Document:

Exhibit 10.16

 Exhibit 10.16 
 CAPITALSOURCE INC. 
 AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

 This Amended and Restated CapitalSource Inc. Deferred Compensation Plan (the “Plan”) is adopted by
CapitalSource Inc., a Delaware corporation (“CapitalSource”), for the purpose of providing a deferred compensation arrangement to officers and to directors of the Company who are not also employees of the Company (“non-employee
directors”) and their beneficiaries in consideration of services rendered to the Company and as an inducement for their continued services in the future. The Plan was first effective November 26, 2003, and was subsequently amended
March 11, 2004. The Plan was amended and restated on each of January 31, 2005, July 31, 2007, August 8, 2008 and July 28, 2010. This amendment and restatement of the Plan is effective October 26, 2011.

 ARTICLE I: DEFINITIONS 
 Whenever used herein, the masculine pronoun shall be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following definitions
shall govern the Plan: 
  

	1.1.	“Account” means the book entry account established under the Plan for each Participant (i) to which shall be credited such amounts as the Company shall
determine and the Participant’s Credited Investment Return (Loss) determined under Article IV and (ii) which shall be reduced by any distributions made to a Participant. 

 

	1.2.	“Beneficiary” those persons, trusts or other entities entitled to receive Benefits which may be payable hereunder upon a Participant’s death as
determined under Article VI. 

  

	1.3.	“Benefits” means the amounts credited to a Participant’s Account pursuant to such Participant’s Deferred Compensation Agreements, plus or minus all
Credited Investment Return (Loss). 

  

	1.4.	“Board of Directors” or “Board” means the Board of Directors of CapitalSource Inc. 

 

	1.5.	 “Change of Control” means (i) the dissolution or liquidation of CapitalSource or a merger, consolidation, or reorganization of
CapitalSource with one or more other entities in which CapitalSource is not the surviving entity, (ii) a sale of substantially all of the assets of CapitalSource to another person or entity, or (iii) any transaction (including without
limitation a merger or reorganization in which CapitalSource is the surviving entity) which results in any person or entity owning 50% or more of the combined voting power of all classes of Shares of CapitalSource or its successor. Notwithstanding
the 

  
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foregoing, a transaction described in clause (i) or clause (ii) of the preceding sentence shall not be a Change of Control if persons who are shareholders of CapitalSource or its
Affiliates immediately prior to the transaction continue to own 50% or more of the combined voting power of CapitalSource or the resulting entity immediately following the transaction. Notwithstanding the foregoing, a Change of Control shall not be
deemed to have occurred if a “change of control” within the meaning of Section 409A of the Code (“Section 409A”) has not occurred. 

 

	1.6.	“Code” means the Internal Revenue Code of 1986, as amended, and references to particular sections of the Code are deemed to refer to such sections or any
successor sections thereto. 

  

	1.7.	“Committee” means the Compensation Committee of the Board. 

  

	1.8.	“Company” means CapitalSource and any past, present or future parent corporation or subsidiary corporation of CapitalSource or other legal entity under common
control with CapitalSource within the meaning of Section 414(c) of the Code. For purposes of the Plan, the terms parent corporation and subsidiary corporation shall be defined as set forth in Sections 424(e) and 424(f) of the Code.

  

	1.9.	“Credited Investment Return (Loss)” means the hypothetical investment return which shall be credited to the Participant’s Account pursuant to Article IV.

  

	1.10.	“Deferred Compensation Agreement” means an agreement to participate and to defer compensation between a Participant and the Company in such form and
consistent with terms of the Plan as the Company may prescribe from time to time. 

  

	1.11.	“Distribution Date” means the date on which distribution of a Participant’s Benefits is made or commenced pursuant to Article V.

  

	1.12.	“Distribution Election” means the election described in Section 5.2(b). 

 

	1.13.	“Early Benefit Distribution Date” means the date in a different calendar year than the year in which the Eligible Compensation to which the Deferred
Compensation Agreement relates is earned that the Participant has elected as a Distribution Date. 

  

	1.14.	“Effective Date” means November 26, 2003. 

  

	1.15.	“Eligible Compensation” means, with regard to non-employee directors of the Company, board or committee retainers, equity awards and, effective
with regard to meeting fees earned on or after the 2004 Annual Meeting, board or committee meeting fees, and with regard to employees, annual bonuses and restricted stock unit grants. 

  
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	1.16.	“Financial Hardship” means one or more of the following events: 

  

	 	a.	A sudden and unexpected illness or accident of the Participant or a dependent (as defined in Section 152(a) of the Code) of the Participant;

  

	 	b.	A loss of the Participant’s property due to casualty; or 

  

	 	c.	Other similar and extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined by the Company.

  

	 	d.	The need to pay for funeral expenses of a spouse, Beneficiary, or a dependent (as defined in Section 152(a) of the Code) 

 

	1.17.	“CapitalSource” means CapitalSource Inc., a Delaware corporation. 

 

	1.18.	“Participant” means a non-employee director of the Company or an officer of the Company who has been designated by the Company as eligible to participate in
this Plan. 

  

	1.19.	“Plan” shall mean this CapitalSource Inc. Deferred Compensation Plan, as it may be amended from time to time. 

 

	1.20.	“Plan Year” means the calendar year or such other period of time as may be designated by the Committee. 

 

	1.21.	“Separation from Service” means a termination of services provided by a Participant to his or her employer, whether voluntarily or involuntarily, other than
by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:

 For a Participant who provides services to an employer as an employee, except as otherwise provided in part
(c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such employer. A Participant shall be considered to have experienced a termination of employment when the facts
and circumstances indicate that the Participant and his or her employer reasonably anticipate that either (i) no further services will be performed for the employer after a certain date, or (ii) that the level of bona fide services the
Participant will perform for the employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of 

  
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the average level of bona fide services performed by such Participant (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of
services to the employer if the Participant has been providing services to the employer less than 36 months). 
 If a Participant
is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if
longer, so long as the Participant retains a right to reemployment with the employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant
does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period.
In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the employer. 

For a Participant who provides services as a non-employee director, a Separation from Service shall occur upon the termination of the
Participant’s services as a non-employee director if there is no other relationship for the Participant to provide services. 
 For a Participant who provides services as both an employee and an independent contractor, a Separation from Service generally shall not occur until the Participant has ceased providing services as an
employee and as an independent contractor, as determined in accordance with the provisions set forth above, respectively. Similarly, if a Participant ceases providing services as an employee and begins providing services as an independent
contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services in all capacities, as determined in accordance with the applicable provisions set forth above.

 Notwithstanding the foregoing provisions in this part (c), if a Participant provides services for an employer as both an
employee and as a member of the Board of Directors, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a member of the Board of Directors shall not be taken into account in determining whether
the Participant has experienced a Separation from Service as an employee, and the services provided by such Participant as an employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service
as a member of the Board of Directors. 

  
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	1.22.	“Shares” means shares of common stock of CapitalSource. 

  

	1.23.	“Stock Unit” means an unfunded right to receive one Share at a future date. Stock Units do not have voting rights. 

 

	1.24.	“Termination Event” means the Participant’s Separation from Service with the Company (within the meaning of Section 409A) for any reason.

 ARTICLE II: ELIGIBILITY 
  

	2.1.	Eligibility. Eligibility for participation in the Plan shall be limited to non-employee directors of the Company and to officers of the Company who are selected
by the Company, in its sole discretion, to participate in the Plan. No employee may be designated as eligible unless the employee belongs to “a select group of management or highly compensated employees” as defined in Title I of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-employee directors and individuals who are in this select group shall be notified as to their eligibility to participate in the Plan and shall be eligible to defer
Eligible Compensation in accordance with this Plan and rules established by the Committee. 

  

	2.2.	Cessation of Participation. Participation in the Plan shall continue until all of the Benefits to which the Participant is entitled thereunder have been paid in
full. 

  

	2.3.	Time of Election of Deferral. Except as otherwise provided in Section 2.3, an election to defer Eligible Compensation must be made before the year in which
the Eligible Compensation is earned. In the case of a bonus, except with regard to bonuses relating to 2005 performance or “performance-based bonuses,” the election to defer must be made prior to the year in which the bonus is earned.
Notwithstanding any provisions of this Section 2.3, in his or her first year of eligibility a Participant may make a deferral election within 30 days of first becoming eligible, and this initial deferral may relate only to Eligible Compensation
attributable to the period following the deferral election. 

  

	 	(i)	Special Rule for 2005 Bonuses. For bonuses earned in 2005, but paid 2006, in accordance with Notice 2005-1 elections to defer such bonuses may be made no later than
March 15, 2005. 

  

	 	(ii)	 Special Rule for Performance-bases Bonuses. If a bonus is “performance-based” within the meaning of Section 409A, an election to defer
such bonus may be made no later than six 

  
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months before the end of the service period to which such bonus relates and while achievement of the performance goals is substantially uncertain. 

ARTICLE III: PARTICIPANT’S ACCOUNTS 
  

	3.1.	Establishment of Accounts. The Company shall cause an Account to be kept in the name of each Participant and each Beneficiary of a deceased Participant which
shall reflect the value of such Participant’s Benefits as adjusted from time to time to reflect Credited Investment Return (Loss). Each such Account initially shall be credited with the number of Stock Units calculated in accordance with the
Deferred Compensation Agreement. 

  

	3.2.	Vesting. Accounts shall be 100% vested at all times, except that any vesting restrictions applicable to an award of Stock Units deferred under the Plan shall
apply to the portion of the Participant’s Account attributable to such award until such restrictions lapse in accordance with the original terms of the award. 

 ARTICLE IV: CREDITED INVESTMENT RETURN (LOSS) 
  

	4.1.	Credited Investment Return (Loss). All amounts credited to an Account shall be deemed to be invested in Stock Units. Accounts shall be credited with dividend
equivalents to the extent dividends are paid on Shares except to the extent the award agreement for such Stock Units provides for direct payment of dividend equivalents to the Participant in cash. 

ARTICLE V: BENEFITS 
  

	5.1.	(a) Timing of Distribution. The vested amounts credited to a Participant’s Account shall be paid (or payment shall commence) within 60 days after the
earlier of (i) the Early Benefit Distribution Date, if the Participant has made a valid election for early distribution of Benefits pursuant to Section 5.1(b), or (ii) a Termination Event. 

Anything in this Plan to the contrary notwithstanding, if (A) on the date of a Termination Event for a Participant, any of the
Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) Participant is determined to be a “specified employee” within the meaning
of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in
Section 409A(a)(1) of 

  
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the Code as a result of such termination, the Participant would receive any payment that, absent the application of this Section 5.1, would be subject to interest and additional tax imposed
pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) 6 months and one day after date of the
Participant’s Termination Event, (2) the Participant’s death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that
have been delayed to be made as of the date of the initial payment). 
 It is the intention of the Company and all Participants
that payments or benefits payable under this Plan not be subject to the additional tax imposed pursuant to Section 409A. To the extent such potential payments or benefits could otherwise be subject to such additional taxes, the Company and
Participant shall cooperate to structure the payments with the goal of giving the Participant the economic benefits described herein in a manner that does not result in such tax being imposed. 

(b) Early Benefit Distribution. A Participant may elect an Early Benefit Distribution Date. Such election shall be made on the
Participant’s original Deferred Compensation Agreement. 
 In the event a Participant has a Termination Event prior to his
or her Early Benefit Distribution Date, his or her election of an Early Benefit Distribution Date shall not be given effect and distribution of the Participant’s Accounts, to the extent vested, shall be made in accordance with
Section 5.1(a) without regard to the Early Benefit Distribution Date. 
  

	5.2.	(a) Method of Distribution. A Participant’s Account shall be paid in one of the following methods specified in his or her most recent valid document or
agreement providing for a distribution method: (i) a single lump sum payment; or (ii) in the case of Participants who are employees of the Company, substantially equal annual installments over up to a ten year period. Accounts, adjusted
for applicable investment gains and losses, shall be divided by the number of years remaining under the election to determine the amount of such annual installment. For purposes of this Plan, the right to receive a benefit payment in annual
installments shall be treated as the entitlement to a single payment. All payments from the Plan shall be in the form of Shares. 

 (b) Distribution Election for Method of Distribution. The Participant shall designate the method of distribution on the Deferred Compensation Agreement and may amend any such designation in such
form and manner as the Company may prescribe. However, no amendment completed within 

  
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twelve (12) full calendar months preceding the Participant’s Termination Event or Early Benefit Distribution Date, if applicable (whichever event or date gives rise to a payment of
Benefits to the Participant), or that has the effect of accelerating payments, shall be given effect with respect to Benefits that become payable as of such Termination Event or Early Benefit Distribution Date, if applicable. In addition, any such
amendment must delay payment (or, in the case of installments, commencement of payments) at least five years. 
 (c) Death
Benefits. In the event the Participant dies before his or her Benefits have been fully distributed, the Participant’s Benefits shall be paid to his or her Beneficiary in accordance with the Participant’s most recent valid Distribution
Election. 
 (d) Non-Election. If no Distribution Election has been properly made prior to the Distribution Date, the
Participant’s Benefits will be distributed in a single lump sum. In the event that a Participant files an amended Distribution Election as to the form of distribution but such amendment cannot be given effect by reason of the provisions of
Section 5.2(b), distribution shall be made in accordance with the Participant’s Deferred Compensation Agreement, any valid amendment thereto, or otherwise in accordance with this Section 5.2(d). 

(e) Valuation of Accounts. Participants Accounts shall be valued as of the valuation date immediately preceding the Distribution
Date. 
  

	5.3.	Financial Hardship. Notwithstanding the foregoing, with the consent of the Company, a Participant who is an employee of the Company may withdraw up to one
hundred percent (100%) of the vested amount credited to his or her Account to the extent such withdrawal is required to meet an unforeseeable emergency of the Participant constituting a Financial Hardship, provided that the entire amount
requested by the Participant is not reasonably available from other resources of the Participant, and provided further that: 

 (a) The withdrawal must be necessary to satisfy the unforeseeable emergency and no more may be withdrawn from the Participant’s Account than is required to relieve the financial need, which shall
include amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account other resources that are reasonably available to the Participant for this purpose; 

(b) The Participant must certify such matters as the Company reasonably may require, including that the financial need cannot be relieved:
(i) through reimbursement or compensation by insurance or otherwise; (ii) by reasonable liquidation of the Participant’s assets, to the extent such liquidation would 

  
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not itself cause an immediate and heavy financial need; (iii) by discontinuing the Participant’s salary deferrals, if any; or (iv) by borrowing from commercial sources on
reasonable commercial terms; and 
 (c) Withdrawals for Financial Hardship will be limited to the amount reasonably necessary to
satisfy the emergency need. The Company shall be entitled to impose such further or additional restrictions on a withdrawal for Financial Hardship as it deems necessary to avoid adverse tax consequences to any Participant. 

 

	5.4.	Limitation on Distributions to Covered Employees. Notwithstanding any other provision of this Article V, in the event that the Participant is a “covered
employee” as defined in Section 162(m)(3) of the Code, or would be a covered employee if the Benefits were distributed in accordance with his or her Distribution Election or withdrawal request, the maximum amount which may be distributed
from the Participant’s Account, in any Plan Year, shall not exceed one million dollars ($1,000,000) less the amount of compensation paid to the Participant in such Plan Year which is not “performance-based” (as defined in Code
Section 162(m)(4)(C)), which amount shall be reasonably determined by the Company at the time of the proposed distribution. Any amount which is not distributed to the Participant in a Plan Year as a result of the limitation set forth in this
Section 5.4 shall be distributed to the Participant in the next Plan Year, subject to compliance with the foregoing limitation set forth in this Section 5.4. This Section 5.4 shall not be given effect if its application would result
in the imposition of the 20% penalty tax under Section 409A. 

  

	5.5.	Tax Withholding. All payments under this Article V shall be subject to all applicable withholding for state and federal income tax and to any other federal,
state or local tax which may be applicable thereto. In the event any taxes become due prior to payment, including but not limited to, taxes under Section 3121(v) of the Code, such taxes shall be the sole responsibility of the Participant.

 ARTICLE VI: BENEFICIARIES 
  

	6.1.	Designation of Beneficiary. The Participant shall have the right to designate, on such form as may be prescribed by the Company, a Beneficiary to receive any
Benefits due under Article V which may remain unpaid at the Participant’s death and shall have the right at any time to revoke such designation and to substitute another such Beneficiary. 

  
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	 	6.2.	No Designated Beneficiary. If, upon the death of the Participant, there is no valid designation of a Beneficiary, the Beneficiary shall be the Participant’s
estate. 

 ARTICLE VII: ADMINISTRATION OF THE PLAN 

 

	7.1.	Administration by the Company. This Plan shall be administered by the Committee. The Committee has the authority to amend the Plan and the sole discretion to
interpret the Plan and to determine all questions arising in the administration, interpretation, and application of the Plan. The Committee’s powers include the power, in its sole discretion and consistent with the terms of the Plan, to
determine who is eligible to participate in this Plan, to determine the eligibility for and the amount of benefits payable under the Plan, to determine when and how amounts are allocated to a Participant’s Account, to establish rules for
determining when and how elections can be made, to adopt any rules relating to administering the Plan and to take any other action it deems appropriate to administer the Plan. The Committee may delegate its authority hereunder to one or more
officers of the Company. Whenever the value of an Account is to be determined under this Plan as of a particular date, the Committee may determine such value using any method that is reasonable, in its discretion. Whenever payments are to be made
under this Plan, such payments shall be made or begin within 60 days and no interest shall be paid on such amounts for any reasonable delay in making the payments. 

 

	7.3	Claims Procedures. (a) The Committee shall maintain procedures with respect to the filing of claims for benefits under the Plan. Pursuant to such
procedures, any Participant or beneficiary (hereinafter called “claimant”) whose claim for benefits under the Plan is denied shall receive written notice of such denial. The notice shall set forth: 

(i) the specific reasons for the denial of the claim; 

(ii) a reference to the specific provisions of the Plan on which the denial is based; 

(iii) any additional material or information necessary to perfect the claim and an explanation why such material or
information is necessary; and 
 (iv) a description of the procedures for review of the denial of the claim and
the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA following a denial on review. 

  
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 Such notice shall be furnished to the claimant within a reasonable period of time, but no
later than 90 days after receipt of the claim by the Plan, unless the Committee determines that special circumstances require an extension of time for processing the claim. In no event shall such an extension exceed a period of 90 days from the end
of the initial 90-day period. If such an extension is required, written notice thereof shall be furnished to the claimant before the end of the initial 90-day period, which shall indicate the special circumstances requiring an extension of time and
the date by which the Committee expects to render a decision. 
 (b) Right to a Review of the Denial. Every claimant whose
claim for benefits under the Plan is denied in whole or in part by the Committee shall have the right to request a review of the denial. Review shall be granted if it is requested in writing by the claimant no later than 60 days after the claimant
receives written notice of the denial. The review shall be conducted by the Committee. 
 (c) Decision of the Committee on
Appeal. At any hearing of the Committee to review the denial of a claim, the claimant, in person or by duly authorized representative, shall have reasonable notice, shall have an opportunity to be present and be heard, may submit written
comments, documents, records and other information relating to the claim, and may review documents, records and other information relevant to the claim under the applicable standards under ERISA. The Committee shall render its decision as soon as
practicable. Ordinarily decisions shall be rendered within 60 days following receipt of the request for review. If the need to hold a hearing or other special circumstances require additional processing time, the decision shall be rendered as soon
as possible, but not later than 120 days following receipt of the request for review. If additional processing time is required, the Committee shall provide the claimant with written notice thereof, which shall indicate the special circumstances
requiring the additional time and the date by which the Committee expects to render a decision. If the Committee denies the claim on review, it shall provide the claimant with written notice of its decision, which shall set forth (i) the
specific reasons for the decision, (ii) reference to the specific provisions of the Plan on which the decision is based, (iii) a statement of the claimant’s right to reasonable access to, and copies of, all documents, records and
other information relevant to the claim under the applicable standards under ERISA, and (iv) and a statement of the claimant’s right to bring a civil action under ERISA. The Committee’s decision shall be final and binding on the
claimant, and the claimant’s heirs, assigns, administrator, executor, and any other person claiming through the claimant. 

  
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 ARTICLE VIII: MISCELLANEOUS 

 

	8.1.	The right of a Participant or his or her designated Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the
Company, and neither the Participant nor a designated Beneficiary shall have any rights in or against any specific assets of the Company. Notwithstanding the previous sentence, the Company reserves the right to establish a grantor trust, the assets
of which shall remain subject to claims of creditors of the Company, to which Company assets may be invested to fund some or all of the liabilities represented by this Plan. This Plan shall not be construed to require the Company to fund, prior to
payment, any of the Benefits payable under this Plan. 

  

	8.2.	If, in the Company’s opinion, a Participant or Beneficiary for any reason is unable to handle properly any property distributable to him or her under the Plan,
then the Company may make such arrangements which it determines to be beneficial to such Participant or Beneficiary, to the extent such arrangements have not been made by such Participant or Beneficiary, for the distribution of such property,
including (without limitation) the distribution of such property to the guardian, conservator, spouse or dependent(s) of such Participant or Beneficiary. 

  

	8.3.	The right of any Participant, any Beneficiary, or any other person to the payment of any Benefits under this Plan shall not be assigned, transferred, pledged or
encumbered. 

  

	8.4.	This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns and the Participant and his or her heirs, executors, administrators
and legal representatives. 

  

	8.5.	Nothing contained herein shall be construed as conferring upon any Participant the right to continue in the employ or service of the Company as an employee or
otherwise. 

  

	8.6.	If the Company, the Participant, any Beneficiary, or a successor in interest to any of the foregoing, brings legal action to enforce any of the provisions of this Plan,
the prevailing party in such legal action shall be reimbursed by the other party for the prevailing party’s costs of such legal action including, without limitation, reasonable fees of attorneys, accountants and similar advisors and expert
witnesses. 

  

	8.7.	This Plan shall be construed in accordance with and governed by the laws of the State of Maryland, without reference to the principles of conflicts of law thereof, to
the extent such construction is not pre-empted by any applicable federal law. 

  
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	8.8.	This Plan constitutes the entire understanding and agreement with respect to the subject matter contained herein, and there are no agreements, understandings,
restrictions, representations or warranties among any Participant and the Company other than those set forth or provided for herein. 

  

	8.9.	This Plan may be amended or terminated by CapitalSource at any time in its sole discretion by resolution of its Board, the Committee or any other committee to which its
Board has delegated such authority to amend; provided, however, that no amendment may be made which would alter the irrevocable nature of an election or which would reduce the amount credited to a Participant’s Account on the date
of such amendment. If the Plan is terminated, Compensation shall prospectively cease to be deferred as of the date of the termination. Each Participant will be paid the value of his or her Account at the time and in the manner provided for in
Article V; provided, that if such payment would result in the imposition of the 20% penalty tax under Section 409A, payment will instead be made in accordance with Section 5.1 and Section 5.2. 

*                    *  
                  * 
 To record the
adoption of the Plan as amended and restated, the Company has caused its authorized officer to execute the same this 26th day of October 2011. 
  

			
	CAPITALSOURCE INC.
		
	By:	 	 /s/ Kori Ogrosky

		
	As its:	 	 Associate General Counsel

  
 - 13 -Form of 2011 Stock Option Award Agreement

 Exhibit 10.1 
 AFFIRMATIVE INSURANCE HOLDINGS, INC. 
 AMENDED AND RESTATED 2004 STOCK
INCENTIVE PLAN 
 as amended 
 STOCK OPTION AGREEMENT 
 This Stock Option Agreement (the
“Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Affirmative Insurance Holdings, Inc., a Delaware corporation (the
“Company”), and the participant named below (the “Participant”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s Amended and Restated 2004 Stock
Incentive Plan, as amended (the “Plan”). 
  

			
	Participant:	  	
		  	  

		
	Address:	  	
		  	  

		
	Total Option Shares:	  	
		  	  

		
	Exercise Price Per Share:	  	
		  	  

		
	Date of Grant:	  	
		  	  

		
	Expiration Date:	  	
		  	  

		
	Vesting Commencement Date:	  	
		  	  

		
	Vesting Schedule:	  	The Option will become vested and exercisable with respect to the Shares (as defined below) in three equal annual installments: (i) one-third (1/3) of the Shares will vest and
become exercisable on the first anniversary of the Vesting Commencement Date, (ii) the second one-third (1/3) of the Shares will vest and become exercisable on the second anniversary of the Vesting Commencement Date and (iii) the remaining one-third
(1/3) of the Shares will vest and become exercisable on the third anniversary of the Vesting Commencement Date.
		
	Type of Stock Option:	  	 ̈ Incentive Stock Option
		
		  	x Nonstatutory Stock Option

  
 Page 1

 1. Grant of Option. The Company hereby grants to Participant an option (this
“Option”) to purchase the total number of shares of Common Stock of the Company set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the
“Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan. If designated as an Incentive Stock Option above, the Option is intended to qualify as an “incentive stock option” (an
“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), although the Company makes no representation or guarantee that such Option will qualify as
an ISO. 
 2. Exercise Period; Vesting. 
 2.1. Exercise Period. Unless expired as provided in Section 3 of this Agreement, this Option may be exercised from time to time after the Date of Grant set forth above (the
“Date of Grant”) to the extent the Option has vested in accordance with the vesting schedule in Subsection 2.2. 
 2.2. Vesting. Provided Participant’s employment pursuant to his employment agreement has not terminated prior to such vesting dates, the Option will become vested and exercisable according to
the Vesting Schedule. If application of the vesting percentage causes a fractional share, such share shall be rounded down to the nearest whole share for each vesting period except for the last period in such vesting period, at the end of which last
period this Option shall become exercisable for the full remainder of the Shares. The Shares issued upon exercise of the Option will be subject to the restrictions on transfer set forth in Sections 8 and 9 below. 

3. Expiration. The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4
below or, if applicable, pursuant to Section 11 of the Plan. 
 4. Termination of Continuous Service. 

4.1. Termination for Any Reason Except Death, Disability or Cause. Unless otherwise provided in an employment agreement the terms
of which have been approved by the Administrator, if Participant’s Continuous Service is terminated for any reason, except death, disability or for Cause, the Option, to the extent (and only to the extent) that it would have been exercisable by
Participant on the date of termination, may be exercised by Participant no later than three (3) months after the date of termination, but in any event no later than the Expiration Date. 

4.2. Termination Because of Death or Disability. If Participant’s Continuous Service is terminated because of death or
disability of Participant, the Option, to the extent that it would have been exercisable by Participant on the date of termination, may be exercised by Participant (or Participant’s legal representative) no later than twelve (12) months
after the date of termination, but in any event no later than the Expiration Date. If permitted by this Agreement, any exercise beyond twelve (12) months after the date of termination when the termination is for Participant’s disability is
deemed to be a Nonstatutory Stock Option (an “NSO”) and not an ISO. 

  
 Page 2

 4.3. Termination for Cause. If Participant’s Continuous Service is terminated
for Cause, then the Option will expire on the Participant’s date of termination. 
 4.4. No Obligation to Employ.
Nothing in the Plan or this Agreement shall confer on Participant any right to continue in the employ of, or other relationship with, the Company or any Affiliate, or limit in any way the right of the Company or any Affiliate to terminate
Participant’s employment or other relationship at any time, with or without Cause. 
 5. Manner of Exercise.

 5.1. Stock Option Exercise Agreement. To exercise this Option, Participant (or in the case of exercise after
Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in
such other form as may be approved by the Administrator from time to time (the “Exercise Agreement”), which shall set forth, inter alia, (a) Participant’s election to exercise the Option, (b) the
number of Shares being purchased, (c) any restrictions imposed on the Shares and (d) any representations, warranties, and agreements regarding Participant’s investment intent and access to information as may be required by the Company
to comply with applicable securities laws. If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.

 5.2. Limitations on Exercise. The Option may not be exercised unless such exercise is in compliance with all
applicable federal and state securities laws, as they are in effect on the date of exercise. The Option may not be exercised for fewer than one (1) Share unless it is exercised as to all Shares as to which the Option is then exercisable.

 5.3. Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the shares being
purchased in cash (by certified check or wire transfer), or where permitted by law and upon written approval by the Administrator: 
 (a) by surrender of shares of the Company’s Common Stock that (i) either (1) have been owned by Participant for more than six (6) months and have been paid for within the meaning of
SEC Rule 144 (and, if such shares were purchased from the Company by use of promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Participant in the open public market; and (ii) are clear of
all liens, claims, encumbrances or security interests; 
 (b) provided that a Listing Date has occurred: (i) through a
“same day sale” commitment from Participant and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby Participant irrevocably elects to exercise the Option and
to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (ii) through
a “margin” commitment from Participant and an NASD Dealer whereby Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from NASD Dealer in
the amount of the total Exercise Price, and 

  
 Page 3

 
whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; provided, however, a cashless exercise by a
Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company or an Affiliate in violation of Section 402(a) of the Sarbanes-Oxley Act (codified as
Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be prohibited; 
 (c) by any other
form of legal consideration that may be acceptable to the Administrator; or 
 (d) by any combination of the foregoing.

 5.4. Tax Withholding. Prior to the issuance of the Shares upon exercise of the Option, Participant must pay or provide
for any applicable federal, state and local withholding obligations of the Company. 
 5.5. Issuance of Shares. Provided
that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Participant, Participant’s authorized assignee, or Participant’s legal
representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto. 
 6.
Notice of Disqualifying Disposition of ISO Shares. If the Option is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (a) the date two (2) years after
the Date of Grant, and (b) the date one (1) year after transfer of such Shares to Participant upon exercise of the Option, Participant shall immediately notify the Company in writing of such disposition. Participant agrees that Participant
may be subject to income tax withholding by the Company on the compensation income recognized by Participant from the early disposition by payment in cash or out of the current wages or other compensation payable to Participant. 

7. Compliance with Laws and Regulations. The exercise of the Option and the issuance and transfer of Shares shall be subject to
compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at the time of such
issuance or transfer. Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance. 

8. Nontransferability of Option. If the Option is an ISO, the Option may not be transferred in any manner other than by will or by
the laws of descent and distribution and may be exercised during the lifetime of Participant only by Participant or in the event of Participant’s incapacity, by Participant’s legal representative. The terms of the Option shall be binding
upon the executors, administrators, successors and assigns of Participant. If the Option is not an ISO, upon written approval by the Administrator, it may be transferred by gift or domestic relations order to a member of the Participant’s
immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-

  
 Page 4

 
law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a
trust in which these persons have more than 75% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 75%
of the voting interests. 
 9. Privileges of Stock Ownership. Participant shall not have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to Participant. 
 10. General. 

10.1. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Participant or the Company
to the Administrator for review. The resolution of such a dispute by the Administrator shall be final and binding on the Company and Participant. 
 10.2. Entire Agreement. The Plan and Participant’s employment agreement are incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties and
supercede all prior undertakings and agreements with respect to the subject matter hereof. If any inconsistency should exit between the nondiscretionary terms and conditions of this Agreement and the Plan, the Plan shall govern and control.

 10.3. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be
in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated above or to
such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: (a) personal delivery; (b) five (5) days after deposit in the United States
mail by certified or registered mail (return receipt requested); (c) two (2) business day after deposit with any return receipt express courier (prepaid); or (d) one (1) business day after transmission by facsimile. 

10.4. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal
representatives, successors and assigns. 
 10.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to its conflict of law principles. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the
maximum extent possible and the other provisions will remain fully effective and enforceable. 
 11. Acceptance.
Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all the terms and conditions of the Plan and this Agreement.
Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Participant should consult a tax advisor prior to such exercise or disposition. 

[SIGNATURE PAGE FOLLOWS] 

  
 Page 5

 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized representative and Participant has executed this Agreement, effective as of the Date of Grant. 

AFFIRMATIVE INSURANCE HOLDINGS, INC. 

By:                   
                                         
                                         
                                    

Name: Gary Y. Kusumi 
 Title: Chief Executive Officer 
 PARTICIPANT 

 

                   
                                         
                                         
                                         
  
 (Signature) 

Printed Name: 
  

  
 Page 6

 EXHIBIT A 
 FORM OF STOCK OPTION EXERCISE AGREEMENT 
 AFFIRMATIVE INSURANCE HOLDINGS, INC.

 AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN 

as amended 

STOCK OPTION EXERCISE AGREEMENT 
 This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as
of                             (the “Effective Date”), by and between Affirmative
Insurance Holdings, Inc., a Delaware corporation (the “Company”), and the purchaser named below (the “Purchaser”). Capitalized terms not defined herein shall have the meanings ascribed to them in the
Company’s Amended and Restated 2004 Stock Incentive Plan, as amended (the “Plan”) or the Stock Option Agreement. 
  

			
	 Participant:
	    	 
		
	 Social Security Number:
	    	 
		
	 Address:
	    	 
		
		    	 
		
	 Option Shares Being Purchased:
	    	 
		
	 Exercise Price Per Share:
	    	 
		
	 Date of Grant:
	    	 
		
	 Expiration Date:
	    	 
		
	 Type of Stock Option:
	    	 ̈ Incentive Stock Option
		
		    	x Nonstatutory Stock Option

 1. Exercise of Option. 

1.1. Exercise. Pursuant to exercise of that certain option (the “Option”) granted to Purchaser under the
Plan and the Stock Option Agreement and subject to the terms and conditions of this Exercise Agreement, Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Total Number of Shares set forth above (the
“Shares”) of the Company’s Common Stock at the Exercise Price Per Share set forth above (the “Exercise Price”). As used in this Exercise Agreement, the term “Shares” refers
to the Shares purchased under this Exercise Agreement and includes all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) all securities
received in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction. 

  
 Page 1

 1.2. Title to Shares. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is: 
 Purchaser desires to take title to the Shares as follows: 

 ̈ Individual, as separate property 

 ̈ Husband and wife, as community property 

 ̈ Joint Tenants 
  ̈ Other; please specify: 
 1.3.
Payment. Purchaser hereby delivers payment of the Exercise Price in cash (by check), whether or not acquired through a loan from the Company, in the amount of $            , receipt
of which is acknowledged by the Company. 
 2. Delivery. 

2.1. Deliveries by Purchaser. Purchaser hereby delivers to the Company (a) this Exercise Agreement, (b) if
Purchaser is married, a consent of spouse in the form of Exhibit A attached hereto executed by Purchaser’s spouse, (c) the Exercise Price and payment or other provision for any applicable tax obligations in the form of a check,
or, if permitted under applicable law and permitted by the Administrator, a secured full recourse promissory note (“Note”) and (d) if the Purchaser has provided a Note for exercise of the Shares, a stock pledge agreement
executed by Purchaser (“Pledge Agreement”) and two (2) copies of a blank stock power (“Stock Power”), both executed by Purchaser (and Purchaser’s spouse, if any). 

2.2. Deliveries by the Company. Upon its receipt of the Exercise Price, payment or other provision for any applicable tax
obligations and all the documents to be executed and delivered by Purchaser to the Company under Section 2.1 hereof, the Company will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser,
provided, however, if the Purchaser has provided a Note for exercise of the Shares, such stock certificate shall be placed in escrow as provided in Section 10 hereof to secure payment of Purchaser’s obligation under
the Note. 
 3. Representations and Warranties of Purchaser. Purchaser represents and warrants to the Company that:

 3.1. Agrees to Terms of the Plan. Purchaser has received a copy of the Plan and the Stock Option Agreement, has read
and understands the terms of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to be bound by their terms and conditions. Purchaser acknowledges that there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares, and that Purchaser should consult a tax advisor prior to such exercise or disposition. 

  
 Page 2

 3.2. SEC Rule 144. Purchaser understands that Rule 144 promulgated under the
Securities Act may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

 4. Compliance with Securities Laws. Purchaser understands and acknowledges that, notwithstanding any
other provision of the Stock Option Agreement to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. Purchaser agrees to cooperate
with the Company to ensure compliance with such laws. 
 5. Rights as a Stockholder. Subject to the terms and conditions
of this Exercise Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares. 

6. Escrow. If the Purchaser has provided a Note for exercise of the Shares, as security for Purchaser’s faithful performance
of this Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Purchaser and by Purchaser’s spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and
to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Exercise Agreement. Purchaser and the Company agree that Escrow Holder will not be liable to any party to this
Exercise Agreement (or to any other party) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may rely upon any
letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Exercise Agreement. The Shares will
remain in escrow so long as they are subject to the Pledge Agreement. 
 7. Tax Consequences. PURCHASER UNDERSTANDS THAT
PURCHASER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES. PURCHASER REPRESENTS: (a) THAT PURCHASER HAS CONSULTED WITH ANY TAX ADVISOR THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH
THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. 

  
 Page 3

 8. Compliance with Laws and Regulations. The issuance and transfer of the Shares will
be subject to and conditioned upon compliance by the Company and Purchaser with all applicable state, local and U.S. Federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the
Company’s Common Stock may be listed or quoted at the time of such issuance or transfer. 
 9. Successors and
Assigns. The Company may assign any of its rights under this Exercise Agreement. This Exercise Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. This exercise Agreement will be binding upon
Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns. 
 10.
Governing Law; Severability. This Exercise Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to its conflict of law principles. If any provision of this Exercise Agreement
is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable. 

11. Notices. Any notice required to be given or delivered to the Company shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Purchaser shall be in writing and addressed to Purchaser at the address indicated above or to such other address as Purchaser may designate
in writing from time to time to the Company. All notices shall be deemed effectively given upon personal delivery, (a) five (5) days after deposit in the United States mail by certified or registered mail (return receipt requested),
(b) two (2) business day after its deposit with any return receipt express courier (prepaid), or (c) one (1) business day after transmission by facsimile. 
 12. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Exercise
Agreement. 
 13. Headings. The captions and headings of this Exercise Agreement are included for ease of reference only
and will be disregarded in interpreting or construing this Exercise Agreement. 
 14. Entire Agreement. The Plan, the
Stock Option Agreement and this Exercise Agreement, together with all Exhibits thereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Exercise Agreement, and supersede all prior
understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter hereof. If there is any inconsistency between the terms of this Exercise Agreement and the terms of the Plan and Stock
Option Agreement, the terms of the Plan and Stock Option Agreement shall govern and control. 
 [SIGNATURE PAGE FOLLOWS]

  
 Page 4

 IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be executed in
triplicate by its duly authorized representative and Purchaser has executed this Exercise Agreement in triplicate as of the Effective Date, indicated above. 

 

			
	AFFIRMATIVE INSURANCE HOLDINGS, INC.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	PARTICIPANT
	
	 
	 (Signature)

	
	 Printed Name:

  
 Page 5

 EXHIBIT A 
 SPOUSE CONSENT 
 The undersigned spouse of (the
“Purchaser”) has read, understands, and hereby approves the Stock Option Exercise Agreement (the “Agreement”) between Purchaser and Affirmative Insurance Holdings, Inc., a Delaware corporation (the
“Company”). In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees
that any community property interest I may have in the Shares shall similarly be bound by the Agreement. The undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

  

			
	 Dated:
	 	 
	
	SPOUSE
	
	  
 (Signature)

	
	  
 Printed Name

		
	 Address:

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