exv10w8w2



 






Exhibit 10.8.2




EMPLOYEE NON-QUALIFIED STOCK OPTION GRANT




     NON-QUALIFIED STOCK OPTION GRANT, dated as of the           day of          , by and between Redwood Trust,
Inc., a Maryland corporation (the “Company”), and          , an employee of the Company (the “Optionee”).



     Pursuant to the 2002 Redwood Trust, Inc. Incentive Stock Plan (such Plan in the form effective on
the date hereof, the “Plan”), the Compensation Committee (the “Committee”) has determined that the
Optionee is to be granted a Non-Qualified Stock Option (the “Option”) to purchase shares of the
Company’s common stock, on the terms and conditions set forth herein, and the Company hereby grants
such Option. It is intended that the Option not constitute an “Incentive Stock Option” within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Any
capitalized terms not defined herein shall have the meaning set forth in the Plan.




	1)  	Number of Shares and Option Price. This Option Grant entitles the Optionee to
purchase          ( ) shares of the Company’s common stock, par value $0.01 per share (the “Original
Option Shares”), at a price (the “Original Option Price”) of           and 00/100 ($ ) per share,
which is not less that the Fair Market Value of the Option Shares as of the date hereof, as
determined by the Committee.






	2)  	DER’s This Option Grant also entitles the Optionee to receive Dividend Equivalent
Rights in the form of “accrued DERs” as defined in the Plan (“Accrued DERs”) in an amount
equal to the value of any common stock dividend (either in cash or property) declared and
accrued on the unexercised number of Option Shares subject to the Option granted above,
subject to the limitations specified below. All such DER’s are intended to qualify as
performance based compensation, having as a performance objective and condition the
requirement that (i) the Company have sufficient earnings to declare and pay dividends during
the period while such DER’s accrue and (ii) solely





 









 






	   	in the case of Accrued DERs payable with respect to unexercised Option Shares pursuant to
Section 4(d), the additional requirement that the number of shares issued with respect to such
Accrued DERs be reduced to the extent that the fair market value of the stock at the termination
of the Grant is not at least equal to its Original Option Price.






	 	a)  	Accrual of DERs will commence with common stock dividends with a record date after the
Date of Grant and will cease for common stock dividends with a record date after the
earlier of the exercise date of the related option and the Expiration Date.
	 
	 	b)  	The Accrued DERs will accrue on the Original Option shares and on the shares
represented by Accrued DERs as set forth in Section 5(8) of the Plan on the payable date of
the respective dividend.
	 
	 	c)  	The Optionee will not receive DER accrual for a dividend declared with respect to
Option Shares for which the related Option has been exercised or terminated as of the
record date of that dividend. The Optionee will not receive DER accruals for a dividend
declared with respect to Option Shares if the Optionee is not an employee on the record
date of that dividend, provided, however, that the Optionee will receive DER accruals in
the event of termination of employment to the extent provided in Sections 7, 8, and 9
hereof.
	 
	 	d)  	DER accruals and Option grants are not considered compensation for purposes of
determination of severance or termination. This provision is subject to any provisions
relative to this issue in any employment agreement between the Company and the Optionee in
effect at the time of this grant (as it may be amended or replaced from time to time).






	3)  	Period of Option. The term of the Option and of this Option Grant shall commence on
the date hereof (the “Date of Grant”) and, unless the Option is previously exercised or
terminated pursuant to this Option Grant, shall terminate upon the expiration of ten years
from the Date of Grant. Upon the Expiration Date, all rights of the Optionee hereunder shall
cease except the right to receive payment in respect of accrued DERs, including accruals with
respect to any dividends with a record date that was





 









 






	   	previous to the Expiration Date. The last day the Option may be exercised pursuant to the terms
of this Option Grant is the Expiration Date.






	4)  	Conditions of Exercise.






	 	a)  	Subject to the provisions of paragraph (b) of this Section 4, the Option shall become
exercisable as follows:






	 	i)  	25% of the Original Option Shares (rounded down to the nearest whole number of
 shares) on          ;
	 
	 	ii)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	iii)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	iv)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	v)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	vi)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	vii)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	viii)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	ix)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	x)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	xi)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	xii)  	An additional 6.25% of the Original Option Shares (rounded down to the nearest
whole number of shares) on          ;
	 
	 	xiii)  	The balance of the Original Option Shares on          .










 









 












	 	b)  	The right of the Optionee to purchase Original Option Shares that have become
exercisable under clause (a) above may be exercised, in whole or in part, at any time or
from time to time up to the Expiration Date, but only during the period in which such
Option remains otherwise exercisable as herein provided.
	 
	 	c)  	Upon exercise of any Original Option Shares, the Optionee
will receive the number of shares representing Accrued DER’s associated with each exercised Original Option Share.
	 
	 	d)  	If the Optionee has not exercised all of the Original Option Shares by the Expiration
Date, the Optionee shall be entitled to receive a number of shares with respect to accrued
but unpaid DERs equal to (if greater than zero) the total number of shares that would have
been received had the Option been exercised on the Expiration Date (the remaining
unexercised Original Option shares plus the remaining accrued DER shares) less the number
of shares that would have been required to make the option exercise payment on that date
(the Original Option Price times the remaining Original Option Shares, divided by the fair
market value of Redwood Stock on the Expiration Date). The Optionee will not be eligible,
however, to receive a number of shares greater than the number of
remaining accrued DER shares at expiration. Such payment will be made within 30 days of the Expiration
Date. Payment of Accrued DERs with respect to unexercised Original Option Shares pursuant
to this section 4(d) is subject to approval by the stockholders of the Company of an
authorizing amendment to the Plan. If the Plan is not amended to allow for this type of
provision in 2004, then this provision 4(d) will not be considered a part of this Option
Grant.





5) Limits on Transferability of Option.





	 	a)  	Except as provided in (b) below, the Option and this Option Grant shall not be
transferable otherwise than by will or by the laws of descent and distribution or pursuant
to a “qualified domestic relations order,” as defined in the Employee Retirement Income
Security Act of 1974; and the Option may be exercised, during the lifetime of the Optionee,
only by the Optionee or in accordance with the terms of a qualified domestic relations
order.





 









 






	 	b)  	The Option may also be transferred to persons and entities referred to in Section
5(6)(b) of the Plan or as may be approved by the Committee upon request. Any transfer must
comply with the terms of Section 5(6)(b), including the provision that no consideration is
permitted for any transfer, unless approved by the Committee. Following transfer, the
Option shall continue to be subject to the same terms and conditions as are applicable
prior to transfer and the terms “Optionee,”
“Participant,” “Stock Option Holder,” and other
references to the original Optionee shall be deemed to refer to the transferee, provided,
however that






	 	i)  	The provisions of this Option Grant dealing with events of termination of
employment shall continue to be applied to the employment of the original Optionee (so
that following any event of termination of employment of the original Optionee, the
Option shall be exercisable by the transferee, but only to the extent and for the
periods specified in this Option Grant); and
	 
	 	ii)  	The original Optionee shall continue to be subject to Section 10(3) of the Plan
regarding payment of taxes, including the provision entitling the Company to deduct
taxes from amounts otherwise due to the original Optionee. Any transfer of the Option
shall automatically include the transfer of DERs granted with the Option; DERs may not
be transferred separately from the Option.






	6)  	Exercise of Option. Options that have become exercisable may be exercised in whole
or in part at any time during the period herein specified by giving written notice of exercise
to the Company specifying the number of shares to be purchased, accompanied by payment in full
of the purchase price in cash or its equivalent as determined by the Committee. As determined
by the Committee, in its sole discretion, payment in whole or in part may also be made in the
form of unrestricted Stock already owned by the Optionee, based in each case, on the Fair
Market Value of the Stock on the date the Option is exercised. Any payment in the form of
stock already owned by the Optionee may be effected by use of an Acknowledgement and
Attestation Form approved by the Committee.




 









 











All deliveries and distributions under this Option Grant are subject to withholding of all
applicable taxes. At the election of the Optionee, but subject to the sole discretion of the
Committee and such rules and limitations as may be established by the Committee from time to time,
such withholding obligations may be satisfied through the surrender of shares of common stock which
the Optionee already owns, or to which the Optionee is otherwise receiving shares of common stock
upon exercise under the Plan.



The Optionee may be able to defer payment of taxes on income realized in connection with the
exercise of these options by participating in the Company’s Deferred Compensation Plan, subject to
the eligibility requirements and other rules and procedures of the Deferred Compensation Plan in
place at that time.




	7)  	Termination by Death. If the Optionee’s relationship as an employee with the Company
terminates by reason of death, the Option becomes immediately fully vested and exercisable.
DER’s will continue to be accrued on unexercised shares with respect to dividend record dates
occurring during the remaining exercise period as noted below. After termination by death,
the Option may be exercised until the later of (a) a period of twelve (12) months after the
date of death or (b) ___, ___, 200_.
<insert date shown on (4)(xiii) + 30 days>
but in no case beyond the stated term of this Option Grant.
	 
	8)  	Termination by Reason of Disability. If the Optionee’s relationship as an employee
with the Company terminates by reason of disability, the Option becomes immediately fully
vested and exercisable. DER’s will continue to be accrued on unexercised shares with respect
to dividend record dates occurring during the remaining exercise period as noted below. After
termination by disability the Option may be exercised until the later of (a) a period of
twelve (12) months after the date of termination or (b) ___, ___, 200_. <insert date
shown on (4)(xiii) + 30 days>but in no case beyond the stated term of this Option Grant;
provided, however, that if the Optionee dies prior to the end of the exercise period following
termination by disability, such Option may thereafter be exercised until the later of (a) a
period of twelve (12) months





 









 






	   	after the date of death or (b) ___, ___, 200_. <insert date shown on (4)(xiii) + 30
days> but in no case beyond the stated term of this Option Grant






	9)  	Other Termination.






	 	a)  	Upon termination by retirement (as defined by the Committee), the Option shall remain
outstanding and continue to vest and become exercisable pursuant to Section 4, until the
later to occur of (i) thirty (30) days after the last dividend record date for which any
Options are yet unvested under the terms of this Option Grant, or (ii) the until the later
of (a) a period of thirty-six (36) months after the date of retirement or (b) ___,
___, 200_. <insert date shown on (4)(xiii) + 30 days> but in no case beyond the stated
term of this Option Grant. Following termination by retirement, DER’s will continue to be
accrued under the provisions of this Option Grant with respect to dividend record dates
occurring during the remaining original vesting period, as noted herein. .
	 
	 	b)  	If the Optionee’s relations as an employee with the Company terminates for any reason
other than death, disability, or retirement, the Option may be exercised, but only to the
extent vested and exercisable at the time of such termination, until the earlier to occur
of (a) three (3) months from the date of such termination or (b) the expiration of the
stated term of the Option. The Optionee is not eligible to accrue DER’s for record dates
subsequent to the date of such termination.
	 
	 	c)  	Notwithstanding anything in this Option Grant to the contrary, if there is in effect an
employment agreement, as such employment agreement as may be amended or replaced from time
to time(the “Employment Agreement”), between the Optionee and the Company on the Date of
Grant, then upon termination of the Optionee’s employment either by the Company other than
for Cause (as such term is defined in the Employment Agreement) or by the Optionee for Good
Reason (as such term is defined in the Employment Agreement), the Option shall become fully
vested and exercisable and DER’s will be accrued and payable to the Optionee as provided in
the Employment Agreement . If not specifically provided in the Employment Agreement, DER’s
will be accrued pursuant to the provisions of this Option Grant. If the Optionee’s
employment with the Company terminates





 









 






	 	   	because of termination by the Company for Cause (as such term is defined in the Employment
Agreement) or because the Optionee terminates employment without Good Reason (as such term
is defined in the Employment Agreement), the Option may be exercised, but only to the extent
vested and exercisable at the time of such termination, until the earlier to occur of (a)
three (3) months from the date of such termination, (b) the expiration of the stated term of
the Option, or (c) such time as may otherwise be provided in the Employment Agreement.






	10)  	At-Will Employment. This Option Grant is not an employment contract and nothing in
this Option Grant shall be deemed to create in any way whatsoever any obligation on your part
to continue in the employ of the Company or on the part of the Company to continue your
employment with the Company. It is understood and agreed to by you, as an Optionee under the
Plan, that this Option Grant and your participation in the Plan does not alter the at-will
nature of your relationship with the Company (subject to the terms of the Employment
Agreement). The at-will nature of your relationship with the Company can only be altered by a
writing signed by both you and the President of the Company.
	 
	11)  	Notices. Any notice required or permitted under this Option Grant shall be deemed
given when delivered personally, or when deposited in a United States Post Office, postage
prepaid, addressed, as appropriate, to the Optionee either at the Optionee’s address
hereinbelow set forth or such other address as the Optionee may designate in writing to the
Company, and to the Company: Attention: Douglas B. Hansen (or his designee), at the Company’s
address or such other address as the Company may designate in writing to the Optionee.
	 
	12)  	Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time
any provision of this Option Grant shall in no way be construed to be a waiver of such
provision or of any other provision hereof.










 









 












	13)  	Existing Agreements. This Option Grant does not supersede nor does it modify any
existing agreements between the Optionee and the Company.
	 
	14)  	Governing Law. This Option Grant shall be governed by and construed according to the
laws of the State of Maryland without regard to its principles of conflict of laws.
	 
	15)  	Incorporation of Plan. The Plan is hereby incorporated by reference and made a part
hereof, and the Option and this Option Grant are subject to all terms and conditions of the
Plan.
	 
	16)  	Amendments. This Option Grant 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 Option Grant on the day and year first above
written.




REDWOOD TRUST, INC.



By            
                   
                   
                   
                




      Harold F. Zagunis, CFO/Corporate Secretary
      Redwood
Trust, Inc.
      One
Belvedere Place, Suite #300
      Mill
Valley, California 94941


The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Option
Grant and to all the terms and provisions of the Plan herein incorporated by reference.




By            
                   
                   
                   
                



[employee name]

[employee address]