Document:

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                        MILLENNIUM PHARMACEUTICALS, INC.

                                       and

                                U.S. BANK, N.A.,
                                   as Trustee

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

                          THIRD SUPPLEMENTAL INDENTURE

                           DATED AS OF APRIL 22, 2002

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

                                  $300,000,000

             5.00% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 1, 2007

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     THIRD SUPPLEMENTAL INDENTURE, dated as of April 22, 2002, between
Millennium Pharmaceuticals, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (as successor to COR, herein called the
"Company"), and U.S. Bank, N.A. (formerly known as Firstar Bank, N.A.), a
national banking association, as Trustee (herein called the "Trustee").

     WHEREAS, pursuant to the Indenture dated as of February 24, 2000 (as
amended, the "Indenture"), between COR Therapeutics, Inc. ("COR") and the
Trustee, COR issued $300,000,000 aggregate principal amount of 5.00% Convertible
Subordinated Notes due March 1, 2007 (the "Securities");

     WHEREAS, COR, the Company and the Trustee have entered into a First
Supplemental Indenture, dated as of February 12, 2002 (the "First Supplemental
Indenture"), to the Indenture, which supplemental indenture provides (i) that
the Securities shall be convertible into shares of the Company's Common Stock,
(ii) for adjustments of the Conversion Rate which shall be as nearly equivalent
as may be practicable to the adjustments provided for in Article 11 of the
Indenture, and (iii) for a full and unconditional guarantee of the obligations
of COR under the Indenture and the Securities by the Company on the terms and
conditions set forth therein;

     WHEREAS, the Company and the Trustee have entered into a Second
Supplemental Indenture, dated as of February 12, 2002 (the "Second Supplemental
Indenture"), to the Indenture, which supplemental indenture provides that (i)
the Company shall expressly assume all of the obligations of COR under the
Indenture and the Securities, which obligations shall be subordinated to other
indebtedness of the Company to the same extent that the obligations of COR under
the Indenture and the Securities were subordinated to other indebtedness of COR,
and (ii) the Company's guarantee of COR's obligations under the Indenture and
the Securities shall be terminated;

     WHEREAS, Section 8.1 of the Indenture provides that the Company and the
Trustee may amend or supplement the Indenture or the Securities without notice
to or consent of any Holder of Securities to, among other things, add to the
covenants of the Company for the benefit of the Holders of Securities; and

     WHEREAS, the Company has complied with all conditions precedent provided
for in the Indenture relating to this Third Supplemental Indenture.

     NOW, THEREFORE, in consideration of the foregoing premises, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
Securities, as follows:

                                  ARTICLE ONE

                                  DEFINITIONS

SECTION 1.1. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Indenture.

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SECTION 1.2.  Section 1.1 of the Indenture is hereby amended to add the
following definitions:

     "Company Notice of Put Right" has the meaning specified in Section 2.2 of
the Third Supplemental Indenture.

     "Put Right Date" has the meaning specified in Section 2.1 of the Third
Supplemental Indenture.

     "Put Right Notice" has the meaning specified in Section 2.2 of the Third
Supplemental Indenture.

     "Put Right Price" has the meaning specified in Section 2.1 of the Third
Supplemental Indenture.

                                  ARTICLE TWO

                REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER

SECTION 2.1.  Right to Require Repurchase. Each Holder shall have the right, at
the Holder's option, to require the Company to repurchase and upon the exercise
of such right the Company shall repurchase, all of such Holder's Securities, or
any portion of the principal amount thereof that is equal to U.S.$1,000 or any
greater integral multiple of U.S.$1,000, on April 29, 2003 (the "Put Right
Date") at a purchase price equal to 108.50% of the principal amount of the
Securities to be repurchased (the "Put Right Price"). Whenever in the Indenture
(including Sections 2.2, 3.1, 5.1(1) and 5.8 thereof) there is a reference to
the principal of any Security as of any time, such reference shall be deemed to
include reference to the Put Right Price payable in respect of such Security to
the extent that such Put Right Price is, was or would be so payable at such
time; provided, however, that the foregoing shall not apply to any reference to
the principal of any Security that concerns the determination of the amount of
interest due or owing under such Security. If any of the foregoing provisions or
other provisions of this Article Two are inconsistent with applicable law,
including without limitation Rule 13e-4 or Regulation 14E promulgated under the
Exchange Act, such law shall govern.

SECTION 2.2.  Notices; Method of Exercising Repurchase Right, Etc.

     (1) On or before the Business Day that is 21 Business Days prior to the Put
Right Date, the Company or, at the request and expense of the Company on or
before the Business Day that is 21 Business Days prior to the Put Right Date,
the Trustee, shall give to all Holders of Securities, in the manner provided in
Section 1.6 of the Indenture, notice (the "Company Notice of Put Right") of the
repurchase right set forth herein. The Company shall also deliver a copy of the
Company Notice of Put Right to the Trustee. The Company Notice of Put Right
shall state:

          (a) the Put Right Date,

          (b) the Put Right Price,

                                      -2-

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          (c) a description of the procedure which a Holder must follow to
exercise the repurchase right, and the place or places where such Securities,
are to be surrendered for payment of the Put Right Price and accrued interest,
if any,

          (d) that on the Put Right Date the Put Right Price, and accrued
interest, if any, will become due and payable upon each such Security designated
by the Holder to be repurchased, and that interest thereon shall cease to accrue
on and after said date,

          (e) the Conversion Rate then in effect, the date on which the right to
convert the principal amount of the Securities to be repurchased will terminate
and the place or places where such Securities may be surrendered for conversion,

          (f) the place or places that the Put Right Notice (as defined below)
shall be delivered, and the form of such Notice, and

          (g) the CUSIP number or numbers of such Securities.

No failure of the Company to give the foregoing notices or defect therein shall
limit any Holder's right to exercise a repurchase right or affect the validity
of the proceedings for the repurchase of Securities pursuant to this Article
Two.

     (2) To exercise a repurchase right, a Holder shall deliver to the Trustee
at any time until 9:00 a.m., New York time, on the Put Right Date, (i) written
notice of the Holder's exercise of such right, which notice shall set forth the
name of the Holder, the principal amount of the Securities to be repurchased
(and, if any Security is to repurchased in part, the serial number thereof, the
portion of the principal amount thereof to be repurchased and the name of the
Person in which the portion thereof to remain Outstanding after such repurchase
is to be registered) and a statement that an election to exercise the repurchase
right is being made thereby (a "Put Right Notice"), and (ii) the Securities with
respect to which the repurchase right is being exercised. Notwithstanding the
delivery of a Put Right Notice by a Holder, such Holder's Securities shall
remain convertible into the Company's Common Stock until the principal of such
Securities (or portion thereof, as the case may be) shall have been paid or duly
provided for. Notwithstanding anything herein to the contrary, any Holder
delivering to the Trustee a Put Right Notice shall have the right to withdraw
such notice at any time prior to 9:00 a.m., New York time, on the Put Right Date
by delivery of a written notice of withdrawal to the Trustee in accordance with
Section 2.4. The Trustee shall promptly notify the Company of its receipt of any
Put Right Notice or written notice of withdrawal thereof.

SECTION 2.3. Payment of Put Right Price. In the event a repurchase right shall
be exercised in accordance with the terms hereof, the Company shall pay or cause
to be paid to the Trustee the Put Right Price in cash for payment to the Holder
on the Put Right Date, together with accrued and unpaid interest to the Put
Right Date payable with respect to the Securities as to which the repurchase
right has been exercised; provided, however, that installments of interest that
mature on or prior to the Put Right Date shall be payable in cash to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Regular Record Date.

                                      -3-

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     If any Security (or portion thereof) surrendered for repurchase shall not
be so paid on the Put Right Date, the principal amount of such Security (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Put Right Date at the rate of 5.00%
per annum, and each Security shall remain convertible into the Company's Common
Stock until the principal of such Security (or portion thereof, as the case may
be) shall have been paid or duly provided for.

     Any Security which is to be repurchased only in part shall be surrendered
to the Trustee (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Security or Securities, containing identical terms and conditions,
each in an authorized denomination in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the Security so
surrendered.

     All Securities delivered for repurchase shall be delivered to the Trustee
to be canceled at the direction of the Trustee, which shall dispose of the same
as provided in Section 3.9 of the Indenture.

SECTION 2.4.  Withdrawal of Put Right Notice. A Put Right Notice may be
withdrawn by means of a written notice of withdrawal delivered to the Trustee at
any time prior to 9:00 a.m., New York time, on the Put Right Date specifying:

     (1) the certificate number of the Securities in respect of which such
notice of withdrawal is being submitted;

     (2) the portion of the principal amount thereof of the Securities with
respect to which such notice of withdrawal is being submitted; and

     (3) the portion of the principal amount thereof, if any, of such Securities
which remains subject to the original Put Right Notice and which has been or
will be delivered for purchase by the Company.

                                 ARTICLE THREE

                     AMENDMENT OF COMPANY REDEMPTION RIGHTS

SECTION 3.1. Section 10.1 of the Indenture is hereby amended by inserting at the
end of such Section, "Notwithstanding any language to the contrary herein or in
the form of Securities, the Company shall be prohibited from redeeming the
Securities on a Redemption Date prior to May 1, 2003."

                                      -4-

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                                  ARTICLE FOUR

                   ACCEPTANCE OF THIRD SUPPLEMENTAL INDENTURE

SECTION 4.1.  Trustee's Acceptance. The Trustee hereby accepts this Third
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.

                                  ARTICLE FIVE

                            MISCELLANEOUS PROVISIONS

SECTION 5.1.  Effectiveness of Third Supplemental Indenture. This Third
Supplemental Indenture shall be effective as of the date hereof.

SECTION 5.2.  Effect of Third Supplemental Indenture. Upon the execution and
delivery of this Third Supplemental Indenture by the Company and the Trustee,
the Indenture, as amended by the First Supplemental Indenture and the Second
Supplemental Indenture, shall be supplemented and amended in accordance
herewith, and this Third Supplemental Indenture shall form a part of the
Indenture for all purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.

SECTION 5.3.  Indenture Remains in Full Force and Effect. Except as supplemented
or amended hereby, all provisions in the Indenture shall remain in full force
and effect.

SECTION 5.4.  Incorporation of Indenture. All the provisions of this Third
Supplemental Indenture shall be deemed to be incorporated in, and made a part
of, the Indenture; and the Indenture, as supplemented and amended by the First
Supplemental Indenture, the Second Supplemental Indenture and this Third
Supplemental Indenture, shall be read, taken and construed as one and the same
instrument.

SECTION 5.5.  Headings. The headings of the Articles and Sections of this Third
Supplemental Indenture are inserted for convenience of reference and shall not
be deemed to be a part thereof.

SECTION 5.6.  Counterparts. This Third Supplemental Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

SECTION 5.7.  Conflict with Trust Indenture Act. If any provision of this Third
Supplemental Indenture limits, qualifies or conflicts with a provision of the
Trust Indenture Act that is required under such Act to be a part of and govern
this Third Supplemental Indenture, the latter provision shall control. If any
provision of this Third Supplemental Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Third Supplemental Indenture
as so modified or to be excluded, as the case may be.

SECTION 5.8.  Successors. All covenants and agreements in this Third
Supplemental Indenture by the Company shall be binding upon and accrue to the
benefit of its successors. All covenants

                                      -5-

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and agreements in this Third Supplemental Indenture by the Trustee shall be
binding upon and accrue to the benefit of its successors.

SECTION 5.9.   Separability Clause. In case any provision in this Third
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION 5.10.  Benefits of Third Supplemental Indenture. Nothing in this Third
Supplemental Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture, the Indenture or the Securities, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of Securities, any benefit
of any legal or equitable right, remedy or claim under this Third Supplemental
Indenture, the First Supplemental Indenture, the Second Supplemental Indenture,
the Indenture or the Securities.

SECTION 5.11.  Trustee Not Responsible for Recitals. The recitals herein
contained are made by the Company, and not by the Trustee and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this Third Supplemental
Indenture.

SECTION 5.12.  Certain Duties and Responsibilities of the Trustee. In entering
into this Third Supplemental Indenture, the Trustee shall be entitled to the
benefit of every provision of the Indenture relating to the conduct or affecting
the liability or affording protection to the Trustee, whether or not elsewhere
herein so provided, and the Trustee shall not be under any responsibility to
determine the correctness of any provisions contained in this Third Supplemental
Indenture relating either to the kind or amount of shares of stock or securities
or property (including cash) receivable by Holders of Securities upon the
conversion of their Securities or to any adjustment to be made with respect
thereto.

SECTION 5.13.  GOVERNING LAW. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
THE UNITED STATES OF AMERICA, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

                                      -6-
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     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, all as of the day and year first above written.

                                       MILLENNIUM PHARMACEUTICALS, INC.

                                       By: /s/ Kevin P. Starr
                                          --------------------------------------
                                          Name:   Kevin P. Starr
                                          Title:  Chief Operating Officer and
                                                  Chief Financial Officer

                                       U.S. BANK, N.A., Trustee

                                       By: /s/ Frank P. Leslie, III
                                          --------------------------------------
                                          Name:   Frank P. Leslie, III
                                          Title:  Vice President

                                      -7-<PAGE>

                                 FIRST AMENDMENT
                          TO SOFTWARE LICENSE AGREEMENT

                                                              April 8, 2002

A.B. Watley Group Inc. ("WATLEY") and E*TRADE Group, Inc. ("E*TRADE") hereby
agree to amend the Software License Agreement dated November __, 2000 between
E*TRADE and Watley (the "SOFTWARE LICENSE AGREEMENT"), effective immediately, as
follows.

The first three sentences of Section 1(a) are deleted and replaced with:

         Upon the terms and conditions contained in this Agreement, Watley
         grants to E*TRADE and E*TRADE's Affiliates a limited, worldwide,
         perpetual, irrevocable, fully paid-up license to use the Software (as
         hereinafter defined) on E*TRADE's and E*TRADE's Affiliate's servers and
         to sublicense object code versions of the Software to, and make object
         code versions of the Software available through E*TRADE's service
         offerings for use only by, Authorized Users. An "Authorized User" is an
         E*TRADE customer who has been sublicensed by E*TRADE to use object code
         versions of the Software.

Section 1(b) is deleted and replaced with:

         The Software will be provided to E*TRADE in object code and source code
         versions, along with any documentation related thereto.

Sections 1(d)(i) and 1(d)(iv) are deleted. Section 1(d) is amended to further
include:

         To the extent that E*TRADE allows a third party to access source code
         included in the Software, such access shall be governed by the
         provisions of Section 16.

Section 1(e) is deleted.

Section 1(f) is deleted and replaced with:

         E*TRADE acknowledges and agrees that, as between Watley and E*TRADE,
         Watley owns the Software (including the source code thereof) and the
         ideas, methods of operation, processes, know-how and intellectual
         property rights, including without limitation, all patent, copyright,
         trade secret and trademark rights, associated therewith, as well as any
         and all derivative works related thereto created by or on behalf of
         Watley and, other than as expressly set forth in this Agreement,
         E*TRADE further acknowledges and agrees that it has no interest
         whatsoever therein. Watley acknowledges and agrees that, as between
         Watley and E*TRADE, E*TRADE owns all derivative works in the Software
         (including the source code thereof) created by or on behalf of E*TRADE
         and the ideas, methods of operation, processes, know-how and
         intellectual property rights, including without limitation, all patent,
         copyright, trade secret and trademark rights, associated therewith, as
         well as any and all derivative works related thereto created by or on
         behalf of E*TRADE and Watley further acknowledges and agrees that it
         has no interest whatsoever therein.

Section 1(g) is deleted.

Section 2(a) is deleted and replaced by:

                  "Software" includes the object code and source code versions,
                  as well as any documentation related thereto, of:

                  (A) the current version of the E*TRADE Pro platform;

                  (B) the current version of the Watley UltimateTrader platform;
                  and

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                                                               EXECUTION DRAFT

                  (C) the current version of the Watley UltimateTrader platform
                  (which includes such features as Comtex news, hot keys, the
                  Island and Arca ECN books, order entry window/level II window,
                  improved chart studies/improved performance, market ticker,
                  high and low ticker, position ticker and export order status,
                  as such features currently exist) modified to include the
                  features and customizations by Watley for E*TRADE included in
                  the current version of the E*TRADE Pro platform.

Section 3 is deleted and replaced with:

         This Agreement shall become effective as of the date first above
         written and shall remain in effect in perpetuity (the "TERM"), unless
         earlier terminated in accordance with the provisions of Section 4.

Sections 4(a) and (b) are deleted.

Section 5 is deleted and replaced with:

         (a)  In consideration for the license and the Transition (as defined
         in Section 13 hereof) provided hereby,

                  (i)      Upon delivery of the source code for the customized
                           version of the UltimateTrader platform provided for
                           by Section 13(c)(1)(C), E*TRADE will pay Watley
                           $1,000,000.

                  (ii)     Upon successful completion of the Transition as
                           determined in the reasonable judgment of E*TRADE,
                           E*TRADE agrees to: (i) issue to Watley $2,400,000 of
                           shares of the common stock, par value $.01 per share,
                           of E*TRADE (the "SHARES"), with the number of such
                           Shares to be issued determined by dividing $2,400,000
                           by the average closing price for the shares on the
                           New York Stock Exchange for the ten trading days
                           prior to the completion of the Transition and (ii)
                           pay Watley $1,000,000.

                  (iii)    Any dispute with respect to successful completion of
                           the Transition as determined in the reasonable
                           judgment of E*TRADE shall be resolved by arbitration
                           under the Commercial Rules of the American
                           Arbitration Association. Three arbitrators shall be
                           selected. Each party shall select one arbitrator and
                           the two chosen arbitrators shall select the third
                           arbitrator or, failing agreement on the selection of
                           the third arbitrator, the American Arbitration
                           Association shall select the third arbitrator. Unless
                           otherwise agreed by the parties, arbitration will
                           take place in New York City, New York. Any court
                           having jurisdiction over the matter may enter
                           judgment on the award of the arbitrator(s).

                   (iv)    Payments made to date (including the payment for
                           February 2002) made by E*TRADE to Watley shall not be
                           refunded.

         (b)  Investment Representations of Watley.

                           Watley hereby represents and warrants that it is an
                           accredited investor within the meaning of Regulation
                           D prescribed by the Securities and Exchange
                           Commission (the "SEC") pursuant to the Securities Act
                           of 1933, as amended (the "SECURITIES ACT"), and that
                           it is acquiring the Shares for investment for its own
                           account and not with a view to, or for resale in
                           connection with, any distribution thereof. Watley
                           understands that the transaction in which Watley is
                           receiving the Shares has not been registered under
                           the Securities Act, that the Shares must be held
                           indefinitely unless subsequently registered under the
                           Securities Act or an exemption from such registration
                           is available, and that the certificates representing
                           the Shares shall bear an appropriate legend to such
                           effect.

         (c)  Registration Rights with respect to the Shares.

                     (i)   From and after the date that the Shares are issued to
                           Watley (the "ISSUE DATE"), E*TRADE agrees to use
                           reasonable efforts to file a registration statement
                           (the

                                       2

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                                                                EXECUTION DRAFT

                           "REGISTRATION STATEMENT") with the SEC to effect the
                           registration under the Securities Act of the resale
                           by Watley of the Shares (together with any shares of
                           E*TRADE common stock issued in connection with any
                           stock dividend, split, combination or
                           recapitalization on, of or with respect to such
                           Shares, collectively, the "REGISTRABLE SHARES"), and
                           to respond promptly to any and all comments made by
                           the staff of the SEC to such Registration Statement
                           so as to cause the Registration Statement to be
                           declared effective by the SEC, subject to the
                           provisions of subsection (c)(ix) below. E*TRADE will
                           use reasonable efforts to file the Registration
                           Statement not later than thirty (30) days after the
                           Issue Date.

                    (ii)   E*TRADE agrees that the Registration Statement shall
                           comply in all material respects with the requirements
                           of the Securities Act and the rules and regulations
                           of the SEC promulgated thereunder and shall not
                           contain any untrue statement of a material fact or
                           omit to state a material fact required to be stated
                           therein, or necessary to make the statements therein
                           not misleading. The financial statements of E*TRADE
                           included in the Registration Statement or
                           incorporated by reference therein will comply as to
                           form in all material respects with the applicable
                           accounting requirements and the published rules and
                           regulations of the SEC applicable with respect
                           thereto, and will be prepared in accordance with GAAP
                           consistently applied during the periods involved
                           (except as may be otherwise indicated in the
                           financial statements or the notes thereto or, in the
                           case of unaudited interim statements, as permitted by
                           the SEC) and fairly present the financial position of
                           E*TRADE at the dates thereof and the results of
                           operations and cash flows for the periods then ended
                           (subject, in the case of unaudited interim
                           statements, to immaterial year-end adjustments).

                    (iii)  E*TRADE shall prepare and file with the SEC, as
                           promptly as is commercially reasonably practicable,
                           such amendments (including post-effective amendments)
                           and supplements to the Registration Statement and the
                           prospectus used in connection with the Registration
                           Statement as may be necessary to keep the
                           Registration Statement effective during the
                           Registration Period, and, during such period, to
                           comply with the provisions of the Securities Act with
                           respect to the disposition of all Registrable Shares
                           covered by the Registration Statement.

                    (iv)   E*TRADE shall furnish to Watley promptly after the
                           same is prepared and filed with the SEC, one copy of
                           the Registration Statement and any amendment thereto
                           and each preliminary prospectus and each amendment or
                           supplement thereto; (B) on the date of effectiveness
                           of the Registration Statement or any amendment
                           thereto, a notice to Watley stating that the
                           Registration Statement or amendment has been declared
                           effective; and (C) such number of copies of a
                           prospectus, including a preliminary prospectus, and
                           all amendments and supplements thereto and such other
                           documents as Watley may reasonably request in order
                           to facilitate the disposition of the Registrable
                           Shares owned by Watley.

                     (v)   E*TRADE shall use reasonable efforts to cause all
                           Registrable Shares to be listed on each national
                           securities exchange or quotation service on which
                           securities of the same class or series issued by
                           E*TRADE are then listed.

                     (vi)  As promptly as practicable after becoming aware of
                           such event, E*TRADE shall notify Watley of the
                           happening of any event, of which E*TRADE has
                           knowledge, as a result of which the prospectus
                           included in the Registration Statement, as then in
                           effect, includes an untrue statement of a material
                           fact or omission to state a material fact required to
                           be stated therein or necessary to make the statements
                           therein not misleading, and use reasonable efforts to
                           promptly prepare a supplement or amendment to the
                           Registration Statement to correct such untrue
                           statement or omission, and deliver such number of
                           copies of such supplement or amendment to Watley as
                           it may reasonably request.

                                       3
<PAGE>

                                                                EXECUTION DRAFT

                    (vii)  E*TRADE shall use reasonable efforts to prevent the
                           issuance of any stop order or other suspension of
                           effectiveness of the Registration Statement, and, if
                           such an order is issued, to obtain the withdrawal of
                           such order as soon as practicable (including in each
                           case by amending or supplementing the Registration
                           Statement) and to notify Watley of the issuance of
                           such order and the resolution thereof, and if the
                           Registration Statement is supplemented or amended,
                           deliver such number of copies of such supplement or
                           amendment to Watley as it may reasonably request.

                    (viii) E*TRADE will keep the Registration Statement
                           effective until the earlier of (A) such date as all
                           of the Registrable Shares have been resold or (B) two
                           years from the date such Registration Statement is
                           declared effective by the SEC (the "REGISTRATION
                           PERIOD").

                    (ix)   Without limiting the generality of subsections (vi)
                           and (vii) above, E*TRADE may defer filing of the
                           Registration Statement or refuse to permit Watley to
                           resell any Registrable Shares pursuant to the
                           Registration Statement at any time if E*TRADE
                           determines in good faith that such a sale would be in
                           violation of the requirements of the Securities Act
                           and the regulations promulgated by the SEC thereunder
                           or there exists at the time material non-public
                           information relating to E*TRADE which, in the
                           business judgment of E*TRADE, should not be
                           disclosed. E*TRADE shall not under any circumstances
                           be entitled to exercise its right to defer filing of
                           the Registration Statement or suspend sales under
                           this subsection more than two times in any twelve
                           (12)-month period, and the period during which the
                           Registration Statement under this subsection may be
                           withdrawn shall not exceed 90 days each such time.

                    (x)    Watley agrees that, upon receipt of any notice from
                           E*TRADE of the happening of any event of the kind
                           described in (vi), (vii) or (ix) above, Watley will
                           immediately discontinue disposition of the
                           Registrable Shares pursuant to the Registration
                           Statement until Watley's receipt of the copies of the
                           supplemented or amended prospectus contemplated by
                           (vi), (vii) or (ix) above, if so directed by E*TRADE,
                           Watley shall deliver to E*TRADE or destroy (and
                           deliver to E*TRADE a certificate of destruction) all
                           copies in Watley's possession, of the prospectus
                           covering such Registrable Shares current at the time
                           of receipt of such notice.

                    (xi)   Watley agrees that E*TRADE shall not be required to
                           conduct an underwritten offering and that any sales
                           of Registerable Shares shall be made through E*TRADE
                           Securities Inc., provided that no commission shall be
                           payable by Watley in connection with such sales.

                    (xii)  Watley, by its acceptance of the Registrable Shares,
                           agrees to cooperate with E*TRADE as reasonably
                           requested by E*TRADE in connection with the
                           preparation and filing of the Registration Statement,
                           unless Watley has notified E*TRADE in writing of its
                           election to waive the obligations of E*TRADE with
                           respect to the Registration Statement, including
                           without limitation that (A) Watley will provide
                           E*TRADE all information and statements about or
                           pertaining to Watley, and shall execute such
                           documents in connection with such registration as
                           E*TRADE may reasonably request, on such timely basis
                           as is reasonably deemed by E*TRADE to be necessary or
                           appropriate for the Registration Statement or to
                           comply with applicable requirements of the National
                           Association of Securities Dealers or other applicable
                           regulatory requirements, and (B) Watley will furnish
                           promptly to E*TRADE in writing all information
                           required from time to time to be disclosed in order
                           to make the information previously furnished to
                           E*TRADE by Watley not misleading. E*TRADE shall have
                           no obligation to register the resale of the
                           Registerable Shares or to cause or maintain the
                           effectiveness of the Registration Statement unless
                           Watley complies with the terms hereof.

                    (xiii) E*TRADE pay all Registration Expenses (as defined
                           below) in connection with any registration,
                           qualification or compliance hereunder, and Watley
                           shall pay all Selling

                                       4

<PAGE>

                                                               EXECUTION DRAFT

                           Expenses (as defined below) and other expenses that
                           are not Registration Expenses relating to the
                           Registrable Shares to be resold by Watley.
                           "Registration Expenses" shall mean all expenses,
                           except for Selling Expenses, incurred by E*TRADE in
                           complying with the registration provisions set forth
                           herein, including, without limitation, all
                           registration, qualification and filing fees, printing
                           expenses, escrow fees, fees and disbursements of
                           counsel for E*TRADE, blue sky fees and expenses and
                           the expense of any special audits incident to or
                           required in connection with any such registration.
                           "Selling Expenses" shall mean selling commissions,
                           underwriting fees, expenses of counsel to Watley and
                           stock transfer taxes applicable to the Registrable
                           Shares.

Section 6(c) is amended by deleting the first sentence thereof and replacing
such first sentence with:

         E*TRADE will have sole responsibility for obtaining the third-party
         software licenses needed to host the Software specified as follows:
         Oracle 8i, BEA Tuxedo, BEA Jolt, Veritas, Sonic Software Sonic MQ,
         Rogue Wave Tools.H++, Tools.H++ Professional and Threads.H++.

Section 7 is deleted.

Section 8(c) is deleted and replaced with:

         EXCEPT FOR BREACHES OF SECTION 16, NEITHER PARTY SHALL HAVE ANY
         LIABILITY WHATSOEVER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL
         DAMAGES ARISING OUT OF OR RELATING TO THE LICENSING, DESIGN,
         MANUFACTURE, INSTALLATION OR USE OF THE SOFTWARE, WHETHER DUE TO
         NEGLIGENCE OR ANY OTHER CAUSE INCLUDING, WITHOUT LIMITATION, DAMAGES
         FOR LOSS OF DATA OR GOODWILL, OR THE COST OF PROCUREMENT OF SUBSTITUE
         GOODS. EXCEPT IN THE EVENT OF E*TRADE'S VIOLATION OF WATLEY'S
         INTELLECTUAL PROPERTY RIGHTS IN AND TO THE SOFTWARE (INCLUDING, WITHOUT
         LIMITATION, E*TRADE'S WILLFULL BREACH OF THE RESTRICTIONS ON
         SUBLICENSING THE SOFTWARE AND E*TRADE'S BREACH OF SECTIONS 1(d), 11 OR
         16 HEREOF), EITHER PARTY'S LIABILITY TO THE OTHER FOR ANY CLAIMS
         HEREUNDER SHALL BE LIMITED TO THE AGGREGATE CONSIDERATION PAID WATLEY
         BY E*TRADE.

Section 8(d) is deleted.

Section 9 is deleted.

Section 10 is deleted.

Section 11 is deleted and replaced with:

         E*TRADE shall not remove or otherwise change any terms of the End-User
         Agreement or the copyright notice contained in the Software without the
         prior written consent of Watley, provided that E*TRADE may include in
         the Software a copyright notice with respect to any additions to or
         modifications of the Software created by or on behalf of E*TRADE.
         Notwithstanding the foregoing, the Software shall not feature or
         display any trademarks, service marks or trade names of Watley unless
         approved in advance and in writing by E*TRADE.

Section 13(a) is amended to further include:

         Watley shall not be responsible for providing Maintenance and Support
         Services in connection with derivative works based on the Software made
         by E*TRADE.

Section 13 is amended to further include:

                                       5
<PAGE>

                                                               EXECUTION DRAFT

         (c)

         (1) Watley and E*TRADE shall each use reasonable best efforts to effect
         the following transition (the "Transition"):

                  (A) provide on the date hereof copies of and familiarize
                  E*TRADE personnel with the source code and operation of the
                  current version of the E*TRADE Pro platform based on the
                  Software;

                  (B) on the date hereof, provide E*TRADE with copies of the
                  source code of the current version of the Watley
                  UltimateTrader platform;

                  (C) within sixty (60) days of the date hereof, customize the
                  current version of the UltimateTrader platform (which includes
                  such features as Comtex news, hot keys, the Island and Arca
                  ECN books, order entry window/level II window, improved chart
                  studies/improved performance, market ticker, high and low
                  ticker, position ticker and export order status, as such
                  features currently exist) to include those features unique to
                  the current version of the E*TRADE Pro platform (including
                  removing Times Ten and replacing it with Oracle) and provide
                  copies of and familiarize E*TRADE personnel with the source
                  code and operation of such customized version;

                  (D) on the date hereof, provide all source code and
                  documentation related to Super SOES order entry to enable
                  E*TRADE to implement Super SOES order entry when its back end
                  is ready; and

                  (E) to the extent required by E*TRADE, provide those services
                  necessary to operate the E*TRADE Pro platform (or
                  UltimateTrader platform, as appropriate) using competent and
                  qualified personnel, including the data feeds and related
                  hardware and software.

         (2) Until the Transition is completed, Watley shall continue to provide
         the services and access to intellectual property and data feeds
         currently provided by Watley to E*TRADE and its customers and otherwise
         as necessary to allow E*TRADE to continue to operate its E*TRADE Pro
         platform based on the Software ("TRANSITION SUPPORT"). Transition
         Support shall include providing the levels of availability set forth in
         Schedule 3. The Transition shall be completed and no further Transition
         Support shall be required only when:

                  (A) E*TRADE is able to operate the customized version of the
                  UltimateTrader platform (including the data feeds and ticker
                  plant) at the same level of functionality and performance as
                  currently provided by Watley in an E*TRADE or an E*TRADE
                  authorized third party data center (such as the AT&T
                  Co-Location center) without assistance from Watley or
                  dependence on third-party data feeds to Watley; and

                  (B) all of the special features unique to E*TRADE's current
                  production version of the E*TRADE Pro platform are fully
                  integrated into the current Watley production version of the
                  UltimateTrader platform such that the E*TRADE specific
                  features run as well as on the current E*TRADE production
                  version, and the Watley-specific features run as well as on
                  the current Watley production version;

         provided that:

                  (C) E*TRADE shall have 21 business days from the date of
                  delivery of the source code (as part of a complete CD-ROM
                  package or via FTP over a web site) for the current version of
                  the E*TRADE Pro platform to compile such source code to
                  determine if the resulting object code is equivalent to the
                  version of object code currently used by E*TRADE; and

                  (D) E*TRADE shall have 21 business days from the date of
                  delivery of the source code (as part of a complete CD-ROM
                  package or via FTP over a web site) for the customized version
                  of the UltimateTrader platform to perform acceptance tests in
                  accordance with the criteria set forth in subsections (A) and
                  (B) above.

                                       6
<PAGE>

                                                               EXECUTION DRAFT

         In each case in subsections (C) and (D) above, unless E*TRADE informs
         Watley within such 21 business day period that such source code is not
         acceptable, such source code will be deemed accepted.

         (3) For a period of at least six (6) months and until the Transition is
         complete; provided that such period shall not exceed twelve (12)
         months, E*TRADE shall pay $100,000 per month as follows:

                           (i) E*TRADE shall pay Watley's UltimateTrader
                  platform data feed vendors directly on behalf of Watley upon
                  presentation of invoices by Watley; then

                           (ii) E*TRADE shall apply any remaining funds to cover
                  E*TRADE's costs of implementing Co-Location (as defined
                  below); then

                           (iii) E*TRADE shall pay any remaining funds to Watley
                  to be applied by Watley first to paying for costs associated
                  with Watley's technology infrastructure (e.g., servers,
                  networks, etc.), maintenance, and technical facilities (either
                  owned or leased) to ensure the delivery of the data feeds and
                  redundancy necessary to support E*TRADE production trading,
                  and second to paying the salaries of employees required to
                  support E*TRADE production trading.

         (4) Watley represents and warrants that the following activities are
         all of the principal tasks required to co-locate the communications and
         routing equipment necessary to support E*TRADE in the manner in which
         Watley has supported E*TRADE to date ("CO-LOCATION"):

                  (A) Re-terminating the following circuits inside of the AT&T
                      Co-Location space in Allen, TX.

                           (i) NASDAQ T1 circuit from Worldcom (carries Level I,
                  Level II, and NTDS feeds)
                           (ii) SIAC T3 circuit from AT&T (carries CQS and CTS
                  feeds)
                           (iii) E*Trade T1 circuit.

                  (B) Connecting the above-listed circuits to a router in the
                      Co-Location space.

                  (C) Installing a Sun departmental machine with 4 CPUs (as well
                  as a back-machine, which also runs the processes that provides
                  the needed market data for the market feed servers located at
                  E*Trade's site) to run the ticker plant and distribution
                  processes in the facility.

         (5) The data feeds required to support the UltimateTrader platform are
         CQS and CTS (both from Siac), Level 1, Level 2 and NTDS (all from
         NASDAQ), the Island ECN book and the Arca ECN book. E*TRADE shall apply
         for such data feeds within 14 days of the date hereof and use
         reasonable best efforts to get them up and running as soon as
         reasonably possible.

         (6)  The parties agree that:

                  (A) in order to assist in the Transition, E*TRADE will send
                  one senior Java developer with Swing experience, one senior
                  Java developer with Oracle or Times Ten database experience,
                  server experience and some C++ experience, and one senior
                  developer with real time multi-tasking C++ experience, to work
                  with Watley developers during the Transition; and

                  (B) because the services of personnel with in-depth knowledge
                  of the operation of the UltimateTrader platform and the
                  E*Trade Pro platform are essential to competing the
                  Transition, Watley will make available the services of each of
                  Leon Ferguson, Eric Lesatz, Jim Mathieu, Barry Kaplan, Chad
                  Hooker, Ashok Kumar and Dale Jensen (along with other
                  necessary Watley employees) to assist in the Transition and as
                  required by E*TRADE.

                  (C) because the services of personnel with in-depth knowledge
                  of the operation of the E*Trade Pro platform are essential to
                  completing the Transition, E*TRADE will make available the

                                       7

<PAGE>

                                                               EXECUTION DRAFT

                  services of its personnel with the greatest familiarity with
                  the E*Trade Pro platform (along with other necessary E*TRADE
                  employees) to assist in the Transition.

         (7) Until the Transition is completed, E*TRADE may have an E*TRADE
         employee present on the Watley premises, and such employee shall be
         given access to management and all such information or documents as he
         or she shall reasonably request, to monitor the progress of the
         Transition and the compliance by Watley with the terms of this
         Amendment.

         (8) As part of the Transition, Watley will modify its ticker plant to
         allow the use of E*TRADE's existing Bridge data feed to E*TRADE's data
         room for providing index quotes and as a back-up for market feeds.

         (e) Watley and E*TRADE agree that E*TRADE shall be entitled to all of
         the benefits of 11 U.S.C. Section 365(n) in connection with this
         license.

Section 14 is deleted and replaced by:

         E*TRADE shall have the right to solicit all of Watley's employees;
         provided that E*TRADE may not solicit Leon Ferguson, Eric Lesatz, Barry
         Kaplan, Louis Van Houten or Steve Bate during their employment by
         Watley.

Section 17 is amended to further include:

         (d) For purposes of Section 17(a), "Software" shall not include any
         modifications to the Software made by E*TRADE. For purposes of Section
         17(b), "Software" shall include any modifications to the Software made
         by E*TRADE.

Section 18 (m) is deleted and replaced with:

         The provisions of Sections 11, 14, 16, 17 and 18 shall survive
termination or expiration of this Agreement.

Schedule 3 (Preferred Escrow Agreement) is deleted and replaced by:

         A.       Infrastructure Services Availability.
                  ------------------------------------

         Watley will provide the following level of availability for the market
         data feeds, connectivity and Watley technology infrastructure necessary
         to support delivery of market data to E*TRADE (the "WATLEY PLATFORM"):

         1. Watley Platform Availability. During Market Hours (as defined
         below), Watley will provide 99.0% average Watley Platform availability
         in any given month and 99.0% average Watley Platform availability in
         any given calendar quarter (not including Scheduled Watley Platform
         Maintenance). "Watley Platform availability" will not be affected by
         failures of E*TRADE developed applications or E*TRADE's systems, or any
         other failures beyond the reasonable control of Watley. The Watley
         Platform is considered unavailable if a Severity 1 Problem or a
         Severity 2 Problem occurs.

         2. Definition of Market Hours. "Market Hours" shall mean 8:00 am to
         8:00 pm ET on days on which the NASD considers normal operating days.
         In the event that those hours of operation are expanded beyond normal
         "Market Hours," the parties shall meet in good faith to discuss whether
         to make any appropriate modifications.

         3.  Notification of Scheduled Watley Platform Downtime.  Watley will
         notify E*TRADE of scheduled platform changes a minimum of seventy-two
         (72) hours in advance.

         B.       Response and Resolution Times.
                  -----------------------------
         1.  Definitions.

                                       8
<PAGE>

                                                                EXECUTION DRAFT

                           * A "Response" is an acknowledgement of a trouble
         ticket delivered by E*TRADE to Watley (a "Trouble Ticket") or a
         response initiated by Watley to E*TRADE in those cases where Watley
         discovers the problem without contact from E*TRADE. Watley will
         proactively escalate problems that are unresolved in accordance with
         the intervals of time listed in the escalation chart. To determine
         compliance with the Response intervals, a Response shall be deemed to
         be provided to E*TRADE when: (1) in response to a Trouble Ticket,
         E*TRADE has received a communication (phone or email or page) from
         Watley acknowledging the problem; or (2) Watley notifies E*TRADE
         through phone or email or page contact of such problem, if such problem
         was discovered by Watley or one of its other partners.
                           * "Resolution" is reached when one or more of the
         following actions have occurred: (1) corrective actions by Watley has
         resumed service; (2) further use of the application during the
         resolution period does not reproduce the problem (in this case, the
         problem is considered closed, but can be reopened should the same
         problem occur at a later date); (3) the suspected problem is determined
         by Watley, in its reasonable discretion and evidenced through records,
         to be known code restriction, caused by the applications or the
         facilities, equipment, and personnel of E*TRADE other than Watley, its
         agents, subcontractors or any third party service provider of Watley
         (in which case, it will no longer be classified as a problem); or (4)
         Watley and E*TRADE mutually agree that the problem is either resolved
         or not considered severe.
                           * A "problem" is a failure of the
         Infrastructure Services as described below.
                           * A "Severity 1 Problem" is a problem that
         causes a complete outage of the market data services provided by
         Watley.  For example, E*TRADE is unable to retrieve market data at
         E*Trade's site.  This would be an indication of an outage.  This
         example must occur multiple times and be reproducible by Watley
         employees
                           * A "Severity 2 Problem" is a problem that causes a
         significant failure or degradation in performance of market data
         services provided by Watley. Examples: (1) delivery of market data
         which is delayed more than one second (1 sec) or (2) Watley code
         modules fail to return the correct result. These examples must have
         occurred multiple times and be reproducible by Watley employees.
                           * A "Severity 3 Problem" is a problem that that
         causes a minor portion of an application to run in degraded mode or not
         work as expected but has only minimal impact upon the use of the
         application. This problem must have occurred multiple times and be
         reproducible by Watley employees.

         2.  Response and Resolution Times.

                  Severity 1 Problem:
                           Response:        within fifteen (15) minutes
                           Resolution:      within four (4) hours

                  Severity 2 Problem:
                           Response:        within thirty (30) minutes
                           Resolution:      within twenty-four (24) hours

                  Severity 3 Problem:
                           Response:        within one (1) business day
                           Resolution:      within five (5) business days

         Although Watley is under no obligation to resolve non-reproducible
         errors, Watley will respond to any such error in the time-frame set
         forth above and will use commercially reasonable efforts in
         collaborating with E*TRADE to resolve such non-reproducible error.

         3.  Escalation Procedures:  If Watley does not respond to requests for
         service from E*TRADE within the time frames described above, E*TRADE
         may contact Watley escalation contacts below.

         Escalation Level         Severity 1       Severity 2        Severity 3
         Support Engineer         15 minutes       1 hour            24 hours
         Manager                  2 hours          4 hours           48 hours

                                       9
<PAGE>

                                                                EXECUTION DRAFT

         Vice President           8 hours          24 hours          96 hours

         Severity 1 Update Frequency:       Every 30 minutes or as otherwise
         agreed to by the parties.

         Severity 2 Update Frequency:       Every hour during business hours or
         as otherwise agreed to by the parties.

         Severity 3 Update Frequency:       Every business day or as otherwise
         agreed to by the parties.

         4. Customer Assistance: E*TRADE employees or E*TRADE authorized
         independent contractors with sufficient knowledge of the problem must
         be available during the Resolution interval to explain and/or describe
         the problem if the Watley staff deems it necessary. Timely resolution
         of the problem may require E*TRADE to provide web access logs,
         application error logs etc.

                                            E*TRADE GROUP, INC.

                                            By:  /s/ Jarret Lillien
                                                ___________________

                                            Name:  Jarret Lillien
                                                   _________________

                                            Date:  April 8, 2002
                                                   __________________

                                            A.B. WATLEY GROUP INC.

                                            By:  /s/ Leon J. Ferguson
                                                 ___________________

                                            Name:  Leon J. Ferguson
                                                   _________________

                                            Date:  April 4, 2002
                                                   __________________

                                       10

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