Escrow Agreement

ESCROW AGREEMENT


THIS ESCROW AGREEMENT (this "Agreement") is made as of August 8th, 2000, by and among A.B. Watley Group Inc., a corporation incorporated under the laws of Delaware (the "Company"), Seacrown Limited ("Purchaser"), and Epstein Becker & Green, P.C., having an address at 250 Park Avenue, New York, NY 10177 (the "Escrow Agent"). Capitalized terms used but not defined herein shall have the meanings set forth in the Common Stock Purchase Agreement referred to in the first recital.


WHEREAS, the Purchaser will from time to time as requested by the Company, purchase shares of the Company's Common Stock from the Company as set forth in that certain Common Stock Purchase Agreement (the "Purchase Agreement") dated the date hereof between the Purchaser and the Company, which will be issued as per the terms and conditions contained herein and in the Purchase Agreement; and


WHEREAS, the Company and the Purchaser have requested that the Escrow Agent hold in escrow and then distribute the initial documents and certain funds which are conditions precedent to the effectiveness of the Purchase Agreement, and have further requested that upon each exercise of a Draw Down, the Escrow Agent hold the relevant documents and the applicable purchase price pending receipt by Purchaser of certificates representing the securities issuable upon such Draw Down;


NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and intending to be legally bound hereby, the parties agree as follows:


ARTICLE I


TERMS OF THE ESCROW FOR THE INITIAL CLOSING


1.1. The parties hereby agree to establish an escrow account with the Escrow Agent whereby the Escrow Agent shall hold the funds and documents which are referenced in Section 5.2 of the Purchase Agreement.


1.2. At the Initial Closing, the Company shall deliver to the Escrow Agent:


(i) the original executed Registration Rights Agreement in
the form of Exhibit A to the Purchase Agreement;


(ii) the original executed opinion of Hartman & Craven LLP
in the form of Exhibit C to the Purchase Agreement;


(iii) the sum of $35,000 for the fees and expenses of the
Purchaser's counsel;


(iv) the sum of $35,000 for the non-accountable expense
allowance of Ladenburg Thalmann & Co. Inc.;


(v) the original executed Company counterpart of this
Escrow Agreement;


(vi) the original executed Company counterpart of the
Purchase Agreement;


(vii) the original executed Warrant in the form of Exhibit E
to the Purchase Agreement; and


(viii) a warrant certificate issued to Ladenburg Thalmann &
Co. Inc. identical to the Warrant (the "LT Warrant").


1.3. Upon receipt of the foregoing, and receipt of executed counterparts from Purchaser of the Purchase Agreement, the Registration Rights Agreement and this Escrow Agreement, the Escrow Agent shall calculate and enter the number, the exercise price, the issuance date and termination date on the face of the Warrant and the LT Warrant and immediately transfer the sum of Thirty-Five Thousand Dollars ($35,000) to Epstein Becker & Green, P.C. ("EB&G"), 250 Park Avenue, New York, New York 10177 for the Purchaser's legal, administrative and escrow costs and the sum of Thirty-Five Thousand Dollars ($35,000) to Ladenburg Thalmann & Co. Inc. as a non-accountable expense allowance and the Escrow Agent shall then arrange to have the Purchase Agreement, this Escrow Agreement, the Registration Rights Agreement, the Warrant and the LT Warrant and the opinion of counsel delivered to the appropriate parties.


1.4. Wire transfers to the Escrow Agent shall be made as follows:


Epstein Becker & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
1411 Broadway - Fifth Floor
New York, New York 10018
ABA No. 021000021
Account No. 035-1-346036
Attention: L. Borneo


ARTICLE II


TERMS OF THE ESCROW FOR EACH DRAW DOWN


2.1. Each time the Company shall send a Draw Down Notice to the Purchaser a ...