##### 



EXHIBIT
10.54
 
 CREDIT AGREEMENT
 among
 CAPITALSOURCE INC.  as the Initial Borrower
 THE GUARANTORS LISTED HEREIN,
 THE LENDERS LISTED HEREIN,
 WACHOVIA BANK, NATIONAL ASSOCIATION,  as the Administrative Agent, Swingline Lender, and Issuing Lender
 BANK OF AMERICA, N.A.,  as Issuing Lender
 
 WACHOVIA CAPITAL MARKETS, LLC,  as Sole Bookrunner and as Lead Arranger
 BANK OF MONTREAL,
 BARCLAYS BANK PLC,
  SUNTRUST BANK,  as Co-Documentation Agents




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##### 



TABLE OF CONTENTS
 PageARTICLE I DEFINITIONS
    
    
    1Section 1.1. Defined Terms
    
    
    1Section 1.2. Other Definitional Provisions
    
    
    27Section 1.3. Accounting Terms
    
    
    27Section 1.4. Computation of Time Periods
    
    
    28Section 1.5. Currencies Generally
    
    
    28ARTICLE II THE LOANS; AMOUNT AND TERMS
    
    
    29Section 2.1. Revolving Loans
    
    
    29Section 2.2. Increase of the Commitments
    
    
    31Section 2.3. Letter of Credit Subfacility
    
    
    33Section 2.4. Swingline Loan Subfacility
    
    
    37Section 2.5. Fees
    
    
    39Section 2.6. Commitment Reductions
    
    
    40Section 2.7. Prepayments
    
    
    40Section 2.8. Minimum Principal Amounts
    
    
    42Section 2.9. Default Rate and Payment Dates
    
    
    42Section 2.10. Conversion Options
    
    
    43Section 2.11. Computation of Interest and Fees
    
    
    44Section 2.12. Pro Rata Treatment and Payments
    
    
    45Section 2.13. Non-Receipt of Funds by the Administrative Agent
    
    
    47Section 2.14. Inability to Determine Interest Rate
    
    
    48Section 2.15. Illegality
    
    
    48Section 2.16. Requirements of Law
    
    
    49Section 2.17. Indemnity
    
    
    50Section 2.18. Taxes
    
    
    51Section 2.19. Indemnification; Nature of Issuing Lenders Duties
    
    
    53Section 2.20. Extension of Commitment Termination Date
    
    
    54Section 2.21. Replacement of Lenders
    
    
    55Section 2.22. Additional Limitations on CSF as Borrower
    
    
    55Section 2.23. Several Liability of the Borrowers
    
    
    55
 -i-




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##### 



TABLE OF CONTENTS
 PageSection 2.24. Currency Conversion of Loans
    
    
    55ARTICLE III CONDITIONS PRECEDENT
    
    
    55Section 3.1. Conditions to Closing.
    
    
    55Section 3.2. Conditions to All Extensions of Credit
    
    
    58ARTICLE IV REPRESENTATIONS AND WARRANTIES
    
    
    59Section 4.1. Existence and Power
    
    
    59Section 4.2. Organizational and Governmental Authorization; No Contravention
    
    
    59Section 4.3. Binding Effect
    
    
    59Section 4.4. Financial Information
    
    
    60Section 4.5. Litigation
    
    
    60Section 4.6. Compliance with ERISA
    
    
    60Section 4.7. Taxes
    
    
    60Section 4.8. Subsidiaries
    
    
    61Section 4.9. Investment Company Act
    
    
    61Section 4.10. [Reserved]
    
    
    61Section 4.11. Ownership of Property
    
    
    61Section 4.12. No Default
    
    
    61Section 4.13. Full Disclosure
    
    
    61Section 4.14. Environmental Matters
    
    
    62Section 4.15. Compliance with Laws
    
    
    62Section 4.16. Capital Stock
    
    
    62Section 4.17. Margin Stock
    
    
    62Section 4.18. Insolvency
    
    
    63Section 4.19. Available Unpledged Assets
    
    
    63Section 4.20. Labor Matters
    
    
    63Section 4.21. Patents, Trademarks, Etc
    
    
    63Section 4.22. Tax Shelter Regulations
    
    
    63Section 4.23. All Consents Required
    
    
    64Section 4.24. Selection Procedures
    
    
    64
 -ii-




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##### 



TABLE OF CONTENTS
 PageSection 4.25. [Reserved]
    
    
    64Section 4.26. Credit and Collection Policy; Residential Mortgage Policies and
Procedures
    
    
    64Section 4.27. Compliance with OFAC Rules and Regulations
    
    
    64Section 4.28. REIT Status
    
    
    64ARTICLE V COVENANTS
    
    
    65Section 5.1. Financial Statements
    
    
    65Section 5.2. Certificates; Other Information
    
    
    66Section 5.3. Payment of Taxes and Other Obligations
    
    
    66Section 5.4. Notices
    
    
    67Section 5.5. Inspection of Property, Books and Records
    
    
    67Section 5.6. Acquisitions
    
    
    68Section 5.7. Restricted Payments
    
    
    68Section 5.8. Capital Expenditures
    
    
    68Section 5.9. Additional Guarantors
    
    
    69Section 5.10. Maintenance of Unsecured Debt Rating
    
    
    69Section 5.11. Ownership of Credit Parties; Restrictions
    
    
    69Section 5.12. Maintenance of Existence
    
    
    69Section 5.13. Dissolution
    
    
    69Section 5.14. Consolidations, Mergers and Sales of Assets
    
    
    70Section 5.15. Use of Proceeds
    
    
    70Section 5.16. Compliance with Laws
    
    
    71Section 5.17. Insurance
    
    
    71Section 5.18. Change in Fiscal Year
    
    
    71Section 5.19. Maintenance of Property
    
    
    71Section 5.20. Environmental Laws
    
    
    71Section 5.21. [Reserved]
    
    
    72Section 5.22. [Reserved]
    
    
    72Section 5.23. Compliance with Material Contracts
    
    
    72Section 5.24. Transactions with Affiliates
    
    
    72
 -iii-




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##### 



TABLE OF CONTENTS
 PageSection 5.25. [Reserved]
    
    
    72Section 5.26. No Restrictive Agreement
    
    
    72Section 5.27. Costs and Expenses
    
    
    72Section 5.28. Additional Debt
    
    
    73Section 5.29. [Reserved]
    
    
    73Section 5.30. Credit and Collection Policy
    
    
    73Section 5.31. REIT Status
    
    
    73Section 5.32. Financial Covenants
    
    
    73Section 5.33. Other
    
    
    74ARTICLE VI [RESERVED]
    
    
    74ARTICLE VII EVENTS OF DEFAULT
    
    
    74Section 7.1. Events of Default
    
    
    74Section 7.2. Acceleration; Remedies
    
    
    77ARTICLE VIII THE ADMINISTRATIVE AGENT
    
    
    78Section 8.1. Appointment
    
    
    78Section 8.2. Delegation of Duties
    
    
    78Section 8.3. Exculpatory Provisions
    
    
    78Section 8.4. Reliance by Administrative Agent
    
    
    79Section 8.5. Notice of Default
    
    
    79Section 8.6. Non-Reliance on Administrative Agent and Other Lenders
    
    
    79Section 8.7. Indemnification
    
    
    80Section 8.8. The Administrative Agent in Its Individual Capacity
    
    
    80Section 8.9. Successor Administrative Agent
    
    
    81Section 8.10. Other Agents
    
    
    81ARTICLE IX MISCELLANEOUS
    
    
    82Section 9.1. Amendments, Waivers and Release of Collateral
    
    
    82Section 9.2. Notices
    
    
    84Section 9.3. No Waiver; Cumulative Remedies
    
    
    86Section 9.4. [Reserved]
    
    
    86Section 9.5. Payment of Expenses and Taxes; Indemnification
    
    
    86
 -iv-




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##### 



TABLE OF CONTENTS
 PageSection 9.6. Successors and Assigns; Participations; Purchasing Lenders
    
    
    87Section 9.7. Set-off
    
    
    90Section 9.8. Table of Contents and Section Headings
    
    
    91Section 9.9. Counterparts
    
    
    91Section 9.10. Effectiveness
    
    
    91Section 9.11. Severability
    
    
    91Section 9.12. Integration
    
    
    92Section 9.13. Governing Law
    
    
    92Section 9.14. Consent to Jurisdiction and Service of Process
    
    
    92Section 9.15. Confidentiality
    
    
    92Section 9.16. Acknowledgments
    
    
    93Section 9.17. Waivers of Jury Trial; Waiver of Consequential Damages
    
    
    93Section 9.18. Patriot Act Notice
    
    
    94Section 9.19. Judgment Shortfall
    
    
    94ARTICLE X GUARANTY
    
    
    94Section 10.1. The Guaranty
    
    
    94Section 10.2. Bankruptcy
    
    
    95Section 10.3. Nature of Liability
    
    
    96Section 10.4. Independent Obligation
    
    
    96Section 10.5. Authorization
    
    
    96Section 10.6. Reliance
    
    
    96Section 10.7. Waiver
    
    
    96Section 10.8. Limitation on Enforcement
    
    
    98Section 10.9. Confirmation of Payment
    
    
    98Section 10.10. Limitation of Guaranty of CSF
    
    
    98
 -v-




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##### 



SCHEDULES
 PageSchedule 1.1(a)
    
    Residential Mortgage Policies and ProceduresSchedule 1.1(b)
    
    Risk Rating LevelsSchedule 2.1(a)
    
    Commitment PercentageSchedule 2.3(i)
    
    Existing Letters of CreditSchedule 4.8
    
    List of SubsidiariesSchedule 4.16
    
    List of LiensSchedule 4.26
    
    Credit and Collection PolicySchedule 5.26
    
    Permitted TransactionSchedule 5.28
    
    Existing Debt on Closing DateSchedule 9.2
    
    Lenders Lending Offices
 EXHIBITS
 Exhibit A
    
    Form of Notice of BorrowingExhibit B
    
    Form of Revolving NoteExhibit C
    
    Form of Notice of ConversionExhibit D
    
    Form of Secretarys CertificateExhibit E
    
    Form of Notice of Swingline BorrowingExhibit F
    
    Form of Swingline NoteExhibit G
    
    Form of Solvency CertificateExhibit H
    
    Form of Officers Compliance CertificateExhibit I
    
    Form of Monthly ReportExhibit J
    
    Form of Commitment Transfer SupplementExhibit K
    
    Form of Borrower Information CertificateExhibit L
    
    Form of 2.18 CertificateExhibit M
    
    Form of Facility Extension RequestExhibit N
    
    Form of Joinder AgreementExhibit O
    
    Mandatory Cost Rate Formula
 -i-




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##### 



CREDIT AGREEMENT Credit Agreement CAPITALSOURCE INC. CAPITALSOURCE TRS
INC. TRS CAPITALSOURCE FINANCE LLC CSF CSE MORTGAGE LLC CSM CAPITALSOURCE SF TRS INC. SFTRS Guarantors Guarantor Lenders Lender WACHOVIA BANK, NATIONAL ASSOCIATION Administrative Agent Agent BANK OF AMERICA, N.A.
  WHEREAS, ;
 NOW, THEREFORE
   Defined Terms
  ABR Default Rate Section 2.9
 Acquisition provided however
 Additional Credit Party Section 5.9
 Advances Outstanding
 -1-




---



##### 



Affiliate provided however
 Agreement Credit Agreement
 Agreement Currency Section 9.19(b)
 Alternate Base Rate plus plus plus plus Prime Rate Federal Funds Effective Rate .
 -2-




---



##### 



Alternate Base Rate Loans
 Alternative Currency
 Alternative Currency Sub-Limit Section
2.1(a)
 Applicable Creditor Section 9.19(b)
 Applicable Law
 Applicable Percentage provided
 -3-




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##### 



Alternative CurrencyAlternate Base Rate Loans,EURIBOR/LIBOR RateRating (S&P/Moodys/Fitch)
    
    Loans and LMIR Loans
    
    Commitment FeeA-/A3/A-
    
    
    0.75
    %
    
    
    0.10
    %BBB+/Baa1/BBB+
    
    
    0.875
    %
    
    
    0.125
    %BBB/Baa2/BBB
    
    
    1.00
    %
    
    
    0.15
    %BBB/Baa3/BBB
    
    
    1.125
    %
    
    
    0.20
    %BB+/Ba1/BB+
    
    
    1.25
    %
    
    
    0.25
    %BB/Ba2/BB
    
    
    1.50
    %
    
    
    0.30
    %< BB/Ba2/BB
    
    
    1.75
    %
    
    
    0.35
    %
  Asset Based Loans
 Assuming Lender Section 2.2(a)
 Available Asset Coverage Ratio
 Available Unpledged Assets
 plus
 plus
 plus
 plus
 plus
 plus
 -4-




---



##### 



plus
  Average Portfolio Charged-Off Ratio provided that
 Bankruptcy
Code
 Bank Subsidiary
 Big 4 Accounting Firm
 Book Value provided that
 Borrower
 Borrowing Date
 Business Day provided however
 -5-




---



##### 



Capital Expenditures
 Capital Lease
 CapitalSource Securitization Notes
 Capital Stock
 Cash Equivalents
 CERCLA
 -6-




---



##### 



CERCLIS
 Change of Control provided however Exchange Act Excluded Person
 Charged-Off Investment Loan
 -7-




---



##### 



Closing Date
 Code
 Commitment Schedule
2.1(a)
 Commitment Fee Section 2.5(a)
 Commitment Increase Section 2.2(a)
 Commitment Increase Date Section 2.2(a)
 Commitment Percentage Schedule 2.1(a) Section
9.6(c) Section
2.2
 Commitment Termination Date Section 2.20
 Commitment Transfer Supplement Exhibit J
 Committed Amount Section 2.1(a)
 Commonly Controlled Entity
 Compliance Certificate Section 5.2(a)
 Consolidated Debt
 -8-




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##### 



Consolidated EBIT plus plus minus
 Consolidated Subsidiary
 Consolidated Tangible Net Worth
 Contractual Obligation
 Controlled Group
 Credit and Collection Policy Schedule 4.26 Section 5.30
 Credit Documents
 Credit Party Credit
Parties
 Credit Party Obligations
 -9-




---



##### 



CSI
 Currency
 Customary Non-Recourse Exclusions
 Debt
 Default Section 7.1
 -10-




---



##### 



Defaulting Lender
 Dollar Equivalent
 Dollars $
 Domestic Lending Office Schedule 9.2
 Domestic Subsidiary
 Environmental Authorizations
 Environmental Laws
 Environmental Liability
 Environmental Requirements
 ERISA
 -11-




---



##### 



EURIBOR
   EURIBOR/LIBOR Lending Office Schedule 9.2
 EURIBOR/LIBOR Rate Loan
 Eurocurrency Reserve Percentage
 Euro
 Event of Default Section 7.1 provided however
 Existing Letters of Credit Section
2.3(i)
 Extension of Credit
 Facility Extension Request Section 2.20
 Fair Market Value provided that
 -12-




---



##### 



Fannie Mae DUS Program
 Fannie Mae Servicing Strips
 Federal Funds Effective Rate
 First Tier Domestic Subsidiary
 First Tier Foreign Subsidiary
 Fiscal Month
 Fiscal Quarter
 Fiscal Year
 Fitch
 Foreign Currency
 Foreign Currency Equivalent
 Fronting Fee Section 2.5(b)
 -13-




---



##### 



GAAP Section 1.3
 Government Acts Section 2.19.
 Governmental Authority
 Guarantor provided however Article X
 Guaranty Article X
 Guaranty Agreement
 Guaranty Obligations
 Hazardous Materials
 -14-




---



##### 



Hedging Agreement
 Increasing Lender Section 2.2(a)
 Initial Borrower
 Insolvency
 Insolvency Event
 Insolvency Laws
 Insolvency Proceeding
 Interest Expense
 Interest Payment Date
 -15-




---



##### 



Interest Period
  provided
      Investment
 -16-




---



##### 



Investment Company Act
 Investment Grade
 Investment Loan
 Investments in Equity Instruments
 Issuing Lender
 Issuing Lender Fees Section 2.5(c)
 Joinder Agreement Exhibit N Section 5.9
 Judgment Currency Section 9.19(b)
 Lender
 Letters of Credit
 Letter of Credit Fee Section 2.5(b)
 -17-




---



##### 



LIBOR
 LIBOR Market Index Rate
 LIBOR Rate
 LIBOR Rate =
    
    LIBOR1.00  Eurocurrency Reserve Percentage
 Lien
 LMIR Loan
 Liquid Real Estate Assets
 -18-




---



##### 



Loan
 LOC Commitment
 LOC Committed Amount Section 2.3(a)
 LOC Documents
 LOC Obligations plus
 Mandatory Cost Rate Exhibit O
 Mandatory LOC Borrowing Section 2.3(e)
 Mandatory Swingline Borrowing Section
2.4(b)(ii)
 Margin Stock
 Material Adverse Change
 Material Adverse Effect
 Material Contract
 -19-




---



##### 



Monthly Report Section 5.2(b)
 Moodys
 Multiemployer Plan
 National Currency
 Net Income
 Net Proceeds of Capital Stock/Conversion of Debt
 Note Notes
 Notice of Borrowing Section 2.1(b)(i)
 Notice of Conversion Section 2.10(a)
 Notice of Swingline Borrowing Section 2.4(b)(i)
 Obligor
 OFAC
 OREO Property
 -20-




---



##### 



Other Parties Section 10.7(c)
 Participant Section 9.6(b)
 Participating Member State
 Participation Interest Section 2.3(c) Section 2.4
 PATRIOT Act Section 9.18
 PBGC
 Permitted Country
 Permitted Lien
 Permitted Lines of Business
 Person
 Plan
 -21-




---



##### 



Portfolio Investments
 Pounds Sterling
 Prime Rate
 Properties
 Purchasing Lender Section 9.6(c)
 Qualified Available Unpledged Assets
 Real Estate Loans
 Real Property Owned provided however
 Register Section 9.6(d)
 Reimbursement Obligation Section 2.3(d)
 REIT
 -22-




---



##### 



Related Property
 Release Condition Section 10.1 Section 2.6(a)(ii) Section
2.6(a)(ii)
 Relevant Time Section 2.22(c)
 Reorganization
 Reportable Event
 Required Lenders provided however
 Residential Mortgage Policies and Procedures Schedule 1.1(a)
 -23-




---



##### 



Responsible Officer
 Restricted Payment
 Revolving Loans Section 2.1
 Revolving Note Section 2.1(e)
 Risk Rating Level Schedule 1.1(b)
 Risk Rated 1 Investment Loan
 Risk Rated 2 Investment Loan
 Risk Rated 3 Investment Loan
 Risk Rated 4 Investment Loan
 Risk Rated 5 Investment Loan
 Risk Rated 6 Investment Loan
 S&P
 Sanctioned Entity http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html
 Sanctioned Person
 -24-




---



##### 



http://www.treas.gov/offices/eotffc/ofac/sdn/index.html
 Screen
   SEC
 Securitization Transaction
 Senior Unsecured Debt
 SPE Subsidiary
 Stockholders Equity
 Subsidiary
 -25-




---



##### 



provided however provided further
 Swingline Commitment Section 2.4(b)(ii)
 Swingline Committed Amount Section 2.4(a)
 Swingline Lender
 Swingline Loan Section 2.4(a)
 Swingline Note Section 2.4(d)
 Taxes Section 2.18(a)
 Transferee Section 9.6(f)
 Transfer Effective Date
 UCC
 United States
 Unrestricted Subsidiary
 Unsecured Debt
 -26-




---



##### 



Voting Stock
 Wachovia
 WCM
 Wholly Owned Subsidiary
 Other Definitional Provisions
       Accounting Terms
  -27-




---



##### 



provided Section
5.32 Section 5.32
 Computation of Time Periods
  Currencies Generally
   -28-




---



##### 



provided
   Revolving Loans
 Revolving Commitment Revolving Loans provided however plus plus Section 2.2 Section 2.6 Committed Amount
 -29-




---



##### 



provided however Alternative Currency Sub Limit
 Revolving Loan Borrowings
 Notice of Borrowing Notice of Borrowing Exhibit A .
 Minimum Amounts
 -30-




---



##### 



Advances Section
9.2
 Repayment
 Interest Section 2.9
 Alternate Base Rate Loans
 EURIBOR/LIBOR Rate Loans
  Revolving Notes Exhibit B Revolving Note
 Increase of the Commitments
 Requests for Increase by Initial Borrower Commitment Increase Increasing Lender Assuming Lender Commitment Increase Date provided
 -31-




---



##### 



Section 2.6(a)
  provided that
   Section 3.2
  Effectiveness of Commitment Increase by Initial Borrower provided that
   -32-




---



##### 



Recordation into Register clause (b)(ii) clause (b)(i)
 Adjustments of Borrowings upon Effectiveness of Increase clauses (b)(i) (b)(ii) provided subclauses (i) (ii) Section 2.17
 Letter of Credit Subfacility
 Issuance Section 2.3(h) provided however LOC
Committed Amount
 -33-




---



##### 



Section 2.3(h) provided however provided further
 Notice and Reports
 -34-




---



##### 



Participations subsection (d)
 Reimbursement plus subsection (e)
 -35-




---



##### 



Repayment with Revolving Loans Mandatory LOC Borrowing pro rata Section 7.2 notwithstanding Section 3.2 Section 2.1(b) provided further
 -36-




---



##### 



Modification, Extension provided
 Letter of Credit Governing Law
 Designation of Subsidiaries as Account Parties Section
2.3(a) provided Section 2.3(h)
 Existing Letters of Credit Schedule 2.3(i) Existing Letters
of Credit Section 2.3 Section 2.5(b)
 -37-




---



##### 



Swingline Loan Subfacility
 Swingline Commitment Swingline Loan Swingline Loans provided however Swingline Committed Amount
 Swingline Loan Borrowings
 Notice of Borrowing and Disbursement Notice
of Swingline Borrowing Exhibit E
 Repayment of Swingline Loans provided however Section 7.1(f) Section 7.1(f) Section
7.2 Mandatory
Swingline Borrowing Section 3.2 Section
2.1(b)(i)
 -38-




---



##### 



Section 7.2
 Interest on Swingline Loans Section
2.9(b) plus
 Swingline Note Exhibit F
 Fees
 Commitment Fee Commitment Fee
 Letter of Credit Fees Letter of Credit Fee
 -39-




---



##### 



Fronting Fee
 Issuing Lender Fees subsection (b) Issuing
Lender Fees
 Administrative Fee
 No Duplication Section 2.5 subsections
(b) (c)
 Commitment Reductions
 Voluntary Reductions
 provided provided further
 -40-




---



##### 



provided Section
10.1 Section 2.6(a)
 Commitment Termination Date
 Prepayments
 Optional Prepayments provided however Section 2.7(a) provided pro rata Section 2.7(a) Section 2.17
 Mandatory Prepayments
 -41-




---



##### 



Committed Amount Section 2.7(b)(i) first second third Section 2.7(b)(i) Section 2.17
 plus Section 2.7(b)(ii) first second Section 2.7(b)(ii) Section 2.17 Section
2.7(b)(ii)
 Minimum Principal Amounts
  Default Rate and Payment Dates
 plus
 -42-




---



##### 



plus ABR Default Rate
 plus plus Section 2.9(b)
 provided subsection (b) Section 2.9
 Conversion Options
 Exhibit C Notice of Conversion provided
 -43-




---



##### 



provided
 Computation of Interest and Fees
    -44-




---



##### 



Pro Rata Treatment and Payments
 Allocation of Payments Before Event of Default pro rata first Section 2.5 second third Section
2.5 pro rata Section 2.7(a) provided Section
2.15 Section
2.7(b) Section 2.18(b) Section
9.2 provided however
 -45-




---



##### 



Section
2.9
 Allocation of Payments After Exercise of Remedies Section 7.2
        -46-




---



##### 



pro rata Section
2.12(b)
 Non-Receipt of Funds by the Administrative Agent
 Section 2.13(d)
 Section 2.13(d)
 -47-




---



##### 



Section 2.13
 pro rata pro rata
 Inability to Determine Interest Rate
  Illegality
  -48-




---



##### 



Section 2.15 Section
2.15 Section 2.15 provided however
 Requirements of Law
      -49-




---



##### 



Section
2.16 Section 2.16 provided however
 Section 2.16
 Section 2.16
 Indemnity
 -50-




---



##### 



Section 2.17 Section 2.17
 Taxes
 Section 2.18(b) Taxes
  -51-




---



##### 



Section 9.6(c) clause (i) Exhibit L 2.18 Certificate Section
2.18(a) Section 2.18(a) Section 2.18(b) clause (ii) Section 2.18 Section 2.18(a)
  -52-




---



##### 



Section 2.18 provided however
 Section 2.18 provided Section 2.18 Section 2.18 Section 2.18
 Section 2.18
 Indemnification; Nature of Issuing Lenders Duties
 Section 2.3 Government Acts
  -53-




---



##### 



Section 2.19 Section 2.3(d) Section 2.19
 Section 2.19
 Extension of Commitment Termination Date
 Exhibit M Facility Extension
Request i.e.
 -54-




---



##### 



provided that
   Replacement of Lenders
 Section
2.16 Section 2.18 Replacement Lender Section 2.21 Section 2.16 Section 2.18
 Additional Limitations on CSF as Borrower Section 2.3(h)
 Several Liability of the Borrower
 -55-




---



##### 



Currency Conversion of Loans Section 2.9 Section 2.10
   Conditions to Closing
  Execution of Credit Agreement and Credit Documents
 Authority Documents
 Certificate of Incorporation, Etc.
 Resolutions
 Bylaws
 Good Standing
 Incumbency
 -56-




---



##### 



Exhibit D Secretarys Certificate
 Personal Property Collateral
 Legal Opinions of Counsel
 Fees Section 2.5
 Litigation
 Government Consent
 Compliance with Laws
 Bankruptcy
 Financial Statements Section 5.1
 No Material Adverse Change
 Financial Condition Certificate Exhibit G Solvency
Certificate
 -57-




---



##### 



Section 5.32
 Officers Certificate
 Borrower Information Certificate Exhibit K Borrower
Information Certificate
 Additional Matters
 Conditions to All Extensions of Credit
  Representations and Warranties
 No Default or Event of Default
 -58-




---



##### 



Compliance with Covenants
 Compliance with Commitments Section 3.2(d)
 Additional Conditions to Revolving Loans Section 2.1
 Additional Conditions to Letters of Credit Section 2.3
 Material Adverse Change
 Section 3.2
    Existence and Power
 -59-




---



##### 



Organizational and Governmental Authorization; No Contravention
 Binding Effect
 Financial Information
  Litigation
 Compliance with ERISA
  -60-




---



##### 



Taxes
 Subsidiaries Schedule 4.8
 Investment Company Act
 Reserved
 Ownership of Property
 No Default
 Full Disclosure
 -61-




---



##### 



Environmental Matters
    Compliance with Laws
 -62-




---



##### 



Capital Stock Schedule 4.16
 Margin Stock
 Insolvency
 Available Unpledged Assets Section 5.2(b)
 Labor Matters
 -63-




---



##### 



Patents, Trademarks, Etc.
 Tax Shelter Regulations
 All Consents Required
 Selection Procedures
 [Reserved]
 Credit and Collection Policy; Residential Mortgage Policies and
Procedures Schedule 1.1(a) Schedule 4.26
 -64-




---



##### 



Compliance with OFAC Rules and Regulations
 REIT Status
    Financial Statements
  Annual Financial Statements
 -65-




---



##### 



Quarterly Financial Statements
 Section 1.3
 Certificates; Other Information
  Sections 5.1(a) 5.1(b) Exhibit H Compliance Certificate Sections 5.8 5.28 5.32
 Monthly Report Exhibit I
 -66-




---



##### 



Payment of Taxes and Other Obligations
  Notices
       -67-




---



##### 



Section 5.4
 Inspection of Property, Books and Records
 provided
 Acquisitions
 Section
5.32
 -68-




---



##### 



Restricted Payments
 Section 7.1(a) Section 7.1(f) Section 7.2
 Capital Expenditures
 provided however Section 5.8
 Additional Guarantors
 provided that
 Maintenance of Unsecured Debt Rating
  Ownership of Credit Parties; Restrictions
  -69-




---



##### 



Maintenance of Existence
 Section 5.13 5.14
 Dissolution
 Section 5.14
 Consolidations, Mergers and Sales of Assets provided Section 5.6
 Section 5.32
 Use of Proceeds
  -70-




---



##### 



provided
 Compliance with Laws
 Compliance with Laws
 ERISA Exemptions
 Insurance
  Change in Fiscal Year
  Maintenance of Property
  -71-




---



##### 



Environmental Laws
    Reserved
 Reserved
 Compliance with Material Contracts
  Transactions with Affiliates
 provided Section 5.24 Section 5.7
 Reserved
 No Restrictive Agreement
 -72-




---



##### 



Schedule 5.26 provided however clause (c) Section 5.32(e)
 Costs and Expenses
 Section 9.5.
 Additional Debt.
 Schedule 5.28 Section 5.32
 Reserved].
 Credit and Collection Policy.
  REIT Status
  Financial Covenants.
  Consolidated Debt to Stockholders Equity Less Liquid Real Estate Assets provided however
 -73-




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##### 



Consolidated Debt to Stockholders Equity
 Minimum Consolidated Tangible Net Worth plus
 Asset Quality
 Available Asset Coverage Ratio provided however Baa3 provided further Baa2 provided further Baa2
 Consolidated EBIT to Interest Expense
 Other
  -74-




---



##### 



Events of Default
 Event of Default
 Payment Default .
 Representations and Warranties
 Covenant Default Sections
5.1 5.2 5.4 5.6 5.7 5.15 5.24 5.28 5.31 5.32 Sections 7.1(a) 7.1(c)(i)
 Debt Payment Default
 -75-




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##### 



Debt Acceleration
 Bankruptcy Default clause (i) clause (i) (ii) (iii) provided however clause (f)
 Judgment Default
 ERISA Default
 -76-




---



##### 



Tax Lien
 Change of Control
   Failure of Credit Documents
 Section 5.10
 Acceleration; Remedies
 Section 7.1(f) Section 8.5
 -77-




---



##### 



Section 7.2
 
 Appointment
  Delegation of Duties
  Exculpatory Provisions
  -78-




---



##### 



Reliance by Administrative Agent
 Section 9.6(c)
 Section
3.1
 Notice of Default
  -79-




---



##### 



provided however
 Non-Reliance on Administrative Agent and Other Lenders
  Indemnification
 Section 8.7
 -80-




---



##### 



provided however Section 8.7
 The Administrative Agent in Its Individual Capacity
  Successor Administrative Agent
 provided that
 -81-




---



##### 



Article VIII
 Other Agents
    Amendments, Waivers and Release of Collateral
 Section 9.1 Section 9.1 provided however
 Section 2.9(b) Section 2.20
 -82-




---



##### 



Section 9.1
 Article VIII
 Sections 5.9 5.13 5.14
     Section 2.12(b)
   provided further
  -83-




---



##### 



Article VIII Section 8.9 provided however Schedule 2.1(a) provided however
  Proposed Change Non-Consenting Lender Replacement Lender
 -84-




---



##### 



Notices
 Article II Schedule 9.2
 The Borrower:
    
    CapitalSource Inc.4445 Willard AvenueChevy Chase, MD 20815Attention: Chief Financial OfficerTelecopier: (301) 841-2307with a copy to:
    
    CapitalSource Inc.4445 Willard AvenueChevy Chase, MD 20815Attention: Chief Legal OfficerTelecopier: (301) 841-2380The Guarantors:
    
    c/o CapitalSource Inc.4445 Willard AvenueChevy Chase, MD 20815Attention: Chief Financial OfficerTelecopier: (301) 841-2307with a copy to:
    
    c/o CapitalSource Inc.4445 Willard AvenueChevy Chase, MD 20815Attention: Chief Legal OfficerTelecopier: (301) 841-2380
 -85-




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##### 



The Administrative Agent:
    
    Wachovia Bank, National Association201 South College StreetNC0680/CP8Charlotte, North Carolina 28288-0608Attention: Syndication Agency ServicesTelecopier: (704) 383-0288Telephone: (704) 374-2698with a copy to:
    
    Wachovia Bank, National AssociationOne Wachovia Center, Mail Code: NC0600Charlotte, North Carolina 28288-0608Attention: Paul BurkhartTelecopier: (704) 715-0067
 provided that Section 2.1 Section 2.10
 provided that Article II provided further that
  -86-




---



##### 



No Waiver; Cumulative Remedies
  [Reserved].
 Payment of Expenses and Taxes; Indemnification.
  -87-




---



##### 



provided however Section 9.5
 Successors and Assigns; Participations; Purchasing Lenders
  Participant Section 2.20
 -88-




---



##### 



provided that Sections 2.16 2.17 2.18 2.19 9.5 provided further that
 Purchasing
Lender provided however provided further
 -89-




---



##### 



Section
9.2 Register
  Transferee Section
9.15
 Section 9.6 Section 2.18
  -90-




---



##### 



Set-off
 benefited Lender provided however
  -91-




---



##### 



provided however
 Table of Contents and Section Headings
  Counterparts
  Effectiveness
  Severability
  Integration
  Governing Law
  -92-




---



##### 



Consent to Jurisdiction and Service of Process
 Section 9.2
 Confidentiality
  -93-




---



##### 



Information
 Acknowledgments
     Waivers of Jury Trial; Waiver of Consequential Damages
  -94-




---



##### 



PATRIOT Act Notice
 PATRIOT Act
 Judgment Shortfall
  Applicable Creditor Judgment Currency Agreement Currency Section 9.19
   The Guaranty
  -95-




---



##### 



Article X
  Bankruptcy
 Section 7.1(f)
 Nature of Liability
  -96-




---



##### 



Independent Obligation
 Section 10.2
 Authorization
  Reliance
  Waiver
  -97-




---



##### 



Other Parties
 -98-




---



##### 



Limitation on Enforcement
  Confirmation of Payment
 Section 10.2
 Limitation of Guaranty of CSF
 Remainder of Page Intentionally Left Blank.
Signature Pages Follow.
 -99-




---



##### 



BORROWER:
    
    CAPITALSOURCE INC.,a Delaware corporationBy:
    
    /s/ Jeffrey LipsonName: Jeffrey LipsonTitle: Vice President and TreasurerGUARANTORS:
    
    CAPITALSOURCE TRS INC.,a Delaware corporationBy:
    
    /s/ Jeffrey LipsonName: Jeffrey LipsonTitle: Vice President and TreasurerCAPITALSOURCE FINANCE LLC,a Delaware limited liability companyBy:
    
    /s/ Jeffrey LipsonName: Jeffrey LipsonTitle: Vice President and TreasurerCSE MORTGAGE LLC,a Delaware limited liability companyBy:
    
    /s/ Jeffrey LipsonName: Jeffrey LipsonTitle: Vice President and TreasurerCAPITALSOURCE SF TRS INC.,a Delaware corporationBy:
    
    /s/ Jeffrey LipsonName: Jeffrey LipsonTitle: Vice President and Treasurer
 Signatures Continued on Following Page




---



##### 



ADMINISTRATIVE AGENT
    
    WACHOVIA BANK, NATIONAL 
ASSOCIATION, as Administrative Agent, as 
Issuing Lender, and as a LenderBy:
    
    /s/ Mike RomanzoName: Mike Romanzo, CFATitle: Director
 Signatures Continued on Following Page




---



##### 



BANK OF AMERICA, N.A., as Issuing
Lender and as a LenderBy:
    
    /s/ Alexa BradfordName: Alexa BradfordTitle: Senior Vice President
 Signatures Continued on Following Page




---



##### 



MORGAN STANLEY BANK, as a LenderBy:
    
    /s/ Daniel TwengeName: Daniel TwengeTitle: Authorized Signatory, Morgan Stanley Bank
 Signatures Continued on Following Page




---



##### 



DRESDNER BANK AG, NEW YORK AND 
GRAND CAYMAN BRANCHES, as a LenderBy:
    /s/ Mark van der GriendName:
    Mark van der GriendTitle:
    Managing DirectorBy:
    /s/ Brian M. SmithName:
    Brian M. SmithTitle:
    Managing Director Signatures Continued on Following Page




---



##### 



SUNTRUST BANK, as a LenderBy:
    /s/ Robert S. AshcomName:
    Robert S. AshcomTitle:
    Director Signatures Continued on Following Page




---



##### 



CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a LenderBy:
    /s/ Jay ChallName:
    Jay ChallTitle:
    DirectorBy:
    /s/ Alain SchmidName:
    Alain SchmidTitle:
    Assistant Vice President Signatures Continued on Following Page




---



##### 



BMO CAPITAL MARKETS FINANCING,  INC., as a LenderBy:
    /s/ Gary HerronName:
    Gary HerronTitle:
    Vice President Signatures Continued on Following Page




---



##### 



BARCLAYS BANK PLC, as a LenderBy:
    /s/ Esther CarrName:
    Esther CarrTitle:
    Manager Signatures Continued on Following Page




---



##### 



BEAR STEARNS CORPORATE LENDING INC., as a LenderBy:
    /s/ Victor BulzacchelliName:
    Victor BulzacchelliTitle:
    Vice President Signatures Continued on Following Page




---



##### 



BAYERISCHE HYPO-UND VEREINSBANK AG, as a LenderBy:
    /s/ Debra L. LaskowskiName:
    Debra L. LaskowskiTitle:
    Managing DirectorBy:
    /s/ Craig M. PinslyName:
    Craig M. Pinsly, CFATitle:
    Director




---



##### 



DEUTSCHE BANK AG NEW YORK BRANCH, as a LenderBy:
    /s/ Melissa CurryName:
    Melissa CurryTitle:
    Vice PresidentBy:
    /s/ Michael CampitesName:
    Michael CampitesTitle:
    Vice President Signatures Continued on Following Page




---



##### 



JPMORGAN CHASE BANK, N.A., as a LenderBy:
    /s/ Richard J. PoworoznekName:
    Richard J. PoworoznekTitle:
    Executive Director Signatures Continued on Following Page




---



##### 



SOCIÉTÉ GÉNÉRALE, as a LenderBy:
    /s/ Shelley YuName:
    Shelley YuTitle:
    Vice President Signatures Continued on Following Page




---



##### 



FORTIS CAPITAL GROUP, as a LenderBy:
    /s/ Shane KleinName:
    Shane KleinTitle:
    Senior Vice PresidentBy:
    /s/ Alan KroukName:
    Alan KroukTitle:
    Managing Director Signatures Continued on Following Page




---



##### 



TAIPEI FUBON COMMERCIAL BANK, NEW YORK AGENCY, as a
LenderBy:
    /s/ Sophia JingName:
    Sophia JingTitle:
    EVP and General Manager Signatures Continued on Following Page




---



##### 



FIRST COMMERCIAL BANK NEW YORK AGENCY, as a LenderBy:
    /s/ Bruce JuName:
    Bruce JuTitle:
    SVP and General Manager Signatures Continued on Following Page




---



##### 



STATE BANK OF INDIA, as a LenderBy:
    /s/ Ashok WachooName:
    Ashok WachooTitle:
    Vice President and Head (Credit) Signatures Continued on Following Page




---



##### 



BANK OF COMMUNICATIONS CO., LTD., NEW YORK BRANCH, as
a LenderBy:
    /s/ Shelley HeName:
    Shelley HeTitle:
    Deputy General Manager Signatures Continued on Following Page




---



##### 



MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD., LOS
ANGELES BRANCH, as a LenderBy:
    /s/ Chia Jang LiuName:
    Chia Jang LiuTitle:
    SVP & General Manager Signatures Continued on Following Page




---



##### 



TAIWAN BUSINESS BANK, as a LenderBy:
    /s/ Ben ChouName:
    Ben ChouTitle:
    VP & General Manager Signatures Continued on Following Page




---



##### 



CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH, as a LenderBy:
    /s/ Jim C.Y. ChenName:
    Jim C.Y. ChenTitle:
    V.P. & General Manager Signatures Continued on Following Page




---



##### 



THE BANK OF EAST ASIA, LTD., NEW YORK BRANCH, as a
LenderBy:
    /s/ Stanley H. KungName:
    Stanley H. KungTitle:
    Senior Vice President, Head of Business
DevelopmentBy:
    /s/ Peng-Wah TangName:
    Peng-Wah TangTitle:
    General Manager Signatures Continued on Following Page




---



##### 



CITIBANK, N.A., as a LenderBy:
    /s/ Drew DeskyName:
    Drew DeskyTitle:
    Vice President




---



##### 



Schedule 2.1(a)
   Lender
    
    Commitment
    
    
    Commitment PercentageWachovia Bank, National Association
    
    $
    85,000,000
    
    
    
    8.0952
    %Bank of America, N.A.
    
    $
    70,000,000
    
    
    
    4.7619
    %BMO Capital Markets Financing, Inc.
    
    $
    70,000,000
    
    
    
    6.6667
    %Credit Suisse, Cayman Islands Branch
    
    $
    80,000,000
    
    
    
    7.6190
    %Deutsche Bank AG New York Branch
    
    $
    80,000,000
    
    
    
    7.6190
    %JPMorgan Chase Bank, N. A.
    
    $
    80,000,000
    
    
    
    6.6667
    %Morgan Stanley Bank
    
    $
    70,000,000
    
    
    
    6.6667
    %Société Générale
    
    $
    30,000,000
    
    
    
    5.7143
    %Sun Trust Bank
    
    $
    60,000,000
    
    
    
    7.6190
    %Barclays Bank PLC
    
    $
    70,000,000
    
    
    
    6.6667
    %Bear Stearns Corporate Lending Inc.
    
    $
    50,000,000
    
    
    
    6.6667
    %Dresdner Bank AG New York and
Grand Cayman Branches
    
    $
    30,000,000
    
    
    
    2.8571
    %Fortis Capital Corp.
    
    $
    70,000,000
    
    
    
    2.3810
    %Bayerische Hypo-Und Vereinsbank AG
    
    $
    25,000,000
    
    
    
    2.8571
    %Taipei Fubon Commercial Bank, New
York Agency
    
    $
    15,000,000
    
    
    
    1.4286
    %First Commercial Bank New York
Agency
    
    $
    15,000,000
    
    
    
    0.9524
    %State Bank of India
    
    $
    10,000,000
    
    
    
    0.9524
    %Bank of Communications, New York
Branch
    
    $
    10,000,000
    
    
    
    0.9254
    %Bank of East Asia, New York Branch
    
    $
    5,000,000
    
    
    
    0.4762
    %Chang Hwa Commercial Bank
    
    $
    15,000,000
    
    
    
    1.4286
    %Mega ICBC, Los Angeles Branch
    
    $
    15,000,000
    
    
    
    1.4286
    %Taiwan Business Bank
    
    $
    20,000,000
    
    
    
    1.9048
    %Citibank, N.A.
    
    $
    80,000,000
    
    
    
    7.6190
    %Total
    
    $
    1,050,000,000.00
    
    
    
    100.00
    %