Document:

Exhibit

EXHIBIT 10.12

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
x
UNITED STATES OF AMERICA, :                                 12 Civ. 1392

Plaintiff, : STIPULATION AND ORDER OF SETTLEMENT AND DISMISSAL
v. :
FLAGSTAR BANK, F.S.B.,  Defendant. :

WHEREAS, this Stipulation and Order of Settlement and Dismissal (the "Stipulation") is entered into by and among plaintiff the United States of America (the "United States" or "Government"), by its attorney, Preet Bharara, United States Attorney for the Southern District of New York, and defendant Flagstar Bank, F.S.B., including its successors by operation of law or otherwise ("Flagstar"), by its authorized representatives;

WHEREAS, Flagstar is a federally-chartered stock savings bank that is headquartered in Troy, Michigan, and is the principal subsidiary of Flagstar Bancorp, Inc., a Michigan-based savings and loan holding company;

WHEREAS, since 1988, Flagstar has been a participant in the Direct Endorsement Lender program (the "DEL program"), a Government program administered by the Federal Housing Administration (the "FHA") of the United States Department of Urban Development ("HUD"). The DEL program authorizes private-sector mortgage lenders ("Direct Endorsement Lenders") to approve mortgage loans for insurance by the FHA;

WHEREAS, simultaneously with the filing of this Stipulation, the Government is filing a complaint against Flagstar in the United States District Court for the Southern District of New York (the "Court") pursuant to the False Claims Act, 31 U.S.C. §§ 3729, et seq., and the common law theories of breach of fiduciary duty, gross negligence and negligence (the "Complaint"); 

WHEREAS, the Complaint alleges that during the period January 1, 2002, to date, Flagstar has been endorsing loans for FHA insurance in violation of DEL program rules, and has been submitting false certifications to the FHA and HUD about its underwriting practices; and

WHEREAS, the Government and Flagstar have reached a mutually-agreeable resolution addressing the claims raised in the Complaint through this Stipulation;

NOW, THEREFORE, upon the Parties’ agreement, IT IS HEREBY ORDERED that: 

TERMS AND CONDITIONS

		
	1.
	Flagstar consents to the Court’s exercise of subject matter jurisdiction over this action and personal jurisdiction over it,

		
	2.
	Flagstar hereby admits, acknowledges, and accepts responsibility for the conduct alleged in the Complaint to the extent set forth below;

		
	a.
	During the period January 1, 2002, to the present (the "Covered Period"), for every mortgage loan that Flagstar endorsed for FHA insurance pursuant to the Direct Endorsement Lender program, a Direct Endorsement Underwriter ("DE Underwriter") employed by Flagstar submitted a certification to the FHA and HUD ("loan-level certification");

		
	b.
	For each loan underwritten manually, the loan-level certification stated that the DE Underwriter had "personally reviewed the appraisal report (if applicable), credit application, and all associated documents," and that the loan was eligible for mortgage insurance under the Direct Endorsement Lender program;

		
	c.
	For each loan underwritten using an automated underwriting system, the loan-level certification stated that the loan was eligible for mortgage insurance under the Direct Endorsement Lender program;

		
	d.
	Under Flagstar’s manual underwriting process (the "Manual Underwriting Process"), Flagstar utilized employees who were not DE Underwriters, called Underwriting Assistants, to review and clear conditions on 

loans. These conditions had to be satisfied in order for the loans to close. Flagstar did not require DE Underwriters to approve the work performed by the Underwriting Assistants in clearing conditions or to review the documentation examined by the Underwriting Assistants in clearing conditions;

		
	e.
	As a result of the Manual Underwriting Process, notwithstanding loan-level certifications to the contrary, a Flagstar DE Underwriter did not in every instance "personally review" "all associated documents" for the loans that Flagstar manually underwrote and endorsed for FHA insurance during the Covered Period;

		
	f.
	In a number of instances, Underwriting Assistants (who were not DE Underwriters) reviewed - and were the only ones to review - documents associated with material conditions on the loans that Flagstar manually underwrote and approved for FHA insurance during the Covered Period;

		
	g.
	Additionally, in a number of instances, Underwriting Assistants cleared material conditions - without DE Underwriter supervision - relating to the borrower’s income, assets and credit;

		
	h.
	In a number of instances, notwithstanding loan-level certifications to the contrary, loans that Flagstar underwrote and approved for FHA insurance during the Covered Period, and for which HUD has paid insurance claims, did not comply with certain underwriting requirements contained in HUD’s handbooks and Mortgagee Letters and therefore were not eligible for mortgage insurance under the Direct Endorsement Lender program; and

		
	i.
	As a result of the conduct described above in this Paragraph, Flagstar made false loan-level certifications on loans that (i) induced the FHA to accept for Government insurance loans that were not eligible for such insurance and that the FHA otherwise would not have insured, and (ii) resulted in losses to HUD when the loans defaulted.

		
	3.
	Flagstar agrees and commits that it shall comply with all relevant HUD/FHA rules applicable to Direct Endorsement Lenders in the DEL program. 

		
	4.
	Flagstar further agrees that, in addition to its compliance with all relevant HUD/FHA rules applicable to Direct Endorsement Lenders in the DEL program, its continued participation in the DEL program shall be conditioned on the following:

		
	a.
	Flagstar’s completion of a one year period during which time Flagstar’s compliance with all relevant HUD/FHA rules applicable to Direct Endorsement Lenders in the DEL program shall be monitored by a third party ("Third Party"). Such Third Party shall be selected by Flagstar and shall be approved by HUD, such approval not to be unreasonably withheld. Flagstar shall bear the cost of the Third Party’s monitoring activities.

		
	b.
	Such Third Party shall make periodic reports to HUD and Flagstar regarding Flagstar’s compliance with all relevant HUD/FHA rules applicable to Direct Endorsement Lenders in the DEL program. The form and frequency of such reports shall be decided and agreed upon in good faith between Flagstar and HUD.

		
	c.
	The period of monitoring shall commence on the beginning of the first month from the Effective Date of this Stipulation or following the approval by HUD of the Third Party, whichever is later, and shall terminate one year from that date, provided that Flagstar’s national total company 24-month compare ratio ("Compare Ratio") remains below 100% (the "Industry Average"). Should Flagstar’s Compare Ratio exceed the Industry Average at the end of the first year, then HUD may extend the period of monitoring for a second year. If at the end of such second year, Flagstar’s Compare Ratio continues to exceed the Industry Average, then HUD may extend the period of monitoring for a third year. In no event shall the monitoring period extend beyond three years.

		
	d.
	During the monitoring period described above, Flagstar shall train all employees involved in the origination and underwriting of FHA loans regarding all relevant HUD/FHA rules applicable to Direct Endorsement Lenders in the DEL program. The form and frequency of such training shall be decided and agreed upon in good faith between Flagstar and HUD; and 

		
	e.
	Flagstar shall certify to HUD that the individuals in senior leadership positions with primary responsibility for, respectively, initiating and overseeing Flagstar’s Manual Underwriting Process, as described above, are no longer employed by Flagstar.

		
	5.
	Flagstar shall pay to the Government $15 million dollars within 30 business days after the Effective Date of this Stipulation.

		
	6.
	Flagstar shall also make additional payments to the Government in the total amount of $117,889,806 (the "Additional Payments"), if, and only if, each of the following events occurs and each of the following criteria is met, except as otherwise provided in Paragraph 19 below. Consistent with its business and regulatory requirements, Flagstar shall seek in good faith to fulfill the below conditions, and will not undertake any conduct or fail to take any action the purpose of which is to frustrate or delay its ability to fulfill any of the below conditions:

		
	a.
	Flagstar generates positive income for a continuously sustained period, such that Flagstar determines it is likely that part or all of a Deferred Tax Asset ("DTA"), which, as of December 31,2011 was $384,589,806 and which has been offset by a valuation allowance ("DTA Valuation Allowance"), shall be realized, as evidenced by the reversal of the DTA Valuation Allowance in accordance with US GAAP;

		
	b.
	Flagstar is able to include capital derived from the reversal of the DTA Valuation Allowance as an addition to its Tier 1 capital in an amount which, in accordance with regulation, is the lesser of 10% of its Tier 1 capital or the amount of the DTA that Flagstar expects to recover within one year based on financial projections; 

		
	c.
	Flagstar or its parent holding company (or its successor) has fully repaid, or otherwise settled to the satisfaction of the United States Government, the $266.7 million amount previously invested by the United States Government in Flagstar’s parent holding company under the Troubled Asset Relief Program ("TARP"), or, to the extent not fully repaid or otherwise settled to the satisfaction of the United States Government, any such remaining $266.7 million has been excluded from Tier 1 capital solely for the purpose of calculating the threshold Tier 1 Ratio as set forth in clause 6(d)(ii) below; and

		
	d.
	Upon the occurrence of the events set forth in (a), (b) and (c) above, and within 30 business days of the occurrence of the last such event, Flagstar shall begin making annual Additional Payments to the Government, provided that (i) each such annual Additional Payment shall be the lesser of (x) $25 million or (y) the portion of the Additional Payments that remains outstanding after deducting any prior Additional Payments, and (ii) no obligation to make such Additional Payment shall arise unless Flagstar’s Recent Call Report reflects a minimum Tier 1 Ratio of 11% or such higher Tier 1 Ratio as may be imposed by the Office of the Comptroller of the Currency ("OCC," or any successor regulator under the Safety and Soundness Program) after excluding, for the purposes of this calculation only, any un-extinguished TARP investment from Tier 1 capital as referenced in clause 6(c) above. For purposes of this section, "Recent Call Report" means Flagstar’s Call Report as filed with the OCC, including any amendments thereto, for the period ending at least six months prior to the making of such Additional Payment. The $15 million payment together with the Additional Payments shall be referred to herein as the Settlement Amount, 

		
	e.
	In no event shall Flagstar be required to make an Additional Payment if doing so would violate any material banking regulatory requirement or the OCC (or any successor regulator under the Safety and Soundness Program) objects in writing to the making of an Additional Payment.

		
	7.
	Payment of the Settlement Amount pursuant to this Stipulation shall be made at http://www.pay.gov to the U.S. Department of Justice account in accordance with instructions provided by the Financial Litigation Unit of the United States Attorney’s Office for the Southern District of New York. Any amounts distributed to HUD-FHA pursuant to this Stipulation may be deposited into FHA’s Capital Reserve Account.

		
	8.
	Subject to Flagstar’s full compliance with the terms of this Stipulation, including Flagstar’s payment of the Settlement Amount as provided herein, the Government immediately releases Flagstar and all of its current and former officers, directors, employees, affiliates, and assigns from any civil or administrative monetary or nonmonetary claim that the United States has or may have under the False Claims Act, 31 U.S.C. §§ 3729, et seq,, the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1833a, the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801, et seq., the common law, or the equitable theories of fraud or mistake of fact in connection with mortgage loans that Flagstar endorsed for FHA insurance during the Covered Period; provided, however, that this release does not encompass the claims set forth in Paragraphs 9 and 10 below.

		
	9.
	Notwithstanding the release given in Paragraph 8 above, or any other term of this Stipulation, the following claims of the Government are specifically reserved and are not released by this Stipulation:

		
	a.
	any claims arising under Title 26, United States Code (Internal Revenue Code);

		
	b.
	any claims arising under Title 12, United States Code (Banks and Banking), other than FIRREA as set forth above;

		
	c.
	any criminal claims; and

		
	d.
	any liability based upon obligations created by this Stipulation.

		
	10.
	To the extent that Flagstar satisfies the commitments and undertakings under this Stipulation, including Paragraphs 3, 4, 5, and 6 above, HUD shall not refuse to pay any insurance claim or seek indemnification or other relief in connection with mortgage loans that Flagstar endorsed for FHA insurance during the Covered Period but for which no claims have yet been paid on the basis of Flagstar’s use of Underwriting Assistants as alleged in the Complaint or referenced in Paragraph 2 above. HUD may in good faith seek indemnification or other relief in connection with mortgage loans that Flagstar endorsed for FHA insurance during the Covered Period but for which no claims have yet been paid for reasons other than the fact of Flagstar’s use of Underwriting Assistants as alleged in the Complaint or referenced in Paragraph 2 above, but only to the extent seeking such indemnification or other relief is consistent with all relevant HUD/FHA rules and HUD’s generally applicable policies and practices in seeking indemnification.

		
	11.
	To the extent that Flagstar satisfies the commitments and undertakings under this Stipulation, including Paragraphs 3, 4, 5, and 6 above, HUD or its assigns shall not seek indemnification or other relief in connection with mortgage loans that Flagstar endorsed for FHA insurance during the Covered Period and for which HUD has paid insurance claims on the basis of the conduct alleged in the Complaint or referenced in Paragraph 2 above.

		
	12.
	Flagstar shall be in default of this Stipulation if it fails to comply materially with any provision of this Stipulation ("Default"). The Government shall provide written notice to Flagstar of any Default in the manner set forth in Paragraph 29 below. Flagstar shall then have an opportunity to cure the Default within fifteen (15) business days from the date of receipt of the notice of Default. In the event that a Default is not fully cured within fifteen (15) business days of the receipt of the notice of Default, Flagstar agrees that the United States, at its option, may (a) rescind this Stipulation and reinstate the Complaint; or (b) seek specific performance of this Stipulation to cure any Default. In the event that the United States opts to rescind this Stipulation pursuant to this Paragraph, Flagstar shall not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any civil or administrative claims that relate to the conduct alleged in the Complaint, except to the extent such defenses were available on the Effective Date.

		
	13.
	Flagstar waives and shall not assert any defenses it may have to any criminal prosecution relating to the conduct alleged in the Complaint that may be based in whole or in part on a contention that, under the Double Jeopardy Clause of the Fifth Amendment of the Constitution, or under the Excessive Fines Clause of the Eighth Amendment of the Constitution, this Stipulation bars a remedy sought in such criminal prosecution. Nothing in this Paragraph or any other provision of this Stipulation constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code. 

		
	14.
	Flagstar releases the Government, its agencies, employees, servants, and agents from any claims that Flagstar has asserted, could have asserted, or may assert in the future against the Government, its agencies, employees, servants, or agents, related to the conduct alleged in the Complaint and the Government’s investigation and prosecution thereof, except with respect to Paragraph 10 and 11 above and any continuing obligations created hereunder.

		
	15.
	This Stipulation is intended to be for the benefit of the Parties and the entities released in Paragraphs 8 and 14 above only. Pursuant to this Stipulation, the Parties are releasing only those entities released as set forth in Paragraphs 8 and 14 above and not releasing any claims against any other person or entity.

		
	16.
	Flagstar represents and warrants that it has reviewed its financial situation, that it is currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and that it reasonably believes that it shall remain solvent following its compliance with its obligations under this Stipulation, including its payment of the Settlement Amount in accordance with the parameters stated in Paragraphs 5 and 6 above. Further, the Parties warrant that, in evaluating whether to execute this Stipulation, they (a) have intended that the mutual promises, covenants, and obligations set 

forth constitute a contemporaneous exchange for new value given to Flagstar, within the meaning of 11 U.S.C. § 547(c)(1); and (b) have concluded that these mutual promises, covenants, and obligations do, in fact, constitute such a contemporaneous exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value that is not intended to hinder, delay, or defraud any entity to which Flagstar was or became indebted to on or after the date of this Stipulation, within the meaning of 11 U.S.C, § 548(a)(1).

		
	17.
	If within 91 days of the Effective Date of this Stipulation or any payment made under this Stipulation, Flagstar commences, or a third party commences, any case, action, or other proceeding under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors (a) seeking an order for relief of Flagstar’s debts, or seeking to adjudicate Flagstar as bankrupt or insolvent; or (b) seeking appointment of a receiver, trustee, custodian, or other similar official for Flagstar or for all or part of Flagstar’s assets, Flagstar agrees as follows:

		
	a.
	Flagstar’s obligations under this Stipulation may not be avoided pursuant to 11 U.S.C. § 547, and Flagstar shall not argue or otherwise take the position in any such case, action, or proceeding that (i) Flagstar’s obligations under this Stipulation may be avoided under 11 U.S.C. § 547; (ii) Flagstar was insolvent at the time this Stipulation was entered into; or (iii) the mutual promises, covenants, and obligations set forth in this Stipulation do not constitute a contemporaneous exchange for new value given to Flagstar.

		
	b.
	If any of Flagstar’s obligations under this Stipulation are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance powers under the Bankruptcy Code or in connection with a receivership, the Government, at its option, may rescind this Stipulation and reinstate the Complaint and pursue any civil and/or administrative claim, action, or proceeding against Flagstar that would otherwise be covered by the release in Paragraph 8 above. Flagstar agrees that (i) any such claim, action, or proceeding brought by the Government would not be subject to an "automatic stay" pursuant to 11 U.S.C, § 362(a) as a result of the case, action, or proceeding described in the first clause of this Paragraph, and Flagstar shall not argue or otherwise contend that the Government’s claim, action, or proceeding is subject to an automatic stay; (ii) Flagstar shall not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any claim, action, or proceeding that is brought by the Government within 60 calendar days of written notification to Flagstar that the Stipulation has been rescinded pursuant to this Paragraph, except to the extent such defenses were available on the Effective Date; and (iii) the Government has a valid claim against Flagstar for any unpaid Settlement Amount, and the Government may pursue its claim in the case, action, or proceeding described in the first clause of this Paragraph, as well as in any other case, action, or proceeding.

		
	c.
	Flagstar acknowledges that its agreements in this Paragraph are provided in exchange for valuable consideration provided in this Stipulation. 

		
	18.
	If more than 90 days after the Effective Date of this Stipulation but before Flagstar has paid the Settlement Amount in full, Flagstar commences, or a third party commences, any case, action, or other proceeding under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors (a) seeking an order for relief of Flagstar’s debts, or seeking to adjudicate Flagstar as bankrupt or insolvent; or (b) seeking appointment of a receiver, trustee, custodian, or other similar official for Flagstar or for all or part of Flagstar’s assets, Flagstar agrees as follows:

		
	a.
	If any of Flagstar’s obligations under this Stipulation are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance powers under the Bankruptcy Code or in connection with a receivership, the Government, at its option, may rescind this Stipulation and reinstate the Complaint and pursue any civil and/or administrative claim, action, or proceeding against Flagstar that would otherwise be covered by the release in Paragraph 8 above, Flagstar agrees that (i) any such claim, action, or proceeding brought by the Government would not be subject to an "automatic stay" pursuant to 11 U.S.C. § 362(a) as a result of the case, action, or proceeding described in the first clause of this Paragraph, and Flagstar shall not argue or otherwise contend that the Government’s claim, action, or proceeding is subject to an automatic stay; (ii) Flagstar shall not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any claim, action, or proceeding that is brought by the Government within 60 calendar days of written notification to Flagstar that the Stipulation has been rescinded pursuant to this Paragraph, except to the extent such defenses were available on the Effective Date; and (iii) the Government has a valid claim against Flagstar for any unpaid Settlement Amount, and the Government may pursue its claim in the case, action, or proceeding described in the first clause of this Paragraph, as well as in any other case, action, or proceeding.

		
	b.
	Flagstar acknowledges that its agreements in this Paragraph are provided in exchange for valuable consideration provided in this Stipulation. 

		
	19.
	No change of control under Section 382 of the Internal Revenue Code of 1986, as amended, that limits Flagstar’s ability to realize all or part of the DTA will relieve Flagstar of its obligations to make Additional Payments hereunder. If such a change of control adversely impacts Flagstar’s ability to satisfy the conditions in either Paragraphs 6(a) or 6(b), such condition(s) will not be deemed to apply. Moreover, if Flagstar or its parent holding company are party to a business combination or other transaction following which Flagstar and its parent holding company represent less than 33.3% of the resulting company’s assets, then 12 months following such combination or other transaction, Flagstar or its successor shall commence making the Additional Payments set forth in paragraph 6(d)(i).

		
	20.
	Flagstar agrees to the following:

		
	a.
	Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on behalf of Flagstar, its present or former officers, directors, employees, shareholders, and agents in connection with:

		
	(1)
	the matters covered by this Stipulation;

		
	(2)
	the United States’ audit(s) and civil investigation(s) of the matters covered by this Stipulation;

		
	(3)
	Flagstar’s investigation, defense, and corrective actions undertaken in response to the United States’ audit(s) and civil investigation(s) in connection with the matters covered by this Stipulation (including attorney’s fees);

		
	(4)
	the negotiation and performance of this Stipulation;  

		
	(5)
	any payments Flagstar makes to the United States pursuant to this Stipulation, including costs and attorney’s fees,

are unallowable costs for government contracting purposes (hereinafter referred to as "Unallowable Costs"). For purposes of this Paragraph, the term Unallowable Costs does not include insurance claims made in connection with mortgage loans that Flagstar endorsed for FHA insurance during the Covered Period.

		
	a.
	Future Treatment of Unallowable Costs: Unallowable Costs will be separately determined and accounted for by Flagstar, and Flagstar shall not charge such Unallowable Costs directly or indirectly to any contract with the United States.

		
	b.
	Treatment of Unallowable Costs Previously Submitted for Payment: Within 90 days of the Effective Date of this Stipulation, Flagstar shall identify and repay by adjustment to future claims for payment or otherwise any Unallowable Costs included in payments previously sought by Flagstar or any of its subsidiaries or affiliates from the United States. The United States, including the Department of Justice and/or the affected agencies, reserves its rights to audit, examine, or reexamine Flagstar’s books and records and to disagree with any calculations submitted by Flagstar or any of its subsidiaries or affiliates regarding any Unallowable Costs included in payments previously sought by Flagstar, or the effect of any such Unallowable Costs on the amount of such payments.

		
	21.
	In connection with the negotiation of this Stipulation, Flagstar has provided the Government with certain publicly-available information about its current financial condition and regulatory requirements, and has discussed with the Government its anticipated performance, as well as the potential effect of any settlement on its business and regulatory requirements (collectively, the "Financial Information"), The Government understands that anticipated performance is uncertain and subject to change. Nevertheless, Flagstar represents that the Financial Information was prepared in good faith and was, to Flagstar’s knowledge, accurate and not misleading in any material respect. The Government has relied on the foregoing representation in entering into this Stipulation. In the event of any breach of the foregoing representation, the Government, at its option, may rescind this Stipulation and reinstate the Complaint. Based on the Financial Information, Flagstar has represented, and the parties have each concluded, that the Settlement Amount represents the maximum of Flagstar’s current ability to pay, or to agree to pay, a monetary settlement in light of its business and regulatory requirements.

		
	22.
	Each Party shall bear its own legal and other costs incurred in connection with this matter.

		
	23.
	Any failure by the Government to insist upon the material performance of any of the provisions of this Stipulation shall not be deemed a waiver of any of the provisions hereof, and the Government, notwithstanding that failure, shall have the right thereafter to insist upon material performance of any and all of the provisions of this Stipulation.

		
	24.
	This Stipulation is governed by the laws of the United States. The exclusive jurisdiction and venue for any dispute relating to this Stipulation is the United States District Court for the Southern District of New York. For purposes of construing this Stipulation, this Stipulation shall be deemed to have been drafted by all Parties to this Stipulation and shall not, therefore, be construed against any Party in any subsequent dispute.

		
	25.
	Subject to the exceptions set forth in this Stipulation, and in consideration of the obligations of Flagstar as set forth in this Stipulation, and conditioned upon Flagstar’s full compliance with the terms of this Stipulation, the Government shall dismiss with prejudice the Complaint; provided, however, that the Court shall retain jurisdiction over this Stipulation and each Party to enforce the obligations of each Party under this Stipulation.

		
	26.
	This Stipulation constitutes the complete agreement between the Parties with respect to the subject matter hereof. This Stipulation may not be amended except by written consent of the Parties.

		
	27.
	The undersigned counsel represent and warrant that they are fully authorized to execute this Stipulation on behalf of the persons and entities indicated below.

		
	28.
	This Stipulation may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Stipulation. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Stipulation.

		
	29.
	Any notices pursuant to this Stipulation shall be in writing and shall be delivered by hand, express courier, or facsimile transmission followed by postage-prepaid mail, and shall be addressed as follows: 

IF TO THE UNITED STATES:

Christopher B. Harwood
Assistant United States Attorney
United States Attorney’s Office
Southern District of New York
86 Chambers Street, Third Floor
New York, New York 10007
Facsimile: (212) 637-2786

IF TO FLAGSTAR:

Veronica E. Rendon
Craig A. Stewart
Arnold & Porter LLP
399 Park Avenue
New York, New York 10022
Facsimile: (212) 715-1399

and

Chief Executive Officer
Chief Legal Officer
Flagstar Bank, F.S.B.
5151 Corporate Drive
Troy, MI 48098
Facsimile: (800) 858-7542

		
	30.
	The Effective Date of this Stipulation is the date upon which this Stipulation is entered by the Court.

Agreed to by:

THE UNITED STATES OF AMERICA

Dated:     New York, New York
February 24, 2012

PREET BHARARA
United States Attorney for the
Southern District of New York
By: /s/ Christopher B. Harwood      
CHRISTOPHER B. HARWOOD
Assistant United States Attorney
86 Chambers Street, Third Floor
New York, New York 10007
Telephone: (212) 637-2728
Facsimile: (212) 637-2786

Attorneys for the United States of America

FLAGSTAR BANK, F.S.B.
Dated:     New York, New York
February 24, 2012

By: /s/ Craig A. Stewart                
VERONICA E. RENDON
CRAIG A. STEWART
Arnold & Porter LLP
399 Park Avenue
New York, New York 10022
Telephone: (212) 715-1000
Facsimile: (212) 715-1399

Attorneys for Flagstar Bank, F.S.B.

Dated:     New York, New York
February 24, 2012

By: /s/ Joseph P. Campanelli         
Title: Chairman, CEO, President
Flagstar Bank, F.S.B.

SO ORDERED:     Feb. 24, 2012

By: /s/ Katherine B. Forrest                  
UNITED STATES DISTRICT JUDGE
Katherine B. ForrestExhibit

FIRST AMENDMENT TO
LEASE/SERVICE MODIFICATION

This First Amendment to Lease ("First Amendment") is entered into this 7th day of March 2017 (the "Effective Date"), by and between CPVF II WEST OAK LLC, a Delaware limited liability company ("Landlord") and MIMEDX GROUP, INC., a Florida corporation ("Tenant").

WHEREAS, on or about the 25th day of January, 2013, HUB Properties GA, LLC, a Delaware limited liability company ("HUB Properties") the Original Landlord, and Tenant   entered into that one certain Lease (the "Lease") for the real property and improvements located  at 1775 W. Oak Commons, Marietta, Georgia (the "West Oak Property"), said improvements consisting of 79,854 square feet, including parking and other facilities located on the real     property described on Exhibit A to the Lease; and

WHEREAS, on or about the 21st day of October, 2015, HUB Properties conveyed West Oak Property to CPVF II West Oak, LLC, who assumed all of the obligations of the Original Landlord under the Lease; and 

WHEREAS, Landlord and Tenant desire to extend the term of the Lease for an additional period of forty-eight (48) months, from the current expiration date of January 31, 2019, to January 31, 2023, on the terms and conditions set forth below, and to make certain other adjustments to their relative rights and obligations under the Lease, as more particularly set forth below;

NOW, THEREFORE, for and in consideration of the mutual promises and covenants set forth herein, the Lease is hereby amended and modified as set forth below.

1.     Extension of Term. The term of the Lease is hereby extended for an additional period of forty-eight (48) months (the "First Amended Term"), commencing on February 1, 2019, the "First Amended Commencement Date" and terminating on January 31, 2023 (the "Termination Date").

2.     Annual Fixed Rent. Commencing on February 1, 2017, Tenant agrees to pay the Annual Fixed Rent according to the terms of Section 4 of the Lease, according to the following schedule.

	
				
	Period
	Rate Per Square Foot of Premises Rentable Area
Per Annum
	Annual Fixed Rent
	Monthly Installment

	03/01/17 - 04/31/17
	$ 9.24
	$  737,850.96
	$61,487.58

	05/01/17-04/31/18
	$ 9.75
	$  778,576.50
	$64,881.38

	05/01/18-01/31/19
	$10.27
	$  820,100.58
	$68,341.72

	02/01/19-01/31/20
	$11.50
	$  918,321.00
	$76,526.75

	02/01/20- 01/31/21
	$11.85
	$  946,269.90
	$78,855.83

	02/01/21 - 01/31/22
	$12.21
	$  975,017.34
	$81,251.45

	02/01/22-01/31/23
	$12.58
	$1,004,563.32
	$83,713.61

Tenant agrees to timely pay all rent and other sums of money which become due and payable by Tenant to Landlord hereunder (collectively "Rent"), without abatement, demand, offset, deduction or counterclaim, except as provided in the Lease or this First Amendment.

3.    Article 1, Section 1.1 the definitions of "Base Operating Costs" and "Base Taxes" are 

deleted in their entirety.

4.        The first four paragraphs of Section 4.2.1 are deleted and the following four paragraphs are substituted in place of the deleted four paragraphs:

4.2.1    Real Estate Taxes. In addition to Annual Fixed Rent under Section 4.1 and Operating Cost under Section 4.2.2, as additional rent, Tenant shall pay all Taxes as hereinafter defined in this Section 4.2.1 (the "Real Estate Taxes"). Each year during the term of this Lease (a "Tax Year"), the Landlord shall make and provide a good faith estimate of the Taxes for the upcoming calendar year (the "Estimated Taxes"). Any amounts paid based on such an estimate shall be subject to adjustment as hereinafter provided within one hundred fifty (150) calendar days of the conclusion of each calendar year of the Term, or as soon thereafter as possible. Except as otherwise provided in this Section 4.2.1, Tenant shall pay the Real Estate Taxes to Landlord at least thirty (30) days prior to the date or dates within any year during the term hereof that the same, or any fractional share thereof, shall be due and payable to any governmental authority responsible for collection of same (as stated in a notice to Tenant given at least forty-five (45) days prior to the date or dates any such payment shall be due, which notice shall set forth the manner of computation of any Real Estate Tax).

Tenant shall pay to Landlord, as Additional Rent on the first day of each calendar month during the term but otherwise in the manner provided for the payment of Annual Fixed Rent, estimated payments on account of the Real Estate Taxes, such monthly amounts to be sufficient to provide Landlord by the time Tax payments are due or are to be made by Landlord a sum equal to the Real Estate Taxes, as reasonably estimated  by  Landlord from time to time on account of Taxes for the then current Tax Year. If the total of such monthly remittances for any Tax Year is greater than the Real Estate Taxes for such Tax Year, Landlord shall credit such overpayment against Tenant's subsequent obligations on account of Taxes (or promptly refund such overpayment if the term of this Lease has ended and Tenant has no further obligations to Landlord); if the total of such remittances is less than the Real Estate Taxes for such Tax Year, Tenant shall pay the difference to Landlord within thirty (30) days after being so notified by Landlord.

If, after Tenant  shall have made all payments due to Landlord  pursuant  to  this subsection 4.2.1, Landlord shall receive a refund of any portion of Taxes as a result of an abatement of such Taxes by legal proceedings, settlement or otherwise (without either party having any obligation to undertake any such proceedings), Landlord shall pay or credit to Tenant the percentage of the refund (after first deducting any reasonable expenses, including attorneys', consultants' and appraisers' fees, incurred in connection with obtaining any such refund) which equals the percentage of the applicable Tax Year included in the term hereof, provided however, in no event shall Tenant be entitled to receive more than the sum of payments actually made by Tenant on account of Taxes with respect to such Tax Year.

In the event that the term of this Lease shall expire or be terminated during any Tax Year, or should the Tax Year or period of assessment of real estate taxes be changed or be more or less than one (1) year, then the amount of Real Estate Taxes which may be otherwise payable by Tenant as provided in this subsection 4.2.1 shall be pro-rated on a daily basis based on a 360 day Tax Year.

5.    The first paragraph of Section 4.2.2 is deleted and the following paragraph is substituted in place of the deleted first paragraph and all reference in Section 4.2.2 to "Operating Cost Excess" is amended to delete the word "Excess" and read "Operating Costs":

4.2.2    Operating Costs. In addition to Annual Fixed Rent under Section 4.1 and Real Estate 

Taxes under Section 4.2.1, as Additional Rent, Tenant shall pay all "Operating Expenses" as hereinafter defined in Section 4.2.2 of the Lease. Each year during the term of this Lease (an "Operating Year"), the Landlord shall make and provide a good faith estimate of the Operating Costs for the Building for the upcoming calendar year (the "Estimated Operating Costs"). Any amounts paid based on such an estimate shall be subject to adjustment as hereinafter provided within one hundred fifty (150) calendar days of the conclusion of each calendar year of the Term, or as soon thereafter as possible, Landlord shall furnish to Tenant a statement of actual Operating Costs for such year prepared, allocated and computed in accordance with the then prevailing custom and practices of the real estate industry in the Marietta, Georgia area consistently applied, when actual Operating Costs are available for such calendar year. The estimated Operating Costs for the calendar year 2017 is $9.86 per rentable square feet.

6.    Leasehold Improvements. Tenant acknowledges that Tenant, prior to the execution  hereof,  has  occupied  the  Premises  since  May  of 2013  and  made an independent determination that the Premises and the existing Leasehold Improvements are suitable for Tenant's intended use and Tenant accepts the Leased Premises and existing Leasehold Improvements "AS-IS," and that, subject to the terms of the Lease, the Landlord does not have any further obligation to make any Leasehold Improvements, except the following:

(i)Landlord to resurface and restripe the existing parking lot within a commercially reasonable time but not to exceed six (6) months from the date of this First Amendment, subject to weather delays and delays in obtaining all required government approvals (permitting).

(ii)Landlord at Landlord's expense shall construct an expanded parking area increasing current parking by 57 parking spaces as soon as commercially possible, but not to exceed six (6) months from the date of this First Amendment, subject to weather delays or delays obtaining all required governmental approval (permitting).

7.     Brokers. Tenant represents and warrants that Tenant has dealt with Jones Lang LaSalle and Avison Young as Tenant's broker in connection with this First Amendment and that, insofar as Landlord and Tenant know, no other broker(s) negotiated this First Amendment or is entitled to any commission in connection herewith. Tenant shall indemnify and hold harmless Landlord from and against all claims (and costs of defending and investigating such claims) of any other broker(s) or similar parties claiming under Tenant in connection with this First Amendment. Landlord has contracted separately with Jones Lang LaSalle for the payment of a commission on this transaction.

8.    Security Deposit. Landlord and Tenant stipulate and agree that pursuant to the terms of the Lease, Tenant provided and Landlord is holding the following Letter of Credit as a security deposit, to-wit:

Bank of America, N.A., Irrevocable Standby Letter of Credit No. 68089243 Current Amount: $51,572.37

Bank of America, N.A., Irrevocable Standby Letter of Credit No. 68095862 Current Amount: $51,572.37

Within a commercially reasonable time after the date of this First Amendment, not to exceed thirty (30) calendar days, Landlord shall return Letter of Credit #68089243 to Tenant and execute such documents as Bank of America shall reasonably require to release Landlord's interest in such Letter of Credit.

9.    Option to Renew.   Tenant is hereby granted an option to renew the Lease for one
(1) renewal term of five (5) years commencing upon the expiration of the First Amended Term by giving Landlord written notice thereof of at least nine (9) months but not more than twelve (12) months prior to the expiration of the First Amended Term. All other terms of Section 2.3 of the Lease shall apply.

10.    Notice. Section 10.1 of the Lease is deleted and the following Section 10.1 is substituted in place of the deleted Section 10.1.

10.1. Notice. Except as otherwise provided herein or as permitted or directed by law, any statement, notice, or other communication that Landlord or Tenant may desire or be required to give to the other shall be (i) hand delivered, (ii) sent by a reputable, national overnight courier service, or (iii) sent by registered or certified mail, return receipt requested. Notices shall be addressed at the address(es) set forth below or at such other addresses(es) as the other party shall designate from time to time by prior written notice. Notices shall be deemed to be given on the earlier of (i) when hand delivered, (ii) on the first business day after being deposited with an overnight courier, (iii) on the third (3rd) business day after being prepared in the manner provided above and deposited in the mail, or (iv) upon refusal of receipt by the recipient or inability to make delivery due to a change of address by the intended recipient without written notice as required herein. Notices may be given on behalf of a party hereto by counsel representing such party. Notice to parties other than the named Tenant and Landlord now or hereafter designated by a party as entitled to notice, are for convenience only and are not required for notice to a party to be effective in accordance with this section.

Landlord's Address:    CPVF II West Oak LLC
c/o CapRidge Partners LLC
823 Congress Avenue, Suite 1111
Austin, Texas 78701 Attn: Kevin Black

Tenant's Address:    MiMedx Group, Inc.
1775 West Oak Commons Marietta, Georgia 30062 Attn: General Counsel

11.    Governing Law, Recording and Exhibits. The Lease shall be governed by and construed in accordance with the laws of the state in which the Premises are located. Tenant shall not record the Lease or any memorandum of the Lease without the prior written consent of Landlord, which consent may be withheld or denied in the sole and absolute discretion of Landlord, and any recordation by Tenant shall be a material breach of the Lease. Notwithstanding the foregoing, the parties acknowledge and agree that Tenant, in its sole discretion, may publicly disclose and file this First Amendment with the Securities & Exchange Commission ("SEC"), as may be required by rules and regulations promulgated by the SEC. Tenant grants to Landlord a power of attorney to execute and record a release releasing any such recorded instrument of record that was recorded without the prior written consent of Landlord. All exhibits and attachments attached to this Lease are incorporated herein by this reference.

12.    Determination of Charges. Landlord and Tenant are knowledgeable and experienced in commercial transactions and agree that the provisions set forth in the Lease for determining rent and other charges and amounts payable by Tenant are commercially reasonable and valid even though such methods may not state a precise mathematical formula for determining such charges.

13.    Patriot Act. Tenant represents and warrants to Landlord that Tenant is not, and shall not 

become prior to or during the Term, a person or entity with whom Landlord is restricted from doing business under applicable laws relating to national security (such as the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, commonly known as the "USA Patriot Act") and executive orders and regulations relating to such applicable laws. Tenant agrees to take all reasonable measures in order to assure the continued validity of its representation and warranty in this Section 12: moreover, Tenant will provide reasonable further assurances and information to Landlord if and to the extent required by such applicable laws.

14.    Subordination Non-Disturbance and Attornment Agreement (SNDA)._ Tenant and Landlord acknowledge that the Tenant, and Landlord's Lender, with Landlord's consent, have entered into a SNDA dated October 21, 2015, a copy of which is attached hereto as Exhibit A - First Amendment. Landlord and Tenant acknowledge that as of the date hereof, and as of the Effective Date, the SNDA remains in full force and effect, according to the terms thereof and is hereby ratified and affirmed.

15.    Lease Ratification. Tenant and Landlord both acknowledge and agree that as of the date hereof: (i) Landlord has no obligation to make or complete any alterations or improvements or provide any allowances to Tenant for any alterations or improvements in or to The West Oak Property, except as expressly set forth herein, (ii) to the current actual knowledge of Tenant and Landlord, neither Landlord nor Tenant is in default under any of the terms, conditions or covenants of the Lease and, to the current actual knowledge of Tenant and Landlord, there has occurred no event, nor does there exist any condition or circumstance, which, with the giving of notice or the passage of time, or both, would constitute a default of either Landlord or Tenant under the Lease, (iii) to the current actual knowledge of Tenant and Landlord, Tenant has no defenses, offsets or credits against the payment of Rent or any other sums due or to become due under the Lease or against the performance of any other of Tenant's obligations under the Lease, (iv) to the current actual knowledge of Tenant and Landlord, Tenant is not delinquent in any rental payments under the Lease and there is no accrued and unpaid rent payable under the Lease, and (vi) Landlord and Tenant do hereby ratify and affirm all the remaining terms and conditions of the Lease and that such remaining terms are in full force and effect.

16.    Miscellaneous.

(a)This First Amendment, in conjunction with the Lease (including its various exhibits), embodies the entire agreement between Tenant and Landlord. Except  as expressly amended hereby, all other provisions of the Lease remain unchanged and continue to be in full force and effect. Any and all of the provisions of the Lease are hereby amended and modified where necessary, and even though not specifically addressed herein, so as to conform to the amendments and modifications set forth in this First Amendment. The terms of this First Amendment will control over any conflict with the terms of the Lease. 
(b)The submission of this First Amendment to Tenant shall not be construed as an offer, nor shall Tenant have any rights under this First Amendment, unless Landlord executes a copy of this First Amendment and delivers it to Tenant.

(c)This First Amendment may be executed in multiple counterparts, and each counterpart when fully executed and delivered will constitute an original instrument, and all such multiple counterparts will constitute but one and the same instrument.

(d)This First Amendment will be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.

IN WITNESS WHEREOF, Tenant and Landlord have executed this instrument as of the date first above and effective March 7, 2017.

    
LANDLORD:

CPVFII WEST OAK LLC,
a Delaware limited liability company

By: /s/ Kevin Black
Kevin Black, President

TENANT:

MIMEDX GROUP, INC., a Florida corporation

By: /s/ William Taylor
William Taylor, President & Chief Operating Officer

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