<PAGE>
                                                                    Exhibit 10.4



                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT



           This Agreement (this "Agreement") is made as of the 3rd day of April,
2002, between CAPITALSOURCE FINANCE LLC, a limited liability company formed
under the laws of the State of Delaware (the "Company") and the successor to
Streamline Finance LLC ("Streamline"), and Steven A. Museles (the "Employee").

           The Employee is currently employed as Senior Vice President and Chief
Legal Officer of the Company pursuant to the terms of an Employment Agreement
dated as of July 10, 2000 (the "Original Agreement") between Streamline and the
Employee.

           The Company is the successor to Streamline. The Company and the
Employee desire to amend and restate the Original Agreement as set forth in this
Agreement.

           NOW, THEREFORE, the parties agree as follows:

1.         DEFINITIONS.

           As used herein the following terms shall have the meaning specified
in this Section 1. Capitalized terms used but not defined herein shall have the
meanings specified in the CapitalSource Holdings Operating Agreement.

           (a) "Affiliate" means, collectively, CapitalSource Holdings, each
Subsidiary, and any Person that owns a controlling interest in the Company and
any successor thereto.

           (b) "Applicable Period" means the period of the Employee's employment
hereunder and continuing until the latest of (i) December 31, 2005, (ii) one
year after termination of his employment with the Company other than for Cause,
and (iii) one year after the end of the period with respect to which Employee is
receiving Base Salary under this Agreement. Notwithstanding the foregoing, the
Applicable Period shall terminate upon the termination of the Company's business
following its liquidation and dissolution (but shall not terminate if the
Company's business continues through a successor or otherwise), a "Voluntary
Dissolution".

           (c) "Area" means the United States.

           (d) "Base Salary" has the meaning set forth in Section 3(a)(i).

           (e) "Bonus Payment" has the meaning set forth in Section 3(a)(ii).

           (f) "Business of the Company" means the business of providing the
types of loans to and investments in small to mid-sized growth companies
described in Section V of the Business Plan attached as Exhibit B to the
CapitalSource Holdings Operating Agreement, using both a traditional and an
Internet origination and customer service platform, and any other material
business conducted by any of the CapitalSource Entities.


<PAGE>

           (g) "CapitalSource Entities" means, collectively, the Company and the
Affiliates and "CapitalSource Entity" means any of the CapitalSource Entities.

           (h) "CapitalSource Holdings" means CapitalSource Holdings LLC, a
Delaware limited liability company and the holder of 99.9% of the equity
interests in the Company.

           (i) "CapitalSource Holdings Operating Agreement" means the Operating
Agreement of CapitalSource Holdings dated as of September 7, 2000, by and among
the members thereof, as the same may be further amended or supplemented.

           (j) "Cause" means the occurrence of any of the following events:

               (i)     the Employee's conviction of or plea of nolo contenders
                       to a felony, (other than in connection with a traffic
                       violation) under any state or federal law; or

               (ii)    the Employee's material breach of this Agreement (as a
                       result of gross negligence or intentional acts) or the
                       Employee's commission of fraud or malfeasance relating to
                       any CapitalSource Entity or his duties;

           (k) a "Change in Control" shall be deemed to have occurred on the
date of (i) the acquisition, whether by merger, consolidation, recapitalization,
reorganization or sale or transfer of equity interests, by any Person (other
than a CapitalSource Entity) of beneficial ownership of 60% or more of the then
outstanding equity interests of the Company or CapitalSource Holdings, or (ii)
the sale or disposition of all or a substantial portion of the assets of the
Company or CapitalSource Holdings to any Person (other than a CapitalSource
Entity). Notwithstanding the foregoing, an IPO shall not be deemed a Change in
Control.

           (l) "Commencement Date" is defined in Section 4(a).

           (m) "Company Operating Agreement" means the Operating Agreement of
the Company dated as of September 7, 2000, by and among the members thereof, as
the same may be further amended or supplemented.

           (n) "Competing Business" means any Person which is engaged, directly
or indirectly in whole or as a material part of its business, in the Business of
the Company within the Area.

           (o) "Confidential Information" means all data, information relating
to the Business of the Company (which does not rise to the status of a Trade
Secret) which is or has been disclosed to the Employee or of which the Employee
became aware as a consequence of or through his relationship to the Company and
is not generally known to its competitors. Confidential Information shall not
include any data or information that has been voluntarily disclosed to the
public by the Company (except where such public disclosure has been made by the
Employee without authorization) or that has been independently developed and
disclosed by others, or that otherwise enters the public domain through lawful
means. The provisions in this Agreement



                                       2
<PAGE>

restricting the use of Confidential Information shall survive until three (3)
years after the end of the Applicable Period.

           (p) "Disability" means (i) the Employee has been declared incompetent
by the decree of a court having jurisdiction or (ii) upon the written opinion of
a physician reasonably acceptable to the Employee and the Manager that because
of illness, injury or other physical or mental disability, the Employee is
unable to reasonably perform his duties hereunder, and that such disability has
existed for a continuous period of at least six (6) months, or for any nine (9)
months during a period of eighteen (18) months.

           (q) "Good Reason" means (i) the Company, or any successor, shall
diminish Employee's duties and responsibilities at any time during the Term,
including by changing his title to one that would reasonably be understood to
have diminished duties or responsibilities; (ii) the Company requires Employee
to relocate more than 25 miles from Chevy Chase, Maryland; or (iii) the Company
breaches the terms of this Agreement in any material respect.

           (r) "IPO" means an underwritten public offering registered under the
Securities Act of 1933, as amended, by the Company or CapitalSource Holdings, or
a corporate successor to the Company or CapitalSource Holdings, of its equity
securities.

           (s) "Manager" means CapitalSource Holdings, in its capacity as the
sole manager of the Company, and its successors and assigns in such capacity.

           (t) "Person" means any individual, corporation, partnership,
co-tenancy, joint venture, business trust, unincorporated organization or
association, or any other legal entity, whether or not a party to this
Agreement.

           (u) "Subsidiary" means any corporation of which the Company or
CapitalSource Holdings owns securities having a majority of the ordinary voting
power in electing the board of directors, directly or through one or more
subsidiaries, and any partnership, limited liability company or other entity in
which the Company or CapitalSource Holdings owns a controlling interest,
directly or through one or more subsidiaries.

           (v) "Term" is defined in Section 4(a).

           (w) "Termination Date" means the date which corresponds to the first
to occur of

               (i)     the death or Disability of the Employee,

               (ii)    the last day of the Term as provided in Section 4(a), or

               (iii)   the date set forth in a notice of termination given
                       pursuant to Section 4(b) or 4(c).

           (x) "Trade Secrets" means information including, but not limited to,
technical or nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques,



                                       3
<PAGE>

drawings, processes, financial data, financial plans, product plans or lists of
actual or potential customers which

               (i)     derives economic value, actual or potential, from not
                       being generally known to, and not being readily
                       ascertainable by proper means by, other persons who can
                       obtain economic value from its disclosure or use,

               (ii)    is the subject of efforts that are reasonable under the
                       circumstances to maintain its secrecy, and

               (iii)   relates to the Business of the Company.

           (y) "Voluntary Dissolution" is defined in Section 1(b).

           (z) "Work" means a copyrightable work of authorship, including
without limitation, any technical descriptions for products, user's guides,
illustrations, advertising materials, computer programs (including the contents
of read only memories) and any contribution to such materials.

2.         TERMS AND CONDITIONS OF EMPLOYMENT.

           (a) Employment. The Company hereby employs the Employee as its Senior
Vice President and Chief Legal Officer, and the Employee accepts such employment
with the Company in such capacity. The Employee shall have such authority and
responsibilities as are typically held by the senior vice president and chief
legal officer of a commercial finance company, including the management of the
internal legal department

           (b) Exclusivity. Throughout the Employee's employment hereunder, the
Employee shall faithfully and industriously perform his duties at a level
reasonably expected of a Senior Vice President and Chief Legal Officer of a
commercial finance company, and shall diligently follow and implement all
management policies and decisions of the Company. The Employee shall devote all
of his time, energy and skill during regular business hours to the performance
of the duties of the Employee hereunder (vacations and reasonable absences due
to illness excepted).



                                       4
<PAGE>

3.         COMPENSATION

           (a) (i) Base Salary. In consideration for the Employee's services
hereunder, the Company shall pay to the Employee an annual base salary (the
"Base Salary") in the amount of $300,000 initially. The Employee's annual base
salary shall be reviewed at least annually by the Chief Executive Officer of the
Company, who may increase (but not decrease) the Employee's annual base salary
from time to time. The Company shall pay the annual base salary in accordance
with the normal payroll payment practices of the Company and subject to such
deductions and withholdings as law or policies of the Company, from time to time
in effect, require.

               (ii)    Bonus Payment. During the Term, the Employee shall be
eligible to receive for each calendar year an annual bonus (each, a "Bonus
Payment"), payable at the sole discretion of the Manager. In the event the
Manager determines to pay such bonus for any calendar year, such bonus shall in
no event be more than 100% of the Base Salary for such year and such bonus shall
be paid no later than the end of the first calendar quarter of such year. After
a Change of Control occurs, as long as the Employee continues to be employed by
the Company, he shall be paid an annual Bonus Payment of not less than 50% of
his Base Salary.

           (b) Vacation. The Employee shall be entitled to four weeks vacation
annually to be taken at times mutually convenient to the Company and the
Employee.

           (c) Expenses. The Employee shall be entitled to be reimbursed in
accordance with the policies of the Company, as adopted and amended from time to
time, for all reasonable and necessary expenses incurred by the Employee in
connection with the performance of the Employee's duties of employment
hereunder; provided, however, the Employee shall, as a condition of such
reimbursement, submit verification of the nature and amount of such expenses in
accordance with the reimbursement policies adopted by the Company from time to
time.

           (d) Disability Insurance. The Company shall provide and pay all costs
associated with disability insurance for the Employee from an insurance company
satisfactory to the Employee. The disability policy shall provide, to the extent
possible, for disability insurance payments to the Employee sufficient to
replace the Employee's Base Salary on an after-tax basis until the Employee
reaches age 65.

           (e) Benefits. In addition to the benefits payable to the Employee
specifically described herein, the Employee shall be entitled to such
non-compensatory benefits as generally may be made available to the Company's
senior officers from time to time; provided, however, that nothing contained
herein shall require the establishment or continuation of any particular plan or
program.

           (f) No Other Benefits. The Employee shall not be entitled to any
benefits or compensation from the Company other than those provided for herein.

           (g) Shares or Units. The Employee shall be entitled to receive
100,000 shares (or units) under the Company's stock participation program.
Notwithstanding anything in the stock



                                       5
<PAGE>

participation program to the contrary, such shares (or units) shall vest no
slower than 20% on the Commencement Date and an additional 20% on each of the
first four anniversary dates of the Commencement Date. Such shares (or units)
will be subject to a written buy-sell program (to be developed by the Company)
based on the fair value of such shares or units at the time of any purchase by
the Company (which fair value will be determined as set forth in the written
program), which will apply while the Company is a private company. Additionally,
the vesting of all such shares (or units) and all additional shares (or units)
granted to the Employee which have not yet vested shall accelerate (i) upon a
Change in Control and (ii) upon the expiration of the Term for any reason other
than for Cause pursuant to Section 4(b) of this Agreement, in which case all
shares (or units) then held by the Employee which have not yet vested will be
fully vested immediately.

4.         TERM, TERMINATION AND TERMINATION PAYMENTS.

           (a) Term. The term of this Agreement (the "Term") shall commence on
August 22, 2000 (the "Commencement Date") and shall expire on December 31, 2005,
with automatic extensions for successive additional one-year terms, as provided
herein. One hundred eighty (180) days before December 31, 2005, and one hundred
eighty (180) days before the end of each year thereafter, this Agreement will be
extended for an additional one-year period unless either party gives prior
written notice to the other of termination. In the event prior notice of
termination is given, this Agreement shall terminate at the end of the remaining
Term then in effect. In addition, the Term shall expire upon a Voluntary
Dissolution.

           (b) Effect of Termination for Cause, Voluntary Resignation or upon
Death or Disability of Employee. Upon termination of this Agreement and the
Employee's employment hereunder for Cause or upon Employee's voluntary
resignation without Good Reason, death or Disability, the CapitalSource Entities
shall have no further obligation to the Employee or the Employee's estate with
respect to this Agreement or the Employee's employment by the Company, except
for payment of Base Salary accrued pursuant to Section 3(a) hereof and unpaid at
the Termination Date, subject to the provisions of Section 10 hereof. Nothing
contained in this Agreement shall limit or impinge any other rights or remedies
of the Company or the Employee under any other agreement or plan to which the
Employee is or may be a party or of which the Employee is or may be a
beneficiary.

           (c) Effect of Termination Other than for Cause. In the event of a
termination by the Company other than for Cause, or by the Employee for Good
Reason, the Employee shall be entitled (1) to receive from the Company an amount
equal to two times his Base Salary at the rate then in effect plus $50,000
payable in a single lump sum on the Termination Date and (ii) to participate in
all pension, insurance and other benefit plan programs or arrangements on terms
identical to those applicable to other senior officers of the Company for one
year following the Termination Date; or if such benefit plan programs are not
available, the Company shall pay for Employee to obtain substantially similar
benefits from a third party of the economic value thereof. Further, all shares
(or units) granted to Employee that have not yet vested at the time of
termination other than for Cause shall immediately vest in full. Notwithstanding
the foregoing, if the termination other than for Cause is a termination by the
Employee for Good Reason in



                                       6
<PAGE>

connection with a Change in Control solely due to a change in Employee's title
but not his duties or responsibilities, Employee shall be entitled to receive
from the Company an amount equal to his Base Salary at the rate then in effect
plus $50,000, payable in a lump sum on the Termination Date.

           (d) Certain Additional Payments by the Company. (i) Except as set
forth below if it shall be determined that any payment or distribution by or for
the account of the Company to or for the benefit of Employee, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 4(d) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties,
collectively, the "Excise Tax"), then Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Employee of the Excise Tax and all other taxes (including, without limitation
income taxes) that are imposed on the Gross-Up Payment, Employee retains an
amount of the Gross-Up Payment equal to the Excise tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 4(d), if it
shall be determined that Employee is entitled to a Gross-Up Payment, but that
Employee, after taking into account the Payments and the Gross-Up Payment, would
not receive a net after-tax benefit of at least $50,000 (taking into account
both income taxes and any Excise Tax) as compared to the net after-tax proceeds
to Employee resulting from an elimination of the Gross-Up Payment and a
reduction of the Payments, in the aggregate, to an amount (the "Reduced Amount")
such that the receipt of Payments would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to Employee, the Payments, in the aggregate, made
to Employee shall not exceed the Reduced Amount, and Employee shall have the
right, in Employee's sole discretion, to designate those payments or benefits
that should be reduced or eliminated to satisfy such requirement.

               (ii)    Subject to the provisions of Section 4(d)(iii) all
determinations required to be made under this Section 4(d), including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the Company's independent, certified public accounting firm or such
other certified public accounting firm as may be designated by Employee and
shall be reasonably acceptable to the Company (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and Employee
within 15 business days of the receipt of notice from Employee that there has
been a Payment, or such earlier time as is requested by the Company. If the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a change in the ownership or effective control (as defined
for purposes of Section 280G of the Code) of the Company, Employee shall appoint
another nationally recognized accounting firm which is reasonably acceptable to
the Company to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 4(d), shall be paid by
the Company to Employee within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company



                                       7
<PAGE>

and Employee. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that additional Gross-Up Payments shall be required to
be made to compensate Employee for amounts of Excise Tax later determined to be
due, consistent with the calculations required to be made hereunder (an
"Underpayment"). If the Company exhausts its remedies pursuant to Section
4(d)(iii) and Employee is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Employee.

               (iii)   Employee shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after Employee is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Employee shall not pay
such claim prior to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Employee in writing prior to the expiration of such period that
they desire to contest such claim, Employee shall:

                       (A) give the Company any information reasonably requested
               by the Company relating to such claim,

                       (B) take such action in connection with contesting such
               claim as the Company shall reasonably request in writing from
               time to time, including, without limitation, accepting legal
               representation with respect to such claim by an attorney
               reasonably selected by the Company,

                       (C) cooperate with the Company in good faith effectively
               to contest such claim, and

                       (D) permit the Company to participate in any proceedings
               relating to such claim; provided, however, that the Company shall
               bear and pay directly all costs and expenses (including
               additional interest and penalties incurred in connection with
               such contest and shall indemnify and hold Employee harmless, on
               an after-tax basis, for any Excise Tax or income tax (including
               interest and penalties with respect thereto) imposed as a result
               of such representation and payment of costs and expenses.

               (iv)      Notwithstanding anything in this Section 4(d) to the
contrary, the Company shall only be obligated to pay a Gross-Up Payment to
Employee in an amount up to $200,000, to the extent any Gross-Up Payment shall
be required to be made hereunder.

5.         AGREEMENT NOT TO COMPETE.

           The Employee agrees that commencing on the Commencement Date and
continuing through the Applicable Period, he will not (except on behalf of or
with the prior written consent



                                       8
<PAGE>

of the Company, which consent may be withheld in Company's sole discretion),
within the Area (including by way of the Internet), either directly or
indirectly, on the Employee's own behalf, or in the service of or on behalf of
others, (i) own any interest in, participate in the ownership or management of,
or be compensated by, or consult for any Competing Business, or (ii) except as a
member of any law firm after the Termination Date, engage in or provide any
services to any Competing Business. Nothing in this Section 5 shall, however,
prohibit the Employee from owning five percent (5%) or less of the outstanding
securities of a Competing Business which securities are listed for trading on a
national securities exchange or NASDAQ. Notwithstanding anything in this
Agreement to the contrary, the Employee may participate in charitable, civic,
political, social, trade, or other non-profit organizations to the extent such
participation does not materially interfere with the performance of his duties
hereunder, and may serve as a nonmanagement director of business corporations
(or in a like capacity in other for-profit organizations) so long as it does not
materially interfere with the Employee's obligations hereunder.

6.         AGREEMENT NOT TO SOLICIT EMPLOYEES.

           The Employee agrees that commencing on the Commencement Date and
continuing through the Applicable Period, he will not, either directly or
indirectly, on the Employee's own behalf or in the service of or on behalf of
others, solicit, divert or hire, or attempt to solicit, divert or hire, any
person who is a full-time employee of any CapitalSource Entity; and, in
addition, that he will not hire any former full-time employee for the Employee's
business unless such person's employment with any of the CapitalSource Entities
has been terminated for at least six (6) months.

7.         OWNERSHIP AND PROTECTION OF PROPRIETARY INFORMATION.

           (a) Confidentiality. The Employee hereby assigns to the Company, and
hereby acknowledges and agrees to be the exclusive property of the Company, all
Confidential Information and Trade Secrets that have been received or have been
developed by him in connection with the CapitalSource Entities and their
respective businesses, including, but not limited to, the Business Plan and any
and all economic models, know-how and processes. All Confidential Information
and Trade Secrets and all physical embodiments thereof received or developed by
the Employee while employed by the Company are confidential to and are and will
remain the sole and exclusive property of the Company. Except to the extent
necessary to perform the duties assigned to him by the Company, the Employee
will hold such Confidential Information and Trade Secrets in trust and strictest
confidence, and will not use, reproduce, distribute, disclose or otherwise
disseminate the Confidential Information and Trade Secrets or any physical
embodiments thereof and may in no event take any action causing or fail to take
the action necessary in order to prevent, any Confidential Information and Trade
Secrets disclosed to or developed by the Employee to lose its character or cease
to qualify as Confidential Information or Trade Secrets.

           (b) Return of Company Property. Upon request by the Company, and in
any event upon termination of the employment of the Employee with the Company
for any reason, as a



                                       9
<PAGE>

prior condition to receiving any final compensation hereunder (including
payments pursuant to Section 4 hereof), the Employee will promptly deliver to
the Company all property belonging to the Company, including, without
limitation, all Confidential Information and Trade Secrets (and all embodiments
thereof) then in the Employee's custody, control or possession.

           (c) Survival. The covenants of confidentiality set forth herein will
apply on and after the date hereof to any Confidential Information and Trade
Secrets disclosed by the Company or developed by the Employee prior to or after
the date hereof. The covenants restricting the use and disclosure of
Confidential Information and Trade Secrets will continue and be maintained by
the Employee until three (3) years after the Applicable Period.

8.         COPYRIGHTS.

           (a) Ownership and Assignment. The Employee hereby assigns to the
Company, and hereby acknowledges and agrees to be the exclusive property of the
Company, all Works that have been developed by him in connection with the
CapitalSource Entities and their respective businesses, including, but not
limited to, the Business Plan and any and all economic models, know-how and
processes and acknowledges and agrees that such Works and any Works created by
the Employee in the course of his employment hereunder are subject to the "Work
for Hire" provisions contained in Sections 101 and 201 of the United States
Copyright Law, Title 17 of the United States Code, and that all right, title and
interest to copyrights in all Works which have been or will be prepared by the
Employee within the scope of his employment hereunder or his duties with respect
to any of the CapitalSource Entities shall be the property of the Company. The
Employee further acknowledges and agrees that, to the extent the Provisions of
Title 17 of the United States Code do not vest in the Company the copyrights to
any Works, the Employee will assign and hereby does assign to the Company all
right, title and interest to copyrights which the Employee may have in such
Works.

           (b) Registration. The Employee agrees to disclose to the Company all
Works referred to in the immediately preceding paragraph and execute and deliver
all applications for registration, registrations, and other documents relating
to the copyrights to the Works and provide such additional assistance, as the
Company may deem necessary and desirable to secure the Company's title to the
copyrights in the Works. The Company shall be responsible for all expenses
incurred in connection with the registration of all such copyrights.

9.         CONTRACTS OR OTHER AGREEMENTS WITH FORMER EMPLOYER OR BUSINESS.

           The Employee hereby represents and warrants that he is not subject to
any employment agreement or other document or arrangement, in each case,
affecting the ability of the Employee to provide his services exclusively to the
Company pursuant to this Agreement or restricting the ability of the Employee to
compete with any Person. The Employee's provision of services as contemplated
hereby would not breach any contract, agreement, judgment or order binding on
the Employee.



                                       10
<PAGE>

10.        REMEDIES.

           (a) The Employee agrees that the covenants and agreements contained
in Sections 5, 6, 7 and 8 hereof are of the essence of this Agreement; that each
of such covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company and the Business of the Company; that
the Company is engaged in and throughout the Area in the Business of the
Company; that the Employee has access to and knowledge of the Company's business
and financial plans; that irreparable loss and damage will be suffered by the
Company should the Employee breach any of such covenants and agreements; that
each of such covenants and agreements is separate, distinct and severable not
only from the other of such covenants and agreements but also from the other and
remaining provisions of this Agreement; that the unenforceability of any such
covenant or agreement shall not affect the validity or enforceability of any
other such covenant or agreements or any other provision or provisions of this
Agreement; and that, in recognition that money damages may not be an adequate
remedy to the Company, in addition to other remedies available to it, the
Company shall be entitled to specific performance of this Agreement and to both
temporary and permanent injunctions to prevent a breach or contemplated breach
by the Employee of any of such covenants or agreements, without the necessity of
posting a bond.

           (b) All rights of the Company and all remedies available to it shall
be enforced solely as directed by the Company and no extension, waiver,
amendment or consent of or under this Agreement shall be effective unless
approved by the Company.

           (c) Notwithstanding anything to the contrary in this Agreement, the
sole obligation of the Employee to the CapitalSource Entities under this
Agreement upon a termination of his employment pursuant to Section 4(c) shall be
to observe and comply with the provisions of Sections 6, 7 and 8 hereof and the
Employee shall not otherwise be liable to the CapitalSource Entities or their
members.

11.        NO SET-OFF.

           The existence of any claim, demand, action or cause of action by the
Employee against any CapitalSource Entity, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of any of its rights hereunder, The existence of any claim, demand,
action or cause of action by the Company against the Employee, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Employee of any of his rights hereunder.

12.        NOTICE.

           All notices, requests, demands and other communications required
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or if mailed, by United States certified or registered mail, prepaid
to the party to which the same is directed at the following addresses (or at
such other addresses as shall be given in writing by the parties to one
another):



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<PAGE>

           If to the Company:        CapitalSource Finance LLC
                                     c/o CapitalSource Holdings LLC
                                     4445 Willard Avenue
                                     12th Floor
                                     Chevy Chase, MD  20815
                                     Attn: Executive Manager

           If to the Employee:       Steven A. Museles
                                     7505 Arrowood Road
                                     Bethesda, MD 20817

           Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication that shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, confirmation of facsimile transmission or
the affidavit of messenger being deemed conclusive but not exclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.

13.        MISCELLANEOUS.

           (a) Assignment. Neither this Agreement nor any right of the parties
hereunder may be assigned or delegated by any party hereto without the prior
written consent of the other party.

           (b) Waiver. The waiver by the Company of any term of or the breach of
this Agreement by the Employee shall not be effective unless in writing, and no
such waiver shall constitute the waiver of the same or another breach on a
subsequent occasion.

           (c) Arbitration. Any controversy or claim arising out of or relating
to this contract, or the breach hereof, shall be promptly submitted to, and
determined by, a single arbitrator selected by the American Arbitration
Association, or by any other arbitrator mutually agreed upon by the Employee and
the Company. Such arbitration shall take place in Montgomery County, Maryland.
However, the provisions of this Subsection (c) shall not prevent the Company
from instituting an action under this Agreement for specific performance of this
Agreement or injunctive relief as provided in Section 10 hereof. In the event of
arbitration, the Company shall advance all expenses (including legal fees)
incurred by the Company or the Employee; provided that expenses advanced by the
Company to cover expenses incurred by the Employee shall be reimbursed by the
Employee if the Company prevails in the arbitration.

           (d) Indemnification. To the maximum extent permitted by law and the
Company's governing documents, the company shall indemnify, save and hold
Employee harmless from and against any an all claims and expenses, including,
but not limited to, attorneys', and experts' fees, arising out of or in
connection with Employee's duties under this Agreement.

           (e) Applicable Law. This Agreement shall be construed and enforced
under and in accordance with the laws of the State of Maryland.



                                       12
<PAGE>

           (f) Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto relating to the subject matter hereof and supersedes all oral
and all prior agreements.

           (g) Amendment. This Agreement may not be modified, amended,
supplemented or terminated except by a written instrument executed by the
parties hereto.

           (h) Severability. Each of the covenants and agreements hereinabove
contained shall be deemed separate, severable and independent covenants, and in
the event that any covenant shall be declared invalid by any court of competent
jurisdiction, such invalidity shall not in any manner affect or impair the
validity or enforceability of any other part or provision of such covenant or of
any other covenant contained herein.

           (i) Captions and Section Headings Except as set forth in Section 1
hereof, captions and section headings used herein are for convenience only and
are not a part of this Agreement and shall not be used in construing it.




                                       13
<PAGE>


           IN WITNESS WHEREOF, the Company and the Employee have each executed
and delivered this Agreement as of the date first shown above.


                                    THE COMPANY:

                                    CAPITALSOURCE FINANCE LLC

                                    By: /s/ John K. Delaney
                                       ----------------------------------------

                                    Title: Chairman and Chief Executive Officer
                                          -------------------------------------


                                    EMPLOYEE:

                                    Name: /s/ Steven A. Museles
                                         --------------------------------------
                                                 Steven A. Museles





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