##### 



Exhibit 4.20.1
 EXECUTION COPY




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TABLE OF CONTENTS
 PageARTICLE I DEFINITIONS
    
    
    2Section 1.01. Definitions
    
    
    2ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
    
    
    11Section 2.01. Designation Amount and Issue of Notes
    
    
    11Section 2.02. Form of Notes
    
    
    11Section 2.03. Execution of Notes
    
    
    11Section 2.04. Additional Notes; Repurchases
    
    
    12ARTICLE III REDEMPTION AND REPURCHASE OF NOTES
    
    
    12Section 3.01. Applicability of Article
    
    
    12Section 3.02. Companys Right to Redeem
    
    
    12Section 3.03. Notice of Optional Redemption; Selection of Notes
    
    
    13Section 3.04. Payment of Notes Called for Redemption by the Company
    
    
    14Section 3.05. Conversion Arrangement on Call for Redemption
    
    
    15Section 3.06. Repurchase of Notes by the Company at Option of Noteholders upon a
Fundamental Change
    
    
    15Section 3.07. Repurchase of Notes by the Company at Option of Holders on Specified
Dates
    
    
    19Section 3.08. Conditions and Procedures for Repurchase at Option of Holders
    
    
    20ARTICLE IV PARTICULAR COVENANTS OF THE COMPANY AND THE GUARANTOR
    
    
    23Section 4.01. Provisions As to Paying Agent
    
    
    23Section 4.02. Calculation of Tax Original Issue Discount
    
    
    24ARTICLE V REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
    
    
    24Section 5.01. Events of Default
    
    
    24Section 5.02. Special Interest Payment
    
    
    26Section 5.03. Waiver of Default by Majority of Noteholders
    
    
    26ARTICLE VI SUPPLEMENTAL INDENTURES
    
    
    26Section 6.01. Applicability of Article
    
    
    26Section 6.02. Supplemental Indentures Without Consent of Noteholders
    
    
    27Section 6.03. Supplemental Indenture with Consent of Noteholders
    
    
    28Section 6.04. Effect of Supplemental Indenture
    
    
    29Section 6.05. Notation on Notes
    
    
    29
 - i -




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TABLE OF CONTENTS
(continued)
 PageSection 6.06. Evidence of Compliance of Supplemental Indenture to Be Furnished to
Trustee
    
    
    30ARTICLE VII [INTENTIONALLY OMITTED]
    
    
    30ARTICLE VIII SATISFACTION AND DISCHARGE OF INDENTURE
    
    
    30Section 8.01. [Intentionally Omitted]
    
    
    30Section 8.02. Paying Agent to Repay Monies Held
    
    
    30Section 8.03. Return of Unclaimed Monies
    
    
    30ARTICLE IX CONVERSION OF NOTES
    
    
    31Section 9.01. Right to Convert
    
    
    31Section 9.02. Exercise of Conversion Privilege; No Adjustment for Interest or Dividends
    
    
    34Section 9.03. Payment and Delivery Due upon Conversion; Payment of Cash in Lieu of
Common Stock
    
    
    35Section 9.04. Fractional Shares
    
    
    35Section 9.05. Conversion Rate
    
    
    35Section 9.06. Adjustment of Conversion Rate
    
    
    35Section 9.07. Effect of Reclassification, Consolidation, Merger or Sale
    
    
    42Section 9.08. Taxes on Shares Issued
    
    
    42Section 9.09. Reservation of Shares, Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock
    
    
    43Section 9.10. Responsibility of Trustee
    
    
    43Section 9.11. Notice to Holders Prior to Certain Actions
    
    
    44Section 9.12. Shareholders
    
    
    44ARTICLE X GUARANTEE
    
    
    44Section 10.01. Release of Guarantee
    
    
    44ARTICLE XI SUBORDINATION OF THE NOTES
    
    
    45Section 11.01. Applicability of Article
    
    
    45Section 11.02. Agreement of Subordination
    
    
    45Section 11.03. Payments to Holders
    
    
    46Section 11.04. Payment Permitted If No Default
    
    
    48Section 11.05. Provisions Solely to Define Relative Rights
    
    
    48Section 11.06. Subrogation of Notes
    
    
    48Section 11.08. Authorization to Effect Subordination
    
    
    48
 - ii -




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TABLE OF CONTENTS
(continued)
 PageSection 11.08. Notice to Trustee
    
    
    49Section 11.09. Rights of Trustee as Holder of Senior Indebtedness
    
    
    49Section 11.10. No Waiver of Subordination Provisions
    
    
    49Section 11.11. Certain Conversions Deemed Payment
    
    
    50Section 11.12. Article Applicable to Paying Agents
    
    
    50Section 11.13. Senior Indebtedness Entitled to Rely
    
    
    51Section 11.14. Trustee Not Fiduciary for Holders of Senior Indebtedness
    
    
    51ARTICLE XII SUBORDINATION OF THE GUARANTEE
    
    
    51Section 12.01. Agreement of Subordination
    
    
    51Section 12.02. Payments to Holders
    
    
    51Section 12.03. Payment Permitted If No Default
    
    
    53Section 12.04. Provisions Solely to Define Relative Rights
    
    
    53Section 12.05. Subrogation of Notes
    
    
    54Section 12.06. Authorization to Effect Subordination
    
    
    54Section 12.07. Notice to Trustee
    
    
    54Section 12.08. Rights of Trustee as Holder of Senior Indebtedness
    
    
    55Section 12.09. No Waiver of Subordination Provisions
    
    
    55Section 12.10. Certain Conversions Deemed Payment
    
    
    56Section 12.11. Article Applicable to Paying Agents
    
    
    56Section 12.12. Senior Indebtedness Entitled to Rely
    
    
    56Section 12.13. Trustee Not Fiduciary for Holders of Senior Indebtedness
    
    
    56ARTICLE XIII MISCELLANEOUS PROVISIONS
    
    
    56Section 13.01. Provisions Binding on Companys and Guarantors Successors
    
    
    56Section 13.02. Official Acts by Successor Corporation
    
    
    56Section 13.03. Addresses for Notices, Etc.
    
    
    57Section 13.04. Notice to Holders
    
    
    57Section 13.05. Governing Law
    
    
    57Section 13.06. Company Responsible for Making Calculations
    
    
    57Section 13.07. Evidence of Compliance with Conditions Precedent, Certificates to Trustee
    
    
    58Section 13.08. Trust Indenture Act
    
    
    58Section 13.09. No Security Interest Created
    
    
    58
 - iii -




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TABLE OF CONTENTS
(continued)
 PageSection 13.10. Benefits to Indenture
    
    
    58Section 13.11. Authenticating Agent
    
    
    58Section 13.12. Execution in Counterparts
    
    
    59Section 13.13. Severability
    
    
    59Exhibit A Form of Note
    
    
    A-1
 - iv -




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INDENTURE
 FIRST SUPPLEMENTAL INDENTURE First Supplemental
Indenture Company Guarantor Trustee
 WITNESSETH:
 Original Indenture
  Notes
 Guarantee




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DEFINITIONS
 Definitions
 98% Trading Exception
 Adjustment Event
 Affiliate control controlling controlled
 beneficial holder
 Bid Solicitation Agent
 Board of Directors
 Board Resolution
 Business Day
 Capital Stock
 - 2 -




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Commission
 Common Stock provided,
 Company
 Company Repurchase Date
 Company Repurchase Election
 Company Repurchase Notice
 Company Repurchase Price
 Conversion Agent
 Conversion Date
 Conversion Obligation
 Conversion Price
 Conversion Rate
 - 3 -




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Corporate Trust Office
 Custodian
 Daily Conversion Value
 Daily Settlement Amount
 Daily VWAP
 Default
 Defaulted Interest
 Depositary
 Determination Date
 Event of Default
 Exchange Act
 Ex-Dividend Date
 - 4 -




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Expiration Time
 First Supplemental Indenture
 Fundamental Change
  provided however
    publicly traded
securities
 Fundamental Change Company Notice
 Fundamental Change Repurchase Date
 Fundamental Change Repurchase Notice
 Fundamental Change Repurchase Price
 GAAP
 - 5 -




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Global Note
 Guarantee
 Guarantor
 holder Noteholder beneficial holder
 Indebtedness
 Indenture
 Interest
 Interest Payment Date
 Issue Date
 Last Reported Sale Price
 - 6 -




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Make-Whole Fundamental Change Fundamental Change Fundamental Change
 Market Disruption Event
 Member Action
 non-electing share
 Notes
 Notice of Conversion
 Observation Period Observation Period
 Officers Certificate provided, that
 Opinion of Counsel
 - 7 -




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Original Indenture
 Outstanding
     Parity Senior Subordinated Notes
 Paying Agent
 Payment Default
 Person
 Principal Value Conversion
 Proceeding
 Quarterly Dividend Threshold Amount
 Record Date
 Redemption Date
 Redemption Notice
 Redemption Price
 Regular Record Date
 - 8 -




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Repurchase Date
 Repurchase Election
 Repurchase Price
 Responsible Officer
 Scheduled Trading Day
 Securities Act
 Senior Indebtedness pari passu pari passu
 Settlement Amount
 Stated Maturity
 Subsidiary
 - 9 -




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Tax Original Issue Discount
 Termination of Trading
 TP Securities
 Trading Day Trading Day
 Trading Price provided however
 Trust Indenture Act provided, that Trust Indenture Act
 Trustee
 - 10 -




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ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
 Designation Amount and Issue of Notes
 Form of Notes
  Global Note
  - 11 -




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Execution of Notes
    Additional Notes; Repurchases provided,
  REDEMPTION AND REPURCHASE OF NOTES
 Applicability of Article
 Companys Right to Redeem
 - 12 -




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Redemption Price
  Notice of Optional Redemption; Selection of Notes
 Redemption Date Redemption Notice provided
  provided
 - 13 -




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pro rata
 pro rata
 Payment of Notes Called for Redemption by the Company provided,
   - 14 -




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Conversion Arrangement on Call for Redemption
 Repurchase of Notes by the Company at Option of Noteholders upon a
Fundamental Change
 Fundamental Change Repurchase Date Fundamental Change Repurchase Price
 Fundamental Change Company Notice
 - 15 -




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provided,
       provided,
       Fundamental Change Repurchase Notice
 - 16 -




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provided,
  provided,
 provided,
 - 17 -




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- 18 -




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Repurchase of Notes by the Company at Option of Holders on Specified
Dates Company Repurchase Date Company Repurchase Price
 Company Repurchase Notice provided,
     provided,
 - 19 -




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Company Repurchase Election th
    provided,
  Conditions and Procedures for Repurchase at Option of Holders
 - 20 -




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provided
      - 21 -




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provided
  - 22 -




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PARTICULAR COVENANTS OF THE COMPANY AND THE GUARANTOR
 Provisions as to Paying Agent
     provided
    - 23 -




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Calculation of Tax Original Issue Discount
   REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
 Events of Default
 Event of Default
         - 24 -




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- 25 -




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Special Interest Payment
  Waiver of Defaults by Majority of Noteholders
 - 26 -




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SUPPLEMENTAL INDENTURES
 Applicability of Article
 Supplemental Indentures Without Consent of Noteholders
    provided
   - 27 -




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provided
   Supplemental Indenture with Consent of Noteholders provided
       - 28 -




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Effect of Supplemental Indenture provided
 - 29 -




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Notation on Notes
 Evidence of Compliance of Supplemental Indenture to Be Furnished to
Trustee
  INTENTIONALLY OMITTED
  SATISFACTION AND DISCHARGE OF INDENTURE
  Paying Agent to Repay Monies Held
  Return of Unclaimed Monies
  - 30 -




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CONVERSION OF NOTES
 Right to Convert
   provided,
 98% Trading Exception provided however Principal Value Conversion
   - 31 -




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Effective
    
    Effective PriceDate
    
    $20.07
    
    $22.50
    
    $25.00
    
    $27.50
    
    $30.00
    
    $32.50
    
    $35.00
    
    $40.00
    
    $45.00
    
    $50.00
    
    $ 55.00July 25, 2007
    
    
    12.9177
    
    
    
    8.4082
    
    
    
    5.2002
    
    
    
    3.0489
    
    
    
    1.6502
    
    
    
    0.7808
    
    
    
    0.2888
    
    
    
    0.0110
    
    
    
    0.0001
    
    
    
    0.0000
    
    
    
    0.0000July 15, 2008
    
    
    12.9177
    
    
    
    8.6432
    
    
    
    5.4361
    
    
    
    3.2736
    
    
    
    1.8558
    
    
    
    0.9603
    
    
    
    0.4285
    
    
    
    0.0403
    
    
    
    0.0011
    
    
    
    0.0000
    
    
    
    0.0000July 15, 2009
    
    
    12.9177
    
    
    
    8.7250
    
    
    
    5.4872
    
    
    
    3.3061
    
    
    
    1.8812
    
    
    
    0.9847
    
    
    
    0.4524
    
    
    
    0.0505
    
    
    
    0.0019
    
    
    
    0.0000
    
    
    
    0.0000July 15, 2010
    
    
    12.9177
    
    
    
    8.5942
    
    
    
    5.2888
    
    
    
    3.0900
    
    
    
    1.6885
    
    
    
    0.8386
    
    
    
    0.3607
    
    
    
    0.0353
    
    
    
    0.0013
    
    
    
    0.0000
    
    
    
    0.0000July 15, 2011
    
    
    12.9177
    
    
    
    8.1176
    
    
    
    4.6260
    
    
    
    2.3941
    
    
    
    1.0946
    
    
    
    0.4226
    
    
    
    0.1310
    
    
    
    0.0059
    
    
    
    0.0001
    
    
    
    0.0000
    
    
    
    0.0000July 15, 2012
    
    
    12.9177
    
    
    
    7.5365
    
    
    
    3.0921
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    
    
    
    0.0000
    - 32 -




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provided however
  provided,
   - 33 -




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Exercise of Conversion Privilege; No Adjustment for Interest or
Dividends Notice of Conversion
   Conversion Date
 provided
 - 34 -




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Payment and Delivery Due upon Conversion; Payment of Cash in Lieu of Common
Stock Conversion Obligation Settlement Amount
 Fractional Shares
 Conversion Rate Conversion Rate
 Adjustment of Conversion Rate
 - 35 -




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CR0
    
    =
    
    the Conversion Rate in effect immediately prior to such
eventCR
    
    =
    
    the Conversion Rate in effect immediately after such eventOS0
    
    =
    
    the number of shares of Common Stock outstanding
immediately prior to such eventOS
    
    =
    
    the number of shares of Common Stock outstanding
immediately after such event
  provided,
 
  CR0
    
    =
    
    the Conversion Rate in effect immediately prior to such
eventCR
    
    =
    
    the Conversion Rate in effect immediately after such event
 - 36 -




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OS0
    
    =
    
    the number of shares of Common Stock outstanding
immediately prior to such eventX
    
    =
    
    the total number of shares of Common Stock issuable
pursuant to such rightsY
    
    =
    
    the number of shares of Common Stock equal to the
aggregate price payable to exercise such rights divided
by the average of the Last Reported Sale Prices of Common
Stock for the ten consecutive Trading Days prior to the
Business Day immediately preceding the Ex-Dividend Date
with respect to the issuance of such rights
      
  CR0
    
    =
    
    the Conversion Rate in effect immediately prior to
such distribution
 - 37 -




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CR
    
    =
    
    the Conversion Rate in effect
immediately after such distributionSP0
    
    =
    
    the average of the Last Reported Sale Prices of
the Common Stock for the ten days prior to the
Business Day immediately preceding the Ex-Dividend
Date with respect to such distributionFMV
    
    =
    
    the fair market value (as determined by the Board
of Directors of the Company) of the shares of the
Companys Capital Stock, evidences of
Indebtedness, assets or property distributed with
respect to each outstanding share of Common Stock
on the Record Date for such distribution
  Quarterly Dividend Threshold Amount
 
 CR0
    
    =
    
    the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such distributionCR
    
    =
    
    the Conversion Rate in effect
immediately after the Ex-Dividend Date for such distributionSP0
    
    =
    
    the average of the closing sale prices of our
Common Stock for the ten consecutive Trading Days
prior to the Business Day immediately preceding
the Ex-Dividend Date with respect to such
distributionC
    
    =
    
    the amount in cash per share the Company
distributes to holders of Common Stock that
exceeds the Quarterly Dividend Threshold Amount
  provided,
 - 38 -




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Expiration Time
 
  CR0
    
    =
    
    the Conversion Rate in effect on
the date such tender or exchange offer expiresCR
    
    =
    
    the Conversion Rate in effect on
the day next succeeding the date such tender or exchange offer
expiresAC
    
    =
    
    the aggregate value of all cash and any other
consideration (as determined by the Board of
Directors of the Company) paid or payable for
shares purchased in such tender or exchange offerOS0
    
    =
    
    the number of shares of Common Stock outstanding
immediately prior to the date such tender or
exchange offer expiresOS
    
    =
    
    the number of shares of Common Stock outstanding
immediately after the date such tender or exchange
offer expiresSP
    
    =
    
    the average of the Last Reported Sale Prices of
Common Stock for the ten consecutive Trading Days
commencing on the Trading Day next succeeding the
date such tender or exchange offer expires.
     - 39 -




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##### 



provided however
   - 40 -




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Determination Date Adjustment Event
       - 41 -




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Effect of Reclassification, Consolidation, Merger or Sale provided, that non-electing share
    Taxes on Shares Issued
 - 42 -




---



##### 



Reservation of Shares, Shares to Be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock
     Responsibility of Trustee
 - 43 -




---



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Notice to Holders Prior to Certain Actions
      Shareholders
  GUARANTEE
 Release of Guarantee
 - 44 -




---



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SUBORDINATION OF THE NOTES
 Applicability of Article
 Agreement of Subordination
   - 45 -




---



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Payments to Holders
  Payment Default
   Defaulted Interest
 Proceeding
 - 46 -




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pari passu
     - 47 -




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Payment Permitted If No Default
  Provisions Solely to Define Relative Rights
  Subrogation of Notes
  Authorization to Effect Subordination
 - 48 -




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Notice to Trustee
 provided
  Rights of Trustee as Holder of Senior Indebtedness
  No Waiver of Subordination Provisions
  - 49 -




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Certain Conversions Deemed Payment
 junior securities
 Article Applicable to Paying Agents
 Trustee
 - 50 -




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Senior Indebtedness Entitled to Rely
  Trustee Not Fiduciary for Holders of Senior Indebtedness
   SUBORDINATION OF THE GUARANTEE
 Agreement of Subordination
     Payments to Holders
 - 51 -




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pari passu
 - 52 -




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Payment Permitted If No Default
  Provisions Solely to Define Relative Rights
  - 53 -




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Subrogation of Notes
  Authorization to Effect Subordination
  Notice to Trustee
 provided
 - 54 -




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Rights of Trustee as Holder of Senior Indebtedness
  No Waiver of Subordination Provisions
       - 55 -




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Certain Conversions Deemed Payment
 junior securities
 Article Applicable to Paying Agents
 Trustee
 Senior Indebtedness Entitled to Rely
  Trustee Not Fiduciary for Holders of Senior Indebtedness
   MISCELLANEOUS PROVISIONS
 Provisions Binding on Companys and Guarantors Successors
 Official Acts by Successor Corporation
 - 56 -




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Addresses for Notices, Etc. provided however
    Notice to Holders
 Governing Law
 Company Responsible for Making Calculations
 - 57 -




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Evidence of Compliance with Conditions Precedent, Certificates to
Trustee
  Trust Indenture Act provided, provided further
 No Security Interest Created
 Benefits of Indenture
 Authenticating Agent
 - 58 -




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##### 



Execution in Counterparts
 Severability
   - 59 -




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CAPITALSOURCE INC., as IssuerBy:
    
    
    
    /s/
    
    JEFFREY A. LIPSONName:
    
    
    
    Jeffrey A. LipsonTitle: Vice President & TreasurerCAPITALSOURCE FINANCE LLC, as GuarantorBy:
    
    
    
    /s/
    
    JEFFREY A. LIPSONName:
    
    
    
    Jeffrey A. LipsonTitle: Vice President & TreasurerWELLS FARGO BANK, N.A., as TrusteeBy:
    
    
    
    /s/
    
    CURTIS H. CLICQUENNOIName:
    
    
    
    Curtis H. ClicquennoiTitle:
    
    
    
    Vice President
 Sch. I-1