ADVANCED FINANCIAL, INC.
1992 KEY EMPLOYEE STOCK OPTION PLAN
1. Purpose. Advanced Financial, Inc. (the "Company") hereby establishes the
1992 Key Employee Stock Option Plan (the "Plan"). The purpose of the Plan is to
advance the interests of the Company and its stockholders by providing a means
by which the Company and its subsidiaries shall be able to attract and retain
competent key employees (including officers and directors who are employees) and
provide such personnel with an opportunity to participate in the increased value
of the Company which their effort, initiative, and skill have helped produced.
The term "Subsidiary" as sued in this Plan means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if each
of the corporations other than the last corporation in such chain owns stock
possessing at least 50 percent of the voting power in one of the other
corporations in such chain.
2. Administration. (a) The Plan will be administered by a committee (the
"Committee") which shall consist of three directors appointed by the Board of
Directors. Any vacancies in the Committee will be filled by the Board of
Directors. The Committee shall have full power to construe and interpret the
Plan and to establish and amend rules and regulations for its administration.
Members of the Committee shall not be eligible to participate in the Plan while
serving on the Committee. No member of the Committee shall be liable for any
action or determination in respect thereto, if made in good faith and shall be
indemnified by the Company against any claim arising in respect thereto.
(b) The Committee shall determine which participants under the Plan shall
be granted options, the number of shares of the Company's Common Stock to be
subject to each option, which participants under the Plan shall be granted stock
appreciation rights and the number of such rights which shall be granted to each
such participant.
(c) Options under this Plan shall be granted upon such terms and conditions
as the Committee may prescribe.
(d) The Committee shall report to the Board of Directors annually the names
of those key employees granted options during the preceding year, indicating
which grantees received stock appreciation rights, the number of shares covered
by each option, the applicable option prices, and the number of stock
appreciation rights granted in each instance.
3. Eligibility. The individuals who shall be eligible to participate in the
Plan to receive options and stock appreciation rights thereunder shall be such
key employees (including officers and directors who are employees) of the
Company and its Subsidiaries as the Committee shall from time to time determine.
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4. Stock subject to plan. (a) Options may be granted permitting the
purchase in the aggregate of not more than 500,000 shares of the Company's $.001
par value Common Stock. These shares may consist either in whole or in part of
shares of the Company's authorized but unissued Common Stock or shares of the
Company's authorized and issued Common Stock reacquired by the Company and held
in its treasury. If an option granted under this Plan is surrendered or for any
other reason ceases to be exercisable in whole or in part, the shares which were
subject to any such option but as to which the option ceases to be exercisable
shall be available for options to be granted under this Plan, except as provided
in subdivision (b)(2) of paragraph 6.
(b) The total number of shares of the Company's Common Stock as to which an
option or options may be granted under this Plan to any one employee shall not
exceed 100,000 shares.
5. Stock Options. (a) Option Price. The price at which options may be
granted under the Plan and the effective date of such grant shall be determined
as follows:
(1) The option price shall be equal to 100% of the fair market value of
the stock on the day the option is granted if the stock to be issued is
registered. However, if the shares to be issued are restricted, the option price
may be less than fair market value but in no event less than 50% of fair market
value. Fair market value may be taken on the reported closing bid price of the
Company's Common Stock on NASDAQ on the day of the granting of the option, or if
no sale of the Company's Common Stock shall have been made on NASDAQ on that
day, on the next preceding day on which there was such a sale.
(2) The Committee shall, after it approves the granting of an option to
an employee, cause the employee to be notified of such action. The date on which
the Committee approves the granting of an option shall be considered the date on
which such option is granted irrespective of the date on which the employee is
notified.
(b) Exercise of Option. The right to purchase shares covered by any option
or options under this Plan shall be exercisable only in accordance with the
terms and conditions of the grant to such optionee. Options granted under the
Plan shall be exercised in the following manner.
(1) The right to purchase shares covered by any option or options
granted under this Plan shall not be exercisable until the expiration of six
months from the date such option is granted except in the event of the death or
total disability of the optionee within such period in which event such option
or options shall be deemed exercisable for purposes of paragraph 5(c)(2) without
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without regard to such six month period. The Committee may, in its discretion,
provide that such option or options may be exercised in whole or in part in
installments, cumulative or otherwise, for any period or periods of time
specified by the Committee of not less than six months nor more than ten years
from the date of the grant of the option. Subject to the provisions of
subdivision (c)(2) of this paragraph 5, that portion of an option which is
exercisable on an installment basis may not be exercised prior to the expiration
of the applicable installment period. No option shall be granted which, under
its terms, would not become exercisable until a date beyond the optionee's
normal retirement date as provided by established Company policy as it may be
amended from time to time. Such grant shall nonetheless be valid except as to
the portion which becomes exercisable after the optionee's normal retirement
date.
(2) If the optionee shall continue in the employ of the Company or any
of its Subsidiaries during the whole of any period for which an installment of
shares shall have been allotted by the terms of any option granted such optionee
under this Plan, the option thereupon shall be exercisable with respect to such
shares in accordance with the terms and conditions of the grant of such option
to such optionee.
(c) Expiration or termination of option.
(1) Each option and all rights and obligations thereunder shall, subject
to the provisions of subdivision (c)(2) of this paragraph 5, expire on a date to
be determined by the Committee, such date, however, in no event to be later than
ten years from the date on which the option is granted.
(2) In the event an optionee's employment with the Company or any
Subsidiary shall terminate as the result of normal retirement, total disability
or early retirement under the terms of a qualified retirement or pension plan
maintained by the Company and in which such optionee is a participant, then an
option granted to such optionee shall be exercisable during the three months
after such optionee ceases to be an employee of the Company or any of its
Subsidiaries. Following the expiration of said three-month period, any option
granted to such optionee shall terminate and may no longer be exercised. If the
optionee dies while in the employ of the Company or of a Subsidiary, to the
extent that the option was exercisable at the time of the optionee's death, such
option may, within one year after the optionee's death (or within such shorter
period as may be specified in the option by the Committee), be exercised by the
person or persons to whom the optionee's rights under the option shall pass by
will or by the applicable laws of descent and distribution; provided, however,
that an option may not be exercised to any extent by anyone after the expiration
of the option. In the event an optionee's employment with the Company or any
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shall terminate as the result of any circumstance other than those referred to
above in this subdivision (c)(2) of paragraph 5, then all options granted to
such optionee under this Plan shall terminate and no longer be exercisable as of
the date such optionee ceases to be an employee of the Company or any Subsidiary
unless otherwise provided by the Committee at the time of grant but, in no
event, more than 90 days after termination of employment. An optionee who is
absent from work with the Company or Subsidiary because of such optionee's
disability, or who is on maternity leave or other leave of absence for the
purpose of serving the United States government, in either a miliary or civilian
capacity or for such other purpose or reason as the Committee may specifically
approve, shall not during the period of any such absence be deemed, by virtue of
such absence alone to have terminated such optionee's employment with the
Company or any Subsidiary except as the Committee may otherwise expressly
provide. All rights which such optionee would have had to exercise stock options
granted hereunder will be suspended during the period of such leave of absence
and may be exercised cumulatively by such optionee upon his return to the
Company or any Subsidiary provided such rights are exercised within ten years
after the grant thereof.
6. Stock appreciation rights. (a) Grant. Stock appreciation rights may be
granted by the Company under this Plan upon such terms and conditions as the
Committee may prescribe. A stock appreciation right may be granted only in
connection with an option right previously granted or to be granted under this
Plan. Each stock appreciation right shall contain a provision that it shall
become nonexercisable and be forfeited if the related option right is exercised.
"Stock appreciation right" as used in this Plan means a right to receive the
excess of the fair market value of a share of the Company's Common Stock on the
date on which an appreciation right is exercised over the option price provided
for in the related stock option and which issued in consideration of services
performed for the Company or for its benefit by the optionee. Such excess is
hereafter called "the differential". "Option right" means the right to purchase
shares of the Company's Common Stock under an option granted under any of the
aforesaid stock option plans.
(b) Exercise of stock appreciation rights. Stock appreciation rights shall
be exercisable and be payable in the following manner:
(1) A stock appreciation right shall be exercisable by the optionee at
any time the option to which it relates could be exercised. An optionee wishing
to exercise a stock appreciation right shall give written notice of such
exercise to the Company addressed to the Company's Secretary, which such notice
shall be forwarded by the Company's Secretary to the Committee. Upon receipt of
such notice, the Committee shall determine whether the optionee's stock
appreciation rights shall be paid in cash or Common Stock or a combination of
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of cash and shares. Upon receipt of such notice, the Company shall, without
transfer or issue tax to the optionee or other person entitled to exercise the
stock appreciation rights, deliver to the person exercising such right a
certificate or certificates for shares of the Company's Common Stock which are
issuable upon exercise of the stock appreciation right or cash or a combination
thereof as the case may be. The date the Company's Secretary receives the
written notice of exercise hereunder is referred to herein as the exercise date.
(2) The exercise of a stock appreciation right shall automatically
result in the surrender of the related stock option right by the grantee on a
share for share basis to the extent shares under such related stock option are
used to calculate the shares for cash or combination thereof to be received by
such grantee upon the exercise of such stock appreciation right. Shares covered
by such surrendered option rights shall not be available for granting further
options under this Plan.
(3) The Committee may impose any other conditions it prescribes upon the
exercise of a stock appreciation right, which conditions may include a condition
that the stock appreciation right may only be exercised in accordance with rules
and regulations adopted by the Committee from time to time.
(4) Upon the exercise of a stock appreciation right and surrender of the
related option right, the Company shall give to the person surrendering the
related option right an amount equivalent to the differential, in cash or shares
of the Company's Common Stock or any combination thereof as determined in
accordance with subdivision (b)(1) of this paragraph 6. The shares to be issued
upon the exercise of a stock appreciation right may consist either in whole or
in part of shares of the Company's authorized and issued Common Stock reacquired
by the Company and held in its treasury. No fractional share of Common Stock
shall be issued and the Committee shall determine whether cash shall be given in
lieu of such fractional share or whether such fractional share shall be
eliminated.
(c) Limitation on payments. Notwithstanding any other provision of the
Plan, the Committee may from time to time determine, including at the time of
exercise, the maximum amount of cash or stock which may be given upon exercise
of any stock appreciation right in any year, provided, however, that all such
amounts shall be paid in full no later than the end of the year immediately
following the year in which the optionee exercised such stock appreciation
rights. Any determination under this paragraph may be changed by the Committee
from time to time provided that no such change shall require the holder to
return to the Committee any amount theretofore received or to extend the period
within which the Company is required to make full payment of the amount due as
the result of the exercise of the optionee's stock appreciation rights.
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(d) Expiration or termination of stock appreciation rights.
(1) Each stock appreciation right and all rights and obligations
thereunder shall expire on a date to be determined by the Committee, such date,
however, in no event to be later than ten years from the date on which the
related option right was granted.
(2) A stock appreciation right shall terminate and may no longer be
exercised upon the termination of the related option right.
7. Capital adjustments. The aggregate number of shares of the Company's
Common Stock subject to this Plan, the maximum number of shares as to which
options may be granted to any one optionee hereunder, and the number of shares
and the price per share subject to outstanding options shall be appropriately
adjusted for any increase or decrease in the number of shares of Common Stock
which the Company has issued resulting from any stock split, stock dividend,
combination of shares or any other change, or any exchange for other securities
or any reclassification, reorganization, redesignation, recapitalization, or
otherwise. Appropriate adjustments shall also be made by the Committee in the
terms of stock appreciation rights to reflect such changes.
8. Nontransferability. An option granted under the Plan or any stock
appreciation rights granted hereunder may not be transferred except by will or
the laws of descent and distribution and, during the lifetime of the employee to
whom granted, may be exercised only by such employee.
9. Amendment, suspension, or termination of plan. The Board of Directors
may at any time suspend or terminate the Plan and may amend it from time to time
in such respects as the Board may deem advisable in order that options or stock
appreciation rights granted thereunder shall conform to any change in the law,
or in any other respect which the Board may deem to be in the best interest of
the Company; provided, however, that, without the consent of a majority of the
shareholders of the Company, no such amendment shall (a) except as specified in
paragraph 7, increase the maximum number of shares of which options may be
granted under this Plan, (b) change the provisions of paragraph 5(a) relating to
the establishment of the option price other than to change the manner of
determining the fair market value of the Company's Common Stock to conform with
any then applicable provisions of the Internal Revenue Code or regulations
issued thereunder; (c) permit the granting of stock appreciation rights other
than in connection with option rights as specified in subdivision (a) of
paragraph 6, (d) permit the exercise of a stock appreciation right without
surrender of the related option right, (e) change the provisions establishing
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the amount the Company shall give granting of options or stock appreciation
rights, or (f) permit the granting of options or stock appreciation rights to
members of the Committee. No option may be granted during any suspension, or
after termination of the Plan. No amendment, suspension or termination of the
Plan shall, without the optionee's consent, alter or impair any of the rights or
obligations under any option or stock appreciation rights theretofore granted to
him under the Plan.
10. Effective date. The effective date of the Plan shall be July 1, 1992.
11. Termination date. Unless this Plan shall have been previously
terminated by the Board of Directors, this Plan shall terminate on July 1, 2002,
except as to stock options and stock appreciation rights theretofore granted and
outstanding under the Plan at that date, and no stock option or stock
appreciation rights shall be granted after that date.
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