ENFORCEMENT MAY BE LIMITED BY THE ENFORCEABILITY EXCEPTIONS, AND THE
PURCHASED NOTES WILL NOT BE SUBJECT TO ANY PREEMPTIVE, PARTICIPATION, RIGHTS OF
FIRST REFUSAL AND OTHER SIMILAR RIGHTS. ASSUMING THE ACCURACY OF FBR'S
REPRESENTATIONS AND WARRANTIES HEREUNDER, THE PURCHASED NOTES (I) WILL BE ISSUED
PURSUANT TO THE INDENTURE AND THIS AGREEMENT EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO SECTION 4(2) OF THE SECURITIES
ACT AND (II) WILL BE ISSUED IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL
LAWS CONCERNING THE ISSUANCE OF THE PURCHASED NOTES.
THE PURCHASED NOTES WILL
BE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT AND WILL NOT BE
5
FREELY TRANSFERABLE BY FBR.
ACCORDINGLY, THE NOTES WILL BEAR RESTRICTIVE
LEGENDS PROVIDED IN SECTION 3(E) HEREOF.
(I)
VALIDITY OF THE UNDERLYING SHARES AND COMMON STOCK.
THE
PURCHASED NOTES MAY BE CONVERTED INTO UNDERLYING SHARES (THE "UNDERLYING
SHARES") OF THE COMPANY'S COMMON STOCK, PAR VALUE $1.00 PER SHARE (THE "COMMON
STOCK"), IN ACCORDANCE WITH THE TERMS OF THE PURCHASED NOTES. THE UNDERLYING
SHARES HAVE BEEN DULY AUTHORIZED AND RESERVED BY THE COMPANY FOR ISSUANCE UPON
CONVERSION OF THE PURCHASED NOTES AND, WHEN ISSUED IN CONNECTION WITH SUCH
CONVERSION IN ACCORDANCE WITH THE TERMS OF THE PURCHASED NOTES, WILL BE VALIDLY
ISSUED, FULLY PAID AND NON-ASSESSABLE, IN COMPLIANCE WITH FEDERAL AND STATE
SECURITIES LAWS, AND THE ISSUANCE OF THE UNDERLYING SHARES WILL NOT BE SUBJECT
TO ANY PREEMPTIVE, RESALE, PARTICIPATION, RIGHTS OF FIRST REFUSAL OR OTHER
SIMILAR RIGHTS.
ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF EACH
SIGNIFICANT SUBSIDIARY OF THE COMPANY THAT IS A CORPORATION HAVE BEEN DULY
AUTHORIZED AND VALIDLY ISSUED AND ARE FULLY PAID AND NON-ASSESSABLE.
ALL OF THE
OUTSTANDING SHARES OF CAPITAL STOCK, PARTNERSHIP INTERESTS OR OTHER OWNERSHIP
INTERESTS OF EACH SIGNIFICANT SUBSIDIARY OF THE COMPANY ARE OWNED DIRECTLY OR
INDIRECTLY BY THE COMPANY, FREE AND CLEAR OF ANY CLAIM, LIEN, ENCUMBRANCE,
SECURITY INTEREST, RESTRICTION UPON VOTING OR TRANSFER, PREEMPTIVE RIGHTS OR ANY
OTHER CLAIM OF ANY THIRD PARTY (COLLECTIVELY, "LIENS"), EXCEPT SUCH LIENS AS
WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.
(J)
FINANCIAL STATEMENTS.
THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE COMPANY AND ITS SUBSIDIARIES (INCLUDING THE RELATED NOTES AND SUPPORTING
SCHEDULES) INCLUDED IN THE COMPANY SEC FILINGS PRESENT FAIRLY IN ALL MATERIAL
RESPECTS THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS OF THE
ENTITIES PURPORTED TO BE SHOWN THEREBY AT THE DATES AND FOR THE PERIODS
INDICATED (SUBJECT TO YEAR-END ADJUSTMENTS IN THE CASE OF UNAUDITED INTERIM
FINANCIAL STATEMENTS) AND HAVE BEEN PREPARED IN ACCORDANCE WITH U.S. GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") APPLIED ON A CONSISTENT BASIS THROUGHOUT
THE PERIODS INDICATED, EXCEPT AS OTHERWISE NOTED THEREIN; AND THE SUPPORTING
SCHEDULES INCLUDED IN THE 2008 FORM 10-K AND THE 2009 FORM 10-QS PRESENT FAIRLY
IN ALL MATERIAL RESPECTS THE INFORMATION REQUIRED TO BE STATED THEREIN.
(K)
ACCOUNTANTS.
KPMG LLP, WHO HAVE REPORTED ON CERTAIN FINANCIAL
STATEMENTS OF THE COMPANY INCLUDED IN THE 2008 FORM