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Execution Version
RETIREMENT AGREEMENT
This RETIREMENT AGREEMENT (this “
Agreement ”), dated as of December 21, 2008, is
hereby entered into by and between FBR Capital Markets Corporation,
a Virginia corporation with its principal place of business at 1001
19th Street North, Arlington, VA 22909 (the “
Company ”), and Eric F. Billings, an individual
residing at the address set forth on the signature page hereof (the
“ Executive ”).
WHEREAS, the Executive currently serves as the
Chairman of the Board of Directors of the Company (the “
Board ”) and as the Company’s Chief
Executive Officer; and
WHEREAS, the Executive desires to resign as the
Company’s Chief Executive Officer (but will continue
Board membership) as of the Effective Date (as defined below), and
the Company desires to provide to the Executive certain payments
and benefits in exchange for the Executive’s entering
into certain covenants as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and mutual covenants and obligations herein and for other good and
valuable consideration, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Voluntary
Resignation as CEO . This Agreement shall be
effective as of January 1, 2009 (the “ Effective
Date ”). On the Effective Date, the Executive
agrees that he shall voluntarily resign as the Company’s
Chief Executive Officer and shall cease to be an officer or
employee of the Company or any of its affiliates in any capacity.
As of the Effective Date, the Executive shall continue to serve as
the Chairman of the Company’s Board.
(a) Vested Deferred
Compensation . Subject to the Executive’s compliance
with the covenants set forth in Sections 3(b) through and
including 3(d) of this Agreement, the Company shall pay the
Executive in respect of each of 2009, 2010, 2011, 2012 and 2013 an
amount, in cash, equal to $1,000,000 (one million U.S. dollars)
(collectively, the “ Deferred Compensation
Payments ”). At the Effective Date, the Company
will establish a deferred compensation account in the
Director’s name (the “ Deferred Compensation
Account ”). The Deferred Compensation Payments shall
be payable to the Executive on the December 31 (or the last
business day of such calendar year) of each of 2009, 2010, 2011,
2012 and 2013, provided that in the event of a termination of the
Executive’s services to the Company due to his death, any
unpaid portion of the Deferred Compensation Account shall be paid
to his estate in a lump sum within 30 days of such death.
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(b)
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Welfare Benefits . The Company shall provide the
Executive, his spouse and his eligible dependents set forth on
Schedule 1 to this Agreement at the Company’s sole
cost with health benefits through the fifth (5th) anniversary of
the Effective Date (such five-year period, the “
Benefits Continuation Period ”) , at the
Company’s sole discretion, either (i) under a fully
insured Company health benefit plan or (ii ) as reimbursement (on a
non-tax able basis) of the health insurance premiums incurred by
the Executive or the Company during the Benefits Continuation
Period under a private health insurance program or arrangement,
chosen by the Company, in each case providing benefits that are no
less favorable than those which the Executive received from the
Company immediately prior to the Effective Date. After the Benefits
Continuation Period, the Executive shall have access to
participation in the Company’s health plans at his sole
expense, to the extent permitted by applicable law. Notwithstanding
the foregoing, the Company shall in no event be required to
provide, or reimburse the cost of, any benefits otherwise described
in this Section 2(b) after such time as the Executive, his
spouse or any eligible dependent, as applicable, becomes entitled
to receive benefits of the same or substantially similar type from
another recipient of the Executive’s services (including
self-employment after the Effective Date).
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(c)
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Outstanding Equity Awards . As of the
Effective Date, the Company shall waive the continued employment
requirements with respect to vesting for the following equity
grants: (i) 266,667 performance-based restricted stock units
(originally granted February 20, 2008, as amended August 20, 2008);
(ii) 266,667 time-vested restricted stock units (originally granted
February 20, 2008, as amended August 20, 2008); (iii) 533,333 stock
options (originally granted February 20, 2008, as amended August
20, 2008); (iv) 243,000 stock options granted on August 16, 2006
and (v) 15,689 shares of restricted stock granted on July 25, 2007
(collectively, the “ Equity Grants ”).
Other than as specifically set forth in the preceding sentence,
there shall be no other change in, or acceleration of, the vesting
terms of the Equity Grants, which shall continue to vest pursuant
to their existing schedule subject to the Executive’s
compliance with the restrictive covenants set forth in Sections
3(b) through and including 3(d) of this Agreement (unless the
Equity Grants vest earlier pursuant to the terms of the underlying
award agreements or plans as in effect on the date hereof).
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(d) Office and
Secretarial Support . While serving on the Board
through December 31, 2011, the Company shall provide the Executive
with appropriate office space and secretarial support.
(e) No Other
Remuneration . The Executive shall not be entitled to any
remuneration under this Agreement except as set forth in this
Section 2.
3. Restrictive
Covenants . The Executive acknowledges and agrees that (i)
the Executive’s past and future service with the Company
has given him and will give him access to the confidential affairs
and proprietary information of the Company, (ii) the payments and
benefits under this Agreement are in consideration of the covenants
and agreements contained in this Section 3 and are essential
to the business and goodwill of the Company, and (iii) the Company
would not have entered into this Agreement but for the covenants
and agreements that the Executive is making as set forth in this
Section 3. Accordingly, the Executive agrees as follows:
(a) Confidentiality .
During and after the period of the Executive’s service
with the Company and its controlled affiliates, the Executive shall
keep secret and retain in strictest confidence, except in
connection with the business and affairs of the Company and its
controlled affiliates and as otherwise required by law, all
confidential matters relating to the business and affairs of the
Company and its controlled affiliates learned by the Executive
heretofore or hereafter directly or indirectly from the Company or
any of its controlled affiliates (the “
Confidential Company Information ”),
and shall not disclose such Confidential Company Information to
anyone outside of the Company except as required by law or with the
Company’s express written consent and except for
Confidential Company Information which is, at the time of receipt,
or thereafter becomes, publicly known through no wrongful act of
the Executive.
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(b)
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Non-competition . During the period beginning on the date
of this Agreement and ending on the earlier of (1) December 31,
2013 or (2) the third anniversary of the date the Executive ceases
to serve on the Board for any reason (the “ Restrict
e d Period ”), the Executive shall not,
without the express written consent of the Company, directly or
indirectly, anywhere in the United States or any other country
where the Company does business as of the date hereof, own an
interest in, join, operate, control or participate in, be connected
as an owner, officer, executive, employee, partner, member,
manager, shareholder, or principal of or with, or otherwise aid or
assist in any manner whatsoever, any individual, corporation or
entity that competes with the activities of the Company or its
subsidiaries and controlled affiliates, including in the capital
markets, money management, financial advisory and/or institutional
sales and trading businesses (a “ Competitive
Activity ”). Notwithstanding the foregoing, the
Executive may (i) own up to one percent (1%) of the outstanding
stock of a publicly held corporation which is or is affiliated with
an entity or person that is in competition with the Company or its
subsidiaries or (ii) be an officer, executive, employee, partner,
member, manager, shareholder, or principal of or with a hedge fund,
mutual fund, side-by-side fund or a third-party asset management
firm (the exceptions set forth in clauses (i) and (ii), the
“ Permitted Activities ”). In the event
that the Executive provides notice to the Company that he will
engage in a Competitive Activity in respect of money management
that is not already a Permitted Activity, and engages in such
activity, notwithstanding anything to the contrary in this
Agreement (or any other agreement by and between the Executive and
the Company), the Company shall have no remedies against the
Executive other than the right to cease making the payments and
providing the benefits to him under Section 2 of this Agreement and
Section 3 of the Director Agreement between the Company and the
Director, dated as of the date of this Agreement (the “
Director Agreement ”). If the
Executive’s service on the Board ceases for any reason
during the twelve
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