Exhibit 10.4
 COMPOSITE VERSION
Reflects all Amendments through April 29, 2009
 
 U.S. $90,000,000
 SALE AND SERVICING AGREEMENT
  CAPITALSOURCE FUNDING III LLC,  as the Seller
 CAPITALSOURCE FINANCE LLC,  as the Originator and as the Servicer
 EACH OF THE CONDUIT PURCHASERS AND THE INSTITUTIONAL
PURCHASERS FROM TIME TO TIME PARTY HERETO,  as Purchasers
 EACH OF THE PURCHASER AGENTS
FROM TIME TO TIME PARTY HERETO,  as the Purchaser Agents
 WACHOVIA CAPITAL MARKETS, LLC,  as the Administrative Agent and as the WBNA Agent
  WELLS FARGO BANK, NATIONAL ASSOCIATION,  as the Backup Servicer and as the Collateral Custodian




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ARTICLE I DEFINITION
    
    
    2Section 1.1 Certain Defined Terms
    
    
    2Section 1.2 Other Terms
    
    
    51Section 1.3 Computation of Time Periods
    
    
    51Section 1.4 Interpretation
    
    
    51ARTICLE II PURCHASE OF THE VARIABLE FUNDING NOTES
    
    
    52Section 2.1 The Variable Funding Notes
    
    
    52Section 2.2 [Reserved]
    
    
    53Section 2.3 Procedures for Advances by Purchasers
    
    
    53Section 2.4 Reduction of the Facility Amount; Mandatory and Optional Repayments
    
    
    53Section 2.5 Determination of Interest
    
    
    55Section 2.6 [Reserved]
    
    
    55Section 2.7 [Reserved]
    
    
    55Section 2.8 Notations on Variable Funding Notes
    
    
    55Section 2.9 Settlement Procedures During the Revolving Period
    
    
    55Section 2.10 Settlement Procedures During the Amortization Period
    
    
    57Section 2.11 Collections and Allocations
    
    
    58Section 2.12 Payments, Computations, Etc
    
    
    59Section 2.13 Optional Repurchase
    
    
    60Section 2.14 Fees
    
    
    60Section 2.15 Increased Costs; Capital Adequacy; Illegality
    
    
    61Section 2.16 Taxes
    
    
    62Section 2.17 Assignment of the Sale Agreement
    
    
    64Section 2.18 Substitution of Assets
    
    
    64Section 2.19 Optional Sales
    
    
    65Section 2.20 Discretionary Sales
    
    
    67Section 2.21 Loans Originated by Affiliates of CapitalSource Inc. Other than the Originator
    
    
    68ARTICLE III CONDITIONS TO ADVANCES
    
    
    68Section 3.1 Conditions to Closing and Initial Advance
    
    
    68Section 3.2 Conditions Precedent to All Advances
    
    
    69ARTICLE IV REPRESENTATIONS AND WARRANTIES
    
    
    71




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Section 4.1 Representations and Warranties of the Seller
    
    
    71Section 4.2 Representations and Warranties of the Seller Relating to the Agreement and the Collateral
    
    
    81Section 4.3 Representations and Warranties of the Servicer
    
    
    82Section 4.4 Representations and Warranties of the Backup Servicer
    
    
    85Section 4.5 Representations and Warranties of the Collateral Custodian
    
    
    85Section 4.6 Breach of Certain Representations and Warranties
    
    
    86ARTICLE V GENERAL COVENANTS
    
    
    87Section 5.1 Affirmative Covenants of the Seller
    
    
    87Section 5.2 Negative Covenants of the Seller
    
    
    90Section 5.3 Covenants of the Seller Relating to the Hedging of Assets
    
    
    92Section 5.4 Affirmative Covenants of the Servicer
    
    
    93Section 5.5 Negative Covenants of the Servicer
    
    
    96Section 5.6 Affirmative Covenants of the Backup Servicer
    
    
    97Section 5.7 Negative Covenants of the Backup Servicer
    
    
    98Section 5.8 Affirmative Covenants of the Collateral Custodian
    
    
    98Section 5.9 Negative Covenants of the Collateral Custodian
    
    
    98ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS
    
    
    98Section 6.1 Designation of the Servicer
    
    
    98Section 6.2 Duties of the Servicer
    
    
    99Section 6.3 Authorization of the Servicer
    
    
    101Section 6.4 Collection of Payments
    
    
    101Section 6.5 Servicer Advances
    
    
    103Section 6.6 Realization Upon Charged-Off Assets
    
    
    103Section 6.7 Maintenance of Insurance Policies
    
    
    104Section 6.8 Servicing Compensation
    
    
    104Section 6.9 Payment of Certain Expenses by Servicer
    
    
    104Section 6.10 Reports
    
    
    105Section 6.11 Annual Statement as to Compliance
    
    
    105Section 6.12 Annual Independent Public Accountants Servicing Reports
    
    
    106Section 6.13 Limitation on Liability of the Servicer and Others
    
    
    106Section 6.14 The Servicer Not to Resign
    
    
    106Section 6.15 Servicer Defaults
    
    
    107




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Section 6.16 Appointment of Successor Servicer
    
    
    108ARTICLE VII THE BACKUP SERVICER
    
    
    110Section 7.1 Designation of the Backup Servicer
    
    
    110Section 7.2 Duties of the Backup Servicer
    
    
    111Section 7.3 Merger or Consolidation
    
    
    112Section 7.4 Backup Servicing Compensation
    
    
    112Section 7.5 Backup Servicer Removal
    
    
    112Section 7.6 Limitation on Liability
    
    
    113Section 7.7 The Backup Servicer Not to Resign
    
    
    113ARTICLE VIII THE COLLATERAL CUSTODIAN
    
    
    114Section 8.1 Designation of Collateral Custodian
    
    
    114Section 8.2 Duties of Collateral Custodian
    
    
    114Section 8.3 Merger or Consolidation
    
    
    116Section 8.4 Collateral Custodian Compensation
    
    
    116Section 8.5 Collateral Custodian Removal
    
    
    116Section 8.6 Limitation on Liability
    
    
    116Section 8.7 The Collateral Custodian Not to Resign
    
    
    117Section 8.8 Release of Documents
    
    
    117Section 8.9 Return of Required Asset Documents
    
    
    118Section 8.10 Access to Certain Documentation and Information Regarding the Collateral; Audits
    
    
    119ARTICLE IX SECURITY INTEREST
    
    
    119Section 9.1 Grant of Security Interest
    
    
    119Section 9.2 Release of Lien on Collateral
    
    
    120Section 9.3 Further Assurances
    
    
    120Section 9.4 Remedies
    
    
    120Section 9.5 Waiver of Certain Laws
    
    
    120Section 9.6 Power of Attorney
    
    
    121ARTICLE X TERMINATION EVENTS
    
    
    121Section 10.1 Termination Events
    
    
    121Section 10.2 Remedies
    
    
    124ARTICLE XI INDEMNIFICATION
    
    
    125Section 11.1 Indemnities by the Seller
    
    
    125




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Section 11.2 Indemnities by the Servicer
    
    
    128Section 11.3 After-Tax Basis
    
    
    128ARTICLE XII THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS
    
    
    129Section 12.1 The Administrative Agent
    
    
    129Section 12.2 The Purchaser Agents
    
    
    131Section 12.3 Additional Agent
    
    
    133ARTICLE XIII MISCELLANEOUS
    
    
    136Section 13.1 Amendments and Waivers
    
    
    136Section 13.2 Notices, Etc
    
    
    136Section 13.3 Ratable Payments
    
    
    136Section 13.4 No Waiver; Remedies
    
    
    136Section 13.5 Binding Effect; Benefit of Agreement
    
    
    137Section 13.6 Term of this Agreement
    
    
    137Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue
    
    
    137Section 13.8 Waiver of Jury Trial
    
    
    137Section 13.9 Costs, Expenses and Taxes
    
    
    138Section 13.10 No Proceedings
    
    
    138Section 13.11 Recourse Against Certain Parties
    
    
    139Section 13.12 Protection of Right, Title and Interest in the Collateral; Further Action Evidencing Advances
    
    
    140Section 13.13 Confidentiality
    
    
    141Section 13.14 Execution in Counterparts; Severability; Integration
    
    
    143Section 13.15 Waiver of Setoff
    
    
    143Section 13.16 Assignments
    
    
    143Section 13.17 Heading and Exhibits
    
    
    144Section 13.18 Loans Subject to Retained Interest Provisions
    
    
    144Section 13.19 Tax Treatment of Advances
    
    
    144




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SALE AND SERVICING AGREEMENT
 THIS SALE AND SERVICING AGREEMENT Agreement
 CAPITALSOURCE FUNDING III LLC Seller
 CAPITALSOURCE FINANCE LLC CapitalSource
Finance Originator Servicer
 EACH OF THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO Conduit Purchaser
 EACH OF THE INSTITUTIONAL PURCHASERS FROM TIME TO TIME PARTY HERETO Institutional Purchaser Purchasers
 EACH OF THE PURCHASER AGENTS FROM TIME TO TIME PARTY HERETO Purchaser Agent
 WACHOVIA CAPITAL MARKETS, LLC WCM Administrative
Agent WBNA WBNA Agent
 WELLS FARGO BANK, NATIONAL ASSOCIATION Wells Fargo Backup Servicer Collateral Custodian




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R
E C I T A L S
 WHEREAS
 WHEREAS
 WHEREAS
 WHEREAS
 WHEREAS
 NOW, THEREFORE,
 ARTICLE I
 DEFINITION
 Section 1.1 Certain Defined Terms
 Section 1.1
 40 Act Section 10.1(i)
 Accrual Period
 Addition Date
 -2-




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Additional Agent
 Additional Agent Fee Letter
 Additional Agents Account
 Additional Assets
 Additional Purchaser
 Additional Purchaser Agreement
 Adjusted Eurodollar Rate minus
 Administrative Agent ARTICLE XII
 Advance Section 2.1(b)
 Advance Rate
 Type of Asset
    
    Advance RateSenior Secured ABL Loans
    
    
    77.5
    %Senior Secured Loans
    
    
    72.5
    %Stretch Senior Secured Loans
    
    
    67.5
    %Senior B-Note Loans
    
    
    60.0
    %Subordinated Loans
    
    
    40.0
    %
 -3-




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provided however
 Advances Outstanding
 Affected Party
 Affiliate
 Agents Account
 Agented Loans
 Aggregate Outstanding Asset Balance minus
 -4-




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Aggregate Unpaids Article XI Section 2.9 Section 2.10 Section 2.14 Section 2.15 Section 2.16
 Alarm Service Agreement
 Allocation Adjustment Event
 Alternative Rate provided, however
 Amortization Period
 Applicable Law
 Asset Checklist
 -5-




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Asset Files
 Asset List Schedule IV
 Assets
 Assigned Loan Section 2.21
 Assignment of Mortgage Exhibit I
 Assumption Agreement Section 13.16(b)
 Availability minus provided
 Available Funds
 Average Pool Charged-Off Ratio
 -6-




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Average Portfolio Charged-Off Ratio
 Average Portfolio Delinquency Ratio
 Backup Servicer Section 7.3 Section 7.5
 Backup Servicer Fee Letter
 Backup Servicer Fee Rate
 Backup Servicer Termination Notice Section 7.5
 Backup Servicing Fee
 Banded Floating Rate Asset
 Bank Subsidiary
 Bankruptcy Code et seq
 -7-




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Base Rate plus
 Benefit Plan Section 3(3) Section 3(5)
 Borrowing Base minus
 Borrowing Base Certificate Exhibit A-3
 Borrowing Notice Exhibit A-1 A-2 Section
2.9(b)
 Breakage Costs
 Business Day
 CapitalSource Bank Transaction
 CapitalSource LIBOR Rate
 CapitalSource Prime Rate provided however
 -8-




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Capital Stock
 Change-in-Control Sections
13(d) 14(d) provided however provided however clause
(a) provided
 -9-




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Section 12(g) Sections 13 15(d)
 Charged-Off Asset
 Charged-Off Portfolio Asset
 -10-




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Clearing Agency
 Closing Date
 Code
 Collateral clause (i) (iii)
 Collateral Custodian Section
8.3 Section
8.5
 Collateral Custodian Fee
 Collateral Custodian Fee Letter
 Collateral Custodian Termination Notice Section 8.5
 Collection Account Section 6.4(f)
 Collection Date
 -11-




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Collection Period
 Collections
 Commercial Paper Notes
 Commitment
 Commitment Fee
 Conduit Purchasers Preamble
 Consolidated Funded Indebtedness
 Consolidated Subsidiary
 Consolidated Tangible Net Worth provided however provided further however
 -12-




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Contractual Obligation
 CP Rate per annum per annum provided per annum
 Credit and Collection Policy Section 5.1(h) Section
5.4(f)
 Cut-Off Date
 Deemed Collection Section 2.4(c)
 Delinquent Asset
 -13-




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Delinquent Portfolio Asset
 Derivatives
 Determination Date
 DIP Loan subsection (b) (c) (d)
 -14-




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Discretionary Sale Section 2.20
 Discretionary Sale Date
 Discretionary Sale Notice Section 2.20
 Distributions
 Dollars $
 Eligible Asset Exhibit L provided Exhibit
A Schedule I provided further
   -15-




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Section 3(a)(3)
      -16-




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-17-




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Section 7.4(a)
        -18-




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-19-




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-20-




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-21-




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provided
 Eligible Obligor
 Eligible Repurchase Obligations clauses (c)(ii) (c)(iv)
 Eligible Risk Rating
 Environmental Laws et seq et
 -22-




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seq et seq et seq et seq et
seq et seq et seq
 Equipment
 Equity Contribution
 ERISA
 ERISA Affiliate Section 414(b) Section 414(c) Section 414(m) clause (a) clause (b)
 Eurocurrency Liabilities
 Eurodollar Disruption Event
 -23-




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Eurodollar Reserve Percentage
 Exchange Act
 Excluded Amounts
 Existing Assets
 Face Amount
 Facility Amount provided, provided, further
 FDIC
 Federal Funds Rate
 Finance Charges
 -24-




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Financial Sponsor
 Fitch
 Fixed Rate Asset
 Fixed Rate Asset Percentage
 Floating Rate Asset
 Funding Date Section 2.3(a) Section 2.3
 GAAP
 Governmental Authority
 H.15
 Healthcare REIT
 Healthcare REIT Consolidated Subsidiary
 -25-




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Healthcare REIT Entities
 Hedge Amount
 Hedge Collateral Section 5.3(b)
 Hedge Breakage Costs
 Hedge Counterparty Section 5.3(b) clauses (i) (ii)
 Hedge Guaranty
 Hedge Notional Amount Section 5.3(a)
 Hedge Percentage
  -26-




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Hedge Transaction Section 5.3(a)
 Hedged Rate
 Hedging Agreement Section 5.3(a) Exhibit D
 Highest Required Investment Category
 Increased Costs Section 2.15
 Indebtedness
 -27-




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clauses (a) (h)
 Indemnified Amounts Section 11.1
 Indemnified Parties Section 11.1
 Industry
 Initial Advance
 Insolvency Event
 Insolvency Laws
 Insolvency Proceeding
 Institutional Purchaser Preamble
 Instrument
 Insurance Policy
 -28-




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Insurance Proceeds
 Intercreditor Agreement
 Interest
 1
  IR
    
    =
    
    the Interest Rate applicable on such day;P
    
    =
    
    the principal amount of such Advance on such day; andD
    
    =
    
    360 or, to the extent the Interest Rate is based on the Base Rate,
365 or 366 days, as applicable.
 provided, however
 Interest Collections
 Interest Rate
   -29-




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provided, however
 Investment
 Investment Loan
 Investment Loan Subsidiary
 Investment in Equity Instruments
 ISDA Definitions
 Issuer
 LIBOR Market Index Rate
 -30-




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Lien
 Liquid Real Estate Assets
 Liquidation Expenses
 -31-




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Liquidity Agreement
 Liquidity Bank
 Liquidity Factor Reduction Event
 Loan
 Loan Register Section 5.4(n)
 Loan-to-Liquidation Value LLV
 Loan-to-Value Ratio LTV plus
 -32-




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Lock-Box Schedule II
 Lock-Box Account Schedule II
 Lock-Box Agreement
 Lock-Box Bank
 Margin Stock
 Material Adverse Effect
 Material Modification provided
 -33-




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##### 



minus provided
 Materially Modified Asset
 Materials of Environmental Concern
 Maximum Availability
  plus
 minus plus
 Minimum Overcollateralization Amount
 -34-




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Minimum Pool Yield
 Monthly Report Section 6.10(b)
 Moodys
 Multiemployer Plan Section 4001(a)(3)
 NAICS Code
 Net Proceeds of Capital Stock/Conversion of Debt provided however
 Noteless Loan
 Obligor for example
 Officers Certificate
 -35-




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Opinion of Counsel
 Optional Sale Section 2.19(a)
 Optional Sale Date Section 2.19(a)
 Originator Section 2.21 provided
 Other Costs Section 13.9(c)
 Outstanding Asset Balance plus provided Section 2.20(a)(vii)
 Overcollateralization Percentage minus
 Participation Loan
 -36-




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provided, however
 Payment Date
 Permitted Investments
  provided, however,
   clause (2)
  -37-




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Permitted Liens
 Permitted Securitization Transaction
 Person
 Pool Charged-Off Ratio
 Pool Concentration Criteria
   -38-




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Pool Rate
 -39-




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Pool Weighted Average Life clause (i); clause (ii) clause (iii)
 Pool Yield minus
 Portfolio Aggregate Outstanding Asset Balance
 Portfolio Asset provided
 Portfolio Charged-Off Ratio provided
 Portfolio Delinquency Ratio provided
 -40-




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Portfolio Outstanding Asset Balance plus
 Prepaid Asset
 Prepayment Amount Section 6.4(b)
 Prepayments Section 6.4(b)
 Prime Rate
 Principal Collections
 Principal Collections Account Section 6.4(f)
 Proceeds
 Program Fee
 Program Fee Rate
 Pro-Rata Share subsection (i)(a) subsection (i)(a)
 -41-




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Purchaser Purchasers
 Purchaser Agent
 Purchaser Fee Letter
 Qualified Institution Section 6.4(f)
 Qualified Transferee
         -42-




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clauses (A) (B)
 clauses (i) (ii) (iii)
  Quarterly Determination Date
 Rating Agency
 Real Estate Loan
 Records
 Recoveries
 Regulation U
 REIT
 -43-




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REIT Requirements
 Related Property
 Related Security
         Replaced Asset Section 2.18(a)
 Reporting Date
 Required Advance Reduction Amount minus
 Required Asset Documents
 -44-




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provided, Section 2.21
 Required Reports Section 6.10(c) Section 6.10(d) Section 6.11 Section 6.12
 Residential Mortgage Policies and Procedures Schedule
X
 Responsible Officer
 Restricted Junior Payment
 Retained Interest
 -45-




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clause (A)
 Revolving Loan provided, however
 Revolving Period
 S&P
 Sale Agreement
 Scheduled Payments
 Secured Party
 Security System Loan
 Security System Loan Advance Multiple
 Security System Loan Average Contract Term
 Seller Preamble
 Senior B-Note Loan
 -46-




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Senior Secured ABL Loan pari passu provided, however
 Senior Secured Loan pari passu
 Servicer  Section 6.16(a)
 Servicer Advance Section 6.5
 Servicer Default Section 6.15
 Servicer Termination Notice Section 6.15
 Servicers Certificate Section 6.10(c)
 Servicing Fee Section 2.14(b)
 -47-




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Servicing Fee Rate
 Servicing Guarantor
 Servicing Guaranty Section
2.21
 Solvent Section
101(32)
 Stretch Senior Secured Loan pari passu
 Subordinated Loan
 -48-




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Subordinated Servicing Fee Ra
 Subsidiary provided however
 Substitute Asset Section 2.18
 Successor Servicer Section 6.16(a)
 Tape Section 7.2(b)(ii)
 Taxes
 Termination Date Section 2.4 Section 10.2(a) Section 10.2(b)
 Termination Event Section 10.1
 Term Loan
 Transaction Section 3.2
 Transaction Documents
 Transferee Letter Section 13.16(a)
 -49-




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Transition Expenses
 UCC
 United States
 Unmatured Termination Event
 Variable Funding Note VFN Section 2.1(a)
 VFCC
 Voting Stock
 Wachovia
 Warranty Asset provided, however, clauses (1)(c) (1)(d) 1(m)(i) 1(t) clause 1(t) 1(w) 1(x) (1)(y) clauses (2)(c) 2(d) clauses 2(c) 2(d) clauses (vi) (viii) (ix)
 Warranty Event
 WBNA Preamble
 WBNA Agent Preamble
 WBNA Agents Account
 -50-




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Weighted Average Advance Rate
 Section 1.2 Other Terms
  Section 1.3 Computation of Time Periods
  Section 1.4 Interpretation
         -51-




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ARTICLE II
 PURCHASE OF THE VARIABLE FUNDING NOTES
 Section 2.1 The Variable Funding Notes
 Variable Funding Note VFN Exhibit B-1 B-2 Section 9.1 provided
 Advance provided Section 2.1 Section 2.9(a)(i) Section
2.10(a)(i)
   -52-




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Section 2.2 [Reserved].
 Section 2.3 Procedures for Advances by Purchasers
 provided however Article III
 Article III Section 2.3
  Section 2.4 Reduction of the Facility Amount; Mandatory and Optional Repayments
  -53-




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provided however Section 2.4(a) Section 2.4(a)
 provided first second third Section 2.4(b)
 Deemed Collection Section 2.4(c)
 -54-




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Section 2.5 Determination of Interest
   Section 2.6 [Reserved]   Section 2.7 [Reserved].
 Section 2.8 Notations on Variable Funding Notes
  Section 2.9 Settlement Procedures During the Revolving Period
  FIRST
 SECOND
 -55-




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THIRD
 FOURTH
 FIFTH
 SIXTH subclauses (a) (b) subclause (b) subclauses (1) (2) subclause (2)
 SEVENTH
 EIGHTH EIGHTH
 NINTH
 -56-




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Section 3.2(b)
  clause (ii) Exhibit A-2
  clauses (i) (iv)
 Section 2.10 Settlement Procedures During the Amortization Period
  FIRST
 SECOND
 THIRD
 -57-




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FOURTH
 FIFTH
 SIXTH subclauses
(a) (b) FIRST
 SEVENTH
 EIGHTH
 NINTH NINTH
 TENTH
 Section 2.11 Collections and Allocations
 Collections
 -58-




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Section 6.10(b)
 Initial Deposits
 Excluded Amounts
 Investment of Funds Section 2.9 Section 2.10
 Section 2.12 Payments, Computations, Etc
 provided however
 -59-




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EIGHTH Section 2.9(a) NINTH Section 2.10
 Section 2.3
 Section 2.13 Optional Repurchase
 provided, Section 2.10
 Section 2.14 Fees
 Section
2.9(a)(v) Section 2.10(a)(v)
 Servicing Fee Section 2.9(a)(iii) Section 2.10(a)(iii)
 Subordinated Servicing
Fee Section 2.9(a)(iii) Section
2.10(a)(iii) Section
 -60-




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2.9(a)(vii) Section 2.10(a)(viii)
 Section 2.9(a)(iv) Section 2.10(a)(iv)
 Section 2.9(a)(iv) Section 2.10(a)(iv)
  Section 2.15 Increased Costs; Capital Adequacy; Illegality
   -61-




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Section
2.15
 clauses
(a) (b) Section 2.15
 Section 2.15 Section 2.15
 clause (a)
 Section 2.16 Taxes
 Additional Amount
 -62-




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Section 2.16(d)
 Section 2.16
 Section 2.16
 -63-




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Section 2.17 Assignment of the Sale Agreement
 Article VIII
 Section 2.18 Substitution of Assets
 Section 2.18 Substitute Asset provided,
 Replaced
Asset
   Section 4.6
  Section 4.1 Section 4.2
   -64-




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Section 2.18
  Section 2.19 Optional Sales
 Optional Sale
    Section
4.1
 -65-




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plus plus provided, clauses (iii) (iv) (v) Section 2.19(a)
   clause (a)(v) clause (a)(iv)
   -66-




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Section 2.20 Discretionary Sales
 Discretionary Sale
   Section 4.1
  -67-




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provided clauses (a) (c) clause (iv)
    Section 2.21 Loans Originated by Affiliates of CapitalSource Inc. Other than the
Originator
  ARTICLE III
 CONDITIONS TO ADVANCES
 Section 3.1 Conditions to Closing and Initial Advance
   -68-




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Schedule I
  Exhibits F-1 F-2
 Exhibits G-1 G-2
 Exhibits E-1 E-2
 Section 3.2 Conditions Precedent to All Advances
 Transaction
 Section 2.3(a) Exhibit A-1 Exhibit A-3 Exhibit A Schedule I Section 2.4(b) Section
2.9(b)
 -69-




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Exhibit A-2 Exhibit A-3
  Section 4.1 Section
4.2 Section 4.3
      Section 2.3(a) Exhibit L provided however
 -70-




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Section 2.3
      ARTICLE IV
 REPRESENTATIONS AND WARRANTIES
 Section 4.1 Representations and Warranties of the Seller
  Organization and Good Standing
 -71-




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Due Qualification
 Power and Authority; Due Authorization; Execution and Delivery
 Binding Obligation
 No Violation
 No Proceedings
 All Consents Required
 -72-




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Bulk Sales
 Solvency Exhibit E-1
 Selection Procedures
 Taxes
 Exchange Act Compliance; Regulations T, U and X
 Security Interest
    -73-




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provided however
  Reports Accurate
 -74-




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Location of Offices Section 13.2 Section 5.2(g)
 Lock-Boxes Schedule II Section 5.2(k)
 Tradenames
 Sale Agreement
 Value Given
 Accounting
 Special Purpose Entity
   -75-




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provided,
        -76-




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##### 



-77-




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##### 



Independent Director provided, however
   Confirmation from the Originator
 Investment Company Act
 ERISA Pension Plans
 -78-




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##### 



[Reserved]
 Compliance with Law
 Credit and Collection Policy
 Collections
 Set-Off, etc Section 6.4(a)
 Full Payment
 Accuracy of Representations and Warranties
 Representations and Warranties in Sale Agreement Section 4.1(ff) mutatis mutandis
 Reaffirmation of Representations and Warranties by the Seller
 -79-




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Section 4.1
 Participation, Acquired and Assigned Loans
 Environmental
       -80-




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USA PATRIOT Act
 Section 4.1(m)
 Section 4.2 Representations and Warranties of the Seller Relating to the Agreement and the
Collateral
  Binding Obligation, Valid Security Interest
  Section 4.1(m)
 Eligibility of Collateral Section
2.3
 -81-




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Section 4.2(a)
 No Fraud
 Loans Secured by Real Property
 Section 4.3 Representations and Warranties of the Servicer
  Organization and Good Standing
 Due Qualification
 Power and Authority; Due Authorization; Execution and Delivery
 Binding Obligation
 No Violation
 -82-




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##### 



No Proceedings
 All Consents Required
 Reports Accurate
 Credit and Collection Policy
 Collections
 Bulk Sales
 Solvency Exhibit E-2
 Taxes
 -83-




---



##### 



Exchange Act Compliance; Regulations T, U and X
 Security Interest
 ERISA Pension Plans
 Investment Company Act
 USA PATRIOT Act
 -84-




---



##### 



Section 4.4 Representations and Warranties of the Backup Servicer
  Organization and Corporate Power
 Due Authorization
 No Conflict
 No Violation
 All Consents Required
 Validity, Etc
 Section 4.5 Representations and Warranties of the Collateral Custodian
  Organization and Corporate Power
 -85-




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##### 



Due Authorization
 No Conflict
 No Violation
 All Consents Required
 Validity, Etc
 Section 4.6 Breach of Certain Representations and Warranties
 Section
2.9 Section 2.10 Section 2.18
 -86-




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##### 



Retransfer Date Section 4.6
 ARTICLE V
 GENERAL COVENANTS
 Section 5.1 Affirmative Covenants of the Seller
  Compliance with Laws
 Preservation of Company Existence
 Performance and Compliance with Collateral
 Keeping of Records and Books of Account
 -87-




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##### 



Originators Collateral
 Delivery of Collections Section 5.4(k)
 Separate Limited Liability Company Existence Section 4.1(u)
 Credit and Collection Policy provided
 Termination Events
 -88-




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##### 



Taxes
 Use of Proceeds
 Obligor Notification Forms
 Adverse Claims
 Sellers Collateral
 Notices
 Income Tax Liability
 Auditors Management Letters
 Representations Section 4.1
 -89-




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##### 



ERISA
 Proceedings provided, however Section 5.1(o)
 Notice of Material Events
 Other
 Section 5.2 Negative Covenants of the Seller
  Other Business Section 5.3(a)
 -90-




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##### 



Collateral Not to be Evidenced by Instruments
 Security Interests provided however Section 5.2(c)
 Mergers, Acquisitions, Sales, etc
 Deposits to Special Accounts
 Restricted Payments
 Change of Name or Location of Loan Files Section 13.2
 Accounting of Purchases
 -91-




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##### 



ERISA Matters
 Operating Agreement; Sale Agreement
 Changes in Payment Instructions to Obligors Schedule II
 Extension or Amendment of Collateral Section 6.4(a) provided however Section 6.4(a)
 Credit and Collection Policy provided
 Section 5.3 Covenants of the Seller Relating to the Hedging of Assets
 provided
 -92-




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##### 



Section 2.9(a)(i) Section 2.10(a)(i)
 Hedge Collateral Section
5.3(a)
 Section 5.4 Affirmative Covenants of the Servicer
  Compliance with Law
 Preservation of Company Existence
 -93-




---



##### 



Obligations and Compliance with Collateral
 Keeping of Records and Books of Account
    Preservation of Security Interest
 Credit and Collection Policy provided
 -94-




---



##### 



Termination Events
 Taxes
 Other
 Proceedings provided however Section 5.4(j)
 Deposit of Collections
 Servicing of Participation, Acquired and Assigned Loans
 Change-in-Control
 -95-




---



##### 



Loan Register
 Loan Register Section 5.04(n) provided, however
  Section 5.5 Negative Covenants of the Servicer
  Deposits to Special Accounts
 Mergers, Acquisition, Sales, etc
 Section 5.5
  -96-




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##### 



Change of Name or Location of Loan Files Section 13.2
 Change in Payment Instructions to Obligors Schedule
II
 Extension or Amendment of Assets Section 6.4(a) provided however Section 6.4(a)
 Section 5.6 Affirmative Covenants of the Backup Servicer
  Compliance with Law
 Preservation of Existence
 -97-




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##### 



Section 5.7 Negative Covenants of the Backup Servicer
  No Changes in Backup Servicer Fee
 Section 5.8 Affirmative Covenants of the Collateral Custodian
  Compliance with Law
 Preservation of Existence
 Location of Required Asset Documents
 Section 5.9 Negative Covenants of the Collateral Custodian
  Required Asset Documents
 No Changes in Collateral Custodian Fee
 ARTICLE VI
 ADMINISTRATION AND SERVICING OF CONTRACTS
 Section 6.1 Designation of the Servicer
 Initial Servicer
 -98-




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##### 



Section 6.1
 Successor Servicer Section 6.15
 Subcontracts provided however
 Servicing Programs
 Section 6.2 Duties of the Servicer
 Appointment Section 6.1
 Duties
   -99-




---



##### 



Section 2.9 Section 2.10
   -100-




---



##### 



Section 6.3 Authorization of the Servicer
  provided however
 Section 6.4 Collection of Payments
 Collection Efforts, Modification of Collateral
 -101-




---



##### 



Prepaid Asset Section
2.18 Prepayment Amount
 Acceleration
 Taxes and other Amounts
 Payments to Lock-Box Account Section 5.1(p)
 Establishment of the Collection Account Collection Account Principal Collections Account Section 2.9(b) provided however
 -102-




---



##### 



Qualified
Institution
 Adjustments
 Section 6.5 Servicer Advances
  Section 6.6 Realization Upon Charged-Off Assets
  -103-




---



##### 



Section 6.7 Maintenance of Insurance Policies
  Section 6.8 Servicing Compensation
 Section 2.9(a)(iii), Section 2.10(a)(iii) Section 2.9(a)(vii) Section 2.10(a)(viii)
 Section 6.9 Payment of Certain Expenses by Servicer
  -104-




---



##### 



Section 6.6 provided however
 Section 6.10 Reports
 Borrowing Notice Section 2.4(b) Section 2.9(b)
 Monthly Report Monthly Report Exhibit C
 Servicers Certificate Servicers Certificate Exhibit J
 Financial Statements
 Tax Returns
 Section 6.11 Annual Statement as to Compliance
  -105-




---



##### 



Section 6.12 Annual Independent Public Accountants Servicing Reports
 Article VI
 Section 6.13 Limitation on Liability of the Servicer and Others
 provided, however,
 Section 6.14 The Servicer Not to Resign
 clause
(i) Section 6.2
 -106-




---



##### 



Section 6.15 Servicer Defaults
 Servicer Default
      Section 6.1
    -107-




---



##### 



Servicer Termination Notice
 Section 6.16 Appointment of Successor Servicer
 Section 6.15 Successor Servicer
 -108-




---



##### 



Section 6.16(a) provided however provided Article IV Section 2.15 Section 2.16(b) Section
2.16(e)
  Section 6.16
 -109-




---



##### 



Section 6.16(a)
 ARTICLE VII
 THE BACKUP SERVICER
 Section 7.1 Designation of the Backup Servicer
 Initial Backup Servicer Section 7.1
 Successor Backup Servicer Section 7.5
 -110-




---



##### 



Section 7.2 Duties of the Backup Servicer
 Appointment Section 7.1
 Duties Section 7.5
 provided, however,
 Tape
  clause (iii) clause (iii)
 -111-




---



##### 



Reliance on Tape Section 7.2(b)
 Section 7.3 Merger or Consolidation
  Section 7.4 Backup Servicing Compensation
 Section 2.9(a)(iv) Section 2.10(a)(iv) Section 7.5 Section 6.16
 Section 7.5 Backup Servicer Removal
 Backup Servicer Termination
 -112-




---



##### 



Notice
 Section 7.6 Limitation on Liability
   Section 7.7 The Backup Servicer Not to Resign
 clause (i)
 -113-




---



##### 



ARTICLE VIII
 THE COLLATERAL CUSTODIAN
 Section 8.1 Designation of Collateral Custodian
 Initial Collateral Custodian Section 8.1
 Successor Collateral Custodian Section 8.5
 Section 8.2 Duties of Collateral Custodian
 Appointment
 Duties Section 8.5
 Section 3.2 Review Criteria
 -114-




---



##### 



provided, however provided, further,
 Schedule III
 Section 2.9 Section 2.10 Payment
Duties
  -115-




---



##### 



Section 8.3 Merger or Consolidation
  Section 8.4 Collateral Custodian Compensation
 Collateral Custodian Fee Section
2.9(a)(iv) Section 2.10(a)(iv) Section 8.5
 Section 8.5 Collateral Custodian Removal
 Collateral Custodian Termination
Notice provided, however
 Section 8.6 Limitation on Liability
   -116-




---



##### 



Section 8.7 The Collateral Custodian Not to Resign
 clause (i)
 Section 8.8 Release of Documents
 Release for Servicing Exhibit L
 -117-




---



##### 



Exhibit H
 Limitation on Release
 Release for Payment Exhibit L
 Section 8.9 Return of Required Asset Documents
 Section 2.18 Section 9.2 Section 4.6 Exhibit H
 -118-




---



##### 



Section 8.10 Access to Certain Documentation and Information Regarding the Collateral;
Audits
 Section 8.10
 ARTICLE IX
 SECURITY INTEREST
 Section 9.1 Grant of Security Interest
 Section 9.1
 -119-




---



##### 



Section 9.2 Release of Lien on Collateral
 Section 2.18 Section 13.6 Section 2.19 Section 2.20, provided, Section 6.6
 Section 9.3 Further Assurances
 Section 13.12 Section 9.1
 Section 9.4 Remedies
 Section 9.1
 Section 9.5 Waiver of Certain Laws
  -120-




---



##### 



Section 9.6 Power of Attorney
  ARTICLE X
 TERMINATION EVENTS
 Section 10.1 Termination Events
 Termination Events
    provided however
 -121-




---



##### 



Section 2.10
            -122-




---



##### 



-123-




---



##### 



provided
 Section 10.2 Remedies
 Section 10.1(i)
 Section 10.1(i)
 Section 10.1
 -124-




---



##### 



Section 2.10
 ARTICLE XI
 INDEMNIFICATION
 Section 11.1 Indemnities by the Seller
 Indemnified Parties Indemnified
Amounts Section 11.1
    -125-




---



##### 



-126-




---



##### 



Section 11.1
 Section 11.1
 Section 11.1
 -127-




---



##### 



Section 11.2 Indemnities by the Servicer
  Section 11.2
  Section 11.2
 Section 11.2
 Section 11.3 After-Tax Basis
 Section 11.1 Section 11.2
 -128-




---



##### 



ARTICLE XII
 THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS
 Section 12.1 The Administrative Agent
 provided however
  Administrative Agents Reliance, Etc
 -129-




---



##### 



Credit Decision with Respect to the Administrative Agent
 Indemnification of the Administrative Agent provided
 -130-




---



##### 



Successor Administrative Agent
 Payments by the Administrative Agent
 Section 12.2 The Purchaser Agents
 Authorization and Action
 -131-




---



##### 



Delegation of Duties
 Exculpatory Provisions Article III
 Reliance provided
 -132-




---



##### 



Non-Reliance on the Purchaser Agent and Other Purchasers
 Purchaser Agents in their Respective Capacities
 Successor Purchaser Agent
 Section 12.3 Additional Agent
 Authorization and Action
 -133-




---



##### 



Delegation of Duties
 Exculpatory Provisions
 Reliance by Additional Agent
 -134-




---



##### 



provided
 Non-Reliance on Additional Agent
 Additional Agent in its Individual Capacity
 Successor Additional Agent Articles XI XII
 -135-




---



##### 



ARTICLE XIII
 MISCELLANEOUS
 Section 13.1 Amendments and Waivers
 Section 13.1 Appendix B provided,
 Section 13.2 Notices, Etc
 provided, however, Article II Section 6.10 Section 6.11 Section 6.12
 Section 13.3 Ratable Payments
 Section 11.1 provided,
however
 Section 13.4 No Waiver; Remedies
  -136-




---



##### 



Section 13.5 Binding Effect; Benefit of Agreement
 Section 2.9(a)(i) Section 2.10(a)(i)
 Section 13.6 Term of this Agreement
 Articles IV V Articles VI VII VIII provided, however Articles III IV Article
XI Section 13.9 Section 13.10 Section 13.11
 Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue
  Section 13.8 Waiver of Jury Trial
  -137-




---



##### 



Section 13.9 Costs, Expenses and Taxes
    Section 13.10 No Proceedings
  -138-




---



##### 



provided Section
13.10
 Section 13.11 Recourse Against Certain Parties
 Section 13.11
 -139-




---



##### 



Section 13.12 Protection of Right, Title and Interest in the Collateral; Further Action
Evidencing Advances
 Section 13.12(a)
  -140-




---



##### 



Article
XI
 Section 3.1
  Section 3.1
 Section 13.13 Confidentiality
 Excepted Persons
 -141-




---



##### 



Section 13.13(a) clause (a)
  provided that
 -142-




---



##### 



Section 13.14 Execution in Counterparts; Severability; Integration
  Section 13.15 Waiver of Setoff
   Section 13.16 Assignments
 provided Exhibit
K Transferee Letter
 provided however
 -143-




---



##### 



Exhibit M Assumption Agreement
 Section 13.17 Heading and Exhibits
  Section 13.18 Loans Subject to Retained Interest Provisions
 provided however clauses (i) (iii) clause (ii) clause (iv)
  Section 13.19 Tax Treatment of Advances
  [Remainder of Page Intentionally Left Blank.]
 -144-




---



##### 



THE SELLER:
    
    CAPITALSOURCE FUNDING III LLCBy:
Name:
    
    /S/ JEFFREY A. LIPSON

Jeffrey A. LipsonTitle:
    
    Vice President and TreasurerCapitalSource Funding III LLC4445 Willard Avenue, 12th FloorChevy Chase, Maryland 20815Attention: TreasuryFacsimile No.: (301) 841-2307Confirmation No.: (301) 841-2779THE ORIGINATOR 
AND SERVICER:
    
    CAPITALSOURCE FINANCE LLCBy:
Name:
    
    /S/ JEFFREY A. LIPSON

Jeffrey A. LipsonTitle:
    
    Vice President and TreasurerCapitalSource Finance LLC4445 Willard Avenue, 12th FloorChevy Chase, Maryland 20815Attention: TreasuryFacsimile No.: (301) 841-2307Confirmation No.: (301) 841-2779
 [Signatures Continued on the Following Page]




---



##### 



WBNA:
    
    WACHOVIA BANK, NATIONAL ASSOCIATIONCommitment:$90,000,000By:
Name:
    
    /S/ RAJ SHAH

Raj ShahTitle:
    
    Managing DirectorWachovia Bank, National AssociationOne Wachovia Center, NC0602Charlotte, North Carolina 28288Attention: Paul BurkhartFacsimile No.: (704) 715-0067Confirmation No.: (704) 383-3766THE ADMINISTRATIVE AGENT 
AND THE WBNA AGENT
    
    WACHOVIA CAPITAL MARKETS, LLCBy:
Name:
    
    /S/ MARY KATHERINE DUBORE

Mary Katherine DuBoreTitle:
    
    Managing DirectorWachovia Capital Markets, LLCOne Wachovia Center, Mail Code: NC0600Charlotte, North Carolina 28288Attention: Paul BurkhartFacsimile No.: (704) 715-0067Confirmation No.: (704) 383-3766
 [Signatures Continued on the Following Page]




---



##### 



THE BACKUP SERVICER: 
AND THE COLLATERAL 
CUSTODIAN:
    
    WELLS FARGO BANK, NATIONAL
ASSOCIATION, not in its individual capacity but
solely as Backup ServicerBy:
Name:
    
    /S/ JEANINE C. CASEY

Jeanine C. CaseyTitle:
    
    Vice PresidentWells Fargo Bank, National AssociationSixth Street and Marquette AvenueMAC N9311-161Minneapolis, Minnesota 55479Attention:              Corporate Trust ServicesCollateral-Backed AdministrationFacsimile No.:       (612) 667-3539Confirmation No.: (612) 667-8058
 [Signatures Continued on the Following Page]