Document:

EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into between John S. Gulas
(“Gulas”) and Farmers National Bank of Canfield, its affiliates and/or subsidiaries (the “Bank”),
effective as of the last date set forth below. In consideration of the mutual covenants herein,
Gulas and the Bank hereby agree as follows:

     1. Job Title and Duties. Gulas will be employed as the Chief Operating Officer and he
will report directly to the President and Chief Executive Officer of the Bank. Gulas will timely,
faithfully and diligently perform all such duties as are customarily associated with and incidental
to the employment of a Chief Operating Officer within the banking industry, including all specific
duties which may be assigned to him from time to time by the Bank. Gulas will be expected to
attend all Board meetings, unless his business or personal circumstances do not permit his
attendance. Gulas understands and agrees that he will have no authority, express or implied, to
perform any acts on behalf of the Bank, except as specifically outlined in this Agreement. Gulas
will not engage in any activity inconsistent with his duties and/or the business objectives of the
Bank. Gulas will refrain from conduct or practices harmful to the Bank’s good will, business
reputation, patents, trademarks and service marks.

     2. Compensation. Gulas will be paid a base salary of U.S. $175,000.00 per annum,
payable in twenty-four (24) bi-monthly installments of $7,291.67 each, less applicable tax
withholdings and benefit deductions. Gulas’ base salary will be reviewed on an annual basis,
consistent with the Bank’s normal compensation review practices for executive employees. Gulas
will also be eligible to participate in the Executive Management Incentive Program, according to
the same terms and conditions applicable to all other executive employees of the Bank.

     3. Term. Gulas’ employment under this Agreement will commence on January 31, 2009 and
will continue for a period of thirty-six (36) months, unless earlier terminated in accordance with
any of the provisions of Paragraph 12 of this Agreement. The term of this Agreement shall
automatically be renewed in 36-month increments, unless written notice of termination is provided
by either party at least 90 days prior to the expiration of the original term or any 36-month
renewal term.

     4. Compliance with Bank Policies. Gulas acknowledges receipt of the Bank’s Personnel
Manual and Code of Ethics. Gulas understands and agrees to be bound by all rules and regulations
contained therein, as well as all other written policies, rules and regulations which may be
established by the Bank from time to time.

     5. Benefit Plans. While employed by the Bank, Gulas will be eligible to participate
in all such benefit plans (including, without limitation, medical and dental plans, disability and
life insurance, and 401(k) plans) according to the same terms and conditions as all other executive
employees of the Bank. The Bank reserves the right to modify, amend or terminate all or part of
its employee benefit plans at any time. If such a change occurs, Gulas will receive notice of the
change and an explanation of how the change will affect his benefit coverage.

     6. Vacation Benefits. Gulas will be eligible for vacation benefits in the amount of
four (4) weeks per year, which may be taken in accordance with the same terms and conditions as
other executive employees of the Bank. There will be no carryover of unused vacation time from
year-to-year. Gulas will be paid for any accumulated but unused vacation time remaining at the
termination

 

 

of his employment, unless his employment is terminated “for cause,” as defined in
Paragraph 12(B) of this Agreement.

     7. Expense Reimbursement. Gulas will receive prompt reimbursement for all reasonable
and necessary expenses incurred in the performance of his duties as Chief Operating Officer,
including mileage, airfare, and reasonable meal and hotel expenses incurred while traveling on
business to locations other than the Bank’s headquarters in Canfield, Ohio. All such expenses must
be documented and accounted for in accordance with the Bank’s reimbursement policies and
procedures. Gulas will also be entitled to reimbursement of relocation expenses consistent with
the terms of the offer letter provided to him on June 30, 2008.

     8. Indemnification. To the fullest extent permitted under the applicable laws of the
State of Ohio and federal banking laws, the Bank will indemnify and hold Gulas harmless from any
and all expenses, judgments, fines, penalties, and amounts paid in settlement as a result of his
service to, or actions (other than actions which are determined by a court of competent
jurisdiction to be made without business judgment or outside the scope of his employment) on behalf
of, the Bank.

     9. Shares of Stock. As an officer of the Bank, Gulas will be eligible to participate
in that certain 1999 Stock Option Plan of Farmers National Banc Corp., the parent of the Bank (the
“Company”), as amended, and as the same may be further amended, modified, or restated from time to
time, and any successor plan, pursuant to which Gulas may receive compensation in an amount
determined by the Company in its discretion.

     10. Confidential Information. Gulas acknowledges and agrees that he will not, while
employed by the Bank and at all times thereafter, directly or indirectly communicate or divulge any
Confidential Information relating to the Bank to any other person or business entity. For purposes
of this Agreement, “Confidential Information” shall refer to any proprietary information relating
to the conduct of the business of the Bank, including the Bank’s unique business methods and
compilations of information that has caused or continues to cause the Bank to enjoy a competitive
advantage over companies engaged in the same or a similar business, including but not limited to
the Bank’s methods of operations, customer relations, customer lists, contacts, confidential price
policies and confidential price characteristics, list of employees, vendors and suppliers,
confidential information relating to marketing plans, quotations and contracts, order processing,
procedures, purchasing and pricing methods and procedures, supplies, personnel information,
financial data, future business plans, and the like.

     All records, files, plans, documents and the like relating to the business of the Bank,
including, but not limited to Confidential Information which Gulas has or will prepare, use or come
into contact with shall remain the sole property of the Bank, shall not be copied without written
permission, and shall be returned immediately to the Bank upon termination of Gulas’ employment
with the Bank, or at the Bank’s request at any time. Further, Gulas will not directly or
indirectly use or disclose to any other person or business entity the Bank’s secret or Confidential
Information without prior written consent of an officer of the Bank. Gulas further agrees to take
all reasonable precautions to protect against the negligent or inadvertent disclosure of the Bank’s
secret or Confidential Information to any other person or business entity. If Gulas does
improperly use or
disclose any secret or Confidential Information, he understands that his employment will be
subject to termination. Gulas also recognizes that all writings, illustrations, drawings and other
similar materials that embody or otherwise contain Confidential Information which he may produce or
which may be given to him in connection with his employment, are the property of the Bank and it
shall be

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Gulas’ obligation to deliver the same to the Bank upon request, and upon termination of
his employment with the Bank for any reason.

     11. Intellectual Property Rights. Gulas acknowledges and agrees that any procedure,
design feature, schematic, invention, improvement, development, discovery, know how, concept, idea
or the like (whether or not patentable, registrable, under copyright or trademark laws, or
otherwise protectable under similar laws) that he may conceive of, suggest, make, invent, develop
or implement during the course of his employment with the Bank (whether individually or jointly
with any other person), relating in any way to the business of the Bank, and all physical
embodiments and manifestations thereof, and all patent rights, copyrights, trademarks (or
application therefore) and similar protections therein (all of which consists of “Work Product”),
shall be the sole, exclusive and absolute property of the Bank. All such Work Product shall be
deemed to be works for hire and, further, Gulas hereby assigns to the Bank all rights, title and
interest in, to and under such Work Product, including but not limited to, the right to obtain such
patents, copyright registrations, trademark registrations or similar protections as the Bank may
desire to obtain. Gulas will immediately disclose all Work Product to the Bank and agree, at any
time upon the Bank’s request and without additional compensation, to execute any documents and
otherwise to cooperate with the Bank respecting the perfection of its rights, title and interest
in, to and under such Work Product, and in any litigation or other controversy in connection
therewith, all reasonable expenses incident thereto to be borne by the Bank.

     12. Termination of the Employment Relationship.

          A. “Without Cause” Either party may terminate Gulas’ employment “without cause” at
any time and for any reason, provided that 30 days’ advance written notice is provided to the other
party.

          B. “For Cause” The Bank may terminate Gulas’ employment without advance notice “for
cause,” which shall mean the occurrence of any one of the following events: (i) Gulas’ commission
of any intentional, reckless, or grossly negligent act which may result in material injury to the
good will, business or business reputation of the Bank; (ii) Gulas’ participation in any fraud,
dishonesty, theft, conviction of a crime, or unethical business conduct; (iii) Gulas’ violation of
any of the covenants of this Agreement or any written policy, rule or regulation of the Bank; or
(iv) Gulas’ failure to adequately perform his job duties or to follow lawful and ethical directions
provided to him, which failure has not been cured in all material respects within twenty (20) days
after receiving notice of such failure from the Bank.

          C. “Good Reason” Gulas may terminate his employment with fourteen (14) days advance
written notice for “good reason,” which shall mean the occurrence of any one of the following
events: (i) a material diminution of the duties, authority or responsibilities of his position;
(ii) a reduction in his base salary of more than 20% of the annual rate set forth in Paragraph 2 of
this Agreement; (iii) any change in Gulas’ principal place of work which would increase Gulas’
commute by fifty (50) miles or more from Gulas’ current principal place of work; or (iv) a material
breach by the Bank of its obligations under this Agreement, which failure has not been cured in all
material respects within twenty (20) days after receiving written notice of such failure from
Gulas.

          D. “Change in Control” Gulas may terminate his employment upon a “change in control”
of the Bank, which will be deemed to have occurred if: (i) any person (as defined in the securities
laws) becomes a direct or indirect beneficial owner of securities of the Bank representing

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20% of
more of the combined voting power of the Bank’s then outstanding securities; or (ii) the Bank is
merged or consolidated with another entity, and as a result of such merger or consolidation, less
than 75% of the outstanding voting securities of the surviving or resulting entity shall be owned
in the aggregate by the former shareholders of the Bank; or (iii) during any two (2) consecutive
years during the term of this Agreement, individuals who at the beginning of such period constitute
the Board, cease for any reason to constitute at least a majority thereof, unless the election of
each director who is not a director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors at the beginning of the period. A
“change in control” will only be deemed to have occurred if one of the three above-listed scenarios
occurs and, as a result thereof, Gulas is not offered a position that is substantially similar to
his position as COO of the Bank, in terms of duties, responsibilities, pay and benefits.

          E. “Disability” Gulas’ employment with the Bank will automatically terminate if Gulas
becomes Totally and Permanently Disabled. For purposes of this Agreement, Gulas will be deemed to
be “Totally and Permanently Disabled” if he is, in the opinion of a majority of the directors of
the Bank, unable to fulfill the responsibilities specified in this Agreement on behalf of the Bank
on a full-time basis for a period of one hundred twenty (120) consecutive days as a result of a
complete and irremediable physical or mental incapacity caused by disease or bodily injury. In the
event of any disagreement as to whether Gulas suffers from a complete and irremediable mental or
physical incapacity, he shall be examined by a physician selected by the mutual agreement of Gulas
and a majority of the Bank’s board or directors and the determination of such physician will be
final and binding on all parties.

          F. “Death" Gulas’ employment will terminate upon his death.

     13. Severance Pay.

          A. Following the termination of Gulas’ employment by the Bank “without cause,” by him for
“good reason,” or due to a “change in control” as defined in Paragraph 12(A), (C) and (D) above,
Gulas will receive (i) a lump sum payment payable within thirty (30) days of termination equal to
any unused vacation time, (ii) seventy-two (72) bi-monthly severance installment payments equal to
the greater of (A) $7,291.67 each, or (B) 1/24 of Gulas’ highest annual salary in effect within
twelve (12) months of Gulas’ termination, less appropriate withholding (the “Severance Payments”),
and (iii) participation in the Executive Management Incentive Program or any other similar program
then in effect on a pro-rata basis for the portion of the incentive period preceding termination.

          B. The provision of Severance Payments will be contingent upon Gulas’ execution of a general
release and waiver agreement in a form that is reasonably satisfactory to the Bank.

          C. Gulas will not be entitled to any Severance Payments if his employment is terminated by the
Bank “for cause” or by him “without cause,” or due to “disability” or “death,” as defined in
Paragraph 12(A), (B), (E) and (F) above. However, upon Gulas’ termination for disability or death
he or his estate will be entitled to receive a lump sum payment for any unused vacation time
and participation in the Executive Management Incentive Program or any other similar program then
in effect on a pro-rata basis for the portion of the incentive period preceding termination.

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          D. In the event that Gulas holds a Board position at the time of termination, then Gulas shall
immediately resign from that position.

     14. Post-Employment Restrictions.

          A. Definition of “the Business”. The Business of the Bank includes, but is not
limited to the business of providing financial, banking, insurance, trust and estate services,
investment, personal and commercial lending, internet cash management and other similar services to
individuals and companies.

          B. Non-Competition. Following the termination of Gulas’ employment by him or the Bank
for any reason whatsoever, Gulas will not, for a period of twelve (12) consecutive months after the
date of termination, directly or indirectly, as owner, partner, joint venturer, stockholder
(excluding the ownership of publicly-traded securities where such ownership does not exceed 1% of
such securities outstanding), employee, officer, director, agent, principal, trustee or any other
business capacity whatsoever, engage in, become financially interested in, become employed by,
render any consulting or business advice with respect to, or have any other connection with, any
person or business entity engaged in the same Business as the Bank in any county where the Bank
maintains a branch or loan production office at the time of termination of Gulas’ employment. The
provisions of this Paragraph 14(B) will not apply in the event that the Bank terminates Gulas’
employment at the end of the initial term or any renewal term, in accordance with the provisions of
Paragraph 3 of this Agreement.

          C. Non-Solicitation of Customers. Following the termination of Gulas’ employment by
him or the Bank for any reason whatsoever, Gulas will not, for a period of twelve (12) consecutive
months after the date of termination, directly or indirectly solicit business from any customers,
clients or business patrons of the Bank who were customers, clients or business patrons of the Bank
at the time of termination of Gulas’ employment.

          D. Non-Solicitation of Employees. Following termination of Gulas’ employment by him
or the Bank for any reason whatsoever, Gulas will not, for a period of twenty-four (24) consecutive
months after the date of termination, directly or indirectly employ or attempt to employ or solicit
for employment any other individual who is employed by the Bank at the time of termination of
Gulas’ employment.

     15. No Waiver. The failure of the Bank to enforce any provision of this Agreement
shall not be construed as a waiver of such provision or of the right of the Bank thereafter to
enforce any other provision of this Agreement.

     16. No Third-Party Obligations. Gulas warrants and represents to the Bank that he is
not a party to any agreement or understanding with any third party which would preclude or prevent
him from legally performing any of his obligations under this Agreement.

     17. Assignability. This Agreement is not assignable by either party without the prior
written consent of the other, except that the Bank may assign this Agreement without prior written
consent to any purchaser, assignee of, or successor to substantially all of the business or assets
of the Bank or any direct or indirect subsidiary or affiliate of the Bank.

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     18. Arbitration. Except as set forth in Paragraph 19 of this Agreement, any
controversy or dispute which arises in connection with the validity, construction, application,
enforcement or breach of this Agreement shall be submitted to final and binding arbitration
pursuant to the commercial arbitration rules of the American Arbitration Association (the “AAA”).
The fees and costs of arbitration (other than attorney fees and costs) shall be borne equally by
the parties. A neutral arbitrator shall be jointly chosen by the parties from a list of
arbitrators provided by the AAA, and any arbitration under this Paragraph 18 shall take place in
the Cleveland, Ohio office of the AAA. Judgment upon an award rendered by an arbitrator under this
Paragraph 18 may be entered in any court of competent jurisdiction.

     19. Injunctive Relief and Other Remedies. Gulas recognizes and understands that the
Bank may not have an adequate remedy at law for the breach or threatened breach by Gulas of the
confidentiality, intellectual property and post-employment restrictions set forth in this Agreement
and Gulas agrees that in the event of any such breach, the Bank may, in addition to the other
remedies which may be available to it, file a suit to enjoin Gulas from violation and breach of
this Agreement. In the event the Bank obtains a permanent injunction against him after notice and
the opportunity to appear, Gulas will be liable to pay all costs, including reasonable attorneys’
fees, which the Bank may incur in enforcing, to any extent, the provisions of this Agreement,
whether or not litigation is actually commenced and including litigation of any appeal taken or
defended by the Bank in any action to enforce this Agreement and which affirms and/or results in a
permanent injunction. Any proceedings brought to enforce Paragraphs 10, 11 or 14 this Agreement
shall be brought in the courts of Mahoning County, Ohio and Gulas expressly waives any objection or
defense relating to jurisdiction or forum non-conveniens or similar doctrine or theory. Gulas
acknowledges and agrees that the remedy at law for any breach of Paragraphs 10, 11 or 14 of this
Agreement will be inadequate, and that the Bank shall be entitled to injunctive relief without
bond. Such injunctive relief shall not be exclusive, but shall be in addition to any other rights
or remedies which the Bank may have for any such breach. In addition to the injunctive remedies
described herein, Gulas acknowledges and agrees that in the event of a final judicial determination
against Gulas with respect to an actual or threatened breach by him of Paragraphs 10, 11 or 14 of
this Agreement, the Bank shall be entitled to withhold any remaining Severance Payments payable
under Paragraph 13 of this Agreement.

     20. Choice of Law. It is understood that the provisions of this Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio without giving effect to
the principles of conflict of laws.

     21. Severability. It is understood that the provisions of this Agreement are
severable and independent. In the event any of the provisions or parts hereof shall be held to be
invalid or unenforceable, all other provisions shall remain in full force and effect. In the event
a court should determine not to enforce a covenant as written due to overbreadth, the parties
specifically agree that said covenant shall be enforced to the maximum extent as allowed by law,
whether said revisions are in time, territory or scope of prohibited activities.

     22. Legal Reformation. It is understood and agreed that, should any term of this
Agreement cause the Bank or its successor to be in violation of any applicable securities law, rule
or regulation, or any amendment thereto, then the parties will cooperate in good faith to amend the
terms of this Agreement as may be required to comply which such securities laws, rules or
regulations.

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     23. Notice. All written communications provided for in this Agreement shall be deemed
to have been duly served when delivered by U.S. registered mail, return receipt requested, postage
prepaid, to the following addresses:

John S. Gulas

[Address]

Farmers National Bank of Canfield

20 South Broad Street

Canfield, Ohio 44406

Attn: Frank L. Paden

     24. Complete Agreement. This Agreement contains the complete understanding of the
parties, and supersedes any previous agreements. Any modifications, amendments or other changes
must be in writing and signed by the parties.

     25. Full Understanding and Consent. Gulas hereby represents that, prior to signing
this Agreement, he has read, fully understands and voluntarily agrees to the terms and conditions
stated above, that he was not coerced into signing this Agreement, that he was not under duress at
the time he signed this Agreement, and that prior to signing this Agreement, he had adequate time
to consider and discuss its terms with an attorney of his choice.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date(s) set forth
below.

	 	 	 	 	 	 	 
	JOHN S. GULAS	 	FARMERS NATIONAL BANK OF CANFIELD	 	 
	 
	 	 	 	 	 	 
	/s/ John S. Gulas

	 	By:	 	James R. Fisher	 	 
	 

	 	 	 	 	 	 
	Signature
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	1/27/09

	 	Its:	 	Chairman of Compensation Committee	 	 
	 

	 	 	 	 	 	 
	Date of Signature
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	1/27/09	 	 
	 	 	 	 	 
	 	 	Date of Signature	 	 

7EX-10.1

Exhibit 10.1

SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (this “Agreement”) by and between Flagstar Bancorp, Inc.
(the “Company”), a corporation organized under the laws of the State of Michigan, with its
principal offices at 5151 Corporate Drive, Troy, Michigan 48098-2639, and the undersigned
subscriber (the “Subscriber”) is made effective as of the date on which the Company accepts
this Agreement by executing the acceptance form below.

     WHEREAS, the Company has entered into an Investment Agreement made as of December 17, 2008
with MP Thrift Investments L.P., a Delaware limited partnership (“MP Thrift”), pursuant to which MP
Thrift agreed to purchase from the Company 250,000 shares of a series of mandatory convertible
participating voting preferred stock, $0.01 par value per share, of the Company (the
“Convertible Preferred Stock”), at a purchase price of $1,000 per share, with each share
convertible into common stock, par value $0.01 per share, of the Company (the “Common
Stock”), at the liquidation preference divided by $0.80 (the “MP Thrift Investment
Agreement”);

     WHEREAS, in order to induce MP Thrift to enter into the MP Thrift Investment Agreement, the
Subscribers have agreed to purchase shares of Common Stock (the “Management 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 an amendment to the Company’s
Amended and Restated Articles of Incorporation to increase the number of authorized shares
thereunder, then the Subscribers 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.

     SECTION 1. Subscription for the Management Shares. At the completion of the purchase
and sale of the Management Shares (the “Closing”), the Subscriber hereby offers to purchase from
the Company, upon the terms and conditions hereinafter set forth,                      shares of Common
Stock at a purchase price of $.80 per share (the “Purchase Price”).

     SECTION 2. Acceptance of Subscriptions. Subscriber understands that the Company may
accept this offer for all or any portion of the aggregate principal amount subscribed for herein or
may reject this subscription without notice, in full or in part, with or without cause. Subscriber
understands that the execution and delivery of this Agreement will not constitute an agreement
between Subscriber and the Company until this Agreement has been accepted by the Company. The
undersigned Subscriber will be notified of the acceptance of this subscription, or its rejection,
by the Company.

     SECTION 3. Delivery of the Shares at the Closing. At the Closing, the Subscriber
shall deliver, in immediately available funds, the full amount of the Purchase Price for the
Management Shares being subscribed for hereunder to an account designated by the Company and the
Company will issue                      shares of Common Stock sold in the offering against

 

 

receipt of subscription funds from Subscribers. Such shares will bear an appropriate legend
referring to the fact that the Management Shares were sold in reliance upon the exemption from
registration under the Securities Act of 1933, as amended (the “Securities Act”), provided
by Section 4(2) thereof and Rule 506 thereunder. The Management Shares, along with a copy of this
Agreement accepted by the Company, will be delivered to Subscriber within five business days of the
Closing.

     SECTION 4. Representations, Warranties and Covenants of the Subscriber. The
Subscriber hereby represents and warrants to, and covenants with, the Company that:

     4.1 Experience. (i) The Subscriber is knowledgeable, sophisticated and experienced in
financial and business matters, in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the purchase of the
Management Shares, including investments in securities issued by the Company and comparable
entities, has the ability to bear the economic risks of an investment in the Management Shares and
has reviewed carefully the information provided by the Company to the Subscriber in connection with
this Agreement and the purchase of the Management Shares hereunder, and has requested, received,
reviewed and considered all information it deems relevant in making an informed decision to
purchase the Management Shares; (ii) the Subscriber is acquiring the number of Management Shares
set forth in Section 2.1 above in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of the Management Shares or any
arrangement or understanding with any other persons regarding the distribution of such Management
Shares (this representation and warranty not limiting the Subscriber’s right to sell pursuant to
the Registration Statement or in compliance with the Securities Act and the rules and regulations
promulgated thereunder (the “Rules and Regulations”)); and (iii) the Subscriber will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Management Shares, nor will the
Subscriber engage in any short sale that results in a disposition of any of the Management Shares
by the Subscriber, except in compliance with the Securities Act and the Rules and Regulations and
any applicable state securities laws.

     4.2 Reliance on Exemptions. The Subscriber understands that the Management Shares are
being offered and sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the Rules and Regulations and state securities laws and that
the Company is relying upon the truth and accuracy of, and the Subscriber’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Subscriber set
forth herein in order to determine the availability of such exemptions and the eligibility of the
Subscriber to acquire the Management Shares.

     4.3 Investment Decision. The Subscriber understands that nothing in this Agreement or
any other materials presented to the Subscriber in connection with the purchase and sale of the
Management Shares, constitutes legal, tax or investment advice. The Subscriber has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Management Shares.

     4.4 Risk of Loss. The Subscriber understands that its investment in the Management
Shares involves a significant degree of risk, including a risk of total loss of the Subscriber’s

2

 

investment, and the Subscriber has full cognizance of and understands all of the risk factors
related to the Subscriber’s purchase of the Securities. The Subscriber understands that the market
price of the Common Stock has been volatile, and that no representation is being made as to the
future value of the Management Shares.

     4.5 Legend. The Subscriber understands that, until such time as the Registration
Statement has been declared effective or the Management Shares may be sold pursuant to Rule 144
under the Securities Act without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Management Shares will bear a restrictive legend in
substantially the following form:

“THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
THE SHARES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE
SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A
TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES
ACT AND SUCH OTHER APPLICABLE LAWS.”

     4.6 Transfer Restrictions. Consistent with the legend set forth in Section 3.5, the
Management Shares may only be disposed of in compliance with state and federal securities laws.

     SECTION 5. Termination of the Offering. The offering of the Management Shares can be
terminated at any time by the Company regardless of whether this Agreement has theretofore been
accepted by the Company. In the event of termination of this offering, the amount paid for the
Management Shares previously remitted by Subscriber, without interest thereon, will be promptly
refunded to Subscriber and this Agreement, and the parties’ obligations hereunder, shall terminate.

     SECTION 6. Subscription Irrevocable. This Agreement and the subscription for the
Management Shares hereby shall be irrevocable after delivery to the Company.

     SECTION 7. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or certified airmail,
e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and
shall be deemed given when so mailed and shall be delivered as addressed as follows:

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	 	(a)	 	if to the Company, to:

Flagstar Bancorp, Inc.

5151 Corporate Drive,

Troy, Michigan 48098-2639

Attention: Mr. Paul Borja

Facsimile: (248) 312-6833

E-mail: paul.borja@flagstar.com

with a copy to:

Kutak Rock LLP

1101 Connecticut Avenue, N.W.

Suite 1000

Washington, DC 20036-4374

Attention: Jeremy Johnson, Esq.

Facsimile: (202) 828-2488

E-mail: jeremy.johnson@KutakRock.com

     or to such other person at such other place as the Company shall designate to the Subscriber
in writing; and

          (b) if to a Subscriber, at its address as set forth at the end of this Agreement, or at such
other address or addresses as may have been furnished to the Company in writing.

     SECTION 8. Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Subscribers. Any amendment or waiver
effected in accordance with this Section 7 shall be binding upon each holder of any Management
Shares purchased under this Agreement at the time outstanding, each future holder of all such
Management Shares, and the Company.

     SECTION 9. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

     SECTION 10. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby.

     SECTION 11. Governing Law; Venue. This Agreement is to be construed in accordance
with and governed by the federal law of the United States of America and the internal laws of the
State of New York without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of New York to the rights
and duties of the parties. The Company and the Subscribers each submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of New York and of any
New York State court sitting in New York City for purposes of all legal proceedings arising out of
or relating to this Agreement and the transactions contemplated hereby. The Company and the
Subscribers each irrevocably waive, to the fullest extent

4

 

permitted by law, any objection that it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such proceeding brought in
such a court has been brought in an inconvenient forum.

     SECTION 12. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. Facsimile signatures shall be deemed original
signatures.

     SECTION 13. Entire Agreement. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the Company nor the
Subscribers make any representation, warranty, covenant or undertaking with respect to such
matters. Each party expressly represents and warrants that it is not relying on any oral or
written representations, warranties, covenants or agreements outside of this Agreement.

     SECTION 14. Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to give such further
written assurance as may be reasonably requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement.

[Remainder of Page Left Intentionally Blank]

5

 

     SECTION 15. Subscriber Information. As a material inducement to the Company to issue
a Management Share to Subscriber, Subscriber represents and warrants to the Company that the
following information is true and correct in all material respects:

	 	 	 	 	 
	Name(s):
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Tax Identification or
	 	 	 	 
	Social Security Number(s):
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	State of Formation or
	 	 	 	 
	Residency
	 	 	 	 
	 

	 	 

	 	 
	Mailing Address:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	Telephone:

	 	(     )	 	 
	 

	 	 

	 	 
	Facsimile:

	 	(     )	 	 
	 

	 	 

	 	 
	e-mail:
	 	 	 	 
	 

	 	 

	 	 

     The Management Shares should be issued in the following name or names:

     If in more than one name, title to the Units should be registered in such names as:

     ___ Joint Tenants with Right of Survivorship

     ___ Tenants in Common

     ___ Husband and Wife, as Community Property

6

 

     The undersigned certifies that the undersigned is:

     ___ An “accredited investor” because the undersigned:

     ___ is a natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000; or

     ___ is a natural person who had an individual income in excess of $200,000 in
each of the two (2) most recent years or joint income with his or her spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year; or

     ___ is a director or executive officer of the Company; or

     ___ is a corporation, partnership, limited liability company, Massachusetts
or similar business trust, organization described Section 501(c)(3) of the Internal Revenue
Code of 1986, or other form of business entity, that (i) has not been formed for the
specific purpose of acquiring Units and (ii) has total assets in excess of $5,000,000; or

     ___ is a bank as defined in Section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether
acting in its individual or fiduciary capacity; or

     ___ is a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; or

     ___ is an insurance company as defined in Section 2(13) of the Act; or

     ___ is an investment company registered under the Investment Company Act of
1940, a business development company as defined in Section 2(a)(48) of the Investment
Company Act of 1940, a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, or a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; or

     ___ is an entity in which all of the equity owners are accredited investors.

     ___ Not an “accredited investor.”

7

 

FLAGSTAR BANCORP, INC.

Signature Page to Subscription Agreement

	 	 	 	 	 	 	 
	Individuals:	 	 	 	Entities:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 

	 	 
	Name of Individual (Please Print)

	 	 	 	Name of Entity (Please Print)	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 

	 	 
	Signature of Individual

	 	 	 	Name and Title of Officer (Please Print)	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 

	 	 
	Name of Individual (for joint tenants)

	 	 	 	Signature of Officer	 	 
	(Please Print)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Signature of Individual (for joint tenants)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:                                         , 2008

	 	 	 	Dated:                                         , 2008	 	 

ACCEPTANCE BY COMPANY

     This Agreement has been accepted by the Company as of the date set forth below.

	 	 	 	 	 
	 	ACCEPTED BY:

FLAGSTAR BANCORP, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	  	 
	 	 	Date:

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