of the Senior
Debt and other  indebtedness  of the  Company,  the  amount  thereof  or payable
thereon,  the amount or amounts paid or distributed  thereon and all other facts
pertinent thereto or to the provisions hereof.

          (g) Notwithstanding any statute,  including,  without limitation,  the
U.S.  Federal  Bankruptcy  Code, as now or hereafter in effect (the  "BANKRUPTCY
CODE"), any rule of law or bankruptcy  procedures to the contrary,  the right of
the Lenders  hereunder to have all of the Senior Debt paid and satisfied in full
prior to the payment of any of the debt  evidenced  by this Note shall  include,
without  limitation,  the right of the  Lenders to be paid in full all  interest
accruing  on the Senior  Debt due to it after the filing of any  petition  by or
against the Company in connection  with any bankruptcy or similar  proceeding or
any other proceeding referred to in subsection 2(c) hereof, prior to the payment
of any  amounts  in respect of this Note,  including,  without  limitation,  any
interest due to the Payee accruing after such date.

          (h) No right of any  present or future  holders of any Senior  Debt to
enforce  subordination  as  herein  provided  shall  at any  time  in any way be
prejudiced  or  impaired by any act or failure to act on the part of the Company
or by any act or  failure to act in good  faith by any such  holders,  or by any
noncompliance  by the  Company  with the  terms  and  provisions  of this  Note,
regardless of any  knowledge  thereof with which any such holders may have or be
otherwise  charged.  The  holders  of the  Senior  Debt may,  without in any way
affecting the obligations of the Payee with respect thereto, at any time or from
time to time in their absolute discretion,  change the manner, place or terms of
payment  of,  change or extend  the time of payment  of, or renew or alter,  any
Senior  Debt,  or amend,  modify  or  supplement  any  agreement  or  instrument
governing  or  evidencing  such  Senior Debt or any other  document  referred to
therein,  or exercise or refrain from exercising any other of their rights under
the Senior Debt including,  without limitation, the waiver of default thereunder
and the release of any collateral  securing such Senior Debt, all without notice
to or assent from the Payee.

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          (i) Subject to the prior payment in full of all Senior Debt, the Payee
shall be  subrogated  to the  rights of the  holders  of Senior  Debt to receive
payments or distributions of assets of the Company applicable to the Senior Debt
until all amounts owing on this Note shall be paid in full,  and for the purpose
of such  subrogation no payments or  distributions  to the holders of the Senior
Debt by or on behalf of the Company or by or on behalf of the Payee by virtue of
the provisions  hereof which  otherwise would have been made to the Payee shall,
as between the Company, its creditors other than the holders of Senior Debt, and
the Payee, be deemed to be payment by the Company to or on account of the Senior
Debt, it being understood that the provisions hereof are and are intended solely
for the purpose of defining the relative  rights of the Payee,  on the one hand,
and the holders of the Senior Debt, on the other hand.

     3. THIS NOTE SENIOR TO ALL  INDEBTEDNESS  OTHER THAN SENIOR DEBT. This Note
shall be  senior  to each  note,  bond and other  item of  indebtedness  that is
subordinated  in any manner  (whether in right of payment on  liquidation of the
Company,  or otherwise) to the Senior Debt (each of such items of  indebtedness,
the "JUNIOR SUBORDINATED DEBT"). It is the intent of the Company and the Lenders
that  this  note  shall be  subordinated  only to the  Senior  Debt and no other
indebtedness of any kind. The Company shall cause all of the Junior Subordinated
Debt to be subordinated to this Note on terms no less favorable to the holder of
this Note than the terms on which this Note is subordinated to the Senior Debt.

     4.   PRINCIPAL AND INTEREST PAYMENTS.

          (a) Subject to the subordination provisions in Section 2 of this Note,
the  Company  shall repay in full the entire  principal  balance and all accrued
interest  thereon  then  outstanding  under this Note on the first to occur (the
"MATURITY  DATE")  of:  (i) sixty (60) days after the demand by the Payee to the
Company for payment or (ii) upon the closing of any  Financing  Transaction  (as
defined below) by the Company.  Alternatively,  at the option of the Payee,  the
Payee  may  convert  this  Note into  equity  or debt  securities  issued in the
Financing Transaction.  For purposes of this Note, "Financing Transaction" means
the issuance to any third party of the Company`s  common stock,  par value $.001
per share (the "COMMON  STOCK") or any  securities  convertible,  exercisable or
exchangeable into Common Stock,  including debt securities.  If the Payee elects
to convert this Note into the equity or debt securities  issued in the Financing
Transaction,  the  consideration  for the Payee`s  interest in the new equity or
debt securities  shall be deemed to be 110% of the outstanding  principal amount
of  this  Note,   together  with  accrued  interest   hereon.   Subject  to  the
subordination  provisions in Section 2 of this Note,  the Company may prepay all
or any part of this Note,  in whole or in part at any time,  without  penalty or
premium, as set forth in Section 8(d) hereof.

          (b) Interest on the outstanding  principal  balance of this Note shall
accrue at a rate of six  percent  (6%) per annum.  Interest  on the  outstanding
principal  balance  of the Note  shall be  computed  on the basis of the  actual
number of days  elapsed  and a year of three  hundred  and sixty  (360) days and
shall be payable by the Company in cash (i) on a quarterly basis,  commencing on
November ___, 2001 and on each three-month  anniversary  thereafter,  continuing
throughout the term of this Note, and (ii) in full on the Maturity Date.

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     5. PAYMENT ON NON-BUSINESS  DAYS.  Whenever any payment to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the State of New
York, such payment may be due on the next succeeding  business day and such next
succeeding  day shall be  included in the  calculation  of the amount of accrued
interest payable on such date.

     6. EVENTS OF DEFAULT.  The occurrence of any of the following  events shall
be an "EVENT OF DEFAULT" under this Note:

          (a) the  Company  shall  fail to make the  payment  of any  amount due
hereunder within sixty (60) days after demand; or

          (b) the  Bankruptcy  of the Company;  as used herein,  the  Bankruptcy
shall be deemed to have  occurred  when the  Company  shall  have  admitted  its
insolvency  in  writing;  shall  have  made an  assignment  for the  benefit  of
creditors;  shall have made any composition or arrangement  with creditors while
insolvent; shall have filed a petition or complaint, or otherwise instituted any
proceeding,  under state or federal law, declaring or seeking an adjudication of
bankruptcy  or  insolvency,   an  arrangement  with  creditors,   an  insolvency
reorganization,  or the appointment of a receiver,  trustee or custodian for its
assets;  or shall have  suffered,  without its  consent,  the  appointment  of a
receiver,  trustee or  custodian  for its  assets,  by the order of any state or
federal court.

     7.  REMEDIES  UPON AN EVENT OF DEFAULT.  If an Event of Default  shall have
occurred and shall be continuing,  the Payee of this Note may at any time at its
option, subject to the subordination provisions of this Note, declare the entire
unpaid  principal  balance  of this Note,  together  with all  interest  accrued
hereon, due and payable, and thereupon, the same shall be accelerated and so due
and payable,  without presentment,  demand, protest, or notice, all of which are
hereby  expressly  unconditionally  and  irrevocably  waived by the Company.  No
remedy  conferred  hereby shall be  exclusive  of any other  remedy  referred to
herein or now or hereafter available at law, in equity, by statute or otherwise.

     8.   PREPAYMENT OPTIONS.

          (a)  PREPAYMENT.  Notwithstanding  anything to the contrary  contained
herein,  the Payee shall have the right, at such Payee`s option,  subject to the
subordination provisions of this Note, to require the Company to prepay all or a
portion of the sum of the outstanding  principal amount and any interest accrued
and outstanding under this Note (the "PREPAYMENT  PRICE"),  PROVIDED,  that such
prepayment is requested upon the occurrence of a Major  Transaction  (as defined
in Section 8(e) below) or a Triggering Event (as defined in Section 8(e) below).

          (b)  MECHANICS OF  PREPAYMENT  AT OPTION OF PAYEE.  Within one (1) day
after the occurrence of a Major  Transaction or a Triggering  Event, the Company
shall  deliver  written  notice  thereof via  facsimile  and  overnight  courier
("NOTICE  OF A  PREPAYMENT  EVENT")  to the  Payee.  At any time on or after the
earlier of the Payee`s  receipt of a Notice of a Prepayment  Event and the Payee
becoming  aware of a Major  Transaction  or a Triggering  Event,  the Payee may,
subject to the  subordination  provisions  of this Note,  require the Company to

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prepay all or a portion of the  outstanding  principal  amount and any  interest
accrued and outstanding under this Note by delivering written notice thereof via
facsimile and overnight  courier  ("NOTICE OF PREPAYMENT AT OPTION OF PAYEE") to
the Company,  which Notice of Prepayment  at Option of Payee shall  indicate the
amount of principal and interest  accrued and  outstanding  under this Note that
the Payee is electing to have prepaid,  the sum of which shall be the Prepayment
Price.

          (c)  PAYMENT OF  PREPAYMENT  PRICE.  Upon the  Company`s  receipt of a
 Notice of  Prepayment  at Option of Payee  from the  Payee, the  Company  shall
immediately  notify the Payee by facsimile of the Company`s  receipt of a Notice
of  Prepayment  at Option  of Payee  and the Payee  which has sent such a notice
shall  promptly  submit to the Company this Note which Payee has elected to have
prepaid.  The Company  shall pay the  Prepayment  Price to Payee within five (5)
business days after the Company`s receipt of a Notice of Prepayment at Option of
Payee;  PROVIDED that this Note shall have been so delivered to the Company.  If
the  Company  shall  fail to prepay  all of the  Prepayment  Price  (other  than
pursuant to a dispute as to the arithmetic calculation of the Prepayment Price),
in addition to any remedy the Payee may have under this Note and a certain  Note
and Warrant Purchase  Agreement  between the Company and the Payee,  dated as of
the date hereof (the  "PURCHASE  AGREEMENT"),  the  Prepayment  Price payable in
respect of such  unprepaid  Notes shall bear interest at the rate of two percent
(2.0%) per each period of thirty (30) consecutive days, pro rated for any period
of less than  thirty (30) days until paid in full.  Until the Company  pays such
unpaid  Prepayment  Price in full to the Payee,  the Payee shall have the option
(the "VOID OPTIONAL PREPAYMENT  OPTION") to, in lieu of prepayment,  require the
Company  to  promptly  return to the Payee  this  Note  that was  submitted  for
prepayment by Payee under this Section 8(c) and for which the  Prepayment  Price
has not been  paid,  by  sending  written  notice  thereof  to the  Company  via
facsimile (the "VOID OPTIONAL PREPAYMENT NOTICE"). Upon the Company`s receipt of
such  Void  Optional  Prepayment  Notice(s)  and  prior to  payment  of the full
Prepayment  Price to Payee,  (i) the  Notice(s) of Prepayment at Option of Payee
shall be null and void with respect to this Note  submitted for  prepayment  and
for which the  Prepayment  Price  has not been paid and (ii) the  Company  shall
immediately  return  this  Note  submitted  to  the  Company  by the  Payee  for
prepayment  under this Section 8(c) and for which the  Prepayment  Price has not
been paid. A Payee`s delivery of a Void Optional  Prepayment Notice and exercise
of its rights  following such notice shall not affect the Company`s  obligations
to make any payments which have accrued prior to the date of such notice.

          (d) COMPANY`S PREPAYMENT OPTION. The Company may prepay, at the option
of its Board of Directors, subject to the subordination provisions of this Note,
all or any  portion  of the  outstanding  principal  amount of this Note and the
accrued and unpaid  interest  thereon upon five (5) business  days prior written
notice to the Payee (the "COMPANY  PREPAYMENT  NOTICE") at a cash price equal to
sum of the outstanding principal amount and any interest accrued and outstanding
(the  "COMPANY  PREPAYMENT  PRICE").  The  Company  may not  deliver  a  Company
Prepayment Notice to the Payee unless the Company has clear and good funds for a
minimum of the amount it intends to prepay in a bank account  controlled  by the
Company.  The Company  Prepayment Notice shall state the date of prepayment (the
"COMPANY PREPAYMENT DATE"), the Company Prepayment Price, the amount of the Note
of such Payee to be prepaid,  the amount of accrued and unpaid interest  through
the Company  Prepayment  Date and shall call upon the Payee to  surrender to the
Company on the Company  Prepayment  Date at the place  designated in the Company
Prepayment  Notice such Payee`s Note.  The Company  Prepayment  Date shall be no
more than five (5) trading days after the date on which the Payee is notified of

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the Company`s intent to prepay the Note (the "COMPANY  PREPAYMENT NOTICE DATE").
If the  Company  fails to pay the  Company  Prepayment  Price by the sixth (6th)
trading day following the Company Prepayment Notice Date, the prepayment will be
declared null and void and the Company shall lose its right to deliver a Company
Prepayment Notice to the Payee in the future. On or after the Company Prepayment
Date,  the Payee shall  surrender the Notes called for prepayment to the Company
at the place designated in the Company  Prepayment Notice and shall thereupon be
entitled to receive payment of the Company Prepayment Price.

          (e) For  purposes  of this  Note,  (1) "MAJOR  TRANSACTION"  means the
consummation of any of the following transactions: (i) the consolidation, merger
or other  business  combination  of the Company  with or into a person or entity
(other than (A) pursuant to a migratory  merger  effected solely for the purpose
of  changing  the  jurisdiction  of  incorporation  of  the  Company,  or  (B) a
consolidation,  merger or other  business  combination  in which  holders of the
Company`s  or any of its  Subsidiaries  voting  power  immediately  prior to the
transaction continue after the transaction to hold, directly or indirectly,  the
voting power of the surviving  entity or entities  necessary to elect a majority
of the members of the board of directors  (or their  equivalent  if other than a
corporation)  of such entity or  entities);  (ii) the sale or transfer of all or
substantially all of the Company`s or any of its Subsidiaries`  assets; or (iii)
the consummation of a purchase,  tender or exchange offer made to the holders of
more than 30% of the outstanding  shares of the Company`s  common stock, and (2)
"TRIGGERING  EVENT"  means (i) the  failure  to have a  registration  statement,
registering the shares of common stock of the Company  issuable upon exercise of
the related warrants  delivered  herewith,  declared effective by the SEC within
one hundred  eighty (180) days  following  the date the Payee makes a demand for
registration   pursuant  to  Section   3(e)  of  the   Warrants;   or  (ii)  any
representation or warranty made by the Company in the Purchase  Agreement or any
of the  Transaction  Documents  shall prove to have been false or incorrect in a
material  respect at the time when made;  or (iii) the  Company  has  breached a
material  covenant or other term or condition  of the Purchase  Agreement or any
related agreement delivered therewith.

     9.  REPLACEMENT.  Upon receipt of a duly executed,  notarized and unsecured
written  statement from the Payee with respect to the loss, theft or destruction
of this Note (or any  replacement  hereof),  and without  requiring an indemnity
bond or other  security,  or, in the case of a  mutilation  of this  Note,  upon
surrender and  cancellation of such Note, the Company shall issue a new Note, of
like tenor and amount,  in lieu of such lost,  stolen,  destroyed  or  mutilated
Note.

     10. PARTIES IN INTEREST,  TRANSFERABILITY.  This Note shall be binding upon
the Company and its  successors  and assigns and the terms hereof shall inure to
the benefit of the Payee and its successors and permitted assigns. This Note may
be transferred or sold, subject to the provisions of Section 20 of this Note, or
pledged, hypothecated or otherwise granted as security by the Payee.

     11.  RELIANCE.  The Payee  acknowledges  and agrees that the  Lenders  have
relied upon and will continue to rely upon,  and are  third-party  beneficiaries
of,  the  subordination  provisions  set forth  herein  in  making  loans and in
otherwise extending credit to the Company.  The Payee hereby waives notice of or
proof of reliance hereon.

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     12.  AMENDMENTS.  This note may not be  modified  or  amended in any manner
except in writing executed by the Company and the Payee; PROVIDED,  HOWEVER, the
subordination provisions contained herein are for the benefit of the Lenders and
may not be rescinded, canceled, amended or modified in any way without the prior
written  consent  thereto of the Lenders,  if the Lenders  shall then be holding
Senior Debt.

     13. NOTICES.  Any notice,  demand,  request,  waiver or other communication
required or  permitted  to be given  hereunder  shall be in writing and shall be
effective  (a) upon hand  delivery,  by telecopy or  facsimile at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours where such notice is to be  received)  or (b) on the second  business  day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur.  The Company  will give written  notice to the Payee at least
thirty  (30) days  prior to the date on which the  Company  closes  its books or
takes a record (x) with respect to any dividend or distribution  upon the common
stock of the  Company,  (y) with respect to any pro rata  subscription  offer to
holders of common  stock of the  Company or (z) for  determining  rights to vote
with  respect  to a  Major  Transaction  or  a  Triggering  Event,  dissolution,
liquidation  or winding-up and in no event shall such notice be provided to such
holder  prior to such  information  being made known to the public.  The Company
will also give  written  notice to the Payee at least  twenty (20) days prior to
the date on which dissolution,  liquidation or winding-up will take place and in
no event shall such  notice be  provided to the Payee prior to such  information
being made known to the public.

         Address of the Payee:              SDS Merchant Fund, L.P.
                                            c/o SDS Capital Partners
                                            One Sound Shore Drive
                                            Greenwich, CT 06830
                                            Attention: Steve Derby
                                            Telecopier: (203) 629-0345

         Address of the Company:            A.B. Watley Group Inc.
                                            40 Wall Street
                                            New York, New York 10005
                                            Attention: Joseph M. Ramos, Jr.
                                            Chief Financial Officer
                                            Telecopier: (212) 422-1724

     14.  GOVERNING  LAW.  This  Note  shall be  governed  by and  construed  in
accordance  with the  internal  laws of the  State of New York,  without  giving
effect to the choice of law  provisions.  This Note shall not be  interpreted or
construed  with any  presumption  against  the  party  causing  this  Note to be
drafted.

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     15. HEADINGS. Article and section headings in this Note are included herein
for purposes of convenience of reference only and shall not constitute a part of
this Note for any other purpose.

     16. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.  The remedies  provided in this Note shall be cumulative and in addition
to all other remedies available under this Note, at law or in equity (including,
without  limitation,  a decree of specific  performance  and/or other injunctive
relief),  no remedy contained herein shall be deemed a waiver of compliance with
the  provisions  giving  rise to such remedy and  nothing  herein  shall limit a
Payee`s right to pursue actual  damages for any failure by the Company to comply
with the terms of this Note.  Amounts  set forth or  provided  for  herein  with
respect to  payments  and the like (and the  computation  thereof)  shall be the
amounts to be received by the Payee and shall not, except as expressly  provided
herein,  be subject to any other  obligation of the Company (or the  performance
thereof).  The  Company  acknowledges  that a  breach  by it of its  obligations
hereunder  will cause  irreparable  and material  harm to the Payee and that the
remedy at law for any such  breach  may be  inadequate.  Therefore  the  Company
agrees that,  in the event of any such breach or  threatened  breach,  the Payee
shall be entitled,  in addition to all other available  rights and remedies,  at
law or in equity,  to seek and obtain such equitable  relief,  including but not
limited to an  injunction  restraining  any such  breach or  threatened  breach,
without the  necessity  of showing  economic  loss and without any bond or other
security being required.

     17.  FAILURE OR INDULGENCE  NOT WAIVER.  No failure or delay on the part of
the Payee in the  exercise  of any power,  right or  privilege  hereunder  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
such power,  right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.

     18. ENFORCEMENT EXPENSES.  The Company agrees to pay all costs and expenses
of  enforcement  of  this  Note,  including,   without  limitation,   reasonable
attorneys` fees and expenses.

     19. BINDING EFFECT.  The obligations of the Company and the Payee set forth
herein  shall be binding  upon the  successors  and  assigns of each such party,
whether or not such successors or assigns are permitted by the terms hereof.

     20.  COMPLIANCE WITH SECURITIES  LAWS. The Payee of this Note  acknowledges
that this Note is being acquired solely for the Payee`s own account and not as a
nominee for any other party,  and for  investment,  and that the Payee shall not
offer,  sell or otherwise dispose of this Note other than in compliance with the
laws of the United States of America and as guided by the rules of the SEC. This
Note and any Note  issued in  substitution  or  replacement  therefore  shall be
stamped or imprinted with a legend in substantially the following form:

          "THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF
          1933, AS AMENDED (THE "SECURITIES  ACT"), OR ANY STATE SECURITIES
          LAW AND MAY NOT BE SOLD,  TRANSFERRED  OR  OTHERWISE  DISPOSED OF
          UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER APPLICABLE
          STATE  SECURITIES  LAWS OR A.B.  WATLEY  GROUP  INC.  SHALL  HAVE
          RECEIVED  AN OPINION OF ITS  COUNSEL  THAT  REGISTRATION  OF SUCH
          SECURITIES  UNDER THE  SECURITIES ACT AND UNDER THE PROVISIONS OF
          APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."

                                       9
<PAGE>

     21.  SEVERABILITY.  The provisions of this Note are  severable,  and if any
provision  shall be held  invalid  or  unenforceable  in whole or in part in any
jurisdiction,  then such invalidity or unenforceability  shall not in any manner
affect such provision in any other  jurisdiction  or any other provision of this
Note in any jurisdiction.

     22. CONSENT TO  JURISDICTION.  Each of the Company and the Payee (i) hereby
irrevocably  submits to the  jurisdiction  of the United States  District  Court
sitting in the Southern  District of New York and the courts of the State of New
York  located  in New York  county  for the  purposes  of any  suit,  action  or
proceeding  arising out of or relating to this Note and (ii) hereby waives,  and
agrees not to assert in any such suit,  action or proceeding,  any claim that it
is not  personally  subject to the  jurisdiction  of such court,  that the suit,
action or  proceeding is brought in an  inconvenient  forum or that the venue of
the suit,  action or proceeding  is improper.  Each of the Company and the Payee
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy  thereof to such party at the address in effect for notices to it
under the Purchase  Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section 22
shall affect or limit any right to serve  process in any other manner  permitted
by law.

     23. COMPANY WAIVERS.  Except as otherwise specifically provided herein, the
Company  and all  others  that  may  become  liable  for all or any  part of the
obligations evidenced by this Note, hereby waive presentment,  demand, notice of
nonpayment,  protest and all other  demands and notices in  connection  with the
delivery,  acceptance,  performance  and enforcement of this Note, and do hereby
consent to any number of renewals of  extensions  of the time or payment  hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon,  all without affecting the liability
of the other persons,  firms or Company liable for the payment of this Note, AND
DO HEREBY WAIVE TRIAL BY JURY.

          (a) No delay or  omission on the part of the Payee in  exercising  its
rights under this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other  right of the Payee,  nor shall any waiver by
the Payee of any such right or rights on any one  occasion be deemed a waiver of
the same right or rights on any future occasion.

          (b) THE COMPANY  ACKNOWLEDGES  THAT THE TRANSACTION OF WHICH THIS NOTE
IS A PART IS A COMMERCIAL  TRANSACTION,  AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW,  HEREBY  WAIVES  ITS  RIGHT TO  NOTICE  AND  HEARING  WITH  RESPECT  TO ANY
PREJUDGMENT  REMEDY WHICH THE PAYEE OR ITS  SUCCESSORS  OR ASSIGNS MAY DESIRE TO
USE.

                                       10
<PAGE>

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11
<PAGE>

     IN WITNESS WHEREOF,  the Company has executed and delivered this Note as of
the date first written above.

                                      A.B. WATLEY GROUP INC.

                                      By:
                                          -------------------------------------
                                            Name:
                                            Title:

                                       12

<PAGE><PAGE>

EXHIBIT 10.43

                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT entered into as of August 12, 2002 (the "Effective
Date") by and between  A.B.  Watley  Group Inc.,  a Delaware  corporation,  with
principal offices at 40 Wall Street,  New York, New York 10005  ("Employer") and
Steven  Malin,  residing  at   _____________________________,   New  York  _____
("Executive").

                              W I T N E S S E T H:

A.   Employer, directly and through its subsidiaries, is engaged in the business
     of developing software for, and providing for use by its ultimate customers
     of, electronic  brokerage  services and electronic trading programs for use
     by  professional  and  other  retail  customers   including  allowing  such
     customers to trade through their own home or office computers, and services
     incident  thereto,   operating  a  block  trading  desk  and  disseminating
     financial and trading information ("Employer`s Business");

B.   Employer desires to employ Executive,  and Executive desires to accept such
     employment, on the terms and conditions set forth in this Agreement.

                              W I T N E S S E T H:

     In  consideration  of the facts mentioned  above,  and of the covenants and
conditions set forth below, the parties agree as follows:

     1.   EMPLOYMENT.

          (a)  During the Term of  Employment  as defined in Section 2, Employer
               agrees  to  employ  Executive  as an  executive,  subject  to the
               direction  and control at all times of the Board of  Directors of
               Employer (the "Board").  Executive agrees to act in the foregoing
               capacity,  in accordance with the terms and conditions  contained
               in this  Agreement.  Executive will have the title of Chairman of
               the  Board  of  Employer.  For so long as  Executive  remains  an
               employee  of  Employer,  Employer  shall use its best  efforts to
               secure the election and retention of Executive to the Board.

          (b)  During   the  Term  of   Employment,   Executive   shall   devote
               substantially  all of his working time to Employer`s  Business as
               conducted from time to time.  Executive shall render services and
               serve  on  the  Board,   without  additional   compensation,   in
               connection with the operation of Employer`s  Business,  including
               activities of affiliates and  subsidiaries of the Employer as may
               exist from time to time. Notwithstanding any of the foregoing, it
               is  expressly  agreed  and  understood  that  Executive  shall be
               entitled to spend a reasonable  amount of his working time on (i)
               charitable  activities  and personal  investments  and (ii) other
               business-related ventures subject to approval by the Board, which
               shall not be unreasonably withheld.

     2.   TERM.

          The initial term of Executive`s  employment under this Agreement shall
          commence on the date hereof and shall  continue  for a period of three
          years  (the  "Initial  Term").  Thereafter,  this  Agreement  shall be
          automatically  renewed and extended for consecutive  one-year  renewal
          terms, unless Executive provides 90 days`

<PAGE>

          written  notice  or  Employer  provides  135 days`  written  notice of
          non-renewal prior to the expiration of the Initial Term or any renewal
          term (each such  one-year  renewal  period,  a  "Renewal  Term").  The
          Initial Term and each Renewal Term are subject to earlier  termination
          as set forth in Section 5. The actual term of employment is defined as
          "Term of Employment."

     3.   COMPENSATION.

          (a)  For the first year of the Term of Employment,  Employer shall pay
               to Executive an annual base salary of $150,000.00  per annum (the
               "Annual  Base  Salary").  Thereafter,  the amount of  Executive`s
               Annual  Base  Salary  shall be  subject  to annual  review by the
               Board; provided,  however, that in no event shall the Annual Base
               Salary  be less  than  $150,000.00.  For each year of the Term of
               Employment,  the Annual  Base  Salary  shall be  increased  to an
               amount not less than  Executive`s  Annual  Base  Salary as of the
               immediately  preceding year,  multiplied by a fraction,  not less
               than one, the  numerator of which is the Consumer  Price Index --
               Wages  (the  "CPIW")  for the  then-current  January  1,  and the
               denominator  of  which  is the  CPIW  for the  immediately  prior
               January 1. Any amount to which Executive`s  Annual Base Salary is
               increased  shall not be reduced after any such increase,  and the
               term "Annual Base Salary" as used in this  Agreement  shall refer
               to the Annual Base Salary as so increased.  All payments shall be
               made in equal  monthly  installments,  in arrears,  or such other
               installments as may be consistent  with the payroll  practices of
               Employer for its senior executives.

          (b)  Upon  commencement  of employment,  Executive shall be issued two
               options to purchase a total of 800,000  shares of common stock of
               Employer  at the  average  closing  price of such shares over the
               five trading days  immediately  preceding the date of grant,  and
               otherwise subject to the terms of an equity plan of Employer, and
               an award agreement between Executive and Employer. The first such
               option shall be exercisable  for 500,000  shares,  and the option
               shall be immediately fully vested and exercisable with respect of
               one-half of the shares subject  thereto,  the option shall become
               fully vested and  exercisable  in respect of  one-quarter  of the
               shares subject thereto on the first  anniversary of the Effective
               Date, and the option shall become fully vested and exercisable on
               the second  anniversary  of the Effective  Date in respect of the
               remaining  one-quarter of the shares subject thereto.  The second
               option shall be exercisable  for 300,000  shares,  and the option
               shall become fully vested and  exercisable in respect of one-half
               of  the  shares  subject   thereto  on  each  of  the  first  two
               anniversaries  of the  Effective  Date  (with  full  vesting  and
               exercisability on the second anniversary).

          (c)  In addition to the compensation set forth above,  Executive shall
               be entitled to receive a semi-annual bonus in accordance with the
               terms of the  semi-annual  bonus  pool set  forth  on  Exhibit  A
               attached hereto and incorporated herein by reference,  subject to
               shareholder  approval intended to satisfy the rules under Section
               162(m) of the  Internal  Revenue  Code of 1986,  as amended  (the
               "Code")  for  performance-based  compensation,  for fiscal  years
               ending  after  September  30, 2002.  Employer  shall use its best
               efforts to procure such shareholder approval,  and, failing to do
               so, in consultation with Executive,  Employer agrees to negotiate
               in  good  faith  with  Executive  for  the  implementation  of  a
               reasonable  alternative,  for which  Employer  will again use its

                                       2
<PAGE>

               best efforts to obtain shareholder approval.

          (d)  It is  expressly  acknowledged  and  agreed  that,  to the extent
               permitted  by  applicable  law,  any option  granted to Executive
               hereunder  shall be qualified as an "incentive  stock option," as
               defined under Section 422(b) of the Code.

          (e)  Employer  shall  (i) use its  best  efforts  to have  the  shares
               subject  to all  options  granted to  Executive  be subject to an
               effective   registration   statement   on  Form  S-8  or  another
               applicable  registration form, and (ii) have all option grants be
               exempt   under  Rule  16b-3  of  the   Securities   and  Exchange
               Commission.

     4.   ADDITIONAL EXECUTIVE BENEFITS.

          (a)  Employer shall reimburse  Executive in accordance with Employer`s
               policies  for all  expenses  reasonably  incurred by Executive in
               connection with the performance of Executive`s  duties under this
               Agreement;  provided  that  Executive  shall submit proof of such
               expenses  prior to  reimbursement  within a reasonable  amount of
               time following such expenses.

          (b)  Executive  shall be permitted  during the Term of  Employment  to
               participate  in any group  life,  hospitalization  or  disability
               insurance plans, health programs, stock option plans, pension and
               profit  sharing plans and similar  benefits that may be available
               to other senior  executives  of Employer  generally,  on the same
               terms as such other  executives,  in each case to the extent that
               Executive is eligible  under the terms of such plans or programs.
               Notwithstanding  the generality of the foregoing,  Employer shall
               provide  and pay  for the  following  benefits:  $1,000,000  life
               insurance  coverage for the first year of the Term of Employment,
               and commencing when Employer first has sufficient  available cash
               to begin paying therefor,  as reasonably  determined by the three
               senior  managers  (including  Executive)  (i) such life insurance
               shall be  increased to  $2,000,000  and (ii)  Executive  shall be
               covered  by  disability   insurance  benefits  equal  to  60%  of
               Executive`s annual salary plus target bonus. Once increased,  the
               level of benefits and  perquisites in the  immediately  preceding
               sentence  shall  not be  decreased  without  Executive`s  written
               consent.

     5.   TERMINATION.

          5.1  TERMINATION FOR CAUSE; TERMINATION WITHOUT GOOD REASON.

          (a)  Employer  may  terminate  this  Agreement  for Cause (as  defined
               below),  and Executive may terminate his employment  without Good
               Reason (as defined  below) upon written  notice to  Employer.  If
               Employer terminates  Executive for Cause, or Executive terminates
               his employment and the termination by Executive is not covered by
               Section  5.2, 5.3 or 5.4,  Executive  shall  receive  Annual Base
               Salary and other benefits earned and accrued under this Agreement
               prior to the effective date of the termination of employment (and
               reimbursement under this Agreement for expenses incurred prior to
               the effective date of the termination of employment).

                                       3
<PAGE>

          (b)  "Cause" within the meaning of this  Agreement  shall mean any one
               of:

               (i)  Executive`s material breach of the provisions of Section 6;

               (ii) Executive`s  material and willful failure or refusal on more
                    than one occasion  (in each case,  of which he is made aware
                    in writing by  Employer  promptly  and in no event more than
                    seven  days  after  such  failure  or  refusal)  to  perform
                    Executive`s  duties in accordance with Section 1 hereof,  if
                    there is a demonstrable adverse affect to Employer;

               (iii)willful  failure on more than one occasion by Executive  (in
                    each case,  of which he is made aware in writing by Employer
                    promptly  and in no event  more than  seven  days after such
                    failure)  to  comply  in  any  material   respect  with  any
                    reasonable written policies or directives of the Board; or

               (iv) Executive  is  convicted  of,  or  pleads  guilty  (or  nolo
                    contendre)  to, any felony  (but not any  traffic or similar
                    infraction) or crime involving  fraud,  misappropriation  or
                    embezzlement against Employer;

provided that (x) no conduct by Executive  shall be deemed  willful for purposes
of this Section 5.1 if Executive believed in good faith that such conduct was in
or not  opposed to the best  interests  of  Employer,  and (y) Cause shall in no
event be deemed to exist (1) with respect to clauses (i),  (ii) and (iii) above,
unless  Executive  shall  have  first  received  written  notice  from the Board
advising  Executive of the specific  acts or omissions  alleged to  constitute a
failure or breach giving rise expressly to Cause hereunder,  and such failure or
breach continues after Executive shall have had a reasonable  opportunity (which
shall be  defined  as a period of time  consisting  of at least 15 days from the
date  Executive  receives  said  notice) to  correct  the acts or  omissions  so
complained  of, and (2) except upon a finding  reflected in a resolution  of the
Board approved by at least 75% of the members of the Board,  whose finding 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 to which Executive
(and Executive`s counsel) shall be invited upon proper notice.

          5.2  TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.

          (a)  Employer may terminate Executive`s employment at any time for any
               reason or no  reason  and  Executive  may  terminate  Executive`s
               employment with Employer for Good Reason. If Employer  terminates
               Executive`s  employment  and the  termination  is not  covered by
               Section 5.1, 5.3 or 5.4, or Executive  terminates  his employment
               for Good Reason and the  termination  by Executive is not covered
               by Section 5.4, (i) Executive shall receive no later than 30 days
               after such  termination (A) Annual Base Salary and other benefits
               earned  and  accrued  under this  Agreement  prior to the date of
               termination (and reimbursement  under this Agreement for expenses
               incurred  prior to the date of  termination)  and (B) a  prorated
               bonus through the date of termination based on the highest annual
               bonus  either  paid in any prior year or  potentially  payable to
               Executive in the year of such  termination;  (ii) Executive shall
               be  entitled  to receive  (A) an amount  equal to the  Applicable
               Factor (as defined  below) times  Executive`s  Annual Base Salary
               (as in effect on the effective date of such termination), payable
               no later than 30 days after such termination, (B) an amount equal
               to the  Applicable  Factor times (x) if such  termination  occurs
               within the first year of the Initial  Term,  the  maximum  annual
               bonus that would be otherwise  payable  under Section 3(c) or (y)
               if such  termination  occurs  after the first year of the Initial
               Term,  the  greater of (1) the  maximum  potential  annual  bonus
               payable under 3(c) in the year of termination and (2) the highest
               annual bonus paid during the Term of Employment, payable no later

                                       4
<PAGE>

               than 30 days  after  such  termination,  and (C) for a number  of
               years  equal  to  the  Applicable  Factor  after  termination  of
               employment (x) such  continuing  health  benefits  (including any
               medical,  vision and dental  benefits)  under  Employer`s  health
               plans and programs  applicable  to senior  executives of Employer
               generally as Executive  would have received  under this Agreement
               (and at such costs to  Executive)  as would  have  applied in the
               absence  of  such  termination;   provided  that  Employer  shall
               continue to be required to provide such coverage  after such time
               as Executive  becomes  entitled to receive  health  benefits from
               another  employer or  recipient  of  Executive`s  services to the
               extent that the benefits  being  provided  hereunder  are greater
               than the  benefits to which  Executive  has  subsequently  become
               entitled;  and provided,  further,  that all "COBRA" continuation
               periods  shall  commence  upon the  expiration  of the  continued
               coverage provided for under this Section 5.2(b)(ii) without being
               reduced by the period of such continued  coverage;  (y) an amount
               reasonably  equivalent  economically  to the  pension  and  other
               retirement  benefits  Executive  would have received if Executive
               remained employed for such period;  and (z) continuing payment or
               reimbursement  for the benefits  provided under Section 4(b); and
               (iii) all outstanding  unvested  options and other equity held by
               Executive shall vest and become immediately exercisable and shall
               otherwise  be  exercisable  in  accordance  with their  terms and
               Executive  shall become  vested in any pension or other  deferred
               compensation other than pension or deferred  compensation under a
               plan intended to be qualified  under Section  401(a) or 403(a) of
               the Code.  The  "Applicable  Factor"  is the  greater  of (i) the
               number of years (including  fractions  thereof)  remaining in the
               term  of  employment  (as   determined   without  regard  to  the
               termination) and (ii) 2.

          (b)  For purposes of this Agreement,  "Good Reason" shall mean, unless
               otherwise consented to in writing by Executive,

                    (i) the material reduction of Executive`s title,  authority,
                    duties or  responsibilities,  or the assignment to Executive
                    of duties materially inconsistent with Executive`s positions
                    with  Employer  as  stated in  Section 1 hereof  (including,
                    without limitation, a failure of Executive to continue to be
                    elected  (after having been elected) to serve as a member of
                    the Board);

                    (ii) (A) a reduction  in the Annual Base Salary of Executive
                    or the failure to provide for the increases thereto required
                    by this  Agreement,  (B) any  failure  to  comply  with  the
                    provisions of Section 3(c) (relating to certain arrangements
                    governing  bonuses),  or (C) without limiting the foregoing,
                    any  failure to pay the Annual  Base  Salary or any bonus to
                    Executive  in  accordance  with  Section  3(b) or  3(c),  as
                    applicable  if such failure is not cured by Employer  within
                    five days of notice of such failure  (provided that Employer
                    shall not have repeated rights to cure);

                    (iii) the relocation of  Executive`s  office to more than 25
                    miles from New York City;

                    (iv)  Employer`s   failure  to  pay  Executive  any  amounts
                    otherwise due hereunder or under any plan, policy,  program,
                    agreement,  arrangement  or other  commitment of Employer if
                    such  failure  is not  cured by  Employer  within 15 days of
                    notice of such failure;

                                       5
<PAGE>

                    (v) the failure by Employer to obtain an  agreement  in form
                    and substance reasonably  satisfactory to Executive from any
                    successor to the business of Employer to assume and agree to
                    perform this Agreement; or

                    (vi)  any  other   material   breach  by  Employer  of  this
                    Agreement.

          (c)  For purposes of this Section 5, if Executive`s  employment is not
               terminated  under this  Section 5 before the Initial  Term or any
               Renewal Term would  otherwise  expire  under  Section 2, then any
               termination  of  employment  at the  expiration  of the  Term  of
               Employment,   after  a  notice  of  non-renewal  by  Employer  as
               contemplated by Section 2, which termination is not a termination
               for Cause by the  Company  covered  by  Section  5.1 and is not a
               termination  covered by Section 5.3 or 5.4, shall be treated as a
               termination  by  Executive  for Good  Reason  covered  under this
               Section  5.2,  except  that  (i) the  Applicable  Factor  for all
               purposes  (other than for  purposes of clause  (ii)(C) of Section
               5.2(a))  shall be 1.5 (and  shall  remain as 2 in respect of such
               clause),  and (ii) the amount of the payments  provided for under
               clauses  (ii)(A)  and  (ii)(B) of the second  sentence of Section
               5.2(a)  shall be paid in  substantially  equal  payments (or more
               frequently if salary is paid more  frequently) on a monthly basis
               over the 18-month period commencing with such termination (rather
               than in a lump sum) for so long as  Executive  complies  with the
               restrictions set forth in Section 6.1 (including  during any part
               of such 18-month period which is after the Restricted  Period (as
               defined below)).

          5.3  TERMINATION UPON DEATH OR DISABILITY.

         If Executive  dies during the Term of  Employment,  the  obligations of
Employer to or with  respect to  Executive  shall  terminate  in their  entirety
except as  otherwise  provided  under this  Section  5.3. If  Executive  becomes
disabled for purposes of Employer`s  long-term  disability plan,  Employer shall
have the right,  to the extent  permitted by law, to terminate the employment of
Executive upon notice in writing to Executive;  provided that Employer will have
no right to terminate  Executive`s  employment if, in the opinion of a qualified
physician  reasonably  acceptable  to Employer,  it is  reasonably  certain that
Executive will be able to resume Executive`s duties on a regular full-time basis
within 30 days of the date Executive  receives notice of such termination.  Upon
death or other termination of employment by virtue of disability,  (i) Executive
(or Executive`s  estate or  beneficiaries in the case of the death of Executive)
shall  receive  no later than 30 days after  such  termination  (A) Annual  Base
Salary and other benefits  earned and accrued under this Agreement  prior to the
date of  termination  (and  reimbursement  under  this  Agreement  for  expenses
incurred prior to the date of termination)  and (B) a prorated bonus through the
date of  termination  based on the highest annual bonus either paid in any prior
year or potentially  payable to Executive in the year of such termination,  (ii)
Executive (or Executive`s  estate or  beneficiaries  in the case of the death of
Executive)  shall  be  entitled  to  receive  any and all  applicable  insurance
proceeds;  and (iii) all outstanding  unvested  options and other equity held by
Executive shall vest and become  immediately  exercisable and shall otherwise be
exercisable in accordance  with their terms and Executive shall become vested in
any  pension  or other  deferred  compensation  other than  pension or  deferred
compensation  under a plan  intended to be  qualified  under  Section  401(a) or
403(a) of the Code.

         Notwithstanding  the  foregoing,  this Section 5.3 shall not apply to a
termination  within  the  six-month  period to follow a Change  of  Control  (as
defined  below)  on  account  of  death  or  disability,  but,  rather,  such  a
termination shall be covered by Section 5.4.

                                       6
<PAGE>

          5.4  CERTAIN TERMINATIONS AFTER CHANGE OF CONTROL.

          (a)  If, after a Change of Control,  (i) during the  six-month  period
               immediately  following  a Change of Control,  either  Employer or
               Executive terminates  Executive`s employment for any reason or no
               reason,  or (ii)  Executive is terminated at any time by Employer
               without Cause or Executive  terminates  his  employment  for Good
               Reason,  then  Executive  shall  receive  or be  entitled  to (as
               applicable) the payments, benefits and accelerations set forth in
               Section 5.2(a), except that for purposes of this Section 5.4, the
               Applicable Factor shall equal three.

          (b)  For  purposes of this  Agreement,  "Change of Control"  means the
               occurrence of one of the following:

                    (i) a "person"  or "group"  within the  meaning of  Sections
                    13(d) and 14(d) of the  Securities  and Exchange Act of 1934
                    (the "Exchange Act"), becomes the "beneficial owner" (within
                    the  meaning  of  Rule  13d-3  under  the  Exchange  Act) of
                    securities of Employer (including options,  warrants, rights
                    and convertible and  exchangeable  securities)  representing
                    25% or more of the combined  voting power of Employer`s then
                    outstanding  securities  in any  one or  more  transactions;
                    provided,  however, that purchases by employee benefit plans
                    of Employer or by Steve Malin,  Robert Malin, or Linda Malin
                    (or family or  charitable  trusts  controlled  thereby),  or
                    Employer or its affiliates shall be disregarded;

                    (ii) the  approval  of any sale,  lease,  exchange  or other
                    transfer  (in  one   transaction  or  a  series  of  related
                    transactions) of all, or substantially all, of the operating
                    assets of Employer,  other than an internal restructuring of
                    Employer;

                    (iii)  the  approval  of a  merger  or  consolidation,  or a
                    transaction  having a similar  effect  unless  such  merger,
                    consolidation or similar transaction is with a subsidiary of
                    Employer  or with  another  company,  a  majority  of  whose
                    outstanding  capital  stock is owned by the same  persons or
                    entities who own a majority of Employer`s outstanding common
                    stock (the "Common Stock") at such time,  where (A) Employer
                    is not the  surviving  corporation,  (B) the majority of the
                    Common   Stock  of   Employer  is  no  longer  held  by  the
                    stockholders   of   Employer   immediately   prior   to  the
                    transaction,  or (C)  Employer`s  Common  Stock is converted
                    into cash,  securities  or other  property  (other  than the
                    common stock of a company into which Employer is merged); or

                    (iv) a majority  of the members of the Board are not persons
                    who (A) had been  directors  of  Employer  for at least  the
                    preceding 24  consecutive  months or (B) when they initially
                    were elected to the Board,  (I) were nominated (if they were
                    elected  by the  stockholders)  or  elected  (if  they  were
                    elected  by the  directors)  with  the  affirmative  vote of
                    two-thirds of the directors  who were  Continuing  Directors
                    (as defined below) at the time of the nomination or election
                    by the  Board and (II)  were not  elected  as a result of an
                    actual or threatened  solicitation of proxies or consents by
                    a person  other than the Board or an  agreement  intended to
                    avoid or settle  such a proxy  solicitation  (the  directors
                    described   in  clauses   (A)  and  (B)  being   "Continuing
                    Directors").

                                       7
<PAGE>

          6.   Non-Competition,  Non-Solicitation,  Non-Disclosure, Shop Rights,
               INSIDER TRADING AND JURISDICTIONAL MATTERS.

          6.1  NON-COMPETITION.

               As a material inducement to Employer to enter into this Agreement
and to perform its obligations  hereunder,  Executive  covenants and agrees that
during  Executive`s Term of Employment with Employer (the  "Restricted  Period")
and for a period of one year thereafter,  neither Executive,  any of Executive`s
agents nor anyone acting on  Executive`s  behalf,  shall directly or indirectly,
either  as  an  employee,   employer,  agent,  investor,   principal,   partner,
shareholder  (except  as a holder of less than five  percent  of the  issued and
outstanding  voting stock of a publicly held  corporation),  corporate  officer,
director,  independent contractor,  or in any other individual or representative
capacity,  engage or  participate  in engage or participate in any entity (other
than  Employer)  engaged  in  Employer`s  Business  wherein  Executive  shall be
involved with online or electronic brokerage or trading activities or facilities
or an  institutional  block  trading  desk,  in the United States or any foreign
country in which  Employer  has offices  (other than with  respect to  employees
Executive brings to Employer as of the Effective Date and identifies to Employer
on such date);  provided,  that,  nothing  contained  in this  Section 6.1 shall
prevent  Executive from  participating  in any  activities  described in Section
1(b).

          6.2  NON-SOLICITATION; NON-DISPARAGEMENT.

               During  the  Restricted  Period  and  for a  period  of one  year
thereafter,  Executive covenants and agrees that Executive will not, directly or
indirectly,  either for itself or for any other person or business  entity,  (i)
solicit any  employee of Employer to  terminate  his  employment  with  Employer
(other than with  respect to  employees  Executive  brings to Employer as of the
Effective  Date and  identifies  to Employer on such date),  or (ii) solicit any
client of Employer, other than a client that was introduced to Employer directly
by Executive as of the  Effective  Date and that is  identified  by Executive as
such, to terminate its  relationship  with Employer  (other than with respect to
clients  Executive brings to Employer as of the Effective Date and identifies to
Employer on such date).  During the Restricted Period and thereafter,  Executive
and Employer agree not to make any disparaging  statements  concerning the other
party,  other than as may be required by legal process,  it being understood and
agreed that this  sentence is not intended to and shall not  prohibit  Executive
from making any comparative  statement favorable to Executive in connection with
any  competitive  activity  which  is not  prohibited  under  the  terms of this
Agreement.

          6.3  NON-DISCLOSURE AND NON-USE; SHOP RIGHTS.

               (a)  DESCRIPTION  OF  CONFIDENTIAL  INFORMATION.  For purposes of
                    this   Section,   "Confidential   Information"   means   any
                    information disclosed during the Restricted Period, which is
                    clearly  either  marked or  reasonably  understood  as being
                    confidential or proprietary  including,  but not limited to,
                    information  disclosed in discussions between the parties in
                    connection with technical  information,  data, proposals and
                    other  documents  of Employer  pertaining  to its  business,
                    products,   services,   finances,  product  designs,  plans,
                    customer  lists,   public   relations  and  other  marketing
                    information and other unpublished information.  Confidential
                    Information shall include all tangible materials  containing
                    Confidential  Information  including,  but not  limited  to,
                    written or printed  documents and computer  disks and tapes,
                    whether machine or user readable.

                                       8
<PAGE>

               (b)  STANDARD  OF  CARE.  Executive  shall  protect  Confidential
                    Information  from  disclosure to any person other than other
                    Executives of Employer who have a need to know, by using the
                    same degree of care, but no less than a reasonable degree of
                    care, to prevent the  unauthorized  use,  dissemination,  or
                    publication  of  Confidential  Information  as  Executive is
                    required to use to protect such Confidential Information.

               (c)  EXCLUSION. This Section imposes no obligation upon Executive
                    with respect to  information  that:  (i) was in  Executive`s
                    possession before receipt from Employer;  (ii) is or becomes
                    a matter of public knowledge  through no fault of Executive;
                    (iii) is rightfully received by Executive from a third party
                    who  does  not  have  a duty  of  confidentiality;  (iv)  is
                    disclosed under operation of law, except that Executive will
                    disclose only such  information  as is legally  required and
                    give Employer  prompt prior  notice;  or (v) is disclosed by
                    Executive with Employer`s prior written consent.

               (d)  INTELLECTUAL  PROPERTY.  Executive hereby agrees to disclose
                    to Employer all work product  developed by Executive  within
                    the scope of his employment,  except as otherwise  permitted
                    by the Board (the "Work Product").  Both parties acknowledge
                    and agree that if any Work Product or any portion thereof is
                    copyrightable,  it will be deemed a "work made for hire," as
                    such term is defined in the Federal Copyright Act, 17 U.S.C.
                    Section 101 et seq., and Employer will own all right,  title
                    and interest in and to the Work Product. Notwithstanding the
                    foregoing,   Employer   acknowledges  and  agrees  (i)  that
                    Executive  brings to Employer a substantial  accumulation of
                    ideas,  concepts,   know-how,   techniques,  data,  modules,
                    components,  designs,  utilities,   interfaces,   templates,
                    subroutines,   analyses,  methods,   algorithms,   formulas,
                    technical    information,    specifications,    and    other
                    pre-existing materials used or developed by Executive in the
                    course  of his  work  performed  outside  the  scope  of his
                    employment for Employer, and that there also exists and will
                    exist an  accumulation of general ideas,  general  concepts,
                    general know-how,  general  techniques,  and general methods
                    gained or learned by Executive during the performance of his
                    employment for Employer (all of the foregoing accumulations,
                    the "Residual Information"), and (ii) that nothing contained
                    in this Agreement is intended to or shall restrict Executive
                    from  using  the  Residual   Information   for  any  purpose
                    whatsoever.

               (e)  STOCK TRADING.  If the  information  disclosed  hereunder is
                    material,   non-public  information  about  Employer,   then
                    Executive agrees not to trade in the securities of Employer,
                    or in the  securities  of or any  appropriate  and  relevant
                    third  party  until  such  time  as  no   violation  of  the
                    applicable  federal and state  securities  laws would result
                    from such securities trading.

               (f)  RETURN   OF   CONFIDENTIAL   INFORMATION.   Executive   will
                    immediately   destroy  or  return  all   tangible   material
                    embodying   Confidential   Information   (in  any  form  and
                    including,  without  limitation,  all summaries,  copies and
                    excerpts of  Confidential  Information)  upon the earlier of
                    (i) the completion or  termination  of the dealings  between
                    the Employer and Executive  under this  Agreement or (ii) at
                    such time that Employer may so request.

               (g)  NOTICE  OF   BREACH.   Executive   shall   notify   Employer
                    immediately  upon  discovery  of  any  unauthorized  use  or
                    disclosure of Confidential Information,  or any other breach

                                       9
<PAGE>

                    of the  Agreement  by  Executive,  and will  cooperate  with
                    Employer in every  reasonable  way to help  Employer  regain
                    possession  of  Confidential  Information  and  prevents its
                    further unauthorized use.

     7.   REPRESENTATION BY EXECUTIVE.

          Executive hereby represents and warrants that he is not a party to any
agreement, whether oral or written, which would prohibit him from being employed
by Employer.

     8.   INJUNCTIVE RELIEF.

          The parties  acknowledge that the services to be rendered hereunder by
Executive are special,  unique and of extraordinary  character,  and that in the
event of a breach or a  threatened  breach of  Executive  of any of  Executive`s
obligations  under  Section  6 of this  Agreement,  Employer  will  not  have an
adequate  remedy at law.  Accordingly,  in the event of any breach or threatened
breach by Executive, Employer shall be entitled to such equitable and injunctive
relief  as may be  available  to  restrain  Executive  and any  business,  firm,
partnership,  individual,  corporation or entity  participating in the breach of
Section 6 of this  Agreement.  Nothing in this  Agreement  shall be construed as
prohibiting  Employer  from  pursing any other  remedies  available at law or in
equity for such breach or threatened  breach,  including the recovery of damages
and  the  immediate  termination  of the  employment  of  Executive  under  this
Agreement.

     9.   NOTICES.

          All  notices  shall be in writing  and shall be  delivered  personally
(including  by  courier),  sent  by  facsimile  transmission  (with  appropriate
documented receipt thereof), by overnight receipted courier service (such as UPS
or Federal  Express) or sent by certified,  registered or express mail,  postage
prepaid,  to the  parties at their  address set forth at the  beginning  of this
Agreement  with  Employer`s  copy being sent to Employer  at its then  principal
office. Any such notice shall be deemed given when so delivered  personally,  or
if sent by facsimile  transmission,  when  transmitted,  or, if mailed, 48 hours
after  the date of  deposit  in the  mail.  Any party  may,  by notice  given in
accordance with this Section 9 to the other party,  designate another address or
person for  receipt of notices  hereunder.  Copies of any notices to be given to
Employer shall be given  simultaneously to: Sichenzia Ross Friedman Ference LLP,
1065 Avenue of the Americas,  21st Floor,  New York, New York 10018,  Attention:
Richard A. Friedman, Esq.,

     10.  MISCELLANEOUS.

          (a)  This  Agreement  shall be  governed  in all  respects,  including
               validity,  construction,  interpretation  and effect, by New York
               law.

          (b)  This Agreement may be amended,  superseded,  canceled, renewed or
               extended,  and the terms hereof may be waived,  only by a written
               instrument  signed by authorized  representatives  of the parties
               or, in the case of a waiver,  by an authorized  representative of
               the party waiving compliance. No such written instrument shall be
               effective  unless it  expressly  recites  that it is  intended to
               amend,  supersede,  cancel,  renew or extend this Agreement or to
               waive  compliance  with one or more of the terms  hereof,  as the
               case may be. No delay on the part of any party in exercising  any
               right,  power or privilege  hereunder  shall  operate as a waiver
               thereof,  nor  shall  any  waiver on the part of any party of any

                                       10
<PAGE>

               such right, power or privilege, or any single or partial exercise
               of any such  right,  power or  privilege,  preclude  any  further
               exercise  thereof or the exercise of any other such right,  power
               or  privilege.  The  rights  and  remedies  herein  provided  are
               cumulative  and are not  exclusive of any rights or remedies that
               any party may otherwise have at law or in equity.

          (c)  Any  controversy  or claim  arising  out of or  relating  to this
               Agreement or the breach of this Agreement that is not resolved by
               Executive  and Employer  (or its  affiliates,  where  applicable)
               shall  be  submitted  to  arbitration  in New  York,  New York in
               accordance  with New York law and the  procedures of the American
               Arbitration  Association.  The determination of the arbitrator(s)
               shall be conclusive  and binding on Employer (or its  affiliates,
               where  applicable)  and  Executive and judgment may be entered on
               the arbitrator(s)` award in any court having jurisdiction.

          (d)  Employer  shall pay, at least  monthly,  all costs and  expenses,
               including  attorneys`  fees and  disbursements,  of Employer  and
               Executive in connection with (i) the preparation, negotiation and
               execution  of this  Agreement  and  (ii)  any  legal  proceeding,
               whether or not  instituted by Employer or Executive,  relating to
               the  interpretation  or  enforcement  of any  provision  of  this
               Agreement;  provided that if Executive  institutes the proceeding
               and Employer prevails on each and every material issue, Executive
               shall pay his own costs and  expenses,  and  promptly  (and in no
               event more than 60 days after demand therefor by Employer) return
               to Employer any amounts  previously  paid by Employer  under this
               Section 10(d)(ii).

          (e)  If  any  provision  or  any  portion  of any  provision  of  this
               Agreement or the application of any such provision or any portion
               thereof to any person or  circumstance,  shall be held invalid or
               unenforceable,  the remaining  portion of such  provision and the
               remaining  provisions of this  Agreement,  or the  application of
               such provision or portion of such provision as is held invalid or
               unenforceable to persons or circumstances  other than those as to
               which it is held invalid or unenforceable,  shall not be affected
               thereby and such  provision or portion of any  provision as shall
               have been held invalid or  unenforceable  shall be deemed limited
               or  modified  to the  extent  necessary  to  make  it  valid  and
               enforceable; in no event shall this Agreement be rendered void or
               unenforceable.

          (f)  The  headings  to  the  Sections  of  this   Agreement   are  for
               convenience  of reference  only and shall not be given any effect
               in the construction or enforcement of this Agreement.

          (g)  This Agreement  shall inure to the benefit of and be binding upon
               the  successor  and assigns of Employer,  but no interest in this
               Agreement shall be  transferable  in any manner by Executive.  In
               the event of any sale,  transfer or other  disposition  of all or
               substantially  all of Employer`s  assets or business,  whether by
               merger,   consolidation  or  otherwise,   Employer`s  obligations
               hereunder  shall be assigned to, and assumed by, the successor or
               successors   of   Employer;   provided   that   Employer   shall,
               notwithstanding such assignment and assumption, remain liable and
               otherwise  responsible  for  the  fulfillment  of the  terms  and
               conditions of this Agreement.

                                       11
<PAGE>

          (h)  This Agreement constitutes the entire agreement and understanding
               between  the  parties  and  supersedes  all  prior   discussions,
               agreements  and  undertakings,  written or oral, of any and every
               nature with respect thereto.

          (i)  This  Agreement may be executed by the parties hereto in separate
               counterparts  which  together  shall  constitute one and the same
               instrument.

          (j)  In the event of the  termination or expiration of this Agreement,
               the  provisions  of Sections 5, 6, 7 and 8 hereof shall remain in
               full force and effect, in accordance with their respective terms.

          (k)  Executive  shall,  at all times,  be  indemnified  by Employer in
               connection  with his  performance of services  hereunder,  at the
               maximum level  permitted by law.  Employer shall cause  Executive
               (together with other officers and directors) to be covered at all
               times by directors  and officers  liability  insurance  with such
               coverage to be not less than $5,000,000.  Employer shall continue
               to  indemnify  Executive  as  provided  above and  maintain  such
               liability  insurance  coverage for  Executive,  after the Term of
               Employment  has ended for any claims that may be made against him
               with respect to his service as a director or officer of Employer.

          (l)  Executive 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  payments  hereunder  be
               subject to offset in the event Executive does mitigate.

          (m)  If all,  or any  portion,  of the  payments  provided  under this
               Agreement,  either  alone or  together  with other  payments  and
               benefits which Executive  receives or is entitled to receive from
               Employer or an affiliate,  would constitute an "excess  parachute
               payment"  within the meaning of Section 280G of the Code (whether
               or not under an existing plan,  arrangement  or other  agreement)
               (each such parachute payment, a "Parachute  Payment"),  and would
               result in the  imposition  on  Executive  of an excise  tax under
               Section 4999 of the Code, then, in addition to any other benefits
               to which  Executive is entitled under this  Agreement,  Executive
               shall be paid by  Employer  an amount in cash equal to the sum of
               the excise  taxes  payable by  Executive  by reason of  receiving
               Parachute  Payments plus the amount necessary to put Executive 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  10(m))  as if no  excise  taxes  had been  imposed  with
               respect to Parachute  Payments (the  "Parachute  Gross-up").  The
               amount of any payment  under this Section 10(m) shall be computed
               by a certified  public  accounting  firm of  national  reputation
               reasonably selected by Executive.  If Employer desires to dispute
               the computation  rendered by such accounting  firm,  Employer may
               select  an  alternative   certified  public  accounting  firm  of
               national  reputation to perform the applicable  computations.  If
               the two  accounting  firms  cannot  agree upon the  computations,
               Executive  and Employer  will jointly  appoint a third  certified
               public  accounting  firm  of  national   reputation,   reasonably
               acceptable  to Executive  and  Employer,  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

                                       12
<PAGE>

               paid to Executive, and payments shall be made accordingly. In any
               event,  Employer  will  pay to  Executive  or pay on  Executive`s
               behalf the Parachute  Gross-up as computed by the accounting firm
               initially  selected by Executive by the time any taxes payable by
               Executive as a result of the Parachute  Payments become due, with
               Executive  agreeing to return the excess  amount of such  payment
               over the final computation rendered from the process described in
               this  Section  10(m).  Executive  and  Employer  will provide the
               accounting  firms with all information  which any accounting firm
               reasonably deems necessary in computing the Parachute Gross-up to
               be made available to Executive.  The costs and expenses of all of
               the  accounting   firms  retained  to  perform  the  computations
               described above shall be borne by Employer.

         IN WITNESS  WHEREOF,  this  Agreement  has been executed as of the date
stated at the beginning of this Agreement.

                                 A.B. Watley Group Inc.

                                 By:      ____________________________________

                                 Title:   ____________________________________

                                 ---------------------------------------------
                                 Steven Malin

                                       13

<PAGE>

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