Document:

Form of Stock Option Grant Notice and Non-Qualified Stock Option Agreement

 
Exhibit 10.40 
  
 ECC CAPITAL
CORPORATION 
  
 2004 INCENTIVE AWARD PLAN 
  
 STOCK OPTION GRANT NOTICE AND NON-QUALIFIED 
 STOCK OPTION AGREEMENT 
  
 ECC Capital Corporation (the “Company”), pursuant to its 2004 Incentive Award Plan (the “Plan”), hereby
grants to the holder listed below (“Holder”), an option to purchase the number of shares of the Company’s Stock set forth below (the “Option”). This Option is subject to all of the terms and
conditions as set forth herein and in the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the Plan, each of which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement. 
  

					
	Holder:	 	 	 	 
	Grant Date:	 	 	 	 
	 Total Number of Shares
 Subject to the
Option:
	 	 	 	 
	Expiration Date:	 	 	 	 

  

					
	Type of Option:	  	 ̈ Incentive Stock Option	  	 ̈ Non-Qualified Stock Option
		
	Vesting Schedule:	  	[To be specified in individual agreements]

  
 By his or her
signature and the Company’s signature below, Holder agrees to be bound by the terms and conditions of the Plan, the Stock Option Agreement and this Grant Notice. Holder has reviewed the Stock Option Agreement, the Plan and this Grant Notice in
their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Stock Option Agreement and the Plan. Holder hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan or the Option. 
  

									
	ECC CAPITAL CORPORATION	 	 	 	HOLDER:
					
	By: 	 	 	 	 	 	By:     	 	 

									
	Print Name: 	 	 	 	 	 	Print Name: 	 	 
	Title:	 	 	 	 	 	 	 	 
	Address:	 	1833 Alton Parkway	 	 	 	Address:	 	 
	 	 	 Irvine, California 92606
	 	 	 	 	 	 

  

  
 EXHIBIT A 

 
 TO STOCK OPTION GRANT NOTICE 
  
 STOCK OPTION AGREEMENT 
  
 Pursuant to the Stock Option Grant Notice (“Grant
Notice”) to which this Stock Option Agreement (this “Agreement”) is attached, ECC Capital Corporation (the “Company”) has granted to Holder an option under the Company’s 2004
Incentive Award Plan (the “Plan”) to purchase the number of shares of Stock indicated in the Grant Notice. 
  
 ARTICLE I 
  
 GENERAL 
  
 1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice. 
  
 1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference.

  
 ARTICLE II 
  
 GRANT OF OPTION 
  
 2.1 Grant of Option. In consideration of Holder’s past and/or
continued employment with or service to the Company or its Subsidiaries and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company irrevocably
grants to Holder the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in the Plan and this Agreement. Unless designated as a Non-Qualified
Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option to the maximum extent permitted by law. 
  
 2.2 Purchase Price. The purchase price of the shares of Stock subject to the Option shall be as set forth in the Grant Notice, without commission
or other charge; provided, however, that if this Option is designated as an Incentive Stock Option, the price per share of the shares subject to the Option shall not be less than the greater of (i) one hundred percent (100%) of the
Fair Market Value of a share of Stock on the Grant Date, or (ii) one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the Grant Date in the case of a Participant then owning (within the meaning of Section 424(d) of the
Code) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of
Section 424 of the Code). 
  

 A-1 

  
 ARTICLE III

  
 PERIOD OF EXERCISABILITY 
  
 3.1 Commencement of Exercisability. 
  
 (a) Subject to Sections 3.3 and 5.8, the Option shall become
vested and exercisable in such amounts and at such times as are set forth in the Grant Notice. 
  
 (b) No portion of the Option which has not become vested and exercisable at the date of Holder’s Termination of Service (as defined
below) shall thereafter become vested and exercisable, except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Holder. 
  
 3.2 Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice
are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes unexercisable under Section 3.3. 
  
 3.3 Expiration of Option. 
  
 (a) The Option may not be exercised to any extent by anyone
after the first to occur of the following events: 
  
 (i) The expiration of ten (10) years from the Grant Date; 
  
 (ii) If this Option is designated as an Incentive Stock Option and Holder owned (within the meaning of Section 424(d) of the Code), at the time the Option was granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the expiration of five (5) years from
the date the Option was granted; or 
  
 (iii) The
expiration of ninety (90) days following the date of Holder’s Termination of Service, unless such termination occurs by reason of Holder’s death or Disability (as defined below); or 
  
 (iv) The expiration of one (1) year following the date of
Holder’s Termination of Service by reason of Holder’s death or Disability. 
  
 (b) For purposes of this Agreement, “Disability” means permanent and total disability within the meaning of Section 22(e)(3) of
the Code. 
  
 (c) For purposes of this Agreement,
“Termination of Service” means the time when the service relationship (whether as an Employee, member of the Board or a Consultant) between Holder and the Company or any Subsidiary is terminated for any reason, with or
without cause, including, but not by way of limitation, a termination by resignation, discharge, death or Disability; but excluding (i) a termination where there is a simultaneous reemployment 

  

 A-2 

 
or continuing employment or consultancy of Holder by the Company or any Subsidiary, (ii) at the discretion of the Administrator, a termination which results
in a temporary severance of the employee-employer relationship, and (iii) at the discretion of the Administrator, a termination which is followed by the simultaneous establishment of a consulting relationship by the Company or a Subsidiary with a
former Employee. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Service for the purposes of this Agreement, and all questions of whether particular leaves of absence
for Participants who are Employees of the Company or any of its Subsidiaries constitute Terminations of Service; provided, however, that, if the Option is designated as an Incentive Stock Option, unless otherwise determined by the
Administrator in its discretion, a leave of absence, change in status from an Employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code. Notwithstanding any other provision of the Plan or this Agreement, the Company or any Subsidiary has an absolute and
unrestricted right to terminate Holder’s employment and/or consultancy at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company and Holder.

  
 3.4 Special Tax Consequences. Holder acknowledges that,
to the extent that the aggregate Fair Market Value of stock with respect to which Incentive Stock Options (but without regard to Section 422(d) of the Code), including the Option, are exercisable for the first time by Holder during any calendar year
(under the Plan and all other incentive stock option plans of the Company, any “subsidiary corporation” of the Company and any “parent corporation” of the Company (each within the meaning of Section 424 of the Code)) exceeds
$100,000, the Option and such other options shall be treated as not qualifying under Section 422 of the Code but rather shall be taxed as Non-Qualified Stock Options. Holder further acknowledges that the rule set forth in the preceding sentence
shall be applied by taking options into account in the order in which they were granted. For purposes of these rules, the Fair Market Value of Stock shall be determined as of the time the option with respect to such Stock is granted. 
  
 ARTICLE IV 
  
 EXERCISE OF OPTION 
  
 4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b)
and 5.2(c), during the lifetime of Holder, only Holder may exercise the Option or any portion thereof. After the death of Holder, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3,
be exercised by Holder’s personal representative or by any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution. 
  
 4.2 Partial Exercise. Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3. 
  

 A-3 

 4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary of the Company or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3: 
  
 (a) An Exercise Notice in writing signed by Holder or any
other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit B to the Grant Notice (or such other form as is prescribed by the Administrator); and 
  
 (b) Subject to Section 5.1(c) of the Plan: 
  
 (i) Full payment (in cash or by check) for the shares with respect to which the Option or portion thereof is exercised; or 
  
 (ii) With the consent of the Administrator, such payment may
be made, in whole or in part, through the delivery of shares of Stock which have been owned by Holder for at least six (6) months, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof; or 
  
 (iii) To the extent permitted under applicable laws, through the delivery of a notice that Holder has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option,
and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided, that payment of such proceeds is made to the Company upon settlement of
such sale; or 
  
 (iv) With the consent of the
Administrator, any combination of the consideration provided in the foregoing paragraphs (i), (ii) and (iii); and 
  
 (c) A bona fide written representation and agreement, in such form as is prescribed by the Administrator, signed by Holder or the other
person then entitled to exercise such Option or portion thereof, stating that the shares of Stock are being acquired for Holder’s own account, for investment and without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder, and that Holder or other person then entitled to exercise such Option or portion thereof will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above. The Administrator may, in its absolute
discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Securities Act and any other federal or state securities laws or
regulations. Without limiting the generality of the foregoing, the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities
Act, and may issue stop-transfer orders 

  

 A-4 

 
covering such shares. Share certificates evidencing Stock issued on exercise of the Option shall bear an appropriate legend referring to the provisions of
this subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been
registered under the Securities Act, and such registration is then effective in respect of such shares; and 
  
 (d) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which in the
discretion of the Administrator may be in the form of consideration used by Holder to pay for such shares under Section 4.3(b), subject to Section 15.3 of the Plan; and 
  
 (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or
persons other than Holder, appropriate proof of the right of such person or persons to exercise the Option. 
  
 4.4 Conditions to Issuance of Stock Certificates. The shares of Stock deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any shares of Stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such shares to listing on all stock exchanges on which such Stock is then listed; and 
  
 (b) The completion of any registration or other
qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem
necessary or advisable; and 
  
 (c) The obtaining
of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and 
  
 (d) The lapse of such reasonable period of time following the exercise of the Option as the Administrator
may from time to time establish for reasons of administrative convenience; and 
  
 (e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which in the
discretion of the Administrator may be in the form of consideration used by the Holder to pay for such shares under Section 4.3(b), subject to Section 15.3 of the Plan. 
  
 4.5 Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a
stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until such shares shall have been issued by the Company to such holder. 
  

 A-5 

  
 ARTICLE V 

 
 OTHER PROVISIONS 
  
 5.1 Administration. The Administrator shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations
and determinations made by the Administrator in good faith shall be final and binding upon Holder, the Company and all other interested persons. No member of the Administrator shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, this Agreement or the Option. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan and this
Agreement. 
  
 5.2 Option Not Transferable. 
  
 (a) Subject to Section 5.2(b), the Option may not be sold,
pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares underlying the Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein shall be liable for the debts, contracts or engagements of Holder or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment
or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. 
  
 (b) Notwithstanding any other provision in this Agreement, with the consent of the Administrator, and to the extent the Option is not
intended to qualify as an Incentive Stock Option, the Option may be transferred to, exercised by and paid to certain persons or entities related to Holder, including but not limited to members of Holder’s family, charitable institutions or
trusts or other entities whose beneficiaries or beneficial owners are members of Holder’s family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Administrator (each a
“Permitted Transferee”), pursuant to such conditions and procedures as the Administrator may require. Any permitted transfer will be subject to the condition that the Committee receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection with Holder’s Termination of Service with the Company or a Subsidiary to assume a position with a governmental, charitable,
educational or similar non-profit institution) and on a basis consistent with the Company’s lawful issue of securities. 
  
 (c) Unless transferred to a Permitted Transferee in accordance with Section 5.2(b), during the lifetime of Holder, only Holder may
exercise the Option or any portion thereof. After the death of Holder, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by Holder’s personal representative or by
any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution. 
  

 A-6 

 5.3 Restrictive Legends and Stop-Transfer Orders. 
  
 (a) The share certificate or certificates evidencing the
shares of Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws. 
  
 (b) Holder agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate
“stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 
  
 (c) The Company shall not be required: (i) to transfer on
its books any shares of Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Stock or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such shares shall have been so transferred. 
  
 5.4 Shares to Be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this Agreement. 
  
 5.5 Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of the Secretary of the Company, and any notice to be given to Holder shall be addressed to Holder at the address given beneath Holder’s signature on the Grant Notice. By a notice given
pursuant to this Section 5.5, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to Holder shall, if Holder is then deceased, be given to the person entitled to
exercise his or her Option pursuant to Section 4.1 by written notice under this Section 5.5. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States Postal Service. 
  
 5.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 
  
 5.7 Governing Law; Severability. This Agreement shall be administered, interpreted and enforced under the laws of the
State of California without regard to conflicts of laws thereof. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable. 
  
 5.8 Conformity to Securities Laws. Holder
acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and
state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by 

  

 A-7 

 
applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. 
  
 5.9 Amendments. This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by Holder or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company. 
  
 5.10 No Employment Rights. If Holder is an Employee, nothing in the
Plan or this Agreement shall confer upon Holder any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are expressly reserved, to
discharge Holder at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company and Holder. 
  
 5.11 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple
assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Holder and his or her heirs, executors,
administrators, successors and assigns. 
  
 5.12 Notification
of Disposition. If this Option is designated as an Incentive Stock Option, Holder shall give prompt notice to the Company of any disposition or other transfer of any shares of Stock acquired under this Agreement if such disposition or transfer
is made (a) within two years from the Grant Date with respect to such shares or (b) within one year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash,
other property, assumption of indebtedness or other consideration, by Holder in such disposition or other transfer. 
  
 5.13 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Holder is subject to
Section 16 of the Exchange Act, the Plan, the Shares and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. 
  

 A-8 

  
 EXHIBIT B 

 
 TO STOCK OPTION GRANT NOTICE 
  
 FORM OF EXERCISE NOTICE 
  
 Effective as of today,
                            ,
                     the undersigned (“Holder”) hereby elects to exercise Holder’s option to
purchase                              shares of the Stock (the
“Shares”) of ECC Capital Corporation (the “Company”) under and pursuant to the ECC Capital Corporation 2004 Incentive Award Plan (the “Plan”) and the Stock Option
Grant Notice and Stock Option Agreement dated                             , (the
“Option Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Option Agreement. 
  

			
	 Grant Date:
	  	________________________
		
	 Number of Shares as to which Option is Exercised:
	  	_____________________________________
		
	 Exercise Price per Share:
	  	$____________
		
	 Total Exercise Price:
	  	$____________
		
	 Certificate to be issued in name of:
	  	_____________________________________
		
	 Cash Payment delivered herewith:
	  	$______________ (Representing the full Exercise Price for the Shares, as well as any applicable withholding tax)

  

					
	 Type of Option:
	  	 ̈ Incentive Stock Option	  	  ̈ Non-Qualified Stock Option

  
 1. Representations
of Holder. Holder acknowledges that Holder has received, read and understood the Plan and the Option Agreement. Holder agrees to abide by and be bound by their terms and conditions. 
  
 2. Rights as Stockholder. Until the Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any’ other rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11.1 of the Plan. 
  
 3. Tax Consultation. Holder understands that there are tax consequences to Holder as a result of Holder’s
purchase or disposition of the Shares. Holder represents that Holder has consulted with any tax consultants Holder deems advisable in connection with the purchase or disposition of the Shares and that Holder is not relying on the Company for any tax
advice. 
  
 4. Entire Agreement. The Plan and Option
Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Holder
with respect to the subject matter hereof. 
  

 B-1 

									
	 ACCEPTED BY:
 ECC CAPITAL
CORPORATION
	 	 	 	 SUBMITTED BY
 HOLDER:

					
	By: 	 	 	 	 	 	By:     	 	 

									
	 Print Name: 
	 	 	 	 	 	 Print Name: 
	 	 
	 Title:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 Address:
	 	 
	 	 	 	 	 	 	 	 	 

  

 B-2Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement

 
Exhibit 10.41 
  
 ECC CAPITAL
CORPORATION 
  
 2004 INCENTIVE AWARD PLAN 
  
 RESTRICTED STOCK AWARD GRANT NOTICE AND 
 RESTRICTED STOCK AWARD AGREEMENT 
  
 ECC Capital Corporation (the “Company”), pursuant to its 2004 Incentive Award Plan (the “Plan”), hereby
grants to the holder listed below (“Holder”) the number of shares of the Company’s Stock set forth below (the “Shares”). This Restricted Stock award is subject to all of the terms and conditions
as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Restricted Stock Agreement”) and the Plan, each of which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement. 
  

			
	Holder:	 	___________________
		
	Grant Date:	 	___________________
		
	Total Number of Shares of Restricted Stock:	 	___________________
		
	Vesting Schedule:	 	[To be specified in individual agreements]

  
 By his or her
signature and the Company’s signature below, Holder agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Agreement and this Grant Notice. Holder has reviewed the Restricted Stock Agreement, the Plan and this Grant
Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Agreement and the Plan. Holder hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Agreement. If Holder is married, his or her spouse has
signed the Consent of Spouse attached to this Grant Notice as Exhibit B. 
  

									
	ECC CAPITAL CORPORATION	 	 	 	HOLDER:
					
	By: 	 	 	 	 	 	By:     	 	 

									
	 Print Name: 
	 	 	 	 	 	Print Name: 	 	 
	 Title:
	 	 	 	 	 	 	 	 
	 Address:
	 	 1833 Alton Parkway
	 	 	 	 Address:
	 	 
	 	 	 Irvine, California 92606
	 	 	 	 	 	 

  

  
 EXHIBIT A 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 RESTRICTED STOCK AWARD AGREEMENT 
  
 Pursuant to the Restricted Stock Award Grant Notice (“Grant
Notice”) to which this Restricted Stock Award Agreement (this “Agreement”) is attached, ECC Capital Corporation (the “Company”) has granted to Holder the number of
shares of Restricted Stock under the Company’s 2004 Incentive Award Plan (the “Plan”) indicated in the Grant Notice. 
  
 ARTICLE I 
  
 GENERAL 
 1.1 Defined Terms. Capitalized terms not specifically defined
herein shall have the meanings specified in the Plan and the Grant Notice. 
  
 1.2 Incorporation of Terms of Plan. The Shares are subject to the terms and conditions of the Plan which are incorporated herein by reference. 
  
 ARTICLE II 
  
 GRANT OF RESTRICTED STOCK 
  
 2.1 Grant of Restricted Stock. In consideration of Holder’s past and/or continued employment with or service to the Company or its
Subsidiaries and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company hereby agrees to issue to Holder the number of shares of Stock
set forth in the Grant Notice (the “Shares”), upon the terms and conditions set forth in the Plan and this Agreement. 
  
 2.2 Issuance of Shares. The issuance of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the
execution of this Agreement by the parties or on such other date as the Company and Holder shall agree (the “Issuance Date”). Subject to the provisions of Article IV below, on the Issuance Date, the Company shall issue the
Shares (which shall be issued in Holder’s name). 
  
 2.3
Conditions to Issuance of Stock Certificates. The Shares, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such Shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any Shares prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such Shares to listing on all stock exchanges on which such Stock is then listed; and 
  

 A-1 

 (b) The completion of any registration or other qualification of such shares under any
state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and 
  
 (c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and 
  
 (d) The lapse of such reasonable period of time following the Issuance Date as the Administrator may from time to time establish for
reasons of administrative convenience; and 
  
 (e) Subject to Section 10.4 of the Plan, the receipt by the Company of payment of any applicable withholding tax. 
  
 2.4 Rights as Stockholder. Except as otherwise provided herein, upon delivery of the Shares to the escrow agent pursuant to Article IV, Holder
shall have all the rights of a stockholder with respect to said Shares, subject to the restrictions herein, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares;
provided, however, that any and all cash dividends paid on such Shares and any and all shares of Stock, capital stock or other securities received by or distributed to Holder with respect to the Shares as a result of any stock dividend stock
split, reverse stock split, recapitalization, combination, reclassification, or similar change in the capital structure of the Company shall also be subject to the Forfeiture Restriction (as defined in Section 3.1 below) and the restrictions on
transfer in Section 3.4 below until such restrictions on the underlying Shares lapse or are removed pursuant to this Agreement. 
  
 ARTICLE III 
  
 RESTRICTIONS ON SHARES 
  
 3.1 Forfeiture Restriction. Subject to the provisions of Section 3.2 below, if Holder has a Termination of Service (as defined below) for any or no reason, all of the Unreleased Shares (as defined below) shall
thereupon be forfeited immediately and without any further action by the Company (the “Forfeiture Restriction”). Upon the occurrence of such a forfeiture, the Company shall become the legal and beneficial owner of the Shares
being forfeited and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being forfeited by Holder. In the event any of the Unreleased Shares are
forfeited under this Section 3.1, any dividends or other distributions paid on such Shares and held by the escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to the Company. 

 
 3.2 Release of Shares from Forfeiture Restriction. The Shares shall
be released from the Forfeiture Restriction as indicated in the Grant Notice. Any of the Shares released from the Forfeiture Restriction shall thereupon be released from the restrictions on transfer under Section 3.4. In the event any of the Shares
are released from the Forfeiture Restriction, any dividends or  

  

 A-2 

 
other distributions paid on such Shares and held by the escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the
escrow agent to Holder. 
  
 3.3 Unreleased
Shares. Any of the Shares which, from time to time, have not yet been released from the Forfeiture Restriction are referred to herein as “Unreleased Shares.” 
  
 3.4 Restrictions on Transfer. Unless otherwise permitted by the
Administrator pursuant to the Plan, no Unreleased Shares or any dividends or other distributions thereon or any interest or right therein or part thereof, shall be liable for the debts, contracts or engagements of Holder or his or her successors in
interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect. 
  

3.5 Definition of Termination of Service. For purposes of this Agreement, “Termination of Service” means the time when
the service relationship (whether as an Employee, member of the Board or a Consultant) between Holder and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by
resignation, discharge, death or Disability; but excluding (i) a termination where there is a simultaneous reemployment or continuing employment or consultancy of Holder by the Company or any Subsidiary, (ii) at the discretion of the Administrator,
a termination which results in a temporary severance of the employee-employer relationship, and (iii) at the discretion of the Administrator, a termination which is followed by the simultaneous establishment of a consulting relationship by the
Company or a Subsidiary with a former Employee. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Service for the purposes of this Agreement, and all questions of
whether particular leaves of absence for Participants who are Employees of the Company or any of its Subsidiaries constitute Terminations of Service. Notwithstanding any other provision of the Plan or this Agreement, the Company or any Subsidiary
has an absolute and unrestricted right to terminate Holder’s employment and/or consultancy at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the
Company and Holder. 
  
 ARTICLE IV 
  
 ESCROW OF SHARES 
  
 4.1 Escrow of Shares. To insure the availability for delivery of
Holder’s Unreleased Shares in the event of forfeiture of such Shares by Holder pursuant to Section 3.1, Holder hereby appoints the Secretary of the Company, or any other person designated by the Administrator as escrow agent, as his or her
attorney-in-fact to assign and transfer unto the Company, such Unreleased Shares, if any, forfeited by Holder pursuant to Section 3.1 and any dividends or other distributions thereon, and shall, upon execution of this Agreement, deliver and deposit
with the Secretary of the Company, or such other person designated by the Administrator, any share certificates representing the Unreleased Shares, together with the stock assignment duly endorsed 

  

 A-3 

 
in blank, attached as Exhibit C to the Grant Notice. The Unreleased Shares and stock assignment shall be held by the Secretary of the Company, or such
other person designated by the Administrator, in escrow, pursuant to the Joint Escrow Instructions of the Company and Holder attached as Exhibit D to the Grant Notice, until the shares are forfeited by Holder as provided in Section 3.1, until
such Unreleased Shares are released from the Forfeiture Restriction, or until such time as this Agreement no longer is in effect. Upon release of the Unreleased Shares, the escrow agent shall deliver to Holder the certificate or certificates
representing such Shares in the escrow agent’s possession belonging to Holder in accordance with the terms of the Joint Escrow Instructions attached as Exhibit D to the Grant Notice, and the escrow agent shall be discharged of all
further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement. If the Shares
are held in book entry form, then such entry will reflect that the Shares are subject to the restrictions of this Agreement. If any dividends or other distributions are paid on the Unreleased Shares held by the escrow agent pursuant to this Section
4.1 and the Joint Escrow Instructions, such dividends or other distributions shall also be subject to the restrictions set forth in this Agreement and held in escrow pending release of the Unreleased Shares with respect to which such dividends or
other distributions were paid from the Forfeiture Restriction. 
  
 4.2 Transfer of Forfeited Shares. Holder hereby authorizes and directs the Secretary of the Company, or such other person designated by the Administrator, to transfer the Unreleased Shares which have been forfeited by Holder to the
Company. 
  
 4.3 No Liability for Actions in Connection with
Escrow. The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment. 
  
 ARTICLE V 
  
 OTHER PROVISIONS 
  
 5.1 Adjustment for Stock Split. In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company, the Administrator shall make appropriate and equitable adjustments in the Unreleased Shares subject to the Forfeiture Restriction and the number of Shares, consistent with
any adjustment under Section 11.1 of the Plan. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Shares, to any and all shares of capital stock or other securities which may be issued in respect
of, in exchange for, or in substitution of the Shares, and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. 
  
 5.2 Taxes. Holder has reviewed with Holder’s own tax advisors the
federal, state, local and foreign tax consequences of this investment and the transactions contemplated by the Grant Notice and this Agreement. Holder is relying solely on such advisors and not on any statements or representations of the Company or
any of its agents. Holder understands that Holder (and not the Company) shall be responsible for Holder’s own tax liability that may arise 

  

 A-4 

 
as a result of this investment or the transactions contemplated by this Agreement. Holder understands that Holder will recognize ordinary income for federal
income tax purposes under Section 83 of the Code. In this context, “restriction” includes the Forfeiture Restriction set forth in Section 3.1. Holder covenants that he or she will not make an election under Section 83(b) of the Code with
respect to the receipt of any of the Shares without the prior written consent of the Administrator. 
  
 5.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Holder is subject to
Section 16 of the Exchange Act, the Plan, the Shares and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. 
  
 5.4 Administration. The Administrator shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations
and determinations made by the Administrator in good faith shall be final and binding upon Holder, the Company and all other interested persons. No member of the Administrator shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, this Agreement or the Shares. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan and this
Agreement. 
  
 5.5 Restrictive Legends and Stop-Transfer
Orders. 
  
 (a) Any share certificate(s)
evidencing the Shares issued hereunder shall be endorsed with the following legend and any other legend required by any applicable federal and state securities laws: 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 
  
 (b) Holder agrees that, in order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 
  
 (c) The Company shall not be required: (i) to transfer on
its books any shares of Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Stock or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such shares shall have been so transferred. 
  

 A-5 

 5.6 Notices. Any notice to be given under the terms of this Agreement to the Company shall be
addressed to the Company in care of the Secretary of the Company, and any notice to be given to Holder shall be addressed to Holder at the address given beneath Holder’s signature on the Grant Notice. By a notice given pursuant to this Section
5.6, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. 
  
 5.7 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

  
 5.8 Governing Law; Severability. This Agreement shall
be administered, interpreted and enforced under the laws of the State of California without regard to conflicts of laws thereof. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable. 
  
 5.9 Conformity to Securities Laws. Holder acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and
rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are to be issued, only in such a
manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. 
  
 5.10 Amendments. This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by Holder and by a duly authorized representative of the Company. 
  
 5.11 No Employment Rights. If Holder is an Employee, nothing in the Plan or this Agreement shall confer upon Holder any right to continue in the
employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are expressly reserved, to discharge Holder at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in a written agreement between the Company and Holder. 
  
 5.12 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Holder and his or her heirs, executors, administrators, successors and assigns.

  

 A-6 

 5.13 Ownership Limit and REIT Status. The Forfeiture Restriction on the Shares shall not lapse if
the lapsing of such restrictions would likely result in any of the following: 
  
 (a) a violation of the restrictions or limitations on ownership provided for from time to time under the terms of the organizational documents of the Company; or 
  
 (b) income to the Company that could impair the
Company’s status as a real estate investment trust, within the meaning of Section 856 through 860 of the Code. 
  

 A-7 

  
 EXHIBIT B 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 CONSENT OF SPOUSE 
  
 I,
                            , spouse of
                            , have read and approve the foregoing Agreement. In consideration
of issuing to my spouse the shares of the common stock of ECC Capital Corporation set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of ECC Capital Corporation issued pursuant thereto under the community property laws or similar laws relating to marital property in
effect in the state of our residence as of the date of the signing of the foregoing Agreement. 
  

					
			
	Dated:                     ,
            	 	 	 	  
	 	 	 	 	Signature of Spouse

  

 B-1 

  
 EXHIBIT C 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 STOCK ASSIGNMENT 
  
 FOR VALUE RECEIVED, the
undersigned,                             , hereby sells, assigns and transfers unto ECC CAPITAL
CORPORATION, a Delaware corporation,                      shares of the common stock of ECC CAPITAL CORPORATION, a Delaware corporation,
standing in its name of the books of said corporation represented by Certificate No.              herewith and do hereby irrevocably constitute and appoint
                     to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

  
 This Stock Assignment may be used only in accordance with the
Restricted Stock Award Agreement between ECC CAPITAL CORPORATION and the undersigned dated                     ,
            . 
  

					
			
	 Dated:             ,
            
	 	 	 	  
	 	 	 	 	 Signature of Holder

  
 INSTRUCTIONS:
Please do not fill in the blanks other than the signature line. The purpose of this assignment is to enable the Company to enforce the Forfeiture Restriction as set forth in the Agreement, without requiring additional signatures on the part of
Holder. 
  

 C-1 

  
 EXHIBIT D 

 
 TO RESTRICTED STOCK AWARD GRANT NOTICE 
  
 JOINT ESCROW INSTRUCTIONS 
  
                         ,
                 
  
 Secretary 
 ECC Capital Corporation 
 1833 Alton Parkway 
 Irvine, California 92606 
  
 Ladies and Gentlemen: 
  
 As escrow agent (the “Escrow Agent”) for both ECC Capital Corporation, a Delaware corporation (“ECC”), and
the undersigned recipient of stock of the Company (the “Holder”), you are hereby authorized and directed to hold in escrow the documents delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement
(“Agreement”) between the Company and the undersigned (the “Escrow”), including the stock certificate and the Assignment in Blank, in accordance with the following instructions: 
  
 1. In the event of forfeiture by Holder of any of the shares owned by Holder
pursuant to the Forfeiture Restriction set forth in the Agreement, ECC and/or any assignee of ECC (referred to collectively for convenience herein as the “Company”) shall give to Holder and you a written notice specifying the
number of shares of stock forfeited and the date of forfeiture. Holder and the Company hereby irrevocably authorize and direct you to effect the forfeiture contemplated by such notice in accordance with the terms of said notice. 
  
 2. As of the date of forfeiture indicated in such notice, you are directed
(a) to date the stock assignments necessary for the forfeiture and transfer in question, (b) to fill in the number of shares being forfeited and transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock
to be forfeited and transferred, to the Company or its assignee. 
  
 3. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Holder does hereby
irrevocably constitute and appoint you as Holder’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any
transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities. Subject to the provisions of this paragraph
3, Holder shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 
  
 4. Upon written request of Holder, but no more than once per calendar year, unless the Forfeiture Restriction has been enforced, you will deliver to
Holder a certificate or certificates representing so many shares of stock as are not then subject to the Forfeiture Restriction. Within one hundred twenty (120) days after any voluntary or involuntary 

  

 
termination of Holder’s services to the Company for any or no reason, you will deliver to Holder a certificate or certificates representing the
aggregate number of shares held or issued pursuant to the Agreement and not forfeited pursuant to the Forfeiture Restriction set forth in Section 2 of the Agreement. 
  
 5. If at the time of termination of this escrow you should have in your possession any documents, securities, or other
property belonging to Holder, you shall deliver all of the same to Holder and shall be discharged of all further obligations hereunder. 
  
 6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 
  
 7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be
personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Holder while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith. 
  
 8. You are hereby expressly
authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 
  
 9. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 
  
 10. You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any
documents deposited with you. 
  
 11. You shall be entitled to
employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

  
 12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 
  

 D-2 

 13. If you reasonably require other or further instruments in connection with these Joint Escrow
Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 
  
 14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 
  
 15. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally or sent by facsimile transmission, overnight air courier, or first class certified or registered mail, postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end
of these Joint Escrow Instructions or such other address as a party may designate by five (5) days’ advance written notice to the other parties hereto. All notices and communications shall be deemed to have been received unless otherwise set
forth herein: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of facsimile transmission, on the date on which the sender receives electronic confirmation that such notice was received by the addressee; (iii) in
the case of overnight air courier, on the second business day following the day sent, with receipt confirmed by the courier; and (iv) in the case of mailing by first class certified or registered mail, postage prepaid, return receipt requested, on
the fifth business day following such mailing. 
  
 16. By signing
these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. 
  

17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

  
 18. These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California, excluding that body of law pertaining to conflicts of law. 
  
 (Signature Page Follows) 
  

 D-3 

 IN WITNESS WHEREOF, the parties have executed these Joint Escrow Instructions as of the date first
written above. 
  

			
	 Very truly yours,

	
	ECC CAPITAL CORPORATION
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

			
		
	 Address:
	 	 1833 Alton Parkway
 Irvine, California
92606

  

			
	HOLDER:
	
	 
		
	 Address 
	 	 
		
	 	 	 

  

			
	ESCROW AGENT:
		
	By:	 	 
	 	 	 Secretary, ECC Capital Corporation

			
		
	 Address:
	 	 1833 Alton Parkway
 Irvine, California 92606

  

 D-4

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