2002 REDWOOD TRUST, INC. INCENTIVE STOCK PLAN
(LAST AMENDED MARCH 4, 2004)
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the 2002 Redwood Trust, Inc. Incentive Stock Plan (the "Plan"). The Plan was adopted
by the Board on March 21, 2002 and approved by the Company's stockholders on May 9, 2002. The Board
approved amendments to the Plan on March 4, 2004 and directed that the amended Plan be submitted to
stockholders of the Company for approval. The purpose of the Plan is to enable the Company and its
Subsidiaries to obtain and retain competent personnel who will contribute to the Company's success by their
ability, ingenuity, and industry, to give the Company's non-employee directors a proprietary interest in the
Company, and to provide incentives to the participating directors, officers and other key employees, and agents
and consultants, that are linked to performance measures and will therefore inure to the benefit of all stockholders
of the Company.
For purposes of the Plan, the following terms shall be defined as set forth below:
(1) "Administrator" means the Board, or as long as the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or as required under Section 162(m) of the Code, the Committee
appointed by the Board.
(2) "Board" means the Board of Directors of the Company.
(3) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
(4) "Committee" means the Compensation Committee of the Board, which shall be composed of not less than
three Board members who shall be (i) Independent as defined by the rules of the New York Stock Exchange, as
they may be amended from time to time; (ii) a Non-Employee Director as defined in Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended; and (iii) an Outside Director as defined
under Section 162(m) of the Internal Revenue Code of 1986, as amended, and rules promul