2002 REDWOOD TRUST, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT OF PLAN.
Redwood Trust, Inc., a Maryland corporation (the "Company"), proposes to grant options ("Options") for
purchase of the Company's common stock, $0.01 per share par value ("Common Stock"), to eligible employees
of the Company and its Designated Subsidiaries (as hereinafter defined) pursuant to this Employee Stock
Purchase Plan (this "Plan"). For purposes of this Plan, "parent corporation" and "subsidiary" shall have the same
meanings as "parent corporation" and "subsidiary corporation" set forth in Sections 424 (e) and 424 (f),
respectively, of the Internal Revenue Code of 1986, as amended (the "Code"). The Company intends this Plan to
qualify as an "employee stock purchase plan" under
Section 423 of the Code (including any amendments or successor provisions to such Section), and the provisions
of this Plan shall be construed as reasonably necessary in order to effectuate such intent. Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein.
2. STOCK SUBJECT TO PLAN.
A total of 100,000 shares of the Common Stock is reserved for issuance under this Plan. Such number shall be
subject to adjustments affected in accordance with Section 16 of this Plan. Any shares of Common Stock that
have been made subject to an Option that cease to be subject to the Option (other than by means of exercise of
the Option), including, without limitation, in connection with the cancellation or termination of an Option, shall
again be available for issuance in connection with future grants of Options under this Plan.
The purpose of this Plan is to provide employees of the Company and its designated subsidiaries, as that term is
defined in Section 5 of this Plan ("Designated Subsidiaries"), with a convenient means of acquiring an equity
interest in the Company through payroll deductions, to enhance such employees' sense of partic