Document:

<PAGE>

                                                                  EXHIBIT 10.8.1

                                                               EXECUTION VERSION

                               AMENDMENT NO. 1 TO
                              LOAN CERTIFICATE AND
                               SERVICING AGREEMENT

         THIS AMENDMENT NO. 1 TO LOAN CERTIFICATE AND SERVICING AGREEMENT, dated
as of April 3, 2003 (this "Amendment"), is entered into by and among

         (1)      CAPITALSOURCE ACQUISITION FUNDING LLC, a Delaware limited
liability company, as the seller (together with its successors and assigns in
such capacity, the "Seller");

         (2)      CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company ("CapitalSource Finance"), as the originator (together with its
successors and assigns in such capacity, the "Originator"), and as the servicer
(together with its successors and assigns in such capacity, the "Servicer");

         (3)      VARIABLE FUNDING CAPITAL CORPORATION, a Delaware corporation
(together with its successors and assigns, "VFCC"), as the purchaser (together
with its successors and assigns in such capacity, the "Purchaser");

         (4)      WACHOVIA SECURITIES, INC., a Delaware corporation (together
with its successors and assigns, "WSI"), as the agent for the Purchaser
(together with its successors and assigns in such capacity, the "Purchaser
Agent") and as the agent for the Purchaser Agent (together with its successors
and assigns in such capacity, the "Administrative Agent"); and

         (5)      WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION ("Wells
Fargo"), not in its individual capacity but as the backup servicer (together
with its successors and assigns in such capacity, the "Backup Servicer"), and
not in its individual capacity but as the collateral custodian (together with
its successors and assigns in such capacity, the "Collateral Custodian").

         Capitalized terms used but not defined herein are used as defined in
the Agreement (defined below).

         WHEREAS, the parties hereto entered into that certain Loan Certificate
and Servicing Agreement, dated as of February 28, 2003 (as amended,
supplemented, modified or restated from time to time, the "Agreement");

         WHEREAS, the parties hereto desire to amend the Agreement as provided
herein;

         NOW THEREFORE, in consideration of the premises and the other mutual
covenants contained herein, the parties hereto agree as follows:

         SECTION 1.        AMENDMENTS.

         (a)      The definition of "Facility Amount" in Section 1.1 of the
Agreement is hereby amended and restated in its entirety as follows:

<PAGE>

         Facility Amount: $125,000,000, as such amount may vary from time to
         time upon the written agreement of the parties hereto; provided, that,
         such amount may not at any time exceed the aggregate Commitments then
         in effect; provided, further, that, on or after the Termination Date,
         the Facility Amount shall mean the Advances Outstanding.

         (b)      Section 2.1(a) of the Agreement is hereby amended and restated
in its entirety as follows:

                  "(a)     On the terms and conditions hereinafter set forth, on
         the Closing Date, the Seller shall deliver to the Purchaser Agent, at
         its address set forth on the signature pages of this Agreement, a duly
         executed variable funding certificate (the "Variable Funding
         Certificate" or "VFC"), in substantially the form of Exhibit B, dated
         as of the date of this Agreement, in an aggregate face amount equal to
         the Facility Amount, and otherwise duly completed. The Variable Funding
         Certificate shall evidence an undivided ownership interest in the
         Assets purchased by the Purchaser in an amount equal, at any time, to
         the percentage equivalent of a fraction (i) the numerator of which is
         the Advances outstanding under the VFC on such day, and (ii) the
         denominator of which is the total aggregate Advances Outstanding on
         such day. Interest shall accrue, and the VFC shall be payable, as
         described herein. The VFC purchased by VFCC shall be in the name of
         "Wachovia Securities, Inc., as the Purchaser Agent" and shall be in the
         face amount equal to $125,000,000."

         (c)      Exhibit B to the Agreement is hereby amended and replaced in
its entirety by Exhibit B attached to this Amendment.

         SECTION 2.        AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.

         Except as specifically amended hereby, the Agreement shall remain in
full force and effect. All references to the Agreement shall be deemed to mean
the Agreement as modified hereby. This Amendment shall not constitute a novation
of the Agreement, but shall constitute an amendment thereof. The parties hereto
agree to be bound by the terms and conditions of the Agreement as amended by
this Amendment, as though such terms and conditions were set forth herein.

         SECTION 3.        CONDITIONS PRECEDENT.

         This Amendment shall not be effective until having been duly executed
by, and delivered to, the parties hereto.

         SECTION 4.        MISCELLANEOUS.

         (a)      This Amendment may be executed in any number of counterparts,
and by the different parties hereto on the same or separate counterparts, each
of which shall be deemed to be an original instrument but all of which together
shall constitute one and the same agreement.

         (b)      The descriptive headings of the various sections of this
Amendment are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.

                                        2

<PAGE>

         (c)      This Amendment may not be amended or otherwise modified except
as provided in the Agreement.

         (d)      The failure or unenforceability of any provision hereof shall
not affect the other provisions of this Amendment.

         (e)      Whenever the context and construction so require, all words
used in the singular number herein shall be deemed to have been used in the
plural, and vice versa, and the masculine gender shall include the feminine and
neuter and the neuter shall include the masculine and feminine.

         (f)      This Amendment represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties. There are no unwritten oral
agreements between the parties.

         (g)      THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE
STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE
OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.

         (h)      TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       3

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

THE SELLER:                      CAPITALSOURCE ACQUISITION FUNDING
                                 LLC

                                 By: /s/ Steven A. Museles
                                    _____________________________________
                                 Name: Steven A. Museles
                                      ___________________________________
                                 Title: Senior Vice President
                                       __________________________________

                                 CapitalSource Acquisition Funding LLC
                                 4445 Willard Avenue, 12th Floor
                                 Chevy Chase, Maryland 20815
                                 Attention:        Controller
                                 Facsimile No.:    (301) 841-2375
                                 Confirmation No.: (301) 841-2731

THE ORIGINATOR                   CAPITALSOURCE FINANCE LLC
AND THE SERVICER:

                                 By: /s/ Steven A. Museles
                                    _____________________________________
                                 Name: Steven A. Museles
                                      ___________________________________
                                 Title: Senior Vice President
                                       __________________________________

                                 CapitalSource Finance LLC
                                 4445 Willard Avenue, 12th Floor
                                 Chevy Chase, Maryland 20815
                                 Attention:        Controller
                                 Facsimile No.:    (301) 841-2375
                                 Confirmation No.: (301) 841-2731

                  [SIGNATURES CONTINUED ON THE FOLLOWING PAGE]

                                      S-1

<PAGE>

VFCC:                            VARIABLE FUNDING CAPITAL
                                 CORPORATION
Commitment:

$125,000,000                     By: Wachovia Securities, Inc., as
                                     attorney-in-fact
                                 By:   /s/ Douglas R. Wilson, Sr.
                                    _____________________________________
                                 Name: Douglas R. Wilson, Sr.
                                      ___________________________________
                                 Title: Vice President
                                       __________________________________

                                 Variable Funding Capital Corporation
                                 c/o Wachovia Securities, Inc.
                                 One Wachovia Center, Mail Code: NC0610
                                 Charlotte, North Carolina 28288
                                 Attention:        Conduit Administration
                                 Facsimile No.:    (704) 383-6036
                                 Confirmation No.: (704) 383-9343

With respect to notices required pursuant to Section 13.2 of the Agreement, a
copy of notices sent to VFCC shall be sent to:

                                 Lord Securities Corp.
                                 2 Wall Street, 19th Floor
                                 New York, New York 10005
                                 Attention:        Vice President
                                 Facsimile No.:    (212) 346-9012
                                 Confirmation No.: (212) 346-9008

THE ADMINISTRATIVE AGENT AND     WACHOVIA SECURITIES, INC.
THE PURCHASER AGENT:

                                 By:  /s/ Paul A. Burkhart
                                    _____________________________________
                                 Name: Paul A. Burkhart
                                      ___________________________________
                                 Title: Vice President
                                       __________________________________

                                 Wachovia Securities, Inc.
                                 One Wachovia Center, Mail Code: NC0610
                                 Charlotte, North Carolina 28288
                                 Attention:        Conduit Administration
                                 Facsimile No.:    (704) 383-6036
                                 Confirmation No.: (704) 383-9343

                  [SIGNATURES CONTINUED ON THE FOLLOWING PAGE]

                                       S-2

<PAGE>

THE BACKUP SERVICER:             WELLS FARGO BANK MINNESOTA,
                                 NATIONAL ASSOCIATION, not in its
                                 individual capacity but solely as Backup
                                 Servicer

                                 By: /s/ Jeanine C. Casey
                                    -------------------------------------
                                 Name: Jeanine C. Casey
                                      -----------------------------------
                                 Title: Corporate Trust Officer
                                       ----------------------------------

                                 Wells Fargo Bank Minnesota, National
                                 Association
                                 Sixth Street and Marquette Avenue
                                 MAC N9311-161
                                 Minneapolis, Minnesota 55479
                                 Attention:        Corporate Trust Services
                                                   Asset-Backed Administration
                                 Facsimile No.:    (612) 667-3539
                                 Confirmation No.: (612) 667-8058

THE COLLATERAL CUSTODIAN:        WELLS FARGO BANK MINNESOTA,
                                 NATIONAL ASSOCIATION, not in its
                                 individual capacity but solely as
                                 Collateral Custodian

                                 By: /s/ Jeanine C. Casey
                                    -------------------------------------
                                 Name: Jeanine C. Casey
                                      -----------------------------------
                                 Title: Corporate Trust Officer
                                       ----------------------------------

                                 Wells Fargo Bank Minnesota, National
                                 Association
                                 Sixth Street and Marquette Avenue
                                 MAC N9311-161
                                 Minneapolis, Minnesota 55479
                                 Attention:        Corporate Trust Services
                                                   Asset-Backed Administration
                                 Facsimile No.:    (612) 667-3539
                                 Confirmation No.: (612) 667-8058

                                       S-3

<PAGE>

EXHIBIT B
To Amendment No. 1 to
Loan Certificate and
Servicing Agreement

                      FORM OF VARIABLE FUNDING CERTIFICATE

$125,000,000                                                       April 3, 2003

         THIS VARIABLE FUNDING CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). NEITHER THIS VARIABLE FUNDING
CERTIFICATE NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
WITH THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.

         THIS VARIABLE FUNDING CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE LOAN CERTIFICATE AND SERVICING AGREEMENT REFERRED TO HEREIN.

         FOR VALUE RECEIVED, CAPITALSOURCE ACQUISITION FUNDING LLC, a Delaware
limited liability company (the "Seller"), promises to pay to Wachovia
Securities, Inc. ("WSI"), as the purchaser agent (the "Purchaser Agent"), or its
or Variable Funding Capital Corporation's ("VFCC") assigns, the principal sum of
ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000), or, if less, the unpaid
principal amount of the aggregate advances ("Advances") made by VFCC to the
Seller pursuant to the Loan Certificate and Servicing Agreement (as defined
below), as set forth on the attached Schedule, on the dates specified in the
Loan Certificate and Servicing Agreement, and to pay interest on the unpaid
principal amount of each Advance on each day that such unpaid principal amount
is outstanding, at the Interest Rate related to such Advance as provided in the
Loan Certificate and Servicing Agreement, on each Payment Date and each other
date specified in the Loan Certificate and Servicing Agreement.

         This Variable Funding Certificate (the "Certificate") is issued
pursuant to the Loan Certificate and Servicing Agreement, dated as of February
28, 2003, by and among the Seller, as the seller, CapitalSource Finance LLC, as
the originator and as the servicer, VFCC, as the purchaser, WSI, as the
administrative agent, the purchaser agent, and Wells Fargo Bank Minnesota,
National Association, as the backup servicer and as the collateral custodian.
Capitalized terms used but not defined in this Certificate are used with the
meanings ascribed to them in the Loan Certificate and Servicing Agreement, as
amended by Amendment No. 1 to Loan Certificate and Servicing Agreement, dated as
of the date hereof (collectively, the "Loan Certificate and Servicing
Agreement").

         Notwithstanding any other provisions contained in this Certificate, if
at any time the rate of interest payable by the Seller under this Certificate,
when combined with any and all other charges provided for in this Certificate,
in the Loan Certificate and Servicing Agreement or in

                                       B-1

<PAGE>

any other document (to the extent such other charges would constitute interest
for the purpose of any applicable law limiting interest that may be charged on
this Certificate), exceeds the highest rate of interest permissible under
applicable law (the "Maximum Lawful Rate"), then so long as the Maximum Lawful
Rate would be exceeded the rate of interest under this Certificate shall be
equal to the Maximum Lawful Rate. If at any time thereafter the rate of interest
payable under this Certificate is less than the Maximum Lawful Rate, the Seller
shall continue to pay interest under this Certificate at the Maximum Lawful Rate
until such time as the total interest paid by the Seller is equal to the total
interest that would have been paid had applicable law not limited the interest
rate payable under this Certificate. In no event shall the total interest
received by VFCC under this Certificate exceed the amount which VFCC could
lawfully have received had the interest due under this Certificate been
calculated since the date of this Certificate at the Maximum Lawful Rate.

         Payments of the principal of, and interest on, Advances represented by
this Certificate shall be made by or on behalf of the Seller to the holder
hereof by wire transfer of immediately available funds in the manner and at the
address specified for such purpose as provided in the Loan Certificate and
Servicing Agreement, or in such manner or at such other address as the holder of
this Certificate shall have specified in writing to the Seller for such purpose,
without the presentation or surrender of this Certificate or the making of any
notation on this Certificate.

         If any payment under this Certificate falls due on a day that is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day and interest shall be payable on any principal so extended at the
applicable Interest Rate.

         If all or a portion of (i) the principal amount hereof or (ii) any
interest payable thereon or (iii) any other amounts payable hereunder shall not
be paid when due (whether at maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum that is equal to the Base
Rate plus 2%, in each case from the date of such non-payment to (but excluding)
the date such amount is paid in full.

         Portions or all of the principal amount of the Certificate shall become
due and payable at the time or times set forth in the Loan Certificate and
Servicing Agreement. Any portion or all of the principal amount of this
Certificate may be prepaid, together with interest thereon (and, as set forth in
the Loan Certificate and Servicing Agreement, certain costs and expenses of
VFCC) at the time and in the manner set forth in, but subject to the provisions
of, the Loan Certificate and Servicing Agreement.

         Except as provided in the Loan Certificate and Servicing Agreement, the
Seller expressly waives presentment, demand, diligence, protest and all notices
of any kind whatsoever with respect to this Certificate.

         All amounts evidenced by this Certificate, VFCC's Advances and all
payments and prepayments of the principal hereof and the respective dates and
maturity dates thereof shall be endorsed by the Purchaser Agent, on the schedule
attached hereto and made a part hereof or on a continuation thereof, which shall
be attached hereto and made a part hereof; provided, however, that the failure
of the Purchaser Agent to make such a notation shall not in any way limit or

                                       B-2

<PAGE>

otherwise affect the obligations of the Seller under this Certificate as
provided in the Loan Certificate and Servicing Agreement.

         The holder hereof may sell, assign, transfer, negotiate, grant
participations in or otherwise dispose of all or any portion of any Advances
made by VFCC and represented by this Certificate and the indebtedness evidenced
by this Certificate.

         This Certificate is secured by the security interests granted pursuant
to Section 9.1 of the Loan Certificate and Servicing Agreement. The holder of
this Certificate is entitled to the benefits of the Loan Certificate and
Servicing Agreement and may enforce the agreements of the Seller contained in
the Loan Certificate and Servicing Agreement and exercise the remedies provided
for by, or otherwise available in respect of, the Loan Certificate and Servicing
Agreement, all in accordance with, and subject to the restrictions contained in,
the terms of the Loan Certificate and Servicing Agreement. If a Termination
Event shall occur, the unpaid balance of the principal of all Advances, together
with accrued interest thereon, shall be declared, and become, due and payable in
the manner and with the effect provided in the Loan Certificate and Servicing
Agreement.

         The Seller, the Originator, the Servicer, the Purchaser, the Collateral
Custodian and the Backup Servicer each intend, for federal, state and local
income and franchise tax purposes only, that the Certificate be evidence of
indebtedness of the Seller secured by the Assets. VFCC, as a Purchaser under the
Loan Certificate and Servicing Agreement, by the acceptance hereof, agrees to
treat the Certificate for federal, state and local income and franchise tax
purposes as indebtedness of the Seller.

         This Certificate is the "Variable Funding Certificate" referred to in
Section 2.1 of the Loan Certificate and Servicing Agreement and represents a
fractional undivided ownership interest in the Assets to the extent provided in
the Loan Certificate and Servicing Agreement. This Certificate shall be
construed in accordance with and governed by the laws of the State of New York.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       B-3

<PAGE>

         IN WITNESS WHEREOF, the undersigned has executed this Certificate as on
the date first written above.

                                              CAPITALSOURCE ACQUISITION FUNDING
                                              LLC

                                              By:_______________________________
                                              Name:_____________________________
                                              Title:____________________________

                                       B-4

<PAGE>

Schedule attached to Variable Funding Certificate dated April 3, 2003 of
CapitalSource Acquisition Funding LLC, payable to the order of Wachovia
Securities, Inc., as agent for Variable Funding Capital Corporation

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                                      B-5<PAGE>

                                                                   EXHIBIT 10.10

[THE BOND MARKET ASSOCIATION LOGO]

                           MASTER REPURCHASE AGREEMENT
                             SEPTEMBER 1996 VERSION

                                                      Dated as of March 24, 2003

Between:

WACHOVIA BANK, NATIONAL ASSOCIATION
and
CAPITALSOURCE REPO FUNDING LLC

1. APPLICABILITY

From time to time the parties hereto may enter into transactions in which one
party ("Seller") agrees to transfer to the other ("Buyer") securities or other
assets ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a date
certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.

2. DEFINITIONS

(a)  "Act of Insolvency", with respect to any party, (i) the commencement by
     such party as debtor of any case or proceeding under any bankruptcy,
     insolvency, reorganization, liquidation, moratorium, dissolution,
     delinquency or similar law, or such party seeking the appointment or
     election of a receiver, conservator, trustee, custodian or similar official
     for such party or any substantial part of its property, or the convening of
     any meeting of creditors for purposes of commencing any such case or
     proceeding or seeking such an appointment or election, (ii) the
     commencement of any such case or proceeding against such party, or another
     seeking such an appointment or election, or the filing against a party of
     an application for a protective decree under the provisions of the
     Securities Investor Protection Act of 1970, which (A) is consented to or
     not timely contested by such party, (B) results in the entry of an order
     for relief, such an appointment or election, the issuance of such a
     protective decree or the entry of an order having a similar effect, or (C)
     is not dismissed within 15 days, (iii) the making by such party of a
     general assignment for the benefit of creditors, or (iv) the admission in
     writing by such party of such party's inability to pay such party's debts
     as they become due;

(b)  "Additional Purchased Securities", Securities provided by Seller to Buyer
     pursuant to Paragraph 4(a) hereof;

(c)  "Buyer's Margin Amount", with respect to any Transaction as of any date,
     the amount obtained by application of the Buyer's Margin Percentage to the
     Repurchase Price for such Transaction as of such date;

                                     September 1996. Master Repurchase Agreement

                                        1

<PAGE>

(d)  "Buyer's Margin Percentage", with respect to any Transaction as of any
     date, a percentage (which may be equal to the Seller's Margin Percentage)
     agreed to by Buyer and Seller or, in the absence of any such agreement, the
     percentage obtained by dividing the Market Value of the Purchased
     Securities on the Purchase Date by the Purchase Price on the Purchase Date
     for such Transaction;

(e)  "Confirmation", the meaning specified in Paragraph 3(b) hereof;

(f)  "Income", with respect to any Security at any time, any principal thereof
     and all interest, dividends or other distributions thereon;

(g)  "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;

(h)  "Margin Excess", the meaning specified in Paragraph 4(b) hereof;

(i)  "Margin Notice Deadline", the time agreed to by the parties in the relevant
     Confirmation, Annex I hereto or otherwise as the deadline for giving notice
     requiring same-day satisfaction of margin maintenance obligations as
     provided in Paragraph 4 hereof (or, in the absence of any such agreement,
     the deadline for such purposes established in accordance with market
     practice);

(j)  "Market Value", with respect to any Securities as of any date, the price
     for such Securities on such date obtained from a generally recognized
     source agreed to by the parties or the most recent closing bid quotation
     from such a source, plus accrued Income to the extent not included therein
     (other than any Income credited or transferred to, or applied to the
     obligations of, Seller pursuant to Paragraph 5 hereof) as of such date
     (unless contrary to market practice for such Securities);

(k)  "Price Differential", with respect to any Transaction as of any date, the
     aggregate amount obtained by daily application of the Pricing Rate for such
     Transaction to the Purchase Price for such Transaction on a 360
     day-per-year basis for the actual number of days during the period
     commencing on (and including) the Purchase Date for such Transaction and
     ending on (but excluding) the date of determination (reduced by any amount
     of such Price Differential previously paid by Seller to Buyer with respect
     to such Transaction);

(l)  "Pricing Rate", the per annum percentage rate for determination of the
     Price Differential;

(m)  "Prime Rate", the prime rate of U.S. commercial banks as published in The
     Wall Street Journal (or, if more than one such rate is published; the
     average of such rates);

(n)  "Purchase Date", the date on which Purchased Securities are transferred by
     Seller to Buyer;

(o)  "Purchase Price", (i) on the Purchase Date, the price at which Purchased
     Securities are transferred by Seller to Buyer, and (ii) thereafter, except
     where Buyer and Seller agree otherwise, such price increased by the amount
     of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b)
     hereof and decreased by the amount of any cash transferred by Seller to
     Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's
     obligations under clause (ii) of Paragraph 5 hereof;

(p)  "Purchased Securities", the Securities transferred by Seller to Buyer in a
     Transaction hereunder, and any Securities substituted therefor in
     accordance with Paragraph 9 hereof. The term "Purchased Securities" with
     respect to any Transaction at any time also shall include Additional
     Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall
     exclude Securities returned pursuant to Paragraph 4(b) hereof;

(q)  "Repurchase Date", the date on which Seller is to repurchase the Purchased
     Securities from Buyer, including any date determined by application of the
     provisions of Paragraphs 3(c) or 11 hereof;

(r)  "Repurchase Price", the price at which Purchased Securities are to be
     transferred from Buyer to Seller upon termination of a Transaction, which
     will be determined in each case (including Transactions terminable upon
     demand) as the sum of the Purchase Price and the Price Differential as of
     the date of such determination;

                                     September 1996. Master Repurchase Agreement

                                       2

<PAGE>

(s)  "Seller's Margin Amount", with respect to any Transaction as of any date,
     the amount obtained by application of the Seller's Margin Percentage to the
     Repurchase Price for such Transaction as of such date;

(t)  "Seller's Margin Percentage", with respect to any Transaction as of any
     date, a percentage (which may be equal to the Buyer's Margin Percentage)
     agreed to by Buyer and Seller or, in the absence of any such agreement, the
     percentage obtained by dividing the Market Value of the Purchased
     Securities on the Purchase Date by the Purchase Price on the Purchase Date
     for such Transaction.

3. INITIATION; CONFIRMATION; TERMINATION

(a)  An agreement to enter into a Transaction may be made orally or in writing
     at the initiation of either Buyer or Seller. On the Purchase Date for the
     Transaction, the Purchased Securities shall be transferred to Buyer or its
     agent against the transfer of the Purchase Price to an account of Seller.

(b)  Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or
     both), as shall be agreed, shall promptly deliver to the other party a
     written confirmation of each Transaction (a "Confirmation"). The
     Confirmation shall describe the Purchased Securities (including CUSIP
     number, if any), identify Buyer and Seller and set forth (i) the Purchase
     Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the
     Transaction is to be terminable on demand, (iv) the Pricing Rate or
     Repurchase Price applicable to the Transaction, and (v) any additional
     terms or conditions of the Transaction not inconsistent with this
     Agreement. The Confirmation, together with this Agreement, shall constitute
     conclusive evidence of the terms agreed between Buyer and Seller with
     respect to the Transaction to which the Confirmation relates, unless with
     respect to the Confirmation specific objection is made promptly after
     receipt thereof. In the event of any conflict between the terms of such
     Confirmation and this Agreement, this Agreement shall prevail.

(c)  In the case of Transactions terminable upon demand, such demand shall be
     made by Buyer or Seller, no later than such time as is customary in
     accordance with market practice, by telephone or otherwise on or prior to
     the business day on which such termination will be effective. On the date
     specified in such demand, or on the date fixed for termination in the case
     of Transactions having a fixed term, termination of the Transaction will be
     effected by transfer to Seller or its agent of the Purchased Securities and
     any Income in respect thereof received by Buyer (and not previously
     credited or transferred to, or applied to the obligations of, Seller
     pursuant to Paragraph 5 hereof) against the transfer of the Repurchase
     Price to an account of Buyer.

4. MARGIN MAINTENANCE

(a)  If at any time the aggregate Market Value of all Purchased Securities
     subject to all Transactions in which a particular party hereto is acting as
     Buyer is less than the aggregate Buyer's Margin Amount for all such
     Transactions (a "Margin Deficit"), then Buyer may by notice to Seller
     require Seller in such Transactions, at Seller's option, to transfer to
     Buyer cash or additional Securities reasonably acceptable to Buyer
     ("Additional Purchased Securities"), so that the cash and aggregate Market
     Value of the Purchased Securities, including any such Additional Purchased
     Securities, will thereupon equal or exceed such aggregate Buyer's Margin
     Amount (decreased by the amount of any Margin Deficit as of such date
     arising from any Transactions in which such Buyer is acting as Seller).

(b)  If at any time the aggregate Market Value of all Purchased Securities
     subject to all Transactions in which a particular party hereto is acting as
     Seller exceeds the aggregate Seller's Margin Amount for all such
     Transactions at such time (a "Margin Excess"), then Seller may by notice to
     Buyer require Buyer in such Transactions, at Buyer's option, to transfer
     cash or Purchased Securities to Seller, so that the aggregate Market Value
     of the Purchased Securities, after deduction of any such

                                     September 1996. Master Repurchase Agreement

                                        3

<PAGE>

     cash or any Purchased Securities so transferred, will thereupon not exceed
     such aggregate Seller's Margin Amount (increased by the amount of any
     Margin Excess as of such date arising from any Transactions in which such
     Seller is acting as Buyer).

(c)  If any notice is given by the Buyer or Seller under subparagraph (a) or (b)
     of this paragraph at or before the Margin Notice Deadline on any business
     day, the party receiving such notice shall transfer cash or Additional
     Purchased Securities as provided in such subparagraph no later than the
     close of business in the relevant market on such day. If any such notice is
     given after the Margin Notice Deadline, the party receiving such notice
     shall transfer such cash or Securities no later than the close of business
     in the relevant market on the next business day following such notice.

(d)   Any cash transferred pursuant to this Paragraph shall be attributed to
      such Transactions as shall be agreed upon by Buyer and Seller.

(e)  Seller and Buyer may agree, with respect to any or all Transactions
     hereunder, that the respective rights of Buyer or Seller (or both) under
     subparagraphs (a) and (b) of this Paragraph may be exercised only where a
     Margin Deficit or Margin Excess, as the case may be, exceeds a specified
     dollar amount or a specified percentage of the Repurchase Prices for such
     Transactions (which amount or percentage shall be agreed to by Buyer and
     Seller prior to entering into any such Transactions).

(f)  Seller and Buyer may agree, with respect to any or all Transactions
     hereunder, that the respective rights of Buyer and Seller under
     subparagraphs (a) and (b) of this Paragraph to require the elimination of a
     Margin Deficit or a Margin Excess, as the case may be, may be exercised
     whenever such a Margin Deficit or Margin Excess exists with respect to any
     single Transaction hereunder (calculated without regard to any other
     Transaction outstanding under this Agreement).

5. INCOME PAYMENTS

   Seller shall be entitled to receive an amount equal to all Income paid or
   distributed on or in respect of the Securities that is not otherwise received
   by Seller, to the full extent it would be so entitled if the Securities had
   not been sold to Buyer. Buyer shall, as the parties may agree with respect to
   any Transaction (or, in the absence of any such agreement, as Buyer shall
   reasonably determine in its discretion), on the date such Income is paid or
   distributed either (i) transfer to or credit to the account of Seller such
   Income with respect to any Purchased Securities subject to such Transaction
   or (ii) with respect to Income paid in cash, apply the Income payment or
   payments to reduce the amount, if any, to be transferred to Buyer by Seller
   upon termination of such Transaction. Buyer shall not be obligated to take
   any action pursuant to the preceding sentence (A) to the extent that such
   action would result in the creation of a Margin Deficit, unless prior thereto
   or simultaneously therewith Seller transfers to Buyer cash or Additional
   Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if
   an Event of Default with respect to Seller has occurred and is then
   continuing at the time such Income is paid or distributed.

6. SECURITY INTEREST

   Although the parties intend that all Transactions hereunder be sales and
   purchases and not loans, in the event any such Transactions are deemed to be
   loans, Seller shall be deemed to have pledged to Buyer as security for the
   performance by Seller of its obligations under each such Transaction, and
   shall be deemed to have granted to Buyer a security interest in, all of the
   Purchased Securities with respect to all Transactions hereunder and all
   Income thereon and other proceeds thereof.

7. PAYMENT AND TRANSFER

    Unless otherwise mutually agreed, all transfers of funds hereunder shall be
    in immediately available funds. All Securities transferred by one party
    hereto to the other party (i) shall be in suitable form for transfer or
    shall be accompanied by duly executed instruments of transfer or assignment
    in blank and

                                     September 1996. Master Repurchase Agreement

                                        4

<PAGE>

   such other documentation as the party receiving possession may reasonably
   request, (ii) shall be transferred on the book-entry system of a Federal
   Reserve Bank, or (iii) shall be transferred by any other method mutually
   acceptable to Seller and Buyer.

8. SEGREGATION OF PURCHASED SECURITIES

   To the extent required by applicable law, all Purchased Securities in the
   possession of Seller shall be segregated from other securities in its
   possession and shall be identified as subject to this Agreement. Segregation
   may be accomplished by appropriate identification on the books and records of
   the holder, including a financial or securities intermediary or a clearing
   corporation. All of Seller's interest in the Purchased Securities shall pass
   to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and
   Seller, nothing in this Agreement shall preclude Buyer from engaging in
   repurchase transactions with the Purchased Securities or otherwise selling,
   transferring, pledging or hypothecating the Purchased Securities, but no such
   transaction shall relieve Buyer of its obligations to transfer Purchased
   Securities to Seller pursuant to Paragraphs 3, 4 or 11 hereof, or of Buyer's
   obligation to credit or pay Income to, or apply Income to the obligations of,
   Seller pursuant to Paragraph 5 hereof.

   REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS CUSTODY OF
   THE PURCHASED SECURITIES

     Seller is not permitted to substitute other securities for those subject to
     this Agreement and therefore must keep Buyer's securities segregated at all
     times, unless in this Agreement Buyer grants Seller the right to substitute
     other securities. If Buyer grants the right to substitute, this means that
     Buyer's securities will likely be commingled with Seller's own securities
     during the trading day. Buyer is advised that, during any trading day that
     Buyer's securities are commingled with Seller's securities, they [will]*
     [may]** be subject to liens granted by Seller to [its clearing bank]*
     [third parties]** and may be used by Seller for deliveries on other
     securities transactions. Whenever the securities are commingled, Seller's
     ability to resegregate substitute securities for Buyer will be subject to
     Seller's ability to satisfy [the clearing]* [any]** lien or to obtain
     substitute securities.

   *Language to be used under 17 C.F.R. Section 403.4(e) if Seller is a
   government securities broker or dealer other than a financial institution.

   **Language to be used under 17 C.F.R. Section 403.5(d) if Seller is a
   financial institution.

9. SUBSTITUTION

(a)  Seller may, subject to agreement with and acceptance by Buyer, substitute
     other Securities for any Purchased Securities. Such substitution shall be
     made by transfer to Buyer of such other Securities and transfer to Seller
     of such Purchased Securities. After substitution, the substituted
     Securities shall be deemed to be Purchased Securities.

(b)  In Transactions in which the Seller retains custody of Purchased
     Securities, the parties expressly agree that Buyer shall be deemed, for
     purposes of subparagraph (a) of this Paragraph, to have agreed to and
     accepted in this Agreement substitution by Seller of other Securities for
     Purchased Securities; provided, however, that such other Securities shall
     have a Market Value at least equal to the Market Value of the Purchased
     Securities for which they are substituted.

10. REPRESENTATIONS

   Each of Buyer and Seller represents and warrants to the other that (i) it is
   duly authorized to execute and deliver this Agreement, to enter into the
   Transactions contemplated hereunder and to perform its obligations hereunder
   and has taken all necessary action to authorize such execution, delivery and

                                     September 1996. Master Repurchase Agreement

                                        5

<PAGE>

   performance, (ii) it will engage in such Transactions as principal (or, if
   agreed in writing, in the form of an annex hereto or otherwise, in advance of
   any Transaction by the other party hereto, as agent for a disclosed
   principal), (iii) the person signing this Agreement on its behalf is duly
   authorized to do so on its behalf (or on behalf of any such disclosed
   principal), (iv) it has obtained all authorizations of any governmental body
   required in connection with this Agreement and the Transactions hereunder and
   such authorizations are in full force and effect and (v) the execution,
   delivery and performance of this Agreement and the Transactions hereunder
   will not violate any law, ordinance, charter, by-law or rule applicable to it
   or any agreement by which it is bound or by which any of its assets are
   affected. On the Purchase Date for any Transaction Buyer and Seller shall
   each be deemed to repeat all the foregoing representations made by it.

11. EVENTS OF DEFAULT

   In the event that (i) Seller fails to transfer or Buyer fails to purchase
   Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to
   repurchase or Buyer fails to transfer Purchased Securities upon the
   applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
   Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to
   comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect
   to Seller or Buyer, (vi) any representation made by Seller or Buyer shall
   have been incorrect or untrue in any material respect when made or repeated
   or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit
   to the other its inability to, or its intention not to, perform any of its
   obligations hereunder (each an "Event of Default"):

(a)  The nondefaulting party may, at its option (which option shall be deemed to
     have been exercised immediately upon the occurrence of an Act of
     Insolvency), declare an Event of Default to have occurred hereunder and,
     upon the exercise or deemed exercise of such option, the Repurchase Date
     for each Transaction hereunder shall, if it has not already occurred, be
     deemed immediately to occur (except that, in the event that the Purchase
     Date for any Transaction has not yet occurred as of the date of such
     exercise or deemed exercise, such Transaction shall be deemed immediately
     canceled). The nondefaulting party shall (except upon the occurrence of an
     Act of Insolvency) give notice to the defaulting party of the exercise of
     such option as promptly as practicable.

(b)  In all Transactions in which the defaulting party is acting as Seller, if
     the nondefaulting party exercises or is deemed to have exercised the option
     referred to in subparagraph (a) of this Paragraph, (i) the defaulting
     party's obligations in such Transactions to repurchase all Purchased
     Securities, at the Repurchase Price therefor on the Repurchase Date
     determined in accordance with subparagraph (a) of this Paragraph, shall
     thereupon become immediately due and payable, (ii) all Income paid after
     such exercise or deemed exercise shall be retained by the nondefaulting
     party and applied to the aggregate unpaid Repurchase Prices and any other
     amounts owing by the defaulting party hereunder, and (iii) the defaulting
     party shall immediately deliver to the nondefaulting party any Purchased
     Securities subject to such Transactions then in the defaulting party's
     possession or control.

(c)  In all Transactions in which the defaulting party is acting as Buyer, upon
     tender by the nondefaulting party of payment of the aggregate Repurchase
     Prices for all such Transactions, all right, title and interest in and
     entitlement to all Purchased Securities subject to such Transactions shall
     be deemed transferred to the nondefaulting party, and the defaulting party
     shall deliver all such Purchased Securities to the nondefaulting party.

                                     September 1996. Master Repurchase Agreement

                                       6

<PAGE>

(d)  If the nondefaulting party exercises or is deemed to have exercised the
     option referred to in subparagraph (a) of this paragraph, the nondefaulting
     party, without prior notice to the defaulting party, may:

         (i) as to Transactions in which the defaulting party is acting as
             Seller, (A) immediately sell, in a recognized market (or otherwise
             in a commercially reasonable manner) at such price or prices as the
             nondefaulting party may reasonably deem satisfactory, any or all
             Purchased Securities subject to such Transactions and apply the
             proceeds thereof to the aggregate unpaid Repurchase Prices and any
             other amounts owing by the defaulting party hereunder or (B) in its
             sole discretion elect, in lieu of selling all or a portion of such
             Purchased Securities, to give the defaulting party credit for such
             Purchased Securities in an amount equal to the price therefor on
             such date, obtained from a generally recognized source or the most
             recent closing bid quotation from such a source, against the
             aggregate unpaid Repurchase Prices and any other amounts owing by
             the defaulting party hereunder; and

         (ii)as to Transactions in which the defaulting party is acting as
             Buyer, (A) immediately purchase, in a recognized market (or
             otherwise in a commercially reasonable manner) at such price or
             prices as the nondefaulting party may reasonably deem satisfactory,
             securities ("Replacement Securities") of the same class and amount
             as any Purchased Securities that are not delivered by the
             defaulting party to the nondefaulting party as required hereunder
             or (B) in its sole discretion elect, in lieu of purchasing
             Replacement Securities, to be deemed to have purchased Replacement
             Securities at the price therefor on such date, obtained from a
             generally recognized source or the most recent closing bid
             quotation from such a source.

     Unless otherwise provided in Annex I, the parties acknowledge and agree
     that (1) the Securities subject to any Transaction hereunder are
     instruments traded in a recognized market, (2) in the absence of a
     generally recognized source for prices or bid or offer quotations for any
     Security, the nondefaulting party may establish the source therefor in its
     sole discretion and (3) all prices, bids and offers shall be determined
     together with accrued Income (except to the extent contrary to market
     practice with respect to the relevant Securities).

(e)  As to Transactions in which the defaulting party is acting as Buyer, the
     defaulting party shall be liable to the nondefaulting for any excess of the
     price paid (or deemed paid) by the nondefaulting party for Replacement
     Securities over the Repurchase Price for such Purchased Securities replaced
     thereby and for any amounts payable by the defaulting party under Paragraph
     5 hereof or otherwise hereunder.

(f)  For purposes of this Paragraph 11, the Repurchase Price for each
     Transaction hereunder in respect of which the defaulting party is acting as
     Buyer shall not increase above the amount of such Repurchase Price for such
     Transaction determined as of the date of the exercise or deemed exercise by
     the nondefaulting party of the option referred to in subparagraph (a) of
     this Paragraph.

(g)  The defaulting party shall be liable to the nondefaulting party for (i) the
     amount of all reasonable legal or other expenses incurred by the
     nondefaulting party in connection with or as a result of an Event of
     Default, (ii) damages in an amount equal to the cost (including all fees,
     expenses and commissions) of entering into replacement transactions and
     entering into or terminating hedge transactions in connection with or as a
     result of an Event of Default, and (iii) any other loss, dam-age, cost or
     expense directly arising or resulting from the occurrence of an Event of
     Default in respect of a Transaction.

(h)  To the extent permitted by applicable law, the defaulting party shall be
     liable to the nondefaulting party for interest on any amounts owing by the
     defaulting party hereunder, from the date the defaulting party becomes
     liable for such amounts hereunder until such amounts are (i) paid in full

                                     September 1996. Master Repurchase Agreement

                                       7

<PAGE>

     by the defaulting party or (ii) satisfied in full by the exercise of the
     nondefaulting party's rights hereunder. Interest on any sum payable by the
     defaulting party to the nondefaulting party under this Paragraph 11(h)
     shall be at a rate equal to the greater of the Pricing Rate for the
     relevant Transaction or the Prime Rate.

(i)  The nondefaulting party shall have, in addition to its rights hereunder,
     any rights otherwise available to it under any other agreement or
     applicable law.

12. SINGLE AGREEMENT

   Buyer and Seller acknowledge that, and have entered hereinto and will enter
   into each Transaction hereunder in consideration of and in reliance upon the
   fact that, all Transactions hereunder constitute a single business and
   contractual relationship and have been made in consideration of each other.
   Accordingly, each of Buyer and Seller agrees (i) to perform all of its
   obligations in respect of each Transaction hereunder, and that a default in
   the performance of any such obligations shall constitute a default by it in
   respect of all Transactions hereunder, (ii) that each of them shall be
   entitled to set off claims and apply property held by them in respect of any
   Transaction against obligations owing to them in respect of any other
   Transactions hereunder and (iii) that payments, deliveries and other
   transfers made by either of them in respect of any Transaction shall be
   deemed to have been made in consideration of payments, deliveries and other
   transfers in respect of any other Transactions hereunder, and the obligations
   to make any such payments, deliveries and other transfers may be applied
   against each other and netted.

13. NOTICES AND OTHER COMMUNICATIONS

   Any and all notices, statements, demands or other communications hereunder
   may be given by a party to the other by mail, facsimile, telegraph,
   messenger, or otherwise to the address specified in Annex II hereto, or so
   sent to such party at any other place specified in a notice of change of
   address hereafter received by the other. All notices, demands and requests
   hereunder may be made orally, to be confirmed promptly in writing, or by
   other communication as specified in the preceding sentence.

14. ENTIRE AGREEMENT; SEVERABILITY

   This Agreement shall supersede any existing agreements between the parties
   containing general terms and conditions for repurchase transactions. Each
   provision and agreement herein shall be treated as separate and independent
   from any other provision or agreement herein and shall be enforceable
   notwithstanding the unenforceability of any such other provision or
   agreement.

15. NON-ASSIGNABILITY; TERMINATION

(a)  The rights and obligations of the parties under this Agreement and under
     any Transaction shall not be assigned by either party without the prior
     written consent of the other party, and any such assignment without prior
     written consent of the other party shall be null and void. Subject to the
     foregoing, this Agreement and any Transactions shall be binding upon and
     shall inure to the benefit of the parties and their respective successors
     and assigns. This Agreement may be terminated by either party upon giving
     written notice to the other, except that this Agreement shall,
     notwithstanding such notice, remain applicable to any Transactions then
     outstanding.

(b)  Subparagraph (a) of this Paragraph 15 shall not preclude a party from
     assigning, charging or otherwise dealing with all or any part of its
     interest in any sum payable to it under Paragraph 11 hereof.

16. GOVERNING LAW

   This Agreement shall be governed by the laws of the State of New York without
   giving effect to the conflict of law principles thereof.

                                     September 1996. Master Repurchase Agreement

                                       8

<PAGE>

17. NO WAIVERS, ETC.

   No express or implied waiver of any Event of Default by either party shall
   constitute a waiver of any other Event of Default and no exercise of any
   remedy hereunder by any party shall constitute a waiver of its right to
   exercise any other remedy hereunder. No modification or waiver of any
   provision of this Agreement and no consent by any party to a departure
   herefrom shall be effective unless and until such shall be in writing and
   duly executed by both of the parties hereto. Without limitation on any of the
   foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b)
   hereof will not constitute a waiver of any right to do so at a later date.

18. USE OF EMPLOYEE PLAN ASSETS

(a)  If assets of an employee benefit plan subject to any provision of the
     Employee Retirement Income Security Act of 1974 ("ERISA") are intended to
     be used by either party hereto (the "Plan Party") in a Transaction, the
     Plan Party shall so notify the other party prior to the Transaction. The
     Plan Party shall represent in writing to the other party that the
     Transaction does not constitute a prohibited transaction under ERISA or is
     otherwise exempt therefrom, and the other party may proceed in reliance
     thereon but shall not be required so to proceed.

(b)  Subject to the last sentence of subparagraph (a) of this Paragraph, any
     such Transaction shall proceed only if Seller furnishes or has furnished to
     Buyer its most recent available audited statement of its financial
     condition and its most recent subsequent unaudited statement of its
     financial condition.

(c)    By entering into a Transaction pursuant to this Paragraph, Seller shall
       be deemed (i) to represent to Buyer that since the date of Seller's
       latest such financial statements, there has been no material adverse
       change in Seller's financial condition which Seller has not disclosed to
       Buyer, and (ii) to agree to provide Buyer with future audited and
       unaudited statements of its financial condition as they are issued, so
       long as it is a Seller in any outstanding Transaction involving a Plan
       Party.

19. INTENT

(a)  The parties recognize that each Transaction is a "repurchase agreement" as
     that term is defined in Section 101 of Title 11 of the United States Code,
     as amended (except insofar as the type of Securities subject to such
     Transaction or the term of such Transaction would render such definition
     inapplicable), and a "securities contract" as that term is defined in
     Section 741 of Title 11 of the United States Code, as amended (except
     insofar as the type of assets subject to such Transaction would render such
     definition inapplicable).

(b)  It is understood that either party's right to liquidate Securities
     delivered to it in connection with Transactions hereunder or to exercise
     any other remedies pursuant to Paragraph 11 hereof, is a contractual right
     to liquidate such Transaction as described in Sections 555 and 559 of Title
     11 of the United States Code, as amended.

(c)  The parties agree and acknowledge that if a party hereto is an "insured
     depository institution," as such term is defined in the Federal Deposit
     Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
     "qualified financial contract," as that term is defined in the FDIA and any
     rules, orders or policy statements thereunder (except insofar as the type
     of assets subject to such Transaction would render such definition
     inapplicable).

(d)  It is understood that this Agreement constitutes a "netting contract" as
     defined in and subject to Title IV of the Federal Deposit Insurance
     Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement
     and payment obligation under any Transaction hereunder shall constitute a
     "covered contractual payment entitlement" or "covered contractual payment
     obligation,"

                                     September 1996. Master Repurchase Agreement

                                       9

<PAGE>

     respectively, as defined in and subject to FDICIA (except insofar as one or
     both of the parties is not a "financial institution" as that term is
     defined in FDICIA).

20. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

   The parties acknowledge that they have been advised that:

(a)  in the case of Transactions in which one of the parties is a broker or
     dealer registered with the Securities and Exchange Commission ("SEC") under
     Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the
     Securities Investor Protection Corporation has taken the position that the
     provisions of the Securities Investor Protection Act of 1970 ("SIPA") do
     not protect the other party with respect to any Transaction hereunder;

(b)  in the case of Transactions in which one of the parties is a government
     securities broker or a government securities dealer registered with the SEC
     under Section 15C of the 1934 Act, SIPA will not provide protection to the
     other party with respect to any Transaction hereunder; and

(c)  in the case of Transactions in which one of the parties is a financial
     institution, funds held by the financial institution pursuant to a
     Transaction hereunder are not a deposit and therefore are not insured by
     the Federal Deposit Insurance Corporation or the National Credit Union
     Share Insurance Fund, as applicable.

CAPITALSOURCE REPO FUNDING LLC

By:    ________________________________
Name:  ________________________________
Title: ________________________________

Date: March 24, 2003

WACHOVIA BANK, NATIONAL ASSOCIATION.

By:    ________________________________
Name:  ________________________________
Title: ________________________________

Date: March 24, 2003

                                     September 1996. Master Repurchase Agreement

                                       10

<PAGE>

                                     ANNEX I
                        SUPPLEMENTAL TERMS AND CONDITIONS

This Annex I forms a part of the Master Repurchase Agreement dated as March 24,
2003 (the "Agreement") between:

WACHOVIA BANK, NATIONAL ASSOCIATION AND

CAPITALSOURCE REPO FUNDING LLC

Capitalized terms used herein but not defined in this Annex I shall have the
meanings ascribed to them in the Agreement. Paragraph references are to
paragraphs in the Agreement. To the extent that the terms of this Annex I
conflict with the terms of the Agreement, the terms of this Annex I shall
control.

1.       Additional Definitions. Whenever used in the Agreement (including all
         Annexes), the following words and phrases, unless the context otherwise
         requires, shall have the meanings set forth below. Capitalized terms
         defined above in the Agreement whose definitions are also defined by
         this Annex I shall, for all purposes of the Agreement, be deemed to
         have been modified by this Annex I.

         (a)      "Affiliate" means, with respect to a Person, any other Person
                  that, directly or indirectly, controls, is controlled by or
                  under common control with such Person, or is a director or
                  officer of such Person. For purposes of this definition,
                  "control" (including the terms "controlling," "controlled by"
                  and "under common control with") when used with respect to any
                  specified Person means the possession, direct or indirect, of
                  the power to vote 20% or more of the voting securities of such
                  Person or to direct or cause the direction of the management
                  or policies of such Person, whether through the ownership of
                  voting securities, by contract or otherwise.

         (b)      "Business Day" means any day other than a Saturday or a Sunday
                  on which (i) banks are not required or authorized to be closed
                  in Minneapolis, Minnesota, New York, New York or Charlotte,
                  North Carolina and (b) if the term "Business Day" is used in
                  connection with the determination of LIBOR, dealings in United
                  States dollar deposits are carried on in the London interbank
                  market.

         (c)      "Buyer" means Wachovia Bank, National Association.

         (d)      "Buyer's Margin Percentage" means, with respect to any
                  Transaction, 133.33%.

         (e)      "Capital Commitment Agreement" means the Capital Commitment
                  Agreement, dated as of March 24, 2003, by and between
                  CapitalSource Finance LLC and Wachovia Bank, National
                  Association.

         (f)      "Charged-Off Loan" means an Eligible Loan as to which any of
                  the following first occurs: (i) all or any portion of any one
                  or more payments remains unpaid for at least ninety (90) days
                  from the original due date for such payment, (ii) the Obligor
                  thereof or any Person obligated thereon is generally unable to
                  meet its financial obligations and (iii) the Obligor or any
                  Person obligated thereon has suffered a material adverse
                  change which materially affects its viability as an ongoing
                  concern.

         (g)      "Confirmation" is defined in Section 5 of this Annex I.

         (h)      "Custodial Agreement" means the Custodial Undertaking in
                  connection with the Master Repurchase Agreement, dated as of
                  March 24, 2003, by and among the

                                       I-1

<PAGE>

                  Buyer, the Seller and Wells Fargo Bank Minnesota, National
                  Association, as custodian.

         (i)      "Eligible Loan" has the meaning ascribed to such term in the
                  Third Amended and Restated Loan Certificate and Servicing
                  Agreement, but, as used herein, shall exclude the terms of
                  clause (z) in the definition of "Eligible Loan" in the Third
                  Amended and Restated Loan Certificate and Servicing Agreement.

         (j)      "Income" means, with respect to any Security at any time, any
                  principal, interest and other amounts payable thereof pursuant
                  to any Underlying Document.

         (k)      "LIBOR" means, with respect to the Transactions, the rate per
                  annum equal to the rate appearing as one-month LIBOR on
                  Telerate page 3750 as of 11:00 a.m., London time, (or if not
                  so reported, then as determined by Buyer from another
                  recognized source or interbank quotation), rounded up to the
                  nearest one-eighth of one percent (1/8%), as calculated on the
                  second London Business Day before the Purchase Date and as
                  subsequently adjusted on the first day of the first calendar
                  month following the Purchase Date and on the first day of each
                  calendar month through and until the date of determination.

         (l)      "Loan" means any Senior Secured Loan or Subordinated Loan sold
                  or contributed to the Seller and included as part of the
                  outstanding assets of the Seller.

         (m)      "London Business Day" means a day of the year on which
                  dealings in United States dollars are carried on in the London
                  interbank market and banks are not required or authorized to
                  close in London or in New York, New York.

         (n)      "Market Value" means, with respect to any Securities as of any
                  date, the price determined by Buyer in its sole and absolute
                  discretion; provided, however, that in the event that (i) all
                  or any portion of any one or more payments due under any
                  Security is not paid when due (after giving effect to any
                  grace period) or would be so delinquent but for any amendment,
                  modification, waiver or variance made to such Security
                  resulting from the Obligor's inability to pay such Security in
                  accordance with its terms, (ii) any Security is classified as
                  delinquent by the Buyer, (iii) the related Obligor is not
                  paying any of the accrued and unpaid interest on a current
                  basis, (iv) any Security becomes a Charged-Off Loan, (v) any
                  Act of Insolvency with respect to the Seller occurs, (vi) any
                  other default occurs that would, individually or in the
                  aggregate, result in a Material Adverse Effect or (vii) the
                  Purchased Securities have not been transferred from Buyer to
                  Seller at the Repurchase Price on the Termination Date (unless
                  such inaction is waived by the Buyer), the Market Value shall
                  equal zero (0).

         (o)      "Material Adverse Effect" means, with respect to any event or
                  circumstance, a material adverse effect on (a) the business,
                  condition (financial or otherwise), operations, performance,
                  properties or prospects of the Seller, the Servicer or
                  CapitalSource Finance LLC, (b) the validity, enforceability or
                  collectibility of this Agreement, the Custodial Agreement or
                  the Sale Agreement or the validity, enforceability or
                  collectibility of the Purchased Securities generally or any
                  material portion of the Purchased Securities, (c) the rights
                  and remedies of the Buyer, (d) the ability of the Seller, the
                  Servicer or the CapitalSource Finance LLC to perform its
                  obligations under this Agreement, the Custodial Agreement or
                  the Sale Agreement, or (e) the status, existence, perfection,
                  priority or enforceability of the Buyer's interest in the
                  Purchased Securities.

         (p)      "Obligor" means, with respect to any Eligible Loan, any Person
                  or Persons obligated to make payments pursuant to or with
                  respect to such Eligible Loan, including any guarantor
                  thereof.

<PAGE>

         (q)      "Permitted Liens" means the liens granted in the Underlying
                  Documents (other than the promissory notes) in respect of the
                  CapitalSource Commercial Loan Trust 2002-1 Transaction (as
                  defined in the Third Amended and Restated Loan Certificate and
                  Servicing Agreement), CapitalSource Commercial Loan Trust
                  2002-2 Transaction (as defined in the Third Amended and
                  Restated Loan Certificate and Servicing Agreement), the Third
                  Amended and Restated Loan Certificate and Servicing Agreement,
                  the private placement transaction of commercial loan-backed
                  notes contemplated with respect to CapitalSource Commercial
                  Loan Trust 2003-1 and, subject to prior written approval by
                  the Buyer, any other asset-backed commercial paper or private
                  placement transaction.

         (r)      "Person" means any individual, corporation, limited liability
                  company, partnership, joint venture, association, joint-stock
                  company, trust, estate, unincorporated organization or
                  government or any agency or political subdivision thereof.

         (s)      "Pricing Rate" means LIBOR plus two hundred fifty (250) basis
                  points; provided that after the occurrence and during the
                  continuation of an Event of Default, the Pricing Rate shall
                  mean LIBOR plus four hundred fifty (450) basis points.

         (t)      "Purchase Date" means the purchase date specified on the
                  Confirmation.

         (u)      "Purchase Price" means (i) on the Purchase Date, the amount
                  equal to 75% of the of aggregate principal amount of the
                  Purchased Securities as of such date minus any deferred
                  interest that is added to the principal amount of any
                  Purchased Security, and (ii) thereafter decreased by the
                  amount of any cash transferred by Seller to Buyer pursuant to
                  Paragraph 4(a) of the Agreement or applied to reduce Seller's
                  obligations under Paragraph 5 of the Agreement.

         (v)      "Purchased Securities" means the Securities transferred by
                  Seller to Buyer in a Transaction under the Agreement, which
                  Securities shall be a minimum of five (5) Securities (in the
                  aggregate) at all times on and after the initial Purchase Date
                  until the Repurchase Date. The term "Purchased Securities"
                  with respect to any Transaction at any time also shall include
                  Additional Purchased Securities delivered pursuant to
                  Paragraph 4(a) of the Agreement. The Buyer shall have sole and
                  absolute discretion in determining whether it will purchase
                  any Security from the Seller.

         (w)      "Revolving Loan" has the meaning ascribed to such term in the
                  Third Amended and Restated Loan Certificate and Servicing
                  Agreement. Any Revolving Loan referred to herein shall be
                  subject to the terms of Section 13.8 of the Third Amended and
                  Restated Loan Certificate and Servicing Agreement.

         (x)      "Sale Agreement" means the Sale Agreement, dated as of March
                  24, 2003, by and among CapitalSource Finance LLC, as seller,
                  and Seller, as buyer.

         (y)      "Securities" means any Loan that, as of its Purchase Date,
                  satisfies each of the following criteria: (i) such Loan is an
                  Eligible Loan, (ii) the Buyer in its sole and absolute
                  discretion has approved such Loan for purchase by the Seller,
                  (iii) such Loan is a Revolving Loan or a Term Loan, and (iv)
                  the outstanding principal amount of such Loan does not exceed
                  $20,000,000.

         (z)      "Seller" means CapitalSource REPO Funding LLC.

         (aa)     "Senior Secured Loan" any Loan secured by a first priority
                  lien on an Obligor's assets and which has a Loan-to-Value
                  Ratio (as defined in the Third Amended and Restated Loan
                  Certificate and Servicing Agreement) of less than 90%.

<PAGE>

         (bb)     "Servicer" means CapitalSource Finance LLC, in its capacity as
                  servicer under the Sale Agreement.

         (cc)     "Subordinated Loan" means any type of Loan other than a Senior
                  Secured Loan.

         (dd)     "Term Loan" means a Loan that is a term loan that has been
                  fully funded and does not contain any unfunded commitment.

         (ee)     "Termination Date" means the date which is ninety days (90)
                  from the date of the Agreement, provided that this date shall
                  be automatically extended for one additional ninety day (90)
                  period unless the Buyer or Seller provides 20 days' prior
                  written notice to the other party that it does not wish to
                  have the Termination Date so extended.

         (ff)     "Third Amended and Restated Loan Certificate and Servicing
                  Agreement" means the Third Amended and Restated Loan
                  Certificate and Servicing Agreement, dated as of February 25,
                  2003, as amended by Amendment No. 1 to Third Amendment and
                  Restated Loan Certificate and Servicing Agreement, dated as of
                  March 3, 2002, by and among CapitalSource Funding LLC, as the
                  seller, CapitalSource Finance LLC, as the originator and as
                  the servicer, Variable Funding Capital Corporation, Fairway
                  Finance Corporation, Eiffel Funding, LLC, and Hannover Funding
                  Company LCC, as the purchasers, Wachovia Bank, National
                  Association., as the administrative agent and as the VFCC
                  agent, BMO Nesbitt Burns Corp., as the Fairway agent, CDC
                  Financial Products Inc., as the Eiffel agent, Norddetsche
                  Landesbank Girozentrale, as the Hannover agent, and Wells
                  Fargo Bank Minnesota, National Association, as the backup
                  servicer and the collateral custodian, as amended, modified,
                  waived, supplemented or restated from time to time.

         (gg)     "UCC" means the Uniform Commercial Code as from time to time
                  in effect in the applicable jurisdiction or jurisdictions.

         (hh)     "Underlying Documents" means, with respect to the applicable
                  Purchased Security, any note, security instrument, guaranty or
                  other instrument or loan document executed in connection with
                  the indebtedness evidenced by such Purchased Security.

2.       Additional Representations. In addition to the representations and
         warranties set forth in Paragraph 10 of the Agreement, Seller
         additionally represents and warrants to Buyer that as of the date of
         the Agreement and as of each Purchase Date, or such other date or dates
         indicated below:

         (a)      Immediately prior to the Transactions, Seller shall own the
                  Securities free and clear of all pledges, liens, security
                  interests, encumbrances, charges and other adverse claims
                  (other than Permitted Liens), and upon the consummation of the
                  Transactions, Buyer shall (i) be the owner of the Securities
                  free and clear of any adverse claim and (ii) obtain a valid,
                  perfected first priority security interest in the Securities;

         (b)      There is no action, suit, proceeding, investigation or
                  arbitration pending or threatened against Seller which may
                  result in any material adverse change in the business,
                  operations, financial conditions, properties or assets of
                  Seller or which may have an adverse effect on the validity of
                  the Agreement or the Purchased Securities or any action taken
                  or to be taken in connection with the obligations of Seller
                  contemplated in the Agreement;

<PAGE>

         (c)      Seller has the power and authority and the legal right to
                  execute and deliver, to perform its obligations under the
                  Agreement and has taken all necessary action to authorize its
                  execution, delivery and performance of the Agreement;

         (d)      The Agreement constitutes Seller's legal, valid and binding
                  obligation, enforceable against it in accordance with its
                  terms, except as enforceability may be limited by bankruptcy,
                  insolvency, reorganization, moratorium or similar laws
                  affecting the enforcement of creditors' rights generally;

         (e)      The consummation of the transactions contemplated by the
                  Agreement and the fulfillment of the terms thereof will not
                  (i) conflict with, result in any material breach of any of the
                  terms and provisions of, or constitute (with or without notice
                  or lapse of time or both) a default under, Seller's operating
                  agreement or other organizational documents, (ii) result in
                  the creation or imposition of any lien, adverse claim or other
                  encumbrance upon any of Seller's assets, other than as
                  expressly created under the Agreement, or (iii) violate any
                  law or order, rule or regulation applicable to Seller of any
                  court or of any federal or state regulatory body,
                  administrative agency, or other governmental instrumentality
                  having jurisdiction over Seller or any of its assets;

         (f)      All material actions, approvals, consents, waivers,
                  exemptions, variances, franchises, orders, permits,
                  authorizations, rights and licenses required to be taken,
                  given or obtained, as the case may be, by or from any federal,
                  state or other governmental authority or agency that are
                  necessary in connection with Seller's execution, delivery and
                  performance of the Agreement, have been duly taken, given or
                  obtained, as the case may be, are in full force and effect on
                  the date hereof, are not subject to any pending proceedings or
                  appeals (administrative, judicial or otherwise) and either the
                  time within which any appeal therefrom may be taken or review
                  thereof may be obtained has expired or no review thereof may
                  be obtained or appeal therefrom taken, and are adequate to
                  authorize the consummation of the transactions contemplated by
                  the Agreement and the performance of its obligations under the
                  Agreement; and

         (g)      Except as explicitly set forth in this Agreement: (i) there
                  are no agreements on the part of Seller to issue, sell or
                  distribute the Purchased Securities, other than the Agreement;
                  and (ii) Seller has no obligation (contingent or otherwise) to
                  purchase, redeem or otherwise acquire any securities or any
                  interest therein or to pay any dividend or make any
                  distribution in respect of the Purchased Securities.

3.       Additional Covenants of Seller. While there is an outstanding
         Transaction, Seller hereby agrees as follows:

         (a)      Seller shall promptly deliver or cause to be delivered to
                  Buyer, upon receipt by Seller, (i) notice of any "default" or
                  "event of default", however defined, under any Underlying
                  Document, (ii) any report or notice received by Seller
                  pursuant to the Underlying Documents that is required to be
                  delivered to the registered holder of the Purchased Securities
                  promptly following receipt thereof and (iii) any other such
                  document or information relating to the Purchased Securities
                  as Buyer may reasonably request from time to time.

         (b)      If Seller shall receive any rights, whether in addition to, in
                  substitution of, as a conversion of, or in exchange for any
                  Purchased Securities, or otherwise in respect thereof, Seller
                  shall accept the same as Buyer's agent, hold the same in trust
                  for Buyer and deliver the same forthwith to Buyer in the exact
                  form received, together with duly executed instruments of
                  transfer or assignment in blank and such other documentation
                  as Buyer shall reasonably request. If any sums of money or
                  property are paid or distributed in respect of the Purchased
                  Securities and received by Seller, Seller shall promptly pay
                  or deliver such money

<PAGE>

                  or property to Buyer and, until such money or property is so
                  paid or delivered to Buyer, hold such money or property in
                  trust for Buyer, segregated from other funds of Seller.

         (c)      At any time and from time to time, upon the written request of
                  Buyer, and at the sole expense of Seller, Seller will promptly
                  and duly execute and deliver such further instruments and
                  documents and take such further actions as Buyer may
                  reasonably request for the purposes of obtaining or preserving
                  the full benefits of the Agreement and all Underlying
                  Documents and of the rights and powers therein granted.

         (d)      Seller shall pay, and save Buyer harmless from, any and all
                  liabilities with respect to, or resulting from, any and all
                  stamp, excise, sales or other taxes which may be payable or
                  determined to be payable with respect to any of the Purchased
                  Securities or in connection with any of the transactions
                  contemplated by the Agreement and all Underlying Documents,
                  including any delay in the payment thereof, other than income
                  taxes of Buyer.

         (e)      Upon five (5) Business Days' prior written notice to Buyer,
                  Seller may amend or modify, or waive any term or condition of,
                  or settle or compromise any claim in respect of, any item of
                  the Purchased Securities, Underlying Documents or any related
                  rights. In connection therewith, the Seller herby acknowledges
                  that such amendment or compromise may result in an adjustment
                  by the Buyer of the Market Value of the Purchased Securities;
                  provided that if the Seller disagrees with such adjusted
                  Market Value, its sole remedy shall be to tender the
                  Repurchase Price.

         (f)      Seller shall promptly notify Buyer upon receipt of notice or
                  actual knowledge of the occurrence of any Event of Default.

4.       Additional Covenant of Seller and Buyer. Each of the Seller and Buyer
         agrees that it will not institute against, or join any other Person in
         instituting against, the Seller any Act of Insolvency so long as there
         shall not have elapsed one (1) year and one (1) day since the
         Repurchase Date.

5.       Modification of Subparagraph 3(b) of the Agreement. Subparagraph 3(b)
         of the Agreement is deleted and replaced with the following:

                  "(b)     Upon agreeing to enter into a Transaction under the
         Agreement, Buyer or Seller (or both), as shall be agreed, shall deliver
         to the other party a written confirmation of each Transaction in the
         form attached as Annex III to this Agreement (a "Confirmation") at
         least two (2) Business Days' prior to the Purchase Date for such
         Transaction. The Confirmation, together with this Agreement, shall
         constitute conclusive evidence of the terms agreed between Buyer and
         Seller with respect to the Transaction to which the Confirmation
         relates, unless with respect to the Confirmation specific objection is
         made promptly after receipt of such Confirmation. In the event of any
         conflict between the terms of such Confirmation and this Agreement,
         this Agreement shall prevail."

6.       Modification of Paragraph 4 of the Agreement.

         (a)      Subparagraph 4(d) of the Agreement is deleted and replaced
                  with the following:

                           "(d)     Any cash transferred pursuant to this
                  Paragraph shall be applied by Buyer as a reduction against the
                  Repurchase Price."

         (b)      Subparagraph 4(e) of the Agreement is deleted and replaced
                  with the following:

<PAGE>

                           "Seller and Buyer agree, with respect to any or all
                  Transactions hereunder, that the rights of Buyer under
                  subparagraph (a) of this Paragraph may be exercised only where
                  a Margin Deficit exceeds a specified dollar amount or a
                  specified percentage of the Repurchase Prices for such
                  Transactions (which amount or percentage shall be agreed to by
                  Buyer and Seller prior to entering into any such
                  Transactions)."

         (c)      Subparagraph 4(f) of the Agreement is deleted and replaced
                  with the following:

                           "Seller and Buyer agree, with respect to any or all
                  Transactions hereunder, that the rights of Buyer under
                  subparagraph (a) of this Paragraph to require the elimination
                  of a Margin Deficit may be exercised whenever such a Margin
                  Deficit exists with respect to any single Transaction
                  hereunder (calculated without regard to any other Transaction
                  outstanding under this Agreement)."

7.       Modification of Paragraph 5 of the Agreement. Paragraph 5 is deleted
         and replaced with the following:

         "(a)     With respect to Income from any interest, fees or other
                  similar payment made pursuant to any Underlying Document
                  ("Interest Income"), Seller shall be entitled to receive an
                  amount equal to the Interest Income paid or distributed on or
                  in respect of the Purchased Securities, to the full extent it
                  would be so entitled if the Securities had not been sold to
                  Buyer; provided, however, the Seller shall not be entitled to
                  receive any Interest Income in the event that, at the time
                  such Interest Income is paid or distributed, (i) a Margin
                  Deficit exists or (ii) an Event of Default with respect to
                  Seller (including an Event of Default relating to the
                  Underlying Documents) has occurred and is then continuing.
                  Such amounts referred to in the preceding proviso shall then
                  be treated as Principal Income (as defined in clause (b)
                  below), and shall reduce the Market Value of the Purchased
                  Securities on which such amounts are paid or distributed in
                  accordance with the terms of clause (b) below.

         (b)      With respect to Income from any principal or cash payment made
                  pursuant to any Underlying Document ("Principal Income"), the
                  Market Value of the Purchased Securities on which such
                  Principal Income is paid or distributed shall be reduced by
                  the amount of such Principal Income, which reduction shall
                  result in a Margin Deficit. In accordance with Section 4(a),
                  Seller shall be required to transfer to the Buyer within two
                  (2) Business Days cash or Additional Purchased Securities so
                  that the cash and aggregate Market Value of the Purchased
                  Securities, including any such Additional Purchased
                  Securities, will thereupon equal or exceed such aggregate
                  Buyer's Margin Amount.

8.       Modification of Paragraph 6 of the Agreement. Paragraph 6 of the
         Agreement is deleted and replaced with the following:

                  "Although the parties intend that all Transactions hereunder
         be sales and purchases and not loans, in the event any such
         Transactions are deemed to be loans, Seller shall be deemed to have
         pledged to Buyer as security for the performance by Seller of its
         obligations under each such Transaction, and shall be deemed to have
         granted to Buyer a security interest in, all of the Purchased
         Securities with respect to all Transactions hereunder and all Income
         thereon and other proceeds thereof and any and all rights of Seller
         under the Underlying Documents. Seller hereby authorizes Buyer to file
         a financing statement indicating Seller as debtor and Buyer as secured
         party and describing as the collateral covered thereby "all of the
         debtor's personal property or assets" or words to that effect,
         notwithstanding that such wording may be broader in scope than the
         collateral described in this Agreement."

<PAGE>

9.       Modification of Paragraph 7 of the Agreement. Clause (iii) of Paragraph
         7 is deleted and replaced with the following:

                           "(iii)   shall be transferred in accordance with the
                  terms of the Custodial Agreement."

10.      Modification of Paragraph 8 of the Agreement. Paragraph 8 of the
         Agreement is deleted and replaced with the following:

                  "All of Seller's interest in the Purchased Securities shall
         pass to Buyer on the Purchase Date and, unless otherwise agreed by
         Buyer and Seller, nothing in this Agreement shall preclude Buyer from
         engaging in repurchase transactions with the Purchased Securities or
         otherwise selling, transferring, pledging or hypothecating the
         Purchased Securities, but no such transaction shall relieve Buyer of
         its obligations to transfer Purchased Securities to Seller pursuant to
         Paragraphs 3, 4 or 11 hereof, or of Buyer's obligation to credit or pay
         Income to, or apply Income to the obligations of, Seller pursuant to
         Paragraph 5 hereof."

11.      Modification of Paragraph 11 of the Agreement.

         (a)      The following language is added to the first paragraph of
                  Paragraph 11 as new clauses (viii) and (ix):

                           "(viii) Seller shall fail to perform or comply with,
                  admit its inability to perform or state its intention not to
                  perform or comply with its obligations and covenants under
                  this Agreement; and

                           (ix) Either (A) this Agreement, the Custodial
                  Agreement, the Sale Agreement and Underlying Documents
                  (including endorsements and assignments reflecting the
                  transfer of the Purchased Securities) and related deliverables
                  shall for any reason not cause, or shall cease to cause, Buyer
                  to be the owner free and clear of any adverse claim to any of
                  the Purchased Securities subject to the Transactions, or, in
                  the alternative (as contemplated by Paragraph 6 of this
                  Agreement), (B) this Agreement and Underlying Documents
                  (including endorsements and assignments reflecting the
                  transfer of the Purchased Securities) and related custodial
                  deliveries shall for any reason not create, or shall cease to
                  create, a valid, perfected first priority security interest in
                  favor of Buyer in any of the Purchased Securities subject to
                  the Transactions."

         (b)      In addition to the rights under Paragraph 11(a) of the
                  Agreement, upon an Event of Default relating to Seller, Buyer
                  shall no longer be obligated to enter into any additional
                  Transactions pursuant to any outstanding Confirmation.

12.      Modification of Paragraph 13 of the Agreement. Paragraph 13 of the
         Agreement is deleted and replaced with the following:

                  "13. Notices and Other Communications. Any and all notices,
         statements, demands or other communications under this Agreement may be
         given by a party to the other by mail, facsimile, electronic mail,
         telegraph, messenger or otherwise to the address specified in Annex II
         to this Agreement, or so sent to such party at any other place
         specified in a notice of change of address hereafter received by the
         other; provided, however, that with respect to notice delivered by
         electronic mail or facsimile, such notice shall not be deemed to have
         been received unless the sender has received confirmation of receipt."

13.      Conditions Precedent. Buyer's obligation to purchase Securities under
         the Agreement shall be subject to the following terms and conditions:

<PAGE>

         (a)      The Agreement and this Annex I shall have been executed and
                  delivered by a duly authorized officer of Buyer and Seller;

         (b)      Buyer shall have received a Confirmation on each related
                  Purchase Date, executed and delivered by a duly authorized
                  officer of Seller;

         (c)      The representations and warranties of Seller in Paragraph 10
                  of the Agreement and Paragraph 3 of this Annex I shall be true
                  and correct as of each Purchase Date;

         (d)      No Event of Default relating to Seller shall have occurred and
                  be continuing;

         (e)      No "default" shall have occurred under the Underlying
                  Documents relating to such Securities;

         (f)      In connection only with the original purchase, Buyer shall
                  have received opinions of counsel to Seller, in form and
                  substance satisfactory to Buyer;

         (g)      In connection only with the original purchase, Buyer shall
                  have received such other and further documents and legal
                  opinions as Buyer in its sole discretion shall require; and

         (h)      Buyer shall receive written confirmation from Custodian that
                  Custodian has received the Required Loan Documents (as defined
                  in the Custodial Agreement).

14.      Assignment of the Sale Agreement. The Seller hereby assigns to the
         Buyer all of the Seller's right, title and interest in and to, but none
         of its obligations under, the Sale Agreement, the Custodial Agreement,
         the Capital Commitment Agreement and any UCC financing statements filed
         under or in connection therewith. In furtherance and not in limitation
         of the foregoing, the Seller hereby assigns to the Buyer its right to
         indemnification under Article VIII of the Sale Agreement. The Seller
         confirms that the Buyer shall have the sole right to enforce the
         Seller's rights and remedies under the Sale Agreement, the Custodial
         Agreement, the Capital Commitment Agreement and any UCC financing
         statements filed under or in connection therewith.

15.      Payment of Pricing Differential. Notwithstanding anything to the
         contrary herein, the parties agree that on each day after the initial
         Purchase Date that LIBOR is adjusted, the Seller shall pay to Buyer in
         accordance with the terms of Section 7 an amount equal to the Pricing
         Differential as of such date.

16.      Servicing the Purchased Securities. The Seller and Buyer agree that the
         Servicer shall service the Purchased Securities in accordance with
         Section 1.6 of the Sale Agreement.

17.      Indemnification.

         (a)      Seller agrees to hold Buyer, and its Affiliates and their
                  officers, directors, employees, agents and advisors (each an
                  "Indemnified Party") harmless from and indemnify any
                  Indemnified Party against all liabilities, losses, damages,
                  judgments, costs and expenses of any kind (including the costs
                  and expenses of legal counsel) which may be imposed on,
                  incurred by or asserted against such Indemnified Party
                  (collectively, the "Costs") relating to or arising out of the
                  Agreement, the Custodial Agreement, the Capital Commitment
                  Agreement, the Underlying Documents or any transaction
                  contemplated hereby or thereby, or any amendment, supplement
                  or modification of, or any waiver or consent under or in
                  respect of, the Agreement, the Custodial Agreement, the
                  Capital Commitment Agreement, the Underlying Documents or any
                  transaction contemplated hereby or thereby, that, in each
                  case, results from anything other than any Indemnified

<PAGE>

                  Party's gross negligence or willful misconduct. Without
                  limiting the generality of the foregoing, Seller agrees to
                  hold any Indemnified Party harmless from and indemnify such
                  Indemnified Party against all Costs with respect to all
                  Purchased Securities relating to or arising out of any
                  violation or alleged violation of any law, rule or regulation
                  that, in each case, results from anything other than such
                  Indemnified Party's gross negligence or willful misconduct. In
                  any suit, proceeding or action brought by an Indemnified Party
                  in connection with any Purchased Security for any sum owing
                  under such Purchased Securities, or to enforce any provisions
                  of any Purchased Security or any Underlying Document, Seller
                  will save, indemnify and hold such Indemnified Party harmless
                  from and against all expense, loss or damage suffered by
                  reason of any defense, set-off, counterclaim, recoupment or
                  reduction or liability whatsoever of the account debtor or
                  obligor under such Purchased Securities, arising out of a
                  breach by Seller of any obligation under such Purchased
                  Securities or arising out of any other agreement, indebtedness
                  or liability at any time owing to or in favor of such account
                  debtor or obligor or its successors from Seller. Seller also
                  agrees to reimburse an Indemnified Party as and when billed by
                  such Indemnified Party for all such Indemnified Party's
                  reasonable costs and expenses incurred in connection with the
                  enforcement or the preservation of such Indemnified Party's
                  rights under the Agreement, any Underlying Document or any
                  transaction contemplated hereby or thereby, including without
                  limitation the reasonable fees and disbursements of its
                  counsel.

         (b)      Seller agrees to pay as and when billed by Buyer all the
                  reasonable due diligence, inspection, testing and review costs
                  and expenses incurred by Buyer with respect to Purchased
                  Securities under the Agreement, including, but not limited to,
                  those reasonable costs and expenses incurred by Buyer and
                  reimbursable by Seller pursuant to Subparagraph 10(a) above.

         (c)      The remedies provided for above are in addition to any rights
                  or remedies that Buyer may have pursuant to Paragraph 11 or
                  any other provision of the Agreement and are in addition to
                  any other rights or remedies that Buyer may have at equity or
                  law.

18.      No Margin Excess; No Retention; No Substitution. Notwithstanding
         anything to the contrary in the Agreement, the parties agree that
         Seller shall have no right to (A) require Buyer to transfer cash or
         Purchased Securities upon the occurrence of a Margin Excess, or (B)
         substitute other Securities for Purchased Securities as contemplated by
         Paragraph 9 of the Agreement. In accordance with such agreement between
         the parties, the following terms and conditions of the Agreement are
         hereby rendered inoperative and void:

         (a)      All of Subparagraphs 2(h), 2(s) and 2(t);

         (b)      All of Subparagraph 4(b); and

         (c)      All of Paragraph 9 of the Agreement.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE>

19.      Counterparts. The Agreement may be executed in any number of
         counterparts, each of which counterparts shall be deemed an original,
         and such counterparts shall constitute but one and the same instrument.

WACHOVIA BANK, NATIONAL                  CAPITALSOURCE REPO FUNDING
ASSOCIATION                              LLC

    /s/ Yu-Ming Wang                         /s/ Steven A. Museles
By:_________________________             By:____________________________
      Yu-Ming Wang                             Steven A. Museles
Name:_______________________             Name:__________________________
       MD                                       Senior Vice President
Title:______________________             Title:_________________________

<PAGE>

                                    ANNEX II

             NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES

IF TO SELLER:

CapitalSource REPO Funding LLC
c/o CapitalSource Finance LLC
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Steven A. Museles
Telecopy:  (301) 841-2380
E-mail: smuseles@capitalsource.com

with a copy to:

Patton Boggs, LLP
2001 Ross Avenue
Suite 3000
Dallas, TX 75291
Attention: Charles P. Miller
Telecopy:  (214) 758-1550
E-mail: cmiller@pattonboggs.com

IF TO BUYER:

Wachovia Bank, National Association.      Wachovia Bank, National Association.
8739 Research Drive                       One Wachovia Center, Mail Code: NC0610
Charlotte, North Carolina 28262-0675      Charlotte, North Carolina 28288
Attention: Jennifer Armour                Attention: William J. Brown
Telecopy: (704) 593-7032                  Telecopy:  (704) 383-4012
E-mail: jennifer.armour@wachovia.com      E-mail: william.brown@wachovia.com

Wachovia Bank, National Association.      Wachovia Bank, National Association.
One Wachovia Center, Mail Code: NC0601    One Wachovia Center, Mail Code: NC0601
Charlotte, North Carolina 28288           Charlotte, North Carolina 28288
Attention: Steve Kramer                   Attention: Lisa Ambrosia
Telephone: (704) 383-0740                 Telephone: (704) 374-3266
E-mail: steve.kramer@wachovia.com         E-mail: lisa.ambrosia@wachovia.com

                                      II-1

<PAGE>

with a copy to:

Mayer, Brown, Rowe & Maw
214 North Tryon Street, Suite 3800
Charlotte, North Carolina 28202
Attention: John M. Timperio
Telecopy: (704) 377-2033
E-mail: jtimperio@mayerbrownrowe.com

<PAGE>

                                    ANNEX III
                              FORM OF CONFIRMATION

                              CONFIRMATION OF TRADE

                                     [DATE]

CapitalSource REPO Funding LLC
c/o CapitalSource Finance LLC
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Steven A. Museles
Telecopy: (301) 841-2380

Ladies and Gentlemen:

         Reference is made to the Master Repurchase Agreement, dated as of March
24, 2003 (the "Master Repurchase Agreement") between Wachovia Bank, National
Association. (the "Buyer") and CapitalSource REPO Funding LLC (the "Seller").
Capitalized terms used but not defined herein shall have the respective meanings
given to such terms in the Master Repurchase Agreement. The Buyer and the Seller
hereby confirm the Buyer's purchase on the date hereof from the Seller under the
Master Repurchase Agreement of Purchased Securities listed on Schedule A
attached hereto.

         Purchase Date:                                    ____________, 2003

         Repurchase Date:                                  ____________, 2003

         Total Market Value:                               $______________

         Total Purchase Price                              $______________

         (Total Market Value x 75%):

         Terminable on Demand? (Y/N)                       _______________

         Pricing Rate Margin:                              _______________%

         Buyer's Margin Percentage:                        _______________%

         Margin Notice Deadline:                           _____________ p.m. ET

         All Securities Listed on Schedule A
         Approved by Buyer as Purchased Securities? (Y/N)  ________________

                  Kindly acknowledge your agreement to the foregoing by signing
and returning the copy of this letter.

                                     III-1

<PAGE>

                                  Sincerely,

                                  WACHOVIA BANK, NATIONAL ASSOCIATION.

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

                                  Acknowledged and Agreed to:

                                  CAPITALSOURCE REPO FUNDING LLC

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

                                  SEE ATTACHED SCHEDULE B FOR WIRE INSTRUCTIONS.

                                     III-2

<PAGE>

                                   SCHEDULE A

                        SCHEDULE OF PURCHASED SECURITIES

<TABLE>
<CAPTION>
                                                                    Moody's
                                         Primary     CS Lending    Industry
Loan Name    Lending Type   Loan Type   Collateral     Group      Description   Market Value    Purchase Price
---------    ------------   ---------   ----------   ----------   -----------   ------------    --------------
<S>          <C>            <C>         <C>          <C>          <C>           <C>             <C>
</TABLE>

                                      A-1

<PAGE>

                                   SCHEDULE B

                                WIRE INSTRUCTIONS

Bank:         Bank of America, Baltimore, MD
Account:      003930250176
ABA:          052001633
Account Name: CapitalSource Finance LLC

                                      B-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]