EXHIBIT 10.1 EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is dated for reference purposes and entered into as of December 1, 2005 (the “Effective Date”), by and between Bank of Internet USA, a federal savings bank (the “Bank”), having a principal place of business at 12777 High Bluff Drive, Suite 100, San Diego, CA 92130, and Terry M. Harris (the “Executive”), whose address is 427 Rosario Lane, White Lake, Michigan 48386. Bank and Executive are sometimes collectively referred to in this Agreement as the “Parties.” As used in this Agreement, the term “Effective Date” means the date this Agreement becomes effective.

1.       Bank desires to employ Executive and avail itself of his skill, knowledge and experience in the management of Bank's business.

2.       The Parties desire to set forth in this Agreement the terms of Executive's employment by Bank.

The Parties therefore agree as follows:

Bank employs Executive to perform the duties described in this Agreement, and Executive accepts such employment, for a term of one year commencing on the Effective Date and ending on the day preceding the one year anniversary of the Effective Date, except (i) that the Term of this Agreement shall be renewed without further notice for a one year period commencing on the annual anniversary date of the Effective Date (the “Anniversary Date”) and on each subsequent Anniversary Date following any such one year period of employment, and (ii) this Agreement may be terminated prior to the end of such Term by Bank or Employee in accordance with and subject to the terms of Paragraph F. (Termination) of this Agreement, including, but not limited to, Paragraph F.2.a providing Executive with Severance Payment (as defined therein) upon termination of this Agreement by Bank other than for cause. When used in this Agreement, “Term” shall refer to the entire period of employment of Executive by Bank under this Agreement.

Subject to the powers and directions of the policies, procedures and directives of the board of directors, as adopted and modified from time to time, Executive shall perform the duties and shall have the titles of “Vice President and Chief Credit Officer.” During the Term, Executive shall perform exclusively for Bank the services contemplated in this Agreement to be performed by Executive, faithfully, diligently and to the best of Executive's ability, consistent with the highest and best standards of the banking industry and in compliance with all applicable laws and regulations and the Bank's federal stock charter and bylaws. Except as permitted by the prior written consent of Bank's board of directors, Executive shall devote Executive's entire working time, ability and attention to the business of Bank during the Term.

1.       Base Salary.    In consideration of Executive's services to be performed under this Agreement and commencing as of the Effective Date, Bank shall pay or cause to be paid to Executive a base salary at the rate of $150,000 per annum, payable in equal installments in conformity with Bank's normal payroll periods. Executive's salary shall be reviewed by the board of directors from time to time at its discretion and Executive shall receive such salary increases, if any, as the board of directors, in its sole discretion, shall determine.

1.       Vacation.    Executive shall be entitled to vacation as prescribed in the Bank's Employee Manual maintained on the Bank's Intranet. In the event this Agreement is terminated pursuant to Paragraph F.2, Bank reserves the right to require Executive to take any unused vacation time prior to the Date of Termination (as defined in Paragraph F.2).

2.         Directors and Officers Liability Insurance.    Bank shall provide for Executive, at Bank's expense, coverage under a directors and officers liability insurance policy in such amounts and on such terms as may be approved by Bank's board of directors and as may be consistent with such coverage provided by Bank for its other officers and directors.

3.         Group Insurance Benefits and Death Benefit.    Executive shall participate in all group insurance plans provided by Bank for all of its senior executive officers at Bank's expense to the same extent and on the same terms as Bank's other senior executive officers. Throughout the Term, the Bank shall provide at its sole cost a death benefit on the life of Executive in an amount equal to three times Executive's then-current annual salary, subject to Executive’s qualification for and the Bank’s purchase of Bank-owned life insurance.

4.       Stock Options.    As of the Effective Date, BofI Holding, Inc. a Delaware corporation (“Holding”), the sole shareholder of Bank, shall grant to Executive stock options pursuant to the BofI Holding, Inc. 2004 Stock Incentive Plan (the “Plan”) and as memorialized in a Stock Option Award Agreement and Notice of Stock Option Award (the “Award Agreement”), to be dated effective as of the Effective Date (the “Grant”). The Award Agreement evidencing the Grant shall provide for, among other things, the grant to Executive of 20,000 stock options with an exercise price equal to the per share fair market value of the common stock of Holding on the date of the Grant and which shall vest over a four year period commencing on the Effective Date as described in the Award Agreement. Notwithstanding the terms of the Plan, in the event that the Bank terminates Executive under this Agreement for any reason other than for cause pursuant to Paragraph F.1 or in the event Executive's death or disability causes the termination of this Agreement, all of Executive's stock options issued pursuant to the Grant and any subsequently issued grant of stock options under the Plan, including all stock options held by Executive that are not otherwise vested at such time, shall become fully vested and Executive may exercise such vested stock options, in whole or in part, at any time within the terms of the Plan. In the event that Executive terminates this Agreement, Executive shall be entitled to exercise only those stock options that are vested as of the Date of Termination (as defined in Paragraph F.2, below), and may be exercised within a three month period in accordance with the Plan. Neither Bank nor Holding shall enter into any transaction during or after the Term that would have the effect of canceling any of Executive's issued under the Grant.

5.       Retirement, Profit Sharing and Other Plans.    Executive shall be entitled to participate in any retirement plans, profit-sharing plans, salary deferral and other deferred compensation plans, medical expense reimbursement plans and other similar plans that Bank may establish with respect to all employees; provided, however, that nothing herein shall require Bank to establish or maintain any of such plans.

1.         Business Expenses.    In addition to Bank's payment or reimbursement of costs of the type described in Paragraph E.2, Bank shall pay or reimburse Executive for any ordinary and necessary business expenses incurred by Executive in the performance of his duties and in acting for or on behalf of Bank during the Term, provided that: (a) each such expenditure is of a nature qualifying it as a proper deduction on the federal and state income tax returns of Bank as a business expense and not as deductible compensation to Executive, (b) Executive furnishes to Bank adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of such expenditures and deductible business expenses of Bank, and (c) Executive's expense reimbursement reports are submitted for approval in accordance with Bank's internal policies.

2.       Additional Expenses.    Bank shall pay or reimburse Executive for the costs and expenses set forth below, subject to the following requirements: (i) Executive shall comply with the Bank's expense payment or reimbursement guidelines and procedures as the Bank may amend such guidelines and procedures or may adopt new guidelines and procedures from time to time, and (ii) prior to the Bank becoming liable for any expenses or reimbursement relating to equipment, publications, education, training or professional organizations pursuant to subparagraphs a. through f., below, any such expenses or reimbursement shall be approved by Bank's board of directors or any committee or person authorized by the board of directors to grant such approval, in advance of incurring any such expenses. Subject to such prior approval of incurring expenses or reimbursement and to compliance with Bank's payment or reimbursement procedures, Bank's obligation to make any such payment or reimbursement pursuant to this paragraph shall not be contingent on whether or to what extent a particular expense may constitute a deductible business expense of Bank or be excludable from Executive's taxable compensation.