Document:

Exhibit 10.3

 

TWO HARBORS investment
corp.

2021 EQUITY INCENTIVE
PLAN

 

RESTRICTED
STOCK UNIT AGREEMENT

 

  

This RESTRICTED STOCK UNIT
AGREEMENT (this “Agreement”) is made and entered into by and between Two Harbors Investment Corp., a Maryland corporation
(the “Company”), and _________ (the “Grantee”), as of the _____ day of ______, 20____ (the “Grant
Date”).

 

WHEREAS, the Company maintains
the Two Harbors Investment Corp. 2021 Equity Incentive Plan (the “Plan”);

 

WHEREAS, the Grantee is an
employee of the Company;

 

WHEREAS, in accordance with
the Plan, the Committee has determined that it is in the best interests of the Company and its stockholders to grant the award of Restricted
Stock Units to the Grantee, subject to the terms and conditions set forth below; and

 

WHEREAS, any capitalized terms
not otherwise defined in this Agreement shall have the meaning set forth in the Plan.

 

NOW, THEREFORE, IT IS HEREBY
AGREED AS FOLLOWS:

 

1.             Grant of Restricted Stock Units.

 

		(a)	Pursuant to Section 4(c) of the Plan, the Company hereby issues to the Grantee on the Grant Date an award
consisting of ________ Restricted Stock Units (the “Restricted Stock Units”). Each Restricted Stock Unit represents
the right to receive one share of Common Stock, subject to the terms and conditions set forth in this Agreement and the Plan. The Plan
is incorporated herein by reference as though set forth herein in its entirety. To the extent such terms or conditions conflict with any
provision of the Plan, the terms and conditions set forth in the Plan shall govern.

 

		(b)	The Restricted Stock Units shall be credited to a separate account maintained for the Grantee on the books
and records of the Company (the “Account”). All amounts credited to the Account shall continue for all purposes to
be part of the general assets of the Company.

 

		(c)	The grant of the Restricted Stock Units is made in consideration of the services to be rendered by the
Grantee to the Company.

 

2.             Vesting,
Restrictions and Conditions.

 

The Restricted Stock Units
awarded pursuant to this Agreement and the Plan shall be subject to the following restrictions and conditions:

 

    

     

    

 

		(a)	Vesting Schedule. Except as otherwise stated herein, provided that the Grantee is continuously
employed by the Company or any of its subsidiaries (or any of their successors) through the applicable vesting date, the Restricted Stock
Units will vest in three substantially equal installments (each a “Vesting Date”) in accordance with the following
schedule (the period during which restrictions apply with respect to Restricted Stock Units, the “Vesting Period”):

 

	Vesting Date	Number of Restricted Stock Units Vesting
	[date]	[number]
	[date]	[number]
	[date]	[number]

 

The Vesting Period shall
only lapse as to whole Restricted Stock Units (no partial units shall be vested). Once vested, the Restricted Stock Units become “Vested
Units.”

 

		(b)	Termination of Service. Subsection to subsection (e) below, if during the Vesting Period the Grantee
has a Termination of Service, the following shall apply:

 

(i)        if
the Termination of Service is by the Company for Cause or by the Grantee for any reason (other than his or her death, Disability, Retirement
or Good Reason, as defined below), then all Restricted Stock Units that have not vested as of the date of such Termination of Service
shall thereupon, and with no further action, be forfeited without consideration by the Grantee and Grantee shall have no further rights
or entitlement with respect to such Restricted Stock Units; and

 

(ii)        if
the Termination of Service is by the Company for any reason (other than for Cause) or by the Grantee for Good Reason, then all Restricted
Stock Units that have not yet vested will fully vest as of the close of business on the date of such Termination of Service and will be
payable as soon as practical following the termination, provided that in no event will payment be made later than sixty (60) days following
such termination.

 

		(c)	Death or Disability. If during the Vesting Period the Grantee has a Termination of Service on account
of the Grantee’s death or Disability, then all Restricted Stock Units that have not vested will fully vest as of the date of such
death or Disability and will be payable as soon as practical following the termination, provided that in no event will payment be made
later than sixty (60) days following such termination.

 

		(d)	Retirement. If during the Vesting Period the Grantee has a Termination of Service on account of
the Grantee’s Retirement, the Grantee’s Restricted Stock Units will continue to vest in accordance with Section 2(a) as if
the Grantee remained in service with the Company until the end of the Vesting Period, and payment shall be made pursuant to Section 4(a).

 

		(e)	Change of Control. If there occurs during the Vesting Period a Change of Control, then the following
shall apply to this Grant of Restricted Stock Units:

 

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(i)        if
the Resulting Entity has assumed this Grant of Restricted Stock Units or has provided Grantee with a Replacement Award (as defined below)
and, during the twenty four (24) month period following the Change of Control the Grantee experiences a Termination of Service without
Cause by the Resulting Entity (as defined below) or by Grantee for Good Reason, then all Restricted Stock Units that have not vested will
fully vest on the date of such Termination of Service without Cause or for Good Reason and will be payable as soon as practical following
the termination, provided that in no event will payment be made later than sixty (60) days following such termination;

 

(ii)       if
the Resulting Entity has not assumed this Grant of Restricted Stock Units or has not provided Grantee with a Replacement Award, then all
Restricted Stock Units that have not vested will fully vest immediately prior to the Change of Control and will be payable as soon as
practical, but in no event later than sixty (60) days following the occurrence of the Change of Control;

 

(iii)      for
purposes of this Agreement, the “Resulting Entity” in the event of a Change of Control shall mean (A) the Company,
in the event of a Change of Control as defined in Section 15(j) (i), (ii), or (iii) (C) of the Plan; (B) the entity (which may or may
not be the Company) that is the continuing entity in the event of a merger or consolidation, in the event of a Change of Control as defined
in Section 15(j)(iii)(A) of the Plan; or (C) the acquirer of the Company’s assets, in the event of a Change of Control as defined
in Section 15(j)(iii)(B) of the Plan; and

 

(iv)     for
purposes of this Agreement, “Replacement Award” shall mean an award (A) of the same type (e.g., time-based restricted
stock unit) covered by this Agreement, (B) that has a value at least equal to the value of the Restricted Stock Units, (C) that relates
to publicly traded equity securities of the Company or the Resulting Entity, (D) the tax consequences of which to Grantee under the Code
are not less favorable to the Grantee than the tax consequences of the Restricted Stock Units, and (E) the other terms and conditions
of which are not less favorable to Grantee than the terms and conditions under this Agreement. A Replacement Award may be granted only
to the extent it does not result in the Restricted Stock Units covered by this Agreement or the Replacement Award failing to comply with
or be exempt from Section 409A of the Code. Without limiting the generality of the foregoing, the Replacement Award may take the form
of a continuation of the Restricted Stock Units covered by this Agreement if the requirements of the two preceding sentences are satisfied.
The determination of whether the conditions of this Section 2(e)(iv) are satisfied will be made by the Committee, as constituted
immediately prior to the Change of Control, in its sole discretion.

 

		(f)	Good Reason. For purposes of this Agreement, “Good Reason” shall mean “good
reason” (or a similar term) as defined in a Grantee’s employment agreement or, if no employment agreement exists or if such
agreement does not define “good reason” (or a similar term), the occurrence of any of the following events without the Grantee’s
written consent:

 

(i)        material
diminution or reduction of the Grantee’s authority, duties or responsibilities, subject to the following conditions:

 

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(A) such material
diminution or reduction is not the result of Grantee’s unsatisfactory performance as determined in the sole discretion of the Company,
Board, or Committee; and

 

(B) neither a
Grantee’s change of title, nor a change in the person or entity to whom a Grantee reports, shall constitute a material diminution
or reduction of the Grantee’s authority, duties or responsibilities;

 

(ii)       the
Company’s relocation of the Grantee’s principal work location to a location that is more than fifty (50) miles from the Grantee’s
then current principal work location;

 

(iii)      material
reduction of the Grantee’s base salary or the Grantee’s target incentive compensation opportunity, exclusive of any across
the board reduction similarly affecting all or substantially all similarly-situated employees; or

 

(iv)     material
breach by the Company of any written employment agreement between the Grantee and the Company.

 

(v)       Notwithstanding
the foregoing, no Termination of Service by the Grantee shall constitute Good Reason unless:

 

		(A)	the Grantee has given written notice of the proposed termination due to Good Reason to the Company, and
provides the Company with reasonable details of the circumstances giving rise to the Good Reason event, not later than ninety (90) days
following the initial occurrence of such event;

 

		(B)	the Company fails to cure the Good Reason event within thirty (30) days of receiving written notice from
the Grantee; and

 

(C) the Grantee
terminates his or her employment within thirty (30) days after the conclusion of the cure period.

 

3.             Dividend
Equivalent Rights; Other Rights.

 

	 	(a)	Dividend Equivalent Rights and Distributions. Each Restricted Stock Unit shall also have a Dividend Equivalent Right. If the Board declares a cash dividend on the shares of Common Stock, the Grantee will be entitled to a Dividend Equivalent Right, to be credited to the Grantee’s account on the dividend payment date established by the Company, equal to the cash dividends payable on the same number of shares of Common Stock as the number of unvested RSUs credited to the Grantee’s account on the dividend record date established by the Company. Each Dividend Equivalent Right represents the right to receive all of the ordinary cash dividends that are or would be payable with respect to the Restricted Stock Units. With respect to each Dividend Equivalent Right, the equivalent of any such cash dividends shall be payable in a single cash lump sum payment on or before the last day of the calendar quarter in which the dividend payment date underlying such Dividend Equivalent Right occurs. Until the Dividend Equivalent Right is paid, it shall be subject to the same terms and conditions applicable to the Restricted Stock Units to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer, forfeiture, vesting and settlement provisions contained in this Agreement. In the event that a Restricted Stock Unit is forfeited as provided in this Agreement, then the related Dividend Equivalent Right which has not yet been paid shall also be forfeited.

 

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		(b)	No Rights as Shareholder. Grantee shall not have any rights of a shareholder with respect to the
shares of Common Stock underlying the Restricted Stock Units, including no right to vote such shares of Common Stock, unless and until
the Restricted Stock Units vest and are settled by the issuance of shares of Common Stock in the name of the Grantee.

 

		(c)	No Right to Transfer. Subject to the provisions of the Plan and this Agreement, during the Vesting
Period, the Grantee shall not be permitted voluntarily or involuntarily to sell, transfer, pledge, alienate, encumber or assign the Restricted
Stock Units or underlying shares of Common Stock, and no other party shall have the right to attach, garnish or otherwise claim an ownership
interest in such Restricted Stock Units or underlying shares of Common Stock; any such attempt in contravention of this Section 3(c) shall
be void and of no effect.

 

4.             Settlement
of Restricted Stock Units.

 

		(a)	Within thirty (30) days following the date on which any Restricted Stock Units vest pursuant to Section
2 hereof (but in no event later than March 15th of the year following the year in which the Restricted Stock Units become Vested
Units), the Company shall (i) issue and deliver to the Grantee the number of shares of Common Stock equal to the number of Vested Units
and (ii) cause the name of the Grantee to be entered into the name of the books of the Company as the shareholder of record with respect
to the shares of Common Stock delivered to Grantee.

 

		(b)	To the extent that Grantee does not vest in any Restricted Stock Unit awarded pursuant to this Agreement,
all interest in such Restricted Stock Units shall be forfeited, and the Grantee shall have no right or interest in any Restricted Stock
Units that are forfeited.

 

5.             Tax
Liability and Withholding.

 

	 	(a)	The Grantee shall be required to pay to the Company, and the Company shall be entitled to deduct from any payments or compensation paid to the Grantee, the amount of any required withholding taxes in respect of the Restricted Stock Units or any Dividend Equivalent Right or distribution payable in relation thereto, and take all such other action as it determines necessary to satisfy all obligations for the payment of such withholding taxes or otherwise required by law. The Company has the right (but not the obligation) to satisfy the payment of income, employment, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”) by (i) withholding from proceeds of the sale of shares of Common Stock acquired upon the settlement of the Restricted Stock Units and Dividend Equivalent Rights through a sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization without further consent), (ii) requiring the Grantee to pay cash, (iii) withholding from any wages or other cash compensation payable to the Grantee by the Company, and/or (iv) reducing the number of shares of Common Stock otherwise deliverable to the Grantee.

 

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		(b)	Notwithstanding any action the Company takes with respect to any Tax-Related Items, the ultimate liability
for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (i) makes no representation or undertakings
regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the Restricted Stock Units or
the subsequent issuance or sale of any shares of Common Stock; and (ii) does not commit to structure the Restricted Stock Units to reduce
or eliminate the Grantee’s liability for Tax-Related Items.

 

6.             Miscellaneous.

 

		(a)	Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD
TO ANY PRINCIPLES OF CONFLICT OF LAWS WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MARYLAND.

 

		(b)	Captions. The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect.

 

		(c)	Amendments. This Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.

 

		(d)	Severability. The invalidity or unenforceability of any provision of this Agreement or the Plan
shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of the Agreement and the
Plan shall be severable and enforceable to the extent permitted by law.

 

		(e)	Interpretation and Administration. The Committee may make such rules and regulations and establish
such procedures for the administration of this Agreement as it deems appropriate. Without limiting the generality of the foregoing, the
Committee may interpret the Plan and this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise
accorded the maximum deference permitted by law, provided that the Committee’s interpretation shall not be entitled to deference
on and after a Change of Control except to the extent that such interpretations are made exclusively by members of the Committee who are
individuals who served as Committee members before the Change of Control and take any other actions and make any other determinations
or decisions that it deems necessary or appropriate in connection with the Plan, this Agreement or the administration or interpretation
thereof. In the event of any dispute or disagreement as to interpretation of the Plan or this Agreement or of any rule, regulation or
procedure, or as to any question, right or obligation arising from or related to the Plan or this Agreement, the decision of the Committee,
except as provided above, shall be final and binding upon all persons.

 

	 	(f)	Notices. All notices hereunder shall be in writing and, if to the Company or the Committee, shall be delivered to the Board or mailed to its principal office, addressed to the attention of the Board; and if to the Grantee, shall be delivered personally, sent by facsimile transmission, or mailed to the Grantee at the address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 6(f). Notices may also be given electronically pursuant to such rules and procedures as the Committee may adopt for electronic notice.

 

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		(g)	No Waiver. The failure of the Grantee or the Company to insist upon strict compliance with any
provision of this Agreement, or to assert any right the Grantee or the Company, respectively, may have under this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

 

		(h)	No Right of Employment. Nothing in this Agreement shall confer on the Grantee any right to continue
in the employ or other service of the Company or its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries
and its stockholders to terminate the Grantee’s employment or other service at any time.

 

		(i)	Clawback. The Restricted Stock Units (or shares of Common Stock issued upon the vesting thereof)
are subject to the clawback and forfeiture provisions of Section 24 of the Plan and any clawback or forfeiture policy that may be adopted
by the Board or the Committee as may be amended from time to time (“Compensation Recovery Policy”). The Company hereby
incorporates into this Agreement the terms of the Compensation Recovery Policy.

 

		(j)	Unsecured Obligation. The obligations of the Company under this Agreement will be merely that of
an unfunded and unsecured promise of the Company to deliver shares of Common Stock or pay cash or distributions in the future, and the
rights of Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as
security for the obligations of the Company under this Agreement.

 

		(k)	Entire Agreement; Counterparts. This Agreement, subject to the terms and conditions of the Plan,
contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written
or oral, with respect thereto. The Agreement may be executed in counterparts, each of which shall be deemed and original but all of which
together will constitute one and the same instrument. Counterpart signature pages transmitted by facsimile transmission, electronic mail
or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document will have the same effect
as physical delivery of the paper document bearing an original signature.

 

		(l)	Acceptance. The Grantee hereby acknowledged receipt of a copy of the Plan and this Agreement. The
Grantee has read and understands the terms and provisions thereof and accepts the Restricted Stock Units subject to all the terms and
conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement
of the Restricted Stock Units, the receipt of any dividend or distribution, or the subsequent disposition of the shares of Common Stock
and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

 

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		(m)	Section 409A.

 

(i)        If
any provision of this Agreement could cause the application of an accelerated or additional tax under Section 409A of the Code upon the
vesting or settlement of the Restricted Stock Units (or any portion thereof), such provision shall be restructured, to the minimum extent
possible, in a manner determined by the Company (and reasonably acceptable to the Grantee) that does not cause such an accelerated or
additional tax. It is intended that all provisions of this Agreement other than those relating to payment of vested Restricted Stock Units
on account of a Grantee’s Retirement, shall not be subject to Section 409A of the Code by reason of the short-term deferral rule
under Treas. Reg. Section 1.409A-1(b)(4), and this Agreement shall be interpreted accordingly.

 

(ii)       With
respect to any payment of Restricted Stock Units under this Agreement that is subject to Section 409A of the Code, and with respect to
which a payment or distribution is to be made upon a Termination of Service, if the Grantee is determined by the Company to be a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and any of the Company’s stock is publicly traded on
an established securities market or otherwise, such payment or distribution may not be made before the date which is six months after
the date of Termination of Service (to the extent required under Section 409A of the Code). Any payments or distributions delayed in accordance
with the prior sentence shall be paid to the Grantee on the first day of the seventh month following the Grantee’s Termination of
Service.

 

(iii)      The
Board and the Committee shall exercise authority and discretion under the Plan and this Agreement, to satisfy the requirements of Section
409A of the Code or any exemption thereto. Provided, however, that neither the Board nor the Committee shall be liable to any Grantee
for the failure of any provision of this Agreement to comply with Section 409A of the Code, including, but not limited to, liability for
any taxes or penalties associated with the failure to comply with Section 409A of the Code.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company
and the Grantee have executed this Restricted Stock Unit Agreement as of the day and year first above written.

 

	 	TWO HARBORS INVESTMENT CORP.
	 	 
	 	By:	 
	 	Name: 
	 	Title:
	 	 
	 	 
	 	Grantee:

 

    9Exhibit 10.4

 

TWO HARBORS investment
corp.

2021 EQUITY INCENTIVE
PLAN

 

Performance
Share UNIT AGREEMENT

 

This PERFORMANCE SHARE
UNIT AGREEMENT (this “Agreement”) is made and entered into by and between Two Harbors Investment Corp., a Maryland
corporation (the “Company”), and _________ (the “Grantee”), as of the _____ day of ______, 20____
(the “Grant Date”).

 

WHEREAS, the Company maintains
the Two Harbors Investment Corp. 2021 Equity Incentive Plan, as may be amended from time to time (the “Plan”);

 

WHEREAS, the Grantee is an
employee of the Company;

 

WHEREAS, in accordance with
the Plan, the Committee has determined that it is in the best interests of the Company and its stockholders to grant the award of Performance
Share Units to the Grantee, subject to the terms and conditions set forth below; and

 

WHEREAS, any capitalized terms
not otherwise defined in this Agreement shall have the meaning set forth in the Plan.

 

NOW, THEREFORE, IT IS HEREBY
AGREED AS FOLLOWS:

 

1.           
Grant of Performance Share Units.

 

		(a)	Pursuant to Section 4(c) of the Plan, the Company hereby grants to the Grantee on the Grant Date an award
consisting of ________ Performance Share Units (the “Target Award”). Each Performance Share Unit (“PSU”)
represents the right to receive one share of Common Stock, subject to the terms and conditions set forth in this Agreement and the Plan.
The Plan is incorporated herein by reference as though set forth herein in its entirety. To the extent such terms or conditions conflict
with any provision of the Plan, the terms and conditions set forth in the Plan shall govern.

 

		(b)	For purposes of this Agreement, the term “Performance Period” shall be the period commencing
on ________ and ending on ________.

 

		(c)	The PSUs shall be credited to a separate account maintained for the Grantee on the books and records of
the Company (the “Account”). All amounts credited to the Account shall continue for all purposes to be part of the
general assets of the Company.

 

		(d)	The grant of the PSUs is made in consideration of the services to be rendered by the Grantee to the Company.

 

2.           
Performance Goals.

 

		(a)	Subject to the terms of this Agreement, the number of PSUs earned by the Grantee for the Performance
                                                                                 Period will be determined at the end of the Performance Period based on the level of achievement of the Performance Goals set forth
                                                                                 in Exhibit A. All determinations of whether the Performance Goals have been achieved, the number of PSUs earned by the Grantee, and
                                                                                 all other matters related to this Section 2 shall be made by the Committee in its sole discretion.

 

     

     

    

 

		(b)	Promptly following the completion of the Performance Period (the “Certification Date”),
the Committee will review and certify, in writing, (i) whether, and to what extent, the Performance Goals for the Performance Period have
been achieved, and (ii) the number of PSUs that the Grantee has earned, if any, subject to compliance with the requirements of Section
3. Such certification shall be final, conclusive and binding on the Grantee, and on all other interested persons, to the maximum extent
permitted by law.

 

3.           
Vesting, Restrictions and Conditions.

 

The PSUs awarded pursuant
to this Agreement and the Plan shall be subject to forfeiture until they vest, in accordance with the following restrictions and conditions:

 

		(a)	Vesting of PSUs. Except as otherwise stated herein, provided that the Grantee is continuously employed
by the Company or any of its subsidiaries (or any of their successors) through the first trading day following the last day of the Performance
Period, the PSUs will vest subject to the certification by the Committee in accordance with Section 2(b). The number of PSUs that vest
and become payable under this Agreement shall be determined by the Committee based on the level of achievement of the Performance Goals
set forth in Exhibit A and shall be rounded up to the nearest whole PSU (no partial units shall be vested).

 

		(b)	Termination of Service. Except as otherwise provided in this Agreement, if the Grantee has a Termination
of Service on or before the last day of the Performance Period, the following shall apply:

 

(i)        if
the Termination of Service is by the Company for Cause or by the Grantee for any reason (other than his or her death, Disability, Retirement,
or for Good Reason), then any PSUs that have not vested as of the date of such Termination of Service shall thereupon, and with no further
action, be forfeited by the Grantee and Grantee shall have no further rights or entitlement with respect to such PSUs;

 

(ii)        if
the Termination of Service is by the Company without Cause or by the Grantee for Good Reason, then the Grantee shall be entitled to vest,
on the last day of the Performance Period, in a pro rata portion of the number of PSUs the Grantee would have received based on the level
of achievement of the Performance Goals for the Performance Period, calculated by multiplying the number of PSUs the Grantee would have
received if Grantee had remained employed through the end of the Performance Period by a fraction, the numerator of which equals the number
of days that the Grantee was employed during the Performance Period and the denominator of which equals the total number of days in the
Performance Period.

 

		(c)	Death or Disability. If during the Performance Period the Grantee incurs a Termination of Service
due to the Grantee’s death or Disability, then the Grantee will fully vest on such date in a number of PSUs equal to the Target
Award for such Performance Period (without regard to the Performance Goals).

 

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		(d)	Retirement. If during the Performance Period the Grantee incurs a Termination of Service on account
of the Grantee’s Retirement, all of the outstanding PSUs will continue to vest in accordance with Section 3(a) subject to achievement
of the Performance Goals as if Grantee remained in service to the Company through the end of the Performance Period.

 

		(e)	Change of Control. If, during the Performance Period, a Change of Control occurs, then the following
shall apply to this Grant of PSUs:

 

(i)       If,
at the consummation of the Change of Control, the Resulting Entity has not assumed this Agreement and the outstanding PSUs, then the Grantee
will be deemed to have fully vested immediately preceding the Change of Control in a number of PSUs equal to the Target Award for such
Performance Period (without regard to the Performance Goals), or, if greater, the number of PSUs the Grantee would receive if measurement
of the Performance Goals were determined as if the date of the Change of Control was the last day of the Performance Period;

 

(ii)       If
the Resulting Entity has assumed this Agreement and the outstanding PSUs:

 

		(A)	Grantee will be deemed to have earned the number of PSUs equal to the Target Award for such Performance
Period (without regard to the Performance Goals), or, if greater, the number of PSUs the Grantee would receive if the Performance Goals
were determined as if the date of the Change of Control was the last day of the Performance Period (the “Assumed PSUs), with such
Assumed PSUs to remain outstanding and subject to forfeiture for the duration of the Performance Period and, if not sooner vested pursuant
to Sections 3(b)(ii), 3(c), or (d), upon the last day of the Performance Period, the Assumed PSUs will vest;

 

		(B)	If, during the twenty-four (24) month period following the Change of Control the Grantee incurs a Termination
of Service without Cause, or due to death or Disability, or by the Grantee for Good Reason, then the Assumed PSUs will fully vest on such
date;

 

(iii)       For
purposes of this Agreement, the “Resulting Entity” in the event of a Change of Control shall mean (A) the Company,
in the event of a Change of Control as defined in Section 15(j)(i) or (ii) of the Plan; (B) the entity (which may or may not be the Company)
that is the continuing entity in the event of a merger or consolidation, in the event of a Change of Control as defined in Section 15(j)(iii)(A)
of the Plan; or (C) the acquirer of the Company’s assets, in the event of a Change of Control as defined in Section 15(j)(iii)(B)
of the Plan.

 

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		(f)	Restrictions and Conditions. 

 

(i)       Grantee
shall forfeit such PSUs (or shares of Common Stock issued upon vesting thereof) as are required to be forfeited under (A) Section 954
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the related rules of the Securities and Exchange Commission
or the applicable listing exchange or (B) such clawback or recoupment policy as the Board or Committee may adopt (the “Compensation
Recovery Policy”). The Company hereby incorporates into this Agreement the terms of the Compensation Recovery Policy; and

 

(ii)       Subject
to the provisions of the Plan and this Agreement, during the Vesting Period, the Grantee shall not be permitted voluntarily or involuntarily
to sell, transfer, pledge, alienate, encumber or assign the PSUs or any shares of Common Stock that would be issuable upon the vesting
thereof, and no other party shall have the right to attach, garnish or otherwise claim an ownership interest in such PSUs or shares of
Common Stock; any such attempt in contravention of this Section 3(f)(ii) shall be void and of no effect.

 

		(g)	Good Reason. For purposes of this Agreement, “Good Reason” shall mean “good
reason” (or a similar term) as defined in a Grantee’s employment agreement or, if no employment agreement exists or if such
agreement does not define “good reason” (or a similar term), the occurrence of any of the following events without the Grantee’s
written consent:

 

(i)        material
diminution or reduction of the Grantee’s authority, duties or responsibilities, subject to the following conditions:

 

(A) such material
diminution or reduction is not the result of Grantee’s unsatisfactory performance as determined in the sole discretion of the Company,
Board, or Committee; and

 

(B) neither a
Grantee’s change of title, nor a change in the person or entity to whom a Grantee reports, shall constitute a material diminution
or reduction of the Grantee’s authority, duties or responsibilities;

 

(ii)        the
Company’s relocation of the Grantee’s principal work location to a location that is more than fifty (50) miles from the Grantee’s
then current principal work location;

 

(iii)        material
reduction of the Grantee’s base salary or the Grantee’s target incentive compensation opportunity, exclusive of any across
the board reduction similarly affecting all or substantially all similarly-situated employees; or

 

(iv)        material
breach by the Company of any written employment agreement between the Grantee and the Company.

 

(v)       Notwithstanding
the foregoing, no Termination of Service by the Grantee shall constitute Good Reason unless:

 

		(A)	the Grantee has given written notice of the proposed termination due to Good Reason to the Company,
                                                                                and provides the Company with reasonable details of the circumstances giving rise to the Good Reason event, not later than ninety
                                                                                (90) days following the initial occurrence of such event;

 

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		(B)	the Company fails to cure the Good Reason event within thirty (30) days of receiving written notice from
the Grantee; and

 

		(C)	the Grantee terminates his or her employment within thirty (30)
days after the conclusion of the cure period.

 

4.           
Dividend Equivalent Rights; Other Rights.

 

		(a)	Dividend Equivalent Rights. Each PSU shall also have Dividend Equivalent Rights (DERs). If, during
the Performance Period, the Board declares a cash dividend or other distribution payable to the holders of Common Stock generally, the
Company will increase the number of PSUs hereunder (i.e., by increasing the Target Award) by the number of shares that represent an amount
equal to the per share cash dividend (or per share cash value of any such other distribution) paid by the Company on its shares of Common
Stock (rounded down to the nearest whole number) multiplied by the number of Target Award PSUs (which shall include any unvested PSUs
previously credited to the Grantee’s account as a result of any preceding DERs) held by the Grantee as of the related dividend payment
record date. Any such additional PSUs awarded by virtue of DERs shall be subject to the same vesting, forfeiture, payment, termination
and other terms, conditions and restrictions under this Agreement as the original Target Award PSUs to which they relate. No additional
PSUs under this Section 4(a) shall be credited with respect to any PSUs which, as of the record date for such dividend or distribution,
have been vested and settled or have been forfeited.

 

		(b)	No Rights as Shareholder. Grantee shall not have any rights of a shareholder with respect to the
shares of Common Stock underlying the PSUs, including no right to vote such shares of Common Stock, unless and until the PSUs vest and
are settled by the issuance of shares of Common Stock in the name of the Grantee.

 

5.           
Settlement of Performance Share Units.

 

		(a)	Promptly following the date on which any PSUs vest pursuant to Section 3 hereof (but in no event later
than March 15th of the year following the year in which the PSUs vest), the Company shall (i) issue and deliver to the Grantee
the number of shares of Common Stock equal to the number of PSUs earned and (ii) cause the name of the Grantee to be entered into the
name of the books of the Company as the shareholder of record with respect to the shares of Common Stock delivered to Grantee.

 

		(b)	To the extent that Grantee does not vest in any PSUs awarded pursuant to this Agreement, all interest
in such PSUs shall be forfeited, and the Grantee shall have no right or interest in any PSUs that are forfeited.

 

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6.           
Tax Liability and Withholding.

 

		(a)	The Grantee shall be required to pay to the Company, and the
Company shall be entitled to deduct from any payments or compensation paid to the Grantee, the amount of any required withholding taxes
in respect of the PSUs or any DER payable in relation thereto and take all such other action as it determines necessary to satisfy all
obligations for the payment of such withholding taxes or otherwise required by law. The
Company has the right (but not the obligation) to satisfy the payment of income, employment, social insurance, payroll tax, fringe benefit
tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to
the Grantee (“Tax-Related Items”) by (i) withholding from proceeds of the sale of shares of Common Stock acquired
upon the settlement of the PSUs and DERs through a sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization
without further consent), (ii) requiring the Grantee to pay cash, (iii) withholding from any wages or other cash compensation payable
to the Grantee by the Company, and/or (iv) reducing the number of shares of Common Stock otherwise deliverable to the Grantee.

 

		(b)	Notwithstanding any action the Company takes with respect to any Tax-Related Items, the ultimate liability
for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (i) makes no representation or undertakings
regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the PSUs or the subsequent issuance
or sale of any shares of Common Stock; and (ii) does not commit to structure the PSUs to reduce or eliminate the Grantee’s liability
for Tax-Related Items.

 

7.           
Non-Competition and Non-Solicitation.

 

		(a)	Because of the Company’s legitimate business interests and in consideration of the good and valuable
consideration offered in granting the PSUs to Grantee, during the term of Grantee’s employment with the Company and for the Restricted
Period (defined below), the Grantee agrees and covenants not to:

 

(i)        directly
or indirectly, in whole or in part, engage in, provide services to, or otherwise participate in, whether as an employee, employer, owner,
operator, manager, advisor, consultant, agent, officer, partner, director, shareholder, volunteer, intern or in any other similar capacity
to an entity engaged in a Competitive Business (as defined below);

 

(ii)        directly
or indirectly, (A) solicit, hire, attempt to hire, engage, contract with or recruit any Company Employee (as defined below), or (B) induce
or otherwise advise or encourage any Company Employee to terminate or alter his or her employment with the Company; or

 

(iii)        directly
or indirectly, solicit, contact (including but not limited to, verbal, email, regular mail, express mail, telephone, fax, and instant
message), attempt to contact or meet with the current or prospective business partners or counterparties (or business partners or counterparties
that have engaged in business or financial transactions with the Company and its subsidiaries within the twelve (12) month period preceding
the Grantee’s Termination of Service).

 

		(b)	If the Grantee breaches any of the restrictive covenants set forth in Section 7(a):

 

(i)        all
unvested Equity Awards (as defined below) made to Grantee pursuant to the Plan shall be immediately forfeited;

 

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(ii)        the
Grantee shall be required to disgorge to the Company any shares of Common Stock issued to Grantee upon the vesting and settlement of any
Equity Awards, or the proceeds of any sales of such shares of Common Stock issued to Grantee upon the vesting and settlement of such Equity
Awards, which occurred during the Restricted Period; and

 

(iii)        the
Grantee hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or
permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without
the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting
any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, money damages
or other available forms of relief.

 

		(c)	The prohibitions in Section 7(a) do not, in any way, restrict or impede the Grantee from:

 

(i)                 
Purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation (even if such corporation is engaged
in a Competitive Business), provided that such ownership represents a passive investment and that the Grantee is not a controlling person
or, or a member of a group that controls, such corporation; or

 

(ii)               
Exercising protected rights to the extent that such rights cannot be waived by this Agreement or from complying with any applicable law
or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance
does not exceed that required by the law, regulation or order (and, in such event, Grantee shall promptly provide written notice of any
such order to the Company’s General Counsel).

 

		(d)	For the purposes of Section 7, the following terms have the meanings ascribed to them below:

 

(i)                 
 “Restricted Period” shall mean the period beginning on the date of Grantee’s Termination of Service and ending
________ months thereafter;

 

(ii)               
 “Competitive Business” shall mean an entity that is engaged in a business that is similar to that in which the Company
and its subsidiaries is engaged (or is actively planning to become engaged), including the business of investing, owning and managing
residential mortgage backed securities, mortgage servicing rights, and similar residential mortgage-related investments, or any entity
that may require or inevitably require the Grantee’s disclosure of the Company’s trade secrets, proprietary information or
confidential non-public information;

 

(iii)              
 “Company Employee” shall mean any individual who is currently employed by the Company or any of its subsidiaries or
was employed by the Company or any of its subsidiaries within the ninety (90) day period prior to the time of such solicitation or inducement
contemplated by Section 7(a)(ii); and

 

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(iv)              
 “Equity Awards” shall mean any equity award (whether in the form of PSUs, restricted stock units, restricted shares
or other form of equity) granted to the Grantee under any Company equity incentive plan, including the Second Restated 2009 Equity Incentive
Plan, the 2021 Equity Incentive Plan or any other similar plan approved by the Board or Committee in the future.

 

8.           
Miscellaneous.

 

		(a)	Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD
TO ANY PRINCIPLES OF CONFLICT OF LAWS WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MARYLAND.

 

		(b)	Captions. The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect.

 

		(c)	Amendments. This Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.

 

		(d)	Severability. The invalidity or unenforceability of any provision of this Agreement or the Plan
shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of the Agreement and the
Plan shall be severable and enforceable to the extent permitted by law.

 

		(e)	Interpretation and Administration. The Committee may make such rules and regulations and establish
such procedures for the administration of this Agreement as it deems appropriate. Without limiting the generality of the foregoing, the
Committee may interpret the Plan and this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise
accorded the maximum deference permitted by law, provided that the Committee’s interpretation shall not be entitled to deference
on and after a Change of Control except to the extent that such interpretations are made exclusively by members of the Committee who are
individuals who served as Committee members before the Change of Control and take any other actions and make any other determinations
or decisions that it deems necessary or appropriate in connection with the Plan, this Agreement or the administration or interpretation
thereof. In the event of any dispute or disagreement as to interpretation of the Plan or this Agreement or of any rule, regulation or
procedure, or as to any question, right or obligation arising from or related to the Plan or this Agreement, the decision of the Committee,
except as provided above, shall be final and binding upon all persons.

 

		(f)	Notices. All notices hereunder shall be in writing and, if to the Company or the Committee, shall
be delivered to the Board or mailed to its principal office, addressed to the attention of the Board; and if to the Grantee, shall be
delivered personally, sent by facsimile transmission, or mailed to the Grantee at the address appearing in the records of the Company.
Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 8(f). Notices may
also be given electronically pursuant to such rules and procedures as the Committee may adopt for electronic notice.

 

    8

     

    

 

		(g)	No Waiver. The failure of the Grantee or the Company to insist upon strict compliance with any
provision of this Agreement, or to assert any right the Grantee or the Company, respectively, may have under this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

 

		(h)	No Right of Employment. Nothing in this Agreement shall confer on the Grantee any right to continue
in the employ or other service of the Company or its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries
and its stockholders to terminate the Grantee’s employment or other service at any time.

 

		(i)	Unsecured Obligation. The obligations of the Company under this Agreement will be merely that of
an unfunded and unsecured promise of the Company to deliver shares of Common Stock or pay cash or distributions in the future, and the
rights of Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as
security for the obligations of the Company under this Agreement.

 

		(j)	Entire Agreement; Counterparts. This Agreement, subject to the terms and conditions of the Plan,
contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written
or oral, with respect thereto. The Agreement may be executed in counterparts, each of which shall be deemed and original but all of which
together will constitute one and the same instrument. Counterpart signature pages transmitted by facsimile transmission, electronic mail
or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document will have the same effect
as physical delivery of the paper document bearing an original signature.

 

		(k)	Acceptance. The Grantee hereby acknowledged receipt of a copy of the Plan and this Agreement. The
Grantee has read and understands the terms and provisions thereof and accepts the PSUs subject to all the terms and conditions of the
Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the PSUs,
the receipt of any dividend or distribution, or the subsequent disposition of the shares of Common Stock and that the Grantee has been
advised to consult a tax advisor prior to such vesting, settlement or disposition.

 

		(l)	Section 409A.

 

(i)        If
any provision of this Agreement could cause the application of an accelerated or additional tax under Section 409A of the Code upon the
vesting or settlement of the Restricted Stock Units (or any portion thereof), such provision shall be restructured, to the minimum extent
possible, in a manner determined by the Company (and reasonably acceptable to the Grantee) that does not cause such an accelerated or
additional tax. It is intended that all provisions of this Agreement other than those relating to payment of vested PSUs on account of
a Grantee’s Retirement, shall not be subject to Section 409A of the Code by reason of the short-term deferral rule under Treas.
Reg. Section 1.409A-1(b)(4), and this Agreement shall be interpreted accordingly.

 

    9

     

    

 

(ii)
        With respect to any payment of PSUs under this Agreement that is subject to Section 409A
of the Code, and with respect to which a payment or distribution is to be made upon a Termination of Service, if the Grantee is
determined by the Company to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and
any of the Company’s stock is publicly traded on an established securities market or otherwise, such payment or distribution
may not be made before the date which is six months after the date of Termination of Service (to the extent required under Section
409A of the Code). Any payments or distributions delayed in accordance with the prior sentence shall be paid to the Grantee on the
first day of the seventh month following the Grantee’s Termination of Service.

 

(iii)        The
Board and the Committee shall exercise authority and discretion under the Plan and this Agreement, to satisfy the requirements of Section
409A of the Code or any exemption thereto. Provided, however, that neither the Board nor the Committee shall be liable to any Grantee
for the failure of any provision of this Agreement to comply with Section 409A of the Code, including, but not limited to, liability for
any taxes or penalties associated with the failure to comply with Section 409A of the Code.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company
and the Grantee have executed this Performance Share Unit Agreement effective as of the day and year first above written.

 

	 	TWO HARBORS INVESTMENT CORP.
	 	 
	 	By:	 
	 	Name:
	 	Title:
	 	 
	 	 
	 	Grantee:

 

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EXHIBIT A 

PERFORMANCE GOALS

 

[ ]

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