EX-10.3






Exhibit 10.3




EMPLOYMENT AGREEMENT




     THIS AGREEMENT, originally effective as of May 25, 2005, by and between Flagstar Bancorp, Inc.
(“Bancorp”) and Flagstar Bank, FSB (the “Bank”) (collectively, the “Company”) and Paul D. Borja
(the “Employee”) is continued, amended and restated as follows effective January 1, 2007 (the
“Effective Date”).



     WHEREAS, the Company wishes to continue to assure retention of the services of the Employee
for the period provided in this Agreement;



     WHEREAS, the Employee is willing to serve in the employ of the Company for this period; and



     WHEREAS, certain provisions of the original agreement require amending to reflect certain tax
and banking laws and regulations, including Internal Revenue Code (the “Code”) Sections 162(m) and
409A.



     NOW, THEREFORE, it is AGREED as follows:



     1. Employment. The Employee is employed as the Executive Vice-President and Chief
Financial Officer of the Company. The Employee shall render such administrative and management
services for the Company as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Company. The Employee’s other
duties shall be such as the Board of Directors of the Company (the “Board”) may from time to time
reasonably direct.



     2. Base Compensation. Bancorp and the Bank, jointly and severally, agree to pay the
Employee during the term of this Agreement an annual base salary, payable in cash in accordance
with the payroll practices of the Bank, at such rate as determined by the Company’s Board (or as
delegated by the Board to the Company’s Compensation Committee). The Company and the Employee
agree that this amount will be not less than $435,000. The Compensation Committee shall review,
not less often than annually, the rate of the Employee’s salary, and the Board, in its sole
discretion (unless delegated to the Compensation Committee), may decide to increase Employee’s
salary..



     3. Discretionary Bonuses. From time to time the Employee may be entitled to
discretionary bonuses at the discretion of the Board and/or the Compensation Committee. No other
compensation provided for in this Agreement shall be deemed a substitute for the Employee’s right
to receive discretionary bonuses.



     4. Additional Benefits.



          (a) Participation in Retirement, Medical and Other Plans. To the extent eligible
under the terms thereof, the Employee shall participate in any plan that the Company maintains for
the benefit of its employees if the plan relates to (i) pension, profit-sharing, or other
retirement benefits, (ii) medical insurance or the reimbursement of medical or dependent care
expenses, or (iii) other group benefits, including disability and life insurance plans.




 









 








          (b) Employee Benefits: Expenses. The Employee shall participate in any fringe
benefits which are or may become available to the Company’s senior management employees and which
are commensurate with the responsibilities and functions to be performed by the Employee under this
Agreement. The Company will continue to provide the Employee with fringe benefits, including
participation in bonus, equity or incentive compensation plans, substantially similar to those now
provided to the Employee and as may hereafter become available. The Employee shall be reimbursed
for all reasonable out-of-pocket business expenses which Employee shall incur in connection with
his services under this Agreement upon substantiation of such expenses in accordance with the
policies of the Company.




          (c) Liability Insurance: Indemnification. The Company shall provide the Employee
(including Employee’s heirs, executors, and administrators) with coverage under a standard
directors’ and officers’ liability insurance policy at the Company’s expense, or in lieu thereof,
shall indemnify the Employee (and Employee’s heirs, executors, and administrators) to the fullest
extent permitted under Federal law against all expenses and liabilities reasonably incurred in
connection with or arising out of any action, suit or proceeding in which Employee may be involved
by reason of Employee’s having been a director or officer of the Company (whether or not Employee
continues to be a director or officer at the time of incurring such expenses or liabilities); such
expenses and liabilities to include, but not limited to, judgments, court costs and attorneys’ fees
and the cost of reasonable settlements, and such settlements to be approved by the Board of
Directors of the Company; provided, however, that such indemnification shall not extend to matters
as to which the Employee is finally adjudged to be liable for willful misconduct or gross
negligence in the performance of duties as a director or officer of the Company.




     5. Term. The Company hereby employs the Employee, and the Employee hereby accepts
such employment under this Agreement, for the period commencing on the Effective Date and ending on
December 31, 2009 (or such earlier date as is determined in accordance with Section 9).
Additionally, on the 1st of January of each year starting on January 1, 2008, the Employee’s term
of employment may be extended by an additional one-year, provided the Board determines in a duly
adopted resolution that this Agreement shall be extended. “Expiration Date” shall mean the last
day of the term of this Agreement.



     6. Loyalty: Noncompetition.



          (a) During the term of employment hereunder and except for illnesses, reasonable vacation
periods, and reasonable leaves of absence, the Employee shall devote all business time, attention,
skill, and efforts to the faithful performance of duties to the Company hereunder and/or to its
affiliates; provided, however, that from time to time the Employee may serve on the boards of
directors of, and hold any other offices or positions in, companies or organizations which will not
present, in the reasonable opinion of the Board, any conflict of interest with the Company or any
of its subsidiaries or affiliates, or unfavorably affect the performance of the Employee’s duties
pursuant to this Agreement, or will not violate any applicable statute or regulation. During the
term of employment under this Agreement, the Employee shall not engage in any business or activity
contrary to the business affairs or interests of the Company and/or its affiliates, or be gainfully
employed in any other position or job other
than as provided above. .




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          (b) Nothing contained in this Paragraph 6 shall be deemed to prevent or limit the Employee’s
right to invest in the capital stock or other securities of any business dissimilar from that of
the Company, or to participate solely as a passive or minority investor in any business.




     7. Standards. The Employee shall perform duties under this Agreement in accordance
with such reasonable standards as the Board may establish from time to time. The Company will
provide the Employee with the working facilities and staff customary for similar executives and
necessary to perform duties.



     8. Paid Time Off. At such reasonable times as the Board shall in its discretion
permit, the Employee shall be entitled, without loss of pay, to be absent voluntarily from the
performance of employment under this Agreement. All such voluntary absences will count as paid
time off, provided that:



          (a) The Employee shall be entitled to paid time off in accordance with the policies that the
Bank periodically establishes for various senior management employees of the Company.




          (b) The Employee shall not receive any additional compensation from the Company on account of
Employee’s failure to take paid time off, and the Employee shall accumulate unused paid time off
from one fiscal year to the next only to the extent provided by the Bank’s policy for its employees
in general or as required by law.




          (c) In addition to the aforesaid paid time off, the Employee shall be entitled without loss of
pay, to be absent voluntarily from the performance of employment with the Company for such
additional periods of time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or leaves of absence,
with or without pay, at such time or times and upon such terms and conditions as such Board in its
discretion may determine.




     9. Termination and Termination Pay. Subject to Section 11 hereof, the Employee’s
employment hereunder may be terminated under the following circumstances:



          (a) Death. The Employee’s employment under this Agreement shall terminate upon
Employee’s death during the term of this Agreement, in which event the Employee’s estate shall be
entitled to receive six months base compensation plus any accrued and unpaid discretionary bonus
due Employee at the time of death, payable in a lump sum the first of the month following the
Employee’s death. In addition, the Company shall maintain at the same level of Company
contribution as prior to the Employee’s death, the existing medical insurance for the Employee’s
immediate family for six months after the Employee’s death.




          (b) Disability. The Company may terminate the Employee’s employment after having
established the Employee’s Disability. For purposes of this Agreement, “Disability” means a
physical or mental infirmity which impairs the Employee’s ability to substantially perform duties
under this Agreement, or which can be expected to impair the Employee’s ability to substantially
perform duties under this Agreement for a period of 180 consecutive days. The




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Employee shall be entitled to the compensation and benefits provided for under this Agreement
for (i) any period during the term of this Agreement and prior to the establishment of the
Employee’s Disability during which the Employee is unable to work due to the physical or mental
infirmity at the election of the Board of Directors, or (ii) any period of Disability which is
prior to the Employee’s termination of employment pursuant to this Section 9(b).




          (c) Just Cause. The Board may, by written notice to the Employee, immediately
terminate Employee’s employment at any time for Just Cause. The Employee shall have no right to
receive compensation or other benefits for any period after termination for Just Cause. Termination
for “Just Cause” shall mean termination because of, in the good faith determination of the Board,
the Employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement. No act, or failure
to act, on the Employee’s part shall be considered “willful” failure to act if such act was in the
best interest of the Company, as determined in the sole discretion of the Board. Notwithstanding
the foregoing, the Employee shall not be deemed to have been terminated for Just Cause unless there
shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the Employee and an opportunity for the
Employee to be heard before the Board), finding that in the good faith opinion of the Board the
Employee was guilty of conduct set forth above of this Subsection (c) and specifying the
particulars thereof in detail.




          (d) Without Just Cause; Constructive Discharge. (1) The Board may, by written notice
to the Employee, immediately terminate Employee’s employment at any time for a reason other than
Just Cause, in which event the Employee shall be entitled to receive the following compensation and
benefits (unless such termination occurs within the time period set forth in Section 11(b) hereof
in which event the benefits and compensation provided for in Section 11 shall apply): (i) The
annual amount of base compensation under Section 2 of this Agreement at the rate then in effect;
(ii) the amount of incentive compensation actually payable to the Employee under the Company’s
incentive compensation program in effect during the Employee’s year of termination as if the
Employee had not terminated employment during the incentive period prorated based on the number of
days Employee was employed during the incentive period; provided, however, that any stock based
compensation that would otherwise be issued in accordance with any incentive compensation program
(i.e., options, stock grants, SARs, etc.) shall instead be settled in a cash payment payable as set
forth below; and (iii) continued participation under the Company’s benefit plans (other than the
incentive compensation program) through the Expiration Date but only to the extent the Employee
continues to qualify for participation therein, with the Company maintaining its same level of
contributions as immediately prior to the termination; provided, however, that to the extent such
benefits include payments for medical expenses that are allowable as a deduction under Code Section
213, the Company will maintain its same level of contributions as immediately prior to the
termination but only during the period of time the Employee would be entitled to continuation
coverage under the Company’s group health plan pursuant to Code Section 4980B (COBRA coverage).
The Company will pay the amount due under subsection (d)(1)(i) to the Employee in a single lump sum
cash payment within [45] days of the date of the Employee’s termination. The Company will pay the
amount due under subsection (d)(1)(ii) to the Employee at the same time




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as the Company pays other participants in the applicable incentive compensation program but in
no event later than the fifteenth day of the third month of the taxable year following the taxable
year containing the last day of the applicable incentive period.




               (2) The Employee may voluntarily terminate employment under this Agreement, in which case the
Employee will receive the compensation and benefits payable under Section 9(d)(1) hereof upon the
occurrence of any of the following events which has not been consented to in advance by the
Employee in writing (unless such voluntary termination occurs within the time period set forth in
Section 11(b) hereof in which event the benefits and compensation provided for in Section 11 shall
apply): (i) the requirement that the Employee perform principal executive functions more than 50
miles from Employee’s primary office; (ii) a material reduction without reasonable cause in the
Employee’s base compensation; (iii) any action or inaction that constitutes a material breach by
the Company of this Agreement; or (iv) a material reduction in the Employee’s duties,
responsibilities or authority (including reporting responsibilities) in connection with his
employment with the Company. The Company will pay all amounts due under this subsection (d)(2) to
the Employee in a single lump sum cash payment within [45] days of the date of the Employee’s
termination, provided: (i) Employee terminates his employment within two years of the initial
existence of any event under this Section 9(d)(2); (ii) the Employee provides the Company notice of
the existence of an event under this Section 9(d)(2); and (iii) after notice from the Employee of
the existence of any event under this Section 9(d)(2), the Company does not remedy the condition
within 30 days.



               (3) Notwithstanding the foregoing, but only to the extent required under federal banking law,
the amount payable under clause (d)(1)(i) hereof shall be reduced to the extent that on the date of
the Employee’s termination of employment, the present value of the benefits payable under clauses
(d)(1)(i) and (ii) hereof exceeds the limitation on severance benefits that is set forth in
applicable regulations or other guidance of the Office of Thrift Supervision (“OTS”), as in effect
on the Effective Date. In the event that Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) becomes applicable to payments made under this Section 9(d), and the payments
exceed the “Maximum Amount” as defined in Section 11(a)(1) hereof, the payments shall be reduced as
provided by Section 11(a)(2) of this Agreement.



          (e) Termination or Suspension Under Federal Law. (1) If the Employee is removed
and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order
issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C.
1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement shall terminate, as of the
effective date of the order with the exception of vested stock or option rights.




               (2) If the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations under
this Agreement shall terminate as of the date of default; however, this Paragraph shall not affect
the vested rights of the Employee.



               (3) All obligations under this Agreement shall terminate, except to the extent that
continuation of this Agreement is necessary for the continued operation of the Bank; (i) by the
Director of the OTS, or designee, at the time that the Federal Deposit Insurance Corporation
(“FDIC”) enters into an agreement to provide assistance to or on behalf of the Bank



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under the authority contained in Section 13(c) of the FDIA; or (ii) by the Director of the OTS, or
designee, at the time that the Director of the OTS, or designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined by the Director of
the OTS to be in an unsafe or unsound condition. Such action shall not affect any vested rights of
the Employee



               (4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) or
(g)(1)) suspends and/or temporarily prohibits the Employee from participating in the conduct of the
Bank’s affairs, the Bank’s obligations under this Agreement shall be suspended as of the date of
such service, unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion (i) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.



          (f) Voluntary Termination by Employee. Subject to Section 11 hereof, the Employee may
voluntarily terminate employment with the Company during the term of this Agreement, upon at least
60 days’ prior written notice to the Board of Directors, in which case the Employee shall receive
only his compensation, vested rights and employee benefits up to the date of termination (unless
such termination occurs pursuant to Section 9(d)(2) hereof or within the time period set forth in
Section 11(a) hereof, in which event the benefits and compensation provided for in Section 9(d) or
11, as applicable, shall apply). Should the Employee voluntarily terminate employment without
providing 60 days prior written notice to the Board of Directors, the Board of Directors may at its
election negate and void any vested rights and/or employee benefits accrued.




          (g) Effect of Equity Plans. In addition to any rights or payments to which Employee
or his beneficiaries is entitled under this Section 9, Employee or his beneficiaries is entitled to
such additional rights as may be provided for under the Company’s equity plans or arrangements,
including, but not limited to the Company’s 2006 Equity Incentive Plan or its successor or
replacement, if any.




     10. No Mitigation. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and no such payment
shall be offset or reduced by the amount of any compensation or benefits provided to the Employee
in any subsequent employment.



     11. Change in Control.



          (a) Change in Control: Involuntary Termination. (1) Notwithstanding any provision
herein to the contrary, if the Employee’s employment under this Agreement is terminated by the
Company, without the Employee’s prior written consent and for a reason other than Just Cause, in
connection with or within 12 months after any change in control of the Company, the Employee shall,
subject to paragraph (2) of this Section 11(a), be paid an amount equal to the difference between
(i) the product of 2.99 times Employee’s “base amount” as defined in Section 280G(b)(3) of the Code
and regulations promulgated thereunder (the “Maximum Amount”), and (ii) the sum of any other
parachute payments (as defined under Section 280G(b)(2) of the Code) that the Employee receives on
account of the change in control. Said sum shall be paid in one lump sum cash payment within [45]
days of the date of the Employee’s termination, and shall be paid in lieu of the payment of any
benefits under Section 9.




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          The Company shall also maintain existing health insurance, at the same level of Company
contribution as prior to the Employee’s termination, for six months after the Employee’s
termination, or if the Employee dies within such six months, the Company shall maintain health
insurance for the Employee’s immediate family, at the same level of Company contribution as prior
to the Employee’s death, for a six-month period beginning on the Employee’s death.




               (2) In the event that the Employee and the Company jointly determine and agree that the total
parachute payments receivable under clauses (i) and (ii) of Section 11(a)(1) hereof exceed the
Maximum Amount, notwithstanding the payment procedure set forth in Section 11(a)(1) hereof, the
Company will reduce the lump sum amount described in Section 11(a)(1) as required so that the total
parachute payments to be received by the Employee do not exceed the Maximum Amount.



               (3) As a result of uncertainty in application of Section 280G of the Code at the time of
payment hereunder, it is possible that such payments will have been made by the Company which
should not have been made (“Overpayment”) or that additional payments will not have been made by
the Company which should have been made (“Underpayment”), in each case, consistent with the
calculations required to be made under Section 11(a)(1) hereof. In the event that the Employee,
based upon the assertion by the Internal Revenue Service against the Employee of a deficiency which
the Employee believes has a high probability of success, determines that an Overpayment has been
made, any such Overpayment paid or distributed by the Company to or for the benefit of Employee
shall be treated for all purposes as a loan ab initio which the Employee shall
repay to the Company together with interest at the applicable federal rate provided for in Section
7872(f)(2)(B) of the Code; provided, however, that no such loan shall be deemed to have been made
and no amount shall be payable by the Employee to the Company if and to the extent such deemed loan
and payment would not either reduce the amount on which the Employee is subject to tax under
Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the
Employee and the Company determine, based upon controlling precedent or other substantial
authority, that an Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.



               (4) The term “change in control” shall mean any one of the following events: (i) the
acquisition of ownership, holding or power to vote more than 50% of the Company’s voting stock,
(ii) the acquisition of the ability to control the election of a majority of the Company’s
directors, (iii) the acquisition of a controlling influence over the management or policies of the
Company by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended), or (iv) the acquisition of control of the Company
within the meaning of 12 C.F.R. Part 574 or its applicable equivalent (except in the case of (i),
(ii), (iii) and (iv) hereof, ownership or control of the Company by the parent holding company,
namely Flagstar Bancorp, Inc., itself shall not constitute a “change in control”). For purposes of
this subparagraph only, the term “person” refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.



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     Notwithstanding the foregoing, but only to the extent required under federal banking law,
the amount payable under Subsection (a) of this Section 11 shall be reduced to the extent that
on the date of the Employee’s termination of employment, the amount payable under Subsection (a) of
this Section 11 exceeds the limitation on severance benefits that is set forth in Regulatory
Bulletin 27a of the OTS, as in effect on the Effective Date.



          (b) Change in Control: Voluntary Termination. Notwithstanding any other provision of
this Agreement to the contrary, but subject to Section 11(a)(2) hereof, the Employee may
voluntarily terminate employment under this Agreement within 12 months following a change in
control of the Company, as defined in paragraph (a)(4) of this Section 11, should any of the
following events occur and which have not been consented to in advance by the Employee in writing:
(i) the requirement that the Employee perform his principal executive functions more than 50 miles
from Employee’s primary office as of the date of the change in control; (ii) a material reduction
in the Employee’s base compensation as in effect on the date of the change in control or as the
same may be changed by mutual agreement from time to time; (iii) any action or inaction that
constitutes a material breach by the Company of this Agreement; or (iv) a material reduction in the
Employee’s duties, responsibilities or authority (including reporting responsibilities, which, in
the case of a Change of Control, shall be defined to include performing such responsibilities
solely for a subsidiary of the controlling entity) in connection with employment with the Company.
In any of these cases, the Employee will receive the payment under the terms described in Section
11(a)(1) of this Agreement within [45] days of the date of the Employee’s termination; provided:
(i) Employee terminates his employment within two years of the initial existence of any event under
this Section 11(b); (ii) the Employee provides the Company notice of the existence of an event
under this Section 11(b); and (iii) after notice from the Employee of the existence of any event
under this Section 11(b), the Company does not remedy the condition within 30 days. Payment under
this subsection (b) is in lieu of the payment of any benefits under Section 9 hereof.




          (c) Compliance with 12 U.S.C. Section 1828(k). Any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.




          (d) Effect of Equity Plans. In addition to any rights or payments to which Employee
or his beneficiaries is entitled under this Section 11, Employee or his beneficiaries is entitled
to such additional rights as may be provided for under the Company’s equity plans or arrangements,
including, but not limited to the Company’s 2006 Equity Incentive Plan or its successor or
replacement, if any.




     12. Arbitration; Reimbursement of Expenses



          (a) Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the arbitration award in any
court having jurisdiction; provided, however, that until the Expiration Date the Employee shall be
entitled to seek specific performance of Employee’s right to be paid during the pendency of any
dispute or controversy arising under or in connection with this Agreement. Any arbitration
proceeding shall be governed by and subject to Michigan arbitration law.




          (b) Reimbursement. All reasonable costs and legal fees paid or incurred by the
Employee pursuant to any dispute or question of interpretation relating to this Agreement, or




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its specific performance, shall be paid or reimbursed by the Company, if the Employee is the
prevailing party. Such payment or reimbursement shall be made within ten (10) days of Employee’s
furnishing the Company written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Employee.




     13. Federal Income Tax Withholding. The Company may withhold all Federal and State
income or other taxes from any benefit payable under this Agreement as shall be required pursuant
to any law or government regulation or ruling.



     14. Successors and Assigns.



          (a) Company. This Agreement shall not be assignable by the Company, provided that
this Agreement shall inure to the benefit of and be binding upon any corporate or other successor
of the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.




          (b) Employee. Since the Company is contracting for the unique and personal skills of
the Employee, the Employee shall be precluded from assigning or delegating Employee’s rights or
duties hereunder without first obtaining the written consent of the Company; provided, however,
that nothing in this paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon death, or (ii) the executors, administrators, or other
legal representatives of the Employee or Employee’s estate from assigning any rights hereunder to
the person or persons entitled thereunto.




          (c) Attachment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be
null, void and of no effect.




     15. Amendments. No amendments, no oral discussions and/or additions to this Agreement
shall be binding unless made in writing and signed by all of the parties, except as herein
otherwise specifically provided.



     16. Applicable Law. Except to the extent preempted by Federal law, the laws of the
State of Michigan shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.



     17. Conformance With Applicable Laws. Notwithstanding anything contained herein to
the contrary, this Agreement will be administered, construed and deemed amended in accordance with
all applicable laws and regulations, including, but not limited to, Code Sections 409A and 162(m).



     18. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.



[The remainder of this page is left intentionally blank.]




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     IN WITNESS WHEREOF, the parties have executed this Agreement as of this 31st day of December,
2008, effective as of the Effective Date specified above.



	 	 	 	 	 
	 	FLAGSTAR BANK, FSB

 	 
	 	By:  	 	 
	 	 	Mark T. Hammond, President and CEO 	 
	 	 	 	 
	 
	 	FLAGSTAR BANCORP, INC.

 	 
	 	By:  	 	 
	 	 	Mark T. Hammond, President and CEO 	 
	 	 	 	 
	 
	 	PAUL D. BORJA, Employee

 	 
	 	By:  	 	 
	 	 	Paul D. Borja 	 
	 	 	 	 
	 




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