Document:

exv10w13w06

 

Exhibit 10.13.6

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (“Agreement”), effective as of
the 22nd day of February, 2005 (the “Effective Date”), is entered into by and between Andrew
Sirkis (the “Executive”) and Redwood Trust, Inc., a Maryland corporation (the
“Company”).

     The Company desires to establish its right to the continued services of the Executive, in the
capacity, on the terms and conditions, and subject to the rights of termination hereinafter set
forth, and the Executive is willing to accept such employment in such capacity, on such terms and
conditions, and subject to such rights of termination. As of the Effective Date, this Agreement
wholly supersedes the Employment Agreement between the Executive and the Company that was effective
as of March 23, 2001.

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

     1. Employment As Vice President Of The Company. The Company does hereby
employ the Executive as Vice President of the Company, reporting to the Office of the President of
the Company (the “OOP”), or any successor organization structure including the Chief Executive
Officer and/or President of the Company. The Executive does hereby accept and agree to such
employment. The Executive’s duties as Vice President shall be such executive and managerial duties
as set forth in Exhibit A attached hereto. The OOP may, from time to time, in its sole discretion,
modify, reassign and/or augment the Executive’s responsibilities, subject to approval by the Board
of Directors of the Company (the “Board”). Any such modification, reassignment or augmentation of
responsibilities shall be in writing. The Executive shall devote such time, energy and skill to
the performance of his duties for the Company and for the benefit of the Company as may be
necessary or required for the effective conduct and operation of the Company’s business.
Furthermore, the Executive shall act only in good faith and exercise due diligence and care in the
performance of his duties to the Company under this Agreement.

     2. Term Of Agreement. The term of this Agreement (the “Term”) shall
commence on the Effective Date and shall continue through December 31, 2007; provided, however,
that (i) on January 1, 2008 and each succeeding January 1, the Term shall automatically be extended
for one additional year unless, not later than three months prior to any such January 1, either
party shall have given written notice to the other that it does not wish to extend the Term and
(ii) such one year extensions of the Term shall not occur on and after the January 1 of the year in
which the Executive will attain age sixty-five (65) but instead the Term shall be extended only
until the date of the Executive’s sixty-fifth (65th) birthday.

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     3. Compensation.

          (a) Base Salary. The Company shall pay the Executive, and the Executive agrees to
accept from the Company, in payment for his services to the Company a base salary at the rate of
$267,000 per year (“Base Salary”), payable in equal biweekly installments or at such other time or
times as the Executive and Company shall agree. Base Salary shall be subject to such adjustments
as the Company and the Executive shall agree.

          (b) Performance Bonus – Board of Directors’ Discretion. The Executive shall be eligible to
receive an annual bonus. The Board in its discretion will determine whether such annual bonus will
be paid, the amount of such bonus and its form of payment. The Executive’s target annual bonus
amount is 75% of his Base Salary (the “Target Bonus”). If the Board determines in its discretion
that the Executive’s performance meets or exceeds the criteria established by the Board for the
award of a Target Bonus, the Board may award the Executive the Target Bonus or a higher amount.
Likewise, if the Executive’s performance does not meet said criteria, the Board may award a lesser
amount, or no bonus may be awarded. Unless otherwise provided in this Agreement, the Executive’s
eligibility to receive any bonus under this Section 3(b) shall be expressly conditioned on, among
other things, the Executive remaining employed with the Company up through any designated
distribution date set by the Board.

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

          (d) Annual Review. The Executive’s performance shall be reviewed at least annually. The
performance evaluations shall consider and assess the Executive’s performance of his duties and
responsibilities, the timely accomplishment of existing performance objectives, his level of
efficiency and overall effectiveness and/or other factors or criteria that the Company, in its sole
discretion, may deem relevant. The frequency of performance evaluations may vary depending upon,
among other things, length of service, past performance, changes in job duties or performance
levels. The Board shall, at least annually, review the Executive’s entire compensation package to
determine whether it continues to meet the Company’s compensation objectives.

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Such annual review will include a determination of (i) whether to increase the Base Salary in
accordance with Section 3(a); (ii) the incentive performance bonus to be awarded in accordance with
Section 3(b); and (iii) the amount and type of any equity awards granted in accordance with Section
3(c). Positive performance evaluations do not guarantee salary increases or incentive bonuses.
Salary increases and incentive bonus awards are solely within the discretion of the Board and may
depend upon many factors other than the Executive’s performance.

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

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

          (b) Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid
time off (“PTO”) per calendar year consistent with the Executive’s satisfactory performance of the
duties set forth in Section 1 and in accordance with Company policies regarding PTO; provided,
however, that the Executive may accrue up to a maximum of fifty (50) days of PTO. The Executive
may use PTO for any reason, including vacation, sick time, personal time and family illness.

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

     6. Termination Of Executive’s Employment.

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

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exercisable for such period as set forth in the applicable award agreement by which such
awards are evidenced.

          (b) Disability. If, as a result of the Executive’s incapacity due to physical or mental
illness (“Disability”), Executive shall have been absent from the full-time performance of his
duties with the Company for six (6) consecutive months, and, within thirty (30) days after written
notice is provided to him by the Company, he shall not have returned to the full-time performance
of his duties, the Executive’s employment under this Agreement may be terminated by the Company for
Disability. During any period prior to such termination during which the Executive is absent from
the full-time performance of his duties with the Company due to Disability, the Company shall
continue to pay the Executive his Base Salary at the rate in effect at the commencement of such
period of Disability. Subsequent to such termination, the Executive’s benefits shall be determined
under the Company’s retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs. In addition, within fifteen (15) days of such
termination, the Company shall pay to the Executive an incentive performance bonus based on
Executive’s Target Bonus then in effect, prorated for the number of days of employment completed by
the Executive during the year in which his employment terminated. The Executive, the Executive’s
beneficiaries or his estate shall receive benefits in accordance with the Company’s retirement,
insurance and other applicable programs and plans then in effect. All stock options or other
equity-related awards, including restricted stock awards, shall vest in full and, in the case of
stock options, shall be exercisable for such period as set forth in the applicable award agreement
by which such awards are evidenced.

          (c) Termination By The Company For Cause. The Company may terminate the Executive’s
employment under this Agreement for Cause, at any time prior to expiration of the Term of the
Agreement. For purposes of this Agreement, “Cause” shall mean (i) the Executive’s material failure
to substantially perform the reasonable and lawful duties of his position for the Company, which
failure shall continue for thirty (30) days after notice thereof by the Company to the Executive;
(ii) acts or omissions constituting gross negligence, recklessness or willful misconduct on the
part of the Executive in respect of the performance of his duties hereunder, his fiduciary
obligations or otherwise relating to the business of the Company; (iii) the habitual or repeated
neglect of his duties by Executive; (iv) the Executive’s conviction of a felony; (v) theft or
embezzlement, or attempted theft or embezzlement, of money or tangible or intangible assets or
property of the Company or its employees, customers, clients, or others having business relations
with the Company.; (vi) any act of moral turpitude by Executive injurious to the interest,
property, operations, business or reputation of the Company; or (vii) unauthorized use or
disclosure of trade secrets or confidential or proprietary information pertaining to Company
business. However, the termination of Executive’s employment shall not be deemed to be for Cause
unless and until there has been delivered to Executive a copy of a resolution duly adopted by the
Board (after reasonable notice is provided to Executive and Executive is given an opportunity to be
heard by the Board), finding that, in the good faith opinion of the Board, Executive’s conduct met
the standard for termination for Cause.

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     In the event of a termination under this Section 6(c), the Company will pay only the portion
of Base Salary or previously awarded bonus unpaid as of the termination date. Fringe benefits
which have accrued and/or vested on the termination date will continue in effect according to their
terms.

          (d) Termination By The Company Without Cause. The Company may terminate Executive’s
employment hereunder at any time without Cause upon 30 days written notice to Executive or pay in
lieu thereof. In the event of a termination under this Section 6(d), the Executive shall be
entitled to the benefits set forth in Section 7.

          (e) Termination By The Executive For Good Reason. The Executive shall have the right to
terminate this Agreement for Good Reason. For purposes of this Agreement, “Good Reason” shall mean
the occurrence, without the Executive’s express written consent, of any one or more of the
following events:

               (i) A significant reduction in Executive’s responsibilities or title;

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

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

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

               (v) The complete liquidation of the Company; or

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

     In the event of a termination under this Section 6(e), the Executive shall be entitled to the
benefits set forth in Section 7.

          (f) Termination By The Executive Without Good Reason. The Executive may at any time during
the Term terminate his employment hereunder for any reason or no reason by giving the Company
notice in writing not less than one hundred twenty (120) days in advance of such termination. The
Executive shall have no further obligations to the Company after the effective date of termination,
as set forth in the

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notice. In the event of a termination by the Executive under this Section 6(f), the Company
will pay only the portion of Base Salary or previously awarded bonus unpaid as of the termination
date. Fringe benefits which have accrued and/or vested on the termination date will continue in
effect according to their terms.

     7. Compensation Upon Termination By The Company Without Cause Or By The Executive
For Good Reason.

          (a) If the Executive’s employment shall be terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall be entitled to the following benefits:

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

               (ii) Payment of Bonus. Within fifteen (15) days of such termination, the Company shall pay to
the Executive his Target Bonus pursuant to Section 3(b), prorated for the number of days of
employment completed by the Executive during the year in which his employment terminated.

               (iii) Severance Payment. The Company shall provide the Executive the following: (x) an amount
equal to one (1) times Executive’s Base Salary as in effect immediately prior to his termination;
(y) an amount equal to one (1) times the Target Bonus amount in effect immediately prior to his
termination; and (z) with respect to options granted on or before December 31, 2002, the sum of the
Dividend Equivalent Rights payments (as defined in the applicable award agreement by which any such
Dividend Equivalent Rights were granted) that would have been payable to Executive over the one (1)
year period following his termination had he remained employed (taking into consideration the term
of options and Dividend Equivalent Rights and assuming that the options are fully vested and remain
unexercised). Payments pursuant to this Section with respect to options granted after December 31,
2002 will be calculated in the same manner, unless such options provide a different formula for
Dividend Equivalent Rights payments if Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason, in which case the Dividend Equivalent Rights payments
shall be governed by the terms of such options. The quarterly dividend per share rate that shall
be used in this calculation is the higher of (I) one-fourth (25%) of the sum of common stock
dividends declared per common share in the twelve (12) months prior to the termination date, and
(II) one-twelfth (8.333%) of the sum of common stock dividends declared per common share in the
thirty-six (36) months prior to the termination date. The amounts set forth in this Section
7(a)(iii)(x), 7(a)(iii)(y) and 7(a)(iii)(z) shall be payable fifty percent (50%) within fifteen
(15) days after the termination date, and the remaining fifty percent (50%) shall be payable in
twelve (12) equal monthly installments beginning on the date fifteen (15) days after the
termination date and continuing on that same day of each of the eleven (11) months thereafter.

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

               (v) Continuation of Fringe Benefits. For the twelve (12) month period following the
termination of the Executive’s employment, the Company shall continue to provide the Executive with
all life insurance, disability insurance and medical coverage fringe benefits set forth in Section
4 as if the Executive’s employment under the Agreement had not been terminated; provided, however,
that such life insurance, disability insurance and medical coverage shall cease as of the date the
Executive receives such coverage from a subsequent employer. No provision of this Agreement will
affect the continuation coverage rules under Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), except that the Company’s payment, if any, of applicable insurance premiums will be
credited as payment by the Executive for purposes of the Executive’s payment required under COBRA.
Therefore, the period during which the Executive may elect to continue the Company’s medical plan
coverage at the Executive’s own expense under COBRA, the length of time during which COBRA coverage
will be made available to the Executive, and all other rights and obligations of the Executive
under COBRA (except the obligation to pay insurance premiums that the Company pays) will be applied
in the same manner that such rules would apply in the absence of this Agreement. For purposes of
this Section 7(a)(v), (A) references to COBRA shall be deemed to refer also to analogous provisions
of state law and (B) any applicable insurance premiums that are paid by the Company shall not
include any amounts payable by the Executive under an Internal Revenue Code Section 125 health care
reimbursement plan, which amounts, if any, are the sole responsibility of the Executive.

               (vi) Excise Tax Gross-Up. In the event that the Executive becomes entitled to the payments
and benefits provided under the provisions of this Section 7 (“Payments and Benefits”), and if any
of the Payments and Benefits will be subject to any excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”), or successor sections
thereto (“Excise Tax”), the Company shall pay to or for the benefit of the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Payments and Benefits and any federal, state and local income tax and
Excise Tax upon the payments provided for under this Section 7(a)(vi), shall be equal to the amount
of the Payments and Benefits. For purposes of determining whether any of the Payments and Benefits
will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or
benefits received or to be received by the Executive that are contingent on a transaction described
in Section 280G(b)(2)(A)(i) of the Code or on an event, including (without limitation) a
termination of the Executive’s employment that is materially related to such a transaction (whether
pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in such a transaction, or any person affiliated with the
Company or such person) shall be treated as “parachute payments”

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within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive, such other payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services actually rendered,
within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined
in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax; (ii) the amount of the Payments and Benefits which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Payments and
Benefits or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying clause (i), above); and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive’s residence on the termination date of employment, net of the
maximum reduction in federal income taxes which could be obtained from deduction of such state and
local taxes based on the marginal rate referenced above. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder at the termination
date, the Executive shall repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive’s employment
(including by reason of any payment, the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the Executive with respect to
such excess, but only to the extent that such interest, penalties or additions would not have been
reduced by prompt payment by the Executive to the appropriate tax authority of the Gross-Up
Payments previously received) at the time that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Payments and Benefits.

          (b) No Mitigation Required; No Other Entitlement To Benefits Under Agreement. The Executive
shall not be required in any way to mitigate the

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amount of any payment provided for in this Section 7, including, without limitation, by
seeking other employment, nor shall the amount of any payment provided for in this Section 7 be
reduced by any compensation earned by the Executive as the result of employment with another
employer after the termination date of employment, or otherwise. Except as set forth in this
Section 7, following a termination governed by this Section 7, the Executive shall not be entitled
to any other compensation or benefits set forth in this Agreement, except as may be separately
negotiated by the parties and approved the Board in writing in conjunction with the termination of
Executive’s employment under this Section 7.

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

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

     9. Noncompetition Provisions.

          (a) Noncompetition. The Executive agrees that during the Term prior to any termination of his
employment hereunder, he will not, directly or indirectly, without the prior written consent of a
majority of the non-employee members of the Board, manage, operate, join, control, participate in,
or be connected as a stockholder (other than as a holder of shares publicly traded on a stock
exchange or the NASDAQ National Market System), partner, or other equity holder with, or as an
officer, director or employee of, any real estate investment organization whose business strategy
is competitive with that of the Company, as determined by a majority of the non-employee members of
the Board. It is further expressly agreed that the Company will or would suffer irreparable injury
if the Executive were to compete with the Company or any subsidiary or affiliate of the Company in
violation of this Agreement and that the

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Company would by reason of such competition be entitled to
injunctive relief in a court of appropriate jurisdiction, and the Executive further consents and
stipulates to the entry of such injunctive relief in such a court prohibiting the Executive from
competing with the Company or any subsidiary or affiliate of the Company, in the areas of business
set forth above, in violation of this Agreement.

          (b) Duty To Avoid Conflict Of Interest. During his employment by the Company, Executive
agrees not to engage or participate in, directly or indirectly, any activities in conflict with the
best interests of the Company. The Company shall be the final decision-maker with regard to any
conflict of interest issue.

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

          (d) Nonsolicitation. The Executive promises and agrees that he will not directly or indirectly
solicit any of the Company’s employees to work for any competing real estate investment
organization as determined under Section 9(a) for a period of one (1) year following the occurrence
of any event entitling the Executive to payments and benefits, provided the Company makes all such
payments when due according to the provisions of herein.

          (e) Confidential And Proprietary Information.

               (1) It is hereby acknowledged that Executive has and shall gain knowledge of trade secrets and
confidential information owned by or related to the Company and/or its affiliates, including but
not limited to the following: (i) the names, lists, buying habits and practices of customers,
clients or vendors, (ii) marketing and related information, (iii) relationships with the persons or
entities with whom or with which the Company has contracted, (iv) products, designs, software,
developments, improvements and methods of operation, (v) financial condition, profit performance and
financial requirements, (vi) the compensation paid to employees, (vii) business plans and the
information contained therein, and (viii) all other confidential information of, about or
concerning the Company, the manner of operation of the Company and other confidential data of any
kind, nature or description relating to the Company (collectively, the “Confidential Information”).
Confidential Information does not include information which (ix) is or becomes generally available
to the public other than as a result of a disclosure by Executive; or (x) becomes available to
Executive on a non-confidential basis after the termination or expiration of Executive’s
obligations under this Agreement from a source other than the Company, provided that such source is
not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation
of confidentiality to the Company or any other party with respect to such information; or (xi) is
independently developed after the termination or expiration of Executive’s obligations

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under this
agreement without reference to the Confidential Information, provided such independent development
can reasonably be proven by Executive by written records.

               (2) The parties hereby acknowledge that the Confidential Information constitutes important,
unique, material and confidential trade secrets which affect the successful activities of the
Company, and constitute a substantial part of the assets and goodwill of the Company. In view of
the foregoing, Executive agrees that he will not at any time whether during or after the term of
this Agreement, except as required in the course of Executive’s employment by Company and at its
direction and for its sole benefit, in any fashion, form or manner, directly or indirectly (i) use
or divulge, disclose, communicate or provide or permit access to any person, firm, partnership,
corporation or other entity, any Confidential Information of any kind, nature or description, or
(ii) remove from Company’s premises any notes or records relating thereto, or copies or facsimiles
thereof (whether made by electronic, electrical, magnetic, optical, laser, acoustic or other
means).

               (3) Promptly upon the request of Company, and immediately upon the termination of Executive’s
employment, Executive shall not transfer to any third person and shall deliver to Company all
Confidential Information, and other property belonging to the Company, including all copies
thereof, in the possession or under the control of the Executive.

               (4) Executive represents that the performance of all the terms of this Agreement will not
conflict with, and will not breach, any other invention assignment agreement, confidentiality
agreement, employment agreement or non-competition agreement to which Executive is or has been a
party. To the extent that Executive has confidential information or materials of any former
employer, Executive acknowledges that the Company has directed Executive to not disclose such
confidential information or materials to the Company or any of its employees, and that the Company
prohibits Executive from using said confidential information or materials in any work that
Executive may perform for the Company. Executive agrees that Executive will not bring with
Executive to the Company, and will not use or disclose any confidential, proprietary information,
or trade secrets acquired by Executive prior to his employment with the Company. Executive will
not disclose to the Company or any of its employees, or induce the Company or any of its employees to use, any confidential or proprietary information
or material belonging to any previous employers or others, nor will Executive bring to the Company
or use in connection with Executive’s work for the Company copies of any software, computer files,
or any other copyrighted or trademarked materials except those owned by or licensed to the Company.
Executive represents that he is not a party to any other agreement that will interfere with his
full compliance with this Agreement. Executive further agrees not to enter into any agreement,
whether written or oral, in conflict with the provisions of this Agreement.

          (f) Inventions. Any and all inventions, discoveries or improvements that Executive has
conceived or made or may conceive or make during the period of employment relating to or in any way
pertaining to or connected with the systems, products, computer programs, software, apparatus or
methods employed, manufactured

11.

 

or constructed by the Company or to systems, products, apparatus or
methods with respect to which the Company engages in, requests or anticipates research or
development, shall be promptly and fully disclosed and described by Executive to the Company and
shall be the sole and exclusive property of the Company, and Executive shall assign, and hereby
does assign to the Company Executive’s entire right, title and interest in and to all such
inventions, discoveries or improvements as well as any modifications or improvements thereto that
may be made. The parties agree that any inventions, discoveries or ideas that Executive has
created or possesses prior to his employment by the Company are specified in Exhibit B attached to
this Agreement and will not be considered to be the property of the Company.

          The obligations outlined in this Section 9(f), except for the requirements as to disclosure,
do not apply to any invention that qualifies fully under California Labor Code Section 2870 or to
any rights Executive may have acquired in connection with an invention, discovery or improvement
that was developed entirely on Executive’s own time for which no equipment, supplies, facilities or
trade secret information of the Company was used and (a) that does not relate directly or
indirectly to the business of the Company or to the Company’s actual or demonstrable anticipated
research or development, or (b) that does not result from any work performed by Executive for the
Company.

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

          (h) Breach. It is expressly agreed that each breach of this Section 9 is a distinct and
material breach of this Agreement and that solely a monetary remedy would be inadequate,
impracticable and extremely difficult to prove, and that each such breach would cause the Company
irreparable harm. It is further agreed that, in addition to any and all remedies available at law
or equity (including money damages), either party shall be entitled to temporary and permanent
injunctive relief to enforce the provisions of this Section, without the necessity of proving
actual damages. It is further agreed that either party shall be entitled to seek such equitable
relief in any forum, including a court of law, notwithstanding the provisions of Section 11.
Either party may pursue any of the remedies described herein concurrently or consecutively in any order as to
any such breach or violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any of the other such remedies.
Any breach of this Section 9 shall immediately terminate any obligations by the Company to provide
Executive with severance and continued benefits pursuant to Section 6 or 7 of this Agreement.

          (i) Unenforceability. Should any portion of this Section 9 be deemed unenforceable because of
its scope, duration or effect, and only in such event, then the parties expressly consent and agree
to such limitation on scope, duration or effect as may be finally adjudicated as enforceable, to
give this Section 9 its maximum permissible scope, duration and effect

12.

 

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

	 	 	 
	

	 	If to the Company:
	

	 	Redwood Trust, Inc.
	

	 	Attn: Doug Hansen
	

	 	President
	

	 	One Belvedere Place, Suite 300
	

	 	Mill Valley, CA 94941
	

	 	Phone: (415) 389-7373
	

	 	Fax: (415) 381-1773
	 
	 	 
	     If to the Executive:

	 	Andrew Sirkis
	

	 	Vice President
	

	 	Redwood Trust, Inc.
	

	 	One Belvedere Place, Suite 300
	

	 	Mill Valley, CA 94941
	

	 	Phone: (415) 389-7373
	

	 	Fax: (415) 381-1773

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

     11. Resolution of Disputes. To ensure the rapid and economical resolution of
disputes that may arise in connection with the Executive’s employment with the Company, the
Executive and the Company agree that any and all disputes, claims, or causes of action, in law or
equity, arising from or relating to the enforcement, breach, performance, or interpretation of this
Agreement, the Executive’s employment, or the termination of the Executive’s employment
(“Arbitrable Claims”) shall be submitted to confidential mediation in San Francisco, California
conducted by a mutually agreeable mediator from Judicial Arbitration and Mediation Services
(“JAMS”) or its successor, and the cost of JAMS’ mediation fees shall be paid by the Company. In the event that
mediation is unsuccessful in resolving the Arbitrable Claims, the Arbitrable Claims shall be
resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in
San Francisco, California conducted by JAMS or its successor, under the then applicable rules of
JAMS. The Executive acknowledges that by agreeing to this arbitration procedure, both the
Executive and the Company waive the right to resolve any such dispute through a trial by jury or
judge or administrative proceeding. The arbitrator shall: (a) have the authority to compel
adequate discovery for the resolution of the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential
findings and conclusions and a statement of the award. The arbitrator shall be authorized to award
any or all remedies that the Executive or the Company would be entitled to seek in a court of law,
including, without limitation, the award of attorneys’

13.

 

fees based on a determination of the extent
to which each party has prevailed as to the material issues raised in determination of the dispute.
The Company shall pay all JAMS’ arbitration fees in excess of those which would be required if the
dispute were decided in a court of law. Nothing in this Agreement is intended to prevent either
the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such mediation or arbitration.

     12. Termination Of Prior Agreements. This Agreement terminates and
supersedes any and all prior agreements and understandings between the parties with respect to
employment or with respect to the compensation of the Executive by the Company.

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

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

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

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

     17. Severability. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or public policy, only
the portions of this Agreement that violate such statute or public policy shall be stricken. All
portions of this Agreement that do not violate any statute or public policy shall continue in full
force and effect. Further, any court order striking any portion of this

14.

 

Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the intentions of the
parties under this Agreement.

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

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

     20. Successor Sections. References herein to sections or rules of the Code
or the Securities Exchange Act of 1934, as amended, shall be deemed to include any successor
sections or rules.

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

	 	 	 	 	 	 	 
	 	 	Redwood Trust, Inc.
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Douglas B. Hansen	 	 
	

	 	 	 	 	 	 
	

	 	 	 	Douglas B. Hansen	 	 
	

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Andrew Sirkis
	 	 	 
	 	 	Andrew Sirkis

15.

 

Exhibit A

ESSENTIAL RESPONSIBILITIES

[OMITTED]

 

 

Exhibit B

PRIOR INVENTIONS

[OMITTED]

 

 

Individual Termination

Exhibit C

RELEASE AGREEMENT

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

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

1.

 

Individual Termination

(21) days to consider this Release Agreement (although Executive may choose voluntarily to
sign this Release Agreement earlier); (D) Executive has seven (7) days following the date that he
signs this Release Agreement to revoke the Release Agreement by providing written notice to an
officer of the Company; and (E) this Release Agreement shall not be effective until the date upon
which the revocation period has expired, which shall be the eighth day after Executive signs this
Release Agreement.

     Both Executive and the Company acknowledge that each has read and understands Section 1542 of
the California Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” Both
Executive and the Company hereby expressly waive and relinquish all rights and benefits under that
section and any law of any jurisdiction of similar effect with respect to each party’s release of
any claims hereunder.

	 	 	 
	

	Executive	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 
	 
	 	 
	

	Company	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 

2.

 

Group Termination

Exhibit D

RELEASE AGREEMENT

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

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

1.

 

Group Termination

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

     Both the Executive and the Company acknowledge that each has read and understands Section 1542
of the California Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” Both
the Executive and the Company hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to each party’s release
of any claims hereunder.

	 	 	 
	

	Executive	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 
	 
	 	 
	

	Company	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 

2.exv10w13w07

 

Exhibit 10.13.7

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (“Agreement”), effective as of
the 22nd day of February, 2005 (the “Effective Date”), is entered into by and between Harold
Zagunis (the “Executive”) and Redwood Trust, Inc., a Maryland corporation (the
“Company”).

     The Company desires to establish its right to the continued services of the Executive, in the
capacity, on the terms and conditions, and subject to the rights of termination hereinafter set
forth, and the Executive is willing to accept such employment in such capacity, on such terms and
conditions, and subject to such rights of termination. As of the Effective Date, this Agreement
wholly supersedes the Employment Agreement between the Executive and the Company that was effective
as of March 13, 2000.

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

     1. Employment As Vice President Of The Company. The Company does hereby
employ the Executive as Vice President of the Company, reporting to the Office of the President of
the Company (the “OOP”), or any successor organization structure including the Chief Executive
Officer and/or President of the Company. The Executive does hereby accept and agree to such
employment. The Executive’s duties as Vice President shall be such executive and managerial duties
as set forth in Exhibit A attached hereto. The OOP may, from time to time, in its sole discretion,
modify, reassign and/or augment the Executive’s responsibilities, subject to approval by the Board
of Directors of the Company (the “Board”). Any such modification, reassignment or augmentation of
responsibilities shall be in writing. The Executive shall devote such time, energy and skill to
the performance of his duties for the Company and for the benefit of the Company as may be
necessary or required for the effective conduct and operation of the Company’s business.
Furthermore, the Executive shall act only in good faith and exercise due diligence and care in the
performance of his duties to the Company under this Agreement.

     2. Term Of Agreement. The term of this Agreement (the “Term”) shall
commence on the Effective Date and shall continue through December 31, 2007; provided, however,
that (i) on January 1, 2008 and each succeeding January 1, the Term shall automatically be extended
for one additional year unless, not later than three months prior to any such January 1, either
party shall have given written notice to the other that it does not wish to extend the Term and
(ii) such one year extensions of the Term shall not occur on and after the January 1 of the year in
which the Executive will attain age sixty-five (65) but instead the Term shall be extended only
until the date of the Executive’s sixty-fifth (65th) birthday.

1.

 

 

     3. Compensation.

          (a) Base Salary. The Company shall pay the Executive, and the Executive agrees to
accept from the Company, in payment for his services to the Company a base salary at the rate of
$267,000 per year (“Base Salary”), payable in equal biweekly installments or at such other time or
times as the Executive and Company shall agree. Base Salary shall be subject to such adjustments
as the Company and the Executive shall agree.

          (b) Performance Bonus – Board of Directors’ Discretion. The Executive shall be eligible to
receive an annual bonus. The Board in its discretion will determine whether such annual bonus will
be paid, the amount of such bonus and its form of payment. The Executive’s target annual bonus
amount is 75% of his Base Salary (the “Target Bonus”). If the Board determines in its discretion
that the Executive’s performance meets or exceeds the criteria established by the Board for the
award of a Target Bonus, the Board may award the Executive the Target Bonus or a higher amount.
Likewise, if the Executive’s performance does not meet said criteria, the Board may award a lesser
amount, or no bonus may be awarded. Unless otherwise provided in this Agreement, the Executive’s
eligibility to receive any bonus under this Section 3(b) shall be expressly conditioned on, among
other things, the Executive remaining employed with the Company up through any designated
distribution date set by the Board.

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

          (d) Annual Review. The Executive’s performance shall be reviewed at least annually. The
performance evaluations shall consider and assess the Executive’s performance of his duties and
responsibilities, the timely accomplishment of existing performance objectives, his level of
efficiency and overall effectiveness and/or other factors or criteria that the Company, in its sole
discretion, may deem relevant. The frequency of performance evaluations may vary depending upon,
among other things, length of service, past performance, changes in job duties or performance
levels. The Board shall, at least annually, review the Executive’s entire compensation package

2.

 

 

to determine whether it continues to meet the Company’s compensation objectives. Such annual
review will include a determination of (i) whether to increase the Base Salary in accordance with
Section 3(a); (ii) the incentive performance bonus to be awarded in accordance with Section 3(b);
and (iii) the amount and type of any equity awards granted in accordance with Section 3(c).
Positive performance evaluations do not guarantee salary increases or incentive bonuses. Salary
increases and incentive bonus awards are solely within the discretion of the Board and may depend
upon many factors other than the Executive’s performance.

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

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

          (b) Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid
time off (“PTO”) per calendar year consistent with the Executive’s satisfactory performance of the
duties set forth in Section 1 and in accordance with Company policies regarding PTO; provided,
however, that the Executive may accrue up to a maximum of fifty (50) days of PTO. The Executive
may use PTO for any reason, including vacation, sick time, personal time and family illness.

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

6. Termination Of Executive’s Employment.

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

3.

 

 

exercisable for such period as set forth in the applicable award agreement by which such
awards are evidenced.

          (b) Disability. If, as a result of the Executive’s incapacity due to physical or mental
illness (“Disability”), Executive shall have been absent from the full-time performance of his
duties with the Company for six (6) consecutive months, and, within thirty (30) days after written
notice is provided to him by the Company, he shall not have returned to the full-time performance
of his duties, the Executive’s employment under this Agreement may be terminated by the Company for
Disability. During any period prior to such termination during which the Executive is absent from
the full-time performance of his duties with the Company due to Disability, the Company shall
continue to pay the Executive his Base Salary at the rate in effect at the commencement of such
period of Disability. Subsequent to such termination, the Executive’s benefits shall be determined
under the Company’s retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs. In addition, within fifteen (15) days of such
termination, the Company shall pay to the Executive an incentive performance bonus based on
Executive’s Target Bonus then in effect, prorated for the number of days of employment completed by
the Executive during the year in which his employment terminated. The Executive, the Executive’s
beneficiaries or his estate shall receive benefits in accordance with the Company’s retirement,
insurance and other applicable programs and plans then in effect. All stock options or other
equity-related awards, including restricted stock awards, shall vest in full and, in the case of
stock options, shall be exercisable for such period as set forth in the applicable award agreement
by which such awards are evidenced.

          (c) Termination By The Company For Cause. The Company may terminate the Executive’s
employment under this Agreement for Cause, at any time prior to expiration of the Term of the
Agreement. For purposes of this Agreement, “Cause” shall mean (i) the Executive’s material failure
to substantially perform the reasonable and lawful duties of his position for the Company, which
failure shall continue for thirty (30) days after notice thereof by the Company to the Executive;
(ii) acts or omissions constituting gross negligence, recklessness or willful misconduct on the
part of the Executive in respect of the performance of his duties hereunder, his fiduciary
obligations or otherwise relating to the business of the Company; (iii) the habitual or repeated
neglect of his duties by Executive; (iv) the Executive’s conviction of a felony; (v) theft or
embezzlement, or attempted theft or embezzlement, of money or tangible or intangible assets or
property of the Company or its employees, customers, clients, or others having business relations
with the Company.; (vi) any act of moral turpitude by Executive injurious to the interest,
property, operations, business or reputation of the Company; or (vii) unauthorized use or
disclosure of trade secrets or confidential or proprietary information pertaining to Company
business. However, the termination of Executive’s employment shall not be deemed to be for Cause
unless and until there has been delivered to Executive a copy of a resolution duly adopted by the
Board (after reasonable notice is provided to Executive and Executive is given an opportunity to be
heard by the Board), finding that, in the good faith opinion of the Board, Executive’s conduct met
the standard for termination for Cause.

4.

 

 

     In the event of a termination under this Section 6(c), the Company will pay only the portion
of Base Salary or previously awarded bonus unpaid as of the termination date. Fringe benefits
which have accrued and/or vested on the termination date will continue in effect according to their
terms.

          (d) Termination By The Company Without Cause. The Company may terminate Executive’s
employment hereunder at any time without Cause upon 30 days written notice to Executive or pay in
lieu thereof. In the event of a termination under this Section 6(d), the Executive shall be
entitled to the benefits set forth in Section 7.

             (e) Termination By The Executive For Good Reason. The Executive shall have the right to
terminate this Agreement for Good Reason. For purposes of this Agreement, “Good Reason” shall mean
the occurrence, without the Executive’s express written consent, of any one or more of the
following events:

               (i) A significant reduction in Executive’s responsibilities or title;

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

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

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

               (v) The complete liquidation of the Company; or

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

     In the event of a termination under this Section 6(e), the Executive shall be entitled to the
benefits set forth in Section 7.

          (f) Termination By The Executive Without Good Reason. The Executive may at any time during
the Term terminate his employment hereunder for any reason or no reason by giving the Company
notice in writing not less than one hundred twenty (120) days in advance of such termination. The
Executive shall have no further obligations to the Company after the effective date of termination,
as set forth in the

5.

 

 

notice. In the event of a termination by the Executive under this Section 6(f), the Company
will pay only the portion of Base Salary or previously awarded bonus unpaid as of the termination
date. Fringe benefits which have accrued and/or vested on the termination date will continue in
effect according to their terms.

     7. Compensation Upon Termination By The Company Without Cause Or By The Executive
For Good Reason.

          (a) If the Executive’s employment shall be terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall be entitled to the following benefits:

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

               (ii) Payment of Bonus. Within fifteen (15) days of such termination, the Company shall pay to
the Executive his Target Bonus pursuant to Section 3(b), prorated for the number of days of
employment completed by the Executive during the year in which his employment terminated.

               (iii) Severance Payment. The Company shall provide the Executive the following: (x) an amount
equal to one (1) times Executive’s Annual Base Salary as in effect immediately prior to his
termination; (y) an amount equal to one (1) times the Annual Target Bonus amount in effect
immediately prior to his termination; and (z) with respect to options granted on or before December
31, 2002, the sum of the Dividend Equivalent Rights payments (as defined in the applicable award
agreement by which any such Dividend Equivalent Rights were granted) that would have been payable
to Executive over the one (1) year period following his termination had he remained employed
(taking into consideration the term of options and Dividend Equivalent Rights and assuming that the
options are fully vested and remain unexercised). Payments pursuant to this Section with respect
to options granted after December 31, 2002 will be calculated in the same manner, unless such
options provide a different formula for Dividend Equivalent Rights payments if Executive’s
employment is terminated by the Company without Cause or by the Executive for Good Reason, in which
case the Dividend Equivalent Rights payments shall be governed by the terms of such options. The
quarterly dividend per share rate that shall be used in this calculation is the higher of (I)
one-fourth (25%) of the sum of common stock dividends declared per common share in the twelve (12)
months prior to the termination date, and (II) one-twelfth (8.333%) of the sum of common stock
dividends declared per common share in the thirty-six (36) months prior to the termination date.
The amounts set forth in this Section 7(a)(iii)(x), 7(a)(iii)(y) and 7(a)(iii)(z) shall be payable
fifty percent (50%) within fifteen (15) days after the termination date, and the remaining fifty
percent (50%) shall be payable in twelve (12) equal monthly installments beginning on the date
fifteen (15) days after the termination date and continuing on that same day of each of the eleven
(11) months thereafter.

6.

 

 

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

     (v) Continuation of Fringe Benefits. For the twelve (12) month period following the
termination of the Executive’s employment, the Company shall continue to provide the Executive with
all life insurance, disability insurance and medical coverage fringe benefits set forth in Section
4 as if the Executive’s employment under the Agreement had not been terminated; provided, however,
that such life insurance, disability insurance and medical coverage shall cease as of the date the
Executive receives such coverage from a subsequent employer. No provision of this Agreement will
affect the continuation coverage rules under Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), except that the Company’s payment, if any, of applicable insurance premiums will be
credited as payment by the Executive for purposes of the Executive’s payment required under COBRA.
Therefore, the period during which the Executive may elect to continue the Company’s medical plan
coverage at the Executive’s own expense under COBRA, the length of time during which COBRA coverage
will be made available to the Executive, and all other rights and obligations of the Executive
under COBRA (except the obligation to pay insurance premiums that the Company pays) will be applied
in the same manner that such rules would apply in the absence of this Agreement. For purposes of
this Section 7(a)(v), (A) references to COBRA shall be deemed to refer also to analogous provisions
of state law and (B) any applicable insurance premiums that are paid by the Company shall not
include any amounts payable by the Executive under an Internal Revenue Code Section 125 health care
reimbursement plan, which amounts, if any, are the sole responsibility of the Executive.

     (vi) Excise Tax Gross-Up. In the event that the Executive becomes entitled to the payments
and benefits provided under the provisions of this Section 7 (“Payments and Benefits”), and if any
of the Payments and Benefits will be subject to any excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”), or successor sections
thereto (“Excise Tax”), the Company shall pay to or for the benefit of the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Payments and Benefits and any federal, state and local income tax and
Excise Tax upon the payments provided for under this Section 7(a)(vi), shall be equal to the amount
of the Payments and Benefits. For purposes of determining whether any of the Payments and Benefits
will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or
benefits received or to be received by the Executive that are contingent on a transaction described
in Section 280G(b)(2)(A)(i) of the Code or on an event, including (without limitation) a
termination of the Executive’s employment that is materially related to such a transaction (whether
pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in such a transaction, or any person affiliated with the
Company or such person) shall be treated as “parachute payments”

7.

 

 

within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive, such other payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services actually rendered,
within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined
in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax; (ii) the amount of the Payments and Benefits which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Payments and
Benefits or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying clause (i), above); and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive’s residence on the termination date of employment, net of the
maximum reduction in federal income taxes which could be obtained from deduction of such state and
local taxes based on the marginal rate referenced above. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder at the termination
date, the Executive shall repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive’s employment
(including by reason of any payment, the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the Executive with respect to
such excess, but only to the extent that such interest, penalties or additions would not have been
reduced by prompt payment by the Executive to the appropriate tax authority of the Gross-Up
Payments previously received) at the time that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Payments and Benefits.

          (b) No Mitigation Required; No Other Entitlement To Benefits Under Agreement. The Executive
shall not be required in any way to mitigate the

8.

 

 

amount of any payment provided for in this Section 7, including, without limitation, by
seeking other employment, nor shall the amount of any payment provided for in this Section 7 be
reduced by any compensation earned by the Executive as the result of employment with another
employer after the termination date of employment, or otherwise. Except as set forth in this
Section 7, following a termination governed by this Section 7, the Executive shall not be entitled
to any other compensation or benefits set forth in this Agreement, except as may be separately
negotiated by the parties and approved the Board in writing in conjunction with the termination of
Executive’s employment under this Section 7.

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

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

     9. Noncompetition Provisions.

          (a) Noncompetition. The Executive agrees that during the Term prior to any termination of his
employment hereunder, he will not, directly or indirectly, without the prior written consent of a
majority of the non-employee members of the Board, manage, operate, join, control, participate in,
or be connected as a stockholder (other than as a holder of shares publicly traded on a stock
exchange or the NASDAQ National Market System), partner, or other equity holder with, or as an
officer, director or employee of, any real estate investment organization whose business strategy
is competitive with that of the Company, as determined by a majority of the non-employee members of
the Board. It is further expressly agreed that the Company will or would suffer irreparable injury
if the Executive were to compete with the Company or any subsidiary or affiliate of the Company in
violation of this Agreement and that the

9.

 

 

Company would by reason of such competition be entitled to injunctive relief in a court of
appropriate jurisdiction, and the Executive further consents and stipulates to the entry of such
injunctive relief in such a court prohibiting the Executive from competing with the Company or any
subsidiary or affiliate of the Company, in the areas of business set forth above, in violation of
this Agreement.

          (b) Duty To Avoid Conflict Of Interest. During his employment by the Company, Executive
agrees not to engage or participate in, directly or indirectly, any activities in conflict with the
best interests of the Company. The Company shall be the final decision-maker with regard to any
conflict of interest issue.

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

          (d) Nonsolicitation. The Executive promises and agrees that he will not directly or indirectly
solicit any of the Company’s employees to work for any competing real estate investment
organization as determined under Section 9(a) for a period of one (1) year following the occurrence
of any event entitling the Executive to payments and benefits, provided the Company makes all such
payments when due according to the provisions herein.

          (e) Confidential And Proprietary Information.

               (1) It is hereby acknowledged that Executive has and shall gain knowledge of trade secrets and
confidential information owned by or related to the Company and/or its affiliates, including but
not limited to the following: (i) the names, lists, buying habits and practices of customers,
clients or vendors, (ii) marketing and related information, (iii) relationships between them and
the persons and entities with whom — or with which the Company has contracted, (iv) with products,
designs, software, developments, improvements and methods of operation, (v) financial condition,
profit performance and financial requirements, (vi) the compensation paid to employees, (vii)
business plans and the information contained therein, and (viii) all other confidential information
of, about or concerning the Company, the manner of operation of the Company and other confidential
data of any kind, nature or description relating to the Company (collectively, the “Confidential
Information”). Confidential Information does not include information which (ix) is or becomes
generally available to the public other than as a result of a disclosure by Executive; or (x)
becomes available to Executive on a non-confidential basis after the termination or expiration of
Executive’s obligations under this Agreement from a source other than the Company, provided that
such source is not bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company or any other party with respect to such
information; or (xi) is independently developed after the termination or expiration

10.

 

 

of Executive’s obligations under this agreement without reference to the Confidential
Information, provided such independent development can reasonably be proven by Executive by written
records.

               (2) The parties hereby acknowledge that the Confidential Information constitutes important,
unique, material and confidential trade secrets which affect the successful activities of the
Company, and constitute a substantial part of the assets and goodwill of the Company. In view of
the foregoing, Executive agrees that he will not at any time whether during or after the term of
this Agreement, except as required in the course of Executive’s employment by Company and at its
direction and for its sole benefit, in any fashion, form or manner, directly or indirectly (i) use
or divulge, disclose, communicate or provide or permit access to any person, firm, partnership,
corporation or other entity, any Confidential Information of any kind, nature or description, or
(ii) remove from Company’s premises any notes or records relating thereto, or copies or facsimiles
thereof (whether made by electronic, electrical, magnetic, optical, laser, acoustic or other
means).

               (3) Promptly upon the request of Company, and immediately upon the termination of Executive’s
employment, Executive shall not transfer to any third person and shall deliver to Company all
Confidential Information, and other property belonging to the Company, including all copies
thereof, in the possession or under the control of the Executive.

               (4) Executive represents that the performance of all the terms of this Agreement will not
conflict with, and will not breach, any other invention assignment agreement, confidentiality
agreement, employment agreement or non-competition agreement to which Executive is or has been a
party. To the extent that Executive has confidential information or materials of any former
employer, Executive acknowledges that the Company has directed Executive to not disclose such
confidential information or materials to the Company or any of its employees, and that the Company
prohibits Executive from using said confidential information or materials in any work that
Executive may perform for the Company. Executive agrees that Executive will not bring with
Executive to the Company, and will not use or disclose any confidential, proprietary information,
or trade secrets acquired by Executive prior to his employment with the Company. Executive will
not disclose to the Company or any of its employees, or induce the Company or any of its employees
to use, any confidential or proprietary information or material belonging to any previous employers
or others, nor will Executive bring to the Company or use in connection with Executive’s work for
the Company copies of any software, computer files, or any other copyrighted or trademarked
materials except those owned by or licensed to the Company. Executive represents that he is not a
party to any other agreement that will interfere with his full compliance with this Agreement.
Executive further agrees not to enter into any agreement, whether written or oral, in conflict with
the provisions of this Agreement.

          (f) Inventions. Any and all inventions, discoveries or improvements that Executive has
conceived or made or may conceive or make during the period of employment relating to or in any way
pertaining to or connected with the systems,

11.

 

 

products, computer programs, software, apparatus or methods employed, manufactured or
constructed by the Company or to systems, products, apparatus or methods with respect to which the
Company engages in, requests or anticipates research or development, shall be promptly and fully
disclosed and described by Executive to the Company and shall be the sole and exclusive property of
the Company, and Executive shall assign, and hereby does assign to the Company Executive’s entire
right, title and interest in and to all such inventions, discoveries or improvements as well as any
modifications or improvements thereto that may be made. The parties agree that any inventions,
discoveries or ideas that Executive has created or possesses prior to his employment by the Company
are specified in Exhibit B attached to this Agreement and will not be considered to be the property
of the Company.

          The obligations outlined in this Section 9(f), except for the requirements as to disclosure,
do not apply to any invention that qualifies fully under California Labor Code Section 2870 or to
any rights Executive may have acquired in connection with an invention, discovery or improvement
that was developed entirely on Executive’s own time for which no equipment, supplies, facilities or
trade secret information of the Company was used and (a) that does not relate directly or
indirectly to the business of the Company or to the Company’s actual or demonstrable anticipated
research or development, or (b) that does not result from any work performed by Executive for the
Company.

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

          (h) Breach. It is expressly agreed that each breach of this Section 9 is a distinct and
material breach of this Agreement and that solely a monetary remedy would be inadequate,
impracticable and extremely difficult to prove, and that each such breach would cause the Company
irreparable harm. It is further agreed that, in addition to any and all remedies available at law
or equity (including money damages), either party shall be entitled to temporary and permanent
injunctive relief to enforce the provisions of this Section, without the necessity of proving
actual damages. It is further agreed that either party shall be entitled to seek such equitable
relief in any forum, including a court of law, notwithstanding the provisions of Section 11.
Either party may pursue any of the remedies described herein concurrently or consecutively in any
order as to any such breach or violation, and the pursuit of one of such remedies at any time will
not be deemed an election of remedies or waiver of the right to pursue any of the other such
remedies. Any breach of this Section 9 shall immediately terminate any obligations by the Company
to provide Executive with severance and continued benefits pursuant to Section 6 or 7 of this
Agreement.

          (i) Unenforceability. Should any portion of this Section 9 be deemed unenforceable because of
its scope, duration or effect, and only in such event, then the parties expressly consent and agree
to such limitation on scope, duration or effect as may be finally adjudicated as enforceable, to
give this Section 9 its maximum permissible scope, duration and effect

12.

 

 

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

	 	 	 
	

	 	If to the Company:
	

	 	Redwood Trust, Inc.
	

	 	Attn: Doug Hansen
	

	 	President
	

	 	One Belvedere Place, Suite 300
	

	 	Mill Valley, CA 94941
	

	 	Phone: (415) 389-7373
	

	 	Fax: (415) 381-1773
	 
	 	 
	     If to the Executive:

	 	Harold Zagunis
	

	 	Vice President
	

	 	Redwood Trust, Inc.
	

	 	One Belvedere Place, Suite 300
	

	 	Mill Valley, CA 94941
	

	 	Phone: (415) 389-7373
	

	 	Fax: (415) 381-1773

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

     11. Resolution of Disputes. To ensure the rapid and economical resolution
of disputes that may arise in connection with the Executive’s employment with the Company, the
Executive and the Company agree that any and all disputes, claims, or causes of action, in law or
equity, arising from or relating to the enforcement, breach, performance, or interpretation of this
Agreement, the Executive’s employment, or the termination of the Executive’s employment
(“Arbitrable Claims”) shall be submitted to confidential mediation in San Francisco, California
conducted by a mutually agreeable mediator from Judicial Arbitration and Mediation Services
(“JAMS”) or its successor, and the cost of JAMS’ mediation fees shall be paid by the Company. In
the event that mediation is unsuccessful in resolving the Arbitrable Claims, the Arbitrable Claims
shall be resolved, to the fullest extent permitted by law, by final, binding and confidential
arbitration in San Francisco, California conducted by JAMS or its successor, under the then
applicable rules of JAMS. The Executive acknowledges that by agreeing to this arbitration
procedure, both the Executive and the Company waive the right to resolve any such dispute through a
trial by jury or judge or administrative proceeding. The arbitrator shall: (a) have the authority
to compel adequate discovery for the resolution of the dispute and to award such relief as would
otherwise be permitted by law; and (b) issue a written arbitration decision including the
arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall
be authorized to award any or all remedies that the Executive or the Company would be entitled to
seek in a court of law, including, without limitation, the award of attorneys’

13.

 

 

fees based on a determination of the extent to which each party has prevailed as to the
material issues raised in determination of the dispute. The Company shall pay all JAMS’
arbitration fees in excess of those which would be required if the dispute were decided in a court
of law. Nothing in this Agreement is intended to prevent either the Executive or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such
mediation or arbitration.

     12. Termination Of Prior Agreements. This Agreement terminates and
supersedes any and all prior agreements and understandings between the parties with respect to
employment or with respect to the compensation of the Executive by the Company.

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

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

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

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

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

14.

 

 

narrowly as possible to give as much effect as possible to the intentions of the parties under
this Agreement.

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

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

     20. Successor Sections. References herein to sections or rules of the Code
or the Securities Exchange Act of 1934, as amended, shall be deemed to include any successor
sections or rules.

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

	 	 	 	 	 	 	 
	 	 	Redwood Trust, Inc.
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Douglas B. Hansen	 	 
	

	 	 	 	 	 	 
	

	 	 	 	Douglas B. Hansen	 	 
	

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Harold Zagunis
	 	 	 
	 	 	Harold Zagunis

15.

 

 

Exhibit A

ESSENTIAL RESPONSIBILITIES

[OMITTED]

 

 

Exhibit B

PRIOR INVENTIONS

- None -

1

 

Individual Termination

Exhibit C

RELEASE AGREEMENT

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

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

1.

 

 

Individual Termination

(21) days to consider this Release Agreement (although Executive may choose voluntarily to
sign this Release Agreement earlier); (D) Executive has seven (7) days following the date that he
signs this Release Agreement to revoke the Release Agreement by providing written notice to an
officer of the Company; and (E) this Release Agreement shall not be effective until the date upon
which the revocation period has expired, which shall be the eighth day after Executive signs this
Release Agreement.

     Both Executive and the Company acknowledge that each has read and understands Section 1542 of
the California Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” Both
Executive and the Company hereby expressly waive and relinquish all rights and benefits under that
section and any law of any jurisdiction of similar effect with respect to each party’s release of
any claims hereunder.

	 	 	 
	

	Executive	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 
	 
	 	 
	

	Company	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 

2.

 

 

Group Termination

Exhibit D

RELEASE AGREEMENT

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

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

1.

 

 

Group Termination

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

     Both the Executive and the Company acknowledge that each has read and understands Section 1542
of the California Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” Both
the Executive and the Company hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to each party’s release
of any claims hereunder.

	 	 	 
	

	Executive	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 
	 
	 	 
	

	Company	 
	 
	 	 
	

	Name: 	 
	

	 	 
	

	Date: 	 
	

	 	 

2.

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