Document:

exv10w38

 

Exhibit 10.38

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of this 22nd day of April, 2005
(the “Effective Date”), by and between CapitalSource Inc., a Delaware corporation (the “Employer”
or the “Company”), and Michael Szwajkowski, an individual (the “Executive”).

     WHEREAS, the Executive is currently employed as the President – Structured Finance Business;
and

     WHEREAS, the Employer and the Executive desire to enter into this Agreement to set out the
terms and conditions for the continued employment relationship of the Executive with the Employer.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:

     1. Employment Agreement. On the terms and conditions set forth in this Agreement, the
Employer agrees to continue to employ the Executive and the Executive agrees to continue to be
employed by the Employer for the Employment Period set forth in Section 2 and in the positions and
with the duties set forth in Section 3. Terms used herein with initial capitalization not
otherwise defined are defined in Section 25.

     2. Term. The initial term of employment under this Agreement shall be for a four-year
period commencing on the Effective Date (the “Initial Term”). The term of employment shall be
automatically extended for an additional consecutive 12-month period (the “Extended Term”) on April
22, 2008 and each subsequent April 22, unless and until the Employer or Executive provides written
notice to the other party in accordance with Section 13 hereof not less than 60 days before such
anniversary date that such party is electing not to extend the term of employment under this
Agreement (“Non-Renewal”), in which case the term of employment hereunder shall end as of the end
of such Initial Term or Extended Term, as the case may be, unless sooner terminated as hereinafter
set forth. Such Initial Term and all such Extended Terms are collectively referred to herein as
the “Employment Period.” Anything herein to the contrary notwithstanding, if on the date of a
Change in Control the remaining term of the Employment Period is less than 24 months, the
Employment Period shall be automatically extended to the end of the 24-month period following such
Change in Control.

     3. Position and Duties. During the Employment Period, the Executive shall serve as
the President – Structured Finance Business, as a member of the Credit Committee with respect to
the Structured Finance Business, and as a member of the Employer’s Executive and Disclosure

 

 

Committees (to the extent the Employer maintains such committees). In such capacities, prior to
any Change in Control the Executive shall report exclusively to the Chief Executive Officer and, in
a dual reporting role, the President of the Employer and shall be responsible for all of the
operations of the Structured Finance Business. In any publications, news releases, and public
filings of the Employer in which the position of the Executive is described, the Executive shall be
referred to as a senior executive, a member of senior management, or other comparable language.
The Executive shall devote the Executive’s reasonable best efforts and full business time to the
performance of the Executive’s duties hereunder and the advancement of the business and affairs of
the Employer; provided that the Executive shall be entitled to serve as a member of the board of
directors of a reasonable number of other companies, to serve on civic, charitable, educational,
religious, public interest or public service boards, and to manage the Executive’s personal and
family investments, in each case, to the extent such activities do not materially interfere with
the performance of the Executive’s duties and responsibilities hereunder.

     4. Place of Performance. During the Employment Period, the Executive’s primary places
of employment shall be the Employer’s offices in Chevy Chase, Maryland and New York, New York,
except for reasonable travel on the Employer’s business consistent with the Executive’s position.
When the Executive is not traveling on business matters and therefore working from the Company’s
offices, he shall use good faith efforts to work two days per business week from the Employer’s
Chevy Chase offices. Notwithstanding the foregoing, the parties acknowledge that the Executive
currently travels on business matters frequently, that business travel on behalf of the Employer
will occasionally prevent the Executive from working two days per business week at the Chevy Chase
offices, and that such an absence shall not, by itself, constitute a breach of this Agreement.

     5. Compensation and Benefits; Options; Change in Control.

          (a) Base Salary. During the Employment Period, the Employer shall pay to the
Executive a base salary (the “Base Salary”) at the rate of no less than $350,000 per calendar year,
less applicable deductions, and prorated for any partial year. The Base Salary shall be reviewed
for increase by the Employer no less frequently than annually and shall be increased in the
discretion of the Employer and any such adjusted Base Salary shall constitute the “Base Salary” for
purposes of this Agreement. The Base Salary shall be paid in substantially equal installments in
accordance with the Employer’s regular payroll procedures. The Executive’s Base Salary may not be
decreased during the Employment Period.

          (b) Annual Bonus. For each calendar year that ends prior to a Change in Control, the
Executive shall receive an annual cash bonus in an amount determined reasonably and in good faith
by the Employer based upon the Employer’s overall performance and the performance of the Executive
and the Structured Finance Business. For each calendar year that ends after a Change in Control,
the Executive shall be paid in cash an annual bonus in an amount not less than two times the
Executive’s Base Salary as in effect on the last day of such calendar

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year. Any annual bonus payable to the Executive hereunder shall be paid at the time bonuses are
otherwise paid to other executive officers of the Employer, but in any event, by March 15 of the
calendar year following the year with respect to which such annual bonus is earned.

          (c) Reserved.

          (d) Vacation; Benefits. During the Employment Period, the Executive shall be entitled
to four weeks vacation annually. In addition, the Employer shall provide to the Executive employee
benefits and perquisites on a basis that (i) prior to a Change in Control is comparable in all
material respects to that provided to any other member of the Employer’s Executive Committee (or
successor committee performing substantially similar functions), excluding the Chief Executive
Officer and President of the Employer and (ii) following a Change in Control is comparable in all
material respects to that provided to other executives of the Employer. Subject to the terms of
this Agreement, all benefits are provided at the Employer’s sole discretion. Subject to the terms
of this Agreement, the Employer shall have the right to change insurance carriers and to adopt,
amend, terminate or modify employee benefit plans and arrangements at any time and without the
consent of the Executive.

          (e) Additional Consideration. In consideration of entering into this Agreement, on
April 22, 2005, the Employer shall grant to the Executive 50,000 shares of the Employer’s common
stock, par value $0.01 (“Stock”), 25,000 of which shall vest and become freely transferable on the
date of the grant, and 25,000 of which shall vest and become freely transferable on the first
anniversary of the date of the grant. In addition, on each of the first, second, and third
anniversaries of the date of the foregoing grant, the Employer shall grant the Executive 50,000
shares of stock, which shall vest and become freely transferable on the first anniversary of each
such grant. Schedule I, which is attached as part of Exhibit A and is hereby incorporated in and
made a part of this Agreement, demonstrates the manner in which the foregoing provisions of this
Section 5(e) are intended to be applied. The terms and conditions of Schedule II, which is
attached as part of Exhibit A and is hereby incorporated in and made a part of this Agreement,
shall apply to the grants of Stock made pursuant to this Section 5(e). Unvested shares of Stock
granted and any shares of Stock scheduled to be granted in the future under this Section 5(e) shall
be forfeited by the Executive if and only if the Executive’s employment with the Employer and all
the Company Affiliates is voluntarily terminated by the Executive without Good Reason or is
terminated by the Employer for Cause, in each case, before the date on which such shares of Stock
would otherwise vest hereunder.

          (f) Change in Control.

          (1)(a) Immediately prior to the occurrence of a Change in Control and contingent upon the
occurrence of a Change in Control, (i) all deferred compensation credited on the Executive’s behalf
shall immediately vest; (ii) all vested stock options, stock appreciation rights or other similar
rights held by the Executive that are outstanding after such Change in Control

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shall remain exercisable for the remainder of their originally scheduled terms (but only if
such awards are assumed by the acquirer); and (iii) all deferred compensation credited on the
Executive’s behalf will, to the extent applicable, be transferred or distributed to the Executive
on the first date such amounts may be distributed without incurring the 20% penalty tax imposed
under Section 409A of the Code (other than such amounts required to be credited pursuant to this
Section 5(f)(1)(b) in cancellation of the Applicable Awards).

          (b) Prior to the occurrence of a Change in Control, the Employer shall establish a trust with
an independent institutional third party trustee selected by the Executive (the “Trust”). The
agreement governing the Trust shall be in a form mutually agreed upon by the parties and in any
event shall be consistent with the intent of this Section 5(f). The assets of the Trust shall not
be used for any purpose other than to satisfy certain liabilities to the Executive described
herein, except that if the Trust is dissolved in accordance with this Section 5(f)(1)(b) the
Employer shall retain the Trust assets. For the avoidance of doubt, the Trust shall be a “secular”
trust, the assets of which shall not be subject to the claims of the Employer’s creditors. Trust
assets shall be invested in short-term money market securities until distribution hereunder.
Immediately prior to the occurrence of a Change in Control and contingent upon a Change in Control,
the Employer shall deposit into the Trust cash in an amount equal to the sum of (i) the Value (as
defined below) of restricted shares of Stock previously granted to the Executive that are not
vested on the date of the Change in Control, (ii) the Value of any shares of Stock described in
Section 5(e) that have not been granted to the Executive as of the occurrence of the Change in
Control, (iii) the value of the spread with respect to any options to acquire Stock held by the
Executive as of the Change in Control (based on the difference between the Value of a share of
Stock and the applicable option exercise price) that are not vested and exercisable on the date of
the Change in Control and (iv) the value of any other equity-related award (based on the Value of a
share of Stock) held by the Executive that are not vested as of the Change in Control (such awards
collectively being referred to herein as the “Applicable Awards”). Upon contribution of the cash
to the Trust, (A) the related Applicable Awards described in clauses (i), (iii) and (iv), above,
shall be canceled and no longer outstanding and (B) the Applicable Awards described in clause (ii),
above, shall be considered granted for all purposes of this Agreement and then canceled and no
longer outstanding. For purposes hereof, the Value of a share of Stock shall be the per share
price of Stock immediately before the Change in Control as listed on the principal exchange on
which such Stock trades. Upon the earlier of the first anniversary of the Change in Control if the
Executive is employed by the Employer or any Company Affiliate on such date and the termination of
the Executive’s employment in a manner that entitles him to benefits under Section 9(a), (b), (d)
or (e) (as applicable, the “Distribution Date”), the Executive (or his estate) shall be paid, based
on an election made by the Executive or his estate to the Employer at the time of such payment, (X)
the amount required to be held in Trust on his behalf hereunder (including any earnings on such
amount) (the “Cash Based Value”) or (Y) the value the Applicable Awards would have had on the
Distribution Date if such Applicable Awards were outstanding on such date based on the value of
Stock on such date (or the value on such date of the stock of any publicly traded parent company of
the Employer assuming the aggregate cash

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contributed to the Trust had been invested in such stock on the date of the Change in Control)
(the “Stock Based Value”). Notwithstanding the foregoing, in any Change in Control transaction
pursuant to which 100% of the Stock holdings of shareholders of the Employer immediately prior to
the transaction are exchanged solely for cash, the Stock Based Value shall be $0. If the Executive
fails to make such an election by the Distribution Date, the Executive shall be paid the greater of
the Cash Based Value or the Stock Based Value. If the Executive is paid the Stock Based Value, the
Executive shall be paid shares of stock of the Employer (or the stock of any publicly-traded parent
company of the Employer) that are freely and immediately transferable by the Executive and the
Trust shall be dissolved and all amounts required to be kept in the Trust shall be returned to the
Employer. If the Executive is paid the Cash Based Value, the Executive shall be paid in cash.
Notwithstanding the foregoing, if any Applicable Award would have vested before the applicable
Distribution Date, the Executive shall be entitled to a payment of the value of such Applicable
Award in the form (cash or stock) and amount as determined in accordance with the principles of the
four preceding sentences (but using the vesting date rather than the Distribution Date for purposes
of determining such value) and such payment shall reduce the amount otherwise payable under this
Section 5(f)(1). The Employer shall be responsible for making any payments required under this
Section 5(f). The Executive shall forfeit his right to any future payment under this Section 5(f)
and his interest in the Trust (the assets of which shall revert to the Employer) only if his
employment is terminated after the occurrence of a Change in Control and before the Distribution
Date in a manner described in Section 9(c); provided that he shall not forfeit his right to any
payment due him under this Section 5(f) with respect to Applicable Awards that would have vested
prior to his date of termination. Payments under this Section 5(f)(1)(b) shall be delayed for six
months following the Executive’s separation from service if so required by Section 409A. To the
extent permitted under Section 409A of the Code, if the Executive shall be entitled to a payment
pursuant to this Section 5(f)(1)(b) prior to the date at which a payment can be made to the
Executive solely because of the Code Section 409A six month delay in payment rule for key
employees, to the extent permitted by Section 409A the Executive shall be entitled to payment by
the Employer of the applicable employee portion of the withholding taxes due on such payment. Such
a payment by the Employer of withholding taxes shall reduce the amount otherwise payable to the
Executive under this Section 5(f)(1).

          (2) Notwithstanding Section 5(f)(1) above, instead of funding a trust with the cash amounts
required to be deposited under Section 5(f)(1) pursuant to the cancellation of the Applicable
Awards, the Employer, may with the Executive’s consent (which shall not be unreasonably withheld),
obtain an irrevocable letter of credit for, or other irrevocable insurance or a guarantee of, the
amounts required to be so deposited from a insurance company or other financial institution with
the highest credit rating from a nationally recognized rating agency on terms that provide the
Executive with no less protection or security than that provided under Section 5(f)(1) above. Even
if the Employer elects to not fund the Trust in accordance with this Section 5(f)(2), the Cash
Based Value for purposes of Section 5(f)(1) shall be calculated as if the Employer had funded the
Trust in accordance with Section 5(f)(1).

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     6. Expenses. The Executive is expected and is authorized to incur reasonable expenses
in the performance of his duties hereunder. The Employer shall reimburse the Executive for all
such expenses reasonably and actually incurred in accordance with policies which may be adopted
from time to time by the Employer promptly upon periodic presentation by the Executive of an
itemized account, including reasonable substantiation, of such expenses.

     7. Confidentiality, Non-Disclosure and Non-Competition Agreement. The Employer and
the Executive acknowledge and agree that during the Executive’s employment with the Employer, the
Executive will have access to and may assist in developing Company Confidential Information and
will occupy a position of trust and confidence with respect to the Employer’s affairs and business
and the affairs and business of the Company Affiliates. The Executive agrees that the following
obligations are necessary to preserve the confidential and proprietary nature of Company
Confidential Information and to protect the Employer and the Company Affiliates against harmful
solicitation of employees and customers, harmful competition and other actions by the Executive
that would result in serious adverse consequences for the Employer and the Company Affiliates:

          (a) Non-Disclosure. During and after the Executive’s employment with the Employer,
the Executive will not knowingly use, disclose or transfer any Company Confidential Information
other than as authorized in writing by the Employer or within the scope of the Executive’s duties
with the Employer as determined reasonably and in good faith by the Executive. Anything herein to
the contrary notwithstanding, the provisions of this Section 7(a) shall not apply (i) when
disclosure is required by law or by any court, arbitrator, mediator or administrative or
legislative body (including any committee thereof) with actual or apparent jurisdiction to order
the Executive to disclose or make accessible any information; (ii) with respect to any other
litigation, arbitration or mediation involving this Agreement, including, but not limited to, the
enforcement of this Agreement; (iii) as to information that becomes generally known to the public
or within the relevant trade or industry other than due to the Executive’s violation of this
Section 7(a); (iv) as to information that is or becomes available to the Executive on a
non-confidential basis from a source which is entitled to disclose it to the Executive; or (v) as
to information that the Executive possessed prior to the commencement of employment with the
Employer.

          (b) Materials. The Executive will not remove any Company Confidential Information or
any other property of the Employer or any Company Affiliate from the Employer’s premises or make
copies of such materials except for normal and customary use in the Employer’s business as
determined reasonably and in good faith by the Executive. The Employer acknowledges that the
Executive, in the ordinary course of his duties, routinely uses and stores Company Confidential
Information at home and other locations. The Executive will return to the Employer all Company
Confidential Information and copies thereof and all other property of the Employer or any Company
Affiliate at any time upon the request of the Employer

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and in any event promptly after termination of Executive’s employment. The Executive agrees to
attempt in good faith to identify and return to the Employer any copies of any Company Confidential
Information after the Executive ceases to be employed by the Employer. Anything to the contrary
notwithstanding, nothing in this Section 7 shall prevent the Executive from retaining a home
computer, papers and other materials of a personal nature, including diaries, calendars and
Rolodexes, information relating to his compensation or relating to reimbursement of expenses,
information that he reasonably believes may be needed for tax purposes, and copies of plans,
programs and agreements relating to his employment.

          (c) No Solicitation or Hiring of Employees. During the Non-Compete Period, the
Executive shall not solicit, entice, persuade or induce any individual who is employed by the
Employer or the Company Affiliates (or who was so employed within 180 days prior to the Executive’s
action) to terminate or refrain from continuing such employment or to become employed by or enter
into contractual relations with any other individual or entity other than the Employer or the
Company Affiliates, and the Executive shall not hire, directly or indirectly, as an employee,
consultant or otherwise, any such person. Anything to the contrary notwithstanding, the Employer
agrees that (i) the Executive’s responding to an unsolicited request from any former employee of
the Employer for advice on employment matters; and (ii) the Executive’s responding to an
unsolicited request for an employment reference regarding any former employee of the Employer from
such former employee, or from a third party, by providing a reference setting forth his personal
views about such former employee, shall not be deemed a violation of this Section 7(c).
Notwithstanding the foregoing, this Section 7(c) shall not preclude the Executive from soliciting
for employment or hiring any person who has been discharged by the Employer or any Company
Affiliate without cause.

          (d) Non-Competition.

               (i) During the Non-Compete Period, the Executive shall not, directly or indirectly, (A)
solicit or encourage any client or customer of the Employer or a Company Affiliate, or any person
or entity who was a client or customer within 180 days prior to Executive’s action to terminate,
reduce or alter in a manner adverse to the Employer, any existing business arrangements with the
Employer or a Company Affiliate or to transfer existing business from the Employer or a Company
Affiliate to any other person or entity, (B) provide services to any entity if (i) the entity
competes with the Employer by engaging in any business engaged in by the Employer, or (ii) the
services to be provided by the Executive are competitive with the Employer and substantially
similar to those previously provided by the Executive to the Employer; provided, however, that
following a Change in Control this Section 7(d)(i)(B)(i) shall not apply to the Executive, or (C)
own an interest in any entity described in subsection (B)(i) immediately above; provided, however,
that Executive may own, as a passive investor, securities of any such entity that has outstanding
publicly traded securities so long as his direct holdings in any such entity shall not in the
aggregate constitute more than 5% of the voting power of such entity. For purposes of this Section
7(d), a “client or customer” shall be limited to any actual

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borrower of the Employer (as set forth in the Employer’s CAM or substantially similar successor or
related system) and any other entity in the “term sheet issued,” “term sheet executed” or “credit
committee approved” categories listed in the Employer’s DealTracker or substantially similar
successor or related system. The Executive agrees that, before providing services, whether as an
employee or consultant, to any entity during the Non-Compete Period, he will provide a copy of this
Agreement to such entity, and such entity shall acknowledge to the Employer in writing that it has
read this Agreement. The Executive acknowledges that this covenant has a unique, very substantial
and immeasurable value to the Employer, that the Executive has sufficient assets and skills to
provide a livelihood for the Executive while such covenant remains in force and that, as a result
of the foregoing, in the event that the Executive breaches such covenant, monetary damages would be
an insufficient remedy for the Employer and equitable enforcement of the covenant would be proper.

               (ii) If the restrictions contained in Section 7(d)(i) shall be determined by any court of
competent jurisdiction to be unenforceable by reason of their extending for too great a period of
time or over too great a geographical area or by reason of their being too extensive in any other
respect, Section 7(d)(i) shall be modified to be effective for the maximum period of time for which
it may be enforceable and over the maximum geographical area as to which it may be enforceable and
to the maximum extent in all other respects as to which it may be enforceable.

          (e) Publicity. During the Employment Period, the Executive hereby grants to the
Employer the right to use, in a reasonable and appropriate manner, the Executive’s name and
likeness, without additional consideration, on, in and in connection with technical, marketing or
disclosure materials, or any combination thereof, published by or for the Employer or any Company
Affiliate.

          (f) Conflicting Obligations and Rights. The Executive agrees to inform the Employer
of any apparent conflicts between the Executive’s work for the Employer and any obligations the
Executive may have to preserve the confidentiality of another’s proprietary information or related
materials before using the same on the Employer’s behalf. The Employer shall receive such
disclosures in confidence and consistent with the objectives of avoiding any conflict of
obligations and rights or the appearance of any conflict of interest.

          (g) Enforcement. The Executive acknowledges that in the event of any breach of this
Section 7, the business interests of the Employer and the Company Affiliates will be irreparably
injured, the full extent of the damages to the Employer and the Company Affiliates will be
impossible to ascertain, monetary damages will not be an adequate remedy for the Employer and the
Company Affiliates, and the Employer will be entitled to enforce this Agreement by a temporary,
preliminary and/or permanent injunction or other equitable relief, without the necessity of posting
bond or security, which the Executive expressly waives. The Executive understands that the
Employer may waive some of the requirements expressed in this

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Agreement, but that such a waiver to be effective must be made in writing and should not in any way
be deemed a waiver of the Employer’s right to enforce any other requirements or provisions of this
Agreement. The Executive agrees that each of the Executive’s obligations specified in this
Agreement is a separate and independent covenant and that the unenforceability of any of them shall
not preclude the enforcement of any other covenants in this Agreement. The Executive further
agrees that any breach of this Agreement by the Employer prior to the Date of Termination shall not
release the Executive from compliance with his obligations under this Section 7, so along as the
Employer fully complies with Sections 9, 10, 11, and 12. The Employer further agrees that any
breach of this Agreement by the Executive that does not result in the Executive’s being terminated
for Cause, other than a willful (as defined in the definition of “Cause”) and material breach of
Sections 7(d)(i)(B) or 7(d)(i)(C) after his employment has terminated, shall not release the
Employer from compliance with its obligations under this Agreement. Notwithstanding the foregoing
two sentences, neither party shall be precluded from pursuing judicial remedies as a result of any
such breaches.

     8. Termination of Employment.

          (a) Permitted Terminations. The Executive’s employment hereunder may be terminated
during the Employment Period under the following circumstances:

               (i) Death. The Executive’s employment hereunder shall terminate upon the Executive’s
death;

               (ii) By the Employer. The Employer may terminate the Executive’s employment:

                    (A) Disability. If the Executive shall have been substantially unable to perform the
Executive’s material duties hereunder by reason of illness, physical or mental disability or other
similar incapacity, which inability shall continue for 180 consecutive days or 270 days in any
24-month period (a “Disability”) (provided, that until such termination, the Executive shall
continue to receive his compensation and benefits hereunder, reduced by any benefits payable to him
under any disability insurance policy or plan applicable to him or her); or

                    (B) Cause. For Cause or without Cause;

               (iii) By the Executive. The Executive may terminate his employment for any reason
(including Good Reason) or for no reason.

          (b) Termination. Any termination of the Executive’s employment by the Employer or the
Executive (other than because of the Executive’s death) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13 hereof. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall

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indicate the specific termination provision in this Agreement relied upon, if any, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated. Termination of the Executive’s
employment shall take effect on the Date of Termination. The Executive agrees, in the event of any
dispute under Section 8(a)(ii)(A) as to whether a Disability exists, and if requested by the
Employer, to submit to a physical examination by a licensed physician selected by mutual consent of
the Employer and the Executive, the cost of such examination to be paid by the Employer. The
written medical opinion of such physician shall be conclusive and binding upon each of the parties
hereto as to whether a Disability exists and the date when such Disability arose. This Section
shall be interpreted and applied so as to comply with the provisions of the Americans with
Disabilities Act and any applicable state or local laws.

     9. Compensation Upon Termination.

          (a) Death. If the Executive’s employment is terminated during the Employment Period
as a result of the Executive’s death, this Agreement and the Employment Period shall terminate
without further notice or any action required by the Employer or the Executive’s legal
representatives. Upon the Executive’s death, the Employer shall pay or provide the following:

               (i) Base Salary. The Employer shall pay to the Executive’s legal representative or
estate, as applicable, a cash lump sum amount equal to one year’s Base Salary within thirty days
following the Executive’s death;

               (ii) Accrued Benefits. The Employer shall pay to the Executive’s legal representative
or estate, as applicable, the Accrued Benefits and the rights of the Executive’s legal
representative or estate with respect to equity or equity-related awards shall be governed by the
applicable terms of the related plan or award agreement; and

               (iii) Equity Awards. All outstanding equity awards held by the Executive immediately
prior to his death shall immediately vest (with outstanding options remaining exercisable for the
length of their remaining term) and all equity awards described in Section 5(e) that have not been
granted as of the Executive’s death shall be immediately granted to the Executive’s estate or
beneficiary, which such awards shall be fully vested.

     The Employer shall pay to the Executive’s estate, or as may be directed by the legal
representatives of such estate, the Executive’s Accrued Benefits due pursuant to Section 9(a)(ii),
at the time such payments are due. Any payments by the Employer pursuant to this Section 9(a)
shall be reduced by the amount of any payments to the Executive’s beneficiaries or estate paid on
account of any life insurance plan or policy provided by the Employer for the benefit of the
Executive. Except as set forth herein, the Employer shall have no further obligation to the
Executive under this Agreement.

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          (b) Disability. If the Employer terminates the Executive’s employment during the
Employment Period because of the Executive’s Disability pursuant to Section 8(a)(ii)(A), (i) the
Employer shall pay to the Executive the Executive’s Base Salary due through the Date of
Termination, (ii) all Accrued Benefits, if any, to which the Executive is entitled as of the Date
of Termination at the time such payments are due, and (iii) all outstanding equity awards held by
the Executive immediately prior to his termination shall immediately vest (with outstanding options
remaining exercisable for the length of their remaining term) and all equity awards described in
Section 5(e) that have not been granted as of the Executive’s termination shall be immediately
granted to the Executive, which such awards shall be fully vested. Except as set forth herein, the
Employer shall have no further obligations to the Executive under this Agreement.

          (c) Termination by the Employer for Cause or by the Executive without Good Reason.
If, during the Employment Period, the Employer terminates the Executive’s employment for Cause
pursuant to Section 8(a)(ii)(B) or the Executive terminates his employment without Good Reason, the
Employer shall pay to the Executive the Executive’s Base Salary due through the Date of Termination
and all Accrued Benefits, if any, to which the Executive is entitled as of the Date of Termination,
at the time such payments are due, and the Executive’s rights with respect to equity or
equity-related awards shall be governed by the applicable terms of the related plan or award
agreement. Unvested shares of Stock previously granted and any shares of Stock scheduled to be
granted under Section 5(e) on or after the Date of Termination shall be forfeited by the Executive.
In addition, if the Executive voluntarily terminates his employment without Good Reason after a
Change in Control, the Employer shall: (i) continue to pay the Executive his Base Salary in effect
on his Date of Termination (without giving any effect to reductions thereto after a Change in
Control) during the Non-Compete Period; and (ii) immediately pay the Executive in a cash lump sum
an amount equal to a pro rata portion (based upon the number of days that the Executive was
employed during the calendar year in which the Date of Termination occurs) of the minimum cash
bonus required to be paid by the Employer under Section 5(b) for the year of his termination.
Except as set forth herein, the Employer shall have no further obligations to the Executive under
this Agreement.

          (d) Termination by the Employer without Cause or by the Executive with Good Reason.
Subject to Section 9(e), if the Employer terminates the Executive’s employment during the
Employment Period other than for Cause or Disability pursuant to Section 8(a) or if the Executive
terminates his employment hereunder with Good Reason, (i) the Employer shall immediately grant (to
the extent not already granted) all equity awards described in Section 5(e); (ii) the Employer
shall pay the Executive (A) the Executive’s Base Salary due through the Date of Termination, (B) a
cash lump sum in an amount equal to a pro rata portion (based upon the number of days the Executive
was employed during the calendar year in which the Date of Termination occurs) of the average
amount of the annual bonuses, if any, that were earned by the Executive for the two calendar years
immediately preceding the year of the Date of Termination,

11

 

(C) all Accrued Benefits, if any, to which the Executive is entitled as of the Date of Termination,
in each case at the time such payments are due and (D) a cash lump sum in an amount equal to the
greater of (x) two times the sum of the Executive’s Base Salary and the average of the annual
bonuses earned by the Executive for the two calendar years immediately preceding the year of the
Date of Termination, if any, and (y) $1.8 million; (iii) (A) all deferred compensation credited on
the Executive’s behalf and all equity or equity-related awards held by, or credited to, the
Executive (including, without limitation, the equity awards required to be granted pursuant to
clause (i) of this Section 9(d), stock options, stock appreciation rights, restricted stock awards,
dividend equivalent rights, restricted stock units or deferred stock awards) shall immediately vest
and, if applicable, become exercisable, (B) all stock options, stock appreciation rights or other
similar rights held by the Executive shall remain exercisable for the remainder of their originally
scheduled terms, and (C) all deferred compensation or other equity or equity-related awards will,
to the extent applicable, be transferred or distributed to the Executive within 10 days of the
Executive’s Date of Termination; and (iii) the Executive and his covered dependents shall be
entitled to continued participation on the same terms and conditions as applicable immediately
prior to the Executive’s Date of Termination for the greater of (A) 24 months or (B) the balance of
the Employment Period in such medical, dental, hospitalization and life insurance coverages in
which the Executive and his eligible dependents were participating immediately prior to the Date of
Termination; provided that if such continued coverage is not permitted under the terms of such
benefit plans, the Employer shall pay Executive an additional amount that, on an after-tax basis,
is equal to the cost of comparable coverage obtained by Executive.

          (e) Change in Control. This Section 9(e) shall apply if there is (i) a termination of
the Executive’s employment by the Employer other than for Cause or Disability pursuant to Section
8(a) or by the Executive for Good Reason in the two-year period after a Change in Control; or (ii)
a termination of the Executive’s employment by the Employer prior to a Change in Control, if the
termination was at the request of a third party or otherwise arose in anticipation of a Change in
Control. If any such termination occurs, the Executive shall receive benefits set forth in Section
9(d), except that (A) in lieu of the lump-sum payment under Section 9(d)(i)(D), the Executive shall
receive in a lump sum after the termination of his employment an amount equal to three multiplied
by the sum of (x) the Executive’s Base Salary and (y) the greater of the average of the annual
bonuses earned by the Executive for the two calendar years immediately preceding the year of the
Date of Termination, if any, and the minimum cash bonus required to be paid by the Employer under
Section 5(b) for the year of his termination and (B) the benefits described in Section 9(d)(iii)
shall be continued for the greater of 36 months or the balance of the Employment Period.
Notwithstanding anything to the contrary herein, this Section 9(e) shall not apply upon the
Executive’s death.

          (f) Liquidated Damages. The parties acknowledge and agree that damages which will
result to the Executive for termination by the Employer of the Executive’s employment without Cause
or by the Executive for Good Reason shall be extremely difficult or impossible to establish or
prove, and agree that the amounts payable to the Executive under

12

 

Section 9(d) or 9(e) (the “Severance Payments”) shall constitute liquidated damages for any such
termination. The Executive agrees that, except for such other payments and benefits to which the
Executive may be entitled as expressly provided by the terms of this Agreement or any other
applicable benefit plan, such liquidated damages shall be in lieu of all other claims that the
Executive may make by reason of any such termination of his employment and that, as a condition to
receiving the Severance Payments, the Executive will execute a release of claims substantially in
the form of one of the two releases (whichever is appropriate) attached hereto as Exhibit B.
Within two business days of the Date of Termination, the Employer shall deliver to the Executive
the appropriate form of release of claims for the Executive to execute. The Severance Payments
shall be made within three business days of Employer’s receipt of the release of claims if the
Executive is under 40 years old on the date on which such release is signed, or within three
business days of the expiration of the revocation period without the release being revoked if the
Executive is 40 years old or older on the date on which such release is signed. In addition, the
Employer will execute a release of claims substantially in the form of the release attached hereto
as Exhibit C and will deliver such release to the Executive along with the Severance Payments.

          (g) No Offset. In the event of termination of his employment, the Executive shall be
under no obligation to seek other employment and there shall be no offset against amounts due to
him on account of any remuneration or benefits provided by any subsequent employment he may obtain.
The Employer’s obligation to make any payment pursuant to, and otherwise to perform its
obligations under, this Agreement shall not be affected by any offset, counterclaim or other right
that the Employer or its affiliates may have against him for any reason.

          (h) Section 409A. To the extent the Executive would be subject to the additional 20%
tax imposed on certain deferred compensation arrangements pursuant to Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), as a result of any provision of this Agreement, such
provision shall be deemed amended to the minimum extent necessary to avoid application of such tax
and the parties shall promptly execute any amendment reasonably necessary to implement this Section
9(h).

     10. Certain Additional Payments by the Employer.

          (a) If it shall be determined that any benefit provided to the Executive or payment or
distribution by or for the account of the Employer to or for the benefit of the Executive, whether
provided, paid or payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code,
or any interest or penalties are incurred by the Executive with respect to such excise tax
resulting from any action or inaction by the Employer (such excise tax, together with any such
interest and penalties, collectively, the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that

13

 

after payment by the Executive of the Excise Tax and all other income, employment, excise and other
taxes that are imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the sum of (A) the Excise Tax imposed upon the Payments and (B) the product of any
deductions disallowed because of the inclusion of the Gross-up Payment in the Executive’s adjusted
gross income and the highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made.

          (b) Subject to the provisions of Section 10(d), all determinations required to be made under
this Section 10, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the Employer’s independent, certified public accounting firm or such other certified public
accounting firm as may be designated by the Executive and shall be reasonably acceptable to the
Employer (the “Accounting Firm”) which shall provide detailed supporting calculations both to the
Employer and the Executive within 15 business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the Employer. If the Accounting
Firm is serving as accountant or auditor for the individual, entity or group effecting a change in
the ownership or effective control (as defined for purposes of Section 280G of the Code) of the
Employer, the Executive shall appoint another nationally recognized accounting firm which is
reasonably acceptable to the Employer to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses
of the Accounting Firm shall be borne solely by the Employer. Any Gross-Up Payment, as determined
pursuant to this Section 10, shall be paid by the Employer to the Executive within five days of the
receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be
binding upon the Employer and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that additional Gross-Up Payments shall be required to be made to compensate the
Executive for amounts of Excise Tax later determined to be due, consistent with the calculations
required to be made hereunder (an “Underpayment”). If the Employer exhausts its remedies pursuant
to Section 10(c) and the Executive is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Employer to or for the benefit of the Executive.

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

14

 

in writing prior to the expiration of such period that they desire to contest such claim, the
Executive shall:

               (i) give the Employer any information reasonably requested by the Employer relating to such
claim;

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

               (iii) cooperate with the Employer in good faith effectively to contest such claim; and

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

     11. Indemnification. During the Employment Period and thereafter, the Employer agrees
to indemnify and hold the Executive and the Executive’s heirs and representatives harmless, to the
maximum extent permitted by law, against any and all damages, costs, liabilities, losses and
expenses (including reasonable attorneys’ fees) as a result of any claim or proceeding (whether
civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether
civil, criminal, administrative or investigative), against the Executive that arises out of or
relates to the Executive’s service as an officer, director or employee, as the case may be, of the
Employer, or the Executive’s service in any such capacity or similar capacity with an affiliate of
the Employer or other entity at the request of the Employer, both prior to and after the Effective
Date, and to promptly advance to the Executive or the Executive’s heirs or representatives such
expenses upon written request with appropriate documentation of such expense upon receipt of an
undertaking by the Executive or on the Executive’s behalf to repay such amount if it shall
ultimately be determined that the Executive is not entitled to be indemnified by the Employer.
During the Employment Period and thereafter, the Employer also shall provide the Executive with
coverage under its current directors’ and officers’ liability policy to the same extent that it
provides such coverage to its other executive officers. If the Executive has any knowledge of any
actual or threatened action, suit or proceeding, whether civil, criminal, administrative or
investigative, as to which the Executive may request indemnity under this provision, the Executive
will give the Employer prompt written notice thereof; provided that the failure to give such notice
shall not affect the Executive’s right to indemnification. The Employer shall be entitled to
assume the defense of any such proceeding and the Executive will

15

 

use reasonable efforts to cooperate with such defense. To the extent that the Executive in good
faith determines that there is an actual or potential conflict of interest between the Employer and
the Executive in connection with the defense of a proceeding, the Executive shall so notify the
Employer and shall be entitled to separate representation at the Employer’s expense by counsel
selected by the Executive (provided that the Employer may reasonably object to the selection of
counsel within ten (10) business days after notification thereof) which counsel shall cooperate,
and coordinate the defense, with the Employer’s counsel and minimize the expense of such separate
representation to the extent consistent with the Executive’s separate defense. This Section 11
shall continue in effect after the termination of the Executive’s employment or the termination of
this Agreement.

     12. Attorney’s Fees. The Employer shall advance the Executive (and his beneficiaries)
any and all costs and expenses (including without limitation attorneys’ fees and other charges of
counsel) incurred by the Executive (or any of his beneficiaries) in resolving any controversy,
dispute or claim arising out of or relating to this Agreement, any other agreement or arrangement
between the Executive and the Employer, the Executive’s employment with the Employer, or the
termination thereof; provided that the Executive shall reimburse the Employer any advances on a net
after-tax basis to cover expenses incurred by the Executive for claims (a) brought by the Employer
on account of the Executive’s alleged breach of Section 7 of this Agreement, breach of the
Executive’s fiduciary duty of loyalty, or fraud or material misconduct, if it is judicially
determined that the Employer is the prevailing party, or (b) brought by the Executive that are
judicially determined to be frivolous or advanced in bad faith. Pending the resolution of any such
claim, the Executive (and his beneficiaries) shall continue to receive all payments and benefits
described in Section 5 of this Agreement. This Section 12 shall continue in effect after the
termination of the Executive’s employment or the termination of this Agreement.

     13. Notices. All notices, demands, requests, or other communications which may be or
are required to be given or made by any party to any other party pursuant to this Agreement shall
be in writing and shall be hand delivered, mailed by first-class registered or certified mail,
return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by
facsimile transmission addressed as follows:

          (i) If to the Employer:

CapitalSource Finance LLC

4445 Willard Avenue

12th Floor

Chevy Chase, Maryland 20815

Attn: Chief Legal Officer

Facsimile Number: 301-841-2380

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          (ii)   If to the Executive:

                  Michael Szwajkowski

Address last shown on the Employer’s Records

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

     14. Severability. The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect.

     15. Effect on Other Agreements. The provisions of this Agreement shall supersede the
terms of any plan, policy, agreement, award or other arrangement of the Employer (whether entered
into before or after the Effective Date) to the extent application of the terms of this Agreement
is more favorable to the Executive.

     16. Survival. It is the express intention and agreement of the parties hereto that
the provisions of Sections 7, 9, 10, 11, 12, 13, 15, 17, 18, 19, 21, 22 and 24 hereof and this
Section 16 shall survive the termination of employment of the Executive. In addition, all
obligations of the Employer to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.

     17. Assignment. The rights and obligations of the parties to this Agreement shall not
be assignable or delegable, except that (i) in the event of the Executive’s death, the personal
representative or legatees or distributees of the Executive’s estate, as the case may be, shall
have the right to receive any amount owing and unpaid to the Executive hereunder and (ii) the
rights and obligations of the Employer hereunder shall be assignable and delegable in connection
with any subsequent merger, consolidation, sale of all or substantially all of the assets or equity
interests of the Employer or similar transaction involving the Employer or a successor corporation.
The Employer shall require any successor to the Employer to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Employer would be required to
perform it if no such succession had taken place.

     18. Binding Effect. Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties

17

 

and their respective heirs, devisees, executors, administrators, legal representatives, successors
and assigns.

     19. Amendment; Waiver. This Agreement shall not be amended, altered or modified
except by an instrument in writing duly executed by the party against whom enforcement is sought.
Neither the waiver by either of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure of either of the parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder,
shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.

     20. Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for
any purpose, and shall not in any way define or affect the meaning, construction or scope of any of
the provisions hereof.

     21. Governing Law. This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed in accordance with
the laws of the State of Maryland (but not including any choice of law rule thereof that would
cause the laws of another jurisdiction to apply).

     22. Entire Agreement. This Agreement constitutes the entire agreement between the
parties respecting the employment of the Executive, there being no representations, warranties or
commitments except as set forth herein.

     23. Counterparts. This Agreement may be executed in two counterparts, each of which
shall be an original and all of which shall be deemed to constitute one and the same instrument.

     24. Withholding. The Employer may withhold from any benefit payment under this
Agreement all federal, state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling; provided that any withholding obligation arising in connection
with the exercise of a stock option or the transfer of stock or other property shall be satisfied
through withholding an appropriate number of shares of stock or appropriate amount of such other
property.

     25. Definitions.

          “Accrued Benefits” means (i) any compensation deferred by the Executive prior to the Date of
Termination and not paid by the Employer or otherwise specifically addressed by this Agreement;
(ii) any amounts or benefits owing to the Executive or to the Executive’s beneficiaries under the
then applicable benefit plans of the Employer; (iii) any amounts owing to

18

 

the Executive for reimbursement of expenses properly incurred by the Executive prior to the Date of
Termination and which are reimbursable in accordance with Section 6; and (iv) any other benefits or
amounts due and owing to the Executive under the terms of any plan, program or arrangement of the
Employer.

          “Cause” shall be limited to the following events (i) the Executive’s conviction of, or plea of
nolo contendere to, a felony (other than in connection with a traffic violation) under any state or
federal law; (ii) the Executive’s willful and continued failure to substantially perform his
essential job functions hereunder after receipt of written notice from the Employer that
specifically identifies the manner in which the Executive has substantially failed to perform his
essential job functions and specifying the manner in which the Executive may substantially perform
his essential job functions in the future; (iii) a material act of fraud or willful and material
misconduct with respect, in each case, to the Employer, by the Executive; (iv) a willful and
material breach of Section 4 or Section 7(d)(i)(B) or (C); or (v) the hiring of any person who was
an employee of the Employer within 180 days prior to such hiring, other than to perform services
for the benefit of the Employer. For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the Executive’s action or omission was
in the best interests of the Employer. Anything herein to the contrary notwithstanding, the
Executive shall not be terminated for “Cause” hereunder unless (A) written notice stating the basis
for the termination is provided to the Executive, (B) as to clauses (ii), (iii) or (iv) of this
paragraph, he is given 30 days to cure the neglect or conduct that is the basis of such claim (it
being understood that any errors in expense reimbursement may be cured by repayment), (C) if he
fails to cure such neglect or conduct, the Executive has an opportunity to be heard with counsel of
his choosing before the full Board prior to any vote regarding the existence of Cause and (D) there
is a vote of a majority of the members of the Board to terminate him for Cause.

          “Change in Control” means the occurrence of one or more of the following events: (i) any
“person” (as such terms is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of
1934 as amended (the “Act”)) or “group” (as such term is used in Section 14(d)(d) of the Act) is or
becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Act) of more
than 30% of the voting Stock of the Employer; (ii) the majority of the Board of Directors of the
Employer (the “Board”) consists of individuals other than Incumbent Directors, which term means the
members of the Board on the Effective Date; provided that any person becoming a director subsequent
to such date whose election or nomination for election was supported by two-thirds of the directors
who then comprised the Incumbent Directors shall be considered to be an Incumbent Director; (iii)
the Employer adopts any plan of liquidation providing for the distribution of all or substantially
all of its assets; (iv) the Employer transfers all or substantially all of its assets or business
(unless the shareholders of the Employer immediately prior to such transaction beneficially own,
directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the
Employer, all of the Voting Stock or other ownership interests of the entity or entities, if any,
that succeed

19

 

to the business of the Employer); or (v) any merger, reorganization, consolidation or similar
transaction unless, immediately after consummation of such transaction, the shareholders of the
Employer immediately prior to the transaction hold, directly or indirectly, more than 50% of the
Voting Stock of the Employer or the Employer’s ultimate parent company if the Employer is a
subsidiary of another corporation (there being excluded from the number of shares held by such
shareholders, but not from the Voting Stock of the combined company, any shares received by
Affiliates of such other company in exchange for stock of such other company). For purposes of
this Change in Control definition, the “Employer” shall include any entity that succeeds to all or
substantially all of the business of the Employer and “Voting Stock” shall mean securities of any
class or classes having general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.

          “Company Affiliate” means any entity controlled by, in control of, or under common control
with, the Employer.

          “Company Confidential Information” means information known to the Executive to constitute
trade secrets or proprietary information belonging to the Employer or other confidential financial
information, operating budgets, strategic plans or research methods, personnel data, projects or
plans, or non-public information regarding the terms of any existing or pending lending transaction
between Employer and an existing or pending client or customer (as the phrase “client or customer”
is defined in Section 7(d)(i) hereof), in each case, received by the Executive in the course of his
employment by the Employer or in connection with his duties with the Employer. Notwithstanding
anything to the contrary contained herein, the general skills, knowledge and experience gained
during the Executive’s employment with the Employer, information publicly available or generally
known within the industry or trade in which the Employer competes and information or knowledge
possessed by the Executive prior to his employment by the Employer, shall not be considered Company
Confidential Information.

          “Date of Termination” means (i) if the Executive’s employment is terminated by the Executive’s
death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because
of the Executive’s Disability pursuant to Section 8(a)(ii)(A), 30 days after Notice of Termination,
provided that the Executive shall not have returned to the performance of the Executive’s duties on
a full-time basis during such 30-day period; (iii) if the Executive’s employment is terminated by
the Employer pursuant to Section 8(a)(ii)(B) or by the Executive pursuant to Section 8(a)(iii), the
date specified in the Notice of Termination; or (iv) if the Executive’s employment is terminated
during the Employment Period other than pursuant to Section 8(a), the date on which Notice of
Termination is given.

          “Extended Term” shall have the meaning set forth in Section 2.

          “Good Reason” means, unless otherwise agreed to in writing by the Executive, (i) any
diminution or adverse change prior to a Change in Control in the Executive’s title;

20

 

(ii) reduction in the Executive’s Base Salary or, after a Change in Control, the annual bonus
payable to the Executive under Section 5(b); (iii) prior to a Change in Control a requirement that
the Executive report to someone other than the Employer’s Chief Executive Officer and, in a dual
reporting role, President (provided, however that Executive acknowledges and agrees that during the
Employment Period an increasing amount of the day-to-day supervision of his work may be undertaken
by the President); (iv) a material diminution in the Executive’s authority, responsibilities or
duties or material interference with the Executive’s carrying out his duties; (v) the assignment of
duties inconsistent with the Executive’s position or status with the Employer as of the date
hereof; (vi) a relocation of the Executive’s New York, New York place of employment to a location
that is more than 25 miles away from the current location of the Employer’s offices in New York,
New York; (vii) any other material breach of the terms of this Agreement or any other agreement
that breach is not cured within ten days after the Executive’s delivery of a written notice of such
breach to the Employer; (viii) any purported termination of the Executive’s employment by the
Employer that is not effected in accordance with the applicable provisions of this Agreement; (ix)
the failure of the Employer to obtain the assumption in writing of its obligations under this
Agreement by any successor to all or substantially all of the assets of the Employer within 15 days
after a merger, consolidation, sale or similar transaction; or (x) the delivery of a notice of
Non-Renewal by the Employer at any time up to and including April 22, 2023. In order to invoke a
termination for Good Reason, the Executive must terminate his employment, if at all, within 30 days
of the occurrence of any event of “Good Reason”. Notwithstanding anything to the contrary herein,
(A) Good Reason shall not, by itself, include removal of the Executive’s authority and/or
responsibility for any aspect of loan management, and (B) after a Change in Control, Good Reason
shall not, by itself, include (i) the removal of the Executive from the Credit Committee; (ii) the
assignment to the Executive of a different title that is, within the organization of the successor
entity, equivalent to the Executive’s title with the Employer immediately prior to the Change in
Control; or (iii) requiring the Executive to report to the person within a successor entity with
management authority for the Executive’s business unit.

          “Non-Compete Period” means the period commencing on the Effective Date and ending twelve
months after the earlier of the expiration of the Employment Period or the Executive’s Date of
Termination, provided that if a Change in Control occurs after 2005, the Non-Compete Period shall
end six months after the earlier of the expiration of the Employment Period or the Executive’s Date
of Termination.

21

 

     IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement, or have
caused this Agreement to be duly executed and delivered on their behalf.

	 	 	 	 	 
	 	CAPITALSOURCE INC.

 	 
	 	By:  	/s/ John K. Delaney
 	 
	 	Name:  	John K. Delaney 	 
	 	Title:  	Chairman of the Board and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Michael Szwajkowski
 	 
	 	Michael Szwajkowski 	 
	 	 	 
	 

22

 

EXHIBIT A

Schedule I

Summary of Grants of CapitalSource Common Stock

to Michael Szwajkowski Provided for in Section 5(e) of Employment Agreement

	 	 	 	 	 	 	 	 	 
	Date	 	Number of Shares Granted	 	Number of Granted Shares Vesting
	April 22, 2005
	 	 	50,000	 	 	 	25,000	 
	April 22, 2006
	 	 	50,000	 	 	 	25,000	 
	April 22, 2007
	 	 	50,000	 	 	 	50,000	 
	April 22, 2008
	 	 	50,000	 	 	 	50,000	 
	April 22, 2009
	 	 	 	 	 	 	50,000	 

Schedule II

As contemplated by Section 5(e), the grants of Stock described in Section 5(e) shall be subject to
the following additional terms and conditions:

1. The Executive shall have all the rights of a shareholder with respect to all Stock actually
granted under Section 5(e), including the right to vote and to receive dividends.

2. The number of shares of Stock contemplated by Section 5(e) shall be equitably adjusted to
prevent the unintended dilution or enlargement of benefits provided thereby to take into account
any Stock split, consolidation or other similar event.

3. The Executive may direct the Employer to withhold shares of Stock to satisfy federal, state and
local tax withholding obligations imposed in connection with the grant or vesting of Stock granted
pursuant to Section 5(e). The value of shares of Stock shall be determined reasonably and in good
faith.

4. Shares of Stock granted pursuant to Section 5(e) shall have been registered for issuance on Form
S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or a successor form, and
they shall be freely transferable by the Executive in compliance with Rule 144 under the Securities
Act (subject to any vesting requirement imposed under Section 5(e) and subject to compliance with
the Employer’s insider trading policy).

5. The terms of the Agreement and this Exhibit A set forth the parties’ complete agreement with
respect to the grants of Stock described in Section 5(e).

 

 

EXHIBIT B

General Release of Claims If Executive Is 40 Years-Old or Older on the Date of Execution

          Consistent with Section 9(f) of the Employment Agreement dated April 22, 2005 between me and
CapitalSource Inc. (the “Employment Agreement”) and in consideration for and contingent upon my
receipt of the Severance Payments set forth in Section 9 of the Employment Agreement, I, for
myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully
and forever release and discharge CapitalSource and its affiliated entities, as well as their
predecessors, successors, assigns, and their current or former directors, officers, partners,
agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims,
demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I
have or may have against any of them arising out of or in connection with my employment by
CapitalSource, the Employment Agreement, the termination of my employment with CapitalSource, or
any event, transaction, or matter occurring or existing on or before the date of my signing of this
General Release, except that I am not releasing any claims arising under Sections 5(f), 10, 11, or
12 of the Employment Agreement, any other right to indemnification that I may otherwise have, or
any claims arising after the date of my signing this General Release. I agree not to file or
otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to
otherwise assert any claims, demands or entitlements that are lawfully released herein. I further
hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages
concerning the claims, demands or entitlements that are lawfully released herein. I represent and
warrant that I have not previously filed or joined in any such claims, demands or entitlements
against CapitalSource or the other persons released herein and that I will indemnify and hold them
harmless from all liabilities, claims, demands, costs, expenses and/or attorneys’ fees incurred as
a result of any such claims, demands or lawsuits.

          This General Release specifically includes, but is not limited to, all claims of breach of
contract, employment discrimination (including any claims coming within the scope of Title VII of
the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical
Leave Act, and Article 49B of the Maryland Code, all as amended, or any other applicable federal,
state, or local law), claims under the Employee Retirement Income Security Act, as amended, claims
under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local
statute relating to payment of wages), claims concerning recruitment, hiring, termination, salary
rate, severance pay, stock options, wages or benefits due, sick leave, holiday pay, vacation pay,
life insurance, group medical insurance, any other fringe benefits, worker’s compensation,
termination, employment status, libel, slander, defamation, intentional or negligent
misrepresentation and/or infliction of emotional distress, together with any and all tort,
contract, or other claims which might have been asserted by me or on my behalf in any suit, charge
of discrimination, or claim against CapitalSource or the persons released herein.

          I acknowledge that I have been given an opportunity of twenty-one (21) days to consider this
General Release and that I have been encouraged by CapitalSource to discuss fully the terms of this
General Release with legal counsel of my own choosing. Moreover, for a period of seven (7) days
following my execution of this General Release, I shall have the right to

 

 

revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal
statute that prohibits employers from discriminating against employees who are age 40 or over. If
I elect to revoke this General Release within this seven-day period, I must inform CapitalSource by
delivering a written notice of revocation to CapitalSource’s Director of Human Resources, 4445
Willard Avenue, 12th Floor, Chevy Chase, Maryland 20815, no later than 11:59 p.m. on
the seventh calendar day after I sign this General Release. I understand that, if I elect to
exercise this revocation right, this General Release shall be voided in its entirety at the
election of CapitalSource and CapitalSource shall be relieved of all obligations to make the
Severance Payments described in Section 9 of the Employment Agreement. I may, if I wish, elect to
sign this General Release prior to the expiration of the 21-day consideration period, and I agree
that if I elect to do so, my election is made freely and voluntarily and after having an
opportunity to consult counsel.

	 	 	 	 	 
	 

	 	AGREED:	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Michael Szwajkowski
	 	Date

 

 

EXHIBIT B

General Release of Claims if the Executive is Under 40 Years-Old on the Date of Execution

          Consistent with Section 9(f) of the Employment Agreement dated April 22, 2005 between me and
CapitalSource Inc. (the “Employment Agreement”) and in consideration for and contingent upon my
receipt of the Severance Payments set forth in Section 9 of the Employment Agreement, I, for
myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully
and forever release and discharge CapitalSource and its affiliated entities, as well as their
predecessors, successors, assigns, and their current or former directors, officers, partners,
agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims,
demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I
have or may have against any of them arising out of or in connection with my employment by
CapitalSource, the Employment Agreement, the termination of my employment with CapitalSource, or
any event, transaction, or matter occurring or existing on or before the date of my signing of this
General Release, except that I am not releasing any claims arising under Sections 5(f), 10, 11, or
12 of the Employment Agreement, any other right to indemnification that I may otherwise have, or
any claims arising after the date of my signing this General Release. I agree not to file or
otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to
otherwise assert any claims, demands or entitlements that are lawfully released herein. I further
hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages
concerning the claims, demands or entitlements that are lawfully released herein. I represent and
warrant that I have not previously filed or joined in any such claims, demands or entitlements
against CapitalSource or the other persons released herein and that I will indemnify and hold them
harmless from all liabilities, claims, demands, costs, expenses and/or attorneys’ fees incurred as
a result of any such claims, demands or lawsuits.

          This General Release specifically includes, but is not limited to, all claims of breach of
contract, employment discrimination (including any claims coming within the scope of Title VII of
the Civil Rights Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and
Medical Leave Act, and Article 49B of the Maryland Code, all as amended, or any other applicable
federal, state, or local law), claims under the Employee Retirement Income Security Act, as
amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal,
state or local statute relating to payment of wages), claims concerning recruitment, hiring,
termination, salary rate, severance pay, stock options, wages or benefits due, sick leave, holiday
pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, worker’s
compensation, termination, employment status, libel, slander, defamation, intentional or negligent
misrepresentation and/or infliction of emotional distress, together with any and all tort,
contract, or other claims which might have been asserted by me or on my behalf in any suit, charge
of discrimination, or claim against CapitalSource or the persons released herein.

          I acknowledge and agree that I have been given a more than sufficient period of time to
consider this General Release and that I have been encouraged by CapitalSource to discuss fully the
terms of this General Release with legal counsel of my own choosing. I further

 

 

acknowledge and agree that my execution of this General Release is made freely and voluntarily and
not under duress or coercion of any kind.

	 	 	 	 	 
	 

	 	AGREED:	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Michael Szwajkowski
	 	Date

 

 

EXHIBIT C

General Release of Claims by CapitalSource

          Consistent with Section 9(f) of the Employment Agreement dated April 22, 2005 between
CapitalSource Inc. and Michael Szwajkowski (the “Employment Agreement”) and in consideration for
and contingent upon Executive’s execution of a general release of claims in favor of CapitalSource
in the form required by the Employment Agreement (and provided that he does not revoke it in the
event that it is revocable), CapitalSource, for itself and its affiliated entities, as well as
their predecessors, successors, assigns, and their current or former directors, officers, partners,
agents, employees, attorneys, and administrators do hereby fully and forever release and discharge
Executive and his attorneys, heirs, executors, administrators, successors, and assigns, from all
suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever which
CapitalSource has or may have against any of them which are known to it as of the date of its
executing this General Release and arising out of or in connection with Executive’s employment by
CapitalSource, the Employment Agreement, the termination of Executive’s employment with
CapitalSource, or any event, transaction, or matter occurring or existing on or before the date of
CapitalSource’s signing of this General Release. CapitalSource agrees not to file or otherwise
institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert
any claims, demands or entitlements that are lawfully released herein. CapitalSource further
hereby irrevocably and unconditionally waives any and all rights to recover any relief or damages
concerning the claims, demands or entitlements that are lawfully released herein. CapitalSource
represents and warrants that it has not previously filed or joined in any such claims, demands or
entitlements against Executive or the other persons released herein and that it will indemnify and
hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorneys’ fees
incurred as a result of any such claims, demands or lawsuits.

          This General Release specifically includes, but is not limited to, all known claims of breach
of contract, tortious conduct, or breach of fiduciary duty, together with any and all known tort,
contract, or other known claims which might have been asserted by CapitalSource or on its behalf in
any suit or claim against Executive or the persons released herein.

          CapitalSource acknowledges and agrees that it has been given a more than sufficient period of
time to consider this General Release and that it have been encouraged by Executive to discuss
fully the terms of this General Release with legal counsel of its own

 

 

choosing. CapitalSource further acknowledges and agrees that its execution of this General Release
is made freely and voluntarily and not under duress or coercion of any kind.

	 	 	 	 	 
	 

	 	AGREED:	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 

	 	CapitalSource
	 	Date

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	  By:
	 	 

	,	 	 	 

	 

	 	 	 	Name
	 	 	 	Titleexv10w39

 

Exhibit 10.39

FOURTH AMENDED AND RESTATED

INTERCREDITOR AND LOCKBOX 

ADMINISTRATION AGREEMENT

dated as of June 30, 2005

     THIS FOURTH AMENDED AND RESTATED INTERCREDITOR AND LOCKBOX ADMINISTRATION AGREEMENT, dated as
of June 30, 2005 (such agreement as amended, modified, waived, supplemented or restated from time
to time, the “Agreement”), is by and among:

     (1) BANK OF AMERICA, N.A., a national banking association (together with its successors and
assigns, “Bank of America”), as lockbox bank under this Agreement (the “Lockbox
Bank”);

     (2) Each of the FINANCING AGENTS party hereto, including each of the parties that from time to
time may become a Financing Agent party hereto by execution and delivery of a joinder agreement in
the form of Exhibit C hereto as financing agent under any of the Financing Documents (as
defined below) (each a “Financing Agent” and collectively, the “Financing Agents”);

     (3) CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the
“Originator”), in each of the following capacities: (i) as original servicer under the
Financing Documents (the “Original Servicer”) and (ii) as lockbox servicer under this
Agreement (solely in such capacity, the “Lockbox Servicer”); and

     (4) CAPITALSOURCE FUNDING INC., a Delaware corporation (f/k/a CapitalSource Funding LLC), as
the owner of the lockbox accounts and lockbox (in such capacity, the “Owner”).

R E C I T A L S

     WHEREAS, the Originator and certain of its affiliates have entered into various commercial
paper conduit, warehouse, securitization, repurchase, loan sale and financing arrangements (each
such transaction is referred to herein as a “Financing” and, collectively, such
transactions are referred to herein as “Financings”) more particularly described on
Schedule I hereto, pursuant to which the Originator and/or such affiliates have sold,
assigned, transferred and/or granted a security interest in certain specific loans, receivables,
general intangibles, other assets and related security (collectively, together with any proceeds
thereof, being the “Obligations”) in favor of the respective Financing Agents;

     WHEREAS, the Originator and certain of its affiliates may from time to time enter into
additional Financings pursuant to which the Originator and/or such affiliates may sell, assign,
transfer and/or grant a security interest in certain specific Obligations in favor of one or more
subsequent Financing Agents (the specified Obligations which have been sold, assigned, transferred
and/or granted, in the case of Financings consummated on or prior to the date hereof

					
	 	 	 	 	 
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and identified on Schedule I hereto as of the date hereof, and which may be sold,
assigned, transferred and/or granted as part of a Financing consummated after the date hereof that
involves a Financing Agent, are referred to herein collectively as “Financing Assets” and
the agreements, instruments or documents executed in connection therewith, as any of the same may
be amended, supplemented, waived, modified or restated from time to time, are referred to
collectively herein as the “Financing Documents”); and

     WHEREAS, the parties hereto have entered into a Fifth Amended and Restated Three Party
Agreement Relating to Lockbox Services and Control, dated on or about June 30, 2005, as the same
may be amended, supplemented or restated from time to time in accordance therewith and herewith (a
copy of which is attached as Exhibit A hereto) (as amended, modified, supplemented,
restated or replaced from time to time, the “Lockbox Agreement”) providing for the
processing of deposits by the Lockbox Bank to accounts in the name of the Owner (the “Lockbox
Accounts”) of payments made by the underlying obligors of certain Obligations that are received
from time to time at the lockbox designated therein (the “Lockbox”) or otherwise deposited
directly into the Lockbox Accounts by wire transfer or otherwise and income or proceeds thereof
(collectively, “Remittances”), some of which Remittances may relate to various Financing
Assets and some of which may not relate to any of the Financing Assets but constitute Remittances
with respect to Obligations or portions of Obligations or other loans, receivables, general
intangibles, other property and related security retained by the Originator (including such
property in which other assignees of the Originator may have an interest) (collectively, “Other
Assets”).

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     Section 1. Regarding Liens and Interests.

     (a) Each Financing Agent shall not have or assert, and hereby disclaims, any right, title or
interest in or to any (i) Financing Assets in which a security interest has not been granted to it
pursuant to its applicable Financing Documents, (ii) Other Assets and (iii) Remittances relating to
either of the foregoing except to the extent such Remittances are commingled with Remittances of
such Financing Agent’s Financing Assets which are pending distribution, and each Financing Agent
claims an undivided interest in the contents of the Lockbox Accounts to the extent such Remittances
deposited therein represent its Financing Assets, in each case subject in all respects to the terms
of this Agreement; provided, however, that each such Financing Agent does not
hereby disclaim its rights under Section 1(d) and 2(c) below, or any rights it may
have as a beneficiary of the security interest in the Lockbox and Lockbox Accounts, referred to in
Section 3 below.

     (b) Each of the Originator, the Original Servicer, the Lockbox Servicer and the Owner shall
not have or assert, and hereby disclaims, any right, title or interest in or to any Financing
Assets (except to the extent permitted pursuant to the related Financing Documents), including,
without limitation, all Remittances relating thereto, except to the extent such Remittances are
commingled with the Remittances representing Financing Assets which are pending distribution, in
which case the Originator claims an undivided interest in the contents of

					
	 	 	 	 	 
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the Lockbox Accounts solely to the extent such Remittances represent Other Assets and subject
in all respects to the terms of this Agreement.

     (c) Nothing herein shall be deemed to waive any rights of any Financing Agent in the event of
any transfer or other disposition of Financing Assets, as the case may be, in violation of the
agreements relating thereto or to preclude the exercise by any Financing Agent of rights and
remedies provided for under the Financing Documents related to the Remittances related to such
Financing Agent, as applicable, including without limitation (and if and to the extent so provided
therein or thereby) notification to customers of the Originator directing such customer’s
Remittances be made to an account or lockbox other than the Lockbox Accounts or Lockbox, it being
understood that this Agreement addresses only Remittances which are contained in or on deposit in
the Lockbox or Lockbox Accounts; provided that in no event shall any Financing Agent cause any
Remittances in which another Financing Agent has an interest or which comprise part of the Other
Assets to be remitted to an account other than the Lockbox Accounts without the prior written
consent of each other Financing Agent that would be affected thereby and, in the case of Other
Assets, the Originator, as applicable.

     (d) In exercising any of its rights or remedies under the Financing Documents, as applicable,
with respect to any right, title and interest of the Originator as lessee, licensee or otherwise,
in and to any computer hardware and software or related intellectual property, each of the
Financing Agents agrees that it shall not take any action that would materially impair the rights
or ability of any other party to use such property in connection with the transactions contemplated
under the Financing Documents, as applicable. The parties acknowledge that such property may be
necessary to or useful in the servicing, administration and collection of all of the Financing
Assets and agree to cooperate in good faith such that the respective interests of each Financing
Agent therein and with respect thereto shall be protected and preserved.

     Section 2. Separation of Collateral.

     (a) Each Financing Agent hereby agrees promptly to transfer and return to, or in accordance
with the directions of, any other applicable Financing Agent or the Originator (as applicable), at
such account or other place as the appropriate other Financing Agent or the Originator (as
applicable) may instruct, any funds or other property that are received by such Financing Agent and
that are identifiable by such Financing Agent, using reasonable efforts, or that are identified by
the Originator, the Original Servicer (or a Successor Servicer, if applicable), the Lockbox
Servicer, the Owner or another Financing Agent, in each case, as not constituting Financing Assets
(or portions thereof) in which such Financing Agent has been granted an interest pursuant to its
applicable Financing Documents but instead constituting (x) Financing Assets (or portions thereof)
other than those in which such Financing Agent has been granted an interest under its Financing
Documents or (y) Other Assets. For purposes of maintaining the perfection of the other Financing
Agent’s (as applicable) interest therein, the other Financing Agents each hereby appoint such
Financing Agent as its agent in respect of such funds and other property; provided, that
such Financing Agent’s sole duty as such agent shall be to hold such funds or other property for
the benefit of the applicable Financing Agent and to transfer such funds or other property to or at
the direction of such other Financing Agent (as applicable) as aforesaid. To the extent any
Financing Agent fails to promptly comply with its obligations to return funds or other property as
provided in this Section 2(a), subsequent

					
	 	 	 	 	 
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distributions that would otherwise be made to such Financing Agent may be paid (on behalf of
such Financing Agent at the instruction of the Originator or such Financing Agent) to such other
Financing Agent or the Originator until such Financing Agent’s obligation to return such funds or
other property is satisfied (whether by return of such funds or other property or through
subsequent distributions), and each Financing Agent hereby agrees to and authorizes the application
of such payments and the rights of the Originator or the applicable Financing Agent, as applicable,
to cause such application.

     (b) Each of the Originator, the Original Servicer, the Lockbox Servicer and the Owner hereby
agrees promptly to transfer and return to, or in accordance with the directions of, the applicable
Financing Agent, at such account or other place as such Financing Agent may instruct, any funds or
other property that are received by the Originator, the Original Servicer, the Lockbox Servicer or
the Owner, and that are identifiable by the Originator, the Original Servicer, the Lockbox Servicer
or the Owner, using reasonable efforts, or that are identified by any Financing Agent, in each
case, as not constituting Other Assets but instead constituting Financing Assets (or proceeds
thereof). For purposes of maintaining the perfection of the respective Financing Agent’s interest
therein, the applicable Financing Agents each hereby appoint the Originator, the Original Servicer,
the Lockbox Servicer or the Owner, as applicable, as their agent in respect of any such funds and
other property. The Originator, the Original Servicer, the Lockbox Servicer or the Owner, as such
agent, shall hold such funds or other property for the benefit of the applicable Financing Agent
and transfer such funds or other property to or at the direction of such Financing Agent as
aforesaid. To the extent the Originator fails to promptly comply with its obligations to return
funds or other property as provided in this Section 2(b), subsequent distributions that
would otherwise be made to the Originator shall be paid (on behalf of the Originator and the
Originator hereby directs such amounts to be paid as described herein) to any applicable Financing
Agent (or, pro rata among any applicable group of Financing Agents) until the Originator’s
obligation to return such funds or other property is satisfied (whether by return of such funds or
other property or through subsequent distributions), and the Originator hereby agrees to and
authorizes the application of such payments and the rights of the applicable Financing Agent or
Financing Agents to cause such application.

     (c) Each Financing Agent hereby acknowledges that certain related records and other files
(including electronic files), documentation, software and similar assets may comprise a portion of
the Financing Assets inapplicable to that Financing Agent and/or Other Assets. Each of the parties
hereto agrees to cooperate in good faith such that the respective interests of the applicable
Financing Agent (or further assignees thereof) in such assets shall be protected and preserved and,
without limiting the obligations of any party hereto, each party hereto agrees to permit each other
reasonable access to such assets (to the extent they shall be in the possession or control of such
party) as shall be necessary or desirable to manage and realize on the Financing Assets or the
Other Assets, as the case may be. Except as otherwise provided in the immediately preceding
sentence, in the event that any of the Financing Assets or the Other Assets become commingled, then
each of the Financing Agents shall, in good faith, cooperate with each other to identify and
separate any such commingled Financing Assets or the Other Assets, as applicable.

     (d) The out–of–pocket costs and expenses incurred by the parties hereto to effect any
identification, separation and/or sharing (including without limitation reasonable fees and
expenses of auditors and attorneys) required by this Section 2 that is not completed by the

					
	 	 	 	 	 
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Original Servicer or the Originator (at their own expense) shall be borne by the Originator.
No Financing Agent shall be required by this Section 2 to take any action that it believes,
in good faith, may prejudice its ability to realize the value of, or to otherwise protect, its
interests (and the interests of the parties for which it acts) in the applicable Financing Assets
or the Other Assets, respectively; provided, that nothing in this sentence shall relieve
the Originator or any of its subsidiaries or affiliates of its obligations hereunder or under the
Financing Documents, as applicable, with respect to the Financing Assets notwithstanding any effect
thereof on the Other Assets or the rights or interests of the Originator or any of its subsidiaries
or affiliates therein or thereto.

     Section 3. Lockbox Issues.

     (a) The Originator, the Owner, the Original Servicer, the Lockbox Servicer and the Lockbox
Bank confirm to each of the Financing Agents that the Lockbox and the Lockbox Accounts have been
established by the Owner with the Lockbox Bank, and that the Lockbox Agreement is in full force and
effect pursuant to its terms.

     (b) The Lockbox Numbers and Lockbox Account Numbers are set forth below:

	 	 	 	 	 
	Lockbox No.	 	Lockbox Account No.
	CapitalSource Funding Inc. — HFG

P.O. BOX 409780

ATLANTA GA 30384-9780

	 	003930559738		 
	 
	 	 	 	 
	CapitalSource Funding Inc. — SFG

P.O. BOX 409739

ATLANTA GA 30384-9739

	 	003938703751	 	 
	 
	 	 	 	 
	CapitalSource Funding Inc. — CFG

P.O. BOX 409761

ATLANTA GA 30384-9761

	 	003939396662	 	 
	 
	 	 	 	 
	CapitalSource Funding Inc.

	 	003922575610	 	 

The Originator and the Owner agree that the Lockbox and the Lockbox Accounts shall be maintained at
all times in the name of the Owner.

     (c) The Lockbox Bank’s authorized representatives will have sole access to the Lockbox, and
neither the Originator nor any of its affiliates (including, without limitation, the

					
	 	 	 	 	 
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Owner) shall have any authority to cancel or alter the name, address, location and other terms
of the Lockbox without the prior written consent of all the parties hereto. Items will be
endorsed, credited to the Lockbox Accounts and presented for payment in accordance with the
Standard Terms and Conditions as attached as Exhibit A to and made a part of the Lockbox
Agreement.

     (d) The Original Servicer is hereby designated as the initial Lockbox Servicer. The Original
Servicer confirms to each of the parties hereto that all actions of the Original Servicer taken
hereunder and under the Lockbox Agreement with respect to Remittances received in the Lockbox or
Lockbox Accounts shall be in its capacity as servicer under the applicable Financing Documents or
hereunder and not in its individual capacity. The Original Servicer (or any Successor Servicer (as
defined below)), shall (within two (2) business days of receipt of the associated remittance
details) determine and identify the portion of such Remittance received in the Lockbox or Lockbox
Accounts that represents the Financing Assets (“Financing Remittances”) and the portion
that represents Other Assets (“Other Remittances”). To the extent such Remittances
constitute Financing Remittances, the Original Servicer shall determine which Financing each
portion of such Financing Remittances relate to and cause the transfer of such funds, to the extent
it is permitted to do so pursuant to Section 3(e)(1) below, to the appropriate collection account
in accordance with (and within the time frames specified by) the related Financing Documents. In
addition, the Original Servicer (or a Successor Servicer) shall determine whether any amounts in
the Lockbox Accounts do not constitute Remittances with respect to either Financing Assets or Other
Assets, but have nonetheless been paid or deposited thereto by a customer in error
(“Misdirected Payments”). The Original Servicer (or a Successor Servicer) shall provide
notice to the Lockbox Servicer (if a separate entity) of the amounts of the payments to be made to
each Financing Agent and the Originator, as applicable, and of any Misdirected Payments (such
notice being an “Allocation Notice”), which amounts shall be determined in accordance with
this Section 3(d). For purposes of this Agreement, portions of Financing Remittances that relate
to each Financing and the Other Remittances shall each constitute a “Type” of Remittance
and the category of Obligations (or portion thereof) to which such Remittance relates constituting
a “Type” of Obligation.

     Each of the parties hereto hereby agrees that:

	 	(1)	 	if the Original Servicer is terminated or has resigned its role as servicer
under any of the applicable Financing Documents, or
	 
	 	(2)	 	if the funds in the Lockbox or Lockbox Accounts become subject to any seizure,
freeze application, or enforcement of any security interest adverse to the interests of
any Financing Agent

(each of the events in clause (1) and (2) being a “Lockbox Trigger Event”), then in any
such case this Agreement and the Lockbox Agreement shall continue to remain in full force and
effect and a successor servicer to the Original Servicer hereunder shall be appointed by delivery
of joint written notice from both (a) the Financing Agents representing holders of at least 66.67%
of the Financing Assets that are part of financings that are term securitizations and (b) the
Financing Agents representing holders of at least 66.67% of the Financing Assets that are part of
financings that are not term securitizations, each as determined from the most recent Financing
Asset Report (as defined below) delivered by the Originator (such Financing Agents being the

					
	 	 	 	 	 
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“Requisite Financing Agents”), to the Originator (with a copy to the Lockbox Bank)
identifying such successor servicer, together with such successor servicer’s written acceptance of
such appointment, and such successor servicer (being referred to herein as the “Successor
Servicer”) shall thereupon succeed to all rights, benefits, duties and obligations of the
Original Servicer hereunder, to the extent the same relate to the giving of disbursement
instructions above.

     Each of the parties hereto hereby agrees that if the Lockbox Bank’s short-term debt rating is
reduced below “F-1” by Fitch, Inc., then in any such case this Agreement and the Lockbox Agreement
shall continue to remain in full force and effect and a successor lockbox bank to the initial
Lockbox Box hereunder shall be appointed by delivery of joint written notice from each Financing
Agent then party to this Agreement pursuant to and in accordance with the provisions of Section
3(h) hereof.

     In the event a customer with respect to an Obligation of one Type is also a customer with
respect to any other Type of Obligation, and one or more Remittances related to such customer are
in the Lockbox Accounts at any one time, the Original Servicer (or a Successor Servicer, if
applicable) shall determine which Remittances relate to which Type, and shall also determine how
such Remittances are to be allocated, in accordance with the allocation rules described below
(unless otherwise specified in writing by the customer in respect of that customer’s Remittance, in
which case the Remittance shall be allocated in accordance with such customer specification to the
extent that none of the parties hereto object to such specification):

     (i) First, to all past due payments, if any, with respect to each Obligation of such customer,
without regard to Type (but subject to the proviso below);

     (ii) Second, to the minimum payment due in the current payment period with respect to each
Obligation of such customer, without regard to Type (but subject to the proviso below); and

     (iii) Third, to the remaining outstanding balance of each Obligation of such customer, without
regard to Type (but subject to the proviso below);

provided, that if in allocating Remittances in accordance with the above,

     (x) the Remittances to be allocated are in respect of more than one Type, and

     (y) the Remittances to be allocated are insufficient to satisfy for all Types of
Obligation, the delinquencies, minimum current payments due or remaining outstanding
balances, as applicable,

then the Remittances shall be allocated to the delinquencies, minimum current payments due or
remaining outstanding balances, as applicable, for each Type of Obligation pro rata based on the
proportion that the delinquency, minimum current payment due or remaining outstanding balance, as
applicable, for each such Type bears to the delinquencies, minimum current payments due or
remaining outstanding balances, as applicable, for all Types.

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
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The allocation contemplated by this Section 3(d) shall be made by the Requisite Financing Agents
(or an entity chosen by them) as opposed to the Original Servicer (or a Successor Servicer) under
the circumstances contemplated by Section 3(e)(2) below.

     (e) Disbursements

	 	(1)	 	The Financing Agents agree that (i) at any time prior to a Lockbox Trigger
Event none of them will deliver or cause the delivery of a Notice (as defined in
Section 2(a) of the Lockbox Agreement, a “Notice”) to the Lockbox Bank and (ii)
at any time prior to delivery of a Notice to the Lockbox Bank (x) the Lockbox Servicer
shall have authority to deliver the written disbursement instructions (the
“Disbursement Instructions”) to the Lockbox Bank and (y) the Original Servicer
(or a Successor Servicer) shall have the authority to make the allocation
determinations described in Section 3(d) above or deliver an Allocation Notice
to the Lockbox Servicer. Until a Notice is received by the Lockbox Bank, the Lockbox
Servicer will deliver Disbursement Instructions to the Lockbox Bank in a timely manner
and in compliance with its obligations to direct Remittances with respect to each
Financing to the applicable collection account and the Lockbox Bank shall make
distributions pursuant to such Disbursement Instructions.
	 
	 	(2)	 	On and after the occurrence of a Lockbox Trigger Event, the Requisite Financing
Agents (or another entity designated by them) shall be entitled to deliver a Notice to
the Lockbox Bank and/or to make the allocation determinations (including the
preparation of the Allocation Notice, if any) described in Section 3(d) above
by providing notice of exercise of such right to the Original Servicer (or any
Successor Servicer). Upon delivery of a Notice to the Lockbox Bank and at all times
thereafter, the Lockbox Bank shall no longer honor such instructions or any Allocation
Notice or Disbursement Instructions received from the Lockbox Servicer, the Owner or
the Originator, but shall instead make distributions pursuant to the account listed in
the Notice from the Requisite Financing Agents (or an entity designated by them). Each
of the Financing Agents agree that the funds so transferred to such account will be
allocated in accordance with the provisions of this Agreement.
	 
	 	(3)	 	The Lockbox Bank shall disburse funds from the Lockbox Account only upon and in
conformity with Section 3(e)(1) or 3(e)(2) above and shall be fully protected to the
extent it follows any such instructions. The Lockbox Bank shall have no obligation or
responsibility to make inquiry or in any way attest to, determine or verify the
accuracy of any such written instructions or allocations, nor shall the Lockbox Bank
have any duty or obligation in this regard other than to comply with such instructions
of the Lockbox Servicer or, after receipt of a Notice, the Requisite Financing Agents
(or an entity designated by them) by effecting funds transfers in accordance with such
instructions.
	 
	 	(4)	 	[Intentionally omitted]

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
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	 	(5)	 	The Original Servicer (or any Successor Servicer) agrees to provide the
Allocation Notice to the Lockbox Servicer for so long as the Financing Agents have not
provided a Notice pursuant to Section 3(e)(2) above and to otherwise cooperate in good
faith to provide access to the information necessary to make the allocations required

by the Disbursement Instructions (including, without limitation preparing such
Disbursement Instructions, or instructions related to disbursements from the account
designated in the Notice on behalf of the Financing Agents if so requested) to the
Lockbox Servicer or the Financing Agents (or a representative appointed by the
Requisite Financing Agents) within the time frames specified by Section 3(d)
above.
	 
	 	(6)	 	Each Disbursement Instruction shall be calculated in accordance with the
Allocation Notice (if any) and (whether presented by the Original Servicer (or a
Successor Servicer) or the Requisite Financing Agents (or an entity designated by
them)) the other provisions of Section 3(d) above and shall identify Remittances held
in the Lockbox Accounts as Financing Remittances or Other Remittances and direct that
transfers be made by the Lockbox Bank from the Lockbox Accounts to (i) the collection
account specified in the written instructions received by the Lockbox Servicer from the
applicable Financing Agent with respect to the Financing Remittances applicable to such
Financing Agent or (ii) the account specified in the written instructions received by
the Lockbox Servicer from the Originator with respect to the Other Remittances, as
applicable.
	 
	 	(7)	 	Each of the parties hereto agrees that it will not (by actions taken hereunder,
pursuant to the Financing Documents or otherwise) cause the payment or application of
Remittances in contravention of the order or the allocation set forth in this Agreement
including as set forth in valid Disbursement Instructions; provided, that the
foregoing shall not prevent any entity that is a Financing Agent from providing
financing, liquidity or other services to the Originator in connection with
transactions which are not Financings and for which such entity does not serve as a
Financing Agent hereunder (for the avoidance of doubt, any such financings, liquidity
or other transactions would involve remittances related to Other Assets and such
entity, until such time as it became a Financing Agent hereunder with respect to that
transaction, would have no direct rights under this Agreement with respect to such
transaction).

     (f) The Lockbox Servicer may resign or cease to perform its respective duties and obligations
as Lockbox Servicer upon written notice thirty (30) days in advance to the Financing Agents of such
intention to resign or cease performing its obligations. The Lockbox Bank may resign or cease to
perform any duties or obligations under this Agreement pursuant to Section 4 of the Lockbox
Agreement. Originator agrees to pay on demand to the Lockbox Bank all usual and customary service
charges, transfer fees and account maintenance fees in connection with its services hereunder and
pursuant to the Lockbox Agreement and agrees to pay to Lockbox Bank, upon receipt of Lockbox Bank’s
invoice, all costs, expenses and attorneys’ fees (including allocated costs for in–house legal
services) incurred by the Lockbox Bank in connection with the enforcement of this Agreement and any
instrument or agreement required hereunder, including but not limited to any such costs, expenses
and fees arising out of the resolution of any conflict,

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
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dispute, motion regarding entitlement to rights or rights of action, or other action to
enforce the Lockbox Bank’s rights in a case arising under Title 11, United States Code. The
Originator agrees to pay the Lockbox Bank, upon receipt of Lockbox Bank’s invoice, all costs,
expenses and attorneys’ fees (including allocated costs for in–house legal services) incurred by
the Lockbox Bank in the preparation and administration of this Agreement (including any amendments
hereto or instruments or agreements required hereunder).

     The Lockbox Bank agrees that pursuant to the Lockbox Agreement it shall not exercise any right
of set–off against Financing Remittances in the Lockbox Accounts; provided, that the
Lockbox Bank may exercise rights of set–off to reimburse itself for any checks against which
payment is made from the Lockbox Accounts which are subsequently returned unpaid or returned for
any reason. Any amounts paid to the Lockbox Bank with respect to returned checks pursuant to this
paragraph shall be allocated among the Financing Agents and/or the Originator, as applicable, in
relation to the funds received in relation to such returned check. Any subsequent distribution
shall be subject to reduction by such amounts pursuant to Section 2(a) and Section
2(b), as applicable by such allocation. Any amounts offset by the Lockbox Bank in respect to
fees and expenses pursuant to this paragraph shall be reimbursed by the Originator to the
applicable Financing Agent within two (2) business days of notice of such offset.

     (g) Each of the Financing Agents hereby appoints the Lockbox Servicer as their agent and
custodian, solely for purposes of continuing the perfection and priority of its respective
interests, with respect to the applicable Financing Remittances; provided, however,
the Lockbox Servicer shall have no fiduciary or other duties or obligations, either express or
implied, to any Financing Agent in such capacity. Such rights shall be in addition to (and not in
lieu of) the Financing Agent’s right to direct disposition of the funds in the Lockbox Accounts
pursuant to the Lockbox Agreement and this Agreement.

     (h) Each of the Lockbox Bank and Lockbox Servicer may be removed upon at least thirty (30)
days’ joint written notice (the “Successor Notice Period”) from each of the Financing
Agents to the Lockbox Bank and/or the Lockbox Servicer, as applicable; provided,
that, no such removal shall be effective until a successor lockbox bank to the Lockbox Bank
and/or a successor lockbox servicer to the Lockbox Servicer, as applicable, shall be appointed by
delivery of joint written notice from each of the Financing Agents to the Lockbox Bank and/or the
Lockbox Servicer identifying such successor, together with such successor lockbox bank’s and/or
lockbox servicer’s written acceptance of such appointment, and such successor lockbox bank (being
referred to herein as the “Successor Lockbox Bank”) and such successor lockbox servicer
(being referred to herein as the “Successor Lockbox Servicer”) shall thereupon succeed to
all rights, benefits, duties and obligations of the Lockbox Bank and the Lockbox Servicer, as
applicable, hereunder and under the Lockbox Agreement and this Agreement; provided,
further, that, in the event no Successor Lockbox Bank or Successor Lockbox Servicer
(as applicable) has been appointed prior to the expiration of the Successor Notice Period, each of
the Financing Agents shall give to the Lockbox Bank or the Lockbox Servicer (as applicable) at
least thirty (30) days’ joint written notice prior to the appointment and acceptance of its
successor becoming effective. Upon receipt of such written notice and acceptance by the Successor
Lockbox Servicer, the Successor Lockbox Servicer shall thereafter make disbursements of Financing
Remittances, as applicable, from the Lockbox Accounts pursuant to Section 3(d) and
(e) above; provided after removal and prior to receipt of notice of such acceptance
of appointment, the

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
	 	10
	 	 

 

 

Lockbox Servicer shall give Disbursement Instructions to disburse Financing Remittances solely
in accordance with the joint written instructions of each of the Financing Agents. Each of the
Financing Agents agrees to use its good faith best efforts to agree upon a mutually acceptable
Successor Lockbox Bank and Successor Lockbox Servicer, as applicable, in the event of the removal
of the Lockbox Bank and/or the Lockbox Servicer.

     Section 4. Security Interest in Lockbox and Lockbox Accounts.

     The parties hereto acknowledge that the Originator and one or more affiliates, as applicable,
have granted a security interest in all their right, title and interest in the Lockbox and Lockbox
Accounts, and the proceeds thereof, in favor of the each Financing Agent (as applicable), but only
to the extent of each of their respective interests under the applicable Financing Documents.

     Section 5. Notice Matters.

     All notices and other communications hereunder or in connection herewith shall be in writing
(including facsimile communication) and shall be personally delivered or sent by certified mail,
postage prepaid, by facsimile or by overnight delivery service, to the intended party at the
address or facsimile number of such party set forth on Exhibit B hereto or at such other
address or facsimile number as shall be designated by such party in a written notice to the other
parties hereto given in accordance with this paragraph. All notices and communications hereunder
or in connection herewith shall be effective only upon receipt. Facsimile transmissions shall be
deemed received upon receipt of verbal confirmation of the receipt of such facsimile.

     Section 6. Authorization; Binding Effect; Survival.

     The Lockbox Bank and the Lockbox Servicer confirm that they are authorized to execute, deliver
and perform this Agreement. The Originator, the Original Servicer and the Owner confirm that they
are able to execute, deliver and perform this Agreement. Each Financing Agent confirms that it is
authorized to execute, deliver and perform this Agreement. This Agreement shall be binding on and
inure to the benefit of each Financing Agent and its respective successors and assigns. Except as
provided in the preceding sentence, the provisions of this Agreement may not be relied upon by any
third party for any purpose.

     Section 7. Integration.

     This Agreement contains a final and complete integration of all prior expressions by the
parties hereto with respect to the intercreditor matters set forth herein and shall together
constitute the entire agreement between the parties hereto with respect to such matters,
superseding all prior oral or written understandings.

     Section 8. Limitation of Liability; Force Majeure.

     (i) The Lockbox Bank may conclusively rely on and shall be fully protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other document delivered to

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
	 	11
	 	 

 

 

it and that in good faith it reasonably believes to be genuine and that has been signed by the
proper party or parties.

     (ii) The Lockbox Bank may consult counsel satisfactory to it and the advice or opinion of such
counsel shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.

     (iii) Except to the extent expressly provided herein or in the Lockbox Agreement, the Lockbox
Bank shall not be liable to the parties hereto for any expense, claim, loss, damage or cost arising
out of or relating to its performance under this Agreement or the Lockbox Agreement, error of
judgment, or for any act done or step taken or omitted by it, in good faith, or for any mistakes of
fact or law, or for anything that it may do or refrain from doing in connection herewith except in
the case of its willful misconduct or grossly negligent performance or omission of its duties.

     (iv) The Lockbox Bank shall not be obligated to take any legal action hereunder that might in
its judgment involve any expense or liability unless it has been furnished with an indemnity
reasonably satisfactory to it. Nothing contained in this Agreement shall create any agency,
fiduciary, joint venture or partnership relationship between the Lockbox Bank and any other party
hereto.

     (v) The Lockbox Bank shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no covenants or obligations
shall be implied in this Agreement against the Lockbox Bank.

     (vi) The Lockbox Bank shall not be required to expend or risk its own funds in the performance
of its duties hereunder.

     (vii) The Lockbox Bank shall not be liable for any loss or claim resulting from any cause
outside of the Lockbox Bank’s reasonable control.

     (viii) In no event shall the Lockbox Bank be liable for incidental, special, indirect or
consequential damages, including but not limited to lost profits.

     (ix) A delay in or failure of performance by the Lockbox Bank under this Agreement will be
excused and shall not constitute a default hereunder or otherwise give rise to any liability of the
Lockbox Bank if such delay or failure could not be prevented by the exercise of reasonable
diligence by the Lockbox Bank and such delay or failure was caused by circumstances beyond the
Lockbox Bank’s reasonable control, including but not limited to (i) legal constraint, emergency
conditions, action or inaction of governmental, civil or military authority, fire, strike, lockout
or other labor dispute, war, riot, theft, flood, earthquake or other natural disaster, breakdown of
public or private or common carrier communications or transmission facilities, equipment failure,
or act, negligence or default of all other parties hereto or (ii) such failure or delay resulted
from the Lockbox Bank’s reasonable belief that the action would have violated any guideline, rule
or regulation of any governmental authority.

					
	 	 	 	 	 
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     Section 9. Amendments.

     No amendment or supplement to or modification of this Agreement and no waiver of or consent to
departure from any of the provisions of this Agreement shall be effective unless such amendment,
supplement, modification, waiver or consent is in writing and signed, in the case of an amendment,
supplement or modification, by each of the Financing Agents, the Lockbox Bank, the Owner, the
Originator, the Original Servicer and the Lockbox Servicer; provided, that after delivery
of a Notice to the Bank, then neither the Owner, the Originator, the Original Servicer (only if it
is still acting in such capacity and there has not been appointed a Successor Servicer) or the
Lockbox Servicer shall need to be a party to any amendment, supplement or modification that does
not increase the liabilities or obligations of such party hereunder or, in the case of any waiver
or consent, by the party against which enforcement of such waiver or consent is sought, and any
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given. Prior to the execution of any such amendment, waiver or consent, the
Originator and/or any applicable Financing Agent shall furnish written notification of the
substance of such amendment, supplement, modification or consent, together with a copy thereof, to
each rating agency to the extent required pursuant to the respective Financing Documents.

     Section 10. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT THAT MATTERS RELATING TO THE PERFECTION
OR EFFECT OF PERFECTION OR NONPERFECTION OF A SECURITY INTEREST IN THE LOCKBOX AND LOCKBOX ACCOUNTS
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WHERE THE ACCOUNT IS MAINTAINED.

     Section 11. Waiver of Jury Trial.

     EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH PARTY FURTHER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS SECTION 11.

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
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     Section 12. Headings.

     Captions and section headings are used in this Agreement for convenience of reference only and
shall not affect the meaning or interpretation of any provision hereof.

     Section 13. Counterparts.

     This Agreement may be executed in any number of counterparts (including by facsimile or other
electronic means) and by the different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken together shall constitute
one and the same agreement.

     Section 14. Termination.

     In the event that all obligations secured by Financing Assets with respect to a Financing
Agent shall have been paid in full and the applicable Financing Documents and liens created
thereunder shall have been terminated or released, then the applicable Financing Agent shall
promptly notify the other parties hereto and the Lockbox Servicer, and such Financing Agent shall
no longer have any rights or obligations hereunder. The foregoing shall not release the Originator
of any obligations it may have to the Lockbox Servicer.

     Section 15. Description of Financings; Effectiveness of Provisions Relating to Subsequent
Financings and Joinder.

     Schedule I attached hereto shall set forth a description of the principal Financing
Documents related to each Financing, the name of the applicable Financing Agent and an abbreviated
name of the related transaction, which shall be used by such Financing Agent to identify the
capacity in which they have executed any documents or taken any action hereunder. Notwithstanding
anything to the contrary contained herein, the provisions of this Agreement relating to subsequent
Financings, the subsequent Financing Assets, and the subsequent Financing Agents shall not become
operative until the applicable subsequent Financing Agent shall have executed and delivered to each
of the parties hereto an executed counterpart of the joinder agreement attached hereto as
Exhibit C agreeing to be bound by all the applicable terms and conditions hereof and of the
Lockbox Agreement. In connection with each subsequent Financing, the Originator will update
Schedule I hereto and provide copies to each of the parties hereto.

     Section 16. Indemnification.

     The Originator hereby agrees to indemnify and hold harmless the Lockbox Bank, the Lockbox
Servicer, and each Financing Agent and each director, officer, employee, agent and affiliate
thereof (collectively, the “Indemnified Parties”) from and against any and all losses,
liabilities (including liabilities for penalties), claims, demands, actions, suits, judgments,
out–of–pocket costs and expenses (including legal fees and expenses) (collectively, the
“Indemnified Amounts”) arising out of or resulting from the execution, performance and
enforcement of this Agreement, except for Indemnified Amounts arising out of or resulting from the
gross negligence, willful misconduct or bad faith of the applicable Indemnified Party. The
obligations

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
	 	14
	 	 

 

 

of the Originator under this Section 16 shall survive the termination of this
Agreement and/or the earlier termination or resignation of an Indemnified Party.

     Section 17. Lockbox Agreement.

     All services of the Lockbox Bank and the Lockbox Servicer in the performance of Remittance
processing, deposit and other administrative duties hereunder shall be governed by the Lockbox
Agreement.

     Section 18. Other Transactions.

     Nothing herein shall limit, restrict or impair Bank of America in any other transaction or
relationship with the Originator or any affiliate of the Originator in such capacity and this
Agreement applies to Bank of America solely in its capacity as Lockbox Bank.

     Section 19. No Proceedings.

     Each of the parties hereto hereby agrees not to institute or join any other person or entity
in instituting, any suit pursuant to Title 11, United States Code, or any similar suit or
proceeding under then applicable state or federal law providing for the relief of debtors or the
protection of creditors, against the Owner prior to the date which is one year and one day (or, if
longer, the applicable preference period then in effect) after payment of all obligations of the
Owner to each applicable Financing Agent (and the parties for which it is acting as agent) are paid
in full. This section shall survive any termination of this Agreement.

     Section 20. Financing Asset Reports.

     The Originator and the Original Servicer agree to deliver to each of the Financing Agents, no
less frequently than quarterly, a report (the “Financing Asset Report”) that specifies the
aggregate amount of all of the Financing Assets and the portion of such aggregate amount held by
each Financing Agent and such other detail as the Originator and the Original Servicer or any
Financing Agent shall deem appropriate to enable the Financing Agents to calculate the Requisite
Financing Agents.

[Remainder of page intentionally left blank]

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, Successor by

Merger to Wells Fargo Bank Minnesota, National

Association, as the CS Funding II Facility Agent, the

2002-2 Securitization Agent, the 2003-1

Securitization Agent, the 2003-2 Securitization

Agent, the 2004-1 Securitization Agent, the 2004-2

Securitization Agent and the 2005-1 Securitization

Agent

 	 
	 
	 	By:  	/s/ Cory Branden
 	 
	 	Name:  	Cory Branden 	 
	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., not in its individual capacity
but solely as the Lockbox Bank
 	 
	 
	 	By:  	/s/ Peter N. Knickerbacker
 	 
	 	Name:  	Peter N. Knickerbacker 	 
	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	HARRIS NESBITT CORP., as the CS Funding Agent

 	 
	 
	 	By:  	/s/ Kevin P. Gibbons
 	 
	 	Name:  	Kevin P. Gibbons 	 
	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	 	WACHOVIA CAPITAL MARKETS, LLC, as the CS Funding III
Warehouse Agent
 	 
	 
	 	By:  	/s/ Paul A. Burkhart
 	 
	 	Name:  	Paul A. Burkhart 	 
	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	BANK OF MONTREAL, CHICAGO BRANCH as the Mariner
Facility Agent
 	 
	 
	 	By:  	/s/ Stephen Maenhout
 	 
	 	Name:  	Stephen Maenhout 	 
	 	Title:  	Vice President 	 
	 

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
	 	 
	 	 

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as CS Funding V Agent

 	 
	 	By:  	/s/ Christine Herrick
 	 
	 	Name:  	Christine Herrick 	 
	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	CAPITALSOURCE FINANCE LLC, as the Originator, as the
Original Servicer and the Lockbox Servicer
 	 
	 
	 	By:  	/s/ Giles R. Coates
 	 
	 	Name:  	Giles R. Coates 	 
	 	Title:  	Director – Treasury and Risk Management 	 
	 

	 	 	 	 	 
	 	CAPITALSOURCE FUNDING INC., as the Owner

 	 
	 	By:  	/s/ Steven A. Museles
 	 
	 	Name:  	Steven A. Museles 	 
	 	Title:  	Senior Vice President 	 
	 

					
	 	 	 	 	 
	Fourth A&R Lockbox Admin. and Intercreditor
	 	 
	 	 

 

 

EXHIBIT A

LOCKBOX AGREEMENT

SEE ATTACHED

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Exhibit A-1
	 	 

 

 

EXHIBIT B

NOTICE ADDRESSES

If to the CS Funding II Facility Agent, the 2002-2 Securitization Agent, the 2003-1 Securitization
Agent, the 2003-2 Securitization Agent, the 2004-1 Securitization Agent, the 2004-2 Securitization
Agent or the 2005-1 Securitization Agent:

	 	 	 
	Wells Fargo Bank, National Association
	Sixth and Marquette Avenue
	MAC N9311–161
	Minneapolis, Minnesota 55479
	Attention:

	 	Corporate Trust Services
 Asset–Backed Administration
	Facsimile No.:

	 	(612) 667–3539
	Confirmation No.:

	 	(612) 667–8058
	 
	 	 
	with a copy to:
	 
	 	 
	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC 0600
	Charlotte, North Carolina 28288
	Attention:

	 	Mary Katherine Dubose
	Facsimile No.:

	 	(704) 374–6495
	Confirmation No.:

	 	(704) 383–0906
	 
	 	 
	And a copy to:
	 
	 	 
	Citigroup Global Markets Realty Corp.
	390 Greenwich Street, 6th Floor
	New York, NY 10013
	Attn: Asset-Backed Finance

If to the CS Funding III Facility Agent:

	 	 	 
	Wachovia Capital Markets, LLC
	One Wachovia Center, Mail Code: NC 0600
	Charlotte, North Carolina 28288
	Attention:

	 	Raj Shah
	Facsimile No.:

	 	(704) 715–0067
	Confirmation No.:

	 	(704) 374–6230

If to the CS Funding Agent:

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Exhibit B-1
	 	 

 

 

					
	Harris Nesbitt Corp.
	115 South LaSalle Street
	13th Floor West
	Chicago, Illinois 60603
	Attention:

	 	Kevin Gibbons
	Facsimile No.:

	 	(312) 293-4908
	Confirmation No.:

	 	(312) 461-5542

If to the Mariner Facility Agent:

Harris Nesbitt Financing, Inc.

115 South LaSalle Street, 12th Floor West

Chicago, Illinois 60603

Attention: Amy Dumser

Telephone: (312) 750-4371

Facsimile: (312) 750-6057

With a copy to

Attention: Maria Torres

115 South LaSalle, 17th Floor West

Chicago, Illinois 60603

Email: maria.torres@bmo.com

Telephone: (312) 750-4347

Facsimile: (312) 750-4345

If to the CS Funding V Agent:

JPMorgan Chase Bank, N.A.

1111 Fannin Street, 10th Floor

Houston, Texas 77002-8069

Attention of Loan and Agency Services

Telecopy No. (713) 750-2223

Telephone No. (713) 750-3570

With a copy to:

JPMorgan Chase Bank, N.A.,

270 Park Avenue, 4th Floor,

New York, New York 10017-2014,

Attention of Collateral Management Services Group

Telecopy No. (212) 270-4628

Telephone No. (212) 270-7449

And a copy to:

					
	 	 	 	 	 
	Fourth A&R Lockbox and
Intercreditor Agreement
	 	Exhibit B-2
	 	 

 

 

	 	 	 
	JPMorgan Chase Bank, N.A.,
	270 Park Avenue,
	New York, New York 10017,
	Attention of Financial Institutions Corporate Banking
	Telecopy No. (212) 270-1511
	Telephone No. (212) 270-9747

If to a subsequent Financing Agent:

	 	 	 
	To the Notice Address Specified in the Applicable Joinder Agreement

If to the Lockbox Bank:

	 	 	 
	Bank of America, N.A.
	Mail Code: MD4–301–10–38
	225 N. Calvert Street
	Baltimore, Maryland 21202
	Attention:

	 	Deposit Support East Manager
	Facsimile No.:

	 	(410) 347-0316
	Confirmation No.:

	 	(410) 605–8616

If to the Owner:

	 	 	 
	CapitalSource Funding Inc.
	4445 Willard Avenue, 12th Floor
	Chevy Chase, Maryland 20815
	Attention:

	 	Treasurer
	Facsimile No.:

	 	(301) 841–2700
	Confirmation No.:

	 	(301) 841–2307

If to the Originator or any of its affiliates, the Lockbox Servicer or the Original Servicer:

	 	 	 
	CapitalSource Finance LLC
	4445 Willard Avenue, 12th Floor
	Chevy Chase, Maryland 20815
	Attention:

	 	Treasurer
	Facsimile No.:

	 	(301) 841–2700
	Confirmation No.:

	 	(301) 841–2307

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Exhibit B-3
	 	 

 

 

EXHIBIT C

JOINDER IN FOURTH AMENDED AND RESTATED INTERCREDITOR 

AND LOCKBOX ADMINISTRATION AGREEMENT

     As required by Section 15 of the Fourth Amended and Restated Intercreditor and Lockbox
Administration Agreement, dated as of June 30, 2005 (such agreement as amended, modified,
supplemented or restated from time to time, the “Agreement”), [Name of Financing Agent], a
[type of entity/jurisdiction of formation], hereby agrees to be bound by all the terms and
provisions of the Agreement as a Financing Agent thereunder and shall, for all purposes, be a
“Financing Agent” thereunder.

     IN WITNESS WHEREOF, the undersigned has executed this joinder in the Agreement as of this
[___] day of [___].

	 	 	 	 	 
	 	[FINANCING AGENT]

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[Executed counterpart to go to each of the parties to the Agreement – Agreement Section 15]

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Exhibit C
	 	 

 

 

EXHIBIT C-1

NOTICE ADDRESS FOR FINANCING AGENT

If to the [Name of Financing Agent]:

	 	 	 
	[Name]
	[                                                                                                                        ]
	[                                                                                                                        ]
	Attention:

	 	[                                                            ]
	Facsimile No.:

	 	[                                                            ]
	Confirmation No.:

	 	[                                                            ]

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Exhibit C-1
	 	 

 

 

SCHEDULE I

	 	 	 	 	 
	Description of Principal	 	 	 	Abbreviated Name of
	Financing Documents	 	Financing Agent	 	Transaction
	Fourth Amended and
Restated Loan
Certificate and
Servicing Agreement
dated May 28, 2004

	 	Harris Nesbitt Corp.
	 	CS Funding Facility
	 
	 	 	 	 
	Amended and
Restated Sale and
Servicing Agreement
dated October 7,
2004 Indenture
dated September 17,
2003

	 	Wells Fargo Bank
Minnesota, National
Association, successor
by merger to Wells Fargo
Bank Minnesota, National
Association
	 	CS Funding II Facility
	 
	 	 	 	 
	Sale and Servicing
Agreement dated
April 20, 2004

	 	Wachovia Capital
Markets, LLC
	 	CS Funding III Facility
	 
	 	 	 	 
	Amended and
Restated Loan
Agreement dated
February 10, 2005

	 	Bank of Montreal,
Chicago Branch
	 	Mariner Facility
	 
	 	 	 	 
	Sale and Servicing
Agreement and
Credit Agreement,
each dated June 30,
2005

	 	JPMorgan Chase Bank, N.A.
	 	CS Funding V Facility
	 
	 	 	 	 
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture each
dated October 30,
2002

	 	Wells Fargo Bank,
National Association,
successor by merger to
Wells Fargo Bank
Minnesota, National
Association
	 	2002-2 Securitization
	 
	 	 	 	 
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture each
dated April 17,
2003

	 	Wells Fargo Bank,
National Association,
successor by merger to
Wells Fargo Bank
Minnesota, National
Association
	 	2003-1 Securitization
	 
	 	 	 	 
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture each
dated November 25,
2003

	 	Wells Fargo Bank,
National Association,
successor by merger to
Wells Fargo Bank
Minnesota, National
Association
	 	2003-2 Securitization

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Schedule I-1
	 	 

 

 

	 	 	 	 	 
	Description of Principal	 	 	 	Abbreviated Name of
	Financing Documents	 	Financing Agent	 	Transaction
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture, each
dated June 22, 2004

	 	Wells Fargo Bank,
National Association
	 	2004-1 Securitization
	 
	 	 	 	 
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture, each
dated October 28,
2004

	 	Wells Fargo Bank,
National Association
	 	2004-2 Securitization
	 
	 	 	 	 
	Commercial Loan
Sale Agreement
Sale and Servicing
Agreement
Indenture, each
dated April 14,
2005

	 	Wells Fargo Bank,
National Association
	 	2005-1 Securitization

					
	 	 	 	 	 
	Fourth A&R Lockbox
and Intercreditor Agreement
	 	Schedule I-2

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