8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) July 26, 2006 (July 20, 2006)

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

(Exact name of Registrant as specified in charter)

Virginia	000-50230	54-1873198
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS employer identification no.)

1001 Nineteenth Street North, Arlington, Virginia	22209
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code (703) 312-9500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Item 8.01 Other Events.

On July 20, 2006, Friedman, Billings, Ramsey Group, Inc. (the “Company”) closed the private offering of common equity by its newly formed taxable REIT subsidiary, FBR Capital Markets Corporation (“FBR Capital Markets”), and the concurrent private placement by FBR Capital Markets to two affiliates of Crestview Partners, as previously announced in the Company’s Current Reports on Form 8-K filed on June 22, 2006 and July 14, 2006. These two concurrent transactions in the aggregate resulted in the sale of $270 million in common equity by FBR Capital Markets. Proceeds to FBR Capital Markets, after deducting the initial purchaser’s discount and placement fee payable to Friedman, Billings, Ramsey & Co., Inc., which has become a wholly-owned subsidiary of FBR Capital Markets as a result of the contribution transaction described below, and a placement fee payable to an affiliate of Crestview Partners with respect to the shares purchased by the Crestview affiliates, were $251.1 million. FBR Capital Markets also reimbursed Crestview for its out-of-pocket expenses incurred in connection with the private placement to the Crestview affiliates. In connection with the transactions, the Company has completed the contribution to FBR Capital Markets of the Company’s investment banking, institutional brokerage and research and asset management businesses.

The Company and FBR Capital Markets have entered into a series of agreements, including a contribution agreement, a corporate agreement, a services agreement, a management services agreement, a trademark license agreement and a tax sharing agreement. Each of these agreements is filed as an exhibit to this report.

In addition, FBR Capital Markets and the Company have entered into a series of definitive agreements with affiliates of Crestview Partners, which reflect the terms and conditions set forth in the amended letter agreement entered into among the parties on July 14, 2006, which was previously announced in the Company’s Current Reports on Form 8-K filed with the SEC on June 22, 2006 and July 14, 2006. The definitive agreements entered into by the Company, FBR Capital Markets and the Crestview affiliates include an investment agreement, a governance agreement, a voting agreement, a registration rights agreement, a professional services agreement and option agreements. Each of these agreements is also filed as an exhibit to this report.

Upon completion of the private offering described above, FBR Capital Markets granted options to purchase an aggregate of 805,000 shares of common stock to Eric F. Billings (270,000 options), J. Rock Tonkel, Jr. (180,000 options), Richard J. Hendrix (180,000 options), Kurt R. Harrington (100,000 options) and William J. Ginivan (75,000 options) under the FBR Capital Markets 2006 Long-Term Incentive Plan, a copy of which is filed as an exhibit to this report. The options have an exercise price of $15.00 per share and will vest on the third anniversary of the grant date, subject to achieving certain corporate performance goals to be determined. In connection with these option grants, Messrs. Billings, Tonkel, Hendrix, Harrington and Ginivan will enter into stock option agreements with FBR Capital Markets Corporation. The forms of incentive stock option agreement and non-qualified stock option agreement that these officers will enter into are filed as exhibits to this report.

The Company intends to discuss these transactions on its quarterly earnings conference call on July 28, 2006.

The securities sold in the private offering and in the concurrent private placement to the affiliates of Crestview Partners have not been registered under the Securities Act of 1933,

as amended, and may not be offered or sold in the United States absent a registration statement or an applicable exemption from the registration requirements under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

10.1	Contribution Agreement, dated as of July 20, 2006, by and between FBR TRS Holdings, Inc. and FBR Capital Markets Corporation.
10.2	Corporate Agreement, dated as of July 20, 2006, by and between Friedman, Billings, Ramsey Group, Inc. and FBR Capital Markets Corporation.
10.3	Management Services Agreement, dated as of July 20, 2006, by and between Friedman, Billings, Ramsey Group, Inc. and FBR Capital Markets Corporation.
10.4	Services Agreement, dated as of July 20, 2006, by and between Friedman, Billings, Ramsey Group, Inc. and FBR Capital Markets Corporation.
10.5	Tax Sharing Agreement, dated as of July 20, 2006, by and between the FBR TRS Holdings, Inc. and FBR Capital Markets Corporation.
10.6	Trademark License Agreement, dated as of July 20, 2006, by and between Friedman, Billings, Ramsey Group, Inc. and FBR Capital Markets Corporation.
10.7	Investment Agreement, dated as of July 19, 2006, by and among Forest Holdings LLC, Forest Holdings (ERISA) LLC and FBR Capital Markets Corporation and Friedman, Billings, Ramsey Group, Inc.
10.8	Governance Agreement, dated as of July 20, 2006, by and among Forest Holdings LLC, Forest Holdings (ERISA) LLC, FBR TRS Holdings, Inc. and Friedman, Billings, Ramsey Group, Inc.
10.9	Voting Agreement, dated as of July 20, 2006, by and among by and among Forest Holdings LLC, Forest Holdings (ERISA) LLC, FBR Capital Markets Corporation, FBR TRS Holdings and Friedman, Billings, Ramsey Group, Inc.
10.10	Professional Services Agreement, dated as of July 20, 2006, by and between Crestview Advisors L.L.C. and FBR Capital Markets Corporation.
10.11	Registration Rights Agreement, dated as of July 20, 2006, by and among Forest Holdings LLC, Forest Holdings (ERISA) LLC and FBR Capital Markets Corporation.
10.12	Stock Option Agreement, dated as of July 20, 2006, by and between FBR Capital Markets Corporation and Forest Holdings LLC.
10.13	Stock Option Agreement, dated as of July 20, 2006, between FBR Capital Markets Corporation and Forest Holdings (ERISA) LLC.
10.14	FBR Capital Markets Corporation 2006 Long-Term Incentive Plan.
10.15	Form of Incentive Stock Option Agreement.
10.16	Form of Non-qualified Stock Option Agreement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 26, 2006

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
By:	/s/ Kurt R. Harrington
Name:	Kurt R. Harrington
Title:	Senior Vice President, Treasurer and Chief Financial Officer

EX-10.1

Exhibit 10.1

CONTRIBUTION AGREEMENT

by and between

FBR TRS HOLDINGS, INC.

and

FBR CAPITAL MARKETS CORPORATION

dated as of July 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE I THE CONTRIBUTION		1
1.1	Contribution of Equity Interests	1
1.2	Consideration	1
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS		1
2.1	Representations and Warranties of Acquirer	1
2.2	Representations and Warranties of Contributor	2
2.3	Covenants of Acquirer	3
2.4	Covenants of Contributor	3
ARTICLE III CONDITIONS PRECEDENT TO THE CLOSING		3
3.1	Conditions to Acquirer’s Obligations	3
3.2	Conditions to Contributor’s Obligations	3
ARTICLE IV CLOSING AND CLOSING DOCUMENTS		4
4.1	Closing	4
4.2	Contributor’s Deliveries	4
4.3	Acquirer’s Deliveries	4
4.4	Fees and Expenses; Closing Costs	5
ARTICLE V MISCELLANEOUS		5
5.1	Entire Agreement; Modifications and Waivers	5
5.2	Successors and Assigns	5
5.3	Article Headings	5
5.4	Governing Law	5
5.5	Counterparts	5
5.6	Severability	5

EXHIBITS & SCHEDULES

Schedule 1 Contributed Property

(i)

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made as of this              day of July 20, 2006 by and between FBR TRS HOLDINGS, INC., a Virginia corporation (“Contributor”) and FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (“Acquirer”).

RECITALS

A. Contributor is the record and beneficial owner of the equity interests set forth on Schedule 1 attached hereto (the “Contributed Property”).

B. Contributor desires to contribute the Contributed Property to Acquirer, on the terms and conditions hereinafter set forth.

C. Acquirer desires to acquire the Contributed Property from Contributor, on the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE I

THE CONTRIBUTION

1.1 Contribution of Equity Interests. Contributor agrees to contribute, transfer, assign and convey the Contributed Property to Acquirer, and Acquirer agrees to acquire and accept transfer of the Contributed Property, pursuant to the terms and conditions set forth in this Agreement. The Contributed Property shall be transferred to Acquirer free and clear of any and all liens, encumbrances, security interests, prior assignments or conveyances, conditions, restrictions, voting agreements, claims, and any other matters affecting title thereto.

1.2 Consideration. The total consideration for which Contributor agrees to contribute and assign the Contributed Property to Acquirer, and which Acquirer agrees to pay to Contributor, subject to the terms of this Agreement, shall be 45,999,000 shares of common stock, par value $.001 per share, of Acquirer (the “Consideration”).

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1 Representations and Warranties of Acquirer. Acquirer hereby represents and warrants to Contributor that the following statements are true, correct, and complete in all material respects as of the date of this Agreement and will be true, correct, and complete in all material respects as of the Closing Date:

(a) Organization and Power. Acquirer is a corporation duly organized and validly existing under the laws of the Commonwealth of Virginia, and has full right, power, and

authority to conduct its business as presently proposed to be conducted, to enter into this Agreement and to assume and perform all of its obligations under this Agreement; and the execution and delivery of this Agreement and the performance by Acquirer of its obligations under this Agreement have been duly authorized by all requisite action of Acquirer and require no further action or approval of Acquirer or of any other individuals or entities to constitute this Agreement as a binding and enforceable obligation of Acquirer, assuming due authorization, execution and delivery of this Agreement by Contributor; this Agreement is the valid and binding agreement of Acquirer, enforceable against Acquirer in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor’s rights generally, and by general principles of equity. Acquirer is duly qualified to do business and is in good standing in each jurisdiction where such qualification is required.

(b) Noncontravention. None of the entry into, the performance of, or the compliance with, this Agreement by Acquirer has resulted, or will result, in any violation of, default under, or the acceleration of, any obligation under the Acquirer’s articles of incorporation, bylaws, or any mortgage, indenture, lien agreement, note, contract, permit, judgment, decree, order, restrictive covenant, statute, rule, or regulation applicable to Acquirer.

(c) Consideration. The shares of common stock of Acquirer that comprise the Consideration have been duly authorized, and, when issued and delivered to the Contributor pursuant to this Agreement, will be validly issued, fully paid and nonassessable.

(d) Consents. Each consent, approval, authorization, order, license, certificate, permit, registration, designation, or filing by or with any governmental agency or body necessary for the execution, delivery, and performance of this Agreement or the transactions contemplated hereby by Acquirer has been obtained.

2.2 Representations and Warranties of Contributor. Contributor hereby represents and warrants to Acquirer that that the following statements are true, correct, and complete in all material respects as of the date of this Agreement and will be true, correct, and complete in all material respects as of the Closing Date:

(a) Organization and Power. Contributor is a corporation duly organized and validly existing under the laws of the Commonwealth of Virginia, and has full right, power, and authority to conduct its business as presently proposed to be conducted, to enter into this Agreement and to assume and perform all of its obligations under this Agreement; and the execution and delivery of this Agreement and the performance by Contributor of its obligations under this Agreement have been duly authorized by all requisite action of Contributor and require no further action or approval of Contributor or of any other individuals or entities to constitute this Agreement as a binding and enforceable obligation of Contributor, assuming due authorization, execution and delivery of this Agreement by Acquirer; this Agreement is the valid and binding agreement of Contributor, enforceable against Contributor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor’s rights generally, and by general principles of equity. Contributor is duly qualified to do business and is in good standing in each jurisdiction where such qualification is required.

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(b) Noncontravention. None of the entry into, the performance of, or the compliance with, this Agreement by Contributor has resulted, or will result, in any violation of, default under, or the acceleration of, any obligation under the Contributor’s articles of incorporation, bylaws, or any mortgage, indenture, lien agreement, note, contract, permit, judgment, decree, order, restrictive covenant, statute, rule, or regulation applicable to Contributor.

(c) Consents. Each consent, approval, authorization, order, license, certificate, permit, registration, designation, or filing by or with any governmental agency or body necessary for the execution, delivery, and performance of this Agreement or the transactions contemplated hereby by Contributor has been obtained.

2.3 Covenants of Acquirer. In addition to the acts, instruments and agreements recited herein and contemplated to be performed, executed and delivered by Acquirer and Contributor, Acquirer shall perform, execute, and deliver or cause to be performed, executed, and delivered at the Closing or after the Closing, any and all further acts, instruments, and agreements and provide such further assurances as Contributor may reasonably require to consummate the transactions contemplated hereunder.

2.4 Covenants of Contributor. In addition to the acts, instruments and agreements recited herein and contemplated to be performed, executed and delivered by Acquirer and Contributor, Contributor shall perform, execute, and deliver or cause to be performed, executed, and delivered at the Closing or after the Closing, any and all further acts, instruments, and agreements and provide such further assurances as Acquirer may reasonably require to consummate the transactions contemplated hereunder.

ARTICLE III

CONDITIONS PRECEDENT TO THE CLOSING

3.1 Conditions to Acquirer’s Obligations. In addition to any other conditions set forth in this Agreement, Acquirer’s obligation to consummate the Closing is subject to the timely satisfaction of each and every one of the conditions and requirements set forth in this Section 3.1, all of which shall be conditions precedent to Acquirer’s obligations under this Agreement.

(a) Contributor’s Obligations. Contributor shall have performed all of its obligations hereunder which are to be performed prior to Closing, and shall have delivered or caused to be delivered to Acquirer all of the documents and other information required to be delivered pursuant to Section 4.2.

(b) Contributor’s Representations and Warranties. Contributor’s representations and warranties set forth in Section 2.2 shall be true and correct as if made again on the Closing Date.

(c) No Injunction. On the Closing Date, there shall be no effective injunction, writ, preliminary restraining order or other order issued by a court of competent jurisdiction restraining or prohibiting the consummation of the transactions contemplated hereby.

3.2 Conditions to Contributor’s Obligations. In addition to any other conditions set forth in this Agreement, Contributor’s obligations to consummate the Closing is subject to the

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timely satisfaction of each and every one of the conditions and requirements set forth in this Section 3.2, all of which shall be conditions precedent to Contributor’s obligations under this Agreement.

(a) Acquirer’s Obligations. Acquirer shall have performed all obligations of Acquirer hereunder which are to be performed prior to Closing, and shall have delivered or caused to be delivered to Contributor, all of the documents and other information required to be delivered pursuant to Section 4.3.

(b) Acquirer’s Representations and Warranties. Acquirer’s representations and warranties set forth in Section 2.1 shall be true and correct as if made again on the Closing Date.

(c) No Injunction. On the Closing Date, there shall be no effective injunction, writ, preliminary restraining order or other order issued by a court of competent jurisdiction restraining or prohibiting the consummation of the transactions contemplated hereby.

ARTICLE IV

CLOSING AND CLOSING DOCUMENTS

4.1 Closing. The consummation and closing (the “Closing”) of the transactions contemplated under this Agreement shall take place at the offices of Hunton & Williams LLP, 1900 K Street, N.W., Washington, D.C. 20006, or such other place as is mutually agreeable to the parties as soon as reasonably practicable following the satisfaction of the conditions set forth in Article III of this Agreement (the “Closing Date”), or as otherwise set by agreement of the parties.

4.2 Contributor’s Deliveries. At the Closing, Contributor shall deliver the following to Acquirer:

(a) Authority Documents. Evidence reasonably satisfactory to Acquirer that the person or persons executing the documents required pursuant to this Agreement on behalf of Contributor has full right, power, and authority to do so.

(b) Stock Certificates. Certificates representing all of the Contributed Property, duly endorsed and assigned to Acquirer.

(c) Other Documents. Contributor shall have executed and delivered any other document or instrument reasonably requested by Acquirer or required hereby.

4.3 Acquirer’s Deliveries. At the Closing, Acquirer shall deliver the following to the Contributors:

(a) The Consideration. Acquirer shall have executed and delivered to Contributor a duly signed and endorsed stock certificate representing the Consideration.

(b) Authority Documents. Evidence reasonably satisfactory to Contributor that the person or persons executing the documents required pursuant to this Agreement on behalf of Acquirer have full right, power, and authority to do so.

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(c) Other Documents. Acquirer shall have executed and delivered any other document or instrument reasonably requested by Contributor or required hereby.

4.4 Fees and Expenses; Closing Costs. Acquirer shall pay all fees, expenses and closing costs relating to the transactions contemplated by this Agreement; provided however, that Contributor shall pay its own attorneys’ and consultants’ fees and expenses.

ARTICLE V

MISCELLANEOUS

5.1 Entire Agreement; Modifications and Waivers. This Agreement constitutes the entire agreement among the parties hereto and may not be modified or amended except by instrument in writing signed by the parties hereto.

5.2 Successors and Assigns. Except as set forth in this Article, this Agreement may not be assigned by Acquirer or Contributor without the prior approval of the other party hereto. This Agreement shall be binding upon, and inure to the benefit of, the Contributor and Acquirer, and their respective legal representatives, successors, and permitted assigns.

5.3 Article Headings. Article headings and article and section numbers are inserted herein only as a matter of convenience and in no way define, limit, or prescribe the scope or intent of this Agreement or any part hereof and shall not be considered in interpreting or construing this Agreement.

5.4 Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Virginia.

5.5 Counterparts. This Agreement may be executed in any number of counterparts and by any party hereto on a separate counterpart, each of which when so executed and delivered shall be deemed an original and all of which taken together shall constitute but one and the same instrument.

5.6 Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURES APPEAR ON FOLLOWING PAGES]

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IN WITNESS WHEREOF, this Agreement has been entered into effective as of the date above first written.

CONTRIBUTOR:
FBR TRS HOLDINGS, INC., a Virginia corporation
By:	/s/ Kurt R. Harrington
Name:	Kurt R. Harrington
Title:	CFO and Treasurer
ACQUIRER:
FBR CAPITAL MARKETS CORPORATION, a Virginia corporation
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

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EX-10.2

Exhibit 10.2

CORPORATE AGREEMENT

by and between

FBR CAPITAL MARKETS CORPORATION

and

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

dated as of July 20, 2006

TABLE OF CONTENTS

		Page
RECITALS		1
AGREEMENTS		2
ARTICLE I DEFINITIONS		2
1.1.	Definitions	2
1.2.	Internal References	6
ARTICLE II CERTAIN COVENANTS AND AGREEMENTS		6
2.1.	No Violations	6
2.2.	Access to Information	7
2.3.	Intercompany Transactions	8
2.4.	Actions Requiring Consent	8
ARTICLE III CORPORATE OPPORTUNITIES AND CONFLICTS OF INTEREST		8
3.1.	General	8
3.2.	Business Activities	9
3.3.	Corporate Opportunities	9
3.4.	FBR Capital Markets Entities and FBR Group Entities	10
3.5.	Notice	11
ARTICLE IV INDEMNIFICATION FOR LIABILITIES		11
4.1.	FBR Capital Markets Indemnification of the FBR Group Entities for Certain Liabilities	11
4.2.	FBR Group Indemnification of FBR Capital Markets Entities for Certain Liabilities	11
4.3.	Third-Party Rights; Tax Benefits	12
4.4.	Notice and Payment of Claims	12
4.5.	Notice and Defense of Third-Party Claims	12
4.6.	Contribution	13
ARTICLE V OPTION		13
5.1.	Option	13
5.2.	Notice	14
5.3.	Option Exercise and Payment	14
5.4.	Effect of Failure to Exercise	15
5.5.	The Offering	15
5.6.	Termination of Option	15
ARTICLE VI TERM		15
ARTICLE VII MISCELLANEOUS		15

(i)

7.1.	Limitation of Liability	15
7.2.	Subsidiaries	15
7.3.	Amendments	16
7.4.	Severability	16
7.5.	Notices	16
7.6.	Further Assurances	17
7.7.	Counterparts	17
7.8.	Governing Law	17
7.9.	Entire Agreement	17
7.10.	Successors	17
7.11.	Specific Performance	17

(ii)

CORPORATE AGREEMENT

THIS CORPORATE AGREEMENT (“Agreement”) is entered into as of July 20, 2006 by and between FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (“FBR Capital Markets”) and FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation (“FBR Group”).

RECITALS

A. FBR TRS Holdings, Inc. (“FBR TRS”), which is a wholly-owned subsidiary of FBR Group, currently owns 1,000 shares of common stock, $0.001 par value per share (“Common Stock”), of FBR Capital Markets, which represents all of the issued and outstanding shares Common Stock; and

B. FBR TRS has agreed in a contribution agreement dated as of the date hereof (the “Contribution Agreement”) to contribute to FBR Capital Markets all of the issued and outstanding shares of capital stock of the following wholly-owned subsidiaries of FBR TRS (the “Contributed Entities” and each, individually, a “Contributed Entity”) in exchange for an additional 45,999,000 shares of Common Stock of FBR Capital Markets:

(i) FBR Asset Management Holdings, Inc.; a Virginia corporation; and

(ii) FBR Capital Markets Holdings, Inc., a Delaware corporation; and

C. Concurrently with the execution and delivery by the parties of this Agreement, FBR Capital Markets is issuing and selling in a private offering 12,066,667 shares of Common Stock, plus up to an additional 1,810,000 shares of Common Stock to cover additional allotments, if any, pursuant to the terms and conditions of that certain Purchase/Placement Agreement, dated as of July 14, 2006, by and between FBR Capital Markets and Friedman, Billings, Ramsey & Co., Inc. (“FBR & Co.”), as well as an additional 5,266,667 shares of Common Stock, subject to adjustment in certain circumstances, in a concurrent private placement to affiliates of Crestview Partners. The private offering and concurrent private placement described in the preceding sentence are referred to as the “Offering.” Following completion of the Offering, FBR TRS will own 46,000,000 shares of Common Stock representing approximately 72.6% of the issued and outstanding shares of Common Stock (or 70.6% if the initial purchaser/placement agent’s additional allotment option in the Offering is exercised in full); and

D. The parties desire to enter into this Agreement to set forth certain arrangements regarding: (i) certain covenants and agreements regarding the conduct of FBR Capital Markets’ business; (ii) treatment of potential corporate opportunities and conflicts of interest between FBR Capital Markets and FBR Group; and (iii) FBR Group’s rights to purchase additional shares of Common Stock upon any issuance by FBR Capital Markets of shares of Common Stock to any person in order to permit FBR Group to maintain its beneficial ownership percentage interest in FBR Capital Markets at approximately 72.6% (or approximately 70.6% if the initial purchaser/placement agent’s additional allotment option in the Offering is exercised in full).

AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FBR Capital Markets and FBR Group, for themselves and their successors and assigns, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Definitions.

As used in this Agreement, the following terms will have the following meanings, applicable both to the singular and the plural forms of the terms described:

“Action” means any claim, suit, action, arbitration, inquiry, investigation or other proceeding of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any arbitrator or Governmental Entity.

“Affiliate” means, with respect to a given Person, any Person controlling, controlled by or under common control with such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to vote a majority of the securities having voting power for the election of directors (or other Persons acting in similar capacities) of such Person or otherwise to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” has the meaning ascribed in the preamble hereto, as such agreement may be amended and supplemented from time to time in accordance with its terms.

“Applicable Stock” means at any time the (i) shares of Common Stock beneficially owned by FBR Group (through FBR TRS) that are owned on the date hereof following completion of the transactions contemplated under the Contribution Agreement, plus (ii) any shares of Common Stock that are issued to FBR TRS in any reclassification, share combination, share subdivision, share dividend, share exchange, merger, consolidation or similar transaction or event in respect of shares described in clause (i) plus (iii) any shares of Common Stock issued to FBR TRS as a result any exercise by FBR Group of the Option.

“Common Stock” has the meaning ascribed in the preamble hereto.

“Contributed Entities” has the meaning ascribed in the preamble hereto.

“Contribution Agreement” has the meaning ascribed in the preamble hereto.

“Contributed Entities Liabilities” means any and all Liabilities relating to any event or set of facts that occurred or existed prior to the Offering Date (i) of or in any way relating, in whole or in part, to any Contributed Entity or any of its Subsidiaries that is in existence at the Offering Date or (ii) as a result of or in connection with the conduct of, in connection with or in any way

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relating to, in whole or in part, the businesses and operations of any Contributed Entity or any of its Subsidiaries that is in existence at the Offering Date or the ownership or use of assets or property in connection therewith.

“Contributed Entity” has the meaning ascribed in the preamble hereto.

“FBR Capital Markets” has the meaning ascribed in the preamble hereto.

“FBR Capital Markets Articles” means the articles of incorporation of FBR Capital Markets, as amended from time to time.

“FBR Capital Markets Board” means the Board of Directors of FBR Capital Markets.

“FBR Capital Markets Entities” means FBR Capital Markets and all of its Subsidiaries, including the Contributed Entities and each of their direct or indirect subsidiaries as of the Offering Date; and “FBR Capital Markets Entity” shall mean any of the FBR Capital Markets Entities.

“FBR Capital Markets Entities Liabilities” means, except as otherwise specifically provided in any Transaction Document, all Liabilities, arising on or after the Offering Date, (i) of or in any way relating, in whole or in part, to any FBR Capital Markets Entity or (ii) arising from the conduct of, in connection with or in any way relating to, in whole or in part, the businesses and operations of the FBR Capital Markets Entities or the ownership or use of assets or property in connection therewith. Notwithstanding the foregoing, “FBR Capital Markets Entities Liabilities” shall exclude (i) all Contributed Entities Liabilities, (ii) all Liabilities for Taxes of the FBR Capital Markets Entities (because the Tax Sharing Agreement will govern those Liabilities); (iii) all Liabilities of the FBR Capital Markets Entities pursuant to the Services Agreement (because the Services Agreement will govern those Liabilities); (iv) all Liabilities of the FBR Capital Markets Entities pursuant to the Management Services Agreement (because the Management Services Agreement will govern those Liabilities), (v) all Liabilities of the FBR Capital Markets Entities pursuant to the License Agreement( because the License Agreement will govern those Liabilities) and (v) all Liabilities of the FBR Capital Markets Entities pursuant to the Registration Rights Agreement (because the Registration Rights Agreement will govern those Liabilities).

“FBR Capital Markets Indemnitee” has the meaning ascribed thereto in Section 4.3.

“FBR Group” has the meaning ascribed in the preamble hereto.

“FBR Group Articles” means the articles of incorporation of FBR Group, as amended from time to time.

“FBR Group Board” means the Board of Directors of FBR Group.

“FBR Group Entities” means FBR Group and Subsidiaries of FBR Group including but not limited to FBR TRS and its Subsidiaries (other than Subsidiaries that constitute FBR Capital Markets Entities) and “FBR Group Entity” shall mean any of the FBR Group Entities.

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“FBR Group Entities Liabilities” means, except as otherwise specifically provided in any Transaction Document, all Liabilities relating to any event or set of facts that occurred, occur, existed or exist, whether arising before, at or after the Offering Date, of or in any way relating, in whole or in part, to or involving in an way any FBR Group Entity or arising from the conduct of, in connection with or in any way relating to, in whole or in part, the businesses and operations of the FBR Group Entities or the ownership or use of assets or property in connection therewith. Notwithstanding the foregoing, “FBR Group Entities Liabilities” shall exclude (i) Liabilities for Taxes of the FBR Group Entities (because the Tax Sharing Agreement will govern those Liabilities); (ii) all Liabilities of the FBR Group Entities pursuant to the Services Agreement (because the Services Agreement will govern those Liabilities; (iii) all Liabilities of the FBR Group Entities pursuant to the License Agreement (because the License Agreement will govern those Liabilities) and (iv) all Liabilities of the FBR Group Entities pursuant to the Management Services Agreement (because the Management Services Agreement will govern those Liabilities).

“FBR TRS” has the meaning ascribed in the preamble hereto.

“FBR TRS Articles” means the articles of incorporation of FBR TRS, as amended from time to time.

“FBR TRS Board” means the Board of Directors of FBR TRS.

“FBR TRS Ownership Reduction” means any decrease at any time in the Ownership Percentage to less than 50%.

“Finally Determined” means, with respect to any Action, threatened Action or other matter, that the outcome or resolution of that Action, threatened Action or matter has either (i) been decided by an arbitrator or Governmental Entity of competent jurisdiction by judgment, order, award or other ruling or (ii) has been settled or voluntarily dismissed and, in the case of each of clauses (i) and (ii), the claimants’ rights to maintain that Action, threatened Action or other matter have been finally adjudicated, waived, discharged or extinguished, and that judgment, order, ruling, award, settlement or dismissal (whether mandatory or voluntary, but if voluntary that dismissal must be final, binding and with prejudice as to all claims specifically pleaded in that Action) is subject to no further appeal, vacatur proceeding or discretionary review.

“Governmental Entity” means any government or any state, department or other political subdivision thereof, or any governmental body, agency, authority (including, but not limited to, any central bank or taxing authority) or instrumentality (including, but not limited to, any court, tribunal or grand jury) exercising executive, prosecutorial, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Indemnified Party” has the meaning ascribed thereto in Section 4.4

“Indemnifying Party” has the meaning ascribed thereto in Section 4.4.

“Information” has the meaning ascribed thereto in Section 2.2(a).

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“Issuance Event” has the meaning ascribed thereto in Section 5.2.

“Issuance Event Date” has the meaning ascribed thereto in Section 5.2.

“Liabilities” means any and all claims, debts, liabilities, assessments, fines, penalties, damages, losses, disgorgements and obligations, of any kind, character or description (whether absolute, contingent, matured, not matured, liquidated, unliquidated, accrued, known, unknown, direct, indirect, derivative or otherwise) whenever arising, including, but not limited to, all costs and expenses relating thereto (including, but not limited to, all expenses of investigation, all attorneys’ fees and all out-of-pocket expenses in connection with any Action or threatened Action).

“License Agreement” means the License Agreement, dated as of the Offering Date, by and between FBR Group and FBR Capital Markets.

“Management Services Agreement” means the Management Services Agreement, dated as of the Offering Date, by and between FBR Group and FBR Capital Markets.

“Offering” has the meaning ascribed in the preamble hereto.

“Offering Date” means the date of closing of the initial sale of shares Common Stock in the Offering.

“Offering Memorandum” means, in connection with the Offering, both (i) the preliminary offering memorandum, subject to completion, dated June 23, 2006 and (ii) the final offering memorandum, July [ ], 2006.

“Option” has the meaning ascribed thereto in Section 5.1.

“Option Notice” has the meaning ascribed thereto in Section 5.2.

“Ownership Percentage” means, at any time, the fraction, expressed as a percentage and rounded to the next highest thousandth of a percent, whose numerator is the number of shares of the Applicable Stock and whose denominator is the number of outstanding shares of Common Stock of FBR Capital Markets; provided, however, that any shares of Common Stock issued by FBR Capital Markets in violation of its obligations under Article V of this Agreement shall not be deemed outstanding for the purpose of determining the Ownership Percentage.

“Person” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, Government Entity (and any department or agency thereof) or other entity.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Offering Date, by and between FBR Capital Markets and Friedman, Billings, Ramsey & Co., Inc.

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“Representative” shall mean, with respect to any Person, each of such Person’s directors, officers, employees, representatives, attorneys, accountants, advisors and agents, and each of the heirs, executors and assigns of any of the foregoing.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute.

“Services Agreement” means the Services Agreement, dated as of the Offering Date, by and among FBR Capital Markets, Friedman, Billings, Ramsey & Co., Inc. and FBR Group.

“Subsidiary” means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled, directly or indirectly, by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof. “Subsidiary,” when used with respect to FBR TRS or FBR Capital Markets, shall also include any other entity affiliated with FBR TRS or FBR Capital Markets, as the case may be, that FBR TRS and FBR Capital Markets may hereafter agree in writing shall be treated as a “Subsidiary” for the purposes of this Agreement.

“Tax” has the meaning assigned to that term in the Tax Sharing Agreement.

“Tax Sharing Agreement” means the Tax Sharing Agreement, dated as of the Offering Date, by and among FBR Capital Markets, FBR TRS and FBR Group.

“Transaction Documents” means this Agreement, the Tax Sharing Agreement, the Services Agreement, the License Agreement and the Management Services Agreement, and the exhibits and schedules to those agreements.

1.2. Internal References.

Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement and references to the parties shall mean the parties to this Agreement.

ARTICLE II

CERTAIN COVENANTS AND AGREEMENTS

2.1. No Violations.

(a) FBR Capital Markets covenants and agrees that it will not take any action or enter into any commitment or agreement that may reasonably be anticipated to result, with or without notice and with or without lapse of time or otherwise, in a contravention or event of default by any FBR Group Entity or FBR TRS Entity of: (i) any provisions of applicable law or regulation; (ii) any provision of the FBR TRS Articles or bylaws and the FBR Group Articles or bylaws;

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(iii) any credit agreement or other material instrument binding upon either FBR TRS or FBR Group in effect as of the date of this Agreement; or (iv) any judgment, order or decree, in effect as of the date of this Agreement, of any Governmental Entity having jurisdiction over FBR TRS, FBR Group or any of their assets.

(b) Each of FBR TRS and FBR Group covenants and agrees that it will not take any action or enter into any commitment or agreement that may reasonably be anticipated to result, with or without notice and with or without lapse of time or otherwise, in a contravention or event of default by any FBR Capital Markets Entity of: (i) any provisions of applicable law or regulation; (ii) any provision of the FBR Capital Markets Articles or bylaws; (iii) any credit agreement or other material instrument binding upon FBR Capital Markets in effect as of the date of this Agreement; or (iv) any judgment, order or decree, in effect as of the date of this Agreement, of any Governmental Entity having jurisdiction over FBR Capital Markets or any of its assets.

(c) Each of FBR Capital Markets and FBR Group agrees to provide to the others any information and documentation requested by the others for the purpose of evaluating and ensuring compliance with Sections 2.1(a) and 2.1(b) hereof.

(d) Notwithstanding the foregoing Sections 2.1(a), 2.1(b) and 2.1(c), nothing in this Agreement is intended to limit or restrict in any way FBR TRS’s rights as a shareholder of FBR Capital Markets.

2.2. Access to Information.

(a) FBR Group and FBR Capital Markets, subject to compliance by each other, their respective Subsidiaries and all of their designated Representatives with the provisions of this Section 2.2, shall afford to each other and to each other’s authorized accountants, counsel and other designated Representatives reasonable access and duplicating rights (with copying costs to be borne by the requesting party) during normal business hours to all books and records and documents, communications, items and matters (collectively, “Information”) within the knowledge, possession or control of the other party or any FBR Group Entity or FBR Capital Markets Entity relating to their respective businesses insofar as such access is (i) reasonably required by FBR Group or FBR Capital Markets or any FBR Group Entity or FBR Capital Markets Entity, as the case may be, for the purpose of performing their respective obligations under this Agreement or any other agreement between or among the parties, and (ii) permitted by law (and shall use reasonable efforts to cause Persons or firms possessing relevant Information to give similar access).

(b) Except as required by law, regulation or legal or judicial process, FBR Group agrees that neither it nor any FBR Group Entity nor any of their respective directors, officers or employees will without the prior written consent of FBR Capital Markets disclose to any Person any material, non-public information concerning the business or affairs of FBR Capital Markets or any FBR Capital Markets Entity acquired from any director, officer or employee of FBR Capital Markets or any FBR Capital Markets Entity (including any director, officer or employee of FBR Capital Markets or any FBR Capital Markets Entity who is also a director, officer or employee of FBR Group or any FBR Group Entity).

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(c) Except as required by law, regulation or legal or judicial process, FBR Capital Markets agrees that neither it nor any FBR Capital Markets Entity nor any of their respective directors, officers or employees will, without the prior written consent of FBR Group, disclose to any Person any material, non-public information concerning the business or affairs of FBR Group or any FBR Group Entity acquired from any director, officer or employee of FBR Group or any FBR Group Entity (including any director, officer or employee of FBR Group or any FBR Group Entity who is also a director, officer or employee of FBR Capital Markets or any FBR Capital Markets Entity).

2.3. Intercompany Transactions.

All material intercompany transactions between any FBR Capital Markets Entity and any FBR Group Entity, including any amendments to this Agreement, the Services Agreement, the Management Services Agreement, the Tax Sharing Agreement, the License Agreement or any other agreement between any FBR Capital Markets Entity, on the one hand, and any FBR Group Entity, on the other hand, will be subject to the approval of the Audit Committee of the FBR Capital Markets Board.

2.4. Actions Requiring Consent.

(a) FBR Capital Markets must obtain FBR Group’s written consent before:

(i) entering into any agreement or arrangement that binds or purports to bind any FBR GroupEntity or contains provisions that trigger a default or require a material payment when FBR Group exercises any of its rights under this Agreement;

(ii) declaring any extraordinary dividend or making any other extraordinary distribution to the holders of the Common Stock; or

(iii) issuing any shares of Common Stock or securities convertible into or exercisable for Common Stock except for shares of Common Stock issued or granted to employees of the FBR Capital Markets Entities pursuant to the terms of any stock option or other executive or employee benefit or compensation plan.

(b) FBR Group may assign all or any portion of its rights under this Section 2.4 to any transferee of shares of Common Stock previously held by FBR TRS. The assignee of these rights may exercise the rights only to the extent that and so long as such transferee owns or has the right to acquire more than 50% of the then outstanding Common Stock.

ARTICLE III

CORPORATE OPPORTUNITIES AND CONFLICTS OF INTEREST

3.1. General.

In anticipation that FBR Capital Markets will cease to be a direct, wholly-owned subsidiary of FBR TRS, but that FBR TRS will remain a substantial shareholder of FBR Capital Markets, and in anticipation that the FBR Capital Markets Entities and the FBR Group Entities

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may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunity, and in recognition of the benefits to be derived by each of FBR Capital Markets and FBR Group through their continued contractual, corporate and business relations, the provisions of this Article III are set forth to regulate and define the conduct of certain affairs each party and its respective officers and directors, and the powers, rights, duties and liabilities of each party and its respective directors and shareholders in connection therewith.

3.2. Business Activities.

(a) FBR Group shall have no duty to refrain from: (i) engaging in the same or similar activities or lines of business as the FBR Capital Markets Entities; (ii) doing business with any customer or client of any FBR Capital Markets Entity; and (iii) employing or engaging any officer or employee of any FBR Capital Markets Entity, and no officer or director thereof (except as provided in Section 3.3) shall be liable to any FBR Capital Markets Entity or its shareholders for breach of any fiduciary duty by reason of any such activities of the FBR Group Entities.

(b) FBR Capital Markets shall have no duty to refrain from: (i) engaging in the same or similar activities or lines of business as the FBR Group Entities; (ii) doing business with any customer or client of any FBR Group Entity; and (iii) employing or engaging any officer or employee of any FBR Group Entity, and no officer or director thereof (except as provided in Section 3.3) shall be liable to any FBR Group Entity or their shareholders for breach of any fiduciary duty by reason of any such activities of the FBR Capital Markets Entities.

3.3. Corporate Opportunities.

(a) In the event that a director or officer of FBR Capital Markets who is also a director or officer of FBR Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity for either or both of FBR Capital Markets and/or FBR Group, such director or officer of FBR Capital Markets shall have fully satisfied and fulfilled the fiduciary duty of such director or officer to FBR Capital Markets and its shareholders and to FBR Group and its shareholders, as applicable, with respect to such corporate opportunity if such director or officer acts in a manner consistent with the following policy:

(i) If any officer or director of FBR Capital Markets who also serves as an officer or director of FBR Group becomes aware of a potential transaction related to the asset management business, investment banking business or sales, trading and institutional brokerage business (as each such business is described in the Offering Memorandum) that may represent a corporate opportunity for FBR Capital Markets and FBR Group, such officer or director has no duty to present that opportunity to FBR Group; and FBR Capital Markets will have the sole right to pursue the transaction if the FBR Capital Markets Board so determines.

(ii) If any officer or director of FBR Capital Markets who also serves as an officer or director of FBR Group becomes aware of any potential transaction not described in clause (i) above that may represent a corporate opportunity for either FBR Capital Markets and FBR Group, such officer or director will have a duty to present that

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opportunity to FBR Group; and FBR Group will have the sole right to pursue the transaction if the FBR Group Board so determines.

(iii) If any officer or director of FBR Capital Markets who also serves as an officer or director of FBR Group, or any officer or director of FBR Capital Markets who also serves as an officer or director of FBR Capital Markets, becomes aware of any potential opportunity to invest as a principal, for investment purposes only and not for strategic purposes, in the securities of a third party issuer that is an existing or potential investment banking client of FBR Capital Markets (a “Merchant Banking Opportunity”), such Merchant Banking Opportunity shall be deemed to represent a corporate opportunity for both FBR Capital Markets and FBR Group and such officer or director shall have a duty to present the Merchant Banking Opportunity to both FBR Capital Markets and FBR Group. If either FBR Group or FBR Capital Markets determines to invest in the Merchant banking Opportunity, then FBR Group shall be required to purchase 50% of the Merchant Banking Opportunity and FBR Capital Markets shall be required to purchase 50% of the Merchant Banking Opportunity; provided, however, that (x) if a majority of a committee of at least three of the independent members of the Board of Directors of FBR Group determines to purchase less than or none of the 50% portion of such Merchant Banking Opportunity that FBR Group is required to purchase, then FBR Capital Markets shall have the right to purchase that portion of the Merchant Banking Opportunity that FBR Group elects not to purchase and (y) if a majority of a committee of at least three of the independent members of the Board of Directors of FBR Capital Markets determines to purchase less than or none of the 50% portion of such Merchant Banking Opportunity that FBR Capital Markets is required to purchase, FBR Group shall have the right to purchase that portion of the Merchant Banking Opportunity that FBR Capital Markets elects not to purchase.

(b) If any officer or director of FBR Capital Markets who does not serve as an officer or director of FBR Group becomes aware of a potential transaction that may represent a corporate opportunity for FBR Capital Markets and FBR Group, neither FBR Capital Markets nor such officer or director has a duty to present that opportunity to FBR Group; and FBR Capital Markets may pursue the transaction if the FBR Capital Markets Board so determines.

(c) If any officer or director of FBR Group who does not serve as an officer or director of FBR Capital Markets becomes aware of a potential transaction that may represent a corporate opportunity for FBR Capital Markets and FBR Group, neither FBR Group nor such officer or director has a duty to present that opportunity to FBR Capital Markets; and FBR Group may pursue the transaction if the FBR Group Board so determines.

3.4. FBR Capital Markets Entities and FBR Group Entities.

For purposes of this Article III only, the term “FBR Capital Markets” shall include any FBR Capital Markets Entity and the term “FBR Group” shall include any FBR Group Entity.

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3.5. Notice.

Any Person purchasing or otherwise acquiring any interest in shares of the Common Stock shall be deemed to have notice of and to have consented to the provisions of this Article III.

ARTICLE IV

INDEMNIFICATION FOR LIABILITIES

4.1. FBR Capital Markets Indemnification of the FBR Group Entities for Certain Liabilities.

(a) Subject to Section 4.4, on and after the Offering Date, FBR Capital Markets shall indemnify and hold harmless each FBR Group Entity and their respective directors, officers and employees (each, an “FBR Group Indemnitee”) from and against any and all Liabilities incurred or suffered by any FBR Group Indemnitee arising out of (i) any and all FBR Capital Markets Entities Liabilities and (ii) the breach by any FBR Capital Markets Entity of any obligation under this Agreement.

(b) Subject to Section 4.4, FBR Capital Markets shall indemnify and hold harmless each FBR Group Indemnitee from and against any and all Liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any document filed with the SEC by any FBR Group Entity pursuant to the Securities Act or the Securities Exchange Act, or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information that is either furnished to any FBR Group Indemnitee by any FBR Capital Markets Entity or incorporated by reference by any FBR Group Indemnitee from any filings made by any FBR Capital Markets Entity with the SEC under the Securities Act or the Securities Exchange Act, if that statement or omission was made or occurred after the Offering Date.

4.2. FBR Group Indemnification of FBR Capital Markets Entities for Certain Liabilities.

(a) Subject to Section 4.4, on and after the Offering Date, FBR Group shall indemnify and hold harmless each FBR Capital Markets Indemnitee from and against any and all Liabilities incurred or suffered by any FBR Capital Markets Indemnitee arising out of (i) any and all FBR Group Entities Liabilities and any Contributed Entities Liabilities and (ii) the breach by any FBR Group Entity of any obligation under this Agreement.

(b) Subject to Section 4.4, FBR Group shall indemnify and hold harmless each FBR Capital Markets Indemnitee from and against any and all Liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any document filed with the SEC by any FBR Capital Markets Entity pursuant to the Securities Act or the Securities Exchange Act, or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based

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upon information that is either furnished to any FBR Capital Markets Indemnitee by any FBR Group Entity or incorporated by reference by any FBR Capital Markets Indemnitee from any filings made by any FBR Group Entity with the SEC under the Securities Act or the Securities Exchange Act, if that statement or omission was made or occurred after the Offering Date.

4.3. Third-Party Rights; Tax Benefits.

Any indemnification pursuant to Sections 4.1 through 4.2 shall be paid net of any tax benefit to the Indemnified Party attributable to the relevant payment. It is expressly agreed that no insurer or any other third party shall be (i) entitled to a benefit (as a third-party beneficiary or otherwise) that it would not be entitled to receive in the absence of Sections 4.1 through 4.2, (ii) relieved of the responsibility to pay any claims to which it is obligated or (iii) entitled to any subrogation rights with respect to any obligation under Sections 4.1 through 4.2.

4.4. Notice and Payment of Claims.

If any FBR Group Indemnitee or FBR Capital Markets Indemnitee (the “Indemnified Party”) determines that it is or may be entitled to indemnification by any party (the “Indemnifying Party”) under Article IV of this Agreement (other than in connection with any Action subject to Section 4.5), the Indemnified Party shall deliver to the Indemnifying Party a written notice specifying, to the extent reasonably practicable, the basis for its claim for indemnification and the amount for which the Indemnified Party reasonably believes it is entitled to be indemnified. Within 30 days after receipt of that notice, the Indemnifying Party shall pay the Indemnified Party that amount in cash or other immediately available funds unless the Indemnifying Party objects to the claim for indemnification or the amount of the claim. If the Indemnifying Party does not give the Indemnified Party written notice objecting to that indemnity claim and setting forth the grounds for the objection(s) within that 30-day period, the Indemnifying Party shall be deemed to have acknowledged its liability for that claim and the Indemnified Party may exercise any and all of its rights under applicable law to collect that amount. If there is a timely objection by the Indemnifying Party, the Indemnifying Party shall pay to the Indemnified Party in cash the amount, if any, that is Finally Determined to be required to be paid by the Indemnifying Party in respect of that indemnity claim within 15 days after that indemnity claim has been so Finally Determined.

4.5. Notice and Defense of Third-Party Claims.

Promptly after the earlier of receipt of (i) notice that a third party has commenced an Action against or otherwise involving any Indemnified Party or (ii) information from a third party alleging the existence of a claim against an Indemnified Party, in either case, with respect to which indemnification may be sought under Article IV of this Agreement (a “Third-Party Claim”), the Indemnified Party shall give the Indemnifying Party written notice of the Third-Party Claim. The failure of the Indemnified Party to give notice as provided in this Section 4.5 shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party is prejudiced by the failure to give notice. Within 30 days after receipt of that notice, the Indemnifying Party may (i) at its option, elect to assume and control the defense of that Third-Party Claim at its sole cost and expense by giving written notice to that effect to the Indemnified Party, or (ii) object to the claim for indemnification set forth in

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the notice delivered by the Indemnified Party pursuant to the first sentence of this Section 4.5; provided, that if the Indemnifying Party does not within that 30-day period give the Indemnified Party written notice objecting to that indemnification claim and setting forth the grounds for the objection(s), the Indemnifying Party shall be deemed to have acknowledged its liability for that indemnification claim. If the Indemnifying Party has acknowledged liability and elected to assume the defense of a Third-Party Claim, (x) the defense shall be conducted by counsel retained by the Indemnifying Party and reasonably satisfactory to the Indemnified Party, provided that the Indemnified Party shall have the right to participate in those proceedings and to be represented by counsel of its own choosing at the Indemnified Party’s sole cost and expense; and (y) the Indemnifying Party may settle or compromise the Third-Party Claim without the prior written consent of the Indemnified Party so long as any settlement or compromise of the Third-Party Claim includes an unconditional release of the Indemnified Party from all claims that are the subject of that Third-Party Claim; provided, that the Indemnifying Party may not agree to any such settlement or compromise pursuant to which any remedy or relief, other than monetary damages for which the Indemnifying Party shall be responsible under this Agreement, shall be applied to or against the Indemnified Party, without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld. If the Indemnifying Party does not assume the defense of a Third-Party Claim for which it has acknowledged liability for indemnification hereunder, the Indemnified Party will act in good faith with respect to that Third-Party Claim and may require the Indemnifying Party to reimburse it on a current basis for its reasonable expenses of investigation, reasonable attorney’s fees and reasonable out-of-pocket expenses incurred in investigating and defending against that Third-Party Claim and the Indemnifying Party shall be bound by the result obtained with respect to that claim by the Indemnified Party; provided, that the Indemnifying Party shall not be liable for any settlement or compromise of any Third-Party Claim effected without its consent, which consent shall not be unreasonably withheld. The Indemnifying Party shall pay to the Indemnified Party in cash the amount, if any, for which the Indemnified Party is entitled to be indemnified under this Agreement within 15 days after that Third-Party Claim has been Finally Determined.

4.6. Contribution.

If for any reason the indemnification provided for in Sections 4.1 through 4.2 is unavailable to any Indemnified Party, or insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid or payable by that Indemnified Party as a result of those Liabilities in that proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, in connection with those statements or omissions, which relative fault shall be determined by reference to the FBR Group Entity or FBR Capital Markets Entity to which those actions, conduct, statements or omissions are primarily related, as well as any other relevant equitable considerations.

ARTICLE V

OPTION

5.1. Option.

(a) FBR Capital Markets hereby grants to FBR Group, on the terms and conditions set forth herein, a continuing right (the “Option”) to purchase (through FBR TRS) from FBR

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Capital Markets, at the times set forth herein, such number of shares of Common Stock as is necessary to allow FBR Group to maintain the Ownership Percentage. The Option shall be assignable, in whole or in part and from time to time, by FBR Group to any FBR Group Entity. The exercise price for each share of Common Stock purchased pursuant to an exercise of the Option shall be the price paid to FBR Capital Markets for each share of the Common Stock issued by FBR Capital Markets in the related Issuance Event, as determined in good faith by the Audit Committee of the FBR Capital Markets Board.

(b) The provisions of Section 5.1(a) hereof notwithstanding, the Option granted pursuant to Section 5.1(a) shall not apply and shall not be exercisable in connection with the issuance by FBR Capital Markets of any shares of Common Stock pursuant to any stock option or other executive or employee benefit or compensation plan maintained by FBR Capital Markets.

5.2. Notice.

At least 20 business days prior to the issuance of any shares of Common Stock (other than in connection with the Offering, including the full exercise of any initial purchasers/placement agents’ additional-allotment option granted in connection therewith, and other than issuances of Common Stock to any FBR Group Entity) or the first date on which any event could occur that, in the absence of a full or partial exercise of the Option, would result in a reduction in the Ownership Percentage, FBR Capital Markets will notify FBR Group in writing (an “Option Notice”) of any plans it has to issue such shares or the date on which such event could first occur. Each Option Notice must specify the date on which FBR Capital Markets intends to issue such additional shares or on which such event could first occur (such issuance or event being referred to herein as an “Issuance Event” and the date of such issuance or event as an “Issuance Event Date”), the number of shares FBR Capital Markets intends to issue or may issue and the other terms and conditions of such Issuance Event.

5.3. Option Exercise and Payment.

The Option may be exercised by FBR Group (or any FBR Group Entity to which all or any part of the Option has been assigned) for a number of shares equal to or less than the number of shares that are necessary for the FBR Group Entities to maintain, in the aggregate, the then-current Ownership Percentage. The Option may be exercised at any time after receipt of an applicable Option Notice and prior to the applicable Issuance Event Date by the delivery to FBR Capital Markets of a written notice to such effect specifying (i) the number of shares of Common Stock to be purchased by FBR Group, or any of the FBR Group Entities and (ii) a determination of the exercise price for such shares. Upon any such exercise of the Option, FBR Capital Markets will, prior to the applicable Issuance Event Date, deliver to FBR Group (or any FBR Group Entity designated by FBR Group), against payment therefor, certificates (issued in the name of FBR Group or its designated FBR Group Entity or its permitted assignee hereunder or as otherwise directed by FBR Group) representing the shares of Common Stock being purchased upon such exercise. Payment for such shares shall be made by wire transfer or intrabank transfer of immediately-available funds to such account as shall be specified by FBR Capital Markets, for the full purchase price for such shares.

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5.4. Effect of Failure to Exercise.

Except as provided in Section 5.6, any failure by FBR Group to exercise the Option, or any exercise for less than all shares purchasable under the Option, in connection with any particular Issuance Event shall not affect FBR Group’s right to exercise the Option in connection with any subsequent Issuance Event; provided, however, that the Ownership Percentage following such Issuance Event in connection with which FBR Group so failed to exercise such Option in full or in part shall be recalculated as set forth in Section 1.1.

5.5. The Offering.

Notwithstanding the foregoing, FBR Group shall not be entitled to exercise the Option in connection with the Offering if, upon the completion of the Offering, including the full exercise of any initial purchasers/placement agents’ additional-allotment option granted in connection therewith, the Ownership Percentage would be no less than 63.6%.

5.6. Termination of Option.

The Option, or any part thereof assigned to any FBR Group Entity other than FBR TRS, shall terminate in the event that the Person to whom the Option, or such part thereof, has been transferred, ceases to be a FBR Group Entity for any reason whatsoever.

ARTICLE VI

TERM

This Agreement shall remain in effect until the Ownership Percentage is less than 50%, provided, however, that: (i) the provisions of Section 2.4 shall remain in effect until terminated in accordance with their terms; and (ii) the provisions of Article IV and Article V shall survive any termination of this Agreement.

ARTICLE VII

MISCELLANEOUS

7.1. Limitation of Liability.

Neither FBR Group nor FBR Capital Markets shall be liable to each other for any special, indirect, incidental or consequential damages of the other arising in connection with this Agreement.

7.2. Subsidiaries.

FBR Group agrees and acknowledges that FBR Group shall be responsible for the performance by each FBR Group Entity of the obligations hereunder applicable to such FBR Group Entity. FBR Capital Markets agrees and acknowledges that FBR Capital Markets shall be

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responsible for the performance by each FBR Capital Markets Entity of the obligations hereunder applicable to such FBR Capital Markets Entity.

7.3. Amendments.

This Agreement may not be amended or terminated orally, but only by a writing duly executed by or on behalf of the parties hereto. Subject to the approval requirements provided for in Section 2.3, any such amendment shall be validly and sufficiently authorized for purposes of this Agreement if it is signed on behalf of FBR Group and FBR Capital Markets by any of their respective presidents or vice presidents.

7.4. Severability.

If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid, illegal or unenforceable to any extent, the remainder of this Agreement or such provision of the application of such provision to such party or circumstances, other than those to which it is so determined to be invalid, illegal or unenforceable, shall remain in full force and effect to the fullest extent permitted by law and shall not be affected thereby, unless such a construction would be unreasonable.

7.5. Notices.

All notices and other communications required or permitted hereunder shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in person, (b) by registered or certified mail, postage prepaid, return receipt requested or (c) by facsimile or other generally accepted means of electronic transmission (provided that a copy of any notice delivered pursuant to this clause (c) shall also be sent pursuant to clause (b)), addressed as follows:

(a) if to FBR Capital Markets, to:

FBR Capital Markets Corporation

1001 Nineteenth Street North

Arlington, VA 22209

Attention: Chief Financial Officer

Telecopy No.:

(b) if to FBR Group, to:

Friedman, Billings, Ramsey Group, Inc.

1001 Nineteenth Street North

Arlington, VA 22209

Attention: Chief Legal Officer

Telecopy No.:

or to such other addresses or telecopy numbers as may be specified by like notice to the other parties.

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7.6. Further Assurances.

FBR Group and FBR Capital Markets shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments and take such other action as may be necessary or advisable to carry out their obligations under this Agreement and under any exhibit, document or other instrument delivered pursuant hereto.

7.7. Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement.

7.8. Governing Law.

This Agreement and the transactions contemplated hereby shall be construed in accordance with, and governed by, the laws of the Commonwealth of Virginia.

7.9. Entire Agreement.

This Agreement constitutes the entire understanding of the parties hereto with respect to the subject matter hereof.

7.10. Successors.

This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights or remedies.

7.11. Specific Performance.

The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that they shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which they may be entitled at law or equity.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
By:	/s/ Kurt R. Harrington
Name:	Kurt R. Harrington
Title:	SVP, CFO and Treasurer
FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

EX-10.3

Exhibit 10.3

MANAGEMENT SERVICES AGREEMENT

by and between

FRIEDMAN, BILLINGS RAMSEY GROUP, INC.

and

FBR CAPITAL MARKETS CORPORATION

dated as of July 20, 2006

MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is made as of July 20, 2006, by and between FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia Corporation (“FBR Group”), and FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (“FBR Capital Markets”).

WHEREAS, FBR Group is the parent company of FBR TRS Holdings, Inc. (“FBR TRS”), which is currently the sole shareholder of FBR Capital Markets; and

WHEREAS, concurrently with the execution and delivery by the parties of this Agreement, FBR Capital Markets is issuing and selling in a private offering 12,066,667 shares of its common stock, $0.001 par value per share (“Common Stock”), plus up to an additional 1,810,000 shares of Common Stock to cover additional allotments, if any, pursuant to the terms and conditions of that certain Purchase/Placement Agreement, dated as of July 14, 2006, by and between FBR Capital Markets and Friedman, Billings, Ramsey & Co., Inc. (“FBR & Co.”), as well as an additional 5,172,813 shares of Common Stock, subject to adjustment in certain circumstances, in a concurrent private placement to affiliates of Crestview Partners; and

WHEREAS, the “taxable REIT subsidiary” election of FBR TRS will be amended to include FBR Capital Markets as a greater than 35% owned subsidiary of FBR TRS; and

WHEREAS, FBR Capital Markets desires to retain and avail itself of the services of an Executive Management Team (as defined below) to be provided by FBR Group, and FBR Group desires to provide such Executive Management Team for FBR Capital Markets, pursuant to the terms of this Agreement, and FBR Group and FBR Capital Markets wish to enter into a reimbursement arrangement whereby FBR Capital Markets will bear its share of certain expenses for the Executive Management Team; and

WHEREAS, FBR Group is not in the business of providing personnel and will not derive any profit from the reimbursement arrangement set forth herein. The parties intend for the amounts paid hereunder by FBR Capital Markets as reimbursements pursuant to this Agreement to be treated as repayments of amounts advanced and not to be included in FBR Group’s gross income for federal income tax purposes.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows:

1. Scope of Duties; Standard of Care.

(a) FBR Group shall provide FBR Capital Markets with the Executive Management Team, each member of which shall hold the office in FBR Capital Markets set forth on Scnhedule 1 attached hereto and who shall be responsible for performing, subject to the oversight of the Board of Directors of FBR Capital Markets, such services and activities as are customarily performed by persons holding the positions set forth on Schedule 1 attached hereto, or as otherwise reasonably requested by the Board of Directors of FBR Capital Markets from time to time. For purposes of this Agreement, the term “Executive Management Team” shall

mean the executive officers of FBR Capital Markets as set forth on Schedule 1 attached hereto, as such schedule may be amended from time to time by the parties to this Agreement.

(b) In providing services hereunder, FBR Group will cause each member of the Executive Management Team to exercise the degree of care required under applicable law with respect to the office held by such member.

2. Term and Amendment; Termination.

(a) The initial term of this Agreement shall expire on December 31, 2007; provided, however, that the term of this Agreement shall be extended automatically for additional one-year periods, on each December 31, unless FBR Capital Markets or FBR Group gives the other party hereto 90 days’ prior written notice that the term of this agreement will not be extended. Except as provided in Section 2(b) below, neither this Agreement nor any provision hereof can be modified, amended, changed, discharged or terminated except by an instrument in writing, signed by each of the parties hereto.

(b) FBR Capital Markets shall have the right to terminate this Agreement upon not less than thirty (30) days prior written notice to FBR Group following the execution and delivery by FBR Capital Markets of a definitive agreement and plan of merger, stock purchase agreement, asset purchase agreement or similar definitive agreement providing for the merger, share exchange, consolidation, sale of all or substantially all of the issued and outstanding capital stock or assets or other business combination transaction that will result in a change of control of FBR Capital Markets or its business.

3. Payment of Allocable Share of Executive Bonus Pool. In consideration for the provision of the Executive Management Team pursuant to the terms of this Agreement, FBR Capital Markets shall pay FBR Group its share of the amount that will be allocated to the Executive Bonus Pool established under The FBR Group Key Employee Incentive Plan, which shall be an annual amount equal to 8.0% of the pre-tax net income of FBR Capital Markets, plus an additional 3.0% of the pre-tax net income of the investment banking unit of FBR & Co. (collectively, the “Allocable Share”), in each case before deducting the Allocable Share. The Allocable Share shall be paid in equal quarterly installments within 45 days after the end of each calendar quarter of each year during the term of this Agreement; provided, that the Allocable Share with respect to the quarter ending on September 30, 2006 shall be pro rated for the shortened period commencing on the date hereof.

4. Independent Contractor. The parties agree that FBR Group is acting as an independent contractor hereunder and no partnership, joint venture, or employee/employer relationship shall exist or be implied hereunder.

5. Liability. Neither FBR Group nor any of its respective affiliates (other than FBR Capital Markets and its respective subsidiaries), partners, employees or agents shall be liable to FBR Capital Markets or its respective subsidiaries or affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of management services contemplated by this Agreement, except to the extent caused by the gross negligence or willful misconduct of FBR Group or any of its respective affiliates (other than FBR Capital Markets and its respective subsidiaries), partners, employees or agents (other than FBR Capital Markets and its subsidiaries).

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6. Indemnity. Each of FBR Capital Markets and its subsidiaries shall, jointly and severally, defend, indemnify and hold harmless each of FBR Group and its respective affiliates (other than FBR Capital Markets and its subsidiaries), partners, employees, agents, directors, officers and controlling persons (each an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against any and all loss, liability, damage or expense, joint or several, arising from any claim (a “Claim”) by any Person with respect to, or in any way related to, the management services (including, without limitation, the engagement of FBR Group pursuant to this Agreement and the performance by FBR Group of the management services pursuant to this Agreement) contemplated by this Agreement (including reasonable attorneys’ fees) resulting from any act or omission of such Indemnified Party except to the extent caused by the gross negligence or willful misconduct of such Indemnified Party. FBR Capital Markets and its respective subsidiaries shall, jointly and severally, defend at their own cost and expense any and all suits or actions (just or unjust) which may be brought against FBR Capital Markets and/or its respective subsidiaries and the Indemnified Parties. FBR Capital Markets and its respective subsidiaries shall, jointly and severally, defend at their own cost and expense any and all suits or actions (just or unjust) which may be brought in which the Indemnified Parties may be impleaded with others upon any Claim upon any matter, directly or indirectly, related to or arising out of the Agreement or the performance hereof by the Indemnified Parties, except that if such damage shall be finally determined by a court of competent jurisdiction to be the direct result of bad faith or willful misconduct by any of the Indemnified Parties, then such Indemnified Party shall reimburse FBR Capital Markets and its respective subsidiaries for the costs of defense and other costs incurred by FBR Capital Markets and its respective subsidiaries in proportion to such Indemnified Party’s culpability as proven.

7. Representations and Warranties.

(a) FBR Capital Markets represents and warrants to FBR Group that: (i) FBR Capital Markets has taken all action necessary to permit it to execute and deliver this Agreement and to carry out the terms hereof; (ii) this Agreement, when duly executed and delivered by FBR Capital Markets, will constitute a valid and binding obligation of FBR Capital Markets, enforceable against FBR Capital Markets in accordance with its terms; and (iii) FBR Capital Markets is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any third party or governmental authority in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such order, consent, approval, authorization, declaration or filing as which has been obtained or made.

(b) FBR Group represents and warrants to FBR Capital Markets that: (i) FBR Group has taken all action necessary to permit it to execute and deliver this Agreement and to carry out the terms hereof; (ii) this Agreement, when duly executed and delivered by FBR Group, will constitute a valid and binding obligation of FBR Group, enforceable against FBR Group in accordance with its terms; and (iii) FBR Group is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any third party or governmental authority in connection with the execution and delivery of this Agreement or the

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consummation of the transactions contemplated hereby, except for such order, consent, approval, authorization, declaration or filing as which has been obtained or made.

8. Notices. All notices, requests, consents and other communications provided for herein shall be in writing and shall be (i) delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class, registered or certified mail, postage prepaid, or (iv) sent by reputable overnight courier service, fees prepaid, to the recipient at the address or telecopy number set forth below, or such other address or telecopy number as may hereafter be designated in writing by such recipient. Notices shall be deemed given upon personal delivery, seven days following deposit in the mail as set forth above, upon acknowledgment by the receiving telecopier or one day following deposit with an overnight courier service.

If to FBR Group:

Friedman, Billings, Ramsey Group, Inc.

1001 North Nineteenth Street

Arlington, VA 22209

Attention: Chief Legal Officer

Phone: 703-469-1040

Fax: 703-469-1140

If to FBR Capital Markets:

FBR Capital Markets Corporation

1001 North Nineteenth Street

Arlington, VA 22209

Attention: Chief Financial Officer

Phone: 703-312-9647

Fax: 703-469-1250

9. Miscellaneous.

(a) Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(c) Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.

(d) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

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(e) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.

(f) Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

(g) Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE COMMONWEALTH OF VIRGINIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF VIRGINIA.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Management Services Agreement on the date first written above.

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Its:	SVP and Chief Legal Officer
FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Its:	SVP, General Counsel and Secretary

[Signature Page to Management Services Agreement]

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EX-10.4

Exhibit 10.4

SERVICES AGREEMENT

by and between

FBR CAPITAL MARKETS CORPORATION

and

FREIDMAN, BILLINGS, RAMSEY GROUP, INC.

Dated as of July 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
Section 1.1	Definitions	1
ARTICLE II SERVICES TO BE PROVIDED		3
Section 2.1	Exhibits	3
Section 2.2	Standard of Care	3
Section 2.3	Records	3
ARTICLE III FEES		4
Section 3.1	General	4
Section 3.2	Payments	4
Section 3.3	Review of Fees	5
ARTICLE IV REPRESENTATIVES		5
Section 4.1	Representatives	5
ARTICLE V PLANNING PROCESS		6
Section 5.1	Annual Operating Plan	6
Section 5.2	Performance Review	6
ARTICLE VI THIRD PARTY AGREEMENTS		6
ARTICLE VII AUTHORITY; INFORMATION; COOPERATION; CONSENTS		6
Section 7.1	Authority	6
Section 7.2	Information Regarding Services	7
Section 7.3	Cooperation	7
Section 7.4	Further Assurances	7
ARTICLE VIII AUTHORITY AS AGENT		7
ARTICLE IX CONFIDENTIAL INFORMATION		8
Section 9.1	Definition	8
Section 9.2	Nondisclosure	8
Section 9.3	Permitted Disclosure	8
Section 9.4	Ownership of Confidential Information	8
ARTICLE X TERM AND TERMINATION		9
Section 10.1	Term	9
Section 10.2	Termination	9
Section 10.3	Transition Assistance Services	9
ARTICLE XI LIMITATION OF LIABILITY; INDEMNIFICATION		9
Section 11.1	Limitation of Liability	9
Section 11.2	Indemnification	9

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TABLE OF CONTENTS

(Continued)

		Page
Section 11.3	Indemnification Procedures	10
ARTICLE XII DISPUTE RESOLUTION		10
ARTICLE XIII MISCELLANEOUS		10
Section 13.1	Governing Law	10
Section 13.2	Assignment	11
Section 13.3	Entire Agreement	11
Section 13.4	Force Majeure	11
Section 13.5	Severability	11
Section 13.6	Notices	11
Section 13.7	Counterparts; Headings	11
Section 13.8	Waiver of Trial By Jury	12

SCHEDULES

1.	FBR Group Subsidiaries
2.	FBR Capital Markets Subsidiaries

EXHIBITS

1.	Government and Corporate Affairs Services
2.	Human Resources Services
3.	Treasury Services
4.	Financial Reporting, Research and Ledger Services
5.	Internal Auditing Services
6.	Information Technology Services
7.	Legal and Corporate Secretary Services
8.	Travel, Building and Conference Services
9.	Tax Services
10.	Corporate Planning and Analysis Services
11.	Corporate Business Development Services
12.	Financial Communications and Investor Relations Services
13.	Administrative Services
14.	Asset Management Services
15.	Marketing and Media Communications Services

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SERVICES AGREEMENT

THIS SERVICES AGREEMENT, as amended, modified and in effect from time to time (this “Agreement”), is made as of July 20, 2006, by and between FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (“FBR Capital Markets”), and FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation (“FBR Group”).

WHEREAS, FBR Capital Markets desires to provide or cause to be provided to FBR Group and the FBR Group Subsidiaries (as defined below) certain services pursuant to the terms set forth in this Agreement.

WHEREAS, FBR Group desires to provide or cause to be provided to FBR Capital Markets and the FBR Capital Markets Subsidiaries (as defined below) certain services pursuant to the terms set forth in this Agreement.

WHEREAS, FBR Capital Markets and FBR Group desire to enter into this Agreement to set forth their respective roles and responsibilities with respect to the provision of such services.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FBR Capital Markets and FBR Group, for themselves and their successors and assigns, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms will have the following meanings, applicable both to the singular and the plural forms of the terms described:

(a) “Actual Cost” has the meaning set forth in Section 3.3 hereof.

(b) “Affiliate” means, with respect to a given Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “Control” when used with respect to any Person means the possession, directly or indirectly, of the power to vote a majority of the securities having voting power for the election of directors (or other Persons acting in similar capacities) of such Person or otherwise to direct the management and policies of such Person whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing.

(c) “AOP” shall have the meaning set forth in Section 5.1 hereof.

(d) “Confidential Information” shall have the meaning set forth in Section 9.1 hereof.

(e) “Damages” shall have the meaning set forth in Section 11.2(a) hereof.

(f) “Exhibits” means the exhibits attached hereto and incorporated by reference in this agreement, as amended, modified and in effect from time to time, and “Exhibit” shall mean each one individually.

(g) “FBR Capital Markets Fees” shall have the meaning set forth in Section 3.1(a) hereof.

(h) “FBR Group Fees” shall have the meaning set forth in Section 3.1(b) hereof.

(i) “Fees” shall have the meaning set forth in Section 3.1(b) hereof.

(j) “FBR Capital Markets Subsidiaries” mean the entities listed on Schedule 2 attached hereto, as may be amended, modified and in effect from time to time.

(k) “FBR Group Subsidiaries” mean the entities listed on Schedule 1 attached hereto, as may be amended, modified and in effect from time to time.

(l) “Finally Determined” means, with respect to any Action, threatened Action or other matter, that the outcome or resolution of that Action, threatened Action or matter has either (i) been decided by an arbitrator or Governmental Entity of competent jurisdiction by judgment, order, award or other ruling or (ii) has been settled or voluntarily dismissed and, in the case of each of clauses (i) and (ii), the claimants’ rights to maintain that Action, threatened Action or other matter have been finally adjudicated, waived, discharged or extinguished, and that judgment, order, ruling, award, settlement or dismissal (whether mandatory or voluntary, but if voluntary that dismissal must be final, binding and with prejudice as to all claims specifically pleaded in that Action) is subject to no further appeal, vacatur proceeding or discretionary review.

(m) “Governmental Entity” means any government or any state, department or other political subdivision thereof, or any governmental body, agency, authority (including, but not limited to, any central bank or taxing authority) or instrumentality (including, but not limited to, any court, tribunal or grand jury) exercising executive, prosecutorial, legislative, judicial, regulatory or administrative functions of or pertaining to government.

(n) “Indemnified Party” shall have the meaning set forth in Section 11.3(a) hereof.

(o) “Indemnifying Party” shall have the meaning set forth in Section 11.3(a) hereof.

(p) “Parties” mean FBR Group and FBR Capital Markets (“Party” means either FBR Group or FBR Capital Markets).

(q) “Person” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, Government Entity (and any department or agency thereof) or other entity.

(r) “Records” shall have the meaning set forth in Section 2.3 hereof.

(s) “Representative” shall have the meaning set forth in Section 4.1 hereof.

(t) “Services” shall have the meaning set forth in Section 2.1(a) hereof, and “Service” means each such Service, individually.

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(u) “Transition Assistance Services” shall have the meaning set forth in Section 10.3 hereof.

ARTICLE II

SERVICES TO BE PROVIDED

Section 2.1 Exhibits.

(a) The Exhibits attached hereto and made a part of this Agreement describe the Services that FBR Capital Markets will provide or cause to be provided to FBR Group and the FBR Group Subsidiaries, as designated from time to time by FBR Group, and that FBR Group will provide or cause to be provided to FBR Capital Markets and the FBR Capital Markets Subsidiaries, as designated from time to time by FBR Capital Markets (collectively, the “Services”). The Parties have made a good faith effort as of the date hereof to identify each Service and to complete the content of the Exhibits accurately. It is anticipated that the Parties will modify the Exhibits and the Services described therein from time to time. In that case or to the extent that any Exhibit is incomplete, the Parties will use good faith efforts to modify such Exhibit. There are certain terms that are specifically addressed in the Exhibits attached hereto. To the extent that the specific terms addressed in the Exhibits conflict with the terms provided in this Agreement, the specific terms addressed in the Exhibits shall govern that Service.

(b) The Parties acknowledge and agree that the Services described in the Exhibits are not exhaustive and that the Parties may identify from time to time additional Services that they wish to include in the Exhibits and incorporate into this Agreement. The Parties will use good faith efforts to identify such Services and to modify the Exhibits or create additional Exhibits setting forth the description of such Services, the Fees for such Services and any other applicable terms.

(c) Provision of Services. FBR Capital Markets and FBR Group each acknowledges and agrees that it will provide or cause to be provided the Services that it is obligated to provide either through its own resources, the resources of its respective subsidiaries or Affiliates, or by contracting with independent contractors as agreed hereunder. To the extent that either FBR Capital Markets or FBR Group decides to provide a Service through an independent contractor that it is currently providing through its own resources or the resources of its respective subsidiaries or Affiliates, the Party providing such Service shall first consult with the Party receiving such Service and obtain the prior approval of the Party receiving such Service, which approval shall not be unreasonably withheld.

Section 2.2 Standard of Care. In providing the Services, FBR Capital Markets and FBR Group will exercise the same degree of care as it has historically exercised in providing such Services prior to the date hereof, including at least the same level of quality, responsiveness and timeliness as has been exercised with respect to such Services.

Section 2.3 Records. FBR Capital Markets and FBR Group will keep full and detailed records dealing with all aspects of the Services provided hereunder (the “Records”). Each Party shall provide access to the Records to the other Party at all reasonable times and shall maintain

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the Records in accordance with good record management practices and with at least the same degree of completeness and care as it maintains for its other similar business interests.

ARTICLE III

FEES

Section 3.1 General.

(a) FBR Group will pay to FBR Capital Markets the fee set forth in each of the Exhibits for the Services that FBR Capital Markets is obligated to provide or cause to be provided to FBR Group and the FBR Group Subsidiaries (collectively, the “FBR Capital Markets Fees”). The FBR Capital Markets Fees constitute full compensation to FBR Capital Markets for all charges, costs and expenses incurred by FBR Capital Markets on behalf of FBR Group and the FBR Group Subsidiaries in providing the Services hereunder, unless otherwise specifically provided in an Exhibit or agreed in an AOP (as defined below). Except as specifically provided herein or in an Exhibit, or as subsequently agreed in an AOP or otherwise by FBR Group, FBR Group will not be responsible to FBR Capital Markets or to any independent contractor retained by FBR Capital Markets, for any additional fees, charges, costs or expenses relating to the Services to be provided by FBR Capital Markets, unless such additional fees, charges, costs or expenses are a direct result of FBR Group’s unilateral deviation from the scope of the Services set forth in the Exhibits.

(b) FBR Capital Markets will pay to FBR Group the fee set forth in each of the Exhibits for the Services that FBR Group is obligated to provide or cause to be provided to FBR Capital Markets and the FBR Capital Markets Subsidiaries (collectively, the “FBR Group Fees” and together with the FBR Capital Markets Fees, the “Fees”). The FBR Group Fees constitute full compensation to FBR Group for all charges, costs and expenses incurred by FBR Group on behalf of FBR Capital Markets and the FBR Capital Markets Subsidiaries in providing the Services hereunder, unless otherwise specifically provided in an Exhibit or agreed in an AOP. Except as specifically provided herein or in an Exhibit, or as subsequently agreed in an AOP or by FBR Capital Markets, FBR Capital Markets will not be responsible to FBR Group or to any independent contractor retained by FBR Group, for any additional fees, charges, costs or expenses relating to the Services to be provided by FBR Group, unless such additional fees, charges, costs or expenses are a direct result of FBR Capital Markets’ unilateral deviation from the scope of the Services set forth in the Exhibits.

Section 3.2 Payments.

(a) FBR Capital Markets will deliver to FBR Group, no later than the last day of the month following the end of each calendar quarter during the term of this Agreement, an invoice for the aggregate FBR Capital Markets Fees incurred by FBR Capital Markets during such calendar quarter. FBR Group will pay to FBR Capital Markets, through an inter-company cash transfer no later than the third Wednesday of the month next following the month in which such invoice was delivered by FBR Capital Markets to FBR Group, the aggregate FBR Capital Markets Fees incurred during such calendar quarter.

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(b) FBR Group will deliver to FBR Capital Markets, no later than the last day of the month following the end of each calendar quarter during the term of this Agreement, an invoice for the aggregate FBR Group Fees incurred by FBR Group during such calendar quarter. FBR Capital Markets will pay to FBR Group, through an inter-company cash transfer no later than the third Wednesday of the month next following the month in which such invoice was delivered by FBR Group to FBR Capital Markets, the aggregate FBR Group Fees incurred during such calendar quarter.

Section 3.3 Review of Fees.

(a) At the end of each six month period during the term of this Agreement, each Party will review the charges, costs and expenses actually incurred by such Party in providing any Services, as well as the calculation of any related Fee (collectively, “Actual Cost”), during the previous six month period. In the event that either Party determines that the Actual Cost for any Service provided by such Party differs from the aggregate Fee for such Service for such period by more than 2%, such Party will deliver to the other Party documentation for such Actual Cost. The Parties agree to renegotiate in good faith any Service, the Actual Cost of which differs from the aggregate Fee for that Service for the period by more than 2%, and to adjust the related Fee accordingly, retroactively or prospectively.

(b) As a part of the AOP process referred to in Section 5.1 of this Agreement, the Parties will set Fees and new budgets for each ensuing year, and may make other changes to the Fees with respect to each Service, based upon an increase or reduction in the provision of, and related costs associated with, such Service. Once an AOP has been finalized (whether by agreement or pursuant to the provisions of Section 5.1 of this Agreement), the Fee for each Service set out in such AOP will apply for the ensuing year, subject to any subsequent written agreements between the Parties.

ARTICLE IV

REPRESENTATIVES

Section 4.1 Representatives.

(a) The Chief Financial Officer of FBR Group and the Chief Operating Officer of FBR Capital Markets will serve as administrative representatives (each a “Representative”) of FBR Group and FBR Capital Markets, respectively, to facilitate day-to-day communications and performance under this Agreement. Each Party may treat an act of a Representative of the other Party as being authorized by such other Party. Each Party may replace its Representative by giving written notice of the replacement to the other Party.

(b) No additional Exhibits, modifications to existing Exhibits, modifications to an AOP approved pursuant to Section 5.1 of this Agreement, or amendments to this Agreement shall be effective unless and until executed by the Representative of each of FBR Group and FBR Capital Markets.

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ARTICLE V

PLANNING PROCESS

Section 5.1 Annual Operating Plan. The Representative of each Party will coordinate the development of an annual operating plan (“AOP”) setting forth the specific objectives, Service standards, performance measures, activity levels and a detailed budget for each of the Services. On or before December 15 of each calendar year, an AOP for each Service to be provided by FBR Capital Markets for the next calendar year will be submitted to the Representative of FBR Group by the Representative of FBR Capital Markets, for review and approval by FBR Group. On or before December 15 of each calendar year, an AOP for each Service to be provided by FBR Group for the next calendar year will be submitted to the Representative of FBR Capital Markets by the Representative of FBR Group, for review and approval by FBR Capital Markets. Approval by the Representative of FBR Capital Markets and the Representative of FBR Group will constitute approval by the Parties of the AOP.

Section 5.2 Performance Review. The Parties will meet annually on or about November 15 to review progress against the AOP objectives, Service standards, performance measures and activity levels. The Parties will use their good faith efforts to resolve any issues concerning Service standards, performance measures or changes in Fees from the AOP during these meetings. If the Parties are unable to resolve those issues, they will refer the disputed issues to the Representative of FBR Capital Markets and the Representative of FBR Group pursuant to Article XII of this Agreement.

ARTICLE VI

THIRD PARTY AGREEMENTS

To the extent that it is not practicable to have FBR Capital Markets or FBR Group as the contracting party for a third party obligation, FBR Group, with respect to all Services provided by FBR Group or contracted for by FBR Group on behalf of FBR Capital Markets and the FBR Capital Markets Subsidiaries, and FBR Capital Markets, with respect to all Services provided by FBR Capital Markets or contracted for by FBR Capital Markets on behalf of FBR Group and the FBR Group Subsidiaries, shall use commercially reasonable efforts to cause all such third party contracts to extend to and be enforceable by FBR Capital Markets or FBR Group, as the case maybe, or to assign such contracts to FBR Capital Markets or FBR Group, as the case maybe. In the event that such contracts are not extendable or assignable, FBR Capital Markets or FBR Group shall act as agent for FBR Capital Markets or FBR Group, as the case maybe, in the pursuit of any claims, issues, demands or actions against such third party provider at FBR Capital Markets’ expense as the case may be.

ARTICLE VII

AUTHORITY; INFORMATION; COOPERATION; CONSENTS

Section 7.1 Authority. Each Party represents and warrants to the other Party that:

(a) it has the requisite corporate authority to enter into and perform this Agreement;

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(b) its execution, delivery, and performance of this Agreement have been duly authorized by all requisite corporate action on its behalf;

(c) this Agreement is enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by general principles of equity; and

(d) it has obtained all consents or approvals of Governmental Entities and other Persons that are conditions to its entering into this Agreement.

Section 7.2 Information Regarding Services. Each Party shall make available to the other Party any information required or reasonably requested by that other Party regarding the performance of any Service and shall be responsible for timely providing that information and for the accuracy and completeness of that information; provided, however, that a Party shall not be liable for failing to provide any information that is subject to a confidentiality obligation owed by it to a Person other than an Affiliate of such Party or the other Party. FBR Group shall not be liable for any impairment of any Service caused by FBR Group not receiving information, either timely or at all, or by its receiving inaccurate or incomplete information from FBR Capital Markets that is required or reasonably requested regarding that Service. FBR Capital Markets shall not be liable for any impairment of any Service caused by FBR Capital Markets not receiving information, either timely or at all, or by its receiving inaccurate or incomplete information from FBR Group that is required or reasonably requested regarding that Service.

Section 7.3 Cooperation. The Parties will use good faith efforts to cooperate with each other in all matters relating to the provision, receipt and payment of Services. Such good faith cooperation will include providing electronic access to systems used in connection with Services and using commercially reasonable efforts to obtain all consents, licenses, sublicenses or approvals necessary to permit each Party to perform its obligations. The Parties will cooperate with each other in making such information available as needed in the event of any and all internal or external audits, whether in the United States or any other country. If this Agreement is terminated in whole or in part, the Parties will cooperate with each other in all reasonable respects in order to effect an efficient transition and to minimize the disruption to the business of both Parties, including the assignment or transfer of the rights and obligations under any contracts.

Section 7.4 Further Assurances. Each Party shall take such actions, upon request of the other Party and in addition to the actions specified in this Agreement, as may be necessary or reasonably appropriate to implement or give effect to this Agreement.

ARTICLE VIII

AUTHORITY AS AGENT

FBR Group, the FBR Group Subsidiaries and FBR Group’s Affiliates are hereby authorized to act as agent for FBR Capital Markets and the FBR Capital Markets Subsidiaries for the purpose of performing Services hereunder as necessary or desirable to perform such Services. FBR Capital Markets, the FBR Capital Markets Subsidiaries and FBR Capital Markets’ Affiliates are hereby authorized to act as agent for FBR Group and the FBR Group Subsidiaries

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for the purpose of performing Services hereunder as necessary or desirable to perform such Services. Each party will execute and deliver to the other Party any document or other evidence which may be reasonably required to demonstrate to third parties the authority as described in this Article VIII.

ARTICLE IX

CONFIDENTIAL INFORMATION

Section 9.1 Definition. For the purposes of this Agreement, “Confidential Information” means non-public information about the disclosing Party’s or any of its Affiliates’ business or activities that is proprietary and confidential, which shall include, without limitation, all business, financial, technical and other information, including software (source and object code) and programming code, of a Party or its Affiliates marked or designated “confidential” or “proprietary” or by its nature or the circumstances surrounding its disclosure should reasonably be regarded as confidential. Confidential Information includes not only written or other tangible information, but also information transferred orally, visually, electronically or by any other means. Confidential Information will not include information that (i) is in or enters the public domain without breach of this Agreement, or (ii) the receiving Party lawfully receives from a third party without restriction on disclosure and to the receiving Party’s knowledge without breach of a nondisclosure obligation.

Section 9.2 Nondisclosure. Each of FBR Group and FBR Capital Markets agree that (i) it will not disclose or cause to be disclosed to any third party or use or caused to be used any Confidential Information disclosed to it by the other except as expressly permitted in this Agreement, and (ii) it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar type and importance.

Section 9.3 Permitted Disclosure. Notwithstanding the foregoing, each Party may disclose Confidential Information (i) to the extent required by a court of competent jurisdiction or other Governmental Entity or otherwise as required by law, including without limitation disclosure obligations imposed under the federal securities laws, provided that such Party has given the other Party prior notice of such requirement when legally permissible to permit the other Party to take such legal action to prevent the disclosure as it deems reasonable, appropriate or necessary, or (ii) on a “need-to-know” basis under an obligation of confidentiality to its consultants, legal counsel, Affiliates, accountants, banks and other financing sources and their advisors.

Section 9.4 Ownership of Confidential Information. All Confidential Information supplied or developed by either Party shall be and remain the sole and exclusive property of the Party who supplied or developed it.

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ARTICLE X

TERM AND TERMINATION

Section 10.1 Term. This Agreement shall remain in effect until such time as it has been terminated as to all Services in accordance with Section 10.2 below.

Section 10.2 Termination. Either Party may terminate this Agreement without cause with respect to one or more Services under this Agreement by providing 12 months’ written notice to the other Party or as otherwise agreed between the Parties hereto.

Section 10.3 Transition Assistance Services. Each Party agrees that, upon termination of this Agreement in while or in part or any of the Services provided under this Agreement, it will cooperate, and will cause its Affiliates to cooperate, in good faith with the other Party and provide the other Party reasonable assistance to make an orderly transition to another supplier of the Services (the “Transition Assistance Services”). Transition Assistance Services shall include, without limitation, the following:

(a) developing a transition plan;

(b) providing training to personnel to perform Services; and

(c) organizing and delivering Records and documents necessary to allow continuation of the Services, including delivering such materials in electronic forms and versions as requested by the requesting Party.

ARTICLE XI

LIMITATION OF LIABILITY; INDEMNIFICATION

Section 11.1 Limitation of Liability. Except as may be provided in Section 11.2 below, FBR Group, the FBR Group Subsidiaries, their controlling persons, if any, directors, officers, employees, agents and permitted assigns (each, an “FBR Group Party”) shall not be liable to FBR Capital Markets, the FBR Capital Markets Subsidiaries and their respective directors, officers, employees, agents or permitted assigns (each, an “FBR Capital Markets Party”), and each FBR Capital Markets Party shall not be liable to any FBR Group Party, in each case, for any liabilities, claims, damages, losses or expenses, including, but not limited to, any special, indirect, incidental or consequential damages, of a FBR Capital Markets Party or a FBR Group Party arising in connection with this Agreement and the Services provided hereunder.

Section 11.2 Indemnification.

(a) FBR Group shall indemnify, defend and hold harmless each FBR Capital Markets Party from and against all liabilities, claims, damages, losses and expenses (including, but not limited to, court costs and reasonable attorneys’ fees) (collectively referred to as “Damages”) of any kind or nature, of third parties unrelated to any FBR Capital Markets Party caused by or arising in connection with the gross negligence or willful misconduct of any employee of FBR Group or any FBR Group Subsidiary in connection with the performance of the Services, except to the extent that Damages were caused directly or indirectly by acts or omissions of any FBR

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Capital Markets Party. Notwithstanding the foregoing, FBR Group shall not be liable for any special, indirect, incidental, or consequential damages relating to such third party claims.

(b) FBR Capital Markets shall indemnify, defend and hold harmless each FBR Group Party from and against all Damages of any kind or nature, of third parties unrelated to any FBR Group Party caused by or arising in connection with the gross negligence or willful misconduct of any employee of FBR Capital Markets or any FBR Capital Markets Subsidiary in connection with the performance of Services under this Agreement, except to the extent that Damages were caused directly or indirectly by acts or omissions of any FBR Group Party. Notwithstanding the foregoing, FBR Capital Markets shall not be liable for any special, indirect, incidental, or consequential damages relating to such third party claims.

Section 11.3 Indemnification Procedures.

(a) If any FBR Group Party or FBR Capital Markets Party (the “Indemnified Party”) determines that it is or may be entitled to indemnification by any party (the “Indemnifying Party”) under Section 11.3 of this Agreement (other than in connection with any Action subject to Section 11.3), the Indemnified Party shall deliver to the Indemnifying Party a written notice specifying, to the extent reasonably practicable, the basis for its claim for indemnification and the amount for which the Indemnified Party reasonably believes it is entitled to be indemnified. Within 30 days after receipt of that notice, the Indemnifying Party shall pay the Indemnified Party that amount in cash or other immediately available funds unless the Indemnifying Party objects to the claim for indemnification or the amount of the claim. If the Indemnifying Party does not give the Indemnified Party written notice objecting to that indemnity claim and setting forth the grounds for the objection(s) within that 30-day period, the Indemnifying Party shall be deemed to have acknowledged its liability for that claim and the Indemnified Party may exercise any and all of its rights under applicable law to collect that amount. If there is a timely objection by the Indemnifying Party, the Indemnifying Party shall pay to the Indemnified Party in cash the amount, if any, that is Finally Determined to be required to be paid by the Indemnifying Party in respect of that indemnity claim within 15 days after that indemnity claim has been so Finally Determined.

ARTICLE XII

DISPUTE RESOLUTION

If any AOP is not submitted or is not approved by the Parties, or if the Parties are unable to resolve any Service, performance or budget issues or if there is a material breach of this Agreement that has not been corrected within 30 days of receipt of notice of such breach, the Representative of FBR Capital Markets and the Representative of FBR Group, will meet promptly to review and resolve those issues in good faith.

ARTICLE XIII

MISCELLANEOUS

Section 13.1 Governing Law. This Agreement and performance hereunder will be governed by and construed in accordance with the laws of the Commonwealth of Virginia without regard to the principles of conflict of laws.

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Section 13.2 Assignment. This Agreement is not assignable in whole or in part by either Party without the prior written consent of the other; provided that either Party may assign this Agreement in whole or in part to a parent, a direct or indirect wholly-owned subsidiary, an Affiliate or a successor thereto.

Section 13.3 Entire Agreement. This Agreement, including the attached Exhibits, is the complete and exclusive statement of the agreement between the Parties and supersedes all prior proposals, understandings and all other agreements, oral and written, between the Parties relating to the subject matter of this Agreement. This Agreement may not be modified or altered except by written instrument duly executed by both Parties.

Section 13.4 Force Majeure. Any delay or failure by either Party in the performance of this Agreement will be excused to the extent that the delay or failure is due solely to causes or contingencies beyond the reasonable control of such Party.

Section 13.5 Severability. If any provision, clause or part of this Agreement, or the application thereof under certain circumstances is held invalid or unenforceable for any reason, the remainder of this Agreement, or the application of such provision, clause or part under other circumstances shall not be affected thereby.

Section 13.6 Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given one day after being delivered personally or by messenger or being received via telecopy, telex or other electronic transmission, or two days after being sent by overnight delivery service, in all cases addressed to the person for whom it is intended at the addresses as follows:

If to FBR Group:

Friedman, Billings, Ramsey Group, Inc.

1001 North Nineteenth Street

Arlington, VA 22209

Facsimile: (703) 312-9780

Attention: Chief Financial Officer

If to FBR Capital Markets:

FBR Capital Markets Corporation

1001 North Nineteenth Street

Arlington, VA 22209

Facsimile: (703) 469-1152

Attention: Chief Operating Officer

Or to such other address as a Party shall have designated by notice in writing to the other Party in the manner provided by this Section 13.6.

Section 13.7 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together shall

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constitute one and the same instrument. The Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

Section 13.8 Waiver of Trial By Jury. FBR CAPITAL MARKETS AND FBR GROUP EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER MAY EXIST WITH REGARD TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY FBR CAPITAL MARKETS AND FBR GROUP, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH A RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE. FBR CAPITAL MARKETS AND FBR GROUP EACH IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH OTHER.

[Remainder of page intentionally left blank.]

[Signature page follows.]

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IN WITNESS WHEREOF, the Parties have signed this Services Agreement as of the date first set forth above.

FRIEDMAN, BILLINGS RAMSEY GROUP, INC.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP and Chief Legal Officer

FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

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EX-10.5

Exhibit 10.5

TAX SHARING AGREEMENT

by and between

FBR TRS HOLDINGS, INC.

and

FBR CAPITAL MARKETS CORPORATION

dated as of

July 20, 2006

TAX SHARING AGREEMENT

THIS TAX SHARING AGREEMENT (“Agreement”) is made and effective as of the 20^th day of July 2006, by and between FBR TRS Holdings, Inc., a Virginia corporation (“TRS Holdings”), and FBR Capital Markets Corporation, a Virginia corporation (“FBR Capital Markets”).

RECITALS

A. As of December 31, 2003, each of TRS Holdings, Pegasus Capital Corporation, a Delaware corporation, FBR Asset Management Holdings, Inc., FBR Bancorp, Inc., FBR National Trust Company, Money Management Advisers, Inc., FBR Fund Advisers, Inc., FBR Investment Management, Inc., Friedman, Billings, Ramsey & Co., Inc., FBR Capital Markets Holdings, Inc., and FBR Investment Services, Inc., entered into a Tax Sharing Agreement (the TRS Tax Sharing Agreement”). The parties to the TRS Tax Sharing Agreement are all taxable REIT subsidiaries (“TRSs”) of Friedman Billings Ramsey Group, Inc. and are members of an affiliated group (the “TRS Holdings Affiliated Group”) within the meaning of section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), of which TRS Holdings is the common parent corporation.

B. The TRS Holdings Affiliated Group filed a consolidated federal income tax return for the taxable year that began April 1, 2003 and ended December 31, 2003 and for each calendar year thereafter.

C. TRS Holdings has formed FBR Capital Markets as a wholly-owned subsidiary of TRS Holdings pursuant to Articles of Incorporation filed with the State Corporation Commission of the Commonwealth of Virginia on June 9, 2006 and Articles of Amendment filed with the State Corporation Commission of the Commonwealth of Virginia on June 21, 2006. Pursuant to a Contribution Agreement dated as of July 20, 2006 between TRS Holdings and FBR Capital Markets, TRS Holdings is contributing 100% of the outstanding capital stock of FBR Asset Management Holdings, Inc. and FBR Capital Markets Holdings, Inc. to FBR Capital Markets in exchange for the issuance of additional stock by FBR Capital Markets (the “Contribution”). FBR Asset Management Holdings, Inc. owns 100% of the capital stock of each of FBR Fund Advisers, Inc. and FBR Investment Management, Inc. FBR Capital Markets Holdings, Inc. owns 100% of the capital stock of each of Friedman, Billings, Ramsey & Co., Inc. (which, in turn, owns 100% of the capital stock of FBRC, Ltd.) and Friedman, Billings, Ramsey International, Ltd. FBR Asset Management Holdings, Inc., FBR Capital Markets Holdings, Inc., and their subsidiaries will be referred to collectively in this Agreement as the “FBR Capital Markets Subsidiaries”). After the Contribution, pursuant to an offering memorandum dated as of July 14, 2006, 12,066,667 shares of the common stock of FBR Capital Markets are being issued and sold by the Company (the “Offering”). After the Offering, it is expected that TRS Holdings will own approximately 72.7% of the outstanding capital stock of FBR Capital Markets (or approximately 70.7% of the outstanding capital stock if the initial purchaser/placement agent’s additional allotment option is exercised in full).

D. As a result of the Contribution and the Offering, FBR Capital Markets and the FBR Capital Markets Subsidiaries will not be members of the TRS Holdings Affiliated Group beginning with their taxable year beginning on the day following the Offering and ending December 31, 2006. The parties hereto desire to establish a method for allocating the tax liabilities and tax benefits of the TRS Holdings Affiliated Group for taxable years (or portions thereof) beginning prior to the Offering (“Pre-Offering Taxable Years”) among the members of the TRS Holdings Affiliated Group.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, it is hereby agreed as follows:

1. Federal Income Tax Returns for Pre-Offering Taxable Years. TRS Holdings shall prepare and timely file the consolidated federal income tax returns and any amended returns of the TRS Holdings Affiliated Group for all Pre-Offering Taxable Years.

2. Apportionment of Tax Liability for Pre-Offering Taxable Years. The consolidated federal income tax liability of the TRS Holdings Affiliated Group for all Pre-Offering Taxable Years shall be apportioned among its members in accordance with the method set forth in section 1552(a)(3) of the Code and sections 1.1502-33(d)(3), 1.1552-1(a)(3), and 1.1552-1(b) of the Treasury regulations. TRS Holdings shall allocate any such tax liability of the TRS Holdings Affiliated Group that arises or is paid to the Internal Revenue Service after the Offering based on the apportionment methods described in the preceding sentence. If, as a result of such allocation, net tax liability is allocated to an FBR Capital Markets Subsidiary, FBR Capital Markets shall pay to TRS Holdings the amount of such net tax liability. TRS Holdings shall pay to FBR Capital Markets the amount of any net tax benefit allocated to an FBR Capital Markets Subsidiary. Such payments shall occur no later than 90 days after the filing of the tax return, in the event that tax is paid with such return, or no later than 90 days after the receipt of a federal income tax refund from the Internal Revenue Service.

3. Interim Estimated Payments. Within a reasonable period after a request by TRS Holdings, FBR Capital Markets shall advance to TRS Holdings amounts necessary to fund that portion of any estimated federal income tax payment of the TRS Holdings Affiliated Group for a Pre-Offering Taxable Year that is allocated to an FBR Capital Markets Subsidiary. Any amounts so paid in any year shall operate to reduce the amount payable to TRS Holdings in connection with the filing of the return for such year pursuant to Section 2, and any balance resulting from such reduction shall promptly be refunded by TRS Holdings to FBR Capital Markets.

4. Tax Adjustments. (a) In the event of a proposed adjustment to the consolidated federal income tax liability of the TRS Holdings Affiliated Group for a Pre-Offering Taxable Year, TRS Holdings shall notify FBR Capital Markets of such proposed adjustment and TRS Holdings and FBR Capital Markets (and their respective subsidiaries) shall cooperate to contest and defend against such proposed tax liability. TRS Holdings shall control and be responsible for any proceedings related to the proposed adjustment, and FBR Capital Markets shall bear the

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portion of any related costs incurred by TRS Holdings that are properly allocable to FBR Capital Markets Subsidiaries. The allocation of such costs will be determined in the sole discretion of TRS Holdings.

(b) In the event of any final adjustment to the consolidated federal income tax liability of the TRS Holdings Affiliated Group for a Pre-Offering Taxable Year (whether by reason of an amended return, claim for refund, or an audit by the Internal Revenue Service), the liability of each member of the TRS Holdings Affiliated Group shall be recomputed under Section 2 of this Agreement to give effect to such adjustments, and any resulting settlement payments between TRS Holdings and the FBR Capital Markets Subsidiaries shall be made within a reasonable time after the computations are made. If any interest is to be paid or received as a result of a consolidated federal income tax deficiency or refund, such interest shall be allocated to the members of the TRS Holdings Affiliated Group in the ratio that each member’s net change in federal income tax liability or tax benefit bears to the total change in tax liability. Any penalty shall be allocated upon such basis as TRS Holdings deems just and proper in view of all applicable circumstances. If an FBR Capital Markets Subsidiary is assessed and pays directly to the Internal Revenue Service tax liability for a Pre-Offering Taxable Year in excess of the amount properly allocable to such subsidiary under Section 2 (taking into account this Section 4), TRS Holdings shall reimburse the FBR Capital Markets Subsidiary for the amount of such excess.

5. Post-Offering Taxable Years. (a) For taxable years (or portions thereof) after the Offering (each, a “Post-Offering Taxable Year”), each of TRS Holdings and FBR Capital Markets shall prepare and timely file federal income tax returns for it and its subsidiaries. Each of TRS Holdings and FBR Capital Markets shall indemnify and hold harmless the other party from and against all taxes incurred by the first party or its subsidiaries with respect to Post-Offering Taxable Years.

(b) Notwithstanding Section 5(a) hereof, any loss, credit, or other item attributable to an FBR Capital Markets Subsidiary arising in a Pre-Offering Taxable Year or a Post-Offering Taxable Year may be applied to a consolidated return of the TRS Holdings Affiliated Group for a Pre-Offering Taxable Year during which such FBR Capital Markets Subsidiary was included in the consolidated return filed by the TRS Holdings Affiliated Group, to the extent and as permitted under applicable law. TRS Holdings shall cooperate with any FBR Capital Markets Subsidiary to the extent reasonably necessary (including, without limitation, amending any return and filing any claim for refund) for such member to realize the tax benefit of using such loss, credit, or other item in such Pre-Offering Taxable Year. TRS Holdings shall remit promptly to FBR Capital Markets any refund or reduction in tax resulting from the use of such tax benefit. No tax attributes of (or allocable to) an FBR Capital Markets Subsidiary may be used in a Post-Offering Taxable Year of the TRS Holdings Affiliated Group.

6. Successors. This Agreement shall be binding on and inure to the benefit of any successor, by merger, acquisition of assets or otherwise, to any of the parties hereto (including but not limited to any successor of a Member succeeding to the tax attributes of the Member

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under Code section 381), to the same extent as if such successor had been an original party to the Agreement.

7. Term. This Agreement shall continue in effect until the expiration of the statute of limitations (or, if later, the date to which any such statute of limitations has been extended by TRS Holdings) for all Pre-Offering Taxable Years.

8. Miscellaneous.

(a) This Agreement shall be governed by the laws of the Commonwealth of Virginia, excluding its choice of law principles.

(b) The provisions herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, oral or written, and all other communications relating to the subject matter hereof. There are no promises, covenants, or undertakings other than those expressly set forth in this Agreement.

(c) If any provision of this Agreement is held to be unenforceable, this Agreement shall be construed without such provision.

(d) The waiver of a party of a right hereunder must be in writing and signed by the party holding the right. The failure by a party to exercise any right hereunder shall not operate as a waiver of such party’s right to exercise such right or any other right in the future.

(e) This Agreement may be amended only by a written document executed by a duly authorized representative of each of the parties. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but one and the same instrument.

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IN WITNESS WHEREOF, each party has caused this Agreement to be executed by its duly authorized officer or representative as of the date first set forth above.

FBR TRS HOLDINGS, INC.
By:	/s/ William J. Ginivan
	Name:	William J. Ginivan
	Title:	General Counsel
FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
	Name:	William J. Ginivan
	Title:	SVP, General Counsel and Secretary

[Signature Page to Tax Sharing Agreement]

EX-10.6

Exhibit 10.6

TRADEMARK LICENSE AGREEMENT

by and between

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

and

FBR CAPITAL MARKETS CORPORATION

dated as of July 20, 2006

TRADEMARK LICENSE AGREEMENT

This TRADEMARK LICENSE AGREEMENT (“Agreement”) dated as of the 20^th day of July, 2006 (the “Effective Date”) is entered into by and between FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation (“Licensor”) and FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (“Licensee”) (each of Licensor and Licensee a “Party” and collectively, the “Parties”).

WHEREAS, Licensor is the owner of the service mark, corporate and trade name “Friedman Billings Ramsey” and “FBR” (each of “Friedman Billings Ramsey” and “FBR” a “Mark” and collectively, the “Marks”);

WHEREAS, Licensee is an investment banking, institutional brokerage and asset management firm recently formed as a Virginia corporation (the “Licensee Business”); and

WHEREAS, Licensee desires to use the Marks in connection with the operation of the Licensee Business in the United States, and Licensor is willing to permit Licensee to use the Marks, subject to the terms and conditions herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

Article 1. Grant of Rights. Subject to the terms and conditions herein, Licensor hereby grants to Licensee, for itself and its subsidiaries, a paid-up, non-exclusive, non-transferable right and license, under Licensor’s right, title and interest in the Marks, to use either of the Marks in the United States solely in connection with the Licensee Business, solely (i) as part of the corporate names FBR Capital Markets Corporation, Friedman, Billings, Ramsey & Co., Inc., Friedman, Billings, Ramsey International, Ltd., FBR Investment Management, Inc. and FBR Fund Advisers, Inc. (the “Corporate Names”); and (ii) as a corporate name, trade name or domain name. Licensor acknowledges that Licensee may conduct the Licensee Business, make investments or have shareholders outside the United States, and any implied “use” of the Corporate Names or the Marks due to this fact shall not violate this Agreement, but is subject to Article 6. All rights not expressly granted to Licensee in this Article 1 are reserved to Licensor.

Article 2. Ownership. The Parties agree that Licensor is the sole owner of the Marks. Licensee agrees not to directly or indirectly challenge or contest the validity of, or Licensor’s rights in the Marks (and the associated goodwill), including without limitation, arising out of or relating to any third-party claim, allegation, action, demand, proceeding or suit (“Action”) regarding enforcement of this Agreement or involving any third party. The Parties intend that any and all goodwill in the Marks arising from Licensee’s use of the Corporate Names or the Marks shall inure solely to the benefit of the Licensor. Notwithstanding the foregoing, in the event that Licensee is deemed to own any rights in the Marks (or the Marks portion of the Corporate Names), Licensee hereby assigns such rights to the Licensor.

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Article 3. Use of the Marks.

Section 3.1. Licensee agrees to maintain and preserve the quality of the Marks, and to use the Corporate Names and Marks in good faith and in a dignified manner, in a manner consistent with Licensor’s high standards of and reputation for quality, and in accordance with good trademark practice wherever the Corporate Names or Marks are used. Licensee shall not take any action that could be detrimental to the Marks, the Corporate Names or their associated goodwill. If Licensor decides in its sole discretion to register the Marks or Corporate Names, Licensee agrees to affix all such trademark notices as may be requested by Licensor or required under applicable laws.

Section 3.2. Upon request by Licensor, Licensee shall furnish to Licensor’s representative samples of all advertising and promotional materials in any media that are used in connection with the Corporate Names or the Marks. Licensee shall make any changes to such materials that Licensor requests to comply with Section 3.1, or preserve the validity of, or Licensor’s rights in, the Marks.

Section 3.3. Licensee shall, at its sole expense, comply at all times with all applicable laws, regulations, exchange and other rules and reputable industry practice pertaining to the Licensee Business and the use of the Corporate Names and Marks.

Article 4. Termination.

Section 4.1. The term of this Agreement (“Term”) commences on the Effective Date and continues in perpetuity, unless termination occurs pursuant to the other provisions of this Article 4.

Section 4.2. If Licensor materially breaches one or more of its obligations hereunder, Licensee may terminate this Agreement, effective upon written notice, if Licensor does not cure such breach within 30 days of written notice thereof (or any mutually-agreed extension). If Licensee materially breaches one or more of its obligations hereunder, Licensor may terminate this Agreement, effective upon written notice, if Licensee does not cure such breach within 30 days of written notice thereof (or any mutually-agreed extension). Licensor may terminate this Agreement immediately, effective upon written notice, if Licensee violates Article 7.

Section 4.3. Licensor has the right to terminate this Agreement immediately upon written notice to Licensee if (i) Licensee makes an assignment for the benefit of creditors; (ii) Licensee admits in writing its inability to pay debts as they mature; (iii) a trustee or receiver is appointed for a substantial part of Licensee’s assets and (iv) to the extent termination is enforceable under applicable law, a proceeding in bankruptcy is instituted against Licensee which is acquiesced in, is not dismissed within 60 days, or results in an adjudication of bankruptcy.

Section 4.4. If an event described in Section 5 occurs, Licensor shall have the right, in addition to their other rights and remedies, to suspend Licensee’s rights regarding the Corporate Names and Marks while Licensee attempts to remedy the situation.

Section 4.5. Upon termination of this Agreement for any reason, (i) Licensee shall immediately cease all use of the Corporate Names (except for limited transitional use of the Corporate Names, for a period of 30 days if Licensor consents) and destroy all materials or forms

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bearing the Marks; (ii) the Parties shall cooperate so as to best preserve the value of the Corporate Names; and (iii) Sections 6.4, 6.5, 6.6 and 6.7 shall survive any such event.

Article 5. Infringement, Protection and Quality Control.

Section 5.1. Licensee agrees to notify Licensor promptly after it becomes aware of any actual or threatened infringement, imitation, dilution, misappropriation or other unauthorized use or conduct in derogation (“Infringement”) of either Mark. Licensor shall have the sole right to bring any Action to remedy the foregoing (or to refrain from taking any Action in its sole discretion), and Licensee shall cooperate with Licensor in same, at Licensor’s expense.

Section 5.2. Licensee shall, at its expense, cooperate fully and in good faith with Licensor for the purpose of securing, preserving and protecting Licensor’s rights in and to its Marks. At the request of Licensor, and at Licensee’s expense, Licensee shall execute and deliver to Licensor any and all documents and do all other acts and things which Licensor deems necessary or appropriate to make fully effective or to implement the provisions of this Agreement relating to the ownership, registration, maintenance or renewal of Licensor’s Marks. Licensee hereby appoints Licensor and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with irrevocable power and authority in place and stead of Licensee and in the name of Licensee or in its own name, for the purposes of carrying out the terms of this Agreement with respect to Licensor’s Marks. Licensor shall have sole control and discretion over the prosecution and maintenance of its Marks and shall take or refrain from taking all actions it deems necessary and/or reasonable to protect its Marks.

Section 5.3. Licensee acknowledges that all services provided under the Marks pursuant to the terms of this Agreement must be of sufficiently high quality to protect the Marks and the goodwill symbolized thereby. In order to preserve the inherent value of the Marks, Licensee shall ensure that it maintains the quality of the Licensee Business and the operation thereof at least equal to the standards prevailing in the operation of Licensor’s business and the Licensee Business as of the date of this Agreement. Licensee further agrees to use the Marks in accordance with such quality standards as may be reasonably established by Licensor and communicated to Licensee from time to time in writing, or as may be agreed to by Licensor and Licensee from time to time in writing. Licensee shall obtain Licensor’s prior written approval over the style and manner in which Licensor’s Marks are used and shall use the Marks only in a style and manner commensurate with the current standards and reputation for quality associated with the Marks. Upon Licensor’s request, Licensee shall submit to Licensor, for Licensor’s review, a representative number of samples of materials used by Licensee bearing Licensor’s Mark. If Licensor requests any modifications to such materials, Licensee shall make all such modifications specified by such Licensor within a reasonable period of time thereafter and shall provide Licensor with samples of such materials for Licensor’s review. Licensee agrees not to register or attempt to register in any jurisdiction any trademark or service mark that could reasonably be deemed to resemble or be confusingly similar to either Mark or which could reasonably be deemed to dilute either Mark, including without limitation any trademark or service mark which incorporates either Mark. Licensee shall permit Licensor or its duly authorized representative, upon reasonable notice, to inspect and review all business locations and materials of Licensee and any and all uses of the Marks for the purposes of assuring the services meet Licensor’s quality standards as contemplated herein.

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Article 6. Representations and Warranties.

Section 6.1. Licensor represents and warrants to Licensee that:

(a) This Agreement is a legal, valid and binding obligation of Licensor, enforceable against Licensor in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity);

(b) Licensor is not subject to any judgment, order, injunction, decree or award of any court, administrative agency or governmental body that would or might interfere with its performance of any of its material obligations hereunder; and

(c) Licensor has full power and authority to enter into and perform its obligations under this Agreement in accordance with its terms.

Section 6.2. Licensee represents and warrants to Licensor that:

(a) This Agreement is a legal, valid and binding obligation of Licensee, enforceable against Licensee in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity);

(b) Licensee is not subject to any judgment, order, injunction, decree or award of any court, administrative agency or governmental body that would or might interfere with its performance of any of its material obligations hereunder; and

(c) Licensee has full power and authority to enter into and perform its obligations under this Agreement in accordance with its terms.

Section 6.3. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6.4, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THIS AGREEMENT, THE MARKS OR THE CORPORATE NAMES, AND EXPRESSLY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES, INCLUDING ANY WITH RESPECT TO TITLE, NON-INFRINGEMENT, MERCHANTABILITY, VALUE, RELIABILITY OR FITNESS FOR USE. LICENSEE’S USE OF THE MARKS AND THE CORPORATE NAMES IS ON AN “AS IS” BASIS AND IS AT ITS OWN RISK (I) OUTSIDE THE UNITED STATES AND (II) EXCEPT AS EXPRESSLY SET FORTH HEREIN, WITHIN THE UNITED STATES.

Section 6.4. Licensor will defend at Licensor’s expense, indemnify and hold harmless Licensee and its affiliates and its respective directors, officers, employees, agents and representatives (“Related Parties”) from any loss, liability, damage, award, settlement, judgment, fee, cost or expense (including reasonable attorneys’ fees and costs of suit) (“Losses”) arising out of or relating to (i) any breach by Licensor of this Agreement or its warranties, representations, covenants and undertakings hereunder; or (ii) any third-party Action against any Related Party that arises out of or relates to any claim that Licensee’s use of the Corporate Names or Marks as expressly authorized hereunder infringes the rights of a third party within the United States.

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Section 6.5. Licensee will defend at its expense, indemnify and hold harmless Licensor and its respective affiliates and its respective Related Parties from any Losses arising out of or relating to any third-party Action against any of them that arises out of or relates to (i) any breach by Licensee of this Agreement or its warranties, representations, covenants and undertakings hereunder; (ii) Licensee’s operation of the Licensee Business; or (iii) any claim that Licensee’s use of the Corporate Names or Marks, other than as explicitly authorized by this Agreement, infringes the rights of a third party anywhere in the world.

Section 6.6. The indemnified Party will promptly notify the indemnifying Party in writing of any indemnifiable claim and promptly tender its defense to the indemnifying Party. Any delay in such notice will not relieve the indemnifying Party from its obligations to the extent it is not prejudiced thereby. The indemnified Party will cooperate with the indemnifying Party at the indemnifying Party’s expense. The indemnifying Party may not settle any indemnified claim in a manner that adversely affects the indemnified Party without its consent (which shall not be unreasonably withheld or delayed). The indemnified Party may participate in its defense with counsel of its own choice at its own expense.

Section 6.7. EXCEPT FOR A PARTY’S WILLFUL MISCONDUCT, NO PARTY WILL BE LIABLE TO ANOTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR INCIDENTAL DAMAGES (INCLUDING LOST PROFITS OR GOODWILL, BUSINESS INTERRUPTION AND THE LIKE) RELATING TO THIS AGREEMENT, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

Article 7. Assignments. Licensee may not assign, sublicense, pledge, mortgage or otherwise encumber this Agreement or its right to use the Marks or the Corporate Names, in whole or in part, without the prior written consent of Licensor in its sole discretion. For the avoidance of doubt, a change of control of Licensee shall be deemed an “assignment” requiring such consent, regardless of whether Licensee is the surviving entity. Pursuant to 11 U.S. 365(c)(1)(A) (as it may be amended from time to time, and including any successor to such provision), in the event of bankruptcy of the Licensee, this Agreement may not be assigned or assumed by Licensee (or any successor thereto) and Licensor shall be excused from rendering performance to, or accepting performance from, Licensee or any successor thereto. Licensee acknowledges that its identity is a material condition that induced Licensor to enter into this Agreement. Any attempted action in violation of the foregoing shall be null and void ab initio and of no force or effect, and shall result in immediate termination of this Agreement. For purposes of this agreement, the term “change of control” means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of Licensee, taken as a whole, to any Person other than Licensor, as recommended or any of its respective affiliates; or (ii) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than Licensor or any of its respective affiliates, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% or more of the total voting power of the voting capital interests of Licensee. For purposes of this Agreement, the term “Person” means any individual, corporation, partnership, joint venture, limited liability

6

company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

Article 8. Miscellaneous.

Section 8.1. All notices hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or nationally recognized overnight courier service or facsimile with delivery confirmed to the following addresses (or at such other addresses as shall be specified by like notice) and will be deemed given on the date received:

LICENSORS:

Friedman, Billings, Ramsey Group, Inc.

1001 North Nineteenth Street

Arlington, VA 22209

Attention: Chief Legal Officer

Facsimile: (703) 469-1040

LICENSEE:

FBR Capital Markets Corporation

1001 North Nineteenth Street

Arlington, VA 22209

Attention: Chief Financial Officer

Facsimile: (703) 312-9500

Section 8.2. Further Assurances. Licensor and Licensee agree to execute such further documentation and perform such further actions, including the recordation of such documentation with appropriate authorities, as may be reasonably requested by the other Party hereto to evidence and effectuate further the purposes and intents set forth in this Agreement.

Section 8.3. Entire Agreement/Construction. This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

Section 8.4. Amendments. This Agreement, including this provision of this Agreement, may not be modified or amended except by an agreement in writing signed by each of the Parties hereto.

Section 8.5. Cumulative Rights; Waiver. All rights and remedies which Licensors or Licensee may have hereunder or by operation of law are cumulative, and the pursuit of one right or remedy shall not be deemed an election to waive or renounce any other right or remedy. The failure of Licensors or Licensee to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

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Section 8.6. Severability. The Parties agree that each provision of this Agreement shall be construed as separable and divisible from every other provision. The unenforceability of any one provision shall not limit the enforceability, in whole or in part, of any other provision hereof. If any term or provision of this Agreement (or the application thereof to any Party or set of circumstances) shall be held invalid or unenforceable in any jurisdiction and to any extent, it shall be ineffective only to the extent of such invalidity or unenforceability and shall not invalidate or render unenforceable any other terms or provisions of this Agreement (or such applicability thereof). In such event, the Parties shall negotiate in good faith a valid, enforceable, applicable substitute provision that attempts as closely as possible to achieve the intended purpose of the previous term or provision and has an effect as comparable as possible on the Parties’ respective positions.

Section 8.7. Governing Law/Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia applicable to contracts made and to be performed entirely in the Commonwealth of Virginia. The Parties agree, for the purposes of any action arising out of or related to this Agreement, to commence any such action solely in the state or federal courts located in the Commonwealth of Virginia.

Section 8.8. Construction. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed as if drafted jointly by the Parties.

Section 8.9. Separate Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, effective as of the date first above written.

LICENSOR:
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
By:	/s/ Kurt R. Harrington
	Name: Kurt R. Harrington
	Title: SVP, CFO and Treasurer
LICENSEE:
FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
	Name: William J. Ginivan
	Title: SVP, General Counsel and Secretary

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EX-10.7

Exhibit 10.7

INVESTMENT AGREEMENT

by and among

FOREST HOLDINGS LLC

FOREST HOLDINGS (ERISA) LLC

and

FBR CAPITAL MARKETS CORPORATION

Dated as of July 19, 2006

TABLE OF CONTENTS

ARTICLE 1
Definitions
Section 1.01 Definitions	1
ARTICLE 2
Transactions
Section 2.01 Purchase and Sale	4
Section 2.02 Closing	4
ARTICLE 3
Representations and Warranties of the Company
Section 3.01 Corporate Status	5
Section 3.02 Authorization	5
Section 3.03 No Conflict	6
ARTICLE 3A
Additional Representations and Warranties of the Company
ARTICLE 4
Representations and Warranties of the Purchasers
Section 4.01 Status	6
Section 4.02 Authorization	6
Section 4.03 No Conflict	7
Section 4.04 Private Placement	7
Section 4.05 Sufficiency of Funds	8

ARTICLE 5
Covenants
Section 5.01 Conduct of the Business	8
Section 5.02 Publicity	8
Section 5.03 Access to Information	9
Section 5.04 Fees and Expenses	9
Section 5.05 Information Rights	9
Section 5.06 Confidentiality	10
Section 5.07 Business Opportunity	11
Section 5.08 Further Assurances; Recirculation	12
ARTICLE 6
Preemptive Right
Section 6.01 Preemptive Right	12
Section 6.02 Notice	12
Section 6.03 Preemptive Right Exercise and Payment	13
Section 6.04 Effect of Failure to Exercise	13
ARTICLE 7
Conditions of Closing
Section 7.01 Conditions to Obligations of the Purchasers and the Company	13
Section 7.02 Additional Conditions to Obligations of the Purchasers	14
Section 7.03 Additional Conditions to Obligations of the Company	14

iii

ARTICLE 8
Termination
Section 8.01 Termination of Agreement	15
Section 8.02 Effect of Termination	16
ARTICLE 9
Indemnification
Section 9.01 Survival	16
Section 9.02 Obligations of the Company	16
Section 9.03 Obligations of the Purchasers	17
Section 9.04 Indemnification Procedures	17
ARTICLE 10
Miscellaneous
Section 10.01 Assignment; Binding Effect	18
Section 10.02 Choice of Law	18
Section 10.03 Notices	18
Section 10.04 Headings	19
Section 10.05 Entire Agreement	19
Section 10.06 Interpretation	20
Section 10.07 Waiver and Amendment	20
Section 10.08 Counterparts; Facsimile Signatures	20
Section 10.09 Third-Party Beneficiaries	20
Section 10.10 Specific Performance	21
Section 10.11 Severability	21
Section 10.12 Jurisdiction	21

iv

Section 10.13 Termination of Certain Provisions	21
Section 10.14 WAIVER OF JURY TRIAL	21
Section 10.15 Legend	22

LIST OF ANNEXES AND EXHIBITS

Annex A – Representations and Warranties

Exhibit A – Form of Governance Agreement

Exhibit B – Form of Voting Agreement

Exhibit C – Form of Registration Rights Agreement

Exhibit D – Form of Professional Services Agreement

Exhibit E – Form of Stock Option

Exhibit F – Form of Amended Bylaws

Exhibit G – Form of Amended Charter

v

INDEX OF DEFINED TERMS

	Page
144A Offering	3
Action	1
Affiliate	1
Affiliates	2
Agreement	2
Amended Bylaws	2
Amended Charter	2
Ancillary Agreements	2
Applicable Stock	2
Asserted Liability	18
Board	2
Business Day	2
Closing	4
Closing Date	4
Commission	2
Common Stock	2
Company	1
Confidential Information	10
Confidentiality Agreement	2
Contract	6
Disclosing Party	11
Encumbrance	2
Governance Agreement	1
Governmental Entity	3
Indemnification Period	16
Indemnified Party	17
Indemnifying Party	17
Interest	3
Issuance Event	13
Issuance Event Date	13
Law	3
Losses	17
Material Adverse Effect	3
Other Business	11
Outside Date	16
Ownership Percentage	3
Per Share Price	3
Person	3
Preemptive Right	13

vi

Preemptive Right Notice	13
Professional Services Agreement	1
Purchase Price	4
Purchased Shares	4
Purchaser	1
Purchaser Expenses	9
Purchaser Percentage	3
Purchasers	1
Registration Rights Agreement	1
Securities Act	3
Stock Option	1
Stock Options	1
Subsidiary	3
Threshold	17
Voting Agreement	1

vii

INVESTMENT AGREEMENT

THIS INVESTMENT AGREEMENT is made and entered into as of the 19th day of July, 2006, by and among Forest Holdings LLC and Forest Holdings (ERISA) LLC (each, a “Purchaser” and, together, the “Purchasers”) and FBR Capital Markets Corporation (the “Company”).

RECITALS

WHEREAS, on the terms and subject to the conditions contained in this Agreement, the Company desires to issue and sell to the Purchasers, and the Purchasers desire to purchase from the Company, the Purchased Shares;

WHEREAS, for the purpose of governing their investments in the Company and certain related matters from and after the Closing, prior to or concurrently with the Closing, the Purchasers or their Affiliates and the other parties thereto will enter into (i) a Governance Agreement in substantially the form attached as Exhibit A (the “Governance Agreement”), (ii) a Voting Agreement in substantially the form attached as Exhibit B (the “Voting Agreement”), (iii) a Registration Rights Agreement in substantially the form attached as Exhibit C (the “Registration Rights Agreement”) and (iv) a Professional Services Agreement (the “Professional Services Agreement”) in substantially the form attached as Exhibit D, in the case of each of clauses (i) through (iv), to be effective as of the Closing Date; and

WHEREAS, at the Closing, the Company will issue to each Purchaser an option to purchase additional shares of Common Stock in substantially the form attached hereto as Exhibit E (each, a “Stock Option” and, together, the “Stock Options”).

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01 Definitions. Capitalized terms used in this Agreement shall have the meanings set forth in this Agreement. In addition, for purposes of this Agreement, the following terms, when used in this Agreement, shall have the meanings assigned to them in this Section 1.01.

“Action” means any action, cause of action, claim, suit, litigation, arbitration or other proceeding, whether civil, criminal or administrative, at Law or in equity, by or before any Governmental Entity.

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly,

the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For purposes hereof, (1) neither the Company or any of its Subsidiaries, on the one hand, nor any Purchaser, on the other hand, shall be considered an “Affiliate” of the other and (2) portfolio companies of Crestview Capital Partners, L.P. (or its affiliates) shall not be considered “Affiliates” of Purchaser.

“Agreement” means this Investment Agreement, as the same may be amended or supplemented from time to time.

“Amended Bylaws” means the Second Amended and Restated Bylaws of the Company, in substantially the form attached as Exhibit F.

“Amended Charter” means the Second Amended and Restated Articles of Incorporation of the Company, in substantially the form attached as Exhibit G.

“Ancillary Agreements” means, collectively, the Governance Agreement, the Voting Agreement, the Registration Rights Agreement, the Stock Options and the Professional Services Agreement. The Ancillary Agreements executed by a specified Person on the date hereof or to be executed by such Person in connection herewith are referred to in this Agreement as “such Person’s Ancillary Agreements,” “its Ancillary Agreements” or another similar expression.

“Applicable Stock” means, at any time, the (i) Purchased Shares, plus (ii) shares of Common Stock that are issued to the Purchasers or their permitted assigns in any reclassification, recapitalization, share combination, share subdivision, share dividend, share exchange, or similar transaction or event in respect of shares described in clause (i) or this clause (ii), plus (iii) shares of Common Stock issued as a result of any previous exercise by the Purchasers or their permitted assigns of the Preemptive Right.

“Board” means the Board of Directors of the Company.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banks are required to be closed in New York, New York.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.001 per share, of the Company.

“Confidentiality Agreement” means the Confidentiality Agreement, dated as of May 8, 2006, between an Affiliate of the Company and Crestview Capital Partners, L.P.

“Encumbrance” means any lien, security interest, pledge, mortgage, hypothecation, charge, option, right of first refusal, easement, right of way, covenant, encumbrance or adverse claim of any nature or kind, except for any restrictions arising under any applicable securities Laws.

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“Governmental Entity” means any federal, state, municipal or local government, or any other governmental, regulatory or administrative authority.

“Interest” means interest at a rate per annum equal to the Prime Rate as published in the Wall Street Journal, Eastern Edition in effect from time to time during the applicable period, calculated on the basis of a year of 365 days and the actual number of days in the applicable period.

“Law” means any law (including common law), statute, code, rule, regulation, ordinance, judgment, order, decree or other governmental requirement enacted, promulgated or imposed by any Governmental Entity having the effect of law.

“Material Adverse Effect” means a material adverse effect on the business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole.

“144A Offering” means the offering in a private placement of shares of Common Stock on substantially the terms set forth in the Preliminary Offering Memorandum dated June 23, 2006, as amended by the Preliminary Offering Memorandum Supplement, dated July 14, 2006, except that the price per share in such offering may be less than $15.00.

“Ownership Percentage” means, at any time, the fraction, expressed as a percentage and rounded to the next highest thousandth of a percent, whose numerator is the number of shares of Applicable Stock then outstanding and whose denominator is the number of then outstanding shares of Common Stock; provided that any shares of Common Stock issued by the Company in violation of its obligations under ARTICLE 6 of this Agreement shall not be deemed outstanding for the purposes of determining the Ownership Percentage.

“Per Share Price” means the lower of (i) $15.00 and (ii) the offering price per share of Common Stock paid by purchasers in the 144A Offering.

“Person” means a corporation, an individual, a partnership, a limited partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Entity.

“Purchaser Percentage” means, with respect to each Purchaser, the percentage set forth underneath such Purchaser’s name on the signature pages hereto.

“Securities Act” means the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.

“Subsidiary” of any Person means, on any date or during any applicable period, any Person of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests or more than 50% of the profits or losses of which are, as of such date, owned, controlled or held by the applicable Person or one or more subsidiaries of such Person.

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ARTICLE 2

TRANSACTIONS

Section 2.01 Purchase and Sale. (a) Subject to the terms and conditions of this Agreement, at the Closing the Company shall issue and sell to the Purchasers, free and clear of all Encumbrances, and the Purchasers shall purchase from the Company, an aggregate number of newly issued shares of Common Stock (rounded up to the nearest whole share) (the “Purchased Shares”) determined by dividing the Purchase Price by the Per Share Price (it being understood that each Purchaser shall purchase at the Closing such Purchaser’s Purchaser Percentage of the Purchased Shares), and the Purchasers shall deliver the Purchase Price to the Company the Purchase Price. For the avoidance of doubt, each Purchaser shall be jointly and severally responsible for the payment of the Purchase Price at the Closing.

(b) The aggregate purchase price to be paid for the Purchased Shares acquired by the Purchasers pursuant to this Agreement shall be $77,592,195, payable in cash (the “Purchase Price”). At the Closing, each Purchaser shall deliver to the Company its Purchaser Percentage of the Purchase Price by wire transfer of immediately available funds pursuant to the wire transfer instructions provided by the Company prior to the Closing Date.

Section 2.02 Closing. (a) The closing of the issuance and sale of the Purchased Shares by the Company to the Purchasers (the “Closing”) shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 concurrently with the consummation of the 144A Offering, provided that the other conditions to the Closing set forth in Article VII have then been satisfied or waived (if permitted) (other than those conditions that by their nature have to be satisfied at Closing), or at such other place and time as the parties may agree. The date on which the Closing will occur is referred to herein as the “Closing Date”.

(b) At the Closing, the Company shall deliver, or cause to be delivered, to the Purchasers:

(i) certificates evidencing the Purchased Shares of each Purchaser registered in the name of such Purchaser;

(ii) the Ancillary Agreements to be executed by each party thereto, other than the Purchasers and their Affiliates, duly executed by each of such Persons;

(iii) certified copies of the Amended Charter and Amended Bylaws;

(iv) the certificate referred to in Section 7.02(d); and

(v) such other documents and instruments as may reasonably be required to consummate the transactions contemplated by this Agreement or any transactions contemplated by any Ancillary Agreement to be consummated at the Closing.

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(c) At the Closing, the Purchasers shall deliver, or cause to be delivered, to the Company:

(i) the Purchase Price, as provided in Section 2.01(b);

(ii) the Ancillary Agreements to be executed by each of the Purchasers, duly executed by such Purchasers;

(iii) the certificates referred to in Section 7.03(c); and

(iv) such other documents and instruments as may reasonably be required to consummate the transactions contemplated by this Agreement or any transactions contemplated by any Ancillary Agreement to be consummated at the Closing.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchasers as of the date hereof and as of the Closing Date as follows:

Section 3.01 Corporate Status. Each of the Company and its Subsidiaries is duly organized and validly existing under the Laws of its jurisdiction of organization and each (a) has all requisite power and authority (corporate or otherwise) to carry on its business as it is now being conducted and to own and operate its property and assets as and in the places where such assets or properties are now owned and operated and (b) is duly qualified to do business in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect.

Section 3.02 Authorization. The Company has all requisite corporate power and authority to enter into, and perform its obligations under, this Agreement and the Ancillary Agreements. The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board and no other corporate or shareholder proceedings of the Company are necessary to authorize this Agreement or the Ancillary Agreements or to consummate the transactions contemplated hereby or thereby (including the adoption and approval of the Amended Charter (which has been filed with the State Corporation Commission of Virginia) and the Amended Bylaws). This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the other parties hereto) this Agreement constitutes, and each Ancillary Agreement, when executed and delivered by the Company (assuming due authorization, execution and delivery by the other parties thereto), will constitute, a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law) and except to the extent that the indemnification provisions set forth in Article 9 hereof may be limited by federal or state securities laws and public policy considerations in respect thereof.

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Section 3.03 No Conflict. The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company and the consummation of the transactions contemplated hereby and thereby by the Company will not, with or without notice, lapse of time or both, (a) violate any applicable Law to which the Company, any of its Subsidiaries or any of their respective assets are subject, (b) conflict in any respect with, result in a violation or breach of, or constitute a default under, require consent or approval under, result in the acceleration of, result in the loss of any right or benefit to which the Company or any of its Subsidiaries would otherwise be entitled under or create in any party the right to accelerate, terminate or cancel, any contract, license, indenture, mortgage, deed of trust, bank loan, credit agreement or other agreement or instrument to which it is a party or by which it or its properties may be bound or affected (a “Contract”), (c) result in the creation or imposition of any material Encumbrance on any material asset of the Company or any Subsidiary or (d) violate the charter, bylaws or other organizational documents of the Company or any of its Subsidiaries, other than, in the case of clause (d) above, as have not had and would not reasonably be expected to have a Material Adverse Effect.

ARTICLE 3A

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes each of the representations and warranties set forth on Annex A as of the date hereof and as of the Closing Date, and each of such representations and warranties are hereby incorporated by reference in, and deemed a part of, this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser represents and warrants to the Company as of the date hereof and as of the Closing Date as follows:

Section 4.01 Status. Such Purchaser is duly organized and validly existing under the Laws of its jurisdiction of organization and (a) has all requisite organizational power and authority to carry on its business as it is now being conducted and to own and operate its property and assets as and in the places where such assets or properties are now owned and operated and (b) is duly qualified to do business in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not materially impair such Purchaser’s ability to perform its obligations under this Agreement or its Ancillary Agreements or consummate the transactions contemplated hereby or thereby.

Section 4.02 Authorization. Such Purchaser has all the requisite power and authority to enter into, and to perform its obligations under, this Agreement and its Ancillary Agreements. The execution, delivery and performance of this Agreement and such Purchaser’s

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Ancillary Agreements by such Purchaser and the consummation by such Purchaser of the transactions contemplated hereby and thereby have been duly and validly authorized by the members of such Purchaser and no other organizational proceedings of such Purchaser are necessary to authorize this Agreement or such Purchaser’s Ancillary Agreements or to consummate the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by such Purchaser, and (assuming due authorization, execution and delivery by the other parties hereto) this Agreement constitutes, and such Purchaser’s Ancillary Agreements, when executed and delivered by such Purchaser (assuming due authorization, execution and delivery by the other parties thereto) will constitute, a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law) and except to the extent that the indemnification provisions set forth in Article 9 hereof may be limited by federal or state securities laws and public policy considerations in respect thereof.

Section 4.03 No Conflict. The execution, delivery and performance of this Agreement and such Purchaser’s Ancillary Agreements by such Purchaser and the consummation of the transactions contemplated hereby and thereby by such Purchaser will not, with or without notice, lapse of time or both, (a) violate any applicable Law to which such Purchaser or any of its assets are subject, (b) conflict with, result in a violation or breach of, or constitute a default under, require consent or approval under, result in the acceleration of, result in the loss of any right or benefit to which such Purchaser would otherwise be entitled under or create in any party the right to accelerate, terminate or cancel, any Contract to which such Purchaser is a party, (c) result in the creation or imposition of any material Encumbrance on any material asset of such Purchaser or (d) violate the organizational documents of such Purchaser, other than, in the case of clauses (d) above, as would not, individually or in the aggregate, reasonably be expected to materially impair such Purchaser’s ability to perform its obligations under this Agreement or its Ancillary Agreements or consummate the transactions contemplated hereby or thereby.

Section 4.04 Private Placement. (a) Such Purchaser understands that the offering and sale of the Purchased Shares is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) of the Securities Act and any applicable state securities or blue sky laws.

(b) The Purchased Shares to be acquired by such Purchaser pursuant to this Agreement are being acquired for its own account and without a view to the resale or distribution of such Purchased Shares or any interest therein. Purchaser understands that the Purchased Shares are not registered under the Securities Act and that the Purchased Shares may not be sold or transferred (in any case, subject to the provisions of this Agreement) unless such shares are registered under the Securities Act or such sale or transfer is pursuant to a valid exemption from registration.

(c) Such Purchaser is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act.

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(d) Such Purchaser has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Purchased Shares and such Purchaser is capable of bearing the economic risks of such investment, including a complete loss of its investment in the Purchased Shares. Such Purchaser understands that its investment in the Purchased Shares involves a high degree of risk.

Section 4.05 Sufficiency of Funds. Such Purchaser has, or will have as of the Closing, sufficient funds on hand necessary to consummate the transactions contemplated by this Agreement and to pay all related fees and expenses.

ARTICLE 5

COVENANTS

Section 5.01 Conduct of the Business. From and after the date hereof and through the Closing, the Company shall, and shall cause its Subsidiaries to, conduct their respective businesses only in the ordinary course of business consistent with past practice (to the extent applicable). Without limiting the generality of the foregoing, after the date hereof and prior to the Closing Date, except as expressly provided for in this Agreement or as consented to in writing by each Purchaser, the Company will not:

(i) amend its articles of incorporation or bylaws;

(ii) split, combine or reclassify any shares of its capital stock;

(iii) declare or pay any dividend or distribution (whether in cash, stock or property) in respect of its Common Stock;

(iv) incur or assume indebtedness other than in the ordinary course of business consistent with past practice (or permit any of its Subsidiaries to do the same); or

(v) enter into any agreement or commitment to do any of the foregoing.

Section 5.02 Publicity. No disclosure or announcement regarding the existence of this Agreement, the Ancillary Agreements, their contents or the transactions contemplated hereby or thereby shall be made by any party hereto or any of their respective Affiliates, representatives or agents (1) publicly, (2) in any offering document distributed by the Company or (3) in any information filed or furnished with the Commission, without in each case affording the other parties hereto a reasonable opportunity (but no fewer than two Business Days prior to such disclosure, announcement or filing) to review and comment thereon (except to the extent that such party has been previously given an opportunity to review and comment on the contents of such disclosure or announcement). Notwithstanding the foregoing, nothing in this Section 5.02 shall prevent any party from (a) making any public announcement, disclosure or regulatory filing required by Law or the rules of any stock exchange, (b) communicating with its stockholders, members or investors in the ordinary course of business or (c) enforcing its rights hereunder or under any Ancillary Agreement (provided that any such disclosure is necessary to enforce such rights).

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Section 5.03 Access to Information. From the date hereof until the Closing Date, the Company shall, and shall cause its Subsidiaries to, afford the Purchasers and their representatives and agents reasonable access during normal business hours, and upon reasonable advanced notice, to the officers, employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and to their books and records, and shall furnish the Purchasers with financial, operating and other data and information with respect to the business and properties of the Company and its Subsidiaries as the Purchasers may reasonably request. In exercising its rights hereunder, each Purchaser shall (and shall cause each of its representatives and agents to) conduct themselves so as not to interfere in any material respect in the conduct of the business of the Company and its Subsidiaries. No investigation by either Purchaser, or by any representative or agent of either Purchaser, or other information received by any such Person, shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Company hereunder or in any Ancillary Agreement.

Section 5.04 Fees and Expenses. (a) At the Closing, the Company shall pay to Crestview Advisors, L.L.C., a Delaware limited liability company, a placement fee in immediately available funds equal to 7% of the Purchase Price.

(b) In addition, the Company shall reimburse the Purchasers: (i) at Closing, for $2 million in respect of actual out-of-pocket expenses (including any filing fees incurred with respect to any filing made under the HSR Act) incurred by the Purchasers in connection with the transactions contemplated by this Agreement or the Ancillary Agreements (“Purchaser Expenses”); provided that within thirty (30) days following the Closing, Purchasers shall provide the Company with documentation supporting such actual Purchaser Expenses, and if Purchasers fail to provide such documentation to the Company by the end of such thirty (30) day period, Purchasers shall reimburse such undocumented amount to the Company within two (2) Business Days thereafter; or (ii) in the event this Agreement is terminated in accordance with Article 8, within two (2) Business Days following such termination, for documented Purchaser Expenses, up to a maximum of $1 million in the aggregate.

(c) Except as otherwise specified in Section 5.04(b), each party shall bear its own fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby.

Section 5.05 Information Rights. The Company shall deliver to each Purchaser:

(a) as soon as available, and in any event within 90 days after the end of each fiscal year of the Company, an audited consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year, and audited consolidated statements of income, cash flows and shareholders equity of the Company and its Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, certified by the Company’s independent public accountant;

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(b) as soon as available, and in any event within 45 days after the end of each fiscal quarter of the Company, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal quarter, and unaudited consolidated statements of income, cash flows and shareholders equity of the Company and its Subsidiaries for such fiscal quarter, setting forth in each case in comparative form the figures for the previous quarter;

(c) as soon as available, and in any event within 30 days after the end of each month, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of such month, unaudited consolidated statements of income and shareholders equity of the Company and its Subsidiaries for such month or such other financial information as may be prepared in the ordinary course of business for the senior management of the Company;

(d) as soon as available, and in any event within 15 days after its adoption, the annual operating budget of the Company;

(e) copies of all reports furnished or filed by the Company to or with the Commission; and

(f) such other available information reasonably requested by any Purchaser or that is provided to any lender under any third party financing arrangement to which the Company or any of its Subsidiaries is party.

(g) Any information provided to a Purchaser pursuant to this Section is confidential information and, following the initial registered public offering of the Common Stock, shall be kept confidential by such Purchaser to the extent necessary to ensure compliance with the Commission’s Regulation FD without a broad public dissemination of such information.

Section 5.06 Confidentiality. Any confidential or proprietary information relating to the Company and its Affiliates provided (either prior to or after the date hereof) by or on behalf of the Company to a Purchaser or any of its Affiliates (or any of their respective advisors, representatives or agents) pursuant to the Confidentiality Agreement, this Agreement or otherwise in connection with the role of Purchaser and its Affiliates as directors, securityholders or advisors to the Company (“Confidential Information”) shall be kept strictly confidential and shall not be shared with any other persons except as required by Law or as permitted pursuant to Section 5.2, provided that if Purchaser, its Affiliates or any of their respective advisors, representatives or agents (such party, the “Disclosing Party”), based on advice of counsel, is required by Law to disclose any Confidential Information, the Disclosing Party shall (to the extent legally permissible) consult with the Company in advance of making any such disclosure. Additionally, if Purchaser, its Affiliates or any of their respective advisors, representatives or agents are requested or required (by oral question or request for information or documents in legal proceedings, interrogatories, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, Purchaser will promptly (to the extent legally permissible) notify the Company of such request or requirement so that the Company may seek an appropriate protective order. If, in the absence of a protective order, the Disclosing Party is nonetheless, based on the advice of counsel, compelled to disclose Confidential Information to any tribunal or regulatory authority, the Disclosing Party, after notice to the Company, shall disclose only such information to such tribunal as, based on advice of counsel, is required to be

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disclosed. The Disclosing Party shall exercise reasonable efforts to obtain assurance that confidential treatment will be accorded the Confidential Information. For the avoidance of doubt, the foregoing shall apply to any Confidential Information Purchaser, its Affiliates or their respective advisors, representatives or agents received pursuant to the Confidentiality Agreement or otherwise prior to the date hereof, and to any Confidential Information Purchaser, its Affiliates or their respective advisors, representatives or agents may receive pursuant to this Agreement, the Voting Agreement, the Governance Agreement, or the Professional Services Agreement. Each Purchaser shall make all reasonable efforts to safeguard the Confidential Information. The foregoing shall become inoperative as to particular portions of the Confidential Information if such information (i) is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement, (ii) was available to a Purchaser on a non-confidential basis prior to its disclosure by the Company or any Affiliate of the Company, or (iii) becomes available to a Purchaser on a non-confidential basis from a source other than the Company or the Company’s Affiliates, advisors and representatives, provided that such source is not known after reasonable inquiry to be bound by a confidentiality agreement relating to the Company or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation. The fact that Confidential Information is or becomes otherwise available under clauses (i) through (iii) above shall not relieve a party of the confidentiality provisions of this Agreement with respect to the balance of the Confidential Information. For the avoidance of doubt, Purchaser shall be permitted to share Confidential Information with the limited partners of Crestview Capital Partners, L.P. provided that the foregoing confidentiality restrictions shall similarly apply to such limited partners and Purchaser shall be responsible for any breaches of the foregoing by such limited partners or any of Purchaser’s Affiliates or their respective advisors, representatives and agents.

Section 5.07 Business Opportunity. The Company expressly acknowledges and agrees that (a) the Purchasers and their Affiliates are permitted to have, and may presently or in the future have, investments or other business relationships, ventures, agreements or arrangements (each, an “Other Business”) with entities engaged in the business of the Company and its Subsidiaries (including in areas in which the Company or any of its Subsidiaries may in the future engage and in related businesses other than through the Company or any of its Subsidiaries), (b) the Purchasers and their Affiliates have or may develop strategic relationships with businesses that are or may be competitive with the Company or any of its Subsidiaries, (c) none of the Purchasers or their Affiliates (including their respective designees serving on the Board or the board of directors of any Subsidiary of the Company, if applicable) will be prohibited by virtue of their investments in the Company or any of its Subsidiaries or their service on the Board or the board of directors of any such Subsidiary from pursuing and engaging in any such activities, (d) none of the Purchasers or their Affiliates will be obligated to inform the Company of any potential opportunity, relationship or investment (but must inform the Company promptly following the consummation or implementation of any such opportunity or investment), (e) neither the Company nor the other shareholders of the Company will have the right to acquire, be provided with an option or opportunity to acquire or be entitled to any interest or participation in any Other Business as a result of the participation therein of any of the Purchasers or their Affiliates and (f) the Company expressly waives, to the fullest extent permitted by applicable Law, any rights to assert any claim that such involvement breaches any duty owed to any shareholder, the Company or any of its Subsidiaries or to assert that such

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involvement constitutes a conflict of interest by such Persons with respect to the Company, the shareholders or any of the Company’s Subsidiaries. For the avoidance of doubt, (1) nothing contained herein shall limit, prohibit or restrict any designee serving on the Board or any representative of any of its Affiliates from serving on the board of directors or other governing body or committee of any Other Business and (2) this Section shall not constitute a waiver by the Company or any securityholder of such Person’s rights with respect to (a) any misuse of Confidential Information or misappropriation by any director of any business opportunity first presented to such director by any officer, director or employee of, or any consultant or advisor retained by, the Company or any of its Subsidiaries, as an opportunity to be pursued by the Company or its Subsidiaries or (b) a failure by a director to inform the Company or its Subsidiaries of what such director reasonably believes in good faith to be a conflict of interest.

Section 5.08 Further Assurances; Recirculation. (a) The parties hereto will use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement and the Ancillary Agreements. The parties agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) The Company will use commercially reasonably efforts to conduct its affairs in such a manner so that it will not be an “investment company” or an entity “controlled” by an investment company within the meaning of the Investment Company Act.

ARTICLE 6

PREEMPTIVE RIGHT

Section 6.01 Preemptive Right. (a) The Company hereby grants to the Purchasers, on the terms and conditions set forth herein, a continuing right for so long as Purchasers own any Applicable Stock (the “Preemptive Right”) to purchase from the Company, at the times set forth herein, such number of shares of Common Stock as is necessary to allow the Purchasers to maintain the Ownership Percentage. The Preemptive Right shall be assignable, in whole or in part and from time to time, by the Purchasers to any of their Affiliates who become parties to this Agreement. The exercise price for each share of Common Stock purchased pursuant to an exercise of the Preemptive Right shall be the price paid to the Company for each share of the Common Stock issued by the Company in the related Issuance Event, as determined in good faith by the Audit Committee of the Board.

(b) The provisions of Section 6.01(a) hereof notwithstanding, the Preemptive Right granted pursuant to Section 6.01(a) shall not apply and not be exercisable in connection with the issuance by the Company of any shares of Common Stock pursuant to (x) any stock option or other director, executive or employee benefit or compensation plan maintained by the Company or (y) the Stock Options.

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Section 6.02 Notice. At least 20 Business Days prior to the issuance of any shares of Common Stock (other than in connection with the 144A Offering, including the full exercise of any initial purchasers’ placement agents’ additional-allotment option granted in connection therewith) or, if earlier, the first date on which any event could occur that, in the absence of a full or partial exercise of the Preemptive Right, would result in a reduction in the Ownership Percentage, the Company will notify the Purchasers in writing (a “Preemptive Right Notice”) of any plans it has to issue such shares or the date on which such event could first occur. Each Preemptive Right Notice must specify the date on which the Company intends to issue such additional shares or on which such event could first occur (such issuance or event being referred to herein as an “Issuance Event” and the date of such issuance or event as an “Issuance Event Date”), the number of shares the Company intends to issue or may issue and the other material terms and conditions of such Issuance Event.

Section 6.03 Preemptive Right Exercise and Payment. The Preemptive Right may be exercised by the Purchasers (or any of their Affiliates to which all or any part of the Preemptive Right has been assigned and who have become parties to this Agreement) for a number of shares equal to or less than the number of shares that are necessary to maintain, in the aggregate, the then-current Ownership Percentage. The Preemptive Right may be exercised at any time after receipt of an applicable Preemptive Right Notice and prior to the applicable Issuance Event Date by the delivery to the Company of a written notice to such effect specifying the number of shares of Common Stock to be purchased by the Purchasers or any of their permitted assigns. Upon any such exercise of the Preemptive Right, the Company will, prior to the applicable Issuance Event Date, deliver to the Purchasers (or any of their permitted assigns), against payment therefor, certificates (issued in the name of the Purchasers or their permitted assigns or as otherwise directed by the Purchasers) representing the shares of Common Stock being purchased upon such exercise. Payment for such shares shall be made by wire transfer or intrabank transfer of immediately-available funds to such account as shall be specified by the Company, for the full purchase price for such shares.

Section 6.04 Effect of Failure to Exercise. Any failure by the Purchasers to exercise the Preemptive Right, or any exercise for less than all shares purchasable under the Preemptive Right, in connection with any particular Issuance Event shall not affect the right of the Purchasers or their permitted assigns to exercise the Preemptive Right in connection with any subsequent Issuance Event; provided that the Ownership Percentage following such Issuance Event in connection with which the Purchasers or their permitted assigns so failed to exercise such Preemptive Right in full or in part shall be recalculated as set forth in the definition of such term.

ARTICLE 7

CONDITIONS OF CLOSING

Section 7.01 Conditions to Obligations of the Purchasers and the Company. The respective obligations of the Company and the Purchasers to consummate the transactions contemplated by this Agreement are subject to the fulfillment or waiver (other than the conditions set forth in subsections (a) and (b) of this Section 7.01) by each such party, on or prior to the Closing Date, of each of the following conditions:

(a) there shall not be any Law in effect making illegal the consummation of the transactions contemplated hereby, and there shall not be any order or injunction of a court of competent jurisdiction in effect prohibiting the consummation of the transactions contemplated hereby;

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(b) the applicable waiting period (and any extension thereof) under the HSR Act, if any, relating to the transactions contemplated by this Agreement shall have been terminated or shall have expired;

(c) the 144A Offering pursuant to which the Company shall have received at least $180 million of gross proceeds (before deducting expenses) shall have been consummated; and

(d) the pre-money valuation (before expenses incurred in connection with the 144A Offering) shall not exceed a premium to tangible book value of $468.1 million.

Section 7.02 Additional Conditions to Obligations of the Purchasers. The obligation of the Purchasers to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Purchasers in whole or in part in their sole discretion):

(a) the representations and warranties of the Company contained in Articles 3 and 3A of this Agreement that are qualified by Material Adverse Effect or materiality shall be true and correct, and the representations and warranties of the Company contained in Articles 3 and 3A of this Agreement that are not so qualified shall be true and correct in all material respects, in each case on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date (except to the extent such representations and warranties shall have been expressly made as of an earlier date, in which case such representations and warranties shall have been true and correct only as of such earlier date);

(b) the Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by the Company on or prior to the Closing Date;

(c) the Amended Charter and the Amended Bylaws shall be in full force and effect;

(d) the Purchasers shall have received a certificate of an executive officer of the Company that the conditions set forth in subsections (a) and (b) of this Section 7.02 have been satisfied; and

(e) the Company and its Affiliates shall have executed and delivered each of the Ancillary Agreements to which they are parties.

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Section 7.03 Additional Conditions to Obligations of the Company. The obligation of the Company to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on the Closing Date, of each of the following conditions (any or all of which may be waived by such party in whole or in part in its sole discretion):

(a) the representations and warranties of the Purchasers contained in ARTICLE 4 of this Agreement that are qualified by materiality shall be true and correct, and the representations and warranties of the Purchasers contained in ARTICLE 4 of this Agreement that are not so qualified shall be true and correct in all material respects, in each case on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date;

(b) the Purchasers shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by the Purchasers on or prior to the Closing Date;

(c) the Company shall have received certificates of an authorized representative of each of the Purchasers that the conditions set forth in subsections (a) and (b) of this Section 7.03 have been satisfied; and

(d) the Purchasers and their Affiliates shall have executed and delivered each of the Ancillary Agreements to which they are party.

ARTICLE 8

TERMINATION

Section 8.01 Termination of Agreement. This Agreement may be terminated at any time prior to the Closing Date as follows:

(a) by mutual written consent of the Company and the Purchasers;

(b) by the written notice of the Company to the Purchasers if the Closing shall not have occurred on or before July 28, 2006 (the “Outside Date”); provided, that the right to terminate this Agreement under this Section 8.01(b) shall not be available to the Company if the failure of the Company to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(c) by the written notice of the Purchasers to the Company if the Closing shall not have occurred on or before the Outside Date; provided, that the right to terminate this Agreement under this Section 8.01(c) shall not be available to the Purchasers if the failure of any Purchaser to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; or

(d) by either the Company or the Purchasers in the event that any Governmental Entity shall have issued an order, decree or ruling, or taken any other action, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or by any Ancillary Agreement and such order, decree, ruling or other action shall have become final and non-appealable.

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Section 8.02 Effect of Termination. In the event of termination of this Agreement by a party pursuant to Section 8.01, written notice thereof shall forthwith be given by the terminating party to the other parties, and this Agreement shall thereupon terminate and become void and have no effect, and the transactions contemplated hereby shall be abandoned without further action by the parties, except that the provisions of Sections 5.04(b)(ii), 10.02, 10.03, 10.04, 10.05, 10.06, 10.08, 10.11, 10.12 and this 8.02 shall survive the termination of this Agreement; provided, that such termination shall not relieve any party of any liability for any willful and material breach of this Agreement prior to the effectiveness of such termination.

ARTICLE 9

INDEMNIFICATION

Section 9.01 Survival. (a) The representations and warranties contained herein shall survive the Closing until the date on which the Purchased Shares are covered by an effective registration statement filed with the Commission (the “Indemnification Period”). Claims for indemnification based on breaches of covenants and agreements contained herein (i) relating to the period from and after the date hereof through the Closing, shall survive until the end of the Indemnification Period and (ii) relating to the period from and after Closing, shall survive until the expiration of the applicable statute of limitations, unless any such covenant or agreement terminates prior to such date by its terms.

(b) Notwithstanding Section 9.01(a), any claim for breach of covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to such Section if notice of such claim (with reasonable specificity, to the extent the applicable facts are known to the Indemnified Party at such time) giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

Section 9.02 Obligations of the Company. (a) If the Closing occurs, subject to the terms of this ARTICLE 9, the Company shall indemnify and hold harmless the Purchasers and the Affiliates of the Purchasers from and against any losses, damages, liabilities, claims, interest, penalties, judgments, fines, settlements, costs and expenses (including reasonable expenses of investigation and reasonable attorney’s fees and expenses in connection with any Action, whether involving a third-party claim or a claim solely between the parties hereto) (collectively, “Losses”) incurred or suffered by the Purchasers or the Affiliates of the Purchasers resulting from or arising out of (i) any breach of any of the representations or warranties of the Company contained in this Agreement, or (ii) the failure of the Company to perform in any material respect any of its covenants or obligations contained in this Agreement or (iii) the 144A Offering (except to the extent such Losses result from or arise out of (1) information contained in the Preliminary Memorandum or the Final Memorandum supplied by Purchaser or its Affiliates for inclusion therein or (2) any gross negligence or willful misconduct of Purchaser or its Affiliates in connection with the 144A Offering.

(b) Notwithstanding the foregoing, the Company shall not be obligated to indemnify the Purchasers or any of the other persons referred to in Section 9.02(a) for Losses pursuant to Section 9.02(a)(i) unless and until the aggregate amount of Losses incurred by such persons in respect thereof exceeds $25 million (the “Threshold”), and then such persons shall be entitled to indemnification for all such Losses incurred to the extent in excess of the Threshold.

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(c) For purposes of determining the amount of a Loss under this resulting from a breach of any representation or warranty of the Company contained in this Agreement (but not for purposes of determining whether there has been a breach or inaccuracy), all references therein to “material,” “Material Adverse Effect,” “in all material respects” and similar qualifications as to materiality shall be deemed to be deleted therefrom for the purpose of determining the amount of such Loss with respect to any such breach.

Section 9.03 Obligations of the Purchasers. (a) If the Closing occurs, subject to the terms of this ARTICLE 9, the Purchasers shall jointly and severally indemnify and hold harmless the Company and its Affiliates from and against any Losses incurred or suffered by the Company or its Affiliates resulting from or arising out of (i) any breach of any of the representations or warranties of the Purchasers contained in this Agreement or (ii) the failure of any Purchaser to perform in any material respect any of its respective covenants or obligations contained in this Agreement.

Section 9.04 Indemnification Procedures. (a) In the event any party entitled to indemnification hereunder (an “Indemnified Party”) should have a claim against any party required to provide indemnification hereunder (an “Indemnifying Party”) under this ARTICLE 9, the Indemnified Party shall deliver notice of such claim (with reasonable specificity, to the extent the applicable facts are known to the Indemnified Party at such time) to the Indemnifying Party promptly following the Indemnified Party becoming aware of the same; provided, that no delay on the part of the Indemnified Party in giving any such notice shall relieve the Indemnifying Party of any indemnification obligation hereunder except to the extent that the Indemnifying Party is materially prejudiced by such delay. Any payment to any Indemnified Party pursuant to this ARTICLE 9 shall be made with Interest on the applicable amount of Losses from the date of the related claim for indemnification up to, but not including, the date of payment.

(b) Notwithstanding the foregoing, with respect to any third-party claim subject to indemnification hereunder (an “Asserted Liability”) the Indemnifying Party shall not be entitled to assume or maintain control of the defense of any Asserted Liability, shall not be entitled to settle or compromise any Asserted Liability, and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party if (i) the Asserted Liability relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation or (ii) the Asserted Liability seeks injunctive or equitable relief against the Indemnified Party. Except as otherwise provided in the preceding sentence, the Indemnifying Party shall be entitled to assume or maintain control of the defense of any Asserted Liability and shall not be liable hereunder for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, consent to any settlement in respect of an Asserted Liability which (A) does not contain an unconditional release of the Indemnified Party from the subject matter of the settlement or that contains an admission of liability or wrongdoing or (B) imposes any sanctions, restrictions or obligations on the Indemnified Party other than the payment of money damages. The Indemnified Party shall have the right (but not the duty) to

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participate in the defense against any Asserted Liability at its own expense; provided, that, if the Indemnifying Party and the Indemnified Party are both named parties to the proceedings and, in the reasonable opinion of counsel to the Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, then the applicable Indemnified Parties shall be entitled to participate in any such defense with one separate counsel at the reasonable expense of the Indemnifying Party. Notwithstanding the foregoing, in any event, the Indemnified Party shall have the right to control, pay or settle any Asserted Liability which the Indemnifying Party shall have undertaken to defend so long as the Indemnified Party shall also waive any right to indemnification therefor by the Indemnifying Party. If the Indemnifying Party undertakes to defend against such Asserted Liability, the Indemnified Party shall reasonably cooperate with the Indemnifying Party to ensure the proper and adequate defense and settlement of such claim or demand.

(c) Notwithstanding any other provision of this Agreement, in no event shall any party be liable for punitive damages or any special or indirect damages of any kind or nature, regardless of the form of action through which such damages are sought.

ARTICLE 10

MISCELLANEOUS

Section 10.01 Assignment; Binding Effect. This Agreement and the rights and obligations hereunder are not assignable unless such assignment is consented to in writing by each of the parties; provided, that each Purchaser shall be entitled to assign in whole or in part from time to time, its rights and obligations pursuant to Section 5.05 to one or more of its controlling parties or controlled Affiliates (subject to all applicable confidentiality requirements) and Article 6 to one or more of its controlled Affiliates; provided, further, that each such assignee shall execute a supplementary agreement pursuant to which it agrees to be bound by the terms and conditions of this Agreement and each of the relevant Ancillary Agreements and that no assignment of rights or obligations pursuant to this Section 10.01 shall relieve the assigning party of its obligations hereunder or thereunder. Subject to the preceding clause, this Agreement and all the provisions hereof shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. For the avoidance of doubt, a permitted assign of a Purchaser shall be deemed a “Purchaser” for all purposes of this Agreement.

Section 10.02 Choice of Law. This Agreement shall be governed by and interpreted and enforced in accordance with the Laws of the State of New York without regard to the conflicts of laws rules thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).

Section 10.03 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) when received if delivered personally, (b) when sent by electronic mail or facsimile (which is confirmed by the intended recipient) and (c) when sent by overnight courier service or when mailed by certified or registered mail, return receipt requested, with postage prepaid to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

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If to the Purchasers, to:

Crestview Capital Partners, L.P.

667 Madison Avenue, 10th Floor

New York, New York 10021

Attn:    Jacob Capps

Fax:     (212) 906-0750

with copies, in the case of notice to the Purchasers, to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attn:    Carole Schiffman, Esq.

Fax:     (212) 450-3800

If to the Company, to:

FBR Capital Markets Corporation

1001 Nineteenth Street

Arlington, Virginia 22209

Attn:    Chief Legal Officer

Fax:     (703) 469-1140

with copies, in the case of notice to the Company, to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attn:    Trevor S. Norwitz

Fax:     (212) 403-2333

Section 10.04 Headings. The headings contained in this Agreement are inserted for convenience only and shall not be considered in interpreting or construing any of the provisions contained in this Agreement.

Section 10.05 Entire Agreement. This Agreement, together with the Ancillary Agreements, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties with respect to such subject matter; provided, that, if this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall continue in full force and effect. The Confidentiality Agreement and the Letter Agreement, dated as of June 22, 2006, as amended, among the parties hereto and certain other Persons shall, automatically and without any action by any party thereto, terminate at the Closing provided, that such termination shall not relieve any party thereto with respect to any breaches of such agreement by such party occurring prior to such termination.

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Section 10.06 Interpretation. (a) When a reference is made in this Agreement to an Article, Section, Annex or Exhibit, such reference shall be to an Article, Section, Annex or Exhibit of or to this Agreement unless otherwise indicated.

(b) Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation” unless the context otherwise requires or unless otherwise specified.

(c) When a reference in this Agreement is made to a “party” or “parties,” such reference shall be to a party or parties to this Agreement unless otherwise indicated.

(d) Unless the context requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words in this Agreement refer to this entire Agreement.

(e) Unless the context requires otherwise, words in this Agreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other genders.

(f) Except as otherwise specifically provided herein, where any action is required to be taken on a particular day and such day is not a Business Day and, as a result, such action cannot be taken on such day, then this Agreement shall be deemed to provide that such action shall be taken on the first Business Day after such day.

(g) This Agreement was prepared jointly by the parties and no rule that it be construed against the drafter will have any application in its construction or interpretation.

Section 10.07 Waiver and Amendment. This Agreement (together with any annex or exhibit hereto) may be amended, modified or supplemented only by a written mutual agreement executed and delivered by the parties. Except as otherwise provided in this Agreement, any failure of any party to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligations, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

Section 10.08 Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which when executed, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties notwithstanding the fact that all of the parties are not signatory to the original or the same counterpart. For purposes of this Agreement, facsimile signatures shall be deemed originals.

Section 10.09 Third-Party Beneficiaries. Except for the rights of the Indemnified Parties pursuant to Article 9, (i) this Agreement is for the sole benefit of the parties and their successors and permitted assigns and (ii) nothing herein express or implied shall give or be construed to give to any Person, other than the parties and such successors and permitted assigns, any legal or equitable rights hereunder.

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Section 10.10 Specific Performance. The parties agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at Law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at Law or in equity.

Section 10.11 Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof. The parties shall engage in good faith negotiations to replace any provision which is declared invalid, illegal or unenforceable with a valid, legal and enforceable provision, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision which it replaces.

Section 10.12 Jurisdiction. The parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with this Agreement, the Ancillary Agreements (except to the extent otherwise provided in any Ancillary Agreement) or the transactions contemplated hereby or thereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 10.03 shall be deemed effective service of process on such party.

Section 10.13 Termination of Certain Provisions. Unless earlier terminated pursuant to Section 8.01, this Agreement (other than Section 5.06 which shall survive termination of this Agreement and Article 6 which shall terminate as provided in Section 6.01) shall terminate on the date on which the Purchasers and their permitted assigns own less than 1% of the Applicable Stock (other than shares of Common Stock referred to in clause (iii) of the definition thereof).

Section 10.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

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Section 10.15 Legend. (a) For as long as a share of Applicable Stock is subject to the terms of the Voting Agreement or Governance Agreement, each certificate (if certificated) evidencing Applicable Stock shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE VOTING AGREEMENT AND GOVERNANCE AGREEMENT, EACH DATED AS OF JULY 20, 2006, RELATING TO FBR CAPITAL MARKETS CORPORATION AND, AMONG OTHER THINGS, MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH SUCH RESTRICTIONS. COPIES OF SUCH AGREEMENTS ARE ON FILE WITH THE SECRETARY OF THE ISSUER AND ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREOF. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE AFORESAID AGREEMENTS.

If any share of Applicable Stock shall cease to be subject to the restrictions set forth in the Voting Agreement or Governance Agreement, the Company shall, upon the written request of the holder thereof, issue to such holder a new certificate evidencing such share of Applicable Stock without the legend (or the reference therein to the Voting Agreement or Governance Agreement) required by this Section 10.15(a) endorsed thereon.

(b) For as long as a share of Applicable Stock is not registered under the Securities Act, each certificate (if certificated) evidencing such share of Applicable Stock shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED OR HYPOTHECATED IN THE UNITED STATES IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.”

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written.

FOREST HOLDINGS LLC
By:	Crestview Capital Partners, L.P., as Member
By:	Crestview Partners, L.P., its General Partner
By:	Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Purchaser Percentage: 94.8%
FOREST HOLDINGS (ERISA) LLC
By:	Crestview Capital Partners (ERISA), L.P., as Member
By:	Crestview Partners, L.P., its General Partner
By:	Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Purchaser Percentage: 5.2%
FBR CAPITAL MARKETS CORPORATION
By:	/s/ Eric F. Billings
Name:	Eric F. Billings
Title:	Chairman and Chief Executive Officer

[Investment Agreement Signature Page]

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EX-10.8

Exhibit 10.8

GOVERNANCE AGREEMENT

by and among

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.,

FBR TRS HOLDINGS, INC.,

FOREST HOLDINGS (ERISA) LLC,

and

FOREST HOLDINGS LLC

dated as of

July 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE 1
DEFINITIONS
Section 1.1	Definitions	1
ARTICLE 2
TRANSFER RESTRICTIONS
Section 2.1	No Transfer in First Year	2
Section 2.2	Certain Permitted Transfers	2
Section 2.3	Right of First Offer and Right of First Refusal	3
Section 2.4	Tag-Along Sale Right	5
ARTICLE 3
DISCLOSURE OBLIGATIONS
Section 3.1	Disclosure Obligations	6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1	Representations and Warranties	6
ARTICLE 5
MISCELLANEOUS
Section 5.1	Term	7
Section 5.2	Counterparts	7
Section 5.3	Governing Law	7
Section 5.4	Entire Agreement	7
Section 5.5	Specific Performance	7
Section 5.6	Notices	7
Section 5.7	Assignment	8
Section 5.8	Headings	9
Section 5.9	Amendments and Waivers	9
Section 5.10	Interpretation; Absence of Presumption	9
Section 5.11	Severability	9
Section 5.12	Jurisdiction	9
Section 5.13	Waiver of Jury Trial	10

		Page
Section 5.14	Further Assurances	10
Section 5.15.	Recapitalization, Etc	10
Section 5.16.	FBR Group Guarantee	10

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THIS GOVERNANCE AGREEMENT (the “Agreement“), dated as of July 20, 2006, relating to FBR Capital Markets Corporation (“FBR” or the “Company”) is made by and among Friedman, Billings, Ramsey Group, Inc., a Virginia corporation, (“FBR Group“), FBR TRS Holdings, Inc., a Virginia corporation, (“FBR TRS“), Forest Holdings (ERISA) LLC, a Delaware limited liability company (“Crestview ERISA“) and Forest Holdings LLC, a Delaware limited liability company (“Crestview LLC” and, together with Crestview ERISA, “Purchaser”).

RECITALS:

WHEREAS, FBR Group, FBR TRS, FBR and Purchaser entered into a letter agreement on June 22, 2006, as amended on July 14, 2006, setting forth the principal terms and conditions pursuant to which Purchaser would acquire common shares (“Shares“) of the Company in connection with the 144A private placement of Shares, and be granted options to buy Shares (the “Options“) from the Company, which letter agreement contemplated that the parties thereto would further memorialize their agreements with respect to such transactions in definitive agreements;

WHEREAS, FBR and Purchaser entered into an Investment Agreement, dated as of July 19, 2006 (the “Investment Agreement“) setting forth the terms and conditions pursuant to which Purchaser is acquiring the Shares from the Company and is being granted the Options;

WHEREAS, following consummation of the transactions contemplated by the Investment Agreement, Purchaser will own a significant percentage of the equity interests in the Company; and

WHEREAS, the parties hereto desire to enter into this Agreement to provide for certain rights and obligations of the parties hereto.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions. Capitalized terms not defined herein shall have their respective meanings specified in the Investment Agreement. As used in this Agreement, the following terms shall have the following respective meanings:

“First Offer Price” shall have the meaning specified in Section 2.3(a).

“Original Shares“ shall mean the Shares acquired by Purchaser with the Purchase Price and the Additional Purchase Price, if any (including Shares issued in respect of, in exchange for or in substitution of such Shares by reason of any Reorganization).

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“Reorganization“ shall mean any reorganization, recapitalization, stock dividend, stock split or any similar change in the capital structure of the Company.

“Restricted Entity“ shall mean an entity set forth on Annex A hereto (including all Subsidiaries of such entity).

“ROFO Notice” shall have the meaning specified in Section 2.3(a).

“ROFR Notice” shall have the meaning specified in Section 2.3(b).

“ROFR Price” shall have the meaning specified in Section 2.3(b).

“Rule 144” shall mean Rule 144 promulgated under the Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the time.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“Tag-Along Notice” shall have the meaning specified in Section 2.4.

“Transfer” shall mean directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of (by operation of law or otherwise), any Shares or any interest in any Shares.

“Transferring Party” shall have the meaning specified in Section 2.3(a).

ARTICLE 2

TRANSFER RESTRICTIONS

Section 2.1 No Transfer in First Year. No party hereto will Transfer any Shares prior to the one-year anniversary of the Closing Date (provided that, for avoidance of doubt, this shall not restrict a merger or other business combination involving the Company). Thereafter, Shares may be Transferred only in compliance with the remainder of this Article 2.

Section 2.2 Certain Permitted Transfers. After the one-year anniversary of the Closing Date, the parties hereto may Transfer Shares in accordance with this Article 2 and in compliance with the United States federal securities laws and all applicable state securities or “blue sky” laws; provided that the requirements of Section 2.3 shall not apply to Transfers of Shares (i) in a public offering, (ii) pursuant to Rule 144 (except in a privately negotiated transaction in which the counterparty is known), (iii) to controlled Affiliates of Crestview, L.L.C. who enter into an agreement reasonably satisfactory to FBR TRS to be bound by the terms of this Agreement to the same extent as the transferor is so bound or (iv) to the equityholders of such transferor pursuant to a distribution that is made pro rata to such equityholders in accordance with the respective partnership or limited liability company agreement of such transferor without

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payment of additional consideration therefor by such equityholders (it being understood that such equityholders will not be bound by the provisions of this Agreement). No Transfer of Shares in violation of this Agreement shall be recorded on the books of the Company, and any such attempted Transfer shall be void ab initio and of no effect.

Section 2.3 Right of First Offer and Right of First Refusal. (a) Right of First Offer. After the one-year anniversary of the Closing Date, subject to the proviso in Section 2.2, prior to Transferring any Shares, Purchaser and or its Affiliates proposing to effect such Transfer (the “Transferring Party”) shall give FBR TRS a right of first offer to purchase such Shares as described in this paragraph (a):

(i) The Transferring Party shall give written notice (a “ROFO Notice”), to FBR TRS stating such Transferring Party’s intention to effect a Transfer, the number of Shares subject to such proposed Transfer, the price (including the form of consideration) at which, and any other terms the Transferring Party wishes to specify on which, such Transferring Party proposes to offer such Shares for Transfer (the “First Offer Price”).

(ii) Upon receipt of the ROFO Notice, FBR TRS (or an Affiliate designated by it in accordance with Section 5.7) may make an irrevocable election, by giving written notice within ten (10) Business Days from receipt of the ROFO Notice, to purchase all, but not less than all, of the Shares subject to such ROFO Notice at the First Offer Price and otherwise on terms and conditions substantially similar to the terms and conditions described in the ROFO Notice. If FBR TRS (or any such Affiliate) fails to so notify the Transferring Party within such ten (10) Business Day period, FBR TRS (and its Affiliates) shall be deemed to have irrevocably waived their right to elect to purchase such Shares (unless such Shares are not Transferred and the last sentence of clause (iv) below is applicable).

(iii) If FBR TRS (or such Affiliate) elects to purchase all of such Shares, FBR TRS (or such Affiliate) and the Transferring Party shall use their commercially reasonable efforts to consummate such transaction as promptly as practicable (but in no event more than fourteen (14) days after the delivery of such election notice, provided that, if the Transfer is subject to regulatory approval, and if definitive documentation with respect to such purchase has been executed within fourteen (14) days, such fourteen (14) day period will be extended until the expiration of five (5) Business Days after all such approvals will have been received, but in no event will such period be extended for more than an additional ninety (90) days).

(iv) If FBR TRS or an Affiliate does not elect to purchase all of such Shares pursuant to this paragraph (a) or if, having made such election, FBR TRS or an Affiliate does not complete such purchase within the applicable time period specified in paragraph (iii), then the Transferring Party shall be free for a period of 120 days from the date that is ten (10) Business Days following receipt of the ROFO Notice (provided that, if the Transfer is subject to regulatory approval, such 120-day period will be extended until the expiration of five (5) Business Days after all such approvals will have been received, but in no event will such period be extended for more than an additional 120 days) to Transfer such Shares to a transferee for consideration having a value not less than the First Offer Price; provided that any such definitive agreement is on terms in the aggregate no less favorable to the Transferring Party than contained in the ROFO Notice. Subject to any confidentiality obligations of the Transferring Party, the

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Transferring Party shall provide FBR TRS a substantially final draft of such definitive agreement (or, if the Transferring Party is prohibited from providing such draft, a summary of the material terms and conditions thereof) at least two (2) Business Days prior to entering into such agreement and in any event prior to such Transfer. In the event that the Transferring Party has not entered into such a definitive agreement with the period referred to in the preceding sentence, or has so entered into such an agreement but has not consummated the sale of such Shares within nine months from the date of such definitive agreement, then the provisions of this paragraph (a) shall again apply, and such Transferring Party shall not Transfer or offer to Transfer such Shares without again complying with this paragraph (a), to the extent applicable.

(v) Notwithstanding anything herein to the contrary, the provisions of this Section 2.3(a) will not apply to any Transfer of Shares (i) that is subject to Section 2.3(b) or (ii) that is referred to in the proviso to Section 2.2.

(b) Right of First Refusal. In addition to compliance with Section 2.3(a), after the one-year anniversary of the Closing Date, prior to Transferring any Shares to any Restricted Entity for the account of such Restricted Entity as principal in a privately negotiated transaction (that is, in which the counterparty is known to be a Restricted Entity), the Transferring Party shall give FBR TRS a right of first refusal to purchase such Shares as described in this paragraph (b):

(i) The Transferring Party shall give written notice (a “ROFR Notice”), to FBR TRS stating such Transferring Party’s intention to enter into a definitive agreement with a Restricted Entity to effect a Transfer, the number of Shares subject to such Transfer, the price (including the form of consideration) at which such Transferring Party proposes to Transfer such Shares (the “ROFR Price”), the identity of the proposed transferee and any other material terms upon which such Transfer is proposed to be made.

(ii) Upon receipt of the ROFR Notice, FBR TRS (or an Affiliate designated by it in accordance with Section 5.7) will have an irrevocable option to purchase all, but not less than all, of the Shares subject to such ROFR Notice at the ROFR Price and otherwise on terms and conditions substantially similar to the terms and conditions described in the ROFR Notice. FBR TRS or such Affiliate shall, within ten (10) Business Days from receipt of the ROFR Notice, indicate if it accepts such offer by sending written notice of such acceptance to the Transferring Party. If FBR TRS (or any such Affiliate) fails to so notify the Transferring Party within such ten (10) Business Day period, FBR TRS (and its Affiliates) shall be deemed to have irrevocably waived their right to elect to purchase such Shares (unless such Shares are not Transferred and the last sentence of clause (iv) below is applicable).

(iii) If FBR TRS or such Affiliate elects to purchase all of such Shares, FBR TRS or such Affiliate and the Transferring Party shall use their commercially reasonable efforts to consummate such transaction as promptly as practicable (but in any event within five (5) Business Days following the delivery of such election notice provided that, if the Transfer is subject to regulatory approval, such five (5) Business Day period will be extended until the expiration of five (5) Business Days after all such approvals will have been received, but in no event will such period be extended for more than an additional ninety (90) days).

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(iv) If FBR TRS or an Affiliate does not elect to purchase all of such Shares pursuant to this paragraph (b) (or if, having made such election, FBR TRS or an Affiliate does not complete such purchase within the applicable time period specified in paragraph (iii)), then the Transferring Party shall be free for a period of fifteen (15) Business Days following receipt of the ROFR Notice to enter into a definitive agreement with such Restricted Entity for consideration having a value not less than the ROFR Price; provided that any such definitive agreement provides for the consummation of such Transfer on terms no less favorable to Purchaser in the aggregate than were contained in the ROFR Notice. Subject to any confidentiality obligations of the Transferring Party, the Transferring Party shall provide FBR TRS a substantially final draft of such definitive agreement (or, if the Transferring Party is prohibited from providing such draft, a summary of the material terms and conditions thereof) at least two (2) Business Days prior to entering into such agreement and in any event prior to such Transfer. In the event that the Transferring Party has not entered into such a definitive agreement within such fifteen (15) Business Day period, or has so entered into such an agreement but has not consummated the sale of such Shares within nine months from the date of such definitive agreement, then the provisions of this paragraph (b) shall again apply, and such Transferring Party shall not Transfer or offer to Transfer such Shares not so Transferred without again complying with this paragraph (b), to the extent applicable.

(v) Notwithstanding anything herein to the contrary, the provisions of this Section 2.3(b) shall not apply to any Transfer (i) that is subject to Section 2.4 or (ii) that is referred to in the proviso to Section 2.2.

Section 2.4 Tag-Along Sale Right. (a) If after the one-year anniversary of the Closing Date, FRB TRS proposes to Transfer Shares constituting 7 ¹/2% or more of the then-outstanding Shares (other than (i) in a public offering, (ii) pursuant to Rule 144 (except in a privately negotiated transaction in which the counterparty is known) or (iii) to one or more controlled Affiliates of FBR Group who enter into an agreement reasonably satisfactory to Purchaser to be bound by the terms of this Agreement to the same extent as FBR TRS is then bound), then FBR TRS shall give written notice of such proposed Transfer to Purchaser (the “Tag-Along Notice”) at least ten (10) Business Days prior to the consummation of such proposed Transfer, setting forth the number of Shares subject to such Transfer, the price (including the form of consideration) at which such FBR TRS proposes to Transfer such Shares, the identity of the transferee, the date of the proposed Transfer and any other material terms upon which such Transfer is proposed to be made. If the consideration payable consists in part or in whole of consideration other than cash, FBR TRS shall provide Purchaser with such information relating to such consideration as Purchaser reasonably requests as being necessary to evaluate such non-cash consideration, it being understood that such request will not obligate FBR TRS to deliver any information not in the possession of FBR TRS.

(b) Upon delivery of the Tag-Along Notice, Purchaser may elect, by giving an irrevocable written notice to FBR TRS within ten (10) Business Days of the date of the Tag-Along Notice, to sell a pro rata portion of its Shares (so that the proportion of its Shares sold and the proportion of FRB TRS’s Shares sold in any transaction subject to this Section 2.4 will be equal), at the same price per Share and on the same terms and conditions as agreed to by FBR TRS (provided that if such transaction is not consummated for any reason, then Purchaser shall retain such Shares). If Purchaser shall not have delivered such notice within such ten (10) Business

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Day period, Purchaser shall be deemed to have irrevocably waived its rights set forth in this Section 2.4 with respect to such transaction, and FBR TRS may sell the Shares that were the subject of the Tag-Along Notice. In the event that FBR TRS has not entered into a definitive agreement with respect to the transaction described in the Tag-Along Notice within thirty (30) Business Days of the date of the Tag-Along Notice, or has entered into such an agreement but has not consummated the sale of such Shares within nine months from the date of such definitive agreement, then the provisions of this Section 2.4 shall again apply, and FBR TRS shall not Transfer or offer to Transfer such Shares not so Transferred without again complying with this Section 2.4, to the extent applicable.

(c) Concurrently with the consummation of any Transfer in connection with which Purchaser has made an election pursuant to Section 2.4(b), FBR TRS will (i) notify Purchaser thereof, (ii) to the extent consideration is not remitted directly to Purchaser, remit to Purchaser the total consideration for the Shares that Purchaser Transferred pursuant thereto concurrently with FBR TRS’ receipt of such consideration and (iii) promptly after the consummation of such Transfer, furnish such other evidence of the completion and the date of completion of such Transfer and the terms thereof as may be reasonably requested by Purchaser.

ARTICLE 3

DISCLOSURE OBLIGATIONS

Section 3.1 Disclosure Obligations. The parties hereto shall have reasonable rights to review in advance and comment on all public disclosure relating to this Agreement. In addition, Section 5.02 of the Investment Agreement is hereby incorporated by reference herein and made a part hereof, mutatis mutandis.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties. Each of FBR Group and FBR TRS, on the one hand, and Crestview ERISA and Crestview LLC, on the other hand, represents and warrants to the other that:

(a) it is an entity duly organized and validly existing and in good standing under the laws of the its jurisdiction of formation, with requisite power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby;

(b) the execution, delivery and performance by it of this Agreement, and the consummation by it of the transactions contemplated hereby and compliance by it with the terms hereof will not conflict with, or result in any breach of or constitute a default under, (i) any provision of its certificate of incorporation or formation or bylaws, or equivalent constitutive documents, (ii) any provision of any contract or other agreement or instrument to which it is a party or by which it or its properties are bound, or (iii) any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or

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order applicable to it, except in the case of clauses (ii) or (iii) for such conflicts, breaches or defaults which have been validly waived or would not reasonably be expected to have a material adverse effect on it or on its ability to perform its obligations under this Agreement; and

(c) this Agreement has been duly authorized, executed and delivered by it and is enforceable against it in accordance with its terms, except in each case as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

ARTICLE 5

MISCELLANEOUS

Section 5.1 Term. The rights and obligations specified in this Agreement shall expire at such time as Purchaser and its Affiliates who have become parties to this Agreement cease to own at least one percent (1%) of the Original Shares.

Section 5.2 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to each other party hereto. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section, provided receipt of copies of such counterparts is confirmed.

Section 5.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

Section 5.4 Entire Agreement. This Agreement, together with the Investment Agreement and the other agreements contemplated thereby, contains the entire agreement between the parties hereto with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the parties hereto other than those set forth or referred to herein. This Agreement is not intended to confer upon any person not a party hereto (or their successors and assigns) any rights or remedies hereunder.

Section 5.5. Specific Performance. The parties hereto acknowledge and agree that a breach or threatened breach, of any agreement contained herein, including, without limitation, those contained in Article 2, will cause irreparable damage, and the other parties hereto will have no adequate remedy at law or in equity. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or in damages, is the appropriate remedy for any such failure and will not oppose the granting of such relief.

Section 5.6 Notices. All notices, requests, demands or other communications required by or otherwise with respect to this Agreement shall be in writing and shall be deemed to have been duly given to any party hereto when delivered by hand, by messenger, or by a nationally recognized overnight delivery company, when delivered by telecopy and confirmed by return telecopy, or when delivered by first-class mail, postage prepaid and return receipt requested,

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in each case to the applicable addresses set forth below. Notices to FBR Group and FBR TRS shall be addressed to such party in care of:

Friedman, Billings, Ramsey Group, Inc.

1001 Nineteenth Street North

Arlington, VA 22209

Attention: William J. Ginivan, Esq.

Telecopy Number: (703) 469-1140

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52^nd Street, 30^th Floor

New York, NY 10019-6150

Attention: Trevor S. Norwitz, Esq.

Telecopy Number: (212) 403-2333

or at such other address and to the attention of such other person as FBR Group or FBR TRS may designate by written notice to Purchaser. Notices to Purchaser shall be addressed to:

Forest Holdings LLC

Forest Holdings (ERISA) LLC

c/o Crestview Capital Partners, L.P.

667 Madison Avenue

New York, NY 10021

Attention: Jacob Capps

Telecopy Number: (212) 906-0750

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY 10017

Attention: Carole Schiffman, Esq.

Telecopy Number: (212) 450-3800

or at such other address and to the attention of such other person as Purchaser may designate by written notice to FBR Group and FBR TRS.

Section 5.7 Assignment.

(a) Assignment. Subject to the immediately following sentence, the rights of the parties specified herein are personal to the parties and will not pass to any acquiror of such party’s Shares. If any party hereto (or any of their respective permitted assignees) transfers Shares to any of their Affiliates (which shall be expressly permitted hereunder, subject to compliance with the remainder of this sentence), such Affiliates shall become bound by all the provisions of this Agreement pursuant to an agreement reasonably satisfactory to such other parties hereto. Except as otherwise specifically provided in this Agreement, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto.

Section 5.8 Headings. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

Section 5.9 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the parties hereto. Any party hereto may, only by an instrument in writing, waive compliance by the other parties hereto with any term or provision hereof on the part of such other parties hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach.

Section 5.10 Interpretation; Absence of Presumption. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, (iv) the word “or” shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions.

(b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 5.11 Severability. If any provision of this Agreement or the application of such provision to any person or circumstances shall be held invalid or unenforceable by a court of competent jurisdiction, such provision or application shall be unenforceable only to the extent of such invalidity or unenforceability, and the remainder of the provision held invalid or unenforceable and the application of such provision to persons or circumstances, other than the party as to which it is held invalid, and the remainder of this Agreement, shall not be affected.

Section 5.12 Jurisdiction. The parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with this Agreement or the transactions contemplated hereby or thereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of

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the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.6 shall be deemed effective service of process on such party.

Section 5.13 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 5.14 Further Assurances. The parties hereto agree that, from time to time, each of them will, and will cause their respective Affiliates to, execute and deliver such further instruments and take such other action as may be necessary to carry out the purposes and intents hereof. Each party shall take all actions necessary to ensure that the Articles of Incorporation and Bylaws of the Company and each of its Subsidiaries facilitate and do not at any time conflict with any provision of this Agreement.

Section 5.15. Recapitalization, Etc. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any Shares by reason of any Reorganization, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement.

Section 5.16. FBR Group Guarantee. FBR Group hereby guarantees to the Purchaser the prompt and full discharge by FBR TRS of all of FBR TRS’ covenants, agreements and obligations under this Agreement including the due and punctual payment of all amounts which are or may become due and payable by FBR TRS hereunder, when and as the same shall become due and payable (collectively, the “FBR TRS Obligations”), in accordance with the terms hereof. FBR Group acknowledges and agrees that, with respect to all the FBR TRS Obligations to pay money, such guaranty shall be a guaranty of payment and performance and not of collection and shall not be conditioned or contingent upon the pursuit of any remedies against FBR TRS. The liabilities and obligations of FBR Group pursuant to this Section are unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by any act, omission to act, delay of any kind by any party hereto or any other Person, or any other circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable discharge of the obligations of FBR Group hereunder.

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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto as of the day first above written.

Forest Holdings LLC
By:	Crestview Capital Partners, L.P., as Member
By:	Crestview Partners, L.P., its General Partner
By:	Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Forest Holdings (ERISA) LLC
By:	Crestview Capital Partners (ERISA), L.P., as Member
By:		Crestview Partners, L.P., its General Partner
By:		Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Friedman Billings Ramsey Group, Inc.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP and Chief Legal Officer
FBR TRS Holdings, Inc.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	General Counsel

[SIGNATURE PAGE TO GOVERNANCE AGREEMENT]

EX-10.9

Exhibit 10.9

VOTING AGREEMENT

by and among

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.,

FBR TRS HOLDINGS, INC.,

FBR CAPITAL MARKETS CORPORATION,

FOREST HOLDINGS (ERISA) LLC,

and

FOREST HOLDINGS LLC

dated as of

July 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE 1
DEFINITIONS
Section 1.1	Definitions	1
ARTICLE 2
BOARD COMPOSITION
Section 2.1	Composition of the Board	2
Section 2.2	Composition of Subsidiary Boards	4
Section 2.3	Continuing Committee Representation	4
Section 2.4	Scale-Back of Purchaser Board Representation	4
Section 2.5	Scale-Back of FBR TRS Board Representation	4
Section 2.6	Implementation	5
Section 2.7	Observer Status	5
ARTICLE 3
AFFILIATE TRANSACTIONS
Section 3.1	Affiliate Transactions	6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1	Representations and Warranties	6
ARTICLE 5
MISCELLANEOUS
Section 5.1	Term	7
Section 5.2	Counterparts	7
Section 5.3	Governing Law	7
Section 5.4	Entire Agreement	7
Section 5.5	Specific Performance	8
Section 5.6	Notices	8
Section 5.7	Assignment, Transfers	9
Section 5.8	Headings	9
Section 5.9	Amendments and Waivers	9
Section 5.10	Interpretation; Absence of Presumption	9

		Page
Section 5.11	Severability	10
Section 5.12	Jurisdiction	10
Section 5.13	Waiver of Jury Trial.	10
Section 5.14	Further Assurances	10
Section 5.15	Recapitalization, Etc.	10
Section 5.16	FBR Group Guarantee	11
Section 5.17	FBR TRS Acknowledgment	11

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THIS VOTING AGREEMENT (the “Agreement“), dated as of July 20, 2006, is made by and among Friedman, Billings, Ramsey Group, Inc., a Virginia corporation, (“FBR Group“), FBR TRS Holdings, Inc., a Virginia corporation, (“FBR TRS“), FBR Capital Markets Corporation, a Virginia corporation, (“FBR“ or the “Company“), Forest Holdings (ERISA) LLC, a Delaware limited liability company, (“Crestview ERISA“) and Forest Holdings LLC, a Delaware limited liability company, (“Crestview LLC“ and together with Crestview ERISA, “Purchaser“).

RECITALS:

WHEREAS, FBR Group, FBR TRS, FBR and Purchaser entered into a letter agreement on June 22, 2006, as amended on July 14, 2006, setting forth the principal terms and conditions pursuant to which Purchaser would acquire shares of common stock of the Company (“Shares“) concurrently with the 144A private placement of Shares, and be granted options to acquire additional Shares (the “Options“) from the Company, which letter agreement contemplated that the parties thereto would further memorialize their agreements with respect to such transactions in definitive agreements;

WHEREAS, FBR and Purchaser entered into an Investment Agreement, dated as of July 19, 2006, (the “Investment Agreement“) setting forth, inter alia, the terms and conditions pursuant to which Purchaser is acquiring the Shares from the Company and is being granted the Options;

WHEREAS, following consummation of the transactions contemplated by the Investment Agreement, Purchaser will own a significant percentage of the equity interests in the Company; and

WHEREAS, the parties hereto desire to enter into this Agreement to provide for certain voting rights of the parties hereto in accordance with Section 13.1-671 of the Virginia Stock Corporation Act.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions. Capitalized terms not defined herein shall have their respective meanings specified in the Investment Agreement. As used in this Agreement, the following terms shall have the following respective meanings:

“Cause“ shall mean the Director’s commission of a felony or any other crime involving moral turpitude or of a material dishonest act or fraud against the Company or any of its Affiliates, or any act or omission by the Director that is the result of misconduct or bad faith and that is, or may reasonably be expected to be, materially injurious to the Company or any of its Affiliates.

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“Director“ shall mean a member of the Board.

“FBR TRS Designees“ shall have the meaning specified in Section 2.1.

“Independent Directors“ shall have the meaning specified in Section 2.1.

“Original Shares“ shall mean the number of Shares acquired by Purchaser with the Invested Capital (including Shares issued in respect of, in exchange for or in substitution of such Shares by reason of any Reorganization).

“Purchaser Designees“ shall have the meaning specified in Section 2.1.

“Reorganization“ shall mean any reorganization, recapitalization, stock dividend, stock split or any similar change in the capital structure of the Company.

ARTICLE 2

BOARD COMPOSITION

Section 2.1 Composition of the Board. Each of the parties to this Agreement agrees that it and its Affiliates which it controls will vote all of the Shares under its control to cause the Board, effective from and after the Closing, to have the following size and composition:

(a) Initial Board. (i) The Board will initially consist of nine Directors, who shall be nominated as follows:

(A) one Director shall be designated for election or appointment, as applicable, by Crestview ERISA and one Director shall be designated for election or appointment, as applicable, by Crestview LLC (collectively, the “Purchaser Designees“);

(B) three Directors shall be designated for election or appointment, as applicable, by FBR TRS (the “FBR TRS Designees“); and

(C) four Directors who shall be independent within the meaning of the rules promulgated by the SEC and the exchange(s) on which the Shares are listed (the “Independent Directors“) shall be designated for election or appointment, as applicable, by FBR TRS who shall be reasonably acceptable to Purchaser.

(ii) The Purchaser Designees and FBR TRS Designees will be elected or appointed, as applicable, and seated as Directors no later than the Closing, and the Independent Directors shall be designated for appointment, and shall be appointed, to fill the four vacancies existing on the Board

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immediately following the Closing as promptly as reasonably practicable thereafter (it being understood that it may take some time following the Closing until all of the Independent Directors are identified).

(b) Removal and Replacement of Directors. Directors may be removed from office and replaced as follows (it being understood that the following shall be effected in a manner that is not in violation of the Virginia Stock Corporation Act or the Articles of Incorporation or Bylaws of the Company regarding removal of directors. That is, removal of any director shall be subject to the approval of the holders of a majority of the outstanding shares of common stock of the Company):

(i) Any party hereto may designate any or all of its own designees for removal from the Board and may designate a nominee for appointment to the Board to fill any vacancy resulting from any such removal.

(ii) For so long as Purchaser has the right to designate one Director nominee for election or appointment, as applicable, to the Board pursuant to this Article 2, FBR TRS may not take any action to cause the removal of a Purchaser Designee except for Cause and in that event the relevant Purchaser entity may nominate a replacement for the Director so removed.

(iii) FBR TRS shall have the right to designate for removal any or all of the Independent Directors at any time and shall have the right to designate an Independent Director nominee to fill the vacancy resulting from any such removal; provided that FBR TRS shall consult Purchaser with respect to the selection of a replacement for any such Independent Director.

(iv) For so long as Purchaser has the right to designate one Director nominee for election or appointment, as applicable, to the Board pursuant to this Article 2, in the event of a vacancy created by the departure (for any reason, including death, disability, retirement, resignation or removal (with or without cause)) of an Independent Director, FBR TRS shall have the right to designate a replacement Independent Director who shall be reasonably acceptable to Purchaser for appointment to fill the vacancy resulting from such departure; provided that if FBR TRS and Purchaser are unable to agree on the replacement Independent Director (x) FBR TRS shall have the right to designate the replacement Independent Director for appointment to fill the vacancy resulting from such departure to serve until such time as FBR TRS and Purchaser can agree on a permanent replacement and (y) if FBR TRS and Purchaser are unable to agree on a permanent replacement Independent Director within 45 days after the creation of such vacancy, the remaining permanent Independent Directors, if any, shall have the right to designate the permanent replacement Independent Director for appointment to fill the vacancy resulting from such departure after consultation with both FBR TRS and Purchaser.

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Section 2.2 Composition of Subsidiary Boards. Each of the parties to this Agreement agrees that, for so long as Purchaser has the right to designate one Director nominee for election or appointment, as applicable, to the Board pursuant to this Article 2, Purchaser shall have the right to designate one of the Purchaser Designees (or another representative reasonably acceptable to FBR TRS) for election or appointment, as applicable, to the board of directors of each Subsidiary of the Company other than the direct and indirect Subsidiaries of the Company that are registered investment advisers; provided that to the extent that applicable Law does not permit such Purchaser Designee (or other representative reasonably acceptable to FBR TRS) to serve as a member of any such Subsidiary board of directors, such Purchaser Designee shall be entitled to observer status on such board of directors. The Company hereby agrees to take such action (and to cause its officers and Subsidiaries to take such action), including but not limited to voting its shares of capital stock in each of its Subsidiaries, as shall be necessary in order to carry out the intents and purposes of this Section 2.2.

Section 2.3 Continuing Committee Representation. Each of the parties to this Agreement agrees that, for so long as Purchaser has the right to designate one Director nominee for election or appointment, as applicable, to the Board pursuant to this Article 2, each Committee of the Board, to the extent permitted by applicable Law (including the rules of the exchange on which the Shares are listed), shall have as a member at least one Purchaser Designee and one FBR TRS Designee; provided that to the extent such applicable Law does not permit such designee(s) to be full members of such Committees, such designee(s) shall be entitled to observer status on such Committees.

Section 2.4 Scale-Back of Purchaser Board Representation. Each of the parties to this Agreement agrees that:

(a) From the time that (1) Purchaser and its Affiliates who become parties to this Agreement cease to own at least 66 ²/3% of the Original Shares, Crestview LLC shall no longer be entitled to designate a nominee for election or appointment to the Board and (2) Purchaser and its Affiliates who become parties to this Agreement cease to own at least 33 ¹/3% of the number of Original Shares, Crestview ERISA shall no longer be entitled to designate a nominee for election or appointment to the Board, and upon either of the foregoing, the applicable Purchaser Designee shall be replaced by an additional Independent Director nominee designated for election or appointment to the Board by FBR TRS who shall be, in the case of clause (1) above only, reasonably acceptable to Purchaser.

(b) From and after such time as Purchaser and its Affiliates cease to own at least 66 ²/3% of the Original Shares, Purchaser shall have no further approval rights with respect to Independent Directors.

Section 2.5 Scale-Back of FBR TRS Board Representation. Each of the parties to this Agreement agrees that:

(a) If FBR TRS sells, transfers or otherwise disposes of greater than 50% of its Shares (measured as of the Closing but including Shares issued in respect of, in exchange for or in substitution of such Shares by reason of any Reorganization), FBR TRS shall no longer have the rights described in Section 2.1 above to select nominees for election or appointment to the Board as Independent Directors.

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(b) FBR TRS shall retain the right to designate for election or appointment to the Board the three FBR TRS Designees unless both (i) FBR TRS sells, transfers or otherwise disposes of greater than 50% of its Shares (measured as of the Closing but including Shares issued in respect of, in exchange for or in substitution of such Shares by reason of any Reorganization) and (ii) none of Eric F. Billings, Richard J. Hendrix or J. Rock Tonkel, Jr. remains with the Company in a senior executive position.

Section 2.6 Implementation.

(a) Each of the parties to this Agreement agrees that it shall (and shall cause its Affiliates to) cooperate in facilitating any action described in or required by this Agreement, including by voting all of the Shares under its control in support of such action. Without limiting the generality of the foregoing, each of the parties to this Agreement agrees that it shall (and shall cause its Affiliates to) vote its Shares or execute consents, as the case may be, and take all other necessary action (including nominating such designees and calling an annual or special meeting of stockholders) in order to ensure that the composition of the Board is as set forth in this Article 2 and otherwise to give effect to the provisions of this Article 2. Each party shall vote its Shares, and shall take all other actions necessary, to ensure that the Articles of Incorporation and Bylaws of the Company facilitate and do not at any time conflict with any provision of this Agreement; provided that no action shall be required to be taken that is, and no amendment to the Articles of Incorporation or Bylaws shall be adopted that is, inconsistent with any provision in the Virginia Stock Corporation Act.

(b) The Company agrees that it will (and will cause its officers and its Subsidiaries to) take all such action as shall be necessary (including by voting all shares of capital stock or other equity interests that it holds in each of its Subsidiaries, either in a meeting or in an action by written consent) to ensure that the articles of incorporation and bylaws or other applicable governing documents of each of its Subsidiaries are consistent with, and do not conflict with, any provision of this Agreement and that the boards of directors, general partners, managing members or other applicable governing body or persons for each such Subsidiary shall act in accordance with the provisions of this Agreement and that each Subsidiary board of directors or other applicable governing body is as set forth in Article 2; provided that no action shall be required that is, and no amendment to the articles of incorporation, bylaws or other similar organizational documents shall be adopted that is, inconsistent with any provision in the Virginia Stock Corporation Act.

Section 2.7 Observer Status. Each of the parties to this Agreement agrees that, during the periods described below in this Section 2.7, to the extent not inconsistent with the requirements of the Virginia Stock Corporation Act and to the extent otherwise as permitted by Law, Crestview ERISA shall have the right to appoint one representative (the “Representative”) to attend each meeting of the Board as a non-voting observer, whether such meeting is conducted in person or by teleconference. The Representative shall have the right to present matters for consideration by the Board and to speak on matters presented by others. The Company shall cause the Representative to be provided with all communications and materials that are provided

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by the Company or its consultant to the members of the Board generally, at the same time and in the same manner that such communications and materials are provided to such members, including all notices, board packages, reports, presentations, minutes and consents. The Representative shall be entitled to meet and consult with the senior executive management team of the Company on a quarterly basis to discuss the quarterly and annual business plans of the Company and its Subsidiaries and to review the progress of the Company and its Subsidiaries in achieving their plans. In addition, upon request to the Chief Executive Officer of the Company, the members of the senior executive management team of the Company shall make themselves available during normal business hours to meet with the Representative on an interim basis, as the Representative may reasonably request from time to time. Upon reasonable request by the Representative to the Chief Executive Officer of the Company, the Representative shall be entitled, at the Representative’s cost and expense, to inspect the books and records and the facilities of the Company and its Subsidiaries during normal business hours and to request and receive reasonable information regarding the financial condition and operations of the Company and its Subsidiaries. The right of Crestview ERISA to appoint a Representative, and the rights of that Representative described above, shall exist (i) solely during the periods, if any, in which Crestview ERISA does not have the right to designate any member for nomination for election to the Board or no person designated for nomination by Purchaser under Article 2 is serving as a member of the Board and (ii) solely for so long Crestview ERISA is intended to qualify (and only as reasonably required for Crestview to qualify) as a “venture capital operating company” under U.S. Department of Labor Regulation 29 C.F.R. Section 2510.3-101. Notwithstanding the foregoing, (1) the Company shall be permitted to exclude a Representative from meetings and from receiving certain information if, based on the advice of counsel, such exclusion is necessary or advisable to protect the attorney-client or any other legal privilege, and (2) such Representative shall be subject to Sections 5.06 and 5.07 of the Investment Agreement.

ARTICLE 3

AFFILIATE TRANSACTIONS

Section 3.1 Affiliate Transactions. Each of the parties to this Agreement agrees that any transaction, agreement or arrangement (including amendments, waivers or terminations of agreements or arrangements) between the Company or any of its Subsidiaries, on the one hand, and FBR Group and its Affiliates (excluding the Company and its Subsidiaries but including FBR TRS), on the other hand, shall be subject to approval by a majority of the Board other than the FBR TRS Designees (that is, by a majority of the Purchaser Designees and the Independent Directors).

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties. Each of FBR Group, FBR TRS and the Company, on the one hand, and Crestview ERISA and Crestview LLC, on the other hand, represents and warrants to the other that:

(a) it is an entity duly organized and validly existing and in good standing under the laws of the its jurisdiction of formation, with requisite power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby;

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(b) the execution, delivery and performance by it of this Agreement, and the consummation by it of the transactions contemplated hereby and compliance by it with the terms hereof will not conflict with, or result in any breach of or constitute a default under, (i) any provision of its certificate of incorporation or formation or bylaws, or equivalent constitutive documents, (ii) any provision of any contract or other agreement or instrument to which it is a party or by which it or its properties are bound, or (iii) any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order applicable to it, except in the case of clauses (ii) or (iii) for such conflicts, breaches or defaults which have been validly waived or would not reasonably be expected to have a material adverse effect on it or on its ability to perform its obligations under this Agreement; and

(c) this Agreement has been duly authorized, executed and delivered by it and is enforceable against it in accordance with its terms, except in each case as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general principles of equity.

ARTICLE 5

MISCELLANEOUS

Section 5.1 Term. The rights and obligations specified in this Agreement shall expire (unless earlier expired or terminated in accordance with the terms hereof) at such time as Purchaser and its Affiliates who are parties to this Agreement cease to own at least one percent (1%) of the Original Shares.

Section 5.2 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to each other party hereto. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section, provided receipt of copies of such counterparts is confirmed.

Section 5.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA WITHOUT REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

Section 5.4 Entire Agreement. This Agreement, together with the Investment Agreement and the other agreements contemplated thereby, contains the entire agreement between the parties hereto with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the parties hereto other than those set forth or referred to herein. This Agreement is not intended to confer upon any Person not a party hereto (or their successors and assigns) any rights or remedies hereunder.

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Section 5.5. Specific Performance. The parties hereto acknowledge and agree that a breach or threatened breach, of any agreement contained herein, including, without limitation, those contained in Article 2, will cause irreparable damage, and the other parties hereto will have no adequate remedy at law or in equity. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or in damages, is the appropriate remedy for any such failure and will not oppose the granting of such relief.

Section 5.6 Notices. All notices, requests, demands or other communications required by or otherwise with respect to this Agreement shall be in writing and shall be deemed to have been duly given to any party hereto when delivered by hand, by messenger, or by a nationally recognized overnight delivery company, when delivered by telecopy and confirmed by return telecopy, or when delivered by first-class mail, postage prepaid and return receipt requested, in each case to the applicable addresses set forth below. Notices to FBR Group, FBR TRS, and FBR shall be addressed to such party in care of:

Friedman, Billings, Ramsey Group, Inc.

1001 Nineteenth Street North

Arlington, VA 22209

Attention: William J. Ginivan, Esq.

Telecopy Number: (703) 469-1140

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52^nd Street, 30^th Floor

New York, NY 10019-6150

Attention: Trevor S. Norwitz, Esq.

Telecopy Number: (212) 403-2333

or at such other address and to the attention of such other Person as FBR Group, FBR TRS, or FBR may designate by written notice to Purchaser. Notices to Purchaser shall be addressed to:

Forest Holdings LLC

Forest Holdings (ERISA) LLC

c/o Crestview Capital Partners, L.P.

667 Madison Avenue

New York, NY 10021

Attention: Jacob Capps

Telecopy Number: (212) 906-0750

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY 10017

Attention: Carole Schiffman, Esq.

Telecopy Number: (212) 450-3800

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or at such other address and to the attention of such other Person as Purchaser may designate by written notice to FBR Group, FBR TRS, and FBR.

Section 5.7 Assignment; Transfers.

(a) Assignment. Subject to the immediately following sentence, the rights of each party specified herein are personal to such party and will not pass to any acquiror of such party’s Shares; provided that nothing herein shall prevent FBR TRS or its Affiliates from Transferring or causing any Affiliate to Transfer any of its Shares or, subject to the immediately following sentence and Section 5.7(b) below, impose any obligations or restrictions on any acquiror of such Shares. If any party hereto other than the Company (or any of their respective permitted assignees) transfers Shares to any of their Affiliates (which Transfers shall be expressly permitted hereunder, subject to compliance with the remainder of this sentence), such Affiliates shall become bound by all the provisions of this Agreement pursuant to an agreement reasonably satisfactory to such other parties hereto. Except as otherwise specifically provided in this Agreement, neither this Agreement nor any right, remedy obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto.

(b) Transfers by FBR TRS. In the event FBR TRS sells or otherwise transfers Shares representing at least a 10% interest in the Company to any Person or group of Persons, FBR TRS will require such Person or group to be bound by the obligations of FBR TRS set forth in Article 2 of this Agreement to vote for and otherwise support the provisions of Article 2 for the benefit of Purchaser.

Section 5.8 Headings. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

Section 5.9 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the parties hereto. Any party hereto may, only by an instrument in writing, waive compliance by the other parties hereto with any term or provision hereof on the part of such other parties hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach.

Section 5.10 Interpretation; Absence of Presumption. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, (iv) the word “or” shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions.

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(b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 5.11 Severability. If any provision of this Agreement or the application of such provision to any Person or circumstances shall be held invalid or unenforceable by a court of competent jurisdiction, such provision or application shall be unenforceable only to the extent of such invalidity or unenforceability, and the remainder of the provision held invalid or unenforceable and the application of such provision to Persons or circumstances, other than the party as to which it is held invalid, and the remainder of this Agreement, shall not be affected.

Section 5.12 Jurisdiction. The parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with this Agreement or the transactions contemplated hereby or thereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.6 shall be deemed effective service of process on such party.

Section 5.13 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 5.14 Further Assurances. The parties hereto agree that, from time to time, each of them will, and will cause their respective Affiliates to, execute and deliver such further instruments and take such other action as may be necessary to carry out the purposes and intents hereof.

Section 5.15 Recapitalization, Etc. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any Shares by reason of any Reorganization, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement.

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Section 5.16 FBR Group Guarantee. FBR Group hereby guarantees to the Purchaser the prompt and full discharge by FBR TRS of all of FBR TRS’ covenants, agreements and obligations under this Agreement including the due and punctual payment of all amounts which are or may become due and payable by FBR TRS hereunder, when and as the same shall become due and payable in accordance with the terms hereof.

Section 5.17 FBR TRS Acknowledgment. FBR TRS hereby acknowledges Section 5.07 of the Investment Agreement and agrees to waive any breach of fiduciary duty owed by the Purchaser or any of its Affiliates (including their respective designees serving on the Board or the boards of directors of the Company’s Subsidiaries) to the extent (and subject to the obligations of the Purchaser) set forth in such Section 5.07.

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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto as of the day first above written.

Forest Holdings LLC
By:	Crestview Capital Partners, L.P., as Member
	By:	Crestview Partners, L.P., its General Partner
	By:	Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Forest Holdings (ERISA) LLC
By:	Crestview Capital Partners (ERISA), L.P., as Member
	By:	Crestview Partners, L.P., its General
		Partner
	By:	Crestview, L.L.C., its General Partner
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
Friedman Billings Ramsey Group, Inc.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP and Chief Legal Officer
FBR TRS Holdings, Inc.
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	General Counsel
FBR Capital Markets Corporation
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

[SIGNATURE PAGE TO VOTING AGREEMENT]

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EX-10.10

Exhibit 10.10

PROFESSIONAL SERVICES AGREEMENT

This PROFESSIONAL SERVICES AGREEMENT, dated as of July 20, 2006 (the “Agreement”), between FBR Capital Markets Corporation, a Virginia Corporation (the “Company”), and Crestview Advisors, L.L.C., a Delaware limited liability company (“Crestview”).

W I T N E S S E T H:

WHEREAS, the Company entered into an Investment Agreement, dated as of July 19, 2006 (as amended from time to time, the “Investment Agreement”), pursuant to which the Company, among other things, sold shares of its common stock to Forest Holdings LLC and Forest Holdings (ERISA) LLC (each an affiliate of Crestview, and together, the “Purchasers”);

WHEREAS, the Company and Crestview believe that the Company (and the value of the Purchaser’s investment in the Company) will benefit from Crestview’s experience and expertise; and

WHEREAS, in furtherance of the foregoing, the Company desires to receive advisory services from Crestview, and Crestview desires to provide such services to the Company.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the parties hereby agree as follows:

Section 1.01. Engagement. The Company hereby engages Crestview as a consultant, and Crestview hereby agrees to provide advisory services to the Company, all on the terms and subject to the conditions set forth below.

Section 1.02. Services. (a) Crestview hereby agrees during the term of this Agreement to assist, advise and consult with the Board of Directors and management of the Company on business and management and financial matters relating to the Company, and provide such other consulting and advisory services as may be reasonably requested from time to time by the Company, including but not limited to assistance, advice or consultation in developing and implementing corporate and business strategy and planning for the Company, including plans and programs for improving operating, marketing and financial performance, budgeting of future corporate investments, acquisition and divestiture strategies, and reorganizational programs (collectively, the “Advisors Services”).

(b) The Company will furnish Crestview with such information as Crestview reasonably believes is appropriate to its engagement hereunder (all such information so furnished being referred to herein as the “Information”). The Company recognizes and confirms that (i) Crestview will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services to be performed hereunder and (ii) Crestview does not assume responsibility for the accuracy or completeness of the Information and such other information. Any Information provided to Crestview hereunder shall be subject to the confidentiality provisions set forth in the Investment Agreement.

Section 1.03. Compensation. (a) The Company agrees to pay Crestview, as compensation for the Advisory Services rendered and to be rendered hereunder, an annual fee (the “Advisory Fee”), equal to $1,000,000, payable in arrears in equal quarterly installments on each January 1, April 1, July 1 and October 1 during the term of this Agreement, with the first such payment to be on October 1, 2006 which payment shall be pro rata based on the number of days between the Closing Date (as defined in the Investment Agreement) and September 30, 2006.

(b) The Company agrees to reimburse Crestview for such reasonable and documented out-of-pocket expenses (“Expenses”) incurred by Crestview in connection with its provision of Advisory Services hereunder. Crestview may submit monthly expense statements, which shall be payable within 30 days from the date of such submission.

Section 1.04. Term. (a) This Agreement shall be in effect until, and shall terminate upon: (i) such time as Purchasers and their affiliates no longer own at least 50% of the number of Original Shares (as defined in the Governance Agreement, dated as of the date hereof among the Purchasers and the other parties thereto), (ii) 30 days’ prior notice to the Company by Crestview, or (iii) the mutual written consent of the Company and Crestview. The provisions of Sections 1.06 and 1.07 shall survive any termination of this Agreement.

(b) Upon termination of this Agreement, a portion of the Advisory Fee pro rated, with respect to the quarter in which such termination occurs, for the portion of such quarter prior to such termination, shall be immediately paid to Crestview.

Section 1.05. Independent Contractor Status. The parties agree that Crestview shall perform services hereunder as an independent contractor, retaining control over and responsibility for its own operations and personnel. Neither Crestview nor any of its employees or agents shall, solely by virtue of this Agreement or the arrangements hereunder, be considered employees or agents of the Company, nor shall any of them have authority to contract in the name of or bind the Company. Nothing herein shall in any way affect the fiduciary duties of the Crestview representatives serving on the boards of directors of the Company and/or any of its Subsidiaries (as defined in the Investment Agreement).

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Section 1.06. Indemnification.

(a) The Company agrees to indemnify, defend and hold harmless Crestview and its successors and permitted assigns, and each of their respective directors, officers, members, managers, employees, representatives and controlling persons (each, an “Indemnitee”) from and against any and all Losses (as defined in the Investment Agreement), whether incurred with respect to third parties or otherwise, in any way arising out of based upon or relating to, the performance by Crestview of the Advisory Services, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or intentional misconduct of Crestview or any Indemnitee.

(b) The provisions set forth in Section 9.04 of the Investment Agreement are hereby incorporated by reference herein or made a part hereof, mutatis mutandis.

(c) The Company hereby agrees to advance costs and expenses, including without limitation reasonable attorney’s fees, incurred by Crestview (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee in defending any claim in advance of the final disposition of such claim upon receipt of an undertaking by or on behalf of Crestview or such Indemnitee to repay amounts so advanced if it shall ultimately be determined that Crestview or such Indemnitee, as the case may be, is not entitled to be indemnified by the Company as authorized by this Agreement.

(d) The rights of each Indemnitee to be indemnified under any other agreement, document, certificate or instrument or applicable law are independent of and in addition to (but without duplication of) any rights of such Indemnitee to be indemnified under this Agreement.

(e) Notwithstanding anything to the contrary herein, the Company shall not provide any indemnification hereunder (1) in the event such indemnification would be contrary to applicable Law (as defined in the Investment Agreement), (2) to any representatives of Crestview serving on the Company’s or any of its subsidiaries’ board of directors with respect to service in such capacity; or (3) in the event that the Company shall notify Crestview in writing that it no longer wishes to receive the Advisory Services (or any particular Advisory Service) and such Losses result from, arise out of or in connection with, are based upon or relate to of Advisory Services provided by Crestview after the date of such notice by the Company and are contrary to the instructions provided by the Company in such notice. Further, any indemnification granted by the Company shall be available only to the extent such Losses are not covered by indemnification granted by any other Person (as defined in the Investment Agreement).

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Section 1.07. Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be given or deemed given in the manner provided pursuant to the Investment Agreement, except that notice to Crestview shall be made to:

Crestview Advisors, L.L.C.

677 Madison Avenue

10th Floor

New York, New York 10021

Facsimile: (212) 906-0750

Attention: Jacob Capps

Section 1.08. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns and their respective successors, heirs and permitted assigns; provided that, neither Crestview nor the Company may assign any of its rights or obligations under this Agreement without the express written consent of the other party hereto, except that Crestview may assign its right to receive the Advisory Fee to one of its affiliates. This Agreement is not intended to confer any right or remedy upon any person other than the parties to this Agreement and their respective successors, heirs and permitted assigns.

Section 1.09. Incorporation of Certain Provisions. The provisions contained in Sections 10.02, 10.04, 10.07, 10.08, 10.11, 10.12, and 10.14 of the Investment Agreement are hereby incorporated by reference herein and made a part hereof, mutatis mutandis.

Signature Page Follows

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Its:	SVP, General Counsel and Secretary
CRESTVIEW ADVISORS L.L.C.
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Its:	President

[Signature page to Professional Services Agreement]

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EX-10.11

Exhibit 10.11

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 20, 2006, by and among FBR Capital Markets Corporation, a Virginia corporation (together with any successor entity thereto, the “Company”), Forest Holdings (ERISA) LLC (“Crestview ERISA”) and Forest Holdings LLC (“Crestview LLC” and, together with Crestview ERISA, the “Crestview Holders”).

This Agreement is made pursuant to the terms of that certain Investment Agreement, dated as of July 19, 2006, by and among the Company and the Crestview Holders (the “Investment Agreement”) pursuant to which, among other things, the Crestview Holders have agreed to purchase, and the Company has agreed to sell, in a direct private placement, an aggregate of 5,172,813 shares of the Company’s common stock (together with such additional shares of the Company’s common stock that the Crestview Holders may purchase, including upon exercise of stock options granted, in accordance with the terms and conditions of the Investment Agreement or through a private purchase under Rule 144A or another available exemption from the registration requirements of the Securities Act, the “Crestview Shares”). In order to induce Crestview to enter into the Investment Agreement and to purchase the Crestview Shares in accordance with the terms thereof, the Company has agreed to provide the Crestview Holders with the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing of the transactions contemplated by the Investment Agreement.

The closing of the transactions contemplated by the Investment Agreement and the execution and delivery by the Crestview Holders of this Agreement are also conditioned on the concurrent closing by the Company of the purchase and sale or placement of an aggregate of 12,066,667 shares of the Company’s common stock (plus up to an additional 1,810,000 shares to cover additional allotments, if any) to third party investors pursuant to the terms of that certain Purchase/Placement Agreement (the “Purchase/Placement Agreement”), dated as of July 14, 2006, by and among the Company and FBR. In connection with, and as a condition to, the offering and sale of such shares of the Company’s common stock pursuant to the terms and conditions of the Purchase/Placement Agreement (the “Concurrent Offering”), the Company has agreed to provide the registration rights to the holders of the shares of the Company’s common stock issued and sold in the Concurrent Offering as set forth in that certain Registration Rights Agreement, dated of even date herewith, by and between the Company and FBR (as it may be amended from time to time, the “Concurrent Registration Rights Agreement”). A copy of the Concurrent Registration Rights Agreement is attached hereto as Exhibit A.

The Company and the Crestview Holders have agreed that the Crestview Holders shall have registration rights that are at least as favorable to the Crestview Holders as the registration rights provided to the purchasers of the Company’s common stock in the Concurrent Offering as set forth in the Concurrent Registration Rights Agreement, as well as certain additional demand and piggy-back registration rights that are set forth herein.

All capitalized terms not defined in this Agreement shall have the same meaning as defined under the Concurrent Registration Rights Agreement.

AGREEMENT

Therefore, the parties agree as follows:

1. Registration Rights Under the Concurrent Registration Rights Agreement

(a) In order to ensure that the Crestview Holders shall have registration rights with respect to the Crestview Shares that are at least as favorable as the registration rights provided to the purchasers of the Company’s common stock in the Concurrent Offering as set forth in the Concurrent Registration Rights Agreement, the parties agree that, except as provided in the second sentence of the lead in to Section 2, the Crestview Shares (upon original issuance thereof and at all times subsequent thereto, including upon the transfer thereof by the original holder or any subsequent holder and any shares or other securities issued in respect of such Registrable Shares by reason of or in connection with any stock dividend, stock distribution, stock split, purchase in any rights offering or in connection with any exchange for or replacement of such Registrable Shares or any combinations of shares, recapitalization, merger or consolidation, or any other equity securities issued pursuant to any other pro rata distribution with respect to the Common Stock) shall be deemed to be Registrable Shares as defined in Section 1 of the Concurrent Registration Rights Agreement and the Crestview Holders shall be deemed to be Holders as that term is defined in Section 1 of the Concurrent Registration Rights Agreement. As a result, the Crestview Holders shall have the same registration rights and other rights with respect to the Crestview Shares that the Holders of Registrable Shares have under the Concurrent Registration Rights Agreement with respect to the Registrable Shares thereunder as if the Crestview Holders were parties to the Concurrent Registration Rights Agreement.

(b) This Agreement hereby incorporates by reference all of the terms and provisions set forth in the Concurrent Registration Rights Agreement attached hereto as Exhibit A that are necessary in order to ensure that the Crestview Holders shall have or be subject to the same rights, obligations and procedural requirements with respect to any registration of the Crestview Shares that apply to the Holders of Registrable Shares under the Concurrent Registration Rights Agreement.

2. Additional Demand Registration Rights

In addition to the registration rights provided to the Crestview Holders under Section 1 above, the Company hereby agrees to provide the Crestview Holders with the following additional demand registration rights to the extent the Crestview Shares are not registered pursuant to the provisions of Section 1 above. For purposes of this Section 2, the Crestview Shares shall be deemed to be Registrable Shares regardless of whether the Crestview Shares are saleable under Rule 144(k) promulgated by the Commission pursuant to the Securities Act of 1933, as amended, (the “Securities Act”).

(a) Requests for Registration. Commencing on the first anniversary of the date of this Agreement, the Crestview Holders shall have the rights specified in Section 2(b) below to request registration for disposition in accordance with the intended method or methods of disposition stated in such request under the Securities Act of all or any portion of the Crestview Shares on Form S-1 or any successor form of registration statement (“Long-Form

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Registrations”), and the Crestview Holders shall have the rights specified in Section 2(c) below to request registration for disposition in accordance with the intended method or methods of disposition stated in such request under the Securities Act of all or any portion of the Crestview Shares on Form S-3 (including pursuant to Rule 415 under the Securities Act) or any successor form of registration statement (“Short-Form Registrations”), if available. All registrations requested pursuant to this Section 2 are referred to herein as “Demand Registrations.” Each request for a Demand Registration shall specify the approximate number of securities requested to be registered and the anticipated per share price range for such offering.

(b) Long-Form Registrations. The Crestview Holders shall be entitled to request two Long-Form Registrations in which the Company shall pay all Registration Expenses; provided, however, that the aggregate gross proceeds of the securities requested to be registered in any Long-Form Registration must equal at least $15 million or, if the aggregate gross proceeds attributable to the remaining Crestview Shares then held by the Crestview Holders is less than $15 million, such lesser amount. A registration shall not count as one of the permitted Long Form Registrations hereunder unless the Crestview Holders are able to register and sell at least 75% of the securities the Crestview Holders requested to be included in such registration; provided, however, that in any event the Company shall pay all Registration Expenses in connection with any registration initiated as a permitted Long-Form Registration whether or not it has become effective and whether or not such registration is counted as one of the permitted Long-Form Registrations. All Long-Form Registrations shall be underwritten registrations.

(c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 2(b), commencing on the date that the Company becomes eligible to use Form S-3 or any successor short-form of registration statement, the Crestview Holders shall be entitled to request an unlimited number of Short-Form Registrations in which the Company shall pay all Registration Expenses; provided, however, that the aggregate gross proceeds of the securities requested to be registered in any Short-Form Registration must equal at least $15 million or, if the aggregate gross proceeds attributable to the remaining Crestview Shares then held by the Crestview Holders is less than $15 million, such lesser amount. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use Form S-3 or any successor short form of registration statement.

(d) Underwriter Cut-Backs in Demand Registrations. The Company shall not include in any Demand Registration any securities pursuant to one or more written registration rights agreements granting the holders of such securities the right to have their securities registered in such Demand Registration without the prior written consent of the Crestview Holders. The Company shall have the right, without the need for any approval of the Crestview Holders, to grant to any person the right to request the Company to register any equity securities of the Company, or any securities, options, or rights convertible or exchangeable into or exercisable for such securities so long as such rights do not adversely affect the rights of the Crestview Holders hereunder. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that, in their opinion, the number of Crestview Shares and other permitted registrable securities requested to be included in such offering exceeds the number that can be sold therein without adversely affecting the marketability of the offering, then the Company shall have the right to reduce the number of securities requested to be included in such Demand Registration in the following order of priority: first, securities requested to be included

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by holder of securities other than the Crestview Shares shall be reduced pro rata among all such holders who have requested that their securities be included in such Demand Registration on the basis of the number of securities requested to be included in such Demand Registration by each such holder and, second, Crestview Shares requested to be included by holders of the Crestview Shares shall be reduced pro rata among all such holders of Crestview Shares who have requested that their Crestview Shares be included in such Demand Registration on the basis of the number of Crestview Shares requested to be included in such Demand Registration by each such holder, such that in each case the total number of securities registered in such offering can, in the opinion of such underwriters, be sold in an orderly manner within the price range specified for such offering.

(e) Restrictions on Long-Form Registrations. The Company shall not be obligated to effect any Demand Registration within 90 days after the effective date of a previous Demand Registration or a previous registration in which the Crestview Holders were given piggy-back rights pursuant to Section 3 hereof and in which there was no reduction in the number of Registrable Securities requested to be included. If the Board of Directors of the Company in good faith determines that the filing or effectiveness of a registration statement in connection with any requested Demand Registration would be reasonably likely to materially and adversely affect any material contemplated acquisition, divestiture, registered primary offering or other transaction as to which the Company has then taken substantial steps, or would require disclosure of facts or circumstances which disclosure would be reasonably likely to materially and adversely affect any material contemplated acquisition, divestiture, registered primary offering or other transaction as to which the Company has then taken or expects to take in the immediate future substantial steps, then the Company may delay such registration for a period of up to 180 days so long as the Company is still pursuing the transaction that allowed such delay (it being agreed that the Company may not delay requested registrations pursuant to this clause (e) for more than an aggregate of 180 days during any 360 consecutive days).

(f) Selection of Underwriters. The Company shall have the right to select the investment banker(s) and manager(s) reasonably acceptable to the Crestview Holders to administer any offering under a Demand Registration; provided, that the parties hereto agree that Friedman, Billings, Ramsey & Co., Inc. shall be reasonably acceptable to the Crestview Holders.

(g) Revocation of Registration Request. The Initial Crestview Holders may, at any time prior to the effective date of the registration statement relating to any requested registration under this Section 2, revoke such request, without liability to any Crestview Holder, by providing a written notice to the Company revoking such request.

(h) Effectiveness of Registrations. Notwithstanding any other provision of this Agreement to the contrary, a registration pursuant to this Section 2 shall not be deemed to have been effected (and, therefore, rights of a Crestview Holder shall be deemed not to have been exercised for purposes of this Section 2) (i) unless such registration has become effective, (ii) if, after such registration has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason other than a misrepresentation or an omission by such Crestview Holder and, as a result thereof, the Registrable Shares requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration

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statement or (iii) if the conditions to closing specified in any purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than solely by reason of some act or omission by such Crestview Holder.

(i) Cooperation of the Company and Appropriate Officers. If the Company is required to effect the registration of any Registrable Shares under the Securities Act as provided in this Section 2, the Company shall as promptly as practicable have appropriate officers of the Company (i) attend any “road shows” and analyst and investor presentations scheduled in connection with any such registration and (ii) use its reasonable best efforts to cooperate as reasonably requested by the Crestview Holders in the marketing of the Registrable Securities, and all reasonable out-of-pocket costs and expenses incurred by the Company or such officers in connection with such attendance or cooperation shall be paid by the Company.

(j) Registration Procedures and Other Rights and Obligations Incorporated by Reference. The parties agree that, to the extent not addressed in this Agreement, all of the registration procedures and related rights, obligations and requirements set forth in the Concurrent Registration Rights Agreement shall apply to any registration of the Crestview Shares under this Section 2 to the extent such registration procedures and related rights, obligations and requirements can reasonably be so applied.

3. Piggyback Registrations

In addition to the registration rights provided to the Crestview Holders under Section 1 and Section 2 above, the Company hereby agrees to provide the Crestview Holders with the following additional piggyback registration rights to the extent the Crestview Shares are not registered pursuant to the provisions of Section 1 or Section 2 above.

(a) Right to Piggyback. Whenever the Company proposes to register any of its securities (including any proposed registration of the Company’s securities by any third party) under the Securities Act (other than in connection with (i) any registration pursuant to Section 1 or Section 2 of this Agreement, (ii) registrations on Form S-4, S-8 or any successor or similar forms, (iii) a registration relating to a reorganization of the Company or other transaction under Rule 145 of the Securities Act, (iv) in connection with a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Crestview Shares or (v) a registration in which the only securities being registered are common stock issuable upon conversion of debt securities that are also being registered) and the registration form to be used may be used for the registration of the Crestview Shares (a “Piggyback Registration”), the Company shall give prompt written notice (and in any event within three business days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to the Crestview Holders of its intention to effect such a registration and shall include in such registration all Crestview Shares with respect to which the Company has received written requests from the Crestview Holders for inclusion therein within 20 days after the receipt of the Company’s notice. The Company’s notice shall state the last day on which the Crestview Holders and the holders of any other registrable securities that have similar piggyback rights may request inclusion in the registration.

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(b) Piggyback Expenses. The Registration Expenses of the Company and the Crestview Holders shall be paid by the Company in all Piggyback Registrations.

(c) Priority and Underwriter Cut-backs in Piggyback Registrations. If a Piggyback Registration is part of an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold therein without adversely affecting the marketability of the offering, then the Company shall include in such registration (i) first, the securities the Company proposes to sell, and (ii) second, the registrable securities requested to be included in such registration, including but not limited to any Crestview Shares, subject to reduction of the total number of such secondary securities pro rata among such holders on the basis of the number of registrable securities requested to be included in such registration by all such holders in order to ensure that that the total number of securities registered in such offering can be sold in an orderly manner within the price range specified for such offering.

(d) Selection of Underwriters. The Company shall have the right to select the investment banker(s) and manager(s) to administer any offering that includes a Piggyback Registration.

(e) Other Registrations. If the Company has previously filed a registration statement for an underwritten offering with respect to Crestview Shares pursuant to Section 1, Section 2 or this Section 3, and if such previous registration has not been withdrawn or abandoned, then the Company shall not be obligated to file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 90 days has elapsed from the effective date of such previous registration.

(f) Registration Procedures and Other Rights and Obligations Incorporated by Reference. The parties agree that, to the extent not addressed in this Agreement, all of the registration procedures and related rights, obligations and requirements set forth in the Concurrent Registration Rights Agreement shall apply to any registration of the Crestview Shares under this Section 3 to the extent such registration procedures and related rights, obligations and requirements can reasonably be so applied.

4. Notices under Concurrent Registration Rights Agreement

Notwithstanding anything to the contrary contained herein, to the extent that FBR, as representative of the Holders of Registrable Shares under the Concurrent Registration Rights Agreement, is entitled to receive any notice from the Company on behalf of the Holders thereunder, the Company shall provide the same notice directly and concurrently to the Crestview Holders.

5. Selling Shareholders’ Counsel for Crestview Holders.

Notwithstanding anything to the contrary contained herein or in the Concurrent Registration Rights Agreement, the parties understand and agree that the Crestview Holders shall

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have the right to engage Davis Polk & Wardwell as their counsel in connection with any registration of the Crestview Shares pursuant to Sections 2 or 3 of this Agreement, and the fees and expenses of such counsel up to $75,000 shall be included in Registration Expenses.

6. Miscellaneous

(a) Remedies; Indemnification and Contribution. With respect to any registration of the Crestview Shares pursuant to this Agreement, the Crestview Holders shall be entitled to all of the remedies to which Holders under the Concurrent Registration Rights Agreement are entitled in accordance with the terms thereof, including but not limited to the rights and remedies set forth in Section 6 of the Concurrent Registration Rights Agreement under the caption “Indemnification and Contribution.”

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, without the written consent of the Company and the Crestview Holders.

(c) Notices. All notices and other communications, provided for or permitted hereunder shall be made in writing by delivered by facsimile (with receipt confirmed), overnight courier or registered or certified mail, return receipt requested, or by telegram

(i) if to the Crestview Holders:

c/o Crestview Capital Partners, L.P.

667 Madison Avenue

New York, NY 10021

Attention: Jacob Capps

Telecopy Number: (212) 907-0750

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY 10017

Attention: Carole Schiffman, Esq.

Telecopy Number: (212) 450-3800

and

(ii) if to the Company, at the offices of the Company at:

1001 Nineteenth Street, North

Arlington, Virginia 22209

Attention: General Counsel

facsimile: 703-469-1140

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with a copy to:

Hunton & Williams LLP

951 East Byrd Street

Richmond, Virginia 23219

Attention: Daniel M. LeBey, Esq.

facsimile: 804-788-8218

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties hereto, including, without limitation and without the need for an express assignment or assumption, subsequent holders of the Crestview Shares for so long as such shares are Registrable Shares. Notwithstanding the preceding sentence, for so long as any of the Crestview Shares are Registrable Shares, the Company shall not, without the prior written consent of the holders of a majority of such Crestview Shares, assign any of its rights or obligations under this Agreement, other than in connection with any merger, consolidation or share exchange, any sale of all or substantially all of the outstanding shares of capital stock or assets of the Company or any other similar business combination transaction.

(e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(h) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL

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PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(i) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties hereto that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(j) Entire Agreement; Conflicts between this Agreement and the Concurrent Registration Rights Agreement. This Agreement, together with the Concurrent Registration Rights Agreement, is intended by the parties hereto as a final, complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. In the event of a conflict between the provisions of this Agreement and the Concurrent Registration Rights Agreement, the provisions of this Agreement shall control.

(k) Adjustments for Stock Splits, etc. Whenever in this Agreement there is a reference to a specific number of shares, then upon the occurrence of any subdivision, combination or stock dividend of such shares, the specific number of shares so referenced in this Agreement shall automatically be proportionately adjusted to reflect the effect of such subdivision, combination or stock dividend.

(l) Survival. This Agreement is intended to survive the consummation of the transactions contemplated by the Purchase/Placement Agreement and the Investment Agreement. The indemnification and contribution obligations of the Company under Section 6 of the Concurrent Registration Rights Agreement, which are incorporated by reference herein and deemed to be a part hereof, shall survive the termination of the Company’s obligations under this Agreement.

(m) Attorneys’ Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover its reasonable attorneys’ fees in addition to any other available remedy.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary
FOREST HOLDINGS LLC
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President
FOREST HOLDINGS (ERISA) LLC
By:	/s/ Thomas S. Murphy, Jr.
Name:	Thomas S. Murphy, Jr.
Title:	President

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EXHIBIT A

CONCURRENT REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 20, 2006, by and between FBR Capital Markets Corporation, a Virginia corporation (together with any successor entity thereto, the “Company”), and Friedman, Billings, Ramsey & Co., Inc., a Delaware corporation (“FBR”), for the benefit of FBR, the purchasers of the Company’s common stock, par value $0.001 per share, as participants (“Participants”) in the private placement by the Company of shares of its common stock (the “Private Placement”), and the direct and indirect transferees of FBR, and each of the Participants.

This Agreement is made pursuant to the Purchase/Placement Agreement (the “Purchase/Placement Agreement”), dated as of July 14, 2006, by and among the Company and FBR in connection with the purchase and sale or placement of an aggregate of 12,066,667 shares of the Company’s common stock (plus an additional 1,810,000 shares to cover additional allotments, if any). In order to induce FBR to enter into the Purchase/Placement Agreement, the Company has agreed to provide the registration rights provided for in this Agreement to FBR, the Participants, and their respective direct and indirect transferees. The execution of this Agreement is a condition to the closing of the transactions contemplated by the Purchase/Placement Agreement.

The parties hereby agree as follows:

1. Definitions

As used in this Agreement, the following terms shall have the following meanings:

Accredited Investor Shares: Shares initially sold by the Company to “accredited investors” (within the meaning of Rule 501(a) promulgated under the Securities Act) as Participants.

Agreement: As defined in the preamble.

Affiliate: As to any specified Person, (i) any Person directly or indirectly owning, controlling or holding, with power to vote, ten percent or more of the outstanding voting securities of such other Person, (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with power to vote, by such other Person, (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person, (iv) any executive officer, director, trustee or general partner of such Person and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. An indirect relationship shall include circumstances in which a Person’s spouse, children, parents, siblings or mother-, father-, sister- or brother-in-law is or has been associated with a Person. For purposes of Section 9, 10(b) and 10(j) of this Agreement, Forest Holdings LLC and Forest Holdings (ERISA) LLC shall not be deemed to be Affiliates of the Company.

Business Day: With respect to any act to be performed hereunder, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York or other applicable places where such act is to occur are authorized or obligated by applicable law, regulation or executive order to close.

Closing Date: July 20, 2006 or such other time or such other date as FBR and the Company may agree.

Commission: The Securities and Exchange Commission.

Common Stock: The common stock, par value $0.001 per share, of the Company.

Company: As defined in the preamble.

Controlling Person: As defined in Section 6(a) hereof.

End of Suspension Notice: As defined in Section 5(b) hereof.

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant thereto.

FBR: As defined in the preamble.

FBR Group: As defined in Section 2(f) hereof.

Filing Deadline: As defined in Section 2(f) hereof.

Filing Default: As defined in Section 2(f) hereof.

Holder: Each record owner of any Registrable Shares from time to time, including FBR and its Affiliates.

Indemnified Party: As defined in Section 6(c) hereof.

Indemnifying Party: As defined in Section 6(c) hereof.

IPO: As defined in Section 2(b) hereof.

IPO Registration Statement: As defined in Section 2(b) hereof.

Liabilities: As defined in Section 6(a) hereof.

NASD: The National Association of Securities Dealers, Inc.

No Objections Letter: As defined in Section 4(t) hereof.

Offering Memorandum: The Offering Memorandum of the Company dated July 14, 2006 pursuant to which the Rule 144A Shares, the Regulation S Shares and the Accredited Investor Shares are offered and sold.

Participant: As defined in the preamble.

Person: An individual, partnership, corporation, trust, unincorporated organization, government or agency or political subdivision thereof, or any other legal entity.

Private Placement: As defined in the preamble.

Proceeding: An action, claim, suit or proceeding (including without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or, to the knowledge of the Person subject thereto, threatened.

Prospectus: The prospectus included in any Registration Statement, including any preliminary prospectus, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus.

Purchase/Placement Agreement: As defined in the preamble.

Purchaser Indemnitee: As defined in Section 6(a) hereof.

Registrable Shares: The Rule 144A Shares, the Accredited Investor Shares and the Regulation S Shares, upon original issuance thereof, and at all times subsequent thereto, including upon the transfer thereof by the original holder or any subsequent holder and any shares or other securities issued in respect of such Registrable Shares by reason of or in connection with any stock dividend, stock distribution, stock split, purchase in any rights offering or in connection with any exchange for or replacement of such Registrable Shares or any combination of shares, recapitalization, merger or consolidation, or any other equity securities issued pursuant to any other pro rata distribution with respect to the Common Stock, until, in the case of any such Rule 144A Share, Accredited Investor Share or Regulation S Share, the earliest to occur of (i) the date on which it has been registered effectively pursuant to the Securities Act and disposed of in accordance with the Registration Statement relating to it, (ii) the date on which either it is distributed to the public pursuant to Rule 144 (or any similar provision then in effect) or is saleable pursuant to Rule 144(k) promulgated by the Commission pursuant to the Securities Act or (iii) the date on which it is sold to the Company.

Registration Expenses: Any and all expenses incident to the performance of or compliance with this Agreement, including, without limitation: (i) all Commission, securities exchange, NASD registration, listing, inclusion and filing fees, (ii) all fees and expenses incurred in connection with compliance with international, federal or state securities or blue sky laws (including, without limitation, any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection with blue sky qualification of any of the Registrable Shares and the preparation of a blue sky memorandum and compliance with the rules of the NASD), (iii) all expenses in preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements, certificates and any other documents relating to the performance under and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing or inclusion of any of the Registrable Shares on any securities exchange or The Nasdaq Stock Market pursuant to Section 4(n) of this Agreement, (v) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company (including, without limitation, the expenses of any special audit and “cold comfort” letters required by or incident to such performance), (vi) reasonable fees and disbursements of Hogan & Hartson L.L.P., as counsel for the Holders, or other counsel reasonably acceptable to the Company, selected by the Holders holding a majority of the Registrable Shares (such counsel, “Selling Holders’ Counsel”) and (vii) any fees and disbursements customarily paid in issues and sales of securities (including the fees and expenses of any experts retained by the Company in connection with any Registration Statement); provided, however, that Registration Expenses shall exclude brokers’ or underwriters’ discounts and commissions, if any, relating to the sale or disposition of Registrable Shares by a Holder.

Registration Statement: Any registration statement of the Company that covers the resale of Registrable Shares pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement.

Regulation S: Regulation S (Rules 901-904) promulgated by the Commission under the Securities Act, as such rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such regulation.

Regulation S Shares: Shares initially resold by FBR pursuant to the Purchase/Placement Agreement to “non-U.S. persons” (in accordance with Regulation S) in an “offshore transaction” (in accordance with Regulation S).

Rule 144: Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 144A: Rule 144A promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 144A Shares: Shares initially resold by FBR pursuant to the Purchase/Placement Agreement to “qualified institutional buyers” (as such term is defined in Rule 144A).

Rule 158: Rule 158 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 174: Rule 174 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 415: Rule 415 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 424: Rule 424 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Rule 429: Rule 429 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.

Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder.

Shares: The shares of Common Stock being offered and sold pursuant to the terms and conditions of the Purchase/Placement Agreement.

Shelf Registration Statement: As defined in Section 2(a) hereof.

Suspension Event: As defined in Section 5(b) hereof.

Suspension Notice: As defined in Section 5(b) hereof.

Underwritten Offering: A sale of securities of the Company to an underwriter or underwriters for reoffering to the public.

2. Registration Rights

(a) Mandatory Shelf Registration. As set forth in Section 4 hereof, the Company agrees to file with the Commission no later than the date that is 120 days after the Closing Date a shelf Registration Statement on Form S-1 or such other form under the Securities Act then available to the Company providing for the resale of any Registrable Shares pursuant to Rule 415 from time to time by the Holders (a “Shelf Registration Statement”).

The Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as soon as practicable after the date on which such Shelf Registration Statement is first filed with the Commission; provided that, if the Company files an IPO Registration Statement (as defined herein) prior to or after the filing of such Shelf Registration Statement but before such Shelf Registration Statement is declared effective by the Commission, the Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective no later than 60 days after the effectiveness of the IPO Registration Statement. Any Shelf Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available (including, without limitation, an Underwritten Offering, a direct sale to purchasers or a sale through brokers or agents, which may include sales over the Internet) by the Holders of any and all Registrable Shares.

(b) IPO Registration. If the Company proposes to file a registration statement on Form S-1 or such other form under the Securities Act (the “IPO Registration Statement”) providing for the underwritten initial public offering of shares of Common Stock (the “IPO”), the Company will notify each Holder, within five (5) Business Days after the date on which the IPO Registration Statement is first filed with the Commission, of the filing and afford each Holder an opportunity to include in the IPO Registration Statement all or any part of the Registrable Shares then held by such Holder. Each Holder desiring to include in the IPO Registration Statement all or part of the Registrable Shares held by such Holder shall, within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Shares such Holder wishes to include in the IPO Registration Statement. Any election by any Holder to include any Registrable Shares in the IPO Registration Statement will not affect the inclusion of such Registrable Shares in the Shelf Registration Statement until such Registrable Shares have been sold under the IPO Registration Statement.

(i) Right to Terminate IPO Registration. The Company shall have the right to terminate or withdraw the IPO Registration Statement initiated by it referred to in this Section 2(b) prior to the effectiveness of such registration whether or not any Holder has elected to include Registrable Shares in such registration.

(ii) Selection of Underwriter. The Company shall have the sole right to select the managing underwriter(s) for its initial public offering, regardless of whether any Registrable Shares are included in the IPO Registration Statement or otherwise.

(iii) Shelf Registration not Impacted by IPO Registration Statement. The Company’s obligation to file the Shelf Registration Statement pursuant to Section 2(a) hereof shall not be affected by the filing or effectiveness of the IPO Registration Statement.

(c) Underwriting. The Company shall advise all Holders of the underwriter for the Underwritten Offering proposed under the IPO Registration Statement. The right of any such Holder’s Registrable Shares to be included in the IPO Registration Statement pursuant to Section 2(b) shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Shares in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Shares through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter(s) selected for such underwriting and complete and execute any questionnaires, powers of attorney, indemnities, securities escrow agreements and other documents reasonably required under the terms of such underwriting, and furnish to the Company such information as the Company may reasonably request in writing for inclusion in the Registration Statement; provided, however, that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder and such Holder’s intended method of distribution and any other representation required by law or reasonably requested by the underwriters. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation on the number of shares to be included, then the managing underwriter(s) may exclude shares (including Registrable Shares) from the IPO Registration Statement and Underwritten Offering, and any shares included in such IPO Registration

Statement and Underwritten Offering shall be allocated first, to the Company, and second, to each of the Holders requesting inclusion of their Registrable Shares in such IPO Registration Statement (on a pro rata basis based on the total number of Registrable Shares then held by each such Holder who is requesting inclusion); provided, however, that the number of Registrable Shares to be included in the IPO Registration Statement shall not be reduced unless all other securities of the Company held by (i) officers, directors, other employees of the Company and consultants; and (ii) other holders of the Company’s capital stock with registration rights that are inferior (with respect to such reduction) to the registration rights of the Holders set forth herein, are first entirely excluded from the underwriting and registration; provided, further, however, that Holders of Registrable Shares shall be permitted to include Registrable Shares comprising at least 25% of the total securities included in the Underwritten Offering proposed under the IPO Registration Statement.

If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least five (5) Business Days prior to the date of the preliminary prospectus printed for use in the road show in connection with the IPO. Any Registrable Shares excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

(d) Form S-3. As soon as the Company becomes eligible to use Form S-3, any Holder shall have the right, upon written request, to require the Company to file a Registration Statement on Form S-3, with respect to any Registrable Shares owned by it, unless and until the Registrable Shares owned by such Holder would otherwise be eligible to be sold under a previously effective Registration Statement. Such Form S-3 shall be treated as a Shelf Registration Statement for purposes of this Agreement, except that the initial filing requirement for a Shelf Registration Statement (i.e., on or prior to a date 120 days after the Closing Date) shall not apply to such Form S-3, which instead shall be filed as soon as reasonably practicable after the written request shall have been received by the Company.

(e) Expenses. The Company shall pay all Registration Expenses in connection with the registration of the Registrable Shares pursuant to this Agreement. Each Holder participating in a registration pursuant to this Section 2 shall bear such Holder’s proportionate share (based on the total number of Registrable Shares sold in such registration) of all discounts and commissions payable to underwriters or brokers in connection with a registration of Registrable Shares pursuant to this Agreement.

(f) Failure to Timely File Registration Statement. Subject to Section 2(a), if the Company does not file a Registration Statement registering the resale of the Registrable Shares within 120 days after the Closing Date (the “Filing Deadline”), other than as a result of the Commission being unable to accept such filings (a “Filing Default”), the quarterly installment of the Fee (as defined in the Management Services Agreement, dated as of             , 2006, by and between the Company and Friedman, Billings, Ramsey Group, Inc. (“FBR Group”)) shall be reduced as follows:

(1) by 0.0056 times the Company’s pre-tax quarterly earnings for each of the first 30 days after the Filing Deadline that occurs during such quarterly period during which the Filing Default continues.

(2) by 0.0111 times the Company’s pre-tax quarterly earnings for each of the 31st—60th days after the Filing Deadline that occurs during such quarterly period during which the Filing Default continues.

(3) by 0.0167 times the Company’s pre-tax quarterly earnings for each day from and after the 61^st day after the Filing Deadline that occurs during such quarterly period during which the Filing Default continues.

3. Rules 144 and 144A Reporting

With a view to making available the benefits of certain rules and regulations of the Commission that may at any time permit the resale of the Registrable Shares to the public without registration, the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(b) use commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements);

(c) so long as a Holder owns any Registrable Shares, if the Company is not required to file reports and other documents under the Securities Act and the Exchange Act, it will make available other information as required by, and so long as necessary to permit sales of Registrable Shares pursuant to, Rule 144 or Rule 144A, and in any event shall make available (either by mailing a copy thereof, by posting on the Company’s website, or by press release) to each Holder a copy of:

(i) the Company’s annual consolidated financial statements (including at least balance sheets, statements of profit and loss, statements of stockholders’ equity and statements of cash flows) prepared in accordance with U.S. generally accepted accounting principles, accompanied by an audit report of the Company’s independent accountants, no later than ninety (90) days after the end of each fiscal year of the Company; and

(ii) the Company’s unaudited quarterly financial statements (including at least balance sheets, statements of profit and loss, statements of stockholders’ equity and statements of cash flows) prepared in a manner consistent with the preparation of the Company’s annual financial statements, no later than forty-five (45) days after the end of each fiscal quarter of the Company; and

(d) so long as a Holder owns any Registrable Shares, to furnish to the Holder promptly upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to the reporting requirements of the Exchange Act), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company, and take such further actions, as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such Registrable Shares without registration.

4. Registration Procedures

In connection with the obligations of the Company with respect to any registration pursuant to this Agreement, the Company shall use its commercially reasonable efforts to effect or cause to be effected the registration of the Registrable Shares under the Securities Act to permit the sale of such Registrable Shares by the Holder or Holders in accordance with the Holder’s or Holders’ intended method or methods of distribution, and the Company shall:

(a) notify FBR and Selling Holders’ Counsel, in writing, at least ten (10) Business Days prior to filing a Registration Statement, of its intention to file a Registration Statement with the Commission and, at least five

(5) Business Days prior to filing, provide a copy of the Registration Statement to FBR, its counsel, and Selling Holders’ Counsel for review and comment; prepare and file with the Commission, as specified in this Agreement, a Registration Statement(s), which Registration Statement(s) (x) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith and (y) shall be reasonably acceptable to FBR, its counsel and Selling Holders’ Counsel; notify FBR and Selling Holders’ Counsel in writing, at least five (5) Business Days prior to filing of any amendment or supplement to such Registration Statement and, at least three (3) Business Days prior to filing, provide a copy of such amendment or supplement to FBR, its counsel and Selling Holders’ Counsel for review and comment; promptly (but in any event, not later than 24 hours) following receipt from the Commission, provide to FBR, its counsel and Selling Holders’ Counsel copies of any comments made by the staff of the Commission relating to such Registration Statement and of the Company’s responses thereto for review and comment; and use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as practicable after filing and to remain effective, subject to Section 5 hereof, until the earlier of (i) such time as all Registrable Shares covered thereby have been sold in accordance with the intended distribution of such Registrable Shares, (ii) there are no Registrable Shares outstanding or (iii) the second anniversary of the effective date of such Registration Statement (subject to extension as provided in Section 5(c) hereof); provided, however, that the Company shall not be required to cause the IPO Registration Statement to remain effective for any period longer than 180 days following the effective date of the IPO Registration Statement (subject to extension as provided in Section 5(c) hereof); provided, further, that if the Company has an effective Shelf Registration Statement on Form S-1 under the Securities Act and becomes eligible to use Form S-3 or such other short-form registration statement form under the Securities Act, the Company may, upon thirty (30) Business Days prior written notice to all Holders, register any Registrable Shares registered but not yet distributed under the effective Shelf Registration Statement on such a short-form Shelf Registration Statement and, once the short-form Shelf Registration Statement is declared effective, de-register such shares under the previous Registration Statement or transfer the filing fees from the previous Registration Statement (such transfer pursuant to Rule 429, if applicable) unless any Holder registered under the initial Shelf Registration Statement notifies the Company within twenty (20) Business Days of receipt of the Company notice that such a registration under a new Registration Statement and de-registration of the initial Shelf Registration Statement would interfere with its distribution of Registrable Shares already in progress;

(b) subject to Section 4(i) hereof, (i) prepare and file with the Commission such amendments and post-effective amendments to each such Registration Statement as may be necessary to keep such Registration Statement effective for the period described in Section 4(a) hereof; (ii) cause each Prospectus contained therein to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be adopted under the Securities Act; and (iii) comply with the provisions of the Securities Act with respect to the disposition of all securities covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof;

(c) furnish to the Holders, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Shares; the Company consents to the use of such Prospectus, including each preliminary Prospectus, by the Holders, if any, in connection with the offering and sale of the Registrable Shares covered by any such Prospectus;

(d) use its commercially reasonable efforts to register or qualify, or obtain exemption from registration or qualification for, all Registrable Shares by the time the applicable Registration Statement is declared effective by the Commission under all applicable state securities or “blue sky” laws of such jurisdictions as FBR or any Holder of Registrable Shares covered by a Registration Statement shall reasonably request in writing, keep each such registration or qualification or exemption effective during the period such Registration Statement is required to be kept effective pursuant to Section 4(a) and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such

Registrable Shares owned by such Holder; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this Section 4(d) and except as may be required by the Securities Act, (ii) subject itself to taxation in any such jurisdiction, or (iii) submit to the general service of process in any such jurisdiction;

(e) use its commercially reasonable efforts to cause all Registrable Shares covered by such Registration Statement to be registered and approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares;

(f) notify FBR and each Holder promptly (but in any event, not later than 24 hours) and, if requested by FBR or any Holder, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of the issuance by the Commission or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iii) of any request by the Commission or any other federal, state or foreign governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iv) of the happening of any event during the period a Registration Statement is effective as a result of which such Registration Statement or the related Prospectus or any document incorporated by reference therein contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (which information shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) and (v) at the request of any such Holder, promptly to furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchaser of such securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(g) make every reasonable effort to avoid the issuance of, or if issued, to obtain the withdrawal of, any order enjoining or suspending the use or effectiveness of a Registration Statement or suspending of the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction, as promptly as practicable;

(h) upon request, furnish to each requesting Holder of Registrable Shares, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by reference or exhibits thereto, unless requested);

(i) except as provided in Section 5, upon the occurrence of any event contemplated by Section 4(f)(iv) hereof, use its commercially reasonable efforts to promptly prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(j) if requested by the representative of the underwriters, if any, or any Holders of Registrable Shares being sold in connection with such offering, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information as the representative of the underwriters, if any, or such Holders indicate relates to them or that they reasonably request be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

(k) in the case of an Underwritten Offering, use its commercially reasonable efforts to furnish to each Holder of Registrable Shares covered by such Registration Statement and the underwriters a signed counterpart, addressed to each such Holder and the underwriters, of: (i) an opinion of counsel for the Company, dated the date of each closing under the underwriting agreement, reasonably satisfactory to such Holder and the underwriters; and (ii) a “comfort” letter, dated the effective date of such Registration Statement and the date of each closing under the underwriting agreement, signed by the independent public accountants who have certified the Company’s financial statements included in such Registration Statement, covering substantially the same matters with respect to such Registration Statement (and the Prospectus included therein) and with respect to events subsequent to the date of such financial statements, as are customarily covered in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other financial matters as such Holder and the underwriters may reasonably request;

(l) enter into customary agreements (including in the case of an Underwritten Offering, an underwriting agreement in customary form) and take all other action in connection therewith in order to expedite or facilitate the distribution of the Registrable Shares included in such Registration Statement and, in the case of an Underwritten Offering, make representations and warranties to the Holders covered by such Registration Statement and to the underwriters in such form and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same to the extent customary if and when requested;

(m) make available for inspection by representatives of the Holders and the representative of any underwriters participating in any disposition pursuant to a Registration Statement and any special counsel or accountants retained by such Holders or underwriters, all financial and other records, pertinent corporate documents and properties of the Company and cause the respective officers, directors and employees of the Company to supply all information reasonably requested by any such representatives, the representative of the underwriters, counsel thereto or accountants in connection with a Registration Statement; provided, however, that such records, documents or information that the Company determines, in good faith, to be confidential and notifies such representatives, representative of the underwriters, counsel thereto or accountants are confidential shall not be disclosed by the representatives, representative of the underwriters, counsel thereto or accountants unless (i) the disclosure of such records, documents or information is necessary to avoid or correct a misstatement or omission in a Registration Statement or Prospectus, (ii) the release of such records, documents or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such records, documents or information have been generally made available to the public;

(n) use its commercially reasonable efforts (including, without limitation, seeking to cure any deficiencies cited by the exchange or market in the Company’s listing or inclusion application) to list or include all Registrable Shares on the New York Stock Exchange or The Nasdaq Stock Market;

(o) prepare and file in a timely manner all documents and reports required by the Exchange Act and, to the extent the Company’s obligation to file such reports pursuant to Section 15(d) of the Exchange Act expires prior to the expiration of the effectiveness period of the Registration Statement as required by Section 4(a) hereof, the Company shall register the Registrable Shares under the Exchange Act and shall maintain such registration through the effectiveness period required by Section 4(a) hereof;

(p) provide a CUSIP number for all Registrable Shares, not later than the effective date of the Registration Statement;

(q) (i) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, (ii) make generally available to its stockholders, as soon as reasonably practicable, earnings statements covering at least 12 months that satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 (or any similar rule promulgated under the Securities Act ) thereunder, but in no event later than forty-five (45) days after the end of each fiscal year of the Company and (iii) not file any Registration Statement or Prospectus or amendment or supplement to such Registration Statement or Prospectus to which any Holder of

Registrable Shares covered by any Registration Statement shall have reasonably objected on the grounds that such Registration Statement or Prospectus or amendment or supplement does not comply in all material respects with the requirements of the Securities Act, such Holder having been furnished with a copy thereof at least two (2) Business Days prior to the filing thereof;

(r) provide and cause to be maintained a registrar and transfer agent for all Registrable Shares covered by any Registration Statement from and after a date not later than the effective date of such Registration Statement;

(s) in connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Registration Statement) that will result in the security being delivered no longer being Registrable Shares, cooperate with the Holders and the representative of the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing the Registrable Shares to be sold, which certificates shall not bear any transfer restrictive legends (other than as required by The Depository Trust Company or the Company’s Charter) and to enable such Registrable Shares to be in such denominations and registered in such names as the representative of the underwriters, if any, or the Holders may request at least two (2) Business Days prior to any sale of the Registrable Shares;

(t) in connection with the initial filing of a Shelf Registration Statement and each amendment thereto with the Commission pursuant to Section 2(a) hereof, prepare and, within one Business Day of such filing with the Commission, file with the NASD all forms and information required or requested by the NASD in order to obtain written confirmation from the NASD that the NASD does not object to the fairness and reasonableness of the underwriting terms and arrangements (or any deemed underwriting terms and arrangements) (each such written confirmation, a “No Objections Letter”) relating to the resale of Registrable Shares pursuant to the Shelf Registration Statement, including, without limitation, information provided to the NASD through its COBRADesk system, and pay all costs, fees and expenses incident to the NASD’s review of the Shelf Registration Statement and the related underwriting terms and arrangements, including, without limitation, all filing fees associated with any filings or submissions to the NASD and the legal expenses, filing fees and other disbursements of FBR and any other NASD member that is the holder of, or is affiliated or associated with an owner of, Registrable Shares included in the Shelf Registration Statement (including in connection with any initial or subsequent member filing);

(u) in connection with the initial filing of a Shelf Registration Statement and each amendment thereto with the Commission pursuant to Section 2(a) hereof, provide to FBR and its representatives, the opportunity to conduct due diligence, including, without limitation, an inquiry of the Company’s financial and other records, and make available members of its management for questions regarding information which FBR may request in order to fulfill any due diligence obligation on its part, and, concurrent with the initial filing of a Shelf Registration Statement with the Commission pursuant to Section 2(a) hereof, pay the sum of $75,000 to FBR, by wire transfer of immediately available funds, to cover FBR’s costs and expenses associated with its due diligence review of the Shelf Registration Statement and the information contained therein; and

(w) upon effectiveness of the first Registration Statement filed under this Agreement, the Company will take such actions and make such filings as are necessary to effect the registration of the Common Stock under the Exchange Act simultaneously with or immediately following the effectiveness of the Registration Statement.

The Company may require the Holders to furnish to the Company such information regarding the proposed distribution by such Holder of such Registrable Shares as the Company may from time to time reasonably request in writing or as shall be required to effect the registration of the Registrable Shares, and no Holder shall be entitled to be named as a selling stockholder in any Registration Statement and no Holder shall be entitled to use the Prospectus forming a part thereof if such Holder does not provide such information to the Company. Each Holder further agrees to furnish promptly to the Company in writing all information required from time to time to make the information previously furnished by such Holder not misleading.

Each Holder agrees that, upon receipt of any written notice from the Company of the happening of any event of the kind described in Section 4(f)(iii) or 4(f)(iv) hereof, such Holder will immediately discontinue disposition of Registrable Shares pursuant to a Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus. If so directed by the Company, such Holder will deliver to the Company (at the expense of the Company) all copies in its possession, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice.

5. Black-Out Period

(a) Subject to the provisions of this Section 5 and a good faith determination by a majority of the independent members of the Board of Directors of the Company that it is in the best interests of the Company to suspend the use of the Registration Statement, following the effectiveness of a Registration Statement (and the filings with any international, federal or state securities commissions), the Company, by written notice to FBR and the Holders, may direct the Holders to suspend sales of the Registrable Shares pursuant to a Registration Statement for such times as the Company reasonably may determine is necessary and advisable (but in no event for more than an aggregate of ninety (90) days in any consecutive twelve (12)-month period commencing on the Closing Date or more than forty-five (45) days in any consecutive 90-day period), if any of the following events shall occur: (i) the representative of the underwriters of an Underwritten Offering of primary shares by the Company has advised the Company that the sale of Registrable Shares pursuant to the Registration Statement would have a material adverse effect on the Company’s initial public offering; (ii) the majority of the independent members of the Board of Directors of the Company shall have determined in good faith that (A) the offer or sale of any Registrable Shares would materially impede, delay or interfere with any proposed material financing, offer or sale of securities, acquisition, corporate reorganization or other material transaction involving the Company, (B) after the advice of counsel, the sale of Registrable Shares pursuant to the Registration Statement would require disclosure of non-public material information not otherwise required to be disclosed under applicable law, and (C) (x) the Company has a bona fide business purpose for preserving the confidentiality of such transaction, (y) disclosure would have a material adverse effect on the Company or the Company’s ability to consummate such transaction, or (z) renders the Company unable to comply with Commission requirements, in each case under circumstances that would make it impractical or inadvisable to cause the Registration Statement (or such filings) to become effective or to promptly amend or supplement the Registration Statement on a post-effective basis, as applicable; or (iii) the majority of the independent members of the Board of Directors of the Company shall have determined in good faith, after the advice of counsel, that it is required by law, rule or regulation or that it is in the best interests of the Company to supplement the Registration Statement or file a post-effective amendment to the Registration Statement in order to incorporate information into the Registration Statement for the purpose of (1) including in the Registration Statement any prospectus required under Section 10(a)(3) of the Securities Act; (2) reflecting in the prospectus included in the Registration Statement any facts or events arising after the effective date of the Registration Statement (or of the most-recent post-effective amendment) that, individually or in the aggregate, represents a fundamental change in the information set forth therein; or (3) including in the prospectus included in the Registration Statement any material information with respect to the plan of distribution not disclosed in the Registration Statement or any material change to such information. Upon the occurrence of any such suspension, the Company shall use its best efforts to cause the Registration Statement to become effective or to promptly amend or supplement the Registration Statement on a post-effective basis or to take such action as is necessary to make resumed use of the Registration Statement compatible with the Company’s best interests, as applicable, so as to permit the Holders to resume sales of the Registrable Shares as soon as possible.

(b) In the case of an event that causes the Company to suspend the use of a Registration Statement pursuant to Section 5(a) (a “Suspension Event”), the Company shall give written notice (a “Suspension Notice”) to FBR and the Holders to suspend sales of the Registrable Shares and such notice shall state generally the basis for the notice and that such suspension shall continue only for so long as the Suspension Event or its effect is continuing and the Company is using its best efforts and taking all reasonable steps to terminate suspension of the use of the

Registration Statement as promptly as possible. The Holders shall not effect any sales of the Registrable Shares

pursuant to such Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice (as defined below). If so directed by the Company, each Holder will deliver to the Company (at the expense of the Company) all copies other than permanent file copies then in such Holder’s possession of the Prospectus covering the Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of the Registrable Shares pursuant to the Registration Statement (or such filings) following further written notice to such effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice shall be given by the Company to the Holders and FBR in the manner described above promptly following the conclusion of any Suspension Event and its effect.

(c) Notwithstanding any provision herein to the contrary, if the Company shall give a Suspension Notice pursuant to this Section 5, the Company agrees that it shall extend the period of time during which the applicable Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of receipt by the Holders of the Suspension Notice to and including the date of receipt by the Holders of the End of Suspension Notice and copies of the supplemented or amended Prospectus necessary to resume sales.

6. Indemnification and Contribution

(a) The Company agrees to indemnify and hold harmless (i) each Holder of Registrable Shares and any underwriter (as determined in the Securities Act) for such Holder (including, if applicable, FBR), (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act), any such Person described in clause (i) (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “Controlling Person”), and (iii) the respective officers, directors, partners, members employees, representatives and agents of any such Person or any Controlling Person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as a “Purchaser Indemnitee”), to the fullest extent lawful, from and against any and all losses, claims, damages, judgments, actions, out-of-pocket expenses, and other liabilities (the “Liabilities”), including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any Purchaser Indemnitee, joint or several, directly or indirectly related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (as amended or supplemented if the Company shall have furnished to such Purchaser Indemnitee any amendments or supplements thereto), or any preliminary Prospectus or any other document used to sell the Shares, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such Liabilities arise out of or are based upon (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Purchaser Indemnitee furnished to the Company or any underwriter in writing by such Purchaser Indemnitee expressly for use therein, or (ii) any untrue statement contained in or omission from a preliminary Prospectus if a copy of the Prospectus (as then amended or supplemented, if the Company shall have furnished to or on behalf of the Holder participating in the distribution relating to the relevant Registration Statement any amendments or supplements thereto) was not sent or given by or on behalf of such Holder to the Person asserting any such Liabilities who purchased Shares, if such Prospectus (or Prospectus as amended or supplemented) is required by law to be sent or given at or prior to the written confirmation of the sale of such Shares to such Person and the untrue statement contained in or omission from such preliminary Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented). The Company shall notify the Holders promptly of the institution, threat or assertion of any claim, proceeding (including any governmental investigation), or litigation of which it shall have become aware in connection with the matters addressed by this Agreement which involves the Company or a Purchaser Indemnitee. The indemnity provided for herein shall remain in full force and effect regardless of any investigation made by or on behalf of any Purchaser Indemnitee.

(b) In connection with any Registration Statement in which a Holder of Registrable Shares is participating, such Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, each Person who

controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and the respective partners, directors, officers, members, representatives, employees and agents of such Person or Controlling Person to the same extent as the foregoing indemnity from the Company to each Purchaser Indemnitee, but only with reference to untrue statements or omissions or alleged untrue statements or omissions made in reliance upon and in strict conformity with information relating to such Purchaser Indemnitee furnished to the Company in writing by such Purchaser Indemnitee expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto or any preliminary Prospectus. The liability of any Purchaser Indemnitee pursuant to this paragraph shall in no event exceed the net proceeds received by such Purchaser Indemnitee from sales of Registrable Shares giving rise to such obligations.

(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to paragraph (a) or (b) above, such Person (the “Indemnified Party”), shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”), in writing of the commencement thereof (but the failure to so notify an Indemnifying Party shall not relieve it from any liability which it may have under this Section 6, except to the extent the Indemnifying Party is materially prejudiced by the failure to give notice), and the Indemnifying Party, upon request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any others the Indemnifying Party may reasonably designate in such proceeding and shall pay the reasonable fees and expenses actually incurred by such counsel related to such proceeding. Notwithstanding the foregoing, in any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party, unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Party failed within a reasonable time after notice of commencement of the action to assume the defense and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its counsel do not actively and vigorously pursue the defense of such action or (iv) the named parties to any such action (including any impleaded parties), include both such Indemnified Party and the Indemnifying Party, or any Affiliate of the Indemnifying Party, and such Indemnified Party shall have been reasonably advised by counsel that, either (x) there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party or such Affiliate of the Indemnifying Party or (y) a conflict may exist between such Indemnified Party and the Indemnifying Party or such Affiliate of the Indemnifying Party (in which case the Indemnifying Party shall not have the right to assume nor direct the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel), for all such Indemnified Parties, which firm shall be designated in writing by those Indemnified Parties who sold a majority of the Registrable Shares sold by all such Indemnified Parties and any such separate firm for the Company, the directors, the officers and such control Persons of the Company as shall be designated in writing by the Company). The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent or if there is a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify any Indemnified Party from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in paragraphs (a) and (b) of this Section 6 is for any reason held to be unavailable to an Indemnified Party in respect of any Liabilities referred to therein (other than by reason of the exceptions provided therein) or is insufficient to hold harmless a party indemnified thereunder, then each Indemnifying Party under such paragraphs, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities (i) in such

proportion as is appropriate to reflect the relative benefits of the Indemnified Party on the one hand and the Indemnifying Party(ies) on the other in connection with the statements or omissions that resulted in such Liabilities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and any Purchaser Indemnitees on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser Indemnitees and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if such Indemnified Parties were treated as one entity for such purpose), or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph 6(d) above. The amount paid or payable by an Indemnified Party as a result of any Liabilities referred to paragraph 6(d) shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall a Purchaser Indemnitee be required to contribute any amount in excess of the amount by which proceeds received by such Purchaser Indemnitee from sales of Registrable Shares exceeds the amount of any damages that such Purchaser Indemnitee has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. For purposes of this Section 6, each Person, if any, who controls (within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) FBR or a Holder of Registrable Shares shall have the same rights to contribution as FBR or such Holder, as the case may be, and each Person, if any, who controls (within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) the Company, and each officer, director, partner, employee, representative, agent or manager of the Company shall have the same rights to contribution as the Company. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties, notify each party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 6 or otherwise, except to the extent that any party is materially prejudiced by the failure to give notice. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act), shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(f) The indemnity and contribution agreements contained in this Section 6 will be in addition to any liability which the Indemnifying Parties may otherwise have to the Indemnified Parties referred to above. The Purchaser Indemnitee’s obligations to contribute pursuant to this Section 6 are several in proportion to the respective number of Shares sold by each of the Purchaser Indemnitees hereunder and not joint.

7. Market Stand-off Agreement

Each Holder that elects to include Registrable Shares in an IPO Registration Statement of the Company hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly sell, offer to sell (including without limitation any short sale), grant any option or otherwise transfer or dispose of any Registrable Shares or other shares of Common Stock of the Company or any securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company then owned by such Holder (other than to donees or partners of the Holder who agree to be similarly bound) for a period of up to one hundred and eighty (180) days, or such shorter period as an underwriter may require, following the effective date of an IPO Registration Statement of the Company filed under the Securities Act; provided, however, that:

(a) the restrictions above shall not apply to Registrable Shares sold pursuant to the IPO Registration Statement;

(b) all executive officers and directors of the Company then holding shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company enter into similar agreements;

(c) the Holders shall be allowed any concession or proportionate release allowed to any officer or director that entered into similar agreements (with such proportion being determined by dividing the number of shares being released with respect to such officer or director by the total number of issued and outstanding shares held by such officer or director); provided, that nothing in this Section 7(c) shall be construed as a right to proportionate release for the executive officers and directors of the Company upon the expiration of the 60-day period applicable to all Holders other than the executive officers and directors of the Company;

(d) this Section 7 shall not be applicable if a Shelf Registration Statement of the Company filed under the Securities Act has been declared effective prior to the filing of an IPO Registration Statement.

In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the securities subject to this Section 7 and to impose stop transfer instructions with respect to the Registrable Shares and such other securities of each Holder (and the securities of every other Person subject to the foregoing restriction) until the end of such period.

8. Termination of the Company’s Obligation

The Company shall have no obligation pursuant to this Agreement at such time as no Registrable Securities are outstanding; provided that the Company’s obligations under Sections 3, 6 and 10 of the Agreement shall remain in full force and effect.

9. Limitations on Subsequent Registration Rights

From and after the date of this Agreement, except pursuant to that certain registration rights agreement, dated of even date herewith, among the Company, Forest Holdings LLC and Forest Holdings (ERISA) LLC, the Company shall not, without the prior written consent of Holders beneficially owning not less than a majority of the then outstanding Registrable Shares (provided, however, that for purposes of this Section 9, Registrable Shares that are owned, directly or indirectly, by an Affiliate of the Company shall not be deemed to be outstanding), enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any Registration Statement filed pursuant to the terms hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of Registrable Shares of the Holders that is included, or (b) to have his securities registered on a registration statement that could be declared effective prior to, or within one hundred eighty (180) days of, the effective date of any Registration Statement filed pursuant to this Agreement.

10. Miscellaneous

(a) Remedies. In the event of a breach by the Company of any of its obligations under this Agreement, each Holder, in addition to being entitled to exercise all rights provided herein or, in the case of FBR, in the Purchase/Placement Agreement, or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Subject to Section 6, the Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, without the written consent of the Company and Holders beneficially owning not less than a majority of the then outstanding Registrable Shares; provided, however, that for purposes of this

Section 10(b), Registrable Shares that are owned, directly or indirectly, by an Affiliate of the Company shall not

be deemed to be outstanding. No amendment shall be deemed effective unless it applies uniformly to all Holders. Notwithstanding the foregoing, a waiver or consent to or departure from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders may be given by such Holder; provided that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence.

(c) Notices. All notices and other communications, provided for or permitted hereunder shall be made in writing by delivered by facsimile (with receipt confirmed), overnight courier or registered or certified mail, return receipt requested, or by telegram

(i) if to a Holder, at the most current address given by the transfer agent and registrar of the Shares to the Company;

with a copy to:

Hogan & Hartson L.L.P.

555 Thirteenth Street, NW

Washington, D.C. 20004

Attention: Stuart A. Barr, Esq.

facsimile: 202-637-5910;

and

(ii) if to the Company or FBR at the offices of the Company or FBR at:

1001 Nineteenth Street, North

Arlington, Virginia 22209

Attention: Compliance Department

facsimile: 703-312-9698;

with a copy to each of:

Hunton & Williams LLP

951 East Byrd Street

Richmond, Virginia 23219

Attention: Daniel M. LeBey, Esq.

facsimile: 804-343-4541;

and

Hogan & Hartson L.L.P.

555 Thirteenth Street, NW

Washington, D.C. 20004

Attention: Stuart A. Barr, Esq.

facsimile: 202-637-5910.

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without limitation and without the need for an express assignment or assumption, subsequent Holders. The Company agrees that the Holders shall be third party beneficiaries to the agreements made hereunder by FBR and the Company, and each Holder shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder; provided, however, that such Holder fulfills all of its obligations hereunder.

(e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(h) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties hereto that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(i) Entire Agreement. This Agreement, together with the Purchase/Placement Agreement, is intended by the parties hereto as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein.

(j) Registrable Shares Held by the Company or its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Shares is required hereunder, Registrable Shares held by the Company or its Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(k) Adjustment for Stock Splits, etc. Wherever in this Agreement there is a reference to a specific number of shares or liquidated damages payable with respect to any Registrable Shares, then upon the occurrence of any subdivision, combination, or stock dividend of such shares, the specific number of shares or amount of liquidated damages payable with respect to any Registrable Shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of stock by such subdivision, combination, or stock dividend.

(l) Survival. This Agreement is intended to survive the consummation of the transactions contemplated by the Purchase/Placement Agreement. The indemnification and contribution obligations under Section 6 of this Agreement shall survive the termination of the Company’s obligations under Section 2 of this Agreement.

(m) Attorneys’ Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover its reasonable attorneys’ fees in addition to any other available remedy.

(n) Waiver of Jury Trial. Each of the parties hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or in connection with this agreement and the transactions contemplated hereby.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

FBR CAPITAL MARKETS CORPORATION
By:	/S/  WILLIAM J. GINIVAN
Name:	William J. Ginivan
Title:	Senior Vice President, General Counsel and Secretary

FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:	/S/  JAMES R. KLEEBLATT
Name:	James R. Kleeblatt
Title:	Senior Managing Director

EX-10.12

Exhibit 10.12

FBR CAPITAL MARKETS CORPORATION

OPTION TO PURCHASE SHARES OF

COMMON STOCK OF FBR CAPITAL MARKETS CORPORATION

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH.

FOR VALUE RECEIVED, FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (the “Company”), hereby certifies that Forest Holdings LLC, its successors or permitted assigns (the “Holder”), is entitled, subject to the provisions of this Option, to purchase from the Company, at the times specified herein, a number of fully paid and non-assessable shares of Common Stock par value $0.001 per share, of the Company (the “Common Stock”) equal to the Option Share Amount at a purchase price per share equal to the Exercise Price. The Option Share Amount and the Exercise Price are subject to adjustment from time to time as hereinafter set forth.

1. Definitions. (a) The following terms, as used herein, have the following meanings:

“Exercise Price” means $17.14 per share of Common Stock, as such amount may be adjusted pursuant to Sections 8 and 9 hereof.

“Fair Market Value” means, with respect to any security on any date, (A) if such security is listed and traded on the New York Stock Exchange, Inc. (“NYSE”), the closing price on such date as reported on the NYSE Composite Transactions Tape; (B) if such security is listed and traded on The NASDAQ Stock Market, Inc. (“NASDAQ”) or another national securities exchange, the last reported sale price or closing price, as the case may be, on such date as reported by NASDAQ or such principal securities exchange; (C) if such security is actively traded over-the-counter, the average of the highest reported bid and lowest reported asked price on such date. If on any determination date there is no active public market for such security, and with respect to other property or assets, the Fair Market Value shall be the fair market value thereof as determined in good faith by the Board; provided that if the Holder shall object to any such determination by the Board, the Company shall retain an investment bank of national reputation and stature reasonably acceptable to the Holder to conduct a

valuation of such property or assets, such valuation to be binding upon the Holder and the Company. The cost of retaining such investment bank shall be shared equally by the Company and the Holder.

“Investment Agreement” means the Investment Agreement dated as of July 19, 2006, among the Company, the Holder and Forest Holdings LLC, as amended from time to time.

“Option Shares” means the shares of Common Stock deliverable upon exercise of this Option, as adjusted from time to time in accordance herewith.

“Option Share Amount” means 2,465,671 shares of Common Stock, as such number may be adjusted pursuant to Sections 8 and 9 hereof.

(b) Terms used herein but not defined shall have the respective meanings set forth in the Investment Agreement.

2. Exercise or Exchange of Option. (a) The Holder is entitled to exercise this Option in whole or in part at any time, from time to time, until July 20, 2012 or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Option, the Holder shall execute and deliver to the Company an Option Exercise Notice substantially in the form annexed hereto. No later than five Business Days after delivery of the Option Exercise Notice, the Holder shall deliver to the Company this Option, including the Option Exercise Subscription Form forming a part hereof duly executed by the Holder, together with payment (in the manner described in the following paragraph) of the applicable Exercise Price. Upon such delivery and payment, the exercise will be effective and the Holder shall be deemed to be the holder of record of the Option Shares subject to such exercise, notwithstanding that the stock transfer books of the Company may then be closed or that certificates representing such Option Shares shall not then be actually delivered to the Holder. If such delivery and payment does not occur within five Business Days after delivery of the Option Exercise Notice, the Option Exercise Notice shall become null and void.

The Exercise Price may be paid in cash by wire transfer in immediately available funds as directed by the Company or by certified or official bank check or bank cashier’s check payable to the order of the Company or by any combination of such cash or check.

(b) The Company shall pay any and all documentary, stamp or similar issue or transfer taxes (“Taxes”) payable in respect of the issue or delivery of the Option Shares.

(c) If the Holder exercises this Option in part, this Option shall be surrendered by the Holder to the Company and a new Option of the same tenor and for the unexercised number of Option Shares shall be

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executed by the Company. The Company shall register the new Option in the name of the Holder or in such name or names of its transferee pursuant to Section 6 hereof (provided, that the Holder and/or such transferee shall be liable for any Taxes resulting from such transfer) as may be directed in writing by the Holder and deliver the new Option to the Person or Persons entitled to receive the same.

(d) Upon surrender of this Option in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Option appropriate evidence of ownership of the shares of Common Stock or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the Person in whose name this Option is registered on the records of the Company regarding registration and transfers of the Options, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 5 below.

(e) In lieu of exercising the Option pursuant to Section 2(a) (but in all other respects in accordance with the exchange procedure set forth in Section 2(a), as it may be adjusted to reflect the exchange referred to herein, except that in lieu of the Option Exercise Notice, the Holder shall deliver a written notice of exchange containing information similar to that contained in the Option Exercise Notice), the Holder may elect to convert this Option into shares of Common Stock, in which event the Company will issue to the Holder the number of shares of Common Stock equal to the following formula:

                X = (A - B) x C

                            A

                where

X =	the number of shares of Common Stock issuable upon exchange pursuant to this Section 2(e)
A =	the Fair Market Value of one share of Common Stock on the day immediately preceding the date on which the Holder delivers notice of the exchange to the Company pursuant to Section 2(a)

B =	the Exercise Price
C =	the number of Options to be exchanged pursuant to Section 2(a)

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If the foregoing calculation results in a negative number, then no shares of Common Stock shall be issued upon exchange pursuant to this Section 2(e).

3. Restrictive Legend. Any certificates representing Option Shares shall bear a legend or legends substantially in the form of the legend(s) set forth in Section 10.15 of the Investment Agreement to the extent the Applicable Stock (as defined in the Investment Agreement) are required to bear such legends.

4. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Option such number of its authorized but unissued shares of Common Stock or other securities of the Company from time to time issuable upon exercise of this Option as will be sufficient to permit the exercise in full of this Option. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, and, shall be free and clear of all liens, security interests, charges and other encumbrances or (other than as set forth in the Governance Agreement) restrictions on sale and free and clear of all preemptive rights.

5. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Option and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Fair Market Value of one share of Common Stock at the date of delivery of the Option Exercise Notice.

6. Exchange, Transfer or Assignment of Option. (a) This Option is exchangeable for multiple Options exercisable into an aggregate number of shares of Common Stock equal to the Option Share Amount, as requested by the Holder surrendering the same. No service charge will be charged to the Holder for such exchange.

(b) The Holder may transfer or assign this Option or any portion hereof or its rights or interest in and to this Option or any portion hereof to any of its Affiliates provided, that the Holder shall be responsible for any and all Taxes resulting from such transfer or assignment. Each permitted assignee, transferee and pledgee shall have all of the rights of the Holder under this Option. Any transfer or assignment of this Option shall be made in compliance with all applicable federal and state securities laws.

(c) Each taker and holder of this Option by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Option as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Option, will, with respect to the Option Shares, be subject to the provisions of, and will have the benefits of, the Governance Agreement

4

and the Registration Rights Agreement to the extent set forth therein (including the transfer restrictions therein).

(d) Upon surrender of this Option to the Company, together with the attached Option Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Option in the name of the assignee or assignees named in such instrument of assignment and, if the Holder’s entire interest is not being assigned, in the name of the Holder and this Option shall promptly be canceled.

7. Loss or Destruction of Option. Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Option, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, or upon surrender and cancellation of this Option, if mutilated, the Company shall execute and deliver a new Option of like tenor and date provided, that the Company shall be entitled to require that the Holder deliver to the Company a customary indemnity bond.

8. Anti-dilution Provisions. So long as this Option is outstanding, the Exercise Price shall be subject to change or adjustment as follows:

(a) (i) If the Company shall issue or sell, after the Closing Date (for the avoidance of doubt, excluding any and all shares of Common Stock issued in connection with the 144A Offering), any Additional Securities without consideration or for a consideration per share less than the Exercise Price for this Option in effect immediately prior to the issuance of such Additional Securities, the Exercise Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the nearest cent) equal to:

(O*P)+A/T

where:

O = the number of shares of Common Stock outstanding immediately prior to such issue or sale

P = the Exercise Price in effect prior to adjustment

A = the aggregate amount of consideration received by the Company in respect of the Additional Securities

T = the number of shares of Common Stock outstanding immediately after the issue or sale of the Additional Securities.

(ii) No adjustment of such Exercise Price shall be made in an amount less than one cent per share; provided that any adjustments which are not required to be made by reason of this

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sentence shall be carried forward and shall be either taken into account in the first to occur of (1) any subsequent adjustment made prior to two years from the date of the event giving rise to the adjustment being carried forward, or (2) at the end of two years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in Section 8(a)(iv)(C) or Section 8(d), no adjustment of such Exercise Price pursuant to this Section 8(a) shall have the effect of increasing the Exercise Price above the Exercise Price in effect immediately prior to such adjustment.

(iii) In the case of an issuance of Additional Securities for cash, the value of the consideration received for such Additional Securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. In the case of an issuance of Additional Securities in whole or in part for consideration other than cash, the value of the consideration received for such Additional Securities shall be deemed to be the Fair Market Value thereof before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. Notwithstanding anything herein to the contrary, if any Additional Securities, options to purchase or rights to subscribe for Additional Securities, or securities by their terms convertible into or exchangeable for Additional Securities or options to purchase or rights to subscribe for such convertible or exchangeable securities, shall be issued in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of the assets and business of the non-surviving corporation as shall be attributable to such Additional Securities, options, rights or securities, as the case may be.

(iv) In the case of the issuance of options to purchase or rights to subscribe for Additional Securities, securities by their terms convertible into or exchangeable for Additional Securities or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for all purposes of this Section 8(a) and Section 8(b):

(A) The aggregate maximum number of shares of Common Stock deliverable upon exercise (to the extent then exercisable) of such options to purchase or rights to subscribe for Common Stock shall be deemed

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to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Section 8(a)(iii)), if any, to be received by the Company upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights for the Common Stock covered thereby.

(B) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange (to the extent then convertible or exchangeable) for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, to be received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Section 8(a)(iii)).

(C) In the event of any change in the number of shares of Common Stock (other than as a result of a stock split, stock dividend or similar event) deliverable or in the consideration payable to the Company upon exercise of such outstanding options or rights or upon conversion of or in exchange for such outstanding convertible or exchangeable securities (including a change resulting from the antidilution provisions thereof) and in the event such options, rights or securities expire unexercised, the applicable Exercise Price, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change or expiration, but (in the case of any such change) no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

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(D) The number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to Section 8(a)(iv)(A) and 8(a)(iv)(B) shall be appropriately adjusted to reflect any change of the type described in Section 8(a)(iv)(C).

(v) The adjustments described in this Section 8(a) shall be made successively upon each such sale or issuance of Additional Securities.

(b) “Additional Securities” shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to Section 8(a)(iv)) by the Company after the Closing Date other than shares of Common Stock issued or issuable:

(1) pursuant to a transaction described in Section 8(c) hereof; or

(2) to employees, consultants, directors of the Company directly or pursuant to a stock option plan or restricted stock plan approved from time to time by the stockholders and Board.

(c) In the event the Company should at any time or from time to time after the Closing Date fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the applicable Exercise Price shall be appropriately decreased so that the number of shares of Common Stock issuable on exercise of this Option shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to the Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in subsection Section 8(a)(iv).

(d) If the number of shares of Common Stock outstanding at any time after the Closing Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of

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such combination, the applicable Exercise Price shall be appropriately increased so that the number of shares of Common Stock issuable on exercise of this Option shall be decreased in proportion to such decrease in outstanding shares.

(e) In the event that the Company shall fix a record date for the making of a distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, assets or other property (excluding dividends payable in Common Stock Equivalents and for which an adjustment is made pursuant to Section 8(c) hereof and excluding cash), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair Market Value of one share of Common Stock in effect immediately prior to such record date, less the Fair Market Value of the portion of the assets, other property or evidence of indebtedness so to be distributed which is applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value of one share of Common Stock in effect immediately prior to such record date.

(f) In the event that the Company shall fix a record date for the making of a cash distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price to be in effect after such record date shall be reduced by an amount equal to the portion of such cash distribution to be received by a holder of one share of Common Stock on such record date.

(g) The adjustments described in Sections 8(c) through 8(f) shall be made successively whenever such a record date is fixed; and in

the event that such distribution or combination is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

9. Consolidation, Merger, or Sale of Assets. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock, or in case of any consolidation or merger (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock) of the Company with or into another entity, or any sale or conveyance of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Company shall cause effective provision to be made so that the Holder shall be entitled to receive, upon exercise or conversion of this Option, the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation,

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merger, sale or conveyance by a holder of the number of shares of Common Stock for which this Option may have been exercised or converted immediately prior to such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance (assuming such holder of Common Stock (x) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or conveyance was made, as the case may be (“constituent Person”), or an affiliate of a constituent Person and (y) failed to exercise any rights of election as to the kind or amount of securities or property (including cash) receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance (provided, that if the kind or amount of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance is not the same for each share of Common Stock held immediately prior to such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance by other than a constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (“non-electing share”), then for the purpose of this Section 9, the kind and amount of securities, cash and other property receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares)). Adjustments for events subsequent to the effective date of any such reclassification, reorganization, consolidation, merger or sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Option. In any such event, effective provisions shall be made in any contract of sale, conveyance, lease or transfer, or otherwise, so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. Notwithstanding anything herein to the contrary, appropriate adjustment shall be made for the application of the provisions herein set forth with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon exercise of this Option. This paragraph shall similarly apply to successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock and to successive consolidations or mergers.

10. Notices of Record Date, etc. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right;

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(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person; or

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

then and in each such event the Company will mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right and (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up. Such notice shall be mailed at least 10 days prior to the date specified in such notice on which any such action is to be taken.

11. Notices. Unless otherwise provided herein, any notices, consents, waivers or other communications required or permitted to be given under the terms of this Option must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally, (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

FBR Capital Markets Corporation

1001 Nineteenth Street

Arlington, Virginia 22209

Attention: Chief Legal Officer

Fax: (703) 469-1140

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52d Street

New York, New York 10019

Attention: Trevor S. Norwitz

Fax: (212) 403-2333

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If to the Holder:

Crestview Partners

667 Madison Avenue

New York, NY 10021

Attention: Jacob Capps

Fax: (212) 906-0750

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Carole Schiffman

Fax: (212) 450-3800

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change.

12. No Reissuance of Option. No Options acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such Options shall be retired.

13. Rights of the Holder. Prior to the exercise of the Option, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions, to exercise any preemptive right or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

14. Choice of Law and Venue; Waiver of Jury Trial. This Option shall be governed by and construed in accordance with the law of the State of New York. The Company and, by accepting this Option, the Holder hereby irrevocably consent to the jurisdiction of the United States District Court for the Southern District of New York or any New York State court sitting in New York City (and of the appropriate appellate courts therefrom) in any suit, action or proceeding seeking to enforce any provision of, or based on any suit, action or proceeding arising out of or in connection with, this Option or the transactions contemplated hereby and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 11 shall be deemed effective service

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of process on such party. EACH OF THE COMPANY AND, BY ACCEPTING THIS OPTION, THE HOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS OPTION.

15. Entire Agreement; Amendments; Waivers. This Option, the Investment Agreement, the Ancillary Agreements and the other documents referred to herein and therein constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Option nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

16. HSR Act and Rules. Notwithstanding any provision herein to the contrary, in connection with any acquisition of Common Stock (and/or any other voting securities of the Company) as to the HSR Act, would, but for this paragraph, be applicable, any person or entity (as defined under the HSR Act) acquiring such Common Stock (and/or other voting securities of the Company) shall have no right to vote such Common Stock or voting securities until such person or entity has complied with the filing and waiting period requirements of the HSR Act.

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IN WITNESS WHEREOF, the Company has duly caused this Option to be signed by its duly authorized officer and to be dated as of July 20, 2006.

FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

Acknowledged and Agreed:

FOREST HOLDINGS LLC

By: Crestview Capital Partners, L.P., as Member

By: Crestview Partners, L.P. its General Partner

By: Crestview, L.L.C., its General Partner

/s/ Thomas S. Murphy, Jr.

Name: Thomas S. Murphy, Jr.

Title: President

EX-10.13

Exhibit 10.13

FBR CAPITAL MARKETS CORPORATION

OPTION TO PURCHASE SHARES OF

COMMON STOCK OF FBR CAPITAL MARKETS CORPORATION

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE

SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD

EXCEPT IN COMPLIANCE THEREWITH.

FOR VALUE RECEIVED, FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (the “Company”), hereby certifies that Forest Holdings (ERISA) LLC, its successors or permitted assigns (the “Holder”), is entitled, subject to the provisions of this Option, to purchase from the Company, at the times specified herein, a number of fully paid and non-assessable shares of Common Stock par value $0.001 per share, of the Company (the “Common Stock”) equal to the Option Share Amount at a purchase price per share equal to the Exercise Price. The Option Share Amount and the Exercise Price are subject to adjustment from time to time as hereinafter set forth.

1. Definitions. (a) The following terms, as used herein, have the following meanings:

“Exercise Price” means $17.14 per share of Common Stock, as such amount may be adjusted pursuant to Sections 8 and 9 hereof.

“Fair Market Value” means, with respect to any security on any date, (A) if such security is listed and traded on the New York Stock Exchange, Inc. (“NYSE”), the closing price on such date as reported on the NYSE Composite Transactions Tape; (B) if such security is listed and traded on The NASDAQ Stock Market, Inc. (“NASDAQ”) or another national securities exchange, the last reported sale price or closing price, as the case may be, on such date as reported by NASDAQ or such principal securities exchange; (C) if such security is actively traded over-the-counter, the average of the highest reported bid and lowest reported asked price on such date. If on any determination date there is no active public market for such security, and with respect to other property or assets, the Fair Market Value shall be the fair market value thereof as determined in good faith by the Board; provided that if the Holder shall object to any such determination by the Board, the Company shall retain an investment bank of

national reputation and stature reasonably acceptable to the Holder to conduct a valuation of such property or assets, such valuation to be binding upon the Holder and the Company. The cost of retaining such investment bank shall be shared equally by the Company and the Holder.

“Investment Agreement” means the Investment Agreement dated as of July 19, 2006, among the Company, the Holder and Forest Holdings LLC, as amended from time to time.

“Option Shares” means the shares of Common Stock deliverable upon exercise of this Option, as adjusted from time to time in accordance herewith.

“Option Share Amount” means 134,329 shares of Common Stock, as such number may be adjusted pursuant to Sections 8 and 9 hereof.

(b) Terms used herein but not defined shall have the respective meanings set forth in the Investment Agreement.

2. Exercise or Exchange of Option. (a) The Holder is entitled to exercise this Option in whole or in part at any time, from time to time, until July 20, 2012 or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Option, the Holder shall execute and deliver to the Company an Option Exercise Notice substantially in the form annexed hereto. No later than five Business Days after delivery of the Option Exercise Notice, the Holder shall deliver to the Company this Option, including the Option Exercise Subscription Form forming a part hereof duly executed by the Holder, together with payment (in the manner described in the following paragraph) of the applicable Exercise Price. Upon such delivery and payment, the exercise will be effective and the Holder shall be deemed to be the holder of record of the Option Shares subject to such exercise, notwithstanding that the stock transfer books of the Company may then be closed or that certificates representing such Option Shares shall not then be actually delivered to the Holder. If such delivery and payment does not occur within five Business Days after delivery of the Option Exercise Notice, the Option Exercise Notice shall become null and void.

The Exercise Price may be paid in cash by wire transfer in immediately available funds as directed by the Company or by certified or official bank check or bank cashier’s check payable to the order of the Company or by any combination of such cash or check.

(b) The Company shall pay any and all documentary, stamp or similar issue or transfer taxes (“Taxes”) payable in respect of the issue or delivery of the Option Shares.

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(c) If the Holder exercises this Option in part, this Option shall be surrendered by the Holder to the Company and a new Option of the same tenor and for the unexercised number of Option Shares shall be executed by the Company. The Company shall register the new Option in the name of the Holder or in such name or names of its transferee pursuant to Section 6 hereof (provided, that the Holder and/or such transferee shall be liable for any Taxes resulting from such transfer) as may be directed in writing by the Holder and deliver the new Option to the Person or Persons entitled to receive the same.

(d) Upon surrender of this Option in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Option appropriate evidence of ownership of the shares of Common Stock or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the Person in whose name this Option is registered on the records of the Company regarding registration and transfers of the Options, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 5 below.

(e) In lieu of exercising the Option pursuant to Section 2(a) (but in all other respects in accordance with the exchange procedure set forth in Section 2(a), as it may be adjusted to reflect the exchange referred to herein, except that in lieu of the Option Exercise Notice, the Holder shall deliver a written notice of exchange containing information similar to that contained in the Option Exercise Notice), the Holder may elect to convert this Option into shares of Common Stock, in which event the Company will issue to the Holder the number of shares of Common Stock equal to the following formula:

X = (A - B) x C                                                A
where
	X =     the number of shares of Common Stock issuable upon exchange pursuant to this Section 2(e)
	A =     the Fair Market Value of one share of Common Stock on the day immediately preceding the date on which the            Holder delivers notice of the exchange to the Company pursuant to Section 2(a)

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B =     the Exercise Price

C =     the number of Options to be exchanged pursuant to Section 2(a)

If the foregoing calculation results in a negative number, then no shares of Common Stock shall be issued upon exchange pursuant to this Section 2(e).

3. Restrictive Legend. Any certificates representing Option Shares shall bear a legend or legends substantially in the form of the legend(s) set forth in Section 10.15 of the Investment Agreement to the extent the Applicable Stock (as defined in the Investment Agreement) are required to bear such legends.

4. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Option such number of its authorized but unissued shares of Common Stock or other securities of the Company from time to time issuable upon exercise of this Option as will be sufficient to permit the exercise in full of this Option. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, and, shall be free and clear of all liens, security interests, charges and other encumbrances or (other than as set forth in the Governance Agreement) restrictions on sale and free and clear of all preemptive rights.

5. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Option and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Fair Market Value of one share of Common Stock at the date of delivery of the Option Exercise Notice.

6. Exchange, Transfer or Assignment of Option. (a) This Option is exchangeable for multiple Options exercisable into an aggregate number of shares of Common Stock equal to the Option Share Amount, as requested by the Holder surrendering the same. No service charge will be charged to the Holder for such exchange.

(b) The Holder may transfer or assign this Option or any portion hereof or its rights or interest in and to this Option or any portion hereof to any of its Affiliates provided, that the Holder shall be responsible for any and all Taxes resulting from such transfer or assignment. Each permitted assignee, transferee and pledgee shall have all of the rights of the Holder under this Option. Any transfer or assignment of this Option shall be made in compliance with all applicable federal and state securities laws.

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(c) Each taker and holder of this Option by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Option as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Option, will, with respect to the Option Shares, be subject to the provisions of, and will have the benefits of, the Governance Agreement and the Registration Rights Agreement to the extent set forth therein (including the transfer restrictions therein).

(d) Upon surrender of this Option to the Company, together with the attached Option Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Option in the name of the assignee or assignees named in such instrument of assignment and, if the Holder’s entire interest is not being assigned, in the name of the Holder and this Option shall promptly be canceled.

7. Loss or Destruction of Option. Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Option, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, or upon surrender and cancellation of this Option, if mutilated, the Company shall execute and deliver a new Option of like tenor and date provided, that the Company shall be entitled to require that the Holder deliver to the Company a customary indemnity bond.

8. Anti-dilution Provisions. So long as this Option is outstanding, the Exercise Price shall be subject to change or adjustment as follows:

(a) (i) If the Company shall issue or sell, after the Closing Date (for the avoidance of doubt, excluding any and all shares of Common Stock issued in connection with the 144A Offering), any Additional Securities without consideration or for a consideration per share less than the Exercise Price for this Option in effect immediately prior to the issuance of such Additional Securities, the Exercise Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the nearest cent) equal to:

(O*P)+A/T

where:

O = the number of shares of Common Stock outstanding immediately prior to such issue or sale

P = the Exercise Price in effect prior to adjustment

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A = the aggregate amount of consideration received by the Company in respect of the Additional Securities

T = the number of shares of Common Stock outstanding immediately after the issue or sale of the Additional Securities.

(ii) No adjustment of such Exercise Price shall be made in an amount less than one cent per share; provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in the first to occur of (1) any subsequent adjustment made prior to two years from the date of the event giving rise to the adjustment being carried forward, or (2) at the end of two years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in Section 8(a)(iv)(C) or Section 8(d), no adjustment of such Exercise Price pursuant to this Section 8(a) shall have the effect of increasing the Exercise Price above the Exercise Price in effect immediately prior to such adjustment.

(iii) In the case of an issuance of Additional Securities for cash, the value of the consideration received for such Additional Securities shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. In the case of an issuance of Additional Securities in whole or in part for consideration other than cash, the value of the consideration received for such Additional Securities shall be deemed to be the Fair Market Value thereof before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof. Notwithstanding anything herein to the contrary, if any Additional Securities, options to purchase or rights to subscribe for Additional Securities, or securities by their terms convertible into or exchangeable for Additional Securities or options to purchase or rights to subscribe for such convertible or exchangeable securities, shall be issued in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of the assets and business of the non-surviving corporation as shall be attributable to such Additional Securities, options, rights or securities, as the case may be.

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(iv) In the case of the issuance of options to purchase or rights to subscribe for Additional Securities, securities by their terms convertible into or exchangeable for Additional Securities or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for all purposes of this Section 8(a) and Section 8(b):

(A) The aggregate maximum number of shares of Common Stock deliverable upon exercise (to the extent then exercisable) of such options to purchase or rights to subscribe for Common Stock shall be deemed to

have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Section 8(a)(iii)), if any, to be received by the Company upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights for the Common Stock covered thereby.

(B) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange (to the extent then convertible or exchangeable) for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, to be received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Section 8(a)(iii)).

(C) In the event of any change in the number of shares of Common Stock (other than as a result of a stock split, stock dividend or similar event) deliverable or in the consideration payable to the Company upon exercise of such outstanding options or rights or upon conversion of or in exchange for such outstanding

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convertible or exchangeable securities (including a change resulting from the antidilution provisions thereof) and in the event such options, rights or securities expire unexercised, the applicable Exercise Price, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change or expiration, but (in the case of any such change) no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

(D) The number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to Section 8(a)(iv)(A) and 8(a)(iv)(B) shall be appropriately adjusted to reflect any change of the type described in Section 8(a)(iv)(C).

(v) The adjustments described in this Section 8(a) shall be made successively upon each such sale or issuance of Additional Securities.

(b) “Additional Securities” shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to Section 8(a)(iv)) by the Company after the Closing Date other than shares of Common Stock issued or issuable:

(1) pursuant to a transaction described in Section 8(c) hereof; or

(2) to employees, consultants, directors of the Company directly or pursuant to a stock option plan or restricted stock plan approved from time to time by the stockholders and Board.

(c) In the event the Company should at any time or from time to time after the Closing Date fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional

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shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the applicable Exercise Price shall be appropriately decreased so that the number of shares of Common Stock issuable on exercise of this Option shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to the Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in subsection Section 8(a)(iv).

(d) If the number of shares of Common Stock outstanding at any time after the Closing Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of

such combination, the applicable Exercise Price shall be appropriately increased so that the number of shares of Common Stock issuable on exercise of this Option shall be decreased in proportion to such decrease in outstanding shares.

(e) In the event that the Company shall fix a record date for the making of a distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, assets or other property (excluding dividends payable in Common Stock Equivalents and for which an adjustment is made pursuant to Section 8(c) hereof and excluding cash), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Fair Market Value of one share of Common Stock in effect immediately prior to such record date, less the Fair Market Value of the portion of the assets, other property or evidence of indebtedness so to be distributed which is applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value of one share of Common Stock in effect immediately prior to such record date.

(f) In the event that the Company shall fix a record date for the making of a cash distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price to be in effect after such record date shall be reduced by an amount equal to the portion of such cash distribution to be received by a holder of one share of Common Stock on such record date.

(g) The adjustments described in Sections 8(c) through 8(f) shall be made successively whenever such a record date is fixed; and in

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the event that such distribution or combination is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

9. Consolidation, Merger, or Sale of Assets. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock, or in case of any consolidation or merger (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock) of the Company with or into another entity, or any sale or conveyance of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Company shall cause effective provision to be made so that the Holder shall be entitled to receive, upon exercise or conversion of this Option, the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation,

merger, sale or conveyance by a holder of the number of shares of Common Stock for which this Option may have been exercised or converted immediately prior to such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance (assuming such holder of Common Stock (x) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or conveyance was made, as the case may be (“constituent Person”), or an affiliate of a constituent Person and (y) failed to exercise any rights of election as to the kind or amount of securities or property (including cash) receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance (provided, that if the kind or amount of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance is not the same for each share of Common Stock held immediately prior to such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance by other than a constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (“non-electing share”), then for the purpose of this Section 9, the kind and amount of securities, cash and other property receivable upon such reclassification, capital reorganization, change, consolidation, merger, sale or conveyance by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares)). Adjustments for events subsequent to the effective date of any such reclassification, reorganization, consolidation, merger or sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Option. In any such event, effective provisions shall be made in any contract of sale, conveyance, lease or transfer, or otherwise, so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall

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expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. Notwithstanding anything herein to the contrary, appropriate adjustment shall be made for the application of the provisions herein set forth with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably practicable, in relation to any shares of stock or other securities or property thereafter deliverable upon exercise of this Option. This paragraph shall similarly apply to successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock and to successive consolidations or mergers.

10. Notices of Record Date, etc. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right;

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or consolidation or merger of the Company with or into any other person; or

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

then and in each such event the Company will mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right and (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up. Such notice shall be mailed at least 10 days prior to the date specified in such notice on which any such action is to be taken.

11. Notices. Unless otherwise provided herein, any notices, consents, waivers or other communications required or permitted to be given under the terms of this Option must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally, (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or (iii) one

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Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

FBR Capital Markets Corporation

1001 Nineteenth Street

Arlington, Virginia 22209

Attention: Chief Legal Officer

Fax: (703) 469-1140

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52d Street

New York, New York 10019

Attention: Trevor S. Norwitz

Fax: (212) 403-2333

If to the Holder:

Crestview Partners

667 Madison Avenue

New York, NY 10021

Attention: Jacob Capps

Fax: (212) 906-0750

with a copy to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Carole Schiffman

Fax: (212) 450-3800

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change.

12. No Reissuance of Option. No Options acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such Options shall be retired.

13. Rights of the Holder. Prior to the exercise of the Option, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the

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Company, including, without limitation, the right to vote, to receive dividends or other distributions, to exercise any preemptive right or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

14. Choice of Law and Venue; Waiver of Jury Trial. This Option shall be governed by and construed in accordance with the law of the State of New York. The Company and, by accepting this Option, the Holder hereby irrevocably consent to the jurisdiction of the United States District Court for the Southern District of New York or any New York State court sitting in New York City (and of the appropriate appellate courts therefrom) in any suit, action or proceeding seeking to enforce any provision of, or based on any suit, action or proceeding arising out of or in connection with, this Option or the transactions contemplated hereby and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 11 shall be deemed effective service

of process on such party. EACH OF THE COMPANY AND, BY ACCEPTING THIS OPTION, THE HOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS OPTION.

15. Entire Agreement; Amendments; Waivers. This Option, the Investment Agreement, the Ancillary Agreements and the other documents referred to herein and therein constitute the full and entire understanding and agreement between the Company and the Holder with respect to the subject hereof. Neither this Option nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

16. HSR Act and Rules. Notwithstanding any provision herein to the contrary, in connection with any acquisition of Common Stock (and/or any other voting securities of the Company) as to the HSR Act, would, but for this paragraph, be applicable, any person or entity (as defined under the HSR Act) acquiring such Common Stock (and/or other voting securities of the Company) shall have no right to vote such Common Stock or voting securities until such person or entity has complied with the filing and waiting period requirements of the HSR Act.

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IN WITNESS WHEREOF, the Company has duly caused this Option to be signed by its duly authorized officer and to be dated as of July 20, 2006.

FBR CAPITAL MARKETS CORPORATION
By:	/s/ William J. Ginivan
Name:	William J. Ginivan
Title:	SVP, General Counsel and Secretary

Acknowledged and Agreed:

FOREST HOLDINGS LLC

By: Crestview Capital Partners, L.P., as Member

By: Crestview Partners, L.P., its General Partner

By: Crestview, L.L.C., its General Partner

/s/ Thomas S. Murphy, Jr.

Name: Thomas S. Murphy, Jr.

Title: President

EX-10.14

Exhibit 10.14

FBR CAPITAL MARKETS CORPORATION

2006 LONG-TERM INCENTIVE PLAN

FBR Capital Markets Corporation, a corporation existing under the laws of the Commonwealth of Virginia (the “Company”), hereby establishes and adopts the following 2006 Long-Term Incentive Plan (the “Plan”).

1. PURPOSE OF THE PLAN

1.1. Purpose. The purpose of the Plan is to assist the Company and its Affiliates in attracting and retaining selected individuals to serve as directors, employees, consultants and/or advisors of the Company who are expected to contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all shareholders of the Company through the additional incentives inherent in the Awards hereunder.

2. DEFINITIONS

2.1. “Accounting Firm” shall have the meaning set forth in Section 11.4.

2.2. “Affiliate” shall mean (i) any person or entity that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company (including any Subsidiary) or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

2.3. “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Dividend Equivalent, Interest Equivalent, or Other Stock-Based Award granted pursuant to the provisions of the Plan.

2.4. “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder.

2.5. “Board” shall mean the board of directors of the Company.

2.6. “Change in Control” shall have the meaning set forth in Section 11.1.

2.7. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

2.8. “Committee” shall mean the Compensation Committee of the Board, or, if such committee of the Board has not been appointed, the Board.

2.9. “Covered Employee” shall mean a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

2.10. “Director” shall mean a non-employee member of the Board.

2.11. “Dividend Equivalents” shall have the meaning set forth in Section 12.5.

2.12. “Employee” shall mean any employee of the Company or any Affiliate. Solely for purposes of the Plan, an Employee shall also mean any consultant or advisor who provides services to the Company or any Affiliate, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and (ii) does not directly or indirectly promote or maintain a market for the Company’s securities.

2.13. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.14. “Fair Market Value” shall mean, with respect to any property other than Shares, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. If the Shares are not listed on a stock exchange, the Fair Market Value of the Shares on any date shall be their fair market value as determined by the Committee using any reasonable method and in good faith. If the Shares are listed on a stock exchange, the Fair Market Value of Shares as of any date shall be the per Share closing price of the Shares as reported on such stock exchange (or the exchange selected by the Committee if the Shares are listed on more than one stock exchange), on the date prior to such date (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported).

2.15. “Freestanding Stock Appreciation Right” shall have the meaning set forth in Section 6.1.

2.16 “Interest Equivalent” shall have the meaning set forth in Section 12.5

2.17. “Limitations” shall have the meaning set forth in Section 10.5.

2.18. “Option” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

2.19. “Option Proceeds” shall mean the cash actually received by the Company for the option price in connection with the exercise of Options or options granted under the Prior Plans that are exercised after the effective date of the Plan, plus the maximum tax benefit that could be realized by the Company as a result of the exercise of such Options or options granted under the Prior Plans, which tax benefit shall be determined by multiplying (a) the amount that is deductible for Federal income tax purposes as a result of any such option exercise (currently, equal to the amount upon which the Participant’s withholding tax obligation is calculated), times (b) the maximum federal corporate income tax rate for the year of exercise. With respect to Options or options granted under the Prior Plans, to the extent that a Participant pays the option price and/or withholding taxes with Shares, Option Proceeds shall not be calculated with respect to the amounts so paid in Shares.

2.20. “Other Stock-Based Award” shall have the meaning set forth in Section 8.1.

2.21. “Participant” shall mean an Employee or Director who is selected by the Committee to receive an Award under the Plan.

2.22. “Payee” shall have the meaning set forth in Section 13.1.

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2.23. “Performance Award” shall mean any Award of Performance Shares or Performance Units granted pursuant to Section 9.

2.24. “Performance Period” shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

2.25. “Performance Share” shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

2.26. “Performance Unit” shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

2.27. “Permitted Assignee” shall have the meaning set forth in Section 12.3.

2.28. “Purchase/Placement Agreement” shall mean that certain agreement by and between the Company and Friedman, Billings, Ramsey & Co., Inc., as initial purchaser/placement agent, dated July 14, 2006.

2.29. “Restricted Stock” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

2.30. “Restricted Stock Award” shall have the meaning set forth in Section 7.1.

2.31. “Restriction Period” shall have the meaning set forth in Section 7.1.

2.32. “Securities Act” shall mean the Securities Act of 1933, as amended.

2.33. “Shares” shall mean the shares of common stock of the Company, par value $0.001 per share.

2.34. “Stock Appreciation Right” shall mean the right granted to a Participant pursuant to Section 6.

2.35. “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock

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possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

2.36. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

2.37. “Tandem Stock Appreciation Right” shall have the meaning set forth in Section 6.1.

In addition, certain other terms used in the Plan have definitions provided to them in the first place in which they are used herein.

3. SHARES SUBJECT TO THE PLAN

3.1 Number of Shares. (a) Subject to adjustment as provided in Section 12.2 and as described herein, a total of 5,509,143 Shares shall be authorized for grant under the Plan, subject to increase by an amount equal to 8% of any additional shares of common stock of the Company sold by the Company pursuant to any exercise by Friedman, Billings, Ramsey & Co., Inc. of its additional allotment option pursuant to the Purchase/Placement Agreement.

(b) If any Shares subject to an Award are forfeited, expire or otherwise terminate without issuance of such Shares, or any Award is settled for cash or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for Awards under the Plan.

(c) In the event that (i) any Option or other Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, or (ii) withholding tax liabilities arising from such Option or other Award are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then only the number of Shares issued net of the Shares tendered or withheld shall be counted for purposes of determining the maximum number of Shares available for grant under the Plan.

(d) Shares reacquired by the Company on the open market using Option Proceeds shall be available for Awards under the Plan. The increase in Shares available pursuant to the repurchase of Shares with Option Proceeds shall not be greater than the amount of such proceeds divided by the Fair Market Value of a Share on the date of exercise of the Option giving rise to such Option Proceeds.

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(e) Substitute Awards shall not reduce the Shares authorized for grant under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares otherwise authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the last date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors or any Affiliate prior to such acquisition or combination.

(f) Grants of Awards as a material inducement to a person becoming an employee of the Company or any Subsidiary, including new employees in connection with a merger or acquisition, or a former employee being rehired as an employee following a bona fide period of interruption of employment, shall not reduce the Shares authorized for grant under the Plan if the Committee so determines.

3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.

4. ELIGIBILITY AND ADMINISTRATION

4.1. Eligibility. Any Employee or Director shall be eligible to be selected as a Participant.

4.2. Administration. (a) The Plan shall be administered by the Committee. The Directors may remove from, add members to, or fill vacancies on, the Committee.

(b) The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees and Directors to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of Shares to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property, subject to Section 8.1; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant; (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect,

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supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) determine whether any Award will have Dividend Equivalents or Interest Equivalents; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

(c) Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, any shareholder and any Employee or any Affiliate. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

(d) The Committee may delegate to a committee of one or more directors of the Company or, to the extent permitted by law, to one or more officers or a committee of officers the right to grant Awards to Employees who are not Directors or officers of the Company and to cancel or suspend Awards to Employees who are not Directors or officers of the Company.

5. OPTIONS

5.1. Grant of Options. Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Section 5 and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.

5.2. Award Agreements. All Options granted pursuant to this Section 5 shall be evidenced by a written Award Agreement in such form and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. Granting of an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Section 5 may hold more than one Option granted pursuant to the Plan at the same time.

5.3. Option Price. Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted pursuant to this Section 5 shall not be less than 100% of the Fair Market Value of such Share on the date of grant of such Option. Other than pursuant to Section 12.2, the Committee shall not be permitted to (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option when the option price per Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award (other than in connection with Substitute Awards), and (c) take any other action with respect to an Option that may be treated as a repricing under the rules and regulations of a stock exchange on which the Shares are listed, without shareholder approval.

5.4. Option Period. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of ten years from the date the Option is granted, except in the event of death or disability as provided in Section 12.4(a).

5.5. Exercise of Options. Vested Options granted under the Plan shall be exercised by the Participant or by a Permitted Assignee thereof (or by the Participant’s executors,

6

administrators, guardian or legal representative, as may be provided in an Award Agreement) as to all or part of the Shares covered thereby, by the giving of written notice of exercise to the Company or its designated agent, specifying the number of Shares to be purchased, accompanied by payment of the full purchase price for the Shares being purchased. Unless otherwise provided in an Award Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (a) in cash or cash equivalents (including by certified check or bank check or wire transfer of immediately available funds), (b) by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Company’s earnings), (c) with the consent of the Committee, by delivery of other consideration (including, where permitted by law and the Committee, other Awards) having a Fair Market Value on the exercise date equal to the total purchase price, (d) with the consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise of the Option, (e) through any other method specified in an Award Agreement, or (f) any combination of any of the foregoing. The notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance. Except under certain circumstances contemplated by Section 11 or as may be set forth in an Award Agreement with respect to death or disability of a Participant, Options will not be exercisable before the expiration of one year from the date the Option is granted.

5.6. Form of Settlement. In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant.

6. STOCK APPRECIATION RIGHTS

6.1. Grant and Exercise. The Committee may provide Stock Appreciation Rights (a) in conjunction with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option (“Tandem Stock Appreciation Right”), (b) in conjunction with all or part of any Award (other than an Option) granted under the Plan or at any subsequent time during the term of such Award, or (c) without regard to any Option or other Award (a “Freestanding Stock Appreciation Right”), in each case upon such terms and conditions as the Committee may establish in its sole discretion.

6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:

(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of exercise or such other lesser amount as the Committee shall so determine at any time during a specified period before the date of exercise over (ii) the grant price of the right on the date of grant which,

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except in the case of Substitute Awards or in connection with an adjustment provided in Section 12.2, shall not be less than the Fair Market Value of one Share on such date of grant of the right.

(b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its sole discretion whether payment shall be made in cash, in whole Shares or other property, or any combination thereof.

(c) Any Tandem Stock Appreciation Right may be granted at the same time as the related Option is granted or at any time thereafter before exercise or expiration of such Option.

(d) Any Tandem Stock Appreciation Right related to an Option may be exercised only when the related Option would be exercisable and the Fair Market Value of the Shares subject to the related Option exceeds the option price at which Shares can be acquired pursuant to the Option. Any Option related to a Tandem Stock Appreciation Right shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has been exercised and any Tandem Stock Appreciation Right shall no longer be exercisable to the extent the related Option has been exercised; provided, however, that if a Tandem Stock Appreciation Right exists with respect to less than the full number of Shares covered by a related Option, then an exercise or termination of such Option shall not reduce the number of Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then exercisable under such Option equals the number of Shares to which the Tandem Stock Appreciation Right applies,.

(e) The provisions of Stock Appreciation Rights need not be the same with respect to each recipient.

(f) The Committee may impose such other conditions or restrictions on the terms of exercise and the exercise price of any Stock Appreciation Right, as it shall deem appropriate. In connection with the foregoing, the Committee shall consider the applicability and effect of Section 162(m) of the Code. Notwithstanding the foregoing provisions of this Section 6.2(f), but subject to Section 12.2 and Section 12.4(a), a Freestanding Stock Appreciation Right shall not have a term of greater than ten years. Except under certain circumstances contemplated by Section 11 or as may be set forth in an Award Agreement with respect to death or disability of a Participant, Freestanding Stock Appreciation Rights will not be exercisable before the expiration of one year from the date the right is granted. In addition to the foregoing, but subject to Section 12.2, the base amount of any Stock Appreciation Right shall not be reduced after the date of grant, without shareholder approval.

(g) The Committee may impose such terms and conditions on Stock Appreciation Rights granted in conjunction with any Award (other than an Option) as the Committee shall determine in its sole discretion.

7. RESTRICTED STOCK AWARDS

7.1. Grants. Awards of Restricted Stock may be issued hereunder to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted Stock Award”). A Restricted Stock Award shall be subject to restrictions imposed by the Committee covering a period of time specified by the Committee (the “Restriction Period”). The provisions of Restricted Stock Awards need not be the same with respect to each recipient. The Committee

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has absolute discretion to determine whether any consideration (other than services) is to be received by the Company or any Affiliate as a condition precedent to the issuance of Restricted Stock

7.2. Award Agreements. The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan.

7.3. Rights of Holders of Restricted Stock. Beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a shareholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the rights of a shareholder, including the right to vote such Shares and the right to receive distributions made with respect to such Shares; provided, however, that any Shares or any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Stock.

7.4. Minimum Vesting Period. Except for certain limited situations (including the death, disability or retirement of the Participant or a Change in Control referred to in Section 11), Restricted Stock Awards subject solely to continued employment restrictions shall have a Restriction Period of not less than three years from date of grant (but permitting pro-rata vesting over such time); provided, that the provisions of this Section 7.4 shall not be applicable to any Substitute Awards or grants of Restricted Stock in payment of Performance Awards pursuant to Section 9. Subject to the foregoing three-year minimum vesting requirement, the Committee may, in its sole discretion and subject to the limitations imposed under Section 162(m) of the Code and the Treasury Regulations thereunder in the case of a Restricted Stock Award intended to comply with the performance-based compensation exception under Code Section 162(m), waive the forfeiture period and any other conditions set forth in any Award Agreement subject to such terms and conditions as the Committee shall deem appropriate.

8. OTHER STOCK–BASED AWARDS

8.1. Stock and Administration. Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or securities convertible into Shares (“Other Stock-Based Awards”) may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. Other Stock-Based Awards shall be paid in Shares, cash or a combination, as determined by the Committee. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees and Directors to whom and the time or times at which such Other Stock-Based Awards shall be made, the number of Shares to be granted pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock-Based Awards need not be the same with respect to each recipient. Except for certain limited situations (including the death, disability or retirement of the Participant or a Change in Control referred to in Section 11), Other Stock-Based Awards subject solely to continued employment restrictions shall be subject to restrictions imposed by the Committee for a period of not less than three years from date of grant (but permitting pro-rata vesting over such time); provided, that such restrictions shall not be applicable to any Substitute Awards, grants of

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Other Stock-Based Awards in payment of Performance Awards pursuant to Section 9, or grants of Other Stock-Based Awards on a deferred basis. In addition, the Committee may award unrestricted Shares to Participants in lieu of certain cash payments awarded under other compensation plans or programs of the Company.

8.2. Terms and Conditions. Shares (including securities convertible into Shares) subject to Awards granted under this Section 8 may be issued for no consideration or for such minimum consideration as may be required by applicable law. Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Section 8 shall be purchased for such consideration as the Committee shall determine in its sole discretion.

9. PERFORMANCE AWARDS

9.1. Terms of Performance Awards. Performance Awards may be issued hereunder to Participants, for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award; provided, however, that a Performance Period shall not be shorter than 12 months nor longer than five years. Except as provided in Section 11 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 10.1. The amount of the Award to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis.

10. CODE SECTION 162(m) PROVISIONS

10.1. Performance Criteria. If any Award will not satisfy the performance-based compensation exception under Code Section 162(m) unless it is subject to performance criteria, then the lapsing of restrictions on such an Award and the distribution of cash, Shares or other property pursuant thereto, as applicable, may be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: revenues, revenue growth; asset growth; combined net worth; debt to equity ratio; debt to capitalization ratio; earnings before interest, taxes, depreciation and amortization; operating income; operating cash flow; pre- or after-tax net income; cash flow or free cash flow; cash flow or free cash flow per share; net earnings; earnings per share; return on equity; return on investment; return on total capital; return on capital employed; return on assets; return on revenue; economic value added (or an equivalent metric); share price performance; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels of the Company or any Affiliate, division or business unit of the Company for or within which the Participant is primarily employed. Such performance goals also may be based solely by reference to the Company’s performance or the performance of an Affiliate, division or business unit of the Company, or based upon the relative performance of other companies or upon

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comparisons of any of the indicators of performance relative to other companies. The Committee may also exclude the impact of an event or occurrence which the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (c) a change in accounting standards required by generally accepted accounting principles. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

10.2. Adjustments. Notwithstanding any provision of the Plan (other than Section 11), with respect to any Restricted Stock, Performance Award or Other Stock-Based Award that is subject to this Section 10, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals, except in the case of the death or disability of the Participant.

10.3. Restrictions. The Committee shall have the power to impose such other restrictions on Awards subject to this Section 10 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

10.4. Limitations on Grants to Individual Participant. Subject to adjustment as provided in Section 12.2, no Participant may be granted (i) Options or Stock Appreciation Rights during any 36-month period with respect to more than 1,000,000 Shares or (ii) Restricted Stock, Performance Awards and/or Other Stock-Based Awards that are denominated in Shares in any 36-month period with respect to more than 1,500,000 Shares (the “Limitations”). In addition to the foregoing, the maximum dollar value payable to any Participant in any 12-month period with respect to Performance Awards and/or Other Stock-Based Awards that are valued with reference to property other than Shares is $25,000,000. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable Limitations.

11. CHANGE IN CONTROL PROVISIONS

11.1. Definition of Change in Control. For purposes of the Plan, a “Change in Control” shall mean the happening of any of the following events:

(a) acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any

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corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (c) of this Section 11.1; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets or stock of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination or the Founders or Founder Affiliates) beneficially owns, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(e) In no event shall a Change in Control be deemed to have occurred under this Section 11.1 upon an initial public offering or a subsequent public offering of the common stock under the Securities Act.

11.2. Impact of Change in Control. Unless the Committee determines otherwise in an Award Agreement, upon a Change in Control, (a) Options and Stock Appreciation Rights outstanding as of the date of the Change in Control immediately vest and become fully

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exercisable, (b) restrictions and deferral limitations on Restricted Stock lapse and the Restricted Stock become free of all restrictions and limitations and become fully vested, (c) all Performance Awards shall be considered to be earned and payable (either in full or pro-rata based on the portion of Performance Period completed as of the date of the Change in Control), and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed, (d) the restrictions and deferral limitations and other conditions applicable to any Other Stock-Based Awards or any other Awards shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant, and (e) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award. Notwithstanding any other provision of the Plan, the Committee, in its discretion, may determine that, upon the occurrence of a Change in Control of the Company, each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and such Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change in Control over the exercise price per share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine.

11.3. Assumption Upon Change in Control. Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for an Option, Stock Appreciation Right, Share of Restricted Stock or Other Stock-Based Award, then each outstanding Option, Stock Appreciation Right, Share of Restricted Stock or Other Stock-Based Award shall not be accelerated as described in Sections 11.2(a), (b) and (d). For the purposes of this Section 11.3, an Option, Stock Appreciation Right, Share of Restricted Stock or Other Stock-Based Award shall be considered assumed or substituted for if following the Change in Control the award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award or Other Stock-Based Award immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of an involuntary termination without cause or a voluntary termination for good reason of a Participant’s employment in such successor company within a 24-month

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period following such Change in Control, each Award held by such Participant at the time of the Change in Control shall be accelerated as described in Sections 11.2(a), (b) and (d) above.

11.4. Limitations on Benefits.

(a) Subject to Section 11.4(e), but despite any other provision of this Plan, if it is determined that receipt of benefits or payments under this Plan, taking into account other benefits or payments provided under other plans, agreements or arrangements, would subject a Participant to tax under Code Section 4999, it must determine whether some amount of the benefits or payments would meet the definition of a “Reduced Amount.” If it is determined that there is a Reduced Amount, the total benefits and payments must be reduced to such Reduced Amount, but not below zero.

(b) If it is determined that the total benefits and payments should be reduced to the Reduced Amount, the Company must promptly notify the Participant of that determination, including a copy of the detailed calculations by the independent accounting firm engaged to audit the Company’s financial statements immediately before the Change in Control (the “Accounting Firm”). All determinations made by the Accounting Firm under this section are binding upon the Company and the Participant.

(c) It is the intention of the Company and the Participant to reduce the total benefits and payments under this Plan and any other plan, agreement or arrangement only if the aggregate Net After Tax Receipts to the Participant would thereby be increased. As a result of the uncertainty in the application of Code section 4999 at the time of the initial determination by the Company’s accounting firm under this section, however, it is possible that amounts will have been paid or distributed under the Plan to or for the benefit of a Participant which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will not have been paid or distributed under the Plan to or for the benefit of a Participant could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount. If the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which the accounting firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment must be treated (if permitted by applicable law) for all purposes as a loan ab initio for which the Participant must repay the Company together with interest at the applicable federal rate under Code section 7872(f)(2); provided, however, that no such loan may be deemed to have been made and no amount shall be payable by Participant to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which Participant is subject to tax under Code section 1 or 4999 or generate a refund of such taxes. If the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, the accounting firm must promptly notify the Administrator of the amount of the Underpayment and such amount, together with interest at the applicable federal rate under Code section 7872(f)(2), must be paid to the Participant.

(d) For purposes of this section, (i) “Net After Tax Receipt” means the Present Value of a payment or benefit under this Plan and all other plans, agreements and arrangements net of all taxes imposed on Participant with respect thereto under Code sections 1 and 4999, determined by applying the highest marginal rate under Code section 1 which applied

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to the Participant’s taxable income for the immediately preceding taxable year; (ii) “Present Value” means the value determined in accordance with Code section 280G(d)(4); and (iii) “Reduced Amount” means the smallest aggregate amount of all payments or benefit under this Plan which (a) is less than the sum of all payments or benefit under this Plan and (b) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the aggregate payments or benefit under this Plan and all other plans, agreements and arrangements were any other amount less than the sum of all payments or benefit under this Plan and all other plans, agreements and arrangements.

(e) This section shall not apply to awards made to any Participant if an Award Agreement or other agreement between the Participant and the Company provides that the Company shall indemnify the Participant against any liability that the Participant may incur under Section 4999 of the Code.

12. GENERALLY APPLICABLE PROVISIONS

12.1. Amendment and Modification of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for shareholder approval imposed by applicable law, including the rules and regulations of any stock exchange or quotation system on which Shares are listed or quoted; provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the Board may not, without the approval of the Company’s shareholders, amend the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to Section 12.2), (b) expand the types of awards available under the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) amend any provision of Section 5.3, (e) increase the maximum permissible term of any Option specified by Section 5.4, or (f) amend any provision of Section 10.5. In addition, no amendments to, or termination of, the Plan shall in any way impair the rights of a Participant under any Award previously granted without such Participant’s consent.

12.2. Adjustments. In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, but without regard to the payment of any cash dividends by the Company in the ordinary course), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, the terms of the Plan and Awards shall be adjusted and such adjustments shall be as the Committee, in its sole discretion, deems equitable or appropriate, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan and, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number.

12.3. Transferability of Awards. Except as provided below, and except as otherwise authorized by the Committee in an Award Agreement, no Award and no Shares subject to Awards described in Section 8 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred,

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pledged or otherwise encumbered, other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative. Notwithstanding the foregoing, a Participant may assign or transfer an Award with the consent of the Committee (each transferee thereof, a “Permitted Assignee”); provided that such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section 12.3.

12.4. Termination of Employment. Unless the Committee shall determine otherwise at or after the date of grant, the following termination provisions shall apply:

(a) Death or Disability. Upon a Participant’s termination due to death or disability, as those terms may be defined in the Award Agreement, (i) Options and Stock Appreciation Rights outstanding as of the date of termination shall immediately vest and become fully exercisable, and remain exercisable for one year, even if one year exceeds the original option term (except for Options that are incentive stock options under Code section 422 and related Tandem Stock Appreciation Rights that shall not be exercisable after the original term), and even if death occurs during a post-termination exercise period; (ii) Performance Awards shall be considered to be earned and payable (either in full or pro-rata based on the portion of Performance Period completed as of the date of termination and performance to such date), and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed; (iii) restrictions and deferral limitations on Restricted Stock, Other Stock-Based Awards, and any other Awards shall lapse and the Restricted Stock shall become free of all restrictions, limitations, or conditions and become fully vested and transferable to the full extent of the original grant; and (iv) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award.

(b) Retirement. Upon a Participant’s retirement, as that term may be defined in the Award Agreement, and conditioned upon the Participant entering into non-compete, non-solicitation, non-disclosure, and non-disparagement agreements, (i) Options and Stock Appreciation Rights outstanding as of the date of termination and that are not vested shall continue to vest and, once vested, shall remain exercisable for the lesser of three (3) years from vesting date or their original terms; (ii) Options and Stock Appreciation Rights outstanding as of the date of termination and that are vested shall remain exercisable for the lesser of three (3) years from the date of termination or their original terms, (iii) Performance Awards shall continue to vest and shall be payable upon completion of the applicable Performance Period to the extent the associated performance goals are achieved; (iv) Restricted Stock, Other Stock-Based Awards, or any other Awards shall continue to vest, as applicable; and (v) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award.

(c) Involuntary Termination Without Cause due to a Reduction in Force. Upon a Participant’s involuntary termination without cause due to a reduction in force, as that

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term may be defined in the Award Agreement, and conditioned upon the Participant entering into non-solicitation, non-disclosure, and non-disparagement agreements, (i) vested Options and Stock Appreciation Rights outstanding as of the date of termination shall remain exercisable for 90 days, and unvested Options and Stock Appreciation Rights shall be forfeited; (ii) Performance Awards shall be payable at the end of the applicable Performance Period, to the extent the associated performance goals are achieved, pro-rata based on the number of months of the Performance Period that have been completed as of the date of termination divided by the total number of months in the Performance Period; (iii) Restricted Stock, Other Stock-Based Awards or any other Awards subject to a cliff vesting or annual pro rata vesting provision shall vest pro-rata based on the number of months of the vesting period completed as of the date of termination divided by the total number of months in the vesting period, and unvested Restricted Stock, unvested Other Stock-Based Awards or any other unvested Awards shall be forfeited; and (iv) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award.

(d) Termination for Cause. Upon a Participant’s termination for cause, as that term may be defined in the Award Agreement, (i) all Options and Stock Appreciation Rights outstanding as of the date of termination, whether vested or not vested, shall be immediately canceled, and (ii) any unvested awards of Restricted Stock, Performance Awards, Other Stock-Based Awards or other Awards shall be immediately forfeited.

(e) Other Termination. Upon a Participant’s termination for any other reason, including voluntary resignation and involuntary termination without cause not due to a reduction in force, as those terms may be defined in the Award Agreement, (i) vested Options and Stock Appreciation Rights outstanding on the date of termination shall remain exercisable for 90 days, and unvested Options and Stock Appreciation Rights shall be forfeited, and (ii) unvested Restricted Stock, Performance Awards, Other Stock-Based Awards or other Awards shall be immediately forfeited.

12.5. Deferral; Dividend Equivalents and Interest Equivalents. The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash, stock or other property dividends, or cash payments in amounts equivalent to cash, stock or other property dividends on Shares (“Dividend Equivalents”) with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Any cash-based Award, including deferred Awards or accumulated cash Dividend Equivalents, may be credited with interest (“Interest Equivalents”) on the same basis as provided above.

13. MISCELLANEOUS

13.1. Tax Withholding. The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable Federal, State and local taxes required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in

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connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any Affiliate shall have the right to withhold from wages or other amounts otherwise payable to such Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay such withholding taxes. If the Payee shall fail to make such tax payments as are required, the Company or its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Payee or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Company’s earnings), or by directing the Company to retain Shares (up to the employee’s minimum required tax withholding rate) otherwise deliverable in connection with the Award.

13.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an Award hereunder shall confer upon any Employee or Director the right to continue in the employment or service of the Company or any Affiliate or affect any right that the Company or any Affiliate may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee or Director at any time for any reason. Except as specifically provided by the Committee, the Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee or Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

13.3. Prospective Recipient. The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied with the then applicable terms and conditions.

13.4. Cancellation of Award. Notwithstanding anything to the contrary contained herein, all outstanding Awards granted to any Participant shall be canceled if the Participant, without the consent of the Company, while employed by the Company or any Affiliate or after termination of such employment or service, establishes a relationship with a competitor of the Company or any Affiliate or engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate, as determined by the Committee in its sole discretion.

13.5. Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

13.6. Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be performed for the Company or any Affiliate, division or business unit of the Company. Any income or gain realized pursuant to Awards under the Plan and any

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Stock Appreciation Rights constitute a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any Affiliate except as may be determined by the Committee or by the Board or board of directors of the applicable Affiliate.

13.7. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

13.8. Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan.

13.9. Construction. All references in the Plan to “Section or Sections” are intended to refer to the Section or Sections, as the case may be, of the Plan. As used in the Plan, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

13.10. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

13.11. Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Virginia and construed accordingly.

13.12. Effective Date of Plan; Termination of Plan. The Plan shall be effective on the date of the approval of the Plan by the holders of a majority of the shares entitled to vote at a duly constituted meeting of the shareholders of the Company. The Plan shall be null and void and of no effect if the foregoing condition is not fulfilled and in such event each Award shall,

19

notwithstanding any of the preceding provisions of the Plan, be null and void and of no effect. Awards may be granted under the Plan at any time and from time to time on or prior to the tenth anniversary of the effective date of the Plan, on which date the Plan will expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.

13.13. Foreign Employees. Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

13.14. Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.

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EX-10.15

Exhibit 10.15

FBR CAPITAL MARKETS CORPORATION

Incentive Stock Option Agreement

THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”), dated as of the __ day of _______, 2006, between FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (the “U”), and ___________________ (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2006 Long-Term Incentive Plan (the “U”), a copy of which has been made available to the Participant. All terms used herein that are defined in the Plan have the meaning given them in the Plan.

1. Grant of Option. Pursuant to the Plan, the Company, on _______, 2006 (the “Date of Grant”), granted to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right and Option to purchase from the Company all or any part of an aggregate of ___________ Shares at the option price of $____ per Share (the “Option Price”). This Option is intended to be an “incentive stock option” under Section 422 of the Code. This Option will be exercisable as hereinafter provided.

2. Terms and Conditions. This Option is subject to the following terms and conditions:

(a) Expiration Date. This Option shall expire at 11:59 p.m. on the day preceding the tenth anniversary of the Date of Grant (the “Expiration Date”).

(b) Exercise of Option. This Option shall be fully exercisable (“Vested”): (i) on and after the third anniversary of the Date of Grant and upon the attainment of the performance goals established by the Committee and set forth on Schedule A hereto (the “Performance Goals”) or (ii) upon a Change in Control that occurs on or before the third anniversary of the Date of Grant. Once this Option becomes exercisable in accordance with clause (i) or clause (ii) of the preceding sentence, this Option shall continue to be exercisable until the earlier of the termination of the Participant’s rights hereunder pursuant to Paragraphs 3, 4 or 5 or until the Expiration Date. A partial exercise of this Option shall not affect the Participant’s right to exercise this Option with respect to the remaining Shares purchasable under this Option, subject to the terms and conditions of the Plan and this Agreement.

(c) Method of Exercise and Payment for Shares. This Option shall be exercised in accordance with the Plan by written notice delivered to the attention of the Company’s Chief Financial Officer at the Company’s principal executive office. The exercise date shall be (i) in the case of notice by mail, the date of postmark, or (ii) if delivered in person, the date of delivery. Such notice shall be accompanied by payment of the Option Price in full, in cash or cash equivalent acceptable to the Committee, or by the surrender of Shares that have been held by the Participant for at least six months with an aggregate Fair Market Value (determined as of the preceding business day) which, together with any cash or cash equivalent paid by the Participant, is not less than the product of Option Price and the number of Shares for which the Option is being exercised.

(d) Nontransferability. This Option is nontransferable except that the Participant may transfer this Option by will or by the laws of descent and distribution.

3. Exercise in the Event of Death or Disability. Paragraph 2 of this Agreement to the contrary notwithstanding, if Participant dies before the expiration of Participant’s rights under this Option or if Participant’s employment with the Company and its Subsidiaries and Affiliates terminates before the expiration of Participant’s rights under this Option on account of disability, this Option shall be immediately Vested and exercisable, in whole or in part, and remain exercisable until the earlier of the first anniversary of Participant’s death or termination on account of disability, as applicable or the Expiration Date. For purposes of this Agreement, “disability” means permanent and total disability as determined by the Committee, in its sole discretion.

4. Exercise After Retirement. Paragraph 2 of this Agreement to the contrary notwithstanding, if Participant’s employment with the Company and its Subsidiaries and Affiliates terminates on account of retirement before the expiration of Participant’s rights under this Option, then (i) if this Option previously Vested it shall remain exercisable, in whole or in part, until the earlier of the third anniversary of Participant’s retirement and the Expiration Date and (ii) if this Option was not Vested on the date of retirement it shall become exercisable if the Option becomes Vested in accordance with Paragraph 2 before the third anniversary of Participant’s retirement, in which case this Option may be exercised, in whole or in part, until the earlier of the third anniversary of Participant’s retirement or the Expiration Date. This paragraph shall apply only if Participant enters into a non-compete, non-solicitation and confidentiality agreement in a form approved by the Committee. For purposes of this Agreement, “retirement” means retirement from employment with the Company, a Subsidiary or an Affiliate of the Company as determined by the Committee, in its sole discretion.

5. Termination for Cause. Paragraph 2 of this Agreement to the contrary notwithstanding, upon a Participant’s termination for cause, all Options outstanding as of the date of termination, whether Vested or not Vested, shall be immediately canceled. For purposes of this Agreement, “Cause” means (1) conviction of the Participant for any crime (or upon entering a plea of guilty or nolo contendre to a charge of any crime) constituting a felony, (2) dishonesty in the course of fulfilling a Participant’s employment duties or (3) willful and deliberate failure on the part of a Participant to perform his employment duties in any material respect. Notwithstanding the foregoing, if the Participant is a party to an employment agreement with the Company or any Subsidiary or Affiliate of the Company that contains a definition of “cause,” such definition shall apply to the Participant for purposes of this Agreement.

6. Exercise After Other Termination. Paragraph 2 of this Agreement to the contrary notwithstanding, upon a termination of Participant’s employment with the Company and its Subsidiaries and Affiliates before the expiration of Participant’s rights under this Option and for any reason not described in paragraph 3, 4 or 5, then (i) if this Option Vested before Participant’s termination of employment it shall remain exercisable, in whole or in part, until the earlier of the ninetieth day after termination or the Expiration Date and (ii) if this Option did not become Vested before Participant’s termination of employment it shall be cancelled as of the date of Participant’s termination of employment. The Committee, in its discretion, may require Participant to enter into a non-compete, non-solicitation and confidentiality agreement in a form

2

acceptable to the Committee as a condition to Participant’s right to exercise this Option pursuant to this paragraph

7. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle the Participant to a fractional share such fraction shall be disregarded.

8. Change in Capital Structure. In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, but without regard to the payment of any cash dividends by the Company in the ordinary course), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, the terms of this Option shall be adjusted as the Committee determines is equitably required.

9. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

10. Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.

11. Participant Bound by Plan. The Participant hereby acknowledges that a copy of the Plan has been made available to the Participant and agrees to be bound by all the terms and provisions thereof.

12. No Right to Continued Service. This Option does not confer upon the Participant any right with respect to continuance of service to the Company or an Affiliate or membership on the Board of Directors.

13. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company.

[Signatures Appear on the Following Page]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Participant has affixed his signature hereto as of the date first set forth above.

FBR CAPITAL MARKETS CORPORATION

By:

Name:

Title:

Participant

Printed Name:

Schedule A

Performance Goals

[To be determined]

EX-10.16

Exhibit 10.16

FBR CAPITAL MARKETS CORPORATION

Stock Option Agreement

THIS STOCK OPTION AGREEMENT (this “Agreement”), dated as of the __ day of _______, 2006, between FBR CAPITAL MARKETS CORPORATION, a Virginia corporation (the “Company”), and ___________________ (“Participant”), is made pursuant and subject to the provisions of the Company’s 2006 Long-Term Incentive Plan (the “Plan”), a copy of which has been made available to Participant

1. Grant of Option. Pursuant to the Plan, the Company, on _______, 2006 (the “Date of Grant”), granted to Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right and Option to purchase from the Company all or any part of an aggregate of __________ Shares at the option price of $_____ per Share (the “Option Price”). This Option is not intended to be an “incentive stock option” under Section 422 of the Code. This Option will be exercisable as hereinafter provided.

2. Terms and Conditions. This Option is subject to the following terms and conditions:

(a) Expiration Date. This Option shall expire at 11:59 p.m. on the day preceding the tenth anniversary of the Date of Grant (the “Expiration Date”).

(b) Exercise of Option. This Option shall be fully exercisable (“Vested”): (i) on and after the third anniversary of the Date of Grant and upon the attainment of the performance goals established by the Committee and set forth on Schedule A hereto (the “Performance Goals”) or (ii) upon a Change in Control that occurs on or before the third anniversary of the Date of Grant. Once this Option becomes exercisable in accordance with clause (i) or clause (ii) of the preceding sentence, this Option shall continue to be exercisable until the earlier of the termination of Participant’s rights hereunder pursuant to Paragraphs 3, 4 or 5 or until the Expiration Date. A partial exercise of this Option shall not affect Participant’s right to exercise this Option with respect to the remaining Shares purchasable under this Option, subject to the terms and conditions of the Plan and this Agreement.

(c) Method of Exercise and Payment for Shares. This Option shall be exercised in accordance with the Plan by written notice delivered to the attention of the Company’s Chief Financial Officer at the Company’s principal executive office. The exercise date shall be (i) in the case of notice by mail, the date of postmark, or (ii) if delivered in person, the date of delivery. Such notice shall be accompanied by payment of the Option Price in full, in cash or cash equivalent acceptable to the Committee, or by the surrender of Shares that have been held by Participant for at least six months with an aggregate Fair Market Value (determined as of the preceding business day) which, together with any cash or cash equivalent paid by Participant, is not less than the product of Option Price and the number of Shares for which the Option is being exercised.

(d) Transferability. During Participant’s lifetime, and subject to the provisions of Section 12.3 of the Plan, this Option may not be transferred, sold, assigned, pledged or otherwise encumbered, other than by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order, and such Option may only be exercised during the life of Participant only by Participant or Participant’s legal guardian and representative. Notwithstanding the foregoing, Participant may assign or transfer this Option with the consent of the Committee, provided that such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and this Agreement relating to the transferred Option and shall execute an agreement satisfactory to the Company evidencing such obligations.

3. Exercise in the Event of Death or Disability. Paragraph 2 of this Agreement to the contrary notwithstanding, if Participant dies before the expiration of Participant’s rights under this Option or if Participant’s employment with the Company and its Subsidiaries and Affiliates terminates before the expiration of Participant’s rights under this Option on account of disability, this Option shall be immediately Vested and exercisable, in whole or in part, and remain exercisable until the first anniversary of Participant’s death or termination on account of disability, as applicable (even if such anniversary is after the Expiration Date). For purposes of this Agreement, “disability” means permanent and total disability as determined by the Committee, in its sole discretion.

4. Exercise After Retirement. Paragraph 2 of this Agreement to the contrary notwithstanding, if Participant’s employment with the Company and its Subsidiaries and Affiliates terminates on account of retirement before the expiration of Participant’s rights under this Option, then (i) if this Option previously Vested it shall remain exercisable, in whole or in part, until the earlier of the third anniversary of Participant’s retirement and the Expiration Date and (ii) if this Option was not Vested on the date of retirement it shall become exercisable if the Option becomes Vested in accordance with Paragraph 2 before the third anniversary of Participant’s retirement, in which case this Option may be exercised, in whole or in part, until the earlier of the third anniversary of Participant’s retirement or the Expiration Date. This paragraph shall apply only if Participant enters into a non-compete, non-solicitation and confidentiality agreement in a form approved by the Committee. For purposes of this Agreement, “retirement” means retirement from employment with the Company, a Subsidiary or an Affiliate of the Company as determined by the Committee, in its sole discretion.

5. Termination for Cause. Paragraph 2 of this Agreement to the contrary notwithstanding, upon Participant’s termination for cause, all Options outstanding as of the date of termination, whether Vested or not Vested, shall be immediately canceled. For purposes of this Agreement, “Cause” means (1) conviction of Participant for any crime (or upon entering a plea of guilty or nolo contendre to a charge of any crime) constituting a felony, (2) dishonesty in the course of fulfilling Participant’s employment duties or (3) willful and deliberate failure on the part of Participant to perform his employment duties in any material respect. Notwithstanding the foregoing, if Participant is a party to an employment agreement with the Company or any Subsidiary or Affiliate of the Company that contains a definition of “cause,” such definition shall apply to Participant for purposes of this Agreement.

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6. Exercise After Other Termination. Paragraph 2 of this Agreement to the contrary notwithstanding, upon a termination of Participant’s employment with the Company and its Subsidiaries and Affiliates before the expiration of Participant’s rights under this Option and for any reason not described in paragraph 3, 4 or 5, then (i) if this Option Vested before Participant’s termination of employment it shall remain exercisable, in whole or in part, until the earlier of the ninetieth day after termination or the Expiration Date and (ii) if this Option did not become Vested before Participant’s termination of employment it shall be canceled as of the date of Participant’s termination of employment. The Committee, in its discretion, may require Participant to enter into a non-compete, non-solicitation and confidentiality agreement in a form acceptable to the Committee as a condition to Participant’s right to exercise this Option pursuant to this paragraph.

7. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle Participant to a fractional share such fraction shall be disregarded.

8. Change in Capital Structure. In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, but without regard to the payment of any cash dividends by the Company in the ordinary course), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, the terms of this Option shall be adjusted as the Committee determines is equitably required.

9. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

10. Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.

11. Participant Bound by Plan. Participant hereby acknowledges that a copy of the Plan has been made available to Participant and agrees to be bound by all the terms and provisions thereof.

12. No Right to Continued Service. This Option does not confer upon Participant any right with respect to continuance of service to the Company or an Affiliate or membership on the Board of Directors.

13. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of Participant and the successors of the Company.

[Signatures Appear on the Following Page]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and Participant has affixed his signature hereto as of the date first set forth above.

FBR CAPITAL MARKETS CORPORATION

By:

Name:

Title:

Participant

Printed Name:

Schedule A

Performance Goals

[To be determined]