Document:

2004 Stock Incentive Plan

 Exhibit 10.1 
  
 PEOPLE’S CHOICE FINANCIAL CORPORATION 
  
 2004 STOCK INCENTIVE PLAN 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	 	2004 STOCK INCENTIVE PLAN

  
 TABLE OF CONTENTS

  

					
	 Section

	  	 	  	Page

	ARTICLE I DEFINITIONS	  	1
			
	 1.01.
	  	Acquiring Person	  	1
	 1.02.
	  	Affiliate	  	1
	 1.03.
	  	Agreement	  	1
	 1.04.
	  	Award	  	1
	 1.05.
	  	Board	  	1
	 1.06.
	  	Cause	  	1
	 1.07.
	  	Change in Control	  	2
	 1.08.
	  	Code	  	3
	 1.09.
	  	Committee	  	3
	 1.10.
	  	Common Stock	  	3
	 1.11.
	  	Company	  	3
	 1.12.
	  	Continuing Director	  	3
	 1.13.
	  	Control Change Date	  	3
	 1.14.
	  	Corresponding SAR	  	4
	 1.15.
	  	Exchange Act	  	4
	 1.16.
	  	Fair Market Value	  	4
	 1.17.
	  	Incentive Award	  	4
	 1.18.
	  	Initial Value	  	4
	 1.19.
	  	Named Executive Officer	  	4
	 1.20.
	  	Option	  	5
	 1.21.
	  	Participant	  	5
	 1.22.
	  	Performance Shares	  	5
	 1.23.
	  	Person	  	5
	 1.24.
	  	Plan	  	5
	 1.25.
	  	Related Entity	  	5
	 1.26.
	  	SAR	  	5
	 1.27.
	  	Stock Award	  	6
	 1.28.
	  	Ten Percent Shareholder	  	6
		
	ARTICLE II PURPOSES	  	7
		
	ARTICLE III ADMINISTRATION	  	8
		
	ARTICLE IV ELIGIBILITY	  	10
		
	ARTICLE V COMMON STOCK SUBJECT TO PLAN	  	11
			
	 5.01.
	  	Common Stock Issued	  	11
	 5.02.
	  	Aggregate Limit	  	11
	 5.03.
	  	Individual Limit	  	11
	 5.04.
	  	Reallocation of Shares	  	11

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

					
	ARTICLE VI OPTIONS	  	12
			
	 6.01.
	  	Grant	  	12
	 6.02.
	  	Option Price	  	12
	 6.03.
	  	Maximum Option Period	  	12
	 6.04.
	  	Nontransferability	  	12
	 6.05.
	  	Transferable Options	  	12
	 6.06.
	  	Exercise	  	13
	 6.07.
	  	Payment	  	13
	 6.08.
	  	Employee Status	  	13
	 6.09.
	  	Change in Control	  	14
	 6.10.
	  	Stockholder Rights	  	14
	 6.11.
	  	Disposition of Shares	  	14
	 6.12.
	  	No Liability of Company	  	15
		
	ARTICLE VII SARS	  	16
			
	 7.01.
	  	Grant	  	16
	 7.02.
	  	Maximum SAR Period	  	16
	 7.03.
	  	Nontransferability	  	16
	 7.04.
	  	Transferable SARs	  	16
	 7.05.
	  	Exercise	  	17
	 7.06.
	  	Change in Control	  	17
	 7.07.
	  	Employee Status	  	18
	 7.08.
	  	Settlement	  	18
	 7.09.
	  	Stockholder Rights	  	18
		
	ARTICLE VIII STOCK AWARDS	  	19
			
	 8.01.
	  	Award	  	19
	 8.02.
	  	Vesting	  	19
	 8.03.
	  	Performance Objectives	  	19
	 8.04.
	  	Employee Status	  	19
	 8.05.
	  	Change in Control	  	20
	 8.06.
	  	Stockholder Rights	  	20
		
	ARTICLE IX PERFORMANCE SHARE AWARDS	  	21
			
	 9.01.
	  	Grant	  	21
	 9.02.
	  	Earning the Award	  	21
	 9.03.
	  	Maximum Performance Share Award Period	  	21
	 9.04.
	  	Payment	  	21
	 9.05.
	  	Stockholder Rights	  	22
	 9.06.
	  	Nontransferability	  	22
	 9.07.
	  	Transferable Performance Shares	  	22
	 9.08.
	  	Employee Status	  	22
	 9.09.
	  	Change in Control	  	22

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

					
	ARTICLE X INCENTIVE AWARDS	  	23
			
	 10.01.
	  	Grant	  	23
	 10.02.
	  	Terms and Conditions	  	23
	 10.03.
	  	Maximum Incentive Award Period	  	23
	 10.04.
	  	Nontransferability	  	23
	 10.05.
	  	Transferable Incentive Awards	  	24
	 10.06.
	  	Employee Status	  	24
	 10.07.
	  	Change in Control	  	24
	 10.08.
	  	Stockholder Rights	  	24
		
	ARTICLE XI ADJUSTMENT UPON CHANGE IN COMMON STOCK	  	25
		
	ARTICLE XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES	  	26
			
	 12.01.
	  	Compliance	  	26
	 12.02.
	  	Postponement of Exercise or Payment	  	26
	 12.03.
	  	Forfeiture of Payment	  	27
		
	ARTICLE XIII GENERAL PROVISIONS	  	28
	 13.01.
	  	Effect on Employment and Service	  	28
	 13.02.
	  	Unfunded Plan	  	28
	 13.03.
	  	Rules of Construction	  	28
	 13.04.
	  	Tax Withholding and Reporting	  	28
	 13.05.
	  	Reservation of Shares	  	29
	 13.06.
	  	Governing Law	  	29
	 13.07.
	  	Other Actions	  	29
	 13.08.
	  	Other Conditions	  	29
	 13.09.
	  	Forfeiture Provisions	  	30
		
	ARTICLE XIV AMENDMENT	  	31
		
	ARTICLE XV DURATION OF PLAN	  	32
		
	ARTICLE XVI EFFECTIVE DATE OF PLAN	  	33

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE I 
 DEFINITIONS 
  

	1.01. 	Acquiring Person 

  
 Acquiring Person means that a Person, considered alone or as part of a “group” within the meaning of Section 13(d)(3) of the Exchange Act, as
amended, is or becomes directly or indirectly the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of securities representing at least fifty percent (50%) of the Company’s then outstanding securities entitled to vote generally
in the election of the Board. 
  

	1.02. 	Affiliate 

  
 Affiliate, as it relates to any limitations or requirements with respect to incentive stock options, means any “subsidiary” or
“parent” corporation (as such terms are defined in Section 424 of the Code) of the Company. Affiliate otherwise means any “subsidiary” or “parent” corporation or Related Entity if “50 percent” were substituted
for “80 percent” in the regulations under Code Section 414(c) for purposes of defining Related Entity. 
  

	1.03. 	Agreement 

  
 Agreement means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and
conditions of an Award granted to such Participant. 
  

	1.04. 	Award 

  
 Award means an Incentive Award, Option, Performance Share, SAR or Stock Award granted under this Plan. 
  

	1.05. 	Board 

  
 Board means the Board of Directors of the Company. 
  

	1.06. 	Cause 

  
 Cause has the same definition as under any employment or service agreement between the Company or any Affiliate and the Participant or, if no such
employment or service agreement exists or if such employment or service agreement does not contain any such definition, Cause means that the Participant (i) has committed fraud or misappropriated, stolen or embezzled funds or property from the
Company or an Affiliate or secured or attempted to secure personally any profit in connection with any transaction entered into on behalf of the Company or any Affiliate, (ii) has been convicted of, or entered a plea of guilty or “nolo
contendere” to, any criminal act or has committed any other act of willful misconduct which brings the Participant into disrepute or is likely to cause material harm to the Company’s (or any Affiliate’s) reputation, business,
customer or supplier relations, financial condition or prospects, (iii) has, notwithstanding not less 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
than 30 days’ prior written notice, willfully failed to perform (other than by reason of illness or temporary disability ) his or her material duties or
to comply with any lawful directives of the Board, the Board of Directors of any Affiliate or any supervisory personnel of the Participant, (iv) has violated or breached any material law or regulation to the material detriment of the Company or any
Affiliate or its or their business, (v) has breached any non-competition, non-disclosure or non-solicitation agreement which causes or is reasonably likely to cause material harm to the Company or any Affiliate or (vi) has committed any act of
willful malfeasance or gross negligence in a matter of material importance to the Company or any Affiliate. For purposes of the Plan, other than where the definition of Cause is determined under any employment or service agreement between the
Company or any Affiliate and the Participant, in which case such employment or service agreement shall control, in no event shall any termination of employment or service be deemed for Cause unless the Company’s Chief Executive Officer
concludes that the situation warrants a determination that the Participant’s employment or service terminated for Cause; in the case of the Chief Executive Officer, any determination that the Chief Executive Officer’s employment terminated
for Cause shall be made by the Board acting without the Chief Executive Officer. 
  

	1.07. 	Change in Control 

  
 “Change in Control” means (i) a Person is or becomes an Acquiring Person; (ii) holders of the securities of the Company entitled to vote thereon
approve any agreement with a Person (or, if such approval is not required by applicable law and is not solicited by the Company, the closing of such an agreement) that involves the transfer of all or substantially all of the Company’s assets on
a consolidated basis; (iii) holders of the securities of the Company entitled to vote thereon approve a transaction (or, if such approval is not required by applicable law and is not solicited by the Company, the closing of such a transaction)
pursuant to which the Company will undergo a merger, consolidation, statutory share exchange or similar event with a Person, regardless of whether the Company is intended to be the surviving or resulting entity after the merger, consolidation,
statutory share exchange or similar event, other than a transaction that results in the voting securities of the Company carrying the right to vote in elections of persons to the Board outstanding immediately prior to the closing of the
transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% (fifty percent) of the Company’s voting securities carrying the right to vote in elections
of persons to the Company’s Board, or such securities of such surviving entity, outstanding immediately after the closing of such transaction; (iv) the Continuing Directors cease for any reason to constitute a majority of the Board; (v) holders
of the securities of the Company entitled to vote thereon approve a plan of complete liquidation of the Company or an agreement for the liquidation by the Company of all or substantially all of the Company’s assets (or, if such approval is not
required by applicable law and is not solicited by the Company, the commencement of actions constituting such a plan or the closing of such an agreement); or (vi) the Board adopts a resolution to the effect that, in its judgment, as a consequence of
any one or more transactions or events or series of transactions or events, a change in control of the Company has effectively occurred. Notwithstanding the foregoing, no event resulting from the offering of securities contemplated by the
People’s Choice Financial 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
Corporation Preliminary Offering Memorandum dated December 6, 2004 shall constitute a Change in Control. The Board shall be entitled to exercise its sole and
absolute discretion in exercising its judgment and in the adoption of such resolution, whether or not any such transaction(s) or event(s) might be deemed, individually or collectively, to satisfy any of the criteria set forth in subparagraphs (i)
through (v) above. 
  

	1.08. 	Code 

  
 Code means the Internal Revenue Code of 1986, and any amendments thereto. 
  

	1.09. 	Committee 

  
 Committee means the Compensation Committee of the Board if the Board appoints one to administer the Plan, or the Board itself if no Compensation Committee
is appointed. If such Compensation Committee is appointed, if and to the extent deemed necessary by the Board, such Compensation Committee shall consist of two or more directors, all of whom are “non-employee directors” within the meaning
of Rule 16b-3 under the Exchange Act and, after the transition period prescribed by the regulations under Code Section 162(m), “outside directors” within the meaning of Code Section 162(m). 
  

	1.10. 	Common Stock 

  
 Common Stock means the common stock, par value $0.01 per share, of the Company. 
  

	1.11. 	Company 

  
 Company means People’s Choice Financial Corporation, a Maryland corporation or any successor thereto. 
  

	1.12. 	Continuing Director 

  
 Continuing Director means any member of the Board, while a member of the Board and (i) who was a member of the Board on (x) a date within one year
following the closing of the Company’s offering of securities as contemplated by the People’s Choice Financial Corporation Preliminary Offering Memorandum dated December 6, 2004 or (y) any time before or within 30 days after the closing of
an initial public offering of the Common Stock, or (ii) whose nomination for or election to the Board was recommended or approved by a majority of the Continuing Directors. 
  

	1.13. 	Control Change Date 

  
 Control Change Date means the date on which a Change in Control occurs. If a Change in Control occurs on account of a series of transactions, the
“Control Change Date” is the date of the last of such transactions. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	1.14. 	Corresponding SAR 

  
 Corresponding SAR means an SAR that is granted in relation to a particular Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates. 
  

	1.15. 	Exchange Act 

  
 Exchange Act means the Securities Exchange Act of 1934, as amended. 
  

	1.16. 	Fair Market Value 

  
 Fair Market Value of a share of Common Stock means, on any given date, the fair market value of a share of Common Stock as the Committee in its discretion
shall determine; provided, however, that the Committee shall determine Fair Market Value without regard to any restriction other than a restriction which, by its terms, will never lapse and, if the shares of Common Stock are traded on any national
stock exchange or quotation system, the Fair Market Value of a share of Common Stock shall be the closing price of a share of Common Stock as reported on such stock exchange or quotation system on such date, or if the shares of Common Stock are not
traded on such stock exchange or quotation system on such date, then on the next preceding day that the shares of Common Stock were traded on such stock exchange or quotation system, all as reported by such source as the Committee shall select. The
Fair Market Value that the Committee determines shall be final, binding and conclusive on the Company, any Affiliate and each Participant. 
  

	1.17. 	Incentive Award 

  
 Incentive Award means an award stated with reference to a specified dollar amount which, subject to such terms and conditions as may be prescribed by the
Committee, entitles the Participant to receive shares of Common Stock or a cash payment from the Company or an Affiliate. 
  

	1.18. 	Initial Value 

  
 Initial Value means, with respect to a Corresponding SAR, the option price per share of the related Option and, with respect to an SAR granted
independently of an Option, the Fair Market Value of one share of Common Stock on the date of grant. 
  

	1.19. 	Named Executive Officer 

  
 Named Executive Officer means a Participant who, as of the last day of a taxable year, is the Chief Executive Officer of the Company (or is acting in such
capacity) or one of the four highest compensated officers of the Company (other than the Chief Executive Officer) or is otherwise one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m).

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	1.20. 	Option 

  
 Option means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price set forth in an
Agreement. 
  

	1.21. 	Participant 

  
 Participant means an employee of the Company or an Affiliate, a non-employee member of the Board, or a person or entity that provides services to the
Company or an Affiliate and who satisfies the requirements of Article IV and is selected by the Committee to receive an Award. 
  

	1.22. 	Performance Shares 

  
 Performance Shares means an award, in the amount determined by the Committee, stated with reference to a specified number of shares of Common Stock, that
in accordance with the terms of an Agreement entitles the holder to receive a cash payment or shares of Common Stock or a combination thereof. 
  

	1.23. 	Person 

  
 “Person” means any human being, firm, corporation, partnership, or other entity. “Person” also includes any human being, firm,
corporation, partnership, or other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange Act. The term “Person” does not include the Company or any Related Entity, and the term Person does not include any employee-benefit
plan maintained by the Company or any Related Entity, or any person or entity organized, appointed, or established by the Company or any Related Entity for or pursuant to the terms of any such employee-benefit plan, unless the Board determines that
such an employee-benefit plan or such person or entity is a “Person”. 
  

	1.24. 	Plan 

  
 Plan means the People’s Choice Financial Corporation 2004 Stock Incentive Plan, in its current form and as hereafter amended. 
  

	1.25. 	Related Entity 

  
 Related Entity means any entity that is part of a controlled group of corporations or is under common control with the Company within the meaning of
Sections 1563(a), 414(b) or 414(c) of the Code. 
  

	1.26. 	SAR 

  
 SAR means a stock appreciation right that in accordance with the terms of an Agreement entitles the holder to receive a number of shares of Common Stock,
or in the discretion of the Committee, a cash award, or a combination of shares of Common Stock and cash based on the increase in the Fair Market Value of the shares underlying the stock appreciation right during a 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
stated period specified by the Committee. References to “SARs” include both Corresponding SARs and SARs granted independently of Options, unless
the context requires otherwise. 
  

	1.27. 	Stock Award 

  
 Stock Award means shares of Common Stock granted to a Participant under Article VIII. 
  

	1.28. 	Ten Percent Shareholder 

  
 Ten Percent Shareholder means any individual who (considering the stock attribution rules described in Code Section 424(d)) owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of the Company or any Affiliate. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE II 
 PURPOSES 
  
 The
Plan is intended to assist the Company and its Affiliates in recruiting and retaining individuals and other service providers with ability and initiative by enabling such persons or entities to participate in the future success of the Company and
its Affiliates and to associate their interests with those of the Company and its stockholders. The Plan is intended to permit the grant of both Options qualifying under Section 422 of the Code (“incentive stock options”) and Options not
so qualifying, and the grant of SARs, Stock Awards, Performance Shares and Incentive Awards in accordance with the Plan and procedures that may be established by the Committee. No Option that is intended to be an incentive stock option shall be
invalid for failure to qualify as an incentive stock option. The proceeds received by the Company from the sale of shares of Common Stock pursuant to this Plan shall be used for general corporate purposes. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE III 
 ADMINISTRATION 
  
 The Plan shall be administered by the Committee. The Committee shall have authority to grant Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include
conditions (in addition to those contained in this Plan) on the exercisability of all or any part of an Option or SAR, the transferability or forfeitability of a Stock Award, or the grant or settlement of Performance Shares or an Incentive Award.
Notwithstanding any such conditions, the Committee may, in its discretion, accelerate the time at which any Option or SAR may be exercised, or the time at which a Stock Award may become transferable or nonforfeitable or the time at which an
Incentive Award or award of Performance Shares may be settled. In addition, the Committee shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting
any power or authority of the Committee. Any decision made, or action taken, by the Committee in connection with the administration of this Plan shall be final and conclusive. The members of the Committee shall not be liable for any act done in good
faith with respect to this Plan or any Agreement or Award. All expenses of administering this Plan shall be borne by the Company. 
  
 To the extent applicable law so permits, the Committee, in its discretion, may delegate to one or more officers of the Company all or part of the
Committee’s authority and duties with respect to Awards to be granted to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and, after the transition period prescribed by the regulations
under Code Section 162(m), who are not Named Executive Officers. The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or delegates that were
consistent with the terms of the Plan and the Committee’s prior delegation. If and to the extent deemed necessary by the Board, all Awards granted to any individual who is subject to the reporting and other provisions of Section 16 of the
Exchange Act shall be made by a Committee comprised solely of two or more directors, all of whom are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and, after the transition period prescribed by the
regulations under Code Section 162(m), all Awards granted to an individual who is a Named Executive Officer shall be made by a Committee comprised solely of two or more directors, all of whom are “outside directors” within the meaning of
Code Section 162(m). 
  
 The Company shall bear all expenses of
administering this Plan. The Company shall indemnify and hold harmless each person who is or shall have been a member of the Committee acting as administrator of the Plan, or any delegate of such, against and from any cost, liability, loss or
expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any action, claim, suit, or proceeding to which such person may be a party or in which such person may be involved by reason of any action
taken or not taken under the Plan and against and from any and all amounts paid by such person in settlement thereof, with 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
the Company’s approval, or paid by such person in satisfaction of any judgment in any such action, suit, or proceeding against such person, provided he
or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. Notwithstanding the foregoing, the Company shall not indemnify and hold
harmless any such person if (i) applicable law or the Company’s Articles of Incorporation or Bylaws prohibit such indemnification or (ii) such person did not act in good faith and in a manner that such person believed to be consistent with the
Plan or such person’s conduct constituted gross negligence or willful misconduct. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Incorporation or Bylaws, as a matter of law or otherwise, or under any other power that the Company may have to indemnify such person or hold him or her harmless. The provisions of the foregoing indemnity shall survive
indefinitely the term of this Plan. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE IV 
 ELIGIBILITY 
  
 Any
employee of the Company or an Affiliate (including an entity that becomes an Affiliate after the adoption of this Plan) and any non-employee member of the Board is eligible to participate in this Plan. In addition, any other person or entity that
provides services to the Company or an Affiliate is eligible to participate in this Plan if the Board, in its sole discretion, determines that it is in the best interest of the Company. For purposes of this Plan, a person or entity shall be treated
as an employee or service provider of the Company or an Affiliate to the extent such person or entity is an employee or service provider of a disregarded entity under Code Section 7701 that is treated as part of the Company or an Affiliate.
Additionally, a trust, partnership or limited liability company, all of whose beneficial ownership interests are held by employees of the Company or an Affiliate and non-employee members of the Board, is eligible to participate in this Plan and
receive Awards as set forth in the third paragraph of Article XI. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE V 
 COMMON STOCK SUBJECT TO PLAN 
  

	5.01. 	Common Stock Issued 

  
 Upon the issuance of shares of Common Stock pursuant to an Award, the Company may deliver to the Participant shares of Common Stock or treasury shares
from its authorized but unissued Common Stock. 
  

	5.02. 	Aggregate Limit 

  
 The maximum aggregate number of shares of Common Stock that may be issued under this Plan shall be 3,000,000, plus an additional number of shares of
Common Stock, equal to 10 percent of the number of shares of Common Stock that are issued (or Common Stock into which securities are convertible relating to securities that are issued) after the closing of the Company’s offering of securities
as contemplated by the People’s Choice Financial Corporation Preliminary Offering Memorandum dated December 6, 2004 (other than shares of Common Stock issued pursuant to the Plan), to be added to the number of issuable shares under the Plan at
the time of such subsequent issuances; provided, however, in no event, during the life of the Plan, shall the aggregate number of shares of Common Stock that may be issued under the Plan exceed 45,000,000 shares of Common Stock. One hundred percent
(100%) of such shares may be issued pursuant to Options. In addition, the maximum aggregate number of shares of Common Stock that may be issued under this Plan and the foregoing limits shall be subject to adjustment as provided in Article XI.
 
  

	5.03. 	Individual Limit 

  
 In any calendar year, no Participant may receive Options, SARs, Stock Awards, Performance Shares or any combination thereof that relate to more than
500,000 shares for Awards that vest or become payable solely on account of the passage of time or continued employment or service. In any calendar year, no Participant may receive other Options, SARs, Stock Awards, Performance Shares or any
combination thereof that relate to more than 500,000 shares. In no case, may a Participant receive an aggregate of Options, SARs, Stock Awards, Performance Shares or any combination thereof that relate to more than 1,000,000 shares in any calendar
year. This Section 5.03 applies only with respect to Awards that are made at the end of the transition period prescribed by the regulations under Code Section 162(m). 
  

	5.04. 	Reallocation of Shares 

  
 If an Option is terminated, in whole or in part, for any reason other than its exercise or the exercise of a Corresponding SAR that is settled with shares
of Common Stock, the number of shares of Common Stock allocated to the Option or portion thereof may be reallocated to other Awards to be granted under this Plan. If an SAR is terminated, in whole or in part, for any reason other than its exercise
that is settled with shares of Common Stock or the exercise of a related Option, the number of shares of Common Stock allocated to the SAR or portion thereof may be reallocated to other Awards to be granted under this Plan. If an award of
Performance Shares is terminated, in whole or in part, for any reason other than its settlement with shares of Common Stock, the number of shares allocated to the Performance Shares or portion thereof may be reallocated to other Awards to be granted
under this Plan. If a Stock Award is forfeited, in whole or in part, for any reason, the number of shares of Common Stock allocated to the Stock Award or portion thereof may be reallocated to other Awards to be granted under this Plan. 

 

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE VI 
 OPTIONS 
  

	6.01.	Grant 

  
 In accordance with the provisions of Article IV, the Committee will designate each individual or entity to whom an Option is to be granted and will
specify the number of shares of Common Stock covered by such grant. Notwithstanding any other provision of the Plan or any Agreement, the Committee may only grant an incentive stock option to an individual who is an employee of the Company or an
Affiliate. 
  

	6.02.	Option Price 

  
 The price per share of Common Stock purchased on the exercise of an Option shall be determined by the Committee on the date of grant, but shall not be
less than the Fair Market Value of a share of Common Stock on the date the Option is granted. However, if at the time of grant of an Option that is intended to be an incentive stock option, the Participant is a Ten Percent Shareholder, the price per
share of Common Stock purchased on the exercise of such Option shall not be less than 110% of the Fair Market Value of a share of Common Stock on the date the Option is granted. 
  

	6.03.	Maximum Option Period 

  
 The maximum period in which an Option may be exercised shall be determined by the Committee on the date of grant, except that no Option shall be
exercisable after the expiration of ten years from the date such Option was granted (five years from the date such Option was granted in the event of an incentive stock option granted to a Ten Percent Shareholder). 
  

	6.04.	Nontransferability 

  
 Except as provided in Section 6.05, each Option granted under this Plan shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any transfer of an Option (by the Participant or his transferee), the Option and any Corresponding SAR that relates to such Option must be transferred to the same person or persons or entity or entities. Except as
provided in Section 6.05, during the lifetime of the Participant to whom the Option is granted, the Option may be exercised only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien,
obligation, or liability of such Participant. 
  

	6.05.	Transferable Options 

  
 Section 6.04 to the contrary notwithstanding, if the Agreement provides, an Option that is not an incentive stock option may be transferred by a
Participant to the Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and conditions as are 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
appropriate for such transferees to be included in the class of transferees who may rely on a Form S-8 Registration Statement under the Securities Act of
1933 to sell shares issuable upon exercise of Options granted under the Plan. The holder of an Option transferred pursuant to this Section shall be bound by the same terms and conditions that governed the Option during the period that it was held by
the Participant; provided, however, that such transferee may not transfer the Option except by will or the laws of descent and distribution. In the event of any transfer of an Option (by the Participant or his transferee), the Option and any
Corresponding SAR that relates to such Option must be transferred to the same person or persons or entity or entities. 
  

	6.06.	Exercise 

  
 Subject to the provisions of this Plan and the applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Committee shall determine; provided, however, that incentive stock options (granted under the Plan and all plans of the Company and its Affiliates) may not be first exercisable in a calendar year
for shares of Common Stock having a Fair Market Value (determined as of the date the Option is granted) exceeding $100,000. If the limitation is exceeded, the Options that cause the limitation to be exceeded shall be treated as nonqualified stock
options. An Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Option. The exercise of an Option shall result in the termination of any Corresponding SAR to the extent of the
number of shares with respect to which the Option is exercised. 
  

	6.07.	Payment 

  
 Subject to rules established by the Committee and unless otherwise provided in an Agreement, payment of all or part of the Option price may be made in
cash, certified check, by tendering shares of Common Stock (which, if acquired from the Company, have been held by the Participant for at least six months) or by a broker-assisted cashless exercise. If shares of Common Stock are used to pay all or
part of the Option price, the sum of the cash and cash equivalent and the Fair Market Value (determined as of the day preceding the date of exercise) of the shares surrendered must not be less than the Option price of the shares for which the Option
is being exercised. 
  

	6.08.	Employee Status 

  
 For purposes of determining the applicability of Section 422 of the Code (relating to incentive stock options), or in the event that the terms of any
Option provide that it may be exercised only during employment or continued service or within a specified period of time after termination of employment or continued service, the Committee may decide to what extent 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous
employment or service. 
  

	6.09.	Change in Control 

  
 Notwithstanding any provision of any Agreement, in the event of or in anticipation of a Change in Control, the Committee in its discretion (i) may declare
that some or all outstanding Options previously granted under the Plan, whether or not then exercisable, shall terminate as of a date before or on the Control Change Date without any payment to the holder of the Option, provided the Committee gives
prior written notice to the Participants of such termination and gives such Participants the right to exercise their outstanding Options before such date to the extent then exercisable or (ii) may terminate before or on the Control Change Date some
or all outstanding Options previously granted under the Plan, whether or not then exercisable, in consideration of payment to the holder of the Option, with respect to each share of Common Stock for which the Option is then exercisable, of the
excess, if any, of the Fair Market Value on such date of the Common Stock subject to the exercisable portion of the Option over the Option price. The payment described in (ii) above may be made in any manner the Committee determines, including in
cash, stock or other property. The Committee may take the actions described in (i) or (ii) above with respect to Options that are not then exercisable whether or not the Participant will receive any payment therefor. The Committee in its discretion
may take the actions described in (i) or (ii) above contingent on consummation of the Change in Control and with respect to some or all outstanding Options, whether or not then exercisable, or on an Option-by-Option basis, which actions need not be
uniform with respect to all outstanding Options. However, the Options shall not be terminated to the extent that written provision is made for their continuance, assumption or substitution by the Company or a successor employer or its parent or
subsidiary in connection with the Change in Control. The Committee may provide in an applicable Agreement that a Participant’s outstanding Options shall be fully exercisable on and after a Control Change Date or immediately before the date the
Options will be terminated in connection with the Change in Control, as described above.  
  

	6.10.	Stockholder Rights 

  
 No Participant shall have any rights as a stockholder with respect to shares subject to his Option until the date of exercise of such Option. 

 

	6.11.	Disposition of Shares 

  
 A Participant shall notify the Company of any sale or other disposition of shares of Common Stock acquired pursuant to an Option that was an incentive
stock option if such sale or disposition occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of shares of Common Stock to the Participant. Such notice shall be in writing and directed to the Secretary of the
Company. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	6.12.	No Liability of Company 

  
 The Company shall not be liable to any Participant or any other person if the Internal Revenue Service or any court or other authority having jurisdiction
over such matter determines for any reason that an Option intended to be an incentive stock option and granted hereunder does not qualify as an incentive stock option. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE VII 
 SARS 
  

	7.01.	Grant 

  
 In accordance with the provisions of Article IV, the Committee will designate each individual or entity to whom SARs are to be granted and will
specify the number of shares of Common Stock covered by such grant. For purposes of the foregoing limit, an Option and Corresponding SAR shall be treated as a single Award. In addition, no Participant may be granted Corresponding SARs (under this
Plan and all other incentive stock option plans of the Company and its Affiliates) that are related to incentive stock options which are first exercisable in any calendar year for shares of Common Stock having an aggregate Fair Market Value
(determined as of the date the related Option is granted) that exceeds $100,000. 
  

	7.02.	Maximum SAR Period 

  
 The term of each SAR shall be determined by the Committee on the date of grant, except that no SAR shall have a term of more than ten years from the date
such SAR was granted (five years for a Corresponding SAR that is related to an incentive stock option and that is granted to a Ten Percent Shareholder). 
  

	7.03.	Nontransferability 

  
 Except as provided in Section 7.04, each SAR granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution.
In the event of any such transfer, a Corresponding SAR and the related Option must be transferred to the same person or persons or entity or entities. Except as provided in Section 7.04, during the lifetime of the Participant to whom the SAR is
granted, the SAR may be exercised only by the Participant. No right or interest of a Participant in any SAR shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
  

	7.04.	Transferable SARs 

  
 Section 7.03 to the contrary notwithstanding, if the Agreement provides, an SAR, other than a Corresponding SAR that is related to an incentive stock
option, may be transferred by a Participant to the Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and
conditions as are appropriate for such transferees to be included in the class of transferees who may rely on a Form S-8 Registration Statement under the Securities Act of 1933 to sell shares received pursuant to Awards granted under the Plan. The
holder of an SAR transferred pursuant to this Section shall be bound by the same terms and conditions that governed the SAR during the period that it was held by the Participant; provided, however, that such transferee may not transfer the SAR
except by will or the laws of descent and distribution. In the event of any transfer of a Corresponding SAR (by the Participant or his transferee), the 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
Corresponding SAR and the related Option must be transferred to the same person or person or entity or entities. 
  

	7.05.	Exercise 

  
 Subject to the provisions of this Plan and the applicable Agreement, an SAR may be exercised in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Committee shall determine; provided, however, that an SAR may be exercised only to the extent that the related Option is exercisable and only when the Fair Market Value of the Common Stock that
is subject to the exercise exceeds the Initial Value of the SAR. An SAR granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the SAR could be exercised. A partial exercise of an SAR
shall not affect the right to exercise the SAR from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the SAR. The exercise of a Corresponding SAR shall result in the termination
of the related Option to the extent of the number of shares with respect to which the SAR is exercised. 
  

	7.06.	Change in Control 

  
 Notwithstanding any provision of any Agreement, in the event of or in anticipation of a Change in Control, the Committee in its discretion (i) may declare
that some or all outstanding SARs previously granted under the Plan, whether or not then exercisable, shall terminate as of a date before or on the Control Change Date without any payment to the holder of the SAR, provided the Committee gives prior
written notice to the Participants of such termination and gives such Participants the right to exercise their outstanding SARs at least 15 days before such termination date to the extent then exercisable or (ii) may terminate before or on the
Control Change Date some or all outstanding SARs previously granted under the Plan, whether or not then exercisable, in consideration of payment to the holder of the SAR, with respect to each share of Common Stock for which the SAR is then
exercisable, of the excess, if any, of the Fair Market Value of such Common Stock on such date over the Initial Value of the SAR. The payment described in (ii) above may be made in any manner the Committee determines, including in cash, stock or
other property. The Committee may take the actions described in (i) or (ii) above with respect to SARs that are not then exercisable whether or not the Participant will receive any payment therefor. The Committee in its discretion may take the
actions described in (i) or (ii) above contingent on consummation of the Change in Control and with respect to some or all outstanding SARs, whether or not then exercisable, or on an SAR-by-SAR basis, which actions need not be uniform with respect
to all outstanding SARs. Notwithstanding the foregoing, no payment shall be made with respect to a Corresponding SAR to the extent the Committee made a payment with respect to the Option that relates to the Corresponding SAR. No SARs shall be
terminated to the extent that written provision is made for their assumption, continuance or substitution by the Company or a successor employer or its parent or subsidiary in connection with the Change in Control. The Committee may provide in an
applicable Agreement that a Participant’s outstanding SARs shall be fully exercisable on and after a Control Change Date or immediately before the date the SARs will be terminated in connection with the Change in Control, as described above.

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	7.07.	Employee Status 

  
 If the terms of any SAR provide that it may be exercised only during employment or continued service or within a specified period of time after
termination of employment or continued service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability or other reasons shall not be deemed interruptions of continuous employment
or service. 
  

	7.08.	Settlement 

  
 At the Committee’s discretion, the amount payable as a result of the exercise of an SAR may be settled in cash, shares of Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable upon the exercise of an SAR but a cash payment will be made in lieu thereof. 
  

	7.09.	Stockholder Rights 

  
 No Participant shall, as a result of receiving an SAR, have any rights as a stockholder of the Company or any Affiliate until the date that the SAR is
exercised and then only to the extent that the SAR is settled by the issuance of Common Stock. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE VIII 
 STOCK AWARDS 
  

	8.01.	Award 

  
 In accordance with the provisions of Article IV, the Committee will designate each individual or entity to whom a Stock Award is to be granted and
will specify the number of shares of Common Stock covered by such grant. 
  

	8.02.	Vesting 

  
 The Committee, on the date of grant, may prescribe that a Participant’s rights in the Stock Award shall be forfeitable and nontransferable for a
period of time or subject to such conditions as may be set forth in the Agreement. By way of example and not of limitation, the Committee may prescribe that a Participant’s rights in a Stock Award shall be forfeitable and nontransferable
subject to (a) the attainment of objectives stated with reference to the Company’s, an Affiliate’s or a business unit’s attainment of objectives stated with respect to performance criteria listed in Section 8.03, (b) the
Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, disability or retirement or (d) satisfaction of a combination of any of the foregoing factors. To the
extent the Participant’s rights in a Stock Award are forfeitable and nontransferable for a period of time, the Committee on the date of grant shall determine the maximum period over which the rights may become nonforfeitable and transferable,
except that such period shall not exceed ten years. 
  

	8.03.	Performance Objectives 

  
 In accordance with Section 8.02, the Committee may prescribe that Stock Awards will become nonforfeitable and transferable based on objectives stated with
respect to the Company’s, an Affiliate’s or a business unit’s (a) total stockholder return, (b) total stockholder return as compared to total return (on a comparable basis) of a publicly available index, (c) net income, (d) pretax
earnings, (e) funds from operations, (f) earnings before interest expense, taxes, depreciation and amortization, (g) operating margin, (h) earnings per share, (i) return on equity, capital, assets or investment, (j) operating earnings, (k) working
capital, (l) ratio of debt to stockholders equity and (m) revenue. If the Committee, on the date of grant, prescribes that a Stock Award shall become nonforfeitable and transferable only upon the attainment of any of the above performance
objectives, the shares of Common Stock subject to such Stock Award shall become nonforfeitable and transferable only to the extent that the Committee certifies in writing that such objectives have been achieved. 
  

	8.04.	Employee Status 

  
 In the event that the terms of any Stock Award provide that shares shall become nonforfeitable and transferable thereunder only after completion of a
specified period of employment or continuous service, the Committee may decide in each case to what extent leaves 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment
or service. 
  

	8.05.	Change in Control 

  
 Notwithstanding any provision of any Agreement, in the event of or in anticipation of a Change in Control, the Committee in its discretion may terminate
before or on the Control Change Date outstanding Stock Awards previously granted under the Plan that are not then nonforfeitable and transferable without any payment to the holder of the Stock Awards. The Committee in its discretion may take the
action described in this Section 8.05 contingent on the consummation of the Change in Control and with respect to some or all outstanding Stock Awards or on a Stock Award-by-Stock Award basis, which actions need not be uniform with respect to
all outstanding Stock Awards. The preceding sentences to the contrary notwithstanding, the Stock Awards shall not be terminated to the extent that written provision is made for their assumption, continuance or substitution by the Company or a
successor employer or its parent or subsidiary in connection with the Change in Control. The Committee may provide in an applicable Agreement that a Participant’s outstanding Stock Awards shall be nonforfeitable and transferable on and after a
Control Change Date or immediately before the date the Stock Awards would otherwise be terminated in connection with the Change in Control, as described above.  
  

	8.06.	Stockholder Rights 

  
 Prior to their forfeiture (in accordance with the applicable Agreement and while the shares of Common Stock granted pursuant to the Stock Award may be
forfeited and are nontransferable), a Participant will have all rights of a stockholder with respect to a Stock Award, including the right to receive dividends and vote the shares; provided, however, that during such period (i) a Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares granted pursuant to a Stock Award, (ii) the Company shall retain custody of the certificates evidencing shares granted pursuant to a Stock Award, and (iii) the Participant
will deliver to the Company a stock power, endorsed in blank, with respect to each Stock Award. The limitations set forth in the preceding sentence shall not apply after the shares granted under the Stock Award are transferable and are no longer
forfeitable. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE IX 
 PERFORMANCE SHARE AWARDS 
  

	9.01.	Grant 

  
 In accordance with the provisions of Article IV, the Committee will designate each individual or entity to whom a grant of Performance Shares is to
be made and will specify the number of shares covered by such grant. 
  

	9.02.	Earning the Award 

  
 The Committee, on the date of grant of the Performance Shares, shall prescribe that the Performance Shares will be earned and become payable subject to
such conditions as are set forth in the Agreement. By way of example and not of limitation, the Committee may prescribe that the Performance Shares will be earned and become payable upon (a) the satisfaction of performance objectives as described
below, (b) the Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, disability or retirement or (d) satisfaction of a combination of any of the foregoing
factors. The performance objectives may be stated with respect to the Company’s, an Affiliate’s or a business unit’s (a) total stockholder return, (b) total Stockholder return as compared to total return (on a comparable basis) of a
publicly available index, (c) net income, (d) pretax earnings, (e) funds from operations, (f) earnings before interest expense, taxes, depreciation and amortization, (g) operating margin, (h) earnings per share, (i) return on equity, capital, assets
or investment, (j) operating earnings, (k) working capital, (l) ratio of debt to stockholders equity and (m) revenue. If the Committee, on the date of grant, prescribes that Performance Shares will be earned and payable only upon the attainment of
such performance objectives, no Performance Shares will be considered earned and no payments will be made with respect to such Performance Shares unless, and then only to the extent that, the Committee certifies in writing that such objectives have
been achieved.  
  

	9.03.	Maximum Performance Share Award Period 

  
 The Committee, on the date of grant, shall determine the maximum period over which Performance Share Awards may be earned, except that such period shall
not exceed ten years. 
  

	9.04.	Payment 

  
 In the discretion of the Committee, the amount payable when an award of Performance Shares is earned may be settled in cash, by the issuance of shares of
Common Stock, or a combination thereof. A fractional share of Common Stock shall not be deliverable when an award of Performance Shares is earned, but a cash payment will be made in lieu thereof. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	9.05.	Stockholder Rights 

  
 No Participant shall, as a result of receiving a grant of Performance Shares, have any rights as a stockholder until and then only to the extent that the
Performance Shares are earned and settled in shares of Common Stock.  
  

	9.06.	Nontransferability 

  
 Except as provided in Section 9.07 Performance Shares granted under this Plan shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in any Performance Shares shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
  

	9.07.	Transferable Performance Shares 

  
 Section 9.06 to the contrary notwithstanding, if the Agreement provides, an award of Performance Shares may be transferred by a Participant to the
Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, on such terms and conditions as are appropriate for such transferees
to be included in the class of transferees who may rely on a Form S-8 Registration Statement under the Securities Act of 1933 to sell shares received pursuant to Awards granted under the Plan. The holder of Performance Shares transferred pursuant to
this Section shall be bound by the same terms and conditions that governed the Performance Shares during the period that they were held by the Participant; provided, however that such transferee may not transfer Performance Shares except by will or
the laws of descent and distribution. 
  

	9.08.	Employee Status 

  
 In the event that the terms of any Performance Share award provide that no payment will be made unless the Participant completes a stated period of
employment or continued service, the Committee may decide to what extent leaves of absence for government or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment or service.

  

	9.09.	Change in Control 

  
 Notwithstanding any provision of any Agreement, in the event of or in anticipation of a Change in Control, the Committee in its discretion may terminate
before or on the Control Change Date some or all outstanding Performance Shares previously granted under the Plan that are not then earned and payable without any payment to the holder of the Performance Shares. The Committee in its discretion may
take the action described in this Section 9.09 contingent on consummation of the Change in Control and with respect to some or all outstanding Performance Shares or on a Performance Share-by-Performance Share basis, which actions need not be
uniform with respect to all outstanding Performance Shares. The Performance Shares shall not be terminated to the extent that written provision is made for their assumption, continuance or substitution by the Company or a successor employer or its
parent or subsidiary in connection with the Change in Control. The Committee may provide in an applicable Agreement that a Participant’s outstanding Performance Shares shall be deemed earned (and any shares of Common Stock to be paid in
settlement of such Performance Shares shall be nonforfeitable and transferable) as of a Control Change Date or immediately before the date the Performance Shares would otherwise be terminated in connection with the Change in Control, as described
above. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE X 
 INCENTIVE AWARDS 
  

	10.01.	Grant 

  
 The Committee shall designate Participants to whom Incentive Awards are to be granted. All Incentive Awards shall be finally determined exclusively by the
Committee under the procedures established by the Committee; provided, however, that no Participant may receive an Incentive Award payment in any calendar year that exceeds $2,000,000. 
  

	10.02.	Terms and Conditions 

  
 The Committee, on the date of grant of an Incentive Award, shall specify in the applicable Agreement the terms and conditions which govern the grant. By
way of example and not of limitation, the Committee may prescribe that the Incentive Award shall be earned and payable upon (a) the satisfaction of performance objectives as described below, (b) the Participant’s completion of a specified
period of employment or service with the Company or an Affiliate, (c) the Participant’s death, disability or retirement or (d) satisfaction of a combination of any of the foregoing factors. The performance objectives may be stated with respect
to the Company’s, an Affiliate’s or a business unit’s (a) total stockholder return, (b) total Stockholder return as compared to total return (on a comparable basis) of a publicly available index, (c) net income, (d) pretax earnings,
(e) funds from operations, (f) earnings before interest expense, taxes, depreciation and amortization, (g) operating margin, (h) earnings per share, (i) return on equity, capital, assets or investment, (j) operating earnings, (k) working capital,
(l) ratio of debt to stockholders equity and (m) revenue. If the Committee, on the date of grant, prescribes that the Incentive Awards will be earned and payable only upon the attainment of such performance objectives, no Incentive Awards will be
considered earned and no payments will be made with respect to such Incentive Awards unless, and then only to the extent that, the Committee certifies in writing that such objectives have been achieved.  
  

	10.03.	Maximum Incentive Award Period 

  
 The Committee, at the time an Incentive Award is made, shall determine the maximum period over which the Incentive Award may be earned, except that such
period shall not exceed ten years. 
  

	10.04.	Nontransferability 

  
 Except as provided in Section 10.05, Incentive Awards granted under this Plan shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in an Incentive Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	10.05.	Transferable Incentive Awards 

  
 Section 10.04 to the contrary notwithstanding, if provided in an Agreement, an Incentive Award may be transferred by a Participant to the
Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such family members or to a partnership in which such family members are the only partners, on such terms and conditions as are appropriate for such
transferees to be included in the class of transferees who may rely on a Form S-8 Registration Statement under the Securities Act of 1933 to sell shares received pursuant to Awards granted under the Plan. The holder of an Incentive Award transferred
pursuant to this Section shall be bound by the same terms and conditions that governed the Incentive Award during the period that it was held by the Participant; provided, however, that such transferee may not transfer the Incentive Award except by
will or the laws of descent and distribution. 
  

	10.06.	Employee Status 

  
 If the terms of an Incentive Award provide that a payment will be made thereunder only if the Participant completes a stated period of employment or
continuous service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability or other reasons shall not be deemed interruptions of continuous employment or service. 
  

	10.07.	Change in Control 

  
 Notwithstanding any provision of any Agreement, in the event of or in anticipation of a Change in Control, the Committee in its discretion may terminate
before or on the Control Change Date some or all outstanding Incentive Awards previously granted under the Plan that are not then earned and payable without any payment to the holder of the Incentive Award. The Committee in its discretion may take
the action described in this Section contingent on consummation of the Change in Control and with respect to some or all outstanding Incentive Awards or on an Incentive Award-by-Incentive Award basis, which actions need not be uniform with respect
to all outstanding Incentive Awards. The Incentive Awards shall not be terminated to the extent that written provision is made for their assumption, continuance or substitution by the Company or a successor employer or its parent or subsidiary in
connection with the Change in Control. The Committee may provide in an applicable Agreement that a Participant’s outstanding Incentive Awards shall be deemed earned (and any shares of Common Stock to be paid in settlement of such Incentive
Awards shall be nonforfeitable and transferable) as of a Control Change Date or immediately before the date the Incentive Awards would otherwise be terminated in connection with the Change in Control, as described above.  
  

	10.08.	Stockholder Rights 

  
 No Participant shall, as a result of receiving an Incentive Award, have any rights as a stockholder of the Company or any Affiliate on account of such
Incentive Award, unless and then only to the extent that the Incentive Award is earned and settled in shares of Common Stock. 
  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XI 
 ADJUSTMENT UPON CHANGE IN COMMON STOCK 
  
 The maximum number of shares that may be issued pursuant to Awards, the terms of outstanding Awards, and the per individual limitations on the number of shares of Common Stock that may be issued pursuant to for which
Awards shall be adjusted as the Board shall determine to be equitably required in the event that (i) the Company (a) effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or (b) engages in a transaction
Section 424 of the Code describes or (ii) there occurs any other transaction or event which, in the judgment of the Board necessitates such action. In addition, the Committee may make such other adjustments to the terms of any Awards to the extent
equitable and necessary to prevent an enlargement or dilution of the Participant’s rights thereunder as a result of any such event or similar transaction. Any determination made under this Article XI by the Board shall be final and
conclusive. 
  
 The issuance by the Company of stock of any class,
or securities convertible into stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of stock or obligations of the Company
convertible into such stock or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the maximum number of shares that may be issued pursuant to Awards may be granted, the per individual limitations
on the number of shares that may be issued pursuant to Awards, or the terms of outstanding Awards. 
  
 The Committee may grant Awards in substitution for performance shares, incentive awards, stock awards, stock options, stock appreciation rights, or
similar awards held by (i) an individual who becomes an employee of the Company or an Affiliate, or a non-employee member of the Board, in connection with a transaction described in the first paragraph of this Article XI or (ii) a trust,
partnership or limited liability company, all of whose beneficial ownership interests are held by individuals described in (i). Notwithstanding any provision of the Plan (other than the limitation of Section 5.02), the terms of such
substituted Awards shall be as the Committee, in its discretion, determines is appropriate. 
  

 -25- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XII 
 COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES 
  

	12.01. 	Compliance. 

  
 No Option or SAR shall be exercisable, no shares of Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no
payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Company is a party, and the rules
of all domestic stock exchanges on which the Company’s shares may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. Any stock certificate evidencing shares of Common Stock issued pursuant to
an Award may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Option or SAR shall be exercisable, no Stock Award or Performance Share shall be granted, no
shares of Common Stock shall be issued, no certificate for shares of Common Stock shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters. 
  
 No
Option or SAR shall be exercisable, no shares of Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan, that would result in a Participant or other person owning,
directly or indirectly, shares of Common Stock, or any other class of capital stock which would be inconsistent with (i) the Real Estate Investment Trust ownership rules contained in the Code and regulations or (ii) the restrictions contained in the
Company’s Articles of Incorporation that are in effect to preserve the Company’s status as a Real Estate Investment Trust. Among other things, with enumerated exceptions, the Company’s Articles of Incorporation provide that (a)
generally no person may own, or be deemed to own by virtue of the attribution provisions of the Code, either (i) more than 4.99% in value of the Company’s capital stock or (ii) more than 4.99% in value or in number of shares, whichever is more
restrictive, of the outstanding shares of Common Stock and (b) no person may beneficially or constructively own or transfer shares of the Company’s capital stock if that ownership or transfer would result in the Company being “closely
held” under Section 856(h) of the Code. 
  

	12.02. 	Postponement of Exercise or Payment. 

  
 The Committee may postpone any grant, exercise, vesting or payment of an Award for such time as the Committee in its sole discretion may deem necessary in
order to permit the Company (i) to effect, amend or maintain any necessary registration of the Plan or the shares of Common Stock issuable pursuant to the Award under the securities laws; (ii) to take any action in order to (A) list such shares of
Common Stock or other shares of stock of the Company on a stock exchange if shares of Common Stock or other shares of stock of the Company are not then listed on such exchange or (B) comply with restrictions or regulations incident to the
maintenance of a public market for its shares of Common Stock or other shares of stock of the Company, including any rules or regulations of any stock exchange on which the shares of 

  

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	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
Common Stock or other shares of stock of the Company are listed; (iii) to determine that such shares of Common Stock in the Plan are exempt from such
registration or that no action of the kind referred to in (ii)(B) above needs to be taken; (iv) to comply with any other applicable law, including without limitation, securities laws; (v) during any such time the Company or any Affiliate is
prohibited from doing any of such acts under applicable law, including without limitation, during the course of an investigation of the Company or any Affiliate, or under any contract, loan agreement or covenant or other agreement to which the
Company or any Affiliate is a party; (vi) to otherwise comply with any prohibition on such acts or payments during any applicable blackout period; (vii) to maintain its Real Estate Investment Trust status under the Code or (viii) to enforce the
shareholder ownership restrictions under the Company’s Articles of Incorporation; and the Company shall not be obligated by virtue of any terms and conditions of any Agreement or any provision of the Plan to recognize the grant, exercise,
vesting or payment of an Award or to grant, sell or issue shares of Common Stock or make any such payments in violation of the securities laws or the laws of any government having jurisdiction thereof or any of the provisions hereof. Any such
postponement shall not extend the term of the Award and neither the Company nor its directors and officers nor the Committee shall have any obligation or liability to any Participant or to any other person with respect to shares of Common Stock or
payments as to which the Award shall lapse because of such postponement. 
  

	12.03. 	Forfeiture of Payment. 

  
 A Participant shall be required to forfeit any and all rights under Awards or to reimburse the Company for any payment under any Award (with interest as
necessary to avoid imputed interest or original issue discount under the Code or as otherwise required by applicable law) to the extent applicable law requires such forfeiture or reimbursement. 
  

 -27- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XIII 
 GENERAL PROVISIONS 
  

	13.01. 	Effect on Employment and Service 

  
 Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof), shall confer upon any
individual or entity any right to continue in the employ or service of the Company or an Affiliate or in any way affect any right and power of the Company or an Affiliate to terminate the employment or service of any individual or entity at any time
with or without assigning a reason therefor. 
  

	13.02. 	Unfunded Plan 

  
 This Plan, insofar as it provides for Awards, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be
represented by Awards under this Plan. Any liability of the Company to any person with respect to any Award under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. 
  

	13.03. 	Rules of Construction 

  
 Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or
other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 
  

	13.04. 	Tax Withholding and Reporting. 

  
 Unless an Agreement provides otherwise, each Participant shall be responsible for satisfying in cash or cash equivalent acceptable to the Committee any
income and employment (including without limitation Social Security and Medicare) tax withholding obligations attributable to participation in the Plan and the grant, exercise, vesting or payment of Awards granted thereunder. In accordance with
procedures that the Committee establishes, the Committee, to the extent applicable law permits, may allow a Participant to pay such amounts (i) in cash, (ii) by certified check, (iii) by tendering shares of Common Stock (which, if acquired from the
Company, have been held by the Participant for at least six months) and which do not exceed the Company’s minimum statutory withholding obligation, (iv) by a broker-assisted cashless exercise or (v) by any combination of the aforementioned
methods of payment. The Company shall comply with all such reporting and other requirements relating to the administration of this Plan and the grant, exercise, vesting or payment of any Award hereunder as applicable law requires. 
  

 -28- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

	13.05. 	Reservation of Shares. 

  
 The Company, during the term of this Plan, shall at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan. Additionally, the Company, during the term of this Plan, shall use its best efforts to seek to obtain from appropriate regulatory agencies any requisite authorizations needed in order to issue and to sell such
number of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan. However, the inability of the Company to obtain from any such regulatory agency the requisite authorizations the Company’s counsel deems to be
necessary for the lawful issuance and sale of any shares of Common Stock hereunder, or the inability of the Company to confirm to its satisfaction that any issuance and sale of any shares of Common Stock hereunder will meet applicable legal
requirements, shall relieve the Company of any liability in respect to the failure to issue or to sell such shares of Common Stock as to which such requisite authority shall not have been obtained. 
  

	13.06. 	Governing Law. 

  
 This Plan and all Awards granted hereunder shall be governed by the laws of the State of Maryland, except to the extent federal law applies. 

 

	13.07. 	Other Actions. 

  
 Nothing in the Plan shall be construed to limit the authority of the Company to exercise its corporate rights and powers, including, by way of
illustration and not by way of limitation, the right to grant options, stock appreciation rights, stock awards, incentive awards or performance shares for proper corporate purposes otherwise than under the Plan to any employee or to any other
person, firm, corporation, association or other entity, or to grant options, stock appreciation rights, stock awards, incentive awards or performance shares to, or assume such awards of any person in connection with, the acquisition, purchase,
lease, merger, consolidation, reorganization or otherwise, of all or any part of the business and assets of any person, firm, corporation, association or other entity. 
  

	13.08. 	Other Conditions. 

  
 The Committee, in its discretion, may, as a condition to the grant, exercise, payment or settlement of an Award, require the Participant on or before the
date of grant, exercise, payment or settlement of the Award to enter into (i) a covenant not to compete (including a confidentiality, non-solicitation, non-competition or other similar agreement) with the Company or any Affiliate, which may become
effective on the date of termination of employment or service of the Participant with the Company or any Affiliate or any other date the Committee may specify and shall contain such terms and conditions as the Committee shall otherwise specify, (ii)
an agreement to cancel any other employment agreement, service agreement, fringe benefit or compensation arrangement in effect between the Company or any Subsidiary and such Participant and/or (iii) a shareholders’ agreement with respect to
shares of Common Stock to be issued pursuant to the Award. If the Participant shall fail to enter into any such agreement at the 

  

 -29- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 
Committee’s request, then no Award shall be granted, exercised, paid or settled and the number of shares of Common Stock that would have been subject to
such Award, if any, shall be added to the remaining shares of Common Stock available under the Plan. 
  

	13.09. 	Forfeiture Provisions. 

  
 Notwithstanding any other provisions of the Plan or any Agreement, all rights to any Award that a Participant has will be immediately discontinued and
forfeited, and the Company shall not have any further obligation hereunder to the Participant with respect to any Award and the Award will not be exercisable (whether or not previously exercisable) or become vested or payable on and after the time
the Participant is discharged from employment or service with the Company or any Affiliate for Cause. 
  

 -30- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XIV 
 AMENDMENT 
  
 The
Board may amend or terminate this Plan at any time; provided, however, that no amendment may adversely impair the rights of a Participant with respect to outstanding Awards without the Participant’s consent. In addition, an amendment will be
contingent on approval of the Company’s stockholders, to the extent required by law or by the rules of any stock exchange on which the Company’s securities are traded or if the amendment would (i) increase the benefits accruing to
Participants under the Plan, including without limitation, any amendment to the Plan or any Agreement to permit a repricing or decrease in the exercise price of any outstanding Options, (ii) increase the aggregate number of shares of Common Stock
that may be issued under the Plan, (iii) modify the requirements as to eligibility for participation in the Plan or, (iv) after the transition period prescribed by the regulations under Code Section 162(m), change the performance objectives set
forth in Sections 8.03, 9.02 or 10.02. 
  

 -31- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XV 
 DURATION OF PLAN 
  
 No Award may be granted under this Plan after 10 years following the effective date of the Plan as set forth in Article XVI. Awards granted before that date shall remain valid in accordance with their terms. 
  

 -32- 

			
	PEOPLE’S CHOICE FINANCIAL CORPORATION	  	2004 STOCK INCENTIVE PLAN

  

 ARTICLE XVI 
 EFFECTIVE DATE OF PLAN 
  
 Awards may be granted under this Plan after its effective date; provided that, this Plan shall not be effective unless approved by unanimous consent of the Company’s stockholders or by a majority of the votes cast by the Company’s
stockholders, voting either in person or by proxy, at a duly held stockholders’ meeting at which a stockholder quorum is present, within one year after the Plan is adopted by the Board. The effective date of the Plan shall be the later of (i)
the adoption of the Plan by the Board or (ii) the date the Company’s Articles of Incorporation are amended to authorize 450,000,000 shares of Common Stock. 
  

 -33-Employment Agreement Neil B. Kornswiet

 Exhibit 10.3 
  
 EMPLOYMENT AGREEMENT 
  

AGREEMENT made this 21st day of December, 2004, between People’s Choice Financial Corporation, a Maryland corporation (the “Company”),
and Neil B. Kornswiet (the “Executive”).  
  
 The Executive is presently employed as the Chairman of the Board, President and Chief Executive Officer of the Company. The Board of Directors of the Company (the “Board”) recognizes that the Executive’s contribution to the
growth and success of the Company has been substantial. The Board desires to provide for the continued employment of the Executive and to make certain changes in the Executive’s employment arrangements with the Company which the Board has
determined will reinforce and encourage the continued attention and dedication to the Company of the Executive as a member of the Company’s management, in the best interest of the Company and its shareholders. The Executive is willing to commit
himself, to continue to serve the Company, on the terms and conditions herein provided. The Executive’s continued employment with the Company is contingent on his execution of this Employment Agreement. 
  
 In order to effect the foregoing, the Company and the Executive wish to enter
into an employment agreement on the terms and conditions set forth below. Accordingly, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows: 
  
 1. Employment. The Company hereby
agrees to continue to employ the Executive, and the Executive hereby agrees to continue to serve the Company, on the terms and conditions set forth herein. 
  
 2. Term. The employment of the Executive by the Company as provided in Section 1 will, commence on the date of the completion of the Company’s private
placement of shares of its common stock pursuant to Rule 144A of the Securities and Exchange Commission and end on December 31, 2007, unless further extended or sooner terminated as hereinafter provided. Commencing on January 1, 2006, and on each
January 1 thereafter (each, an “Anniversary Date”), the term of the Executive’s employment shall, automatically be extended for one (1) additional year, unless the Company or the Executive, provides 90 days’ written notice prior
to any such Anniversary Date that it or he does not wish the Term of this Agreement’ to continue to be automatically extended as described above. In the event either party gives such notice, no additional automatic extensions shall take effect. For purposes of this Agreement, “Term” shall mean the actual duration of Executive’s
employment hereunder, taking into account any extensions or notices not to extend pursuant to this Section 2 or termination of employment pursuant to Section 7. 
  

3. Position and Duties. The Executive shall serve as the Chairman of the Board, President and Chief Executive Officer, of the Company and shall have such
responsibilities, duties and authority as he may have as of the date hereof and as may from time to time be assigned to the Executive by the Board that are consistent with such responsibilities, duties and authority. The 

 
Executive shall devote substantially all his working time and efforts to the business and affairs of the Company; provided, that nothing in this Agreement
shall preclude Executive from serving as a director or trustee in any other firm or from pursuing personal real estate investments and other personal investments, as long as such activities do not interfere with Executive’s performance of his
duties hereunder or violate Section 9 or 10 of this Agreement. 
  
 4. Service
as Chairman of the Board. During the Term, the Executive agrees to continue to serve, and the Company agrees to nominate the Executive annually for reelection to serve, without additional compensation, as a director of the Company and as
Chairman of the Board. The Executive also agrees to serve as the director of any subsidiary of the Company upon the request of the Board. The Executive shall be indemnified for serving in such capacities on a basis no less favorable than is
currently provided by the Company to any other director of the Company or subsidiary of the Company. 
  
 5. Place of Performance. In connection with the Executive’s employment by the Company, the Executive shall be based at the principal executive offices of the Company in Irvine, California, except for
required travel on the Company’s business to an extent substantially consistent with present business travel obligations. 
  
 6. Compensation and Related Matters. 
  
 (a) Base Salary. The Company shall pay the Executive a base salary annually (the “Base Salary”), which shall be payable in periodic
installments according to the Company’s normal payroll practices. The initial Base Salary shall be $500,000. During the Term, the Board or the Compensation Committee of the Board (the “Compensation Committee”) shall review the Base
Salary at least once a year to determine whether the Base Salary should be increased effective the following January 1; provided, however, that on January 1, 2006 and on each January 1 thereafter, the Base Salary shall be increased by at
least 10 percent. The Base Salary, including any increases, shall not be decreased during the Term. For purposes of this Agreement, the term “Base Salary” shall mean the amount established and adjusted from time to time pursuant to this
Section 6(a). 
  
 (b) Annual Cash Incentive Awards. The
Executive shall be eligible to participate in the Company’s annual cash incentive bonus plan adopted by the Compensation Committee for each fiscal year during the Term of this Agreement (“Bonus Plan”), subject to the terms and
conditions of the Bonus Plan. If the Executive or the Company, as the case may be, satisfies the performance criteria contained in such Bonus Plan for a fiscal year, he shall receive an annual cash incentive bonus (the “Incentive Bonus”)
in an amount determined by the Compensation Committee, with a target Incentive Bonus of two hundred percent (200%) of Executive’s Base Salary for such fiscal year and subject to ratification by the Board, if required. If the Executive or the
Company, as the case may be, fails to satisfy the performance criteria contained in such Bonus Plan for a fiscal year, the Compensation Committee may determine whether any Incentive Bonus shall be payable to Executive for that year, subject to
ratification by the Board, if required. Beginning January 1, 2005, the Bonus Plan shall contain both individual and group goals established by the Compensation Committee. The annual Incentive Bonus shall be paid to the Executive no later than thirty
(30) days after the date the Compensation Committee determines 

  

 2 

 
whether the criteria in the Bonus Plan for such fiscal year were satisfied. For purposes of this Agreement, the term “Incentive Bonus” shall mean
the amount established pursuant to this Section 6(b). 
  
 (c)
Stock Based Awards. The Company has established the 2004 Equity Incentive Plan (“Equity Incentive Plan”). Subject to the terms and conditions of the Equity Incentive Plan, the Executive shall be eligible to participate in the Equity
Incentive Plan, and shall be eligible to receive annual stock option and/or restricted stock awards under the Equity Incentive Plan. The Compensation Committee shall make and approve any such awards to the Executive pursuant to the Equity Incentive
Plan. 
  
 (i) 2004 Equity Incentive Plan
Option Grants. Option awards under the Equity Incentive Plan will have an exercise price per share equal to the closing price of the Company’s common stock on the trading day immediately preceding the date of grant, will have a term of ten
(10) years and will vest and become exercisable with respect to 1/3 of the underlying shares of Company common stock on the first, second and third anniversaries, respectively, of the date of grant; provided, however, that the Executive will
be 100% vested in all outstanding option awards, including the unvested portion of such awards, upon (i) a Change in Control (as defined herein), (ii) a termination by the Company without Cause (as defined herein), or (iii) a termination by the
Executive for Good Reason (as defined herein), and that the Executive will forfeit all unvested options if he is terminated for Cause, Disability (as defined below) or death, or if he terminates his employment hereunder for other than Good Reason.

  
 (ii) 2004 Equity Incentive Plan Restricted
Stock Awards. The Equity Incentive Plan provides for the issuance of shares of Company common stock as restricted common stock (“Restricted Stock Grants”) to the extent that such shares of common stock are available thereunder.
Restricted Stock Grants awarded to the Executive shall be subject to forfeiture restrictions that will terminate with respect to 1/3 of the awarded shares on the first, second and third anniversaries of the date of the issuance; provided,
further, that the Executive will be 100% vested and all restrictions on each outstanding Restricted Stock Grant will lapse upon (i) a Change in Control (as defined herein), (ii) a termination by the Company without Cause (as defined herein), or
(iii) a termination by the Executive for Good Reason (as defined herein), and that the Executive will forfeit all shares with respect to which the forfeiture restrictions have not terminated if he is terminated for Cause, Disability (as defined
below) or death, or if he terminates his employment hereunder for other than Good Reason. The common stock issued as Restricted Stock Grants will have voting and dividend rights. 
  
 For purposes of this Agreement: 
  
 “Acquiring Person” means that a Person, considered alone or as part of a “group” within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, is or becomes directly or indirectly the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of securities representing more than thirty-three and one-third percent (33 1/3%) of the
Company’s then outstanding securities entitled to vote generally in the election of the Board. 
  

 3 

 “Continuing Director” means any member of the Board, while a member of the Board and (i) who
was a member of the Board on the closing date of the Company’s initial public offering of the Common Stock or (ii) whose nomination for or election to the Board was recommended or approved by a majority of the Continuing Directors. 

 
 “Control Change Date” means the date on which a Change in
Control occurs. If a Change in Control occurs on account of a series of transactions, the “Control Change Date” is the date of the last of such transactions. 
  
 “Change in Control” means (i) a Person is or becomes an Acquiring Person; (ii) holders of the securities of the
Company entitled to vote thereon approve any agreement with a Person (or, if such approval is not required by applicable law and is not solicited by the Company, the closing of such an agreement) that involves the transfer of all or substantially
all of the Company’s total assets on a consolidated basis, as reported in the Company’s consolidated financial statements filed with the Securities and Exchange Commission; (iii) holders of the securities of the Company entitled to vote
thereon approve a transaction (or, if such approval is not required by applicable law and is not solicited by the Company, the closing of such a transaction) pursuant to which the Company will undergo a merger, consolidation, or statutory share
exchange with a Person, regardless of whether the Company is intended to be the surviving or resulting entity after the merger, consolidation, or statutory share exchange, other than a transaction that results in the voting securities of the
Company carrying the right to vote in elections of persons to the Board outstanding immediately prior to the closing of the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% (fifty percent) of the Company’s voting securities carrying the right to vote in elections of persons to the Company’s Board, or such securities of such surviving entity, outstanding immediately after the
closing of such transaction; (iv) the Continuing Directors cease for any reason to constitute a majority of the Board; (v) holders of the securities of the Company entitled to vote thereon approve a plan of complete liquidation of the Company or an
agreement for the sale or liquidation by the Company of all or substantially all of the Company’s assets (or, if such approval is not required by applicable law and is not solicited by the Company, the commencement of actions constituting such
a plan or the closing of such an agreement); or (vi) the Board adopts a resolution to the effect that, in its judgment, as a consequence of any one or more transactions or events or series of transactions or events, a Change in Control of the
Company has effectively occurred. The Board shall be entitled to exercise its sole and absolute discretion in exercising its judgment and in the adoption of such resolution, whether or not any such transaction(s) or event(s) might be deemed,
individually or collectively, to satisfy any of the criteria set forth in subparagraphs (i) through (v) above. 
  
 “Person” means any human being, firm, corporation, partnership, or other entity. “Person” also includes any human being, firm,
corporation, partnership, or other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange Act. The term “Person” does not include the Company or any Related Entity, and the term Person does not include any employee-benefit
plan maintained by the Company or any Related Entity, or any person or entity organised, appointed, or established by the Company or any Related Entity for or pursuant to the terms of any such employee-benefit plan, unless the Board determines that
such an employee-benefit plan or such person or entity is a “Person”. 
  

 4 

 “Related Entity” means any entity that is part of a controlled group of corporations or is
under common control with the Company within the meaning of Sections 1563(a), 414(b) or 414(c) of the Code. 
  
 (d) Benefits. 
  
 (i) Vacation. The Executive shall be entitled to five (5) weeks of paid vacation per full calendar year. The Executive shall not be
entitled to cash in lieu of any unused vacation time. The Executive shall be entitled to carry over any unused vacation time from year to year pursuant to the Company’s then current vacation policy. 
  
 (ii) Sick and Personal Days. The Executive shall be
entitled to sick and personal days in accordance with the policies of the Company. 
  
 (iii) Employee Benefits. 
  
 (A) Participation in Employee Benefit Plans. Subject to the terms of any applicable plans, policies or programs, the Executive and
his spouse and eligible dependents, if any, and their respective designated beneficiaries where applicable, will be eligible for and entitled to participate in any Company sponsored employee benefit plans, including but not limited to benefits such
as group health, dental, accident, disability insurance, group life insurance, and a 401(k) plan, as such benefits may be offered from time to time, on a basis no less favorable than that applicable to other executives of the Company. 
  
 (B) Disability Insurance. The Company will maintain,
at its cost, a renewable long-term Disability plan that, subject to the terms of such plan and any applicable plans, policies or programs, provides for payment of not less than 60% of the Executive’s Base Salary for so long as any long-term
Disability of the Executive continues. In addition, the Company shall reimburse the Executive the amount of premiums payable by the Executive with respect to a personal supplemental long-term disability insurance policy providing for benefits equal
to at least 40% of the Executive’s Base Salary for so long as any long-term Disability of the Executive continues. 
  
 (iv) Directors and Officers Insurance. During the Term and for a period of thirty-six (36) months thereafter, the Executive shall
be entitled to director and officer insurance coverage for his acts and omissions while an officer and director of the Company on a basis no less favorable to him than the coverage provided to current officers and directors. 
  
 (v) Expenses, Office and Secretarial Support. The
Executive shall be entitled to reimbursement of all reasonable expenses, in accordance with the Company’s policy as in effect from time to time and on a basis no less favorable than that applicable to other executives of the Company, including,
without limitation, telephone, reasonable travel and reasonable entertainment expenses incurred by the Executive in connection with the business of the Company, promptly upon the presentation by the Executive of appropriate documentation. The
Company shall also provide Executive with an automobile allowance of $1,500 per month. The Executive shall also be entitled to appropriate office space, administrative support, and such 

  

 5 

 
other facilities and services as are suitable to the Executive’s positions and adequate for the performance of the Executive’s duties. 

 
 (vi) Reimbursement of Certain Professional Fees.
The Company shall reimburse, at the request of the Executive, fees for financial, tax and accounting advisory services, and professional organizations reasonably related to the mortgage banking and REIT industries. 
  
 (vii) Life Insurance. The Company may purchase on the
life of the Executive up to $15 million of key man life insurance with the Company as the beneficiary of the death benefit. The Company shall also purchase on the life of the Executive a 30 year vanishing premium, whole life insurance policy with a
death benefit of at least four times the Executive’s Base Salary and target Incentive Bonus with the Executive as the owner of the policy and the beneficiaries of the death benefit to be designated by the Executive, and the Company will pay the
Executive such additional amount as necessary to have no tax effect on the Executive. The life insurance shall be issued by an AA or better rated (by AM Best) insurer. The Company will obtain bids for this program and review the final program with
the Executive and the Chairman of the Compensation Committee for approval. The program will be structured to comply with all requirements of the Sarbanes-Oxley Act or similar requirements. 
  
 7. Termination. The Executive’s employment hereunder may be terminated without
any breach of this Agreement only under the following circumstances: 
  
 (a) Death. The Executive’s employment hereunder shall terminate upon his death. 
  
 (b) Disability. If, in the written opinion of a qualified physician reasonably agreed to by the Company and the Executive, the Executive shall
become unable to perform his duties hereunder due to Disability, the Company may terminate the Executive’s employment hereunder. As used in this Agreement, the term “Disability” shall mean inability of the Executive, due to physical
or mental condition, to perform the essential functions of the Executive’s job, after consideration of the availability of reasonable accommodations, for more than 180 total calendar days during any period of 12 consecutive months. 

 
 (c) For Cause. The Company may terminate the Executive’s
employment hereunder immediately for Cause. For purposes of this Agreement, the Company shall have “Cause” to terminate the Executive’s employment hereunder upon a determination by at least a majority of the members of the Board
(other than Executive) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive of such meeting, the purpose thereof and the particulars of the basis for such meeting and the Executive is given
an opportunity, together with counsel, to be heard before the Board) that Executive (i) has committed fraud or misappropriated, stolen or embezzled funds or property from the Company or an affiliate of the Company or secured or attempted to secure
personally any profit in connection with any transaction entered into on behalf of the Company or any affiliate of the Company, (ii) has been convicted of, or entered a plea of guilty or “nolo contendre” to, a felony, whether or not
involving the Company, which constitutes a crime of moral turpitude or which is punishable by imprisonment or which is likely to cause material harm to the Company’s (or any affiliate of 

  

 6 

 
the Company) business, customer or supplier relations, financial condition or prospects, (iii) has, notwithstanding not less than 30 days’ prior written
notice from the Board, willfully failed to perform (other than by reason of illness or temporary disability) his material duties hereunder on an exclusive and full-time basis, or willfully violated any reasonable directive or decision of the Board
(iv) has knowingly violated or breached any material law or regulation to the material detriment of the Company or any affiliates of the Company or its business, or (v) has breached any non-competition, non-disclosure or non-solicitation agreement
between Executive and the Company which causes or is reasonably likely to cause material harm to the Company. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it
is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that his action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. Any notice of termination delivered
by the Company to Executive that purports to notify Executive of a termination for Cause, but where the Company has not otherwise followed the procedures set forth in the definition of “Cause” above, shall be deemed to constitute a notice
of termination without Cause pursuant to Section 7(d) hereof. Neither a notice from the Company to Executive that a meeting of the Board has been scheduled to determine whether grounds for a termination for “Cause” exist, nor the holding
of such a meeting, shall itself be construed as a notice of termination for such purpose. 
  
 (d) Without Cause. The Company may at any time terminate the Executive’s employment hereunder without Cause. 
  
 (e) Termination by the Executive. 
  
 (i) The Executive may terminate his employment hereunder (A) for Good Reason, or (D) at any time after the date hereof by giving sixty
(60) days prior notice of his intention to terminate. 
  
 (ii) For purposes of this Agreement, “Good Reason” shall mean (A) a failure by the Company to comply with any material provision of this Agreement (other than the Company’s payment obligations referred to in clause (E) below)
which has not been cured within thirty (30) days after notice of such noncompliance has been given by the Executive to the Company, (B) the assignment to the Executive of any material duties inconsistent with the Executive’s position with the
Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities without the consent of the Executive, (C) without the consent of the Executive, a material reduction in employee benefits other than a
reduction generally applicable to similarly situated executives of the Company, (D) without the consent of the Executive, relocation of the Company’s principal place of business outside a fifty (50) mile radius of Irvine, California, (E) any
failure by the Company to pay the Executive Base Salary or any Incentive Bonus to which he is entitled under the Bonus Plan or hereunder which failure has not been cured within ten (10) days after notice of such noncompliance has been given by the
Executive to the Company or any failure of the Compensation Committee to approve a Bonus Plan for any fiscal year, or (F) without the consent of the Executive, a failure by the Board of 

  

 7 

 
Directors to nominate the Executive for reelection as a director of the Company and as Chairman of the Board and any failure by the stockholders of the
Company to reelect Executive as a director of and as Chairman of the Board of the Company and any removal by the stockholders or the Board of Directors of the Executive from his positions as Chief Executive Officer, President, or as director of and
as Chairman of the Board of the Company, other than for Cause. 
  
 (f) Any termination of the Executive’s employment by the Company or by the Executive (other than termination pursuant to subsection (a) or (b) of this Section 7) shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 14. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. 
  
 (g) “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death, (ii) if the
Executive’s employment is terminated pursuant to subsection (b) above, the date as of which the physician’s written opinion is received by the Company, (iii) if the Executive’s employment is terminated pursuant to subsection (c)
above, the date specified in the Notice of Termination, and (iv) if the Executive’s employment is terminated for any other reason, the date sixty (60) days following the date on which a Notice of Termination is given. 
  
 8. Compensation Upon Termination, Death or During Disability. 
  
 (a) Disability. Should Executive become disabled from performing his
duties hereunder as defined above, Executive acknowledges that his employment may be terminated anytime thereafter if such disability continues; provided that during the period of the disability prior to such termination of employment, Executive
shall continue to receive all compensation and benefits as if he were actively employed less any sums received directly by the Executive, if any, under any policy or policies of disability income insurance purchased by the Company. In the event of
such termination, Executive shall be entitled to receive any unpaid Base Salary to the Date of Termination, the earned but unpaid Incentive Bonus for any completed fiscal year and any amounts due to Executive pursuant to Section 6(d) through the
Date of Termination. Executive’s rights to receive any additional salary or payments under this Agreement shall terminate but Executive shall have the right to continue to receive any and all payments made by an insurance company under any and
all policies of disability insurance purchased by the Company. Executive’s rights under any Company benefit plan will be those rights accorded to any terminated employee under the plan provisions and applicable law. Executive will remain
entitled to receive any benefits under state disability or worker’s compensation laws. In addition, all stock options, restricted stock grants awards and any other equity awards granted by the Company to the Executive shall become fully vested,
unrestricted and exercisable as of the Date of Termination. 
  
 (b) Death. If the Executive’s employment is terminated by his death, the Company shall within ten (10) days following the date of the Executive’s death, pay to the Executive’s designated beneficiary (ies) any amounts
due to the Executive under Section 6(d) through the 

  

 8 

 
date of and as a result of his death, an amount equal to the Executive’s annual Base Salary for the year in which the termination took place, and an
amount equal to either the Executive’s target Incentive Bonus for the year in which the termination took place (if termination occurs during the first year of this Agreement), or an amount equal to the average Incentive Bonus earned by
Executive during the term of this Agreement (if termination occurs after the first year of this Agreement) together with any other amounts to which the Executive is entitled pursuant to death benefit plans, programs and policies. In addition, all
stock options, restricted stock awards and any other equity awards granted by the Company to the Executive shall become fully vested, unrestricted and exercisable as of the Date of Termination. 
  
 (c) Cause or other than Good Reason. If the Executive’s
employment shall be terminated by the Company for Cause or by the Executive for other than Good Reason, the Company shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination
is given and reimburse the Executive for all reasonable and customary expenses incurred by the Executive in performing services hereunder prior to the Date of Termination in accordance with Section 6(d), and the Company shall have no further
obligations to the Executive under this Agreement. 
  
 (d)
Termination by the Company without Cause (other than for death or Disability) or Termination by the Executive for Good Reason. If the Company shall terminate the Executive’s employment other than for death, Disability, or Cause, or the
Executive shall terminate his employment for Good Reason, then: 
  
 (i) the Company shall pay to the Executive within two business days following the date of termination any unpaid Base Salary to the Date of Termination, the earned but unpaid Incentive Bonus for any completed fiscal
year, and any amounts due to Executive pursuant to Section 6 (d) through the Date of Termination; 
  
 (ii) pay to the Executive as severance pay (a) an aggregate amount equal to three (3) times the Executive’s annualized rate of Base
Salary and target Incentive Bonus in effect as of the date of termination, such aggregate amount to be paid in a series of substantially equal installments (not less frequently that monthly) over a period of three (3) years following the Date of
Termination. 
  
 (iii) In the case of a
termination of the Executive’s employment by the Company without Cause or for Disability, or by the Executive for Good Reason, the Company shall pay the full cost for the Executive to participate in the health insurance plan in which the
Executive was enrolled immediately prior to the Date of Termination for a period of thirty-six (36) months, provided that the Executive’s continued participation is possible under the general terms and provisions of such plans and programs. In
the event that the Executive’s participation in any such plan or program is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive would otherwise have been entitled to
receive under such plan from which his continued participation is barred; and 
  
 (iv) The obligations of the Company to make any payments to Executive required under Section 8(d) hereof shall be conditioned on the execution and delivery by the Executive of a general release of claims in form and
substance reasonably satisfactory to the Company. 
  

 9 

 9. Nondisclosure. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of
its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those
designated by it. The agreement made in this Section 9 shall be in addition to, and not in limitation or derogation of, any obligations otherwise imposed by law or by separate agreement upon the Executive in respect of confidential information of
the Company. 
  
 10. Non-Competition and Non-Solicitation. During the
Executive’s employment with the Company and for a period of twelve (12) months following the Executive’s Date of Termination, the Executive shall not, for himself or on behalf of or in conjunction with any other person, persons, company,
firm, partnership, corporation, business, group or other entity (each, a “Person”), work in the principal line of business engaged in, or planned to be engaged in, by the Company at the Date of Termination within any state where the
Company is doing business or has plans for commencing business as of the Date of Termination. The Executive’s passive ownership of less than five percent (5%) of the securities of a public company shall not be treated as an action in
competition with the Company. 
  
 (a) Executive hereby
acknowledges and agrees that his employment with the Company places him in a position of trust and confidence with respect to the business operations, customers, prospects and personnel of the Company. He agrees that, due to his position and
knowledge, his engaging in any business that competes in the principal line of business as the Company will cause the Company significant and irreparable harm. 
  

(b) In consideration of the compensation and benefits extended to him under this Agreement, Executive agrees that, during the term of Executive’s
employment by the Company and for twelve (12) months following the Executive’s Date of Termination, the Executive shall not, for any reason whatsoever, directly or indirectly, for himself or herself or on behalf of or in conjunction with any
other Person with whom the Executive works or is affiliated: 
  
 (i) solicit and/or hire any Person who is on the Date of Termination, or has been within six (6) months prior to the Date of Termination, an employee of the Company or its affiliates; 
  
 (ii) solicit, induce or attempt to induce any Person who is,
at the Date, of Termination, or has been within six (6) months prior to the Date of Termination, an actual customer, client, business partner, or a prospective customer, client, business partner (i.e., a customer, client or business partner who is
party to a written proposal or letter of intent with the 

  

 10 

 
Company, in each case written less than six (6) months prior to the Date of Termination) of the Company, for the purpose or with the intent of (A) inducing
or attempting to induce such Person to cease doing business with the Company or its affiliates, (B) enticing or attempting to entice such Person to do business with Executive or any affiliate of Executive, or (C) in any way interfering with the
relationship between such Person and the Company or its affiliates; or 
  
 (iii) solicit, induce or attempt to induce any Person who is or that is, at the time of the Date of Termination, or has been within six (6) months prior to the Date of Termination, a supplier, licensee or consultant
of, or provider of goods or services to the Company or its affiliates, for the purpose or with the intent of (A) inducing or attempting to induce such Person to cease doing business with the Company or its affiliates or (B) in any way interfering
with the relationship between such Person and the Company or its affiliates. 
  
 (c) Because of the difficulty of measuring economic losses to the Company as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, Executive agrees that the foregoing covenants in this Section 10, in addition to and not in limitation of any other rights, remedies or damages available to the Company at law, in equity or under this
Agreement, shall be enforced by the Company in the event of the breach or threatened breach by Executive, by injunctions and/or restraining orders. 
  
 (d) It is agreed by the parties that the covenants contained in this Section 10 impose a fair and reasonable restraint on Executive in light of the
activities and business of the Company on the date of the execution of this Agreement and the current plans of the Company; but it is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company and its affiliates throughout the term of these covenants. Executive also acknowledges that this restraint will not prevent him from earning a living in his chosen field of work. 

 
 (e) The covenants in this Section 10 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any other covenant. Moreover, in the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth herein are
unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent that such court deems reasonable, and the Agreement shall thereby be reformed to reflect the same. 
  
 (f) All of the covenants in this Section 10 shall be construed as an
agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against the Company whether predicated on this Agreement or otherwise shall not constitute a defense to the enforcement by
the Company of such covenants. It is specifically agreed that the duration of the period during which the agreements and covenants of Executive made in this Section 10 shall be effective shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this Section 10. 
  
 (g) Notwithstanding any of the foregoing, if any applicable law, judicial ruling or order shall reduce the time period during which Executive shall be prohibited from engaging in any 

  

 11 

 
competitive activity described in Section 10 hereof, the period of time for which Executive shall be prohibited pursuant to Section 10 hereof shall be the
maximum time permitted by law. 
  
 11. Successors; Binding Agreement. This
Agreement shall be binding upon and inure to the benefit of successors and permitted assigns of the parties. This Agreement may not be assigned, nor may performance of any duty hereunder be delegated, by either party without the prior written
consent of the other; provided, however, the Company may assign this Agreement to any successor to its business, including but not limited to in connection with any subsequent merger, consolidation, sale of all or substantially all of the
assets or stock of the Company or similar transaction involving the Company or a successor corporation. 
  
 12. Additional Payments by the Company. 
  
 (a) If it is determined (as hereafter provided) that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any option, share appreciation right or similar right, or the lapse or termination of any restriction on
or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties, are hereafter collectively referred to as the “Excise Tax”), then Executive will be entitled to receive an additional
payment or payments (a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross Up Payment equal to the Excise Tax imposed upon the Payments. 
  
 (b) All determinations required to be made under this Section 12, including whether an Excise Tax is payable by Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, will be made by the Company’s then current outside auditors; provided that if that firm is unwilling or unable to provide such services, another accounting
firm may be selected by the Company (such accounting firm the “Accounting Firm”). The Company will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and Executive within 30
calendar days after the date of the change in control or the date of Executive’s termination of employment, if applicable, and any other such time or times as may be requested by the Company or Executive. If the Accounting Firm determines that
any Excise Tax is payable by Executive, the Company will pay the required Gross-Up Payment to Executive no later than five calendar days prior to the due date for Executive’s income tax return on which the Excise Tax is included. If the
Accounting Firm determines that no Excise Tax is payable by Executive, it will, at the same time as it makes such determination, furnish Executive with an opinion that he has substantial authority not to report any Excise Tax on Ms federal, state,
local income or other tax return. Any determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty 

  

 12 

 
regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts or fails to pursue its remedies pursuant to Section
12(f) hereof and Executive thereafter is required to make a payment of any Excise Tax, Executive shall so notify the Company, which will direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company to, or for the benefit of, Executive within five business days after receipt of
such determination and calculations. 
  
 (c) The Company and
Executive will each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 12(b) hereof. 
  
 (d) The federal, state and local income or other tax returns filed by Executive will be prepared and filed on a consistent basis with the determination of
the Accounting Firm with respect to the Excise Tax payable by Executive. To the extent the Excise Tax has not been previously withheld from amounts paid to the Executive, Executive will make proper payment of the amount of any Excise Tax, and at the
request of the Company, provide to the Company true and correct copies (with any amendments) of his federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment. If prior to the filing of Executive’s federal income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, Executive will within five business days pay to the Company the amount of such reduction. 
  
 (e) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations
contemplated by Sections 12(b) and 12(d) hereof will be borne by the Company. If such fees and expenses are initially advanced by Executive, the Company will reimburse Executive the full amount of such fees and expenses within five business days
after receipt from Executive of a statement therefore and reasonable evidence of his payment thereof. 
  
 (f) Executive will notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later than ten (10) business days after Executive actually receives notice of such claim and Executive will further apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid (in each case, to the extent known by Executive). Executive will not pay such claim prior to the earlier of (x) the expiration of the 30-calendar-day period following the date on
which he gives such notice to the Company and (y) the date that any payment of amount with respect to such 

  

 13 

 
claim is due. If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive will:

  
 (i) provide the Company with any written
records or documents in his possession relating to such claim reasonably requested by the Company; 
  
 (ii) take such action in connection with contesting such claim as the Company reasonably requests in writing from time to time, including
without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company; 
  
 (iii) cooperate with the Company in good faith in order effectively to contest such claim; and 

 
 (iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and will indemnify and hold harmless Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section
12(f), the Company will control all proceedings taken in connection with the contest of any claim contemplated by this Section 12(f) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided that Executive may participate therein at his own cost and expense) and may, at its option, either direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine; provided,
however, that if the Company directs Executive to pay the tax claimed and sue for a refund, the Company will advance the amount of such payment to Executive on an interest-free basis and will indemnify and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which the contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of any such contested claim will be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 
  
 (g) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Section 12(1) hereof, Executive receives any refund with respect to such claim, Executive will (subject to the Company’s complying with the requirements of Section 12(f)) hereof) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 12(f) hereof, a determination is made that Executive will not be
entitled to any refund with respect to such claim and the Company does not 

  

 14 

 
notify Executive in writing of its intent to contest such denial or refund prior to the expiration of 30 calendar days after such determination, then such
advance will be forgiven and will not be required to be repaid and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid pursuant to this Section 12. If, after the receipt by Executive of a
Gross-Up Payment but before the payment by Executive of the Excise Tax, it is determined by the Accounting Firm that the Excise Tax payable by Executive is less than the amount originally computed by the Accounting Firm and consequently that the
amount of the Gross-Up Payment is larger than that required by this Section 12, Executive shall promptly refund to the Company the amount by which the Gross-Up Payment initially made to Executive exceeds the Gross-Up Payment required under this
Section 12. 
  
 13. Continued Performance. Provisions of this Agreement
shall survive any termination of Executive’s employment hereunder if so provided herein or if necessary or desirable fully to accomplish the purposes of such provisions, including, without limitation, the obligations of the Executive under the
terms and conditions of Sections 9 and 10. Any obligation of the Company to make payments to or on behalf of the Executive under Section 8 is expressly conditioned upon the Executive’s continued performance of the Executive’s obligations
under Sections 9 and 10 for the time periods stated in Sections 9 and 10. The Executive recognizes that, except to the extent, if any, provided in Section 8, the Executive will earn no compensation from the Company after the Date of Termination.

  
 14. Notices. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows: 
  
 If to the Executive:

  
 108 Emerald Bay 
 Laguna Beach, CA 92651 
 FAX: 949-715-1693 
  
 If to the
Company: 
  
 PEOPLE’S CHOICE FINANCIAL
CORPORATION 
 7515 Irvine Center Drive 
 Irvine, California 92618 
 Attention: Board of Directors 
 FAX: _________________ 
  
 With a copy to: 
  
 PEOPLE’S CHOICE FINANCIAL CORPORATION 
 7515 Irvine Center Drive 
 Irvine, California 92618 
 Attention: General Counsel 
 FAX: (949) 341-2248 
  

 15 

 or to such other address as any party may have furnished to the others in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt. 
  
 15.
Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of law principles. 
  
 (a) Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
  
 (b) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall deemed to be in an
original but all of which together will constitute one and the same instrument. 
  
 (c) Disputes. 
  
 (i) Arbitrable Claims. All disputes between Executive (and Executive’s attorneys, successors, and assigns) and the Company (and its affiliates, shareholders, directors, officers, employees, agents, successors, attorneys, and
assigns) relating in any manner whatsoever to the employment or termination of Executive, including, without (imitation, all disputes arising under this Agreement (“Arbitrable Claims”), shall be resolved by final and binding arbitration.
All persons and entities specified in the preceding sentence (other than Company and Executive) shall be considered third-party beneficiaries of the rights and obligations created by this Section 15. Arbitrable Claims shall include, but are not
limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment
insurance claims. By way of example and not in limitation of the foregoing, Arbitrable Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, and the California Fair Employment and Housing Act, as well as any claims asserting wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress,
negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, defamation, invasion of privacy, and claims related to disability. Arbitration shall be final and binding upon the

  

 16 

 
parties and shall be the exclusive remedy for all Arbitrable Claims, except that the Company may, at its option, seek interim injunctive relief and other
provisional remedies in court as set forth in Section 15 (vi) of this Agreement. The parties hereby waive any rights they may have to trial by jury in regard to Arbitrable Claims. 
  
 (ii) Procedure. Arbitration of Arbitrable Claims shall be in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association, as amended (“AAA Employment Rules”), as augmented in this Agreement. Arbitration shall be initiated as provided by the AAA Employment Rules, although the
written notice to the other party initiating arbitration shall also include a statement of the claim(s) asserted and all the facts upon which the claim(s) are based. Either party may bring an action in court to compel arbitration under this
Agreement and to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. All arbitration hearings under this Agreement shall be conducted in
Orange County, California. The Federal Arbitration Act shall govern the interpretation and enforcement of this Section 15. 
  
 (iii) Arbitrator Selection and Authority. All disputes involving Arbitrable Claims shall be decided by a single arbitrator. The
arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the parties cannot agree on an arbitrator, then the complaining party shall notify the AAA and
request selection of an arbitrator in accordance with the AAA Employment Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claim(s) asserted and any
action of the arbitrator in contravention of this limitation maybe the subject of court appeal by the aggrieved party. No other aspect of any ruling by the arbitrator shall be appealable, and, except for being limited to relief that would be
available in a court proceeding, all other aspects of the arbitrator’s ruling shall be final and non-appealable. The expenses of arbitration shall be borne by the Company. The arbitrator shall have exclusive authority to resolve all Arbitrable
Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable. 
  
 (iv) Confidentiality. All proceedings and all documents prepared in connection with any Arbitrable Claim shall be confidential and,
unless otherwise required by law, the subject matter thereof shall not be disclosed to any person other than the parties to the proceedings, their counsel, witnesses and experts, the arbitrator, and, if involved, the court and court staff. All
documents filed with the arbitrator or with a court shall be filed under seal. The parties shall stipulate to all arbitration and court orders necessary to effectuate fully the provisions of this subsection concerning confidentiality. 
  
 (v) Continuing Obligations. The rights and
obligations of Executive and the Company set forth in this Section 15 shall survive the termination of Executive’s employment and the expiration of this Agreement. 
  
 (vi) Exceptions for Injunctive Relief. Notwithstanding the foregoing, in order to provide for interim
relief pending the finalization of arbitration proceedings hereunder, 

  

 17 

 
nothing in this Section 15 shall prohibit the Company from pursuing a claim for interim injunctive relief, for other applicable provisional remedies, and for
related attorneys’ fees in a court of competent jurisdiction from Executive’s breach of Executive’s obligations set forth in this Agreement including, without limitation, Sections 3, 9, 10 and 15 of this Agreement. 
  
 (d) Executive’s Legal Expenses. In the event that the Executive
institutes any proceeding to enforce his rights under, or to recover damages for breach of this Agreement, the Executive, if he is the prevailing party, shall be entitled to recover from the Company any actual expenses for attorney’s fees and
disbursements incurred by him. 
  
 (c) Indemnification. The
Company shall indemnify and hold the Executive harmless to the maximum extent permitted by the laws of the State of Maryland (and the law of any other appropriate jurisdiction after any reincorporation of the Company) against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys’ fees incurred by Executive, in connection with the defense of, or as a result of any action or proceeding (or any appeal from any action or proceeding) in which Executive
is made or is threatened to be made a party by reason of the fact that he is or was an officer or director of the Company, regardless of whether such action or proceeding is one brought by or in the right of the Company to procure a judgment in its
favor (or other than by or in the right of the Company); provided, however, that this indemnification provision shall not apply to any action or proceeding relating to a dispute between the Company and the Executive based on any alleged
breach or violation of this Agreement. 
  
 (d) Entire
Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein. 
  

 18 

 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

  

									
	 Attest:
	 	 	 	 PEOPLE’S CHOICE FINANCIAL CORPORATION

					
	By: 	 	/s/    IRWIN S. GUBMAN        	 	 	 	By: 	 	/s/    NEIL B. KORNSWIET        
	 	 	 	 	 	 	 Name:
	 	 
	 	 	 	 	 	 	 Title:
	 	CEO
				
	 	 	 	 	 	 	 NEIL B. KORNSWIET

	 Attest:
	 	 	 	 
					
	By: 	 	/s/    IRWIN S. GUBMAN        	 	 	 	By: 	 	/s/    NEIL B. KORNSWIET        
	 	 	 	 	 	 	 Name:
	 	 
	 	 	 	 	 	 	 Title:
	 	 

  

 19 

 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT 
  
 THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this
“Amendment”) is made this 29th day of August, 2005, by and between People’s Choice Financial Corporation, a Maryland corporation (the “Company”) and Neil B. Kornswiet (the “Executive”).

  
 The Executive and the Company entered into an Employment
Agreement on December 21, 2004 (the “Agreement”) pursuant to which the Company agreed to nominate the Executive as the Chairman of the Board of Directors of the Company (the “Board”). The Executive and the
Company recognize that it is in the best interest of the Company and its stockholders for the positions of Chairman of the Board and Chief Executive Officer not to be held by one person. In consideration of the Executive’s continued employment
with the Company, the Executive and the Company desire to enter into this Amendment (i) to remove the Company’s obligation to nominate the Executive as Chairman of the Board and (ii) require that the Executive tender his resignation
as a member of the Board upon the expiration or earlier termination of the Term. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Agreement. 
  
 In order to effect the foregoing, the Company and the Executive wish to enter
into this Amendment on the terms and conditions set forth below. Accordingly, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows: 
  
 1. Amendment to Section 3. Section 3 of the
Agreement is hereby amended by deleting the first sentence therein in its entirety and replacing it with the following: 
  
 The Executive shall serve as the President and Chief Executive Officer of the Company and shall have such responsibilities, duties and authority as he may
have as of the date hereof and as may from time to time be assigned to the Executive by the Board that are consistent with such responsibilities, duties and authority. 
  
 2. Successors; Binding Agreement. This Amendment shall be binding upon and inure to the benefit of successors and permitted assigns
of the parties. This Amendment may not be assigned, nor may performance of any duty hereunder be delegated, by either party without the prior written consent of the other; provided, however, the Company may assign this Amendment to any
successor to its business, including but not limited to in connection with any subsequent merger, consolidation, sale of all or substantially all of the assets or stock of the Company or similar transaction involving the Company or a successor
corporation. 
  
 3. Miscellaneous. No provisions of this Amendment may be
modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer of the Company as may be specifically designated by the Board of Directors. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Amendment to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the
same 

  

 20 

 or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are not set forth expressly in the Agreement or this Amendment. The validity, interpretation, construction and performance of this Amendment shall be governed by the laws of the State
of California without regard to its conflicts of law principles. 
  
 (a) Validity. The invalidity or unenforceability of any provision or provisions of this Amendment shall not affect the validity or enforceability of any other provision of this Amendment, which shall remain in full force and effect.

  
 (b) Counterparts. This Amendment may be executed in one
or more counterparts, each of which shall deemed to be in an original but all of which together will constitute one and the same instrument. 
  
 (c) Entire Agreement. The Agreement and this Amendment set forth the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein. 
  
 (d) Continuing Effectiveness. Except as herein amended, the Agreement shall remain in full force and effect without change or modification and is hereby ratified and confirmed in all respects. 
  
 IN WITNESS WHEREOF, the parties have executed this Amendment on the date and
year first above written. 
  

									
	 Attest:
	 	 	 	PEOPLE’S CHOICE FINANCIAL CORPORATION
					
	By: 	 	 	 	 	 	By: 	 	/s/ Irv Gubman
	 	 	 	 	 	 	 Name:
	 	 
	 	 	 	 	 	 	 Title:
	 	 
				
	 	 	 	 	 	 	NEIL B. KORNSWIET
	 Attest:
	 	 	 	 
				
	By: 	 	 	 	 	 	 /s/ Neil Kornswiet

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

  

 21

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