EXHIBIT 10.5

Execution Version

INVESTMENT AGREEMENT
dated as of December 17, 2008

between
FLAGSTAR BANCORP, INC.
and
MP Thrift Investments L.P.

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TABLE OF CONTENTS
ARTICLE I

PURCHASE; CLOSING
1.1    Purchase                                            2
1.2    Closing                                                3

ARTICLE II
REPRESENTATIONS AND WARRANTIES

2.1    Disclosure                                            6
2.2    Representations and Warranties of the
Company                            7
2.3    Representations and Warranties of
Purchaser                                24

ARTICLE III
COVENANTS

3.1    Filings; Other Actions                                        27
3.2    Access, Information and Confidentiality                                29
3.3    Conduct of the Business                                        30
3.4    Acquisition Proposals                                        34

ARTICLE IV
ADDITIONAL AGREEMENTS

4.1    Governance Matters                                        37
4.2    Legend                                                39
4.3    Reservation for Issuance                                        40
4.4    Certain Transactions                                        40
4.5    Indemnity                                            40
4.6    Exchange Listing                                            43
4.7    Registration Rights                                        43
4.8    Certificate of Designations                                        55

ARTICLE V
TERMINATION

5.1    Termination                                            55
5.2    Effects of Termination                                        57
5.3    Fees                                                57

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ARTICLE VI
MISCELLANEOUS

6.1    Survival                                                58
6.2    Expenses                                            58
6.3    Amendment; Waiver                                        58
6.4    Counterparts and Facsimile                                    59
6.5    Governing Law                                            59
6.6    Waiver of Jury Trial                                        59
6.7    Notices                                                59
6.8    Entire Agreement, Etc                                        60
6.9    Interpretation; Other Definitions                                    60
6.10    Captions                                                61
6.11    Severability                                            61
6.12    No Third Party Beneficiaries                                    61
6.13    Time of Essence                                            62
6.14    Certain Adjustments                                        62
6.15    Public Announcements                                        62
6.16    Specific Performance                                        62

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INDEX OF DEFINED TERMS
Term
 
Location of Definition
Acquisition Proposal
 
3.4(b)
Affiliate
 
6.9(a)
Agency
 
2.2(w)(2)(A)
Agreement
 
Preamble
Alternative Acquisition Agreement
 
3.4(c)(2)
Applicant
 
2.2(f)
Authorizations
 
2.2(a)(1)
Bank
 
1.2(c)(2)(D)
Bank Charter
 
2.2(a)(2)
beneficial owner
 
6.9(g)
beneficially own
 
6.9(g)
Benefit Plan
 
2.2(s)
Board Observers
 
4.1(a)
Board of Directors
 
1.2(G)
Board Representative
 
4.1(a)
Burdensome Condition
 
1.2(c)(2)(F)
business day
 
6.9(e)
Capitalization Date
 
2.2(b)
CERCLA
 
2.2(q)
Certificate of Incorporation
 
Recitals
Change of Recommendation
 
3.4(c)(2)
Closing
 
1.2(a)
Closing Date
 
1.2(a)
Code
 
2.2(j)
Common Stock
 
Recitals
Company
 
Preamble
Company Financial Statements
 
2.2(g)
Company Preferred Stock
 
2.2(b)
Company Recommendation
 
3.1(b)
Company Reports
 
2.2(h)(1)
Company Significant Agreement
 
2.2(m)
Company 10-K
 
2.1(c)(2)(A)
control/controlled by/under common control with
 
6.9(a)
Converted Common Shares
 
Recitals
Convertible Preferred Stock
 
Recitals
Covered Persons
 
4.9
DIF
 
2.2(a)(2)
Disclosure Schedule
 
2.1(a)
ERISA
 
2.2(s)(1)
Exchange Act
 
2.2(h)(1)
Expense Reimbursement
 
6.2
FDIC
 
2.2(a)(2)
GAAP
 
2.1(b)
Governance Committee
 
4.1(a)
Governmental Entity
 
1.2(c)(1)(A)
herein/hereof/hereunder
 
6.9(d)
HOLA
 
2.2(a)(1)

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Term
 
Location of Definition
Holder
 
4.7(l)(1)
Holders’ Counsel
 
4.7(l)(2)
including/includes/included/include
 
6.9(c)
Indemnified Party
 
4.5(c)
Indemnifying Party
 
4.5(c)
Indemnitee
 
4.7(g)(1)
Information
 
3.2(b)
Insurer
 
2.2(w)(2)(C)
Interim Financials
 
2.2(g)
Investment Company Act
 
2.2(ee)
Investor Warrants
 
Recitals
Investor Amendments
 
Recitals
knowledge of the Company
 
6.9(h)
Liens
 
2.2(d)(2)
Loan Investor
 
2.2(w)(2)(B)
Losses
 
4.5(a)
Management Equity
 
3.1(b)
Management Purchased Shares
 
Recitals
Management Purchasers
 
Recitals
material
 
2.1(b)
Material Adverse Effect
 
2.1(b)
MatlinPatterson
 
Recitals
May Purchase Agreement
 
Recitals
Michigan Secretary
 
Recitals
NYSE
 
1.2(c)(1)(D)
NYSE Approval
 
1.2(c)(1)(C)
Operating Plan
 
3.3(c)
Option Shares
 
Recitals
or
 
6.9(b)
OTS
 
2.2(f)
Outside Date
 
5.1(b)
Pending Underwritten Offering
 
4.7(m)
person
 
6.9(f)
Piggyback Registration
 
4.7(a)(4)
Pre-Closing Period
 
3.3(a)
Preferred Stock Certificate of Designations
 
Recitals
Previously Disclosed
 
2.1(c)
Proprietary Rights
 
2.2(z)
Purchase Price
 
1.2(b)(2)
Purchased Shares
 
Recitals
Purchaser
 
Preamble
Qualifying Ownership Interest
 
3.2(a)
Register, registered and shelf registration
 
4.7(l)(3)
Registrable Securities
 
4.7(l)(4)
Registration Demand
 
4.7(a)(2)
Registration Expenses
 
4.7(l)(5)
Regulatory Agreement
 
2.2(u)
Representatives
 
3.4
Required Approvals
 
2.2(f)

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Term
 
Location of Definition
Rule 144
 
4.7(l)(6)
Rule 144A
 
4.7(l)(6)
Rule 159A
 
4.7(l)(6)
Rule 405
 
4.7(l)(6)
Rule 415
 
4.7(l)(6)
Scheduled Black‑out Period
 
4.7(l)(7)
SEC
 
2.1(c)(2)(A)
Securities
 
Recitals
Securities Act
 
Recitals
Selling Expenses
 
4.7(l)(8)
Shelf Registration Statement
 
4.7(a)(2)
SLHC Parties
 
2.2(f)
Special Registration
 
4.7(j)
Stockholder Proposals
 
3.1(b)
Subsidiary
 
2.2(a)(1)
Superior Proposal
 
3.4(b)
TARP Approval
 
Recitals
TARP Documents
 
Recitals
TARP Preferred Stock
 
Recitals
TARP Securities
 
Recitals
TARP Transaction
 
Recitals
TARP Warrant
 
Recitals
TARP Warrant Shares
 
Recitals
Tax/Taxes
 
2.2(j)
Tax Return
 
2.2(j)
Termination Fee
 
5.3(c)
Threshold Amount
 
4.5(e)
Treasury
 
Recitals
Voting Debt
 
2.2(b)

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LIST OF SCHEDULES AND EXHIBITS
Schedule A
List of Management Members for Recital D
Schedule B
List of Subsidiaries
Schedule C
[Reserved]
Schedule D
List of Management Purchasers
Schedule E
Terms of Management Equity
Schedule F
List of Applicants
 
 
Exhibit A
Preferred Stock Certificate of Designations

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INVESTMENT AGREEMENT, dated as of December 17, 2008 (this "Agreement"), between
Flagstar Bancorp, Inc., a corporation organized under the laws of the State of
Michigan (the "Company") and MP Thrift Investments L.P. a Delaware limited
partnership ("Purchaser").
RECITALS:
A.
Purchaser. Purchaser is formed as an "alternative investment vehicle" for the
purpose of making the investment described herein with capital intended to be
contributed (subject to the terms and conditions of this Agreement) by investors
in MatlinPatterson Global Opportunities Partners III L.P. and MatlinPatterson
Global Opportunities Partners Cayman III L.P. The parties acknowledge and agree
that the investment is being made by Purchaser in accordance with the "silo"
structure set forth in Schedule 2.2(f) of the Purchaser Disclosure Schedule and
neither MatlinPatterson Global Advisers LLC or its Affiliates
("MatlinPatterson"), MatlinPatterson Global Opportunities Partners III L.P.,
MatlinPatterson Global Opportunities Partners Cayman III L.P., nor any other
fund or entity sponsored or advised by MatlinPatterson shall have any
obligations hereunder;

B.
The Investment. The Company intends to issue and sell to Purchaser, and
Purchaser intends to purchase from the Company, as an investment in the Company
250,000 shares of a series of mandatory convertible participating voting
preferred stock, $0.01 par value per share, of the Company, having the terms set
forth in Exhibit A (the "Convertible Preferred Stock"), in each case on the
terms and conditions described herein. Each share of Convertible Preferred Stock
will be sold to Purchaser at a purchase price of $1,000 per share and shall be
convertible into common stock, par value $0.01 per share, of the Company (the
"Common Stock") at the liquidation preference divided by $0.80;

C.
TARP Transaction. The Company submitted an application for participation in the
TARP Capital Purchase Program. If such application is approved by the United
States Department of the Treasury ("Treasury"), the Company intends to issue and
sell to Treasury in transactions exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act"), (i) shares of fixed rate
cumulative perpetual preferred stock (the "TARP Preferred Stock") and (ii) a
warrant (the "TARP Warrant") to purchase a specified number of shares of Common
Stock (the "TARP Warrant Shares" and together with the TARP Preferred Stock and
the TARP Warrant, collectively, the "TARP Securities"; the issuance and sale of
the TARP Securities are the "TARP Transaction"; the approval of the TARP
Transaction granted by Treasury is the "TARP Approval" and the definitive
documents entered into in connection therewith are the "TARP Documents");

D.
Management Agreement. In connection with the TARP Transaction, members of
management of the Company listed on Schedule A hereto have agreed, if and to the
extent required, to amend their respective employment agreements and executive
compensation arrangements to comply with the requirements of participation in
the TARP Capital Purchase Program;

E.
Certificate of Incorporation Amendment. The Company intends to amend its Amended
and Restated Articles of Incorporation (the "Certificate of Incorporation") and
its bylaws, in form and substance reasonably satisfactory to Purchaser, to give
effect to the transactions, including the Stockholder Proposals and the
governance matters described in Article IV hereof, contemplated by this
Agreement;

F.
Investor Amendments. Certain of the several investors who purchased securities
pursuant to the Purchase Agreement, dated May 14, 2008, between the Company and
the purchasers named therein (the "May Purchase Agreement") have, in connection
with the TARP Transaction, agreed to accept in full satisfaction of any and all
obligations under Section 8 of the May Purchase Agreement, warrants (the
"Investor Warrants") to purchase Common Stock (the "Investor Amendments");

G.
Management Purchase. In connection with the investment by Purchaser, the Company
shall issue and sell to the persons listed in Schedule D hereto (the "Management
Purchasers") shares of Common Stock (the "Management Purchased Shares") for an
aggregate purchase price of not less than $4 million and not more than $5
million at a price per Management Purchased Share of $0.80 per share, provided,
however, that if the Company does not have sufficient shares of Common Stock
available for issuance prior to the Certificate of Incorporation amendment, then
the Management Purchasers shall instead purchase an equivalent number shares of
Convertible Preferred Stock on an as converted basis as would have been
purchased if sufficient shares of Common stock were available for issuance; and

H.
The Securities. The term "Purchased Shares" refers to the Convertible Preferred
Stock to be purchased pursuant to the terms of Section 1.2(b)(1) of this
Agreement. The term "Securities" refers collectively to (1)  the Convertible
Preferred Stock and the shares of Common Stock into which the Convertible
Preferred Stock is convertible in

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accordance with the terms thereof and of this Agreement (the "Converted Common
Shares"), (2) the Management Equity (including the shares of Common Stock to be
issued upon exercise of options, the "Option Shares"), (3) the Investor Warrants
(including shares of Common Stock to be issued upon exercise thereof), (4) the
TARP Securities and the shares of Common Stock issuable upon the exercise of the
TARP Warrant and (5) the Management Purchased Shares. When issued and purchased
in accordance with the terms of this Agreement, the Convertible Preferred Stock
will be evidenced by a share certificate incorporating the terms set forth in a
certificate of designations for the Convertible Preferred Stock substantially in
the form attached as Exhibit A (the "Preferred Stock Certificate of
Designations") made a part of the Certificate of Incorporation by the filing of
the Preferred Stock Certificate of Designations with the Michigan Department of
Labor and Economic Growth (the "Michigan Secretary").
NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE I

PURCHASE; CLOSING

1.1    Purchase. On the terms and subject to the conditions set forth herein,
Purchaser will purchase from the Company, and the Company will sell to Purchaser
a number of Purchased Shares determined in accordance with Section 1.2(b)(1).

1.2    Closing.
(a)
Subject to the satisfaction or waiver of the conditions to the Closing set forth
in this Agreement, the closing of the purchase of the Purchased Shares referred
to in Section 1.1 by Purchaser pursuant hereto (the "Closing") shall occur at
9:30 a.m., New York time, on December 31, 2008, provided that if such conditions
have not been so satisfied or waived on such date, the Closing shall occur on
the third business day after the satisfaction or waiver (by the party entitled
to grant such waiver) of the conditions to the Closing set forth in this
Agreement (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to fulfillment or waiver of those conditions), at
the offices of Sullivan & Cromwell LLP located at 125 Broad Street, New York,
New York 10004 or such other date or location as agreed by the parties. The date
of the Closing is referred to as the "Closing Date."

(b)
Subject to the satisfaction or waiver on the Closing Date of the applicable
conditions to the Closing in Section 1.2(c), at the Closing:

(1)
the Company will deliver to Purchaser (A) the Expense Reimbursement in
accordance with Section 6.2 hereof and (B) 250,000 shares of Convertible
Preferred Stock; and

(2)
Purchaser will deliver $250,000,000 (the "Purchase Price") to the Company.

(c)
Closing Conditions. (1)  The obligation of Purchaser, on the one hand, and the
Company, on the other hand, to effect the Closing is subject to the fulfillment
or written waiver by Purchaser and the Company prior to the Closing of the
following conditions:

(A)
no provision of any applicable law or regulation and no judgment, injunction,
order or decree shall prohibit the Closing or shall prohibit or restrict
Purchaser or its Affiliates from owning or voting, or, subject to the receipt of
approval of the Stockholder Proposals, converting any Purchased Shares in
accordance with the terms thereof and no lawsuit shall have been commenced by
any court, administrative agency or commission or other governmental authority
or instrumentality, whether federal, state, local or foreign, or any applicable
industry self-regulatory organization (each, a "Governmental Entity") seeking to
effect any of the foregoing;

(B)
the Company shall have received proceeds of the sale of the TARP Securities of
not less than $250,000,000 prior to the Closing Date;

(C)
the Company shall have received the approval of the NYSE to issue the
Convertible Preferred Stock and to convert the Convertible Preferred Stock into
Common Stock without the approval of the Company’s stockholders in reliance on
Section 312.05 of the

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NYSE Listed Company Manual (the "NYSE Approval"), and such NYSE Approval shall
be in full force and effect; and

(D)
the Converted Common Shares shall have been authorized for listing on the New
York Stock Exchange ("NYSE") or such other market on which the Common Stock is
then listed or quoted, subject to stockholder approval, if necessary, and
official notice of issuance.

(2)
The obligation of Purchaser to purchase the Purchased Shares at Closing is also
subject to the fulfillment or written waiver by Purchaser prior to the Closing
of each of the following conditions:

(A)
The Company shall have performed in all material respects all obligations
required to be performed by it at or prior to Closing;

(B)
All representations and warranties of the Company contained in this Agreement
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except to
the extent any such representations and warranties expressly relate to a
specified date, in which case such representation and warranty need only be true
and correct as of such specified earlier date);

(C)
Purchaser shall have received a certificate signed on behalf of the Company by a
senior executive officer certifying to the effect that the conditions set forth
in Sections 1.2(c)(2)(A) and (B) have been satisfied;

(D)
Since the date of this Agreement, (i) no fact, event, change, condition,
development or circumstance shall have occurred that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect (as
defined herein) with respect to the Company, (ii) there shall have been no
decrease greater than or equal to 7.5% in core deposits (i.e., money market,
demand, checking, savings and transactional accounts for retail customers) of
the Company as of September 30, 2008 and (iii) there shall have been no material
legislative change or change in regulatory interpretation affecting the tax
consequences of the Purchase to Flagstar Bank, FSB (the "Bank") under existing
Notice 2008-83, or any other material change to any rules under Section 382 that
affect the application of Section 382 to unrealized built-in losses of Flagstar
Bank, FSB (the "Bank") and any Affiliate (if relevant) that exist on or after
the Closing Date;

(E)
As of the Closing Date, the Bank’s authorized line of credit under the Advances,
Pledge and Security Agreement, dated as of August 6, 1996, among the Bank,
Flagstar Capital Markets Corporation and the Federal Home Loan Bank of
Indianapolis shall not have decreased by more than 5% from the date of this
Agreement, such that such line of credit is less than $6.65 billion;

(F)
Any Required Approvals (as defined herein) required to consummate the
transactions contemplated by this Agreement shall have been made or been
obtained and shall be in full force and effect as of the Closing Date; provided,
however, that (1) no such Required Approval shall impose any restraint or
condition that would reasonably be expected to impair in any material respect
the benefits to Purchaser of the transactions contemplated by this Agreement and
(2) no such Required Approval shall contemplate the registration of
MatlinPatterson or any fund sponsored or advised by it, or any of its Affiliates
(other than Purchaser or those companies identified as possible Applicants in
Schedule F) as a savings and loan company or subsidiary thereof, or impose any
activities or other restrictions, require a modification of governance, fee
arrangements and carried interests with respect to, or impose any capital or
other requirements on MatlinPatterson or any person (other than Purchaser or
those companies identified as possible Applicants in Schedule F), including with
respect to any person any agreement or requirement to maintain or contribute to
capital of the Company or the Bank) (each, a "Burdensome Condition") and,
provided, further that, notwithstanding any other provision of this Agreement,
the imposition of a Burdensome Condition in connection with any Required
Approval shall constitute a denial of such Required Approval and such Required
Approval shall be deemed not received for all purposes in this Agreement,
including Section 5.1(d);

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(G)
The board of directors of the Company (the "Board of Directors") shall have
adopted a board resolution nominating the Board Representatives and appointing
the Board Representatives effective as of Closing, as contemplated in Section
4.1;

(H)
The Company shall have received proceeds of the sale of the Management Purchased
Shares of not less than $4 million on or prior to the Closing Date; and

(I)
At the Closing, taking into account payment for the Purchased Shares, Management
Purchased Shares and the TARP Securities, the Bank’s Tier I leverage ratio shall
be no lower than a minimum of 7% and the Bank’s total risk-based capital ratio
shall be a minimum of 12%.

(3)
The obligation of the Company to effect the Closing is subject to the
fulfillment or written waiver by the Company prior to the Closing of the
following additional conditions:

(A)
Purchaser shall have performed in all material respects all obligations required
to be performed by it at or prior to the Closing;

(B)
All representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except to
the extent any such representations and warranties expressly relate to a
specified date, in which case such representation and warranty need only be true
and correct as of such specified earlier date); and

(C)
the Company shall have received a certificate signed on behalf of Purchaser by a
senior executive officer certifying to the effect that the conditions set forth
in Sections 1.2(c)(3)(A) and (B) have been satisfied.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1    Disclosure.

(a)
On or prior to the date hereof, the Company delivered to Purchaser and Purchaser
delivered to the Company a schedule (a "Disclosure Schedule") setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties contained
in Section 2.2 with respect to the Company, or in Section 2.3 with respect to
Purchaser, or to one or more covenants contained in Article III.

(b)
As used in this Agreement, any reference to any fact, change, circumstance or
effect being "material" with respect to the Company means such fact, change,
circumstance or effect is material in relation to the business, assets,
properties, prospects or results of operations or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole. As used in this
Agreement, the term "Material Adverse Effect" means any circumstance, event,
change, development or effect (including changes in applicable laws, rules and
regulations or interpretations thereof by Governmental Entities, changes in U.S.
generally accepted accounting principals ("GAAP") or changes in general
economic, monetary or financial conditions) that, individually or in the
aggregate, (1) is material and adverse to the business, assets, properties,
prospects, results of operations or condition (financial or otherwise) of the
Company and Subsidiaries taken as a whole, or (2) would materially impair the
ability of the Company to perform its obligations under this Agreement or to
consummate the Closing.

(c)
"Previously Disclosed" with regard to (1) a party means information set forth on
its Disclosure Schedule, provided, however, that disclosure in any section of
such Disclosure Schedule shall apply only to the indicated section of this
Agreement except to the extent that it is reasonably apparent from the face of
such disclosure that such disclosure is relevant to another section of this
Agreement, and (2) the Company means

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information publicly disclosed by the Company in (A) its Annual Report on
Form 10‑K for the fiscal year ended December 31, 2007, as filed by it with the
Securities and Exchange Commission ("SEC") on March 13, 2008 (the "Company
10-K"), (B) its Definitive Proxy Statement on Schedule 14A, as filed by it with
the SEC on April 29, 2008, (C) its Quarterly Reports filed on Form 10-Q for the
periods ended March 31, 2008, June 30, 2008 and September 30, 2008 or (D) any
Current Report on Form 8-K filed or furnished by it with the SEC since
January 1, 2008 and publicly available prior to the date of this Agreement
(excluding any risk factor disclosures contained in such documents under the
heading "Risk Factors" and any disclosure of risks included in any
"forward-looking statements" disclaimer or other statements that are similarly
non-specific and are predictive or forward-looking in nature).

2.2    Representations and Warranties of the Company. The Company represents and
warrants to Purchaser, as of the date of this Agreement and as of the Closing
Date (except to the extent made only as of a specified date in which case as of
such date), that:

(a)
Organization and Authority. (1) The Company is, and at the Closing Date will be,
a corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan. The Company is a savings and loan holding company
under the Home Owners’ Loan Act of 1933, as amended ("HOLA"). The Company has,
and at the Closing Date will have, the power and authority (corporate,
governmental, regulatory and otherwise) and has or will have all necessary
approvals, orders, licenses, certificates, permits and other governmental
authorizations (collectively, the "Authorizations") to own or lease all of the
assets owned or leased by it and to conduct its business in the manner
Previously Disclosed, and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Company is, and at the Closing Date will be, duly licensed or qualified to
do business and in good standing as a foreign corporation in all jurisdictions
(i) in which the nature of the activities conducted by the Company requires such
qualification and (ii) in which the Company owns or leases real property other
than such failures that would not have any material impact on the Company. The
Amended and Restated Articles of Incorporation of the Company comply in all
material respects with applicable law. A complete and correct copy of the
Amended and Restated Articles of Incorporation and bylaws of the Company, as
amended and as currently in effect, has been delivered or made available to
Purchaser. The Company’s subsidiaries (each a "Subsidiary" and collectively the
"Subsidiaries") are listed on Schedule B to this Agreement.

(2)
The Bank is a Subsidiary of the Company and is a federally chartered stock
savings bank duly organized, validly existing and in good standing under HOLA.
The deposit accounts of the Bank are insured up to applicable limits by the
Deposit Insurance Fund ("DIF"), which is administered by the Federal Deposit
Insurance Corporation (the "FDIC"), and no proceedings for the termination or
revocation of such insurance are pending or, to the knowledge of the Company,
threatened. The Bank has the power and authority (corporate, governmental,
regulatory and otherwise) and has or will have all necessary Authorizations to
own or lease all of the assets owned or leased by it and to conduct its business
in the manner Previously Disclosed. The Bank is duly licensed or qualified to do
business and in good standing in all jurisdictions (i) in which the nature of
the activities conducted by the Bank requires such qualification and (ii) in
which the Bank owns or leases real property other than such failures that would
not have any material impact on the Company. The Federal Stock Savings Bank
Charter ("Bank Charter") of the Bank complies in all material respects with
applicable law. A complete and correct copy of the Bank Charter, as amended and
as currently in effect, has been delivered or made available to Purchaser.

(3)
Each of the Subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each such Subsidiary has the power and authority (corporate,
governmental, regulatory and otherwise) and has or will have all necessary
Authorizations to own or lease all of the assets owned or leased by it and to
conduct its business as Previously Disclosed. Each such Subsidiary is duly
licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions (i) in which the nature of the activities
conducted by such Subsidiary requires such qualification and (ii) in which such
Subsidiary owns or leases real property other than such failures that would not
have any material impact on the Company. The articles or certificate of
incorporation or certificate of trust of each Subsidiary comply in all material
respects with applicable law. A complete and correct copy of the articles or
certificate of incorporation or certificate of trust of each Subsidiary, as
amended and as currently in effect, has been delivered or made available to
Purchaser.

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(b)
Capitalization. The authorized capital stock of the Company consists of
150,000,000 shares of Common Stock and 25,000,000 shares of preferred stock,
$0.01 par value per share, of the Company (the "Company Preferred Stock"). As of
the close of business on December 15, 2008 (the "Capitalization Date"), there
were 83,626,726 shares of Common Stock outstanding and zero shares of Company
Preferred Stock outstanding. Since the Capitalization Date and through the date
of this Agreement, except in connection with (A) this Agreement and the
transactions contemplated hereby, (B) the TARP Securities, (C) the Management
Equity, (D) the Investor Warrants, (E) the Management Purchased Shares and
(F) as set forth in Company Disclosure Schedule 2.2(b), the Company has not (i)
issued or authorized the issuance of any shares of Common Stock or Company
Preferred Stock, or any securities convertible into or exchangeable or
exercisable for shares of Common Stock or Company Preferred Stock, (ii) reserved
for issuance any shares of Common Stock or Company Preferred Stock or (iii)
repurchased or redeemed, or authorized the repurchase or redemption of, any
shares of Common Stock or Company Preferred Stock. As of the close of business
on the Capitalization Date, other than in respect of the Convertible Preferred
Stock, the TARP Securities, the Management Equity, the Investor Warrants, the
Management Purchased Shares, the Flagstar Bancorp, Inc. 1997 Employees and
Directors Stock Option Plan, as amended, the Flagstar Bancorp, Inc. 2000 Stock
Incentive Plan, as amended, and the 2006 Equity Incentive Plan in respect of
which an aggregate of 521,537 shares of Common Stock have been reserved for
issuance, no shares of Common Stock or Company Preferred Stock were reserved for
issuance. All of the issued and outstanding shares of Common Stock and Company
Preferred Stock have been duly authorized and validly issued and are fully paid
and nonassessable, and have been issued in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. No
bonds, debentures, notes or other indebtedness having the right to vote on any
matters on which the stockholders of the Company may vote ("Voting Debt") are
issued and outstanding. As of the date of this Agreement, except (i) pursuant to
any cashless exercise provisions of any Company stock options or pursuant to the
surrender of shares to the Company or the withholding of shares by the Company
to cover tax withholding obligations under the Benefit Plans, and (ii) as set
forth elsewhere in this Section 2.2(b), the Company does not have and is not
bound by any outstanding subscriptions, options, calls, commitments or
agreements of any character calling for the purchase or issuance of, or
securities or rights convertible into or exchangeable for, any shares of Common
Stock or Company Preferred Stock or any other equity securities of the Company
or Voting Debt or any securities representing the right to purchase or otherwise
receive any shares of capital stock of the Company (including any rights plan or
agreement).

(c)
Subsidiaries. With respect to each of the Subsidiaries, (i) all the issued and
outstanding shares of such Subsidiary’s capital stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and (ii) there are no outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of such Subsidiary’s capital stock, any
other equity security or any Voting Debt, or any such options, rights,
convertible securities or obligations.

(d)
Authorization. (1) The Company has the full legal right, corporate power and
authority to enter into this Agreement and the Preferred Stock Certificate of
Designations and to carry out its obligations hereunder. The execution, delivery
and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors. This Agreement has been duly and validly executed and delivered by
the Company and, assuming due authorization, execution and delivery by
Purchaser, is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms (except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors’ rights or by general equity principles). No other corporate
proceedings are necessary for the execution and delivery by the Company of this
Agreement, the performance by it of its obligations hereunder or the
consummation by it of the transactions contemplated hereby, subject, in the case
of the authorization of the Converted Common Shares, to receipt of the approval
by the Company’s stockholders of the Stockholder Proposals. Assuming the receipt
of the NYSE Approval, no vote of stockholders will be needed for the issuance of
the Convertible Preferred Stock or the ability of Purchaser to exercise the
voting rights contained therein, except for the approval described in
Section 3.1(b)(A) to issue the Converted Common Shares. The only vote of the
stockholders of the Company required in connection with (i) the conversion of
the Convertible Preferred Stock into Common Stock and the amendments to the
Company’s equity compensation plan to effect the Management Equity issuance for
purposes of Section 312.03 of the

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NYSE Listed Company Manual is a majority of the votes cast on such proposal,
provided that the total vote cast on the proposal represents over 50% in
interest of all securities entitled to vote on the proposal (after taking into
account any securities not entitled to vote pursuant to the rules of the NYSE),
(ii) the amendment of the Certificate of Incorporation to increase the number of
authorized shares of Common Stock to at least such number as shall be sufficient
to permit the full issuance of the Securities and the amendment of the
Certificate of Incorporation and bylaws to implement the governance matters
contemplated in Section 4.1 hereof, is the affirmative vote of the holders of
not less than a majority of the outstanding Common Stock. To the Company’s
knowledge, all shares of Common Stock outstanding on the record date for a
meeting at which a vote is taken with respect to the Stockholder Proposals shall
be eligible to vote on such proposals.

(2)
Neither the execution and delivery by the Company of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof (including, without limitation, the
conversion provisions of the Convertible Preferred Stock), will (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or result in the
loss of any benefit or creation of any right on the part of any third party
under, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of any liens, charges,
adverse rights or claims, pledges, covenants, title defects, security interests
and other encumbrances of any kind ("Liens") upon any of the material properties
or assets of the Company or any Subsidiary under any of the terms, conditions or
provisions of (i) subject in the case of the authorization and issuance of the
Converted Common Shares to receipt of the approval by the Company’s stockholders
of the Stockholder Proposals, its Certificate of Incorporation or bylaws (or
similar governing documents) or the certificate of incorporation, charter,
bylaws or other governing instrument of any Subsidiary or (ii) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which it may be bound, or to which the Company or any Subsidiary or any of the
properties or assets of the Company or any Subsidiary may be subject, or
(B) subject to compliance with the statutes and regulations referred to in
Section 2.2(f), violate any law, statute, ordinance, rule, regulation, permit,
concession, grant, franchise or any judgment, ruling, order, writ, injunction or
decree applicable to the Company or any Subsidiary or any of their respective
properties or assets.

(e)
Accountants. Virchow, Krause & Company, LLP, who has expressed its opinion with
respect to the consolidated financial statements contained in the Company’s
Annual Report on Form 10‑K for the year ended December 31, 2007, are registered
independent public accountants, within the meaning of the Code of Professional
Conduct of the American Institute of Certified Public Accountants, as required
by the Securities Act and the rules and regulations promulgated thereunder and
by the rules of the Public Accounting Oversight Board.

(f)
Consents. Schedule 2.2(f) of the Company Disclosure Schedule lists all
governmental and any other material consents, approvals, authorizations,
applications, registrations and qualifications that are required to be obtained
in connection with or for the consummation of the transactions contemplated by
this Agreement (the "Required Approvals"), including the approval of the persons
listed on Schedule 2.2(f) of the Purchaser Disclosure Schedule (the "SLHC
Parties") as savings and loan holding companies and an application to the Office
of Thrift Supervision ("OTS") by the persons listed in Schedule F hereto (such
listed persons, including the SLHC Parties, the "Applicants") and the written
determination by each of the FDIC and the OTS that neither MatlinPatterson nor
any fund sponsored or advised by it or their Affiliates (other than the
Applicants) will control the Company or the Bank or be an "institution
affiliated party" (as defined in 12 USC Section 1813(u)) with respect thereto in
connection with the structure outlined in Schedule 2.2(f) of the Purchaser
Disclosure Schedule. Other than the securities or blue sky laws of the various
states and the Required Approvals, no material notice to, registration,
declaration or filing with, exemption or review by, or authorization, order,
consent or approval of, any Governmental Entity, or expiration or termination of
any statutory waiting period, is necessary for the consummation by the Company
of the transactions contemplated by this Agreement; no person other than each of
the Applicants is required to obtain any Required Approval or other consent or
approval from any Governmental Entity in connection with the transactions
contemplated by this Agreement and no person other than each of the SLHC Parties
is required to be registered as a savings and loan holding company in order to
consummate the transactions contemplated by this Agreement.

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(g)
Financial Statements. Each of the consolidated balance sheets of the Company and
the Subsidiaries and the related consolidated statements of income,
stockholders’ equity and cash flows, together with the notes thereto
(collectively, the "Company Financial Statements"), included in any Company
Report filed with the SEC prior to the date of this Agreement, and the unaudited
consolidated balance sheets of the Company and the Subsidiaries as of November
30, 2008 and the related consolidated statements of income, stockholders’ equity
and cash flows for the period ending November 30, 2008, together with the notes
thereto and in the form Previously Disclosed to Purchaser (the "Interim
Financials") (1) have been prepared from, and are in accordance with, the books
and records of the Company and the Subsidiaries in all material respects,
(2) other than the Interim Financials, complied as to form, as of their
respective date of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, (3) have been prepared in accordance with GAAP applied on
a consistent basis during the periods involved and (4) present fairly in all
material respects the consolidated financial position of the Company and the
Subsidiaries as of the dates set forth therein and the consolidated results of
operations, changes in stockholders’ equity and cash flows of the Company and
the Subsidiaries for the periods stated therein subject, in the case of any
unaudited financial statements, to period end adjustments.

(h)
Reports. (1) Since December 31, 2005, the Company and each Subsidiary has timely
filed all material reports, registrations, documents, filings, statements and
submissions, together with any amendments thereto, that it was required to file
with any Governmental Entity (the foregoing, collectively, the "Company
Reports") and has paid all material fees and assessments due and payable in
connection therewith. As of their respective dates of filing, the Company
Reports complied in all material respects with all statutes and applicable rules
and regulations of the applicable Governmental Entities. To the knowledge of the
Company, as of the date of this Agreement, there are no outstanding comments
from the SEC or any other Governmental Entity with respect to any Company
Report. In the case of each such Company Report filed with or furnished to the
SEC, such Company Report did not, as of its date or if amended prior to the date
of this Agreement, as of the date of such amendment, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading and complied as to form
in all material respects with the applicable requirements of the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With
respect to all other Company Reports, the Company Reports were complete and
accurate in all material respects as of their respective dates, or the dates of
their respective amendments. No executive officer of the Company or any
Subsidiary has failed in any respect to make the certifications required of him
or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(2)
The records, systems, controls, data and information of the Company and the
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Subsidiaries or their accountants (including all means of
access thereto and therefrom). The Company (i) keeps books, records and accounts
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company and the Bank, and (ii) maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management's
general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (C) access to
assets is permitted only in accordance with management's general or specific
authorization and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company (A) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a‑15(e) of the Exchange
Act) to ensure that material information relating to the Company, including the
consolidated Subsidiaries, is made known to the chief executive officer and the
chief financial officer of the Company by others within those entities, and (B)
has disclosed, based on its most recent evaluation prior to the date hereof, to
the Company’s outside auditors and the audit committee of the Board of Directors
(x) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as defined in
Rule 13a‑15(f) of the Exchange Act) that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal
controls over financial reporting. Since December 31, 2007 and until the date of
this Agreement, (A) neither the Company nor any Subsidiary nor, to the knowledge
of the Company, any director,

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officer, employee, auditor, accountant or representative of the Company or any
Subsidiary has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or any Subsidiary or their respective internal accounting controls,
including any material complaint, allegation, assertion or claim that the
Company or any Subsidiary has engaged in questionable accounting or auditing
practices, and (B) no attorney representing the Company or any Subsidiary,
whether or not employed by the Company or any Subsidiary, has reported evidence
of a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board of Directors or any committee thereof or to any director or officer
of the Company. The Company is otherwise in compliance in all material respects
with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and
the rules and regulations promulgated thereunder.

(i)
Properties and Leases. The Company and the Subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by them
(other than any assets the Company has repossessed), in each case free from
Liens that would affect the value thereof or interfere with the use made or to
be made thereof by them in any material respect. The Company and its
Subsidiaries own or lease all properties as are necessary to their operations as
now conducted. The Company and the Subsidiaries hold all leased real or personal
property under valid and enforceable leases with no exceptions that would
interfere with the use made or to be made thereof by them in any material
respect.

(j)
Taxes. Except as set forth in Schedule 2.2(j) of the Company Disclosure
Schedule, (1) each of the Company and the Subsidiaries has duly and timely filed
(including, pursuant to applicable extensions granted without penalty) all
material Tax Returns required to be filed by it and all such Tax Returns are
correct and complete in all material respects. Each of the Company and the
Subsidiaries have paid in full all Taxes due or made adequate provision in the
financial statements of the Company (in accordance with GAAP) for any such
Taxes, whether or not shown as due on such Tax Returns; (2) no material
deficiencies for any Taxes have been proposed, asserted or assessed in writing
against or with respect to any Taxes due by, or Tax Returns of, the Company or
any of the Subsidiaries which deficiencies have not since been resolved; and
(3) there are no Liens for Taxes upon the assets of either the Company or the
Subsidiaries except for statutory Liens for current Taxes not yet due. None of
the Company or any of the Subsidiaries has been a "distributing corporation" or
a "controlled corporation" in any distribution occurring during the last two
years in which the parties to such distribution treated the distribution as one
to which Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code") is applicable. None of the Company or any Subsidiary has engaged in any
transaction that is the same as or substantially similar to a "reportable
transaction" for federal income tax purposes within the meaning of Treasury
Regulations section 1.6011‑4. Neither the Company nor any of the Subsidiaries
has engaged in a transaction of which it made disclosure to any taxing authority
to avoid penalties under Section 6662(d) or any comparable provision of state,
foreign or local law. Neither the Company nor any of the Subsidiaries has
participated in any "tax amnesty" or similar program offered by any taxing
authority to avoid the assessment of penalties or other additions to Tax. The
Company and each of the Subsidiaries have complied in all material respects with
all requirements to report information for Tax purposes to any individual or
Taxing Authority, and have collected and maintained all requisite certifications
and documentation in valid and complete form with respect to any such reporting
obligation, including, without limitation, valid Internal Revenue Service Forms
W-8 and W-9. No claim has been made by a Tax Authority in a jurisdiction where
the Company or any of the Subsidiaries, as the case may be, does not file Tax
Returns that the Company or any of such Subsidiaries, as the case may be, is or
may be subject to Tax by that jurisdiction. For purposes of this Agreement,
"Taxes" shall mean all taxes, charges, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing authority,
including any income, excise, property, sales, transfer, franchise, payroll,
withholding, social security, abandoned or unclaimed property or other taxes,
together with any interest or penalties attributable thereto, and any payments
made or owing to any other person measured by such taxes, charges, levies,
penalties or other assessment, whether pursuant to a tax indemnity agreement,
tax sharing payment or otherwise (other than pursuant to commercial agreements
or Benefit Plans). For purposes of this Agreement, "Tax Return" shall mean any
return, report, information return or other document (including any related or
supporting information) required to be filed with any taxing authority with
respect to Taxes, including, without limitation, all information returns
relating to Taxes of third parties, any claims for refunds of Taxes and any
amendments or supplements to any of the foregoing.

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(k)
Absence of Certain Changes. Since December 31, 2007 until the date hereof and
except as Previously Disclosed, (1) the Company and the Subsidiaries have
conducted their respective businesses in all material respects in the ordinary
and usual course of business and consistent with prior practice, (2) neither the
Company nor the Bank has issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings in the
ordinary course of business, (3) except for publicly disclosed ordinary
dividends on the Common Stock and outstanding Company Preferred Stock, the
Company has not made or declared any distribution in cash or in kind to its
stockholders or issued or repurchased any shares of its capital stock or other
equity interests, (4) the Company has not had and no fact, event, change,
condition, development or circumstance has occurred that would reasonably be
expected to have a Material Adverse Effect with respect to the Company, and
(5) no material default (or event which, with notice or lapse of time, or both,
would constitute a material default) exists on the part of either the Company or
the Bank or, to their knowledge, on the part of any other party, in the due
performance and observance of any term, covenant or condition of any agreement
to which the Company or the Bank is a party and which is, individually or in the
aggregate, material to the condition (financial or otherwise) of the Company and
the Bank, taken as a whole. Such agreements are in full force and effect, and no
other party to any such agreement has instituted or, to the knowledge of the
Company or the Bank, threatened any action or proceeding wherein the Company or
the Bank is or would be alleged to be in default thereunder, under circumstances
where such action or proceeding, if determined adversely to the Company or the
Bank, would have or be reasonably likely to have a Material Adverse Effect.

(l)
No Undisclosed Liabilities. Neither the Company nor any of the Subsidiaries has
any material liabilities or obligations of any nature and is not an obligor
under any guarantee, keepwell or other similar agreement (absolute, accrued,
contingent or otherwise) except for (i) liabilities or obligations reflected in
or reserved against in the Company’s consolidated balance sheet as of December
31, 2007 and September 30, 2008 and current liabilities that have arisen since
the respective dates thereof in the ordinary and usual course of business and
consistent with past practice and (ii) contractual liabilities under (other than
liabilities arising from any breach or violation of) agreements made in the
ordinary and usual course of business and consistent with past practice and that
have either been Previously Disclosed or would not have a material impact on the
Company.

(m)
Commitments and Contracts. (i) The Company has Previously Disclosed or provided
(by hard copy, electronic data room or otherwise) to Purchaser or its
representatives true, correct and complete copies of, each of the following to
which the Company or any Subsidiary is a party or subject (whether written or
oral, express or implied) (each, a "Company Significant Agreement"):

(1)
any contract or agreement which is a "material contract" within the meaning of
Item 601(b)(10) of Regulation S-K to be performed in whole or in part after the
date of this Agreement;

(2)
any contract or agreement which limits the freedom of the Company or any of the
Subsidiaries to compete in any material line of business;

(3)
any material contract or agreement with a labor union or guild (including any
collective bargaining agreement);

(4)
any contract or agreement which grants any person a right of first refusal,
right of first offer or similar right with respect to any material properties,
assets or businesses of the Company or the Subsidiaries;

(5)
any indenture, deed of trust, loan agreement or other financing agreement or
instrument; and

(6)
any contract relating to the acquisition or disposition of any material business
or material assets (whether by merger, sale of stock or assets or otherwise),
which acquisition or disposition is not yet complete or where such contract
contains continuing material obligations, including continuing material
indemnity obligations, of the Company or any of the Subsidiaries.

(ii)
Each of the Company Significant Agreements has been duly and validly authorized,
executed and delivered by the Company or any Subsidiary and is binding on the
Company and the Subsidiaries, as

--------------------------------------------------------------------------------

applicable, and in full force and effect; (iii) the Company and each of the
Subsidiaries, as applicable, are in all material respects in compliance with and
have in all material respects performed all obligations required to be performed
by them to date under each Company Significant Agreement; and (iv) as of the
date hereof, to the Company’s knowledge, neither the Company nor any of the
Subsidiaries has received notice of any material violation or default (or any
condition which with the passage of time or the giving of notice would cause
such a violation of or a default) by any party under any Company Significant
Agreement.
(n)
Offering of Purchased Shares. Neither the Company nor any person acting on its
behalf has taken any action (including any offering of any securities of the
Company) under circumstances which would require the integration of such
offering with the offering of any of the Purchased Shares to be issued pursuant
to this Agreement under the Securities Act, and the rules and regulations of the
SEC promulgated thereunder, which might subject the offering, issuance or sale
of any of the Purchased Shares to Purchaser pursuant to this Agreement to the
registration requirements of the Securities Act.

(o)
Status of Purchased Shares. The Purchased Shares (upon filing of the Preferred
Stock Certificate of Designations with the Michigan Secretary) to be issued
pursuant to this Agreement have been duly authorized by all necessary corporate
action, subject to the approval of the Stockholder Proposals. When issued,
delivered and sold against receipt of the consideration therefore as provided in
this Agreement, the Purchased Shares will be validly issued, fully paid and
nonassessable, will not be issued in violation of or subject to preemptive
rights of any other stockholder of the Company and, provided that the TARP
Transaction is consummated, will not result in the violation or triggering of
any price-based antidilution adjustments under any agreement to which the
Company is a party. The voting rights of the Holders of the Purchased Shares
will be enforceable in accordance with the terms of this Agreement and with the
terms of the Certificate of Designations. No stockholder of the Company has any
right (which will not have been waived or will not have expired by reason of
lapse of time following notification of the Company’s intention to file the
Shelf Registration Statement (as defined herein)) to require the Company to
register the sale of any capital stock owned by such stockholder under the Shelf
Registration Statement.

(p)
Litigation and Other Proceedings. There is no pending or, to the knowledge of
the Company, threatened material claim, action, suit, investigation or
proceeding, against the Company or any Subsidiary or to which any of their
assets are subject, nor is the Company or any Subsidiary subject to any order,
judgment or decree. There is no material unresolved violation, criticism or
exception by any Governmental Entity with respect to any report or relating to
any examinations or inspections of the Company or any Subsidiaries.

(q)
Compliance with Laws. The Company and each Subsidiary have all material permits,
licenses, franchises, authorizations, orders and approvals of, and have made all
filings, applications and registrations with, Governmental Entities that are
required in order to permit them to own or lease their properties and assets and
to carry on their business as presently conducted and that are material to the
business of the Company or such Subsidiary. The Company and each Subsidiary has
complied in all material respects and is not in default or violation in any
respect of, and none of them is, to the knowledge of the Company, under
investigation with respect to or, to the knowledge of the Company, has been
threatened to be charged with or given notice of any material violation of, any
applicable material domestic (federal, state or local) or foreign law, statute,
ordinance, license, rule, regulation, policy or guideline, order, demand, writ,
injunction, decree or judgment of any Governmental Entity. Except for statutory
or regulatory restrictions of general application, no Governmental Entity has
placed any material restriction on the business or properties of the Company or
any Subsidiary. The Company and its Subsidiaries have, and at the Closing Date
will have complied in all material respects with all laws, regulations,
ordinances and orders relating to public health, safety or the environment
(including without limitation all laws, regulations, ordinances and orders
relating to releases, discharges, emissions or disposals to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances, pollutants
or contaminants, or to exposure to toxic, hazardous or other controlled,
prohibited or regulated substances), the violation of which would or might have
a material impact on the Company on the consummation of the transactions
contemplated by this Agreement. In addition, and irrespective of such
compliance, neither the Company nor any of its Subsidiaries is subject to any
liability for environmental remediation or clean-up, including any liability or
class of liability of the lessee under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or the Resource
Conservation and Recovery Act of 1976, as amended,

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which liability would or might have a material impact on the consummation of the
transactions contemplated by this Agreement.

(r)
Labor. Employees of the Company and the Subsidiaries are not represented by any
labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees. No labor organization or group of employees of
the Company or any Subsidiary has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or threatened to
be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. There are no organizing activities, strikes,
work stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or to the Company’s
knowledge threatened against or involving the Company or any Subsidiary. The
Company and each Subsidiary believe that their relations with their employees
are good. No executive officer of the Company (as defined in
Rule 501(f) promulgated under the Securities Act) has notified the Company that
such officer intends to leave the Company or otherwise terminate such officer’s
employment with the Company. No executive officer of the Company is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other agreement or any restrictive covenant,
and the continued employment of each such executive officer does not subject the
Company or any Subsidiary to any liability with respect to any of the foregoing
matters.

(s)
Company Benefit Plans.

(1)
(A) With respect to each Benefit Plan, the Company and the Subsidiaries have
complied, and are now in compliance, in all material respects, with all
provisions of Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code and all laws and regulations applicable to such Benefit
Plan; and (B) each Benefit Plan has been administered in all material respects
in accordance with its terms. "Benefit Plan" means any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, any employee pension benefit
plan within the meaning of Section 3(2) of ERISA, and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program, agreement or
policy sponsored or maintained by the Company and the Subsidiaries.

(2)
Except for liabilities fully reserved for or identified in the Financial
Statements, no claim has been made, or to the knowledge of the Company
threatened, against the Company or any of the Subsidiaries related to the
employment and compensation of employees or any Benefit Plan, including, without
limitation, any claim related to the purchase of employer securities or to
expenses paid under any defined contribution pension plan.

(3)
No Benefit Plans are subject to Title IV or described in Section 3(37) of ERISA,
and neither the Company nor its Subsidiaries has at any time within the past six
(6) years sponsored or contributed to, or has or had within the past six
(6) years any liability or obligation in respect of, any plan subject to Title
IV or described in Section 3(37) of ERISA. The Company has not incurred any
current or projected liability in respect of post-retirement health, medical or
life insurance benefits for Company Employees, except as required to avoid an
excise tax under Section 4980B of the Code or comparable State benefit
continuation laws.

(4)
(A) Neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby will (i) result in any payment
(including severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any current or former employee, officer or director
of the Company or any Subsidiary from the Company or any Subsidiary under any
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Benefit Plan, (iii) result in any acceleration of the time of payment or
vesting of any such benefits, (iv) require the funding or increase in the
funding of any such benefits or (v) result in any limitation on the right of the
Company or any Subsidiary to amend, merge, terminate or receive a reversion of
assets from any Benefit Plan or related trust and (B) neither the Company nor
any Subsidiary has taken, or permitted to be taken, any action that required,
and no circumstances exist that will require the funding, or increase in the
funding, of any benefits, or will result, in any limitation on the right of the
Company

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or any Subsidiary to amend, merge, terminate any Benefit Plan or receive a
reversion of assets from any Benefit Plan or related trust.

(5)
The Company and the Subsidiaries will be in compliance as of the Closing Date,
with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008,
including all guidance issued thereunder by a Governmental Entity.

(t)
Risk Management Instruments. All material derivative instruments, including,
swaps, caps, floors and option agreements, whether entered into for the
Company’s own account, or for the account of one or more of the Subsidiaries,
were entered into (1) only in the ordinary and usual course of business and
consistent with past practice, (2) in accordance with prudent practices and in
all material respects with all applicable laws, rules, regulations and
regulatory policies and (3) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of the Subsidiaries, enforceable in
accordance with its terms. Neither the Company or the Subsidiaries, nor, to the
knowledge of the Company, any other party thereto, is in breach of any of its
material obligations under any such agreement or arrangement.

(u)
Agreements with Regulatory Agencies. Except as set forth in Schedule 2.2(u) of
the Company Disclosure Schedule, neither the Company nor any Subsidiary is
subject to any cease-and-desist or other similar order or enforcement action
issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any capital directive by, or has
adopted any board resolutions at the request of, any Governmental Entity that
currently restricts in any material respect the conduct of its business or that
in any material manner relates to its capital adequacy, its liquidity and
funding policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management or its
operations or business (each item in this sentence, a "Regulatory Agreement"),
nor has the Company or any Subsidiary been advised since December 31, 2006 and
until the date hereof by any Governmental Entity that it is considering issuing,
initiating, ordering, or requesting any such Regulatory Agreement. Neither the
Company nor any Subsidiary is a party or subject to any Regulatory Agreement.

(v)
Environmental Liability. There is no legal, administrative, arbitral or other
proceeding, claim, action or notice of any nature seeking to impose, or that
could result in the imposition of, on the Company or any Subsidiary, any
liability or obligation of the Company or any Subsidiary with respect to any
environmental health or safety matter or any private or governmental,
environmental health or safety investigation or remediation activity of any
nature arising under common law or under any local, state or federal
environmental, health or safety statute, regulation or ordinance, including
CERCLA, pending or, to the Company’s knowledge, threatened against the Company
or any Subsidiary or any property in which the Company or any Subsidiary has
taken a security interest the result of which has had or would reasonably be
expected to have a material impact on the Company; to the Company’s knowledge,
there is no reasonable basis for, or circumstances that could reasonably be
expected to give rise to, any such proceeding, claim, action, investigation or
remediation; and to the Company’s knowledge, neither the Company nor any
Subsidiary is subject to any agreement, order, judgment, decree, letter or
memorandum by or with any Governmental Entity or third party that could impose
any such environmental obligation or liability.

(w)
Mortgage Banking Business.

(1)
Other than as set forth in Schedule 2.2(w)(i) of the Company Disclosure
Schedule, the Company and each Subsidiary has in all material respects complied
with, and all documentation in connection with the origination, processing,
underwriting and credit approval of any mortgage loan originated, purchased or
serviced by the Company or any Subsidiary satisfied in all material respects,
(A) all applicable federal, state and local laws, rules and regulations with
respect to the origination, insuring, purchase, sale, pooling, servicing,
subservicing, or filing of claims in connection with mortgage loans, including
all laws relating to real estate settlement procedures, consumer credit
protection, truth in lending laws, usury limitations, fair housing, transfers of
servicing, collection practices, equal credit opportunity and adjustable rate
mortgages, (B) the responsibilities and obligations relating to mortgage loans
set forth in any agreement between the Company or any Subsidiary and any Agency,
Loan Investor or Insurer, (C) the applicable rules, regulations, guidelines,
handbooks and other requirements of any Agency, Loan Investor or Insurer and (D)
the

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terms and provisions of any mortgage or other collateral documents and other
loan documents with respect to each mortgage loan; and

(2)
Other than as set forth in Schedule 2.2(w)(2) of the Company Disclosure
Schedule, no Agency, Loan Investor or Insurer has (A) claimed in writing that
the Company or any Subsidiary has violated or has not complied in all material
respects with the applicable underwriting standards with respect to mortgage
loans sold by the Company or any Subsidiary to a Loan Investor or Agency, or
with respect to any sale of mortgage servicing rights to a Loan Investor, (B)
imposed in writing restrictions on the activities (including commitment
authority) of the Company or any Subsidiary or (C) indicated in writing to the
Company or any Subsidiary that it has terminated or intends to terminate its
relationship with the Company or any Subsidiary for poor performance, poor loan
quality or concern with respect to the Company’s or any Subsidiary’s compliance
with laws.

For purposes of this Section 2.2(w):    

(A)
"Agency" shall mean the Federal Housing Administration, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the Government
National Mortgage Association, or any other federal or state agency with
authority to (i) authority to determine any investment, origination, lending or
servicing requirements with regard to mortgage loans originated, purchased or
serviced by the Company or any Subsidiary or (ii) originate, purchase, or
service mortgage loans, or otherwise promote mortgage lending, including,
without limitation, state and local housing finance authorities;

(B)
"Loan Investor" shall mean any person (including an Agency) having a beneficial
interest in any mortgage loan originated, purchased or serviced by the Company
or any Subsidiary or a security backed by or representing an interest in any
such mortgage loan; and

(C)
"Insurer" means a person who insures or guarantees for the benefit of the
mortgagee all or any portion of the risk of loss upon borrower default on any of
the mortgage loans originated, purchased or serviced by the Company or any
Subsidiary, including, the Federal Housing Administration, the United States
Department of Veterans’ Affairs, the Rural Housing Service of the U.S.
Department of Agriculture and any private mortgage insurer, and providers of
hazard, title or other insurance with respect to such mortgage loans or the
related collateral.

(x)
Insurance. The Company maintains insurance underwritten by insurers of
recognized financial responsibility, of the types and in the amounts that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, with such deductibles as are customary for
companies in the same or similar business, all of which insurance is in full
force and effect.

(y)
Reinsurance. There are no provisions in any first lien residential mortgage
insurance policy or any other insurance policy, certificate of insurance or
other contingent obligation, or any derivative or hedging instrument, or any
commitment to issue any of the foregoing, under which Flagstar Bank, FSB or any
of its affiliates is a beneficiary or owed obligations, that require as a
condition to payment or other performance of the obligor hereunder that (i)
Flagstar Reinsurance Company not be insolvent or subject to any rehabilitation,
liquidation, conservatorship or similar proceeding, (ii) Flagstar Reinsurance
Company be in compliance with, or not in default under, any or all of its
obligations under any reinsurance or other agreement, or (iii) any reinsurance
or other agreement to which Flagstar Reinsurance Company is a party to be in
full force and effect.

(z)
Intellectual Property. The Company and its Subsidiaries own or possess all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, "Proprietary Rights") used in or necessary for the
conduct of the business of the Company as now conducted and as proposed to be
conducted as Previously Disclosed, except where the failure to own such
Proprietary Rights would not have any material impact on the Company. The
Company and its Subsidiaries have the right to use all Proprietary Rights used
in or necessary for the conduct of their

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respective businesses without infringing the rights of any person or violating
the terms of any licensing or other agreement to which the Company or any
Subsidiary is a party and, to the Company’s knowledge, no person is infringing
upon any of the Proprietary Rights, except where the infringement of or lack of
a right to use such Proprietary Rights would not have any material impact on the
Company. Except as Previously Disclosed, no charges, claims or litigation have
been asserted or, to the Company’s knowledge, threatened against the Company or
any Subsidiary contesting the right of the Company or any Subsidiary to use, or
the validity of, any of the Proprietary Rights or challenging or questioning the
validity or effectiveness of any license or agreement pertaining thereto or
asserting the misuse thereof, and, to the Company's knowledge, no valid basis
exists for the assertion of any such charge, claim or litigation. All licenses
and other agreements to which the Company or any Subsidiary is a party relating
to Proprietary Rights are in full force and effect and constitute valid, binding
and enforceable obligations of the Company or such Subsidiary, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, as the case may be, and there have not been
and there currently are not any defaults (or any event which, with notice or
lapse of time, or both, would constitute a default) by the Company or any
Subsidiary under any license or other agreement affecting Proprietary Rights
used in or necessary for the conduct of the business of the Company or any
Subsidiary, except for defaults, if any, which would not have any material
impact on the Company. The validity, continuation and effectiveness of all
licenses and other agreements relating to the Proprietary Rights and the current
terms thereof will not be affected by the transactions contemplated by this
Agreement.

(aa)
Anti-takeover Provisions Not Applicable. The Board of Directors has taken all
necessary action to ensure that the transactions contemplated by this Agreement
and any of the transactions contemplated hereby will be deemed to be exceptions
to the provisions of the Michigan Business Corporation Act, and that any other
similar "moratorium," "control share," "fair price," "takeover" or "interested
stockholder" law does not and will not apply to this Agreement or to any of the
transactions contemplated hereby.

(ab)
Knowledge as to Conditions. As of the date of this Agreement, the Company knows
of no reason why any regulatory approvals and, to the extent necessary, any
other approvals, authorizations, filings, registrations, and notices required or
otherwise a condition to the consummation of the transactions contemplated by
this Agreement will not be obtained or that any Required Approval will not be
granted without imposition of a Burdensome Condition.

(ac)
Brokers and Finders. Except as set forth in Schedule 2.2(cc) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary nor any of their
respective officers, directors, employees or agents has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder’s fees, and no broker or finder has acted directly
or indirectly for the Company or any Subsidiary, in connection with this
Agreement or the transactions contemplated hereby.

(ad)
Price of Common Stock. The Company has not taken, and will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities.

(ae)
Investment Company. The Company is not and, after giving effect to the offering
and sale of the Purchased Shares and the application of the proceeds thereof,
will not be an "investment company" or an "affiliated person" of, or "promoter"
or "principal underwriter" for an investment company, as such term is defined in
the Investment Company Act of 1940 (the "Investment Company Act"), as amended,
and the rules and regulations of the SEC promulgated thereunder.

(af)
Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other
than income taxes) that are required to be paid in connection with the sale and
transfer of the Purchased Shares to be sold to the Purchaser hereunder will have
been, fully paid or provided for by the Company and all laws imposing such taxes
will have been fully complied with.

(ag)
Related Party Transactions. No transaction has occurred between or among the
Company, on the one hand, and its Affiliates, officers or directors on the other
hand, that is required to have been described under applicable securities laws
in its Exchange Act filings and is not so described in such filings.

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(ah)
Listing. Except as Previously Disclosed, (i) the Company is in compliance with
the requirements of the NYSE for continued listing of the Common Stock thereon
and (ii) the Company has taken no action designed to, or, to its knowledge,
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the listing of the Common Stock on the NYSE, nor has
the Company received any notification that the SEC or the NYSE is contemplating
terminating such registration or listing. The transactions contemplated by this
Agreement will not contravene the rules and regulations of the NYSE. The Company
will comply with all requirements of the NYSE with respect to the issuance of
the Converted Common Shares and shall cause the Common Stock and Converted
Common Shares to be listed on the NYSE.

(ai)
Foreign Corrupt Practices. Neither the Company, nor any Subsidiary, nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

(aj)
U.S. Real Property Holding Corporation Status. The Company is not, nor has ever
been, a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended.

(ak)
Shell Company Status. The Company is not, nor has ever been, an issuer of the
type described in Rule 144(i)(l) under the Securities Act.

(al)
Solvency. The Company and each of its Subsidiaries does and will after giving
effect to the to the transactions contemplated hereby to occur at the Closing
and the issuance and sale of the Securities (a) own assets the fair saleable
value of which are (i) greater than the total amount of its liabilities
(including known contingent liabilities) and (ii) greater than the amount that
will be required to pay the probable liabilities of its existing debts as they
become absolute and matured considering the financing alternatives reasonably
available to it and (b) not have capital that will be unreasonably small in
relation to its business as presently conducted or any contemplated. The Company
has no knowledge of any facts or circumstances which lead it to believe that it
or any of its Subsidiaries will be required to file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction, and
has no present intent to so file.

2.3    Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to the Company, as of the date of this Agreement and as of the
Closing Date (except to the extent made only as of a specified date, in which
case as of such date), that:

(a)
Organization and Authority. Purchaser is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, is duly
qualified to do business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified, and Purchaser has the corporate or other power and authority
and governmental authorizations to own its properties and assets and to carry on
its business as it is now being conducted.

(b)
Authorization. (1) Purchaser has the corporate or other power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby have been duly authorized
by Purchaser’s board of directors, general partner or managing members, as the
case may be, and no further approval or authorization by any of its partners or
other equity owners, as the case may be, is required. This Agreement has been
duly and validly executed and delivered by Purchaser and assuming due
authorization, execution and delivery by the Company, is a valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms (except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors’ rights or by general
equity principles).

(2)
Neither the execution, delivery and performance by Purchaser of this Agreement,
nor the consummation of the transactions contemplated hereby, nor compliance by
Purchaser with any of the provisions hereof, will (A) violate, conflict with, or
result in a breach of any provision of, or

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constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of any Lien upon any of the
properties or assets of Purchaser under any of the terms, conditions or
provisions of (i) its certificate of limited partnership or partnership
agreement or similar governing documents or (ii) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Purchaser is a party or by which it may be bound, or to
which Purchaser or any of the properties or assets of Purchaser may be subject,
or (B) subject to compliance with the statutes and regulations referred to in
the next paragraph, violate any law, statute, ordinance, rule or regulation,
permit, concession, grant, franchise or any judgment, ruling, order, writ,
injunction or decree applicable to Purchaser or any of its properties or assets
except in the case of clauses (A)(ii) and (B) for such violations, conflicts and
breaches as would not reasonably be expected to materially and adversely affect
Purchaser’s ability to perform its respective obligations under this Agreement
or consummate the transactions contemplated hereby on a timely basis.

(3)
Assuming the Company’s representation contained in Section 2.2(f) is true and
correct and other than the securities or blue sky laws of the various states or
as set forth in Schedule 2.3(c)(3) of the Purchaser Disclosure Schedule, no
material notice to, registration, declaration or filing with, exemption or
review by, or authorization, order, consent or approval of, any Governmental
Entity, or expiration or termination of any statutory waiting period, is
necessary for the consummation by the Purchaser of the transactions contemplated
by this Agreement.

(c)
Purchase for Investment. Purchaser acknowledges that the Securities have not
been registered under the Securities Act or under any state securities laws.
Purchaser (1) is acquiring the Securities pursuant to an exemption from
registration under the Securities Act solely for investment with no present
intention to distribute any of the Securities to any person, (2) will not sell
or otherwise dispose of any of the Securities, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
other applicable securities laws, (3) has such knowledge and experience in
financial and business matters and in investments of this type that it is
capable of evaluating the merits and risks of its investment in the Securities
and of making an informed investment decision, and (4) is an "accredited
investor" (as that term is defined by Rule 501 of the Securities Act).

(d)
Financial Capability. At Closing, Purchaser will have available funds necessary
to consummate the Closing on the terms and conditions contemplated by this
Agreement; Purchaser has available to it commitments for the full Purchase Price
to be funded by persons advised by MatlinPatterson. As of the date hereof,
neither MatlinPatterson Global Opportunities Partners III L.P. nor
MatlinPatterson Global Opportunities Partners Cayman III L.P. is the subject of
any pending withdrawals or redemption requests that it does not have the
financial ability to fulfill, nor do either MatlinPatterson Global Opportunities
Partners III L.P. or MatlinPatterson Global Opportunities Partners Cayman III
L.P. have any knowledge of any pending withdrawal or redemption requests that it
will not have the financial ability to fulfill.

(e)
Purchaser’s Operations. Purchaser has not conducted any business other than that
(x) incidental to its formation for the sole purpose of carrying out the
transactions contemplated by this Agreement and (y) in relation to this
Agreement the transactions contemplated hereby.

(f)
Brokers and Finders. Neither Purchaser nor its Affiliates, any of their
respective officers, directors, employees or agents has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder’s fees, and no broker or finder has acted directly
or indirectly for Purchaser, in connection with this Agreement or the
transactions contemplated hereby, in each case, whose fees the Company would be
required to pay (other than pursuant to the reimbursement of expenses provisions
of Section 6.2).

(g)
Knowledge as to Conditions. As of the date of this Agreement, the Purchaser has
not been advised by any Governmental Entity that any regulatory approvals and,
to the extent necessary, any other approvals, authorizations, filings,
registrations, and notices required or otherwise a condition to the consummation
of the transactions contemplated by this Agreement will not be obtained or that
any Required Approval will not be granted without the imposition of a Burdensome
Condition.

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(h)
Ownership. As of the date of this Agreement, Purchaser is not the owner of
record or the beneficial owner of shares of Common Stock or securities
convertible into or exchangeable for Common Stock.

(i)
Investment Company Status. The Purchaser is not an "investment company" nor
controlled by an "investment company" as such term is defined in the Investment
Company Act and the rules and regulations of the SEC promulgated thereunder.

ARTICLE III

COVENANTS

3.1    Filings; Other Actions.

(a)
Purchaser, on the one hand, and the Company, on the other hand, will cooperate
and consult with the other and use reasonable best efforts to prepare and file
all necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits,
consents, orders, approvals and authorizations of, or any exemption by, all
third parties and Governmental Entities, including, without limitation, the
Required Approvals, and the expiration or termination of any applicable waiting
period, necessary or advisable to consummate the transactions contemplated by
this Agreement, and to perform the covenants contemplated by this Agreement.
Each party shall execute and deliver both before and after the Closing such
further certificates, agreements and other documents and take such other actions
as the other party may reasonably request to consummate or implement such
transactions or to evidence such events or matters. In particular, Purchaser
will use its reasonable best efforts to promptly obtain or submit, and the
Company will cooperate as may reasonably be requested by Purchaser to help
Purchaser promptly obtain or submit, as the case may be, as promptly as
practicable, (i) the approvals and authorizations of, filings, applications and
registrations with, and notifications to, or expiration or termination of any
applicable waiting period, under the HOLA (it being understood and agreed that
such application shall reflect and seek approval for the "silo" structure
previously disclosed to the Company (and set forth in the Purchaser’s Disclosure
Schedule) and that no person other than Purchaser and the other Applicants
listed on Schedule F (nor any investors in any fund sponsored or advised by
MatlinPatterson, including investors in MatlinPatterson Global Opportunities
Partners III L.P. or MatlinPatterson Global Opportunities Partners Cayman III
L.P.) shall be required to file or become parties to any such filing or
registration, or in any way become subject to HOLA or restrictions or
requirements thereunder), and, as applicable, any such approvals and
authorizations, filings, applications and registrations shall include
information and documentation to implement the securities trading platform as
described at Schedule 3.1(a) of the Purchaser Disclosure Schedule and otherwise
shall be consistent with the silo structure referred to above and (ii) a written
determination, in form and substance reasonably satisfactory to the relevant
Applicant and notified to Purchaser, of each of the FDIC and the OTS that
neither MatlinPatterson nor any fund sponsored or advised by it or its
Affiliates (other than the Applicants) will control the Company or the Bank or
be an "institution affiliated party" (as defined in 12 USC Section 1813(u)) with
respect thereto. Purchaser and the Company will have the right to review in
advance, and to the extent practicable, each will consult with the other in each
case, subject to applicable laws relating to the exchange of information, all
the information relating to such other party, and any of their respective
Affiliates, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions to which it will be party contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees to keep the
other party apprised of the status of matters referred to in this Section
3.1(a). Purchaser shall promptly furnish the Company, and the Company shall
promptly furnish Purchaser, to the extent permitted by applicable law, with
copies of written communications received by it or its Subsidiaries from, or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.

(b)
Unless this Agreement has been terminated pursuant to Section 5.1, the Company
shall call a special meeting of its stockholders, as promptly as practicable
following the Closing but in any event no later than the next annual stockholder
meeting, to vote on proposals (collectively, the "Stockholder Proposals") to
(A) amend the Certificate of Incorporation to increase the number of authorized
shares of Common Stock to at least such number as shall be sufficient to permit
issuance of all of the Securities and (B) amend the Certificate of Incorporation
and bylaws to opt out of Article 7B of the Michigan Business Corporation Act and
to implement the governance matters contemplated in Section 4.1 hereof and (C)
to amend the Company’s

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equity compensation plans as necessary to implement an equity incentive program
(the "Management Equity") as described at Schedule E hereto. The Board of
Directors shall unanimously recommend to the Company’s stockholders that such
stockholders vote in favor of the Stockholder Proposals (subject to any legally
required abstentions) (such recommendation, the "Company Recommendation") and
the Purchaser shall vote (to the extent it is entitled to vote) in favor of the
Stockholder Proposals, provided that, Purchaser’s obligation to vote in favor of
the Stockholder Proposal described in clause (C) above shall be conditioned upon
the prior approval by the stockholders of the Stockholder Proposals described in
clauses (A) and (B) above. In connection with such meeting, the Company shall
promptly prepare (and Purchaser will reasonably cooperate with the Company to
prepare) and file with the SEC a preliminary proxy statement, shall use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause a definitive proxy statement related to such stockholders’ meeting to
be mailed to the Company’s stockholders not more than five business days after
clearance thereof by the SEC, and shall use its reasonable best efforts to
solicit proxies for such stockholder approval. The Company shall notify
Purchaser promptly of the receipt of any comments from the SEC or its staff with
respect to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply Purchaser with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to such proxy statement. If at any time prior to such
stockholders’ meeting there shall occur any event that is required to be set
forth in an amendment or supplement to the proxy statement, the Company shall as
promptly as practicable prepare and mail to its stockholders such an amendment
or supplement. Each of Purchaser and the Company agrees promptly to correct any
information provided by it or on its behalf for use in the proxy statement if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall, as promptly as practicable, prepare
and mail to its stockholders an amendment or supplement to correct such
information to the extent required by applicable laws and regulations. The
Company shall consult with Purchaser prior to filing any proxy statement, or any
amendment or supplement thereto, and provide Purchaser with a reasonable
opportunity to comment thereon. In the event that the approval of any of the
Stockholder Proposals is not obtained at such special stockholders meeting, the
Company shall include a proposal to approve (and the Board of Directors shall
unanimously recommend approval of and the Purchaser shall vote in favor of) each
such proposal at a meeting of its stockholders no less than once in each
subsequent six-month period beginning on March 1, 2009 until all such approvals
are obtained or made.

(c)
Purchaser, on the one hand, agrees to furnish the Company, and the Company, on
the other hand, agrees, upon request, to furnish to Purchaser, all information
concerning itself, its Affiliates, directors, officers, partners and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the proxy statement in connection with any such stockholders
meeting and any other statement, filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any Governmental Entity
in connection with the Closing and the other transactions contemplated by this
Agreement.

(d)
Unless this Agreement has been terminated pursuant to Section 5.1, Purchaser
hereby agrees that at any meeting of the stockholders of the Company held to
vote on any Stockholder Proposals contemplated herein and not previously
approved by the Company’s stockholders, however called, Purchaser shall vote, or
cause to be voted, all of the Purchased Shares owned by Purchaser and its
Affiliates in favor of such Stockholder Proposals; provided, further that,
Purchaser’s obligation to vote in favor of the Stockholder Proposal described in
clause (C) of Section 3.1(b) above shall be conditioned upon the prior approval
by the stockholders of the Stockholder Proposals described in clauses (A) and
(B) of Section 3.1(b) above.

3.2    Access, Information and Confidentiality.

(a)
From the date hereof until the date when the Securities purchased pursuant to
this Agreement and held by Purchaser represent less than 5% of the outstanding
Common Stock (counting as shares owned by Purchaser all Converted Common Shares
and assuming that to the extent Purchaser shall purchase any additional shares
of Common Stock, any later sales of Common Stock by Purchaser shall be deemed to
be shares other than Securities to the extent of such additional purchases) (the
"Qualifying Ownership Interest"), the Company will permit Purchaser to visit and
inspect, at Purchaser’s expense, the properties of the Company and the
Subsidiaries, to examine the corporate books and to discuss the affairs,
finances and accounts of the Company and the Subsidiaries with the principal
officers of the Company, all upon reasonable notice and at such reasonable times
and as often as Purchaser may reasonably request. Any investigation pursuant to
this Section 3.2 shall be conducted during normal business hours and in such
manner as not to interfere unreasonably with the conduct of the business of the
Company, and nothing herein shall require the Company

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or any Subsidiary to disclose any information to the extent (i) prohibited by
applicable law or regulation, (ii) that the Company reasonably believes such
information to be competitively sensitive proprietary information (except to the
extent Purchaser provides assurances reasonably acceptable to the Company that
such information shall not be used by Purchaser or its Affiliates to compete
with the Company and Subsidiaries), or (iii) that such disclosure would
reasonably be expected to cause a violation of any agreement to which the
Company or any Subsidiary is a party or would cause a risk of a loss of
privilege to the Company or any Subsidiary (provided that the Company shall use
commercially reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances where the restrictions in this clause (iii)
apply). In the event, and to the extent, that, as a result of any change in
applicable law or regulation or a judicial or administrative interpretation of
applicable law or regulation, it is reasonably determined that the rights
afforded pursuant to this Section 3.2 are not sufficient for purposes of the
Department of Labor’s "plan assets" regulations, to the extent such plan assets
regulation applies to the investment in the Securities, Purchaser and the
Company shall cooperate in good faith to agree upon mutually satisfactory
management access and information rights which satisfy such regulations.

(b)
Each party to this Agreement will hold, and will cause its respective Affiliates
and their directors, officers, employees, agents, consultants and advisors to
hold, in strict confidence, unless disclosure to a regulatory authority is
necessary or appropriate in connection with any necessary regulatory approval or
unless disclosure is required by judicial or administrative process or, in the
written opinion of its counsel, by other requirement of law or the applicable
requirements of any regulatory agency or relevant stock exchange, all non-public
records, books, contracts, instruments, computer data and other data and
information (collectively, "Information") concerning the other party hereto
furnished to it by such other party, its representatives or any Board Observer
pursuant to this Agreement (except to the extent that such information can be
shown to have been (1) previously known by such party on a non-confidential
basis, (2) in the public domain through no fault of such party or (3) later
lawfully acquired from other sources by the party to which it was furnished),
and neither party hereto shall release or disclose such Information to any other
person, except its auditors, attorneys, financial advisors, other consultants
and advisors and as permitted by Section 4.1(f).

3.3    Conduct of the Business.

(a)
The Company agrees that, prior to the earlier of the Closing Date and the
termination of this Agreement pursuant to Section 5.1 (the "Pre-Closing
Period"), except as Previously Disclosed in the comparable subsection of the
Disclosure Schedule with regard to the Company, without the prior written
consent of Purchaser, it will not, and will cause each of the Subsidiaries not
to:

(1)
Ordinary Course. Fail to use commercially reasonable efforts to carry on its
business in the ordinary and usual course of business and consistent with past
practice or fail to use reasonable best efforts to maintain and preserve its and
such Subsidiary’s business (including its organization, assets, properties,
goodwill and insurance coverage) and to preserve its business relationships with
customers, strategic partners, suppliers, distributors and others having
business dealings with it.

(2)
Operations. Enter into any new line of business or materially change its
lending, investment, underwriting, risk and asset liability management, and
other banking and operating policies, except as required by applicable law or
policies imposed by any Governmental Entity.

(3)
Capital Expenditures. Make any capital expenditures in excess of $500,000
individually or $2,500,000 in the aggregate, other than as required pursuant to
commitments already entered into.

(4)
Material Contracts. Terminate, enter into, amend, modify (including by way of
interpretation) or renew any material contract, other than in the ordinary
course of business and consistent with past practice, or terminate, amend or
modify (including by way of interpretation) any Investor Waiver.

(5)
Capital Stock. Issue, sell or otherwise permit to become outstanding, or dispose
of or encumber or pledge, or authorize or propose the creation of, any
additional shares of its stock or any additional options or other rights, grants
or awards with respect to the Common Stock, except the TARP Securities, the
Management Purchased Shares, the Investor Warrants and any shares of Common
Stock issued pursuant to the exercise of outstanding stock options or vesting of
restricted stock.

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(6)
Dividends, Distributions, Repurchases. Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any distribution on
any shares of its stock (other than (A) dividends from its wholly owned
Subsidiaries to it or another of its wholly owned Subsidiaries or (B) dividends
on trust preferred securities issued by any Subsidiary) or directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its stock or any options or other rights, grants or
awards with respect to the Common Stock.

(7)
Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue any of its assets, deposits, business or properties, except for
sales, transfers, mortgages, encumbrances or other dispositions or
discontinuances in the ordinary course of business consistent with past practice
and in a transaction that individually or taken together with all other such
transactions is not material to it and the Subsidiaries, taken as a whole.

(8)
Extensions of Credit and Interest Rate Instruments. Make, renew or amend (except
in the ordinary and usual course of business and consistent with past practice
where there has been no material change in the relationship with the borrower or
in an attempt to mitigate loss with respect to the borrower) any extension of
credit in excess of $2,000,000, or enter into, renew or amend any interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of it or for the
account of a customer of it or one of the Subsidiaries, except in the ordinary
and usual course of business and consistent with past practice.

(9)
Acquisitions. Acquire (other than by way of foreclosures, acquisitions of
control in a fiduciary or similar capacity, acquisitions of loans or
participation interests, or in satisfaction of debts previously contracted in
good faith, in each case in the ordinary and usual course of business and
consistent with past practice) all or any portion of the assets, business,
deposits or properties of any other person.

(10)
Constituent Documents. Amend its Certificate of Incorporation or bylaws or
similar organizational documents of its Subsidiaries.

(11)
Accounting Methods. Implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or applicable
accounting requirements of a Governmental Entity.

(12)
Tax Matters. Make, change or revoke any Tax election, file any amended Tax
Return (unless to correct an error), enter into any closing agreement, settle
any Tax claim or assessment, or surrender any right to claim a refund of Taxes.

(13)
Claims. Settle any action, suit, claim or proceeding against it, except for an
action, suit, claim or proceeding that is settled in the ordinary and usual
course of business and consistent with past practice in an amount or for
consideration not in excess of $500,000 and that would not (A) impose any
material restriction on the business of it or the Subsidiaries and, after the
Closing, Purchaser or its Subsidiaries or (B) create precedent for claims that
are reasonably likely to be material to it or its subsidiaries and, after the
Closing, Purchaser or its subsidiaries.

(14)
Compensation. Terminate, enter into, amend, modify (including by way of
interpretation) or renew any employment, officer, consulting, severance, change
in control or similar contract, agreement or arrangement with any director,
officer, employee or consultant, or grant any salary or wage increase or
increase any employee benefit, including incentive or bonus payments (or, with
respect to any of the preceding, communicate any intention to take such action),
except (A) to make changes that are required by applicable law, or (B) to
satisfy Previously Disclosed contractual obligations existing as of the date
hereof, or (C) annual or merit-based salary or wage increases or increases in
benefits, in both cases to employees who are not executive officers or directors
of the Company, undertaken in the ordinary and usual course of business and
consistent with past practice and in any event not to exceed three percent (3%)
of such employees’ annual salaries in the aggregate, or (D) pursuant to the TARP
Transaction.

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(15)
Benefit Arrangements. Terminate, enter into, establish, adopt, amend, modify
(including by way of interpretation), make new grants or awards under or renew
any pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any director,
officer, employee or consultant, amend the terms of any outstanding equity-based
award, take any action to accelerate the vesting, exercisability or payment (or
fund or secure the payment) of stock options, restricted stock or other
compensation or benefits payable thereunder or add any new participants to any
non-qualified retirement plans (or, with respect to any of the preceding,
communicate any intention to take such action), except (A) as required by
applicable law and (B) to satisfy Previously Disclosed contractual obligations
existing as of the date hereof, or (C) pursuant to the TARP Transaction.

(16)
Intellectual Property. (i) grant, extend, amend (except as required in the
diligent prosecution of the Proprietary Rights owned (beneficially, and of
record where applicable) by or developed for the Company and its Subsidiaries),
waive, or modify any material rights in or to, sell, assign, lease, transfer,
license, let lapse, abandon, cancel, or otherwise dispose of, or extend or
exercise any option to sell, assign, lease, transfer, license, or otherwise
dispose of, any Proprietary Rights, or (ii) fail to exercise a right of renewal
or extension under any material agreement under which the Company or any of its
Subsidiaries is licensed or otherwise permitted by a third party to use any
Proprietary Rights (other than "shrink wrap" or "click through" licenses).

(17)
Communication. Make any written or oral communications to the officers or
employees of the Company or any of the Subsidiaries pertaining to compensation
or benefit matters that are affected by the transactions contemplated by this
Agreement without providing Purchaser with a copy or written description of the
intended communication and a reasonable period of time to review and comment on
such communication; provided, however, that the foregoing shall not prevent
human resources personnel of the Company from orally answering questions of
individual employees pertaining to compensation or benefit matters with respect
to such individual employee that are affected by the transactions contemplated
by this Agreement on an individual basis with such employee.

(18)
Adverse Actions. Notwithstanding any other provision hereof, knowingly take, or
knowingly omit to take, any action that is reasonably likely to result in any of
the conditions set forth in Section 1.2(c) not being satisfied, or any action
that is reasonably likely to materially impair its ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby, except as required by applicable law or this Agreement.

(19)
Commitments. Enter into any contract with respect to, or otherwise agree or
commit to do, any of the foregoing.

Notwithstanding the foregoing, nothing in this Section 3.3(a) shall limit or
require any actions that the Board of Directors may, in good faith, determine to
be inconsistent with their duties or the Company’s obligations under applicable
law or imposed by any Governmental Entity.

(b)
If applicable, in the event the Company takes any action that would require any
antidilution adjustment to be made under the Preferred Stock Certificate of
Designations as if issued on the date of this Agreement, the Company shall make
appropriate adjustments such that Purchaser will receive the benefit of such
transaction as if the Securities to be purchased by Purchaser at the Closing had
been outstanding as of the date of such action.

(c)
As soon as practicable after the date of this Agreement, the Company shall
develop an operating plan (the "Operating Plan") and use its best efforts to
cause such plan, in form and substance reasonably satisfactory to Purchaser
(such approval not to be unreasonably withheld), to be approved by the Board of
Directors as soon as reasonably practicable thereafter; provided that, such
approval by the Board of Directors shall occur no later than the Closing. The
Board of Directors may make such changes or modifications to the Operating Plan
that, in the exercise of its fiduciary duties upon advice of counsel, it
determines are necessary or in the best interests of the Company, provided that,
no change or modification shall be made without providing Purchaser with a
reasonable opportunity for consultation prior to any such change or
modification.

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(d)
The Company shall cooperate with the Purchaser and use its reasonable best
efforts to take, or cause to be taken, all appropriate action to implement the
securities trading platform contemplated in Schedule 3.1(a) of the Purchaser
Disclosure Schedule and from the date hereof and through the closing of any such
transactions contemplated thereby, shall comply with the terms and obligations
set forth in such Section 3.1(a) (provided that no such transaction shall be
required to be implemented prior to Closing).

3.4    Acquisition Proposals.

(a)
No Solicitation or Negotiation. The Company agrees that, except for the TARP
Transaction or as expressly permitted by this Section 3.4, neither it nor any of
the Subsidiaries nor any of the officers and directors of it or the Subsidiaries
shall, and that it shall use its best efforts to instruct and cause its and the
Subsidiaries’ employees, investment bankers, attorneys, accountants and other
advisors or representatives (such directors, officers, employees, investment
bankers, attorneys, accountants and other advisors or representatives,
collectively, "Representatives") not to, directly or indirectly:

(1)
initiate, solicit or encourage any inquiries or the making of any proposal or
offer that constitutes, or could reasonably be expected to lead to, any
Acquisition Proposal;

(2)
engage in, continue or otherwise participate in any discussions or negotiations
regarding, or provide any non-public information or data to any person relating
to, any Acquisition Proposal; or

(3)
otherwise facilitate knowingly any effort or attempt to make an Acquisition
Proposal.

Notwithstanding anything in the foregoing to the contrary, the Company may
(A) provide information in response to a request therefor by a person who has
made an unsolicited bona fide written Acquisition Proposal providing for the
acquisition of more than 50% of the assets (on a consolidated basis) or total
voting power of the equity securities of the Company if the Company receives
from the person so requesting such information an executed confidentiality
agreement on terms not less restrictive to the other party than those contained
in the confidentiality agreement entered into by the Company and Purchaser on
November 18, 2008 and promptly discloses (and, if applicable, provides copies
of) any such information to Purchaser to the extent not previously provided to
Purchaser; (B) engage or participate in any discussions or negotiations with any
person who has made such an unsolicited bona fide written Acquisition Proposal;
or (C) after having complied with Section 3.4(c), approve, recommend, or
otherwise declare advisable or propose to approve, recommend or declare
advisable (publicly or otherwise) such an Acquisition Proposal, if and only to
the extent that, (x) prior to taking any action described in clause (A), (B) or
(C) above, the Board of Directors determines in good faith after consultation
with outside legal counsel that such action is necessary in order for such
directors to comply with the directors’ fiduciary duties under applicable law,
(y) in each such case referred to in clause (A) or (B) above, the Board of
Directors has determined in good faith based on the information then available
and after consultation with its financial advisor that such Acquisition Proposal
either constitutes a Superior Proposal or is reasonably likely to result in a
Superior Proposal, and (z) in the case referred to in clause (C) above, the
Board of Directors determines in good faith (after consultation with its
financial advisor and outside legal counsel) that such Acquisition Proposal is a
Superior Proposal.

(b)
Definitions: For purposes of this Agreement:

"Acquisition Proposal" means (i) any proposal or offer with respect to a merger,
joint venture, partnership, consolidation, dissolution, liquidation, tender
offer, recapitalization, reorganization, rights offering, share exchange,
business combination or similar transaction involving the Company or any of the
Subsidiaries and (ii) any acquisition by any person resulting in, or proposal or
offer, which, if consummated, would result in any person becoming the beneficial
owner, directly or indirectly, in one or a series of related transactions, of
15% or more of the total voting power of any class of equity securities of the
Company or those of any of the Subsidiaries, or 15% or more of the consolidated
total assets (including, without limitation, equity securities of its
Subsidiaries) of the Company, in each case other than the transactions
contemplated by this Agreement, including, but not limited to, the TARP
Transaction.

"Superior Proposal" means an unsolicited bona fide Acquisition Proposal that
would result in any person becoming the beneficial owner, directly or
indirectly, more than 50% of the assets (on a consolidated basis) or more than
50% of the total voting power of the equity securities of the Company that the
Board of Directors has determined in its good faith judgment is reasonably
likely to be consummated in accordance with its

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terms, taking into account all legal, financial and regulatory aspects of the
proposal and the person making the proposal, and, if consummated, would result
in a transaction more favorable to the Company’s stockholders from a financial
point of view than the transaction contemplated by this Agreement (after taking
into account any revisions to the terms of the transaction contemplated by
Section 3.4(c) of this Agreement pursuant to Section 3.4(c) and the time likely
to be required to consummate such Acquisition Proposal).

(c)
No Change in Recommendation or Alternative Acquisition Agreement. The Board of
Directors and each committee of the Board of Directors shall not:

(1)
withhold, withdraw, qualify or modify (or publicly propose or resolve to
withhold, withdraw, qualify or modify) the Company Recommendation in a manner
adverse to Purchaser; or

(2)
except as expressly permitted by, and after compliance with, Section 5.1(g)
hereof, cause or permit the Company to enter into any letter of intent,
memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement or other agreement (other than a confidentiality agreement
referred to in Section 3.4(a) entered into in compliance with Section 3.4(a))
(an "Alternative Acquisition Agreement") relating to any Acquisition Proposal.

Notwithstanding anything to the contrary set forth in this Agreement, prior to
the earlier of the time, but not after, the Closing or the date the Stockholder
Proposals are approved, the Board of Directors may withhold, withdraw, qualify
or modify the Company Recommendation or approve, recommend or otherwise declare
advisable any Superior Proposal made after the date of this Agreement that was
not solicited, initiated, encouraged or knowingly facilitated in breach of this
Agreement, if the Board of Directors determines in good faith, after
consultation with outside counsel, that such action is necessary in order for
such directors to comply with the directors’ fiduciary duties under applicable
law (a "Change of Recommendation"); provided, however, that no Change of
Recommendation may be made until after at least three business days following
Purchaser’s receipt of notice from the Company advising that management of the
Company currently intends to recommend to the Board of Directors that it take
such action and the basis therefor, including all necessary information under
Section 3.4(f). In determining whether to make a Change of Recommendation in
response to a Superior Proposal or otherwise, the Board of Directors shall take
into account any changes to the terms of this Agreement proposed by Purchaser
and any other information provided by Purchaser in response to such notice. Any
material amendment to any Acquisition Proposal will be deemed to be a new
Acquisition Proposal for purposes of this Section 3.4(c), including with respect
to the notice period referred to in this Section 3.4(c).
(d)
Certain Permitted Disclosure. Nothing contained in this Section 3.4 shall be
deemed to prohibit the Company from complying with its disclosure obligations
under U.S. federal or state law with regard to an Acquisition Proposal;
provided, however, that if such disclosure does not reaffirm the Company
Recommendation or has the substantive effect of withdrawing or adversely
modifying the Company Recommendation, such disclosure shall be deemed to be a
Change in Recommendation and Purchaser shall have the right to terminate this
Agreement as set forth in Section 5.1(h).

(e)
Existing Discussions. The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal. The
Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 3.4. The Company also agrees that it will
promptly request each person that has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring it or any of the
Subsidiaries to return or destroy all confidential information heretofore
furnished to such person by or on behalf of it or any of the Subsidiaries.

(f)
Notice. The Company agrees that it will promptly (and, in any event, within
24 hours) notify Purchaser if any inquiries, proposals or offers with respect to
an Acquisition Proposal are received by, any such information is requested from,
or any such discussions or negotiation are sought to be initiated or continued
with, it or any of its Representatives indicating, in connection with such
notice, the name of such person and the material terms and conditions of any
proposals or offers (including, if applicable, copies of any written requests,
proposals or offers, including proposed agreements) and thereafter shall keep
Purchaser informed, on a current basis, of the status and terms of any such
proposals or offers (including any amendments thereto)

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and the status of any such discussions or negotiations, including any change in
the Company’s intentions as previously notified.

ARTICLE IV

ADDITIONAL AGREEMENTS

4.1    Governance Matters.

(a)
At and following the Closing, the Company will cause such number of persons
nominated by Purchaser as will represent the Purchaser’s pro rata share of the
total number of members of the Board of Directors (each a "Board Representative"
and collectively, the "Board Representatives") to be elected and appointed to
the Board of Directors, subject to satisfaction of all legal and governance
requirements regarding service as a director of the Company and to the
reasonable approval of the Company’s Nominating and Board of Directors
Governance Committee ("Governance Committee") (such approval not to be
unreasonably withheld or delayed). For purposes of this Section 4.1, "pro rata
share" shall mean that fraction where the numerator is all shares of Common
Stock beneficially owned by Purchaser, assuming full conversion of the
Convertible Preferred Stock and assuming sufficient Common Stock is authorized
under the Certificate of Incorporation to allow such conversion and the
denominator is the total number of issued shares of Common Stock (other than
treasury shares) plus the number of shares of Common Stock into which the
Convertible Preferred Stock may be converted. After such appointment, so long as
Purchaser holds at least 10% of the voting power in the Company (including for
this purpose votes in respect of shares of Common Stock issuable upon conversion
of the Convertible Preferred Stock acquired pursuant to this Agreement) acquired
by Purchaser in connection with the transactions contemplated by this Agreement
(as adjusted from time to time for any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in the Company’s capitalization), the Company will be required to
recommend to its stockholders the election of the Board Representatives at the
Company’s annual meeting, subject to satisfaction of all legal and governance
requirements regarding service as a director of the Company and to the
reasonable approval of the Governance Committee (such approval not to be
unreasonably withheld or delayed), to the Board of Directors. Purchaser shall
also be entitled to appoint two observers to the Board of Directors (the "Board
Observers"), which Board Observers are reasonably acceptable to the Board of
Directors. The Board Observers shall be entitled to participate fully in all
meetings of the Board of Directors, but shall not have the authority to vote
thereat. If Purchaser no longer holds the minimum percentage of voting power
specified in the prior sentence, Purchaser will have no further rights under
Sections 4.1(a) through 4.1(c) and, at the written request of the Board of
Directors, shall use all reasonable best efforts to cause its Board
Representatives to resign from the Board of Directors and the Board Observers to
resign as promptly as possible thereafter. At the option of the Board
Representatives, the Board of Directors shall cause the Board Representatives to
be appointed to the Governance Committee of the Board of Directors (or any
successor committee thereto), so long as the Board Representatives qualify to
serve on such Governance Committee under the applicable rules of the NYSE or any
other nationally recognized securities exchange on which the Common Stock may be
listed and the Company’s corporate governance guidelines and the charter of such
Governance Committee.

(b)
The Board Representatives (including any successor nominee) duly selected in
accordance with Section 4.1(a) shall, subject to applicable law, be the
Company’s and the Governance Committee’s nominees to serve on the Board of
Directors. The Company shall use its reasonable best efforts to have the Board
Representatives elected as a director of the Company and the Company shall
solicit proxies for each such person to the same extent as it does for any of
its other nominees to the Board of Directors. If applicable law or the NYSE
rules and regulations prevent any Board Representative from serving on a
committee, the Purchaser shall be entitled to appoint a Board Observer to such
committee, so long as any such Board Observer meets any applicable independence
rules of the NYSE.

(c)
Subject to Section 4.1(a), Purchaser shall have the power to designate each
Board Representative’s replacement upon the death, resignation, retirement,
disqualification or removal from office of such director, subject to
satisfaction of all legal and governance requirements regarding service as a
director of the Company and to the reasonable approval of the Governance
Committee (such approval not to be unreasonably withheld or delayed). The Board
of Directors will promptly take all action reasonably required to fill the
vacancy resulting therefrom with such person (including such person, subject to
applicable law,

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being the Company’s and the Governance Committee’s nominee to serve on the Board
of Directors, using all reasonable best efforts to have such person elected as
director of the Company and the Company soliciting proxies for such person to
the same extent as it does for any of its other nominees to the Board of
Directors).

(d)
The Board Representatives shall be entitled to the same compensation and same
indemnification and insurance coverage in connection with his or her role as a
director as the other members of the Board of Directors, and each Board
Representative shall be entitled to reimbursement for documented, reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or any committees thereof, to the same extent as the other members of the Board
of Directors. The Company shall notify the Board Representatives of all regular
and special meetings of the Board of Directors and shall notify the Board
Representatives of all regular and special meetings of any committee of the
Board of Directors of which each Board Representative is a member. The Company
shall provide the Board Representatives with copies of all notices, minutes,
consents and other materials provided to all other members of the Board of
Directors concurrently as such materials are provided to the other members.

(e)
Promptly following the execution of this Agreement, the Company will take all
steps necessary to amend (including recommending and submitting for
stockholder approval in accordance with Section 3.1(a)) its organizational
documents (including, without limitation, the Certificate of Incorporation, its
bylaws, its corporate governance guidelines and the charters
of relevant committees of the Board of Directors) in form and substance
reasonably satisfactory to Purchaser, to effectuate, to the extent required, the
purpose and intent of, and the matters contemplated by, this Section 4.1
(including, without limitation, removal of classified Board of Directors
provisions).

(f)
For so long as Purchaser holds the Securities purchased pursuant to this
Agreement, the Company shall provide or permit the Board Observer to provide to
Purchaser any Information provided to the Board of Directors, including any
materials presented at any ordinary or special meeting of the Board of Directors
or any committee thereof, and Purchaser agrees to hold, and will cause its
respective Affiliates and its and their directors, officers, employees, agents,
consultants and advisors and any prospective participant in a sale or
disposition of the Purchased Shares to hold, such Information in strict
confidence for three years from the receipt of such Information, unless
disclosure to a regulatory authority is necessary or appropriate in connection
with any necessary regulatory approval or unless disclosure is required by
judicial or administrative process or, in the written opinion of its counsel, by
other requirement of law or the applicable requirements of any regulatory agency
or relevant stock exchange and except to the extent that such Information can be
shown to have been (1) previously known by such party on a non-confidential
basis, (2) in the public domain through no fault of such party or (3) later
lawfully acquired from other sources by the party to which it was furnished). In
addition, Purchaser agrees not to release or disclose such Information to any
other person, except its auditors, attorneys, financial advisors, other
consultants and advisors and any prospective participant in a sale or
disposition of the Purchased Shares.

4.2    Legend.

(a)
Purchaser agrees that all certificates or other instruments representing the
Securities subject to this Agreement will bear a legend substantially to the
following effect:

(1)
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

(2)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF DECEMBER 17,
2008, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

(b)
Upon request of Purchaser, upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no
longer required under the Securities Act and applicable state laws, the Company
shall promptly cause clause (1) of the legend to be removed from any certificate
for any

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Securities to be Transferred in accordance with the terms of this Agreement and
clause (2) of the legend shall be removed upon the expiration of such transfer
and other restrictions set forth in this Agreement.

4.3    Reservation for Issuance. The Company will reserve that number of shares
of Common Stock sufficient for issuance upon exercise or conversion of the
Securities without regard to any limitation on such conversion; provided that in
the case of the Convertible Preferred Stock, solely to the extent the Company is
unable to reserve such number of shares under its charter the Company will
reserve such sufficient number of shares of Common Stock following the approval
of the Stockholder Proposals pursuant to Section 3.1(b).

4.4    Certain Transactions. The Company will not merge or consolidate into, or
sell, transfer or lease all or substantially all of its property or assets to,
any other party unless the issuer constituent corporation, successor, transferee
or lessee party, as the case may be (if not the Company), expressly assumes the
due and punctual performance and observance of each and every covenant and
condition of this Agreement to be performed and observed by the Company.

4.5    Indemnity.

(a)
Following the Closing, the Company agrees to indemnify and hold harmless
Purchaser and its Affiliates and each of their respective officers, directors,
partners, members and employees, and each person who controls Purchaser within
the meaning of the Exchange Act and the rules and regulations promulgated
thereunder, to the fullest extent lawful, from and against any and all actions,
suits, claims, proceedings, costs, losses, liabilities, damages, expenses
(including reasonable attorneys’ fees and disbursements), amounts paid in
settlement and other costs (in each case calculated to take into account
Purchaser’s ownership interest in the Company as of the relevant payment date -
i.e., increased to take into account Purchaser’s ownership interest in the
capital of the Company as of such date) (collectively, "Losses") arising out of
or resulting from (1) any inaccuracy in or breach of the Company’s
representations or warranties in this Agreement or (2) the Company’s breach of
agreements or covenants made by the Company in this Agreement or (3) any action,
suit, claim, proceeding or investigation by any Governmental Entity, stockholder
of the Company or any other person (other than the Company) relating to this
Agreement or the transactions contemplated hereby (other than any Losses
attributable to the acts, errors or omissions on the part of Purchaser, but not
including the transactions contemplated hereby); and the Company agrees to
indemnify and hold harmless the Purchaser from and against any Losses with
respect to Taxes of the Company for taxable periods or portions thereof ending
on or prior to the Closing Date.

(b)
Following the Closing, Purchaser agrees to indemnify and hold harmless each of
the Company and its Affiliates and each of their officers, directors, partners,
members and employees, and each person who controls the Company within the
meaning of the Exchange Act and the rules and regulations promulgated
thereunder, to the fullest extent lawful, from and against any and all Losses
arising out of or resulting from (1) any inaccuracy in or breach of Purchaser’s
representations or warranties in this Agreement or (2) Purchaser’s breach of
agreements or covenants made by Purchaser in this Agreement.

(c)
A party entitled to indemnification hereunder (each, an "Indemnified Party")
shall give written notice to the party indemnifying it (the "Indemnifying
Party") of any claim with respect to which it seeks indemnification promptly
after the discovery by such Indemnified Party of any matters giving rise to a
claim for indemnification; provided that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 4.5 unless and to the extent that the
Indemnifying Party shall have been actually prejudiced by the failure of such
Indemnified Party to so notify such party. Such notice shall describe in
reasonable detail such claim. In case any such action, suit, claim or proceeding
is brought against an Indemnified Party, the Indemnified Party shall be entitled
to hire, at its own expense, separate counsel and participate in the defense
thereof; provided, however, that the Indemnifying Party shall be entitled to
assume and conduct the defense thereof, unless the counsel to the Indemnified
Party advises such Indemnifying Party in writing that such claim involves a
conflict of interest (other than one of a monetary nature) that would reasonably
be expected to make it inappropriate for the same counsel to represent both the
Indemnifying Party and the Indemnified Party, in which case the Indemnified
Party shall be entitled to retain its own counsel at the cost and expense of the
Indemnifying Party (except that the Indemnifying Party shall only be liable for
the legal fees and expenses of one law firm for all Indemnified Parties, taken
together with respect to any single action or group of related actions). If the
Indemnifying Party assumes the defense of any claim, all Indemnified Parties
shall thereafter deliver to the Indemnifying Party copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the claim, and each Indemnified Party shall cooperate in the defense or
prosecution of such claim. Such

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cooperation shall include the retention and (upon the Indemnifying Party’s
request) the provision to the Indemnifying Party of records and information that
are reasonably relevant to such claim, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Indemnifying Party shall not be liable for
any settlement of any action, suit, claim or proceeding effected without its
written consent; provided, however, that the Indemnifying Party shall not
unreasonably withhold or delay its consent. The Indemnifying Party further
agrees that it will not, without the Indemnified Party’s prior written consent
(which shall not be unreasonably withheld or delayed), settle or compromise any
claim or consent to entry of any judgment in respect thereof in any pending or
threatened action, suit, claim or proceeding in respect of which indemnification
has been sought hereunder unless such settlement or compromise includes an
unconditional release of such Indemnified Party from all liability arising out
of such action, suit, claim or proceeding.

(d)
For purposes of the indemnity contained in Section 4.5(a)(1) and Section
4.5(b)(1), all qualifications and limitations set forth in the parties’
representations and warranties (other than Section 2.2(j)(3)) as to
"materiality" and words of similar import, shall be disregarded in determining
whether there shall have been any inaccuracy in or breach of any representations
and warranties in this Agreement; provided that no inaccuracy in or breach of
the representations and warranties contained in Section 2.2(v) shall be deemed
to occur if such representations and warranties are true and correct in all
material respects.

(e)
The Company shall not be required to indemnify the Indemnified Parties
affiliated with (or whose claims are permitted by virtue of their relationship
with) Purchaser pursuant to Section 4.5(a)(1) unless and until the aggregate
amount of all Losses incurred with respect to all claims pursuant to Section
4.5(a)(1) exceed $1,500,000 (the "Threshold Amount"), in which event the Company
shall indemnify the Indemnified Parties pursuant to Section 4.5(a)(1) the full
amount of such Losses (not merely the portion of such Losses exceeding the
Threshold Amount). Purchaser shall not be required to indemnify the Indemnified
Parties affiliated with (or whose claims are permitted by virtue of their
relationship with) the Company pursuant to Section 4.5(b)(1) unless and until
the aggregate amount of all Losses incurred with respect to all claims pursuant
to Section 4.5(b)(1) exceed the Threshold Amount, in which event Purchaser shall
indemnify the Company pursuant to Section 4.5(b)(1) the full amount of such
Losses (not merely the portion of such Losses exceeding the Threshold Amount).
The cumulative indemnification obligation of (1) the Company to Purchaser and
all of the Indemnified Parties affiliated with (or whose claims are permitted by
virtue of their relationship with) Purchaser or (2) Purchaser to the Company and
the Indemnified Parties affiliated with (or whose claims are permitted by virtue
of their relationship with) the Company, in each case for inaccuracies in or
breaches of representations and warranties, shall in no event exceed the
Purchase Price. Notwithstanding the foregoing, the indemnification by the
Company of the Purchaser for Losses with respect to Taxes shall not be subject
to the limitations of this Section 4.5(e).

(f)
Any claim for indemnification pursuant to this Section 4.5 for breach of any
representation or warranty can only be brought on or prior to the second
anniversary of the Closing Date; provided that if notice of a claim for
indemnification pursuant to this Section 4.5 for breach of any representation or
warranty is brought prior to the end of such period, then the obligation to
indemnify in respect of such breach shall survive as to such claim, until such
claim has been finally resolved. Any claim for indemnification pursuant to this
Section 4.5 for Losses with respect to Taxes can only be brought on or before
the thirtieth (30) day following the expiration of the applicable statute of
limitations.

(g)
The indemnity provided for in this Section 4.5 shall be the sole and exclusive
monetary remedy of Indemnified Parties after the Closing for any inaccuracy of
any representation or warranty or any other breach of any covenant or agreement
contained in this Agreement; provided that nothing herein shall limit in any way
any such party’s remedies in respect of fraud by any other party in connection
with the transactions contemplated hereby. No party to this Agreement (or any of
its Affiliates) shall, in any event, be liable or otherwise responsible to any
other party (or any of its Affiliates) for any consequential or punitive damages
of such other party (or any of its Affiliates) arising out of or relating to
this Agreement or the performance or breach hereof.

(h)
No investigation of the Company by Purchaser, or by the Company of Purchaser,
whether prior to or after the date hereof, shall limit any Indemnified Party’s
exercise of any right hereunder or be deemed to be a waiver of any such right.

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(i)
Any indemnification payments pursuant to this Section 4.5 shall be treated as an
adjustment to the Purchase Price for the Securities for U.S. federal income and
applicable state and local Tax purposes, unless a different treatment is
required by applicable law.

4.6    Exchange Listing. The Company shall promptly use its reasonable best
efforts to cause the shares of Common Stock reserved for issuance upon the
conversion of the Convertible Preferred Stock to be approved for listing on the
NYSE or such other nationally recognized securities exchange on which the Common
Stock may be listed, subject to official notice of issuance and upon receipt of
the approval by the Company’s stockholders of the Stockholder Proposals, as
promptly as practicable, and in any event before the Closing if permitted by the
rules of the NYSE.

4.7    Registration Rights.

(a)
Registration.

(1)
Subject to the terms and conditions of this Agreement, the Company covenants and
agrees that no later than the date that is six months after the Closing Date,
the Company shall have prepared and filed with the SEC a Shelf Registration
Statement covering all Registrable Securities (or otherwise designate an
existing Shelf Registration Statement filed with the SEC to cover the
Registrable Securities), and, to the extent the Shelf Registration Statement has
not theretofore been declared effective or is not automatically effective upon
such filing, the Company shall use reasonable best efforts to cause such Shelf
Registration Statement to be declared or become effective and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a period
from the date of its initial effectiveness until such time as there are no
Registrable Securities remaining (including by refiling such Shelf Registration
Statement (or a new Shelf Registration Statement) if the initial Shelf
Registration Statement expires). So long as the Company is a well-known seasoned
issuer (as defined in Rule 405 under the Securities Act) at the time of filing
of the Shelf Registration Statement with the SEC, such Shelf Registration
Statement shall be designated by the Company as an automatic Shelf Registration
Statement.

(2)
Any registration pursuant to this Section 4.7(a) shall be effected by means of a
shelf registration under the Securities Act (a "Shelf Registration Statement")
in accordance with the methods and distribution set forth in the Shelf
Registration Statement and Rule 415. If Purchaser or any other holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement intends to
distribute any Registrable Securities by means of an underwritten offering (a
"Registration Demand") it shall promptly so advise the Company and the Company
shall take all reasonable steps to facilitate such distribution, including the
actions required pursuant to Section 4.7(c), provided that Purchaser and any
other Holder will be entitled to initiate no more than three such Registration
Demands, and the Company will not be obligated to facilitate an underwritten
offering of Registrable Securities unless the expected gross proceeds from such
offering exceed $50,000,000. The lead underwriters in any such distribution
shall be selected by the holders of a majority of the Registrable Securities to
be distributed.

(3)
The Company shall not be required to effect a registration (including a resale
of Registrable Securities from an effective Shelf Registration Statement)
pursuant to this Section 4.7(a): (i) with respect to securities that are not
Registrable Securities; (ii) during any Scheduled Black-out Period or (iii) if
the Company has notified Purchaser that in the good faith judgment of the Board
of Directors, it would be materially detrimental to the Company or its
securityholders for such registration to be effected at such time, in which
event the Company shall have the right to defer such registration for a period
of not more than 90 days after receipt of the request of Purchaser; provided
that such right to delay a registration shall be exercised by the Company (A)
only if the Company has generally exercised (or is concurrently exercising)
similar black-out rights against holders of similar securities that have
registration rights and (B) not more than twice in any 12-month period and not
more than 90 days in the aggregate in any 12-month period.

(4)
Whenever the Company proposes to register any of its securities, other than a
registration pursuant to Section 4.7(a)(1) or a Special Registration, and the
registration form to be filed may be used for the registration or qualification
for distribution of Registrable Securities, the Company will give prompt written
notice to Purchaser and all other Holders of its intention to effect such a
registration

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(but in no event less than ten days prior to the anticipated filing date) and
will include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within ten
business days after the date of the Company’s notice (a "Piggyback
Registration"). Any such person that has made such a written request may
withdraw its Registrable Securities from such Piggyback Registration by giving
written notice to the Company and the managing underwriter, if any, on or before
the fifth business day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 4.7(a)(4) prior to the effectiveness of such registration, whether or
not Purchaser or any other Holders have elected to include Registrable
Securities in such registration.

(5)
If the registration referred to in Section 4.7(a)(4) is proposed to be
underwritten, the Company will so advise Purchaser and all other Holders as a
part of the written notice given pursuant to Section 4.7(a)(4). In such event,
the right of Purchaser and all other Holders to registration pursuant to this
Section 4.7(a) will be conditioned upon such persons’ participation in such
underwriting and the inclusion of such person’s Registrable Securities in the
underwriting, and each such person will (together with the Company and the other
persons distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If any participating person
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing underwriter and
Purchaser.

(6)
If a Piggyback Registration relates to an underwritten primary offering on
behalf of the Company, and the managing underwriters advise the Company that in
their reasonable opinion the number of securities requested to be included in
such registration exceeds the number which can be sold without adversely
affecting the marketability of such offering (including an adverse effect on the
per share offering price), the Company will include in such registration or
prospectus only such number of securities that in the reasonable opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering (including an adverse effect on the per share offering price), which
securities will be so included in the following order of priority subject to any
conflicting terms of the TARP Documents: (i) first, the securities the Company
proposes to sell, (ii) second, Registrable Securities of Purchaser and all other
Holders who have requested registration of Registrable Securities pursuant to
Section 4.7(a)(4), pro rata on the basis of the aggregate number of such
securities or shares owned by each such person and (iii) third, any other
securities of the Company that have been requested to be so included, subject to
the terms of this Agreement.

(b)
Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance hereunder shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the holders of the securities so registered pro
rata on the basis of the aggregate offering or sale price of the securities so
registered.

(c)
Obligations of the Company. The Company shall use its reasonable best efforts
for so long as there are Registrable Securities outstanding, to take such
actions as are under its control to not become an ineligible issuer (as defined
in Rule 405 under the Securities Act). In addition, whenever required to effect
the registration of any Registrable Securities or facilitate the distribution of
Registrable Securities pursuant to an effective Registration Statement, the
Company shall, as expeditiously as reasonably practicable:

(1)
Prepare and file with the SEC a prospectus supplement with respect to a proposed
offering of Registrable Securities pursuant to an effective registration
statement, subject to Section 4.7(c), keep such registration statement effective
or such prospectus supplement current.

(2)
Prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

(3)
Furnish to the Holders and any underwriters such number of copies of the
applicable registration statement and each such amendment and supplement thereto
(including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the

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Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned or to be
distributed by them.

(4)
Use its reasonable best efforts to register and qualify the securities covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as shall be reasonably requested by the Holders or any
managing underwriter(s), to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and to take any
other action which may be reasonably necessary to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such
Holder; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

(5)
Notify each Holder of Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the applicable prospectus, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.

(6)
Give written notice to the Holders:

(A)
when any registration statement filed pursuant to Section 4.7(a) or any
amendment thereto has been filed with the SEC and when such registration
statement or any post-effective amendment thereto has become effective;

(B)
of any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional information;

(C)
of the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that purpose;

(D)
of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose;

(E)
of the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made); and

(F)
if at any time the representations and warranties of the Company contained in
any underwriting agreement contemplated by Section 4.7(c)(10) cease to be true
and correct.

(7)
Use its reasonable best efforts to prevent the issuance or obtain the withdrawal
of any order suspending the effectiveness of any registration statement referred
to in Section 4.7(c)(6)(C) at the earliest practicable time.

(8)
Upon the occurrence of any event contemplated by Section 4.7(c)(5) or
4.7(c)(6)(E), promptly prepare a post-effective amendment to such registration
statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to the Holders and any underwriters,
the prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with Section 4.7(c)(6)(E) to suspend the use
of the prospectus until the requisite changes to the prospectus have been made,
then the Holders and any underwriters shall suspend use of such prospectus and
use their reasonable best efforts to return to the Company all copies of such
prospectus (at the Company’s expense) other than permanent file copies then in
such Holder’s or underwriter’s possession. The total number of days that any
such suspension may be in effect in any 12-month period shall not exceed 90
days.

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(9)
Use reasonable best efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities, including with
respect to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by the Holders or any
managing underwriter(s).

(10)
Enter into an underwriting agreement in customary form, scope and substance and
take all such other actions reasonably requested by the Holders of a majority of
the Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to participate in "road show", similar sales events and other
marketing activities), (i) make such representations and warranties to the
Holders that are selling stockholders and the managing underwriter(s), if any,
with respect to the business of the Company and its Subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in customary form,
substance and scope, and, if true, confirm the same if and when requested, (ii)
use its reasonable best efforts to furnish underwriters opinions of counsel to
the Company, addressed to the managing underwriter(s), if any, covering the
matters customarily covered in such opinions requested in underwritten
offerings, (iii) use its reasonable best efforts to obtain "cold comfort"
letters from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any business
acquired by the Company for which financial statements and financial data are
included in the Registration Statement) who have certified the financial
statements included in such Registration Statement, addressed to each of the
managing underwriter(s), if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters, (iv)
if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in underwritten offerings,
and (v) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company. Notwithstanding anything contained herein to the contrary,
the Company shall not be required to enter into any underwriting agreement or
permit any underwritten offering absent an agreement by the applicable
underwriter(s) to indemnify the Company in form, scope and substance as is
customary in underwritten offerings by the Company in which an affiliate of the
Company acts as an underwriter.

(11)
Make available for inspection by a representative of Holders that are selling
stockholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested by any such representative, managing
underwriter(s), attorney or accountant in connection with such Registration
Statement.

(12)
Cause all such Registrable Securities (other than Convertible Preferred Stock)
to be listed on each securities exchange on which similar securities issued by
the Company are then listed or, if no similar securities issued by the Company
are then listed on any securities exchange, use its reasonable best efforts to
cause all such Registrable Securities (other than Convertible Preferred Stock)
to be listed on the NYSE or the NASDAQ Stock Market, as determined by the
Company.

(13)
If requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.

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(14)
Timely provide to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(d)
Suspension of Sales. During any Scheduled Black-out Period and upon receipt of
written notice from the Company that a registration statement, prospectus or
prospectus supplement contains or may contain an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that circumstances
exist that make inadvisable use of such registration statement, prospectus or
prospectus supplement, Purchaser and each Holder of Registrable Securities shall
forthwith discontinue disposition of Registrable Securities until termination of
such Scheduled Black-Out Period or until Purchaser and/or Holder has received
copies of a supplemented or amended prospectus or prospectus supplement, or
until such Holder is advised in writing by the Company that the use of the
prospectus and, if applicable, prospectus supplement may be resumed, and, if so
directed by the Company, such Holder shall deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus and, if applicable, prospectus supplement
covering such Registrable Securities current at the time of receipt of such
notice. The total number of days that any such suspension may be in effect in
any 12-month period shall not exceed 90 days.

(e)
Termination of Registration Rights. A Holder’s registration rights as to any
securities held by such Holder (and its Affiliates, partners, members and former
members) shall not be available unless such securities are Registrable
Securities.

(f)
Furnishing Information.

(1)
Neither Purchaser nor any Holder shall use any free writing prospectus (as
defined in Rule 405) in connection with the sale of Registrable Securities
without the prior written consent of the Company.

(2)
It shall be a condition precedent to the obligations of the Company to take any
action pursuant to Section 4.7(c) that Purchaser and/or the selling Holders and
the underwriters, if any, shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to effect the
registered offering of their Registrable Securities.

(g)
Indemnification.

(1)
The Company agrees to indemnify each Holder and, if a Holder is a person other
than an individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each person, if any, that controls a Holder
within the meaning of the Securities Act (each, an "Indemnitee"), against any
and all losses, claims, damages, actions, liabilities, costs and expenses
(including, without limitation, reasonable fees, expenses and disbursements of
attorneys and other professionals incurred in connection with investigating,
defending, settling, compromising or paying any such losses, claims, damages,
actions, liabilities, costs and expenses), joint or several, arising out of or
based upon any untrue statement or alleged untrue statement of material fact
contained in any registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto or
any documents incorporated therein by reference or contained in any free writing
prospectus (as such term is defined in Rule 405) prepared by the Company or
authorized by it in writing for use by such Holder (or any amendment or
supplement thereto); or any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, that the
Company shall not be liable to such Indemnitee in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
omission made in such registration statement, including any such preliminary
prospectus or final prospectus contained therein or any such amendments or
supplements thereto or contained in any free writing prospectus (as such term is
defined in Rule 405) prepared by the Company or authorized by it in writing for
use by such Holder (or any amendment or supplement thereto), in reliance upon
and in conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company by such Indemnitee for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto, or (ii) offers
or sales effected by or on behalf, such

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Indemnitee "by means of" (as defined in Rule 159A) a "free writing prospectus"
(as defined in Rule 405) that was not authorized in writing by the Company.

(2)
If the indemnification provided for in Section 4.7(g)(1) is unavailable to an
Indemnitee with respect to any losses, claims, damages, actions, liabilities,
costs or expenses referred to therein or is insufficient to hold the Indemnitee
harmless as contemplated therein, then the Company, in lieu of indemnifying such
Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as
a result of such losses, claims, damages, actions, liabilities, costs or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnitee, on the one hand, and the Company, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, actions, liabilities, costs or expenses as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of the Indemnitee, on the other hand, shall be determined by reference
to, among other factors, whether the untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
the Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 4.7(g)(2) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 4.7(g)(2). No
Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from the Company
if the Company was not guilty of such fraudulent misrepresentation.

(h)
Assignment of Registration Rights. The rights of Purchaser to registration of
Registrable Securities pursuant to Section 4.7(a) may be assigned by Purchaser
to a transferee or assignee of Registrable Securities to which (i) there is
transferred to such transferee no less than $50,000,000 in Registrable
Securities and (ii) such Transfer is permitted under the terms hereof; provided,
however, the transferor shall, within ten days after such transfer, furnish to
the Company written notice of the name and address of such transferee or
assignee and the number and type of Registrable Securities that are being
assigned.

(i)
"Market Stand-Off" Agreement; Agreement to Furnish Information. Purchaser and
each Holder hereby agrees:

(1)
that Purchaser shall not sell, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale with respect to any common equity
securities of the Company or any securities convertible into or exchangeable or
exercisable for any common equity securities of the Company held by Purchaser
(other than those included in the registration) for a period specified by the
representatives of the underwriters of the common equity or equity-related
securities not to exceed ten days prior and 90 days following the effective date
of any firm commitment underwritten registered sale of common equity securities
of the Company or any securities convertible into or exchangeable or exercisable
for any common equity securities of the Company by the Company for the Company’s
own account in which the Company gave Purchaser an opportunity to participate in
accordance with Sections 4.7(a)(4) through 4.7(a)(6); provided that all
executive officers and directors of the Company enter into similar agreements
and only if such persons remain subject thereto (and are not released from such
agreement) for such period; provided that nothing herein will prevent Purchaser
from making any distribution of Registrable Securities to the partners or
stockholders thereof or a transfer to an Affiliate that is otherwise in
compliance with applicable securities laws, so long as such distributees or
transferees agree to be bound by the restrictions set forth in this Section
4.7(i);

(2)
to execute and deliver such other agreements as may be reasonably requested by
the Company or the representatives of the underwriters which are consistent with
the foregoing obligation in Section 4.7(i)(1) or which are necessary to give
further effect thereto; and

(3)
if requested by the Company or the representative of the underwriters of Common
Stock (or other securities of the Company), Purchaser shall provide, within ten
days of such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company’s securities pursuant to a registration statement filed under the
Securities Act in which Purchaser participates;

--------------------------------------------------------------------------------

provided, that clauses (1) and (2) of this Section 4.7(i) shall not apply to
Purchaser or any Holder that, together with its affiliates, is the beneficial
owner of less than 5% of the outstanding Common Stock.
(j)
With respect to any underwritten offering of Registrable Securities by Purchaser
or other Holders pursuant to this Section 4.7, the Company agrees not to effect
(other than pursuant to such registration or pursuant to a Special Registration)
any public sale or distribution, or to file any Registration Statement (other
than such registration or a Special Registration) covering any of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the period not to exceed ten days prior and 90 days
following the effective date of such offering, if requested by the managing
underwriter. "Special Registration" means the registration of (i) equity
securities and/or options or other rights in respect thereof solely registered
on Form S-4 or Form S-8 (or successor form) or (ii) shares of equity securities
and/or options or other rights in respect thereof to be offered to directors,
members of management, employees, consultants, customers, lenders or vendors of
the Company or its direct or indirect Subsidiaries or in connection with
dividend reinvestment plans.

(k)
Rule 144; Rule 144A. With a view to making available to Purchaser and Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:

(1)
make and keep public information available, as those terms are understood and
defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the
Securities Act, at all times after the effective date of this Agreement;

(2)
(A) file with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act and (B) if at any time the
Company is not required to file such reports, make available, upon request of
any Holder, such information necessary to permit sales pursuant to Rule 144A
(including the information required by Rule 144A(d)(4) under the Securities
Act);

(3)
so long as Purchaser or a Holder owns any Registrable Securities, furnish to
Purchaser or such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 under
the Securities Act, and of the Exchange Act; a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as
Purchaser or Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration; and

(4)
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act.

(l)
As used in this Section 4.7, the following terms shall have the following
respective meanings:

(1)
"Holder" means Purchaser and any other holder of Registrable Securities to whom
the registration rights conferred by this Agreement have been transferred in
compliance with Section 4.7(h) hereof.

(2)
"Holders’ Counsel" means one counsel for the selling Holders chosen by Holders
holding a majority interest in the Registrable Securities being registered.

(3)
"Register," "registered," and "Shelf Registration" shall refer to a registration
effected by preparing and (a) filing a registration statement in compliance with
the Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of effectiveness of such registration statement or
(b) filing a prospectus and/or prospectus supplement in respect of an
appropriate effective Shelf Registration Statement.

(4)
"Registrable Securities" means the Purchased Shares (and any shares of capital
stock or other equity interests issued or issuable to any Holder with respect to
such Purchased Shares (including the Converted Common Shares) by way of stock
dividends or stock splits or in connection with a combination of shares,
recapitalization, merger or other reorganization), provided that, once issued,
such Securities will not be Registrable Securities when (i) they are sold
pursuant to an effective registration statement under the Securities Act,
(ii) they may be sold pursuant to Rule 144 without

--------------------------------------------------------------------------------

limitation thereunder on volume or manner of sale, (iii) they shall have ceased
to be outstanding or (iv) they have been sold in a private transaction in which
the transferor's rights under this Agreement are not assigned to the transferee
of the securities. No Registrable Securities may be registered under more than
one registration statement at any one time.

(5)
"Registration Expenses" means all expenses incurred by the Company in effecting
any registration pursuant to this Agreement (whether or not any registration or
prospectus becomes effective or final) or otherwise complying with its
obligations under this Section 4.7, including, without limitation, all
registration, filing and listing fees, printing expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses, expenses incurred in
connection with any "road show", the reasonable fees and disbursements of
Holders’ Counsel, and expenses of the Company’s independent accountants in
connection with any regular or special reviews or audits incident to or required
by any such registration, but shall not include Selling Expenses and the
compensation of regular employees of the Company, which shall be paid in any
event by the Company.

(6)
"Rule 144", "Rule 144A", "Rule 159A", "Rule 405" and "Rule 415" mean, in each
case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.

(7)
"Scheduled Black-out Period" means the period from and including the last day of
a fiscal quarter of the Company to and including the business day after the day
on which the Company publicly releases its earnings for such fiscal quarter,
provided that the trading window applicable to the Company’s senior management
under the Company’s trading policies then in effect is not open any time during
such period.

(8)
"Selling Expenses" mean all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses).

(m)
At any time, any holder of Securities (including any Holder) may elect to
forfeit its rights set forth in this Section 4.7 from that date forward;
provided, that a Holder forfeiting such rights shall nonetheless (i) be
obligated under Section 4.7(i)(1) with respect to any Pending Underwritten
Offering to the same extent that such Holder would have been obligated if the
holder had not withdrawn and (ii) be entitled to participate under Sections
4.7(a)(4)-(6) in any Pending Underwritten Offering to the same extent that such
Holder would have been entitled to if the holder had not withdrawn; and
provided, further, that no such forfeiture shall terminate a Holder’s rights or
obligations under Section 4.7(f) with respect to any prior registration or
Pending Underwritten Offering. "Pending Underwritten Offering" means, with
respect to any Holder forfeiting its rights pursuant to this Section 4.7(m),
(i) any registered sale described in Section 4.7(i)(1) that has an effective
date prior to the date of such Holder’s forfeiture, and (ii) any other
underwritten offering of Registrable Securities (including an underwritten
offering pursuant to a Shelf Registration Statement) in which such Holder has
advised the Company of its intent to register its Registrable Securities either
pursuant to Section 4.7(a)(2) or 4.7(a)(4) prior to the date of such Holder’s
forfeiture.

4.8    Certificate of Designations. The Company shall file the Preferred Stock
Certificate of Designations for the Convertible Preferred Stock in the form
attached to this Agreement as Exhibit A with the Michigan Secretary, and such
Preferred Stock Certificate of Designations shall be in full force and effect as
of the Closing Date.

4.9    Indemnification. Neither Article XI nor Article XII of the Certificate of
Incorporation shall be amended, repealed or otherwise modified for a period of
six years after the Closing Date in any manner that would adversely affect the
rights thereunder of any individuals covered thereby (the "Covered Persons").
From and after the Closing Date, any determination to be made pursuant to
Article XI of the Certificate of Incorporation by the Board of Directors with
respect to the advancement of expenses shall be made without the participation
of any Board Representative. If the Board of Directors makes a determination
that the facts then known to the Board of Directors would not preclude
indemnification under the Michigan Business Corporation Act, and the Covered
Person has complied with the requirements of clauses (a) and (b) of the second
sentence of Article XI of the Certificate of Incorporation, then the Company
shall be required to advance such expenses to such Covered Person to the fullest
extent permitted by the Michigan Business Corporations Act. The provisions of
this Section 4.9 shall survive the Closing Date and are intended to be for the
benefit of, and shall be enforceable by, each Covered Person and his or her
heirs and representatives.

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ARTICLE V

TERMINATION

5.1    Termination. This Agreement may be terminated prior to the Closing:

(a)
by mutual written agreement of the Company and Purchaser;

(b)
by the Company or Purchaser, upon written notice to the other party, in the
event that the Closing Date does not occur on or before February 16, 2009 or
such later date, if any, as Purchaser and the Company agree upon in writing (as
such date may be extended, the "Outside Date"); provided, however, that the
right to terminate this Agreement pursuant to this Section 5.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing Date to occur on or prior to the Outside Date;

(c)
by the Company or Purchaser, upon written notice to the other party, in the
event that any Governmental Entity shall have issued any order, decree or
injunction or taken any other action restraining, enjoining or prohibiting any
of the transactions contemplated by this Agreement, and such order, decree,
injunction or other action shall have become final and nonappealable;

(d)
by Purchaser, if Purchaser or any of its Affiliates receives written notice from
or is otherwise advised by a Governmental Entity that it will not grant (or
intends to rescind or revoke if previously approved) any Required Approval or
receives written notice from such Governmental Entity that it will not grant
such Required Approval on the terms contemplated by this Agreement without
imposing any Burdensome Condition, provided that, prior to terminating this
Agreement, Purchaser shall have used its reasonable best efforts to obtain such
Required Approval without the imposition of such Burdensome Condition;

(e)
by the Company, if the Company is not in material breach of any of the terms of
this Agreement, and there has been a breach of any representation, warranty,
covenant or agreement made by Purchaser in this Agreement, or any such
representation and warranty shall have become untrue after the date of this
Agreement, such that Section 1.2(c)(3)(A) or (B) would not be satisfied and such
breach or condition is not curable or, if curable, is not cured within thirty
(30) days after written notice thereof is given by the Company to Purchaser;

(f)
by Purchaser, if the Purchaser is not in material breach of any of the terms of
this Agreement, and there has been a breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement, or any such
representation and warranty shall have become untrue after the date of this
Agreement, such that Section 1.2(c)(2)(A) or (B) would not be satisfied and such
breach or condition is not curable or, if curable, is not cured within thirty
(30) days after written notice thereof is given by Purchaser to the Company;

(g)
by the Company, at any time following the date of this Agreement and prior to
the Closing Date, if (i) the Company is not in material breach of any of the
terms of this Agreement, (ii) the Board of Directors of the Company authorizes
the Company, subject to complying with the terms of this Agreement, to enter
into an agreement with respect to a Superior Proposal and the Company notifies
Purchaser in writing that it intends to enter into such an agreement, attaching
the most current version of such agreement to such notice, (iii) Purchaser does
not make, within three business days of receipt of the Company’s written
notification of its intention to enter into a binding agreement for a Superior
Proposal, an offer that the Board of Directors determines, in good faith after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of the Company as the Superior
Proposal and (iv) the Company prior to such termination pays to Purchaser in
immediately available funds any fees required to be paid pursuant to
Section 5.3. The Company agrees (x) that it will not enter into the binding
agreement referred to in clause (ii) above until at least the fourth business
day after it has provided the notice to Purchaser required thereby, (y) to
notify Purchaser promptly if its intention to enter into the written agreement
referred to in its notification changes and (z) during such three business day
period, to negotiate in good faith with Purchaser with respect to any revisions
to the terms of the transaction contemplated by this Agreement proposed by
Purchaser in response to such proposed Superior Proposal, if any;

--------------------------------------------------------------------------------

(h)
by Purchaser if the Board of Directors shall have made a Change of
Recommendation or the Company shall have breached the covenant contained in
Section 3.4 hereof; or

(i)
by Purchaser (1) if the TARP Approval is not obtained on reasonably satisfactory
terms by January 19, 2009 or (2) if the OTS Required Approvals (as defined in
Schedule 2.2(f) of the Company Disclosure Schedule), on reasonably satisfactory
terms, are not received on or before January 30, 2009.

5.2    Effects of Termination. In the event of any termination of this Agreement
as provided in Section 5.1, subject to Section 5.3, this Agreement (other than
Section 3.2(b) and Articles V and VI, which shall remain in full force and
effect) shall forthwith become wholly void and of no further force and effect;
provided that nothing herein shall relieve any party from liability for
intentional breach of this Agreement.

5.3    Fees.

(a)
Subject to Section 5.3(b), if this Agreement is terminated by Purchaser pursuant
to any of the subsections of Section 5.1 (other than Section 5.1(i)), the
Company shall pay to Purchaser the Expense Reimbursement (not to exceed $5
million) pursuant to Sections 5.3(c) and 6.2.

(b)
In lieu of any Expense Reimbursement payable pursuant to (a) above, (1) if this
Agreement is terminated pursuant to Section 5.1(f) if the Company breached
Section 3.4, or pursuant to Section 5.1 (g) or (h), the Company shall pay to
Purchaser a Termination Fee in accordance with Section 5.3(c) and (2) if an
Acquisition Proposal is made to the Company, any Subsidiary, or its stockholders
generally, or becomes public and thereafter this Agreement is terminated
pursuant to Section 5.1(b), (f), (g), (h) or (i) and within 12 months after such
termination the Company enters into a definitive agreement to effect, or
consummates, an Acquisition Proposal, the Company shall pay to Purchaser a
Termination Fee in accordance with Section 5.3(c).

(c)
"Termination Fee" means an amount in cash equal to 3.99% of the Purchase Price.
Any Termination Fee or Expense Reimbursement payable pursuant to this Section
5.3 shall be paid by wire transfer of immediately available funds to the account
or accounts designated by Purchaser (i) in the case of Section 5.3(a) or
5.3(b)(1), contemporaneously with the termination of this Agreement, (ii) in the
case of Section 5.3(b)(2), no later than two business days after the day on
which the obligation to pay such Termination Fee or Expense Reimbursement
arises. To the extent not paid when due, any Termination Fee shall accrue
interest at a rate equal to 18%. In the event the Termination Fee is paid when
due, the Company shall have no obligation to pay any Expense Reimbursement.

(d)
Each of the Company and Purchaser acknowledges that the agreements contained in
this Section 5.3 are an integral part of the transactions contemplated by this
Agreement. In the event that a party shall fail to pay the Termination Fee when
due, the party obligated to pay such Termination Fee shall reimburse the party
receiving the Termination Fee for all reasonable expenses actually incurred or
accrued by such other party (including reasonable expenses of counsel) in
connection with the collection under and enforcement of this Section 5.3. The
parties hereto agree and understand that in no event shall any party be required
to pay a Termination Fee on more than one occasion, and in no event shall the
aggregate fees payable by any such party pursuant to Section 5.3 exceed the
maximum amount of the Termination Fee.

ARTICLE VI

MISCELLANEOUS

6.1    Survival. Each of the representations and warranties set forth in this
Agreement, shall survive the Closing under this Agreement but only for a period
of two years following the Closing Date (or until final resolution of any claim
or action arising from the breach of any such representation and warranty, if
notice of such breach was provided prior to the end of such period) and
thereafter shall expire and have no further force and effect, including in
respect of Section 4.5 provided that (i) the representations and warranties
contained in Section 2.2(a) (Organization and Authority), Section 2.2(d)
(Authorization), Section 2.2(b) (Capitalization), Section 2.2(c) (Subsidiaries)
each of which shall survive the Closing until the date that is three years from
the Closing Date, and (ii) the representations and warranties contained in
Section 2.2(j) (Taxes) which shall survive the Closing until 60 days after the
expiration of the applicable statute of limitations. Except as otherwise
provided herein, all

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covenants and agreements contained herein, other than those which by their terms
are to be performed in whole or in part after the Closing Date, shall terminate
as of the Closing Date.

6.2    Expenses. Each of the parties will bear and pay all other costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated pursuant to this Agreement; except that the Company shall bear and
upon Purchaser’s request in the manner specified below, reimburse Purchaser for
all of its reasonable out-of-pocket expenses incurred in connection with due
diligence, the negotiation and preparation of this Agreement and undertaking of
the transactions contemplated pursuant to this Agreement (including fees and
expenses of attorneys, consultants and accounting and financial advisers
incurred by or on behalf of Purchaser or its Affiliates in connection with the
transactions contemplated pursuant to this Agreement) (the "Expense
Reimbursement"); provided that, if payable at any time other than in connection
with a termination pursuant to Section 5.1, such Expense Reimbursement shall not
exceed $10 million.

6.3    Amendment; Waiver. No amendment or waiver of any provision of this
Agreement will be effective with respect to any party unless made in writing and
signed by an officer of a duly authorized representative of such party. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The conditions to each party’s
obligation to consummate the Closing are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law. No waiver of any party to this Agreement, as the case may be,
will be effective unless it is in a writing signed by a duly authorized officer
of the waiving party that makes express reference to the provision or provisions
subject to such waiver. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.

6.4    Counterparts and Facsimile. For the convenience of the parties hereto,
this Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
will together constitute the same agreement. Executed signature pages to this
Agreement may be delivered by facsimile and such facsimiles will be deemed as
sufficient as if actual signature pages had been delivered.

6.5    Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State (except to the extent that
mandatory provisions of Michigan law are applicable). The parties hereby
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the state and federal courts located in the Borough of Manhattan, State of
New York for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby.

6.6    WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.7    Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to
have been duly given (a) on the date of delivery if delivered personally or by
telecopy or facsimile, upon confirmation of receipt, (b) on the first business
day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.

(a)
If to Purchaser to it at:

MP Thrift Investments L.P.
520 Madison Avenue
New York, New York 10022
Attn: Robert H. Weiss, General Counsel
Telephone: 212-651-9525
Fax: 212-651-4014

with a copy to (which copy alone shall not constitute notice):

Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attn:    Mitchell S. Eitel    

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George Sampas
Telephone: (212) 558-4000
Fax: (212) 558-3588

(b)
If to the Company:

Flagstar Bancorp, Inc.
5151 Corporate Drive
Troy, Michigan 48098-2639
Fax No.: (248) 312-6833
Attn:    Paul Borja

with a copy to (which copy alone shall not constitute notice):

Kutak Rock LLP
1101 Connecticut Avenue, N.W.
Suite 1000
Washington, DC 20036-4374
Fax No.: (202) 828-2488
Attn:    Jeremy T. Johnson

6.8    Entire Agreement, Etc. (a) This Agreement (including the Exhibits,
Schedules and Disclosure Schedules hereto) constitutes the entire agreement, and
supersedes all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter hereof; and (b) this Agreement will not be assignable by
operation of law or otherwise (any attempted assignment in contravention hereof
being null and void); provided that Purchaser may assign its rights and
obligations under this Agreement (i) to any Affiliate, but only if the
transferee agrees in writing for the benefit of the Company (with a copy thereof
to be furnished to the Company) to be bound by the terms of this Agreement (any
such transferee shall be included in the term "Purchaser"); provided, further,
that no such assignment shall relieve Purchaser of its obligations hereunder and
(ii) for those rights contained in Article IV (subject to applicable law).

6.9    Interpretation; Other Definitions. Wherever required by the context of
this Agreement, the singular shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa,
and references to any agreement, document or instrument shall be deemed to refer
to such agreement, document or instrument as amended, supplemented or modified
from time to time. All article, section, paragraph or clause references not
attributed to a particular document shall be references to such parts of this
Agreement, and all exhibit, annex and schedule references not attributed to a
particular document shall be references to such exhibits, annexes and schedules
to this Agreement. In addition, the following terms are ascribed the following
meanings:

(a)
the term "Affiliate" means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other
person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") when used
with respect to any person, means the possession, directly or indirectly, of the
power to cause the direction of management or policies of such person, whether
through the ownership of voting securities by contract or otherwise;

(b)
the word "or" is not exclusive;

(c)
the words "including," "includes," "included" and "include" are deemed to be
followed by the words "without limitation"; and

(d)
the terms "herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision;

(e)
"business day" means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in the State of New York
or in the State of Ohio generally are authorized or required by law or other
governmental action to close;

(f)
"person" has the meaning given to it in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act;

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(g)
a person shall be deemed to "beneficially own" any securities of which such
person is considered to be a "beneficial owner" under Rule 13d-3 under the
Exchange Act; and

(h)
to the "knowledge of the Company" or "Company’s knowledge" means the actual
knowledge after due inquiry of the "officers" (as such term is defined in
Rule 3b-2 under the Exchange Act, but excluding any Vice President or Secretary)
of the Company.

6.10    Captions. The article, section, paragraph and clause captions herein are
for convenience of reference only, do not constitute part of this Agreement and
will not be deemed to limit or otherwise affect any of the provisions hereof.

6.11    Severability. If any provision of this Agreement or the application
thereof to any person (including the officers and directors the parties hereto)
or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, will remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the parties.

6.12    No Third Party Beneficiaries. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person other than the
parties hereto, any benefit right or remedies, except that (i) the provisions of
Sections 4.5 shall inure to the benefit of the persons referred to in that
Section, (ii) the provisions of Section 4.9 shall inure to the benefit of the
Covered Persons and (iii) the provisions of Sections 1.2(c)(1)(C), 3.1(a) and
Section 3.2(b) shall inure to the benefit of MatlinPatterson, and in the case of
clause (iii) MatlinPatterson shall be entitled to seek specific performance of
the terms thereof, in addition to any other remedies to which it is entitled at
law or equity; provided that, it is understood that the rights of
MatlinPatterson pursuant to this Section 6.12 are not intended to create any
obligation for MatlinPatterson under this Agreement nor make MatlinPatterson a
party to this Agreement.

6.13    Time of Essence. Time is of the essence in the performance of each and
every term of this Agreement.

6.14    Certain Adjustments. If the representations and warranties set forth in
Section 2.2(b) shall not be true and correct as of the Closing Date, the number
of shares of Common Stock and Convertible Preferred Stock to be purchased shall
be, at Purchaser’s option, proportionately adjusted to provide Purchaser the
same economic effect as contemplated by this Agreement in the absence of such
failure to be true and correct.

6.15    Public Announcements. Subject to each party’s disclosure obligations
imposed by law or regulation or the rules of any stock exchange upon which its
securities are listed, each of the parties hereto will cooperate with each other
in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement, and neither the Company nor
Purchaser will make any such news release or public disclosure without first
consulting with the other, and, in each case, also receiving the other’s consent
(which shall not be unreasonably withheld or delayed) and each party shall
coordinate with the party whose consent is required with respect to any such
news release or public disclosure.

6.16    Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to seek specific performance of the terms hereof,
this being in addition to any other remedies to which they are entitled at law
or equity.

* * *

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.

 
 
FLAGSTAR BANCORP, INC.
 
 
 
 
 
 
By:
/s/ Mark T. Hammond
 
 
Name:
Mark T. Hammond

 
 
Title:
President and Chief Executive Officer

 
 
 
 
 
 
 
 
 
 
MP THRIFT INVESTMENTS L.P.
 
 
 
 
 
 
By:
MP (Thrift) Global Partners III LLC,
 
 
 
its General Partner
 
 
 
 
 
 
 
/s/ Robert H. Weiss
 
 
Name:
Robert H. Weiss
 
 
Title:
General Counsel

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Schedule A

List of Management Members

1.
Thomas J. Hammond

2.
Mark T. Hammond

3.
Paul D. Borja

4.
Kirstin A. Hammond

5.
Matthew I. Roslin

6.
Robert O. Rondeau

Schedule A-1

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Schedule B

Name of Subsidiary
 
State or Other Jurisdiction of Incorporation/Organization
 
 
 
Douglas Insurance Agency, Inc.
 
Michigan
Flagstar Bank, FSB
 
United States of America
Flagstar Commercial Corporation
 
Michigan
Flagstar Investment Group, Inc.
 
Michigan
Flagstar Reinsurance Company
 
Vermont
Flagstar Statutory Trust II
 
Connecticut
Flagstar Statutory Trust III
 
Delaware
Flagstar Statutory Trust IV
 
Delaware
Flagstar Statutory Trust V
 
Delaware
Flagstar Statutory Trust VI
 
Delaware
Flagstar Statutory Trust VII
 
Delaware
Flagstar Statutory Trust VIII
 
Delaware
Flagstar Statutory Trust IX
 
Delaware
Flagstar Statutory Trust X
 
Delaware
Flagstar Title Insurance Agency, Inc.
 
Michigan
Paperless Office Solutions, Inc.
 
Michigan

Schedule B-1

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Schedule C

[Reserved]

Schedule C-1

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Schedule D

List of Management Purchasers of Management Purchased Shares
1.
Thomas J. Hammond, who the Company represents is committed to invest $2 million.

2.
Mark T. Hammond, who the Company represents is committed to invest $2 million.

3.
Such other senior executives of the Company, who may invest, in the aggregate,
an additional $1 million.

 
Schedule D-1

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Schedule E
The following is a summary Term Sheet of the material terms of the equity awards
that will be applicable to certain senior executives of the Company, subject to
(i) all requisite approvals of the Compensation Committee of the Company’s Board
of Directors, and (ii) the occurrence of the Closing. Following the date hereof,
the parties shall promptly and in good faith negotiate the definitive terms and
documents on customary terms, including with respect to antidilution, and
consistent with the terms below and reasonably acceptable to the parties.
PLAN
Equity for 14.5% of the total shares of Company common stock will be granted
under the Company’s stockholder-approved Flagstar Bancorp, Inc. 2006 Equity
Incentive Plan (as amended, the "Plan"). The executives to receive grants below
have agreed to waive their current outstanding equity grants, with the exception
of restricted stock grants that have been issued but not yet vested.
TYPE OF AWARDS
Stock options and restricted shares will be granted in three tranches.

The first tranch of awards will be time-vested stock options, which will be
granted to the following executives at the Closing, as further described herein.
The executives receiving the first tranch will be determined prior to Closing.

The second tranch of awards will be a performance-vested stock option pool,
which will be granted subject to performance criteria and allocation, as further
described herein.
 
The third tranch of awards will be restricted shares, which will be granted to
the first tranch executives at the time the Purchaser disposes of a majority of
the aggregate amount of Company shares that it acquired at the Closing (an "MP
Sale").
TIME VESTED STOCK
OPTIONS TERMS

Time and Amount of Grants:

•
The first tranch will be options to acquire shares of Company common stock equal
to up to 3% of the total shares of Company common stock on the date of grant
(the “Time Vested Stock Options”). The Time Vested Stock Options will have a
term that expires 10 years after the date of grant.

•
The allocation among the executives of the Time Vested Stock Options will be
determined before Closing.

•
In the event that there is not a sufficient number of shares available for
issuance under the Plan to allow for the award of the full 3% of the Time Vested
Stock Options on the Closing, the proposed amendments to the Plan as part of the
Stockholder Proposals will provide adequate availability to increase the amount
of shares available for issuance under the Plan to accommodate the equity grants
contemplated under this Term Sheet so that, promptly following the approval, the
executives will receive an additional grant of Time Vested Stock Options equal
to the remainder of the Time Vested Stock Option 3% grant that was not granted
at the Closing.
 
Vesting:
•
The Time Vested Stock Options will vest and become exercisable as follows: (1)
ratably over three years from the date of grant on each anniversary of grant, or
(2) immediately on the date of an MP Sale. The vesting of the Time Vested Stock
Options will be subject to and conditioned upon the continuous employment of the
grantee through the relevant vesting date. If the grantee’s employment is
terminated for any reason (other than as described below), all unvested Time
Vested Stock Options will be forfeited upon such termination of employment.

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•
In the event that a grantee is terminated by the Company without Cause or
resigns for Good Reason (each, as defined) prior to the vesting date, he or she
will be automatically vested in any unvested Time Vested Stock Options on the
date of such termination. The Time Vested Stock Options will have a
post-termination exercise period equal to the shorter of (i) 1 year following
the date of such termination or (ii) the remainder of the term of the option.
 
Exercise Price:
The exercise price of the Time Vested Stock Options will be the greater of (i)
the per share Purchase Price, or (ii) the fair market value of the Company’s
common stock on the date of grant (“FMV”).

PERFORMANCE-VESTED STOCK OPTION POOL

Time and Amount of Grant:
•
After the approval of the Stockholder Proposals concerning the amended Plan, the
Company will allocate for options to acquire shares of Company common stock
equal to 4.5% of the total shares of Company common stock on the date of grant
(the “Performance Vested Stock Option Pool”). The Performance Vested Stock
Option Pool will have a term that expires 10 years from the date of grant.

•
The allocation among the executives, other members of management and employees
of the Performance Vested Stock Option Pool will be established as of the
relevant performance vesting dates as set forth in the grant documentation
approved by the Compensation Committee of the Board. The allocation mechanics
and the structure as options and/or restricted stock and/or SARs will be subject
to further tax review and optimization.

 
Allocation/Vesting:
•
The Performance Vested Stock Option Pool will be allocated and will initially
vest based upon the attainment of performance criteria to be established by the
Compensation Committee. The subsequent vesting of allocated portions of the
Performance Vested Stock Option Pool will also be subject to and conditioned
upon the continuous employment of the applicable grantee(s), with ratable
vesting of the allocated grants over the three years following the date(s) of
allocation on each anniversary date. If an applicable grantee terminates
employment for any reason (other than as set forth in his or her specific grant
or employment contract), all unvested grants from the Performance Vested Stock
Option Pool will be forfeited upon such termination of employment.
 

•
In the event of a Change of Control (as defined) of the Company, all performance
criteria will be measured by the Compensation Committee as of the Change of
Control date and vesting/allocations will be effected accordingly or, if
determined by the Board, the Performance Vested Stock Option Pool will continue
following such event with such modifications to performance criteria as the
Compensation Committee deems appropriate to give effect to the transaction.

 
Exercise Price:
The “exercise price” of the Performance Vested Stock Option Pool grants will be
the FMV at the initial allocation date for the pool.

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RESTRICTED SHARE TERMS

TIME AND AMOUNT OF GRANT:
•
 At the time of an MP Sale, all executives who received the Time Vested Stock
Options and who remain employed with the Company at the time of an MP Sale will
receive a one-time grant of restricted shares under the Plan (the “Restricted
Shares”).

•
Only one grant of Restricted Shares will be granted to the executives under this
program in the amount described below.

•
The initial allocation of the Restricted Shares for issuance to the executives
in connection with a MP Sale shall be as set forth below will be determined
before Closing.

•
The aggregate number of Restricted Shares subject to grant to the executives on
the MP Sale will be such number of shares of Common Stock that equal the dollar
value determined as follows:
 
(FMV per share of Company common stock determined in MP Sale - the per-share
Purchase Price) x “n” shares of Company common stock. 

“n” is determined as follows:
 
If and to the extent that the Purchaser’s return on the MP Sale (as measured by
the sale price of Company common shares in the MP Sale compared to the per-share
Purchase Price) is equal to the following multiples, As a hypothetical example,
if at the time of the MP Sale, the FMV per share of Company stock is $2, and the
return to Purchaser on this MP Sale is a 2.0X return, the Executives as a group
would receive a grant of restricted shares in aggregate value equal to $1 [$2 -
$1] multiplied by 1.5% of the total shares of Company common stock at the
Closing (i.e., the value as if such 1.5% of the Company common stock had a value
of $1 per share).

As another hypothetical example, if at the time of the MP Sale, the FMV per
share of Company is $5 per share, and the return to Purchaser on this MP Sale is
a 5.0X return, the Executives as a group would receive a grant of restricted
shares in aggregate value equal to $4 [$5 - $1] multiplied by 7.0% of the total
shares of Company common stock at the Closing (i.e., the value as if such 7.0%
of the Company common stock had a value of $4 per share).

 then “n” shall be set as follows:
 
2.0X  = 1.5% of the total shares of Company common stock at the Closing
 
3.0X  = + 1.5% of the total shares of Company common stock at the Closing
 
4.0X = + 2.0% of the total shares of Company common stock at the Closing
 
5.0X = + 2.0% of the total shares of Company common stock at the Closing
 
Vesting:
•
The Restricted Shares will vest and the restrictions thereon will lapse based
upon the percentage of interest in the Company that is sold by Purchaser in the
MP Sale.

•
If the MP Sale results in Purchaser disposing of 100% of its interests in the
Company, the Restricted Shares that are issued in connection with the MP Sale
will fully vest in the executives on such date.

1 As a hypothetical example, if at the time of the MP Sale, the FMV per share of
Company stock is $2, and the return to Purchaser on this MP Sale is a 2.0X
return, the Executives as a group would receive a grant of restricted shares in
aggregate value equal to $1 [$2 - $1] multiplied by 1.5% of the total shares
of Company common stock at the Closing (i.e., the value as if such 1.5% of the
Company common stock had a value of $1 per share).

As another hypothetical example, if at the time of the MP Sale, the FMV per
share of Company is $5 per share, and the return to Purchaser on this MP Sale is
a 5.0X return, the Executives as a group would receive a grant of restricted
shares in aggregate value equal to $4 [$5 - $1] multiplied by 7.0% of the total
shares of Company common stock at the Closing (i.e., the value as if such 7.0%
of the Company common stock had a value of $4 per share).

--------------------------------------------------------------------------------

 
•
If the MP Sale results in Purchaser retaining any portion of its interest in the
Company, the Restricted Shares that are issued will vest in the executives as
follows: (i) the proportion of Restricted Shares equal to the actual percentage
disposed of by Purchaser in the MP Sale will vest fully in the executives on
such date, and (ii) the remaining Restricted Shares that are issued in
connection with the MP Sale will vest ratably over the two years following the
date of grant on each anniversary date, conditioned on the continued employment
of the executive with the Company during such period, provided, however, that if
a Change of Control occurs after the MP Sale, all unvested Restricted Shares
that were issued in connection with the MP Sale shall vest on such date of the
Change of Control.

 
•
In the event that an executive is terminated by the Company without Cause or
leaves for Good Reason either prior to an MP Sale or after such an MP Sale but
prior to the relevant vesting date, he or she will retain the rights to receive
the Restricted Shares for up to one year from the date of such termination, and
any Restricted Shares that were or are issued to an executive in connection with
an MP Sale that would remain subject to two-year vesting will be fully vested.

Schedule E-7

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Schedule F

MP (Thrift) LLC
MP (Thrift) Asset Management  LLC
MP (Thrift) Global Partners III LLC
MP (Thrift) Global Opportunities Partners (Special) III LP
MP (Thrift) Global Opportunities Investments III LP

Schedule F-1

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Exhibit A
Preferred Stock Certificate of Designations