Exhibit 10.4

TWO HARBORS investment corp.

2021 EQUITY INCENTIVE PLAN

Performance Share UNIT AGREEMENT

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

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

WHEREAS, the Grantee is an employee of the Company;

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

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

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.            Grant of Performance Share Units.

2.            Performance Goals.

3.            Vesting, Restrictions and Conditions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.            Dividend Equivalent Rights; Other Rights.

5.            Settlement of Performance Share Units.

6.            Tax Liability and Withholding.

7.            Non-Competition and Non-Solicitation.

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

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

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

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

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

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

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

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

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

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

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

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

8.            Miscellaneous.

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

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

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

[Signature Page Follows]

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

EXHIBIT A
PERFORMANCE GOALS

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