AMENDMENT TO STEVEN A. MUSELES EMPLOYMENT AGREEMENT
Exhibit
10.46.1
THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT (“Amendment”) is made, effective as of December 31,
2008, by and between CapitalSource Inc., a Delaware corporation (the “Company”), and Xxxxxx X.
Xxxxxxx (the “Executive”).
Recitals:
WHEREAS, the Executive and the Company previously entered into the Employment Agreement,
effective as of February 1, 2007 (the “Employment Agreement”); and
WHEREAS, the Executive and the Company desire to amend the Employment Agreement to comply with
the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.
Agreement:
NOW, THEREFORE, in consideration of the agreements contained herein and of such other good and
valuable consideration, the sufficiency of which the Executive acknowledges, the Company and the
Executive, intending to be legally bound, agree as follows:
1. Section 9(d) of the Employment Agreement is hereby amended by adding a new sentence at the
end of said Section 9(d) to read as follows:
“The Executive will forfeit all rights to the Severance Payments if the Executive fails to
execute and deliver the release within 30 days of delivery of the release to the Executive.
”
2. Section 9(g) of the Employment Agreement is hereby deleted in its entirety and amended and
restated to read as follows:
“(g) 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 preserve to the maximum extent possible the original
intent and economic benefit to the
Executive and the Company, and
the parties shall promptly execute any amendment reasonably
necessary to implement this Section 9(g).
(i) For purposes of Section 409A, the Executive’s right to receive installment payments
pursuant to this Agreement including, without limitation, each severance payment and COBRA
continuation reimbursement shall be treated as a right to receive a series of separate and
distinct payments.
(ii) The Executive will be deemed to have a Date of Termination for purposes of
determining the timing of any payments or benefits hereunder that are classified as deferred
compensation only upon a “separation from service” within the meaning of Code Section 409A.
(iii) Notwithstanding any other provision of this Agreement to the contrary, if at the
time of the Executive’s separation from service, (i) the Executive is a specified employee
(within the meaning of Section 409A and using the identification methodology selected by the
Company from time to time), and (ii) the Company makes a good faith determination that an
amount payable on account of such separation from service to the Executive constitutes
deferred compensation (within the meaning of Section 409A) the payment of which is required
to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to
avoid taxes or penalties under Section 409A (“the Delay Period”), then the Company will not
pay such amount on the otherwise scheduled payment date but will instead pay it in a lump
sum on the first business day after such six-month period (or upon the Executive’s death, if
earlier), together with interest for the period of delay, compounded annually, equal to the
prime rate (as published in the Wall Street Journal) in effect as of the dates the payments
should otherwise have been provided. To the extent that any benefits to be provided during
the Delay Period is considered deferred compensation under Code Section 409A provided on
account of a “separation from service,” and such benefits are not otherwise exempt from Code
Section 409A, the Executive shall pay the cost of such benefit during the Delay Period, and
the Company shall reimburse the Executive, to the extent that such costs would otherwise
have been paid by the Company or to the extent that such benefits would otherwise have been
provided by the Company at no cost to the Executive, the Company’s share of the cost of such
benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed
or provided by the Company in accordance with the procedures specified herein.
(iv) (A) Any amount that the Executive is entitled to be reimbursed under this
Agreement will be reimbursed to the Executive as
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promptly as practical and in any event not later than the last day of the calendar year
after the calendar year in which the expenses are incurred, (B) any right to reimbursement
or in kind benefits will not be subject to liquidation or exchange for another benefit, and
(C) the amount of the expenses eligible for reimbursement during any taxable year will not
affect the amount of expenses eligible for reimbursement in any other taxable year.
(v) Whenever a payment under this Agreement specifies a payment period with reference
to a number of days (e.g., “payment shall be made within thirty (30) days following the date
of termination”), the actual date of payment within the specified period shall be within the
sole discretion of the Company.
3. The fourth sentence of Section 10(b) of the Employment Agreement is hereby amended and
restated to read as follows:
“Any Gross-Up Payment, as determined pursuant to this Section 10 shall be paid by the
Employer to the Executive within five days of receipt of the Accounting Firm’s
determination, but in no event later than the end of the taxable year following the taxable
year in which the related taxes are remitted by the Executive.”
4. The next to last sentence in Section 25, definition of “Good Reason” is hereby deleted and
the following two sentences are inserted to at the same place to read as follows:
“In order to invoke a termination for Good Reason, the Executive must deliver a written
notice of such breach to the Employer within 60 days of the occurrence of the breach which
shall have 30 days to cure the breach. In order to terminate his employment, if at all, for
Good Reason, Executive must terminate employment within 30 days of the end of the cure
period if the breach has not been cured.”
5. The provisions of this Amendment may be amended and waived only with the prior written
consent of the parties hereto. This Amendment may be executed and delivered in one or more
counterparts, each of which shall be deemed an original and together shall constitute one and the
same instrument.
6. Except as set forth in this Amendment, the Employment Agreement shall remain unchanged and
shall continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment on the date
first written above.
| CAPITALSOURCE INC. |
||||
| By: | /s/ XXXX X. XXXXXX | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | President and Chief Operating Officer | |||
| EXECUTIVE |
||||
| By: | /s/ XXXXXX X. XXXXXXX | |||
| Xxxxxx X. Xxxxxxx | ||||
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