Document:

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.

 

 

	
  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.

  

 

2

 

	
  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 

  

 

3

 

	
   

  	
   

  	
  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.

  

 

4

 

	
   

  	
   

  	
  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.

  

 

5

 

	
  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:

  

 

6

 

	
   

  	
   

  	
  •                  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.

 

7Exhibit 10.19

 

Summary of
Board of Directors’ Compensation

 

Any member of our board of
directors who is also an employee of Fieldstone Investment Corporation or any
of its subsidiaries will not receive any additional compensation for serving on
our board.

 

Independent directors of
Fieldstone Investment Corporation are paid the following fees: 

 

	
  Annual retainer

  	
   

  	
  $40,000 ($50,000 per annum for the Chairman of the Board)

  
	
   

  	
   

  	
   

  
	
  Annual retainer for
  committee chair

  	
   

  	
  $5,000 ($10,000 per annum for the Audit Committee chair)

  
	
   

  	
   

  	
   

  
	
  Fee for each board and
  committee meeting attended in person

  	
   

  	
  $2,500 ($5,000 per meeting for the Chairman of the Board or the Chair
  of the Committee)

  
	
   

  	
   

  	
   

  
	
  Fee for each board and
  committee meeting attended telephonically

  	
   

  	
  $1,250 ($2,500 per meeting for the Chairman of the Board or the Chair
  of the Committee)

  

 

Non-employee directors are
reimbursed for their reasonable travel expenses incurred in connection with
their attendance at board meetings and committee meetings and in connection
with their participation in conferences and training related to their duties as
directors.

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