1992 Key Employee Stock Option Plan

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 applica ...