Document:

EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT, dated as of April 18, 2005, is made by and
between First American Capital Corporation, a Kansas Corporation (the
"Company"), and Richard H. Katz ("Employee").

RECITALS

      WHEREAS, the Company desires to employ Employee pursuant to the terms
and conditions of this Agreement; and

      WHEREAS, Employee desires to be employed by the Company pursuant to the
terms and conditions of this Agreement;

      NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises herein contained, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:

      1.     Term of Employment.

a) Initial Term; Effective Date.  Subject to the terms and conditions set
forth herein, the Company hereby employs Employee, and Employee hereby accepts
such employment, which shall commence on the Effective Date (as defined below)
and shall terminate as of the earliest of:

      (i) Six (6) months from the Effective Date ("Initial Term");

      (ii) The death of Employee; or

      (iii) The earliest occurrence of an event described in Section 8(a) of
      this Agreement.

      For purposes of this Agreement, the term "Effective Date" shall mean
      February 07, 2005.

b) At-Will Employment.  Following the expiration of the Initial Term, unless
this Agreement has previously termintaed in accordance woth Section 1(a)
hereof, this Agreement shall, on August 07, 2005 become an at-will employment
Agreement, subject to termination by either party, with or without cause, and
with or without advance notice.  Such termination must be in writing.

      (i) In the event of termination during at-will employment, the Company
      shall have no further liability to Employee under the Agreement for the
      payment of compensation and benefits under the Agreement, except that
      any accrued unused vacation, comp days and performance bonus will be
      paid, and except for any benefits that by law must continue after
      termination.

<PAGE>

      (ii) Notwithstanding Section 1(b)(i), if Employee is terminated by the
      Company without "cause" during at-will employment, the Company will pay
      to Employee severance, which is comprised of three months of Base
      Salary and payment by the Company for three months of continuation
      coverage for health insurance, if Employee elects such continuation
      coverage (collectively, "Severance"). The three months of Base Salary
      will be paid over a three month period of time, in regular payroll
      intervals, with payment to begin within thirty (30) days of the signing
      of a comprehensive release to be provided, but in no event will such
      payment begin before the eighth day following execution of the release.

      2.     Duties of Employee.

a) Title.  Employee shall be employed in the position of Chief Marketing
Officer of the Company and of the Company's affiliate, First Life America
Corporation, to perform the duties normally attendant with such position and
as assigned to Employee by the President of the Company.  See Exhibit A for
a list of Employee's duties, which Exhibit is attached hereto and incorporated
herein.  Employee understands and agrees that Employee must abide by all
Company policies applicable to employees, unless specifically excluded herein.

b) Modification of Duties.  The Company shall have the right, from time to
time, to modify or change Employee's duties and/or responsibility hereunder.
Any such modification or change, including, without limitation, the expansion
of Employee's duties hereunder, shall not, unless specifically agreed by the
Company in a duly executed amendment of this Agreement, result in any
modification or increase of Employee's compensation as provided in this
Agreement.

c) Extent of Services.  Employee shall devote his/her full time during normal
business hours, and additional hours as necessary, to the business of the
Company.

      3.     Compensation.  During the term of this Agreement and for all
services rendered by Employee to or for the Company:

a) Base Salary.  The Company shall pay Employee a gross annual base salary of
One Hundred and Four Thousand and Eight Hundred Dollars ($104,800) ("Base
Salary"), which shall be paid in bi-weekly installments in arrears.  The
payment of compensation authorized under this Agreement shall be subject to
applicable withholdings for federal, state and local taxes and for other
reductions authorized by Employee under authorized employee benefit plans.
The President of the Company shall review the Base Salary of Employee at
least annually and shall adjust the Base Salary, as the Board deems
appropriate.

<PAGE>

b) Bonus/Incentive Program.  See Exhibit B, which Exhibit is attached hereto
and incorporated herein.

      4.     Employee Benefits.  During Employee's employment under this
Agreement, Employee shall be eligible to participate in employee benefit plans
or programs of the Company, if any, generally made available to all other
employees of the Company, subject to the eligibility criteria, rules, plan
provisions and regulations applicable to such plans.  At this time, the plans
and programs to be made available to Employee are as set forth on Exhibit C,
which is attached hereto and incorporated herein. Nothing contained herein
shall be construed as negating or limiting the ability of the Company to
amend, modify or terminate such employee benefit plans or programs, in its
sole discretion and in accordance with plan documents.

      5.     Expenses.  The Company shall reimburse Employee for Employee's
reasonable travel, meals, entertainment and other similar expenses reasonably
incurred in the performance of Employee's duties.  All requests for
reimbursement for expenses must be accompanied by valid receipts or any other
documentation required pursuant to any applicable Company policy.  Any
expenses not accompanied by appropriate receipts where a satisfactory
explanation is not provided, shall not be reimbursed.

      6.     Disclosure of Information.

a) Employee acknowledges that, in and as a result of employment hereunder,
Employee will be making use of, acquiring knowledge of and/or adding to
confidential or proprietary information relating to the Company and its
affiliates, which is not publicly known, including, without limitation, the
Company's lists of customers and accounts, systems, procedures, policies,
manuals, advertising, marketing plans, marketing strategies, trade secrets,
business plans, financial data, strategies, methods of conducting business,
price lists, formulas, processes, procedures, standards, know-how, manuals,
techniques, technology, confidential reports, software code (both object and
source), and all other information, knowledge, or data of any kind or nature
relating to the products, services, or business of the Company or any
affiliate of the Company (collectively, "Confidential Information").  As a
material inducement to the Company to enter into this Agreement, Employee
covenants and agrees that Employee shall not, at any time during or following
the term of Employee's employment with the Company, directly or indirectly,
except in furtherance of the Company business and in accordance with the
Company policies, use, disseminate, divulge or disclose, for any purpose
whatsoever, any Confidential Information, and will maintain the
confidentiality of all Confidential Information, until the Confidential
Information is made public by the Company.

<PAGE>

b) All documents, records, notebooks, software, discs, electronic information,
and similar repositories of or documents containing any Confidential
Information, including all existing copies or extractions thereof, whether or
not in Employee's possession or in Employee's control, and whether prepared by
Employee or others, shall be the property of the Company.  Upon termination of
employment with the Company, whether such termination was by Employee or by
the Company, all documents, records, notebooks and similar repositories of
documents containing Confidential Information, shall be promptly returned to
the Company.

      7.     Conflict of Interest.  Employee agrees and acknowledges that
he/she is to devote his/her entire business time and effort to the Company's
business and shall not be engaged in any personal financial interest, which
may be in conflict with the interest of the Company.  Employee acknowledges
and agrees that he/she will not accept the receipt of payments, gifts,
entertainment, or other fees which go beyond common courtesies usually
associated with accepted business practices and which might be regarded as
placing him/her under some obligation to a third party dealing with or
desiring to deal with the Company.  This does not preclude the acceptance of
items of minor or nominal value of which are of such nature as would indicate
they are merely tokens of respect or friendship and not related to any
particular transactions, nor does this section preclude the Employee from
receiving renewal and/or residual compensation from other companies or vendors
as a result of business transacted prior to the effective date of this
agreement.  Employee agrees that during the course of his/her employment
hereunder he/she shall not accept any additional fees, compensations,
commissions, wages, salaries or remuneration from a third party, without the
consent of the Board of Directors of the Company.

      8.     Termination of Employment During the Initial Term.  During the
Initial Term of this Agreement,

a)    The employment of Employee will terminate as of the earliest of:

(i)	In the event of Employee's disability resulting in an inability to
perform his/her essential job functions with or without a reasonable
accommodation for a period of, in general, one hundred and twenty (120)
consecutive days, as determined in the sole discretion of the Company and in
compliance with applicable law;

(ii) By the mutual written agreement of Employee and the Company;

(iii) Immediately upon a determination by the Company that "cause" exists for
such termination;

(iv) Thirty (30) days after notice is given by the Company in the event
termination of Employee is without "cause"; and

(v) Thirty (30) days after notice is given by Employee in the event he/she
resigns from his/her employment.

<PAGE>

b) For purposes of this Agreement, the term "cause" shall include, without
limitation, Employee's material breach of this Agreement, fraud against the
Company, misappropriation of the Company's assets, embezzlement, theft,
malfeasance, willful misconduct, material failure to follow the Company's
rules and regulations, neglect of material duties Employee is required to
perform under this Agreement, and the arrest or charge for or with a crime
involving drug abuse, violence, dishonesty or theft.

c) The Company shall have no further liability to Employee under this
Agreement for the payment of unaccrued compensation or benefits under this
Agreement following the termination of Employee's employment under this
Section 8, or for any reason specified in Section 1 (a), except that any
accrued unused vacation, comp days and performance bonus, and any severance
pay, if applicable under Section 2 (b) (ii) will be paid, and except for any
benefits that by law must continue after Employee's termination.

d) At any time during the term of this Agreement and, specifically, after
notice of termination of this Agreement by either party, the Company may, in
its discretion, exclude Employee from the Company's workplace.

e) In the event that Employee's employment with the Company is terminated by
the Company pursuant to the exercise of Section 8(a)(iv) above, the Company
agrees to provide to Employee a severance payment equal to the remaining
salary that would have been paid to Employee for the then-existing remaining
term of this Agreement had Employee's employment not been terminated.
Payment will be made by the Company to Employee by lump sum cash payment
made within thirty (30) days after the date of termination hereunder.

	9.     Employee Termination Due to Change in Control.  If there is
a "change in control" of the Company, whether during the Initial Term or
during at-will employment, Employee may terminate his employment with the
Company within a period of sixty (60) days after the change in control
becomes effective by providing thirty (30) days written notice (the notice
must be given within the requisite sixty (60) days).  In such event, Employee
will receive a lump sum cash payment in the amount of $74,000 within thirty
(30) days of his last date of employment.  If Employee (or any covered
dependent) elects, pursuant to applicable federal or state law, continuation
coverage under the Company's health, major medical or dental plans, the
Company will pay for the same portion or percentage of such coverage as it
was paying prior to Employee's termination of employment, for the first six
(6) months of such period of continuation coverage or such lesser period of
time as Employee (or any covered dependent) remains eligible for and
continues to purchase such continuation coverage.  If Employee (or any
covered dependent) remains eligible for and continues to purchase federal
or state continuation coverage under Company's health, major medical or
dental plans beyond the twelve (6) month period described in the previous
sentence, Employee (or such covered dependent) will thereafter be responsible
for the full cost of such continuation coverage.  In addition, Employee will
be immediately vested in any nonqualified deferred compensation arrangement
of the Company within which Employee is a participant, and will receive
additional severance pay (at the same time as the lump-sum payment described
above) equal to the non-vested portion of Employee's account(s) under any
qualified pension, profit-sharing or retirement plan of the Company as of
the date of termination of employment.  For purposes of this Agreement, the
term "change in control" is defined to include:

<PAGE>

a) the consummation of any sale (by the Company or a shareholder) of the
Company's stock pursuant to which any person or group (as that term is
defined under the rules and regulations of the Securities Exchange Act of
1934, as amended) would own twenty percent (20%) or more of the combined
voting power of the Company's outstanding securities;

b) the sale or transfer of substantially all of the Company's assets to
another corporation which is not a wholly-owned subsidiary of the Company;

c) any merger or consolidation of the Company with another corporation, where
less than twenty percent (20%) of the outstanding voting shares of the
surviving or resulting corporation are owned in the aggregate by the
Company's former shareholders; and

d) any tender offer, exchange offer, merger, sale of assets and/or contested
election, which results in a change in a majority of the Company's Board of
Directors.

The amount paid to Employee pursuant to this Section 9 will be deemed
severance pay in consideration of Employee's past services to the Company
and his continued services from the date of this Agreement, and shall be
paid, in addition to any and all other payments to be made and benefits
available to Employee pursuant to this Agreement.  Employee will have no
duty to mitigate his damages by seeking other employment, nor will
Employee's severance pay pursuant to any provision of this Section 9 be
reduced or offset by any such future earnings.

      10.     Delegation of Duties and Assignment of Rights.  Employee may
not delegate the performance of any of his/her obligations or duties
hereunder, or assign any rights hereunder, without the prior written consent
of the Company.  Any such purported delegation or assignment in the absence
of any such written consent shall be void.  The Company may assign all of its
rights and obligations under this Agreement in writing, with notice to
Employee, to a person or entity acquiring the principal assets used or useful
in the operation of the Company's business or portion thereof for which
Employee is involved.  In the event of an assignment by the Company, each
reference in this Agreement to the Company shall include the assignee from
and after the date of such assignment.

      11.     Burden and Benefit.  This Agreement shall be binding upon, and
shall inure to the benefit of, the Company and Employee, and their respective
heirs, personal and legal representatives, successors and permitted assigns.
Employee shall have no right or power to assign this Agreement.

<PAGE>

      12.     Governing Law.  The construction and interpretation of this
Agreement shall at all times and in all respects be governed by the laws of
the State of Kansas.

      13.     Severability.  The provisions of this Agreement (including
particularly, but not limited to, the provisions of Section 6) shall be
deemed severable, and the invalidity or unenforceability of any one or more
of the provisions hereof shall not affect the validity and enforceability of
the other provisions hereof.

      14.     Notices.  Any notice required to be given hereunder shall be
sufficient and deemed given when in writing, and sent by certified or
registered mail, return receipt requested, first class postage prepaid, or
by courier service, to his last known residence in the case of Employee, and
to its principal office in the case of the Company, Attn:  President, First
American Capital Corporation.

      15.     Remedies.  Employee acknowledges and agrees that a breach by
him/her of the provisions of this Agreement will cause the Company
irreparable injury and damage.  Employee, therefore, expressly agrees that
the Company shall be entitled to injunctive and other equitable relief to
prevent a breach of this Agreement, or any part thereof by Employee, or by
Employee's partners, agents, representatives, servants, employers, employees
and/or any and all persons directly or indirectly acting for or with
him/her, and to secure its enforcement, in addition to any other remedy to
which the Company might be entitled.  Company acknowledges and agrees that a
breach by it of the provisions of this Agreement will cause the Employee
irreparable injury and damage.  Company, therefore, expressly agrees that the
Employee shall be entitled to injunctive and other equitable relief to the
prevent a breach of this Agreement, or any part thereof by Company, or by
Company's agents, representatives, affiliates, servants, shareholders,
employees and/or any and all persons directly or indirectly acting for or
with it, and to secure its enforcement, in addition to any other remedy to
which the Employee might be entitled.

      Employee and the Company expressly waive the posting of any bond or
surety required prior to the issuance of an injunction hereunder.  However,
in the event that the court refuses to honor the waiver of bond hereunder,
Employee and the Company hereby expressly agree to a bond in the amount of
$100.00.  Any and all of the Company's remedies for the breach of this
Agreement shall be cumulative and the pursuit of one remedy shall not be
deemed to exclude any and all other remedies with respect to the subject
matter hereof.

      16.     Termination of Prior Agreements.  All prior agreements and/or
arrangements, oral or written, relating to the employment of the Employee by
the Company and/or its subsidiaries, including the termination of such
employment, are hereby terminated and superseded by this Agreement.

      17.     Entire Agreement.  This Agreement contains the entire agreement
and understanding by and between the Company and Employee with respect to the
employment herein referred to, and no representations, promises, agreements or
understandings, written or oral, not herein contained shall be of any force
or effect.  No change or modification hereof shall be valid or binding unless
the same is in writing and signed by the party intended to be bound.  No
waiver of any provision of this Agreement shall be valid unless the same is
in writing and signed by the party against whom such waiver is sought to be
enforced.  No valid waiver of any provision of or breach of this Agreement at
any time shall be deemed a waiver of any other provision or subsequent breach
of this Agreement at such time or will be deemed a valid waiver of such
provision or subsequent breach at any other time.

<PAGE>

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
as of the day and year first above written.

COMPANY:				EMPLOYEE:

By: /s/ John F. Van Engelen		/s/ Rick Katz
Name: John F. Van Engelen
Title: President & CEO

<PAGE>

EXHIBIT A

CHIEF MARKETING OFFICER
FIRST AMERICAN CAPITAL CORPORATION
FIRST LIFE AMERICA CORPORATION

Serve as senior marketing/sales officer for day-to-day operations

Manage the Agency Services, Regional Sales and Marketing Departments in the
organization

Develop management systems that provides information for company growth,
profitability and identification in areas of sales and marketing

Be responsible for the development of policies and procedures in sales and
marketing

Keep the President informed of the operations and status of the marketing and
sales function

Develop, implement and manage the strategic and business plans to insure the
long term growth of the company and to insure that the company achieves its
goals and objectives and is profitable for the stockholders, including
product development, distribution strategies and acquisition costs control

Represent the company and project an immediate favorable impression

Exhibit strong leadership and management capabilities

Display a strong but flexible personality with solid business acumen and a
make-things-happen, results-oriented mentality

Be customer-focused for both internal and external constituencies

Be tactful and diplomatic with good listening skills and be strong team
oriented leader

Initiate action based on the organization's priorities, a problem solver
with high work ethic

Learn and not be afraid to tackle new situations

Any other duties normally attendant with the position of Chief Marketing
Officer or as assigned from time to time by the President of the Company

<PAGE>

EXHIBIT B
PERFORMANCE BONUS
Performance Bonus:

At the end of any calendar quarter of employment under this Agreement, the
Company shall pay Employee a bonus pursuant to the schedules (1) and (2)
shown below, but such quarterly bonus for the first year of employment shall
not be less than twelve thousand dollars ($12,000).

This performance bonus shall be payable within 30 days after the end of each
applicable quarter or sooner pursuant to 9(c).

 (1)  Other Income  Brokerage Operations

Other Income  Brokerage Operations

Quarterly Income   		% Bonus

$0 to 250,000                      15%

250,001 to 500,000                 10%

500,001 to 750,000                  5%

750,001 to 1,000,000                2%

Other income is defined as annualized commissions, fees, or other income
derived received from outside parties as a direct result of brokerage
activities.

<PAGE>

(2)  New Business Bonus  First Life America Corporation

New Business Bonus

NewQuarterly Annualized Premium or Annuity Payments   % Bonus

First Whole Life

$0 to 125,000                                           5%

$125,001 to 250,000                                     3%

First Term

$0 to 250,000                                           2%

First Annuities

$0 to 3,000,000                                     .0025%

<PAGE>

EXHIBIT C

Benefit Plans

1. Health insurance for Employee and his dependents.

2. If automobile is used for Company business, the rate of reimbursement will
be the approved level, currently at $.405.

3. Participation in IRA, with employer contribution of 3% of Base Salary per
year (but not to exceed the amount in effect for such taxable year under
section 219(b)(1)(A) of the Internal Revenue Code).

4. Employee shall be entitled to ten working days vacation per year after the
first six months of continuous employment.  Vacation can be taken at times
during the year at the discretion of Employee.  However, in scheduling said
vacation, Employee agrees to do so in such a manner that will not materially
adversely impact upon the operations of the Company.

5. Cell phone and laptop computer, which shall remain the property of the
Company.  Cell phone and laptop computer are intended for business use.

<PAGE>Exhibit 10.1

 

4/05 AMENDMENT TO CREDIT
AGREEMENT

 

Preamble

 

This 4/05 Amendment to Credit Agreement (the “4/05 Amendment”
or, within itself, this “Amendment”) dated as of April 20, 2005 amending (for the
first time) the 4/04 Amended and Restated Senior Secured Credit Agreement dated
April 21, 2004 (the “4/04 A&R Credit Agreement”, and, as it may be
supplemented, further amended or restated from time to time, the “Current
Credit Agreement”), among FIELDSTONE INVESTMENT CORPORATION (“FIC”),
a Maryland corporation and FIELDSTONE MORTGAGE COMPANY (the “Company”),
a Maryland corporation, each having its principal office at 11000 Broken Land
Parkway, Columbia, Maryland 21044 (FIC and the Company are sometimes
collectively called the “Borrowers” and individually called a “Borrower”),
and JPMORGAN CHASE BANK, N.A., (“JPMorgan” or the “Lender”), a
national banking association and successor to JPMorgan Chase Bank, a New York
banking corporation, having a branch at 712 Main Street, Houston, Texas 77002,
recites and provides as follows.

 

Recitals

 

The
Borrowers have asked the Lender to (i) extend the Maturity Date from April 20,
2005 to April 19, 2006; (ii) reduce the Committed Sum to $150,000,000; (iii)
allow Borrowers to incur Debt and contingent liabilities in the form of
Permitted Guarantees; (iv) modify the interest rates; (v) decrease the Facility
Fee; (vi) increase the limit on conditional repurchase, indemnity or other
recourse obligations from $3,000,000 to $10,000,000; (vii) increase the
materiality limits on certain Events of Default from $2,500,000 to $10,000,000;
(viii) revise the GAAP net income requirement to allow for hedge fluctuations;
and (ix) to correct certain scriveners errors and the Lender has agreed to do
so on the terms and subject to the conditions of this Amendment.

 

All capitalized
terms used in the 4/04 A&R Credit Agreement and used but not defined
differently in this Amendment have the same meanings here as there.

 

The numbered
Sections of this Amendment are numbered to correspond with the numbers of the
Sections of the 4/04 A&R Credit Agreement amended hereby and are
accordingly often nonsequential.

 

In the event of a
conflict between the foregoing recitals and the following agreements, the
latter will govern and control.

 

Agreements

 

In consideration
of the premises, the mutual agreements stated below and other good and valuable
consideration paid by each party to each other party to this Agreement, the
receipt and sufficiency of which each hereby acknowledges, the parties hereby
agree as follows.

 

 

1.             DEFINITIONS

1.2.          Definitions
of General Application.

 

A.  The following new definitions are hereby
added to the 4/04 A&R Credit Agreement, in alphabetical order:

 

“4/05 Amendment”
means the 4/05 Amendment to Credit Agreement dated as of April 20, 2005 between
the Borrowers and the Lender.

 

“4/05
Amendment Effective Date” means April 20, 2005, the effective date of
the 4/05
Amendment.

 

“Permitted
Guarantees” shall mean (a) mortgage repurchase and warehouse facilities
whereby the Borrowers are jointly and severally liable thereunder; (b) mortgage
repurchase and warehouse facilities whereby FIC guarantees the obligations of
the Company thereunder; and (c) obligations of the Borrower pursuant to surety
bonds required in connection with state licensing of branch offices

 

B.  The following definitions are hereby amended
in their entirety to henceforth read as follows:

 

“Change of Control”
means any event after which:

 

(i)            with respect to FIC
(a) any Person shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Exchange
Act except that for purposes of this definition, a Person shall not be deemed
to have acquired beneficial ownership of securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person until such
tendered securities are accepted for purchase or exchange), directly or
indirectly, of either (i) Voting Stock of FIC (or other securities convertible
into such Voting Stock) representing more than fifteen percent (15%) of the
combined voting power of all Voting Stock of FIC or (ii) more than fifteen
percent (15%) of the outstanding shares of any class or series of capital stock
of FIC; or (b) any Person shall have succeeded in having so many of such Person’s
nominees elected to the board of directors of FIC that such nominees, when
added to any existing directors remaining on the board of directors of FIC
after such election who were previously nominated by or are Affiliates of such
Person, comprise a majority of the board of directors of FIC; or

 

(ii)           with respect to the
Company, all of the Capital Stock of the Company is not directly or indirectly
owned by FIC or a wholly-owned Subsidiary of FIC.

 

“Committed Sum”
means, for any day, the maximum amount the Lender is committed on that day to
lend to the Borrowers (or for their accounts) on a

 

2

 

revolving credit
basis pursuant to this Agreement, on its terms and subject to its
conditions.  From the 4/05 Amendment
Effective Date through and including the Termination Date or such other date
(if any) when it is changed by written agreement of the Lender, FIC and the
Company or by any Legal Requirement, the Committed Sum is One Hundred Fifty
Million Dollars ($150,000,000).

 

“Custodian”
means JPMorgan Chase, as Custodian under the Custody Agreement, or any
successor custodian under the Custody Agreement or any successor Custody
Agreement.

 

“Custody
Agreement” means the 4/04 Custody Agreement dated as of April 21, 2004
between the Borrowers and JPMorgan Chase, as Custodian, as it may hereafter be
supplemented, amended or restated from time to time, or any successor Custody
Agreement.

 

“Maturity Date”
means April 19, 2006, or the
earlier date (the “Acceleration Date”), if any, when the Lender
accelerates maturity of the Senior Credit Note pursuant to this Agreement, or
the maturity of the Senior Credit Note is effectively accelerated by order of
any Governmental Authority or by operation of law.

 

“Total Liabilities”
means all liabilities of FIC and its consolidated Subsidiaries including Debt
incurred and outstanding in connection with a Permitted Securitization, in
accordance with GAAP, as reflected on FIC’s consolidated balance sheet.

 

1.3.          Definitions
for Interest Calculations.

 

A.  The following definitions are hereby amended
in their entirety to henceforth read as follows:

 

“Margin” means the interest rate
margin to be added (or subtracted as the case may be) to a specified Index to
determine a Rate.  The margins used in
this Agreement are:

 

(a)           the “Alternate Base
Rate Margin”, which is applicable to Advances for each Class of
Borrowings in the Alternate Base Rate Tranche (if any) outstanding on any day; 

 

(b)           the “Balances
Equivalent Margin”, which is applicable to Advances for each Class
of Borrowings in the Balances Equivalent Tranche (if any) outstanding on any
day; and

 

(c)           the “LIBOR Margin”,
which is applicable to Advances for each Class of Borrowings in the Base Rate
Tranche (if any) outstanding on any day.

 

For outstanding Advances of the type that is described on a row in the
first

 

3

 

column of the
following table, the applicable interest rate margins are as stated on the same
row:

 

	
  Type of Advance/Margin

  	
   

  	
  Balances

  Equivalent Margin

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Alternate Base

  Rate Margin

  	
   

  
	
  Single-family Advances that are not Wet Warehousing
  Advances, Subprime Loan Advances, Second Lien Loan Advances or Repurchased
  Loan Advances

  	
   

  	
  0.90

  	
  %

  	
  0.90

  	
  %

  	
  (0.10

  	
  )%

  
	
  Single-family Warehouse Advances that are Wet Warehousing Advances,
  Subprime Loan Advances, Second Lien Loan Advances or Repurchased Loan
  Advances

  	
   

  	
  1.00

  	
  %

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  

 

“Rate” means an interest rate
applicable to a Class of Borrowings in a Tranche.  Each Rate is stated as an annual percentage
rate and, except for the Ceiling Rate, is the sum of an Index and a
Margin.  The Rates used in this Agreement
are:

 

(a)           the “Alternate Base Rate”, which for each
day of the Interest Period applicable to the Alternate Base Rate Tranche (if
any), is a rate per annum equal to the lesser of:

 

(i)            the Prime Rate in
effect on that day plus or minus (as the case may be) the Alternate Base Rate
Margin for each Class of Borrowings in the Alternate Base Rate Tranche (if
any), rounded upwards, if necessary, to the nearest one-eighth percent
(0.125%); and

 

(ii)           the Ceiling Rate for
that day;

 

with any change in the Alternate Base Rate due to a change in the Prime
Rate being effective on the effective date of such change in the Prime Rate;

 

(b)           the “Ceiling Rate” which means, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of applicable
federal or Texas law permits the higher interest rate, stated as a rate per
annum;

 

(c)           the “Balances Equivalent Rate” which, for
each day in each calendar month (whether a whole or partial month), is a rate
per annum that is equal to the lesser of:

 

(i)            the sum of (x) zero
plus (y) the Balances Equivalent Margin for that day and for each Class of
Borrowings in the Balances Equivalent Tranche (if

 

4

 

any); and

 

(ii)           the Ceiling Rate for
that day;

 

(d)           the “Base Rate” which, for each day of the term of the Loan,
is a rate per annum equal to the lesser of:

 

(i)            the sum of (1) the quotient
of (x) LIBOR for that day divided by (y) 1.00 minus the Eurodollar Reserve
Requirement for one day loans, plus (2) the LIBOR Margin for each Class of
Borrowings in the Base Rate Tranche (if any), rounded upwards, if necessary, to
the nearest 1/1,000th of 1%; and

 

(ii)           the Ceiling Rate for
that day; and

 

(e)           the “Past Due Rate” which means, on any day, the lesser of:

 

(i)            either (x) a rate per
annum equal to the per annum interest rate that would be applicable for that
day if the subject amount were not past due, plus three percent (3%), or (y) if
there is more than one (or no) such per annum interest rate reasonably
applicable to the subject amount if not past due, the Prime Rate for that day
plus three percent (3%) per annum and

 

(ii)           the Ceiling Rate for
that day.

 

Each determination by the Lender of any Rate may be computed using any
reasonable method and, unless plainly wrong, shall be conclusive and binding.

 

“Stated Rate”
means:

 

(a)           on any day, for each
Class of Borrowings in the Balances Equivalent Tranche, the Balances Equivalent
Rate for the month in which that day falls and that Class of Borrowings,
computed in accordance with the provisions of this Agreement, compounded
annually, and for the Balances Equivalent Tranche as a whole, the weighted
average of such Balances Equivalent Rates for such Classes of Borrowings;

 

(b)           on any day, for each
Class of Borrowings in the Base Rate Tranche, the Base Rate for that day and
that Class of Borrowings, computed in accordance with the provisions of this Agreement,
compounded annually, and for the Base Rate Tranche as a whole, the weighted
average of such Base Rates for such Classes of Borrowings;

 

(c)           on any day, for each
Class of Borrowings in the Alternate Base Rate Tranche, the Alternate Base Rate
for that day and that Class of Borrowings, computed in accordance with the
provisions of this Agreement, compounded

 

5

 

annually, and for
that Tranche as a whole, the weighted average of such Alternate Base Rates for
such Classes of Borrowings;

 

(d)           for each Borrowing as a
whole, the weighted average of the interest rates applicable to each of its
constituent Tranches; and

 

(e)           for the Loan as a
whole, the weighted average of the interest rates applicable to each of the
constituent Tranches of each outstanding Borrowing;

 

provided that if on any day the
applicable rate for any such Tranche, any such Borrowing as a whole or the Loan
as a whole shall exceed the relevant Ceiling Rate for that day, then the Stated
Rate therefor shall be reset to equal the Ceiling Rate on that day and shall be
set to equal the Ceiling Rate for each day thereafter until the total amount of
interest accrued at the Stated Rate on the unpaid balance of that Tranche, that
Borrowing or the Loan (as applicable) equals the total amount of interest that
would have accrued on it if there were no Ceiling Rate.

 

6.  INTEREST,
PRINCIPAL AND FEES PAYMENTS

 

Section
6.5 is hereby amended in its entirety to henceforth read as follows:

 

6.5           Facility Fee.  The Borrowers jointly and severally agree to
pay to the Lender a cash facility fee (the “Facility Fee”) in an amount
equal to fifteen basis points (.15%) per annum of the Committed Sum for the
period from the 4/05 Amendment Effective Date through the Termination
Date.  The Facility Fee for the period
from the 4/05 Amendment Effective Date through July 31, 2005 shall be due and
payable in advance on the 4/05 Amendment Effective Date, and the Facility Fee
for each succeeding period of three (3) months (or less) until the Maturity
Date shall be due and payable in advance on the fifteenth (15th) day
of the first calendar month in each such period, commencing August 15,
2005.  If the Committed Sum shall be
increased or decreased from time to time either pursuant to a provision of this
Agreement or by separate agreement among the Borrowers and the Lender
(excluding, however, any change occurring as a result of or following the
occurrence of a Default or an Event of Default, in respect of which no
adjustment of the Facility Fee shall be required except if and to the extent
required by the provisions of Section 16.3), the amount of the Facility
Fee paid in advance for the three-month period in which the effective date of
the amendment producing such increase or decrease occurs shall be adjusted for
the unexpired portion of that three-month period by, respectively, a cash
payment by the Borrowers to the Lender or a cash refund by the Lender to the
Borrowers, and the amounts of payments of the Facility Fee subsequently due
shall likewise be proportionately adjusted based on the new Aggregate Committed
Sum.  The Facility Fee is compensation to
the Lender for committing to make funds available for revolving credit Advances
on the terms and subject to the conditions of this Agreement, and is not
compensation for the use or forbearance or detention of money, although this
Section (as well as every other Section of this

 

6

 

Agreement) is
subject to the provisions of Section 16.3.  Each calculation by the Lender of the amount
of the Facility Fee shall be conclusive, absent manifest error.  The Borrowers shall be jointly and severally
liable to pay to the Lender on demand any deficiency in payment by the
Borrowers of the Facility Fee.

 

7.  COLLATERAL

 

7.1           Grant of Security Interest. 
The provisions of Section 7.1 of the 4/04 A& R Credit Agreement are not
amended hereby.  Cumulative of such
existing provisions, as security for the payment of the Loan and for the
payment and performance of all of the Obligations, each Borrower hereby GRANTS
to the Lender a first priority security interest in all of such Borrower’s
present and future estate, right, title and interest in and to the Collateral
and the parties hereby declare and confirm that all such security interests
were and are granted to and held by the Lender.

 

8.  CONDITIONS
PRECEDENT

 

Section 8 of the 4/04
A&R Credit Agreement is hereby amended by adding the following new Section 8.3
to the end of Section 8, viz.:

 

8.3           Advances.  In addition
to the conditions precedent stated in Sections 8.1 and 8.2, above, the
obligations of the Lender to fund any Advance under this Agreement after the
4/05 Amendment Effective Date are subject to the satisfaction, in the sole
discretion of the Lender, on or before the date of the first such Advance, of
the following condition precedent:

 

The Lender shall have
received the following, all of which must be satisfactory in form and content
to the Lender in its sole discretion:

 

(a)           the 4/05
Amendment, duly executed by all parties; 

 

(b)           a
certificate of each Borrower’s secretary as to (i) the incumbency of the
officers of such Borrower executing this Amendment, each applicable Request for
Borrowing and all other Credit Papers executed or to be executed by or on
behalf of such Borrower and (ii) the authenticity of their signatures — and
specimens of their signatures shall be included in such certificate or set
forth on an exhibit attached to it — (the Lender shall be entitled to rely on
that certificate until such Borrower has furnished new certificates to the
Lender, and certifying that attached to such certificates are true and correct
copies of all amendments to such Borrower’s certificates of organization and
regulations since its inception);

 

(c)           such other
documents, if any, as shall be specified by the Lender.

 

7

 

9. 
REPRESENTATIONS

 

Each Borrower
hereby republishes, and ratifies and (except as to those that are specified to
relate only to a specific date) confirms as being currently true and correct,
its warranties and representations made in the 4/04 A&R Credit Agreement,
effective as of the 4/05 Amendment Effective Date.

 

11.  NEGATIVE
COVENANTS

 

Section
11.1 is hereby amended to add subsection (j) to henceforth read as follows:

 

(j)            Permitted Guarantees.

 

Sections
11.2, 11.3, 11.4 and 11.8(e) are hereby amended in their entirety to henceforth
read as follows:

 

11.2         Debt to
Affiliates.  Incur any Debt to any
Affiliate or otherwise undertake or engage in any other transaction with any
Affiliate (except unsecured Debt to the other Borrower) except upon fair and
reasonable terms no less favorable than the applicable Borrower could obtain in
a comparable arm’s-length transaction with a Person who is not an Affiliate
and, after giving effect to any and all of which transactions, there is no
violation of any of Sections 11.1, 11.8 or 12.1(i).

 

11.3         Contingent Liabilities.  Assume, guarantee, endorse or otherwise
become liable for the Debt or other obligation of any Person or entity except (i) permitted Debt of the other
Borrower or by endorsement of negotiable instruments for deposit or collection
in the ordinary course of business and (ii) Permitted Guarantees; provided
that customary sales representations and warranties made in respect of Mortgage
Loans sold to investors in secondary market transactions that are typical for
sales or securitizations of the type contemplated and made in the ordinary
course of the applicable Borrower’s business shall not be considered to be
guaranties for purposes of this Section.

 

11.4         Conditional Repurchase, Indemnity or Other
Recourse Obligations. 
Undertake or assume any conditional repurchase, indemnity or other
recourse obligations in respect of Mortgage Loans sold (excluding customary sales representations and
warranties made in connection with any Whole Loan sale or securitization that
are typical for Whole Loan Sales or securitizations of that same type) which
obligations could expose the Borrower to losses in excess of Ten Million
Dollars ($10,000,000) in the aggregate.

 

11.8(e)    GAAP Net Income of FIC. 
Permit FIC (on a consolidated basis with its Subsidiaries) to earn less
than One Dollar ($1) of net income, as determined in accordance with GAAP and
without regard to unrealized gains or losses from mark to

 

8

 

market valuations
resulting from Borrower’s interest rate protection agreement during such
periods, in any two (2) consecutive rolling fiscal quarters.

 

12.  DEFAULTS AND REMEDIES

 

Sections 12.1(c)
and 12.1(j) are hereby amended in their entirety to henceforth read as follows:

 

(c)           Failure
of the Borrowers or any of their Subsidiaries to pay any other Debt when due
(other than Debt of a consolidated, wholly-owned Subsidiary that is a Special
Purpose Entity incurred in connection with Permitted Securitizations), or any
default in the payment when due of any principal or interest on any other such
Debt or in the payment when due of any contingent obligation; or breach or default
with respect to any other material term of any other Debt or of any promissory
note, bond, loan agreement, reimbursement agreement, mortgage, indenture or
other agreement relating thereto, if the effect of any such failure, default or
breach referred to in this Section 12.1(c), is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, Debt of the Borrowers or any of their Subsidiaries
in the aggregate amount of Ten Million Dollars ($10,000,000) or more to become
or be declared due before its stated maturity. 

 

(j)            Any
money judgment, writ or warrant of attachment, or similar process involving in
any case an amount in excess of Ten Million Dollars ($10,000,000) shall be entered or filed against either
Borrower or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60)
days or in any event later than five (5) days before the date of any proposed sale
thereunder (unless, in respect of any such case the judgment debtor or the
subject of the writ or warrant of attachment or similar process is one of the
relevant Borrower’s Subsidiaries or such Subsidiary’s property, and such order,
case commencement, consent, assignment, inability or failure or admission has
no material adverse effect on the Borrowers’ ability to fulfill their
obligations under this Agreement, any Senior Credit Note or any other Credit
Paper).

 

16. 
MISCELLANEOUS

 

Notice
Pursuant to Tex. Bus. & Comm. Code §26.02.  THE 4/04 A&R CREDIT AGREEMENT DATED AS OF
APRIL 21, 2004, AS AMENDED BY THE 4/05 AMENDMENT TO CREDIT AGREEMENT DATED AS
OF APRIL 20, 2005 AND THE OTHER CREDIT PAPERS TOGETHER CONSTITUTE A WRITTEN
LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

9

 

(The remainder of this page is
intentionally blank; unnumbered counterpart

signature pages follow.)

 

10

 

EXECUTED
effective as April 20, 2005.

 

	
   

  	
  FIELDSTONE INVESTMENT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert G. Partlow

  	
   

  
	
   

  	
  Name: Robert G. Partlow

  
	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
  Name: Mark C. Krebs

  
	
   

  	
  Title: Sr. Vice
  President & Treasurer

  
					

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ray M. Meyer

  	
   

  
	
   

  	
  Name: Ray M. Meyer

  
	
   

  	
  Title: Vice President

  

 

 

 

 

 

4/05
AMENDMENT TO CREDIT AGREEMENT

Dated as of April 20,
2005

Amending (for the first
time) the 

 

4/04 Amended and Restated Senior Secured Credit Agreement

dated as of April 21,
2004

by and among

 

FIELDSTONE
INVESTMENT CORPORATION

 

FIELDSTONE
MORTGAGE COMPANY

 

and

 

JPMORGAN
CHASE BANK, N.A.

 

 

$200,000,000
Senior Secured Revolving Credit

 

 

 

 

Index of Defined Terms

 

	
  4/04 A&R Credit Agreement

  	
   

  
	
  4/05 Amendment

  	
   

  
	
  4/05 Amendment
  Effective Date

  	
   

  
	
  Acceleration Date

  	
   

  
	
  Alternate Base
  Rate

  	
   

  
	
  Alternate Base
  Rate Margin

  	
   

  
	
  Amendment

  	
   

  
	
  Balances
  Equivalent Margin

  	
   

  
	
  Balances Equivalent Rate

  	
   

  
	
  Base Rate

  	
   

  
	
  Borrower

  	
   

  
	
  Borrowers

  	
   

  
	
  Ceiling Rate

  	
   

  
	
  Change of Control

  	
   

  
	
  Committed Sum

  	
   

  
	
  Company

  	
   

  
	
  Current Credit Agreement

  	
   

  
	
  Custodian

  	
   

  
	
  Custody Agreement

  	
   

  
	
  Facility Fee

  	
   

  
	
  FIC

  	
   

  
	
  JPMorgan

  	
   

  
	
  Lender

  	
   

  
	
  LIBOR Margin

  	
   

  
	
  Margin

  	
   

  
	
  Maturity Date

  	
   

  
	
  Past Due Rate

  	
   

  
	
  Permitted Guarantees

  	
   

  
	
  Rate

  	
   

  
	
  Stated Rate

  	
   

  
	
  Total Liabilities

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