exv4w1w1



 




Exhibit 4.1.1








CAPITALSOURCE INC.,

as Issuer,



U.S. BANK NATIONAL ASSOCIATION,

as Trustee,



CAPITALSOURCE HOLDINGS INC.,

as Guarantor,



CAPITALSOURCE FINANCE LLC,

as Guarantor













FIRST SUPPLEMENTAL INDENTURE



DATED AS OF OCTOBER 18, 2004



TO



INDENTURE



DATED AS OF JULY 7, 2004








 









 







     FIRST SUPPLEMENTAL INDENTURE dated as of October 18, 2004, by and among
CapitalSource Inc., a Delaware corporation (hereinafter called the “Company”),
as issuer, CapitalSource Holdings Inc., a Delaware corporation (formerly known
as CapitalSource Holdings LLC prior to its conversion to corporate status
pursuant to §265 of the General Corporation Law of the State of Delaware and
§18-216 of the Delaware Limited Liability Company Act, hereinafter called
"Holdings”), CapitalSource Finance LLC, a Delaware limited liability company
(hereinafter called “Finance,” and together with Holdings, the “Guarantors” and
each a “Guarantor”), each having its principal office at 4445 Willard Avenue,
12th Floor, Chevy Chase, Maryland 20815, and U.S. Bank National Association, as
trustee hereunder (hereinafter called the “Trustee”).



     WHEREAS, the Company has heretofore executed and delivered an indenture
dated as of July 7, 2004 (the “Original Indenture”), by and among the Company,
the Guarantors and the Trustee, pursuant to which the Company has issued
$330,000,000 aggregate principal amount of 3.5% Senior Convertible Debentures
due 2034 (the “Debentures”) and the Guarantors have executed and delivered
their guarantees of the Debentures (the “Guarantees”); and



     WHEREAS, Section 10.01 of the Original Indenture provides that, without
the consent of any Holder of a Debenture, the Company, the Guarantors and the
Trustee may amend or supplement the Original Indenture to make any change to
cure any ambiguity or correct any error in the Original Indenture; and



     WHEREAS, all conditions to the entering of this First Supplemental
Indenture have been satisfied; and



     WHEREAS, the Company, the Guarantors and the Trustee desire to enter into
this First Supplemental Indenture to effect the amendments to the Original
Indenture;



     NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, and of the acceptance of this trust by the Trustee,
and of other valuable consideration, the receipt whereof is hereby
acknowledged, it is hereby covenanted, declared and agreed by and between the
parties hereto, for the benefit of Holders of the Debentures, as follows:



SECTION 1.



DEFINITIONS



     Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Original Indenture.



SECTION 2.



EFFECTIVENESS OF AMENDMENTS



     Upon the execution and delivery of this First Supplemental Indenture by
the Company, the Guarantors and the Trustee, this First Supplemental Indenture
shall become effective and the



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Original Indenture and the Debentures and Guarantees issued thereunder shall be
amended and supplemented in accordance herewith, and this First Supplemental
Indenture shall form a part of the Original Indenture for all purposes, and
every holder of Debentures authenticated and delivered under the Original
Indenture shall be bound hereby.



SECTION 3.



AMENDMENTS TO THE INDENTURE



     SECTION 3.1 Amendments to Article 14. Article 14 of the Original
Indenture is hereby amended as follows:



          (a) The second sentence of Section 14.03(b) of the Original Indenture is
hereby amended and restated to read as follows:




In such case, the Company will not send individual notices of its
election to satisfy the Conversion Obligation in cash, if applicable, and
the applicable Conversion Settlement Distribution will be computed in the
same matter as set forth in clause (a) above except that the Cash
Settlement Averaging Period shall be the five consecutive Trading Days
ending on the third Trading Day prior to the Conversion Date and
settlement (in cash or shares) will occur on the third Business Day
following the Conversion Date.



          (b) Section 14.03(c) of the Original Indenture is hereby amended and
restated in its entirety to read as follows:




Notwithstanding anything to the contrary in this Indenture, at any time
prior to Stated Maturity, the Company may irrevocably elect, in its sole
discretion without the consent of Debentureholders, by notice to the
Trustee and the Debentureholders, to satisfy in cash 100% of the
principal amount of the Debentures converted after the date of such
election pursuant to the following procedures. Upon any conversion made
following the date of any such election, settlement dates will be
determined in the same manner as set forth above in clauses (a) and (b)
of this Section 14.03, and settlement amounts will be determined as set
forth in the next two succeeding sentences. The Company will deliver to
holders surrendering Debentures for conversion a cash amount equal to the
lesser of (1) the amount of the Conversion Settlement Distribution
calculated in accordance with clause (a)(ii) of this Section 14.03, or
(2) 100% of the principal amount of Debentures surrendered for conversion
(the “Face Amount”). In addition, if the amount of the Conversion
Settlement Distribution calculated in accordance with clause (a)(ii) of
this Section 14.03 exceeds the Face Amount, the Company will deliver to
holders surrendering Debentures for conversion either cash in the amount
of such excess or, at the Company’s option, a number of shares of Common
Stock equal to the excess, if any, of (A) the number of shares equal to
(i) the aggregate principal amount of Debentures to be converted divided
by 1,000, multiplied by (ii) the Conversion Rate, over (B) the number of
shares equal to the sum, for each day of the Cash Settlement Averaging
Period, of (x) 1/7th (or 1/5th, as applicable) of the Face Amount,
divided by (y) the Last Reported



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Sale Price of the Common Stock, plus cash for any fractional shares
pursuant to Section 14.04.



SECTION 4.



MISCELLANEOUS



     SECTION 4.1 Execution as Supplemental Indenture. This First
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this First Supplemental Indenture forms a part thereof. Except as
herein expressly otherwise defined, the use of the terms and expressions herein
is in accordance with the definitions, uses and constructions contained in the
Original Indenture.



     SECTION 4.2 No Other Amendments. Except as expressly amended
hereby, the Original Indenture shall continue in full force and effect in
accordance with the provisions thereof.



     SECTION 4.3 Provisions Binding on the Company’s Successors. All
the covenants, stipulations, promises and agreements contained in this First
Supplemental Indenture made by the Company and the Guarantors shall bind their
successors and assigns whether so expressed or not.



     SECTION 4.4 Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE AND
EACH DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW OR ANY SUCCESSOR TO SUCH STATUTE).



     SECTION 4.5 Execution and Counterparts. This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
an original but such counterparts shall together constitute but one and the
same instrument.



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     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the date first written above.


	 	 	 	 	 
	 	CAPITALSOURCE INC.,
     as Issuer

 	 
	 	By:  	/s/ Steven A. Museles
 	 
	 	 	Name:  	Steven A. Museles 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	CAPITALSOURCE HOLDINGS INC.,
     as Guarantor

 	 
	 	By:  	/s/ Steven A. Museles
 	 
	 	 	Name:  	Steven A. Museles 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	CAPITALSOURCE FINANCE LLC,
     as Guarantor

 	 
	 	By:  	/s/ Steven A. Museles
 	 
	 	 	Name:  	Steven A. Museles 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	U.S. BANK NATIONAL ASSOCIATION,
     as Trustee

 	 
	 	By:  	/s/ Lori Anne Rosenberg
 	 
	 	 	Name:  	Lori Anne Rosenberg 	 
	 	 	Title:  	Assistant Vice President 	 
	 





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