Document:

Exhibit 10.3 

FBR CAPITAL MARKETS
CORPORATION 

Form of Stock Option
Agreement 

        THIS
STOCK OPTION AGREEMENT (this “Agreement”) 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 August __, 2008 (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”) which is not less than the Fair Market Value on
          the Date of Grant. 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. All capitalized terms that are defined in the Plan have
          the meaning assigned by the Plan. 

         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 seventh anniversary of the Date of Grant (the “Expiration
          Date”). 

         (b)       
          Exercise of Option. This Option shall not be exercisable unless Participant,
          before August 27, 2008, enters into a restrictive covenant agreement in the
          form approved by the Committee. Subject to the preceding sentence, this Option
          shall be exercisable (“Vested”): (i) with respect to
          one-third of the Shares subject to this Option on the third anniversary of the
          Date of Grant; (ii) with respect to an additional one-third of the Shares
          subject to this Option on the fourth anniversary of the Date of Grant; and (iii)
          with respect to the remaining one-third of the Shares subject to this Option on
          the fifth anniversary of the Date of Grant. Once this Option becomes exercisable
          in accordance with 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, 5 or 6 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 to the Company’s Stock Plan
          Administration designated agent, with a copy 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. 

         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.       
          Change in Control. In the event of a Change in Control, the Committee
          will determine the impact of the Change in Control, including whether this
          Option will Vest in accordance with Section 11.2 of the Plan or be assumed or
          substituted in accordance with Section 11.3 of the Plan. 

         10.       
          Governing Law. This Agreement shall be governed by the laws of the
          Commonwealth of Virginia. 

         11.       
          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. 

         12.       
          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. 

         13.       
          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. 

         14.       
          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. 

        IN
WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly
authorized officer, and Participant has affixed his/her signature hereto. 

FBR CAPITAL MARKETS
CORPORATION 

By:__________________________________ 

Name:     Eric F. Billings

Title:     Chairman and CEO

___________________________________

Date_______________________________Exhibit 10.4 

Form of Restrictive
Covenant Agreement 

To: 

From: FBR Capital Markets
Corporation (FBR Capital Markets Corporation, Friedman, Billings, Ramsey Group, Inc.,
their respective affiliates and subsidiaries are collectively referred to in this
Agreement as “FBR”) 

Date: August     , 2008 

Re: Notice Period and
Restrictive Covenant Provisions 

In consideration of your continued
employment with FBR Capital Markets Corporation and the promises set forth in the
amendment to your         , 2008 Restricted Stock Unit (“RSU”) award, the
August     , 2008 grant of RSUs and the August     ,
2008 grant of stock options, you agree as follows: 

     a.    
          A Notice Period of Not Less Than 90 days. You agree to provide FBR with
          written notice of your resignation 90 calendar days prior to your separation of
          employment. During the period between your written notice and your separation
          date (the “Notice Period”) FBR will pay you your base salary and/or
          earned commission if you are a commissioned employee and continue its
          cost-sharing arrangements for medical and dental insurance premiums. In
          exchange, you will continue to devote your full business time to any duties
          directed by FBR. FBR, however, may choose to place you on leave during the
          Notice Period or terminate your employment; you will still be paid your base
          salary during this time, up to and including your original separation
          date.(1) You may not perform any services for any other employer
          during the Notice Period unless FBR agrees in writing. You will not be entitled
          to participate in FBR’s discretionary bonus plan during your Notice Period,
          even if such period coincides with FBR’s payment of a bonus to comparable
          employees. 

     b.    
          Non-Solicitation of Employees. During your employment with FBR, and for a
          period of 12 months from the date your employment ends, for whatever reason, you
          shall not, directly or indirectly, solicit for employment as an employee or
          engagement as an independent contractor the services of any person who is
          employed by FBR at that time or was employed by FBR during the 6 months prior to
          the termination of your employment. Further, during such period, you shall not
          take any action that could reasonably be expected to have the effect of
          encouraging or inducing any such employee to cease his or her relationship with
          FBR for any reason. This Non-Solicitation Period will begin to run following the
          end of any applicable Notice Period. 

     c.    
          Non-Competition. You agree that while you are employed by FBR and during
          the Notice Period, or for a period of 90 days from the date your employment
          ends, if you are terminated by FBR, and you are not subject to a Notice Perid
          (the “Restricted Period”), you shall not, within any jurisdiction or
          marketing area in which FBR is doing business, directly or indirectly (including
          through entities controlled by you or otherwise), own, own an interest in, join,
          manage, operate, control, consult with, be employed by, participate in the
          ownership, management, operation or control of, or otherwise render services to,
          or engage in, any business that competes with FBR in the capital markets,
          financial advisory and/or institutional sales and trading business
          (collectively, “Competitive Services”) in the same or similar capacity
          in which you provided those services to FBR. You agree that during the
          Restricted Period you will not be employed or otherwise engaged by any client in
          any capacity which competes with or which may compete with FBR. 

You will be deemed to be performing
Competitive Services if you engage in such businesses or perform such services, directly
or indirectly, whether for your own account or for that of another person, or whether as a
stockholder, principal, partner, member, agent, investor, proprietor, director, manager,
trustee, officer, employee, or consultant, or in any other capacity; provided, however,
that your ownership of securities of two percent (2%) or less of any publicly traded class
of securities of a public company shall not violate this paragraph. 

     d.    
          Non-Solicitation of Clients. You agree that, during your employment and
          for 180 days from the date your employment ends, for whatever reason, (“the
          Non-Solicitation Period”), you shall not, directly or indirectly, recruit,
          solicit or otherwise induce or influence any proprietor, partner, shareholder,
          member, director, manager, officer, employee, agent, joint venture, or any other
          person that (i) has a business relationship with FBR and with whom you had
          access to proprietary information about or had contact with in connection with
          your employment, or (ii) had a business relationship with FBR at any time within
          the twelve-month period preceding the end of your employment and with whom you
          had access to proprietary information about or had contact with in connection
          with your employment, to discontinue, reduce or modify such business
          relationship with FBR. A “business relationship” is not limited to any
          person or entity with which FBR has a contractual relationship, but also
          includes, for purposes of this Agreement, any person or entity with which anyone
          at FBR has had substantial contact with for purposes of securing a contractual
          relationship with such person or entity. The Non-Solicitation Period will begin
          to run following the end of any applicable Notice Period. 

     e.    
          Non-Disparagement. You agree that throughout your employment and
          continuing after your employment ends, for whatever reason, that you will not,
          directly or indirectly, engage in any conduct that involves the maligning or
          publishing of written or oral statements or remarks (including, without
          limitation, the repetition or distribution of derogatory rumors, allegations,
          remarks, and/or negative reports or comments) which are disparaging,
          deleterious, or damaging to the integrity, reputation, or good will of FBR, or
          any of its officers or any of its employees in the context of their employment
          with FBR. 

These policies supersede any shorter
or equal notice period or non-solicitation obligations that you may have under separate
written agreement with FBR, but is not intended to shorten any longer notice period or
non-solicitation obligations. All other terms and conditions of your employment remain in
full force and effect. These policies are not intended to be, and should not be construed
as creating a contract guaranteeing employment for any specific duration. The relationship
between you and FBR is one of at will employment. Either you or FBR may terminate your
employment at any time for any lawful reason or no reason. 

You and FBR agree that a breach (or
anticipatory breach) of the provisions of this Agreement would cause FBR irreparable harm,
and that FBR shall be entitled to temporary and permanent injunctive relief without the
necessity of proving actual damages. You agree that FBR shall be entitled to such
injunctive relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions, without the necessity of posting bond or other undertaking in
connection therewith. Any such requirement of a bond or undertaking in excess of $1,000 is
hereby waived by you. 

If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Agreement is invalid or
unenforceable within any jurisdiction, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision that is
valid and enforceable within such jurisdiction and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified. Further, you agree that in the event of any such
determination, this Agreement shall be deemed to be a series of separate covenants, one
for each and every state of the United States of America, the District of Columbia, and
any territory or possession of the United States of America where this Agreement is
intended to be effective, and, notwithstanding your previous agreement to Virginia as your
choice of law this Agreement shall be governed by and construed in accordance with the
internal laws of the corresponding state of the United States of America, the District of
Columbia, territory or possession of the United States of America where this Agreement is
intended to be effective without regard to any otherwise applicable conflict of law
principles. Absent any determination that the Agreement is invalid or unenforceable,
Virginia law applies. 

Accepted:
______________________________________

Date: __________ 

     (1)    
          In cases of commissioned employees, FBR will pay base monthly pay on average of
          previous 6 months commissions.

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