ADVANCED FINANCIAL, INC.
1992 INCENTIVE STOCK OPTION PLAN
1. Purpose of plan. This Incentive Stock Option Plan (the "Plan"), is
intended to encourage ownership of shares of Advanced Financial, Inc. (the
"Corporation"), by key employees of the Corporation and its subsidiaries and to
provide additional incentive for them to promote the success of the business.
2. Shares subject to plan. There will be reserved for use upon the exercise
of options to be granted from time to time under the Plan ("Options"), an
aggregate of 500,000 Common Shares, of the par value $.001 per share (the
"Common Shares"), of the Corporation, which shares may be in whole or in part,
as the Board of Directors of the Corporation (the "Board of Directors"), shall
from time to time determine, authorized but unissued Common Shares or issued
Common Shares which shall have been reacquired by the Corporation. For purposes
of the Plan, the "Plan Year" shall be the 12-month period ending on each June
30. Options shall not be granted in any Plan Year for in excess of an aggregate
of 100,000 Common Shares; provided, however, that, if an Option shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares covered thereby shall (unless the Plan shall have been terminated) be
added to the shares otherwise available for Options which may be granted in
accordance with the terms of the Plan.
3. Administration of plan. The Board of Directors shall appoint a Stock
Option Plan Committee (the "Committee"), which shall consist of not less than
three members of the Board of Directors. Subject to the provisions of the Plan,
the Committee shall have complete authority in its discretion to determine the
employees of the Corporation and its subsidiaries to whom Options shall be
granted, the number of shares to be covered by each of the Options, and the time
or times at which Options shall be granted; to interpret the Plan; and to
prescribe, amend, and rescind rules and regulations relating to it; provided,
however, that, in the case of employees who shall also be directors of the
Corporation, Options shall be granted in accordance with the provisions of
paragraphs 4 and 5 hereof. The Board of Directors may from time to time appoint
members of the Committee in substitution for or in addition to members
previously appointed and may fill vacancies, however caused, in the Committee.
The Committee shall select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A majority of its
members shall constitute a quorum. All action of the Committee shall be taken by
a majority of its members. Any action may be then by a written instrument signed
by a majority of the members and action so taken shall be fully as effective as
if it had been taken by a vote of a majority of the members at a meeting duly
called and held. The Committee may appoint a secretary, shall keep minutes of
its meetings, and shall make such rules and regulations for the conduct of its
business as it shall deem advisable. Members of the Committee shall be
indemnified by the Company for any act or omission in connection with the Plan
or any option granted thereunder.
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4. Employees to whom options shall be granted. An Option shall be granted
in each Plan Year:
(a) To each director of the Corporation who is also in the employ of the
Corporation or in the employ of one or more of its present or future subsidiary
corporations ("Subsidiaries"), as defined in Section 424 of the Internal Revenue
Code of 1986; and
(b) To each other employee of the Corporation or one or more of its
subsidiaries who shall be selected by the Committee from the class of employees
made up of those who are officer of the Corporation or of one or more of its
subsidiaries and those who are heads of departments of the Corporation or of one
or more of its subsidiaries, whether or not in any case the grantee shall have
received one or more Options hereunder in any previous Plan Year or Years. Any
employee to whom an Option shall have been granted in any Plan Year and who
shall thereafter in such Plan Year become a director of the Corporation shall
not be granted another Option in such Plan Year.
In no event shall an Option which is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or of
its parent or any subsidiary corporation.
5. Number of shares covered by options granted to individual employees. The
number of shares of the Common Stock covered by the Option that shall be granted
to any individual employee in any Plan Year shall not exceed 20,000. Subject to
the limitations imposed by the foregoing provisions of the Plan, in any Plan
Year the Option to be granted to an employee who at the date of the granting
thereof shall also be a director of the Corporation shall cover, and any Option
granted to any other employee shall cover not in excess of, such number of
Common Shares (rounded out, if not an even 100 shares or multiple thereof, to
the next lower 100-share lot) as shall have an aggregate option price equal to
such employee's current aggregate annual compensation (including fixed salary
and incentive compensation) from the Corporation and all corporations controlled
by it. Such current aggregate annual compensation shall, in each case, be
determined by multiplying by four the aggregate compensation received by him
during the calendar quarter-year next preceding the date of the granting of his
Option.
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6. Factors considered in granting options. In making any determination as
to employees (other than those who are also directors of the Corporation) to
whom Options shall be granted and as to the number of shares to be covered by
such Options, the Committee shall take into account the duties of the respective
employees, their present and potential contributions to the success of the
Corporation, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
7. Option prices. The purchase price of the Common Shares which shall be
covered by each Option shall be 100 percent of the fair market value of the
Common Shares at the time of granting the Option. Such fair market value shall
be deemed to be the bid price of the Common Shares on NASDAQ on the day on which
the Option shall be granted. Notwithstanding the foregoing, the purchase price
for Common Shares under an Option or Options granted to any person then owning
more than 10 percent of the total combined voting power of all classes of shares
of the Corporation, or of its parent or subsidiary corporation, shall be 110
percent of the fair market value of the Common Shares at the time of grant of
the Option.
8. Terms of options. Each option must be exercised within ten years from
the date of the grant thereof; provided, however, that any Option granted to any
person then owning more than 10 percent of the total combined voting power of
all classes of shares of the Corporation, or of its parent or subsidiary
corporation, must be exercised within five years from the date of the grant
thereof. The option term may be subject to termination prior to the expiration
of the period mentioned above, as provided hereinafter.
9. Exercise of options. An Option may be exercised, at any time or from
time to time, as to any part of or all the shares which shall be covered
thereby; provided, however, that: (a) an Option may not be exercised as to less
than 100 shares at any one time (or the remaining shares then purchasable under
the Option, if less than 100 shares); and (b) an option shall not be exercisable
prior to the expiration of six months following the date on which the option was
granted. The purchase price of the shares as to which an Option shall be
exercised shall be paid in full in cash at the time of exercise. Except as
provided in paragraphs 12 and 13 hereof, an Option may not be exercised at any
time unless the holder thereof shall have been in the continuous employ of the
Corporation and/or of one or more of its subsidiaries, from the date of the
granting of the Option to the date of its exercise. The holder of an Option
shall not have any of the rights of a shareholder with respect to the shares
covered by his Option, except to the extent that one or more certificates for
such shares shall be delivered to him upon the due exercise of the Option.
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10. Nontransferability. An Option shall not be transferable otherwise than
by will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. Employee's agreement to serve. Each employee receiving an Option shall,
as one of the terms of the option agreement hereinafter referred to, agree that
he will remain in the employ of the Corporation or one or more of its
subsidiaries for a period of at least two years from the date on which the
Option shall be granted to him; and that he will, during such employment, devote
his full business time, energy, and skill to the service of the Corporation or
one or more of its subsidiaries, subject to vacations, sick leaves, and military
absences. Such employment, subject to the provisions of paragraph 12 hereof and
subject also to the provisions of any contract between the Corporation or any
such subsidiary and such employee, shall be at the pleasure of the Board of
Directors of each employing corporation and at such compensation as such
employing corporation or corporations shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of his employing corporation or corporations
shall be deemed a violation by the employee of his agreement. In the event of
such violation, any Option or Options held by him, to the extent not previously
exercised, shall immediately terminate.
12. Termination of employment. In the event that the employment of an
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death), such Option may, subject to the provisions
of paragraph 11 hereof, be exercised (to the extent that the employee shall have
been entitled to do so at the termination of his employment) at any time within
three months after such termination, but not more than five years after the date
on which such Option shall have been granted. So long as the holder of an Option
shall continue to be an employee of the Corporation or one or more of its
subsidiaries, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation or of any of its
subsidiaries, or interfere in any way with the right of the Corporation or any
such subsidiary to terminate his employment at any time; provided, however, that
the employment of a recipient of an Option shall not be terminated without his
consent during the first year of the term of such Option, except for cause.
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13. Death of employee. If an employee to whom an Option shall have been
granted shall die while he shall be employed by the Corporation or one or more
of its subsidiaries or within three months after the termination of his
employment, such Option may be exercised (to the extent that the employee shall
have been entitled to do so at the date of his death) by a legatee or legatees
of the employee under his last will, or by his personal representatives or
distributees, at any time within one year after his death (but not more than
five years after the date on which such Option shall have been granted).
14. Adjustments upon changes in capitalization. In the event of changes in
the outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and the
maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the Committee. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares which may
be purchased at any time.
15. Effectiveness of plan. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after the shareholders of the
Corporation shall, by the affirmative vote of a majority in interest of the
Common Shares, in addition to the affirmative vote of a majority in interest of
all the shares of the Corporation, have approved the Plan.
16. Time of granting options. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the Committee shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement shall have been duly executed and
delivered by or on behalf of the Corporation and by the employee to whom such
Option shall be granted.
17. Limitation. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at the
time of the grant of the Option) exceeds $100,000. No employee shall be given
the opportunity to exercise Options granted hereunder with respect to shares
valued in excess of $100,000 in any calendar year, except and to the extent that
the Options shall have accumulated over a period in excess of one year.
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18. Termination and amendment of plan. The Plan shall terminate on July 1,
2002 and an Option shall not be granted under the Plan after that date. The Plan
may at any time or from time to time be terminated, modified, or amended by the
shareholders of the Corporation, by the affirmative vote of a majority in
interest of the Common Shares, in addition to the affirmative vote of a majority
in interest of all the shares of the Corporation. The Board of Directors may at
any time and from time to time modify or amend the plan in such respects as it
shall deem advisable in order that the Options shall continue to be "incentive
stock options" as defined in Section 422 of the Internal Revenue Code of 1986 or
to conform to any change in the law, or in any other respect which shall not
change: (a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any individual
employee; (b) the option prices other than to change the manner of determining
the fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then applicable provisions of the Internal Revenue
Code or regulations thereunder; (c) the periods during which Options may be
granted or exercised; (d) the provisions relating to the determination of
employees to whom Options shall be granted and the numbers of shares to be
covered by such Options; or (e) the provisions relating to adjustments to be
made upon changes in capitalization. The termination or any modification or
amendment of the Plan shall not, without the consent of an employee, affect his
rights under an Option previously granted to him.
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