Document:

Form of Employment Agreement (A. J. Meyerson)

 EXHIBIT 10.4 
  
 EMPLOYMENT AGREEMENT 
  
 THIS AGREEMENT, made and entered into as of
                            , 2004 (the “Signing Date”), by and among A. Jay Meyerson (the
“Executive”), Aames Investment Corporation (the “Parent Company”), and Aames Financial Corporation (the “Employer”); 
  
 WITNESSETH THAT: 
  
 WHEREAS, the parties desire to enter into this Agreement pertaining to the employment of the Executive by the Employer; 
  
 NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive, the Parent Company, and the Employer as follows: 
  
 1. Performance of Services. The Executive’s employment with the Employer shall be subject to the following: 
  

	(a)	Subject to the terms of this Agreement, the Employer hereby agrees to employ the Executive during the Agreement Term (as defined below). During the Agreement Term, the Executive
shall serve as the President and Chief Executive Officer of the Parent Company. 

  

	(b)	During the Agreement Term, while the Executive is employed by the Employer, the Board of Directors of the Parent Company (the “Board”) shall use its best efforts to cause
the Executive to be elected as a member of the Board. 

  

	(c)	During the Agreement Term, while the Executive is employed by the Employer, his main office shall be at the Parent Company’s headquarters in Los Angeles County, California.
However, if the Parent Company relocates its headquarters to Orange County, California, the parties agree that the Executive’s main office will be relocated to such headquarters in Orange County, California. 

  

	(d)	During the Agreement Term, while the Executive is employed by the Employer, the Executive shall devote his full time, energies and talents to serving as its President and Chief
Executive Officer of the Parent Corporation. 

  

	(e)	The Executive agrees that he shall perform his duties faithfully and efficiently subject to the directions of the Board. The Executive’s duties may include providing services
for the Parent Company and the Subsidiaries (as defined below), as determined by the Board; provided that the Executive shall not, without his consent, be assigned tasks that would be inconsistent with those of President and Chief Executive Officer
of the Parent Company. The Executive shall report to the Board and shall have such authority, power, responsibilities and duties as are inherent in his positions (and the undertakings applicable to his positions) and necessary to carry out his
responsibilities and the duties required of him hereunder. 

  

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	(f)	Notwithstanding the foregoing provisions of this paragraph 1, during the Agreement Term, the Executive may devote reasonable time to activities other than those required under this
Agreement, including the supervision of his personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of
other organizations, and similar types of activities, to the extent that, in the judgment of the Board, such other activities do not inhibit or prohibit the performance of the Executive’s duties under this Agreement, or conflict in any material
way with the business of the Parent Company or any Subsidiary; provided, however, that the Executive shall not serve on the board of any business, hold any other position with any business, or otherwise engage in any business activity, without the
consent of the Board. 

  

	(g)	Subject to the terms of this Agreement, the Executive shall not be required to perform services under this Agreement during any period that he is Disabled. The Executive shall be
considered “Disabled” during any period in which he has a physical or mental disability which renders him incapable, after reasonable accommodation, of performing his duties under this Agreement. In the event of a dispute as to whether the
Executive is Disabled or Permanently Disabled, the Board may refer the same to a licensed practicing physician of the Board’s choice, and reasonably acceptable to the Executive, and the Executive agrees to submit to such tests and examinations
as such physician shall deem appropriate. During the period in which the Executive is Disabled, the Board may appoint a temporary replacement to assume the Executive’s responsibilities. 

  

	(h)	The Agreement shall become effective on the “Effective Date,” which shall be the date of the closing of the initial public offering of the common stock of the Parent
Company (the “Public Offering Date”), if the Executive is employed by the Employer on that date. However, if the Public Offering Date does not occur before September 30, 2004, or if the Executive is not employed by the Employer on the
Public Offering Date, this Agreement will be void. 

  

	(i)	The “Agreement Term” shall be the period beginning on the Effective Date and ending on the three year anniversary of the Effective Date. Thereafter, as of the date the
Agreement Term (as it may be extended from time to time under this paragraph) would otherwise end, the Agreement Term will be automatically extended for 12 months, unless one party to this Agreement provides notice of non-renewal to each of the
others at least 90 days before the day that would be the last day of the Agreement Term in the absence of such renewal. A Notice of Termination shall be deemed to constitute a notice of non-renewal under this paragraph (i) to be effective as of the
earliest date permitted under this paragraph (i). 

  

	(j)	For purposes of this Agreement, the term “Subsidiary” shall mean any corporation, partnership, joint venture or other entity during any period in which at least a fifty
percent interest in such entity is owned, directly or indirectly, by the Parent Company (or a successor to the Parent Company), including the Employer. 

  

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 2. Compensation. Subject to the terms of this Agreement, during the Agreement Term, while the
Executive is employed by the Employer, the Employer shall compensate him for his services as follows: 
  

	(a)	Salary. The Executive shall receive, for each 12-consecutive month period beginning on the Effective Date and each anniversary thereof, in substantially equal monthly or more
frequent installments, an annual base salary of not less than $425,000 (the “Salary”). The Executive’s Salary rate shall be reviewed annually by the Compensation Committee of the Board at the same time as such review is performed for
other senior officers of the Parent Company, while the Executive is employed by the Employer, to determine whether an increase in the amount of Salary is appropriate. In no event shall the Salary of the Executive be reduced to an amount that is less
than the amount specified in this paragraph (a), or to an amount that is less than the amount that he was previously receiving. 

  

	(b)	Bonus. The Executive shall participate in an annual bonus program. The bonus program shall provide for an annual bonus payment of $650,000 if target level of performance is
achieved (“target bonus”), adjusted based upon actual performance pursuant to the Parent Company’s Executive Bonus Plan. Subject to the preceding sentence, the amount of the bonus may be less if the actual level of performance is less
than the target level of performance, and subject to the preceding sentence, may be more (but not less) if the actual level of performance is greater than the target level. The performance goals for the year shall be established by the Compensation
Committee in its sole discretion after consultation with the Executive. The level of performance achievement by the Executive for each year shall be reviewed by the Compensation Committee of the Board as set forth under the Parent Company’s
Executive Bonus Plan. The target bonus shall be reviewed by the Compensation Committee of the Board at the same time as such review is performed for other senior officers of the Parent Company, while the Executive is employed by the Employer, to
determine whether an increase in the target bonus is appropriate. In no event shall the target bonus of the Executive be reduced to an amount that is less than the amount specified in this paragraph (b). 

  

	(c)	Options and Restricted Stock. As of the Effective Date: 

  

	 	(i)	The Executive shall be granted shares of restricted stock subject to the vesting schedule at the rate of 25% per year, if the Executive is then employed by the Employer, subject to
terms of this Agreement. The Executive will receive 32% of the initial restricted stock grant. 

  

	 	(ii)	In exchange for surrender and cancellation of Executive’s options to purchase 3,850,000 shares of Aames Financial Corporation common stock granted on October 25, 1999, August
4, 2000, December 29, 2000 and February 7, 2002, the Executive shall be granted restricted stock units of the Parent Company. With respect to each option, the total number of units so granted will equal (A) the amount by which the per share
consideration that would have been received by Aames Financial common shareholders had the holders of Aames Financial Series B convertible preferred stock and Series C convertible preferred stock received 

  

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 the stated value of such shares in the merger (“Stated Value Adjustment”), exceeds the option
exercise price, multiplied by (B) the number of shares covered by the option, divided by (C) the initial public offering price of common stock of the Parent Company. Schedule A provides a summary of restricted stock units and value based on minimum,
middle and maximum valuation based upon the stated Value Adjustment. Schedule A is attached to and forms a part of this agreement. 
  

	(d)	Other Fringe Benefits. Except as otherwise specifically provided to the contrary in this Agreement, the Executive shall be provided with the welfare benefits and other fringe
benefits to the same extent and on the same terms as those benefits are provided by the Parent Company or the Employer from time to time to the Parent Company’s other senior officers; provided, however, that if any such benefits are adjusted to
reflect an officer’s position, the Executive’s benefits shall be adjusted in a manner commensurate with his position. The Executive shall also be entitled to the perquisites that are customarily provided in connection with his position.
Notwithstanding the above, in lieu of providing additional life insurance for the Executive, the Employer shall pay the annual premiums in an amount not to exceed $25,000 annually, on Executive’s life insurance policies in amounts not to exceed
$1,000,000.00. However, neither the Parent Company nor the Employer shall not be required to provide a benefit under this paragraph (d) if such benefit would duplicate (or otherwise be of the same type as) a benefit specifically required to be
provided under another provision of this Agreement. The Executive shall complete all forms and physical examinations, and otherwise take all other similar actions to secure coverage and benefits described in this paragraph 2, to the extent
determined to be necessary or appropriate by the Employer. 

  

	(e)	Expenses. The Executive is authorized to incur reasonable expenses for entertainment, traveling, meals, lodging and similar items in promoting the business of the Parent
Company or the Subsidiaries. The Employer will reimburse the Executive for all reasonable expenses so incurred, provided that such expenses are incurred and accounted for in accordance with the reasonable policies and procedures established by the
Employer, and further provided that such expenses are subject to review by the Audit Committee of the Board. 

  

	(f)	Indemnification and Insurance. The Parent Company and the Employer will, to the maximum extent permitted by law, defend, indemnify and hold harmless the Executive and the
Executive’s heirs, estate, executors and administrators against any costs, losses, claims, suits, proceedings, damages or liabilities to which the Executive may become subject which arise out of, are based upon or relate to the Executive’s
employment by the Employer and services provided to the Parent Company and its Subsidiaries (and any predecessor company to the Parent Company and the Subsidiaries), or the Executive’s service as an officer or member of the Board of Directors
of the Parent Company or any Subsidiary (or any predecessor company), including without limitation reimbursement for any legal or other expenses reasonably incurred by the Executive in connection with investigation and defending against any such
costs, losses, claims, suits, proceedings, damages or liabilities. The Parent Company and/or the Employer shall maintain directors and officers liability insurance in commercially reasonable amounts (as reasonably 

  

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 determined by the Board), and the Executive shall be covered under such insurance to the same extent as
other senior officers and directors of the Parent Company; provided, however, that neither the Parent Company nor the Employer shall be required to maintain such insurance coverage unless the Board determines that it is obtainable at reasonable
cost. 
  
 3. Termination. The Executive’s employment
with the Employer during the Agreement Term may be terminated by the Employer or the Executive without any breach of this Agreement only under the circumstances described in paragraphs 3(a) through 3(f): 
  

	(a)	Death. The Executive’s employment hereunder will terminate upon his death. 

  

	(b)	Permanent Disability. The Employer may terminate the Executive’s employment during any period in which he is Permanently Disabled. The Executive shall be considered
“Permanently Disabled” during any period in which he is Disabled; provided, however, that the Executive shall not be considered to be “Permanently Disabled” unless the Executive has a physical or mental disability which renders
the Executive incapable, after reasonable accommodation, of performing any substantial portion of the Executive’s duties under this Agreement on a permanent, full-time basis, and such disability is reasonably expected by the Board to continue
for at least 120 days. 

  

	(c)	Cause. The Employer may terminate the Executive’s employment hereunder at any time for Cause. For purposes of this Agreement, the term “Cause” exists when the
Executive shall have (i) been determined by a court of law to have committed any felony including, but not limited to, a felony involving fraud, theft, misappropriation, dishonesty, embezzlement, or any other crime involving moral turpitude, or if
the Executive shall have been arrested or indicted for violation of any criminal statute constituting a felony, provided the Board reasonably determines that the continuation of the Executive’s employment after such event would have an adverse
impact on the operation or reputation of the Parent Company or its affiliates; (ii) committed one or more acts of gross negligence or willful misconduct, either within or outside the scope of his employment that, in the good faith opinion of the
Board, materially impair the goodwill or business of the Parent Company or cause material damage to its property, goodwill, or business, or would, if known, subject the Parent Company to public ridicule; (iii) refused or failed to a material degree
to perform his duties; (iv) violated any material written Company policy generally applicable to senior officers of the Parent Company that is provided to the Executive during or prior to the term of employment; or (v) the continued failure by the
Executive to substantially perform his duties with the Parent Company (other than any such failure resulting from the Executive’s being Disabled), within a reasonable period of time after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties. 

  

	(d)	Constructive Discharge. If (I) the Executive provides written notice to the Parent Company of the occurrence of Good Reason (as defined below) within a reasonable time (not
to exceed 60 days) after the Executive has knowledge of the circumstances constituting Good Reason, which notice specifically identifies the circumstances which 

  

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 the Executive believes constitute Good Reason; (II) the Parent Company fails to notify the Executive of
the Parent Company’s intended method of correction within a reasonable period of time (not to exceed 60 days) after the Parent Company receives the notice, or the Parent Company fails to correct the circumstances within a reasonable period of
time (not to exceed 60 days) after such notice; and (III) the Executive resigns within a reasonable time (not to exceed 60 days) after receiving the Parent Company’s response, if such notice does not indicate an intention to correct such
circumstances, or within a reasonable time (not to exceed 60 days) after the Parent Company fails to correct such circumstances; then the Executive shall be considered to have been subject to a Constructive Discharge by the Parent Company.
Notwithstanding the foregoing provisions of this paragraph (d), the Executive shall not be deemed to have been subject to a “Constructive Discharge” unless the Executive remains in the employ of the Employer (at the location where he was
employed immediately prior to the occurrence of the events constituting Good Reason)for the period requested by the Employer (not to exceed 90 days after the Executive provides written notice in accordance with clause (I) above). “Good
Reason” means the occurrence of: (i) the assignment to the Executive of any duties materially inferior to those of the Executive’s position and status as set forth in paragraph 1, any material reduction in the authority or responsibility
of the Executive or other substantial reduction in the terms and conditions of the Executive’s employment, a change in Executive’s reporting relationship from the reporting relationship required in accordance with paragraph 1, or the
failure of the Executive to be elected or reelected to the Board; (ii) a reduction by the Employer in the Executive’s annual base salary or any material adverse change in the terms or conditions of Executive’s aggregate annual bonus from
that in effect on the date thereof, if any, which change is not pursuant to a program applicable to all comparably situated officers of the Parent Company; (iii) the relocation of the Executive’s principal place of employment to a location
outside of Orange County or Los Angeles County, California (which location is more than fifty (50) miles from the Executive’s principal residence); (iv) the failure of the Employer or the Parent Company, as applicable, to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement; or (v) any material breach of this Agreement by the Parent Company or the Employer not described in clauses (i) through (iv) next above. Notwithstanding the provisions of
paragraph 1(a), the Board may elect an individual other than the Executive as the President of the Parent Company, which shall not be a breach of this Agreement, and shall not constitute Good Reason under this paragraph 3(d); provided that the
election of the President is approved by the Executive and the President reports to the Executive. 
  

	(e)	Termination by Executive. The Executive may terminate his employment hereunder at any time for any reason by giving the Parent Company prior written Notice of Termination,
which Notice of Termination shall be effective not less than 60 days after it is given to the Parent Company, provided that nothing in this Agreement shall require the Executive to specify a reason for any such termination. However, to the extent
that the procedures specified in paragraph 3(d) are required, the procedures of this paragraph (e) may not be used in lieu of the procedures required under paragraph 3(d). 

  

	(f)	Termination by Employer. The Employer may terminate the Executive’s employment hereunder at any time for any reason, by giving the Executive prior written Notice of

  

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 Termination, which Notice of Termination shall be effective immediately, or such later time as is
specified in such notice. The Employer shall not be required to specify a reason for the termination under this paragraph (f), provided that termination of the Executive’s employment by the Employer shall be deemed to have occurred under this
paragraph (f) only if it is not for reasons described in paragraph 3(b), 3(c), 3(d), or 3(e). 
  

	(g)	Notice of Termination. Any termination of the Executive’s employment by the Employer or the Executive (other than a termination pursuant to paragraph 3(a)) must be
communicated by a written Notice of Termination to the other party hereto (if by the Executive, to the Employer or the Parent Company, as provided above). For purposes of this Agreement, a “Notice of Termination” means a dated notice which
indicates the Date of Termination (not earlier than the date on which the notice is provided), and which indicates the specific termination provision in this Agreement relied on and which sets forth in reasonable detail the facts and circumstances,
if any, claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. 

  

	(h)	Date of Termination. “Date of Termination” means the last day the Executive is employed by the Employer (including any successor to the Employer as determined in
accordance with paragraph 16). If the Executive becomes employed by an entity into which the Employer is merged, or the purchaser of substantially all of the assets of the Employer, or a successor to such entity or purchaser, the Executive shall not
be treated as having terminated employment for purposes of this Agreement until such time as the Executive terminates employment with the successor (including, without limitation, the merged entity or purchaser), provided that the new employer
agrees in writing to assume this Agreement and be substituted for the Employer under this Agreement. 

  

	(i)	Effect of Termination. If, on the Date of Termination, the Executive is a member of the Board of Directors of the Parent Company, or any of the Subsidiaries, or holds any
other position with the Parent Company and the Subsidiaries, the Executive shall resign from all such positions as of the Date of Termination. 

  
 4. Rights Upon Termination. The Executive’s right to payment and benefits under this Agreement for periods after his Date of Termination shall
be determined in accordance with the following provisions of this paragraph 4: 
  

	(a)	General. If the Executive’s Date of Termination occurs during the Agreement Term for any reason, the Employer shall pay to the Executive: 

  

	 	(i)	The Executive’s Salary for the period ending on the Date of Termination. 

  

	 	(ii)	Payment for unused vacation days, as determined in accordance with Employer policy as in effect from time to time. 

  

	 	(iii)	If the Date of Termination occurs after the end of a performance period and prior to the payment of the performance bonus (as described in paragraph 2(b)) for the period, the
Executive shall be paid such bonus amount at the regularly scheduled time. 

  

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	 	(iv)	The Executive and any of his dependents shall be eligible for COBRA continuation coverage (as described in section 4980B of the Internal Revenue Code of 1986, as amended) to the
extent required by applicable law. 

  

	 	(v)	Any other payments or benefits to be provided to the Executive by the Parent Company or a Subsidiary pursuant to any employee benefit plans or arrangements established or adopted by
the Parent Company or a Subsidiary (including, without limitation, any rights to indemnification from the Parent Company or a Subsidiary (or from a third-party insurer for directors and officers liability coverage) with respect to any costs, losses,
claims, suits, proceedings, damages or liabilities to which the Executive may become subject which arise out of, are based upon or relate to the Executive’s employment by the Employer or the Executive’s service as an officer or member of
the Board of Directors of the Parent Company or any Subsidiary), to the extent such amounts are due from the Parent Company or any Subsidiary in accordance with the terms of such plans or arrangements. 

  
 Except as may otherwise be expressly provided to the contrary in this
Agreement, nothing in this Agreement shall be construed as requiring the Executive to be treated as employed by the Parent Company or any Subsidiary for purposes of any employee benefit plan or arrangement following the Executive’s Date of
Termination. 
  

	(b)	Resignation and Termination for Cause. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(c) (relating
to the Executive’s termination for Cause), or paragraph 3(e) (relating to the Executive’s resignation), then, except as otherwise expressly provided in this Agreement or otherwise agreed in writing by the Parent Company or the Employer,
respectively, the Parent Company and the Employer shall have no obligation to make payments under the Agreement for periods after the Executive’s Date of Termination. 

  

	(c)	Death or Disability. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(a) (relating to
Executive’s death) or paragraph 3(b) (relating to Executive’s being Permanently Disabled), then, in addition to the amounts payable in accordance with paragraph 4(a), and in lieu of payment of a bonus for the year in which the Date of
Termination occurs, the Executive shall receive payment equal to $650,000 subject to a pro-rata reduction for the portion of the bonus performance period following the Date of Termination, which amount shall be payable in a lump sum as soon as
practicable (but not more than 15 days) after the Date of Termination. 

  

	(d)	Termination without Cause and Constructive Discharge. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph
3(d) (relating to Constructive Discharge) or paragraph 3(f) (relating to termination by the Employer without Cause), then, in addition to the amounts payable in accordance with paragraph 4(a): 

  

	 	(i)	The Executive shall receive from the Employer for the thirty-six (36) month period (the “Severance Period”), the Salary amount described in paragraph 2(a),

  

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 as in effect on his Date of Termination, in monthly or more frequent installments as is required under
that paragraph. In the event of the Executive’s death during the Severance Period, the Employer shall continue to make payments under this paragraph (d) to the Executive’s estate. 
  

	 	(ii)	In lieu of payment of a bonus for the year in which the Date of Termination occurs, the Executive shall receive payment equal to $650,000 subject to a pro-rata reduction for the
portion of the bonus performance period following the Date of Termination, which amount shall be payable in a lump sum as soon as practicable (but not more than 15 days) after the Date of Termination. 

  

	 	(iii)	For the 36-month period following the Executive’s Date of Termination, the Employer shall pay the annual premiums, in an amount not to exceed $25,000 annually, on the
Executive’s life insurance policies in amounts not to exceed $1,000,000.00. 

  

	(e)	Options and Restricted Stock. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described paragraph 3(d) (relating to
Constructive Discharge) or paragraph 3(f) (relating to termination by the Employer without Cause): 

  

	 	(i)	Any outstanding restricted stock and restricted stock units granted to the Executive prior to the Date of Termination shall vest as of the Date of Termination.

  

	 	(ii)	The exercise restrictions with respect to stock options granted to the Executive shall lapse, and the options shall become vested and exercisable as of the Date of Termination. The
portion of any stock option granted to the Executive that is exercisable immediately prior to the Date of Termination, as well as the portion of any stock option that becomes exercisable by reason of this paragraph (ii) shall remain exercisable for
180 days after the Date of Termination, but in no event later than the date fixed for expiration of the option (determined without regard to Executive’s termination of employment). 

  
 Nothing in this Agreement shall be construed to permit the Executive to
purchase or sell securities of the Parent Company in violation of securities rules or other applicable rules. 
  

	(f)	Supplemental Payments. If (i) the Executive’s Date of Termination occurs at or after the end of the Agreement Term; (ii) during the Executive’s period of employment
he devoted reasonable efforts to implementation of a program for succession of leadership of the Parent Company after his Date of Termination and, pursuant to such succession program, the Executive made best efforts to present one or more qualified
candidates to the Board for such leadership positions(s), with Executive’s performance to be reasonably evaluated by the Board based on evaluation of process taken to identify and present qualified successor; (iii) the Executive agrees to
provide reasonable consultation services to the Parent Company and/or the Employer (not to exceed 200 hours per year) for three years after his Date of Termination; and (iv) the Executive is not entitled to benefits under paragraph (d) above; then:

  

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	 	(i)	Beginning with the calendar month following the month in which the Executive’s Date of Termination occurs, the Executive will receive equal monthly Supplemental Payments from
the Employer for a period of 36 months at the rate of $350,000 per year. For purposes of this paragraph (i), services rendered as a member of the Board shall be counted toward the hours of service required of the Executive, and compensation set
forth in the preceding sentence shall, in part, constitute compensation for services as a director and shall be in lieu of any separate directors fees for performing services as a director (although the Executive shall be entitled to reimbursement
of out of pocket expenses as a director to the same extent as other directors). In the event of the Executive’s death during the Severance Period, the Employer shall continue to make the Supplemental Payments under this paragraph (f) to the
Executive’s estate. 

  

	 	(ii)	For purposes of determining the vesting of outstanding restricted stock and restricted stock units granted to the Executive that are not vested on the Date of Termination, the
Executive be treated as though he continues to be employed by the Employer after the Date of Termination until such restricted stock and restricted stock units vest, provided that for purposes of determining such vesting, the Executive’s
employment will be deemed to terminate at the time the Executive ceases to provide services in accordance with this paragraph (f) if such cessation is by reason of death, disability, or voluntary resignation, and further provided that the Executive
will become fully vested in all restricted stock and restricted stock units at the time he ceases to perform services in accordance with this paragraph (f) if such cessation occurs either at or after the end of the 36-month period following the Date
of Termination or by reason of termination by the Employer for any reason. 

  

	 	(iii)	For purposes of determining the vesting of outstanding stock options granted to the Executive that are not vested and exercisable on the Date of Termination, the Executive be
treated as though he continues to be employed by the Employer after the Date of Termination until such options vest and become exercisable, provided that for purposes of determining such vesting and exercisability, the Executive’s employment
will be deemed to terminate at the time the Executive ceases to provide services in accordance with this paragraph (f) if such cessation is by reason of death, disability, or voluntary resignation, and further provided that all such options will
become fully vested and exercisable at the time he ceases to perform services in accordance with this paragraph (f) if such cessation occurs either at or after the end of the 36-month period following the Date of Termination or by reason of
termination by the Employer for any reason. The portion of each such option shall remain exercisable for 180 days after that portion becomes vested. 

  

	 	(iv)	For the 36-month period following the Executive’s Date of Termination, the Employer shall pay the annual premiums, in an amount not to exceed $25,000 annually, on the
Executive’s life insurance policies in amounts not to exceed $1,000,000.00. 

  

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	(g)	Medical Benefits. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(a) (relating to Executive’s
death), paragraph 3(b) (relating to Executive’s being Permanently Disabled), paragraph 3(d) (relating to Constructive Discharge), or paragraph 3(f) (relating to termination by the Employer without Cause), or if the Executive’s Date of
Termination occurs after the three-year anniversary of the Effective Date (regardless of the reason for such termination), then for the period beginning on the Date of Termination, and ending on the Executive’s 65th birthday (with respect to
the Executive) and ending on the 65th birthday of the Executive’s wife as of the Signing Date (with respect to the Executive’s wife), the Employer shall continue health and dental insurance benefits to the Executive and/or the
Executive’s wife (determined as of the Signing Date, and regardless of whether both survive after that date) which are concurrently being provided to active senior officers (and their spouses) of the Parent Company during that period, and the
Employer shall pay all premiums for such coverage. 

  

	(h)	Other Plans. Except as may be otherwise specifically provided in an amendment of this paragraph (h) adopted in accordance with paragraph 12, the Executive’s rights under
this paragraph 4 shall be in lieu of any benefits that may be otherwise payable to or on behalf of the Executive pursuant to the terms of any severance pay arrangement of the Parent Company or any Subsidiary including any agreement with Aames
Financial Corporation or any other, similar arrangement of the Parent Company or any Subsidiary providing benefits upon involuntary termination of employment including any agreement with Aames Financial Corporation. This paragraph (h) shall not be
construed to adversely affect the Executive’s rights under the terms of any option on stock of the Parent Company or any other award based on the stock of the Parent Company. 

  
 5. Duties on Termination. Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice of Termination, and ending on the Date of Termination, the Executive shall continue to perform his duties as set forth in this Agreement, and shall also perform such services
for the Parent Company and the Employer as are necessary and appropriate for a smooth transition to the Executive’s successor, if any. Notwithstanding the foregoing provisions of this paragraph 5, the Parent Company and the Employer may suspend
the Executive from performing his duties under this Agreement (including, without limitation, his duties as a member of the Board of Directors of the Parent Company or any Subsidiary) following the delivery of a Notice of Termination providing for
the Executive’s resignation, or delivery by the Employer of a Notice of Termination providing for the Executive’s termination of employment for any reason; provided, however, that during the period of suspension (which shall end on the
Date of Termination), the Executive shall continue to be treated as employed by the Employer for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension. 
  
 6. Mitigation, Alienation, and Set-Off. The Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Employer shall be entitled to set off against amounts payable to the Executive any amounts owed to the Parent Company and the
Subsidiaries by the Executive, but neither the Parent Company, the Employer, nor the Subsidiaries shall be entitled to set off against the amounts payable to the Executive under this Agreement any amounts earned by the Executive in 
  

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 other employment after termination of his employment with the Employer, or any amounts which might have been earned by
the Executive in other employment had he sought such other employment. This Agreement is personal to the Executive and may not be assigned by the Executive without the written consent of the Employer. Except as otherwise provided in this paragraph,
the interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive’s
beneficiary. However, to the extent that rights or benefits under this Agreement otherwise survive the Executive’s death, the Executive’s heirs and estate shall succeed to such rights and benefits pursuant to the Executive’s will or
the laws of descent and distribution; provided that the Executive shall have the right at any time and from time to time, by notice delivered to the Employer, to designate or to change the beneficiary or beneficiaries with respect to such benefits.

  
 7. Confidential Information. The Executive agrees that,
during the Agreement Term, and at all times thereafter: 
  

	(a)	Except as may be required by the lawful order of a court or agency of competent jurisdiction, except as necessary to carry out his duties to the Parent Company and its Subsidiaries,
or except to the extent that the Executive has express authorization from the Parent Company, the Executive agrees to keep secret and confidential indefinitely, all Confidential Information, and not to disclose the same, either directly or
indirectly, to any other person, firm, or business entity, or to use it in any way. The Executive shall, during the continuance of the Executive’s employment, use the Executive’s best endeavors to prevent the unauthorized publication or
misuse of any Confidential Information. 

  

	(b)	To the extent that any court or agency seeks to have the Executive disclose Confidential Information, he shall promptly inform the Parent Company, and he shall take reasonable steps
to prevent disclosure of Confidential Information until the Parent Company has been informed of such requested disclosure, and the Parent Company has an opportunity to respond to such court or agency. To the extent that the Executive obtains
information on behalf of the Parent Company or any of the Subsidiaries that may be subject to attorney-client privilege as to the Parent Company’s attorneys, the Executive shall take reasonable steps to maintain the confidentiality of such
information and to preserve such privilege. 

  

	(c)	Nothing in the foregoing provisions of this paragraph 7 shall be construed so as to prevent the Executive from using, in connection with his employment for himself or an employer
other than the Parent Company or any of the Subsidiaries, knowledge which was acquired by him during the course of his employment with the Employer and the Subsidiaries and its affiliates, and which is generally known to persons of his experience in
other companies in the same industry. 

  

	(d)	For purposes of this Agreement, the term “Confidential Information” shall include all non-public information (including, without limitation, information regarding
litigation and pending litigation) concerning the Parent Company and the Subsidiaries which was acquired by or disclosed to the Executive during the course of his employment with the Employer and its affiliates, or during the course of his
consultation with the Parent 

  

 12 

 Company and the Employer and their affiliates prior to the commencement of his employment and following
his Date of Termination (regardless of whether consultation is pursuant to paragraph 10). For purposes of this Agreement, the term “Confidential Information” shall also include all non-public information concerning any other company that
was shared with the Parent Company or a Subsidiary subject to an agreement to maintain the confidentiality of such information. 
  

	(e)	This paragraph 7 shall not be construed to unreasonably restrict the Executive’s ability to disclose confidential information in an arbitration proceeding or a court proceeding
in connection with the assertion of, or defense against any claim of breach of this Agreement. If there is a dispute between the Parent Company or the Employer and the Executive as to whether information may be disclosed in accordance with this
paragraph (e), the matter shall be submitted to the arbitrators or the court (whichever is applicable) for decision. 

  
 8. Non-Disparagement. The Executive agrees that, while he is employed by the Employer, and after his Date of Termination, he shall not make any
false, defamatory or disparaging statements about the Parent Company and the Subsidiaries, or the officers or directors of the Parent Company or the Subsidiaries that are reasonably likely to cause material damage to the Parent Company or the
Subsidiaries, or the officers or directors of the Parent Company or the Subsidiaries. While the Executive is employed by the Employer, and after his Date of Termination, the Parent Company agrees, on behalf of itself and the Subsidiaries, that
neither the officers nor the directors of the Parent Company or the Subsidiaries shall make any false, defamatory or disparaging statements about the Executive that are reasonably likely to cause material damage to the Executive. 
  
 9. Restrictions on Solicitation. For a period of twenty four (24)
months after the Date of Termination, the Executive will not: (i) hire any person who was employed by the Parent Company or the Subsidiaries on such Date of Termination or at any time within six months prior thereto or hire any agent, consultant, or
independent contractor of the Parent Company or the Subsidiaries, or of any organization with respect to which the Parent Company or its Subsidiaries has agreed to a similar prohibition and of which the Executive has knowledge, or induce or attempt
to induce any such person to discontinue such employment or affiliation with the Parent Company or the Subsidiaries or such organization, as the case may be, or (ii) induce or attempt to induce any client or customer of the Parent Company or the
Subsidiaries on the date of termination to discontinue any business relationship or to refrain from entering into a new business relationship with the Parent Company or the Subsidiaries, including, without limitation, the solicitation or
interference with any borrowers or brokers who have submitted loans or loan applications to the Parent Company or the Subsidiaries. 
  
 10. Assistance with Claims. The Executive agrees that, for the period beginning on the Effective Date, and continuing for a reasonable period after
the Executive’s Date of Termination, the Executive will assist the Parent Company and the Subsidiaries in the defense of any claims that may be made against the Parent Company and the Subsidiaries, and will assist the Parent Company and the
Subsidiaries in the prosecution of any claims that may be made by the Parent 
  

 13 

 Company or the Subsidiaries, to the extent that such claims may relate to services performed by the Executive for the
Parent Company and the Subsidiaries. The Executive agrees to promptly inform the Parent Company if he becomes aware of any lawsuits involving such claims that may be filed against the Parent Company or any Subsidiary. The Employer and the Parent
Company agrees to provide legal counsel to the Executive in connection with such assistance (to the extent legally permitted), and to reimburse the Executive for all of the Executive’s reasonable out-of-pocket expenses associated with such
assistance, including travel expenses. For periods after the Executive’s employment with the Employer terminates, the Employer agrees to provide reasonable compensation to the Executive for such assistance. The Executive also agrees to promptly
inform the Parent Company if he is asked to assist in any investigation of the Parent Company or the Subsidiaries (or their actions) that may relate to services performed by the Executive for the Parent Company or the Subsidiaries, regardless of
whether a lawsuit has then been filed against the Parent Company or the Subsidiaries with respect to such investigation. 
  
 11. Equitable Remedies. The Executive acknowledges that the Parent Company would be irreparably injured by a violation of paragraph 7, 8, or 9, and
he agrees that the Parent Company, in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the
Executive from any actual or threatened breach of paragraph 7, paragraph 8, or paragraph 9. If a bond is required to be posted in order for the Parent Company to secure an injunction or other equitable remedy, the parties agree that said bond need
not be more than a nominal sum. The Parent Company acknowledges that the Executive would be irreparably injured by a violation of paragraph 8, and agrees that the Executive, in addition to any other remedies available to him for such breach or
threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Parent Company from any actual or threatened breach of paragraph 8. If a bond is required to be posted in
order for the Executive to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum. 
  
 12. Amendment. This Agreement may be amended or cancelled only by mutual agreement of the parties in writing without the consent of any other
person. So long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 
  
 13. Applicable Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of
California, without regard to the conflict of law provisions of any state. All disputes shall be arbitrated or litigated (whichever is applicable) in Los Angeles, California. 
  
 14. Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity
or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

  
 15. Waiver of Breach. No waiver by any party hereto of
a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any 
  

 14 

 subsequent breach by such other party of any similar or dissimilar provisions and conditions at the same or any prior or
subsequent time. The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues. 
  
 16. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Parent Company and the Employer and their its successors and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Parent Company’s and the
Employer’s, assets and business, respectively, and the successor shall be substituted for the Parent Company or the Employer, respectively, under this Agreement. The Parent Company and the Employer, as applicable, will require any successor to
expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Parent Company and the Employer, as applicable, would be required to perform it if no such assignment or succession had taken place. For the
avoidance of doubt, it is recited that, for purposes of paragraphs 7 through 11, reference to the Parent Company and the Subsidiaries includes reference to their predecessors and successors. 
  
 17. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below (or
such other addresses as shall be specified by the parties by like notice). Such notices, demands, claims and other communications shall be deemed given: 
  

	(a)	in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; 

  

	(b)	in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or 

  

	(c)	in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise; 

  
 provided, however, that in no event shall any such communications be deemed to be given later
than the date they are actually received. Communications that are to be delivered by the U.S. mail or by overnight service are to be delivered to the addresses set forth below: 
  
 to the Parent Company: 
  
 Aames Investment Corporation 
 350 S. Grand
Avenue, 43rd Floor 
 Los Angeles, CA 90071 
  
 to the Employer: 
  
 Aames Financial Corporation 
 350 S. Grand
Avenue, 43rd Floor 
 Los Angeles, CA 90071 
  
 or to the Executive: 
  

 15 

 A. Jay Meyerson 
 121 Northstar Mall 
 Marina Del Rey, CA 90292 
  
 All notices to the Parent Company shall be directed to the attention of General Counsel of the Parent Company, with a copy to the Secretary
of the Parent Company. Each party, by written notice furnished to the other party, may modify the applicable delivery address, except that notice of change of address shall be effective only upon receipt. 
  
 18. Survival of Agreement. Except as otherwise expressly provided in
this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive’s employment with the Employer. 
  

IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Parent Company and the Employer have caused these presents to be executed in their
names, all as of the Signing Date. 
  

	
	 Executive

	
	 
	 

  

	
	Aames Investment Corporation
	
	 
	 

  

	
	Aames Financial Corporation
	
	 
	 

  

 16 

			
	 	 	 Schedule A
 Jay Meyerson Stock Option Summary

  

												
	 CEO

	  	No. of Current
Options

	  	Current
Strike
Price

	  	Options Rolled
Over into
Restricted Stock
Units

	  	No. of Restricted
Stock Units
granted from
Common
Options Rolled
Over

	  	Total Value
Restricted Stock
Units

	 IPO Price Per Share $9
	  	1,847,795	  	$	0.85	  	1,847,795	  	340,816	  	3,067,340
	 (stated price $2.51)
	  	1,152,205	  	$	0.85	  	1,152,205	  	212,518	  	1,912,660
	 Pre-money valuation 306MM
	  	250,000	  	$	0.85	  	250,000	  	46,111	  	415,000
	 	  	
	  	 	 	  	
	  	
	  	

	 	  	3,250,000	  	 	 	  	3,250,000	  	599,444	  	5,395,000
	 	  	 	  	 	 	  	 	  	 	  	 
	 IPO Price Per Share $10
	  	1,847,795	  	$	0.85	  	1,847,795	  	390,809	  	3,908,086
	 (stated price $2.96)
	  	1,152,205	  	$	0.85	  	1,152,205	  	243,691	  	2,436,914
	 Pre-money valuation 340MM
	  	250,000	  	$	0.85	  	250,000	  	52,875	  	528,750
	 	  	
	  	 	 	  	
	  	
	  	

	 	  	3,250,000	  	 	 	  	3,250,000	  	687,375	  	6,873,750
	 	  	 	  	 	 	  	 	  	 	  	 
	 IPO Price Per Share $11
	  	1,847,795	  	$	0.85	  	1,847,795	  	421,969	  	4,641,661
	 (stated price $3.36)
	  	1,152,205	  	$	0.85	  	1,152,205	  	263,122	  	2,894,339
	 Pre-money valuation 374MM
	  	250,000	  	$	0.85	  	250,000	  	57,091	  	628,000
	 	  	
	  	 	 	  	
	  	
	  	

	 	  	3,250,000	  	 	 	  	3,250,000	  	742,182	  	8,164,000

  

 17Form of Aames Investment Equity Incentive Plan

 
Exhibit 10.1 
 AAMES INVESTMENT CORPORATION 2004 
 EQUITY INCENTIVE PLAN 
  
 SECTION 1 
 GENERAL 
  
 1.1. Purpose. The Aames Investment Corporation 2004 Equity Incentive Plan (the “Plan”) has been established
by Aames Investment Corporation (the “Company”) to (i) attract and retain persons eligible to participate in the Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve long-range goals; (iii) provide incentive
compensation opportunities that are competitive with those of other similar companies; and (iv) further identify Participants’ interests with those of the Company’s other stockholders through compensation that is based on the
Company’s common stock; and thereby promote the long-term financial interest of the Company and the Subsidiaries, including the growth in value of the Company’s equity and enhancement of long-term stockholder return. 
  
 1.2. Participation. Subject to the terms and conditions of the Plan,
the Committee shall determine and designate, from time to time, from among the Eligible Individual, those persons who will be granted one or more Awards under the Plan, and thereby become “Participants” in the Plan. 
  
 1.3. Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be subject to the provisions of Section 5 (relating to operation and administration). Capitalized terms in the Plan shall be defined as set forth in the Plan (including the
definition provisions of Section 9). 
  
 SECTION 2

 OPTIONS AND SARS 
  
 2.1. Definitions. 
  

	(a)	The grant of an “Option” entitles the Participant to purchase shares of Stock at an Exercise Price established by the Committee. Any Option granted under this Section 2
may be either an incentive stock option (an “ISO”) or a non-qualified option (an “NQO”), as determined in the discretion of the Committee. An “ISO” is an Option that is intended to satisfy the requirements applicable to
an “incentive stock option” described in section 422(b) of the Code. An “NQO” is an Option that is not intended to be an “incentive stock option” as that term is described in section 422(b) of the Code.

  

	(b)	A stock appreciation right (an “SAR”) entitles the Participant to receive, in cash or Stock (as determined in accordance with subsection 5.7), value equal to (or otherwise
based on) the excess of: (a) the Fair Market Value of a specified number of shares of Stock at the time of exercise; over (b) an Exercise Price established by the Committee. 

  
 2.2. Exercise Price. The “Exercise Price” of each Option and SAR granted under this Section 2 shall be
established by the Committee or shall be determined by a method established by the Committee at the time the Option or SAR is granted. The Exercise Price shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant
(or, if greater, the par value of a share of Stock); provided, however, that the Committee, in its discretion, may establish an Exercise Price of an Option or SAR granted under this Section 2 that varies based on the stock price of a comparator
group of companies or such other index as is selected by the Committee (resulting in an Exercise Price that may at times be less than the Fair Market Value of a share of Stock on the date of grant); and further provided that such variable price
shall not be used if the Committee intends that the Options or SARs be Performance-Based Compensation and/or the Options be Incentive Stock Options, and the use of such variable pricing would preclude such treatment. 
  

 C-1 

 2.3. Exercise. An Option and an SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the Committee. In no event, however, shall an Option or SAR expire later than ten years after the date of its grant. 
  
 2.4. Payment of Option Exercise Price. The payment of the Exercise Price of an Option granted under this Section 2
shall be subject to the following: 
  

	(a)	Subject to the following provisions of this subsection 2.4, the full Exercise Price for shares of Stock purchased upon the exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement approved by the Committee and described in paragraph 2.4(c), payment may be made as soon as practicable after the exercise). 

  

	(b)	Subject to applicable law, the Exercise Price shall be payable in cash, by promissory note, or by tendering, by either actual delivery of shares or by attestation, shares of Stock
acceptable to the Committee, and valued at Fair Market Value as of the day of exercise, or in any combination thereof, as determined by the Committee; provided that, except as otherwise provided by the Committee, payments made with shares of Stock
in accordance with this paragraph (b) shall be limited to shares held by the Participant for not less than six months prior to the payment date. 

  

	(c)	Subject to applicable law, the Committee may permit a Participant to elect to pay the Exercise Price upon the exercise of an Option by irrevocably authorizing a third party to sell
shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.

  
 2.5. No Repricing. Except for either
adjustments pursuant to paragraph 5.2(f) (relating to the adjustment of shares), or reductions of the Exercise Price approved by the Company’s stockholders, the Exercise Price for any outstanding Option may not be decreased after the date of
grant nor may an outstanding Option granted under the Plan be surrendered to the Company as consideration for the grant of a replacement Option with a lower exercise price. 
  
 2.6. Grants of Options and SARs. An Option may but need not be in tandem with an SAR, and an SAR may but need not be
in tandem with an Option (in either case, regardless of whether the original award was granted under this Plan or another plan or arrangement). If an Option is in tandem with an SAR, the exercise price of both the Option and SAR shall be the same,
and the exercise of the Option or SAR with respect to a share of Stock shall cancel the corresponding tandem SAR or Option right with respect to such share. If an SAR is in tandem with an Option but is granted after the grant of the Option, or if an
Option is in tandem with an SAR but is granted after the grant of the SAR, the later granted tandem Award shall have the same exercise price as the earlier granted Award, but the exercise price for the later granted Award may be less than the Fair
Market Value of the Stock at the time of such grant. 
  
 SECTION
3 
 FULL VALUE AWARDS 
  
 3.1. Definition. A “Full Value Award” is a grant of one or more shares of Stock or a right to receive one or more shares of Stock in the
future, with such grant subject to one or more of the following, as determined by the Committee: 
  

	(a)	The grant shall be in consideration of a Participant’s previously performed services, or surrender of other compensation that may be due. 

  

	(b)	The grant shall be contingent on the achievement of performance or other objectives during a specified period. 

  

	(c)	The grant shall be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the
Participant, or achievement of performance or other objectives. 

  

 C-2 

 The grant of Full Value Awards may also be subject to such other conditions, restrictions and
contingencies, as determined by the Committee. 
  
 3.2.
Restrictions on Awards. 
  

	(a)	The Committee may designate a Full Value Award granted to any Participant as Performance-Based Compensation. To the extent required by Code section 162(m), any Full Value Award so
designated shall be conditioned on the achievement of one or more performance objectives. The performance objectives shall be based on the Performance Measures selected by the Committee. For Awards under this Section 3 intended to be
Performance-Based Compensation, the grant of the Awards and the establishment of the Performance Measures shall be made during the period required under Code section 162(m). 

  

	(b)	If the right to become vested in a Full Value Award is conditioned on the completion of a specified period of service with the Company or the Subsidiaries, without achievement of
Performance Measures or other performance objectives (whether or not related to Performance Measures) being required as a condition of vesting, and without it being granted in lieu of other compensation, then the required period of service for full
vesting shall be not less than three years (subject to acceleration of vesting, to the extent permitted by the Committee, in the event of the Participant’s death, disability, retirement, change in control or termination).

  
 SECTION 4 
 CASH INCENTIVE AWARDS 
  
 A Cash Incentive Award is the grant of a right to receive a payment of cash (or in the discretion of the Committee, Stock having value equivalent to the
cash otherwise payable) that is contingent on achievement of performance objectives over a specified period established by the Committee. The grant of Cash Incentive Awards may also be subject to such other conditions, restrictions and
contingencies, as determined by the Committee. The Committee may designate a Cash Incentive Award granted to any Participant as Performance-Based Compensation. To the extent required by Code section 162(m), any such Award so designated shall be
conditioned on the achievement of one or more Performance Measures, as selected by the Committee. For Awards under this Section 4 intended to be Performance-Based Compensation, the grant of the Awards and the establishment of the Performance
Measures shall be made during the period required under Code section 162(m). 
  
 SECTION 5 
 OPERATION AND ADMINISTRATION 
  
 5.1. Effective Date. Subject to the approval of the shareholders of
the Company and of Aames Financial Corporation, and contingent on the closing of the initial public offering of the Stock of the Company not later than September 30, 2004 (the “Public Offering”), the Plan shall be effective as of the
“Effective Date,” which shall be the date immediately prior to the date of the Public Offering. In the event of Plan termination, the terms of the Plan shall remain in effect as long as any Awards under it are outstanding; provided,
however, that no Awards may be granted under the Plan after the ten-year anniversary of the Effective Date. 
  
 5.2. Shares and Other Amounts Subject to Plan. The shares of Stock for which Awards may be granted under the Plan shall be subject to the
following: 
  

	(a)	The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued or, to the extent permitted by applicable law,
currently held or acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions. 

  

	(b)	Subject to the following provisions of this subsection 5.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall
be equal to                  shares of Stock. 

  

 C-3 

	(c)	To the extent provided by the Committee, any Award may be settled in cash rather than Stock. 

  

	(d)	Only shares of Stock, if any, actually delivered to the Participant or beneficiary on an unrestricted basis with respect to an Award shall be treated as delivered for purposes of
the determination under paragraph (b) above, regardless of whether the Award is denominated in Stock or cash. Consistent with the foregoing: 

  

	 	(i)	To the extent any shares of Stock covered by an Award are not delivered to a Participant or beneficiary because the Award is forfeited or canceled, or the shares of Stock are not
delivered on an unrestricted basis (including, without limitation, by reason of the Award being settled in cash or used to satisfy the applicable tax withholding obligation), such shares shall not be deemed to have been delivered for purposes of the
determination under paragraph (b) above. 

  

	 	(ii)	If the exercise price of any Option granted under the Plan, or the tax withholding obligation with respect to any Award granted under the Plan, is satisfied by tendering shares of
Stock to the Company (by either actual delivery or by attestation), only the number of shares of Stock issued net of the shares of Stock tendered shall be deemed delivered for purposes of determining the number of shares of Stock available for
delivery under the Plan. 

  

	(e)	Subject to paragraph 5.2(f), the following additional maximums are imposed under the Plan. 

  

	 	(i)	The maximum number of shares of Stock that may be delivered to Participants and their beneficiaries with respect to ISOs granted under the Plan shall be
             shares; provided, however, that to the extent that shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to ISOs, such rules
shall apply to the limit on ISOs granted under the Plan. 

  

	 	(ii)	The maximum number of shares that may be covered by Awards granted to any one Participant during any one calendar-year period pursuant to Section 2 (relating to Options and SARs)
shall be              shares. For purposes of this paragraph (ii), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a share of Stock
cancels the tandem SAR or Option right, respectively, with respect to such share, the tandem Option and SAR rights with respect to each share of Stock shall be counted as covering but one share of Stock for purposes of applying the limitations of
this paragraph (ii). 

  

	 	(iii)	The maximum number of shares of Stock that may be issued in conjunction with Awards granted pursuant to Section 3 (relating to Full Value Awards) shall be
                 shares. 

  

	 	(iv)	For Full Value Awards that are intended to be Performance-Based Compensation, no more than              shares of Stock
may be delivered pursuant to such Awards granted to any one Participant during any one-calendar-year period (regardless of whether settlement of the Award is to occur prior to, at the time of, or after the time of vesting); provided that Awards
described in this paragraph (iv) that are intended to be Performance-Based Compensation shall be subject to the following: 

  

	 	(A)	If the Awards are denominated in Stock but an equivalent amount of cash is delivered in lieu of delivery of shares of Stock, the foregoing limit shall be applied based on the
methodology used by the Committee to convert the number of shares of Stock into cash. 

  

	 	(B)	If delivery of Stock or cash is deferred until after shares of Stock have been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after
the date the shares are earned shall be disregarded. 

  

	 	(v)	For Cash Incentive Value Awards that are intended to be Performance-Based Compensation, the maximum amount payable to any Participant with respect to any performance period shall
equal $             multiplied by the number of calendar months included in that performance period; provided that Awards described in this paragraph (v) that are intended to be
Performance-Based Compensation, shall be subject to the following: 

  

	 	(A)	If the Awards are denominated in cash but an equivalent amount of Stock is delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the
methodology used by the Committee to convert the cash into shares of Stock. 

  

 C-4 

	 	(B)	If delivery of Stock or cash is deferred until after cash has been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date
the cash is earned shall be disregarded. 

  

	(f)	In the event of a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the Committee may adjust Awards to preserve the benefits or potential benefits of the Awards. Action by the Committee may include: (i) adjustment of the
number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the Exercise Price of outstanding Options and SARs; and (iv) any other adjustments
that the Committee determines to be equitable (which may include, without limitation, (I) replacement of Awards with other Awards which the Committee determines have comparable value and which are based on stock of a company resulting from the
transaction, and (II) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of payment, provided that in the case of an Option or SAR, the amount of such
payment may be the excess of value of the Stock subject to the Option or SAR at the time of the transaction over the exercise price). 

  
 5.3. General Restrictions. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following: 
  

	(a)	Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless
such delivery or distribution complies with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity. 

 

	(b)	To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock exchange. 

  
 5.4. Tax Withholding. All distributions under the Plan are subject to withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the applicable withholding obligations. Except as otherwise provided by the Committee, such withholding obligations may be satisfied (i) through cash payment by the
Participant; (ii) through the surrender of shares of Stock which the Participant already owns (provided, however, that to the extent shares described in this clause (ii) are used to satisfy more than the minimum statutory withholding obligation, as
described below, then, except as otherwise provided by the Committee, payments made with shares of Stock in accordance with this clause (ii) shall be limited to shares held by the Participant for not less than six months prior to the payment date);
or (iii) through the surrender of shares of Stock to which the Participant is otherwise entitled under the Plan, provided, however, that such shares under this clause (iii) may be used to satisfy not more than the Company’s minimum statutory
withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). 
  
 5.5. Grant and Use of Awards. In the discretion of the Committee, a Participant may be granted any Award permitted
under the provisions of the Plan, and more than one Award may be granted to a Participant. Subject to subsection 2.5 (relating to repricing), Awards may be granted as alternatives to or replacement of awards granted or outstanding under the Plan, or
any other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). Subject to the overall limitation on the number of shares
of Stock that may be delivered under the Plan, the Committee may use available shares of Stock as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or a Subsidiary,
including the plans and arrangements of the Company or a Subsidiary assumed in business combinations. Notwithstanding the provisions of subsection 2.2, Options and SARs granted under the Plan in replacement for awards under plans 

  

 C-5 

 
and arrangements of the Company or a Subsidiary assumed in business combinations may provide for exercise prices that are less than the Fair Market Value of
the Stock at the time of the replacement grants, if the Committee determines that such exercise price is appropriate to preserve the economic benefit of the award. 
  
 5.6. Dividends and Dividend Equivalents. An Award (including without limitation an Option or SAR Award) may provide
the Participant with the right to receive dividend or dividend equivalent payments with respect to Stock subject to the Award (both before and after the Stock subject to the Award is earned, vested, or acquired), which payments may be either made
currently or credited to an account for the Participant, and may be settled in cash or Stock, as determined by the Committee. Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in shares of Stock, may
be subject to such conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in Stock equivalents. 
  
 5.7. Settlement of Awards. The obligation to make payments and distributions with respect to Awards may be satisfied
through cash payments, the delivery of shares of Stock, the granting of replacement Awards, or combination thereof as the Committee shall determine. Satisfaction of any such obligations under an Award, which is sometimes referred to as
“settlement” of the Award, may be subject to such conditions, restrictions and contingencies as the Committee shall determine. The Committee may permit or require the deferral of any Award payment, subject to such rules and procedures as
it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, and may include converting such credits into deferred Stock equivalents. Each Subsidiary shall be liable for payment of cash due under
the Plan with respect to any Participant to the extent that such benefits are attributable to the services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for cash payments shall be resolved by the
Committee. 
  
 5.8. Transferability. Except as otherwise
provided by the Committee, Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution. 
  
 5.9. Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be made by
any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the Committee at such times, in such form, and subject to such restrictions and limitations,
not inconsistent with the terms of the Plan, as the Committee shall require. 
  
 5.10. Agreement With Company. An Award under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant shall be reflected in such form of written (including electronic) document as is determined by the Committee. A copy of such document shall be provided to the Participant, and the Committee may, but need
not require that the Participant sign a copy of such document. Such document is referred to in the Plan as an “Award Agreement” regardless of whether any Participant signature is required. 
  
 5.11. Action by Company or Subsidiary. Any action required or
permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock exchange) by a duly authorized officer of such company. 
  
 5.12. Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the
plural and the plural shall include the singular. 
  
 5.13.
Limitation of Implied Rights. 
  

	(a)	 Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right in or title to any assets, funds or property of the
Company or any Subsidiary whatsoever, including, without 

  

 C-6 

	 	 
limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a contractual right to the Stock or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. 

  

	(b)	The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee the right to be retained in the employ of the Company
or any Subsidiary, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder
thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. 

  

5.14. Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties. 
  
 SECTION 6 
 CHANGE IN CONTROL 
  
 Subject to the provisions of paragraph 5.2(f) (relating to the adjustment of
shares), the occurrence of a Change in Control shall have the effect, if any, with respect to any Award as set forth in the Award Agreement or, to the extent not prohibited by the Plan or the Award Agreement, as provided by the Committee.

  
 SECTION 7 
 COMMITTEE 
  
 7.1. Administration. The authority to control and manage the operation and administration of the Plan shall be vested in a committee (the
“Committee”) in accordance with this Section 7. The Committee shall be selected by the Board, and shall consist solely of two or more members of the Board. If the Committee does not exist, or for any other reason determined by the Board,
and to the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. 
  
 7.2. Powers of Committee. The Committee’s administration of the
Plan shall be subject to the following: 
  

	(a)	Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the Eligible Individuals those persons who shall receive Awards, to
determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the
restrictions imposed by Section 8) to amend, cancel, or suspend Awards. 

  

	(b)	To the extent that the Committee determines that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Awards in jurisdictions outside the
United States, the Committee will have the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United
States. 

  

	(c)	The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms
and provisions of any Award Agreement made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan. 

  

 C-7 

	(d)	Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons. 

  

	(e)	In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the articles and by-laws of the Company, and
applicable state corporate law. 

  
 7.3.
Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may
delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. 
  
 7.4. Information to be Furnished to Committee. The Company and Subsidiaries shall furnish the Committee with such
data and information as it determines may be required for it to discharge its duties. The records of the Company and Subsidiaries as to an employee’s or Participant’s employment, termination of employment, leave of absence, reemployment
and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan. 
  
 SECTION 8

 AMENDMENT AND TERMINATION 
  
 The Board may, at any time, amend or terminate the Plan, and the Board or the Committee may amend any Award Agreement, provided that no amendment or
termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted
under the Plan prior to the date such amendment is adopted by the Board (or the Committee, if applicable); and further provided that adjustments pursuant to paragraph 5.2(f) shall not be subject to the foregoing limitations of this Section 8; and
further provided that the provisions of subsection 2.5 (relating to Option repricing) cannot be amended unless the amendment is approved by the Company’s stockholders. 
  
 SECTION 9 
 DEFINED TERMS 
  
 In addition to the other
definitions contained herein, the following definitions shall apply: 
  

	(a)	Award. The term “Award” means any award or benefit granted under the Plan, including, without limitation, the grant of Options, SARs, Full Value Awards, and Cash
Incentive Awards. 

  

	(b)	Board. The term “Board” means the Board of Directors of the Company. 

  

	(c)	Change in Control. For purposes of the Plan, the term “Change in Control” means the occurrence of the events described in any of paragraphs (i), (ii), (iii) or (iv)
below: 

  

	 	(i)	Acquisition of Securities. The acquisition (disregarding any Excluded Acquisitions) by any Person of ownership of any Voting Securities if, immediately after such
acquisition, such Person has ownership of more than [twenty-five percent (25%)] of either the Outstanding Company Common Stock, or the combined voting power of the Outstanding Company Voting Securities. 

  

	 	(ii)	Change in Board. Individuals who constitute the Incumbent Board cease for any reason to represent greater than 50% of the voting power of the members of the Board.

  

	 	(iii)	Corporate Transaction. Consummation of (A) a Corporate Transaction or (B) the sale or other disposition of more than fifty percent (50%) of the operating assets of the
Company (determined on a consolidated basis), but not including an Internal Reorganization. 

  

 C-8 

	 	(iv)	Liquidation. Approval by the shareholders of the Company of a plan of complete liquidation or dissolution of the Company. 

  

	 	(v)	Definitions. The terms used in the definition of “Change in Control” shall have the following meanings: 

  

	 	(A)	The term “Company Plan” means an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

  

	 	(B)	The term “Corporate Transaction” means any reorganization, merger, consolidation, or other business combination involving the Company. 

  

	 	(C)	The following shall constitute “Excluded Acquisitions” of Stock or Voting Securities (whichever is applicable): 

  

	 	(I)	Any acquisition of Stock or Voting Securities (whichever is applicable) by a Company Plan. 

  

	 	(II)	Any acquisition of Stock or Voting Securities (whichever is applicable) by an underwriter temporarily holding securities pursuant to an offering of such securities.

  

	 	(III)	Any acquisition of Stock or Voting Securities (whichever is applicable) by any Person pursuant to an Internal Reorganization. 

  

	 	(IV)	Any acquisition of Stock or Voting Securities (whichever is applicable) directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion
or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company). 

  

	 	(V)	Any acquisition of Stock or Voting Securities (whichever is applicable) by the Company. 

  

	 	(D)	The members of the “Incumbent Board” shall mean the members of the Board of Directors as of the Effective Date of this Agreement and shall also mean any individual
becoming a director after that date whose election, or nomination for election by the Company shareholders, was approved by a vote of a least a majority of the directors then comprising the Incumbent Board; provided, however, that
there shall be excluded for this purpose any such individual whose initial assumption of office occurs as a result of an actual or publicly threatened election contest (as such terms are used in Rule 14a-11 promulgated under the Exchange Act) or
other actual or publicly threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. 

  

	 	(E)	The term “Internal Reorganization” means a sale-leaseback or other arrangement resulting in the continued utilization of the assets being sold or otherwise transferred (or
the operating products of such assets) by the Company. The term “Internal Reorganization” also means a Corporate Transaction to which all of paragraphs (I), (II), and (III) below are applicable: 

  

	 	(I)	All or substantially all of the individuals and entities who have ownership, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction have ownership of more than fifty percent (50%) of, respectively, the then outstanding shares of common equity securities and the combined voting power of the then outstanding Voting Securities
entitled to vote generally in the election of directors, as the case may be, of the ultimate parent entity resulting from such Corporate Transaction (including, without limitation, an entity which, as a result of such transaction, has ownership of
the Company or all or substantially all of the assets of the Company either directly or through one or more subsidiaries) in substantially the same relative proportions as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. 

  

	 	(II)	 No Person (other than the Company, any Company Plan or related trust, the corporation resulting from such Corporate Transaction, and any Person having ownership,
immediately 

  

 C-9 

	 	 
prior to such Corporate Transaction, directly or indirectly, of more than twenty-five percent (25%) of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) will have ownership of more than twenty-five percent (25%) of, respectively, the then outstanding common stock of the ultimate parent entity resulting from such Corporate Transaction or the
combined voting power of the then outstanding Voting Securities of such entity. 

  

	 	(III)	Individuals who were members of the Incumbent Board immediately prior to the Corporate Transaction will constitute at least a majority of the members of the board of directors of
the ultimate parent entity resulting from such Corporate Transaction. 

  

	 	(F)	The term “Outstanding Company Common Stock” as of any date means the then outstanding shares of common stock, of whatever class, of the Company. 

 

	 	(G)	The term “Outstanding Company Voting Securities” as of any date means the then outstanding Voting Securities (which shall be counted based on the number of votes that may
be cast per share). 

  

	 	(H)	The term “ownership” means beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act. 

  

	 	(I)	The term “Person” means an individual, entity or group as that term is used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. 

  

	 	(J)	The term “Voting Securities” as of any date means any of the outstanding securities of the Company entitled to vote generally in the election of the Company’s Board
of Directors. 

  

	(d)	Code. The term “Code” means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor
provision of the Code. 

  

	(e)	Eligible Individual. For purposes of the Plan, the term “Eligible Individual” means any employee of the Company or a Subsidiary, and any consultant, director, or
other person providing services to the Company or a Subsidiary; provided, however, that an incentive stock option may only be granted to an employee of the Company or a Subsidiary. An Award may be granted to an employee, in connection with hiring,
retention or otherwise, prior to the date the employee first performs services for the Company or the Subsidiaries, provided that such Awards shall not become vested prior to the date the employee first performs such services.

  

	(f)	Fair Market Value. Except as otherwise provided by the Committee, for purposes of determining the “Fair Market Value” of a share of Stock as of any date, the
following rules shall apply: 

  

	 	(i)	If the principal market for the Stock is a national securities exchange or the Nasdaq stock market, then the “Fair Market Value” as of that date shall be the mean between
the lowest and highest reported sale prices of the Stock on that date on the principal exchange or market on which the Stock is then listed or admitted to trading. 

  

	 	(ii)	If sale prices are not available or if the principal market for the Stock is not a national securities exchange and the Stock is not quoted on the Nasdaq stock market, then the
“Fair Market Value” as of that date shall be the mean between the highest bid and lowest asked prices for the Stock on such day as reported on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Incorporated or a
comparable service. 

  

	 	(iii)	If the day is not a business day, and as a result, paragraphs (i) and (ii) above are inapplicable, the Fair Market Value of the Stock shall be determined as of the next earlier
business day. If paragraphs (i) and (ii) above are otherwise inapplicable, then the Fair Market Value of the Stock shall be determined in good faith by the Committee. 

  

	(g)	Performance-Based Compensation. The term “Performance-Based Compensation” shall have the meaning ascribed to it under Code section 162(m) and the regulations
thereunder. 

  

 C-10 

	(h)	Performance Measures. The “Performance Measures” shall be based on any one or more of the following Company, Subsidiary, operating unit or division performance
measures:                         ; or any combination thereof. Each goal may be expressed on an absolute and/or relative basis,
may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other companies, and in the case of earnings-based measures, may use or employ comparisons
relating to capital, stockholders equity and/or shares outstanding, investments or to assets or net assets. 

  

	(i)	Subsidiary. For purposes of the Plan, the term “Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which at least a
fifty percent voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a
successor to the Company) has a significant interest, as determined in the discretion of the Committee. 

  

	(j)	Stock. The term “Stock” means shares of common stock of the Company. 

  

 C-11 

 Possible Performance Measures 
  
 These are alternatives for the definition of “Performance Measures.” 
  
 core earnings 
  
 earnings per share 
  
 growth in earnings 
  
 ratio of earnings to equity or assets 
  
 earnings before income taxes and depreciation 
  
 earnings before interest, taxes, depreciation and
amortization (“EDITDA”) 
  
 operating earnings
(earnings before transaction-related expense) per diluted share of common stock, either before or after amortization of intangible assets (goodwill) 
  
 cash flow 
  
 return on total capital 
  
 return on assets 
  
 total shareholder return 
  
 return on equity 
  
 return on average common equity 
  
 return on average equity 
  
 return on average assets 
  
 return on invested capital 
  
 economic value added 
  
 increase in surplus 
  
 reductions in operating expenses 
  
 increases in operating margins 
  
 net worth 
  
 asset quality 
  
 efficiency ratio 
  
 loan origination 
  
 deposit growth 
  
 interest rate risk 
  
 net operating expense, either before or after amortization of intangible assets (goodwill) 
  
 ratio of non-performing assets to total assets 

 
 customer service 
  
 regulatory compliance 
  
 cost reductions and savings 
  
 pre-tax operating income 
  
 productivity improvements 
  

 C-12

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