Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    (As
Amended and Restated on December 10, 2008)

     

    The Board
of Directors of Redwood Trust, Inc. a corporation, (“Company”) originally adopted
this Executive Deferred Compensation Plan (“Plan”) effective
June 1, 2002, approved amendments to the Plan as of May 8, 2003 and
approved further amendments to the Plan as of November 29,
2006.  In addition, the Board of Directors adopted and ratified
resolution(s) requiring administration of the Plan in accordance with those
terms necessary or advisable to bring the Plan into compliance
with Section 409A of the Code effective with respect to deferrals not
vested as of January 1, 2005 and on November 10, 2007 and December 10, 2008,
approved further amendments to the Plan evidencing such terms.

     

    1.
Purpose

     

    The
primary purpose of the Plan is to provide the opportunity to defer compensation
to a select group of management, highly compensated employees and independent
directors.  The plan is intended to be a top-hat plan described in
Section 201(2) of the “ERISA that meets the rules for non-qualified
deferred compensation under Section 409A of the Code.

     

    
      2.
Definitions and Capitalized Terms

    

     

    The
capitalized terms, set forth in alphabetical order defined below, are used
throughout the Plan.

     

    (a) “AFR Rate” means 120% of the
long term Applicable Federal Rate (as defined in the Code), compounded monthly,
as in effect each month.

     

    (b) “Annual Base Salary” means
the regular rate of compensation to be paid to the Participant for services
rendered during the Plan Year, excluding severance or termination payments,
commissions, foreign service payments, payments for consulting services and such
other unusual or extraordinary payments as the Committee may
determine.

     

    (c)
“Annual Non-Performance Based
Bonus” means all annual bonus amounts for a year payable to an Employee
under an annual bonus plan of the Company, other than bonus
amounts  that qualify as an Annual Performance Based
Bonus.

     

    (d)
“Annual Performance Based
Bonus” means an annual bonus that meets the requirements for
qualification as “performance based” under Section 409A of the Code (as in
effect from time to time) with respect to that Participant, which requirements
generally include, as of the date hereof:  (i) that receipt of the
bonus be contingent on meeting specified performance criteria, (ii) the
performance criteria be specified in writing, (iii) the service period be at
least 12 months, (iv) the performance criteria be established no later than
90 days after commencement of the service period, (v) the outcome of the
performance criteria are not substantially certain when established, and (vi)
the criteria relate to performance of the Participant, his or her business unit
or the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) “Beneficiary” refers to the
term defined in Section 8.5.

     

    (f) “Board” or “Board of Directors” refers
to the Board of Directors of the Company.

     

    (g) “Cash DERs” refers to DERs
payable in cash.

     

    (h) “Change of Control” refers to
the occurrence of any of the following:

     

    (1) any
one person, or more than one person acting as a group (within the meaning of
Section 409A of the Code), acquires ownership of stock of the Company that,
together with other stock held by such person or group constitutes more than 50
percent of the total fair market value or total voting power of all stock of the
Company; or

     

    (2) any
one person, or more than one person acting as a group (within the meaning of
Section 409A of the Code), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing 30 percent or more of the total
voting power of the stock of the Company; or

     

    (3)
during any 12-month period, a majority of the members of the Company’s board of
directors is replaced by directors whose appointment or election is not endorsed
by a majority of the members of the Company’s board of directors prior to such
appointment or election; or

     

    (4) any
one person, or more than one person acting as a group (within the meaning of
Section 409A of the Code), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value equal to or
more than 40 percent of the total gross fair market value of all of the assets
of the Company immediately before such acquisition or acquisition; provided, that that no change
of control shall be deemed to occur when the assets are transferred to (x) a
shareholder of the  Company in exchange for or with respect to its
stock, (y) a person, or more than one person acting as a group (within the
meaning of Section 409A of the Code), that owns, directly or indirectly, 50
percent or more of the total value or voting power of all of the outstanding
stock of the Company, or (z) an entity, at least 50 percent of the total value
or voting power of which is owned, directly or indirectly, by a person that owns
directly or indirectly 50 percent or more of the total value or voting power of
all of the outstanding stock of the Company, in each case with such persons
status determined immediately after the transfer of assets.

     

    
      
        
        

      

      
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    (i) “Code” refers to the Internal
Revenue Code of 1986, as amended from time to time.

     

    (j) “Committee” refers to the
Company’s Compensation Committee.

     

    (k) “Company” refers to Redwood
Trust, Inc. a Maryland corporation and any of its subsidiaries.

     

    (l) “Compensation” refers to
Annual Base Salary, Annual Performance Based Bonus, Annual Non-Performance Based
Bonus, Cash DERs, Deferred Stock Awards, Retainers, Fees and such other
compensation payments as may be designated by the Committee under
Section 5.2(f).

     

    (m) “Deferral” means an amount of
Compensation deferred pursuant to a Deferral Election.

     

    (n) “Deferral Account” refers to
the bookkeeping entries established and maintained by the Company for the
purpose of recording (i) the amounts of Compensation deferred by a
Participant, (ii) and interest and stock accruals with respect to those
amounts, and (iii) any distributions to a Participant or
Beneficiary.

     

    (o) “Deferral Crediting Date”
means the business day coinciding with or next following the date the
Compensation being deferred would otherwise have been received by the
Participant.

     

    (p) “Deferral Election” means a
Participant’s irrevocable election to defer receipt of Compensation to a later
Plan Year.

     

    (q) “Deferred Stock Award” refers
to an award of the Company’s Common Stock made to a Participant in the form of a
grant of deferred stock under the 2002 Redwood Trust, Inc. Incentive Plan, as
amended, or other applicable stock-based incentive plan of the
Company.  

     

    (r) “DERs” means Dividend
Equivalent Rights.

     

    (s) “Director” refers to any
non-management director of the Board of Directors of the Company.

     

    (t)
“Disability”  means
either:

     

    (1) a determination by the Social
Security Administration that a Participant is totally disabled, or

     

    (2) a determination that the
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or

     

    
      
        
        

      

      
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    (3)  the Participant is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under a disability plan or other accident
and health plan maintained by the Company.

     

    (u) “Distribution Date” means the
date or dates on which Compensation being deferred will be distributed, as
selected by the Participant on the Deferral Election form.  The term
Distribution Date does not include other dates on which amounts may be
distributed to a Participant under the Plan such as upon total Disability,
death, Unforeseeable Financial Emergency, or termination of employment other
than upon Retirement.

     

    (v) “Employee” refers to any
employee, within the meaning of Section 3121(d) of the Code, who is highly
compensated, has the title of Vice President (but only with respect to Deferrals
made prior to November 10, 2007), Managing Director, President or Chief
Executive Officer or is otherwise a member of senior management selected by the
Committee to participate in this Plan.  The Committee shall determine
at least annually whether an employee is to be considered highly compensated,
applying a definition with a dollar threshold at least as high as that set under
Section 401(a) of the Code from time to time with respect to qualified
plans.  Where the Committee considers appropriate in applying the
provisions of this Plan, the term Employee shall include only persons who are
Participants or Inactive Participants under Plan.  

     

    (w) “ERISA” refers the Employee
Retirement Income Security Act of 1974, as amended from time to
time.

     

    (x) “Fees” refers to meeting and
other fees payable to Directors of the Company, in addition to
Retainers.

     

    (y) “GAAP” refers to generally
accepted accounting principles, applied on a consistent basis, stated in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants, or in statements and pronouncements
of the Financial Accounting Standards Board or in such other statements by
another entity or entities as may be approved by a significant segment of the
accounting profession.

     

    (z) “Inactive Participant” refers
to any Employee who elected to defer Compensation under the Plan during a
previous Plan Year but who is no longer eligible to defer Compensation payable
during a current Plan Year, whether due to separation from service, change in
status or otherwise.

     

    
      
        
        

      

      
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    (aa)
“Interest Account”
refers to the subaccount of a Participant’s Deferral Account that is deemed
invested so as to earn the applicable Rate of Return each Plan
Year.

     

    (bb)
“Interim Period” means
with respect to a Participant under the Plan that receives payments before July
1, 2007, the period beginning January 1 of the year in which such payment
is made and ending on the date of such payment.

     

    (cc)
“Interim Rate of
Return” is the rate that is credited on amounts distributed from the
Interest Account during a Plan Year with respect to the Interim
Period.  The Interim Rate of Return is 8% per annum, as calculated on
an actual daily uncompounded basis.

     

    (dd)
“Market Value” has the
meaning set forth in Section 6.2(a).

     

    (ee)
“Mutual Fund Rate”
means, with respect to Deferral Elections made prior to January 1, 2007, the
annual rate of return on a publicly traded mutual fund or individual stock or
other investment selected by a Participant at the time of completion of a
Deferral Election and approved by the Committee.

     

    (ff)
“Original Effective
Date” refers to June 1, 2002 with respect to Compensation first
earned, determined or payable after that date.  

     

    (gg)
“Original Default Rate of
Return” means, solely with respect to Pre-July 2004 Deferrals credited to
the Interest Account, the average economic return – as calculated annually for
each calendar year of the Company (or, in the case of the initial Plan Year, for
the period beginning on July 1, 2002 and ending December 31,
2002) – that the Company earned as a percentage of its entire average
capital base (including common, preferred, and other forms of equity, that
portion of long-term unsecured debt that has a remaining maturity of at least
one year past the end of the Plan year and is designated as capital by the
Committee, deferred amounts under this Plan, and other forms of capital that may
be designated by the Committee) before overhead, before variable stock option
expense, and before payments made to capital (such as dividends, interest
payments on debt designated as capital, and accruals for the deferred amounts
under the Plan), less 1%.  In no case shall the rate of return for a
Plan Year be less than 0%.  The Committee shall, in good faith,
estimate a reasonable measure of the Company’s average pre-overhead marginal
economic return on capital for each year by examining the Company’s
results.  In the absence of a different determination by the
Committee, the Company’s GAAP accounting books shall be deemed an adequate
estimate of economic return and GAAP accounting numbers shall be used to
calculate the Rate of Return for the Plan.  The Committee may adjust
or modify the Company’s GAAP results, or use a different measure of results, in
order to achieve a better reasonable estimation of the Company’s economic
returns for the year (or, in the case of the initial Plan Year, the applicable
portion thereof).  

     

    
      
        
        

      

      
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    (hh)
“Participant” refers to
any Employee or Director who has elected to defer under the Plan part or all of
his or her Compensation payable during a Plan Year. 

     

    (ii)
“Plan” means this
Redwood Trust, Inc. Executive Deferred Compensation Plan.

     

    (jj)
“Plan Year” refers to
the period of 12 consecutive months commencing on the first day of January
of each year.  The initial Plan Year shall commence on the Original
Effective Date of the Plan and end on the final day of December of the same
calendar year.

     

    (kk)
“Pre-July 2004
Deferrals” means all deferrals made before July 1,
2004.

     

    (ll)
“Pre-2007 Deferrals”
means all deferrals made on or after July 1, 2004 and before January 1,
2007.

     

    (mm)
“Rate of Return” is the
rate used to credit interest accrued with respect to a Plan Year on Deferrals
and amounts previously credited to the Interest Account.  Except as
otherwise provided in Section 6.2(b), the Rate of Return on Pre-July 2004
Deferrals shall be the rate specified in the applicable Deferral Election, or
the Original Default Rate of Return if no such rate was specified in the
Deferral Election. Except as otherwise provided in Section 6.2(b), the Rate of
Return on Pre-2007 Deferrals shall be the Mutual Fund Rate if specified in the
applicable Deferral Election and approved by the Committee, and if no such rate
was specified or approved, or if the specified rate subsequently becomes unable
to be determined, the AFR Rate.  The Rate of Return on all other
Deferrals and at all other times shall be the AFR Rate.  

     

    (nn)
“Re-Deferral Election”
means a Participant’s irrevocable election to extend a Distribution
Date.

     

    (oo)
“Retainer” refers to
the annual fixed compensation amount, payable in cash to Directors, for each
fiscal year of the Company or such portion thereof as they may serve as
Directors.

     

    (pp)
“Retirement” means a
Participant’s amicable Separation from Service with the Company after employment
with the Company (including any subsidiary or affiliate of the Company) for an
aggregate period of not less than ten (10) years, or as otherwise required
to be defined under Section 409A of the Code. 

     

    (qq) “Separation
from Service” means the
termination of a Participant’s employment or service with the Company for any
reason which constitutes a “separation from service” within the meaning of
Section 409A of the Code and the regulations promulgated thereunder, including
Treasury Regulation Section 1.409A-1(h).

     

    (rr)
“Stock Equivalent
Account” refers to the subaccount of a Participant’s Deferral Account
that is deemed  invested in the Company’s common stock.

     

    
      
        
        

      

      
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    (ss)
“Unforeseeable Financial
Emergency” means a severe financial hardship to the Participant resulting
from (i) illness or accident of the Participant or of a spouse or dependent
(as defined in Section 152(a) of the Code) of the Participant;
(ii) loss of the Participant’s property due to casualty; or (iii) such
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, as defined in Treasury
Regulation Section 1.409A-3(i)(3)(i).

     

    (tt)
“Valuation
Date”  means any date when the value of amounts credited to a
Deferral Account is measured; provided that, with respect to Plan Years
commencing prior to January 1, 2008, Valuation Date generally shall mean January
1st of each year.

     

    
      3.
Administration

    

     

    The Plan
shall be administered by the Committee except as otherwise expressly provided
herein.  The Committee shall have the powers set forth in the Plan and
the power to interpret its provisions.  Any decisions of the Committee
shall be final and binding on all persons with regard to the
Plan.  The Committee may delegate its authority hereunder to the
President of the Company or to such other officers of the Company as it may deem
appropriate, provided
that no such officer shall be delegated authority to make decisions with respect
to his or her own Deferrals or Deferral Account.

     

    
      4.
Eligibility

    

     

    The
Committee may, in writing from time to time, designate by name or title those
Employees and Directors of the Company who are eligible to participate in the
Plan for one or more Plan Years and the date upon which each such Employee’s or
Director’s participation may commence.  All designated Employees and
Directors shall be notified in writing by the Board or the Committee of their
eligibility to participate.  No Employee or Director shall be entitled
to participate in the Plan unless notified of their eligibility by the
Committee.  If the Committee provides a Participant with written
notice of revocation of eligibility, the effective date of any such
ineligibility shall be the first day of the Plan Year in which the notice is
received or the next following Plan Year, as specified in the
notice.  A Participant’s eligibility to participate in the Plan does
not confer upon the Participant any right to any award, bonus, or other
remuneration of any kind.

     

    
      5.
Deferral of Compensation

    

     

    5.1.
Rules for Deferral
Election.  Any Employee or Director may make irrevocable
elections to defer receipt of their Base Salary, Annual Performance Based Bonus,
Annual Non-Performance Based Bonus, Cash DERs, Deferred Stock Awards, Retainers
or Fees (each such election shall be referred to as a “Deferral Election” and the
amount deferred pursuant to such an election the “Deferral”) in accordance
with the rules set forth below.

     

    (a) An
Employee or Director shall be eligible to make a Deferral Election only if he or
she is an Employee or Director on the date such election is made.

     

    
      
        
        

      

      
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    (b) For
each Plan Year, an Employee or Director may make no more than one Deferral
Election regarding Annual Base Salary, Annual Performance Based Bonus, Annual
Non-Performance Based Bonus, Cash DERs, Deferred Stock Awards, Fees or
Retainer.

     

    (c) All
Deferral Elections must be made in writing on such forms as the Committee may
prescribe and must be received by the Committee no later than (i)
December 31 preceding the calendar year in which the Participant is to
perform the services to which the Compensation relates, (ii) in the case of an
Annual Performance Based Bonus, June 30th of the calendar year in which the
Participant performs the services to which such bonus relates, (iii) in the case
of Deferred Stock Awards having a vesting date more than 12 months after
the date of award, the date of award thereof, and (iv) in the case of Deferred
Stock Awards having a vesting date of 12 months or less but awarded pursuant to
the same criteria as but in lieu of an Annual Performance Based Bonus or Annual
Non-Performance Based Bonus, the same date that Deferral Elections must be made
for that type of bonus.

     

    (d) As
part of each Deferral Election, the Employee or Director must specify the
Distribution Date or Dates on which the Deferral will be paid.  The
Distribution Dates specified in an Employee’s or Director’s Deferral Elections
may, but need not necessarily, be the same for all Deferrals.  Except
as provided in subsection (h) below, the dates specified for distribution
of a Deferral shall be irrevocable and shall apply to that portion of the
Participant’s Deferral Account which is attributable to that
Deferral.

     

    (e)
Except for lump sum distributions upon termination of employment or at total
Disability or death, a Distribution Date must be specified as May 1 so as
to permit the final audit and reporting of performance for the prior year to be
completed.

     

    (f) The
earliest Distribution Date selected by an Employee or Director for any
Compensation deferred under the Plan shall not be earlier than the May 1
that occurs 16 months after the end of the Plan Year during which the
Deferral Crediting Date for such Compensation occurs.

     

    (g) As
part of each Deferral Election, an Employee or Director must elect the form in
which the Deferral will be paid beginning on the selected Distribution
Date.  The Deferral may be paid in a single lump sum or in annual
installments over a period not exceeding fifteen years.

     

    (h) A
Participant may elect to extend the Distribution Date or Dates and/or change the
method of payment (lump sum or installments) relating to any Deferral Election
(a “Re-Deferral Election”); provided, that no Re-Deferral
Election shall be effective unless (i) the Committee receives the election
at least 12 months prior to the first Distribution Date for such Deferral,
and (ii) any new first Distribution Date is at least five years later than
the existing first Distribution Date for such Deferral.  No Deferral
Election may be made the subject of more than one Re-Deferral Election to extend
the Distribution Date or Dates and, in addition, one Re-Deferral Election may be
made to change the method of payment.  All Re-Deferral Elections must
be made in writing on such forms and pursuant to such rules as the Committee may
prescribe.  Except as provided in this Section 5.1(h), an
Employee’s or Director’s election as to the time and method of payment of a
Deferral shall be irrevocable.  No payments shall be made with respect
to a Participant’s Deferral Account except as provided in the applicable
Deferral Election, this Plan or as required by law or court order.

     

    
      
        
        

      

      
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    (i) As
part of each Deferral Election, an Employee or Director must elect the
investment alternatives that shall apply to the Deferral in accordance with
Section 6.2.

     

    (j) A
Deferral Election with respect to a type of Compensation for a year shall be
irrevocable except that (A) a Participant may elect to discontinue deferral
of future unaccrued Compensation (other than Deferred Stock Awards) at any time
prior to the earlier of the date that the election to defer could have been made
under 5.1(c) above or the performance of services related to such
Compensation have commenced and (B) if the Committee determines that a
Participant has an Unforeseeable Financial Emergency and such Participant
receives distributions from his or her Deferral Account as a result thereof,
then all of the Participant’s Deferral Elections then in effect shall be revoked
with respect to all future accrued Compensation covered thereby.  A
Participant that elects to discontinue deferrals under (A) above will not be
eligible to make a new Deferral Election with respect to such type of
Compensation until the next applicable date specified for such type of
Compensation under subsection (c) above.

     

    (k)
Notwithstanding Section 5.1(c), a Participant may make a Deferral Election
with respect to all Compensation related to the year in which the Participant
first becomes eligible to participate in the Plan no later than the
30th day after the date such Participant becomes eligible to participate in
the Plan.

     

    (l)
Notwithstanding any of the foregoing required deadlines for the submission of a
Deferral Election, the Committee may, to the extent permitted by Notice 2007-86,
provide a limited period in which Participants may make new distribution
elections, or revise existing distribution elections, with respect to amounts
subject to the terms of the Plan, by submitting a Deferral Election on or before
the deadline established by the Committee, which in no event shall be later than
December 31, 2008.  Any distribution election(s) made by a
Participant, and accepted by the Committee, in accordance with this Section
shall not be treated as a change in either the form or timing of a Participant’s
benefit payment for purposes of Section 409A of the Code or the
Plan.  If any distribution election submitted by a Participant in
accordance with this Section either (i) relates to an amount that would
otherwise be paid to the Participant in 2008, or (ii) would cause an amount to
be paid to the Participant in 2008 which would have been paid in a subsequent
year, such election shall not be effective.

     

    (m)
Notwithstanding any other provision of the Plan, the Committee may refuse, in
its sole discretion, to accept any Deferral Election from a Participant
regardless of such Participant’s eligibility to participate in the Plan at the
time.

     

    
      
        
        

      

      
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    5.2.
Amounts
Deferred.  An Employee or Director may make a Deferral Election
to defer receipt of the following amounts:

     

    (a) All
or any portion of the Employee’s Annual Base Salary.

     

    (b) All
or any portion of the Employee’s Annual Performance Based Bonus or Annual
Non-Performance Based Bonus.

     

    (c) All
or any portion of Cash DERs payable to the Participant.

     

    (d) All
or any portion of a Deferred Stock Award payable to the
Participant.

     

    (e) All
or any portion of the Director’s Retainer or Fees.

     

    (f) Such
other payments under any plan or arrangement of compensation for Employees or
Directors established by the Company or such other compensation as the Committee
may designate as eligible for deferral under this Plan in such increments and
subject to such limitations and restrictions as the Committee may
establish.

     

    
      6.
Deferral Accounts

    

     

    6.1.
Deferral
Accounts.  All amounts deferred pursuant to a Participant’s
Deferral Elections under the Plan shall be allocated to a bookkeeping account in
the name of the Participant (“Deferral Account”) and the
Committee shall maintain a separate subaccount under a Participant’s Deferral
Account for each Deferral.  Deferrals shall be credited to the
Deferral Account as of the Deferral Crediting Date coinciding with or next
following the date on which, in the absence of a Deferral Election, the
Participant would otherwise have received the Compensation that was deferred
(based on any vesting schedule or other payment conditions applicable to the
that type of Compensation).  No Deferral made with respect to
Compensation that is subject to a vesting requirement or other payment condition
shall be credited to a Deferral Account prior to satisfaction of any such
vesting or other condition.

     

    6.2.
Investment
Alternatives.  A Participant must make an investment election
at the time of each Deferral Election.  The investment election must
be made in writing on such forms and pursuant to such rules as the Committee may
prescribe, subject to paragraph 6.3, and shall designate the portion of the
Deferral which is to be treated as if invested in each investment
alternative.  The two investment alternatives shall be as
follows:

     

    (a) Stock Equivalent
Account.  The value of a Participant’s Deferrals credited to
the Stock Equivalent Account shall be determined as if the Deferral were
invested in the Company’s common stock as of the Deferral Crediting
Date.  For all Deferrals other than Deferrals of Deferred Stock
Awards, the number of shares of common stock equivalents to be credited to the
Participant’s Deferral Account and appropriate subaccounts on each Deferral
Crediting Date shall be determined by dividing the Deferral to be “invested” on
that date by the closing price of the Company’s common stock on the New York
Stock Exchange Composite Transaction Tape on the business day preceding the
Deferral Crediting Date (“Market
Value”).  Fractional stock equivalents will be computed to two
decimal places.  In the case of Deferrals of Deferred Stock Awards,
the number of shares of common stock equivalent shares to be credited to the
Deferral Account shall be the number of shares of common stock which would
otherwise have been payable under the Deferred Stock Award to the Participant on
or prior to the Deferral Crediting Date but as to which the Participant has
elected to defer delivery pursuant to the terms of the Plan.  An
amount equal to the number of common stock equivalents multiplied by the
dividend paid per share on the Company’s common stock on each dividend record
date shall be payable in cash to the Participant on the related dividend payment
date.  The Participant may elect at the time of the Deferral Election
to have such amount credited to the Interest Account.  Except as the
Committee may otherwise permit upon request of the Participant, the number of
shares of the Company’s common stock to be paid to a Participant on a
Distribution Date with respect to any Deferral subaccount in the Stock
Equivalent Account shall be equal to the number of common stock equivalents
accumulated in the Deferral subaccount as of such Distribution Date divided by
the total number of payments remaining to be made from such Deferral
subaccount.  Shares of common stock paid in respect of a Deferred
Stock Award or other balance in the Stock Equivalent Account shall be deemed to
be issued and delivered pursuant to the 2002 Redwood Trust, Inc. Incentive
Plan as an award thereunder (or such successor incentive stock plan of the
Company as is in effect at the time of the award).  All payments from
the Stock Equivalent Account shall be made in whole shares of the Company’s
common stock with fractional shares credited to federal income taxes
withheld.

     

    
      
        
        

      

      
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    (b) Interest
Account.  A Participant’s Deferrals credited to the Interest
Account shall be deemed to accrue interest at an annual rate equal to the
applicable Rate of Return.  Applicable Rates of Return shall be
computed for each calendar year and shall be credited in arrears to the Interest
Account subaccount of the Participant’s Deferral Account, effective as of each
Valuation Date.  The Rate of Return shall be applied to the average
balance in each subaccount during such calendar year (or shorter interim period,
if applicable), such average balance to be computed on an actual daily basis and
excluding any amounts distributed to the Participant since the last Valuation
Date.  Calculation of the interest credits shall be made as soon as
practicable following the completion of the independent accountant’s audit of
the Company’s financial statements each year and the Committee’s determination
of the proper Rate(s) of Return for that year, and application of the interest
credits will be effective as of the applicable Valuation Date.  Any
Participant’s distributions made prior to the completion of the Committee’s
determination of the Rate(s) of Return shall be based upon the conservative
estimate by the Chief Financial Officer of the Company of the credits to be
applied, if any, and following the Committee’s determination of the Rate of
Return and any adjustments necessary to reflect the same, proper credits will be
made with the Participant on May 1 of that year.  

     

    Pre-July 2004 Deferrals credited to the
Interest Account, along with all interest accrued thereon, shall accrue interest
under the Plan at the Original Default Rate of Return until the earlier of (i)
the Distribution Date(s) on which such Pre-July 2004 Deferrals were scheduled to
be distributed in accordance with the related Deferral Elections as in effect on
July 1, 2004, (ii) the date(s) the Participant actually received
distribution of such Pre-July 2004 Deferrals pursuant to the terms of this Plan
and (iii) June 30, 2007, after which such Deferrals and related interest
accruals shall accrue interest at the AFR Rate.

     

    
      
        
        

      

      
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    Pre-2007 Deferrals credited to the
Interest Account, along with all interest accrued thereon, shall accrue interest
under the Plan at the Mutual Fund Rate, if any, specified in the applicable
Deferral Election until the earlier of (i) the Distribution Date(s) on which
such Pre-2007 Deferrals were scheduled to be distributed in accordance with the
related Deferral Elections as in effect on January 1, 2007, (ii) the date(s) the
Participant actually received distribution of such Pre-2007 Deferrals pursuant
to the terms of this Plan and (iii) June 30, 2007, after which such
Deferrals and related interest accruals shall accrue interest at the AFR
Rate.

     

    With respect to distribution of a
Deferral Account deemed invested in an Interest Account, the amount to be paid
to the Participant from such subaccount on a Distribution Date shall be an
amount determined by dividing the balance in such subaccount as of the
Distribution Date by the total number of payments remaining to be paid with
respect to such subaccount of the Participant’s Deferral
Account.  Each lump sum payment, each installment payment and any
other payment of balances credited to the Participant’s Interest Account shall
be accompanied by an amount of accrued interest on such payment at the AFR Rate
(or, for payments made prior to July 1, 2007, the Interim Rate of Return for the
Interim Period).  All payments of amounts credited to the Interest
Account shall be made in cash.

     

    6.3.
Investment
Elections.  A Participant’s investment elections shall be
subject to the following rules:

     

    (a) Except as provided in
subsection (b) below with respect to Deferred Stock Awards that would have
been paid in the form of the Company’s common stock, if the Participant fails to
make an investment election with respect to a Deferral, the Deferral shall be
deemed to be invested in the Interest Account.

     

    (b) Any Deferral attributable to a
Deferred Stock Award in the form of the Company’s common stock, restricted or
otherwise, shall automatically be deemed to be invested in the Stock Equivalent
Account.

     

    6.4.
Matching, Vesting and Other
Conditions.  

     

    (a) The
Committee may condition awards of Compensation from time to time on the
Participant’s consent to defer all or a portion thereof under the
Plan.  The Committee may also establish vesting requirements or other
conditions with respect to awards of Compensation to be deferred under the
Plan.  All such vesting requirements or other conditions shall be
specified in the Deferral Election form or other related award
agreement.  The Committee may authorize matching of Compensation that
is subject to a Deferral, in which case such matched Compensation shall be
treated as a Deferral for all purposes of this Plan (including but not limited
to all restrictions applicable to distributions and changes to distributions of
Deferrals).  However such matching Compensation shall, unless
otherwise expressly stated in the applicable Deferral Election, be subject to
vesting on the same terms as matching contributions made under the Company’s
401K Plan (as in effect on the date of the Deferral Election applicable to the
Compensation being matched).

     

    
      
        
        

      

      
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    (b) Except as otherwise provided above
with respect to matching Compensation or in the Deferral Election or the related
award agreement, a Participant shall be fully vested at all times in the balance
that has been credited to his Deferral Account in accordance with Section
6.1.  If a Deferral (or any portion thereof) is subject to any vesting
or performance condition and such Participant’s service with the Company is
terminated for any reason prior to the satisfaction or lapse of such vesting or
performance condition, then the portion of such Deferral that is not yet vested
or for which performance conditions are not yet satisfied, along with any
interest, dividend or stock equivalent payments accrued thereon, shall be
forfeited and no amounts shall be distributed in respect thereof.

     

    
      7.
Effect on Employee Benefits

    

     

    Amounts
deferred under this Plan or distributed pursuant to the terms of this Plan are
not taken into account in the calculation of an Employee’s benefits under any
employee pension or welfare benefit program or under any other compensation
practice maintained by the Company, except to the extent provided in such
program or practice.

     

    
      8.
Payment of Deferral Accounts

    

     

    8.1.
Time of
Payment.  Payment of amounts credited to a Participant’s
Deferral account shall be made in a single lump sum or in installments, as
elected by the Participant in the Deferral Election in accordance with
Section 5.1(c) above.  If no form of distribution is specified,
the distribution shall be made in a single lump sum.  If a
Participant’s Deferral Account is payable in a single lump sum, the payment
shall be made as soon as practicable following the Distribution Date specified
by the Participant in the applicable Deferral Election.  If a
Participant’s Deferral is payable in installments, then, subject to Section
8.12, the Participant’s Deferral shall be paid in annual installments as
determined under Section 6.2 over the period elected by the Participant in
the Deferral Election, commencing as soon as practicable following the
Distribution Date specified by the Participant in the applicable Deferral
Election.  No payment of a Participant’s Deferrals shall be made
earlier than the date specified in the applicable Deferral Election except as
otherwise provided herein or as otherwise permitted under
Section 409A.

     

    8.2.
Payment Upon Total
Disability.  If a Participant suffers a total Disability before
all amounts credited to his Deferral Account have been paid out, payment of
amounts credited to the Participant’s Deferral Account shall be made pursuant to
the distribution arrangements, if any, specified by such Participant for such
event in the applicable Deferral Election (and using the normal distribution
provisions of the Plan to the extent not otherwise specified).  

     

    
      
        
        

      

      
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    8.3.
Payment Upon Retirement or
Other Termination of Employment.   Following Retirement, a
Participant’s Deferral Account shall continue to be maintained for the benefit
of the Participant and amounts credited to such Participant’s Deferral Account
shall continue to be paid in accordance with the Participant’s Deferral
Elections.  A Participant will continue to have the right following
Retirement to make Re-Deferral Elections as provided herein, subject to the
limitations provided herein.  If the Participant terminates employment
with the Company for any reason other than Retirement, becoming totally
Disabled, or death before the entire balance credited to the Participant’s
Deferral Account has been paid, and such termination constitutes a Separation
from Service, then subject to Section 8.12, the balance credited to such
Participant’s Deferral Account shall be distributed in a single lump sum as soon
as practicable.  

     

    8.4.
Payment Upon Death of a
Participant.  If a Participant dies before all amounts credited
to his Deferral Account have been paid out, payment of the Participant’s
Deferral Account shall be made pursuant to the distribution arrangements, if
any, specified by such Participant in the applicable Deferral Election (using
the normal distribution provisions of the Plan to the extent not otherwise
specified). 

     

    8.5.
Beneficiary.  A
Participant’s Beneficiary shall mean the individual(s) or entity designated by
the Participant to receive the balance of the Participant’s Deferral Account in
the event of the Participant’s death prior to the payment of his entire Deferral
Account.  To be effective, any Beneficiary designation shall be filed
in writing with the Committee.  A Participant may revoke an existing
Beneficiary designation by filing another written Beneficiary designation with
the Committee.  The latest Beneficiary designation received by the
Committee shall be controlling.  In the event a married Participant
designates someone other than his or her spouse as sole, primary beneficiary,
such initial designation or subsequent change shall be invalid unless the spouse
consents in a writing which names the designated Beneficiary.  If no
Beneficiary is named by a Participant or if he survives all of his named
Beneficiaries, the Deferral Account shall be paid in the following order of
precedence:

     

    (a) the
Participant’s spouse or qualified domestic partner;

     

    (b) the
Participant’s children (including adopted children), per stirpes; or

     

    (c) the
Participant’s estate.

     

    8.6.
Form of
Payment.   Payment of that portion of a Participant’s
Deferrals deemed to be invested in the Interest Account shall be made in
cash.  Payment of that portion of a Participant’s Deferrals deemed to
be invested in the Stock Equivalent Account shall be made by distribution in
whole shares of the Company’s common stock with fractional shares credited to
federal income taxes withheld.

     

    8.7.
Unforeseeable Financial
Emergency.  If the Committee or its designee determines that a
Participant has incurred an Unforeseeable Financial Emergency, the Participant
may withdraw in cash and/or stock the portion of the balance credited to his
Deferral Account needed to satisfy the Unforeseeable Financial Emergency plus
any taxes on the amounts so distributed.  A withdrawal on account of
an Unforeseeable Financial Emergency shall not exceed the amount reasonably
needed to satisfy the emergency, computed after taking into account any other
sources of funds, including reimbursements, compensation by insurance,
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of
future deferrals under the Plan.  Withdrawals shall be paid as soon as
possible following the date on which the withdrawal is approved in writing by
the Committee setting forth the grounds therefor.

     

    
      
        
        

      

      
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    8.8.
Withholding of
Taxes.  The Company shall withhold any applicable Federal,
state or local income tax from payments due under the Plan.  The
Company shall also withhold any applicable Social Security taxes, including the
Medicare portion of such taxes, and any other employment taxes as necessary in
its view based on the advice of counsel to comply with applicable laws and the
Company’s standard practices.  The Committee may in its sole
discretion and in satisfaction of the foregoing withholding requirements allow a
Participant to elect to have the Company withhold shares of the Company’s Common
Stock otherwise payable to the Participant.  The number of shares of
the Company’s Common Stock which may be so withheld shall be limited to the
number of shares which have a Market Value on the date of withholding equal to
the aggregate amount of such withholding tax liabilities based on the minimum
statutory withholding rates for Federal, state and local income tax and payroll
tax purposes. 

     

    8.9.
Small
Amounts.  Notwithstanding any election by a Participant
regarding the timing and manner of payment of amounts credited to his Deferral
Account, in the event of a Participant’s Retirement, death or total Disability, the
Employer shall pay the Participant (or the Participant’s Beneficiary) a lump sum
distribution of the entire value of the Participant’s Deferral Account if the
value of such account is less than ten thousand dollars ($10,000) determined as
of the Valuation Date coinciding with or immediately following the Participant’s
Retirement, death or total Disability.  

     

    8.10.
Income Tax
Obligations.  If a Participant is assessed Federal, state or
local income or FICA taxes by reason of, and computed on the basis of, his or
her undistributed deferred Compensation or undistributed interest accrued on his
or her Deferral Account (based on an assertion that the Plan does not comply
with Section 409A of the Code or otherwise), the Participant shall notify
the Committee in writing of such assessment and there shall be distributed from
the Participant’s Deferral Account deferred Compensation or accrued interest in
an amount equal to the taxes so assessed, together with any interest due and
penalties assessed thereupon within 30 days following such notice; provided however, that if the
Committee determines that such assessment is improper, it may request that the
Participant contest the assessment, at the expense of the Company (which expense
shall include all costs of appeal and litigation, including legal and accounting
fees, and any additional interest assessed on the deficiency from and after the
date of the Participant’s notice to the Committee); and during the period such
contest is pending, the sums otherwise distributable pursuant to this
Section 8.10 shall not be distributed.  

     

    
      
        
        

      

      
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    8.11.
Capital
Changes.  In the event that at any time or from time to time a
stock dividend, stock split, spin-off, combination or exchange of shares,
recapitalization, merger, consolidation, distribution to stockholders other than
a normal cash dividend, or other change in the Company’s corporate or capital
structure results in (a) the outstanding shares of common stock or any
securities exchanged therefor or received in their place being exchanged for a
different number or class of securities of the Company or of any other
corporation or (b) new, different, or additional securities of the Company
or of any other corporation being received by the holders of shares of common
stock, then the Committee, in its sole discretion, shall make such equitable
adjustments as it shall deem appropriate in the circumstances in the number and
kind of shares of stock equivalents credited or to be credited to each
Participant’s Stock Equivalent Account.

     

    8.12.
Six-Month
Delay.  Notwithstanding any of the foregoing or any other
provision of the Plan to the contrary, if a distribution of a Participant’s
Deferral Account is to be made as a result of a Separation from Service of a
Participant who is a “specified employee” (as determined in accordance with
Treasury Regulation
Section 1.409A-1(i)) on the date his Separation from Service occurs, to
the extent delayed commencement of any portion of the benefits to which the
Participant is entitled hereunder is required in order to avoid a prohibited
distribution under Code Section 409A(a)(2)(B)(i), such portion of the
Participant’s benefits shall not be provided prior to six (6) months and one (1)
day following the date of the Participant’s Separation from Service (or if
earlier, upon death), and upon the first business day following the applicable
date, all payments deferred pursuant to this sentence shall be paid in a lump
sum, and any remaining payments due under the Plan shall be paid as otherwise
provided herein.  For purposes of Section 409A of the Code, a
Participant’s right to receive more than one payment pursuant to the Plan shall
be treated as a right to receive a series of separate payments and accordingly,
each payment shall at all times be considered a separate and distinct
payment.

     

    
      9.
Funding

    

     

    Benefits
payable under the Plan to any Participant shall be paid directly by the
Company.  The Company shall not fund, or otherwise segregate assets to
be used for payment of benefits under, the Plan.  Participants
acknowledge that the Company intends to use the amounts deferred under this Plan
as capital.

     

    
      10.
Account Statements

    

     

    As soon
as practical after May 1 of each calendar year (or after such other date or
dates as the Committee, in its discretion, may designate but at least annually),
each Participant shall be provided with a statement of the balance of his
Deferral Account as of the most recent Valuation Date.  If any such
statement identifies both vested and unvested balances in the Participant’s
Deferral Account, such information shall be presented solely as a courtesy and
is not intended to constitute crediting of unvested amounts to such Deferral
Account.

     

    
      
        
        

      

      
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      11.
Employment Rights

    

     

    Establishment
of the Plan shall not be construed to give any Employee the right to be retained
in the Company’s service or to any benefits not specifically provided by the
Plan.  An Employee’s election to participate in the Plan shall not
affect the rights of the Employee under any employee agreement, stock option, or
other incentive compensation agreement or to any other benefits to which the
Employee is entitled.

     

    
      12.
Interests Not Transferable

    

     

    Except as
to withholding of any tax under the laws of the United States or any state or
locality and the provisions of Section 13, no benefit payable at any time
under the plan shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment or other legal process, or encumbrance of any
kind.  Any attempt to alienate, whether currently or thereafter
payable, shall be void.  No person shall, in any manner, be liable for
or subject to the debts or liabilities of any person entitled to such
benefits.  If any person shall attempt to, or shall alienate, sell,
transfer, assign, pledge or otherwise encumber his benefits under the Plan, or
if by any reason of his bankruptcy or other event happening at any time, such
benefits would devolve upon any other person or would not be enjoyed by the
person entitled thereto under the Plan, then the Committee, in its discretion,
may terminate the interest in any such benefits of the person entitled thereto
under the Plan and hold or apply them for or to the benefit of such person
entitled thereto under the terms of this Plan or his spouse, children or other
dependents, or any of them, in such manner as the Committee may deem
proper.

     

    
      13.
Forfeiture

    

     

    Unclaimed
amounts shall consist of the amounts of the Deferral Account of a Participant
that are not distributed because of the Committee’s inability, after a
reasonable search, to locate a Participant or his Beneficiary, as applicable,
within a period of two (2) years after the Distribution Date upon which the
payment of any benefits becomes due.  No interest will be credited on
such amounts invested in the Interest Account following such Distribution Date
and no dividend equivalent payments will accrue on such amounts invested in the
Stock Equivalent Account after such Distribution Date.  Unclaimed
amounts shall be forfeited at the end of such two-year period.  These
forfeitures will reduce the obligations of the Company under the Plan and the
Participant or Beneficiary, as applicable, shall have no further right to his
Deferral Account.

     

    
      14.
Controlling Law

    

     

    This plan
shall be construed in accordance with the laws of the State of California
(exclusive of its rules regarding conflicts of law) to the extent that such laws
are not preempted by ERISA or other federal laws.  If any provision of
this Plan shall be held illegal or invalid for any reason, such determination
shall not affect the remaining provisions of this Plan which shall be construed
as if said illegal or invalid provision had never been included.

     

    
      
        
        

      

      
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      15.
Action by the Company

    

     

    Except as
otherwise specifically provided herein, any action required of or permitted by
the Company under the Plan shall be by resolution of the Board of Directors of
the Company or by action of any member of the committee or person(s) authorized
by resolution of the Committee.

     

    
      16.
Amendment or Termination of Plan

    

     

    (a) The
Company intends the Plan to be permanent, but reserves the right at any time by
action of its Board of Directors to terminate the Plan.  The Board of
Directors may also modify or amend the Plan and outstanding Deferral Elections,
provided, however, that
any such modification or amendment shall not reduce or eliminate any Deferral
Account accrued through the date of such modification or amendment or otherwise
impair the rights of a Participant under any Deferral Elections made prior to
the date of such modification or amendment without such Participant’s
consent.  The Committee shall have the same authority to modify or
amend the Plan and outstanding Deferral Elections as the Board of Directors of
the Company in the following circumstances:

     

    (i) to adopt amendments to the Plan and
outstanding Deferral Elections which the Committee determines are necessary or
desirable for the Plan and outstanding Deferral Elections to comply with or to
obtain (or maintain) benefits or advantages under the provisions of Section 409A
of the Code or other applicable law, regulations or rulings or requirements of
the Internal Revenue Service or other governmental or administrative agency or
changes in such law, regulations, rulings or requirements; and

     

    (ii) to adopt any other procedural or
cosmetic amendment that the Committee determines to be necessary or desirable
that does not materially change benefits to Participants or their Beneficiaries
or materially increase the Company’s obligations under the Plan.

     

    (b) The
Committee shall provide notice of amendments adopted by the Committee to the
Board of Directors of the Company on a timely basis.

     

    (c) This
Plan shall terminate immediately if a court of competent jurisdiction determines
that this Plan is not exempt from the fiduciary provisions of Part 4 of Title I
of ERISA.  To the extent practicable and not inconsistent with the
limitations of Section 409A of the Code, the Plan shall be deemed to have
terminated as of the date it ceased to be exempt.

     

    (d) The
Committee may, in its discretion, terminate the Plan in connection with a Change
of Control or other determination that doing so is in the best interests of the
Company or the Participants.

     

    (e) Upon
termination of the Plan, whether as a result of a Change of Control or
otherwise, the Committee shall distribute all amounts due with respect balances
credited to all Deferral Accounts as soon as practicable following such
termination.  Such distributions shall be made in accordance with the
rules for plan terminations specified in Treasury Regulations or other guidance
promulgated under Section 409A of the Code.

     

    
      
        
        

      

      
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      17.
Miscellaneous

    

     

    17.1.
Alternative Acts and
Times.  If it becomes impossible or burdensome for the Company
or the Committee to perform a specific act at a specific time required by this
Plan, the Company or Committee may perform such alternative act which most
nearly carries out the intent and purpose of this Plan and may perform such
required or alternative act at a time as close as administratively feasible to
the time specified in this Plan for such performance.  Nothing in the
preceding sentence shall allow the Company or Committee to accelerate or defer
any payments to Participants or Inactive Participants under this Plan, except as
otherwise expressly permitted herein.

     

    17.2.
Masculine and Feminine,
Singular and Plural.  Whenever used herein, pronouns shall
include both genders, and the singular shall include the plural, and the plural
shall include the singular, whenever the context shall plainly so
require.

     

    17.3.
Notices.  Any
notice from the Company or the Committee to an Employee, Participant, Inactive
Participant or Beneficiary regarding this Plan may be addressed to the last
known residence of said person as indicated in the records of the
Company.  Any notice to, or any service of process upon, the Company
or the Committee with respect to this Plan may be addressed as
follows:

     

    Chief
Financial Officer

    Redwood
Trust, Inc.

    One
Belvedere Place, Suite 300

    Mill
Valley, CA  94941

     

    17.4.
Facility of
Payment.  If the Committee, in its sole discretion, determines
that any Employee, Participant, Inactive Participant or Beneficiary by reason of
infirmity, minority or other disability, is physically, mentally or legally
incapable of giving a valid receipt for any payment due him or her or is
incapable of handling his or her own affairs and if the Committee is not aware
of any legal representative appointed on his or her behalf, then the Committee,
in its sole discretion, may direct (a) payment to or for the benefit of the
Employee, Director, Participant, Inactive Participant or Beneficiary;
(b) payment to any person or institution maintaining custody of the
Employee, Director, Participant, Inactive Participant or Beneficiary; or
(c) payment to any other person selected by the Committee to receive,
manage and disburse such payment for the benefit of the Employee, Director,
Participant, Inactive Participant or Beneficiary.  The receipt by any
such person of any such payment shall be a complete acquittance therefore; and
any such payment, to the extent thereof, shall discharge the liability of the
Company, the Committee, and the Plan for any amounts owed to the Employee,
Director, Participant, Inactive Participant or Beneficiary
hereunder.  In the event of any controversy or uncertainty regarding
who should receive or whom the Committee should select to receive any payment
under this Plan, the Committee may seek instruction from a court of proper
jurisdiction or may place the payment (or entire Deferral Account) into such
court with final distribution to be deemed by such court.

     

    
      
        
        

      

      
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    17.5.
Correction of
Errors.  Any crediting of Compensation or interest accruals to
the Deferral Account of any Employee, Director, Participant, Inactive
Participant or Beneficiary under a mistake of fact or law shall be returned to
the Company.  If an Employee, Director, Participant, Inactive
Participant or Beneficiary in an application for a benefit or in response to any
request by the Company or the Committee for information, makes an erroneous
statement, omits any material fact, or fails to correct any information
previously furnished incorrectly to the Company or the Committee, of if the
Committee makes an error in determining the amount payable to an Employee,
Director, Participant, Inactive Participant or Beneficiary, the Company or the
Committee may correct its error and adjust any payment on the basis of correct
facts.  The amount of any overpayment or underpayment may be deducted
from or added to the next succeeding payments, as directed by the
Committee.  The Committee and the Company reserve the right to
maintain any action, suit or proceeding to recover any amounts improperly or
incorrectly paid to any person under the Plan or in settlement of a claim or
satisfaction of a judgment involving the Plan.

     

    17.6.
Status of
Participants.  In accordance with Revenue Procedure 92-65
Section 3.01, this Plan hereby provides:

     

    (a) Employees, Directors, Participants
and Inactive Participants under this Plan shall have the status of general
unsecured creditors of the Company;

     

    (b) This plan constitutes a mere
promise by the Company to make benefit payments in the future; and

     

    (c) It is the intention of the parties
that the arrangements under this plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.

     

    17.7.
Employee and Spouse
Acknowledgement.  By executing this Plan document or related
enrollment or election form, the undersigned Employee or Director and, if
Employee or Director is married, Employee’s or Director’s spouse hereby
acknowledge that each of them has read and understood this Plan
document.  Employee or Director and his or her spouse also acknowledge
that they knowingly and voluntarily agree to be bound by the provisions of the
Plan, as amended from time to time, including those Plan provisions which
require the resolution of disputes by binding out-of-court
arbitration.  Employee or Director and his or her spouse further
acknowledge that they have had the opportunity to consult with counsel of their
own choosing with respect to all of the financial, tax and legal consequences of
participating in this Plan, including in particular the effects of participation
of any community property or other interest which the Employee’s spouse may have
in the Compensation deferred under this Plan.

     

    17.8.
Arbitration.  Any
claim or controversy between the parties which the parties are unable to resolve
themselves, including any claim arising out of a Participant’s employment or the
termination of that employment, and including any claim arising out of,
connected with, or related to the formation, interpretation, performance or
breach of any provision of this Plan, and any claim or dispute as to whether a
claim is subject to arbitration, shall be submitted to and resolved exclusively
by expedited arbitration by a single arbitrator in accordance with the following
procedures:

     

    
      
        
        

      

      
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    (a) In the event of a claim or
controversy subject to this arbitration provision, the complaining party shall
promptly send written notice to the other party identifying the matter in
dispute and the proposed remedy.  Following the giving of such notice,
the parties shall meet and attempt in good faith to resolve the
matter.  In the event the parties are unable to resolve the matter
within 21 days, the parties shall meet and attempt in good faith to select
a single arbitrator acceptable to both parties.  If a single
arbitrator is not selected by mutual consent within 10 business days
following the giving of the written notice of dispute, an arbitrator shall be
selected from a list of nine persons each of whom shall be an attorney who is
either engaged in the active practice of law or a recognized arbitrator and who,
in either event, is experienced in serving as an arbitrator in disputes between
employers and employees, which list shall be provided by the main office of the
American Arbitration Association (“AAA”) located in Marin
County, California, or the nearest office of the Federal Mediation and
Conciliation Service.  If, within three business days of the parties’
receipt of such list, the parties are unable to agree upon an arbitrator from
the list, then the parties shall each strike names alternatively from the list,
with the first to strike being determined by the flip of a
coin.  After each party has had four strikes, the remaining name on
the list shall be the arbitrator.  If such person is unable to serve
for any reason, the parties shall repeat this process until an arbitrator is
selected.

     

    (b) Unless the parties agree otherwise,
within 60 days of the selection of the arbitrator, a hearing shall be
conducted before such arbitrator at a time and a place in Marin County agreed
upon by the parties.  In the event the parties are unable to agree
upon the time or place of the arbitration, the time and place within Marin
County shall be designated by the arbitrator after consultation with the
parties.  Within 30 days of the conclusion of the arbitration
hearing, the arbitrator shall issue an award, accompanied by a written decision
explaining the basis for the arbitrator’s award.

     

    (c) In any arbitration hereunder, the
Company shall pay all administrative fees of the arbitration and all fees of the
arbitrator, except that the Participant or Beneficiary may, if he or she wishes,
pay up to one-half of those amounts.  Each party shall pay its own
attorneys’ fees, costs, and expenses, unless the arbitrator orders
otherwise.  The prevailing party in such arbitration, as determined by
the arbitrator, and in any enforcement or other court proceedings, shall be
entitled, to the extent permitted by law, to reimbursement from the other party
for all of the prevailing party’s costs (including but not limited to the
arbitrator’s compensation), expenses, and attorneys’ fees.  The
arbitrator shall have no authority to add to or to modify this Plan, shall apply
all applicable law, and shall have no lesser and no greater remedial authority
than would a court of law resolving the same claim or
controversy.  The arbitrator shall, upon an appropriate motion,
dismiss any claim without an evidentiary hearing if the party bringing the
motion establishes that it would be entitled to summary judgment if the matter
had been pursued in court litigation.  The parties shall be entitled
to reasonable discovery subject to the discretion of the
arbitrator.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (d) The decision of the arbitrator
shall be final, binding, and non-appealable, and may be enforced as a final
judgment in any court of competent jurisdiction.

     

    (e) This arbitration provision of the
Plan shall extend to claims against any parent, subsidiary, or affiliate of each
party, and, when acting within such capacity, any officer, director,
shareholder, Participant, Beneficiary, or agent of each party, or of any of the
above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common law
or under this Plan.

     

    (f) Notwithstanding the foregoing, and
unless otherwise agreed between the parties, either party may, in an appropriate
matter, apply to a court for provisional relief, including a temporary
restraining order or preliminary injunction, on the ground that the arbitration
award to which the applicant may be entitled may be rendered ineffectual without
provisional relief.

     

    (g) Any arbitration hereunder shall be
conducted in accordance with the employee benefit plan claims rules and
procedures of the AAA then in effect; provided, however, that
(i) all evidence presented to the arbitrator shall be in strict conformity
with the legal rules of evidence, and (ii) in the event of any
inconsistency between the employee benefit plan claim rules and procedures of
the AAA and the terms of this Plan, the terms of this Plan shall
prevail.

     

    (h) If any of the provisions of this
Section 17.8 are determined to be unlawful or otherwise unenforceable, in
whole or in part, such determination shall not affect the validity of the
remainder of this Section 17.8, and this Section 17.8 shall be
reformed to the extent necessary to carry out its provisions to the greatest
extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by
neutral, binding arbitration.  If a court should find that the
provisions of this Section 17.8 are not absolutely binding, then the
parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.

     

    (i) Arbitration of a Disability claim
under this Section 17.8 shall (i) be considered one of the two levels
of mandatory appeals permitted under Department of Labor Regulation
Section 2560.503-1 and (ii) shall not preclude the claimant from
challenging the decision of the arbitrator under Section 502(a) of
ERISA.

     

    17.9.
Performance Based
Compensation.  It is intended that all Deferrals that would
have qualified as performance based compensation for purposes of
Section 162(m) of the Code if paid when originally due (without regard to
the Deferral Election), and all earnings on such Deferrals that are paid or
credited to accounts under this Plan, qualify as performance based compensation
under Section 162(m) of the Code when and as actually paid in accordance
with this Plan.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    17.10.
Section 409A
Compliance.  The terms and operation of this Plan are intended
to comply with the provisions of Section 409A of the Code.  The
Plan shall be administered in a manner consistent with this intent, and any
provision that would cause the Plan to fail to satisfy Section 409A of the
Code shall have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent
permitted by Section 409A of the Code) and may be made by the Company
without the consent of the Participants.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    


    Exhibits -
Forms to be Used with Plan

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Annual
Compensation Deferral Election

    


    


    PARTICIPANT
NAME  : _____________________________

     

     

    


    Please
complete all sections.

     

    SECTION 1:   ELECTION TO DEFER
COMPENSATION

    


     

    I hereby
elect to defer the following amount(s) paid for calendar year
20____.  1

     

    (Check all that apply and where
applicable, circle the appropriate quarters):

     

    


     

    
      	
              q  

            	
              Salary
      2                                         _______%      OR                $_________

            


    

    


     

    
      	
              q  

            	
              Bonus                                           _______%      OR                $_________

            


    

    


     

    
      	
              q  

            	
              Director’s
      Retainer                  
         _______%      OR                $_________                                Q1    
      Q2     Q3    
  Q4

            


    

    


     

    
      	
              q  

            	
              Director’s
      Fees                         
        
      _______%      OR               $_________                                Q1    
      Q2     Q3    
  Q4

            


    

    


     

    
      	
              q  

            	
              Cash
      DERs                                   _______%      OR              
      $_________                                Q1    
      Q2     Q3    
  Q4

            


    

    


     

    


    MATCHING:

    


    Deferrals
are subject to Matching 3  
Yes:_______No:_______

     

     

     

    
      
        

      

    

    
      (________
Initial)

    

     

    
      
        
          
            
              	
                      1

                    	
                      Elections must
      be as to amounts scheduled to be paid in the calendar year after the year
      of
election.

                    


            

          

        

      

        

      
        
          
            
              
                	
                        
                          2

                        

                      	
                        Such deferrals will be made in
      equal installments throughout the year on regular pay dates unless a
      separate schedule is provided as part of this form and attached
      hereto.

                      


              

            

          

        

          

      

      
        
          
            
              	
                      
                        3

                      

                    	
                      Company to specify and
      describe which types of Compensation are subject to matching and at what
      rates.

                    


            

          

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Annual
Compensation Deferral Election

     

    SECTION
2:   INVESTMENT OPTIONS

    


     

    I
WISH TO HAVE MY DEFERRALS CREDITED TO THE FOLLOWING ACCOUNT AS DESCRIBED IN AND
SUBJECT TO THE TERMS OF THE EXECUTIVE DEFERRED COMPENSATION PLAN:

     

    


    
      	
              q  

            	
              Stock
      Equivalent Account – treated as Deferred Stock
  Units

            


    

    


     

    
      	
              q  

            	
              Interest
      Equivalent Account - earns Rate of Return equivalent to 120% of the
      long-term Applicable Federal Rate, compounded
  monthly.

            


    

     

     

    

      (________
Initial)

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Annual
Compensation Deferral Election

     

    SECTION
3:   SPECIFIED DISTRIBUTION REQUEST

    


    The
earliest date for any distribution of any amount deferred is the May 1 that
occurs 16 months after the end of the Plan year during which the Deferral
Crediting Date for such deferred amount occurs.

    


    For this
deferral election, the earliest permitted distribution date is
_______________

    


    I wish to
have my distributions commence as noted below (check all that
apply):

     

    
      a) Distribution
Date

    

    
       

      
        	
                q  

              	Specific Date - please
specify


      

    

    
      	
              q  

            	
              Earliest
      permitted distribution date specified
above

            


    

    
      	
              q  

            	
              Other
      later date (please specify year) May 1,
________

            


    

     

    
      	
              q  

            	
              Retirement
      (Beginning with the first May 1 following my Retirement from the
      Company)

            


    

     

    
      	
              q  

            	
              Disability
      (as defined in the Plan)

            


    

     

    
      	
              q  

            	
              Death

            


    

     

    
      	
              q  

            	
              The
      earliest of each of the dates checked
above

            


    

     

    
      b) Distribution
Method

    

     

    
      	
              q  

            	
              Lump
      Sum

            


    

     

    
      	
              q  

            	
              _____
      Annual Installments* (Must be at least 2 and not exceed
  15)

            


    

     

    *The
installments will be calculated in accordance with the terms of the Plan unless
another payout schedule is specified and attached hereto.

    


     

    SECTION
4:   VESTING REQUIREMENTS OR OTHER CONDITIONS ON
DISTRIBUTIONS

     

    All
vesting requirements or other conditions with respect to the Compensation being
deferred must be satisfied prior to any crediting of such Compensation, or any
accruals thereon, to your account or distribution of amounts or delivery of
shares in respect of your account balance.  Any vesting requirements
or other conditions with respect to the Compensation being deferred that were
established by the Committee are attached hereto.

     

    Any
matching of Compensation that is deferred and which is subject to vesting shall
not be distributable until such matching Compensation is fully vested, at which
point it will be distributed in accordance with Section 3; notwithstanding the
foregoing, upon a separation from service, all vested matching Compensation
shall be available for distribution.

     

    (________
Initial)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Annual
Compensation Deferral Election


     

    
      
        	
                1. 

              	
                I
      understand that I may discontinue deferral of unearned future Compensation
      at any time during the Plan Year.  I also understand that if I
      discontinue deferral of unearned future Compensation during the year, I
      cannot restart deferral until the beginning of the succeeding calendar
      year.  The foregoing election is voluntarily made by me after
      reviewing the terms of the Plan and with knowledge that this Deferral
      Election is otherwise irrevocable except to the limited extent permitted
      under the terms of the Plan.

              


      

    

     

    
      
        	
                2. 

              	
                I
      acknowledge that the terms and conditions of the Redwood Trust, Inc. EXECUTIVE DEFERRED
      COMPENSATION PLAN have been explained to me, including the tax
      consequences of my decision to participate in the Plan.  I
      understand that no ruling or determination letter has been obtained from
      the Internal Revenue Service that guarantees the deferral of income taxes
      on amounts deferred under the Plan.  I agree that my election to
      defer distribution of Compensation is intended to comply with Section 409A
      of the Code and authorize the Company to interpret the Plan and this
      Deferral Election in a manner appropriate to qualify for deferral of
      income under Section 409A of the
Code.

              


      

    

    


    
      
        	
                3. 

              	
                I
      agree to defer a portion of my Compensation (as defined in the Plan) and
      to have that income distributed to me at a later date pursuant to the
      terms and conditions of the Plan, which is incorporated by reference, in
      its entirety, in this Deferral Election
Form.

              


      

    

    


    
      
        	
                4. 

              	
                I
      understand that this Deferral Election Form is not an employment
      agreement, does not guarantee that I will receive any predetermined amount
      of compensation, and does not guarantee that I will receive any bonus, or
      incentive compensation.

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                5.

              	
                I
      understand that any Compensation I defer will be held as an asset of
      Redwood Trust, Inc., and will remain subject to the claims of the general
      creditors of Redwood Trust, Inc.  I understand that I could lose
      all amounts deferred and I accept that
risk.

              


      

    

    


    This
Deferral Election is executed and agreed:

    


    __________________________________                                   _____________________________________

    (Signature)                                                                                                    
(Election Date)

     

    


    _________________________________                                     _____________________________________

    (Name)                                                                                                           
(SSN)

    


    Agreed:

    


    Redwood
Trust, Inc.

    


    Name: _____________________________

    


    Title:   _____________________________

    


    Date:  _____________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Deferred
Stock Deferral Election

    


    (Page 1
of 4)

    


     

    PARTICIPANT
NAME : _______________________________

     

     

     

    
      Please
complete all sections

    

     

     

    SECTION
1:  
ELECTION TO DEFER STOCK
UNITS 4

    


     

    
      a) I
hereby elect to defer the following:

    

     

    
      	
              q  

            	
              Deferred
      Stock Units

            


    

     

                        
__________ Award
Shares                                           Grant
Date:
__________

     

     

    
      b) I wish to receive dividend equivalent
rights (DERs) on the above deferrals:

    

    


    
      	
              q  

            	
              In
      Cash 5

            


    

    


    
      	
              q  

            	
              Deferred
      and Credited to

            


    

    


    ____  Stock
Equivalent Account - paid in additional deferred shares

    


    ____  Interest
Account -  earns Rate of Return equivalent to 120% of the long-term
Applicable Federal Rate compounded monthly.

     

     

    


    (________
Initial)

     

     

    
      
        

      

    

    
      
        
          
            	
                    4

                  	
                    Election to defer may be made
      on date of award if award does not vest for at least one
      year.  If award is not subject to vesting, then election must be
      made at same time as elections for equivalent cash bonus (in advance of
      award).

                  


          

        

      

    

      
      
        
          
            	
                    5

                  	
                    This choice
      may not be available under terms of
  award.

                  


          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Deferred
Stock Deferral Election

    


    (Page 2
of 4)

     

    SECTION
2:   SPECIFIED DISTRIBUTION REQUEST

    


    The
earliest date for any distribution of any amount deferred is the May 1 that
occurs 16 months after the end of the Plan year during which the Deferral
Crediting Date for such deferred amount occurs.

    


    For this
grant, the earliest permitted distribution date is _______________

    


    I wish to
have my distributions commence as noted below (check all that
apply):

     

    
      a)
Distribution
Date

    

    
       

      
        	
                q  

              	
                Specific
      Date - please specify

              


      

       

    

    
      	
              q  

            	
              Earliest
      permitted distribution date specified
above

            


    

    
      	
              q  

            	
              Other
      later date (please specify year) May 1,
________

            


    

     

    
      	
              q  

            	
              Retirement
      (Beginning with the first May 1 following my Retirement from the
      Company)

            


    

     

    
      	
              q  

            	
              Disability
      (as defined in the Plan)

            


    

     

    
      	
              q  

            	
              Death

            


    

     

    
      	
              q  

            	
              The
      earliest of each of the dates checked
above

            


    

     

    b)
Distribution Method

    


    
      	
              q  

            	
              Lump
      Sum

            


    

     

    
      	
              q  

            	
              _____
      Annual Installments* (Must be at least 2 and not exceed
  15)

            


    

    


    *
The installments will be calculated in accordance with the terms of the Plan
unless another payout schedule is specified and attached hereto.

    
 

    


    (________
Initial)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Deferred
Stock Deferral Election

    


    (Page 3
of 4)

    


     

    SECTION 3: 
 VESTING REQUIREMENTS OR OTHER CONDITIONS ON DISTRIBUTIONS

     

     

    All
vesting requirements or other conditions established by the Committee with
respect to the award that is the subject of this Deferral Election must be
satisfied prior to any crediting of the Award Shares and related DERs to your
account or delivery of shares in respect of your account
balance.  Unless elsewhere expressly provided, all accruals with
respect to unvested Award Shares will be forfeited, along with the unvested
Award Shares, if employment is terminated prior to vesting dates.

     

    


     

     

    


     

    


     

    


     

    


     

    (________
Initial)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Deferred
Stock Deferral Election

    


    (Page 4
of 4)

    


     

    
      	
              1.

            	
              I
      acknowledge that the terms and conditions of the Redwood Trust, Inc. EXECUTIVE DEFERRED
      COMPENSATION PLAN and the 2002 Redwood Trust, Inc. INCENTIVE PLAN have
      each been explained to me, including the tax consequences of my decision
      to participate in the Plans.  I understand that no ruling or
      determination letter has been obtained from the Internal Revenue Service
      that guarantees the deferral of income taxes on amounts deferred under the
      Plans.  I agree that the Award and my election to defer
      distribution thereof are intended to comply with Section 409A of the Code
      and authorize the Company to interpret my Award Agreement, the Plans and
      this Deferral Election in a manner appropriate to qualify for deferral of
      income under Section 409A of the
Code.

            


    

    


    
      	
              2.

            	
              I
      agree to defer a portion of my Compensation (as defined in the EXECUTIVE DEFERRED
      COMPENSATION PLAN) and to have that income distributed to me at a
      later date pursuant to the terms and conditions of the EXECUTIVE DEFERRED
      COMPENSATION PLAN, which is incorporated by reference, in its
      entirety, in this Deferral Election Form.  I understand that the
      elections made herein are irrevocable (except to the limited extent
      otherwise permitted under EXECUTIVE DEFERRED
      COMPENSATION PLAN).

            


    

     

    
      	
              3.

            	
              I
      understand that this Deferral Election Form is not an employment
      agreement, does not guarantee that I will receive any predetermined amount
      of compensation, and does not guarantee that I will receive any bonus, or
      incentive compensation.

            


    

    


    
      	
              4.

            	
              I
      understand that any Compensation I defer will be held as an asset of
      Redwood Trust, Inc., and will remain subject to the claims of the general
      creditors of Redwood Trust, Inc.  I understand that I could lose
      all amounts deferred and I accept that
risk.

            


    

     

    This
Deferral Election is executed and agreed:

     

    
      


      __________________________________                                   _____________________________________

      (Signature)                                                                                               (Election
Date)

       

      


      _________________________________                                     _____________________________________

      (Name)                                                                                                      (SSN)

    

    
 

    Agreed:

    


    Redwood
Trust, Inc.

    


    Name:   _____________________________

    


    Title:     _____________________________

    


    Date:     _____________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Beneficiary
Designation

     

    
      	
              I.

            	
              _______________________________________
      (Insert Employee’s/Director’s name)

            


    

     

    
      	
              II.

            	
              The
      above-named Participant’s Beneficiary under the Executive Deferred
      Compensation Plan is set forth
below:

            


    

     

    
      	
                              Primary
      Beneficiary(ies):

            	
              ________________________________________________

            


    

     

    
      	
               
      

            	
              Relationship:

            	
              ________________________________________________

            


    

     

    
      	
               
      

            	
              Address:

            	
              ________________________________________________

            


    

     

    
      	
                             
      Social Security Number:

            	
              ________________________________________________

            


    

     

    
      	
                             
      Contingent Beneficiary(ies):

            	
              ________________________________________________

            


    

     

    
      	
               
      

            	
              Relationship:

            	
              ________________________________________________

            


    

     

    
      	
               
      

            	
              Address:

            	
              ________________________________________________

            


    

     

    
      	
              Social
      Security Number:

            	
              ________________________________________________

            


    

     

    
      	
              III.

            	
              If
      no individual beneficiary named is living at the Participant’s death, the
      Beneficiary shall be the executor(s) or administrator(s) of the
      Participant’s estate.

            


    

     

    
      	
              IV.

            	
              This
      Beneficiary Designation revokes all prior designations and shall be
      effective as of the date it is filed with the Company.  The
      Participant retains the right to revoke this Beneficiary
      Designation.

            


    

     

    
      	
              V.

            	
              If
      the above-named Primary Beneficiary is someone other than the spouse of a
      married Participant, the spouse of such Participant must execute this
      Beneficiary Designation below.

            


    

     

    Dated at
______________________, State of ______________________, on __________,
20__.

     

     

    
      
        	___________________________________	___________________________________
	
                Signature
      of Participant

              	
                Witness

              


      

    

    
       

       

      
        
          	___________________________________	___________________________________
	
                  
                    Signature
      of Spouse (if not the Primary 

                    Beneficiary)

                  

                	
                  Witness

                


        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Re-Deferral
Election 6

    


     

    I wish to
change the distribution election previously set forth under my Deferral Election
dated ___________, 2_______.  I understand that I can make only one
change to extend the Distribution Date or Dates I initially selected and only
one change to the initial method of payment (lump sum or installments) that I
selected.  I also understand that I can only make this change if the
original Distribution Date is at least 12 months from the date of this election
and the new Distribution Date is at least five years later than the original
Distribution Date.  All other terms of the Deferral Election will
remain in effect.  The following is my requested amendment to my
original distribution election.

     

    
      	
              ___

            	
              Specified
      Distribution Date Amendment Request 7

            


    

     

    I wish to
receive payment in respect of all deferrals made pursuant to this Re-Deferral
Election in the following form:

     

    
      	
               
      

            	
              ___

            	
              (i)

            	
              lump
      sum, payable on May 1, ____;

            


    

    
      	
               
      

            	
              ___

            	
              (ii)

            	
              in
      annual installments beginning on May 1, ____.  The number of
      installments is ___ (must be at least 2 and not exceed 15).  The
      installments will be calculated in accordance with the terms of the Plan
      unless another payout schedule is specified and attached
      hereto.

            


    

     

    
      	
              ___

            	
              Retirement
      Related Distribution Date Amendment Request 8

            


    

     

    I wish to
receive payment in respect of all deferrals made pursuant to this Re-Deferral
Election in the following form:

     

    
      	
               
      

            	
              ___

            	
              (i)

            	
              lump
      sum, payable as soon as practicable following Retirement from the
      Company;

            


    

    
      	
               
      

            	
              ___

            	
              (ii)

            	
              lump
      sum, payable on the first May 1 following my Retirement from the
      Company;

            


    

    
      	
               
      

            	
              ___

            	
              (iii)

            	
              in
      annual installments beginning on the first May 1 following Retirement from
      the Company.  The number of installments is ___ (must be at
      least 2 and not exceed 15).  The installments will be calculated
      in accordance with the terms of the Plan unless another payout schedule is
      specified and attached hereto.

            


    

     

    
      
         

         

          
            

          

        

         

        
          
            
              	
                      
                        6

                      

                    	
                      Check for further guidance
      under 409A prior to completion if original deferral was
      pre-2005.

                    


            

          

        

      

      
         

        
          
            
              	
                      
                        7

                      

                    	
                      These changes permissible only
      if specified date was elected as a date for distribution in the original
      Deferral
Election.

                    


            

          

        

      

      
         

        
          
            
              	
                      
                        8

                      

                    	
                      These changes permissible only
      if retirement was elected as a date for distribution in the original
      Deferral
Election.

                    


            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Redwood
Trust, Inc.

    Executive
Deferred Compensation Plan

    Re-Deferral
Election

     

    This
Re-Deferral Election is executed and agreed:

     

     

    
      
        	___________________________________	___________________________________
      (Election
      Date)
	
                (Signature)

              	
                (Date)

              


      

    

     

     

    
      
        	___________________________________	___________________________________
	
                (Print
      Name)

              	
                (Social
      Security Number)

              


      

    

     

    Agreed:

     

    Redwood
Trust, Inc.

     

     

    Name: ____________________________                                                              

    Title:__________________________

    Date:__________________________