exv10w8w3



 






Exhibit 10.8.3




REDWOOD TRUST, INC.




RESTRICTED STOCK AWARD AGREEMENT




     This Agreement is made as of the                      day of                     ,      , by and between Redwood Trust, Inc., a Maryland
corporation (the “Corporation”), and                     (“Purchaser”).



     Pursuant to the Redwood Trust, Inc. 2002 Incentive Stock Plan the Corporation’s Compensation
Committee (the “Committee”) has determined that the Purchaser is to be granted a Restricted Stock
award to purchase shares of the Corporation’s common stock, on the terms and conditions set forth
herein, and the Committee hereby grants such award. Any capitalized terms not defined herein shall
have the meaning set forth in the Plan.



     In consideration of the mutual covenants and representations set forth herein, the Corporation
and Purchaser agree as follows:



     1. Purchase and Sale of Stock. Subject to the terms and conditions of this Agreement,
the Corporation hereby agrees to sell to Purchaser and Purchaser agrees to purchase from the
Corporation on the Closing Date (as herein defined),      (xxxx) shares of the Corporation’s Common
Stock (the “Stock”) at a price of One Cent ($0.01) per share, for an aggregate purchase price of                     
and 00/100 Dollars ($xxx.00). The purchase price for the Stock shall be paid in cash.



     2. Closing. The purchase and sale of the Stock shall occur at a Closing to be held at
such time and place (the “Closing Date”), as designated by the Corporation by written notice to the
Purchaser of at least one (1) business day prior to the Closing Date. The Closing will take place
at the principal office of the Corporation or at such other place as shall be designated by the
Corporation. At the Closing, Purchaser shall deliver to the Corporation a check payable to the
order of the Corporation in the aggregate amount of the purchase price of the Stock, and the
Corporation will issue, as promptly thereafter as practicable, a certificate representing the Stock
registered in the name of the Purchaser.



     3. Purchase Option.



     (a) All of the Stock shall be subject to the right and option of the Corporation to repurchase
the Stock (the “Purchase Option”) as set forth in this Section 3. In the event Purchaser shall
cease to be employed by the Corporation (including a parent or subsidiary of the Corporation) for
any reason except as set forth in subparagraph (c) hereof (the “Termination”), the Purchase Option
shall come into effect. Following a Termination, the Corporation shall have the right, as provided
in subparagraph (b) hereof, to purchase from the Purchaser or his or her personal representative,
as the case may be, at the purchase price per share originally paid as set forth in Section 1
hereof (the “Option Price”), a portion of the Stock computed as follows:



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	 	 	Percentage of Stock
	If the Termination Occurs:	 	Subject to Purchase
	 	 	Option
	Prior to January 1, 2006

	 	 	100.00	 






     (b) Within 90 days following a Termination, the Corporation shall notify Purchaser by written
notice delivered or mailed as provided in subparagraph 9(c), as to whether it wishes to purchase
the Stock pursuant to exercise of the Purchase Option. If the Corporation (or its assignee) elects
to purchase the Stock hereunder, it shall set a date for the closing of the transaction at a place
and time specified by the Corporation, or, at the Corporation’s option, such closing may be
consummated by mail as provided in Section 9(c) hereof. At such closing, the Corporation (or its
assignee) shall tender payment for the Stock and the certificates representing the Stock so
purchased shall be cancelled. The Option Price shall be payable in cash or by check.



     4. Stock Splits, etc. If, from time to time during the term of this Agreement:



     (a) There is any stock dividend or liquidating dividend of cash and/or property, stock split
or other change in the character or amount of any of the outstanding securities of the Corporation;
or



     (b) There is any consolidation, merger or sale of all, or substantially all, of the assets of
the Corporation; then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of his ownership of Stock shall be
immediately subject to this Agreement and be included in the word “Stock” for all purposes with the
same force and effect as the shares of Stock presently subject to the Purchase Option, right of
first refusal and other terms of this Agreement. While the aggregate Option Price shall remain the
same after each such event, the Option Price per share of Stock upon execution of the Purchase
Option shall be appropriately adjusted.



     5. Restriction on Transfer. Purchaser shall not sell, transfer, pledge, hypothecate
or otherwise dispose of any shares of the Stock which remain subject to the Purchase Option.



     The Corporation shall not be required (i) to transfer on its books any shares of Stock which
shall have been sold or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or
to pay dividends to any transferee to whom such shares shall have been so transferred.



     For a period of 90 days following the date any shares of the Stock cease to be subject to the
Purchase Option, upon the request of the Purchaser or the Purchaser’s personal representative, the
Corporation will purchase all or such portion of such shares as is requested, at the Fair Market
Value thereof on the date such request is received by the Corporation.



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     6. Legend. All certificates representing any of the shares of Stock subject to the
provisions of this Agreement shall have endorsed thereon the following legend:




     “THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE REDWOOD
TRUST, INC. AMENDED AND RESTATED 1994 EXECUTIVE AND NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN AND A RESTRICTED STOCK AWARD AGREEMENT OR PERFORMANCE SHARE AWARD
AGREEMENT ENTERED INTO AND BETWEEN THE REGISTERED OWNER AND REDWOOD TRUST, INC.
COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE OFFICES OF REDWOOD TRUST, INC.”



     7. Purchaser’s Representations. In connection with the purchasers purchase of the
Stock, the Purchaser hereby represents and warrants to the Corporation as follows:



          (a) Investment Intent; Capacity to Protect Interests. The Purchaser is purchasing the
Stock solely for Purchaser’s own account for investment and not with a view to or for sale in
connection with any distribution of the Stock or any portion thereof and not with any present
intention of selling, offering to sell or otherwise disposing of or distributing the Stock or any
portion thereof in any transaction other than a transaction exempt from registration under the Act.
The Purchaser also represents that the entire legal and beneficial interest of the Stock is being
purchased, and will be held, for the Purchaser’s account only, and neither in whole nor in part for
any other person. Purchaser either has a preexisting business or personal relationship with the
Corporation or any of its officers, directors or controlling persons or by reason of Purchaser’s
business or financial experience or the business or financial experience of Purchaser’s
professional advisors who are unaffiliated with and who are not compensated by the Corporation or
any affiliate or selling agent of the Corporation, directly or indirectly, could be reasonably
assumed to have the capacity to evaluate the merits and risks of an investment in the Corporation
and to protect Purchaser’s own interests in connection with this transaction.



          (b) Residence. The Purchaser’s principal residence is within the State of California
and is located at the address indicated beneath the Purchaser’s signature below.



          (c) Limitations on Disposition. Without in any way limiting Purchaser’s
representations set forth above, the Purchaser further agrees that he or she shall in no event make
any disposition of all or any portion of the Stock unless and until:



               (i) The shares of Stock proposed to be transferred are no longer subject to the Purchase
Option set forth in Section 3; and



               (ii) If Purchaser is an affiliate of the Corporation, the disposition is made pursuant to an
effective registration statement or pursuant to Rule 144 or is



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otherwise exempt from registration requirements in the opinion of counsel acceptable to the
Corporation.




               (d) Section 83(b) Election. The Purchaser understands that Section 83 of the Internal
Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the
amount paid for the Stock and the fair market value of the Stock as of the date any restrictions on
the Stock lapse. In this context, “restriction” means the right of the Company to buy back the
stock pursuant to the Purchase Option. In the event the Company has registered its securities under
the Exchange Act, “restriction” with respect to officers, directors and 10% shareholders also means
the six-month period after the Closing during which such officers, directors and 10% shareholders
are subject to suit under Section 16(b) of the Exchange Act. The Purchaser understands that if such
provision is applicable to him he may elect to be taxed at the time the Stock is purchased rather
than when and as the Purchase Option or six-month Section 16(b) period expires by filing an
election under Section 83(b) of the Code with the I.R.S. within thirty (30) days from the date of
purchase. Even if the fair market value of the Stock equals the amount paid for the Stock, the
election must be made to avoid adverse tax consequences in the future. The form for making this
election is attached as Exhibit A hereto. The Purchaser understands that failure to make this
filing timely will result in the recognition of ordinary income by the Purchaser, as the Purchase
Option lapses, or after the lapse of the six month Section 16(b) period, on the difference between
the purchase price and the fair market value of the Stock at the time such restrictions lapse. The
Purchaser further understands that the income tax laws of the State of California contain
provisions similar to Section 83.



     THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER’S SOLE RESPONSIBILITY AND NOT THE
CORPORATION’S TO FILE TIMELY THE ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b) AND UNDER ANY
CORRESPONDING PROVISIONS OF STATE TAX LAW, EVEN IF THE PURCHASER REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER’S BEHALF.



     8. Escrow. As security for the faithful performance of the terms of this Agreement
and to ensure the availability for delivery of the Purchaser’s Stock upon exercise of the Purchase
Option herein provided for, the Purchaser agrees to deliver to and deposit with the Secretary of
the Corporation, or such other person designated by the Corporation, as escrow agent in this
transaction (the “Escrow Agent”), two Stock Assignments duly endorsed (with date and number of
shares blank) in the form attached hereto as Exhibit B, together with the certificate or
certificates evidencing the Stock; said documents are to be held by the Escrow Agent and delivered
by said Escrow Agent pursuant to the Joint Escrow Instructions of the Corporation and the Purchaser
set forth in Exhibit C attached hereto and incorporated by this reference, which instructions shall
also be delivered to the Escrow Agent at the closing hereunder.



     9. Miscellaneous.



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               (a) Subject to the provisions and limitations hereof, Purchaser shall have, during the term of
this Agreement, exercise all rights and privileges of a stockholder of the Corporation with respect
to the Stock deposited in said escrow.



               (b) The parties agree to execute such further instruments and to take such further action as
may reasonably be necessary to carry out the intent of this Agreement.



               (c) Any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to Purchaser at his address
shown on the Corporation’s employment records and to the Corporation at the address of its
principal corporate offices (attention: Secretary) or at such other address as such party may
designate by ten days’ advance written notice to the other party hereto.



               (d) The Corporation may assign its rights and delegate its duties under this Agreement,
including paragraphs 3 and 5 hereof. If any such assignment or delegation requires consent of any
state securities authorities, the parties agree to cooperate in requesting such consent. This
Agreement shall inure to the benefit of the successors and assigns of the Corporation and, subject
to the restrictions on transfer herein set forth, be binding upon Purchaser, his or her heirs,
executors, administrators, successors and assigns.



               (e) Purchaser hereby authorizes and directs the Secretary or Transfer Agent of the Corporation
to transfer the Stock as to which the Purchase Option or right of first refusal has been exercised
from Purchaser to the Corporation.



               (f) Nothing in this Agreement shall affect in any manner whatsoever the right or power of the
Corporation, or a parent or subsidiary of the Corporation, to terminate Purchaser’s employment, for
any reason, with or without cause.



               (g) The failure of the Corporation to enforce at any time any provision on this Agreement
shall in no way be construed to be a waiver of such provision or of any other provision hereof.



               (h) This Agreement shall be governed by and construed according to the laws of the State of
Maryland without regard to its principles of conflict of laws.



               (i) The Plan is hereby incorporated by reference and made a part hereof, and this Agreement is
subject to all terms and conditions of the Plan.



               (j) This Agreement may be amended or modified at any time by an instrument in writing signed
by the parties hereto.



     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above
written.



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	 	REDWOOD TRUST, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	 
	 	

	 
	 	 	 	 
	

	 	Title:	 	 
	 
	 	

	 
	 	 	 	 
	

	 	Address:
	 	One Belvedere Place
	

	 	 	 	Suite 300
	

	 	 	 	Mill Valley, CA 94949
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	

	

	 	By:	 	 
	 
	 	 	 	 
	

	 	Address:	 	 







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EXHIBIT A




ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE




     1. The name, address and taxpayer identification number of the taxpayer is as follows:



	 	 	 
	

	 	

	

	 	Name
	 
	 	 
	

	 	

	

	 	Street Address
	 
	 	 
	

	 	

	

	 	City, State, Zip
	 
	 	 
	

	 	

	

	 	[Social Security No.]






     2. This election under Section 83(b) of the Internal Revenue Code is being made with respect
to the taxpayer’s                      Shares of Common Stock (the “Property”) in Redwood Trust, Inc. (the
“Company”).



     3. The Property was received by the taxpayer on                     ,      . The election is being made
with respect to the       tax year.



     4. The Property is subject to a substantial risk of forfeiture due to death, permanent or
temporary disability, involuntary termination with or without cause or voluntary termination from
the Company.



     5. The fair market value of the Property was $     .



     6. The amount paid for the Property was $     , which amount is equal to the fair market
value of $                    .



     7. Copies of this statement have been provided to the Company and the Internal Revenue
Service, and shall be attached to the taxpayer’s income tax return for the       tax year.



	 	 	 
	 

	 	

	

	 	Name






	 	 	 	 	 
	 

	 	Date:	 	 
	

	 	 	 	







 









 





EXHIBIT B




IRREVOCABLE STOCK OR BOND POWER




FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and transfer to




	 
	


	 

	Redwood Trust, Inc.

	


	 

	








(Social Security or Taxpayer Identifying No.)




	 	 	 	 	 
	IF STOCK,

COMPLETE

THIS

PORTION

	 	}
	 	                   shares of the Common stock of Redwood Trust, Inc.
represented by Certificate(s) No(s).

                    
inclusive, standing the name of the undersigned on the
books of said Company
	 
	 	 	 	 
	IF BONDS,

COMPLETE

THIS

PORTION

	 	}
	 	                    

               
                    
bonds
                    
of

                                         in the principal

amount of $                    , No(s).                     

inclusive, standing in the name of the undersigned on the
books of said Company.
	 
	 	 	 	 
	

	 	 	 	The undersigned does hereby irrevocably constitute and
appoint attorney to transfer the said stock or bond(s), as
the case may be, on the books of said Company, with full
power of substitution in the premises.






Dated:                                         




	 	 	 	 	 
	IMPORTANT
— READ CAREFULLY

The signature(s) to this Power must
correspond with the name(s) as
written upon the face of the
certificate(s) or bond(s) in every
particular without alteration or enlargement or any change whatever.

	 	By:	 	 
	 

	 	 	 	

	

	 	 	 	Name:







 










 






EXHIBIT C




JOINT ESCROW INSTRUCTIONS




[Date]                    




Harold F. Zagunis, Secretary

c/o Redwood Trust, Inc.

One Belvedere Place

Suite 300

Mill Valley, CA 94949



Dear Sir:




     As Escrow Agent for the undersigned parties, Redwood Trust, Inc., a Maryland corporation (the
“Corporation”), and                      (“Purchaser”), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement (the
“Agreement”) between the Corporation and the Purchaser, to which a copy of these Joint Escrow
Instructions is attached as Exhibit C, in accordance with the following instructions:



     1. In the event the Corporation and/or any assignee of the Corporation (referred to
collectively for convenience herein as the “Corporation”) exercises the Purchase Option set forth
in the Agreement, the Corporation shall give to the Purchaser and you a written notice specifying
the number of shares of stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Corporation. The Purchaser and the Corporation hereby
irrevocably authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.



     2. At the closing, you are directed (a) to date the stock assignments necessary for the
transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the
same, together with the certificate evidencing the shares of stock to be transferred, to the
Corporation against the simultaneous delivery to you of the purchase price (by check) for the
number of shares of stock being purchased pursuant to the exercise of the Purchase Option.



     3. The Purchaser irrevocably authorizes the Corporation to deposit with you any certificate
evidencing shares of stock to be held by you hereunder and any additions and substitutions to said
shares as defined in the Agreement. The Purchaser does hereby irrevocably constitute and appoint
you as his attorney-in-fact and agent for the term of this escrow to execute with respect to such
securities all documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated. Subject to the provisions of this paragraph 3, the
Purchaser shall have all rights and privileges of a shareholder of the Corporation while the stock
is held by you.



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     4. Upon written request of the Purchaser or the Purchaser’s personal representative, the
Corporation will confirm to you in writing the number of shares of stock that are no longer subject
to the Purchase Option. Promptly after your receipt of such confirmation, you will deliver to the
Purchaser or the Purchaser’s personal representative a certificate or certificates representing
such number of shares of stock as are not then subject to the Purchase Option and have not been
previously delivered to the Purchaser or the Purchaser’s personal representative. Such
certificates will be free of legends.



     5. If at the time of termination of this escrow you should have in your possession any
documents, securities, or other property belonging to the Purchaser, you shall deliver all of same
to the Purchaser and shall be discharged of all further obligations hereunder.



     6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed
by all of the parties hereto.



     7. You shall be obligated only for the performance of such duties as are specifically set
forth herein and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed by you to be genuine and to have been signed or presented by the
proper party or parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for the Purchaser while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith. The Corporation shall indemnify and hold the Escrow Agent harmless
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, attorney fees or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against it or them hereunder and under the Agreement, except
for any of the foregoing incurred in connection with, or arising out of, the Escrow Agent’s willful
misfeasance, bad faith or negligence in the performance of its duties hereunder or by reason of its
reckless disregard for its obligations and duties hereunder.



     8. You are hereby expressly authorized to disregard any and all warnings given by any of the
parties hereto or by any other person or corporation, excepting only orders or process of courts of
law and you are hereby expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or decree, you shall not be
liable to any of the parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without jurisdiction.



     9. You shall not be liable in any respect on account of the identity, authorities or rights of
the parties executing or delivering or purporting to execute or deliver the Agreement or any
documents or papers deposited or called for hereunder.



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     10. You shall not be liable for relinquishing of any rights under the Statute of Limitations
with respect to these Joint Escrow Instructions or any documents deposited with you.



     11. You shall be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder, and you may rely
upon the advice of such counsel. Such counsel’s reasonable compensation shall be paid by the
Corporation.



     12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be
Secretary of the Corporation or if you shall resign by written notice to each party. In the event
of any such termination, the Corporation shall appoint a successor Escrow Agent.



     13. You are authorized to employ as agents banks, brokerage firms or other financial
institutions to hold in safekeeping any certificates, instruments or other documents delivered to
you hereunder and to perform other services such as sale of securities, recordkeeping and other
administrative services as you may deem appropriate. All fees and expenses of such agents shall be
paid by the Corporation. If you reasonably require other or further instruments in connection with
these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto
shall join in furnishing such instruments.



     14. It is understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the securities held by you hereunder, you are authorized
and directed to retain in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but you shall be under no
duty whatsoever to institute or defend any such proceedings.



     15. Any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to each of the other parties
thereunto entitled at the following addresses, or at such other addresses as a party may designate
by ten days’ advance written notice to each of the other parties hereto.



CORPORATION:



Redwood Trust, Inc.

One Belvedere Place, Suite 300

Mill Valley, CA 94949



PURCHASER:



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[name]

[address]



ESCROW AGENT:



Harold F. Zagunis

c/o Redwood Trust, Inc.

One Belvedere Place, Suite 300

Mill Valley, CA 94949



     16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose
of said Joint Escrow Instructions; you do not become a party to the Agreement.



     17. Your duties under these Joint Escrow Instructions shall terminate upon the earlier of the
exercise of the Purchase Option by the Corporation or the expiration of the Purchase Option as to
all shares of stock covered thereby and the delivery of the certificates evidencing the stock to
the party entitled thereto.



     18. This instrument shall be binding upon and inure to the benefit of the parties hereto, and
their respective successors and permitted assigns.



	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	REDWOOD TRUST, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Name
	 
	 	 	 	 
	 	 	ESCROW AGENT:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Harold F. Zagunis
	 	 	Secretary






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REDWOOD TRUST, INC.




ADDENDUM NO. 1 TO




RESTRICTED STOCK PURCHASE AGREEMENT




TO BE INSERTED ABOVE




     THIS ADDENDUM NO. 1 is made as of the 31st day of December, 2001, by and between
Redwood Trust, Inc., a Maryland corporation (the “Corporation”), and George E. Bull III
(“Purchaser”).



     Pursuant to the Redwood Trust, Inc. Amended and Restated 1994 Executive and Non-Employee
Director Stock Option Plan (the “Plan”), the Corporation’s Compensation Committee (the “Committee”)
granted to the Purchaser a Restricted Stock award to purchase shares of the Corporation’s common
stock, on the terms and conditions set forth in a Restricted Stock Award Agreement, dated as of
January 18, 2001 (the “Agreement”). Any capitalized terms not defined herein shall have the
meaning set forth in the Plan or the Agreement.



     In consideration of the mutual covenants and representations set forth herein, the Corporation
and Purchaser agree as follows:



     1. Arrangement Regarding Payment of Withholding Tax. Section 11(3) of the Plan
requires that recipients of awards under the Plan make arrangements satisfactory to the Committee
regarding payment of federal, state or local taxes of any kind required by law to be withheld with
respect to awards. The Purchaser hereby agrees with the Committee and the Corporation with respect
to any withholding taxes required to be paid upon the lapse of the Purchase Option under the
Agreement as follows:



          (a) unless the Purchaser otherwise directs the Corporation in writing at least five (5)
business days prior to the date of any lapse of the Purchase Option with respect to shares of the
Stock, payment of all withholding taxes for each lapse of the Purchase Option shall be made by the
assignment by the Purchaser to the Corporation of such number of shares of Stock as to which the
Purchase Option is lapsing sufficient in value to fully cover the tax payment due, with the shares
being valued for such purpose at the closing price on the last trading day prior to the date of the
lapse and any fractional share value in excess of the tax payment due to be paid in cash to the
Purchaser; or



          (b) to the extent otherwise directed by the Purchaser, payment of withholding taxes may be
made through deduction from salary or other payments due to the Purchaser or through such other
method as may be requested by the Purchaser and acceptable to the Committee.



     2. Miscellaneous.



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          (a) The Purchaser hereby authorizes and directs the Secretary or Transfer Agent of the
Corporation to transfer on the stock ledger of the Corporation the shares of Stock which are to be
applied to the payment of taxes from the Purchaser to the Corporation.



          (b) This Agreement shall be governed by and construed according to the laws of the State of
Maryland without regard to its principles of conflict of laws.



          (c) The Plan is hereby incorporated by reference and made a part hereof, and this Agreement is
subject to all terms and conditions of the Plan.



     IN WITNESS WHEREOF, the parties have executed this Addendum No. 1 on the day and year first
above written.



	 	 	 	 	 
	 	 	REDWOOD TRUST, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Address:
	 	591 Redwood Highway
	

	 	 	 	Suite 3100
	

	 	 	 	Mill Valley, CA 94941
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	George E. Bull III
	 
	 	 	 	 
	

	 	Address:
	 	101 Underhill Road
	

	 	 	 	Mill Valley, CA 94941







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