EMPLOYMENT AGREEMENT
Exhibit 10.2
Execution Copy
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 16th day of October,
2009 by and between Flagstar Bancorp, Inc., a Michigan corporation maintaining offices at 0000
Xxxxxxxxx Xxxxx, Xxxx, Xxxxxxxx 00000 (the “Company”), and Xxxxxxxxx X. Xxxxxxx, residing at
___(“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
desires to employ Executive as its Executive Vice-President and Chief of Staff, and Executive
desires to become so employed by the Company,
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 19, 2009 (the “Effective Date”).
As of the Effective Date, the Company hereby employs Executive as its Executive Vice-President and
Chief of Staff, and Executive hereby accepts such employment by the Company, subject to the terms
of this Agreement. Notwithstanding anything herein to the contrary, Executive’s employment 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 Regional Director of the Office of Thrift
Supervision in accordance with condition 7 of Order number 2009-06, issued January 29, 2009 by the
Office of Thrift Supervision. 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 initial stub term of Executive’s employment by the Company under this Agreement shall
commence on the Effective Date and end on December 31, 2009 (the “Stub Period”). Following the
Stub Period, the initial term of Executive’s employment by the Company under this Agreement shall
commence on January 1, 2010 and end on December 31, 2012 (the “Initial Term”), and Executive’s
employment hereunder shall continue thereafter for successive terms of one (1) year following the
Initial Term (the Stub Period, the Initial Term and each one (1)-year term thereafter being
collectively referred to as the “Term”), unless either Party delivers written notice to the other
Party at least two (2) months prior to end of the Initial Term or of any subsequent year (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 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 for 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 Executive
Vice-President and Chief of Staff, subject to the authority and direction of the Company’s
Board of Directors (the “Board”), and shall report directly to the President and Chief
Executive Officer of the Company (“CEO”). 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 Executive Vice-President and Chief of
Staff, as are assigned to him from time to time by the CEO and any other duties undertaken
or accepted by Executive consistent with such position. In that connection, throughout the
Term Executive shall serve as Executive Vice-President and Chief of Staff of the Company as
determined by the Board in its discretion. Executive shall have such authority,
responsibility and duties as are normally associated with the position of Executive
Vice-President and Chief of Staff with respect to the Company. Executive shall be appointed
to such position with the Company effective as of the Effective Date.
(b) Subject to the provisions of this Section 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 affair.
1.05 Compensation.
(a) Base Salary. During the Stub Period, the Company shall pay to Executive a gross
monthly base salary of $45,833.00, payable monthly or more frequently in accordance
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with the Company’s payroll policy for its other executives and pro-rated for any partial
month during the Stub Period. During the Initial Term, the Company shall pay to Executive a
gross annual salary of $550,000.00 (the “Base Salary”), payable monthly or more frequently
in accordance with the Company’s payroll policy for its other executives. Following the
Initial 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 $550,000), such adjusted
amount shall become the “Base Salary” for purposes of this Agreement.
(b) Share Salary. During the Stub Period, the Company shall pay to Executive a
gross monthly share salary of $25,000.00, payable at the time that base salary is payable to
the Executive and pro-rated for any partial month during the Stub Period, in grants of
unrestricted shares of the Company’s common stock, par value $0.01 per share (the “Common
Stock”), having a Fair Market Value (as defined below) on the date of grant equal to the pro
rata portion of the share salary payable on each such pay date. During the Initial Term,
the Company shall pay to Executive a gross annual share salary of $300,000.00 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 may (as determined by the Board, or a
committee thereof designated to make such determination, in its sole discretion) grant to
Executive, at the end of each calendar year, including the Stub Period, an additional amount
the Fair Market Value of which is equal to up to one-third (1/3) of Executive’s
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annual compensation for such year, in restricted shares of Common Stock, with the Fair
Market Value of such shares 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. 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, until the Company is no longer subject to the Troubled Asset Relief Program 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, including pursuant to any final rule.
(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, the
Exhibit hereto and related matters.
1.06 Fringe and Other Benefits.
During the Term, the Company shall make available to Executive such fringe and other benefits
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, including, without limitation, the
restriction on tax gross-up payments.
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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, 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; (iii) as may be required by law or (iv) as may be mutually agreed upon between
the Parties in a signed written negotiated agreement entered into in connection with a
termination of Executive’s employment under this Agreement, which agreement shall contain a
release in favor of the Company which is comparable in scope to the release referred to in
the next sentence. Notwithstanding any other provision of this Agreement, as a precondition
to the payment of any compensation or benefits in excess of those otherwise required by law
to be paid upon termination of employment, the Executive agrees to execute a release of any
claims against the Company, its employees, officers, directors, shareholders, Affiliates and
subsidiaries arising out of, in connection with or relating to Executive’s employment with
or termination of employment from the Company including any claims under the terms of this
Agreement, and specifically including but not limited to a release of claims under the Age
Discrimination in Employment Act and any similar rights under any state or local law, in a
form reasonably acceptable to the Company. Anything to the contrary herein
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notwithstanding, nothing in the releases described in this Section 1.07(c) shall release any
releasee from any claims or damages based on (i) any right or claim that arises exclusively
from events occurring after the date Executive executes such release, (ii) any right
Executive may have to payments, benefits or entitlements under this Agreement or any
applicable plan, policy, program or arrangement of, or other agreement with, the Company or
any Affiliate, (iii) Executive’s eligibility for indemnification in accordance with this
Agreement, the organizational documents of the Company and the Company’s subsidiaries which
are material to the Business of the Company (said documents collectively referred to as the
“Corporate Documents”), or applicable laws, or under any applicable insurance policy, with
respect to any liability Executive incurs as a director, officer or employee of the Company
or any Affiliate or (iv) any right Executive may have to obtain contribution as permitted by
law in the event of entry of judgment against Executive as a result of any act or failure to
act for which Executive and any releasee are jointly liable. For so long as the Company is
subject to the TARP Requirements, any such agreement or release shall be subject to the TARP
Requirements.
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.
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
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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 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
by the Executive of his employment with the Company other than for Good Reason or any termination
of Executive’s employment by the Company, 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
by the Executive of his employment with the Company other than for Good Reason or any termination
of Executive’s employment by the Company, 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.
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2.04 Non-Disparagement.
Executive agrees that, during the Term and thereafter, Executive will not intentionally make
any disparaging or detrimental public comments about the Company, any of its officers, directors,
employees, Affiliates or agents nor will Executive authorize, encourage or participate with anyone
on Executive’s behalf to make such statements. In consideration of the foregoing, the Company will
instruct its directors and senior officers not intentionally to make any disparaging or detrimental
public comments about Executive during the Term or thereafter. Nothing in this Section 2.04 shall
preclude either party from fulfilling any duty or obligation that he or it may have at law, from
responding to any subpoena or official inquiry from any court or government agency, including
providing truthful testimony, documents subpoenaed or requested or otherwise cooperating in good
faith with any proceeding or investigation, or, in the case of Executive, from taking any
reasonable actions to enforce his rights under this Agreement.
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.
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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 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 Good Reason.
For purposes of this Agreement, “Good Reason” shall mean, in the absence of the written
consent of Executive:
(i) the failure of the Executive to continue to report directly to the CEO;
(ii) the assignment to Executive of duties materially inconsistent with the
Executive’s titles, positions, status, reporting relationships, authority, duties or
responsibilities as contemplated by Section 1.04, or any other action by the Company
which results in a diminution in the Executive’s titles, positions, status,
reporting relationships, authority, duties or responsibilities from his most senior
titles, positions, status, reporting relationships, authority, duties or
responsibilities existing during the Term, other than insubstantial or inadvertent
actions not taken in bad faith which are remedied by the Company promptly after
receipt of notice thereof given by Executive;
(iii) any failure by the Company to make the payments and/or provide the
benefits to Executive contemplated in, or any other failure to comply with any of
the provisions of, Sections 1.05 or 1.06 (whether or not the reason for any such
failure is based on the TARP Requirements or other applicable law), other than
insubstantial or inadvertent failures not in bad faith which are remedied by the
Company promptly after receipt of notice thereof given by Executive;
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(iv) any failure by the Company to comply with and satisfy Section 3.02; or
(v) any material failure by the Company to comply with any other material
provision of this Agreement (including Exhibit A).
Anything notwithstanding to the contrary, Executive may only terminate his employment for “Good
Reason” upon 30 days’ written notice to the Company given within 60 days after Executive has
knowledge of the occurrence of the event or events giving rise to Good Reason (provided the Company
does not remedy or otherwise cure the event or events giving rise to Good Reason prior to the
expiration of such 30-day notice period).
2.08 Cause.
For purposes of this Agreement, “Cause” shall mean that the Executive:
(i) willfully fails or refuses to substantially perform the Executive’s
responsibilities under this Agreement, after demand for substantial performance has
been given by the Board that specifically identifies how the Executive has failed to
perform such responsibilities;
(ii) engages in gross misconduct which is materially and demonstrably injurious
to the Company;
(iii) is convicted of a felony or pleads guilty or nolo contendere to a felony;
(iv) materially breaches Article Two of this Agreement;
(v) engages in any act of fraud (including misappropriation of the Company’s
funds or property) in connection with the Business of the Company which is
materially and demonstrably injurious to the Company; or
(vi) is disqualified or barred by any governmental or self-regulatory authority
from serving in the capacity contemplated by this Agreement.
The termination of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than 66% of the entire
membership of the Board (excluding the Executive) at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive and
the Executive is given an opportunity, together with counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive is guilty
of the conduct described above, and specifying the particulars thereof in detail.
For purposes of this Agreement, no act or omission on the part of the Executive
shall be considered “willful” unless it is done or omitted in bad faith or without
reasonable belief that the act or omission was in the best interests
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of the Company. Any act or omission based upon a resolution duly adopted by the
Board or upon advice of counsel for the Company shall be conclusively presumed to
have been done or omitted in good faith and in the best interests of the Company.
2.09 Survival.
Any termination of the Executive’s employment or of this Agreement (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.
3.03 Indemnification and Directors and Officers Liability Insurance.
(a) To the extent permitted by applicable law and the Corporate Documents, 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
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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.
(b) A directors’ and officers’ liability insurance policy (or policies) shall be kept in
place, during the Term and thereafter until the later of (i) the sixth anniversary of the
date on which Executive’s employment with the Company terminates and (ii) the date on which
all claims against Executive that would otherwise be covered by the policy (or policies)
would become fully time barred, providing coverage to Executive that is no less favorable to
him in any respect (including, without limitation, with respect to scope, exclusions,
amounts and deductibles) than the coverage then being provided to any other present or
former senior executive or director of the Company.
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. 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:
Xxxxxxxxx X. Xxxxxxx
and if to the Company:
Flagstar Bancorp, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: Xxxx.Xxxxxx@xxxxxxxx.xxx
Attention: Xxxxxxx X. Xxxxxx
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with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxxxxxxx.xxx
Attention: Xxxx X. Xxxxxxx
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, with or without Good Reason, 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, with or without Cause, 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.
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.
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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 Executive Vice-President and Chief of Staff, 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 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
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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.
* * *
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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: October 23, 2009 | /s/ Xxxxxxxxx X. Xxxxxxx | |||
| Xxxxxxxxx X. Xxxxxxx | ||||
| FLAGSTAR BANCORP, INC.: |
||||
| Dated: October 23, 2009 | By: | /s/ Xxxxxx X. Xxxxxxxxxx | ||
| Name: | Xxxxxx X. Xxxxxxxxxx | |||
| Title: | President and CEO | |||
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