Exhibit 10.2





	
  FIELDSTONE INVESTMENT CORPORATION

  



 


RE:         EXTENDED SEVERANCE BENEFIT


Dear Cynthia:


Fieldstone
Investment Corporation (“Fieldstone” or “the Company”) greatly values your
contributions as a senior manager of Fieldstone and the quality of the services
that you provide the Company.


Because of the importance
of your role and in order to reduce any uncertainty you may feel regarding your
future with the Company, we are very pleased to offer to you an extended
severance benefit. It is our expectation that you and Fieldstone will have a
positive long term relationship. However, because Fieldstone is a publicly
traded company, no one can predict whether there ever will be a “change in
control” regarding Fieldstone.


The Company wishes to
minimize the uncertainties that may arise in connection with a Change in
Control (as defined in Exhibit A to this letter) by providing you
with an extended severance benefit payable in connection with a Change in
Control, subject to the terms and conditions of this letter as set forth in the
attachment entitled “Terms and Conditions” (the “Extended Severance Benefit”)
as follows:


If a Change in Control occurs while you are employed by the Company and
you undergo or are subject to a Qualifying Termination during the one year
period following the Change in Control, you will be eligible for a single, “lump
sum” severance payment in an amount equal to twelve (12)
months of your then current base salary.


In the event of a Change
in Control, this Extended Severance Benefit will apply in lieu of any other
severance pay to which you may be entitled under any Company severance plan,
program, practice or arrangement.


Sincerely,


/s/ Michael J. Sonnenfeld


Michael J. Sonnenfeld,
President and Chief Executive Officer


Accepted and Agreed:


/s/ Cynthia L. Harkness


Date: February 27,
2006












Terms &
Conditions


You must be in the
employ of the Company at the time of the Change in Control to be eligible for
the Extended Severance Benefit. Your Extended Severance Benefit will be paid in
a single lump sum payment within thirty (30) days following your Qualifying
Termination, subject to any delay in payment required to avoid the additional
tax imposed by Section 409A of the Internal Revenue Code.


For the purpose of
your Extended Severance Benefit, a “Qualifying Termination” means: (i) you
terminate your employment with the Company or its successor for Good Reason (as
defined in herein) or (ii) your employment with the Company or its
successor is terminated by the Company or its successor for a reason other than
for Cause (as defined in the Company’s Equity Incentive Plan as of the date of
this letter). Your termination of employment must occur within one year
following a Change in Control to be a Qualifying Termination. Further, you will
not be considered to have undergone a Qualifying Termination if upon your
termination of employment you are immediately thereafter reemployed by the
Company’s successor (or a parent or affiliate of the Company or its successor).
For the purpose of this letter agreement and your Extended Severance Benefit
hereunder, “Good Reason” means, without your consent, a material reduction in
your base salary or responsibilities, or a required relocation of your
principal place of employment immediately preceding the Change in Control by
more than 25 miles.


If a Change in
Control occurs and you do not undergo a Qualifying Termination within the one
year period following the closing of the Change in Control, you will not be
entitled to the Extended Severance Benefit.


The Company’s
Compensation Committee will make all decisions and interpretations regarding
your Extended Severance Benefit, and the decisions and interpretations of the
Compensation Committee are final, binding and conclusive.


Your Extended
Severance Benefit will be reduced by any taxes or other amounts required to be
withheld by the Company under applicable law. You remain an employee-at-will of
the Company. Nothing in this letter constitutes, and shall not be construed to
provide, any assurance of your continuing employment with the Company, its
affiliates or successors.


Prior to the
occurrence of a Change in Control, the Company has the right, in its sole
control and discretion, to amend or terminate this letter agreement and your
Severance Benefit at any time and for any reason and without consideration to
you, upon sixty (60) days written notice to you.












Exhibit A


For purposes of your Severance Benefit, a “Change in
Control” means:


(1)           The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of either (i) the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this Section 1, the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by the Company; (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; and (iii) any
acquisition by any entity pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of Section (3) of this Exhibit A;
or


(2)           Individuals who, as
of the date hereof, constitute the Company’s Board of Directors (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or


(3)           Consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a “Business Combination”), in
each case unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock 












and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the entity resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, and (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or


(4)           Approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company.


(5)           This letter
agreement shall apply only to the first Change in Control that occurs following
the date of this letter.