<PAGE>
As filed with the Securities and Exchange Commission on April 21, 2000
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------------
A.B. Watley Group Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3911867
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
40 Wall Street, New York, New York 10005
(Address of Principal Executive Offices) (Zip Code)
1997 STOCK OPTION PLAN
SECOND AMENDED AND RESTATED 1998 STOCK OPTION PLAN
1999 STOCK OPTION PLAN
(Full Title of the Plan)
Steven Malin, Chairman
A.B. Watley Group Inc.
40 Wall Street
New York, New York 10005
(Name and address of agent for service)
(212) 422-1664
--------------
(Telephone number, including area code, of agent for service)
Copy to:
Edward I. Tishelman, Esq.
Hartman & Craven LLP
460 Park Avenue
New York, New York 10022
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================= ================ =============== ================= ==============
Proposed Proposed
maximum Maximum Amount of
Title of Amount to be offering price Aggregate registration
securities to be registered registered per unit(1) Offering price(1) fee
- ------------------------------------------------- ---------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
common stock, par value $.001 per share.......... 2,000,000 shares $20.50 $21,028,679 $5,551.57
================================================= ================ =============== ================= ==============
</TABLE>
(1) Based on a per share exercise price of (i) $2.00 per share for 180,500
shares, (ii) $5.00 per share for 85,700 shares, (iii) $7.00 per share for
785,600 shares, (iv) $8.00 per share for 2,000 shares, (v) $9.8125 per share for
150,000 shares, (vi) $10.00 per share for 68,500 shares, (vii) $10.1875 per
share for 148,750 shares, (viii) $10.25 per share for 11,000 shares, (ix)
$10.4375 per share for 2,000 shares, (x) $10.50 per share for 6,000 shares, (xi)
$10.75 per share for 3,000 shares, (xii) $10.875 per share for 5,000 shares,
<PAGE>
(xiii) $11.38 per share for 1,650 shares, (xiv) $11.50 per share for 21,350
shares, (xv) $12.125 per share for 10,000 shares, (xvi) $12.4375 per share for
12,000 shares, (xvii) $13.00 per share for 16,000 shares, (xviii) $13.25 per
share for 2,000 shares, (xix) $15.125 per share for 500 shares, (xx) $15.25 per
share for 2,500 shares, and (xxi) $16.25 per share for 2,000 shares. The balance
of the shares are exercisable at $20.50 per share and is estimated solely for
the purpose of calculating the registration fee in accordance with Rule 457(c)
and (h) under the Securities Act of 1933, as amended. The price per share is
estimated based on the average of the high and low sales prices for A.B. Watley
Group Inc.'s Common Stock on April 18, 2000, as reported on the Nasdaq National
Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation Of Documents By Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by A.B. Watley Group Inc. (the "Registrant") are
hereby incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1999 filed with the Commission on December 29, 1999;
(b) The Registrant's Form 10-QSB for the quarter ended December 31,
1999 filed with the Commission on February 15, 2000;
(c) The description of the Registrant's common stock, $0.001 par value
(the "Common Stock"), contained in the Registrant's Registration Statement on
Form 8-A (Registration No. 001-14897) filed with the Commission on March 23,
1999 under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, after the date hereof and prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all the securities offered hereby have been sold, or which
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof commencing on the respective dates on which such documents are filed.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interest of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in
3
<PAGE>
successfully defending against a claim and authorizes Delaware corporations to
indemnify their officers and directors under certain circumstances against
expenses and liabilities incurred in legal proceedings involving such persons
because of their being or having been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit a director"s liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director"s liability with respect to any of the following: (i) breaches of the
director"s duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct or a
knowing violation of laws; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation Law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the Registrant or its stockholders to obtain injunctive relief, specific
performance or other equitable relief against directors.
Article Eighth of the Registrant"s Certificate of Incorporation
provides that the personal liability of the directors of the Registrant be
eliminated to the fullest extent permitted under Section 102(b) of the Delaware
General Corporation Law.
Article Ninth of the Registrant"s Certificate of Incorporation and the
Registrant"s By-laws provides that all persons who the Registrant is empowered
to indemnify pursuant to the provisions of Section 145 of the Delaware General
Corporation Law (or any similar provision or provisions of applicable law at the
time in effect), shall be indemnified by the Registrant to the full extent
permitted thereby. The foregoing right of indemnification shall not be deemed to
be exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise.
At present, there is no pending litigation or other proceeding
involving a director or officer of the Registrant as to which indemnification is
being sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any officer or director.
Item 7. Exemption From Registration Claimed.
Not Applicable.
4
<PAGE>
Item 8. Exhibits.
EXHIBIT DESCRIPTION
NUMBER
4 Restated Certificate of Incorporation and form of amendment thereto.*
4.1 By-laws of the Company, as amended.*
4.2 1997 Stock Option Plan.
4.3 Second Amended and Restated 1998 Stock Option Plan.
4.4 1999 Stock Option Plan.
5 Opinion of Hartman & Craven LLP regarding legality of the Common Stock
being registered.
23.1 Consent of Hartman & Craven LLP (included in their opinion filed as
Exhibit 5).
23.2 Consent of Ernst & Young LLP, independent auditors.
- ----------
* Filed as an exhibit to the Registrant"s Registration Statement on Form SB-2
(File No. 333- 71783) and hereby incorporated by reference herein.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on April 21, 2000.
A.B. WATLEY GROUP INC.
By: /s/ Steven Malin
---------------------------
Steven Malin
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Steven Malin Chairman of the Board, Chief Executive Officer and April 21, 2000
- ------------------------ Director (Principal Executive Officer and Principal
Steven Malin Financial Officer)
/s/ Joseph M. Ramos, Jr. Senior Vice President and Chief Financial Officer April 21, 2000
- ------------------------ (Principal Accounting Officer)
Joseph M. Ramos, Jr.
/s/ Harry Simpson President, Chief Operating Officer and Director April 21, 2000
- ------------------------
Harry Simpson
/s/ Robert Malin Director April 21, 2000
- ------------------------
Robert Malin
/s/ Michael Kraines Director April 21, 2000
- ------------------------
Michael Kraines
/s/ Elizabeth Chambers Director April 21, 2000
- ------------------------
Elizabeth Chambers
/s/ Mark Chambre Director April 21, 2000
- ------------------------
Mark Chambre
/s/ Stanley Weinstein Director April 21,2000
- ------------------------
Stanley Weinstein
</TABLE>
6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.2 1997 Stock Option Plan
4.3 Second Amended and Restated 1998 Stock Option Plan
4.4 1999 Stock Option Plan
5 Opinion of Hartman & Craven LLP regarding legality of the
Common Stock being registered
23.1 Consent of Hartman & Craven LLP (included in their opinion
filed as Exhibit 5)
23.2 Consent of Ernst & Young LLP, independent auditors
<PAGE>
A.B. WATLEY GROUP INC. EXHIBIT 4.2
1997 STOCK OPTION PLAN
1. Purpose
This plan (the "Plan") enables employees, non-employee directors and
officers (including officers and directors who are also employees) as well as
independent contractors who contribute to the success of A.B. Watley Group Inc.,
a Delaware corporation (the "Company") to participate in its future prosperity
and growth and further to identify their interests with those of the
shareholders of the Company. The purpose of this Plan is to provide long-term
incentive for gain through outstanding service to the Company and its
shareholders and to assist in recruiting and retaining people of ability and
initiative.
2. Administration
This Plan shall be administered by a stock option committee (the
"Committee") selected by the Board of Directors (the "Board") of the Company
which shall consist of not less than one (1) nor more than three (3) persons.
The Board may also select one or more persons as alternate members of the
Committee, who may take the place of any absent member or members at any meeting
of the Committee. Any vacancy occurring in the membership of the Committee shall
be filled by appointment of the Board. The Committee shall have complete
authority to interpret all provisions of this Plan consistent with law, to
determine and designate those directors or employees of the Company (including,
but not limited to, members of the Committee) to whom options may be granted and
the type and number of option to be granted, to prescribe the form of
instruments evidencing any option granted under this Plan, to adopt, amend and
rescind general and special rules and regulations for its administration, and to
make all other determinations necessary or advisable for the administration of
this Plan.
3. Eligibility
Any member of the Board of the Company, officer and/or any salaried
employee or independent contractor of or to the Company or any of its
subsidiaries (including any subsidiary acquired after adoption of this Plan) who
in the judgment of the Committee contributes significantly to the overall
success of the Company or a subsidiary may be granted an option hereunder.
The Committee will designate non-employee directors and officers and
employees and independent contractors to whom options are to be granted and will
specify whether the option is an Incentive Stock Option (as hereinafter defined)
or non-statutory stock option (except that non-employee directors and officers,
and independent contractors
<PAGE>
may only be granted non-statutory stock options) and the number of shares
subject to each option.
The Committee will also designate non-employee directors and officers,
and employees to whom options are to be granted and will specify the number of
shares subject to each option.
4. Shares Subject to Option
Options may be granted under this Plan on or after January 27, 1997.
Each option so granted will give the optionee the right to purchase a designated
number of the shares of common stock of the Company, $.001 par value (the
"Shares"), (subject to adjustment under Section 9 hereof). Upon exercise of any
option the Company may deliver to the optionee authorized but unissued Shares,
treasury Shares, or any combination thereof.
The Committee will maintain records showing the cumulative total of all
Shares subject to options outstanding under this Plan. The number of Shares
delivered under this Plan shall not exceed in the aggregate 400,000 Shares. The
number may be adjusted to reflect any change in the capitalization of the
Company resulting from a stock dividend or a stock split or other adjustment
contemplated by Section 9 hereof and occurring after the adoption of this Plan.
Subject to Section 6(D) hereof, if an option is terminated, in whole or in part,
for any reason other than the exercise thereof, the Shares allocated to the
option or portion thereof so terminated may be reallocated to another option or
options to be granted under this Plan.
5. Stock Options
(A) Allotment of Shares
(1) Subject to the limitations specified in Section
4(A)(2) hereof, the Committee may grant to optionees
(i) options which are intended to qualify as
incentive stock options ("Incentive Stock Options")
under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"); (ii) options which are
not intended to qualify as Incentive Stock Options;
or (iii) both of the foregoing if not granted to an
optionee in tandem where the exercise of one type of
option would reduce the Shares available under the
other type of option. The Committee may, in its sole
discretion, offer an optionee the opportunity to
surrender his or her options granted pursuant to this
Plan in exchange for different options to be granted
pursuant to this Plan.
<PAGE>
(2) The aggregate fair market value (determined at the
time the option is granted) of the Shares for which
Incentive Stock Options may be granted to an optionee
with respect to which an option is exercisable for
the first time by such optionee during any calendar
year (under all incentive stock option plans of the
Company and its subsidiaries) may not exceed the
amount set forth in Section 422 of the Code with
respect to vesting limits. No Incentive Stock Option
may be granted more than ten years after the
effective date of this Plan.
(3) Options which are not Incentive Stock Options may be
granted to any optionee without regard to the
limitation stated in Section 5(A)(2) hereof.
(B) Option Price
The price per share for Shares purchased by the exercise of any
Incentive Stock Option granted pursuant to this Plan will be the fair market
value per Share of such Shares at the time the option is granted except that the
price per share for Shares purchased by the exercise of any Incentive Stock
Option granted to any employee who at the time of such grant owns 10% or more of
the total combined voting power of all classes of stock of the Company or any
parent corporation (as defined by Section 425(e) of the Code) or any subsidiary
shall be at least 110% of the fair market value of the Shares at the time of
grant, and such option shall not be exercisable after the expiration of five (5)
years from the date of its grant; the price per share for Shares purchased by
exercise of any non-statutory stock option granted pursuant to this Plan shall
be at the sole discretion of the Committee.
(C) Option Period
Except as set forth in Section 5(B) above, each option shall expire on
such date as the Committee shall determine at the time of the grant and except
further that Incentive Stock Options shall not be exercisable after the
expiration of ten (10) years from the date such option is granted.
(D) Exercise of Options
(1) By an Optionee during Continuous Service or
Employment
Subject to the provisions of this Plan, each option granted
hereunder shall be exercisable on such date or dates and
during such period and for such number of Shares as the
Committee may determine.
<PAGE>
Subject to the provisions of subparagraphs (2) and (3) of
paragraph (D) of this Section 5, no director or employee may
exercise any part of an option granted under this Plan unless,
at the time of such exercise, he had served continuously on
the Board of the Company or he has been in he continuous
employment of the /Company of a subsidiary of the Company, as
the case may be, since the date the option was granted. The
Committee may decide in each case to what extent leaves of
absence for government or military service, illness, temporary
disability, or other reasons shall not, for this purpose, be
deemed interruptions of continuous employment.
During the lifetime of an optionee, the option may be
exercised only by the optionee, his attorney-in-fact, his
guardian, or his assignee as hereinafter provided.
(2) By a Former Director, Former Employee or Former
Independent Contractor
After an optionee ceases to be a director or employee or
independent contractor of the Company or such subsidiary, as
the case may be, whether as a result of termination by the
Company or such subsidiary or by the optionee, normal
retirement, early retirement, or disability retirement because
of physical or mental disability, the option may be exercised
by him, his attorney-in-fact, or his guardian, as appropriate,
at any time after the date on which he ceases to be such (but
no later than the earlier of (a) 90 days after he ceases to be
a member of the Company's Board or ceases to be employed by,
or an independent contractor to, the Company or a subsidiary
thereof (for whichever of the above reasons) or, (b) the end
of the fixed term of the option) for the number of Shares for
which the option could have been exercised at the time he
ceased to be a director or an employee, as the case may be, or
for such greater number of Shares subject to the option as to
which the Committee may authorize an acceleration of the
schedule of the time or times of exercise under the option.
(3) In Case of Death or Disability
If an optionee shall die or become permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code,
hereinafter referred to as "Disabled" or "Disability") while
an employee or a director or independent contractor of the
Company or of a subsidiary or if an employee or a director or
independent contractor dies within 90 days after termination
pursuant to 5(D)(2), and at the time of death
<PAGE>
or Disability was entitled to exercise any option granted
under this Plan, then the option may be exercised by such
Disabled optionee or his legal representative, as the case may
be, or by his estate, or by a person who acquires the right to
exercise the option by bequest or inheritance, at any time
after the date of death or Disability (but no later than the
earlier of (a) twelve (12) months after the date of death or
termination by reason of Disability of the optionee or, (b)
the end of the fixed term of the option); provided, however,
in the case of options which are not Incentive Stock Options,
that the Committee may prescribe a period during which the
option may be exercised which is shorter than twelve months
after the death or Disability. The option may be exercised
only for the number of Shares (subject to adjustment under
Section 9 hereof) for which it could have been exercised at
the time the director or former director or employee or former
employee died or became Disabled, or for such greater number
of Shares subject to the option for which the Committee may
authorize an acceleration of the schedule of the time or times
of exercise under the option.
(4) Acceleration or Conversion
On a case-by-case basis, the Committee may, in its sole
discretion, accelerate the schedule of the time or times when
an option granted under this Plan may be exercised. The
Committee may also, in its sole discretion, from time to time,
on a case by case basis, convert Incentive Stock Options
granted to an optionee hereunder into non-statutory stock
option on such basis as the Committee deems advisable.
6. Special Provisions Respecting Exercise
(A) Simultaneously with the exercise of any options granted hereunder,
the Company may require any such optionee to simultaneously make
payment of any federal, state or employment taxes required to be
withheld with respect to the exercise of such options or payable in
connection with such exercise.
(B) An optionee exercising an option hereunder may pay a portion or all
of the exercise price by delivering Shares of the Company already
issued to, and held by such optionee provided that the Company then has
Shares publicly traded (regardless of whether the Shares being utilized
by such optionee are themselves registered for trading). The value of
the Shares being tendered by an optionee shall be calculated at the
last trade price on the day prior to the date of exercise of such stock
option, when Shares are then listed on NASDAQ or a
<PAGE>
national stock exchange or, alternatively, the mean between the "bid"
"asked" price for Shares if there are no trades or if Shares are not
listed thereon.
7. Method of Exercise
Each option granted under this Plan shall be deemed exercised when the
optionee shall indicate the decision to do so in a writing delivered to the
Company, and shall at the same time tender to the Company payment in full for
the Shares for which the option is exercised, and shall comply with such other
reasonable requirements as the Committee may establish pursuant to Sections 10
and 11 hereof. Payment for the Shares shall be made in cash or, in the
discretion of the Committee, through delivery of Shares or a combination of cash
and Shares. No person, estate or other entity shall have any of the rights of a
shareholder with reference to Shares subject to an option until a certificate or
certificates for the Shares shall have been delivered to such person, estate or
other entity.
An option granted under this Plan may be exercised for any lesser
number of Shares than the full amount for which it could be exercised. Such
partial exercise of an option or Stock Appreciation Right shall not affect the
right to exercise the option from time to time in accordance with this Plan for
the remaining Shares subject to the option.
8. Assign ability
No Incentive Stock Option granted to an employee under this Plan shall
be transferable by him except by will or by the laws of descent and
distribution. No non-statutory stock option granted to an optionee hereunder may
be assigned except by will or by the laws of descent and distribution.
9. Adjustment Upon Change of Shares
In the event of a reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange of Shares, stock
split, stock dividend, spin-off, rights offering or other events affecting
Shares of the Company, the number and class of Shares then subject to options
previously granted under this Plan, and the price per Share payable upon
exercise of such options, shall be equitably adjusted by the Committee to
reflect the change.
10. Compliance With Law and Approval of Regulatory Bodies
No option shall be exercisable and no Shares will be delivered under
this Plan except in compliance with all applicable federal and state laws and
regulations, including without limitation, compliance with withholding tax
requirements and with the rules of all stock exchanges on which the Company's
Shares may be listed. Any Share certificate issued to evidence Shares for which
an option is exercised may bear legends and
<PAGE>
statements which the Committee shall deem advisable to assure compliance with
federal and state laws and regulations. No option shall be exercisable, and no
Shares will be delivered under this Plan, until the Company has obtained consent
or approval from regulatory bodies, federal or state, having jurisdiction over
such matters as the Committee may deem advisable.
In the case of the exercise of an option by a person or estate
acquiring the right to exercise the option by bequest or inheritance, the
Committee may require reasonable evidence as to the ownership of the option and
may require such consents and releases of taxing authorities that it may deem
advisable.
11. Investment Representation
The Committee may require the optionee to furnish to the Company,
before the issuance of any Shares upon the exercise of all or any part of an
option granted pursuant to this Plan, a representation (in such form as the
Committee may specify) in which the optionee acknowledges that the Shares
acquired by him upon exercise of his option right have not been registered under
the Securities Act of 1933, as amended, and may not be sold or disposed of,
except in accordance with said Act.
12. General Provisions
Neither the adoption of this Plan nor its operation, nor any document
describing or referring to this Plan, or any part thereof, shall confer upon any
employee any right to continue in the employ of the Company or any subsidiary,
or shall in any way affect the right and power of the Company or any subsidiary
to terminate the employment of any employee at any time with or without
assigning a reason therefor to the same extent as the Company might have done if
this Plan had not been adopted.
Headings are given to the sections of this Plan solely as a convenience
to facilitate reference; such headings, numbering and paragraphing shall not in
any case be deemed in any way material or relevant to the construction of this
Plan or any provisions thereof. The use of the masculine gender shall also
include within its meanings the feminine. The use of the singular shall also
include within its meaning the plural, and vice versa.
13. Amendment
The Board of Directors of the Company may alter, amend or terminate
this Plan from time to time, except no amendment to this Plan may become
effective for which approval of the shareholders of the Company is necessary for
continued compliance of this Plan with Section 422 of the code without such
approval having been obtained.
<PAGE>
14. Duration of the Plan
No option shall be granted under this Plan after January 26, 2007.
Options granted before that date shall remain valid thereafter in accordance
with their terms.
15. Effective Date of Plan
This Plan was adopted by the Board of Directors of the Company on
January 27, 1997.
<PAGE>
A.B. WATLEY GROUP INC.
SECOND AMENDED AND RESTATED 1998 STOCK OPTION PLAN
SECTION 1. Establishment. There is hereby established the Second
Amended and Restated A.B. Watley Group Inc. 1998 Stock Option Plan
("Plan"), pursuant to which employees (including officers), directors,
consultants and other persons who perform substantial services for or on behalf
of A.B. Watley Group Inc. and/or its subsidiaries (the "Company") may
be granted options to purchase shares of common stock of the Company, par value
$.001 per share ("Common Stock"), and thereby share in the future growth of the
business. The subsidiaries of the Company included in this Plan (the
"Subsidiaries") shall be any subsidiary of the Company as defined in Section 424
of the Internal Revenue Code of 1986, as amended (the "Code").
SECTION 2. Status of Options. The options which may be granted pursuant
to this Plan will constitute either incentive stock options within the meaning
of Section 422 of the Code ("Incentive Stock Options") or options which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and Non-incentive Stock Options shall be collectively referred to herein as
"Options".
SECTION 3. Eligibility. All employees (including officers, whether or
not they are members of the Board of Directors) of the Company or any of its
Subsidiaries who are employed at the time of the adoption of this Plan or
thereafter, any directors of the Company, and any consultants and other persons
who perform substantial services for or on behalf of the Company, any of its
Subsidiaries or affiliates, or any entity in which the Company has an interest
(collectively, the "Grantees") shall be eligible to be granted Non-incentive
Stock Options under this Plan. All employees (including officers, whether or not
they are members of the Board of Directors) of the Company or any of its
Subsidiaries who are employed at the time of adoption of this Plan or thereafter
shall be eligible to be granted Incentive Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights.
The total number of shares which may be issued and sold pursuant to Options
granted under this Plan shall be 800,000 shares of Common Stock (or the number
and kind of shares of stock or other securities which, in accordance with
Section 9 of this Plan, shall be substituted for such shares of Common Stock or
to which said shares shall be adjusted; hereinafter, all references to shares of
Common Stock are deemed to be references to said shares or shares so adjusted.)
The issuance of shares upon exercise of an Option shall be free from any
preemptive or preferential right of subscription or purchase on the part of any
shareholder. If any outstanding Option granted under
1
<PAGE>
this Plan expires or is terminated, for any reason, the shares of Common Stock
subject to the unexercised portion of the Option will again be available for
Options issued under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board"). Subject to the express provisions of this Plan, the Board
shall have complete authority, in its discretion, to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), to determine the Grantees to whom, and the times and the prices at
which, Options shall be granted, the option periods, the number of shares of the
Common Stock to be subject to each Option and, as limited by Section 3 hereof,
whether each Option shall be an Incentive Stock Option or a Non-incentive Stock
Option, and to make all other determinations necessary or advisable for the
administration of the Plan. Each Option shall be clearly identified at the time
of grant as to its status. In making such determinations, the Board may take
into account the nature of the services rendered by the respective Grantees,
their present and potential contributions to the success of the Company and such
other factors as the Board, in its discretion, shall deem relevant. Nothing
contained in this Plan shall be deemed to give any Grantee any right to be
granted an Option to purchase shares of Common Stock except to the extent and
upon such terms and conditions as may be determined by the Board. The Board's
determination on all of the matters referred to in this Section 5 shall be
conclusive.
(b) The Board may at its election provide in any option agreement
covering the grant of Options under this Plan that, upon the exercise of such
Options, the Company will loan to the holder thereof such amount as shall equal
the purchase price of the shares of Common Stock issuable upon such exercise,
such loan to be on terms and conditions deemed appropriate by the Board.
(c) Notwithstanding any provision hereof to the contrary, the Board
shall have sole and exclusive authority with respect to the grant of Options to
directors.
SECTION 6. Terms of Incentive Stock Options. Each Incentive Stock
Option granted under this Plan shall be evidenced by an Incentive Stock Option
Agreement which shall be executed by the Company and by the person to whom such
Incentive Stock Option is granted, and shall be subject to the following terms
and conditions:
(a) The price at which shares of Common Stock covered by each Incentive
Stock Option may be purchased pursuant thereto shall be determined in each case
on the date of grant by the Board, but shall be an amount not less than the par
value of such shares and not less than the fair market value of such shares on
the date of grant. For purposes of this Section and Section 7, the fair market
value of shares of Common Stock on any day shall be (i) in the event the Common
Stock is not publicly traded, the fair market value on such day as determined in
good faith by the
2
<PAGE>
Board or (ii) in the event the Common Stock is publicly traded, the last sale
price of a share of Common Stock as reported by the principal quotation service
on which the Common Stock is listed, if available, or, if last sale prices are
not reported with respect to the Common Stock, the mean of the high bid and low
asked prices of a share of Common Stock as reported by such principal quotation
service, or, if there is no such report by such quotation service for such day,
such fair market value shall be the average of (i) the last sale price (or, if
last sale prices are not reported with respect to the Common Stock, the mean of
the high bid and low asked prices) on the day next preceding such day for which
there was a report and (ii) the last sale price (or, if last sale prices are not
reported with respect to the Common Stock, the mean of the high bid and low
asked prices) on the day next succeeding such day for which there was a report,
or as otherwise determined by the Board in its discretion pursuant to any
reasonable method contemplated by Section 422 of the Code and any regulations
issued pursuant to that Section.
(b) The price of the shares to be purchased pursuant to each Incentive
Stock Option shall be paid in full in cash, or by delivery (i.e., surrender) of
shares of Common Stock of the Company then owned by the Grantee, at the time of
the exercise of the Incentive Stock Option. Shares of Common Stock so delivered
will be valued on the day of delivery for the purpose of determining the extent
to which the option price has been paid thereby, in the same manner as provided
for the purchase price of Incentive Stock Options as set forth in paragraph (a)
of this Section, or as otherwise determined by the Board, in its discretion,
pursuant to any reasonable method contemplated by Section 422 of the Code and
any regulations issued pursuant to that Section.
(c) Each Incentive Stock Option Agreement shall provide that such
Incentive Stock Option may be exercised by the Grantee, in such parts and at
such times as may be specified in such Agreement, within a period not exceeding
ten years after the date on which the Incentive Stock Option is granted
(hereinafter called the "Incentive Stock Option Period") and, in any event, only
during the continuance of the employee's employment by the Company or any of its
Subsidiaries or during the period of three months after the termination of such
employment to the extent that the right to exercise such Incentive Stock Option
had accrued at the date of such termination; provided, however, that if
Incentive Stock Options as to 100 or more shares are held by a Grantee, then
such Incentive Stock Options may not be exercised for less than 100 shares at
any one time, and if Incentive Stock Options for less than 100 shares are held
by a Grantee, then Incentive Stock Options for all such shares must be exercised
at one time; and provided, further, that if the Grantee, while still employed by
the Company or any of its Subsidiaries, shall die or become disabled (within the
meaning of Section 22(e)(3) of the Code) within the Incentive Stock Option
Period, the Incentive Stock Option may be exercised, to the extent specified in
the Incentive Stock Option Agreement, and as herein provided, but only prior to
the first to occur of:
(i) the expiration of the period of one year after the date of
the Grantee's death or disability, or
3
<PAGE>
(ii) the expiration of the Incentive Stock Option Period,
by the person or persons entitled to do so under the Grantee's will, or, if the
Grantee shall fail to make testamentary disposition of said Incentive Stock
Option, or shall die intestate, by the Grantee's legal representative or
representatives.
(d) Each Incentive Stock Option granted under this Plan shall by its
terms be non-transferable by the Grantee except by will or by the laws of
descent and distribution, and each Incentive Stock Option shall by its terms be
exercisable during the Grantee's lifetime only by him.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the meaning of
Section 424(d) of the Code, more than 10% of the total combined voting power of
all classes of stock of the employer corporation (or a parent or subsidiary of
such corporation within the meaning of Section 424 of the Code), the price at
which each share of Common Stock covered by such Incentive Stock Option may be
purchased pursuant to such Incentive Stock Option shall not be less than 110% of
the fair market value (determined as in paragraph (a) of this Section) of the
shares of Common Stock at the time the Incentive Stock Option is granted, and
such Incentive Stock Option must be exercised within a period specified in the
Incentive Stock Option Agreement which does not exceed five years after the date
on which such Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Board including, without limitation,
provisions (i) requiring the giving of satisfactory assurances by the Grantee
that the shares are purchased for investment and not with a view to resale in
connection with a distribution of such shares, and will not be transferred in
violation of applicable securities laws, (ii) restricting the transferability of
such shares during a specified period and (iii) requiring the resale of such
shares to the Company at the option price if the employment of the employee
terminates prior to a specified time. In addition, the Board, in its discretion,
may afford to holders of Incentive Stock Options granted under this Plan the
right to require the Company to cause to be registered under the Securities Act
of 1933, as amended, for public sale by the holders thereof, shares of Common
Stock subject to such Incentive Stock Options upon such terms and subject to
such conditions as the Board may determine to be appropriate.
(g) In the discretion of the Board, a single Stock Option Agreement may
include both Incentive Stock Options and Non-incentive Stock Options, or those
options may be included in separate stock option agreements.
SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive
Stock Option granted under this Plan shall be evidenced by a Non-incentive Stock
Option Agreement which shall be executed by the Company and by the person to
whom such Non-incentive Stock Option is granted, and shall be subject to the
following terms and conditions:
4
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(a) The price at which shares of Common Stock covered by each
Non-incentive Stock Option may be purchased pursuant thereto shall be an amount
not less than the par value of such shares and not less than the fair market
value of such shares on the date of grant.
(b) Each Non-incentive Stock Option Agreement shall provide that such
Non-incentive Stock Option may be exercised by the Grantee, in such parts and at
such times as may be specified in such Agreement, within a period up to and
including ten years after the date on which the Non-incentive Stock Option is
granted.
(c) Each Non-incentive Stock Option granted under this Plan shall by
its terms be non-transferable by the optionee except by will or by the laws of
descent and distribution, and each Non-incentive Stock Option shall by its terms
be exercisable during the Grantee's lifetime only by him.
(d) The Non-incentive Stock Option Agreement entered into pursuant
hereto may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Board, in its sole discretion, including
without limitation the terms, provisions and conditions set forth in Section
6(f) with respect to Incentive Stock Option Agreements.
SECTION 8. Limit on Option Amount.
(a) Notwithstanding any provision contained herein, the aggregate fair
market value (determined under Section 6(a) as of the time Incentive Stock
Options are granted) of the shares of Common Stock with respect to which
Incentive Stock Options are first exercisable by any employee during any
calendar year (under all stock option plans of the employee's employer
corporation and its parent and subsidiary corporation within the meaning of
Section 424 of the Code) shall not exceed $100,000. If an Incentive Stock Option
exceeds this $100,000 limitation, the portion of such Option which is
exercisable for shares of Common Stock in excess of the $100,000 limitation
shall be treated as a Non-incentive Stock Option. The limit in this paragraph
shall not apply to Options which are designated as Non-incentive Stock Options,
and, except as otherwise provided herein, there shall be no limit on the amount
of such Options which may be first exercisable in any year.
(b) Notwithstanding any provision contained herein, grants of options
under this Plan to any one optionee who is an employee of the Company shall be
limited to Options to purchase no more than 150,000 shares of Common Stock per
calendar year (subject to adjustment in the event of a stock split).
SECTION 9. Adjustment of Number of Shares.
(a) In the event that a dividend shall be declared upon the shares of
Common
5
<PAGE>
Stock payable in shares of Common Stock, the number of shares of Common Stock
then subject to any Option granted hereunder, and the number of shares reserved
for issuance pursuant to this Plan but not yet covered by an Option, shall be
adjusted by adding to each of such shares the number of shares which would be
distributable thereon if such share had been outstanding on the date fixed for
determining the shareholders entitled to receive such stock dividend. In the
event that the outstanding shares of Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then there shall be substituted for each share of Common Stock
subject to any such Option and for each share of Common Stock reserved for
issuance pursuant to the Plan but not yet covered by an Option, the number and
kind of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed or for which each such share shall be
exchanged; provided, however, that in the event that such change or exchange
results from a merger or consolidation, and in the judgment of the Board such
substitution cannot be effected or would be inappropriate, or if the Company
shall sell all or substantially all of its assets, the Company shall use
reasonable efforts to effect some other adjustment of each then outstanding
Option which the Board, in its sole discretion, shall deem equitable. In the
event that there shall be any change, other than as specified above in this
Section 9(a), in the number or kind of outstanding shares of Common Stock or of
any stock or other securities into which such shares of Common Stock shall have
been changed or for which they shall have been exchanged, then, if the Board
shall determine that such change equitably requires an adjustment in the number
or kind of shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an Option and of the shares then subject to an Option or Options,
such adjustment shall be made by the Board and shall be effective and binding
for all purposes of this Plan and of each stock option agreement.
Notwithstanding the foregoing, if any adjustment in the number of shares which
may be issued and sold pursuant to Options is required by the Code or
regulations issued pursuant thereto to be approved by the stockholders in order
to enable the Company to issue Incentive Stock Options pursuant to this Plan,
then no such adjustment shall be made without the approval of the stockholders.
In the case of any such substitution or adjustment as provided for in this
Section 9(a), the option price in each stock option agreement for each share
covered thereby prior to such substitution or adjustment will be the total
option price for all shares of stock or other securities which shall have been
substituted for each such share or to which such share shall have been adjusted
pursuant to this Section 9. No adjustment or substitution provided for in this
Section 9 shall require the Company, in any stock option agreement, to sell a
fractional share, and the total substitution or adjustment with respect to each
stock option agreement shall be limited accordingly. Notwithstanding the
foregoing, in the case of Incentive Stock Options, if the effect of the
adjustments or substitution is to cause the Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option or to cause a modification,
extension or renewal of such Incentive Stock Option within the meaning of
Section 424 of the Code, the Board of Directors shall use reasonable efforts to
effect such other adjustment of each then outstanding option as the Board of
Directors, in its sole discretion, shall deem equitable.
6
<PAGE>
(b) In the event that the Company shall effect a distribution, other
than a normal and customary cash dividend, upon shares of Common Stock, the
Board may, in order to prevent significant diminution in the value of Options as
a result of any such distribution, take such measures as it deems fair and
equitable, including, without limitation, the adjustment of the option price per
share for shares not issued and sold hereunder prior to the record date for said
distribution.
SECTION 10. Amendments. This Plan may be terminated or amended from
time to time by vote of the Board; provided, however, that no such termination
or amendment shall materially adversely affect or impair any then outstanding
Option without the consent of the Grantee thereof and no amendment which shall
(i) change the total number of shares which may be issued and sold pursuant to
Options granted under this Plan, or (ii) change the designation or class of
employees or other persons eligible to receive Incentive Options or
Non-incentive Options, shall be effective without the approval of the
stockholders. Notwithstanding the foregoing, the Plan may be amended by the
Board to incorporate any amendments made to the Code or regulations promulgated
thereunder which the Board deems to be necessary or desirable to preserve (i)
incentive stock option status for outstanding Incentive Stock Options and the
ability to issue Incentive Stock Options pursuant to the Plan, and (ii) the
deductibility by the Company pursuant to Section 162(m) of the Code of amounts
taxed to Plan participants as ordinary compensation income.
SECTION 11. Effective Date and Termination. The Plan shall become
effective on the date hereof, subject to timely adoption and approval by the
stockholders of the Company. Except to the extent necessary to govern
outstanding Options, this Plan shall terminate on, and no additional Options
shall be granted after, ten years from the date of first adoption of the Plan
and approval by the stockholders. (March 16, 1998)
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<PAGE>
Exhibit 4.4
A.B. WATLEY GROUP INC.
1999 STOCK OPTION PLAN
SECTION 1. Establishment. There is hereby established the A.B. Watley
Group Inc. 1999 Stock Option Plan (the "Plan"), pursuant to which employees
(including officers, directors, consultants and other persons who perform
substantial services for or on behalf of A.B. Watley Group Inc. and/or its
subsidiaries) [the "Company"] may be granted options to purchase shares of
common stock of the Company, par value $.001 per share ("Common Stock"), and
thereby share in the future growth of the business. The subsidiaries of the
Company included in this Plan (the "Subsidiaries") shall be any subsidiary of
the Company as defined in Section 424 of the Internal Revenue Code of 1986, as
amended (the "Code").
SECTION 2. Status of Options. The options which may be granted pursuant
to this Plan will constitute either incentive stock options within the meaning
of Section 422 of the Code ("Incentive Stock Options") or options which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and Non-incentive Stock Options shall be collectively referred to herein as
"Options".
SECTION 3. Eligibility. All employees (including officers, whether or
not they are members of the Board of Directors) of the Company or any of its
Subsidiaries who are employed at the time of the adoption of this Plan or
thereafter, any directors of the Company, and any consultants and other persons
who perform substantial services for or on behalf of the Company, any of its
Subsidiaries or affiliates, or any entity in which the Company has an interest
(collectively, the "Grantees") shall be eligible
<PAGE>
to be granted Non-incentive Stock Options under this Plan. All employees
(including officers, whether or not they are members of the Board of Directors)
of the Company or any of its Subsidiaries who are employed at the time of
adoption of this Plan or thereafter shall be eligible to be granted Incentive
Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights.
The total number of shares which may be issued and sold pursuant to Options
granted under this Plan shall be 800,000 shares of Common Stock (or the number
and kind of shares of stock or other securities which, in accordance with
Section 9 of this Plan, shall be substituted for such shares of Common Stock or
to which said shares shall be adjusted; hereinafter, all references to shares of
Common Stock are deemed to be references to said shares or shares so adjusted.)
The issuance of shares upon exercise of an Option shall be free from any
preemptive or preferential right of subscription or purchase on the part of any
shareholder. If any outstanding Option granted under this Plan expires or is
terminated, for any reason, the shares of Common Stock subject to the
unexercised portion of the Option will again be available for Options issued
under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board"). Subject to the express provisions of this Plan, the Board
shall have complete authority, in its discretion, to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), to determine the Grantees to whom, and the times and the prices at
which, Options shall be granted, the option periods, the number of shares of the
Common Stock to be subject to each Option and, as limited by Section 3 hereof,
whether each Option shall be an Incentive Stock Option or a Non-incentive Stock
<PAGE>
Option, and to make all other determinations necessary or advisable for the
administration of the Plan. Each Option shall be clearly identified at the time
of grant as to its status. In making such determinations, the Board may take
into account the nature of the services rendered by the respective Grantees,
their present and potential contributions to the success of the Company and such
other factors as the Board, in its discretion, shall deem relevant. Nothing
contained in this Plan shall be deemed to give any Grantee any right to be
granted an Option to purchase shares of Common Stock except to the extent and
upon such terms and conditions as may be determined by the Board. The Board's
determination on all of the matters referred to in this Section 5 shall be
conclusive.
(b) The Board may at its election provide in any option agreement
covering the grant of Options under this Plan that, upon the exercise of such
Options, the Company will loan to the holder thereof such amount as shall equal
the purchase price of the shares of Common Stock issuable upon such exercise,
such loan to be on terms and conditions deemed appropriate by the Board.
(c) Notwithstanding any provision hereof to the contrary, the Board
shall have sole and exclusive authority with respect to the grant of Options to
directors.
SECTION 6. Terms of Incentive Stock Options. Each Incentive Stock
Option granted under this Plan shall be evidenced by an Incentive Stock Option
Agreement which shall be executed by the Company and by the person to whom such
Incentive Stock Option is granted, and shall be subject to the following terms
and conditions:
(a) The price at which shares of Common Stock covered by each Incentive
Stock Option may be purchased pursuant thereto shall be determined in each case
on the date of grant by the Board, but shall be an amount not less than the par
value of such shares and not less than the fair market value of
<PAGE>
such shares on the date of grant. For purposes of this Section and Section 7,
the fair market value of shares of Common Stock on any day shall be (i) in the
event the Common Stock is not publicly traded, the fair market value on such day
as determined in good faith by the Board or (ii) in the event the Common Stock
is publicly traded, the last sale price of a share of Common Stock as reported
by the principal quotation service on which the Common Stock is listed, if
available, or, if last sale prices are not reported with respect to the Common
Stock, the mean of the high bid and low asked prices of a share of Common Stock
as reported by such principal quotation service, or, if there is no such report
by such quotation service for such day, such fair market value shall be the
average of (i) the last sale price (or, if last sale prices are not reported
with respect to the Common Stock, the mean of the high bid and low asked prices)
on the day next preceding such day for which there was a report and (ii) the
last sale price (or, if last sale prices are not reported with respect to the
Common Stock, the mean of the high bid and low asked prices) on the day next
succeeding such day for which there was a report, or as otherwise determined by
the Board in its discretion pursuant to any reasonable method contemplated by
Section 422 of the Code and any regulations issued pursuant to that Section.
(b) The price of the shares to be purchased pursuant to each Incentive
Stock Option shall be paid in full in cash, or by delivery (i.e., surrender) of
shares of Common Stock of the Company then owned by the Grantee, at the time of
the exercise of the Incentive Stock Option. Shares of Common Stock so delivered
will be valued on the day of delivery for the purpose of determining the extent
to which the option price has been paid thereby, in the same manner as provided
for the purchase price of Incentive Stock Options as set forth in paragraph (a)
of this Section, or as otherwise determined by the Board, in its discretion,
pursuant to any reasonable method contemplated by Section 422 of the Code and
any regulations issued pursuant to that Section.
<PAGE>
(c) Each Incentive Stock Option Agreement shall provide that such
Incentive Stock Option may be exercised by the Grantee, in such parts and at
such times as may be specified in such Agreement, within a period not exceeding
ten years after the date on which the Incentive Stock Option is granted
(hereinafter called the "Incentive Stock Option Period") and, in any event, only
during the continuance of the employee's employment by the Company or any of its
Subsidiaries or during the period of three months after the termination of such
employment to the extent that the right to exercise such Incentive Stock Option
had accrued at the date of such termination; provided, however, that if
Incentive Stock Options as to 100 or more shares are held by a Grantee, then
such Incentive Stock Options may not be exercised for less than 100 shares at
any one time, and if Incentive Stock Options for less than 100 shares are held
by a Grantee, then Incentive Stock Options for all such shares must be exercised
at one time; and provided, further, that if the Grantee, while still employed by
the Company or any of its Subsidiaries, shall die or become disabled (within the
meaning of Section 22(e)(3) of the Code) within the Incentive Stock Option
Period, the Incentive Stock Option may be exercised, to the extent specified in
the Incentive Stock Option Agreement, and as herein provided, but only prior to
the first to occur of:
(i) the expiration of the period of one year after the date of
the Grantee's death or disability, or
(ii) the expiration of the Incentive Stock Option Period,
by the person or persons entitled to do so under the Grantee's will, or, if the
Grantee shall fail to make testamentary disposition of said Incentive Stock
Option, or shall die intestate, by the Grantee's legal representative or
representatives.
(d) Each Incentive Stock Option granted under this Plan shall by its
terms be non-transferable by the Grantee except by will or by the laws of
descent and distribution, and each
<PAGE>
Incentive Stock Option shall by its terms be exercisable during the Grantee's
lifetime only by him.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the meaning of
Section 424(d) of the Code, more than 10% of the total combined voting power of
all classes of stock of the employer corporation (or a parent or subsidiary of
such corporation within the meaning of Section 424 of the Code), the price at
which each share of Common Stock covered by such Incentive Stock Option may be
purchased pursuant to such Incentive Stock Option shall not be less than 110% of
the fair market value (determined as in paragraph (a) of this Section) of the
shares of Common Stock at the time the Incentive Stock Option is granted, and
such Incentive Stock Option must be exercised within a period specified in the
Incentive Stock Option Agreement which does not exceed five years after the date
on which such Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Board including, without limitation,
provisions (i) requiring the giving of satisfactory assurances by the Grantee
that the shares are purchased for investment and not with a view to resale in
connection with a distribution of such shares, and will not be transferred in
violation of applicable securities laws, (ii) restricting the transferability of
such shares during a specified period and (iii) requiring the resale of such
shares to the Company at the option price if the employment of the employee
terminates prior to a specified time. In addition, the Board, in its discretion,
may afford to holders of Incentive Stock Options granted under this Plan the
right to require the Company to cause to be registered under the Securities Act
of 1933, as amended, for public sale by the holders thereof, shares of Common
Stock subject to such Incentive Stock Options upon such terms and subject to
such conditions as the Board may determine to be appropriate.
<PAGE>
(g) In the discretion of the Board, a single Stock Option Agreement may
include both Incentive Stock Options and Non-incentive Stock Options, or those
options may be included in separate stock option agreements.
SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive
Stock Option granted under this Plan shall be evidenced by a Non-incentive Stock
Option Agreement which shall be executed by the Company and by the person to
whom such Non-incentive Stock Option is granted, and shall be subject to the
following terms and conditions:
(a) The price at which shares of Common Stock covered by each
Non-incentive Stock Option may be purchased pursuant thereto shall be such
amount as determined by the Board but not less than the par value of such
shares.
(b) Each Non-incentive Stock Option Agreement shall provide that such
Non-incentive Stock Option may be exercised by the Grantee, in such parts and at
such times as may be specified in such Agreement, within a period up to and
including ten years after the date on which the Non-incentive Stock Option is
granted.
(c) Each Non-incentive Stock Option granted under this Plan shall by
its terms be non-transferable by the optionee except by will or by the laws of
descent and distribution, and each Non-incentive Stock Option shall by its terms
be exercisable during the Grantee's lifetime only by him.
(d) The Non-incentive Stock Option Agreement entered into pursuant
hereto may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Board, in its sole discretion, including
without limitation the terms, provisions and conditions set forth in Section
6(f) with respect to Incentive Stock Option Agreements.
SECTION 8. Limit on Option Amount.
<PAGE>
(a) Notwithstanding any provision contained herein, the aggregate fair
market value (determined under Section 6(a) as of the time Incentive Stock
Options are granted) of the shares of Common Stock with respect to which
Incentive Stock Options are first exercisable by any employee during any
calendar year (under all stock option plans of the employee's employer
corporation and its parent and subsidiary corporation within the meaning of
Section 424 of the Code) shall not exceed $100,000. If an Incentive Stock Option
exceeds this $100,000 limitation, the portion of such Option which is
exercisable for shares of Common Stock in excess of the $100,000 limitation
shall be treated as a Non-incentive Stock Option. The limit in this paragraph
shall not apply to Options which are designated as Non-incentive Stock Options,
and, except as otherwise provided herein, there shall be no limit on the amount
of such Options which may be first exercisable in any year.
(b) Notwithstanding any provision contained herein, grants of options
under this Plan to any one optionee who is an employee of the Company shall be
limited to Options to purchase no more than 150,000 shares of Common Stock per
calendar year (subject to adjustment in the event of a stock split).
SECTION 9. Adjustment of Number of Shares.
(a) In the event that a dividend shall be declared upon the shares of
Common Stock payable in shares of Common Stock, the number of shares of Common
Stock then subject to any Option granted hereunder, and the number of shares
reserved for issuance pursuant to this Plan but not yet covered by an Option,
shall be adjusted by adding to each of such shares the number of shares which
would be distributable thereon if such share had been outstanding on the date
fixed for determining the shareholders entitled to receive such stock dividend.
In the event that the outstanding shares of Common Stock shall be changed into
or exchanged for a different number or kind of shares of stock or other
<PAGE>
securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger
or consolidation, then there shall be substituted for each share of Common Stock
subject to any such Option and for each share of Common Stock reserved for
issuance pursuant to the Plan but not yet covered by an Option, the number and
kind of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed or for which each such share shall be
exchanged; provided, however, that in the event that such change or exchange
results from a merger or consolidation, and in the judgment of the Board such
substitution cannot be effected or would be inappropriate, or if the Company
shall sell all or substantially all of its assets, the Company shall use
reasonable efforts to effect some other adjustment of each then outstanding
Option which the Board, in its sole discretion, shall deem equitable. In the
event that there shall be any change, other than as specified above in this
Section 9(a), in the number or kind of outstanding shares of Common Stock or of
any stock or other securities into which such shares of Common Stock shall have
been changed or for which they shall have been exchanged, then, if the Board
shall determine that such change equitably requires an adjustment in the number
or kind of shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an Option and of the shares then subject to an Option or Options,
such adjustment shall be made by the Board and shall be effective and binding
for all purposes of this Plan and of each stock option agreement.
Notwithstanding the foregoing, if any adjustment in the number of shares which
may be issued and sold pursuant to Options is required by the Code or
regulations issued pursuant thereto to be approved by the stockholders in order
to enable the Company to issue Incentive Stock Options pursuant to this Plan,
then no such adjustment shall be made without the approval of the stockholders.
In the case of any such substitution or adjustment as provided for in this
Section 9(a), the option price in each stock option agreement for each share
covered thereby prior to such
<PAGE>
substitution or adjustment will be the total option price for all shares of
stock or other securities which shall have been substituted for each such share
or to which such share shall have been adjusted pursuant to this Section 9. No
adjustment or substitution provided for in this Section 9 shall require the
Company, in any stock option agreement, to sell a fractional share, and the
total substitution or adjustment with respect to each stock option agreement
shall be limited accordingly. Notwithstanding the foregoing, in the case of
Incentive Stock Options, if the effect of the adjustments or substitution is to
cause the Incentive Stock Option to fail to continue to qualify as an Incentive
Stock Option or to cause a modification, extension or renewal of such Incentive
Stock Option within the meaning of Section 424 of the Code, the Board of
Directors shall use reasonable efforts to effect such other adjustment of each
then outstanding option as the Board of Directors, in its sole discretion, shall
deem equitable.
(b) In the event that the Company shall effect a distribution, other
than a normal and customary cash dividend, upon shares of Common Stock, the
Board may, in order to prevent significant diminution in the value of Options as
a result of any such distribution, take such measures as it deems fair and
equitable, including, without limitation, the adjustment of the option price per
share for shares not issued and sold hereunder prior to the record date for said
distribution.
SECTION 10. Change-in-Control. The Board shall have the right to
provide in any Incentive Stock Option Agreement or Non-incentive Stock Option
Agreement that in the event an optionee's employment with the Company is
terminated by the Company within one (1) year of the occurrence of a
Change-in-Control Event, all outstanding Options held by such optionee at the
time of such termination shall become fully vested and exercisable. In no event
shall this Section 10 or Section 9 be subject to modification after a
Change-in-Control Event has occurred.
For purposes of this Section 10, a Change-in-Control Event shall mean
any of the following
<PAGE>
events:
any Person, together with its affiliates and associates (as such terms
are used in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 15% or more of the then
outstanding shares of Common Stock of the Company; or
the following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on November 1,1999,
constituted the Board and any new director whose appointment or election by the
Board or nomination for election by the Company's stockholders was approved by a
vote of at least a majority of the directors then still in office who either
were directors on November 1, 1999 or whose appointment, election or nomination
for election was previously so approved; or
the Company consolidates with, or merges with or into, any other Person
(other than a wholly owned subsidiary of the Company), or any other Person
consolidates with, or merges with or into, the Company, and, in connection
therewith, all or part of the outstanding shares of Common Stock shall be
changed in any way or converted into or exchanged for stock or other securities
or cash or any other property; or
a transaction or series of transactions in which, directly or
indirectly, the Company shall sell or otherwise transfer (or one or more of its
subsidiaries shall sell or otherwise transfer) assets (i) aggregating more than
50% of the assets (measured by either book value or fair market value) or (ii)
generating more than 50% of the operating income or cash flow of the Company and
its subsidiaries (taken as a whole) to any other Person or group of Persons.
Notwithstanding the foregoing, no "Change-in-Control Event" shall be
deemed to have
<PAGE>
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
of the Company immediately prior to such transaction or series of transactions
own a majority of the outstanding voting shares and in substantially the same
proportion in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction nor series of transactions.
For purposes of this Section 10, "Person" shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include (i) the Company or
any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange
Act), (ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company.
SECTION 11. Amendments. This Plan may be terminated or amended from
time to time by vote of the Board; provided, however, that no such termination
or amendment shall materially adversely affect or impair any then outstanding
Option without the consent of the Grantee thereof and no amendment which shall
(i) change the total number of shares which may be issued and sold pursuant to
Options granted under this Plan, or (ii) change the designation or class of
employees or other persons eligible to receive Incentive Options or
Non-incentive Options, shall be effective without the approval of the
stockholders. Notwithstanding the foregoing, the Plan may be amended by the
Board to incorporate any amendments made to the Code or regulations promulgated
thereunder which the Board deems to be necessary or desirable to preserve (i)
incentive stock option status for outstanding Incentive Stock Options and the
ability to issue Incentive Stock Options pursuant to the Plan, and (ii) the
deductibility
<PAGE>
by the Company pursuant to Section 162(m) of the Code of amounts taxed to Plan
participants as ordinary compensation income.
SECTION 12. Effective Date and Termination. The Plan shall become
effective on the date hereof, subject to adoption and approval by the
stockholders of the Company at the Annual Meeting of Stockholders to be held in
March 2000. Except to the extent necessary to govern outstanding Options, this
Plan shall terminate on, and no additional Options shall be granted after, ten
years from the date of first adoption of the Plan and approval by the
stockholders.
<PAGE>
EXHIBIT 5
HARTMAN & CRAVEN LLP
460 Park Avenue
New York, New York 10022
April 21, 2000
A.B. Watley Group Inc.
40 Wall Street
New York, New York 10005
Re: Registration Statement on Form S-8
Dear Sirs:
We are acting as counsel to A.B. Watley Group Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-8 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"). The Registration Statement relates to 2,000,000
shares of the Company's common stock, $0.001 par value per share ("Common
Stock"), which are to be issued pursuant to the Company's 1997 Stock Option
Plan, Second Amended and Restated 1998 Stock Option Plan and 1999 Stock Option
Plan (collectively, the "Plans"). The shares of Common Stock which are to be
issued pursuant to the Plans are hereinafter referred to as the "Shares".
In connection with this opinion, we have examined and relied upon
copies certified or otherwise identified to our satisfaction of: (i) the Plans;
(ii) the Company's Certificate of Incorporation, as amended and By-laws, as
amended; (iii) the minute books and other records of corporate proceedings of
the Company, as made available to us by officers of the Company; and have
reviewed such matters of law as we have deemed necessary or appropriate for the
purpose of rendering this opinion.
For purposes of this opinion we have assumed the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of all documents submitted to us as copies. We
have also assumed the legal capacity of all natural persons, the genuineness of
all signatures on all documents examined by us, the authority of such persons
signing on behalf of the parties thereto other than the Company and the due
authorization, execution and delivery of all documents by the parties thereto
other than the Company. As to certain factual matters material to the opinion
expressed herein, we have relied to the extent we deemed proper upon
representations, warranties and statements as to factual matters of officers and
other
<PAGE>
representatives of the Company. Our opinion expressed below is subject to the
qualification that we express no opinion as to any law other than the laws of
the State of New York, the State of Delaware and the federal laws of the United
States of America. Without limiting the foregoing, we express no opinion with
respect to the applicability thereto or effect of municipal laws or the rules,
regulations or orders of any municipal agencies within any such state.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, it is our opinion that
the Shares to be issued by the Company pursuant to the Plans have been duly
authorized and reserved for issuance and, when certificates for the Shares have
been duly executed by the Company, countersigned by a transfer agent, duly
registered by a registrar for the Shares and issued and paid for in accordance
with the terms of the Plans, the Shares will be validly issued, fully paid and
non-assessable.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of New York, the State of Delaware or the federal laws of the
United States of America be changed by legislative action, judicial decision or
otherwise.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
This opinion is furnished to you in connection with the filing of the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
Very truly yours,
HARTMAN & CRAVEN LLP
By: /s/ Edward I. Tishelman
------------------------
Edward I. Tishelman,
a partner
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm in the Registration Statement (Form S-8
No. 333-xxxxx) pertaining to the 1997 Stock Option Plan, Second Amended and
Restated 1998 Stock Option Plan and 1999 Stock Option Plan of A.B. Watley Group
Inc. and to the incorporation by reference therein of our report dated November
22, 1999, with respect to the consolidated financial statements of A.B. Watley
Group Inc. included in its Annual Report (Form 10-KSB) for the year ended
September 30, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
New York, New York
April 19, 2000
