Exhibit
10.1

              
 

              AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

              


                         This
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT ("Agreement"), originally effective as of the 7th day of April,
2003 (the "Effective Date"), as amended from time to time thereafter, and as
amended and restated as of the 31st day of
March, 2009, is entered into by and between GEORGE E. BULL, III (the
"Executive") and REDWOOD TRUST,
INC., a Maryland corporation (the "Company").

              


                         The
Company desires to establish its right to the continued services of the
Executive, in the capacity, on the terms and conditions, and subject to the
rights of termination hereinafter set forth, and the Executive is willing to
accept such employment in such capacity, on such terms and conditions, and
subject to such rights of termination. As of the Effective Date, this Agreement
wholly supersedes the Employment Agreement between the Executive and the Company
that was effective as of August 19, 1994.

              


                         In
consideration of the mutual agreements hereinafter set forth, the Executive and
the Company have agreed and do hereby agree as follows:

              


              1.  EMPLOYMENT AS CHAIRMAN
OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE COMPANY. The Company does
hereby employ, engage and hire the Executive as Chairman of the Board and Chief
Executive Officer of the Company, and the Executive does hereby accept and agree
to such hiring, engagement, and employment. The Executive's duties as Chairman
of the Board and Chief Executive Officer shall be such executive and managerial
duties as the Board of Directors of the Company shall from time to time
prescribe and as provided in the Bylaws of the Company. The Executive shall
devote such time, energy and skill to the performance of his duties for the
Company and for the benefit of the Company as may be necessary or required for
the effective conduct and operation of the Company's business. Furthermore, the
Executive shall exercise due diligence and care in the performance of his duties
to the Company under this Agreement.

              


              2.  TERM OF
AGREEMENT. The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue through December 31, 2005; provided, however,
that (i) on January 1, 2006 and each succeeding January 1, the Term shall
automatically be extended for one additional year unless, not later than three
months prior to any such January 1, either party shall have given written notice
to the other that it does not wish to extend the Term and (ii) such one year
extensions of the Term shall not occur on and after the January 1 of the year in
which the Executive will attain age sixty-five (65) but instead the Term shall
be extended only until the date of the Executive's sixty-fifth (65th)
birthday.

               

              
                
                  
                  

                

                
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              3.  COMPENSATION.

              


              (a)  Base
Salary.  The Company shall pay the Executive, and the Executive agrees
to accept from the Company, in payment for his services to the Company a base
salary at the rate of $700,000 per year ("Base Salary"), payable in equal
biweekly installments or at such other time or times as the Executive and
Company shall agree. Base Salary shall be subject to such adjustments as the
Company and the Executive shall agree.

               

              (b)  Performance
Bonus – Board of Directors’ Discretion. The Executive shall be eligible to
receive an annual bonus. The Compensation Committee of the Company's Board of
Directors (the "Compensation Committee") in its discretion will determine
whether such annual bonus will be paid, the amount of such bonus and its form of
payment. The Executive's target annual bonus amount is 175% of his Base Salary
(the "Target Bonus"). If the Compensation Committee determines in its discretion
that the Executive's performance meets or exceeds the criteria established by
the Compensation Committee for the award of a Target Bonus, it may award
Executive the Target Bonus or a higher amount. Likewise, if the Executive's
performance does not meet the criteria, the Committee may award a lesser amount
or no bonus may be awarded.

               

              (c)  Equity
Incentive Awards.   Executive shall be eligible to receive grants
of equity-based long-term incentive awards, including options to purchase
Company stock and Company restricted stock. Such awards shall be determined in
the discretion of the Compensation Committee. In the event of a Change of
Control (as defined in Section 2(f) of the Redwood Trust, Inc. Executive
Deferred Compensation Plan) in which the surviving or acquiring corporation does
not assume the Executive's outstanding stock options and equity-related awards
(including options and awards granted both before and after the Effective Date)
or substitute similar options and equity-related awards, such options and
equity-related awards shall immediately vest and become exercisable if the
Executive's service with the Company has not terminated before the effective
date of the Change of Control; provided, however, that the foregoing provision
shall only apply if the Company is not the surviving corporation or if shares of
the Company's common stock are converted into or exchanged for other securities
or cash.

               

              (d)  Annual
Review.  The Company's Board of Directors shall, at least annually,
review the Executive's entire compensation package to determine whether it
continues to meet the Company's compensation objectives. Such annual review will
include a determination of (i) whether to increase the Base Salary in accordance
with Section 3(a); (ii) the incentive performance bonus to be awarded in
accordance with Section 3(b); and (iii) the amount and type of any equity awards
granted in accordance with Section 3(c).

               

              
                
                  
                  

                

                
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              4.  FRINGE
BENEFITS. The Executive shall be entitled to participate in any
benefit programs adopted from time to time by the Company for the benefit of its
senior executive employees, and the Executive shall be entitled to receive such
other fringe benefits as may be granted to him from time to time by the
Company's Board of Directors.

              


              (a)  Benefit
Plans.  The Executive shall be entitled to participate in any
benefit plans relating to stock options, stock purchases, pension, thrift,
profit sharing, life insurance, medical coverage, education, or other retirement
or employee benefits available to other senior executive employees of the
Company, subject to any restrictions (including waiting periods) specified in
such plans and/or related individual agreements. The Company shall make
commercially reasonable efforts to obtain medical and disability insurance, and
such other forms of insurance as the Board of Directors shall from time to time
determine, for its senior executive employees.

              


              (b)  Paid Time
Off.  The
Executive shall be entitled to such number of weeks of paid vacation per
calendar year consistent with Executive's satisfactory performance of the duties
set forth in Section 1.

              


              5.  BUSINESS
EXPENSES. The Company shall reimburse the Executive for any and all
necessary, customary and usual expenses, properly receipted in accordance with
Company policies, incurred by Executive on behalf of the Company.

               

              6.  TERMINATION
OF EXECUTIVE'S EMPLOYMENT.

               

              (a)  Death.  If
the Executive dies while employed by the Company, his employment shall
immediately terminate. The Company's obligation to pay the Executive's Base
Salary shall cease as of the date of the Executive's death, and any unpaid Base
Salary shall be paid to the Executive's estate. In addition, within fifteen (15)
days of the Executive's death, the Company shall pay to the Executive's estate
an incentive performance bonus based on Executive's Target Bonus then in effect,
prorated for the number of days of employment completed by the Executive during
the year of his death. Executive's beneficiaries or his estate shall receive
benefits in accordance with the Company's retirement, insurance and other
applicable programs and plans then in effect. All stock options or other
equity-related awards, including restricted stock awards, shall vest in full
and, in the case of stock options, shall be exercisable for such period as set
forth in the applicable award agreement by which such awards are
evidenced.

               

              (b)  Disability.  If,
as a result of the Executive's incapacity due to physical or mental illness
("Disability"), Executive shall have been absent from the full-time performance
of his duties with the Company for six (6) consecutive months, and, within
thirty (30) days after written notice is provided to him by the Company, he
shall not have returned to the full-time performance of his duties, the
Executive's employment under this Agreement may be terminated by the Company for
Disability. During any period prior to such termination during which the
Executive is absent from the full-time performance of his duties with the
Company due to Disability, the Company shall continue to pay the Executive his
Base Salary at the rate in effect at the commencement of such period of
Disability. Subsequent to such termination, the Executive's benefits shall be
determined under the Company's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs. In
addition, within fifteen (15) days of such termination, the Company shall pay to
the Executive an incentive performance bonus based on Executive's Target Bonus
then in effect, prorated for the number of days of employment completed by the
Executive during the year in which his employment terminated.

               

              
                
                  
                  

                

                
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              The Executive, the Executive's
beneficiaries or his estate shall receive benefits in accordance with the
Company's retirement, insurance and other applicable programs and plans then in
effect. All stock options or other equity-related awards, including restricted
stock awards, shall vest in full and, in the case of stock options, shall be
exercisable for such period as set forth in the applicable award agreement by
which such awards are evidenced.

              


              (c)  Termination By The
Company For Cause.  The Company may terminate the Executive's
employment under this Agreement for Cause, at any time prior to expiration of
the Term of the Agreement. For purposes of this Agreement, "Cause" shall mean
(i) the Executive's material failure to substantially perform the reasonable and
lawful duties of his position for the Company, which failure shall continue for
thirty (30) days after notice thereof by the Company to the Executive; (ii) acts
or omissions constituting gross negligence, recklessness or willful misconduct
on the part of the Executive in respect of his fiduciary obligations or
otherwise relating to the business of the Company; or (iii) the Executive's
conviction of a felony involving fraud, misappropriation or embezzlement. In
such a case, the Executive's employment under this Agreement may be terminated,
and the Company's obligation to pay the Executive's Base Salary, any bonus and
fringe benefits shall cease as of the termination date. However, the termination
of Executive's employment shall not be deemed to be for Cause unless and until
there has been delivered to Executive a copy of a resolution duly adopted by the
Company's Board of Directors (after reasonable notice is provided to Executive
and Executive is given an opportunity to be heard by the Company's Board of
Directors), finding that, in the good faith opinion of the Company's Board of
Directors, Executive's conduct met the standard for termination for
Cause.

               

              (d)  Termination By The
Company Without Cause. The Executive shall have the right to terminate
this Agreement for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without the Executive's express written consent, of
any one or more of the following events:

               

              (i)  (A) the
Executive's not being either Chairman of the Board or Chief Executive Officer of
the Company, or if the Company is a subsidiary, of the ultimate parent entity,
except in connection with the Company's termination of the Executive's
employment for Cause pursuant to Section 6(c) or as otherwise expressly
contemplated herein; (B) the assignment of duties to the Executive not
consistent with being Chairman of the Board or Chief Executive Officer of the
Company, or if the Company is a subsidiary, of the ultimate parent entity; or
(C) the Executive's not reporting to the Company's Board of Directors, or if the
Company is a subsidiary, of the ultimate parent entity;

               

              
                
                  
                  

                

                
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              (ii)  A reduction in
the Executive's Base Salary or a material reduction in the value of the
Executive's total compensation package (salary, bonus opportunity, equity
incentive award opportunity and benefits) if such a reduction is inconsistent
with compensation trends for Chairmen of the Board and Chief Executive Officers
at comparable companies, or such reduction is not made in proportion to an
across-the-board reduction for all senior executives of the Company and a Change
of Control (as defined in Section 2(f) of the Redwood Trust, Inc. Executive
Deferred Compensation Plan) has not occurred;

               

              (iii)  The
relocation of the Executive's principal Company office to a location more than
twenty-five (25) miles from its location as of the Effective Date or the
Company's requiring the Executive to be based anywhere other than the Company's
principal executive offices, except for required travel on the Company's
business to the extent necessary to fulfill the Executive's obligations under
Section 1;

               

              (iv)  A failure to
re-elect the Executive as a member of the Company's Board of Directors, or if
the Company is a subsidiary, of the Board of Directors of the ultimate parent
entity;

               

              (v)  A failure at
any time to renew this Agreement for successive one-year periods pursuant to
Section 2;

               

              (vi)  The complete
liquidation of the Company; or

               

              (vii)  In the event
of a merger, consolidation, transfer, or closing of a sale of all or
substantially all the assets of the Company with or to any other individual or
entity, the failure of the Company's successor to affirmatively adopt this
Agreement or to otherwise comply with its obligations pursuant to Section 13
below.

               

              (e)  Termination By The
Executive Without Good Reason.  The Executive may at any time
during the Term terminate his employment hereunder for any reason or no reason
by giving the Company notice in writing not less than one hundred twenty (120)
days in advance of such termination. The Executive shall have no further
obligations to the Company after the effective date of termination, as set forth
in the notice. In the event of a termination by the Executive under this Section
6(e), the Company will pay only the portion of Base Salary or previously awarded
bonus unpaid as of the termination date. Fringe benefits which have accrued
and/or vested on the termination date will continue in effect according to their
terms.

               

              
                
                  
                  

                

                
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                         7.
COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE
EXECUTIVE FOR GOOD REASON.

              


              (a)  If the
Executive's employment shall be terminated by the Company other than for Cause
or by the Executive for Good Reason, the Executive shall be entitled to the
following benefits:

               

              (i)  Payment of Unpaid Base
Salary. The Company shall immediately pay the Executive any portion of
the Executive's Base Salary or previously awarded bonus not paid prior to the
termination date.

               

              (ii)  Severance
Payment.  The Company shall provide the Executive the
following: (x) an amount equal to 8.25 times Executive’s Annual Base Salary as
in effect immediately prior to his termination; (y) an amount equal to 1.75
times the Executive’s Annual Base Salary in effect immediately prior to his
termination prorated for the number of days of employment completed by the
Executive during the year in which his employment is terminated; and (z) with
respect to options granted on or before December 31, 2002, the sum of the
Dividend Equivalent Rights payments (as defined in the applicable award
agreement by which any such Dividend Equivalent Rights were granted) that would
have been payable to Executive over the three (3) year period following his
termination had he remained employed (taking into consideration the term of
options and Dividend Equivalent Rights and assuming that the options are fully
vested and remain unexercised).  Payments pursuant to this Section
with respect to options granted after December 31, 2002 will be calculated in
the same manner, unless such options provide a different formula for Dividend
Equivalent Rights payments if Executive’s employment is terminated by the
Company other than for Cause or by the Executive for Good Reason, in which case
the Dividend Equivalent Rights payments shall be governed by the terms of such
options. The
quarterly dividend per share rate that shall be used in this calculation is the
higher of (I) one-fourth (25%) of the sum of common stock dividends declared per
common share in the twelve (12) months prior to the termination date, and (II)
one-twelfth (8.333%) of the sum of common stock dividends declared per common
share in the thirty-six (36) months prior to the termination date.

               

              (iii)  Stock Options and
Other Equity-Related Awards.  All stock options and other
equity-related awards, including restricted stock awards, held by the Executive
as of the termination date shall vest in full and, in the case of stock options,
shall be exercisable for such period as set forth in the applicable award
agreements by which such awards are evidenced.

               

              (iv)  Continuation of
Fringe Benefits.  For the three (3) year period following the
termination of the Executive's employment, the Company shall continue to provide
the Executive with all life insurance, disability insurance and medical coverage
fringe benefits set forth in Section 4 as if the Executive's employment under
the Agreement had not been terminated; provided, however, that such life
insurance, disability insurance and medical coverage shall cease as of the date
the Executive receives such coverage from a subsequent employer. No provision of
this Agreement will affect the continuation coverage rules under Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), except that the Company's
payment, if any, of applicable insurance premiums will be credited as payment by
the Executive for purposes of the Executive's payment required under COBRA.
Therefore, the period during which the Executive may elect to continue the
Company's medical plan coverage at the Executive's own expense under COBRA, the
length of time during which COBRA coverage will be made available to the
Executive, and all other rights and obligations of the Executive under COBRA
(except the obligation to pay insurance premiums that the Company pays) will be
applied in the same manner that such rules would apply in the absence of this
Agreement. For purposes of this Section 7(a)(iv), any applicable insurance
premiums that are paid by the Company shall not include any amounts payable by
the Executive under an Internal Revenue Code Section 125 health care
reimbursement plan, which amounts, if any, are the sole responsibility of the
Executive.

               

              
                
                  
                  

                

                
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              (v)  Excise Tax
Gross-Up.  In the event that the Executive becomes entitled to
the payments and benefits provided under the provisions of this Section 7
("Payments and Benefits"), and if any of the Payments and Benefits will be
subject to any excise tax imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or successor sections
thereto ("Excise Tax"), the Company shall pay to or for the benefit of the
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Payments and
Benefits and any federal, state and local income tax and Excise Tax upon the
payments provided for under this Section 7(a)(v), shall be equal to the amount
of the Payments and Benefits. For purposes of determining whether any of the
Payments and Benefits will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments or benefits received or to be received by the
Executive that are contingent on a transaction described in Section
280G(b)(2)(A)(i) of the Code or on an event, including (without limitation) a
termination of the Executive's employment that is materially related to such a
transaction (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in
such a transaction, or any person affiliated with the Company or such person)
shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless, in the opinion of tax counsel selected by the Company and reasonably
acceptable to the Executive, such other payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered, within
the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount
(as defined in Section 280G(b)(3) of the Code) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax; (ii) the amount of
the Payments and Benefits which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments and
Benefits or (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying clause (i), above); and (iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the termination date of employment, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes based on the marginal rate referenced
above. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the termination date, the
Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income tax
imposed on the Gross-Up Payment being repaid by the Executive to the extent that
such repayment results in a reduction in Excise Tax and/or a federal, state or
local income tax deduction) plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise

               

              
                
                  
                  

                

                
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              Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of the Executive's employment (including by reason of any payment,
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess, but only to the extent that such
interest, penalties or additions would not have been reduced by prompt payment
by the Executive to the appropriate tax authority of the Gross-Up Payments
previously received) at the time that the amount of such excess is finally
determined. The Executive and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Payments and Benefits.

              


              (b)  No Mitigation Required; No Other
Entitlement To Benefits Under Agreement. The Executive shall not be
required in any way to mitigate the amount of any payment provided for in this
Section 7, including, without limitation, by seeking other employment, nor shall
the amount of any payment provided for in this Section 7 be reduced by any
compensation earned by the Executive as the result of employment with another
employer after the termination date of employment, or otherwise. Except as set
forth in this Section 7, following a termination governed by this Section 7, the
Executive shall not be entitled to any other compensation or benefits set forth
in this Agreement, except as may be separately negotiated by the parties and
approved the Company's Board of Directors in writing in conjunction with the
termination of Executive's employment under this Section 7.

               

              (c)  Release
Agreement.  As a condition of receiving any of the payments and
benefits set forth in this Section 7, the Executive shall be required to execute
a mutual release agreement in the form attached hereto as Exhibit A or Exhibit
B, as appropriate, and such release agreement must have become effective in
accordance with its terms. The Company, in its sole discretion, may modify the
term of the required release agreement to comply with applicable state law and
may incorporate the required release agreement into a termination agreement or
other agreement with the Executive.

               

              (d)  Timing of Severance Payments.
Notwithstanding any other provision of this Agreement, any and all severance
payments provided under this Agreement in connection with the termination of the
employment of the Executive shall be payable in an amount equal to 75% of such
payments on the date that is six months after the termination date, and the
remaining 25% shall be payable in six equal monthly installments beginning on
the date that is seven months after the termination date and continuing on the
same date of each of the five months thereafter.

               

              
                
                  
                  

                

                
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              (e)  Timing of Bonus
Payments.  Notwithstanding any other provision of this
Agreement, any and all bonus payments provided under the Agreement in connection
with the termination of the employment of the Executive shall be payable on the
date that is six months after the termination date.

               

              8.  DISPUTES RELATING TO
EXECUTIVE'S TERMINATION OF EMPLOYMENT FOR GOOD REASON. If the Executive
resigns his employment with the Company alleging in good faith as the
basis for such resignation "Good Reason" as defined in Section 6(d), and if the
Company then disputes the Executive's right to the payment of benefits
under Section 7, the Company shall continue to pay the Executive the full
compensation (including, without limitation, his Base Salary) in effect at the date
the Executive provided written notice of such resignation, and the Company shall
continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was then a participant, until the
earlier of the expiration of the Term or the date the dispute is finally
resolved, either by mutual written agreement of the parties or by application of the
provisions of Section 11. For the purposes of this Section 8, the Company
shall bear the burden of proving that the grounds for the Executive's
resignation do not fall within the scope of Section 6(d), and there shall be a
rebuttable presumption that the Executive alleged such grounds in good
faith.

              


              9.  NONCOMPETITION
PROVISIONS.

              


              (a)  Noncompetition.
Executive agrees that during the Term prior to any termination of his employment
hereunder and for a period of one (1) year following the occurrence of any event
entitling the Executive to Payments and Benefits, provided the Company makes all
such payments when due according to the provisions of Section 7, he will not,
directly or indirectly, without the prior written consent of a majority of the
non-employee members of the Company's Board of Directors, manage, operate, join,
control, participate in, or be connected as a stockholder (other than as a
holder of shares publicly traded on a stock exchange or the NASDAQ National
Market System), partner, or other equity holder with, or as an officer, director
or employee of, any real estate investment organization whose business strategy
is competitive with that of the Company, as determined by a majority of the
non-employee members of the Company's Board of Directors. It is further
expressly agreed that the Company will or would suffer irreparable injury if the
Executive were to compete with the Company or any subsidiary or affiliate of the
Company in violation of this Agreement and that Company would by reason of such
competition be entitled to injunctive relief in a court of appropriate
jurisdiction, and the Executive further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting the Executive from competing
with the Company or any subsidiary or affiliate of the Company, in the areas of
business set forth above, in violation of this Agreement.

               

              
                
                  
                  

                

                
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              (b)  Right To Company
Materials.  The Executive agrees that all styles, designs,
lists, materials, books, files, reports, correspondence, records, and other
documents ("Company Materials") used, prepared, or made available to the
Executive shall be and shall remain the property of the Company. Upon the
termination of employment or the expiration of this Agreement, all Company
Materials shall be returned immediately to the Company, and the Executive shall
not make or retain any copies thereof.

              


              (c)  Nonsolicitation.
The Executive promises and agrees that he will not directly or indirectly
solicit any of the Company's executive employees to work for any competing real
estate investment organization as determined under the preceding Section
9(a).

              


              (d)  Maryland Law.
The Executive agrees, in accordance with Maryland law, to first offer to
the Company corporate opportunities learned of solely as a result of his service
as an officer and director of the Company.

              


              10.  NOTICES. All
notices and other communications under this Agreement shall be in writing and
shall be given by fax or first class mail, certified or registered with return
receipt requested, and shall be deemed to have been duly given three (3) days
after mailing or twenty-four (24) hours after transmission of a fax to the
respective persons named below:

              


              
                	
                      	
                        If
      to the Company:   

                      	
                        Redwood
      Trust, Inc.

                      


              

              Attn: President

              One Belvedere Place, Suite
300

              Mill Valley, CA 94941

              Phone: (415) 389-7373

              Fax: (415) 381-1773

              


              
                	
                      	
                        If
      to the Executive:    

                      	
                        George
      E. Bull, III

                      
	 	 	
                        c/o
      Redwood Trust, Inc.

                        
                          One
      Belvedere Place, Suite 300

                        

                        
                          Mill
      Valley, CA 94941

                        

                        
                          Phone:
      (415) 389-7373

                        

                        
                          Fax:
      (415) 381-1773

                        

                      


              

               

              Either
party may change such party's address for notices by notice duly given pursuant
hereto.

               

              
                
                  
                  

                

                
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              11.  RESOLUTION OF
DISPUTES. To ensure the rapid and economical resolution of disputes that
may arise in connection with the Executive's employment with the Company, the
Executive and the Company agree that any and all disputes, claims, or causes of
action, in law or equity, arising from or relating to the enforcement, breach,
performance, or interpretation of this Agreement, the Executive's employment, or
the termination of the Executive's employment ("Arbitrable Claims") shall be
submitted to confidential mediation in San Francisco, California conducted by a
mutually agreeable mediator from Judicial Arbitration and Mediation Services
("JAMS") or its successor, and the cost of JAMS' mediation fees shall be paid by
the Company. In the event that mediation is unsuccessful in resolving the
Arbitrable Claims, the Arbitrable Claims shall be resolved, to the fullest
extent permitted by law, by final, binding and confidential arbitration in San
Francisco, California conducted by JAMS or its successor, under the then
applicable rules of JAMS. THE EXECUTIVE ACKNOWLEDGES THAT BY AGREEING TO THIS
ARBITRATION PROCEDURE, BOTH THE EXECUTIVE AND THE COMPANY WAIVE THE RIGHT TO
RESOLVE ANY SUCH DISPUTE THROUGH A TRIAL BY JURY OR JUDGE OR ADMINISTRATIVE
PROCEEDING. The arbitrator shall: (a) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would
otherwise be permitted by law; and (b) issue a written arbitration decision
including the arbitrator's essential findings and conclusions and a statement of
the award. The arbitrator shall be authorized to award any or all remedies that
the Executive or the Company would be entitled to seek in a court of law,
including, without limitation, the award of attorneys' fees based on a
determination of the extent to which each party has prevailed as to the material
issues raised in determination of the dispute. The Company shall pay all JAMS'
arbitration fees in excess of those which would be required if the dispute were
decided in a court of law. Nothing in this Agreement is intended to prevent
either the Executive or the Company from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such mediation or
arbitration.

              


              12.  TERMINATION OF PRIOR
AGREEMENTS. This Agreement terminates and supersedes
any and all prior agreements and understandings between the parties with respect
to employment or with respect to the compensation of the Executive by the
Company.

              


              13.  ASSIGNMENT
SUCCESSORS. This Agreement is personal in its nature, and neither of the
parties hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that, in
the event of the merger, consolidation, transfer, or sale of all or
substantially all of the assets of the Company with or to any other individual
or entity, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder.

              


              14.  GOVERNING LAW.
This Agreement and the legal relations thus created between the parties hereto
shall be governed by and construed under and in accordance with the laws of the
State of California.

              


              15.  ENTIRE AGREEMENT;
HEADINGS. This Agreement embodies the entire agreement of the parties
with respect to the subject matter hereof, excluding the plans and programs
under which compensation and benefits are provided pursuant to Sections 3 and 4
hereof to the extent such plans and programs are not inconsistent with this
Agreement, and may be modified only in writing. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

               

              
                
                  
                  

                

                
                  11

                  
                    

                  

                

                
                  
                  

                

              

              


              16.  WAIVER;
MODIFICATION. Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times. This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.

              


              17.  SEVERABILITY.
In the event that a court of competent jurisdiction determines that any portion
of this Agreement is in violation of any statute or public policy, only the
portions of this Agreement that violate such statute or public policy shall be
stricken. All portions of this Agreement that do not violate any statute or
public policy shall continue in full force and effect. Further, any court order
striking any portion of this Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the
parties under this Agreement.

              


              18.  INDEMNIFICATION.
The Company shall indemnify and hold Executive harmless to the maximum extent
permitted by Section 2-418 of the Maryland General Corporations Law or its
successor statute, or if greater, by the Company's Bylaws, by any applicable
resolution of the Company's Board of Directors or by the terms providing the
most extensive indemnification contained in any written agreement between the
Company and any director or officer of the Company. The Company shall make
Executive a named beneficiary under all director and officer liability policies
maintained by the Company from time to time for the benefit of its directors and
officers, entitled to all benefits provided thereunder to persons serving in a
comparable role as both an officer and director of the Company.

              


              19.  COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

               

              
                
                  
                  

                

                
                  12

                  
                    

                  

                

                
                  
                  

                

              

              
 

              20.  SUCCESSOR
SECTIONS. References herein to sections or rules of the Code or Exchange
Act shall be deemed to include any successor sections or rules.

               

              IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Executive has hereunto signed this Agreement,
as of the Effective Date.

              


               

              
                
                  	 	REDWOOD TRUST,
      INC.	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	/S/ MARIANN BYERWALTER	 
	 	 	Mariann
      Byerwalter	 
	 	 	Chair,
      Compensation Committee	 
	 	 	 	 
	 	 	/S/ GEORGE E.
      BULL,
      III	 
	 	 	GEORGE
      E. BULL, III	 
	 	 	 	 


                

                 

                
                  
                    
                    

                  

                  
                    13

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                
                  Individual
Termination

                   

                

              

              EXHIBIT
A

              


              RELEASE
AGREEMENT

              


              Except as otherwise set forth in this
Release Agreement or in Sections 7 and 18 of the Amended and Restated Employment
Agreement between George E. Bull, III and Redwood Trust, Inc., George E. Bull,
III ("Executive") hereby generally and completely releases the Company and its
directors, officers, employees, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities and obligations, both known and
unknown, that arise out of or are in any way related to events, acts, conduct,
or omissions occurring at any time prior to and including the date Executive
signs this Release Agreement. The Company, its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns, hereby releases
Executive and his heirs, executors, successors and assigns, from any and all
claims, liabilities and obligations, both known and unknown, that arise out of
or are in any way related to events, acts, conduct, or omissions occurring at
any time prior to and including the date the Company signs this Release
Agreement. This general mutual release includes, but is not limited to: (A) all
claims arising out of or in any way related to Executive's employment with the
Company or the termination of that employment; (B) all claims related to
Executive's compensation or benefits from the Company, including salary,
bonuses, commissions, vacation pay, expense reimbursements, severance pay,
fringe benefits, stock, stock options, or any other ownership interests in the
Company; (C) all claims for breach of contract, wrongful termination, and breach
of the implied covenant of good faith and fair dealing; (D) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (E) all federal, state, and local statutory
claims,
including claims for discrimination, harassment, retaliation, attorneys' fees,
or other claims arising under the federal Civil Rights Act of 1964 (as amended),
the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act of 1967 (as amended) ("ADEA"), the federal
Employee Retirement Income Security Act of 1974 (as amended), and the California
Fair Employment and Housing Act (as amended); provided, however, that nothing in
this paragraph shall be construed in any way to release the Company from its
obligation to indemnify Executive pursuant to agreement, the Company's bylaws or
binding resolutions, or applicable law.

              


              Executive acknowledges that he is
knowingly and voluntarily waiving and releasing any rights he may have under the
ADEA, and that the consideration given under his Employment Agreement with the
Company for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which he was already entitled. Executive
further acknowledges that he has been advised by this writing, as required by
the ADEA, that: (A) this waiver and release does not apply to any rights or
claims that may arise after the date Executive signs this Release Agreement; (B)
Executive should consult with an attorney prior to signing this Release
Agreement (although Executive may choose voluntarily not do so); (C) Executive
has twenty-one (21) days to consider this Release Agreement (although Executive
may choose voluntarily
to sign this Release Agreement earlier); (D) Executive has seven (7) days
following the date that he signs this Release Agreement to revoke the Release
Agreement by providing written notice to an officer of the Company; and (E) this
Release Agreement shall not be effective until the date upon which the
revocation period has expired, which shall be the eighth day after Executive
signs this Release Agreement.

               

              
                
                  
                  

                

                
                  1

                  
                    

                  

                

                
                  
                  

                

              

              


              Both Executive and the Company
acknowledge that each has read and understands Section 1542 of the California
Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR." Both Executive and the Company hereby expressly
waive and relinquish all rights and benefits under that section and any law of
any jurisdiction of similar effect with respect to each party's release of any
claims hereunder.


               

              	
                    	EXECUTIVE	 
	 	 	 	 
	
                       

                    	Name:        	 	 
	 	 	 	 
	 	Date:       	 	 
	 	 	 	 


               

               

              
                
                  
                    	 	
                            Company

                          	 
	 	 	 	 
	
                             

                          	Name:        	 	 
	 	 	 	 
	 	Date:       	 	 
	 	 	 	 


                  

                

              

               

                                                                    

              
                
                  
                  

                

                
                  2

                  
                    

                  

                

                
                  
                  

                

              

               

              
                Group Termination

                 

              

              EXHIBIT
B

              


              RELEASE
AGREEMENT

              


              Except as otherwise set forth in this
Release Agreement or in Sections 7 and 18 of the Amended and Restated Employment
Agreement between George E. Bull, III and Redwood Trust, Inc., George E. Bull,
III ("Executive") hereby generally and completely releases the Company and its
directors, officers, employees, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities and obligations, both known and
unknown, that arise out of or are in any way related to events, acts, conduct,
or omissions occurring at any time prior to and including the date Executive
signs this Release Agreement. The Company, its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns, hereby releases
Executive and his heirs, executors, successors and assigns, from any and all
claims, liabilities and obligations, both known and unknown, that arise out of
or are in any way related to events, acts, conduct, or omissions occurring at
any time prior to and including the date the Company signs this Release
Agreement. This general mutual release includes, but is not limited to: (A) all
claims arising out of or in any way related to Executive's employment with the
Company or the termination of that employment; (B) all claims related to
Executive's compensation or benefits from the Company, including salary,
bonuses, commissions, vacation pay, expense reimbursements, severance pay,
fringe benefits, stock, stock options, or any other ownership interests in the
Company; (C) all claims for breach of contract, wrongful termination, and breach
of the implied covenant of good faith and fair dealing; (D) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (E) all federal, state, and local statutory
claims,
including claims for discrimination, harassment, retaliation, attorneys' fees,
or other claims arising under the federal Civil Rights Act of 1964 (as amended),
the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act of 1967 (as amended) ("ADEA"), the federal
Employee Retirement Income Security Act of 1974 (as amended), and the California
Fair Employment and Housing Act (as amended); provided, however, that nothing in
this paragraph shall be construed in any way to release the Company from its
obligation to indemnify Executive pursuant to agreement, the Company's bylaws or
binding resolutions, or applicable law.

              


              Executive acknowledges that he is
knowingly and voluntarily waiving and releasing any rights he may have under the
ADEA, and that the consideration given under his Employment Agreement with the
Company for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which he was already entitled. Executive
further acknowledges that he has been advised by this writing, as required by
the ADEA, that: (A) this waiver and release does not apply to any rights or
claims that may arise after the date Executive signs this Release Agreement; (B)
Executive should consult with an attorney prior to signing this Release
Agreement (although Executive may choose voluntarily not do so); (C) Executive
has forty-five (45)

              days to
consider this Release Agreement (although he may choose voluntarily to sign this
Release Agreement earlier); (D) Executive has seven (7) days following the date
that he signs this Release Agreement to revoke the Release Agreement by
providing written notice to an officer of the Company; (E) this Release
Agreement shall not be effective until the date upon which the revocation period
has expired, which shall be the eighth day after Executive signs this Release
Agreement; and (F) Executive has received with this Release Agreement a detailed
list of the job titles and ages of all employees who were terminated in this
group termination and the ages of all employees of the Company in the same job
classification or organizational unit who were not terminated.

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

               

              Both the
Executive and the Company acknowledge that each has read and understands Section
1542 of the California Civil Code which reads as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." Both the Executive and
the Company hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to
each party's release of any claims hereunder.

               

            

          

        

      

      
        
          
            	 	EXECUTIVE	 
	 	 	 	 
	
                     

                  	Name:        	 	 
	 	 	 	 
	 	Date:       	 	 
	 	 	 	 


          

        

         

         

        
          
            
              	 	
                      Company

                    	 
	 	 	 	 
	
                       

                    	Name:        	 	 
	 	 	 	 
	 	Date:       	 	 
	 	 	 	 


            

          

        

      

       

      
        
          
          

        

        
          2