**Exhibit10.4**

 
|  | **FIELDSTONE  INVESTMENT CORPORATION** |
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**RE:****         EXTENDEDSEVERANCE BENEFIT**

 

Dear John:

 

FieldstoneInvestment Corporation (“Fieldstone” or “the Company”) greatly values yourcontributions as a senior manager of Fieldstone and the quality of the servicesthat you provide the Company.

 

Because of the importance of your role and inorder to reduce any uncertainty you may feel regarding your future with theCompany, we are very pleased to offer to you an extended severancebenefit.  It is our expectation that youand Fieldstone will have a positive long term relationship.  However, because Fieldstone is a publiclytraded company, no one can predict whether there ever will be a “change incontrol” regarding Fieldstone.

 

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

 

If a Change inControl occurs while you are employed by the Company and you undergo or aresubject to a Qualifying Termination during the one year period following theChange in Control, you will be eligible for a single, “lump sum” severancepayment in an amount equal to **twenty-four (24) months ofyour then current base salary**.

 

In the event of a Change in Control, thisExtended Severance Benefit will apply in lieu of any other severance pay towhich you may be entitled under any Company severance plan, program, practiceor arrangement.

 

Sincerely,

 

 

Michael J. Sonnenfeld, President and ChiefExecutive Officer

 

Accepted and Agreed:

 

 
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Terms & Conditions

 

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

 

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

 

If a Change inControl occurs and you do not undergo a Qualifying Termination within the oneyear period following the closing of the Change in Control, you will not beentitled to the Extended Severance Benefit.

 

The Company’sCompensation Committee will make all decisions and interpretations regardingyour Extended Severance Benefit, and the decisions and interpretations of theCompensation Committee are final, binding and conclusive.

 

Your ExtendedSeverance Benefit will be reduced by any taxes or other amounts required to bewithheld by the Company under applicable law. You remain an employee-at-will of the Company.  Nothing in this letter constitutes, and shallnot be construed to provide, any assurance of your continuing employment withthe Company, its affiliates or successors.

 

Prior to theoccurrence of a Change in Control, the Company has the right, in its solecontrol and discretion, to amend or terminate this letter agreement

 

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and yourSeverance Benefit at any time and for any reason and without consideration toyou, upon sixty (60) days written notice to you.

 

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Exhibit A

 

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

 

(1)           The acquisition by any individual, entity orgroup (within the meaning of Section 13(d)(3) or 14(d)(2) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)of beneficial ownership (within the meaning of Rule 13d-3 promulgatedunder the Exchange Act) of more than 50% of either (i) the thenoutstanding shares of common stock of the Company (the “Outstanding CompanyCommon Stock”) or (ii) the combined voting power of the then outstandingvoting securities of the Company entitled to vote generally in the election ofdirectors (the “Outstanding Company Voting Securities”); provided, however,that for purposes of this Section 1, the following acquisitions shall notconstitute a Change in Control: (i) any acquisition by the Company; (ii) anyacquisition by any employee benefit plan (or related trust) sponsored ormaintained by the Company or any corporation controlled by the Company; and (iii) anyacquisition 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 forany reason to constitute at least a majority of the Board; provided, however,that any individual becoming a director subsequent to the date hereof whoseelection, or nomination for election by the Company’s shareholders, wasapproved by a vote of at least a majority of the directors then comprising theIncumbent Board shall be considered as though such individual were a member ofthe Incumbent Board, but excluding, for this purpose, any such individual whoseinitial assumption of office occurs as a result of an actual or threatenedelection contest with respect to the election or removal of directors or otheractual or threatened solicitation of proxies or consents by or on behalf of aPerson other than the Board; or

 

(3)           Consummation of a reorganization, merger orconsolidation or sale or other disposition of all or substantially all of theassets of the Company (a “Business Combination”), in each case unless,following such Business Combination, (i) all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of theOutstanding Company Common Stock and Outstanding Company Voting Securitiesimmediately prior to such Business Combination beneficially own, directly orindirectly, more than 50% of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding votingsecurities entitled to vote generally in the election of directors, as the casemay be, of the entity resulting from such Business Combination (including,without limitation, a corporation which as a result of such transaction ownsthe Company or all or substantially all of the Company’s assets either directlyor through one or more subsidiaries) in substantially the same proportions astheir

 

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ownership, immediately priorto such Business Combination of the Outstanding Company Common Stock andOutstanding Company Voting Securities, as the case may be, and (ii) noPerson (excluding any corporation resulting from such Business Combination orany employee benefit plan (or related trust) of the Company or such corporationresulting from such Business Combination) beneficially owns, directly orindirectly, 35% or more of, respectively, the then outstanding shares of commonstock of the corporation resulting from such Business Combination or thecombined voting power of the then outstanding voting securities of suchcorporation except to the extent that such ownership existed prior to theBusiness Combination and (iii) at least a majority of the members of theboard of directors of the corporation resulting from such Business Combinationwere members of the Incumbent Board at the time of the execution of the initialagreement, or of the action of the Board, providing for such BusinessCombination; or

 

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

 

(5)           Thisletter agreement shall apply only to the first Change in Control that occursfollowing the date of this letter.

 

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