exv10w2



 






Exhibit 10.2




AMENDMENT TO EMPLOYEE NON-QUALIFIED STOCK OPTION GRANT




          This Amendment (the “Amendment”) is made as of November 16, 2005 by Redwood Trust, Inc., a
Maryland corporation (the “Company”), and the undersigned officer of the Company (the “Executive”).




          WHEREAS, the Company and the Executive are parties to the Employee Non-Qualified Stock Option
Grant, dated ___(the “Grant Agreement”).




          WHEREAS, the Company and the Executive wish to comply with the recently enacted Internal
Revenue Code Section 409A deferred compensation rules that require nonqualified stock option grants
to meet certain criteria in order to be exempt from Section 409A, and since the Accrued DERs do not
meet those criteria under their present terms, the Board of Directors has authorized the
modification of Accrued DERs to Current-Pay DERs, as defined in the 2002 Redwood Trust, Inc.
Incentive Stock Plan (“Plan”), effective as of the date of this Amendment.




          NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree that,
notwithstanding any provision of the Grant Agreement to the contrary:




          All Accrued DERs accrued under the terms of the Grant Agreement prior to this Amendment shall
be paid in cash to the Optionee within ten days of the date of this Amendment.




          The following Section of the Grant Agreement shall be deleted, effective for all dividends
with a record date after the date of this Amendment:



2)      DER’s This Option Grant also entitles the Optionee to receive Dividend Equivalent Rights
in the form of “accrued DERs” as defined in the Plan (“Accrued DERs”) in an amount equal to the
value of any common stock dividend (either in cash or property) declared and accrued on the
unexercised number of Option Shares subject to the Option granted above, subject to the limitations
specified below. All such DER’s are intended to qualify as performance based compensation, having
as a performance objective and condition the requirement that (i) the Company have sufficient
earnings to declare and pay dividends during the period while such DER’s accrue and (ii) solely in
the case of Accrued DERs payable with respect to unexercised Option Shares pursuant to Section
4(d), the additional requirement that the number of shares issued with respect to such Accrued DERs
be reduced to the extent that the fair market value of the stock at the termination of the Grant is
not at least equal to its Original Option Price.




 









 









	 	a)	 	Accrual of DERs will commence with common stock dividends with a record date after
the Date of Grant and will cease for common stock dividends with a record date after the
earlier of the exercise date of the related option and the Expiration Date.






	 	b)	 	The Accrued DERs will accrue on the Original Option shares and on the shares
represented by Accrued DERs as set forth in Section 5(8) of the Plan on the payable date
of the respective dividend.






	 	c)	 	The Optionee will not receive DER accrual for a dividend declared with respect to
Option Shares for which the related Option has been exercised or terminated as of the
record date of that dividend. The Optionee will not receive DER accruals for a dividend
declared with respect to Option Shares if the Optionee is not an employee on the record
date of that dividend, provided, however, that the Optionee will receive DER accruals in
the event of termination of employment to the extent provided in Sections 7, 8, and 9
hereof.






	 	d)	 	DER accruals and Option grants are not considered compensation for purposes of
determination of severance or termination. This provision is subject to any provisions
relative to this issue in any employment agreement between the Company and the Optionee in
effect at the time of this grant (as it may be amended or replaced from time to time).





          The foregoing deleted Section of the Grant Agreement shall be replaced with the following
Section, effective for all dividends with a record date after the date of this Amendment:





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






	 	a)	 	Current-Pay DERs will commence with common stock dividends with a record date after
the date of this Amendment and will cease for common stock dividends with a record date
after the earlier of the exercise date of the related option and the Expiration Date.






	 	b)	 	The Optionee will not receive a Current-Pay DER for a dividend declared with respect
to Option Shares for which the related Option has been exercised or terminated as of the
record date of that dividend. The Optionee will not receive a Current-Pay DER for a
dividend declared with respect to Option Shares if the Optionee is not an employee on the
record date of that dividend, provided, however, that the Optionee will receive
Current-Pay DERs in the event of termination of employment to the extent provided in
Sections 7, 8, and 9 hereof.





 









 









Current-Pay DERs and Option grants are not considered compensation for purposes of determination of
severance or termination pay. This provision is subject to any provisions relative to this issue
in any employment agreement between the Company and the Optionee in effect at the time of this
grant (as it may be amended or replaced from time to time).




          Effective for all dividends with a record date after the date of this Amendment, the
following shall be deleted:



In Section 3 of the Grant Agreement, the words: “except the right to receive payment in
respect of accrued DERs, including accruals with respect to any dividends with a record date that
was previous to the Expiration Date.”




Section 4c and Section 4d of the Grant Agreement in their entirety.




          Effective for all dividends with a record date after the date of this Amendment, the term
“accrued” shall be replaced with “paid” in the remainder of the Grant Agreement.




[SIGNATURE PAGE FOLLOWS]





 









 








          IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the date
set forth above.




	 	 	 	 	 
	 	EMPLOYEE

 	 
	 	   	________________________________
 	 
	 	 	Name:  	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	REDWOOD TRUST, INC.

 	 
	 	By:  	____________________________
 	 
	 	 	Name:  	 	 
	 	 	Title: