Exhibit 10.8
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
