Exhibit
10.4


 


	
  

  	
  FIELDSTONE
  INVESTMENT CORPORATION

  



 


RE:         EXTENDED
SEVERANCE BENEFIT


 


Dear John:


 


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 twenty-four (24) 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,


 


 


Michael J. Sonnenfeld, President and Chief
Executive Officer


 


Accepted and Agreed:


 


 


	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
				



 





















 


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.