RETENTION, SEPARATION AND RELEASE AGREEMENT

This Retention, Separation and Release Agreement (“Agreement”) is entered into as of this 4th day of November, 2005, between Matrix Bancorp, Inc. (the ‘Company”), Matrix Capital Bank (the “Bank”), Matrix Bancorp Trading, Inc., First Matrix Investment Services Corp., First Matrix, LLC, ABS School Services, LLC, Matrix Financial Services Corporation, Matrix Funding Corp., MTXC Realty Corp., Sterling Trust Company (“Sterling”), The Vintage Group, Inc., Vintage Delaware Holdings, Inc., EquiMor Holdings, Inc., MSCS Ventures, Inc., Charter Facilities Funding, LLC, Charter Facilities Funding III LLC and Community Development Funding I, LLC (collectively, the “Employers”) and David W. Kloos (the “Employee”).

WHEREAS , as of the date hereof, the Company has commenced a private placement offering of its common stock (the “Offering”), the proceeds of which are to be used to fund an issuer tender offer, in which certain members of the Company’s current senior management have agreed to tender all of their shares of common stock and resign upon completion of the Offering;

WHEREAS, the Company and Employee have agreed and desire to memorialize that, in consideration for Employee agreeing to cancel and terminate his existing Change of Control Agreement with the Company, dated as of October 28, 2003 (the “Change of Control Agreement”), Employee shall receive a payment from the Company upon closing of the Offering;

WHEREAS, the Company’s proposed new management team has requested that Employee remain with the Employers in his current position, performing his current duties and responsibilities, and at his current base salary through June 30, 2006 in order to ensure for a smooth transition; and

WHEREAS, the Employers and the Employee desire to set forth the terms upon which Employee will remain with Employers and the terms of Employee’s separation from employment with Employers thereafter.

NOW, THEREFORE , in consideration of the mutual promises and the terms and conditions set forth below and other obligations under this Agreement, the Employers and the Employee (collectively referred to as the “‘Parties”) hereby agree as follows:

1.   Effectiveness of Agreement . This Agreement is effective as of the date first set forth above; provided, however, to the extent the Offering is not consummated, this Agreement shall be null and void and of no further effect.

2.   Payments to Employee; Benefit Participation .

(a)   Subject to Section 2(e) hereof, in consideration for Employee’s agreement to cancel and terminate his Change of Control Agreement with the Company, the Company agrees to provide Employee with a payment of seven hundred sixty five thousand dollars ($765,000) upon the closing of the Offering. Upon such payment, Employee’s Change of Control Agreement shall be terminated and be of no further effect.

(b)   Subject to Section 2(e) hereof, at the close of business on each of March 31, 2006 and June 30, 2006, the Employee shall receive from the Company a retention payment amounting to eighty one thousand two hundred fifty dollars ($81,250.00), less any applicable income and employment taxes required to be withheld therefrom pursuant to Section 14 hereof (the “Retention Payment”). The Retention Payment shall be in addition to Employee’s current base salary as in effect on the date hereof, which shall continue to be paid, less any applicable income and employment taxes required to be withheld therefrom pursuant to Section 14 hereof. The payments to be provided hereunder shall be subject to Employees performance of his current duties and responsibilities (subject to oversight, direction and management by the Company’s new management) through June 30, 2006. Employers agree that provided that Employee satisfactorily performs his duties and responsibilities, it is the Employers’ intention to employ Employee through June 30, 2006. In the event of a dispute between the Employers and the Employee over whether Employee has properly performed his duties and responsibilities hereunder, the Compensation Committee shall consider whether Employee's performance was in accordance with the known published policies and procedures of Employers, and shall determine whether to withhold payments due to Employee hereunder, in whole or in part. To the extent that Employee disagrees with the decision of the Compensation Committee, Employee may utilize the dispute resolution procedures provided for in this Agreement.

(c)   Employee shall continue to receive his usual and customary board fees for attending meetings of the board of directors of the Bank and Sterling for so long as he shall remain a member of such boards of directors.

(d)   Until the Termination Date, Employee shall continue to participate in such benefits that are offered by the Employers generally to all employees.

(e)   (i)   Notwithstanding anything herein to the contrary, the payments to be made by Employers pursuant to this Section 2, as well as the payments to be made pursuant to a Stock Option Cancellation Agreement between the Company and Employee shall not exceed, in the aggregate, the safe harbor amounts set forth under Section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

(ii)   For purposes of this Section 2(e), in the event there is any disagreement between Employee and the Employers as to whether one or more payments to which Employee becomes entitled hereunder constitute “parachute payments” under Section 280G of the Code or as to whether the aggregate of such payments constitute “excess parachute payments” under the Code, such dispute will be resolved as follows:

(x)   In the event temporary, proposed or final regulations in effect at the time under Section 280G of the Code (or applicable judicial decisions) specifically address the status of any such payment or the method of valuation therefor, the characterization afforded to such payment by the regulations (or such decisions) will, together with the applicable valuation methodology, be controlling.

(y)   In the event regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to a nationally-recognized independent accounting firm mutually acceptable to Employee and the Employers (“Independent Accountant”). The resolution reached by the Independent Accountant will be final and controlling; provided, however, that if in the judgment of the Independent Accountant, the status of the payment in dispute can be resolved through the obtainment of a private letter ruling from the Internal Revenue Service, a formal and proper request for such ruling will be prepared and submitted, and the determination made by the Internal Revenue Service in the issued ruling will be controlling. Employee shall share equally in the expenses incurred in connection with the retention of the Independent Accountant and (if applicable) the preparation and submission of the ruling request until Employee shall have expended $5,000 and, thereafter, any additional expenses shall be borne solely by the Employers.

3.   Termination of Employment Relationships . Subject to Section 17 hereof, the employment relationships between the Employee and the Employers shall terminate on June 30, 2006 (the “Termination Date”). Effective as of the Termination Date, the Employee agrees to resign all officer and employee positions (including all responsibilities attendant thereto) with each of the Employers, his membership on all Boards of Directors and Committees of each of the Employers and his positions as trustee or administrator with respect to any statutory business trusts formed by the Company.

4.   Benefits . (a) For a period of twelve (12)   months from the Termination Date, which Termination Date shall be the “qualifying event” date under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Employee shall have the right to continue coverage under the Company’s medical and dental insurance programs as provided by COBRA, which coverage shall be provided at the Company’s expense.

(b)   Except as set forth in this Section 4 and as required by applicable law, the Employee shall not be entitled to participate in any benefit plans or programs provided to employees of the Employers following the Termination Date.

5.   No Other Payments Due . Except as provided in Section 2 and Section 4 hereof, the Employee shall not be entitled to any payments or other benefits following the Termination Date. The Employee further acknowledges that, subject to the above-referenced exceptions, there is no other compensation arising out of or as a result of his employment by the Employers.

6.   Release and Indemnification . (a) In consideration of the above, the sufficiency of which the Employee hereby acknowledges, the Employee, as of the Termination Date, on behalf of the Employee and the Employee’s heirs, executors and assigns, agrees to release and forever discharge the Employers and each of the Employers’ shareholders, parents, affiliates, subsidiaries, divisions, any and all current and former directors, officers, employees, agents, and contractors and their heirs and assigns, and any and all employee pension benefit or welfare benefit plans of the Employers, including current and former trustees and administrators of such employee pension benefit and welfare benefit plans (the “Released Parties”), from all claims, charges, or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, without limitation, any claims the Employee may have arising from or relating to the Employee’s employment relationships or termination from such relationships with the Employers, including a release of any rights or claims the Employee may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment based upon race, color, sex, religion and national origin); the Age Discrimination in Employment Act; the Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on requesting or taking a family or medical leave);   Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate); the National Labor Relations Act; the Colorado Labor Peace Act; the Employee Retirement Income Security Act of 1974, as amended (other than any accrued benefit(s) to which the Employee has a non-forfeitable right under any pension benefit plan)(which prohibits discrimination with regard to benefits); the Worker Adjustment and Retraining Notification Act; the Colorado Anti-Discrimination Act; the Fair Labor Standards Act; the Colorado Wage Claim Act;   and any other federal, state or local laws against discrimination; or any other U.S. federal, state, or local statute, or common law relating to employment, wages, hours, or any other terms and conditions of employment. The release provided for herein includes a release by the Employee of any claims for wrongful discharge, breach of contract, torts or any other claims in any way related to the Employee’s employment relationships with or resignation or termination from each of the Employers. The Employee understands that this is a general waiver and release of all claims, known or unknown, that the Employee may have against the Released Parties based on any act, omission, matter, cause or thing that occurred through the date the Employee signs this Agreement. This release does not release the Employers from any obligations due to the Employee under this Agreement, or from any rights, claims or coverages to which Employee may be entitled in respect of or under any former, current or future insurance policies of the Employers and their affiliates; provided, however, that Employee specifically agrees to waive all rights, claims and coverages to which Employee may be entitled under the Bank Owned Life Insurance and/or Company Owned Life Insurance policies. !

(b)   In consideration of the above, the sufficiency of which the Employers hereby acknowledge, as of the Termination Date, the Employers and their successors and assigns agree to release and forever discharge the Employee and the Employee’s heirs, executors and assigns, from all claims, charges, or demands, in law or in equity, whether known or unknown, which may have e