Exhibit 10.7
Grant No.: «NUM»
CAPITALSOURCE INC.
THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
     CapitalSource Inc., a Delaware corporation (the “Company”), hereby grants
shares of its common stock (“Stock”) to the Grantee named below, subject to the
vesting and other conditions set forth below. Additional terms and conditions of
the grant are set forth in the attached Restricted Stock Agreement (the
“Agreement”) and in the Company’s Third Amended and Restated Equity Incentive
Plan (as amended from time to time, the “Plan”).
Name of Grantee: «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»
Grantee’s Social Security Number: «SSN»
Number of shares of Restricted Stock: «SHARES»
Grant Date: «GRANT_DATE»
Vest Base Date: «VEST_BASE_DATE»
Vesting Schedule: The Stock shall vest [on each vesting date if the Company
attains an annualized return on equity of [  ]% for the related performance
period set forth below (as determined by the Company) and Grantee continues in
Service to the Company on such vesting date] as follows:

  •   [insert#] [for performance period [Dates]]on [Vest Date];     •  
[insert#] [for performance period [Dates]]on [Vest Date]; and     •   [insert#]
[for performance period [Dates]]on [Vest Date].

     By your signature below, you agree to all of the terms and conditions
described herein, in the attached Agreement and in the Plan, a copy of which is
available on the Company’s intranet and on DocServer, the Company’s internal
document management system in the System View named Equity Incentive Plan. You
acknowledge that you have carefully reviewed the Plan, and agree that the Plan
will control in the event any provision of this cover sheet or Agreement should
appear to be inconsistent.

                 
 
      Date:        
 
Grantee
         
 
   
 
               
 
      Date:        
 
CapitalSource Inc.
         
 
   
Title:
               

Attachment
     This is not a stock certificate or a negotiable instrument.

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CAPITALSOURCE INC.
THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT

     
Restricted Stock
  This Agreement evidences an award of shares of Stock in the number set forth
on the cover sheet and subject to the vesting and other conditions set forth
herein, in the Plan and on the cover sheet (the “Restricted Stock”).
 
   
Transfer of Restricted Stock
  Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered, whether by operation of law or otherwise, nor may the
Restricted Stock be made subject to execution, attachment or similar process. If
you attempt to do any of these things, the Restricted Stock will immediately
become forfeited.
 
   
Issuance and Vesting
  The Company will issue your Restricted Stock in the name set forth on the
cover sheet.
 
   
 
  [Your right to the Stock under this Restricted Stock grant and this Agreement
shall vest in accordance with the vesting schedule set forth on the cover sheet
so long as you continue in Service on the vesting dates set forth on the cover
sheet.

Notwithstanding your vesting schedule, the Restricted Stock will become 100%
vested upon your termination of Service due to your death or Disability if you
have provided Services to the Company for at least one (1) year at the time your
Service terminates.]
 
   
 
  OR (for performance based vesting)
 
   
 
  [Subject to the terms and conditions of this Agreement, the Restricted Stock
shall vest, if at all, and no longer be subject to any restrictions hereunder
pursuant to the vesting schedule set forth on the cover sheet.
 
   
 
  Notwithstanding your vesting schedule, the Restricted Stock will become 100%
vested upon your termination of Service due to your death or Disability if you
have provided Services to the Company for at least one (1) year at the time your
Service terminates.]
 
   
[Change of Control]
  [Notwithstanding your vesting schedule, upon the closing of a Change of
Control, the Restricted Stock will become 100% vested (i) if the Restricted
Stock is not assumed, or equivalent restricted securities are not substituted
for the Restricted Stock, by the Company or its successor, or (ii) upon your
Involuntary Termination within the 24-month period following the closing of the
Change in Control.

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  For purposes of this Agreement:
 
   
 
  • “Change of Control” means (i) the dissolution or liquidation of the Company
or a merger, consolidation, or reorganization of the Company with one or more
other entities in which the Company is not the surviving entity, (ii) a sale of
substantially all of the assets of the Company to another person or entity, or
(iii) any transaction (including without limitation a merger or reorganization
in which the Company is the surviving entity) which results in any person or
entity owning 50% or more of the combined voting power of all classes of Shares
of the Company or its successor. Notwithstanding the foregoing a transaction
described in clause (i) or clause (ii) of the preceding sentence shall not be a
Change of Control if persons who are shareholders of the Company or its
Affiliates immediately prior to the transaction continue to own 50% or more of
the combined voting power of the Company or the resulting entity immediately
following the transaction.
 
   
 
  • “Involuntary Termination” means termination of your Service by reason of
(i) your involuntary dismissal by the Company for reasons other than Cause; or
(ii) your voluntary resignation following (x) a change in your position with the
Company which materially reduces your duties and responsibilities or the level
of management to which you report, (y) a material reduction in your level of
compensation (including base salary, fringe benefits and target bonus) or (z) a
relocation of your place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is brought about by the Company
without your consent.]
 
   
Evidence of Issuance
  The issuance of the Stock under the grant of Restricted Stock evidenced by
this Agreement shall be evidenced in such a manner as the Company, in its
discretion, will deem appropriate, including, without limitation, book-entry,
registration or issuance of one or more Stock certificates, with any unvested
Restricted Stock bearing the appropriate restrictions imposed by this Agreement.
As your interest in the Restricted Stock vests, the recordation of the number of
shares of Restricted Stock attributable to you will be appropriately modified if
necessary. In so far as any share certificates are issued for unvested
Restricted Stock, such certificates shall be held in escrow and shall contain an
appropriate legend.
 
   
Forfeiture of Unvested Restricted Stock [Remove paragraph for immediately
vesting Awards]
  Unless the termination of your Service triggers accelerated vesting of your
Restricted Stock pursuant to the terms of this Agreement, the Plan, or any other
written agreement between the Company (or any Affiliate) and you, you will
automatically forfeit to the Company all of the unvested shares of Restricted
Stock in the event your Service terminates for any reason.

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  (for performance based vesting)
 
   
 
  [Any Restricted Stock that has not vested following the Company’s
determination of whether it has attained the performance based goal as set forth
in the cover sheet will automatically terminate.]
 
   
Forfeiture of Rights
  If you should take actions in violation or breach of or in conflict with any
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof, the Company has
the right to cause an immediate forfeiture of your rights to the Restricted
Stock awarded under this Agreement, and the Restricted Stock shall immediately
expire.
 
   
 
  In addition, if you have vested in Shares of Restricted Stock awarded under
this Agreement during the two year period prior to your actions, you will owe
the Company a cash payment (or forfeiture of shares) in an amount determined as
follows: (1) for any Shares that you have sold prior to receiving notice from
the Company, the amount will be the proceeds received from the sale(s), and
(2) for any Shares that you still own, the amount will be the number of Shares
owned times the Fair Market Value of the Shares on the date you receive notice
from the Company (provided, that the Company may require you to satisfy your
payment obligations hereunder either by forfeiting and returning to the Company
the Shares or any other shares or making a cash payment or a combination of
these methods as determined by the Company in its sole discretion).
 
   
Leaves of Absence
  For purposes of this Agreement, your Service does not terminate when you go on
a bona fide employee leave of absence that was approved by the Company in
writing if the terms of the leave provide for continued Service crediting, or
when continued Service crediting is required by applicable law. Your Service
terminates in any event when the approved leave ends unless you immediately
return to active employee work.
 
   
 
  The Company determines, in its sole discretion, which leaves count for this
purpose, and when your Service terminates for all purposes under the Plan.
 
   
Section 83(b) Election
  Under Section 83 of the Internal Revenue Code of 1986, as amended (the
“Code”), the difference between the purchase price paid for these shares of
Stock and their Fair Market Value on the date any forfeiture restrictions
applicable to such shares lapse will be reportable as ordinary income at that
time. For this purpose, “forfeiture restrictions” include the forfeiture of
unvested Stock described above. You may elect to be taxed at the time these
shares in restricted form are acquired rather than when such shares cease to be
subject to such forfeiture restrictions by filing an election under
Section 83(b) of the

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  Code with the Internal Revenue Service within thirty (30) days after the Grant
Date. You will have to make a tax payment to the extent the purchase price
($0.01 per share) is less than the Fair Market Value of these shares on the
Grant Date. The form for making this election is attached as Exhibit A hereto.
Failure to make this filing within the thirty (30) day period will result in the
recognition of ordinary income by you (in the event the Fair Market Value of the
shares increases after the date of purchase) as the forfeiture restrictions
lapse.
 
   
 
  YOU ACKNOWLEDGE THAT IT IS YOUR SOLE DECISION AND RESPONSIBILITY, AND NOT THE
COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b). YOU ALSO ACKNOWLEDGE
THAT YOUR SECTION 83(b) ELECTION IS NOT REVOCABLE AND THAT YOU WILL NOT BE ABLE
TO RECOUP OR RECOVER ANY TAXES PAID IN CONNECTION WITH THE SECTION 83(b)
ELECTION FOR ANY REASON, INCLUDING ON FORFEITURE OF THE UNVESTED SHARES OF STOCK
IN CONNECTION WITH ANY TERMINATION OF SERVICE WITH THE COMPANY. YOU ALSO
ACKNOWLEDGE THAT THESE SHARES OF STOCK ARE STILL SUBJECT TO FORFEITURE
RESTRICTIONS WHICH WILL NOT LAPSE BY VIRTUE OF YOUR SECTION 83(b) ELECTION OR
PAYMENT OF TAXES IN CONNECTION WITH SUCH ELECTION AND THAT YOU WILL FORFEIT ANY
UNVESTED SHARES AT THE TIME OF YOUR TERMINATION OF SERVICE EVEN THOUGH YOU HAVE
ALREADY MADE A SECTION 83(b) ELECTION AND PAID THE TAXES ON SUCH UNVESTED SHARES
IN CONNECTION WITH SUCH ELECTION. THE COMPANY AND ITS REPRESENTATIVES WILL NOT
MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS
WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(b) ELECTION,
INCLUDING WITH RESPECT TO THE RISKS INVOLVED IF THE FAIR MARKET VALUE OF THESE
SHARES OF STOCK FALLS AFTER THE GRANT DATE.
 
   
Withholding Taxes
  You agree as a condition of this grant that you will make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the vesting or receipt of the Restricted Stock. In the event that the Company
determines that any federal, state, local or foreign tax or withholding payment
is required relating to the vesting or receipt of Stock arising from this grant,
the Company shall have the right to require such payments from you, or withhold
such amounts from other payments due to you from the Company or any Affiliate
(including withholding the delivery of vested shares of Stock otherwise
deliverable under this Agreement).
 
   
Retention Rights
  This Agreement and the grant evidenced hereby do not give you the right to be
retained by the Company (or any Affiliate) in any capacity.

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  Unless otherwise specified in an employment or other written agreement between
the Company (or any Affiliate) and you, the Company (and any Affiliate) reserve
the right to terminate your Service at any time and for any reason.
 
   
Stockholder Rights
  You will be entitled to receive, upon the Company’s payment of a cash dividend
on outstanding shares of Stock, an amount of cash, Restricted Stock or
Restricted Stock Units (as determined by the Company from time to time) equal to
the per-share dividend paid on the shares of Restricted Stock that you hold as
of the record date for such dividend, which shall be subject to the same
vesting, forfeiture and other conditions as the associated Restricted Stock. No
adjustments are made for dividends or other rights if the applicable record date
occurs before your certificate is issued (or an appropriate book entry is made),
except as described in the Plan.
 
   
 
  Your grant shall be subject to the terms of any applicable agreement of
merger, liquidation or reorganization in the event the Company is subject to
such corporate activity.
 
   
Legends
  If and to the extent that the shares of Stock are represented by certificates
rather than book entry, all certificates representing the Stock issued under
this grant shall, where applicable, have endorsed thereon the following legends:
 
   
 
  “THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VESTING, FORFEITURE AND OTHER RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE
SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES
REPRESENTED BY THIS CERTIFICATE.”
 
   
Applicable Law
  This Agreement will be interpreted and enforced under the laws of the State of
Delaware, other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction.
 
   
The Plan
  The text of the Plan is incorporated in this Agreement by reference.
 
   
 
  Certain capitalized terms used in this Agreement are defined in the Plan, and
have the meaning set forth in the Plan.
 
   
 
  This Agreement, the associated cover sheet, and the Plan constitute the entire
understanding between you and the Company regarding this grant. Any prior
agreements, commitments or negotiations concerning this grant are superseded;
except that any written employment, consulting, confidentiality, non-competition
and/or severance

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  agreement between you and the Company (or any Affiliate) shall supersede this
Agreement with respect to its subject matter.
 
   
Data Privacy
  In order to administer the Plan, the Company may process personal data about
you. Such data includes, but is not limited to, information provided in this
Agreement or the cover sheet hereto and any changes thereto, other appropriate
personal and financial data about you such as your contact information, payroll
information and any other information that might be deemed appropriate by the
Company to facilitate the administration of the Plan.
 
   
 
  By accepting this grant, you give explicit consent to the Company to process
any such personal data.
 
   
Code Section 409A
  It is intended that this Award comply with Section 409A of the Code
(“Section 409A”) or an exemption to Section 409A. To the extent that the Company
determines that you would be subject to the additional 20% tax imposed on
certain non-qualified deferred compensation plans pursuant to Section 409A as a
result of any provision of this Agreement, such provision shall be deemed
amended to the minimum extent necessary to avoid application of such additional
tax. The nature of any such amendment shall be determined by the Company.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

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