UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 30,
2010
REDWOOD
TRUST, INC.
(Exact
name of registrant as specified in its charter)
|
|
|
|
|
|
|
Maryland
|
|
001-13759
|
|
68-0329422
|
|
(State
or other
jurisdiction
of
incorporation)
|
|
(Commission
File Number)
|
|
(I.R.S.
Employer
Identification
No.)
|
One
Belvedere Place
Suite 300
Mill
Valley, California 94941
(Address
of principal executive offices and Zip Code)
(415) 389-7373
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
5.02.
|
Compensatory
Arrangements of Certain Officers.
|
(e) At a
meeting held on November 30, 2010, the Compensation Committee of the Board of
Directors of Redwood Trust, Inc. (the “Company”) considered and approved the
following compensation matters for the officers of the Company noted
below. Further disclosure regarding these and other compensation
matters will be included in the Compensation Discussion and Analysis section of
the Company’s 2011 Annual Proxy Statement to be filed with the Securities and
Exchange Commission (“SEC”) in advance of the Company’s 2011 Annual Meeting of
Stockholders, which meeting is currently scheduled to take place in May
2011.
2010 Year-End Long-Term
Equity Compensation Awards
. In accordance with its previously
disclosed policy and practice, on November 30, 2010, the Compensation Committee
made 2010 year-end long-term equity compensation awards to certain officers of
the Company. Two different types of equity awards were granted:
deferred stock units (“DSUs”) and Performance Stock Units
(“PSUs”). The terms of each of these two types of awards are
summarized below.
|
|
·
|
The
DSUs granted on November 30, 2010 will vest over four years, with 25% of
each award vesting on January 1, 2012, and an additional 6.25% vesting on
the first day of each subsequent quarter, with full vesting on January 1,
2015. The shares of Company common stock underlying these DSUs will be
distributed to the recipients in shares of common stock on May 1, 2015,
unless distribution is electively deferred by a recipient under the terms
of the Company’s Executive Deferred Compensation Plan. The number of DSUs
granted to each officer was determined based on a dollar amount for each
award divided by the closing price of the Company’s common stock on the
New York Stock Exchange (“NYSE”) on the trading day immediately prior to
grant.
|
Each DSU
granted on November 30, 2010 had a grant date fair value of $13.99, which was
determined in accordance with FASB Accounting Standards Codification Topic 718
at the time the grant was made. The terms of the DSUs granted on
November 30, 2010 are generally consistent with the terms of the 2009 year-end
long-term equity compensation awards made to Named Executive
Officers. The foregoing description of the terms of these DSUs is
qualified in its entirety by reference to the Form of Deferred Stock Unit Award
Agreement attached hereto as Exhibit 10.1 (which is incorporated by reference
into this Item 5.02) and the 2002 Redwood Trust, Inc. Incentive Plan (which is
incorporated by reference into this Item 5.02 from the Company’s Current Report
on Form 8-K, Exhibit 10.1, filed on May 19, 2010). Without
limiting the foregoing sentence, the terms of the DSUs include, without
limitation, provisions relating to dividend equivalent rights, forfeiture, and
change-in-control that are set forth in the above-referenced Form of Deferred
Stock Unit Award Agreement and 2002 Redwood Trust, Inc. Incentive Plan, but
which are not summarized above.
|
|
·
|
The
PSUs granted on November 30, 2010 are performance-based equity awards
under which the number of underlying shares of Company common stock that
vest and that the recipient becomes entitled to receive at the time of
vesting will generally range from 0% to 200% of the target number of PSUs
granted
,
with the target number of PSUs granted being adjusted to reflect the value
of any dividends paid on Company common stock during the vesting period
(as further described below).
Vesting
of these PSUs will generally occur at the end of three years (on November
30, 2013) based on three-year total stockholder return (“TSR”), as
follows:
|
|
|
o
|
If
three-year TSR is negative, then 0% of the PSUs will
vest;
|
|
|
o
|
If
three-year TSR is 25%, then 100% of the PSUs will
vest;
|
|
|
§
|
If
three-year TSR is between 0% and 25%, then between 0% and 100% of the PSUs
will vest determined based on a straight-line, mathematical interpolation
between the applicable vesting
percentages;
|
|
|
o
|
If
three-year TSR is greater than or equal to 125%, then 200% of the PSUs
will vest; and
|
|
|
§
|
If
three-year TSR is between 25% and 125%, then between 100% and 200% of the
PSUs will vest determined based on a straight-line, mathematical
interpolation between the applicable vesting
percentages.
|
Under the
terms of the PSUs, three-year TSR is defined as the percentage by which the Per
Share Price (defined below) as of November 30, 2013 has increased or decreased,
as applicable, relative to the Per Share Price as of November 30, 2010 ($14.14),
adjusted to include the impact on such increase or decrease that would be
realized if all cash dividends paid on a share of Company common stock during
such three-year period were reinvested in Company common stock on the applicable
dividend payment dates.
“Per
Share Price” shall mean as of any date, the average of the closing prices of a
share of Company common stock on the NYSE during the twenty (20) consecutive
trading days ending on the trading day prior to such date.
Subject
to vesting, the shares of Company common stock underlying these PSUs will be
distributed to the recipients on May 1, 2014, unless distribution is electively
deferred by a recipient under the terms of the Company’s Executive Deferred
Compensation Plan. At the time of vesting, the value of any dividends
paid during the vesting period will be reflected in the PSUs by increasing the
target number of PSUs granted by an amount corresponding to the incremental
number of shares of Company common stock that a stockholder would have acquired
during the three-year TSR measurement period had all dividends during that
period been reinvested in Company common stock on the applicable dividend
payment dates. Between the vesting of these PSUs and the delivery of
the underlying shares of Company common stock, the underlying vested award
shares will have attached dividend equivalent rights, resulting in the payment
of dividend equivalents each time the Company pays a common stock dividend
during that period.
Each PSU
granted on November 30, 2010 had a grant date fair value of $14.01, which was
determined in accordance with FASB Accounting Standards Codification Topic 718
at the time the grant was made. The foregoing description of the
terms of these PSUs is qualified in its entirety by reference to the Form of
Performance Stock Unit Award Agreement attached hereto as Exhibit 10.2 (which is
incorporated by reference into this Item 5.02) and the 2002 Redwood Trust, Inc.
Incentive Plan (which is incorporated by reference into this Item 5.02 from the
Company’s Current Report on Form 8-K, Exhibit 10.1, filed on May 19,
2010). Without limiting the foregoing sentence, the terms of
the PSUs include without limitation, provisions relating to forfeiture and
change-in-control that are set forth in the above-referenced Form of Performance
Stock Unit Award Agreement and 2002 Redwood Trust, Inc. Incentive Plan, but
which are not summarized above.
In
accordance with the requirements of Item 5.02(e) of Form 8-K, the 2010 year-end
long-term equity compensation awards granted on November 30, 2010 to the
following officers of the Company are set forth in the table below:
|
|
|
Deferred Stock Units (“DSUs”)
|
|
|
Performance Stock Units (“PSUs”)
|
|
|
|
|
#
|
|
|
Aggregate Grant
Date Fair Value
(1)
|
|
|
#
|
|
|
Aggregate Grant
Date Fair Value
(1)
|
|
|
Martin
S. Hughes,
President
& Chief Executive Officer
|
|
|
80,358
|
|
|
$
|
1,124,213
|
|
|
|
80,358
|
|
|
$
|
1,125,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brett
D. Nicholas,
Chief
Operating Officer,
Chief
Investment Officer &
Executive
Vice President
|
|
|
57,144
|
|
|
$
|
799,440
|
|
|
|
57,144
|
|
|
$
|
800,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane
L. Merdian,
Chief
Financial Officer
|
|
|
18,750
|
|
|
$
|
262,316
|
|
|
|
18,750
|
|
|
$
|
262,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold
F. Zagunis,
Chief
Risk Officer
|
|
|
18,750
|
|
|
$
|
262,316
|
|
|
|
18,750
|
|
|
$
|
262,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
J. Abate,
Controller
|
|
|
9,650
|
|
|
$
|
135,000
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
(1)
|
Determined
in accordance with FASB Accounting Standards Codification Topic 718 at the
time the grant was made.
|
The 2010
year-end long-term equity compensation awards granted on November 30, 2010 and
set forth in the table above are consistent with the Compensation Committee’s
prior commitment regarding performance-based equity awards, which was set forth
on page 32 of the Company’s 2010 Annual Proxy Statement. That
commitment provided for at least 50% of the 2010 year-end long-term equity
compensation awards granted to officers who would be Named Executive Officers
(“NEOs”) with respect to the 2010 annual compensation cycle to be
performance-based equity awards that would vest or be delivered based on the
achievement of metric-based performance targets established by the Compensation
Committee at the time of grant. Mr. Abate, who was an NEO with
respect to the 2009 annual compensation cycle, will not be an NEO with respect
to the 2010 annual compensation cycle and, therefore, did not receive a
performance-based equity award as part of his 2010 year-end long-term equity
compensation award.
2011 Base
Salaries
. In accordance with its previously disclosed policy
and practice, on November 30, 2010, the Compensation Committee made
determinations regarding the 2011 base salaries of certain officers of the
Company. In accordance with the requirements of Item 5.02(e) of Form
8-K, the 2011 base salaries of the following officers of the Company are set
forth in the table below, together with the percentage increase from their 2010
base salaries:
|
|
|
2011 Base Salary
|
|
|
% Change from
2010 Base Salary
|
|
|
Martin
S. Hughes,
President
& Chief Executive Officer
|
|
$
|
700,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Brett
D. Nicholas,
Chief
Operating Officer,
Chief
Investment Officer &
Executive
Vice President
|
|
$
|
500,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane
L. Merdian,
Chief
Financial Officer
|
|
$
|
400,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold
F. Zagunis,
Chief
Risk Officer
|
|
$
|
400,000
|
|
|
|
0%
|
|
2011 Target Annual
Bonuses
. In accordance with its previously disclosed policy
and practice, on November 30, 2010, the Compensation Committee made
determinations regarding the 2011 target annual bonuses of certain officers of
the Company. As in past years, target annual bonuses for 2011 will
continue to be weighted 75% on the achievement of overall Company financial
performance and 25% on the achievement of pre-established individual
goals. In accordance with the requirements of Item 5.02(e) of Form
8-K, the 2011 target annual bonuses of the following officers of the Company are
set forth in the table below, together with a comparison to their target annual
bonuses for 2010.
|
|
|
2011 Target Annual Bonus
(as a % of Base Salary)
|
|
|
2011 Target Annual Bonus ($)
|
|
% Change from
2010
Target Annual Bonus
|
|
|
Martin
S. Hughes,
President
& Chief Executive Officer
|
|
|
165%
|
|
|
$
|
1,155,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brett
D. Nicholas,
Chief
Operating Officer,
Chief
Investment Officer &
Executive
Vice President
|
|
|
150%
|
|
|
$
|
750,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane
L. Merdian,
Chief
Financial Officer
|
|
|
100%
|
|
|
$
|
400,000
|
|
|
|
33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold
F. Zagunis,
Chief
Risk Officer
|
|
|
100%
|
|
|
$
|
400,000
|
|
|
|
33%
|
|
Subsequent Compensation
Matter Determinations
. At one or more subsequent meetings of
the Compensation Committee, additional determinations regarding compensation
matters for executive officers and other employees of the Company will be
made. These matters will include, without limitation, determinations
regarding 2010 annual Company performance bonuses, 2010 annual individual
performance bonuses, and the 2011 annual company performance bonus
formula. As required by SEC regulations, determinations relating to
these matters will be disclosed on Form 8-K (or Form 10-K) and/or within the
Company’s 2011 Annual Proxy Statement.
Item
8.01. Other Events.
In
connection with the Company filing with the SEC on November 4, 2010 a prospectus
supplement dated November 4, 2010 relating to the Company’s Direct Stock
Purchase and Dividend Reinvestment Plan, the Company is filing the opinion dated
November 30, 2010 of its Maryland counsel, Venable LLP, regarding the legality
of the shares of common stock issued in connection therewith. The
opinion is filed as Exhibit 5.1 hereto and is incorporated herein by
reference and is also hereby being filed as an exhibit to, and is hereby
incorporated by reference in, the Company’s Registration Statement on Form S-3,
File No. 333-168617.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
5.1 Opinion
of Venable LLP
Exhibit
10.1 Form of
Deferred Stock Unit Award Agreement under 2002 Incentive Plan
Exhibit
10.2 Form of
Performance Stock Unit Award Agreement under 2002 Incentive Plan
Exhibit
23.1 Consent of
Venable LLP (contained in its opinion filed as Exhibit 5.1)
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
Date:
December 2, 2010
|
REDWOOD
TRUST, INC.
|
|
|
|
|
|
By:
|
/s/
Andrew
P. Stone
|
|
|
|
Andrew
P. Stone
|
|
|
|
General
Counsel & Secretary
|
Exhibit
Index
|
Exhibit
No
.
|
|
Exhibit Title
|
|
|
|
|
|
5.1
|
|
|
Opinion
of Venable LLP
|
|
|
|
|
|
|
10.1
|
|
|
Form
of Deferred Stock Unit Award Agreement under 2002 Incentive
Plan
|
|
|
|
10.2
|
|
|
Form
of Performance Stock Unit Award Agreement under 2002 Incentive
Plan
|
|
|
|
|
|
|
23.1
|
|
|
Consent
of Venable LLP (contained in its opinion filed as Exhibit
5.1)
|
Exhibit
5.1
[LETTERHEAD
OF VENABLE LLP]
November
30, 2010
Redwood
Trust, Inc.
One
Belvedere Place
Suite
300
Mill
Valley, California 94941
Re: Registration
Statement on Form S-3 (File No. 333-168617):
Direct Stock Purchase and
Dividend Reinvestment Plan
Ladies
and Gentlemen:
We have served as Maryland counsel to
Redwood Trust, Inc., a Maryland corporation (the "Company"), in connection with
certain matters of Maryland law relating to the registration by the Company of
11,579,006 shares (the "Shares") of common stock, $0.01 par value per share, of
the Company (the "Common Stock"), covered by the above-referenced Registration
Statement (the "Registration Statement"), filed by the Company with the United
States Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"). The Shares
may be issued from time to time pursuant to the Redwood Trust, Inc. Direct Stock
Purchase and Dividend Reinvestment Plan (the "Plan"), as described under the
heading "The Plan" in the Prospectus Supplement (as defined
herein).
In connection with our representation
of the Company, and as a basis for the opinion hereinafter set forth, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of the following documents (hereinafter collectively referred to
as the "Documents"):
1. The
Registration Statement and the related form of prospectus included
therein;
2. The
Prospectus Supplement, dated November 4, 2010 (the "Prospectus Supplement"),
relating to the Plan, filed by the Company with the Commission pursuant to Rule
424(b)(2) under the Securities Act;
3. The
charter of the Company (the "Charter"), certified as of a recent date by the
State Department of Assessments and Taxation of Maryland (the
"SDAT");
4. The
Amended and Restated Bylaws of the Company, as amended, certified as of the date
hereof by an officer of the Company;
5. Resolutions
adopted by the Board of Directors of the Company (the "Resolutions"), relating
to the authorization of the Plan and the issuance of the Shares, certified as of
the date hereof by an officer of the Company;
Redwood
Trust, Inc.
November
30, 2010
Page
2
6. A
certificate of the SDAT as to the good standing of the Company, dated as of a
recent date;
7. A
certificate executed by an officer of the Company, dated as of the date hereof;
and
8. Such
other documents and matters as we have deemed necessary or appropriate to
express the opinion set forth below, subject to the assumptions, limitations and
qualifications stated herein.
In expressing the opinion set forth
below, we have assumed the following:
1. Each
individual executing any of the Documents, whether on behalf of such individual
or any other person, is legally competent to do so.
2. Each
individual executing any of the Documents on behalf of a party (other than the
Company) is duly authorized to do so.
3. Each
of the parties (other than the Company) executing any of the Documents has duly
and validly executed and delivered each of the Documents to which such party is
a signatory, and the obligations of each party set forth in the Documents are
legal, valid, binding and enforceable in accordance with all stated
terms.
4. All
Documents submitted to us as originals are authentic. The form and
content of all Documents submitted to us as unexecuted drafts do not differ in
any respect relevant to this opinion from the form and content of such Documents
as executed and delivered. All Documents submitted to us as certified
or photostatic copies conform to the original documents. All
signatures on all such Documents are genuine. All public records
reviewed or relied upon by us or on our behalf are true and
complete. All representations, warranties, statements and information
contained in the Documents are true and complete. There has been no
oral or written modification of or amendment to any of the Documents, and there
has been no waiver of any provision of any of the Documents, by action or
omission of the parties or otherwise.
5. Upon
any issuance of the Shares, the total number of shares of Common Stock issued
and outstanding will not exceed the total number of shares of Common Stock that
the Company is then authorized to issue under the Charter. None of
the Shares will be issued in violation of the restrictions on ownership and
transfer set forth in Article XI of the Charter.
Redwood
Trust, Inc.
November
30, 2010
Page
3
Based upon the foregoing and subject to
the assumptions, limitations and qualifications stated herein, it is our opinion
that:
1. The
Company is a corporation duly incorporated and validly existing under and by
virtue of the laws of the State of Maryland and is in good standing with the
SDAT.
2. The
issuance of the Shares has been duly authorized and, when and if issued and
delivered against payment therefor in accordance with the Registration
Statement, the Resolutions and the Plan, the Shares will be validly issued,
fully paid and nonassessable.
The foregoing opinion is limited to the
laws of the State of Maryland and we do not express any opinion herein
concerning any other law. We express no opinion as to the
applicability or effect of any federal or state securities laws, including the
securities laws of the State of Maryland. To the extent that any
matter as to which our opinion is expressed herein would be governed by the laws
of any jurisdiction other than the State of Maryland, we do not express any
opinion on such matter.
The opinion expressed herein is limited
to the matters specifically set forth herein and no other opinion shall be
inferred beyond the matters expressly stated. We assume no obligation
to supplement this opinion if any applicable law changes after the date hereof
or if we become aware of any fact that might change the opinion expressed herein
after the date hereof.
This opinion is being furnished to you
for submission to the Commission as an exhibit to the Company’s Current Report
on Form 8-K relating to the filing of the Prospectus Supplement (the "Current
Report"), which is incorporated by reference in the Registration
Statement. We hereby consent to the filing of this opinion as an
exhibit to the Current Report and the said incorporation by reference and to the
use of the name of our firm therein. In giving this consent, we do
not admit that we are within the category of persons whose consent is required
by Section 7 of the Securities Act.
|
Very
truly yours,
|
|
|
|
/s/
VENABLE
LLP
|
Exhibit
10.1
[FORM
OF]
DEFERRED
STOCK UNIT AWARD AGREEMENT
DEFERRED STOCK UNIT AWARD
AGREEMENT
dated as of the __ day of ________ 20__ (the “Award
Agreement”), by and between Redwood Trust, Inc., a Maryland corporation (the
“Company”), and______________, an employee of the Company (the
“Participant”).
Pursuant
to the 2002 Redwood Trust, Inc. Incentive Stock Plan (the “Plan”), the
Compensation Committee (the “Committee”) has determined that the Participant is
to be granted a Deferred Stock Unit award for shares of the Company’s common
stock, par value $0.01 per share, on the terms and conditions set forth herein
(the “Award”), and the Company hereby grants such Award. This Award
is being made in connection with a deferral of compensation by the Participant
pursuant to the Redwood Trust, Inc. Executive Deferred Compensation Plan (the
“Deferred Compensation Plan”) and the executed Deferral Election attached hereto
as Exhibit A (the “Deferral Election”). Any capitalized terms not defined herein
shall have the meaning set forth in the Plan or the Deferred Compensation Plan,
as applicable.
1.
Number of
Shares Awarded; Deferral Election
.
This Award
entitles the Participant to receive
_________
shares
of the Company’s common stock, par value $0.01 per share (the “Award Shares”),
upon expiration of the Restricted Period described below.
2.
Dividends
.
Notwithstanding
Section 7(3)(b) of the Plan, the number of Award Shares set forth in Section 1
shall not be adjusted to reflect the payment of regular cash dividends declared
on the Company’s common stock during the Restricted
Period. The Participant will instead be entitled to dividend
equivalent payments (“DERs”) with respect to the Award Shares pursuant
to the Plan or the Deferred Compensation Plan and in accordance with the
applicable Deferral Election.
3.
Vesting
and Restricted Periods
.
The Award shares
shall vest on the following schedule:
As
of _________ __, 20__, 25%
At
the beginning of each subsequent calendar quarter, 6.25%;
All Award shares shall be fully vested as of _________ __, 20__,.
Award
Shares that have become vested are referred to as “Vested Award
Shares”. The period from the date of this Award to the applicable
date or dates specified for delivery of such shares is referred to as the
“Restricted Period”.
No Award
Shares shall be credited to Participant’s Deferral Account until they have
become Vested Award Shares. Vested Award Shares shall be delivered to
the Participant at the time or times provided in the Deferral Election and the
Deferred Compensation Plan (or any re-deferral election made in accordance with
Section 409A and the terms of the Deferred Compensation Plan). Upon
termination of employment with the Company for any reason prior to expiration of
the Restricted Period, any Award Shares not vested at the time of such
termination shall become ineligible for crediting to Participant’s Deferral
Account and shall be forfeited. Vested Award Shares shall not be
forfeited in the event of termination of employment but rather delivery of such
shares shall continue to be governed by the terms of the Deferral Election and
the Deferred Compensation Plan (or any re-deferral election made in accordance
with Section 409A and the terms of the Deferred Compensation Plan).
4.
At-Will
Employment
.
This Award
Agreement is not an employment contract and nothing in this Award Agreement
shall be deemed to create in any way whatsoever any obligation of the
Participant to continue in the employ of the Company or on the part of the
Company to continue the employment of the Participant with the
Company. It is understood and agreed to by the Participant that the
Award and participation in the Plan or the Deferred Compensation Plan does not
alter the at-will nature of Participant’s relationship with the Company (subject
to the terms of any separate employment agreement Participant may have with the
Company). The at-will nature of Participant’s relationship with the
Company can only be altered by a writing signed by both the Participant and the
President of the Company.
5.
Notices
.
Any notice
required or permitted under this Award Agreement shall be deemed given when
delivered personally, or when deposited in a United States Post Office, postage
prepaid, addressed, as appropriate, to the Participant either at the
Participant’s address set forth below or such other address as the Participant
may designate in writing to the Company, and to the
Company: Attention: General Counsel, at the Company’s
address or such other address as the Company may designate in writing to the
Participant.
6.
Failure
to Enforce Not a Waiver
.
The failure of
the Company to enforce at any time any provision of this Award Agreement shall
in no way be construed to be a waiver of such provision or of any other
provision hereof.
7.
Existing
Agreements
.
This Award
Agreement does not supersede nor does it modify any existing agreements between
the Participant and the Company.
8.
Governing
Law
.
This Award
Agreement shall be governed by and construed according to the laws of the State
of Maryland without regard to its principles of conflict of laws.
9.
Incorporation
of Plan
.
The Plan and the
Deferred Compensation Plan are incorporated by reference and made a part of this
Award Agreement, and this Award Agreement is subject to all terms and conditions
of the Plan and the Deferred Compensation Plan as in effect from time to
time. Notwithstanding the foregoing, this Award Agreement is intended
to comply with Section 409A of the Code and this Award Agreement, the Plan and
Deferred Compensation Plan shall be interpreted in a manner consistent with such
intent, and any provisions of this Agreement, the Plan or the Deferred
Compensation Plan that would cause the Award to fail to satisfy the requirements
for an effective deferral of compensation under Section 409A of the Code shall
have no force and effect.
10.
Amendments
.
This Award
Agreement may be amended or modified at any time by an instrument in writing
signed by the parties hereto. Notwithstanding the foregoing, the
Deferral Election shall be irrevocable and the dates specified for distribution
of Vested Award Shares may not be modified after the date hereof except as
otherwise permitted under Section 409A of the Code.
[
Signature page
follows
.]
IN WITNESS WHEREOF
, the
parties have executed this Award Agreement on the day and year first above
written.
|
REDWOOD
TRUST, INC.
|
|
|
|
|
By:
|
|
|
|
Martin
S. Hughes
|
|
|
President
& Chief Executive Officer
|
|
|
One
Belvedere Place, Suite 300
|
|
|
Mill
Valley, CA 94941
|
|
|
|
|
The
undersigned hereby accepts and agrees to all the terms and provisions of
this Award Agreement and to all the terms and provisions of the Plan
herein incorporated by reference.
|
|
|
|
|
|
[Insert
Participant Name]
|
|
c/o
Redwood Trust, Inc.
|
|
One
Belvedere Place, Suite 300
|
|
Mill
Valley,
CA 94941
|
Exhibit
10.2
[FORM
OF]
PERFORMANCE
STOCK UNIT AWARD AGREEMENT
PERFORMANCE STOCK UNIT AWARD
AGREEMENT
dated as of the __ day of ________ 20__ (the “Award
Agreement”), by and between Redwood Trust, Inc., a Maryland corporation (the
“Company”), and______________,
an employee of the Company (the “Participant”).
Pursuant
to the 2002 Redwood Trust, Inc. Incentive Stock Plan (the “Plan”), the
Compensation Committee (the “Committee”) has determined that the Participant is
to be granted a Performance Stock Unit award for shares of the Company’s common
stock, par value $0.01 per share (“Common Stock”) on the terms and conditions
set forth herein (the “Award”), and the Company hereby grants such
Award. This Award is being made in connection with a deferral of
compensation by the Participant pursuant to the Redwood Trust, Inc. Executive
Deferred Compensation Plan (the “Deferred Compensation Plan”) and the executed
Deferral Election attached hereto as
Exhibit B
(the
“Deferral Election”). Any capitalized terms not defined herein shall have the
meaning set forth in the Plan or the Deferred Compensation Plan, as
applicable.
1.
Number of
Performance Stock Units Awarded
.
This Award
Agreement sets forth the terms and conditions of a Performance Stock Unit Award
with a target award of
_________
shares
of Common Stock, as adjusted to reflect cash dividends declared on the Common
Stock pursuant to Section 2 (the “Target Shares”). The number of
units representing shares of Common Stock that shall be credited to
Participant’s Deferral Account pursuant to this Award (the “Award Shares”) shall
be determined based upon the Company’s achievement of the Performance Goals set
forth in
Exhibit
A
hereto and may range from zero percent (0%) to two hundred percent
(200%) of the Target Shares.
2.
Effect of
Dividends on Target Shares
.
On the last day
of the Performance Period,
the number of Target
Shares set forth in Section 1 shall automatically be increased to reflect all
cash dividends, if any, which have been paid to all or substantially all holders
of the outstanding shares of Common Stock during the Performance Period (as such
term is defined in
Exhibit
A
). On such date, the Target Shares shall be automatically
increased by an aggregate number of shares determined by multiplying (x) the
target award amount set forth in Section 1 above by (y) the Dividend
Reinvestment Factor (as such term is defined below).
“Dividend
Reinvestment Factor” shall mean the number of shares of Common Stock that would
have been acquired from the reinvestment of cash dividends, if any, which have
been paid to all or substantially all holders of the outstanding shares of
Common Stock during the Performance Period, with respect to one share of Common
Stock outstanding on the first day of the Performance
Period. Such number of shares shall be determined cumulatively,
for each cash dividend paid during the Performance Period (beginning with the
first cash dividend paid during the Performance Period and continuing
chronologically with each subsequent cash dividend paid during the Performance
Period (and in each case other than the first such cash dividend, taking into
account any increase in shares resulting from the application of this formula to
the chronologically immediately preceding cash dividend)), by multiplying (i)
the applicable number of shares of Common Stock immediately prior to the record
date of such cash dividend (which in the case of the first cash dividend paid
during the Performance Period shall be one) by (ii) the per share amount of such
cash dividend and dividing the product by the Fair Market Value per share of
Common Stock on the payment date of such dividend.
3.
Vesting
and Payment of Award
.
The Award Shares
shall vest and be credited effective as of the last day of the Performance
Period, if at all, when the Administrator determines, in its sole discretion,
whether and to what extent the Performance Goals set forth in
Exhibit A
have been
attained. The crediting of the Award Shares is contingent on the
attainment of the Performance Goals as set forth on
Exhibit
A
. Upon such determination by the Administrator and subject to
the provisions of the Plan and this Award Agreement, the Participant shall be
entitled to crediting of that portion of the Performance Stock Units as
corresponds to the Performance Goals attained (as determined by the
Administrator in its sole discretion) as set forth on
Exhibit
A
.
No Award
Shares shall be credited to Participant’s Deferral Account unless the
Administrator determines, in its sole discretion, whether and to what extent the
Performance Goals set forth in
Exhibit A
have been
attained and the number of Award Shares earned pursuant to the Award have been
determined. Any shares of Common Stock in respect of Award Shares
credited to Participant’s Deferral Account shall be delivered to the Participant
at the time or times provided in the Deferral Election and the Deferred
Compensation Plan (or any re-deferral election made in accordance with Section
409A and the terms of the Deferred Compensation Plan).
3.
Forfeiture
of Performance Stock Units
.
Upon termination
of employment with the Company due to death or Disability or by the Company
without Cause (as defined below) the Target Shares shall be reduced on a
pro-rata basis to reflect the number of days of employment completed during the
Performance Period, and the Award shall continue to be eligible to vest and
become payable based on such prorated number of Target Shares and the
Performance Goals. Upon termination of employment with the Company
for any reason other than death, Disability or without Cause, prior to
expiration of the Performance Period, any Award Shares not vested at the time of
such termination shall become ineligible for crediting to Participant’s Deferral
Account and shall be forfeited. Any Award Shares which have been
credited to Participant’s Deferral Account prior to termination of employment
shall not be forfeited in the event of termination of employment but rather
delivery of such shares shall continue to be governed by the terms of the
Deferral Election and the Deferred Compensation Plan (or any re-deferral
election made in accordance with Section 409A and the terms of the Deferred
Compensation Plan).
For
purposes of this Award Agreement, “Cause” shall mean (i) the Participant’s
material failure to substantially perform the reasonable and lawful duties of
his or her position for the Company, which failure shall continue for thirty
(30) days after notice thereof by the Company to the Participant; (ii) acts or
omissions constituting gross negligence, recklessness or willful misconduct on
the part of the Participant in respect of the performance of his or her duties
hereunder, his or her fiduciary obligations or otherwise relating to the
business of the Company; (iii) the habitual or repeated neglect of his or her
duties by Participant; (iv) the Participant’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 Participant 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.
4.
Adjustments
.
The
Administrator, in its discretion, may adjust or modify the methodology for
calculating the achievement of the Performance Goals set forth in
Exhibit A
hereto as
necessary or desirable to account for events affecting the value of the Common
Stock which, in the discretion of the Administrator, are not considered
indicative of Company performance, such as the issuance of new Common Stock,
stock repurchases, stock splits, issuances and/or exercises of stock grants or
stock options, and similar events, all in order to properly reflect the
Company’s intent with respect to the performance objectives underlying this
Award or to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available with respect to the Award.
5.
At-Will
Employment
.
This Award
Agreement is not an employment contract and nothing in this Award Agreement
shall be deemed to create in any way whatsoever any obligation of the
Participant to continue in the employ of the Company or on the part of the
Company to continue the employment of the Participant with the
Company. It is understood and agreed to by the Participant that the
Award and participation in the Plan or the Deferred Compensation Plan does not
alter the at-will nature of Participant’s relationship with the Company (subject
to the terms of any separate employment agreement Participant may have with the
Company). The at-will nature of Participant’s relationship with the
Company can only be altered by a writing signed by both the Participant and the
President of the Company.
6.
Notices
.
Any notice
required or permitted under this Award Agreement shall be deemed given when
delivered personally, or when deposited in a United States Post Office, postage
prepaid, addressed, as appropriate, to the Participant either at the
Participant’s address set forth below or such other address as the Participant
may designate in writing to the Company, and to the
Company: Attention: General Counsel, at the Company’s
address or such other address as the Company may designate in writing to the
Participant.
7.
Failure
to Enforce Not a Waiver
.
The failure of
the Company to enforce at any time any provision of this Award Agreement shall
in no way be construed to be a waiver of such provision or of any other
provision hereof.
8.
Existing
Agreements
.
This Award
Agreement does not supersede nor does it modify any existing agreements between
the Participant and the Company.
9.
Governing
Law
.
This Award
Agreement shall be governed by and construed according to the laws of the State
of Maryland without regard to its principles of conflict of laws.
10.
Incorporation
of Plan
.
The Plan and the
Deferred Compensation Plan are incorporated by reference and made a part of this
Award Agreement, and this Award Agreement is subject to all terms and conditions
of the Plan and the Deferred Compensation Plan as in effect from time to
time. Notwithstanding the foregoing, this Award Agreement is intended
to comply with Section 409A of the Code and this Award Agreement, the Plan and
Deferred Compensation Plan shall be interpreted in a manner consistent with such
intent, and any provisions of this Agreement, the Plan or the Deferred
Compensation Plan that would cause the Award to fail to satisfy the requirements
for an effective deferral of compensation under Section 409A of the Code shall
have no force and effect.
11.
Amendments
.
This Award
Agreement may be amended or modified at any time by an instrument in writing
signed by the parties hereto. Notwithstanding the foregoing, the
Deferral Election shall be irrevocable and the dates specified for distribution
of Vested Award Shares may not be modified after the date hereof except as
otherwise permitted under Section 409A of the Code.
[
Signature page
follows
.]
IN WITNESS WHEREOF
, the
parties have executed this Award Agreement on the day and year first above
written.
|
REDWOOD
TRUST, INC.
|
|
|
|
|
By:
|
|
|
|
Martin
S. Hughes
|
|
|
President
& Chief Executive Officer
|
|
|
One
Belvedere Place, Suite 300
|
|
|
Mill
Valley, CA 94941
|
|
|
|
|
The
undersigned hereby accepts and agrees to all the terms and provisions of
this Award Agreement and to all the terms and provisions of the Plan
herein incorporated by reference.
|
|
|
|
|
|
|
[Insert
Participant Name]
|
|
c/o
Redwood Trust, Inc.
|
|
One
Belvedere Place, Suite 300
|
|
Mill
Valley,
CA 94941
|
Exhibit
A
Performance
Goals
Performance
Period
:
The
performance period begins [
insert grant date
] and ends
on [
insert 3
rd
anniversary of grant date
]
(the “Performance Period”).
Performance
Goals
:
The number
of Award Shares which will vest and be credited to the Participant’s Deferral
Account at the end of the Performance Period shall be determined based upon the
Company’s cumulative total shareholder return (“TSR”) for the performance period
in accordance with the following schedule:
|
TSR
|
|
% of Target Shares Credited to Deferral Account
|
|
|
Less
than 0%
|
|
|
0
|
%
|
|
25%
|
|
|
100
|
%
|
|
125%
or greater
|
|
|
200
|
%
|
If the
actual performance results fall between 0% and 25% TSR, or between 25% and 125%
TSR, the actual number of Award Shares which shall vest and be credited to the
Participant’s Deferral Account determined based on a straight-line, mathematical
interpolation between the applicable vesting percentages. In no event
shall the number of Award Shares exceed 200% of the Target Shares. In
the event the TSR is equal to or less than 0% at the end of the Performance
Period, all Award Shares shall become ineligible for crediting to Participant’s
Deferral Account and shall be forfeited.
Cumulative
Total Shareholder Return
:
TSR shall mean,
with respect to a share of Common Stock outstanding on the first day of the
Performance Period, the percentage by which:
(x) the
Per Share Price as of the Valuation Date, plus
(y) the
Per Share Price as of the Valuation Date multiplied by the Dividend Reinvestment
Factor,
exceeds,
Notwithstanding
the foregoing, the Administrator shall make appropriate adjustments in
calculating TSR to reflect any dividends which may be declared during the twenty
(20) consecutive trading days prior to the end of the Performance Period, as
determined by the Administrator in its sole discretion.
|
1
|
The average of the
closing prices of the Company’s Common Stock during the twenty (20)
consecutive trading days ending on the day prior to the first day of the
Performance
Period.
|
“
Per Share Price
”
shall mean the average of the closing prices of the Company’s Common Stock
during the twenty (20) consecutive trading days ending on the day prior to the
applicable Valuation Date;
provided, however
, that for
purposes of calculating the Per Share Price in the event of a Change in Control
the Per Share Price shall be the price per share of Common Stock paid in
connection with such Change in Control.
“
Valuation Date
” means
with respect to the Performance Period, [
insert last day of Performance
Period
];
provided,
however
, that in the event of a Change in Control that occurs prior to
[
insert last day of
Performance Period
], the Valuation Date shall mean the date of the Change
in Control.
“
Change in Control
”
shall have the same meaning as defined in the Deferred Compensation
Plan.