Exhibit 10.12  



	

 	 
	 	FIELDSTONE INVESTMENT CORPORATION
	

	 	11000 BROKEN LAND PARKWAY, SUITE 600

COLUMBIA, MARYLAND 21044

TELEPHONE (410) 772 7211 FACSIMILE (443) 367-2060





March 10,
2004 


Mr. John
C. Kendall

6484 North Lake Drive

Fox Point, WI 53217 


Re:    Proposed Employment Terms  


Dear John: 


        This
letter sets forth the proposed terms of your employment by Fieldstone Investment Corporation ("Fieldstone"). As we have discussed, we are excited about the prospect of working
together with you to continue to build Fieldstone's portfolio of residential mortgage loans. 


1.     scope of responsibility:  



	a)
	you
will be responsible for:



	(i)
	the
securitization of Fieldstone's non-conforming mortgage originations



	(ii)
	the
acquisition and analysis of a portfolio of mortgages, mortgage-backed securities and derivative mortgage securities for Fieldstone



	(iii)
	the
capital markets and financing strategies for Fieldstone's portfolio of mortgages, mortgage-backed securities and derivative mortgage securities; and



	(iv)
	Fieldstone's
capital markets offering materials and presentations to investors, underwriters and rating agencies in connection with its capital markets and
securitization initiatives






	b)
	your
title will be Senior Vice President, Investment Portfolio



	c)
	you
will participate as a member of Fieldstone's Senior Risk Committee



	d)
	you
will report to the Chief Financial Officer of Fieldstone 




2.     compensation: you will receive: 



	a)
	a
base salary of $20,833.33 per month, payable semi-monthly



	b)
	beginning
in 2004, you will be eligible to earn current-year annual incentive compensation upon achieving incentive goals agreed in writing with the CFO and President of
Fieldstone.



	i)
	as
a senior officer of Fieldstone, you will earn portions of your bonus based on the performance of Fieldstone over-all, the performance of the portfolio you
manage and the achievement of specific objectives by you and the personnel you manage



	ii)
	for
2004, the incentive compensation available to you will be an amount of up to 100% of your base salary



	iii)
	in
2004 only, you may earn a bonus of up to 60% of your base salary based on the achievement of specific objectives by you and the personnel you manage 











 


	iv)
	annual
incentive bonuses are payable within 90 days following the end of the year to which they relate 



	c)
	you
will be eligible to participate in the benefits and long-term incentive plans as are available to Fieldstone's Senior Managers, on terms as may be approved by the Board
of Directors of Fieldstone 




3.     additional reimbursement:  



	a)
	Fieldstone
will reimburse you for reasonable and customary business expenses incurred by you during the course of business



	b)
	you
will receive $150 per month toward your cellular telephone expenses



	c)
	you
will be reimbursed for your reasonable relocation expenses, up to a total of $50,000 based on your actual expenditures, including amounts relative to recording and title insurance
fees on your new house, moving expenses, temporary housing expenses and travel for you and your family to and from your home in Wisconsin in connection with your relocation to Maryland; in addition,
if you are unable to recover the deposit you made previously to purchase a new house in Wisconsin, Fieldstone will reimburse you up to $35,000 for any such lost deposit






	4.
	benefits: subject to the terms outlined in Fieldstone's Employee Handbook, Fieldstone currently offers the following package of
benefits:



	a)
	standard
health and dental plans



	b)
	life
and disability insurance, subject to qualification



	c)
	defined
contribution or savings plan, as possible under the tax rules, after your third month of employment, including a 401(k) plan



	d)
	three
weeks' paid vacation each calendar year, pro rated for partial years 






5.     additional terms:  



	a)
	you
will begin work for Fieldstone on or before April 1, 2004



	b)
	you
will work in Fieldstone's office in Columbia, Maryland



	c)
	you
will devote your full time efforts to making Fieldstone successful, and you will avoid any action or behavior that is detrimental to Fieldstone



	d)
	you
will hold all information and materials relating to the business plans, customers and financial results of Fieldstone, its customers or affiliates of any of them in strictest
confidence



	e)
	your
employment by Fieldstone and your compensation are subject to verification of the information provided by you to Fieldstone on your employment application



	f)
	you
will be subject to the terms of employment outlined in Fieldstone's Employee Handbook, as that may be amended from time to time, including the provision that you will be an "at
will" employee of Fieldstone (as are all other employees), and this letter shall in no way be deemed to constitute an employment contract



	h)
	you
agree not to solicit or aid in the solicitation of Fieldstone's employees for a period of two years following the date of any termination of your employment with Fieldstone



	j)
	the
terms of this offer letter may be replaced in their entirety by the terms of an employment agreement between you and Fieldstone 



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        If
you have any questions regarding the above please call me at (410) 772 7211 or, if you would like a further explanation of the benefits, please contact Terri Smyth at
(410) 772 7244. 


        I
trust the foregoing represents your understanding of the terms that we have discussed. I am excited about our opportunity and the prospect of working with you. I look forward to
talking with you soon and to working together in the future. 



	

Sincerely,	
 	

ACKNOWLEDGED AND AGREED:
	

/s/ Michael J. Sonnenfeld	
 	

/s/ John C. Kendall
 Mr. John C. Kendall
	President	 	 
	 	 	3/15/04
 Date
	cc: Robert G. Partlow	 	 




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