EMPLOYMENT AGREEMENT
Exhibit 10.2
This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 6th day of June,
2006 (the “Effective Date”), by and between CapitalSource Inc., a Delaware corporation (the
“Employer” or the “Company”), and Xxxxx X. Xxxx, an individual (the “Executive”).
WHEREAS, the Executive is currently employed as the Vice Chairman of the Company’s Board of
Directors (the “Board”) and Chief Investment Officer of the Company; 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 one-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 June
6, 2007 and each subsequent June 6, 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
Vice Chairman of the Board, a member of the Board and Chief Investment Officer of the Employer. In
such capacities, the Executive shall report directly and exclusively to the Board (or, if the
Employer becomes a subsidiary of a different entity, the board of directors of the Employer’s
ultimate parent company). During the Employment Period, the Executive shall
have the powers and authority customarily exercised by individuals serving as chief investment
officer of a company of the size and nature of the Employer. 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 shall be based
primarily at a principal office of the Employer designated by the Employer in San Francisco,
California, except for reasonable travel on the Employer’s business consistent with the Executive’s
position.
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 $400,000 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.
(e) Vacation; Benefits. During the Employment Period, the Executive shall be entitled
to six weeks vacation annually. In addition, the Employer shall provide to the Executive employee
benefits and perquisites on a basis that is no less favorable to that provided to any other senior
officer of the Company. 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.
(f) Equity Awards. Contemporaneously with the execution and delivery of this
Agreement by the parties, the Employer hereby grants the options to purchase 700,000 shares of
Stock pursuant to the Option Agreement attached hereto as Exhibit A (the “Options”). For calendar
years after 2006, the parties will mutually agree upon an appropriate equity award, if any.
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 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 anywhere in the United States to any
entity if (i) during the preceding 12 months more than 5% of the revenues of such entity and its
affiliates is derived from any business from which the Employer derived more than 5% of its revenue
during such period (a “Material Business”) or (ii) the services to be provided by the Executive are
competitive with a Material Business and substantially similar to those previously provided by the
Executive to a Material Business; 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 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 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 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) the Employer shall pay to the Executive’s legal representative or estate, as
applicable, the Executive’s Base Salary due through the Executive’s Date of Termination; and (ii)
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.
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. Except as set forth herein, the Employer shall have no further
obligation to the Executive under this Agreement.
(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 Executive’s 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) subject to the terms of the agreements
covering the Options, 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. 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.
(d) Termination by the Employer without Cause or by the Executive with Good Reason.
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 pay the Executive (A) the Executive’s Base
Salary due through the end of the Employment Period, and (B) 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; (ii) (A) subject to the terms of the agreements covering the Options, 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, 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 (including the
Options) 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 24 months 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) 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 Section 9(d) (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 the release
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.
(f) 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.
(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 the parties shall promptly execute any amendment reasonably necessary to implement this Section
9(g).
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 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) I 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 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 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 0000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxxxx Xxxxx, Xxxxxxxx 00000 Attn: Chief Legal Officer Facsimile Number: 000-000-0000 |
| (ii) | If to the Executive: | ||
| Xxxxx X. Xxxx 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 distributes 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
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 and supersedes the Employment Agreement by and
between the parties dated September 7, 2000 (the “Previous Agreement”).
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 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, excluding the
Executive, 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 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 in the Executive’s titles or positions; (ii) reduction in the
Executive’s Base Compensation; (iii) a requirement that the Executive report to someone other than
the Board (or the board of directors of the Employer’s ultimate parent company if it is a
subsidiary of another entity); (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 positions or status with the
Employer as of the date hereof; (vi) a relocation of the Executive’s primary place of employment to
a location more than 25 miles further from the Executive’s primary residence than the current
location of the Employer’s offices; (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 4,
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”.
“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.
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/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Legal Officer | |||
| EXECUTIVE |
||||
| /s/ Xxxxx X. Xxxx | ||||
| Xxxxx X. Xxxx | ||||
Exhibit A
Option Agreement
CAPITALSOURCE INC.
THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN
THIRD AMENDED AND RESTATED EQUITY INCENTIVE PLAN
NON-QUALIFIED OPTION AGREEMENT
June 6, 2006
June 6, 2006
CapitalSource Inc., a corporation organized under the laws of Delaware (the “Company”),
hereby grants an option to purchase its shares of common stock, par value $0.01 per share (“Common
Stock”) to Xxxxx X. Xxxx (the “Optionee”). The terms and conditions of the option are set forth
below and in the Company’s Third Amended and Restated Equity Incentive Plan (the “Plan”).
Concurrently with the execution and delivery of this option agreement, the Company and the Optionee
are entering into an employment agreement, dated as of the date hereof (the “Employment
Agreement”).
| Grant Date | June 6, 2006 (the “Grant Date”). |
|
| Number of Shares Covered | 700,000 shares of Common Stock (the “Shares”). |
|
| Option Price per Share |
$23.72 per share of Common Stock (the “Option Price”). |
|
| Non-qualified Option | This option is not intended to be an incentive option
under Section 422 of the Internal Revenue Code and
will be interpreted accordingly. |
|
| Vesting | • General. This option is exercisable only as
to the vested portion of the Shares. The option may
be exercised, in whole or in part, to purchase a
whole number of vested Shares of not less than 100
Shares, unless the number of vested Shares purchased
is the total number available for purchase under the
option, by following the procedures set forth in the
Plan and below in this Agreement. |
|
• Normal Vesting. Except as provided below,
this option shall vest and become exercisable in full
on January 1, 2007. |
||
• Accelerated Vesting. Notwithstanding
anything to the contrary contained herein, this
option shall become 100% vested and exercisable on
the earliest to occur of (i) a Change in Control (as
defined in the Employment Agreement) or, (ii) the
Optionee’s termination of employment pursuant to
Section 9(a), 9(b) or 9(d) of the Employment
Agreement. |
| Term | • Except as set forth in the two immediately
succeeding bullet points, this option will expire in
any event on June 6, 2016 (the “Expiration Date”). |
|
• The unvested portion of this option
(determined after giving effect to any provision of
this agreement that provides for accelerated vesting)
will expire upon your termination of employment with
the Company and its affiliates for any reason. |
||
• The vested portion of this option will expire
prior to the Expiration Date if (and only if) the
Company terminates your employment for Cause (as
defined in the Employment Agreement). |
||
| Leaves of Absence | For purposes of this option, your Service does not
terminate when you go on a bona fide employee leave
of absence that was approved by the Board of
Directors of the Company (the “Board”) in writing, if
the terms of the leave provide for continued Service
crediting, or when continued Service crediting is
required by applicable law. Your Service terminates
in any event when the approved leave ends unless you
immediately return to active employee work. |
|
The Board determines, in its sole discretion, which
leaves count for this purpose, and when your Service
terminates for all purposes under the Plan. |
||
| Notice of Exercise | When you wish to exercise this option, you must
notify the Company by filing the proper “Notice of
Exercise” form at the address given on the form.
Your notice must specify how many Shares you wish to
purchase (in a parcel of at least 100 Shares
generally). Your notice must also specify how your
Shares should be registered (in your name only or in
your and your spouse’s names as joint tenants with
right of survivorship). The notice will be effective
when it is received by the Company. |
|
If someone else wants to exercise this option after
your death, that person must prove to the Company’s
reasonable satisfaction that he or she is entitled to
do so. |
| Form of Payment | When you submit your notice of exercise, you must
include payment of the Option Price for the Shares
you are purchasing. Payment may be made in one (or a
combination) of the following forms: |
|
— Cash, your personal check, a cashier’s
check, a money order or another cash equivalent
acceptable to the Company. |
||
— Shares which have already been owned by you
and which are surrendered to the Company as long as
there is no accounting charge |
resulting from such
payment. The value of the Shares, determined as of
the effective date of the option exercise, will be
applied to the option price. |
||
— To the extent a public market for the
Shares exists as determined by the Company, by
delivery (on a form prescribed by the Company) of an
irrevocable direction to a licensed securities broker
acceptable to the Company to sell Shares and to
deliver all or part of the sale proceeds to the
Company in payment of the aggregate option price and
any withholding taxes. |
||
Alternatively, you may exercise all or any portion of
this option in a “cashless exercise”, meaning that
upon exercise of all or a portion of this option you
shall not be required to pay the applicable exercise
price and the Company shall deliver you the number of
Shares that have an aggregate fair market value equal
to the aggregate spread with respect to the portion
of the option that is exercised. |
||
| Withholding Taxes | You will not be allowed to exercise this option
unless you make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the option exercise or sale of Shares
acquired under this option. In the event that the
Company determines that any federal, state, local or
foreign tax or withholding payment is required
relating to the exercise or sale of Shares arising
from this grant, the Company shall have the right to
require such payments from you, or withhold such
amounts from other payments due to you from the
Company or any Affiliate. In lieu of paying the
Company the amount of taxes required to be withheld,
you may direct the Company to withhold the number of
Shares that have an aggregate fair market value equal
to the Company’s withholding obligation. |
|
| Transfer of Option | During your lifetime: |
|
• only you (or, in the event of your legal
incapacity or incompetency, your guardian or legal
representative) may exercise the option; and |
||
• you cannot transfer or assign this option.
For instance, you may not sell this option or use it
as security for a loan. |
||
If you attempt to do any of these things, this option
will immediately become invalid. You may, however,
dispose of this option in your will or it may be
transferred upon your death by the laws of descent
and distribution. Regardless of any marital property
settlement agreement, the Company is not obligated to
honor a notice of exercise from your spouse, nor is
the Company obligated to recognize your spouse’s
interest in this option in any other way. |
Notwithstanding the restrictions on transfer in this
section of the Agreement, the Board may authorize, in
their sole discretion, the transfer of a vested
option (in whole or in part) to a member of your
immediate family or a trust for the benefit of your
immediate family. |
||
| Retention Rights | Unless otherwise specified in the Employment
Agreement, the Company (and any Affiliate) reserve
the right to terminate your Service at any time and
for any reason. |
|
| Shareholder Rights | You, or your estate or heirs, have no rights as a
shareholder of the Company until the Shares have been
issued upon exercise of this option and either a
certificate evidencing your Shares has been issued or
an appropriate entry has been made on the Company’s
books. No adjustments are made for distributions or
other rights if the applicable record date occurs
before your certificate is issued (or an appropriate
book entry is made), except as described in the Plan
or in this Agreement. |
|
| Adjustments | • Notwithstanding any provision of the Plan to
the contrary, in the event of a split, distribution,
spin off or other similar transaction involving of
any business or direct or indirect subsidiary of the
Company (any such business, “Newco”), you will be
granted a new option on Newco on such terms and
conditions and this option will be equitably adjusted
so that, on a combined basis immediately after such
transaction, the economic benefit to you of this
option will be preserved. |
|
• Notwithstanding any provision of the Plan to
the contrary, in the event of a merger,
reorganization, consolidation, amalgamation or other
transaction in which all outstanding Shares are
exchanged for, or converted into, stock of another
entity, this option shall remain outstanding and
shall be equitably converted into an option to
acquire such stock on a basis so that immediately
after such transaction, the economic benefit to you
of this option (measured based on the total per Share
consideration involved in such transaction) is
preserved. |
||
• In the event of a liquidation of the Company
or any transaction in which all outstanding Shares
are exclusively exchanged for, or converted into,
cash, this option shall be treated similarly to other
outstanding options to acquire Shares granted by the
Company to employees. |
||
• Unless otherwise consented to in writing by
you, the “Adjustment” provisions set forth in this
Agreement will exclusively govern this option and
shall supersede any inconsistent provision of the
Plan. |
| Applicable Law | This Non-Qualified Option Agreement will be
interpreted and enforced under the laws of the State
of Delaware, other than any conflicts or choice of
law rule or principle that might otherwise refer
construction or interpretation of this Agreement to
the substantive law of another jurisdiction. |
|
| The Plan and the Employment Agreement | The text of the Plan and the Employment Agreement are
incorporated in this Non-Qualified Option Agreement
by reference. Certain capitalized terms used in this
Non-Qualified Option Agreement are defined in the
Plan or the Employment Agreement, and have the
meaning set forth therein. |
|
This Non-Qualified Option Agreement, the Plan and the
Employment Agreement constitute the entire
understanding between you and the Company regarding
this option. Any prior agreements, commitments or
negotiations concerning this option are superseded. |
[Signature Page Follows]
By signing this Non-Qualified Option Agreement, you agree to all of the terms and conditions
described herein, in the Plan and the Employment Agreement, copies of which are also attached. You
acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the
event any provision of this Non-Qualified Option Agreement should appear to be inconsistent.
| Optionee: | /s/ Xxxxx X. Xxxx | |||
| (Signature) | ||||
| CAPITALSOURCE INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chief Legal Officer | |||
This is not a stock certificate or a negotiable instrument.
Exhibit B
General Release of Claims
Consistent with Section 9(e) of the Employment Agreement dated June 6, 2006 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 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, 0000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, 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: |
||
Exhibit C
General Release of Claims by CapitalSource
Consistent with Section 9(e) of the Employment Agreement dated June 6, 2006 between
CapitalSource Inc. and Xxxxx X. Xxxx (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: | ||||||
By:
|
, | |||||
| Name | Title | |||||
