Exhibit 10.7

 

 

Option No.:        

 

FIELDSTONE INVESTMENT CORPORATION EQUITY INCENTIVE PLAN

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

Fieldstone Investment Corporation (the “Company”) hereby grants an option to
purchase shares of its common stock (the “Stock”) to the optionee named below.
The terms and conditions of the option are set forth in this cover sheet, in the
attachment, and in the Company’s Equity Incentive Plan (the “Plan”).

 

Grant Date:                   , 200  

 

Option Expiration Date:           

 

 

 

Name of Optionee:                                              

 

State of Residence:               

 

 

 

Optionee’s Social Security Number:      -    -          

 

 

 

 

 

Number of Shares Covered by Option:                              

 

 

 

 

 

Option Price per Share: $     .   

 

 

 

 

 

Vesting Schedule: Vesting Date

Number of Shares

 

By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
attached. You acknowledge that you have carefully reviewed the Plan, and agree
that the Plan will control in the event any provision of this Agreement should
appear to be inconsistent.

 

 

 

Optionee:

 

 

 

 

(Signature)

 

 

 

Company:

 

 

 

 

(Signature)

 

 

 

 

Title:

 

 

Attachment

 

This is not a stock certificate or a negotiable instrument.

 

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Nonqualified Stock Option

 

This option is not intended to be an incentive stock option under Section 422 of
the Internal Revenue Code and will be interpreted accordingly.

 

 

 

Vesting

 

This option is only exercisable before it expires and then only with respect to
the vested portion of the option. Subject to the preceding sentence, you
may exercise this option, in whole or in part, to purchase a whole number of
vested shares not less than 100 shares, unless the number of shares purchased is
the total number available for purchase under the option, by following the
procedures set forth in the Plan and below in this Agreement.

Your right to purchase shares of Stock under this option vests as to the number
of shares of Stock indicated in the vesting schedule on the cover sheet, on each
of the Vesting Dates shown on the cover sheet, provided you then continue in
Service. The resulting aggregate number of vested shares will be rounded to the
nearest whole number, and you cannot vest in more than the number of shares
covered by this option. No additional shares of Stock will vest after your
Service has terminated for any reason.

Notwithstanding the forgoing, 100% of the Option Shares shall become vested upon
your Involuntary Termination within one year following a Corporate Transaction.
For the purpose of this Agreement, “Involuntary Termination” means a termination
of your Service by the Company without Cause or a termination of your Service by
you for Good Reason. Good Reason shall be determined by the Board and shall
mean, unless otherwise provided in an applicable agreement between you and the
Company or an Affiliate, without your consent: (i) any material diminution of
your duties or responsibilities (except in each case in connection with the
termination of your employment for Cause or as a result of your death or
Disability), or the assignment to you of duties or responsibilities that are
materially inconsistent with your then position; or (ii) a relocation by the
Company of your office as of the Grant Date to a location more than 50 miles
from the location of such office, other than on a temporary basis not to exceed
a period equal to two calendar months.

 

 

 

Term

 

Your option will expire in any event at the close of business at Company
headquarters on the Option Expiration Date, as shown on the cover sheet. Your
option will expire earlier (but never later) if your Service terminates, as
described below.

 

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Regular Termination

 

If your Service terminates for any reason, other than death, Disability or
Cause, then your option will expire at the close of business at Company
headquarters on the 90th day after your termination date.

 

 

 

Termination for Cause

 

If your Service is terminated for Cause, then you shall immediately forfeit all
rights to your option and the option shall immediately expire.

 

 

 

Death

 

If your Service terminates because of your death, then your option shall become
100% vested and will expire at the close of business at Company headquarters on
the date twelve (12) months after the date of death. During that twelve month
period, your estate or heirs may exercise the vested portion of your option.

In addition, if you die during the 90-day period described in connection with a
regular termination (i.e., a termination of your Service not on account of your
death, Disability or Cause), and a vested portion of your option has not yet
been exercised, then your option will instead expire on the date twelve (12)
months after your termination date. In such a case, during the period following
your death up to the date twelve (12) months after your termination date, your
estate or heirs may exercise the vested portion of your option.

 

 

 

Disability

 

If your Service terminates because of your Disability, then your option shall
become 100% vested and will expire at the close of business at Company
headquarters on the date twelve (12) months after your termination date.

 

 

 

Leaves of Absence

 

For purposes of this option, your Service does not terminate when you go on a
bona fide employee leave of absence that was approved by the Company in writing,
if the terms of the leave provide for continued Service crediting, or when
continued Service crediting is required by applicable law. However, your Service
will be treated as terminating 90 days after you went on employee leave, unless
your right to return to active work is guaranteed by law or by a contract. Your
Service terminates in any event when the approved leave ends unless you
immediately return to active employee work.

The Company determines, in its sole discretion, which leaves count for this
purpose, and when your Service terminates for all purposes under the Plan.

 

 

 

Notice of Exercise

 

When you wish to exercise this option, you must notify the Company by filing the
proper “Notice of Exercise” form at the address given on the form. Your notice
must specify how many

 

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shares you wish to purchase (in a parcel of at least 100 shares generally). Your
notice must also specify how your shares of Stock should be registered (in your
name only or in your and your spouse’s names as joint tenants with right of
survivorship). The notice will be effective when it is received by the Company.

If someone else wants to exercise this option after your death, that person must
prove to the Company’s satisfaction that he or she is entitled to do so.

 

 

 

Form of Payment

 

When you submit your notice of exercise, you must include payment of the option
price for the shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:

•                  Cash, your personal check, a cashier’s check, a money order
or another cash equivalent acceptable to the Company.

•                  Shares of Stock which have already been owned by you for more
than six months and which are surrendered to the Company. The value of the
shares, determined as of the effective date of the option exercise, will be
applied to the option price.

•                  To the extent a public market for the Stock exists as
determined by the Company, by delivery (on a form prescribed by the Company) of
an irrevocable direction to a licensed securities broker acceptable to the
Company to sell Stock and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate option price and any withholding taxes.

 

 

 

Withholding Taxes

 

You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or sale of Stock acquired under this option. In the event
that the Company determines that any federal, state, local or foreign tax or
withholding payment is required relating to the exercise or sale of shares
arising from this grant, the Company shall have the right to require such
payments from you, or withhold such amounts from other payments due to you from
the Company or any Affiliate.

 

 

 

Transfer of Option

 

During your lifetime, only you (or, in the event of your legal incapacity or
incompetency, your guardian or legal representative) may exercise the option.
You cannot transfer or assign this option. For instance, you may not sell this
option or use it as security for a loan. If you attempt to do any of these
things, this option will immediately become invalid. You may, however, dispose
of this option in your will or it may be transferred upon your death by the laws
of descent and distribution.

 

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Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse, nor is the Company
obligated to recognize your spouse’s interest in your option in any other way.

 

 

 

Retention Rights

 

Neither your option nor this Agreement give you the right to be retained by the
Company (or any Affiliate) in any capacity. The Company (and any Affiliates)
reserve the right to terminate your Service at any time and for any reason.

 

 

 

Shareholder Rights

 

You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option’s shares has been issued (or an appropriate
book entry has been made). No adjustments are made for dividends or other rights
if the applicable record date occurs before your stock certificate is issued (or
an appropriate book entry has been made), except as described in the Plan.

 

 

 

Investment Representation

 

If the sale of Stock under the Plan is not registered under the Securities Act,
but an exemption is available which requires an investment or other
representation, you shall represent and agree at the time of exercise that the
Stock being acquired upon exercise of this option is being acquired for
investment, and not with a view to the sale or distribution thereof, and shall
make such other representations as are deemed necessary or appropriate by the
Company and its counsel.

 

 

 

Adjustments

 

In the event of a stock split, a stock dividend or a similar change in the
Stock, the number of shares covered by this option and the option price per
share shall be adjusted (and rounded down to the nearest whole number) if
required pursuant to the Plan. Your option shall be subject to the terms of the
agreement of merger, liquidation or reorganization in the event the Company is
subject to such corporate activity.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of
Maryland, other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction.

 

 

 

The Plan

 

The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan, and have the
meaning set forth in the Plan.

This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.

 

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Other Agreements

 

You agree, as a condition of the grant of this option, that in connection with
the exercise of the option, you will execute such document(s) as necessary to
become a party to any shareholder agreement or voting trust as the Company
may require.

 

 

 

Consent to Electronic Delivery

 

The Company may choose to deliver certain statutory materials relating to the
Plan in electronic form. By accepting this option grant you agree that the
Company may deliver the Plan prospectus and the Company’s annual report to you
in an electronic format. If at any time you would prefer to receive paper copies
of these documents, as you are entitled to, the Company would be pleased to
provide copies. Please contact the Secretary of the Company to request paper
copies of these documents.

 

 

 

Stock Ownership Requirements

 

Your right to this option is subject to your compliance with the stock ownership
requirement (“Stock Ownership Requirement”) set forth in this section of the
Agreement. If you are at or above the level of Senior Vice President, you are
required to continue to hold an aggregate of sixty percent (60%) of the shares
of Stock acquired by you pursuant to this option together with all other shares
of Stock acquired by you pursuant to any other option grant made under the Plan
(such 60% to be determined after reducing the shares of Stock covered by this
grant and all other option grants made to you under the Plan by the number
shares of Stock equal in value to the amount required to be withheld to pay
taxes in connection with the exercise of this Option and such other option
grants and by the number of shares of Stock equal in value to the Option Price
as of the date of exercise) until the number of shares of Stock owned by you
satisfies the Company’s stock ownership guidelines. If the number of shares of
Stock owned by you satisfies the Company’s stock ownership guidelines, you
may dispose of the shares of Stock acquired pursuant to this option as long as
you continue to satisfy the Company’s stock ownership guidelines after the
disposition. The Stock Ownership Requirements shall lapse upon your termination
of Service.

The Company shall have the right to enforce the Stock Ownership Requirements
contained in the Agreement through the use of an escrow arrangement. In the
event the Company uses an escrow, the certificates for the shares issued
pursuant to the exercise of this option shall be deposited in escrow with the
Secretary of the Company to be held in accordance with this section of the
Agreement. The shares of Stock held in escrow shall be subject to the following
terms and conditions relating to their release from escrow:

 

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•                  All shares shall be released upon your termination of
Service.

•                  Upon your written request, the shares (or a portion thereof)
shall be released to you from the escrow upon presentation of evidence
satisfactory to the Company that the disposition of such shares would not cause
you to violate the Stock Ownership Requirements.

 

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

 

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