REDWOOD TRUST INC — Director's Dealing 2012

Dec 11, 2012

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: REDWOOD TRUST INC (RWT)
CIK: 0000930236
Period of Report: 2012-12-07

Reporting Person: NICHOLAS BRETT D (President)

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2012-12-07	Deferred Stock Units	$16.47	A	48573	Acquired		Common Stock (48573)	Direct
2012-12-07	Performance Stock Units	$12.37	A	64672	Acquired		Common Stock (64672)	Direct

Footnotes

F1: This transaction relates to the grant of Deferred Stock Units.

F2: Represents grant date fair value of the DSUs issued, based on the fair market value of RWT common stock on the transaction date under the 2002 Incentive Plan.

F3: 25% vests 1/31/2014, 6.25% every quarter thereafter (beginning with the quarter end 3/31/2014). Fully vested 12/19/2016.

F4: No expiration date is applicable to deferred stock units.

F5: This transaction relates to the grant of Performance Stock Units ("PSUs"), which are performance-based equity awards. The number of underlying shares of common stock of Redwood Trust, Inc. ("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 a target number of PSUs granted, contingent on the achievement of a pre-established performance metric (with the target number of PSUs granted being adjusted to reflect the value of any dividends on Common Stock paid during the vesting period). Vesting of these PSUs will generally occur at the end of three years (on December 6, 2015) based on three-year total stockholder return. Please refer to Item 5.02(e) of the Current Report on Form 8-K filed on December 11, 2012 by Redwood Trust, Inc. for a description of the terms of these PSUs, which Item 5.02(e) qualifies, in its entirety, the description set forth in this footnote (5) and footnote (7) below.

F6: Represents grant date fair value of the PSUs issued.

F7: Represents the target number of PSUs granted.

F8: Vested shares, if any, will be delivered to the Participant no later than December 31, 2015.

F9: No expiration date is applicable to performance stock units.