Document:

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                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made as of the 7th day of September, 2000, between
CAPITALSOURCE HOLDINGS LLC, a limited liability company formed under the laws of
the State of Delaware (the "Company"), and JOHN K. DELANEY (the "Executive").

                                  INTRODUCTION

         The Company and the Executive desire to enter into an employment
agreement embodying the terms and conditions of the Executive's employment.

         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 Operating Agreement.

         (a)      "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including
the terms "controlling", "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and such "control"
will be presumed if any Person owns 10% or more of the voting capital stock or
other ownership interests, directly or indirectly, of any other Person.
Notwithstanding the generality of the foregoing, "Affiliate" shall include, with
respect to any Person, an "associate" of such Person (as such term is used and
defined in Rule 12b-2 of the regulations promulgated under the Securities
Exchange Act of 1934, as amended).

         (b)      "Applicable Period" means the period of the Executive's
employment hereunder and continuing until the latest of (i) December 28, 2002,
(ii) eighteen (18) months after the date on which Executive is no longer an
Executive Manager (within the meaning of the Operating Agreement), (iii)
eighteen (18) months after termination of his employment with the Company and
(iv) eighteen (18) months after the end of the period with respect to which
Executive is receiving base salary under this agreement. Notwithstanding the
foregoing, the Applicable Period shall terminate upon the earlier of (A)
termination of the Company's business or (B) six (6) months, in each case
following the election of the Majority-in-Interest of the Preferred Members to
liquidate and dissolve the Company under Section 5.2 of the Company's Operating
Agreement (but shall not terminate if the Company's business continues through a
successor or otherwise), each a "Voluntary Dissolution".

         (c)      "Area" means the United States.

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         (d)      "Board" means the Board of Managers of the Company.

         (e)      "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
Operating Agreement of the Company, using both a traditional and an Internet
origination and customer service platform, and any other material business
conducted by the Company or its subsidiaries from time to time.

         (f)      "CapitalSource Entities" means the Company and each of its
Subsidiaries.

         (g)      "Cause" means the occurrence of any of the following events
with respect to the Executive:

                  (i)      a conviction of or plea of nolo contendere to a
                           felony (other than in connection with a traffic
                           violation) or the commission of any other crime
                           involving dishonesty, disloyalty or fraud with
                           respect to the Company or any of its Subsidiaries,

                  (ii)     repeatedly reporting to work under the influence of
                           alcohol to the extent that he is unable to properly
                           perform his duties under this Agreement or the
                           Operating Agreement or other repeated conduct causing
                           the Company and its Subsidiaries repeated public
                           disgrace or disrepute,

                  (iii)    the use of illegal drugs (whether or not at the work
                           place),

                  (iv)     substantial, intentional and repeated failure to
                           perform the reasonable, legal and ethical directives
                           of the Board of Managers relating to his duties under
                           the Operating Agreement,

                  (v)      gross negligence or intentional misconduct with
                           respect to the Company or any of its Subsidiaries,

                  (vi)     an intentional and material breach of this Agreement
                           or the Operating Agreement,

                  (vii)    the existence after the Ramp Up Period for any twelve
                           (12) months in a twenty-four (24) month period of a
                           Delinquency Ratio in excess of 0.0525 and a Charge
                           Off Ratio in excess of 0.04, or

                  (viii)   he has become subject to a Disability.

         If the "Cause" is other than an event described in clauses (i), (vii)
or (viii) of this Section 1(f), the Executive shall first be given notice of
such event by the Board of Managers and allowed a reasonable opportunity to cure
the conduct stated as the Cause. Further, if an Executive disputes whether a
Cause has occurred, such dispute 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 Executive Manager and the Board
of Managers, and the determination of the arbitrator shall be binding upon the
Executive and the Company.

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Any expense (including legal fees) in connection with such arbitration incurred
by the Executive or the Company shall be advanced by the Company; provided,
however, that expenses advanced by the Company to cover expenses of the
Executive shall be reimbursed by the Executive if the Company prevails in the
arbitration. Upon request of the Board of Managers, the Executive shall subject
himself to a physical examination by a physician reasonably acceptable to the
Executive for the purpose of determining whether or not the Executive has become
subject to a Disability.

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

         (i)      "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, including, without limitation, any
broad-based commercial finance business; provided, however, that with respect to
actions the Executive may take after the effective date of his termination or
resignation under this Agreement, "Competing Business" shall not include any
Person if at least 67% of the aggregate asset value of such Person (determined
on a book basis under GAAP) consists of loans to and investments in companies in
the health care industry.

         (j)      "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 Executive or of which the
Executive became aware as a consequence of or through his relationship to the
Company. 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 Executive 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
restricting the use of Confidential Information shall survive until three (3)
years after the end of the Applicable Period.

         (k)      "Disability" means (i) the Executive 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 Executive and the
Board of Managers of the Company that because of illness, injury or other
physical or mental disability, the Executive is unable to reasonably perform his
duties hereunder or under either Operating Agreement, 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.

         (l)      "Members" means the parties to the Operating Agreement.

         (m)      "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)      "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.

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

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

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                  (i)      the death or Disability of the Executive,

                  (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).

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

                  (ii)     relates to the business of the Company.

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

         (s)      "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 Executive as its
Executive Manager and Chief Executive Officer, and the Executive accepts such
employment with the Company in such capacity. The Executive shall have such
authority and responsibilities and perform such dudes as are provided in the
Operating Agreement for a Chief Executive Officer and any other offices held by
the Executive.

         (b)      Exclusivity. Throughout the Executive's employment hereunder,
the Executive shall faithfully and industriously perform his duties hereunder
and under the Operating Agreement, and shall diligently follow and implement all
management policies and decisions of the Company. The Executive shall devote
substantially all of his time, energy and skill during regular business hours to
the performance of the duties of the Executive hereunder (vacations and
reasonable absences due to illness excepted); provided, however, that this
Agreement shall not prohibit the Executive from performing his other current
business obligations disclosed on Schedule 1 attached hereto to the extent they
do not materially interfere with the performance of his duties to the
CapitalSource Entities (collectively, "Permitted Activities").

3.       COMPENSATION.

         (a)      (i) Base Salary. In consideration for the Executive's services
hereunder, the Company shall pay to the Executive an annual base salary in the
amount of $400,000. The Executive's annual base salary shall be reviewed at
least annually by the Board of Managers (excluding the Executive Managers or
their appointees or representatives), who may increase

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(but not decrease) the Executive'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. At the time the annual audited financial
statements are distributed pursuant to Section 15.2(b) of the Operating
Agreement, the Company shall pay an annual bonus (each, a "Bonus Payment") in an
amount equal to ten percent (10%) of the Company's Profits attributable to such
Fiscal Year, subject to the maximum amounts provided for in this Section. If the
Company's Profits attributable to the applicable Fiscal Year are equal to
$70,000,000 or less, the Bonus Payment paid to the Executive for such Fiscal
Year shall not exceed $1,000,000; if the Company's Profits attributable to the
applicable Fiscal Year exceed $70,000,000, the Bonus Payment paid to the
Executive for such Fiscal Year shall not exceed $2,000,000. The Board of
Managers shall have ten (10) days to review the audited consolidated financial
statements of the Company for such Fiscal Year prior to payment of the Bonus
Payment. Bonus Payments shall be treated as a Company Expense and not as a
Distribution pursuant to Section 10 of the Operating Agreement. For the purposes
of this Section 3(a)(ii), "Profits" shall be defined as all Company income,
profits and gains net of all expenses, deductions and costs before federal state
and local income taxes, and before any charge for the Bonus Payment to the
Executive and the similar bonus payment to any other Executive Manager of the
Company, determined in compliance with generally accepted accounting principles.
The Company's obligation to make any Bonus Payment under this Section 3(a)(ii)
shall expire upon an IPO.

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

         (c)      Expenses. The Executive 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 Executive in
connection with the performance of the Executive's duties of employment
hereunder; provided, however, the Executive 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)      Life Insurance. As soon as practicable after the date hereof,
the Company shall obtain a two-year term life insurance policy insuring the life
of the Executive from an insurance company reasonably satisfactory to the
Executive which policy shall provide for a death benefit of at least
$10,000,000; provided that such life insurance policy shall not cost more than
$10,000 per year. The Company shall maintain such policy for a period of three
years and pay all of the premiums with respect to such policy during the Term,
with a right of the Executive to continue the policy in force by assuming the
obligation to pay the premiums and to purchase the policy for its cash surrender
value, if any. The Executive shall be entitled to name the beneficiary or
beneficiaries of such life insurance policy. The Executive shall cooperate with
the Company to provide all information necessary to obtain such policy and shall
make himself available for any medical examinations required by the insurance
company providing such policy.

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         (e)      Disability Insurance. The Company shall provide and pay all
costs associated with disability insurance for the Executive from an insurance
company satisfactory to the Executive; provided that such disability insurance
(including his allocable share of group disability insurance) shall not cost
more than $5,500 per year. The disability policy shall provide, to the extent
possible, for disability insurance payments to the Executive sufficient to
replace the Executive's Base Salary on an after-tax basis until the Executive
reaches age 65.

         (f)      Benefits. In addition to the benefits payable to the Executive
specifically described herein, the Executive shall be entitled to such
non-compensatory benefits as generally may be made available to substantially
all other employees of the Company from time to time; provided, however, that
nothing contained herein shall require the establishment or continuation of any
particular plan or program.

         (g)      The Executive shall not be entitled to any benefits or
compensation from the Company other than those provided for herein.

4.       TERM, TERMINATION AND TERMINATION PAYMENTS.

         (a)      Term. The term of this Agreement (the "Term") shall commence
on September 7, 2000 (the "Commencement Date") and shall expire on June 28, 2005
with automatic extensions for successive additional one-year terms, as provided
herein. Ninety (90) days prior to June 28, 2005, and ninety (90) days before the
end of each year thereafter, the Agreement is extended for an additional
one-year period unless either party gives prior notice 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)      Termination. The Executive's employment by the Company
hereunder may only be terminated before expiration of the Term:

                  (i)      by mutual agreement of the Executive and the Company;

                  (ii)     by the Executive upon resignation by the Executive as
                           an Executive Manager of the Company as provided in
                           Section 13.1 of the Operating Agreement of the
                           Company; or

                  (iii)    by the Company for Cause; or

                  (iv)     upon the death of the Executive.

Notice of termination by either the Company or the Executive shall be given in
writing and shall specify the basis for termination and the effective date of
termination; provided, however, that if the Company does not specify an
effective date of termination under Section 4(b)(iii), termination shall be
immediate.

         (c)      Effect of Termination. Upon termination of this Agreement and
the Executive's employment hereunder, the CapitalSource Entities shall have no
further obligation to the Executive or the Executive's estate with respect to
this Agreement or the Executive's employment by the Company, except for payment
of salary accrued pursuant to Section 3(a)

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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 Executive under any other agreement or
plan to which the Executive is or may be a party or of which the Executive is or
may be a beneficiary.

5.     AGREEMENT NOT TO COMPETE.

         Except with respect to Permitted Activities, the Executive 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 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 Executive'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) engage in or provide any
services to any Competing Business. Nothing in this Section 5 shall, however,
prohibit the Executive 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 on NASDAQ.

6.       AGREEMENT NOT TO SOLICIT EMPLOYEES.

         The Executive agrees that commencing on the Commencement Date and
continuing through the Applicable Period, he will not, either directly or
indirectly, on the Executive'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 so hire any former full-time employee for the
Executive'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 Executive 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 or other embodiments thereof received or
developed by the Executive while employed by the Company or acting as an
Executive Manager of any CapitalSource Entity 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 Executive
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 Executive to lose its character or
cease to qualify as Confidential Information or Trade Secrets.

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         (b)      Return of Company Property. Upon request by the Company, and
in any event upon termination of the employment of the Executive with the
Company for any reason, as a prior condition to receiving any final compensation
hereunder (including payments pursuant to Section 4(d) hereof), the Executive
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 Executive'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 Executive 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 Executive until three (3) years after the Applicable Period.

8.       COPYRIGHTS.

         (a)      Ownership and Assignment. The Executive 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 Executive 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
Executive within the scope of his employment hereunder or his duties as a
Manager of any of the CapitalSource Entities shall be the property of the
Company. The Executive 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 Executive will assign and hereby does assign to the
Company all right, title and interest to copyrights which the Executive may have
in such Works.

         (b)      Registration. The Executive 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 Executive hereby represents and warrants that (A) he is not subject
to any employment agreement or other document or arrangement (affecting the
ability of the Executive to provide his services exclusively to the Company
pursuant to this Agreement or restricting the ability of the Executive to
compete with any Person) except those listed on Schedule 2 hereto, a true copy
of each of which has been delivered previously to the Combined Members
Representative and (B) the Executive's provision of services as contemplated
hereby and by the Operating Agreement (and the Exhibits and Schedules attached
thereto) will not breach any

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contract, agreement, judgment or order binding on the Executive, including those
listed on Schedule 2 attached hereto.

10.      REMEDIES.

         (a)      The Executive 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 Executive 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 Executive 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 Executive 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 Board of Managers (excluding John K.
Delaney and Jason M. Fish) and no extension, waiver, amendment or consent of or
under this Agreement shall be effective unless approved by the Board of Managers
(excluding John K. Delaney and Jason M. Fish).

         (c)      Notwithstanding anything to the contrary in this Agreement,
the sole obligation of the Executive to the CapitalSource Entities under this
Agreement upon a termination of his employment pursuant to Section 4(b)(ii)
shall be to observe and comply with the provisions of Sections 5, 6, 7 and 8
hereof and the Executive 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
Executive against the Company, or any Affiliate of the Company, 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
Executive, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Executive 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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         If to the Company:         The Board of Managers
                                    CapitalSource Holdings LLC
                                    1133 Connecticut Avenue, N.W.
                                    Suite 310
                                    Washington, DC 20036

         If to the Executive:       John K. Delaney
                                    CapitalSource Holdings LLC
                                    1133 Connecticut Avenue, N.W.
                                    Suite 310
                                    Washington, DC 20036

Notices delivered in person shall be effective on the date of delivery. Notices
delivered by mail as aforesaid shall be effective upon the third calendar day
subsequent to the postmark date hereof.

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; provided that this Agreement may be
assigned by the Company (provided the Board of Managers has so approved) to a
subsidiary or a corporate successor to the Company or one of its Subsidiaries.

         (b)      Waiver. The waiver by the Company of any term of or the breach
of this Agreement by the Executive 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 Executive
and the Company. Such arbitration shall take place in Washington, DC. 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 Executive; provided that expenses advanced by the
Company to cover expenses incurred by the Executive shall be reimbursed by the
Executive if the Company prevails in the arbitration.

         (d)      Applicable Law. This Agreement shall be construed and enforced
under and in accordance with the laws of Washington, DC.

         (e)      Entire Agreement. This Agreement and the Operating Agreement
embody the entire agreement of the parties hereto relating to the subject matter
hereof and supersede all oral and all prior agreements.

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

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         (g)      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.

         (h)      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.

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

                                   THE COMPANY:

                                   CAPITALSOURCE HOLDINGS LLC

                                   By: /s/ Jason M. Fish
                                       ------------------------------------
                                       Jason M. Fish
                                       Executive Manager

                                   EXECUTIVE

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

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                                   SCHEDULE 1

                              PERMITTED ACTIVITIES

         (a)      Executive Officer and Member of the Board of Directors of
                  HealthCare Financial Partners REIT, Inc.

         (b)      Member of the Board of Directors of USAsia Telecom, LLC

<PAGE>

                                   SCHEDULE 2

Employment Agreement with HealthCare Financial Partners, Inc., dated January l,
1999, and as further amended by (i) the terms of Attachment 5.2 to the
Disclosure Schedule to the Agreement and Plan of Merger by and among HealthCare
Financial Partners, Inc., Heller Financial, Inc. and HF5, Inc. dated as of April
19, 1999, and (ii) letter agreement with Heller Financial, Inc. dated May 10,
2000, copies of which are attached hereto as Exhibit A.<PAGE>

                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made as of the 7th day of September, 2000, between
CAPITALSOURCE HOLDINGS LLC, a limited liability company formed under the laws of
the State of Delaware (the "Company"), and JASON M. FISH (the "Executive").

                                  INTRODUCTION

         The Company and the Executive desire to enter into an employment
agreement embodying the terms and conditions of the Executive's employment.

         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 Operating Agreement.

         (a)      "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including
the terms "controlling", "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and such "control"
will be presumed if any Person owns 10% or more of the voting capital stock or
other ownership interests, directly or indirectly, of any other Person.
Notwithstanding the generality of the foregoing, "Affiliate" shall include, with
respect to any Person, an "associate" of such Person (as such term is used and
defined in Rule 12b-2 of the regulations promulgated under the Securities
Exchange Act of 1934, as amended).

         (b)      "Applicable Period" means the period of the Executive's
employment hereunder and continuing until the latest of (i) December 28, 2002,
(ii) eighteen (18) months after the date on which Executive is no longer an
Executive Manager (within the meaning of the Operating Agreement), (iii)
eighteen (18) months after termination of his employment with the Company and
(iv) eighteen (18) months after the end of the period with respect to which
Executive is receiving base salary under this agreement. Notwithstanding the
foregoing, the Applicable Period shall terminate upon the earlier of (A)
termination of the Company's business or (B) six (6) months, in each case
following the election of the Majority-in-Interest of the Preferred Members to
liquidate and dissolve the Company under Section 5.2 of the Company's Operating
Agreement (but shall not terminate if the Company's business continues through a
successor or otherwise), each a "Voluntary Dissolution".

         (c)      "Area" means the United States.

<PAGE>

         (d)      "Board" means the Board of Managers of the Company.

         (e)      "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
Operating Agreement of the Company, using both a traditional and an Internet
origination and customer service platform, and any other material business
conducted by the Company or its subsidiaries from time to time.

         (f)      "CapitalSource Entities" means the Company and each of its
Subsidiaries.

         (g)      "Cause" means the occurrence of any of the following events
with respect to the Executive:

                  (i)      a conviction of or plea of nolo contendere to a
                           felony (other than in connection with a traffic
                           violation) or the commission of any other crime
                           involving dishonesty, disloyalty or fraud with
                           respect to the Company or any of its Subsidiaries,

                  (ii)     repeatedly reporting to work under the influence of
                           alcohol to the extent that he is unable to properly
                           perform his duties under this Agreement or the
                           Operating Agreement or other repeated conduct causing
                           the Company and its Subsidiaries repeated public
                           disgrace or disrepute,

                  (iii)    the use of illegal drugs (whether or not at the work
                           place),

                  (iv)     substantial, intentional and repeated failure to
                           perform the reasonable, legal and ethical directives
                           of the Board of Managers relating to his duties under
                           the Operating Agreement,

                  (v)      gross negligence or intentional misconduct with
                           respect to the Company or any of its Subsidiaries,

                  (vi)     an intentional and material breach of this Agreement
                           or the Operating Agreement,

                  (vii)    the existence after the Ramp Up Period for any twelve
                           (12) months in a twenty-four (24) month period of a
                           Delinquency Ratio in excess of 0.0525 and a Charge
                           Off Ratio in excess of 0.04, or

                  (viii)   he has become subject to a Disability.

         If the "Cause" is other than an event described in clauses (i), (vii)
or (viii) of this Section 1(f), the Executive shall first be given notice of
such event by the Board of Managers and allowed a reasonable opportunity to cure
the conduct stated as the Cause. Further, if an Executive disputes whether a
Cause has occurred, such dispute 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 Executive Manager and the Board
of Managers, and the determination of the arbitrator shall be binding upon the
Executive and the Company.

                                        2

<PAGE>

Any expense (including legal fees) in connection with such arbitration incurred
by the Executive or the Company shall be advanced by the Company; provided,
however, that expenses advanced by the Company to cover expenses of the
Executive shall be reimbursed by the Executive if the Company prevails in the
arbitration. Upon request of the Board of Managers, the Executive shall subject
himself to a physical examination by a physician reasonably acceptable to the
Executive for the purpose of determining whether or not the Executive has become
subject to a Disability.

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

         (i)      "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, including, without limitation, any
broad-based commercial finance business; provided, however, that with respect to
actions the Executive may take after the effective date of his termination or
resignation under this Agreement, "Competing Business" shall not include any
Person if at least 67% of the aggregate asset value of such Person (determined
on a book basis under GAAP) consists of loans to and investments in companies in
the real estate industry.

         (j)      "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 Executive or of which the
Executive became aware as a consequence of or through his relationship to the
Company. 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 Executive 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
restricting the use of Confidential Information shall survive until three (3)
years after the end of the Applicable Period.

         (k)      "Disability" means (i) the Executive 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 Executive and the
Board of Managers of the Company that because of illness, injury or other
physical or mental disability, the Executive is unable to reasonably perform his
duties hereunder or under either Operating Agreement, 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.

         (1)      "Members" means the parties to the Operating Agreement.

         (m)      "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)      "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.

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

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

                                        3

<PAGE>

                  (i)      the death or Disability of the Executive,

                  (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).

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

                  (ii)     relates to the business of the Company.

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

         (s)      "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 Executive as its
Executive Manager and President, and the Executive accepts such employment with
the Company in such capacity. The Executive shall have such authority and
responsibilities and perform such duties as are provided in the Operating
Agreement for a President and any other offices held by the Executive.

         (b)      Exclusivity. Throughout the Executive's employment hereunder,
the Executive shall faithfully and industriously perform his duties hereunder
and under the Operating Agreement, and shall diligently follow and implement all
management policies and decisions of the Company. The Executive shall devote
substantially all of his time, energy and skill during regular business hours to
the performance of the duties of the Executive hereunder (vacations and
reasonable absences due to illness excepted); provided, however, that this
Agreement shall not prohibit the Executive from performing his other current
business obligations disclosed on Schedule 1 attached hereto to the extent they
do not materially interfere with the performance of his duties to the
CapitalSource Entities (collectively, "Permitted Activities").

3.       COMPENSATION.

         (a)      (i) Base Salary. In consideration for the Executive's services
hereunder, the Company shall pay to the Executive an annual base salary in the
amount of $400,000. The Executive's annual base salary shall be reviewed at
least annually by the Board of Managers (excluding the Executive Managers or
their appointees or representatives), who may increase

                                        4

<PAGE>

(but not decrease) the Executive'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. At the time the annual audited financial
statements are distributed pursuant to Section 15.2(b) of the Operating
Agreement, the Company shall pay an annual bonus (each, a "Bonus Payment") in an
amount equal to ten percent (10%) of the Company's Profits attributable to such
Fiscal Year, subject to the maximum amounts provided for in this Section. If the
Company's Profits attributable to the applicable Fiscal Year are equal to
$70,000,000 or less, the Bonus Payment paid to the Executive for such Fiscal
Year shall not exceed $1,000,000, if the Company's Profits attributable to the
applicable Fiscal Year exceed $70,000,000, the Bonus Payment paid to the
Executive for such Fiscal Year shall not exceed $2,000,000. The Board of
Managers shall have ten (10) days to review the audited consolidated financial
statements of the Company for such Fiscal Year prior to payment of the Bonus
Payment. Bonus Payments shall be treated as a Company Expense and not as a
Distribution pursuant to Section 10 of the Operating Agreement. For the purposes
of this Section 3(a)(ii), "Profits" shall be defined as all Company income,
profits and gains net of all expenses, deductions and costs before federal state
and local income taxes, and before any charge for the Bonus Payment to the
Executive and the similar bonus payment to any other Executive Manager of the
Company, determined in compliance with generally accepted accounting principles.
The Company's obligation to make any Bonus Payment under this Section 3(a)(ii)
shall expire upon an IPO.

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

         (c)      Expenses. The Executive 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 Executive in
connection with the performance of the Executive's duties of employment
hereunder; provided, however, the Executive 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)      Life Insurance. As soon as practicable after the date hereof,
the Company shall obtain a two-year term life insurance policy insuring the life
of the Executive from an insurance company reasonably satisfactory to the
Executive which policy shall provide for a death benefit of at least
$10,000,000; provided that such life insurance policy shall not cost more than
$10,000 per year. The Company shall maintain such policy for a period of three
years and pay all of the premiums with respect to such policy during the Term,
with a right of the Executive to continue the policy in force by assuming the
obligation to pay the premiums and to purchase the policy for its cash surrender
value, if any. The Executive shall be entitled to name the beneficiary or
beneficiaries of such life insurance policy. The Executive shall cooperate with
the Company to provide all information necessary to obtain such policy and shall
make himself available for any medical examinations required by the insurance
company providing such policy.

                                        5

<PAGE>

         (e)      Disability Insurance. The Company shall provide and pay all
costs associated with disability insurance for the Executive from an insurance
company satisfactory to the Executive; provided that such disability insurance
(including his allocable share of group disability insurance) shall not cost
more than $5,500 per year. The disability policy shall provide, to the extent
possible, for disability insurance payments to the Executive sufficient to
replace the Executive's Base Salary on an after-tax basis until the Executive
reaches age 65.

         (f)      Benefits. In addition to the benefits payable to the Executive
specifically described herein, the Executive shall be entitled to such
non-compensatory benefits as generally may be made available to substantially
all other employees of the Company from time to time; provided, however, that
nothing contained herein shall require the establishment or continuation of any
particular plan or program.

         (g)      The Executive shall not be entitled to any benefits or
compensation from the Company other than those provided for herein.

4.       TERM, TERMINATION AND TERMINATION PAYMENTS.

         (a)      Term. The term of this Agreement (the "Term") shall commence
on September 7, 2000 (the "Commencement Date") and shall expire on June 28, 2005
with automatic extensions for successive additional one-year terms, as provided
herein. Ninety (90) days prior to June 28, 2005, and ninety (90) days before the
end of each year thereafter, the Agreement is extended for an additional
one-year period unless either party gives prior notice 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)      Termination. The Executive's employment by the Company
hereunder may only be terminated before expiration of the Term:

                  (i)      by mutual agreement of the Executive and the Company;

                  (ii)     by the Executive upon resignation by the Executive as
                           an Executive Manager of the Company as provided in
                           Section 13.1 of the Operating Agreement of the
                           Company; or

                  (iii)    by the Company for Cause; or

                  (iv)     upon the death of the Executive.

Notice of termination by either the Company or the Executive shall be given in
writing and shall specify the basis for termination and the effective date of
termination; provided, however, that if the Company does not specify an
effective date of termination under Section 4(b)(iii), termination shall be
immediate.

         (c)      Effect of Termination. Upon termination of this Agreement and
the Executive's employment hereunder, the CapitalSource Entities shall have no
further obligation to the Executive or the Executive's estate with respect to
this Agreement or the Executive's employment by the Company, except for payment
of salary accrued pursuant to Section 3(a)

                                        6

<PAGE>

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 Executive under any other agreement or
plan to which the Executive is or may be a party or of which the Executive is or
may be a beneficiary.

5.       AGREEMENT NOT TO COMPETE.

         Except with respect to Permitted Activities, the Executive 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 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 Executive'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) engage in or
provide any services to any Competing Business. Nothing in this Section 5 shall,
however, prohibit the Executive 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 on NASDAQ.

6.       AGREEMENT NOT TO SOLICIT EMPLOYEES.

         The Executive agrees that commencing on the Commencement Date and
continuing through the Applicable Period, he will not, either directly or
indirectly, on the Executive'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 so hire any former full-time employee for the
Executive'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 Executive 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 or other embodiments thereof received or
developed by the Executive while employed by the Company or acting as an
Executive Manager of any CapitalSource Entity 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 Executive
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 Executive to lose its character or
cease to qualify as Confidential Information or Trade Secrets.

                                        7

<PAGE>

         (b)      Return of Company Property. Upon request by the Company, and
in any event upon termination of the employment of the Executive with the
Company for any reason, as a prior condition to receiving any final compensation
hereunder (including payments pursuant to Section 4(d) hereof), the Executive
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 Executive'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 Executive 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 Executive until three (3) years after the Applicable Period.

8.       COPYRIGHTS.

         (a)      Ownership and Assignment. The Executive 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 Executive 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
Executive within the scope of his employment hereunder or his duties as a
Manager of any of the CapitalSource Entities shall be the property of the
Company. The Executive 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 Executive will assign and hereby does assign to the
Company all right, title and interest to copyrights which the Executive may have
in such Works.

         (b)      Registration. The Executive 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 Executive hereby represents and warrants that (A) he is not subject
to any employment agreement or other document or arrangement (affecting the
ability of the Executive to provide his services exclusively to the Company
pursuant to this Agreement or restricting the ability of the Executive to
compete with any Person) except those listed on Schedule 2 hereto, a true copy
of each of which has been delivered previously to the Combined Members
Representative and (B) the Executive's provision of services as contemplated
hereby and by the Operating Agreement (and the Exhibits and Schedules attached
thereto) will not breach any

                                        8

<PAGE>

contract, agreement, judgment or order binding on the Executive, including those
listed on Schedule 2 attached hereto.

10.      REMEDIES.

         (a)      The Executive 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 Executive 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 Executive 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 Executive 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 Board of Managers (excluding John K.
Delaney and Jason M. Fish) and no extension, waiver, amendment or consent of or
under this Agreement shall be effective unless approved by the Board of Managers
(excluding John K. Delaney and Jason M. Fish).

         (c)      Notwithstanding anything to the contrary in this Agreement,
the sole obligation of the Executive to the CapitalSource Entities under this
Agreement upon a termination of his employment pursuant to Section 4(b)(ii)
shall be to observe and comply with the provisions of Sections 5, 6, 7 and 8
hereof and the Executive 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
Executive against the Company, or any Affiliate of the Company, 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
Executive, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Executive 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):

                                        9

<PAGE>

         If to the Company:        The Board of Managers
                                   CapitalSource Holdings LLC
                                   1133 Connecticut Avenue, N.W.
                                   Suite 310
                                   Washington, DC 20036

         If to the Executive:      Jason M. Fish
                                   CapitalSource Holdings LLC
                                   One Maritime Plaza, Suite 1355
                                   San Francisco, CA 94111

Notices delivered in person shall be effective on the date of delivery. Notices
delivered by mail as aforesaid shall be effective upon the third calendar day
subsequent to the postmark date hereof.

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; provided that this Agreement may be
assigned by the Company (provided the Board of Managers has so approved) to a
subsidiary or a corporate successor to the Company or one of its Subsidiaries.

         (b)      Waiver. The waiver by the Company of any term of or the breach
of this Agreement by the Executive 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 Executive
and the Company. Such arbitration shall take place in San Francisco, CA.
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 Executive; provided that expenses advanced by the
Company to cover expenses incurred by the Executive shall be reimbursed by the
Executive if the Company prevails in the arbitration.

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

         (e)      Entire Agreement. This Agreement and the Operating Agreement
embody the entire agreement of the parties hereto relating to the subject matter
hereof and supersede all oral and all prior agreements.

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

                                       10

<PAGE>

         (g)      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.

         (h)      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.

                                       11

<PAGE>

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

                                   THE COMPANY:

                                   CAPITAL SOURCE HOLDINGS LLC

                                   By: /s/ John K. Delaney
                                       -----------------------------------
                                       John K. Delaney
                                       Chief Executive Officer

                                   EXECUTIVE

                                   Name: /s/ Jason M. Fish
                                         ---------------------------------
                                         Jason M. Fish

                                       12

<PAGE>

                                   SCHEDULE 1

                              PERMITTED ACTIVITIES

         (a)      Member of the Board of Directors of Gardenburger, Inc.

         (b)      Member of the Board of Directors of Town Sports International,
                  Inc.

         (c)      As required by the Binding Term Sheet among Farallon Capital
                  Management, L.L.C., Farallon Partners, L.L.C. and Jason M.
                  Fish, as amended by letter agreement dated August 3, 2000,
                  copies of which are attached hereto as Exhibit A.

<PAGE>

                                   SCHEDULE 2

         None.

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