Document:

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                                                                   EXHIBIT 10.13

                            ITLA CAPITAL CORPORATION
                            SALARY CONTINUATION PLAN
                           (EFFECTIVE MARCH 31, 2000)

                                    Preamble

        ITLA Capital Corporation, a Delaware business corporation and its
subsidiaries, have adopted the ITLA Capital Corporation Salary Continuation Plan
as of the Effective Date, for a select group of executives and senior management
personnel to ensure that the overall effectiveness of the Company's executive
compensation program will attract, retain and motivate qualified executives and
senior management personnel.

                                    ARTICLE I
                                   DEFINITIONS

        When used herein, the following words shall have the meanings below
unless the context clearly indicates otherwise:

        1.1 The term "Change in Control" means the occurrence of any of the
following events with respect to the Company: (1) any person (as the term is
used in section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding securities; (2)
individuals who are members of the Board of Directors of the Company on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least two thirds of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company's stockholders was approved by the nominating committee serving
under an Incumbent Board, shall be considered a member of the Incumbent Board;
(3) a reorganization, merger, consolidation, sale of all or substantially all of
the assets of the Company or a similar transaction in which the Company is not
the resulting entity (unless the continuing ownership requirements clause (4)
below are met with respect to the resulting entity); or (4) a merger or
consolidation of the Company with any other corporation other than a merger or
consolidation in which the voting securities of the Company outstanding
immediately prior thereto represent at least 66.67% of the total voting power
represented by the voting securities of the Company or the surviving entity
outstanding immediately after such merger or consolidation. The term "Change in
Control" shall not include: (1) an acquisition of securities by an employee
benefit plan of the Company; or (2) any of the above mentioned events or
occurrences which require but do not receive the requisite government or
regulatory approval to bring the event or occurrence to fruition.

        1.2 "Claims Reviewer" means the Compensation Committee of the Board of
Directors of the Company, unless another person or organizational unit is
designated by the Company as Claims Reviewer.

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        1.3 "Company" means ITLA Capital Corporation and its subsidiaries and
any successor(s) thereto. For purposes of determining whether a Participant is
employed by the Company at any particular time, the term "Company" shall also
include any entity that would be treated as a single employer with the Company
under Section 414 of the Internal Revenue Code.

        1.4 "Designated Beneficiary" means the individual the Participant
designates as his or her beneficiary in such Participant's ITLA Capital
Corporation Salary Continuation Plan designation of beneficiary form.

        1.5 "Disability" means, with respect to Mr. Haligowski, Disability as
defined in Mr. Haligowski's Employment Agreement dated January 28, 2000, or as
later amended, or, with respect to any other Participant, as defined in the
Participant's Change in Control Severance Agreement. If the Participant does not
have a Change in Control Severance Agreement defining the term "Disability,"
then Disability shall mean total and permanent disability as defined in the
Company's long term disability plan.

        1.6 "Effective Date" means March 31, 2000.

        1.7 "Involuntary Termination" means, with respect to Mr. Haligowski, an
involuntary termination as defined in Mr. Haligowski's Employment Agreement
dated January 28, 2000, or as later amended, or, with respect to any other
Participant, as defined in the Participant's Change in Control Severance
Agreement.

        1.8 "Normal Retirement Date" means retirement from service with the
Company, which becomes effective on or after the first day of the calendar month
following the month in which the Participant reaches his or her 65th birthday.

        1.9 "Participant" means any employee of the Company who meets the
eligibility requirements of Article II and is designated and approved for
participation in the Plan as set forth in Article II.

        1.10 "Participation Date" means the date any employee of the Company
becomes a Participant in the Plan.

        1.11 "Plan" means the ITLA Capital Corporation Salary Continuation Plan,
as set forth herein and as amended from time-to-time.

        1.12 "Plan Year" means the calendar year.

        1.13 "Termination for Cause" means, with respect to Mr. Haligowski, a
termination for cause as defined in Mr. Haligowski's Employment Agreement dated
January 28, 2000, or as later amended, or, with respect to any other
Participant, as defined in the Participant's Change in Control Severance
Agreement.

        1.14 "Voluntary Termination" or "Voluntarily Terminates" means an
employee's intentional conclusion of employment with the Company other than by
death, Disability, attainment of the Normal Retirement Date, or Involuntary
Termination. With respect to

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Mr. Haligowski's participation in the Plan, "Voluntary Termination" shall be as
defined in Mr. Haligowski's Employment Agreement dated January 28, 2000, or as
later amended.

                                   ARTICLE II
                           ELIGIBILITY TO PARTICIPATE

        2.1 Eligibility to Participate. For purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan is
limited to a select group of management and highly compensated employees.

        2.2 Designated Participants. An executive or senior management employee
of the Company is eligible to become a Participant in the Plan; provided such
employee is designated as a Participant on Exhibit A attached hereto or, such
employee is later designated as a Participant by the Compensation Committee of
the Board of Directors of the Company and, such designation is attached as a
written amendment to the Plan signed by a duly authorized officer of the
Company. Under no circumstance shall an employee below the level of Managing
Director or Senior Vice President be eligible to participate in the Plan. Once
an employee becomes a Participant, he or she shall remain a Participant until
all benefits to which he or she (or his or her Designated Beneficiary) is
entitled under the Plan have been paid.

                                   ARTICLE III
                           ELIGIBILITY FOR AND PAYMENT
                                   OF BENEFITS

        3.1 Eligibility for Retirement Benefits. Each Participant shall be
eligible to receive the benefits under the Plan upon the earlier of the
attainment of the Normal Retirement Date, or the Participant's death,
Disability, or termination of employment (other than a Termination for Cause),
or upon Change in Control. Except upon a Change in Control as set forth in
Section 3.6 below, no benefits shall be payable from the Plan to a Participant
while such Participant is employed with the Company.

        3.2 Calculation of Benefit. A Participant's benefit under the Plan will
be calculated as of the earlier of Participant's attainment of the Normal
Retirement Date, the Participant's death, Disability, termination of employment
(other than a Termination for Cause), or upon Change in Control.

        3.3 Incidents of Ownership. Notwithstanding the above, a Participant
shall have no incidents of ownership with respect to the benefits under the
Plan.

        3.4 Benefits. If the Participant's employment with the Company is
terminated prior to a Change in Control as a result of attaining the Normal
Retirement Date, death, or Disability or termination for any reason other than
Voluntary Termination or Termination for Cause, the Participant shall be
entitled to receive a monthly salary continuation benefit from the Company,
beginning on the first day of the month following the termination of employment
and continuing on the first day of each month thereafter for a period of 15
years in an amount set forth in Exhibit A attached hereto or in the written
amendment to the Plan designating the individual as a Participant in the Plan.

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        3.5 Benefits upon Voluntary Termination Prior to Normal Retirement Date.
If a Participant Voluntarily Terminates employment with the Company prior to
attainment of the Normal Retirement Date, the Participant shall be entitled to
receive monthly, beginning on the first day of the month following written
notice of Voluntary Termination to the Company and continuing on the first day
of each month thereafter, for a period of 15 years, a reduced benefit payment
equal to the salary continuation benefit set forth in Exhibit A attached hereto
(or applicable amendment), multiplied by a fraction:

                a. The numerator of which is the actual number of months the
Participant has been employed by the Company from the Participant's
Participation Date in this Plan until the date of Voluntary Termination; and

                b. The denominator of which is the actual number of months the
Participant would have been employed by the Company from the Participation Date
until his or her Normal Retirement Date (at age 65).

        For purposes of determining the applicable number of months of
participation, a Participant shall be deemed to have been a Participant as of
January 1 of any Plan Year if such Participant is designated as a Participant
prior to the end of the Plan Year and remains an employee of the Company as of
the end of such Plan Year.

        3.6 Benefits upon Change in Control. Upon Change in Control prior to
commencement of benefits under Sections 3.4 or 3.5 of the Plan, the Participant
shall be entitled to receive the salary continuation benefit set forth in
Exhibit A attached hereto (or in the written amendment to the Plan designating
the individual as a Participant in the Plan) for a 15-year period.
Notwithstanding the preceding sentence, the actual salary continuation benefit
payable upon a Change in Control shall be paid monthly, beginning on the first
day of the month following the Change in Control and continuing on the first day
of each month thereafter for a ten-year period, with each monthly payment
increased to reflect the shorter payment period. The present value of the
payments made over the ten-year period set forth in the preceding sentence shall
be equivalent to the present value of the salary continuation benefit set forth
in Exhibit A paid over a 15-year period.

        3.7 Participant's Death. If a Participant dies while employed by the
Company and prior to commencement of benefits to which the Participant is
entitled to under the Plan, the Participant's Designated Beneficiary shall
receive the benefits the Participant would otherwise receive under the Plan. If
a Participant dies after the commencement of benefits hereunder, all of the
remaining benefits to which the Participant was entitled at the time of his or
her death shall be paid to the Participant's Designated Beneficiary. If a
Participant survives his or her Designated Beneficiary or the Participant fails
to name a Designated Beneficiary prior to receipt of the entire distribution to
which the Participant is entitled hereunder, then all of the distribution to
which the Participant is entitled under the Plan and which has not been
distributed to such Participant at the date of death shall be payable to the
Participant's estate.

        3.8 Termination for Cause. Notwithstanding any other provision of this
Plan, in no event shall any benefits be payable under this Plan to a Participant
whose employment with the Company is Terminated for Cause.

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        3.9 Commencement of Benefit. A Participant's benefit payable on account
of the occurrence of a Change in Control or the Participant's death, Disability,
attainment of the Normal Retirement Date or termination of employment shall be
payable commencing on the first day of the calendar month next following the
occurrence of the event giving rise to the payment.

        3.10 No Duplication of Benefits. The Plan is intended to pay salary
continuation benefits to eligible Participants upon the first to occur of the
events described in Section 3.1 of the Plan: attainment of Normal Retirement
Date, death, Disability, termination of employment (other than a Termination for
Cause) or a Change in Control. In no event shall benefits be payable to any
Participant under this Plan for more than one event listed in Section 3.1 of the
Plan. Thus, if benefits are payable to a Participant upon a Change in Control as
set forth in Section 3.6 of the Plan, a subsequent termination of the
Participant's employment shall not entitle the Participant to any additional
benefits under the Plan. Similarly, if a Participant becomes entitled to
benefits under Section 3.1 of the Plan as a result of a termination of
employment with ITLA Capital Corporation or a subsidiary, no additional benefits
will be payable to the Participant upon a Change in Control or termination of
employment from another related entity. In addition, except as otherwise set
forth in a Participant's Employment Agreement or upon a Change in Control, no
benefits shall be payable to a Participant upon a termination of employment with
the Company if the Participant continues to be employed by a subsidiary or
successor of the Company.

        3.11 Limitation on Distribution to Covered Employees. Notwithstanding
any other provision of the Plan, in the event that the Participant is a "covered
employee" as defined in Section 162(m)(3) of the Internal Revenue Code, or would
be a covered employee if the benefits were distributed in accordance with the
other provisions of Article III, the maximum amount which may be distributed in
any Plan Year shall not exceed one million dollars ($1,000,000) less the amount
of compensation paid by the Company to the Participant in such Plan Year which
is not "performance-based" (as defined in Internal Revenue Code Section
162(m)(4)(C)). The amount of compensation which is not "performance-based" shall
be reasonably determined by the Company at the time of the proposed
distribution. Any amount which is not distributed to the Participant in a Plan
Year as a result of the limitation set forth in this Section 3.11 shall be
distributed to the Participant in the next Plan Year, subject to compliance with
the foregoing limitation set forth in this Section 3.11. The provisions of this
Section 3.11 shall not apply if the Compensation Committee of the Board of
Directors, upon consultation with legal counsel, determines that the
restrictions of Code Section 162(m) do not apply to limit the deductibility of
payments made under the Plan (or otherwise by the Company) to the Participant.

        3.12 Acceleration in Payment of Benefits. Notwithstanding any other
provision of this Plan and without regard to whether benefits are currently
payable under this Article III, the Company in its sole and absolute discretion
may at any time elect to pay a Participant or Beneficiary a lump sum payment
equal to the present value of the remaining payments due such Participant or
Beneficiary. Present value shall be determined using such actuarial factors and
interest rates as determined by the Compensation Committee of the Board of
Directors of the Company. The payment of the lump sum shall discharge all of the
Company's obligations hereunder with respect to the Participant. The Company
shall not be responsible for any increased taxes imposed on the Participant as a
result of receiving benefits in a lump sum payment under the Plan.

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        3.13 Parachute Payments. In the event that any payments or benefits
provided or to be provided to a Participant pursuant to this Plan in combination
with payments or benefits, if any, from other plans or arrangements maintained
by the Company constitute "excess parachute payments" under Section 280G of the
Internal Revenue Code of 1986, as amended, the Company shall either reduce the
payments to the Participant under the Plan or provide an additional Gross Up
Payment to the Participant in accordance with the provisions of the
Participant's Change in Control Severance Agreement or Employment Agreement. If
the Participant does not have a Change in Control Severance Agreement or
Employment Agreement that addresses the treatment of excess parachute payments,
then the Compensation Committee of the Board of Directors of the Company shall,
in its sole and absolute discretion and notwithstanding any other provision of
this Plan, either reduce the benefits payable to the Participant under this Plan
so that none of the payments are excess parachute payments or provide the
Participant with a gross-up payment to offset the additional tax on any Plan
benefits that are treated as excess parachute payments under Section 280G of the
Internal Revenue Code.

                                   ARTICLE IV
                            AMENDMENT AND TERMINATION

        4.1 Amendment or Termination. The Company intends the Plan to remain in
existence until all Participants in the Plan have received all of their benefits
payable under the Plan. The Company, however, reserves the right to amend or
terminate the Plan. No such amendment may reduce or eliminate benefits payable
under the Plan to any Participant or remove the obligation of the Company to
contribute amounts to a grantor trust as set forth in Section 5.1 below. In the
event that the Company elects to terminate the Plan prior to the commencement of
any benefits hereunder, each Participant shall be entitled to begin receiving
the salary continuation benefit set forth in Section 3.4 of the Plan, with the
amount of the benefit calculated as of the date of termination of the Plan. Any
amendment or termination of the Plan shall be made pursuant to a resolution of
the Compensation Committee of the Board of Directors of the Company.

                                    ARTICLE V
                                 ADMINISTRATION

        5.1 Funding of Benefits. The Company shall establish a grantor trust to
hold assets to pay benefits due Participants under the Plan. At least annually,
the Company shall contribute to the trust an amount determined by the actuaries
for the Company (using reasonable actuarial assumptions) as necessary to fund
the benefits payable under the Plan. In addition, within 15 days after a Change
in Control, the Company shall contribute an amount to the trust as determined by
the actuaries for the Company to be necessary to fully fund the benefits payable
under Article III of the Plan. At no time shall the Participant be deemed to
have a lien nor right, title nor interest in or to any specific funding
investment or to any assets of the Company. If the Company elects to invest in a
life insurance or annuity policy for the life of the Participant, then the
Participant shall assist the Company by freely submitting to a physical
examination and supply such additional information necessary to obtain such
insurance or annuities.

        5.2 Unsecured Claims. The right of a Participant or his or her
Designated Beneficiary to receive a benefit hereunder shall be an unsecured
claim against the general assets of the

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Company, and neither a Participant nor his or her Designated Beneficiary shall
have any rights in or against any amount credited under this Plan or under any
trust established under the Plan or any other assets of the Company.
Notwithstanding any other provisions to the contrary, the Plan at all times
shall be considered entirely unfunded both for tax purposes and for purposes of
Title I of ERISA as amended. Any funds invested hereunder shall continue for all
purposes to be part of the general assets of the Company and available to its
general creditors in the event of bankruptcy or insolvency. Any benefits which
may be payable pursuant to this Plan are not subject in any manner to
anticipation, sale, alienation, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of a Participant or his or her
Designated Beneficiary. The Plan constitutes a mere unsecured promise by the
Company to make benefit payments in the future. No interest or right to receive
a benefit may be taken, either voluntarily of involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.

        5.3 Plan Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company, which shall
have the authority, duty and power in its sole and absolute discretion to
interpret and construe the provisions of the Plan as the Compensation Committee
of the Board of Directors deems appropriate including the authority to determine
eligibility for benefits under the Plan. The Compensation Committee of the Board
of Directors shall have the duty and responsibility of maintaining records,
making the requisite calculations and disbursing the payments hereunder. The
interpretations, determinations, regulations and calculations of the
Compensation Committee of the Board of Directors shall be final and binding on
all persons and parties concerned. The Compensation Committee may delegate any
of its duties, to an employee or employees of the Company or other persons as it
deems appropriate.

        5.4 Expenses. Expenses of administration of the Plan shall be paid by
the Company. The Compensation Committee of the Board of Directors of the Company
shall be entitled to rely on all tables, valuations, certificates, opinions,
data and reports furnished by any actuary, accountant, controller, counsel or
other person employed or retained by the Company with respect to the Plan.

        5.5 Statements. The Compensation Committee of the Board of Directors of
the Company or its agents shall furnish individual periodic statements of
benefits being paid to each Participant (or if the Participant's Designated
Beneficiary is currently receiving benefits under the Plan, to such
Participant's Designated Beneficiary) in such form as determined by the
Compensation Committee of the Board of Directors or as may be required by the
law.

        5.6 No Enlargement of Rights. The sole rights of a Participant or his or
her Designated Beneficiary under this Plan shall be to have this Plan
administered according to its provisions, to receive whatever benefits he or she
may be entitled to hereunder, and nothing in the Plan shall be interpreted as a
guaranty that any benefits which may be established in connection with the Plan
or assets of the Company will be sufficient to pay any benefit hereunder.
Further, the adoption and maintenance of this Plan shall not be construed as
creating any contract of employment between the Company and the Participant. The
Plan shall not affect

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the right of the Company to deal with any Participants in employment respects,
including their hiring, discharge, compensation and conditions of employment.

        5.7 Rules and Procedures. The Company may from time to time establish
rules and procedures which it determines to be necessary for the proper
administration of the Plan and the benefits payable to an individual in the
event that individual is declared incompetent and a conservator or other person
legally charged with that individual's care is appointed. Except as otherwise
provided herein, when the Company determines that such individual is unable to
manage his or her financial affairs, the Company may pay such individual's
benefits to such conservator, person legally charged with such individual's
care, or institution then contributing toward or providing for the care and
maintenance of such individual. Any such payment shall constitute a complete
discharge of any liability of the Company and the Plan for such individual.

        5.8 Information. Each Participant shall keep the Company informed of his
or her current address and the current address of his or her Designated
Beneficiary. The Company shall not be obligated to search for any person. If
such person(s) is (are) not located within three (3) years after the date on
which payment of the Participant's benefits payable under this Plan may first be
made, payment may be made as though the Participant or his or her Designated
Beneficiary had died at the end of such three-year period.

        5.9 Loss. Notwithstanding any provision herein to the contrary, neither
the Company nor any individual acting as an employee or agent of the Company
shall be liable to any Participant, his or her Designated Beneficiary, or any
other person for any claim, loss, liability or expense incurred in connection
with the Plan, unless attributable to fraud or willful misconduct on the part of
the Company or any such employee or agent of the Company.

        5.10 Indemnification. The Company shall indemnify and hold harmless the
members of the Board of Directors, and any other employees to whom any
responsibility with respect to the Plan is allocated or delegated, from and
against any and all liabilities, costs and expenses, including attorneys' fees,
incurred by such persons as a result of any act, or omission to act, in
connection with the performance of their duties, responsibilities and
obligations under the Plan and under ERISA, other than such liabilities, costs
and expenses as may result from the bad faith, willful misconduct or criminal
acts of such persons or to the extent such indemnification is specifically
prohibited by ERISA. The Company shall have the obligation to conduct the
defense of such persons in any proceeding to which this Section applies. If any
Board member or any employee covered by this indemnification clause determines
that the defense provided by the Company is inadequate, that member or employee
shall be entitled to retain separate legal counsel for his or her defense and
the Company shall be obligated to pay for all reasonable legal fees and other
court costs incurred in the course of such defense unless a court of competent
jurisdiction finds such person has acted in bad faith or engaged in willful
misconduct or criminal acts.

        5.11 Applicable Law. All questions pertaining to the construction,
validity and effect of the Plan shall be determined in accordance with the laws
of the United States and the extent not preempted by such laws, by the laws of
the State of California.

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        5.12 Withholdings. All benefit payments under this Plan shall be reduced
by taxes and other required or authorized withholdings. The Company may also, in
its discretion, reduce any benefit payment payable hereunder to a Participant by
any amounts that the Participant owes the Company at the time of the payment
from the Plan.

                                   ARTICLE VI
                                CLAIMS PROCEDURE

        6.1 Claims Procedure. An initial claim for benefits under the Plan must
be made by the Participant or his or her Designated Beneficiary in accordance
with the terms of the Plan through which the benefits are provided. Not later
than 90 days after receipt of such a claim, the Claims Reviewer will render a
written decision on the claim to the claimant, unless special circumstances
require the extension of such 90-day period. If such extension is necessary, the
Claims Reviewer shall provide the Participant or his or her Designated
Beneficiary with written notification of such extension before the expiration of
the initial 90-day period. Such notice shall specify the reason or reasons for
such extension and the date by which the final decision can be expected. In no
event shall such extension exceed a period of 90 days from the end of the
initial 90-day period. In the event the Claims Reviewer denies the claim of a
Participant or his or her Designated Beneficiary in whole or in part, the Claims
Reviewer's written notification shall specify, in a manner calculated to be
understood by the claimant, the reason for the denial; a reference to the Plan
or other document or form that is the basis for the denial; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such information or material is necessary; and
an explanation of the applicable claims procedure. Should the claim be denied in
whole or in part and should the claimant be dissatisfied with the Claim's
Reviewer's disposition of the claimant's claim, the claimant may have a full and
fair review of the claim by the Company upon written request therefore submitted
by the claimant or the claimant's duly authorized representative and received by
the Company within 60 days after the claimant receives written notification that
the claimant's claim has been denied. In connection with such review, the
claimant or the claimant's duly authorized representative shall be entitled to
review pertinent documents and submit the claimant's views as to the issues, in
writing. The Company shall act to deny or accept the claim within 60 days after
receipt of the claimant's written request for review unless special
circumstances require the extension of such 60-day period. If such extension is
necessary, the Company shall provide the claimant with written notification of
such extension before the expiration of such initial 60-day period. In all
events, the Company shall act to deny or accept the claim within 120 days of the
receipt of the claimant's written request for review. The action of the Company
shall be in the form of a written notice to the claimant and its contents shall
include all of the requirements for action on the original claim. In no event
may a claimant commerce legal action for benefits the claimant believes are due
the claimant until the claimant has exhausted all of the remedies and procedures
afforded the claimant by this Article VII.

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        IN WITNESS WHEREOF, ITLA Capital Corporation has caused this Plan to be
executed on this 28th day of July, 2000.

                                   By: /s/ Jeffrey Lipscomb
                                       -----------------------------------------
                                       Jeffrey Lipscomb, Member of the Board of
                                       Directors
                                       Chairman of the Compensation Committee
                                       On Behalf of ITLA Capital Corporation and
                                       Its Subsidiaries

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<PAGE>   11

                            ITLA CAPITAL CORPORATION
                            SALARY CONTINUATION PLAN

                                    EXHIBIT A

<TABLE>
<CAPTION>
Designated Participant     Date of Designation          Salary Continuation Benefit
----------------------     -------------------     ----------------------------------------
<S>                        <C>                     <C>
  George Haligowski           March 31, 2000       75 percent of Mr. Haligowski's average
                                                   annual base salary for the three full
                                                   calendar years preceding the calendar
                                                   year in which he becomes eligible for
                                                   benefits under Article III of the Plan.
                                                   The monthly salary continuation benefit
                                                   shall be 1/12th of the annual amount
                                                   determined under the preceding sentence.
</TABLE>

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                                                                  EXHIBIT 10.9.3

                              BANKERS TRUST COMPANY
                               CUSTODIAN AGREEMENT
                                   US CUSTODY

        AGREEMENT dated as of DECEMBER 1, 2000 between BANKERS TRUST COMPANY
(the "Custodian") and REDWOOD TRUST, INC. (the "Customer").

        1. Employment of Custodian. The Customer hereby employs the Custodian as
custodian of all assets of the Customer which are delivered to and accepted by
the Custodian (the "Property") pursuant to the terms and conditions set forth
herein. For purposes of this Agreement, "delivery" of Property shall include the
acquisition of a security entitlement (as that term is defined in the New York
Uniform Commercial Code ("UCC)) with respect thereto. Without limitation, such
Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of the Customer ("Securities") and cash from whatever source
and in whatever currency ("Cash"), provided that the Custodian shall have the
right, in its sole discretion, to refuse to accept as Property any property that
the Custodian considers not to be appropriate or in proper form for deposit for
any reason. The Custodian shall not be responsible for any property of the
Customer held or received by the Customer or others and not delivered to and
accepted by the Custodian or any of its Subcustodians (as that term is defined
in Section 4 below) as hereinafter provided.

        2. Custody Account. The Custodian agrees to establish and maintain one
or more custody accounts on its books in the name of the Customer (the
"Account") for any and all Property consisting of Securities from time to time
received and accepted by the Custodian or any of its Subcustodians for the
account of the Customer. Any and all Property consisting of Cash from time to
time received and accepted by the Custodian or any of its Subcustodians for the
account of the Customer shall be credited to one or more demand deposit accounts
or custody cash accounts of the Customer (the "Cash Account") on the books of
the Custodian. The Customer acknowledges its responsibility as a principal for
all of its obligations to the Custodian arising under or in connection with this
Agreement, notwithstanding that it may be acting on behalf of other persons, and
warrants its authority to deposit in the Account or Cash Account, as the case
may be, any Property received therefor by the Custodian or its Subcustodian and
to give, and authorize others to give, instructions relative thereto pursuant to
the terms of this Agreement. The Customer further agrees that the Custodian
shall not be subject to, nor shall its rights and obligations under this
Agreement or with respect to the Account or the Cash Account, as the case may
be, be affected by, any agreement between the Customer and any other person.

        The Custodian shall hold, keep safe and protect as custodian for the
Account, on behalf of the Customer, all Property in the Account and the Cash
Account and to the extent such Property constitutes financial assets for
purposes of the New York UCC, shall maintain those financial assets as security
entitlements in favor of the Customer. Subject to the provisions of the next
paragraph relating to Securities issued outside of the United States and
collections of income in a currency other than United States dollars, all
transactions involving the Property shall be executed or settled solely in
accordance with Instructions (as

<PAGE>   2

that term is defined in Section 8), except that until the Custodian receives
Instructions to the contrary, the Custodian will:

        (a)     collect all interest and dividends and all other income and
                payments, whether paid in cash or in kind, on the Property, as
                the same become payable and credit the same to the Cash Account.

        (b)     present for payment all Securities held in the Account which are
                called, redeemed or retired or otherwise become payable and all
                coupons and other income items which call for payment upon
                presentation to the extent that the Custodian is actually aware
                of such opportunities and credit the cash received to the Cash
                Account;

        (c)     (i) exchange Securities where the exchange is purely ministerial
                (including, without limitation, the exchange of temporary
                securities for those in definitive form and the exchange of
                warrants, or other documents of entitlement to securities, for
                the Securities themselves); and (ii) when notification of a
                tender or exchange offer (other than ministerial exchanges
                described in (i) above) is received for the Account, endeavor to
                receive Instructions, provided that if such Instructions are not
                received in time for the Custodian to take timely action, no
                action shall be taken with respect thereto;

        (d)     whenever notification of a rights entitlement or a fractional
                interest resulting from a rights issue, stock dividend or stock
                split is received for the Account and such rights entitlement or
                fractional interest bears an expiration date, if after
                endeavoring to obtain Instructions such Instructions are not
                received in time for the Custodian to take timely action, sell
                in the discretion of the Custodian (which sale the Customer
                hereby authorizes the Custodian to make) such rights entitlement
                or fractional interest and credit the Cash Account with the net
                proceeds of such sale:

        (e)     execute in the Customer's name for the Account, whenever the
                Custodian deems it appropriate, such ownership and other
                certificates as may be required to obtain the payment of income
                from the Property; and

        (f)     appoint brokers and agents for any of the ministerial
                transactions involving the Securities described in (a) - (e),
                including, without limitation, affiliates of the Custodian or
                any Subcustodian.

        Notwithstanding the foregoing and any Instructions received in
connection therewith, with respect to Securities issued outside of the United
States, the Custodian shall not assume any responsibility with respect to coupon
payments, redemptions, exchanges, or similar matters affecting such Securities,
and its duties hereunder shall be limited to the safekeeping of such Securities
only. Collections of income in foreign currency are, to the extent possible, to
be converted into United States dollars as soon as practicable, and in effecting
such conversions the Custodian may use such methods or agencies as it may see
fit, including the facilities of its own foreign division at customary rates.

        The Custodian shall deliver, subject to Section 7 below, any and all
Property in the Account in accordance with Instructions and, in connection
therewith, the Customer will accept delivery of Securities of the same class and
amount in place of those contained in the Account.

                                                                            Pg 2
<PAGE>   3

        3. Records, Ownership of Property and Statements. The ownership of the
Property, whether maintained directly by the Custodian or indirectly through a
Subcustodian or a Securities System (as that term is defined in Section 4) in
which the Custodian participates, shall be clearly recorded on the Custodian's
books as belonging to the Account or the Cash Account and not for the
Custodian's own interest. The Custodian shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other transactions for
the Account and the Cash Account. All accounts, books and records of the
Custodian relating thereto shall be open, upon reasonable notice from the
Customer to the Custodian, to inspection and audit at all reasonable times
during normal business hours by any person designated by the Customer.

        Subject to the election of the Customer as hereinafter provided, the
Custodian will supply to the Customer from time to time, as mutually agreed
upon, a statement in respect to any Property in the Account or the Cash Account
maintained by the Custodian or by a Subcustodian. In the absence of the filing
in writing with the Custodian by the Customer of exceptions or objections to any
such statement within sixty (60) days of the mailing thereof, the Customer shall
be deemed to have approved such statement; and in such case or upon written
approval of the Customer of any such statement, such statement shall be presumed
to be correct for all purposes with respect to all information set forth
therein. In addition, the Customer understands that it has the option to elect
to participate in the Custodian's electronic on-line service and communication
system which can provide the Customer, on a daily basis, with the ability to
view on-line or to print on hard copy (the "Electronic On-Line System"): (i) all
transactions involving the delivery in and out of the Account on a free or
payment basis; (ii) payments of principal and interest or dividends; (iii)
pending transactions and fails; and (iv) schedules of Securities in the Account
plus the market values thereof. To the extent that the Electronic On-Line System
shall include market values of Securities in the Account, the Customer hereby
acknowledges that the Custodian now obtains and will in the future obtain
information on such values from outside sources which the Custodian deems to be
reliable, and confirms that the Custodian does not verify nor represent or
warrant either the accuracy or the completeness of any such information
furnished or transacted by or through the Electronic On-Line System, and the
Custodian shall be without liability in selecting and using such sources and
furnishing any information derived therefrom.

        4. Subcustodians, Securities Systems and Foreign Subcustodians.

        (a) The Customer authorizes and instructs the Custodian to maintain the
Property in the Account directly in one of its U.S. branches or indirectly
through custody accounts which have been established by the Custodian with the
following other securities intermediaries:(a) another U.S. bank or trust company
or branch thereof located in the U.S. (individually, a "Subcustodian"), or (b) a
U.S. securities depository or clearing agency or system in which the Custodian
or a Subcustodian participates (individually, a "Securities System"). The
Custodian shall select in its sole discretion the entity or entities in the
custody of which any of the Securities may be so maintained or with which any
Cash may be so deposited. The Custodian may, at any time in its discretion, upon
written notification to the Customer, terminate the employment of any
Subcustodian or Securities System.

        (b) In the event that the Customer invests in a Security for which the
principal trading market is a country other than the United States or which is
to be acquired or presented for payment in a country other than the United
States, the Custodian will use reasonable effort to appoint a subcustodian in
the appropriate jurisdiction ("Foreign Subcustodian"). The Foreign Subcustodian
may be a banking institution, securities depository or securities clearing
system organized under the laws of a country other than the United States.

                                                                            Pg 3
<PAGE>   4

        5. Holding of Securities, Nominees, etc. Securities in the Account which
are maintained by the Custodian or any Subcustodian may be held directly by such
entity in the name of the Customer or in bearer form or maintained, in the
Custodian's or Subcustodian's own name, in the name of the Custodian's or
Subcustodian's nominee. Securities which are maintained through a Subcustodian
or are eligible for deposit in a Securities System as provided above may be
maintained with the Subcustodian or the Securities System in an account for the
Custodian's or Subcustodian's customers. The Custodian or Subcustodian, as the
case may be, may combine certificates representing Securities held in the
Account with certificates of the same issue held by it as fiduciary or as a
custodian. In the event that any Securities in the name of the Custodian or its
nominee or held by one of its Subcustodians and registered in the name of such
Subcustodian or its nominee are called for partial redemption by the issuer of
such Security, the Custodian may, subject to the rules or regulations pertaining
to allocation of any securities depository in which such Securities have been
deposited, allot, or cause to be allotted, the called portion to the respective
beneficial holders of such class of security in any manner the Custodian deems
to be fair and equitable. Securities maintained with a Securities System shall
be maintained subject to the rules of that Securities System governing the
rights and obligations among the Securities System and its participants.

        6. Proxies, etc. If the Custodian shall receive any proxies, notices,
reports or other communications relative to any of the Securities in the
Account, the Custodian shall as soon as practicable transmit to the Customer, or
notify the Customer of the receipt of, such proxies, notices, reports or other
communications. Neither the Custodian nor its nominees or agents shall vote upon
or in respect of any of the Securities in the Account, execute any form of proxy
to vote thereon, or give any consent or take any action (except as provided in
Section 2) with respect thereto except upon the receipt of Instructions relative
thereto.

        7. Settlement Procedures.

        (a) The proceeds from the sale or exchange of Securities will be
credited and the cost of such Securities purchased or acquired will be debited
to the Cash Account in accordance with the schedule specified in the Custodian's
Policies and Standards Manual in effect from time to time. Upon the execution
and delivery of this Agreement, the Customer acknowledges receipt of the
Custodian's Policies and Standards Manual in effect on the date hereof.
Notwithstanding the preceding sentence, settlement and payment for Securities
received for the Account and delivery of Securities maintained for the Account
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such Securities from such purchaser or dealer. The
Custodian shall not be liable for any loss which results from effecting
transactions in accordance with the customary or established securities trading
or securities processing practices and procedures in the applicable jurisdiction
or market.

        (b) The Custodian shall not be required to comply with any Instructions
to settle the purchase of any securities for the Account, unless there are
sufficient immediately available funds in the Cash Account, provided that, if,
after all expenses, debits and withdrawals ("Debits") applicable to the Cash
Account have been made and if after all Conditional Credits, as defined below,
applicable to the Cash Account have been made final entries as set forth in (d)
below, the amount of immediately available funds in such Cash Account is at
least equal to the aggregate purchase price of all securities for which the

                                                                            Pg 4
<PAGE>   5

Custodian has received Instructions to settle on that date ("Settlement Date"),
the Custodian, upon settlement, shall credit the Securities to the Account by
making a final entry on its books and records.

        (c) Notwithstanding the foregoing, if after all Debits applicable to the
Cash Account have been made, there remains outstanding any Conditional Credit
applicable to the Cash Account or the amount of immediately available funds in
such Cash Account are less than the aggregate purchase price of all securities
for which the Custodian has received Instructions to settle on the Settlement
Date, the Custodian, upon settlement, may provisionally credit the Securities to
the Account by making a conditional entry on its books and records ("Conditional
Credit"), pending receipt of sufficient immediately available funds in the Cash
Account.

        (d) If, within a reasonable time after the posting of a Conditional
Credit and after all Debits applicable to the Cash Account have been made,
immediately available funds at least equal to the aggregate purchase price of
all securities subject to a Conditional Credit on a Settlement Date are
deposited into the Cash Account, the Custodian shall make the Conditional Credit
a final entry on its books and records. In such case, the Customer shall be
liable to the Custodian only for late charges at a rate mutually agreed upon in
writing by the Custodian and the Customer.

        (e) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not on deposit in the Cash Account, or (ii) any Proceeding
shall occur, the Custodian may sell such of the Securities subject to the
Conditional Credit as it selects in its sole discretion and shall apply the net
proceeds of such sale to cover such Debit, including related late charges, and
any remaining proceeds shall be credited to the Cash Account. If such proceeds
are insufficient to satisfy such debt in full, the Customer shall continue to be
liable to the Custodian for any shortfall. The Custodian shall make the
Conditional Credit a final entry on its books as to the Securities not required
to be sold to satisfy such Debit. Pending payment in full by the Customer of the
purchase price for Securities subject to a Conditional Credit, and the
Custodian's making a Conditional Credit a final entry on its books, and unless
consented to by the Custodian, the Customer shall have no right to give further
instructions in respect of Securities subject to a Conditional Credit. The
Custodian shall have the sole discretion to determine which Securities shall be
deemed to have been paid for by the Customer out of funds available in the
Account. Any such Conditional Credit may be reversed (and any corresponding
Debit shall be canceled) by the Custodian unless and until the Custodian makes a
final entry on its books crediting such Securities to the Account. The term
"Proceeding" shall mean any insolvency, bankruptcy, receivership, reorganization
or similar proceeding relating to the Customer, whether voluntary or
involuntary.

        (f) The Customer agrees that it will not use the Cash Account to
facilitate the purchase of securities without sufficient funds in the Cash
Account (which funds shall not include the proceeds of the sale of the purchased
securities).

        8. Instructions. The term "Instructions" means instructions from the
Customer in respect of any of the Custodian's duties hereunder which have been
received by the Custodian at its address set forth in Section 13 below (i) in
writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as the Customer
shall have from time to time authorized to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with the Custodian; or (ii) which have been transmitted
electronically through the Electronic On-Line System; or (iii) a telephonic or
oral communication by one or more persons as the Customer shall have from time
to time authorized to give

                                                                            Pg 5
<PAGE>   6

the particular class of Instructions in question and whose name has been filed
with the Custodian; or (iv) upon receipt of such other form of instructions as
the Customer may from time to time authorize in writing and which the Custodian
agrees to accept. Instructions in the form of oral communications shall be
confirmed by the Customer by tested telex or writing in the manner set forth in
clause (i) above, but the lack of such confirmation shall in no way affect any
action taken by the Custodian in reliance upon such oral instructions prior to
the Custodian's receipt of such confirmation.

        The Custodian shall have the right to assume in the absence of notice to
the contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.

        9. Standard of Care. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Securities in the Account and in carrying out its obligations
under this Agreement. So long as and to the extent that it has exercised
reasonable care, the Custodian shall not be responsible for the title, validity
or genuineness of any Property or other property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon, and may conclusively rely on, without liability for any
loss resulting therefrom, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed or furnished
by the proper party or parties, including, without limitation, Instructions, and
shall be indemnified by the Customer for any losses, damages, costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by
the Custodian and arising out of action taken or omitted with reasonable care by
the Custodian hereunder or under any Instructions. The Custodian shall be liable
to the Customer for any act or omission to act of any Subcustodian to the same
extent as if the Custodian committed such act itself. With respect to a
Securities System or a Foreign Subcustodian, the Custodian shall only be
responsible or liable for losses arising from employment of such Securities
System or Foreign Subcustodian caused by the Custodian's own failure to exercise
reasonable care. In the event of any loss to the Customer by reason of the
failure of the Custodian or its Subcustodian to utilize reasonable care, the
Custodian shall be liable to the Customer to the extent of the Customer's actual
damages at the time such loss was discovered without reference to any special
conditions or circumstances. In no event shall the Custodian be liable for any
consequential or special damages. The Custodian shall be entitled to rely, and
may act, on advice of counsel (who may be counsel for the Customer) on all
matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.

        In the event the Customer subscribes to the Electronic On-Line System,
the Customer shall be fully responsible for the security of the Customer's
connecting terminal, access thereto and the proper and authorized use thereof
and the initiation and application of continuing effective safeguards and the
Customer agrees to defend, indemnify the Custodian and hold the Custodian
harmless from and against any and all liabilities, losses, damages, costs,
including attorneys' fees and every other expense of every nature incurred by
the Custodian as a result of any improper or unauthorized use of such terminal
by the Customer or by others on the Customer's premises.

                                                                            Pg 6
<PAGE>   7

        All collections of funds or other property paid or distributed in
respect of Securities in the Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by its Subcustodian of any payment, redemption or other
transaction regarding Securities in the Account in respect of which the
Custodian has agreed to take action as provided in Section 2 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, acts of
governmental authorities (whether de jure or de facto), including, without
limitation, nationalization, expropriation, and the imposition of currency
restrictions; acts of war, terrorism, insurrection or revolution; strikes or
work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of the Custodian; hurricane,
cyclone, earthquake, volcanic eruption, nuclear fusion, fission or radioactivity
or other acts of God.

        The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.

        The provisions of this Section shall survive termination of this
Agreement.

        10. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Custodian shall not be liable to the Customer and the Customer
agrees to indemnify the Custodian and its nominees, for any loss, damage or
expense suffered or incurred by the Custodian or its nominees arising out of any
violation of any investment restriction or other restriction or limitation
applicable to the Customer pursuant to any contract or any law or regulation.
The provisions of this Section shall survive termination of this Agreement.

        11. Fees and Expenses. The Customer agrees to pay to the Custodian such
compensation for its services pursuant to this Agreement, including if elected
by the Customer the Electronic On-Line System, as may be mutually agreed upon in
writing from time to time and the Custodian's out-of-pocket or incidental
expenses in connection with the performance of this Agreement, including (but
without limitation) legal fees. The initial fee schedule is set forth in Exhibit
A attached hereto. Such fees will not be abated by, nor shall the Custodian be
required to account for, any profits or commissions received by the Custodian in
connection with its provision of custody services under this Agreement. The
Customer hereby agrees to hold the Custodian harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to any Property in the
Account and the Cash Account and also agrees to hold the Custodian, its
Subcustodians, and their respective nominees harmless from any liability as a
record holder of Property in the Account and the Cash Account. The Custodian is
authorized to charge the Cash Account and any other deposit account of the
Customer with the Custodian for such items. The provisions of this Section shall
survive the termination of this Agreement.

        12. Amendment, Modifications, etc. No provisions of this Agreement may
be amended, modified or waived except in writing signed by the parties hereto.
No waiver of any provision hereto shall be deemed a continuing waiver unless it
is so designated. No failure or delay on the part of either party in exercising
any power or right under this Agreement operates as a waiver, nor does any
single or partial exercise of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right.

                                                                            Pg 7
<PAGE>   8

        13. Termination. This Agreement may be terminated by the Customer or the
Custodian by sixty (60) days' written notice to the other; provided that notice
by the Customer shall specify the names of the persons to whom the Custodian
shall deliver the Securities in the Account and to whom the Cash in the Cash
Account shall be paid. If notice of termination is given by the Custodian, the
Customer shall, within sixty (60) days following the giving of such notice,
deliver to the Custodian a written notice specifying the names of the persons to
whom the Custodian shall deliver the Securities in the Account and to whom the
Cash in the Cash Account shall be paid. In either case, the Custodian will
deliver such Securities and pay such Cash to the persons so specified, after
payment of any amounts which the Custodian determines to be owed to it under
Sections 2 and 11. In addition, the Custodian may in its discretion withhold
from such delivery such Cash and Securities as may be necessary to settle
transactions pending at the time of such delivery. If within sixty (60) days
following the giving of a notice of termination by the Custodian, the Custodian
does not receive from the Customer a written notice specifying the names of the
persons to whom the Custodian shall deliver the Securities in the Account and to
whom the Cash in the Cash Account shall be paid, the Custodian, at its election,
may deliver such Securities and pay such Cash to a bank or trust company doing
business in the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or may continue to hold such Securities and Cash
until a written notice as aforesaid is delivered to the Custodian, provided that
the Custodian's obligations shall be limited to safekeeping.

        14. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.

        15. Security for Payment. To secure payment of all fees and expenses
payable to Custodian hereunder, including but not limited to amounts payable
pursuant to the indemnification provisions, the Customer hereby grants to
Custodian a continuing security interest in and right of setoff against the
Account, the Cash Account and all Property held therein from time to time in the
full amount of such obligations. Should the Customer fail to pay promptly any
amounts owed hereunder, Custodian shall be entitled to use available Cash in the
Cash Account, and to dispose of Securities in the Account as is necessary. In
any such case and without limiting the foregoing, the Custodian shall be
entitled to take such other action(s) or exercise such other options, powers and
rights as the Custodian now or hereafter has as a secured creditor under the New
York UCC or any other applicable law.

        16. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.

        17. Publicity. Customer shall furnish to Custodian at its office
referred to in Section 14 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to Custodian. Customer shall not distribute or permit the
distribution of such materials if Custodian reasonably objects in writing within
ten (10) business days (or such other time as may be mutually agreed) after
receipt thereof. The provisions of this Section shall survive the termination of
this Agreement.

                                                                            Pg 8
<PAGE>   9

        18. Submission to Jurisdiction. To the extent, if any, to which the
Customer or any of its respective properties may be deemed to have or hereafter
to acquire immunity, on the ground of sovereignty or otherwise, from any
judicial process or proceeding to enforce this Agreement or to collect amounts
due hereunder (including, without limitation, attachment proceedings prior to
judgment or in aid of execution) in any jurisdiction, the Customer hereby waives
such immunity and agrees not to claim the same. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of New York, State of New York, United States of America,
and the Customer irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that such suit, action or proceeding was brought in an
inconvenient forum. The Customer further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by certified air mail, postage prepaid, to the
Customer at its address on the signature page here of or in any other manner
permitted by law, such service to become effective upon the earlier of (i) the
date fifteen (15) days after such mailing or (ii) any earlier date permitted by
applicable law. Both parties agree to waive all rights to a jury trial.

        19. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Customer,
or any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation. The
provisions of this Section shall survive the termination of this Agreement.

        20. Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.

        21. Entire Agreement. This Agreement together with any exhibits attached
hereto, contains the entire agreement between the parties relating to the
subject matter hereof and supersedes any oral statements and prior writings with
respect thereto.

        22. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.

        23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.

        24. Signature Authorization. The Customer Signatories appearing below
are duly authorized officers or agents of the Customer. The Customer will
deliver to the Custodian a duly executed Secretary's Certificate in the form of
Exhibit B hereto, or such other evidence of such authorization as the Custodian
may reasonably require, whether by way of a certified resolution or otherwise.

                                                                            Pg 9
<PAGE>   10

        IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized signatories to execute this Agreement as of the date first written
above.

                                       REDWOOD TRUST, INC.

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       BANKERS TRUST COMPANY

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                                                           Pg 10

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