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Exhibit 10.23.2
 
 
  CapitalSource Inc.  th
   Letter Agreement JPMorgan Original Confirmation
 Transaction
 Equity Definitions
  Agreement
 JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association.
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746. Registered
Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority




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General Terms:Trade Date:
    
    March 16, 2004Warrants:
    
    Equity call warrants to be issued by the Company to JPMorgan,  each giving the holder the right to
 purchase one Share at the Strike Price,  subject to the  Settlement  Terms set forth below.  For the purposes of Equity Definitions, each reference to a Warrant shall be deemed to be a reference to a Call Option.Warrant Style:
    
    AmericanBuyer:
    
    JPMorganSeller:
    
    CompanyShares:
    
    The common stock of Company, par value USD 0.01 per Share (Exchange symbol CSE)Number of Warrants:
    
    7,401,420Warrant Entitlement:
    
    One Share per WarrantMultiple Exercise:
    
    ApplicableMinimum Number of Warrants:
    
    1Maximum Number of Warrants:
    
    7,401,420Strike Price:
    
    USD 40.3025 (which represents the Strike Price as of the Trade Date; the Strike Price has been subsequently adjusted since the Trade Date and is as of April 4, 2007 USD 30.5594).Premium:
    
    USD 24,220,377.30 (which Premium was paid to Company on the Premium Payment Date pursuant to the terms of the Original Confirmation).Premium Payment Date:
    
    March 19, 2004Exchange:
    
    The New York Stock ExchangeRelated Exchange(s):
    
    The principal exchange(s) for options contracts or futures contracts, if any, with respect to the SharesExercise and Valuation:Expiration Time:
    
    The Valuation TimeExpiration Date(s):
    
    For any Daily Number of Warrants, each date specified as such in Annex A hereto.
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Automatic Exercise:
    
    Applicable;  and means that, a number of unexercised  Warrants for each Expiration Date
equal to the Daily Number of Warrants (as adjusted  pursuant to the terms hereof) for such Expiration Date will be deemed to be automatically exercised.Valuation applicable to each Warrant:Valuation Time:
    
    At the close of trading of the regular  trading session on the Exchange;
provided that if the principal  trading  session is extended,  the Calculation  Agent shall determine the Valuation Time in its sole discretion.Valuation Date:
    
    Each Exercise Date.  Notwithstanding  anything to the contrary in the Equity  Definitions,  if
there is a Market  Disruption  Event on any Valuation Date,  then the Calculation  Agent shall determine the Settlement Price for such Valuation Date, as the case may be, on the basis of its good faith estimate of the trading value for the relevant
Shares.Settlement Terms applicable to the Transaction:Method of Settlement:
    
    Net Share  Settlement;  and means that, on each Settlement Date,  Company shall deliver to JPMorgan,
 the Share Delivery Quantity of Shares for such Settlement Date to the account specified hereto free of payment through the Clearance System.Share Delivery Quantity:
    
    For any Settlement Date, a number of Shares,  as calculated by the Calculation  Agent,
equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the Valuation Date in respect of such Settlement Date, plus cash in lieu of any fractional shares (based on such Settlement Price).Net Share Settlement Amount:
    
    For any  Settlement  Date, any amount equal to (i) the Number of Warrants being  exercised on the
relevant  Exercise Date (or in the case of any exercise  (including any Automatic Exercise) on an Expiration Date, the Daily Number of Warrants for such Expiration  Date)  multiplied by (ii) the Strike Price  Differential for such
Settlement Date. For avoidance of doubt,  if any Warrants are exercised  prior to the first  Expiration  Date, the  Calculation  Agent will  proportionately  adjust each Daily Number of
Warrants to reflect such exercise.Strike Price Differential:
    
    (a) If the Settlement Price for any Valuation Date is greater than the Strike Price, an amount equal to the excess of such Settlement Price over the Strike Price; or(b) If such Settlement Price is less than or equal to the Strike Price, zero.Settlement Price:
    
    For any  Valuation  Date,  the closing sale price per Share quoted by the Exchange
 (or, if no closing sale price is so quoted,  the last  reported sale price) as of the Valuation Time on the Valuation Date.Settlement Date:
    
    For any Exercise Date, the date defined as such in Section 6.2 of the Equity Definitions, subject to Section 9(r)(i) hereof.
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Failure to Deliver:
    
    ApplicableOther Applicable Provisions:
    
    The provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10 of the Equity Definitions
will be applicable,  except that all references in such provisions to  Physically-Settled  shall
be read as references to Net Share Settled. Net Share Settled in relation to any Warrant means that Net Share Settlement is applicable to that Warrant.3. Additional Terms applicable to the Transaction:Adjustments applicable to the Warrants:Method of Adjustment:
    
    Calculation Agent Adjustment.  For avoidance of doubt, in making any adjustments under the Equity Definitions, the Calculation Agent may adjust the Daily Number of Warrants.Extraordinary Events applicable to the Transaction:Consequence of Merger Events(a) Share-for-Share:
    
    Alternative  Obligation;  provided that the Calculation  Agent will determine if the Merger
Event affects the  theoretical  value of the Transaction and if so JPMorgan in its sole discretion may elect to make adjustments to the Strike Price and any other term necessary to reflect the characteristics  (including volatility,  dividend
practice
 and policy and liquidity) of the New Shares. Notwithstanding the foregoing,  Cancellation and Payment shall apply in the event the New Shares are not
publicly traded on a United States national securities exchange.(b) Share-for-Other:
    
    Cancellation and Payment(c) Share-for-Combined:
    
    Cancellation and PaymentNationalization or Insolvency:
    
    Cancellation and Payment4. Calculation Agent:
    
    JPMorgan,  whose calculations and  determinations  shall be made in good faith and in a commercially
 reasonable  manner,  including with respect to calculations and determinations that are made in its sole discretion.
  (a)
    
    Account for payments to Company:
 
   (b)
    
    Account for payments to JPMorgan:
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(a)
    
    Address for notices or communications to Company:
 th
   th
  (a)
    
    The Company hereby represents and warrants to JPMorgan that the Company has
been duly incorporated and is an existing corporation in good standing under the laws
of the State of Delaware, with corporate power and authority to own its properties and
conduct its business as set
forth or incorporated by reference in or contemplated by Companys Form S-4
Registration Statement (file number 333-140650) filed February 13, 2007, as the same
may be amended (the Form S-4), related to the Exchange Offer as defined in the
Letter Agreement (as amended by any subsequent annual, quarterly and current reports
filed and other filings made to the date hereof
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under the Securities Exchange Act of
1934, as amended (the Exchange Act), including, without limitation, any Form 10-K
filed by the Company subsequent to the Companys 2005 Form 10-K) (such reports and
filings, collectively, the Companys Filings); and the Company is duly authorized,
qualified or registered, as the case may be, to do business as a foreign corporation
in all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such authorization, qualification or registration,
except where the failure to obtain such authorization, qualification or registration
would not, individually or in the aggregate, have a material adverse effect on the
business, financial condition, management or results of operations of the Company
and its subsidiaries, taken as a whole (Material Adverse Effect).(b)
    
    The Company hereby represents and warrants to JPMorgan that the Company has all
necessary corporate power and authority to execute, deliver and perform its obligations
in respect of this Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on the Companys part; and this
Confirmation has been duly and validly executed and delivered by the Company and
constitutes its valid and binding obligation, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors rights and
remedies generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution thereunder may be limited by
federal or state securities laws or public policy relating thereto.(c)
    
    The Company hereby represents and warrants to JPMorgan that neither the
execution and delivery of this Confirmation nor the incurrence or performance of
obligations of the Company hereunder will conflict with or result in a breach of the
Delaware General Corporation Law, the Companys Second Amended and Restated Certificate
of Incorporation, as amended from time to time (the Charter), or by-laws (or any
equivalent documents) of the Company, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which the Company or
any of its subsidiaries is subject, or constitute a default under, or result in the
creation of any lien under, any such agreement or instrument, or breach or constitute a
default under any agreements and contracts of the Company and its subsidiaries filed as
exhibits to the Companys Filings.(d)
    
    The Company hereby represents and warrants to JPMorgan that no consent,
approval, authorization, or order of, or filing with, any governmental agency or body
or any court is required in connection with the execution, delivery or performance by
the Company of this Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933 (the Securities Act) or state
securities laws.(e)
    
    The Company hereby represents and warrants to JPMorgan that the Shares of the
Company initially issuable upon exercise of the Warrant by the net share settlement
method (the Warrant Shares) have been reserved for issuance by all required corporate
action of the Company. The Warrant Shares have been duly authorized and, when
delivered against payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant following the exercise
of the Warrant in accordance with the terms and conditions of the Warrant, will be
validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares
will not be subject to any preemptive or similar rights.(f)
    
    The Company hereby represents and warrants to JPMorgan that except as set forth
or incorporated by reference in the Form S-4, there are no pending actions, suits or
proceedings against or affecting
the Company, any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have, or reasonably be expected to have, a Material Adverse
Effect, or would materially and adversely affect
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the ability of the Company to
perform its obligations under this Confirmation; and no such actions, suits or
proceedings are, to the Companys knowledge, threatened or contemplated.(g)
    
    The Company hereby represents and warrants to JPMorgan that the Companys
Filings which are incorporated by reference in the Form S-4 do not contain an untrue
statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.(h)
    
    The Company hereby represents and warrants to JPMorgan that it is an eligible
contract participant (as such term is defined in Section 1(a)(12) of the Commodity
Exchange Act, as amended).(i)
    
    The Company hereby represents and warrants to JPMorgan that the Company is not
an investment company or a company controlled by an investment company, in each
case within the meaning of the Investment Company Act of 1940, as amended.(j)
    
    Company has all necessary corporate power and authority to execute, deliver and
perform its obligations in respect of the letter (the Waiver) dated as of February
13, 2007 delivered by Company to JPMorgan and entitled Waiver of Ownership Limit;
such execution, delivery and performance have been duly authorized by all necessary
corporate action on Companys part; and the Waiver has been duly and validly executed
and delivered by Company and constitutes its valid and binding obligation, enforceable
against Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).(k)
    
    Assuming the accuracy of the representations made by JPMorgan in the certain
letter to the Company dated February 13, 2007, neither the execution and delivery of
the Waiver nor the incurrence or performance of obligations of Company thereunder will
conflict with or result in a breach of the Charter or by-laws (or any equivalent
documents) of Company, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any agreement
or instrument to which Company or any of its subsidiaries is a party or by which
Company or any of its subsidiaries is bound or to which Company or any of its
subsidiaries is subject, or constitute a default under, or result in the creation of
any lien under, any such agreement or instrument, or breach or constitute a default
under any agreements and contracts of Company or any of its significant subsidiaries
filed as exhibits to the Companys Form 10-K.
  (a)
    
    No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or in any other
capacity); (ii) neither the other party nor any of its agents is acting as a fiduciary
for it; (iii) it is not relying upon any representations except those expressly set
forth in the Agreement or this Confirmation; (iv) it has not relied on the other party
for any legal, regulatory, tax, business, investment, financial, and accounting advice,
and it has made its own investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any of its agents; and
(v) it is entering into this Transaction with a full understanding of the terms,
conditions and risks thereof and it is capable of and willing to assume those risks.(b)
    
    Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the final Valuation Date, the Shares cease
to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the shares of common
stock underlying the Options are listed or quoted on The New York Stock Exchange,
The American Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select
Market (or their
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respective successors) (the Successor Exchange)) and are not
immediately re-listed or quoted as of the date of such de-listing on the Successor
Exchange, then Cancellation and Payment (as defined in Section 9.6 of the Equity
Definitions treating the Announcement Date as the date of first public
announcement that the Share De-Listing will occur and the Merger Date as the date
of the Share De-Listing) shall apply, and the date of the de-listing shall be deemed
the date of termination for purposes of calculating any payment due from one party
to the other in connection with the cancellation of this Transaction. If the Shares
are immediately re-listed on a Successor Exchange upon their de-listing from the
Exchange, this Transaction shall continue in full force and effect, provided that
the Successor Exchange shall be deemed to be the Exchange for all purposes
hereunder. In addition, the Calculation Agent shall make any adjustments it deems
necessary to the terms of the Transaction in accordance with Calculation Agent
Adjustment method as defined under Section 9.1(c) of the Equity Definitions.(c)
    
    Repurchase Notices. Company shall give JPMorgan written notice of any
repurchase of Shares (a Repurchase Notice) at least ten Exchange Business Days prior
to effecting such repurchase if, after giving effect to such repurchase, the fraction
(x) the numerator of which is the product of (A) (a) the Number of Warrants multiplied
by(b) the Warrant Entitlement; plus(B) the product of (a) the Number of Options for
the Call Option Transaction Reference Number 2480433 between Counterparty and JPMorgan
(the Amended Call Option Transaction) multiplied by(b) the Option Entitlement for
the Amended Call Option Transaction; plus(B) the product of (a) the Number of Options
for the Call Option Transaction (the New Call Option Transaction) between
Counterparty and JPMorgan relating to the Companys Senior Subordinated Convertible
Debentures due 2034 issued in accordance with the exchange offer pursuant to the
Companys Form S-4 Registration Statement filed February 13, 2007, as amended,
multiplied by(b) the Option Entitlement for the New Call Option Transaction and (y)
the denominator of which is the number of Companys Shares outstanding on such day
(such fraction expressed as a percentage, the Warrants Equity Percentage) would be
greater than 10.14%. Such Repurchase Notice shall set forth the number of Shares to be
outstanding after giving effect to the relevant Share repurchase. In connection with
any delivery of any Repurchase Notice to JPMorgan, Company shall (x) concurrently with
or prior to such delivery, publicly announce and disclose the relevant repurchase or
(y) represent and warrant in such Repurchase Notice that the information set forth in
such Repurchase Notice does not constitute material non-public information with respect
to Company or the Shares.(d)
    
    Conversion Rate Adjustments. Company shall provide to JPMorgan written
notice (such notice, a Conversion Rate Adjustment Notice) at least ten Exchange
Business Days prior to consummating or otherwise executing or engaging in any
transaction or event, other than a publicly announced cash dividend payment (a
Conversion Rate Adjustment Event), that would lead to an increase in the Conversion
Rate (as such term is defined in the Indenture), other than an increase pursuant to
Section 14.06(a) of the Indenture, which Conversion Rate Adjustment Notice shall set
forth the new, adjusted Conversion Rate after giving effect to such Conversion Rate
Adjustment Event (the New Conversion Rate); providedthat no such Conversion Rate
Adjustment Notice needs to be provided unless, after giving effect to such Conversion
Rate Adjustment Event, the Warrants Equity Percentage would be greater than 10.14%. In
connection with the delivery of any Conversion Rate Adjustment Notice to JPMorgan,
Company shall (x) concurrently with or prior to such delivery, publicly announce and
disclose the Conversion Rate Adjustment Event or (y) concurrently with such delivery,
represent and warrant that the information set forth in such Conversion Rate Adjustment
Notice does not constitute material non-public information with respect to Company or
the Shares.(e)
    
    Regulation M. The Company was not on the Trade Date and is not on the
date hereof engaged in a distribution, as such term is used in Regulation M under the
Exchange Act, of any securities of Company, other than a distribution meeting the
requirements of the exception set forth in sections
101(b)(10) and 102(b)(7) of Regulation M. The Company shall not, until the fifth
Exchange Business Day immediately following the Trade Date, engage in any such
distribution.
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(f)
    
    No Manipulation. The Company is not entering into this Transaction for
the purpose of (i) creating actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or (ii) raising or depressing
or otherwise manipulating the price of the Shares (or any security convertible into or
exchangeable for the Shares), in either case in violation of Section 9 of the Exchange
Act.(g)
    
    Board Authorization. Company represents that it is entering into the
Transaction, solely for the purposes stated in the board resolution authorizing this
Transaction and in its public disclosure. Company further represents that there is no
internal policy, whether written or oral, of Company that would prohibit Company from
entering into any aspect of this Transaction, including, but not limited to, the
purchases of Shares to be made pursuant hereto.(h)
    
    Transfer or Assignment. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent of JPMorgan.
JPMorgan may transfer or assign all or any portion of its rights or obligations under
this Transaction without consent of the Company. If after JPMorgans commercially
reasonable efforts, JPMorgan is unable to effect such a transfer or assignment on
pricing terms reasonably acceptable to JPMorgan and within a time period reasonably
acceptable to JPMorgan of a sufficient number of Options to reduce (i) JPMorgans
beneficial ownership (within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) to 8.0% of Companys outstanding Shares or less, (ii) the
Warrants Equity Percentage to 10.14% or less or (iii) J.P. Morgan Chase & Cos (Bank)
Beneficial Ownership (as such term is defined in the Charter) of Shares (as such term
is defined in the Charter) to 18% or less, JPMorgan may designate any Exchange Business
Day as an Early Termination Date with respect to a portion (the Terminated Portion)
of this Transaction, such that (i) its beneficial ownership following such partial
termination will be equal to or less than 8.0%, (ii) the Warrants Equity Percentage
following such partial termination will be equal to or less than 10.14% or (iii) Banks
Beneficial Ownership (as such term is defined in the Charter) of Shares (as such term
is defined in the Charter) following such partial termination will be equal to or less
than 18%. Solely for purposes of this subsection, following receipt of any Repurchase
Notice or Conversion Rate Adjustment Notice, (i) JPMorgans beneficial ownership
(within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder)
with respect to Shares, (ii) the Options Equity Percentage and (iii) Banks Beneficial
Ownership (as such term is defined in the Charter) with respect to the Shares (as such
term is defined in the Charter), as the case may be, shall incorporate the deemed
effect of the relevant Share repurchase (in the case of a Repurchase Notice) or New
Conversion Rate (in the case of a Conversion Rate Adjustment Notice). In the event
that JPMorgan so designates an Early Termination Date with respect to a portion of this
Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a Transaction having terms
identical to this Transaction and a Number of Options equal to the Terminated Portion,
(ii) Company shall be the sole Affected Party with respect to such partial termination
and (iii) such Transaction shall be the only Terminated Transaction (and, for the
avoidance of doubt, the provisions of Section 9(p) shall apply to any amount that is
payable by JPMorgan to Company pursuant to this sentence as if Company was not the
Affected Party).Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing JPMorgan to purchase, sell, receive or deliver any shares or
other securities to or from Company, JPMorgan may designate any of its affiliates to
purchase, sell, receive or deliver such shares or other securities and otherwise to
perform JPMorgans obligations in respect of this Transaction and any such designee
may assume such obligations. JPMorgan shall be discharged of its obligations to
Company to the extent of any such performance.(i)
    
    Amendment. Paragraph (i) of Section 9.7(b) of the Equity Definitions
is hereby amended for purposes of this Transaction by replacing two-year with 90
calendar day.(j)
    
    Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages, even if informed of
the possibility thereof.
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(k)
    
    [Reserved](l)
    
    Dividends. If at any time during the period from and including the
Trade Date, to but excluding the Expiration Date, an ex-dividend date for a cash
dividend occurs with respect to the Shares (an Ex-Dividend Date), and that dividend
is greater than the Regular Dividend on a per share basis, then the Calculation Agent
will adjust the Strike Price to preserve the fair value of the Warrant to JPMorgan
after taking into account such dividend. Regular Dividend shall mean USD 0.00 per
Share per quarter.(m)
    
    Role of Agent. Each party agrees and acknowledges that (i) J.P. Morgan
Securities Inc., an affiliate of JPMorgan (JPMSI), has acted solely as agent and not
as principal with respect to this Transaction and (ii) JPMSI has no obligation or
liability, by way of guaranty, endorsement or otherwise, in any manner in respect of
this Transaction (including, if applicable, in respect of the settlement thereof). Each
party agrees it will look solely to the other party (or any guarantor in respect
thereof) for performance of such other partys obligations under this Transaction.(n)
    
    Additional Provisions.(i) The first paragraph of Section 9.1(c) of the Equity Definitions is hereby
amended to read as follows: (c) If Calculation Agent Adjustment is specified as
the method of adjustment in the Confirmation of a Share Option Transaction, then
following the declaration by the Issuer of the terms of any Potential Adjustment
Event, the Calculation Agent will determine whether such Potential Adjustment Event
has a material effect on the theoretical value of the relevant Shares or Warrants
and, if so, will (i) make appropriate adjustment(s), if any, to any one or more
of: and, the sentence immediately preceding Section 9.1(c)(ii) is hereby amended by
deleting the words diluting or concentrative.(ii) Section 9.1(e)(vi) of the Equity Definitions is hereby amended by deleting the
words other similar between any and event; deleting the words diluting or
concentrative and replacing them with material; and adding the following words at
the end of the sentence or Warrants.(iii) Section 9.6(a)(ii) of the Equity Definitions is hereby amended by (1)
deleting from the third line thereof the word or after the word official and
inserting a comma therefor, and (2) deleting the period at the end of subsection
(ii) thereof and inserting the following words therefor  or (C) at JPMorgans
option, the occurrence of any of the events specified in Section 5(a)(vii) (1)
through (9) of the ISDA Master Agreement with respect to that Issuer.(iv) Notwithstanding Section 9.7 of the Equity Definitions, everything in the first
paragraph of Section 9.7(b) of the Equity Definitions after the words Calculation
Agent in the third line through the remainder of such Section 9.7 shall be deleted
and replaced with the following:and based on an amount representing the Calculation Agents commercially
reasonable, good faith determination of the fair value to Buyer of an option with
terms that would preserve for Buyer the economic equivalent of any payment or
delivery (assuming satisfaction of each applicable condition precedent) by the
parties in respect of the relevant Transaction that would have been required after
that date but for the occurrence of the Merger Event, Nationalization, Insolvency or
De-Listing Event, as the case may be.(v) Any provision in the Agreement with respect to (1) the netting of obligations of
the Company or (2) the satisfaction of the Companys payment obligations to the
extent of JPMorgans payment obligations to the Company in the same currency and in
the same Transaction (including, without limitation Section 2(c) thereof), in each
case as applied solely to this Transaction, shall not apply to the Company and, for
the avoidance of doubt, the Company shall fully satisfy such payment
obligations notwithstanding any payment obligation to the Company by JPMorgan in the
same currency and in the same Transaction. In calculating any amounts under Section
6(e) of the Agreement, notwithstanding anything to the contrary in the Agreement,
clause (i) of the foregoing
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sentence shall apply as follows: (1) separate amounts
shall be calculated as set forth in such Section 6(e) with respect to (a) this
Transaction and (b) all other Transactions, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement.(o)
    
    No Collateral or Setoff.Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary, the obligations
of the Company hereunder are not secured by any collateral. Obligations under this
Transaction shall not be set off against any other obligations of the parties, whether
arising under the Agreement, this Confirmation, under any other agreement between the
parties hereto, by operation of law or otherwise, and no other obligations of the
parties shall be set off against obligations under this Transaction, whether arising
under the Agreement, this Confirmation, under any other agreement between the parties
hereto, by operation of law or otherwise, and each party hereby waives any such right
of setoff. Any provision in the Agreement with respect to the satisfaction of the
Companys payment obligations to the extent of JPMorgans payment obligations to the
Company in the same currency and in the same Transaction (including, without limitation
Section 2(c) thereof) shall not apply to the Company and, for the avoidance of doubt,
the Company shall fully satisfy such payment obligations notwithstanding any payment
obligation to the Company by JPMorgan in the same currency and in the same Transaction.
In calculating any amounts under Section 6(e) of the Agreement, notwithstanding
anything to the contrary in the Agreement, (i) separate amounts shall be calculated as
set forth in such Section 6(e) with respect to (a) this Transaction and (ii) all other
Transactions, and (2) such separate amounts shall be payable pursuant to Section
6(d)(ii) of the Agreement.(p)
    
    Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If, in respect of this Transaction, an amount is payable by
the Company to JPMorgan, (i) pursuant to Section 9.7 of the Equity Definitions (except
in the event of a Nationalization or Insolvency or a Merger Event, in each case, in
which the consideration to be paid to holders of Shares consists solely of cash) or
(ii) pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of
Default in which Company is the Defaulting Party or a Termination Event in which
Company is the Affected Party, other than an Event of Default of the type described in
Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or a Termination Event of the
type described in Section 5(b)(i), (ii), (iii), (iv), or (v) or (vi) of the Agreement
that resulted from an event or events outside Companys control) (a Payment
Obligation), Company may, in its sole discretion, satisfy any such Payment Obligation
by the Share Termination Alternative (as defined below) and shall give irrevocable
telephonic notice to JPMorgan, confirmed in writing within one Currency Business Day,
between the hours of 9:00 a.m. and 4:00 p.m. New York local time on the Merger Date,
the date of the occurrence of the Nationalization or Insolvency, or Early Termination
Date, as applicable (Notice of Share Termination). Upon Notice of Share Termination
no later than 8:00 a.m. on the Exchange Business Day immediately following the Merger
Date, the date of the occurrence of the Nationalization or Insolvency, or Early
Termination Date, as applicable, the following provisions shall apply:
 Share Termination Alternative:
    
    Applicable and means that Company
shall deliver to JPMorgan the Share Termination Delivery Property on the date
(the Share Termination Payment Date) when the Payment Obligation would
otherwise be due, subject to paragraph (r)(i) below, in satisfaction, subject
to paragraph (r)(ii) below, of the Payment Obligation in the manner reasonably
requested by JPMorgan free of payment.Share Termination Delivery Property:
    
    A number of Share Termination
Delivery Units, as calculated by the Calculation Agent, equal to the
Payment Obligation divided by the Share
Termination Unit Price. The Calculation Agent
shall adjust the Share Termination Delivery
Property by
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replacing any fractional portion
of a security therein with an amount of cash
equal to the value of such fractional security
based on the values used to calculate the
Share Termination Unit Price.Share Termination Unit Price:
    
    The value to JPMorgan of property
contained in one Share Termination Delivery Unit on the date such Share
Termination Delivery Units are to be delivered as Share Termination Delivery
Property, as determined by the Calculation Agent in its discretion by
commercially reasonable means and notified by the Calculation Agent to Company
at the time of notification of the Payment Obligation. In the case of a
Private Placement of Share Termination Delivery Units that are Restricted
Shares (as defined below) as set forth in paragraph (r)(i) below, the Share
Termination Unit Price shall be determined by the discounted price applicable
to such Share Termination Delivery Units. In the case of a Registered
Settlement of Share Termination Delivery Units that are Restricted Shares (as
defined below) as set forth in paragraph (r)(ii) below, the Share Termination
Unit Price shall be the Settlement Price on the Merger Date, the date of the
occurrence of the Nationalization or Insolvency, or Early Termination Date, as
applicable.Share Termination Delivery Unit:
    
    In the case of a Termination Event
or Event of Default, one Share or, in the case of Nationalization or Insolvency
or a Merger Event, a unit consisting of the number or amount of each type of
property received by a holder of one Share (without consideration of any
requirement to pay cash or other consideration in lieu of fractional amounts of
any securities) in such Nationalization or Insolvency or such Merger Event. If
a Share Termination Delivery Unit consists of property other than cash or New
Shares, the Calculation Agent will replace such property with cash, New Shares
or a combination thereof as components of a Share Termination Delivery Unit in
such amounts, as determined by the Calculation Agent in its discretion by
commercially reasonable means, as shall have a value equal to the value of the
property so replaced. If such Merger Event involves a choice of consideration
to be received by holders, such holder shall be deemed to have elected to
receive the maximum possible amount of cash.Failure to Deliver:
    
    ApplicableOther applicable provisions:
    
    If this Transaction is to be Share
Termination Settled, the provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10
(as modified above) of the Equity Definitions
will be applicable, except that all references
in such provisions to Physically-Settled
shall be read as
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references to Share
Termination Settled and all references to
Shares shall be read as references to Share
Termination Delivery Units. Share
Termination Settled in relation to this
Transaction means that Share Termination
Settlement is applicable to this Transaction.
 (q)
    
    Registration/Private Placement Procedures. If, in the reasonable
opinion of JPMorgan, following any delivery of Shares or Share Termination Delivery
Property to JPMorgan hereunder, such Shares or Share Termination Delivery Property
would be in the hands of JPMorgan subject to any applicable restrictions with respect
to any registration or qualification requirement or prospectus delivery requirement for
such Shares or Share Termination Delivery Property pursuant to any applicable federal
or state securities law (including, without limitation, any such requirement arising
under Section 5 of the Securities Act as a result of such Shares or Share Termination
Delivery Property being restricted securities, as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule 145 under the
Securities Act) (such Shares or Share Termination Delivery Property, Restricted
Shares), then delivery of such Restricted Shares shall be effected pursuant to either
clause (i) or (ii) below at the election of Company, unless waived by JPMorgan.
Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants
exercised or deemed exercised on any Expiration Date, the Company shall elect, prior to
the first Settlement Date for the first Expiration Date, a Private Placement Settlement
or Registered Settlement for all deliveries of Restricted Shares for all such
Expiration Dates, which election shall be applicable to all Settlement Dates for such
Daily Number of Warrants and the procedures in clause (i) or clause (ii) below shall
apply for all such delivered Restricted Shares on an aggregate basis commencing after
the final Settlement Date for such Daily Number of Warrants. The Calculation Agent
shall make reasonable adjustments to settlement terms and provisions under this
Confirmation to reflect a single Private Placement or Registered Settlement for such
aggregate Restricted Shares delivered hereunder.
 (i)
    
    If the Company elects to settle the Transaction pursuant to
this clause (i) (a Private Placement Settlement), then delivery of Restricted
Shares by the Company shall be effected in customary private placement
procedures with respect to such Restricted Shares reasonably acceptable to
JPMorgan; providedthat the Company may not elect a Private Placement
Settlement if, on the date of its election, it has taken, or caused to be
taken, any action that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by the Company to JPMorgan (or
any affiliate designated by JPMorgan) of the Restricted Shares or the exemption
pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of
the Restricted Shares by JPMorgan (or any such affiliate of JPMorgan). The
Private Placement Settlement of such Registered Shares shall include customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to JPMorgan, due diligence rights (for JPMorgan or
any designated buyer of the Restricted Shares by JPMorgan), opinions and
certificates, and such other documentation as is customary for private
placement agreements, all reasonably acceptable to JPMorgan. In the case of a
Private Placement Settlement, JPMorgan shall determine the appropriate discount
to the Share Termination Unit Price (in the case of settlement of Share
Termination Delivery Units pursuant to paragraph (q) above) or any Settlement
Price (in the case of settlement of Shares pursuant to Section 2 above)
applicable to such Restricted Shares in a commercially reasonable manner and
appropriately adjust the amount of such Restricted Shares to be delivered to
JPMorgan hereunder; providedthat in no event such number shall be greater than
the five times the Number of Warrants (the Maximum Amount). Notwithstanding
the Agreement or this Confirmation, the date of delivery of such Restricted
Shares shall be the Exchange
Business Day following notice by JPMorgan to the Company, of such applicable
discount and the number of Restricted Shares to be delivered pursuant to
this clause (i). For the avoidance of doubt, delivery of Restricted Shares
shall be due as set forth in the
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previous sentence and not be due on the
Share Termination Payment Date (in the case of settlement of Share
Termination Delivery Units pursuant to paragraph (q) above) or on the
Settlement Date for such Restricted Shares (in the case of settlement of
Shares pursuant to Section 2 above).(ii)
    
    If the Company elects to settle the Transaction pursuant to
this clause (ii) (a Registration Settlement), then the Company shall promptly
(but in any event no later than the beginning of the Resale Period (as defined
below)) file and use its reasonable best efforts to make effective under the
Securities Act a registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably satisfactory to
JPMorgan, to cover the resale of such Restricted Shares in accordance with a
customary underwriting agreement that includes covenants, conditions,
representations, underwriting discounts (if applicable), commissions (if
applicable), indemnities, due diligence rights, opinions and certificates, and
such other documentation, all mutually acceptable to the Company and JPMorgan.
If JPMorgan is satisfied with such procedures and documentation, it shall sell
the Restricted Shares pursuant to such registration statement during a period
(the Resale Period) commencing on the Exchange Business Day following
delivery of such Restricted Shares (which, for the avoidance of doubt, shall be
(x) any Settlement Date in the case of an exercise of Warrants prior to the
first Expiration Date pursuant to Section 2 above, (y) the Share Termination
Payment Date in case of settlement of Share Termination Delivery Units pursuant
to paragraph (q) above or (z) the Settlement Date in respect of the final
Expiration Date for all Daily Number of Warrants) and ending on the earliest of
(i) the Exchange Business Day on which JPMorgan completes the sale of all
Restricted Shares or, in the case of settlement of Share Termination Delivery
Units, a sufficient number of Restricted Shares so that the realized net
proceeds of such sales exceed the Payment Obligation (as defined above), (ii)
the date upon which all Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(1) or
(2) (or any similar provision then in force) under the Securities Act and (iii)
the date upon which all Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144(k) (or any similar provision then in force)
or Rule 145(d)(3) (or any similar provision then in force under the Securities
Act. If the Payment Obligation exceeds the realized net proceeds from such
resale, Company shall transfer to JPMorgan by the open of the regular trading
session on the Exchange on the Exchange Trading Day immediately following the
last day of the Resale Period the amount of such excess (the Additional
Amount) in cash or in a number of Shares (Make-whole Shares) in an amount
that, based on the Settlement Price on the last day of the Resale Period (as if
such day was the Valuation Date for purposes of computing such Settlement
Price), has a dollar value equal to the Additional Amount. The Resale Period
shall continue to enable the sale of the Make-whole Shares. If Company elects
to pay the Additional Amount in Shares, the requirements and provisions for
Registration Settlement shall apply. This provision shall be applied
successively until the Additional Amount is equal to zero. In no event shall
the Company deliver a number of Restricted Shares greater than the Maximum
Amount.(iii)
    
    Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to JPMorgan, as purchaser of such
Restricted Shares, (i) may be transferred by and among JPMorgan Chase Bank and
its affiliates and Company shall effect such transfer without any further
action by JPMorgan and (ii) after the minimum holding period within the
meaning of Rule 144(d) under the Securities Act has elapsed after any
Settlement Date for such Restricted Shares, Company shall promptly remove, or
cause the transfer agent for such Restricted Shares to remove, any legends
referring to any such restrictions or requirements from such Restricted Shares
upon delivery by
JPMorgan (or such affiliate of JPMorgan) to Company or such transfer agent
of sellers and brokers representation letters customarily delivered by
JPMorgan in connection with resales of restricted securities pursuant to
Rule 144 under the Securities Act, without any
 14




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further requirement for the
delivery of any certificate, consent, agreement, opinion of counsel, notice
or any other document, any transfer tax stamps or payment of any other
amount or any other action by JPMorgan (or such affiliate of JPMorgan).
 If the Private Placement Settlement or the Registration Settlement shall not be
effected as set forth in clauses (i) or (ii), as applicable, then failure to effect
such Private Placement Settlement or such Registration Settlement shall constitute
an Event of Default with respect to which Company shall be the Defaulting Party.(r)
    
    Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, JPMorgan may not exercise any Warrant hereunder, and Automatic Exercise shall
not apply with respect thereto, to the extent (but only to the extent) that, after such
receipt, JPMorgan would directly or indirectly beneficially own (as such term is
defined for purposes of Section 13(d) of the Exchange Act) in excess of 9.9% of the
outstanding Shares. Any purported delivery hereunder shall be void and have no effect
to the extent (but only to the extent) that, after such delivery, JPMorgan would
directly or indirectly so beneficially own in excess of 9.9% of the outstanding Shares.
If any delivery owed to JPMorgan hereunder is not made, in whole or in part, as a
result of this provision, the Companys obligation to make such delivery shall not be
extinguished and the Company shall make such delivery as promptly as practicable after,
but in no event later than one Business Day after, JPMorgan gives notice to the Company
that, after such delivery, JPMorgan would not directly or indirectly so beneficially
own in excess of 9.9% of the outstanding Shares.(s)
    
    Share Deliveries. The Company acknowledges and agrees that, to the
extent the holder of this Warrant is not then an affiliate and has not been an
affiliate for 90 days (it being understood that JPMorgan will not be considered an
affiliate under this Section 9(r) solely by reason of its receipt of Shares pursuant to
this Transaction), and otherwise satisfies all holding period and other requirements of
Rule 144 of the Securities Act applicable to it, any delivery of Shares or Share
Termination Property hereunder at any time after 2 years from the Trade Date shall be
eligible for resale under Rule 144(k) of the Securities Act and the Company agrees to
promptly remove, or cause the transfer agent for such Shares or Share Termination
Property, to remove, any legends referring to any restrictions on resale under the
Securities Act from the Shares or Share Termination Property. The Company further
agrees, for any delivery of Shares or Share Termination Property hereunder at any time
after 1 year from the Trade Date but within 2 years of the Trade Date, to the to the
extent the holder of this Warrant then satisfies the holding period and other
requirements of Rule 144 of the Securities Act, to promptly remove, or cause the
transfer agent for such Restricted Share to remove, any legends referring to any such
restrictions or requirements from such Restricted Shares. Such Restricted Shares will
be de-legended upon delivery by JPMorgan (or such affiliate of JPMorgan) to the Company
or such transfer agent of customary sellers and brokers representation letters in
connection with resales of restricted securities pursuant to Rule 144 of the Securities
Act, without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by JPMorgan (or such affiliate of
JPMorgan). The Company further agrees that any delivery of Shares or Share Termination
Delivery Property prior to the date that is 1 year from the Trade Date, may be
transferred by and among JPMorgan and its affiliates and the Company shall effect such
transfer without any further action by JPMorgan. Notwithstanding anything to the
contrary herein, the Company agrees that any delivery of Shares or Share Termination
Delivery Property shall be effected by book-entry transfer through the facilities of
DTC, or any successor depositary, if at the time of delivery, such class of Shares or
class of Share Termination Delivery Property is in book-entry form at DTC or such
successor depositary. Notwithstanding anything to the contrary herein, to the extent
the provisions of Rule 144 of the Securities Act or any successor rule are amended, or
the applicable interpretation thereof by the Securities Exchange Commission or any
court change after the Trade Date, the agreements of the Company herein shall be deemed
modified to the extent necessary, in
the opinion of outside counsel of the Company, to comply with Rule 144 of the
Securities Act, including Rule 144(k) as in effect at the time of delivery of the
relevant Shares or Share Termination Property.
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(t)
    
    Governing Law. New York law (without reference to choice of law
doctrine).(u)
    
    Indemnification. Company agrees to indemnify and hold harmless
JPMorgan and its affiliates and their respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an Indemnified Person)
from and against any and all losses (including, without limitation, losses relating to
JPMorgans hedging or trading activities, losses relating to JPMorgans hedging
activities as a consequence of becoming, or of the risk of becoming, a Section 16
insider, any losses resulting from the operation of any ownership limitations
contained in the Charter and any losses in connection therewith with respect to this
Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorneys fees), joint or several, which an Indemnified Person may become
subject to, as a result of (i) Companys failure to publicly announce and disclose the
contents of any Repurchase Notice or Conversion Rate Adjustment Notice, as the case may
be, or (ii) Companys failure to provide JPMorgan with a Repurchase Notice on the day
and in the manner specified in Section 9(c); and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable legal or other
expenses incurred in connection with investigating, preparing for, providing testimony
or other evidence in connection with or defending any of the foregoing. If any suit,
action, proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against the Indemnified Person as a result of
Companys failure to publicly announce and disclose the contents of any Repurchase
Notice or Conversion Rate Adjustment Notice, as the case may be, such Indemnified
Person shall promptly notify Company in writing, and Company, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others Company may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Company shall not be liable for any settlement of any proceeding
contemplated by this subsection that is effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, Company
agrees to indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Company shall not, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or threatened
proceeding contemplated by this subsection that is in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter of
such proceeding on terms reasonably satisfactory to such Indemnified Person. If the
indemnification provided for in this subsection is unavailable to an Indemnified Person
or insufficient in respect of any losses, claims, damages or liabilities referred to
therein, then Company hereunder, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified Person
as a result of such losses, claims, damages or liabilities. The remedies provided for
in this subsection are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any Indemnified Party at law or in equity. The indemnity
and contribution agreements contained in this subsection shall remain operative and in
full force and effect regardless of the termination of this Transaction.(v)
    
    Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees, representatives, or
other agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to Company relating to
such tax treatment and tax structure.(w)
    
    Right to Extend. JPMorgan may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with respect to some or all
of the relevant Warrants (in which event the Calculation Agent shall make appropriate
adjustments to the Daily Number of Warrants with
respect to one or more Expiration Dates) if JPMorgan determines, in its commercially
reasonable judgment, that such extension is reasonably necessary or appropriate to
preserve JPMorgans hedging or hedge unwind activity hereunder in light of existing
liquidity conditions or to enable JPMorgan to effect purchases of Shares in
connection with its hedging, hedge unwind or
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settlement activity hereunder in a
manner that would, if JPMorgan were Issuer or an affiliated purchaser of Issuer, be
in compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to JPMorgan.(x)
    
    Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a securities contract and a swap agreement as defined in
the Bankruptcy Code (Title 11 of the United States Code) (the Bankruptcy Code), and
the parties hereto to be entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code; (b)
a partys right to liquidate the Transaction and to exercise any other remedies upon
the occurrence of any Event of Default under the Agreement with respect to the other
party to constitute a contractual right as described in the Bankruptcy Code; and (c)
each payment and delivery of cash, securities or other property hereunder to constitute
a margin payment or settlement payment and a transfer as defined in the
Bankruptcy Code..(y)
    
    Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.
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(212) 622 8519
  J.P. Morgan Securities Inc., as agent forJPMorgan Chase Bank, National AssociationBy:
    
    /s/ JEFF ZAJKOWSKIAuthorized SignatoryName: Jeff Zajkowski
 Accepted and confirmedas of the Trade Date:CapitalSource Inc.By:
    
    /s/ JEFFREY LIPSONAuthorized SignatoryName: Jeffrey Lipson
            Vice
President & Treasurer
 JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association.
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746. Registered
Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority