EX-10.1 LETTER AGREEMENT

Exhibit 10.1

dislocations in the credit markets and the Committee’s view that your services are vital to overcoming those challenges; the recommendation of the Committee’s compensation consultant that the guaranteed portion of the proposed fee structure is commensurate with the fees paid by comparable financial service companies to non-executive board chairs who actively participate in the company’s management and closely support the company’s chief executive officer; the fact that the proposed fee structure will disqualify you from continuing to receive the independent director fees you have been receiving, as the Board will no longer be able to make the affirmative determination that you meet the DFR and New York Stock Exchange standards for independent director status; and the enhanced alignment of your interests with those of DFR shareholders in connection with the success fees that are part of the proposed fee structure.

     1. Base Fee

          a. Base Fee. Subject to b. below, DFR shall pay you a fee, or the Base Fee, for 2008 of $500,000 (less the $20,000 that has been paid to you in 2008 as your additional compensation for your services as Board Chairman under the Temporary Arrangement). The Base Fee will be paid in cash, on a monthly basis, in accordance with payroll practices of DFR’s subsidiary, Deerfield Capital Management LLC, or DCM. The Base Fee for the period from January 1, 2008 to the date of the first periodic payment shall be paid in a lump sum on the date of the first periodic payment. The payments of the Base Fee amounts shall be subject to customary tax withholding.

          b. Termination of Base Fee. DFR shall terminate the Base Fee immediately upon your (i) voluntary resignation as Board Chairman, (ii) death or Disability (as defined below), (iii) removal as a Board member pursuant to the Director removal provision in Section 4.8 of DFR’s Charter as in effect on the date hereof or (iv) failure to be re-elected as a Director by the DFR stockholders at the DFR 2008 annual stockholders meeting. Disability means your physical or mental incapacity as a result of which you are unable for a period of 90 days during any 180-day period to perform your duties as Board Chairman with substantially the same level of quality as immediately before the incapacity.

          c. Equity Participation. There shall be no prohibition against the Committee, in the exercise of its discretion, granting you all or part of the equity awards granted to the independent directors of the Board (upon the same terms and conditions as the grants to such directors).

     2. Success Fees

          a. General. You shall be eligible for a discretionary success fee in either or both of the two situations specified below. The Committee shall have complete discretion as to whether a success fee is awarded in either situation, and, if awarded, the amount of the fee (subject to the ceilings on each fee specified below), as well as the fee

portion, if any, payable in cash and the portion, if any, payable in Performance Shares (as defined in the DFR Stock Incentive Plan, or the Plan, in effect on the date hereof) or other non-cash compensation specified in the Plan. The Committee shall also have complete discretion as to the vesting and other provisions relating to such non-cash awards, subject to the condition that such provisions shall generally be comparable to those relating to the awards of non-cash compensation to DCM employees for their 2008 services.

          b. Capital Transaction Success Fee. You shall be eligible for a Capital Transaction Success Fee, not to exceed $1,000,000, if the following conditions are met: (i) in your capacity as Board Chairman, you are instrumental in causing DFR to execute agreement(s) for a Capital Transaction, as defined below, in 2008 that substantially increases DFR shareholder value; and (ii) after the Capital Transaction the surviving entity does not offer you a position with DFR that is acceptable to you.

          A Capital Transaction means (i) the ownership or acquisition by any person of more than 50% of the outstanding common stock of DFR; (ii) the merger or consolidation of DFR with or into any person; or (iii) any one or a series of related sales or conveyances to any person of all or substantially all of DFR’s assets.

          c. Other Success Fee. You shall also be eligible for the Other Success Fee, not to exceed $500,000, if the following conditions are met: (i) in your capacity as Board Chairman you are instrumental in causing DFR to engage in actions other than a Capital Transaction that increase DFR shareholder value, such as strategic partnerships or joint ventures, and (ii) such actions result in a substantial increase in DFR shareholder value in 2008.

          d. Committee Discretion. You acknowledge and agree that the awards of the Capital Transaction Success Fee and/or the Other Success Fee are wholly within the discretion of the Committee, as are the amounts of any such awards and the cash or stock components of such awards; that the Committee may award you both or one of the success fees and not the other; and that the Committee may not award you either of the fees.

Agreed and Acknowledged:

/s/ Peter H. Rothschild
Peter H. Rothschild