1998 Stock Option Plan of Ahl

EXHIBIT 10.1


ACCREDITED HOME LENDERS, INC.
1998 STOCK OPTION PLAN


1. Establishment, Purpose and Term of Plan.


1.1 Establishment. The Accredited Home Lenders, Inc. 1998 Stock Option Plan (the "Plan") is hereby established effective as of March 1, 1998 (the "Effective Date").


1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its shareholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and to motivate such persons to contribute to the growth and profitability of the Participating Company Group.


1.3 Term of Plan. The Plan shall continue in effect until terminated by the Board or until all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at all, within ten (10) years from the Effective Date.


2. Definitions and Construction.


2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:


(a) "Board" means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, "Board" shall also mean such Committee(s).


(b) "Code" means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.


(c) "Committee" means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.


(d) "Company" means Accredited Home Lenders, Inc., a California corporation, or any successor corporation thereto.


(e) "Consultant" means any person, including an advisor, engaged by a Participating Company to render services other than as an Employee or a Director.


(f) "Director" means a member of the Board or of the board of directors of any other Participating Company.


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(g) "Employee" means any common-law employee (including officers and Directors who are also common-law employees) of a Participating Company; provided, however, that neither service as a Director nor payment of a director's fee shall be sufficient to constitute employment for this purpose.


(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.


(i) "Fair Market Value" means, as of any date, the value of a share of stock or other property as determined by the Board, in its sole discretion.


(j) "Incentive Stock Option" means an Option intended to be (as set forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422 (b) of the Code.


(k) "Insider" means an officer or Director of the Company or any other person whose transactions in the Stock are subject to Section 16 of the Exchange Act.


(l) "Nonstatutory Stock Option" means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option.


(m) "Option" means a right to purchase Stock (subject to adjustment as provided in Section 5.2) pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.


(n) "Optionee" means a person who has been granted one or more Options.


(o) "Option Agreement" means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee.


(p) "Parent Corporation" means any present or future "parent corporation" of the Company, as defined in Section 424(e) of the Code.


(q) "Participating Company" means the Company or any Parent Corporation or Subsidiary Corporation.


(r) "Participating Company Group" means, at any point in time, all corporations collectively which are then Participating Companies.


(s) "Rule 16b-3" means Rule 16b-3 as promulgated under the Exchange Act, as amended from time to time, or any successor rule or regulation.


(t) "Stock" means the common stock, without par value, of the Company, as adjusted from time to time in accordance with Section 5.2.


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(u) "Subsidiary Corporation" means any present or future "subsidiary corporation" of the Company, as defined in Section 424(f) of the Code.


(v) "Ten Percent Owner Optionee" means an Optionee who, at the time an Option is granted to the Optionee, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code.


2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, and the plural shall include the singular. Use of the term "or" is not intended to be exclusive, unless the context clearly requires otherwise.


3. Administration.


3.1 Administration by the Board. The Plan shall be administered by the Board, including any duly appointed Committee of the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election.


3.2 Powers of the Board. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its sole discretion:


(a) to determine the persons to whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option;


(b) to designate Options as Incentive Stock Options or Nonstatutory Stock Options;


(c) to determine the Fair Market Value of shares of stock or other property;


(d) to determine the terms and conditions of each Option (which need not be identical), including, without limitation, the exercise price of the Option, the method of payment for shares purchased upon the exercise of the Option, the method for satisfaction of any tax withholding obligation arising in connection with the Option, including by the withholding or delivery of shares of stock, the timing and terms of the exercisability and vesting of the Option, the time of the expiration of the Option, the effect of the Optionee's termination of employment or service, and all other terms and conditions of the Option not inconsistent with the terms of the Plan;


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(e) to approve one or more forms of Option Agreement;


(f) to amend, modify, extend, or renew, or grant a new Option in substitution for, any Option or to waive any restrictions or conditions applicable to any Option or the exercise thereof;


(g) to accelerate, continue, extend or defer the exercisability or vesting of any Option, including with respect to the period following an Optionee's termination of employment or service with the Participating Company Group;


(h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and


(i) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan and any Option as the Board may deem advisable, to the extent consistent with the Plan and applicable law.


3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.


4. Eligibility and Option Limitations.


4.1 Eligible Persons. Options may be granted only to Employees, Consultants, and Directors. For purposes of the foregoing sentence, "Employees", "Consultants" and "Directors" shall include prospective Employees, prospective Consultants and prospective Directors to whom Options are granted in connection with written offers of employment or other service r ...