2002 REDWOOD TRUST, INC.
EMPLOYEE STOCK PURCHASE PLAN

 

(as amended)


 


1.
ESTABLISHMENT OF PLAN.


 


Redwood
Trust, Inc., a Maryland corporation (the “Company”), proposes to grant options (“Options”) for purchase
of the Company's common stock, $0.01 per share par value (“Common Stock”), to eligible employees of the Company and
its Designated Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this “Plan”).
For purposes of this Plan, “parent corporation” and “subsidiary” shall have the same meanings as “parent
corporation” and “subsidiary corporation” set forth in Sections 424(e) and 424(f), respectively, of the Internal
Revenue Code of 1986, as amended (the “Code”). The Company intends this Plan to qualify as an “employee stock
purchase plan” under Section 423 of the Code (including any amendments or successor provisions to such Section), and the
provisions of this Plan shall be construed as reasonably necessary in order to effectuate such intent. Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein.


 


2. STOCK SUBJECT TO PLAN.


 


A total
of 450,000 shares of the Common Stock is reserved for issuance under this Plan. Such number shall be subject to adjustments affected
in accordance with Section 16 of this Plan. Any shares of Common Stock that have been made subject to an Option that cease to be
subject to the Option (other than by means of exercise of the Option), including, without limitation, in connection with the cancellation
or termination of an Option, shall again be available for issuance in connection with future grants of Options under this Plan.


 


3. PURPOSE.


 


The
purpose of this Plan is to provide employees of the Company and its designated subsidiaries, as that term is defined in Section
5 of this Plan (“Designated Subsidiaries”), with a convenient means of acquiring an equity interest in the Company
through payroll deductions, to enhance such employees' sense of participation in the affairs of the Company and its Designated
Subsidiaries, to provide an incentive for continued employment with the Company and its Designated Subsidiaries, to provide an
additional form of tax-advantaged compensation for employees, and to provide a performance incentive that will inure to the benefit
of all of the Company's stockholders.


 


4. ADMINISTRATION.


 


This
Plan shall be administered by a committee (the “Committee”) appointed by the Company's Board of Directors (the “Board”)
consisting of at least two members of the Board, each of whom is a “non-employee director” as defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (unless the General Counsel of the Company
shall have rendered a written opinion to the Board that such composition of the Committee is not required for the exemption under
Rule 16b-3 to be available with respect to purchases of Common Stock under the Plan), which shall be the Compensation Committee
of the Board if it satisfies such requirements. Subject to the provisions of this Plan and the limitations of Section 423 of the
Code or any successor provision in the Code, the Committee shall have exclusive authority, in its discretion, to determine all
matters relating to Options granted under this Plan, including all terms, conditions, restrictions, and limitations of Options;
provided, however, that all participants granted Options under an offering pursuant to this Plan shall have the same rights and
privileges within the meaning of Code Section 423(b)(5) except as required by applicable law. The Committee shall also have exclusive
authority to interpret this Plan and may from time to time adopt rules and regulations of general application for this Plan's administration.
The Committee's exercise of discretion and interpretation of this Plan, its rules and regulations, and all actions taken and determinations
made by the Committee pursuant to this Plan shall be conclusive and binding on all parties involved or affected. The Committee
may delegate administrative duties to the Plan Financial Agent (defined in Section 12) or such of the Company's officers or employees
as it so determines (provided that no such delegation may be made that would cause the purchase of Common Stock by participants
under this Plan to cease to be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)). All expenses incurred in connection with the administration of this Plan shall be paid by the Company and the Designated
Subsidiaries; provided, however, that the Committee may require a participant to pay any costs or fees in connection with the sale
by the participant of shares of Common Stock acquired under this Plan or in connection with the participant's request for the issuance
of a certificate for shares of Common Stock held in the participant's account under the Plan.


 


5. ELIGIBILITY.


 


Any
employee of the Company or the Designated Subsidiaries is eligible to participate in the Plan for any Offering Period (as hereinafter
defined) under this Plan except the following:


 


(a)
employees who have not been continuously employed by the Company or Subsidiaries from the date of hire or rehire or of return
from an unapproved leave of absence for a period of at least three months before the beginning of such Offering Period;


 


(b)
employees who are customarily employed for less than 20 hours per week;


 


(c)
employees who are customarily employed for not more than five months in a calendar year; and


 


(d)
employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the
Code, own stock or hold options to purchase stock possessing 5% or more of the total combined voting power or value of all classes
of stock of the Company or any of its Subsidiaries or who, as a result of being granted Options under this Plan, would own stock
or hold options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of
the Company or any of its Subsidiaries.


 






    	 



    	 



    

  


For
all purposes of this Plan, the term Designated Subsidiaries shall mean those Subsidiaries which have been, or which may in the
future be, determined by the Board to be Designated Subsidiaries. A Designated Subsidiary will cease to be a Designated Subsidiary
on the earlier of (i) the date the Committee or the Board determines that such Subsidiary is no longer a Designated Subsidiary
or (ii) such Designated Subsidiary ceases for any reason to be a “parent corporation” or “subsidiary corporation”
as defined in Sections 424(e) and 424(f), respectively, of the Code.


 


6. EFFECTIVE DATE; OFFERING
AND PURCHASE PERIODS.


 


The
effective date of this Plan shall be July 1, 2002 (the “Effective Date”). The offering periods of this Plan (individually,
an “Offering Period”) shall consist of periods determined as described below not to exceed the maximum period permitted
by Section 423 of the Code. Until determined otherwise by the Committee or the Board, (a) Offering Periods shall commence on each
January 1 and continue for twelve months, provided, however, that the first Offering Period shall begin on July 1, 2002 and continue
for six months and the initial Offering Period for any newly eligible employee that becomes a participant during an otherwise ongoing
Offering Period shall be deemed to begin on the first day of the first Purchase Period after eligibility, and (b) each Offering
Period shall consist of one or more purchase periods (individually, a “Purchase Period”) during which payroll deductions
of the participants are accumulated under this Plan. Until otherwise determined by the Committee or the Board, each Purchase Period
shall be a three-month period commencing on each January 1, April 1, July 1, and October 1, provided, however, that the first Purchase
Period shall commence with the first Offering Period on July 1, 2002. The first day of each Offering Period is referred to as the
“Offering Date”. The last day of each Purchase Period is referred to as the “Purchase Date”. Subject to
the requirements of Section 423 of the Code, the Committee or the Board shall have the power to change the duration of Offering
Periods or Purchase Periods with respect to future offerings if such change is announced at least 30 days prior to the first day
of the first Offering Period or Purchase Period to be affected by such change.


 


7. PARTICIPATION IN THIS
PLAN.


 


Eligible
employees may become participants in an Offering Period under this Plan as of the Purchase Period first commencing after satisfying
the eligibility requirements by delivering an enrollment form provided by the Company to the Secretary of the Company or such other
officer as he or she may designate from time to time (“Redwood Plan Administrator”) not later than the 15 th
day of the month (or if such day is not a business day for the Company or the applicable Subsidiary, on the immediately preceding
business day) before commencement of such Purchase Period unless a later time for filing the enrollment form authorizing payroll
deductions is set by the Committee for all eligible employees with respect to a given Purchase Period. Notwithstanding the foregoing,
for the initial Offering Period, commencing on the effective date, the time for filing an enrollment form and commencing participation
for employees who satisfy the eligibility requirements as of the effective date shall be determined by the Committee and communicated
to such employees. Once an employee becomes a participant in the Plan, such employee will automatically participate in all Purchase
Periods commencing after satisfying the eligibility and enrollment requirements as set forth in the first sentence or second sentence
of this section unless the employee withdraws from this Plan or terminates further participation in the Offering Period as set
forth in Sections 13 and 14 below. Such participant is not required to file any additional enrollment forms in order to continue
participation in this Plan.


 


8. GRANT OF OPTION ON ENROLLMENT.


 


Enrollment
by an eligible employee in this Plan with respect to an Offering Period will constitute the grant by the Company to such employee
as of the relevant Offering Date of an Option to purchase on each relevant Purchase Date up to that number of whole shares of Common
Stock of the Company, determined by dividing (a) the amount accumulated in such employee's payroll deduction account during the
Purchase Period ending on such Purchase Date by (b) the Purchase Price as that term is defined in Section 9; provided, however,
that the number of shares which may be purchased pursuant to an Option may in no event exceed (i) the number determined by dividing
the amount of $6,250 by the fair market value (as defined in Section 9) of a share of Common Stock on the Offering Date, or (ii)
such other maximum number of shares as may be specified in the future by the Board or Committee in lieu of the limitation contained
in clause (i).


 


9. PURCHASE PRICE.


 


The
purchase price per share (the “Purchase Price”) at which a share of Common Stock will be sold on any Purchase Date
shall initially be the LOWER of (a) 85% of the fair market value of such share on the first day of the Offering Period in which
such Purchase Date occurs or (b) 85% of the fair market value of such share on the Purchase Date.


 


For
purposes of this Plan, the term “fair market value” of the Common Stock on any date shall be the closing price on such
date of the Common Stock reported on the New York Stock Exchange or any national securities exchange on which the Common Stock
is listed. If there is no reported closing price of the Common Stock on such date, then the “fair market value” shall
be measured on the next preceding trading day for which such reported closing price is available. If there is no regular trading
market for the Common Stock, the fair market value of the Common Stock shall be as determined by the Committee in its sole discretion,
exercised in good faith. The Committee may change the manner in which the Purchase Price is determined with respect to future Offering
Periods or Purchase Periods (provided such determination does not have the effect of lowering the Purchase Price to an amount less
than that which would be computed utilizing the method for determining the Purchase Price set forth in the first paragraph of this
Section 9) if such changed manner of computation applied to all eligible employees and is announced at least 30 days prior to the
first day of the first Offering Period or Purchase Period to be affected by such change.


 


10. PURCHASE OF SHARES;
CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF SHARES.


 


(a)
Funds contributed by each participant for the purchase of shares under this Plan shall be accumulated by regular payroll deductions
made during each Offering Period. The deductions shall be made in $50 increments as selected by the Participant up to a maximum
of not more than 15% of the participant's Compensation. As used herein, “Compensation” shall mean all base salary,
wages, cash bonuses, commissions, current-pay dividend equivalent rights (“DERs”), and overtime; provided, however,
that, for purposes of determining a participant's Compensation, any election by such participant to reduce his or her regular cash
remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did not make such election. “Compensation”
does not include severance pay, hiring and relocation allowances, pay in lieu of vacation, automobile allowances, imputed income
arising under any Company group insurance or benefit program, income received in connection with stock options or other stock-based
awards (other than current-pay DERs), or any other special items of remuneration. Payroll deductions shall commence on the first
payday following the Offering Date and shall continue through the last payday of the Offering Period unless sooner altered or terminated
as provided in this Plan.


 






    	 



    	 



    

  


(b)
A participant may lower (but not increase) the rate of payroll deductions during a Purchase Period by filing with the Redwood Plan
Administrator a new authorization for payroll deductions, in which case the new rate shall become effective for the next payroll
period commencing more than 15 days after the Redwood Plan Administrator's receipt of the authorization and shall continue for
the remainder of the Offering Period unless changed as described below. Such change in the rate of payroll deductions may be made
at any time during a Purchase Period, but not more than one change may be made effective during any Purchase Period. Notwithstanding
the foregoing, a participant may lower the rate of payroll deductions to zero for the remainder of the Purchase Period. A participant
may increase or decrease the rate of payroll deductions for any subsequent Purchase Period by filing with the Redwood Plan Administrator
a new authorization for payroll deductions not later than the 15 th day of the month (or if such date is not a business
day, the immediately preceding business day) before the beginning of such Purchase Period. A participant who has decreased the
rate of withholding to zero will be deemed to continue as a participant in the Plan until the participant withdraws from the Plan
in accordance with the provisions of Section 13. A participant shall have the right to withdraw from this Plan in the manner set
forth in Section 13 regardless of whether the participant has exercised his or her right to lower the rate at which payroll deductions
are made during an Offering Period.


 


(c)
All payroll deductions made for a participant will be credited to his or her account under this Plan and deposited with the general
funds of the Company. No interest will accrue on payroll deductions. All payroll deductions received or held by the Company may
be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.


 


(d)
On each Purchase Date, provided that the participant has not terminated employment in accordance with Section 14 or has not submitted
to the Redwood Plan Administrator a signed and completed withdrawal form, in either case on or before the 15 th day
(or if such date is not a business day, on the immediately preceding business day) of the last month of the Purchase Period in
accordance with Section 10(b) or Section 13 of this Plan, or the Plan has not been terminated prior to the date referred to in
the foregoing clause, the Company shall apply the funds then in the participant's account to the purchase at the Purchase Price
of whole share(s) of Common Stock issuable under the Option deemed granted to such participant with respect to the Offering Period
to the extent that such Option is exercisable on the Purchase Date; provided that in no event shall an Option be deemed exercised
(by applying funds to a purchase) after the expiration of 27 months from the date such Option was deemed granted under Section
8 hereof. Subject to Section 11, any funds remaining in the participant's account will be applied to the following Purchase Period.
No fractional shares will be purchased.


 


(e)
During a participant's lifetime, such participant's Option to purchase shares hereunder is exercisable only by him or her. The
participant will have no interest or voting right in shares covered by his or her Option until such Option has been exercised.


 


11. LIMITATIONS ON RIGHT
TO PURCHASE.


 


(a)
No employee shall be granted an Option to purchase Common Stock under this Plan at a rate which, when aggregated with his or her
rights to purchase stock under all other employee stock purchase plans of the Company or any Subsidiary which is intended to meet
the requirements of Code Section 423, exceeds $25,000 in fair market value, determined as of the applicable date of the grant of
the Option, for each calendar year in which the employee participates in this Plan (or any other employee stock purchase plan described
in this Section 11(a)).


 


(b)
The number of shares which may be purchased by any employee on a Purchase Date may not exceed the number of shares determined by
dividing the sum of $6,250 by the fair market value (as defined in Section 9) of a share of Common Stock on the first day of the
Offering Period in which such Purchase Date occurs or, in the event the Committee or Board may specify a different limitation to
be applied in lieu of the foregoing limitation, then the number of shares which may be purchased by any employee on a Purchase
Date may not exceed such other limitation.


 


(c)
If the number of shares to be purchased on a Purchase Date by all employees participating in this Plan exceeds the number of shares
then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform
a manner as shall be reasonably practicable and as the Committee shall determine to be equitable. In such event, the Company shall
give written notice of such reduction of the number of shares to be purchased under a participant's Option to each participant
affected thereby.


 


(d)
Any payroll deductions accumulated in a participant's account which are not used to purchase stock due to the limitations in this
Section 11 shall be returned to the participant as soon as practicable after the end of the applicable Purchase Period without
interest.


 


12. EVIDENCE OF STOCK OWNERSHIP.


 


(a)
Promptly following each Purchase Date, the number of full shares of Common Stock purchased by each participant shall be deposited
into an account established in the participant's name at a stock brokerage or other financial services firm designated or approved
by the Committee (the “Plan Financial Agent”). A participant shall be free to undertake a disposition (whether by way
of sale, gift, or other transfer) of the shares in his or her account at any time, subject to the Company's Insider Trading Policy
and applicable securities law rules and regulations, but, in the absence of such a disposition, the shares must remain in the participant's
account at the Plan Financial Agent until the holding period set forth in Code Section 423(a) has been satisfied. With respect
to full shares for which the Code Section 423(a) holding period has been satisfied, the participant may move those shares to another
brokerage account of the participant's choosing or request that a stock certificate for full shares be issued and delivered to
him or her.


 






    	 



    	 



    

  


(b)
Following termination of a participant's employment for any reason, the participant shall have a period of 60 days to notify the
Plan Financial Agent whether such participant desires (i) to receive a certificate representing all full shares then in the participant's
account with the Plan Financial Agent and any cash being held for future purchases or (ii) to sell the shares in the participant's
account through the Plan Financial Agent. If the terminated participant fails to file such notice with the Plan Financial Agent
within 60 days after termination, he or she shall be deemed to have elected the alternative set forth in clause (i) above, provided
that the Plan Financial Agent will continue to hold the terminated participant's certificates, on his or her behalf, in an account
no longer subject to this Plan, until otherwise directed by such participant or determined by the Plan Financial Agent. However,
the participant shall not in any event receive a certificate representing shares with respect to which the Code Section 423(a)
holding period has not been satisfied until such holding period has been satisfied.


 


13. WITHDRAWAL.


 


(a)
Each participant may withdraw from an Offering Period under this Plan by signing and delivering to the Redwood Plan Administrator
a written notice to that effect on a form provided for such purpose. Such withdrawal may be elected at any time on or prior to
the 15 th day of the last month (or if such date is not a business day, the immediately preceding business day) of a
Purchase Period.


 


(b)
Upon withdrawal from this Plan, the accumulated payroll deductions of the participant not theretofore utilized for the purchase
of shares of Common Stock on a Purchase Date shall be returned to the withdrawn participant, without interest, and his or her participation
in this Plan shall terminate. In the event a participant voluntarily elects to withdraw from this Plan, he or she may not resume
his or her participation in this Plan during the same Offering Period unless otherwise determined by the Committee, but he or she
may participate in any subsequent Offering Period by filing a new authorization for payroll deductions in the same manner as set
forth above for initial participation in this Plan.


 


14. TERMINATION OF EMPLOYMENT;
LEAVE OF ABSENCE.


 


Termination
of a participant's employment for any reason, including retirement, death, or the failure of a participant to remain an eligible
employee, immediately terminates his or her participation in this Plan. In such event, except as provided in Section 15, the payroll
deductions credited to the participant's account will be returned to him or her or, in the case of his or her death, to his or
her beneficiary or heirs, without interest. For purposes of this Section 14, an employee will not be deemed to have terminated
employment or failed to remain in the continuous employ of the Company in the case of any leave of absence permitted by applicable
law or otherwise approved by the Committee.


 


15. RETURN OF PAYROLL DEDUCTIONS.


 


In the
event a participant's interest in this Plan is terminated by withdrawal, termination of employment, or otherwise, or in the event
this Plan is terminated by the Board, the Company shall promptly deliver to the participant all contributions of the participant
to the Plan which have not yet been applied to the purchase of stock unless such termination of participation occurs later than
the 15 th day of the final month of any Purchase Period (or if such date is not a business day, on the preceding business
day), in which event such contributions will be utilized to purchase Common Stock for the participant. No interest shall accrue
on the payroll deductions of a participant in this Plan.


 


16. 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 maximum number and kind of shares of stock subject to this Plan as set forth in Sections 1 and 2, the number and kind of
shares subject to outstanding Options, and the Purchase Price. The determination by the Committee as to the terms of any of the
foregoing adjustments shall be conclusive and binding.


 


17. NONASSIGNABILITY.


 


Neither
payroll deductions credited to a participant's account nor any rights with regard to the exercise of an Option or to receive shares
under this Plan may be assigned, transferred, pledged, or otherwise disposed of in any way (other than by will, the laws of descent
and distribution, or as provided in Section 24 hereof) by the participant. Any such attempt at assignment, transfer, pledge, or
other disposition shall be void and without effect.


 


18. REPORTS AND STATUS
OF ACCOUNTS.


 


Individual
accounts will be maintained by the Plan Financial Agent for each participant in this Plan. The participant shall have all ownership
rights with respect to shares of Common Stock held in his or her account by the Plan Financial Agent, including the right to vote
such shares and to receive any dividends or distributions which may be declared thereon by the Board. The Plan Financial Agent
shall send to each participant promptly after the end of each Purchase Period a report of his or her account setting forth the
total of shares purchased, the total number of shares then held in his or her account, and the market value per share. Neither
the Company nor any Designated Subsidiary shall have any liability for any error or discrepancy in any such report.


 






    	 



    	 



    

  


19. NO RIGHTS TO CONTINUED
EMPLOYMENT; NO IMPLIED RIGHTS.


 


Neither
this Plan nor the grant of any Option hereunder shall confer any right on any employee to remain in the employ of the Company or
any Subsidiary or restrict the right of the Company or any Subsidiary to terminate such employee's employment. The grant of any
Option hereunder during any Offering Period shall not give a participant any right to similar grants thereafter.


 


20. EQUAL RIGHTS AND PRIVILEGES.


 


All
eligible employees shall have equal rights and privileges with respect to this Plan except as required by applicable law so that
this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision
of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision
of the Code shall, without further act or amendment by the Company, the Board, or the Committee, be reformed to comply with the
requirements of Section 423. This Section 20 shall take precedence over all other provisions in this Plan.


 


21. NOTICES.


 


All
notices or other communications by a participant to the Company under or in connection with this Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for
the receipt thereof.


 


22. AMENDMENT OF PLAN.


 


This
Plan may be amended by the stockholders of the Company. The Board may also amend this Plan in such respects as it shall deem advisable;
however, stockholder approval will be required for any amendment that will increase the total number of shares as to which Options
may be granted under this Plan, or, but for such shareholder approval, cause this Plan to fail to continue to qualify as an “employee
stock purchase plan” under Section 423 of the Code or cause the purchase of shares thereunder to fail to be exempt from the
provisions of Section 16(b) of the Exchange Act.


 


23. TERMINATION OF THE
PLAN.


 


The
Company's stockholders or the Board may suspend or terminate this Plan at any time. Unless this Plan shall theretofore have been
terminated by the Company's stockholders or the Board, this Plan shall remain in full force and effect until all shares reserved
under Section 2 have been purchased pursuant to the terms hereof.


 


24. DESIGNATION OF BENEFICIARY.


 


(a)
A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's
account under this Plan in the event of such participant's death prior to delivery to him or her (or to the Plan Financial Agent
on his or her behalf) of such shares and cash.


 


(b)
Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such participant's
death, the Company shall deliver such shares or cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver
such shares or cash to the spouse or to any one or more dependents or relatives of the participant or, if no spouse, dependent,
or relative is known to the Company, to such other person as the Company may in good faith determine to be the appropriate designee.


 


25. CONDITIONS UPON ISSUANCE
OF SHARES; LIMITATION ON SALE OF SHARES.


 


Shares
shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of the New York
Stock Exchange or any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


26. WITHHOLDING.


 


The
Committee shall have the right to make such provisions as it deems appropriate to satisfy any obligation of the Company to withhold
federal, state, or local income or other taxes incurred by reason of the operation of the Plan.


 


27. GOVERNING LAW.


 


Except
to the extent that provisions of this Plan are governed by applicable provisions of the Code or any other substantive provision
of federal law, this Plan shall be construed in accordance with, and shall be governed by, the substantive laws of the State of
California without regard to any provisions of California law relating to the conflict of laws.