Document:

ex10-1.htm

Exhibit 10.1

 

NORTH BAY RESOURCES INC.

CONVERTIBLE PROMISSORY NOTE

$750,000 PLUS INTEREST DUE & PAYABLE

 

THIS CONVERTIBLE NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  HOLDER SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

FOR VALUE RECEIVED, on the Effective Date, as defined below on the signature page, North Bay Resources, Inc. (“the Company”), with current address at North Bay Resources Inc., 2120 Bethel Road,

 

Lansdale, PA 19446, as Obligor (“Borrower,” or “Obligor”), hereby promises to pay the Lender (“Lender” or “Holder”), as defined below on the signature page, the Principal Sum, as defined below, along with the Interest Rate, as defined below, according to the terms herein.

 

	
The “Lender” shall be:

	
Tangiers Investors LP / Its Principal or Its Assignees

 

	
The “Principal Sum” shall be:

	
Up to $750,000 (Seven Hundred and Fifty Thousand US Dollars): Subject to the following: accrued, unpaid interest shall be added to the Principal Sum.

 

	
The “Consideration” shall be:

	
Up to $750,000 (Seven Hundred and Fifty Thousand US Dollars) paid via bank wire in tranches of $50,000 (Fifty Thousand US Dollars) no less than bi-weekly, by mutual consent.

 

	
The “Interest Rate” shall be:

	
The interest on the unpaid principal balance equal to 7%, computed on the basis of the actual number of days elapsed and a year of 365 days from the date of each draw on this Convertible Note. No interest or principal payments are required until the Maturity Date(s), but both principal and interest may be included in conversion prior to maturity date. Interest shall accrue on each $50,000 (Fifty Thousand US Dollars) tranche independently from other tranches.

 

	
The “Conversion Price” shall be the following price:

	
As applied to the Conversion Formula set forth in 2.2, the undiscounted Volume Weighted Average Price (VWAP) on the date prior to conversion, subject to a floor price of $.0129 and a ceiling price of the undiscounted Volume Weighted Average Price (VWAP) on the date each tranche is received by the borrower; as applies to North Bay Resources Inc. voting common stock.

 

  

  

  

 

	
The “Warrant Rights” shall be:

	
Upon Conversion, 125,000 5-year warrants for each $50,000 in Consideration received, at an exercise price of 125% of the Conversion Price of each tranche, as applicable.

 

	
The “Maturity Date” is the date upon which the Principal Sum of this Note, 

as well as any unpaid interest shall be due and payable, and that date shall be:

	
 

24 (twenty four) months from the Effective Date of each tranche.

 

	
The “Prepayment Terms” shall be:

	
Prepayment is permitted at no penalty, subject to mutual consent.

 

	
The “Use of Proceeds” shall be:

	
The proceeds of this debenture shall be used for mining projects and general working capital.

 

ARTICLE 1: PAYMENT-RELATED PROVISION

 

	
1.1.  

	
Interest Rate. Subject to the Holder’s right to convert, interest payable on this Note will accrue interest at the Interest Rate and shall be applied to the Principal Sum.

 

ARTICLE 2: CONVERSION RIGHTS

 

The Holder will have the right to convert the Principal Sum and accrued interest under this Note into Shares of the Borrower’s Common Stock as set forth below.

 

	
2.1  

	
Conversion Rights and Cashless Exercise. Subject to the terms set forth in Section 2.7, the Holder will have the right at its election from and after the Effective Date, and then at any time, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company (as such stock exists on the date of issuance of this Note, or any shares of capital stock of The Company into which such stock is hereafter changed or reclassified, herein the “Shares” or the “Common Stock”) as per the Conversion Formula set forth in Section 2.2. Any such conversion shall be cashless, and shall not require further payment from Holder. Unless otherwise agreed in writing by both the Borrower and the Holder, at no time will the Holder convert any amount of the Note into common stock that would result in the Holder owning more than 9.99% of the common stock outstanding of The Company.  Shares from any such conversion delivered to the Company (see 4.1) by 4:00pm EST will be delivered to Holder within 2 (two) business days of conversion notice with delivery via “DWAC/FAST” electronic transfer (see Section 2.6).

 

	
2.2  

	
 To effect conversions hereunder, the Holder shall not be required to physically surrender Debentures to the Company. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error.

 

	
2.3  

	
Conversion Formula. The number of shares issued through conversion is the conversion amount divided by the conversion price.

 

#Shares = Conversion Amount

                  Conversion Price

 

  

  

  

 

	
2.4  

	
Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. If the Company, at any time while this Debenture is outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities  payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Debenture, including as interest  thereon), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

	
2.5  

	
Additional Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall  authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval  of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any  sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Debentures, and shall cause to be mailed to the Holders at their last addresses as they shall  appear upon the stock books of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Holders are entitled to convert Debentures during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

 

  

  

  

 

	
2.6  

	
Merger, Sale, Tender, Exchange, Reclassification, etc. If, at any time while this Debenture is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Underlying Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to  such Fundamental Transaction, the holder of one share of  Common Stock (the "Alternate Consideration"). For purposes of any such conversion, the determination of the Set Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Set Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder's right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If any Fundamental Transaction constitutes or results in a Change of Control Transaction, then at the request of the Holder delivered before the 90th day after such Fundamental Transaction, the Company (or any such successor or surviving entity) will purchase the Debenture from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if  later, on the effective date of the Fundamental Transaction), equal to the 100% of the remaining unconverted principal amount of this Debenture on the date of such request, plus all accrued and unpaid interest thereon, plus all other accrued and unpaid amounts due hereunder.

 

	
2.7  

	
Reservation of Shares. As of the issuance date of this Note and for the remaining period during which the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note constitutes full authority to its officers, agents and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

 

  

  

  

 

	
2.8  

	
Delivery of Conversion Shares. Shares from any such conversion delivered to Company by 4:00pm EST will be requested to be issued to Holder by 2:30pm EST within 2 (two) business days of conversion notice delivery (see 4.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). In the event delivery DWAC/FAST is unavailable for use in an electronic transfer, physical certificates may be used at Holder’s approval, but the issuance request must be submitted within the same period of time specified above.  If those shares are not requested to be delivered in accordance with this timeframe stated in this Section 2.7, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower. The Company will make its best efforts to deliver shares to Holder same day / next day. For each conversion, in the event that shares are not issued for overnight courier delivery by the third business day (inclusive of the day of the conversion), a penalty of $1,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made. The Company acknowledges that it would be extremely difficult or impracticable to determine the Lender’s actual damages and costs resulting from a failure to deliver the Common stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Any such damages will be added to the principal balance of the Note, under Holders expectation that any damage amounts will tack back to the original date of the note). If the Company intentionally does not request the issuance of the shares underlying this Debenture after receipt of a notice of conversion within three (3) business days (inclusive of the day of conversion), or the shares are not issued for overnight delivery within four (4) business days (inclusive of the day of conversion) Perry Leopold shall, in his personal capacity, be responsible for any differential in the value of the converted shares underlying this Debenture between the value of the closing price on the date the shares should have been delivered (the third business day following the submission of a conversion request) and the date the shares are actually delivered.  The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof. Any such clause in this Section 2.7 will be waived in the event of an Act of God.

 

ARTICLE 3: EVENTS OF DEFAULT

 

	
  

	
a)

	
"Event of Default", wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

	
  

	
i) any default in the payment of the principal of, interest (including Late Fees) on, or liquidated damages in respect to this Debenture, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default is not cured, if possible to cure, within 3 days of notice of such default sent by the Holder;

 

	
  

	
ii) the Company or any of its subsidiaries shall commence, or there shall be commenced against the Company or any such subsidiary a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary thereof or there is commenced against the Company or any subsidiary thereof any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 30 days; or the Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Company or any subsidiary thereof makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary thereof shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary thereof shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary thereof for the purpose of effecting any of the foregoing;

 

  

  

  

 

	
  

	
(iii) the Company shall fail to request the issuance of the shares underlying this Debenture after receipt of a notice of conversion within four (4) business days following the period allowed by Holder for any objection;

 

	
  

	
(iv) the Company shall fail to timely file all reports required to be filed by it with the SEC pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise required by the Exchange Act; or

 

	
  

	
(v) the Common Stock of the Company, after being listed for trading on an exchange above the pinksheets, shall cease to be quoted for trading or listing for trading on any of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the NASDAQ National Market, (d) the NASDAQ Capital Market, or (e) the NASDAQ OTC Bulletin Board (“OTC”) (each, a “Primary Market”) and shall not again be quoted or listed for trading on any Primary Market within five (5) trading days of such delisting.

 

	
  

	
b)

	
If any Event of Default occurs and is continuing, one hundred and fifty percent (150%) of the full principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a Debenture holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

ARTICLE 4: MISCELLANEOUS

 

	
  

	
4.1

	
Notices. Any notice required or permitted hereunder must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

 

  

  

  

 

	
  

	
4.2

	
Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, means this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

	
  

	
4.3

	
Assignability. This Note will be binding upon the Borrower and its successors and permitted assigns, and will inure to the benefit of the Holder and its successors and permitted assigns, and may be assigned by the Holder.

 

	
  

	
4.4

	
Governing Law. This Note will be governed by, and construed and enforced in accordance, with the laws of the State of California, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of San Diego or in the federal courts located in Los Angeles, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such Service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. Additionally, each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby.

 

	
  

	
4.5

	
Maximum Payments. Nothing contained herein may be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum will be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

	
  

	
4.6

	
Obligations.  Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, interest and liquidated damages (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein. As long as this Debenture is outstanding, the Company shall not and shall cause it subsidiaries not to, without the consent of the Holder, (a) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (b) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or other equity securities other than as to the Underlying Shares to the extent permitted or required hereunder; or (c) enter into any agreement with respect to any of the foregoing.

 

	
  

	
4.7

	
Unenforceability.  If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Debentures as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

  

  

  

 

	
  

	
4.8

	
Attorney Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

 

	
  

	
4.9

	
No Public Announcement. Except as required by securities law, no public announcement may be made regarding this Note, payments, or conversions without written permission by both Borrower and Holder.

 

	
  

	
4.10

	
Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Holder has the right to have any such opinion provided by its counsel. Holder also has the right to have any such opinion provided by Borrower’s counsel.

 

	
  

	
4.11

	
Effective Date. This Note will become effective only upon occurrence of the three following events: the Effective Date has been reached, execution by both parties, and delivery of valid payment by the Lender.

 

	
  

	
4.12

	
Director’s Resolution. Once effective, Borrower will execute and deliver to Holder a copy of a Board of Director’s resolution resolving that this note is validly issued, paid, and effective.

 

	
  

	
4.13

	
No Shorting. Holder agrees that so long as any Notes from Borrower to Holder remain outstanding, Holder will not enter into or effect any “short sales” of the common stock or hedging transaction with establishes a net short position with respect to the common stock of the Company. Borrower acknowledge and agrees that upon submission of conversion notice as set forth above (up to the amount of cash paid in under the Notes), Holder immediately owns the common shares described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

 

 

*********************

Signature Page Follows

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Debenture to be signed in its name as of the effective date written below.

 

 

BORROWER[S]:

 

/s/ Perry Leopold                                                            

AUTHORIZED SIGNATORY:  PERRY LEOPOLD

 

 

POSITION:                      CEO

 

COMPANY NAME:   NORTH BAY RESOURCES INC.

 

EIN#:           83-0402389

 

CEO (as to his obligation to Section 2.7 Only):

/s/ Perry Leopold                                                             

NAME:  PERRY LEOPOLD

 

 

LENDER/HOLDER:

 

/s/ Michael Sobeck                                                         

For: Tangiers Investors, LP

By: Tangiers Capital, LLC

Its: General Partner

 

 

EFFECTIVE DATE AS EXCUTED BY LENDER/HOLDER: October 2, 2012

 

  

  

  

 

SAMPLE NOTICE OF CONVERSION

 

 

(To be executed by the Holder in order to convert a portion or the entire Note)

 

The undersigned hereby elects to convert a portion of the Note issued by The Company into Shares of Common Stock of The Company according to the conditions set forth in such Note, as of the date written below.

 

Date of Conversion: _________________________________________________________

 

Conversion Amount: ________________________________________________________

 

 

Conversion Price: ___________________________________________________________

 

 

Shares to Be Delivered: ______________________________________________________

 

 

Signature: _________________________________________________________________

 

 

Print Name: ________________________________________________________________

 

 

Address: ___________________________________________________________________

 

___________________________________________________________________________

 

 

Delivery Instructions:__________________________________________________________

 

 

 

Shares must be delivered to Holder within 2 (two) business days of conversion notice in accordance with Section 2.7.

 

  

  

  

 

SHARE DELIVERY ATTACHMENT

 

EXAMPLE

 

2.7           Delivery of Conversion Shares. Shares from any such conversion notice delivered by Holder to Company before 4:00pm EST will be delivered to Holder by 2:30pm EST within 2 (two) business days of the date of conversion (see 4.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.7, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower.

 

Example:

 

Holder delivers conversion notice to Borrower at 1:45pm EST on Monday February 1st.

 

Borrower’s transfer agent must send shares to Holder via “DWAC/FAST” electronic transfer no later than Tuesday February 2nd.

 

Holder must have received the shares or received a delivery attempt no later than 10:30am eastern time on Wednesday February 3rd.Exhibit 10.1

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into as of the 1st day of October, 2012 by and between Flagstar Bancorp, Inc., a Michigan corporation maintaining offices at 5151 Corporate Drive, Troy, Michigan 48098 (the “Company”), and
Michael J. Tierney (“Executive”) (the Company and Executive referred to collectively as the “Parties” and individually as a “Party”). 

W I T N E S S E T H: 

WHEREAS the Company is a holding company, primarily engaged, through its subsidiaries, in the business of obtaining funds in the form of
deposits and wholesale borrowings and investing those funds in single-family mortgages and other types of loans (the “Business of the Company”); and 
 WHEREAS, the Company currently employs the Executive and desires to appoint Executive as its President and Chief Executive Officer (“CEO”), and Executive desires to accept such position.

 NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the Parties agree as follows:

 ARTICLE ONE 
 EMPLOYMENT 
 1.01 Agreement as to Employment. 

This Agreement will be deemed to be effective as of October 1, 2012 (the “Effective Date”). As of the Effective
Date, the Company hereby employs Executive as its President and as of November 1, 2012 Executive will also assume the position of CEO. Executive hereby accepts such employment by the Company, subject to the terms of this Agreement.
Notwithstanding anything herein to the contrary, Executive’s appointment as President and CEO and the Company’s and Executive’s obligations hereunder are contingent upon receipt by Flagstar Bank, FSB (“Flagstar Bank”)
of prior written non-objection of the Federal Reserve and the Office of Comptroller of the Currency. In the event such prior written non-objection is not received, this Agreement shall terminate effective immediately prior to the Effective Date and
neither the Company nor Executive shall have any obligations hereunder. 
 1.02 Employment Term. 

The term of Executive’s employment by the Company under this Agreement shall commence on the Effective Date and continue until either
Party delivers six (6) months’ prior written notice to the other Party (the “Notice Period”) that it or he wishes to terminate this Agreement, in which event this Agreement shall terminate as of the end of the Notice
Period (the period from the Effective Date until the end of the Notice Period, the “Term”), unless earlier terminated as hereinafter provided. The Company reserves the right to relieve Executive of his

 
duties at any time after his or its notice of termination without affecting his right to compensation and other benefits under the Agreement during the Notice Period and without such
relief’s constituting a separate termination or a breach of this Agreement. No termination of this Agreement shall be effective as to those portions of this Agreement which, by their express terms as set forth herein, require performance by
either Party following termination of this Agreement. 
 1.03 Freedom to Contract. 

Executive represents and warrants that he has the right to enter into this Agreement, that he is eligible to continue employment by the
Company and that no other written or verbal agreements exist that would be in conflict with or prevent performance of any portion of this Agreement. Executive further agrees to hold the Company harmless from any and all liability arising out of any
prior contractual obligations entered into by Executive. Executive represents and warrants that he has not made and will not make any contractual or other commitments that do or would conflict with or prevent his performance of his obligations
hereunder. 
 1.04 Title and Duties. 
 (a) During the Term, Executive shall be employed by the Company to serve as its President, effective as of the Effective Date, and CEO, effective as of November 1, 2012, subject to the authority and
direction of the Company’s Board of Directors (the “Board”), and shall report directly to the Board. Executive shall perform such duties relating to the Company and its affiliates, including any subsequently-acquired affiliates
(collectively the “Affiliates”), consistent with his position as President and CEO, as are assigned to him from time to time by the Board and any other duties undertaken or accepted by Executive consistent with such position. In
that connection, throughout the Term Executive shall serve as president and chief executive officer and as a director of each of the Company’s subsidiaries which are material to the Business of the Company as determined by the Board in its
discretion (collectively, the “Material Subsidiaries”). Executive shall have such authority, responsibility and duties as are normally associated with the positions of President and CEO with respect to the Company and with the
positions of president and chief executive officer with respect to the Material Subsidiaries. Executive shall be appointed to such positions with the Company and the Material Subsidiaries effective as of the Effective Date. 

(b) Subject to the provisions of this subsection 1.04(b), Executive agrees to devote substantially all of his business time and efforts to
the Company as long as he is employed under this Agreement. Notwithstanding the foregoing, Executive may continue, throughout the Term, to engage in charitable, community and personal activities and in the management of personal investments and his
personal and family affairs, and he may serve on the board of directors of up to two for-profit corporations, provided that such activities in the aggregate do not conflict with the interests of the Company or interfere with his obligations under
this Agreement. 

  
 2 

 (c) The Executive shall be appointed to the Board effective as of the Effective Date and
the Company shall use its reasonable best efforts to cause Executive to be nominated for reelection to the Board at each annual meeting of the stockholders of the Company held during the Term. The Executive shall receive no additional compensation
for his service as a member of the Board. 
 1.05 Compensation. 

(a) Base Salary. During the Term, the Company shall pay to Executive a gross annual base salary of $895,000.00 (the “Base
Salary”), pro-rated for any partial calendar year during the Term and payable monthly or more frequently in accordance with the Company’s payroll policy for its other executives. During the Term, the Base Salary shall be reviewed for
adjustment at the discretion of the Board annually during the Term, and, if adjusted (but not below $895,000), such adjusted amount shall become the “Base Salary” for purposes of this Agreement. 

(b) Share Salary. During the Term, the Company shall pay to Executive a gross annual share salary of $600,000.00, pro-rated for any
partial calendar year during the Term and payable, at the time that base salary is payable to the Executive, in grants of unrestricted shares of the Common Stock, having a Fair Market Value on the date of grant equal to the pro rata portion
of the share salary payable on each such pay date (the “Share Salary”). For purposes of this Agreement, “Fair Market Value” shall mean, as of any specified date, the closing price of the Common Stock as reported in
The Wall Street Journal’s New York Stock Exchange (“NYSE”)—Composite Transactions listing for such day (corrected for obvious typographical errors), or if the shares are listed for trading on the NYSE but no closing price
is reported in such listing for such day, then the last reported closing price for such shares on the NYSE, or if such shares are not listed or traded on the NYSE, the closing sales price on any national securities exchange on which the Common Stock
is traded, or if the Common Stock is not traded on any national securities exchange, then the mean of the reported high and low sales prices for such shares in the over-the-counter market, as reported on the National Association of Securities
Dealers Automated Quotations System, or if such prices shall not be reported thereon, the mean between the closing bid and asked prices reported by the National Quotation Bureau Incorporated, or in all other cases, the fair market value of a share
of Common Stock as determined in good faith by the Board. The Board may, but shall have no obligation to, engage one or more appraisers in making its determination of Fair Market Value, and the Fair Market Value as determined by the Board may be
higher or lower than any such appraisal. In making its determination of Fair Market Value, the Board shall comply with Section 409A (as defined below), to the extent applicable, and the applicable Internal Revenue Service and Treasury
Department regulations thereunder. Following the Initial Term, the Share Salary shall be reviewed for increase (but not decrease) at the discretion of the Board annually during the Term, and, if adjusted, such adjusted amount shall become the
“Share Salary” for purposes of this Agreement. 
 (c) Discretionary Shares. The Company shall grant to
Executive, at the end of each calendar year of the Term, an additional amount the Fair Market Value of which is equal to $600,000.00 (pro-rated for any partial calendar year during the Term), but in no event in excess of one-third (1/3) of
Executive’s annual compensation for such year, in restricted shares of Common Stock, with the Fair Market Value of such shares 

  
 3 

 
determined on the date of grant; provided, however, that no such shares shall be granted unless Executive remains employed by the Company, without notice of termination of his
employment or this Agreement by either Party for any reason, through the date on which any such grant is due to be made. For purposes of this Section 1.05(c), “annual compensation” shall have the meaning as set forth in the Interim
Final Rule, as may be amended from time to time, including pursuant to any final rule. The “Interim Final Rule” shall mean the interim final rule promulgated pursuant to section 101(a)(1), 101(c)(5) and 111 of the Emergency Economic
Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009, which was published by the Department of the Treasury on June 15, 2009 (the “Interim Final Rule”). Any such granted restricted shares shall
vest (as determined by the Board, or a committee thereof designated to make such determination, in its sole discretion) in accordance with performance goals (which performance goals shall be determined by the Board or such committee after
consultation with the Executive and shall be reasonably achievable without excessive risk taking in the context of the Company’s business plan approved by the Board or such committee after consultation with the Executive) and continued
substantial service by Executive as set forth in the grant agreement evidencing each such award and as required under the Emergency Economic Stabilization Act of 2008, including the Interim Final Rule and any other rules and regulations thereunder,
as amended (the “TARP Requirements”), shall be subject to all applicable TARP restrictions, including, without limitation, a minimum two (2) year vesting requirement from the date of grant as set forth in the Interim Final
Rule, as may be amended from time to time. 
 (d) Business Expenses. The Company shall promptly pay directly, or shall
reimburse Executive for, all business expenses, including but not limited to expenses for travel and entertainment, paid or incurred by Executive during the Term that are reasonable and appropriate to the conduct by Executive of the Company’s
business, subject to Executive’s providing reasonable substantiation of such expenses to the Company in accordance with Company policies. In addition, the Company shall promptly pay all reasonable expenses incurred by Executive in connection
with the drafting and negotiation of this Agreement. 
 1.06 Fringe and Other Employee Benefits. 

During the Term, the Company shall make available to Executive such fringe and other employee benefits (including medical and dental
coverage and participation in the Company’s 401(k) plan) and perquisites as are regularly and generally provided to the other senior executives of the Company, subject to the terms and conditions of any employee benefit plans and arrangements
maintained by the Company and all applicable TARP Requirements. During the Term, the Executive shall be entitled to take thirty (30) days of paid vacation annually (pro-rated for any partial calendar year during the Term). In addition, subject
to all applicable TARP Restrictions, during the Term and provided the Executive remains employed through the date of each applicable payment, the Company shall (i) pay the monthly premiums for supplemental short- and long-term disability
insurance with an annual coverage limit equal to the Executive’s Base Salary and (ii) provide the Executive with a monthly car allowance in an amount equal to no less than his monthly car allowance as in effect immediately prior to the

  
 4 

 
Effective Date. Effective as of the date of this Agreement, the Company shall obtain a whole life insurance policy over the Executive’s life in the amount of $2,000,000, which policy shall
be owned by the Executive and shall be funded through thirty-six monthly premium payments. The Company shall pay the monthly premium payments on such life insurance policy to the extent such payments become due during the Term and provided the
Executive remains employed through the date such premium payment becomes due. The Executive shall thereafter be responsible for paying all other premiums on such life insurance policy. 

1.07 Termination of Employment. 
 (a) Payments upon Termination. If Executive terminates his employment under this Agreement for any reason or if the Company terminates Executive’s employment under this Agreement for any
reason, then, upon any such termination of Executive’s employment, Executive shall receive from the Company: any unpaid Base Salary and Share Salary for any period ending on or before the date of termination of employment, any unreimbursed
business expenses subject to reimbursement under Section 1.05(d), vacation pay for accrued but unused vacation days through the date of termination and any benefits to which Executive may be entitled pursuant to the terms and conditions of any
applicable employee benefit plan of the Company, which shall be paid on the Company’s first payroll date following Executive’s termination of employment (or, for purposes of benefits under an employee benefit plan of the Company, provided
pursuant to the terms of the applicable employee benefit plan). Notwithstanding anything to the contrary, no payment or benefit will be provided to Executive if any such payment or benefit would violate the TARP Requirements. 

(b) Return of Company Property. Upon termination of Executive’s employment, or upon the request of the Company at any time,
Executive shall terminate his use of and return to the Company all Company property, including without limitation, any Confidential Information, vehicles, credit cards, equipment, computers, phones, cell phones, pagers, equipment, supplies, tools,
keys or locks. 
 (c) No Further Obligations. Upon termination of Executive’s employment under this Agreement, the
Parties shall have no further obligations under this Agreement to each other except as expressly stated herein and in any written employee benefit plans and arrangements applicable to Executive which are maintained by the Company at the time of such
termination of Executive’s employment, and no further payments of Base Salary or Share Salary or other compensation or benefits shall be payable by the Company to Executive, except such obligations and payments (i) as are set forth in this
Section 1.07; (ii) as are required by the express terms of any written employee benefit plans and arrangements applicable to Executive which are maintained by the Company at the time of such termination of Executive’s employment; or
(iii) as may be required by law, subject, in each case, to any applicable TARP Requirements. 

  
 5 

 1.08 Force Majeure. 

Notwithstanding any other provision of this Agreement, if, as a result of force majeure, including and without limitation (i) acts of
God; (ii) acts of public enemy; (iii) civil disturbances; (iv) war or (v) any and all other events and circumstances not within or subject to a Party’s reasonable control, the Company is unable to carry out, wholly or in
part, its duties and obligations under this Agreement, then the duties and obligations shall be suspended during the continuance of the force majeure event. The Company shall use all reasonable diligence to remove the force majeure event as quickly
as reasonably possible. The requirement that any force majeure shall be remedied with all reasonable diligence shall not require the settlement of strikes, lockouts or other labor difficulty suffered, but resolution of all such difficulties shall be
entirely within the discretion of the Party concerned. 
 1.09 Negotiation of Agreement upon TARP Repayment. 

The Parties hereby agree that in the event the Company repays its TARP obligation during the Term, the Parties agree to negotiate in good
faith to enter into a mutually agreeable revised employment agreement with customary terms and conditions. 
 ARTICLE TWO

 RESTRICTIVE COVENANTS 
 2.01 Confidentiality. 
 In the course of performing his duties for the
Company, the Company agrees to provide the Executive with certain proprietary, confidential and trade secret information of the Company and its affiliates, including but not limited to: the database of customer accounts; customer, supplier and
distributor list; customer profiles; information regarding sales and marketing activities and strategies; trade secrets; data regarding technology, products and services; information regarding pricing, pricing techniques and procurement; financial
data and forecasts regarding the Company and customers, suppliers and distributors of the Company; software programs and intellectual property (collectively, “Confidential Information”). All Confidential Information shall be and
remain the sole property of the Company and its assigns, and the Company shall be and remain the sole owner of all patents, copyrights, trademarks, names and other rights in connection therewith and without regard to whether the Company is at any
particular time developing or marketing the same. The Executive acknowledges that the Confidential Information is a valuable, special and unique asset of the Company and that his access to and knowledge of the Confidential Information is essential
to the performance of his duties as an employee of the Company. In light of the competitive nature of the business in which the Company is engaged, Executive agrees that he will, both during the Term and thereafter, maintain the strict
confidentiality of all Confidential Information known or obtained by him or to which he has access in connection with his employment by the Company and that he will not, without prior written consent of the Board for and on behalf of the Company,
(i) disclose any Confidential Information to any person or entity (other than in proper performance of his duties hereunder) or (ii) make any use of any Confidential Information for his own purposes or for direct or indirect benefit of any
person or entity other than the Company. Confidential Information shall not be deemed to include (a) information which becomes generally available to the public through no fault of the Executive, (b) information which is

  
 6 

 
previously known by the Executive prior to his receipt of such information from the Company, (c) information which becomes available to the Executive on a non-confidential basis from a
source which, to the Executive’s knowledge, is not prohibited from disclosing such information by legal, contractual or fiduciary obligation to the Company or (d) information which is required to be disclosed in order to comply with any
applicable law or court order. Immediately upon termination of the Executive’s employment or at any other time upon the Company’s request, the Executive will return to the Company all memoranda, notes and data, computer software and
hardware, records or other documents compiled by the Executive or made available to the Executive during the Executive’s employment with the Company concerning the Business of the Company, including without limitation, all files, records,
documents, lists, equipment, supplies, promotional materials, keys, phone or credit cards and similar items and all copies thereof or extracts therefrom. 
 2.02 No Solicitation of Employees. 
 Executive agrees that, both during the
Term and for a period of one year following termination of the Executive’s employment with the Company for any reason, Executive will not, directly or indirectly, on behalf of himself or any other person or entity, hire, engage or solicit to
hire for employment or consulting or other provision of services, any person who is actively employed (or in the six months preceding Executive’s termination of employment with the Company was actively employed) by the Company, except for
rehire by the Company. This includes, but is not limited to, inducing or attempting to induce, or influence or attempting to influence, any person employed by the Company to terminate his or her employment with the Company. 

2.03 No Solicitation of Customers. 
 Executive agrees that, both during the Term and for a period of one year following termination of the Executive’s employment with the Company for any reason, Executive will not directly, on behalf of
any competitor of the Company in the Business of the Company, solicit the business of any entity within the United States who is a customer of the Company. 
 2.04 Non-Competition. 
 In return for the Company’s promises herein,
including the promise to provide Executive with Confidential Information, and in accordance with Executive’s acknowledgements and promises in subparagraph 2.01, during the Term and for a period of one year following termination of the
Executive’s employment with the Company for any reason, Executive shall not, on behalf of himself or for others, directly or indirectly (whether as employee, consultant, investor, partner, sole proprietor or otherwise), be employed by, perform
any services for, or hold any ownership interest in any business engaged in the Business of the Company in any state of the United States where the Company is doing business. The Parties agree that this subparagraph 2.04 shall not prohibit the
ownership by Executive, solely as an investment, of securities of a person engaged in the Business of the Company if (i) Executive is not an “affiliate” (as such term is defined in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act of 1934, as amended) of the issuer of such securities, (ii) such securities are publicly traded on a national securities exchange and (iii) the Executive does not, directly or indirectly, beneficially own more than
two percent (2%) of the class of which such securities are a part. 

  
 7 

 2.05 Enforcement. 

Executive acknowledges and agrees that the services to be provided by him under this Agreement are of a special, unique and extraordinary
nature. Executive further acknowledges and agrees that the restrictions contained in this Article Two are necessary to prevent the use and disclosure of Confidential Information and to protect other legitimate business interests of the Company.
Executive acknowledges that all of the restrictions in this Article Two are reasonable in all respects, including duration, territory and scope of activity. In the event a court of competent jurisdiction determines as a matter of law that any of the
terms of this Article Two are unreasonable or overbroad, the Parties expressly allow such court to reform this Agreement to the extent necessary to make it reasonable as a matter of law and to enforce it as so reformed. The Executive agrees that the
restrictions contained in this Article Two shall be construed as separate agreements independent of any other provision of this Agreement or any other agreement between Executive and the Company. Executive agrees that the existence of any claim or
cause of action by Executive against the Company (whether predicated on this Agreement or otherwise) shall not constitute a defense to the enforcement by the Company of the covenants and restrictions in this Article Two. Executive agrees that the
restrictive covenants contained in this Article Two are a material part of Executive’s obligations under this Agreement for which the Company has agreed to compensate Executive and provide him with Confidential Information as provided in this
Agreement. Executive agrees that the injury the Company will suffer in the event of the breach by Executive of any clause of this Article Two will cause the Company irreparable injury that cannot be adequately compensated by monetary damages alone.
Therefore, Executive agrees that the Company, without limiting any other legal or equitable remedies available to it, shall be entitled to obtain equitable relief by injunction or otherwise from any court of competent jurisdiction, including,
without limitation, injunctive relief to prevent Executive’s failure to comply with the terms and conditions of this Article Two. The restricted periods referenced in Article Two shall be extended on a day-for-day basis for each day during
which Executive violates the provisions of any respective provision hereof in any material respect, so that Executive is restricted from engaging in the activities prohibited by Article Two for the full periods specified therein, as applicable.

 2.06 Intangible Property. 
 Executive will not at any time during or after the Term have or claim any right, title or interest in any trade name, trademark, patent, copyright, work for hire or other similar rights belonging to or
used by the Company and shall not have or claim any right, title or interest in any material or matter of any sort prepared for or used in connection with the business or promotion of the Company, whatever Executive’s involvement with such
matters may have been, and whether procured, produced, prepared, or published in whole or in part by Executive, it being the intention of the Parties that Executive shall and hereby does recognize that the Company now has and shall hereafter have
and retain the sole and exclusive rights in any and all such trade names, trademarks, patents, copyrights (all Executive’s work in this regard being a work for hire for the Company under the copyright laws of the United States), material and

  
 8 

 
matter as described above. If any such work created by Executive is not a work made for hire under the copyright laws of the United States, then Executive hereby assigns to the Company all right,
title and interest in each such work (including without limitation all copyright rights). Executive shall cooperate fully with the Company, at the cost and expense of the Company, during his employment and thereafter in the securing of trade name,
trademark, patent or copyright protection or other similar rights in the United States and in foreign countries and shall give evidence and testimony and execute and deliver to the Company all papers reasonably requested by it in connection
therewith. 
 2.07 Survival. 
 Any termination of the Executive’s employment or of this Agreement, other than a termination of this Agreement pursuant to the last sentence of section 1.01, (or breach of this Agreement by the
Executive or the Company) shall have no effect on the continuing operation of this Article Two. 
 ARTICLE THREE 

MISCELLANEOUS 
 3.01 Entire Agreement. 
 This Agreement constitutes the entire agreement and
understanding between the Parties hereto concerning the subject matter hereof. No modification, amendment, termination or waiver of this Agreement shall be binding unless in writing and signed by Executive and duly authorized officer(s) of the
Company. Failure of the Company or Executive to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a continuing waiver of such or other terms, covenants and conditions. 

3.02 Successors and Assigns. 
 This Agreement shall be binding upon and inure to the benefit of Executive and the heirs, executors, assigns and administrators of Executive or his estate and property and shall be binding upon and inure
to the benefit of the Company and its successors and assigns (as provided below). Executive may not assign or transfer to others the obligation to perform Executive’s duties hereunder, and there are no third party beneficiaries to
Executive’s rights hereunder. The Company may assign or transfer its rights and obligations under this Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid. 

  
 9 

 3.03 Indemnification and Directors and Officers Liability Insurance. 

To the extent permitted by applicable law and the organizational documents of the Company and the Material Subsidiaries, the Company
hereby agrees to indemnify Executive from and against all loss, costs, damages and expenses including, without limitation, legal expenses of counsel (which expenses the Company will, to the extent so permitted, advance to Executive as the same are
incurred) arising out of or in connection with the fact that Executive is or was an officer, employee or agent of the Company and/or its Affiliates. However, the Executive shall repay any expenses paid or reimbursed by the Company if it is
ultimately determined that he is not legally entitled to be indemnified by the Company. If the Company’s ability to make any payment contemplated by this Section 3.03 depends on an investigation or determination by the Board, at the
Executive’s request the Company will use its best efforts to cause the investigation to be made (at the Company’s expense) and to have the Board reach a determination as soon as reasonably possible. 

3.04 Insurance. 
 If the Company desires at any time or from time to time during the Term to apply in its own name or otherwise for life, health, accident or other insurance covering Executive, the Company may do so and
may take out such insurance for any sum which the Company may deem necessary to protect its interests. Except as otherwise provided in Section 1.06, Executive will have no right, title or interest in or to such insurance, but will,
nevertheless, assist the Company in procuring and maintaining the same by submitting from time to time to the usual customary medical, physical, and other examinations and by signing such applications, statements and other instruments as may
reasonably be required by the insurance company or companies issuing such policies. 
 3.05 Notices. 

Notices hereunder shall be deemed delivered upon the confirmation of delivery of a facsimile or of actual receipt by the addressee and
shall be sent as follows (or if receipt is acknowledged by the recipient, by email): 
 If to Executive: 

Michael J. Tierney 
 At the address on file with the Company 
 Telephone: At the number on file with the
Company Email: At the address on file with the Company 
 with a copy to: 

Sue Ellen Eisenberg & Associates, P.C. 
 33 Bloomfield Hills Parkway, Suite 145 
 Bloomfield Hills, MI 48304 

Telephone: (248) 258-5050 
 Facsimile: (248) 258-5055 
 Email: see@seelawpc.com 

Attention: Sue Ellen Eisenberg 

  
 10 

 and if to the Company: 

Flagstar Bancorp, Inc. 
 5151 Corporate Drive 
 Troy, Michigan 48098 

Telephone: (248) 312-5070 
 Facsimile: (866) 748-6978 
 Email: Paul.D.Borja@flagstar.com 

Attention: Paul D. Borja, Executive Vice President and Chief Financial Officer 

with a copy to: 

Sullivan & Cromwell LLP 
 125 Broad Street 
 New York, NY 10004 

Telephone: (212) 558-4000 
 Facsimile: (212) 291-9157 
 Email: trevinom@sullcrom.com 

Attention: Marc R. Trevino 
 or
to such other address and/or person designated by a Party in writing and in the same manner to the other Party. Any written notice required to be provided by or to Executive under this Agreement may be provided by or to such representative or
representatives as Executive may designate by written notice to the Company. 
 3.06 Offset/Breach. 

The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any setoff, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. Executive’s termination of his employment hereunder, shall not be a breach of this
Agreement. Performance of Executive’s obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense or other claim, right or action which Executive may have against the Company or others. The Company’s
termination of Executive’s employment hereunder shall not be a breach of this Agreement. 
 3.07 Counterparts.

 This Agreement may be signed in counterparts, each of which shall be deemed an original and all of which taken together shall
constitute one and the same agreement, and delivered by facsimile or other electronic transmission confirmed promptly thereafter by actual delivery of executed counterparts. 
 3.08 Applicable Law. 
 This Agreement and all rights and liabilities of the
Parties shall be governed by and interpreted in accordance with the laws of the State of New York, excluding any choice of law rules which would refer the matter to the laws of another jurisdiction. 

  
 11 

 3.09 Headings. 

The captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of the Agreement.

 3.10 Severability. 
 To the extent any provision of this Agreement or portion hereof shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall
be unaffected and shall continue in full force and effect and the Parties agree to meet promptly to negotiate in good faith a substitute enforceable provision which preserves to the greatest extent possible the benefits (economic and other) intended
to be conferred on the Parties under this Agreement. 
 3.11 Representations, Warranties and Covenants. 

The Company represents and warrants that (i) the execution and performance of this Agreement, including the employment of Executive
as President and CEO of the Company and the appointment of the Executive to the Board, have been duly authorized by all necessary action of the Company and/or the Board and (ii) that the information relating to the Company as set forth in the
Agreement is true and correct. 
 3.12 Golden Parachute Payment. 

If any payment or benefit to the Executive under this Agreement or otherwise would be a Golden Parachute Payment that is prohibited by
applicable law, then the total payments and benefits will be reduced to the Golden Parachute Limit. For purposes of this Section 3.12, “Golden Parachute Payment” means a golden parachute payment within the meaning of
Section 18(k) of the Federal Deposit Insurance Act and “Golden Parachute Limit” means the greatest amount of payments and benefits that could be made to the Executive without having any payment or benefit be a Golden Parachute
Payment. 
 ARTICLE FOUR 
 TAXATION AND TARP 
 4.01 Taxation. 

The Parties believe that the provisions of this Agreement are in compliance with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”), as presently in effect, if and to the extent that such requirements apply. In the event that any of the payment obligations hereunder will be considered by the Internal Revenue Service to
be not in compliance with the requirements of Section 409A, the Parties will cooperate in good faith to endeavor to meet these requirements in a manner which preserves to the greatest extent possible the economic benefits intended to be
conferred on the Executive under this Agreement. Notwithstanding any provision of this Agreement to the contrary, only to the extent that any payment or benefit paid or provided to the Executive under this Agreement or otherwise (including, but not
limited to, the Supplemental Retirement Benefit) is subject to the 

  
 12 

 
requirements of Section 409A and is not exempted from such requirements, if at the time of Executive’s termination of employment with the Company, he is a “specified employee”
as defined in Section 409A, no payment or benefit that results from his termination of employment shall be provided until the date which is six months after the date of his termination of employment (or, if earlier, his date of death). Payments
to which Executive would otherwise be entitled during the six-month period described above shall be accumulated and paid in a lump sum on the first day of the seventh month after the date of his termination of employment. Notwithstanding anything to
the contrary, to the extent required by Section 409A: (a) the amount of expenses eligible for reimbursement or to be provided as an in-kind benefit under this Agreement during a calendar year may not affect the expenses eligible for
reimbursement or to be provided as an in-kind benefit in any other calendar year; (b) the right to reimbursement or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit; and (c) no
reimbursement under this Agreement shall be made later than the last day of the calendar year following the calendar year in which the expense was incurred. The Parties acknowledge and agree all payments under this Agreement are subject to
withholding under applicable law and payments hereunder will be made net of withholding, if any. 
 4.02 TARP and Other
Applicable Law 
 The Parties believe that the provisions of this Agreement are in compliance with the TARP Requirements and
other applicable law, as presently in effect, if and to the extent that such requirements apply. For so long as the Company is subject to the TARP Requirements, the provisions of this Agreement are subject to and shall be, to the fullest extent
possible, interpreted to be consistent with the TARP Requirements, which terms control over the terms of this Agreement in the event of any conflict between the TARP Requirements and this Agreement. Notwithstanding anything in this Agreement to the
contrary, in no event shall any payment, award or benefit under this Agreement vest or be settled, paid or accrued, if any such vesting, settlement, payment or accrual would be in violation of the TARP Requirements or other applicable law. In the
event of any such violation, the Parties will cooperate in good faith to endeavor to meet the TARP Requirements and other applicable law in a manner which preserves to the greatest extent possible the intent and purposes of this Agreement.

 *   *   * 

  
 13 

 IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth below
opposite their names, effective as of the date first set forth above. 
  

					
		  	EXECUTIVE:
	Dated:	  	 /s/

		  		  	Michael J. Tierney
		
		  	FLAGSTAR BANCORP, INC.:
			
	Dated:	  	By:	  	 /s/

		  		  	Name:
		  		  	Title:

  
 14

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