EXHIBIT 10.2
TRANSITION SERVICES
AGREEMENT
THIS TRANSITION SERVICES AGREEMENT,
as amended, modified and in effect from time to time (this “
Agreement ”), is made as of May 20, 2009, by and
between FBR CAPITAL MARKETS CORPORATION, a Virginia corporation
(“ FBR Capital Markets ”), and FRIEDMAN,
BILLINGS, RAMSEY GROUP, INC. (d/b/a ARLINGTON ASSET INVESTMENT
CORP.), a Virginia corporation (“ FBR Group
”).
RECITALS
WHEREAS, pursuant to that certain
Stock Repurchase Agreement, dated as of May 18, 2009, by and
between FBR Capital Markets, FBR Group, and FBR TRS Holdings, Inc.
(the “ Repurchase Agreement ”), FBR Capital
Markets has agreed to repurchase certain shares of capital stock of
FBR Capital Markets that are currently held of record by FBR TRS
Holdings, Inc.;
WHEREAS, pursuant to the terms of
the Repurchase Agreement, the Parties have terminated that certain
Services Agreement, dated as of July 20, 2006, by and between
FBR Capital Markets and FBR Group (the “ Services
Agreement ”), which agreement provided for the provision
of certain support services between the Parties;
WHEREAS, in connection with the
entering into of the Repurchase Agreement and the termination of
the Services Agreement, FBR Group has requested that FBR Capital
Markets, and FBR Capital Markets has agreed to, continue to provide
certain support services on a transitional basis in connection with
FBR Group’s operation of its own business following the
consummation of the Repurchase Agreement, all as more fully
described herein; and
WHEREAS, in connection with the
Repurchase Agreement, FBR Capital Markets desires to continue to
provide, and FBR Group desires to continue to obtain, such services
on a transitional basis, all on the terms and subject to the
conditions set forth in this Agreement.
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:
AGREEMENT
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:
“ Action ” shall
mean any claim, action, suit, arbitration, inquiry or proceeding,
whether civil, criminal, administrative, investigative or
appellate, in law or at equity, by or before any Governmental
Entity.
“ 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.
“ Confidential
Information ” shall have the meaning set forth in
Section 8.1 hereof.
“ Damages ” shall
have the meaning set forth in Section 10.2(a)
hereof.
“ Exhibit ” means
Exhibit A hereto and incorporated by reference in this
agreement, as amended, modified and in effect from time to
time.
“ Fees ” shall
have the meaning set forth in Section 3.1
hereof.
“ FBR Group
Subsidiaries ” mean the entities listed on Schedule
1 attached hereto, as may be amended, modified and in effect
from time to time.
“ 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
” shall have the meaning set forth in
Section 10.3 hereof.
“ Indemnifying Party
” shall have the meaning set forth in
Section 10.3 hereof.
“ Parties ” mean
FBR Group and FBR Capital Markets (“ Party ”
means either FBR Group or FBR Capital Markets).
“ 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.
2
“ Records ” shall
have the meaning set forth in Section 2.3
hereof.
“ Representative
” shall have the meaning set forth in
Section 4.1(a) hereof.
“ Services ”
shall have the meaning set forth in Section 2.1(a)
hereof, and “ Service ” means each such Service,
individually.
ARTICLE II
SERVICES TO BE
PROVIDED
Section 2.1 Exhibit
.
(a) Services . Exhibit
A (Services) hereto is made a part of this Agreement and
describes the services that FBR Capital Markets will provide or
cause to be provided to FBR Group (collectively, the “
Services ”) during the Term. The Parties have made a
good faith effort as of the date hereof to identify each Service
and to complete the content of the Exhibit accurately. It is
anticipated that the Parties may modify the Exhibit and the
Services described therein from time to time during the Term. In
that case, or to the extent that the Exhibit is incomplete, the
Parties will cooperate diligently and in good faith to modify the
Exhibit. There are certain terms that are specifically addressed in
the Exhibit. To the extent that the specific terms addressed in the
Exhibit conflict with the terms provided in this Agreement, the
specific terms addressed in the Exhibit shall govern that
Service.
(b) Extent of Services . The
Parties acknowledge and agree that the Services described in the
Exhibit are not exhaustive and that the Parties may identify from
time to time additional Services that they wish to include in the
Exhibit and incorporate into this Agreement. The Parties will
cooperate diligently and in good faith to identify such Services
and to modify the Exhibit 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 .
The Parties acknowledge and agree that FBR Capital Markets may
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 FBR
Capital Markets 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, it
shall first consult with FBR Group and obtain the prior approval of
FBR Group, which approval shall not be unreasonably
withheld.
(d) Reduction in Services .
The Parties agree that FBR Group shall be permitted during the Term
of this Agreement to reduce the Services provided hereunder, in
whole or in part, provided that such reduction shall be accompanied
by a corresponding and proportionate reduction in the Fees to be
paid by FBR Group as to be determined diligently and in good faith
by the Parties.
Section 2.2 Standard of Care
. In providing the Services, FBR Capital Markets 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 or which FBR Capital
Markets would use to provide such Services for its own
behalf.
3
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 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 . FBR
Group will pay to FBR Capital Markets the fixed dollar fee set
forth in the Exhibit 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 “ Fees
”); provided , however , that such Fee shall
not exceed the dollar amount paid by FBR Group to FBR Capital
Markets for the provision of similar services under the Services
Agreement for the first quarter of 2009. The 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. Except as
specifically provided herein or in an Exhibit, or as subsequently
agreed 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 Exhibit.
Section 3.2 Payments . 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 Fees
payable by FBR Group for such calendar quarter. FBR Group will pay
to FBR Capital Markets, by wire transfer of immediately available
funds or other mutually agreeable means, no later than the third
Wednesday of the month following the month in which such invoice
was delivered by FBR Capital Markets to FBR Group, the aggregate
Fees incurred during such calendar quarter.
ARTICLE IV
REPRESENTATIVES
Section 4.1 Representatives
.
(a) The Chief Financial Officer of
FBR Group and the Chief Financial 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.
4
(b) No additional exhibits,
modifications to the Exhibit, or amendments to this Agreement shall
be effective unless and until executed by the Representative of
each of FBR Group and FBR Capital Markets.
ARTICLE V
THIRD PARTY
AGREEMENTS
To the extent that it is not
practicable to have FBR Group as the contracting party for a third
party obligation, 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 Group or to
assign such contracts to FBR Group. In the event that such
contracts are not extendable or assignable, subject to FBR
Group’s approval, FBR Capital Markets shall act as agent for
FBR Group in the pursuit of any claims, issues, demands or actions
against such third party provider at FBR Group’s
expense.
ARTICLE VI
AUTHORITY; INFORMATION;
COOPERATION; CONSENTS
Section 6.1 Authority . Each
Party represents and warrants to the other Party that:
(a) it has the requisite corporate
authorit
