Employment Agreement between A.B. Watley Group Inc. and John G. Hewitt (Chief Executive Officer)

Summary

This agreement is between A.B. Watley Group Inc. and John G. Hewitt, who is being hired as Chief Executive Officer for a two-year term starting March 21, 2005. Mr. Hewitt will receive a $250,000 annual salary, 5 million restricted shares, and warrants to purchase additional shares if certain profit targets are met. He is also eligible for bonuses and standard executive benefits. The agreement outlines his duties, compensation, and conditions for extending or terminating employment.

EX-10.1 2 v014905_ex10-1.txt EXHIBIT 10.1 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 21st day of March, 2005 (the "Commencement Date"), and is by and between A.B. WATLEY GROUP INC., a Delaware corporation with an office at 90 Park Avenue, New York, NY 10016 (hereinafter "Company"), and JOHN G. HEWITT with an address at 945 Fifth Avenue, New York, New York, 10021 (hereinafter the "Executive"). W I T N E S S E T H : WHEREAS, the Company wishes to retain the services of Executive to serve as Chief Executive Officer of the Company and its wholly owned subsidiary, A.B. Watley Direct, Inc. and in such other capacities as the Company and Executive shall mutually agree in accordance with the following terms, conditions and provisions; and WHEREAS, Executive wishes to perform such services for and on behalf of Company, in accordance with the terms, conditions and provisions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained the parties hereto intending to be legally bound hereby agree as follows: 1. EMPLOYMENT. Company hereby employs Executive and Executive accepts such employment and shall perform his duties and the responsibilities provided for herein in accordance with the terms and conditions of this Agreement. 2. EMPLOYMENT STATUS. Executive shall at all times be Company's employee subject to the terms and conditions of this Agreement. 3. TERM. Unless earlier terminated pursuant to terms and provisions of this Agreement, this Agreement shall have a term (the "Term") of two (2) years from the Commencement Date. The Term may be extended for additional one year periods, at the mutual discretion of the parties, on terms to be negotiated. 4. POSITIONS. During Executive's employment hereunder, Executive shall serve as Chief Executive Officer of the Company and its wholly owned subsidiary, A.B. Watley Direct, Inc. and shall work primarily for the Company. In such position, Executive shall have the customary powers, responsibilities and authorities of such position in corporations of the size, type and nature of Company. Executive shall perform such duties and exercise such powers commensurate with his positions and responsibilities as shall be determined from time to time by the Board of Directors of Company (the "Board"). Neither Executive's title nor any of his functions shall be changed, diminished or adversely affected during the Term without written direction from the Board. Executive shall be provided with an office, staff and other working facilities at the executive offices of Company consistent with his positions and as required for the performance of his duties. At such time, if any, that the Company secures Directors and Officers Insurance, and for the balance of the Term, subject to earlier removal, resignation or replacement, Executive shall also serve as a Director of the Company. 5. LOCATION. During Executive's employment hereunder, Executive shall be based at the Company's offices in New York, New York. 6. COMPENSATION. For the performance of all of Executive's services to be rendered pursuant to the terms of this Agreement, Company will pay and Executive will accept the following compensation: 6.1 Base Salary. During the Term, Company shall pay Executive a base annual salary of $250,000 (the "Base Salary") payable in equal semi-monthly installments. The Company shall deduct and withhold from Executive's compensation all necessary or required taxes, including but not limited to Executive's statutory income tax withholding and employment insurance contributions, and any other applicable amounts required by law or any taxing authority. 6.2 Stock. As soon as practicable following execution of this Agreement, the Company will issue to Executive 5,000,000 shares of its restricted common stock (the "Compensation Shares"). 6.3 Warrants. The Company hereby grants Executive common stock purchase warrants (the "Warrants") to acquire an aggregate of 7,500,000 common shares of Company stock, the vesting of which is subject to the Company meeting certain net profit levels. The terms of such Warrants are as follows: (i) 2,000,000 Warrants, each to acquire one share of the Company's common stock at a price of $.05 per share at any time during a period of 10 years from issuance. These Warrants are only exercisable in the event that Company's cumulative net profit during the Term, as such may be extended, as calculated on a quarterly basis, commencing with the quarter starting April 1, 2005 (net of amounts, if any, distributed from the Company's Bonus Pool) equals or exceeds $1,500,000; (ii) an additional 2,000,000 Warrants, each to acquire one share of the Company's common stock at a price of $.20 per share at any time during a period of 10 years from issuance. These Warrants are only exercisable in the event that Company's cumulative net profit during the Term, as such may be extended, as calculated on a quarterly basis, commencing with the quarter starting April 1, 2005 (net of amounts, if any, distributed from the Company's Bonus Pool) equals or exceeds $4,500,000; (iii) an additional 2,000,000 Warrants, each to acquire one share of the Company's common stock at a price of $.40 per share at any time during a period of 10 years from issuance. These Warrants are only exercisable in the event that Company's cumulative net profit during the Term, as such may be extended, as calculated on a quarterly basis, commencing with the quarter starting April 1, 2005 (net of amounts, if any, distributed from the Company's Bonus Pool) equals or exceeds $7,500,000; 2 (iv) an additional 1,500,000 Warrants, each to acquire one share of the Company's common stock at a price of $.40 per share at any time during a period of 10 years from issuance. These Warrants are only exercisable in the event that Company's cumulative net profit during the Term, as such may be extended, as calculated on a quarterly basis, commencing with the quarter starting April 1, 2005 (net of amounts, if any, distributed from the Company's Bonus Pool) equals or exceeds $10,500,000; and Subject to earlier forfeiture, as provided in this Agreement, in the event the cumulative net profit target of $10,500,000 set forth in (v) above is not achieved on or before March 31, 2009, all non-vested Warrants will be forfeited. If the Company at any time while any Warrants are outstanding shall (i) pay a stock dividend or otherwise make a distribution of shares of its common stock payable in shares of its common stock, (ii) subdivide or reclassify outstanding shares of common stock into a larger number of shares, or (iii) combine outstanding shares of common stock into a smaller number of shares, there shall be a corresponding adjustment in the Warrant exercise price and the number of Warrants issuable upon exercise thereof. 6.4. Bonus Pool Participation. During the Term, Executive will be eligible to participate in the Company's bonus pool for Company employees (the "Bonus Pool"). The Bonus Pool, which is not presently in existence, will be funded with up to 25% of the Company's annual net profit, if any, for the twelve month periods commencing April 1, 2005. Funding of the Bonus Pool and payments from the Bonus Pool to eligible participants will be made at the sole discretion of the Board. Eligible participants that are members of the Board will abstain from voting on their own participation in the Bonus Pool. A maximum of $1,000,000 of the first $2,000,000 paid from the Bonus Pool for a given year may be paid to Executive. 7. EXECUTIVE BENEFITS. 7.1 Executive shall be entitled to receive 4 weeks paid vacation per year. 1.1 Reasonable travel and other business expenses actually incurred by Executive in the performance of his duties hereunder shall be reimbursed by Company in accordance with Company policies as in effect from time to time. 7.3 Executive shall be eligible to participate in all health insurance and other Company benefit plans maintained by the Company for the benefit of its employees. 8. TERMINATION. 8.1 Termination by Company Without Cause. Subject to Section 8.6 hereof, the Company shall have the right to terminate Executive's employment hereunder without cause by giving Executive written notice to that effect. Any such termination of employment shall be effective on the date specified in such notice. 3 8.2 Termination by Company for Cause. Subject to Section 8.6 hereof, the Company shall have the right to terminate this Agreement and Executive's employment hereunder "for cause" by giving Executive written notice to that effect. Any such termination of employment shall be effective on the date specified in such notice. For the purpose of this Agreement, "for cause" shall mean (i) commission of a willful act of dishonesty in the course of Executive's duties hereunder, (ii) conviction by a court of competent jurisdiction of a criminal offense or a crime constituting a felony or conviction in respect of any act involving fraud, dishonesty or moral turpitude resulting in Company's detriment or reflecting upon Company's integrity (other than traffic infractions or similar minor offenses), (iii) a material breach by Executive of the terms of this Agreement and failure to cure such breach within 30 days after receipt of written notice from Company specifying the nature of such breach or to pay compensation to Company deemed reasonable by Company if the breach cannot be cured, or (iv) the discovery by the Company in the course of a background check on the Executive to be completed by the Company within 60 days of the date hereof that Executive has previously been convicted of a felony, a criminal offense involving fraud, dishonesty, or moral turpitude or has engaged in other activities which in the Company's reasonable judgment brings into question Executive's ability to properly perform the duties and responsibilities being undertaken by him hereunder or which could reasonably be deemed to be materially damaging or detrimental to the Company. 8.3 Death, Incapacitation or Disability. (a) Subject to Section 8.6 hereof, if Executive dies during his employment hereunder, this Agreement shall terminate upon the date of Executive's death. (b) Subject to Section 8.6 hereof, in the event Executive suffers Total and Permanent Disability, Company may terminate Executive's employment. "Total and Permanent Disability" means any condition affecting Executive that prevents the performance of the essential job functions and which is expected to be of a long, continued and indefinite duration which has caused Executive's absence from service, after providing to Executive reasonable accommodation to perform the requirements of the job if required by law, for not less than 20 consecutive days or for such shorter periods aggregating 30 days during any 6 month period. In such instance, a determination of the existence of Executive's disability and of the duration of the disability may be made by written agreement between Company and Executive, or Executive's legally appointed guardian if Executive then is incompetent. If the parties do not agree, such determination shall be made, and certified in writing, by a licensed physician and not an employee of Company, and such physician's determination, after the proper medical examination, shall be binding and conclusive upon the parties to this Agreement. If Executive is found to be totally disabled, Executive shall be deemed to remain disabled until found otherwise by the examining physician. 8.4 Termination by Executive for Good Reason. (a) Subject to Section 8.6 hereof, Executive shall have the right to terminate this Agreement and his employment hereunder for "good reason" if (A) Executive shall have given Company prior written notice of the reason therefor, (B) such notice shall have been given to Company within fifteen (15) days after Executive is notified or otherwise first learns of the event constituting "good reason," and (C) a period of fifteen (15) days following receipt by Company of such notice shall have lapsed and the matters which constitute or give rise to such "good reason" shall not have been cured or eliminated by Company; provided, however, that if such matters are of a nature that same cannot be cured or eliminated within such fifteen (15) day period, such period shall be extended up to forty five (45) days, provided that Company shall take and diligently pursue during such period such action necessary to cure or eliminate such matters. In the event Company shall not take such action within such period, Executive may send another notice to Company electing to terminate his employment hereunder and, in such event, Executive's employment hereunder shall terminate and the effective date of such termination shall be the third business day after Company shall have received such notice. 4 (b) For the purpose of this Agreement, "good reason" shall mean the occurrence of any of the following without Executive `s prior written consent: (A) Requiring Executive to engage in (x) an illegal act or (y) an act which is inconsistent with prior practices of Company and which could reasonably be deemed to be materially damaging or detrimental to Executive; (B) A default by Company in the payment of any material sum or the provision of any material benefit due to Executive pursuant to this Agreement; (C) The failure of Company to obtain the assumption of this Agreement by any successor to substantially all of the assets or business of Company; or (D) Any material breach by Company of any provision of this Agreement which is not corrected by Company or, if the breach cannot be corrected, as to which Company fails to pay to Executive reasonable compensation for such breach, within 60 days following receipt by Company of written notice from Executive specifying the nature of such breach. 8.5 Termination by Executive Without Good Reason. Subject to Section 8.6 hereof, Executive shall have the right to terminate this Agreement and his employment hereunder without good reason by giving Company 60 days prior written notice to that effect. The termination of employment shall be effective on the date specified in such notice, or earlier, at the determination of Company, in which event such termination shall remain classified as a termination by Executive without good reason. 8.6 Consideration. (a) If Company terminates this Agreement "without cause" under Section 8.1 or if Executive terminates this Agreement for "good reason" under Section 8.4, then Executive shall be entitled to receive, and Company shall pay to Executive: (i) 100% of the total Base Salary remaining for the Term without reduction for present valuation not later than the next regularly scheduled payment date in accordance with Section 6.1; 5 (ii) any business expenses to be reimbursed but not reimbursed under Section 7 not later than the next regularly scheduled payment date in accordance with Section 7; (b) If Company terminates this Agreement "with cause" under Section 8.2, or if Executive terminates this Agreement for other than "good reason" under Section 8.5, or if this Agreement is terminated as a result of the death of Executive under Section 8.3, then Executive shall be entitled to receive, and Company shall pay to Executive, or, in the case of death, Executive's administrator: (i) all of the accrued but unpaid Base Salary through the date of termination or death not later than the next regularly scheduled payment date in accordance with Section 6.1; (ii) any business expenses to be reimbursed but not reimbursed under Section 6 not later than the next regularly scheduled payment date in accordance with Section 6; (c) If at any time during the initial year of the Term, the Company terminates this Agreement "with cause" under Section 8.2 or if Executive terminates this Agreement for other than "good reason" under Section 8.5 Executive shall promptly return the Compensation Shares to the Company for cancellation. (d) If this Agreement is terminated as a result of the disability of Executive under Section 8.3, Executive shall be entitled to receive, and Company shall pay to Executive: (iii) the accrued but unpaid Base Salary through the date of termination not later than the next regularly scheduled payment date in accordance with Section 6.1; (iv) any business expenses to be reimbursed but not reimbursed under Section 7 not later than the next regularly scheduled payment date in accordance with Section 7; (e) If the Company terminates this Agreement "without cause" under Section 8.1; if Executive terminates this Agreement for "good reason" under Section 8.4; or if this Agreement is terminated as a result of the death or disability of Executive under Section 8.3, the Warrants shall continue to be given the opportunity to vest for the remainder of the then existing Term. At the end of such existing Term all non-vested Warrants shall be cancelled. (f) If the Company terminates this Agreement "for cause" under Section 8.2; or if Executive terminates this Agreement "without good reason" under Section 8.5, all Warrants received by Executive under Section 6.2 shall become immediately void and of no further effect. 6 9. INTELLECTUAL PROPERTY. During the term of this Agreement, Executive shall disclose immediately to Company all ideas and inventions that he makes, conceives, discovers or develops during the course of employment with Company, including but not limited to any inventions, modifications, discoveries, developments, improvements, trademarks, computer programs, processes, products or procedures (collectively "Work Product") that: (i) relates to the business of Company; or (ii) results from tasks assigned to Executive by Company; or (iii) results from the use of the premises or property (whether tangible or intangible) owned, leased or contracted for or by Company. Executive agrees that any Work Product shall be the sole and exclusive property of Company without the payment of any royalty or other consideration except for the compensation paid to Executive hereunder. Executive agrees that during the term of this Agreement and thereafter, upon the request of Company and at its expense, she shall execute and deliver any and all applications, assignments and other instruments which Company shall deem necessary or advisable to transfer to and vest in Company Executive's entire right, title and interest in and to all such ideas, inventions, trademarks or other developments and to apply for and to obtain patents or copyrights for any such patentable or copyrightable ideas, inventions, trademarks and other developments. 10. NON-DISCLOSURE OF INFORMATION. 10.1 Executive acknowledges that by virtue of his position he will be privy to Company's confidential information and trade secrets, as they may exist from time to time, and that such confidential information and trade secrets may constitute valuable, special, and unique assets of Company (hereinafter collectively "Confidential Information"). Accordingly, Executive shall not, during the Term and for a period of five (5) years thereafter, intentionally disclose all or any part of the Confidential Information to any person, firm, corporation, association or any other entity for any reason or purpose whatsoever, nor shall Executive and any other person by, through or with Executive, during the term and for a period of five (5) years thereafter, intentionally make use of any of the Confidential Information for any purpose or for the benefit of any other person or entity, other than Company, under any circumstances. 10.2 Company and Executive agree that a violation of the foregoing covenants will cause irreparable injury to Company, and that in the event of a breach or threatened breach by Executive of the provisions of this Section 10, Company shall be entitled to an injunction restraining Executive from disclosing, in whole or in part, any Confidential Information, or from rendering any services to any person, firm, corporation, association or other entity to whom any such information, in whole or in part, has been disclosed or is threatened to be disclosed in violation of this Agreement. Nothing herein stated shall be construed as prohibiting Company from pursuing any other rights and remedies, at law or in equity, available to Company for such breach or threatened breach, including the recovery of damages from Executive. 10.3 Notwithstanding anything contained in this Section 10 to the contrary, "Confidential Information" shall not include (i) information in the public domain as of the date hereof, (ii) information which enters the public domain hereafter through no fault of Executive, (iii) information created, discovered or developed by Executive independent of his association with Company, provided that such information is supported by accompanying documentation of such independent development. Nothing contained in this Section 10 shall be deemed to preclude the proper use by Executive of Confidential Information in the exercise of his duties hereunder or the disclosure of Confidential Information required by law 7 11. ARBITRATION. Other than with respect to a proceeding for injunctive relief referred to herein, any controversy or claim arising out of or relating to this Agreement, the performance thereof or its breach or threatened breach shall be settled by arbitration in New York, New York or other mutually acceptable place in accordance with the then governing rules of the American Arbitration Association. The finding of the arbitration panel or arbitrator shall be final and binding upon the parties with the costs of arbitration to be equally borne by the plaintiffs and the defendants, i.e. the costs borne by defendant side in the arbitration, whether single or multiple, shall equal the costs borne by the plaintiff side in the arbitration, whether single or multiple. Judgement upon any arbitration award rendered may be entered and enforced in any court of competent jurisdiction. In no event may the arbitration determination change Executive's compensation, title, duties or responsibilities, the entity to whom Executive reports or the principal place where Executive is to render his services. 12. INDEMNIFICATION. 12.1 (a) Indemnification of Expenses. Except as provided in Section 12(b) hereof, the Company shall indemnify to the fullest extent permitted by law if Executive was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Executive in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a "Claim") by reason of (or arising in part out of) any event or occurrence related to the fact that Executive is or was a director, officer, employee, agent or fiduciary of Company, or any subsidiary of Company, or is or was serving at the request of Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, or by reason of any action or inaction on the part of Executive while serving in such capacity (hereinafter an "Indemnifiable Event") against any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by Company, which approval shall not be unreasonably withheld) of such Claim and any federal, state, local or foreign taxes imposed on Executive as a result of the actual or deemed receipt of any payments under this Agreement (collectively, hereinafter "Expenses"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by Company as soon as practicable but in any event no later than twenty days after Executive presents written demand therefor to Company. (b) Limitation on Indemnification. The Company's obligation to indemnify Executive pursuant to this Agreement shall not extend to acts of Executive constituting gross negligence or other acts of malfeasance. 8 12.2 Expenses; Indemnification Procedure. (a) Subject to the other terms and conditions of this Agreement, Company shall advance all Expenses incurred by Executive. The advances to be made hereunder shall be paid by Company to Executive as soon as practicable but in any event no later than twenty days after written demand by Executive therefor to Company. (b) Executive shall, as a condition precedent to Executive's right to be indemnified under this Agreement, give Company notice in writing as soon as practicable of any Claim made against Executive for which indemnification will or could be sought under this Agreement. Notice to Company shall be directed to the Board of Directors of Company at the address shown on the signature page of this Agreement and to the address of each Director (or such other address as Company shall designate in writing to Executive). In addition, Executive shall give Company such information and cooperation as it may reasonably require and as shall be within Executive's power. (c) For purposes of this Agreement, the determination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Executive did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. (d) If, at the time of the receipt by Company of a notice of a Claim pursuant to Section 12.2(b) hereof, Company has liability insurance in effect which may cover such Claim, Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Executive, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies. (e) In the event Company shall be obligated hereunder to pay the Expenses of any Claim, Company shall be entitled to assume the defense of such Claim with counsel approved by Executive, which approval shall not be unreasonably withheld, upon the delivery to Executive of written notice of its election so to do. After delivery of such notice, approval of such counsel by Executive and the retention of such counsel by Company, Company will not be liable to Executive under this Agreement for any fees of counsel subsequently incurred by Executive with respect to the same Claim; provided that, (i) Executive shall have the right to employ Executive's counsel in any such Claim at Executive's expense and (ii) if (A) the employment of counsel by Executive has been previously authorized by Company, (B) Executive shall have reasonably concluded that there is a conflict of interest between Company and Executive in the conduct of any such defense, or (C) Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Executive's counsel shall be at the expense of Company. Company shall have the right to conduct such defense as it sees fit in its sole discretion, including the right to settle any claim against Executive without the consent of Executive so long as in the case of the settlement (i) Company has the financial ability to satisfy any monetary obligation involving Executive under such settlement and (ii) the settlement does not impose injunctive type relief on the activities of Executive. In all events, Executive will not unreasonably withhold its consent to any settlement. 9 12.3 Additional Indemnification Rights; Nonexclusivity. (a) Except as provided in Section 12(b) hereof, the Company hereby agrees to indemnify Executive to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, Company's Certificate of Incorporation, Company's Bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, it is the intent and agreement of the parties hereto that Executive shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder. (b) The indemnification provided by this Agreement shall be in addition to any rights to which Executive may be entitled under Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the Delaware General Corporation Law, or otherwise. The indemnification provided under this Agreement shall continue as to Executive for any action Executive took or did not take while serving in an indemnified capacity even though Executive may have ceased to serve in such capacity. (c) Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Executive to the extent Executive has otherwise actually received payment (under any insurance policy, Certificate of Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. (d) If Executive is entitled under any provision of this Agreement to indemnification by Company for some or a portion of Expenses incurred in connection with any Claim, but not, however, for all of the total amount thereof, Company shall nevertheless indemnify Executive for the portion of such Expenses to which Executive is entitled. 13. NOTICES. Any notice required, permitted or desired to be given under this Agreement shall be sufficient if it is in writing and (a) personally delivered to Executive or an authorized member of Company, (b) sent by overnight delivery or (c) sent by registered or certified mail, return receipt requested, to Company's or Executive's address as provided in this Agreement or to a different address designated in writing by either party. Notice is deemed given on the day it is delivered personally or by overnight delivery, or five (5) business days after it is sent by registered or certified mail. 14. ASSIGNMENT. Executive acknowledges that his services are unique and personal. Accordingly, Executive may not assign his rights or delegate his duties or obligations under this Agreement. Company's rights and obligations under this Agreement shall inure to the benefit of and shall be binding upon Company's successors and assigns. 15. WAIVER OF BREACH. Any waiver of a breach of a provision of this Agreement, or any delay or failure to exercise a right under a provision of this Agreement, by either party, shall not operate or be construed as a waiver of that or any other subsequent breach or right. 10 16. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties. It may not be changed orally but only by an agreement in writing which is signed by the parties. The parties hereto agree that any existing employment agreement between them shall terminate as of the date of this Agreement. 17. GOVERNING LAW; VENUE. This Agreement shall be construed in accordance with and governed by the laws of the New York as applied to agreements entered into and to be performed entirely in New York. Any dispute or controversy concerning or relating to this Agreement shall be exclusively resolved in the courts located in the City of New York and the State of New York. 18. SEVERABILITY. The invalidity or non-enforceability of any provision of this Agreement or application thereof shall not affect the remaining valid and enforceable provisions of this Agreement or application thereof. 19. CAPTIONS. Captions in this Agreement are inserted only as a matter of convenience and reference and shall not be used to interpret or construe any provisions of this Agreement. 20. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement. Delivery of signed counterparts via facsimile transmission shall be effective as manual delivery thereof. [SIGNATURE PAGE FOLLOWS] 11 IN WITNESS WHEREOF, each of the parties hereto has executed their Agreement as of the date first herein above written. COMPANY: A.B. WATLEY GROUP, INC. By: /s/ Robert Malin ----------------------- Name: Robert Malin Title: President EXECUTIVE: /s/ John G. Hewitt - ----------------------- John G. Hewitt 12