First Amendment To Software License Agreement

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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(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


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"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.


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