An exhaust valve rocker arm assembly operable in a combustion engine mode and an engine braking mode includes: a rocker shaft defining a pressurized oil supply conduit; a rocker arm that receives the rocker shaft and rotates around the rocker shaft, the rocker arm having an oil supply passage therein; a valve bridge that engages a first exhaust valve at a first foot and a second exhaust valve at a second foot; and a capsule assembly disposed on the rocker arm having a capsule body that moves between first and second capsule positions, wherein, in the first capsule position, the capsule body is in a retracted position in the rocker arm offset from the valve bridge, wherein, in the second capsule position, the capsule body extends rigidly for cooperative engagement with the valve bridge.