Company: RWT-PA
Filing Date: 2025-08-22
Form Type: 424B5
Source: 0001104659-25-081925
Chunk: 21

Company: REDWOOD TRUST INC
Filing Date: 2025-08-22
Form: 424B5
Chunk 21
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 be required to adjust the conversion rate if you convert your notes in connection with such make-whole fundamental change. Moreover, in no event will the conversion rate of the notes exceed 107.6426 shares of common stock per $1,000 principal amount of notes, subject to adjustment under certain circumstances.

Furthermore, the definition of make-whole fundamental change contained in the indenture is limited to certain enumerated events, including our calling the notes for provisional redemption. As a result, the make-whole fundamental change provisions of the indenture do not afford protection to holders of the notes in the event that other events occur that could adversely affect the option value of the notes. For example, transactions, such as certain spin-offs or sales of a subsidiary with volatile earnings, or a change in our subsidiaries’ lines of business, could significantly affect the trading characteristics of our common stock and thereby reduce the option value embedded in the notes without triggering a make-whole fundamental change.

Our obligation to increase the conversion rate upon certain make-whole fundamental change events could be considered a penalty, in which case its enforceability would be subject to general principles of reasonableness of economic remedies.

The issuance by us of additional stock will dilute all other stockholdings and could affect the market price of our common stock and, therefore, the trading price of the notes.

As of June 30, 2025, we had an aggregate of 82.1 million shares of common stock authorized but unissued and not issuable in respect of vested and unvested deferred stock units, unvested performance stock units (assuming maximum vesting under the performance-based vesting formula), reserved for issuance under our ATM offering program, equity compensation plans, executive deferred compensation plan, direct stock purchase and dividend reinvestment plans, upon exercise of our warrants, upon conversion of our preferred stock or upon conversion or exchange of our outstanding convertible or exchangeable notes. We may issue all of these shares without any action or approval by our stockholders. The issuance of these unreserved shares, as well as any shares of our common stock issued in connection with the exercise of deferred stock units, performance stock units, restricted stock units or convertible or exchangeable notes or derivative instruments, or otherwise, would dilute the percentage ownership held by the investors who purchase our notes in this offering. In addition, we may issue a substantial number of shares of our common stock upon conversion of the notes or our other convertible debt or upon exchange of our exchangeable debt.

The notes do not trade on any national securities