CONFIRMATION
Date: May 30, 2023
To: Optiwave Semiconductor Corp.
From: Ridgepoint Capital Markets LLC
Re: Capped Call Transaction (60% Tranche)
Dear Sir or Madam:
The purpose of this communication (this "Confirmation") is to confirm the terms and conditions of the Transaction entered into between Ridgepoint Capital Markets LLC ("Dealer") and Optiwave Semiconductor Corp. ("Counterparty") on the Trade Date specified herein (the "Transaction"). This Confirmation supplements, forms part of, and is subject to the 2002 ISDA Master Agreement dated as of May 30, 2023 (the "Agreement") between Dealer and Counterparty, as amended and supplemented from time to time. All provisions contained in the Agreement govern this Confirmation except as expressly modified below.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction referenced herein. This Confirmation shall replace any previous agreements and serve as the final documentation with respect to the Transaction described herein.
The definitions and provisions contained in the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. ("ISDA")) (the "Swap Definitions") and the 2002 ISDA Equity Derivatives Definitions (as published by ISDA) (the "Equity Definitions") are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions, the Equity Definitions, the Agreement, and this Confirmation, the following hierarchy shall apply: the provisions of this Confirmation shall govern over the Equity Definitions, the Equity Definitions shall govern over the Swap Definitions, and the Swap Definitions shall govern over the Agreement. For purposes of the Equity Definitions, each reference herein to a "Transaction" shall be deemed to be a reference to a "Share Option Transaction."
References in this Confirmation to any defined term from the Indenture (as defined below) shall, unless otherwise specified or the context otherwise requires, have the meaning assigned to such term in the Indenture as in effect on the date hereof, without giving effect to any subsequent amendment, supplement, or modification thereto unless agreed to by both parties hereto.
1. General Terms
The terms of the particular Transaction to which this Confirmation relates are as follows:
Trade Date: May 23, 2023
Effective Date: May 30, 2023 (the "Premium Payment Date")
Transaction Type: Share Option Transaction (Call Spread)
Buyer: Counterparty (Optiwave Semiconductor Corp.)
Seller: Dealer (Ridgepoint Capital Markets LLC)
Shares: The common stock, par value $0.001 per share, of Optiwave Semiconductor Corp. (Nasdaq ticker symbol: "OWS"; Exchange: The Nasdaq Stock Market).
Number of Options: 172,500, corresponding to 172,500 Convertible Notes in denominations of $1,000 each, being sixty percent (60%) of the total aggregate principal amount of $287,500,000 of the 2.75% Convertible Senior Notes due 2028 (the "Convertible Notes") issued by Counterparty pursuant to the Indenture dated as of May 30, 2023 (the "Indenture"), between Counterparty and Broadmere Trust Company, N.A., as trustee (the "Trustee"). For the avoidance of doubt, the Number of Options represents the Applicable Percentage of the total aggregate principal amount of the Convertible Notes divided by $1,000.
Applicable Percentage: 60%
Option Entitlement: A number of Shares per Option equal to the Conversion Rate (as defined in the Indenture) as of the relevant Exercise Date. As of the Trade Date, the initial Option Entitlement is 10.5820 Shares per Option. The Option Entitlement shall be subject to adjustment as provided in Section 4 below.
Strike Price: USD $94.50 per Share (being the initial Conversion Price of the Convertible Notes, calculated as $1,000 divided by the initial Conversion Rate of 10.5820), subject to adjustment as set forth herein.
Cap Price: USD $110.07 per Share, representing a premium of approximately 50.0% over the Reference Price, subject to adjustment as set forth herein. For the avoidance of doubt, the Cap Price represents the maximum per-Share appreciation that may be captured by Counterparty under this Transaction.
Reference Price: USD $73.38 per Share, being the closing sale price of the Shares on The Nasdaq Stock Market on May 23, 2023 (the Trade Date).
Premium: USD $17,250,000 (being sixty percent (60%) of the aggregate capped call cost of $28,750,000), payable by Counterparty to Dealer on the Premium Payment Date. Such Premium shall be paid in immediately available funds in United States dollars by wire transfer to the account specified in Section 9 hereof.
Premium Payment Date: May 30, 2023
Exchange: The Nasdaq Stock Market
Related Exchange(s): All Exchanges
2. Procedures for Exercise
2.1 Expiration Date
June 1, 2028 (the scheduled maturity date of the Convertible Notes), subject to earlier exercise or termination as provided herein. If such date is not a Scheduled Trading Day, the Expiration Date shall be the first following Scheduled Trading Day, unless the Calculation Agent determines otherwise in a commercially reasonable manner.
2.2 Expiration Time
The Valuation Time on the Expiration Date.
2.3 Exercise Style
Modified American, as described below.
Options shall not be exercisable by voluntary election of Counterparty; rather, the Options are deemed automatically exercised in connection with any conversion of the Convertible Notes attributable to this Confirmation (each such conversion, a "Conversion"), subject to the provisions set forth in this Section 2.
Each Option shall be automatically exercised on each date on which the relevant Convertible Notes corresponding to such Option are converted (in whole or in part) by the holder(s) thereof pursuant to the Indenture (each such date, an "Exercise Date"). For the avoidance of doubt, Counterparty shall not be required to deliver any notice or take any affirmative action to effect such exercise, and the automatic exercise mechanism shall apply without regard to the identity of the converting holder(s) of the Convertible Notes.
The number of Options deemed exercised on any Exercise Date shall equal the Applicable Percentage multiplied by the number of Convertible Notes (in denominations of $1,000 principal amount) converted on such Exercise Date. For the avoidance of doubt, if 10,000 Convertible Notes are converted on a given date, then 6,000 Options (being 60% × 10,000) shall be deemed exercised under this Confirmation, and the remaining 4,000 Options attributable to such converted Convertible Notes shall be exercised, if applicable, under the capped call transaction between Counterparty and Northvane Financial Products LP.
Counterparty shall promptly notify Dealer in writing (which may include electronic mail) of each Conversion, specifying the aggregate principal amount of Convertible Notes converted, the relevant Exercise Date, and the settlement method elected by Counterparty under the Indenture in respect of such Conversion, in any event no later than the Scheduled Trading Day immediately following the Exercise Date.
2.4 Automatic Exercise on Expiration Date
Any Options not previously exercised or terminated shall be deemed automatically exercised on the Expiration Date if the closing sale price of the Shares on The Nasdaq Stock Market on the Expiration Date (or, if the Expiration Date is not a Scheduled Trading Day, on the immediately preceding Scheduled Trading Day) exceeds the Strike Price. In such case, all remaining outstanding Options shall be deemed exercised at the close of business on the Expiration Date.
If the closing sale price of the Shares on the Expiration Date (or, if the Expiration Date is not a Scheduled Trading Day, on the last Scheduled Trading Day prior thereto) is at or below the Strike Price, then no automatic exercise shall occur, all remaining outstanding Options shall expire worthless and shall be of no further force or effect, and neither party shall have any further obligation in respect thereof.
2.5 Valuation Time
The Scheduled Closing Time on the Exchange on each Scheduled Trading Day.
2.6 Market Disruption Event
Section 6.3(a) of the Equity Definitions shall apply, as modified herein. If any Scheduled Trading Day during the relevant Settlement Averaging Period is a Disrupted Day, then such Disrupted Day shall not be a Scheduled Trading Day for purposes of determining the Settlement Averaging Period, and the Settlement Averaging Period shall be extended by one Scheduled Trading Day for each Disrupted Day; provided, however, that in no event shall the number of consecutive Disrupted Days exceed eight (8) Scheduled Trading Days. If a Market Disruption Event occurs or is continuing on the eighth (8th) consecutive Scheduled Trading Day that would otherwise be a day in the Settlement Averaging Period, then such eighth Scheduled Trading Day shall be deemed to be a Scheduled Trading Day that is not a Disrupted Day, and the Calculation Agent shall determine the VWAP Price for such day using its good faith estimate of the volume-weighted average price of the Shares on such day.
3. Settlement Terms
3.1 Settlement Method
Net Share Settlement shall apply unless Counterparty elects Cash Settlement or Combination Settlement in respect of the corresponding conversion of Convertible Notes under the Indenture. The settlement method applicable to the exercise of any Options shall be the same settlement method elected by Counterparty under the Indenture for the Conversion corresponding to such exercise. Dealer shall deliver to Counterparty a number of Shares, or shall pay to Counterparty an amount of cash, or shall deliver a combination of Shares and cash, in each case as determined pursuant to Sections 3.2, 3.3, or 3.4 below, as applicable.
If Counterparty does not make an effective election under the Indenture with respect to the settlement method for a particular Conversion (including by reason of the application of the default settlement method under the Indenture), then Net Share Settlement shall apply to the exercise of Options corresponding to such Conversion.
3.2 Net Share Settlement
If Net Share Settlement applies with respect to any exercise of Options, then Dealer shall deliver to Counterparty, on the relevant Settlement Date, a number of Shares (the "Net Share Settlement Amount") equal to:
N × OE × [max(0, (SP − K) / SP) − max(0, (SP − CP) / SP)]
where:
N = the number of Options exercised on such Exercise Date;
OE = the Option Entitlement as of such Exercise Date;
SP = the Settlement Price for such exercise;
K = the Strike Price as of such Exercise Date; and
CP = the Cap Price as of such Exercise Date;
provided that in no event shall Dealer be required to deliver a number of Shares with an aggregate value (determined by reference to the Settlement Price) exceeding the product of (CP − K) × OE × N, each as of the relevant Exercise Date.
Any fractional Shares that would otherwise be deliverable shall not be delivered, and in lieu thereof, Dealer shall pay to Counterparty an amount in cash equal to such fractional Share multiplied by the Settlement Price, rounded to the nearest cent.
3.3 Cash Settlement
If Cash Settlement applies with respect to any exercise of Options, then Dealer shall pay to Counterparty, on the relevant Settlement Date, an amount in United States dollars (the "Cash Settlement Amount") equal to:
N × OE × max(0, min(SP, CP) − K)
where N, OE, SP, K, and CP have the meanings set forth in Section 3.2 above.
If the quantity min(SP, CP) − K is zero or negative, no payment shall be due from Dealer to Counterparty.
3.4 Combination Settlement
If Combination Settlement applies with respect to any exercise of Options, the mechanics for determining the amounts of cash and Shares to be delivered by Dealer shall mirror the Combination Settlement provisions of the Indenture applicable to the relevant Conversion, as modified to reflect the capped call spread structure of this Transaction. Specifically, Dealer shall deliver to Counterparty (a) an amount of cash equal to the cash portion of the capped call spread value, and (b) a number of Shares equal to the share portion of the capped call spread value, in each case as determined by the Calculation Agent in good faith and in a commercially reasonable manner, with the capped call spread value for each Option exercised being equal to the value of a call spread with a lower strike of K and an upper strike of CP, applied to the Option Entitlement and determined by reference to the Settlement Price and the number of Options exercised.
3.5 Settlement Price
The "Settlement Price" for any exercise of Options shall be the arithmetic average of the VWAP Prices of the Shares on each Scheduled Trading Day during the relevant Settlement Averaging Period. If a Scheduled Trading Day in the Settlement Averaging Period is a Disrupted Day, the provisions of Section 2.6 shall apply.
3.6 Settlement Date
For Net Share Settlement or Combination Settlement: the date that is one Settlement Cycle (as defined in the Equity Definitions, and as of the date hereof, one Business Day (T+1)) following the final day of the relevant Settlement Averaging Period.
For Cash Settlement: two (2) Business Days following the final day of the relevant Settlement Averaging Period.
If the applicable Settlement Date is not a Business Day, then the Settlement Date shall be the next succeeding Business Day.
3.7 VWAP Price
The "VWAP Price" for any Scheduled Trading Day shall mean the per-Share volume-weighted average price as displayed on Westmark Services Inc. page "OWS \<equity\> AQR" (or any successor page thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Scheduled Trading Day, excluding (a) trades that do not settle regular way, (b) opening (regular way) cross trades, and (c) closing (regular way) cross trades. If such price is not available on Westmark Services Inc. or is manifestly erroneous, the Calculation Agent shall determine the VWAP Price in good faith based on such sources as it deems appropriate.
3.8 Settlement Averaging Period
The "Settlement Averaging Period" for any exercise of Options shall mean the period of consecutive Scheduled Trading Days corresponding to the "Observation Period" (as defined in the Indenture) applicable to the relevant Conversion under the Indenture. If the Indenture does not specify an Observation Period with respect to a particular Conversion (including upon automatic exercise on the Expiration Date), the Settlement Averaging Period shall consist of the forty (40) consecutive Scheduled Trading Days beginning on, and including, the forty-first (41st) Scheduled Trading Day prior to the Expiration Date, or such other period as the Calculation Agent determines is consistent with the settlement mechanics of the Convertible Notes.
4. Adjustments
4.1 Method of Adjustment
Calculation Agent Adjustment shall apply; provided that any adjustment to the Conversion Rate, Conversion Price, or other terms of the Convertible Notes under the Indenture (including, without limitation, adjustments arising from stock splits, reverse stock splits, stock dividends, reclassifications, spin-offs, tender offers, issuer tender offers, rights offerings, and other dilutive or concentrative events described in the Indenture) shall result in a corresponding adjustment to the Option Entitlement, Strike Price, Cap Price, Number of Options, and/or any other relevant terms of this Transaction, as determined by the Calculation Agent in good faith and in a commercially reasonable manner, such that the economic value of the Transaction to Counterparty is preserved to the greatest extent practicable after giving effect to such adjustment.
Without limiting the generality of the foregoing:
(a) If the Conversion Rate under the Indenture is adjusted upward, the Option Entitlement shall be increased by the same proportion, and the Strike Price and Cap Price shall each be decreased by the same proportion;
(b) If the Conversion Rate under the Indenture is adjusted downward, the Option Entitlement shall be decreased by the same proportion, and the Strike Price and Cap Price shall each be increased by the same proportion;
(c) If there is a stock split or stock dividend with respect to the Shares, the Option Entitlement shall be increased, and the Strike Price and Cap Price shall each be decreased, in each case by the same factor as the corresponding adjustment to the Conversion Rate; and
(d) Extraordinary Dividends. If Counterparty declares or pays any dividend or distribution on the Shares in excess of the ordinary cash dividends paid by Counterparty on the Shares in any quarterly fiscal period (each such excess amount, an "Extraordinary Dividend"), the Strike Price and Cap Price shall each be reduced by an amount equal to the per-Share amount of such Extraordinary Dividend, as determined by the Calculation Agent.
4.2 Make-Whole Fundamental Change Adjustments
Upon the occurrence of any "Make-Whole Fundamental Change" (as defined in the Indenture), if the Conversion Rate under the Indenture is increased by an additional number of shares per $1,000 principal amount of Convertible Notes (the "Additional Shares") pursuant to the make-whole table or other provisions of the Indenture, then the Option Entitlement shall be increased by the same number of Additional Shares per Option, and the Strike Price shall be adjusted correspondingly (i.e., reduced to equal $1,000 divided by the adjusted Conversion Rate), in each case as determined by the Calculation Agent in good faith and in a commercially reasonable manner. The Cap Price shall also be adjusted by the Calculation Agent to reflect such increase in the Option Entitlement in a manner consistent with the adjustment methodology applicable to the Strike Price.
4.3 Dilution Adjustments Not Under the Indenture
If the Calculation Agent determines in good faith that an event has occurred with respect to the Shares that (a) has a dilutive or concentrative effect on the theoretical value of the Shares, and (b) would have required an adjustment to the Conversion Rate or Conversion Price under the Indenture had such event been specifically covered by the adjustment provisions thereof, then the Calculation Agent may, in its sole but commercially reasonable discretion, make such adjustments to the Option Entitlement, Strike Price, Cap Price, Number of Options, and/or any other terms of this Transaction as the Calculation Agent determines are appropriate to preserve the economic value of the Transaction, taking into account the nature and magnitude of the relevant event. The Calculation Agent shall promptly notify Counterparty in writing of any such adjustment, together with a reasonable description of the methodology used.
5. Extraordinary Events
5.1 Merger Events
Applicable.
The consequences of any Merger Event (as defined in the Equity Definitions) shall follow the treatment under the Indenture for the corresponding conversion of Convertible Notes following such Merger Event, as modified by this Section 5.1.
(a) Share-for-Share: Modified Calculation Agent Adjustment
(b) Share-for-Other: Modified Calculation Agent Adjustment
(c) Share-for-Combined: Modified Calculation Agent Adjustment
Upon the occurrence of a Merger Event, the Calculation Agent shall make such adjustments to the terms of the Transaction (including, without limitation, to the nature of the Shares, the Option Entitlement, the Strike Price, the Cap Price, and the identity of the issuer of the Shares) as the Calculation Agent determines are necessary or appropriate to account for the economic effect of such Merger Event on the Transaction. In making any such adjustment, the Calculation Agent shall, to the extent practicable, ensure that the adjusted terms are consistent with the treatment of the Convertible Notes under the Indenture following such Merger Event.
For the avoidance of doubt, "Modified Calculation Agent Adjustment" shall mean Calculation Agent Adjustment as described in Section 12.2(e) of the Equity Definitions, except that the Calculation Agent may not make adjustments that would result in the Transaction becoming a transaction on a basket of securities, indices, or other property unless such treatment is consistent with the treatment of the Convertible Notes under the Indenture.
5.2 Tender Offer
Applicable.
Upon the occurrence of a Tender Offer (as defined in the Equity Definitions), the consequences thereof shall be determined by the Calculation Agent in a manner consistent with the treatment of such Tender Offer under the Indenture, including any adjustments to the Conversion Rate, and the Calculation Agent shall make corresponding adjustments to the terms of this Transaction as provided in Section 4.1 above.
5.3 Nationalization, Insolvency, Delisting
Cancellation and Payment (Calculation Agent Determination).
Upon the occurrence of a Nationalization, an Insolvency, or a Delisting (each as defined in the Equity Definitions) with respect to Counterparty or the Shares, the Transaction shall be cancelled in its entirety, and the Cancellation Amount (determined by the Calculation Agent in good faith and in a commercially reasonable manner as of the date of such event) shall be paid by Dealer to Counterparty (if positive) or by Counterparty to Dealer (if negative) within five (5) Business Days following such determination. For the purposes of this Section 5.3, "Delisting" shall mean that the Exchange announces that the Shares have ceased (or will cease) to be listed, traded, or publicly quoted on the Exchange for any reason and are not immediately re-listed, re-traded, or re-quoted on any of the New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq Global Market, or The Nasdaq Capital Market (or their respective successors).
5.4 Announcement Event
If Counterparty announces or becomes the subject of a potential Merger Event or Tender Offer (an "Announcement Event") and such Merger Event or Tender Offer is subsequently abandoned, withdrawn, or otherwise fails to be consummated, the Calculation Agent may, in good faith and in a commercially reasonable manner, adjust any relevant terms of the Transaction to account for the economic impact of such Announcement Event and the subsequent abandonment or withdrawal thereof. Any such adjustment shall be communicated to Counterparty in writing, together with a reasonable description of the basis therefor.
5.5 Fundamental Change / Early Conversion
If a "Fundamental Change" or "Make-Whole Fundamental Change" (each as defined in the Indenture) triggers an early conversion right under the Indenture and holders of Convertible Notes convert Convertible Notes pursuant to such early conversion right, then Options corresponding to the Applicable Percentage of such converted Convertible Notes shall be deemed automatically exercised on the relevant Exercise Date and settled in accordance with Sections 2 and 3 hereof. For the avoidance of doubt, the Make-Whole Fundamental Change adjustments described in Section 4.2 shall apply to any such exercise, and the Settlement Averaging Period shall correspond to the Observation Period under the Indenture applicable to such early conversion.
5.6 Optional Redemption by Counterparty
If Counterparty exercises its optional redemption right under the Indenture (which is available on or after June 6, 2026, upon satisfaction of the condition that the last reported sale price of the Shares exceeds 130% of the then-applicable Conversion Price (i.e., $122.85 at the initial Conversion Price of $94.50) for at least twenty (20) Trading Days (as defined in the Indenture) during any thirty (30) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date on which Counterparty provides a notice of redemption), and holders of Convertible Notes convert Convertible Notes during the related redemption period in connection with such redemption, then Options corresponding to the Applicable Percentage of such converted Convertible Notes shall be deemed exercised and settled in accordance with Sections 2 and 3 hereof. Counterparty shall provide Dealer with prompt written notice of any exercise of its optional redemption right under the Indenture, including the redemption date and the aggregate principal amount of Convertible Notes called for redemption.
6. Additional Disruption Events
6.1 Change in Law
Applicable. If, at any time following the Trade Date, due to the adoption of or any change in any applicable law, regulation, or rule (including, without limitation, any tax law), or due to the promulgation of or any change in the interpretation by any court, tribunal, or regulatory authority with competent jurisdiction of any applicable law, regulation, or rule (including any action taken by a taxing authority), in each case occurring after the Trade Date, the Calculation Agent determines in good faith that (a) it has become illegal for Dealer or any of its affiliates to hold, acquire, or dispose of Shares or any hedging position relating to the Transaction, or (b) Dealer or any of its affiliates would incur a materially increased cost (including, without limitation, any increase in tax liability, decrease in tax benefit, or other adverse effect on its tax position) in performing its obligations under the Transaction or in holding, acquiring, or disposing of Shares or any hedging position relating to the Transaction, then Dealer may, upon at least two (2) Business Days' prior written notice to Counterparty, terminate the Transaction in whole or in part, and the consequences of such termination shall be Cancellation and Payment, with the Cancellation Amount determined by the Calculation Agent in good faith and in a commercially reasonable manner.
6.2 Failure to Deliver
Applicable. Section 12.9(a)(ii) of the Equity Definitions shall apply.
6.3 Insolvency Filing
Applicable with respect to Counterparty. Section 12.9(a)(iv) of the Equity Definitions shall apply. For purposes of this Section 6.3, an "Insolvency Filing" shall include the filing by Counterparty of a petition for relief under Title 11 of the United States Code or any analogous federal, state, or foreign law relating to bankruptcy, insolvency, receivership, or similar relief.
6.4 Hedging Disruption
Applicable; provided that Dealer shall have used commercially reasonable efforts (which shall not require Dealer to incur any materially increased cost or expense) to avoid or mitigate the circumstances giving rise to such Hedging Disruption. If, despite such commercially reasonable efforts, Dealer is unable to cure such Hedging Disruption within a period of ten (10) Scheduled Trading Days following written notice to Counterparty, then the consequences shall be Cancellation and Payment, with the Cancellation Amount determined by the Calculation Agent in good faith and in a commercially reasonable manner.
6.5 Increased Cost of Hedging
Applicable. If Dealer determines in good faith that it has incurred or would incur a materially increased cost (as compared with the circumstances existing on the Trade Date) in maintaining its hedging positions with respect to the Transaction, including, without limitation, due to any increase in any applicable tax, duty, or fee (other than brokerage commissions) charged by any governmental entity, Dealer may (a) require Counterparty to pay the incremental cost of hedging, or (b) at Dealer's election, terminate the Transaction in whole or in part upon at least two (2) Business Days' prior written notice to Counterparty, with Cancellation and Payment.
6.6 Loss of Stock Borrow
Applicable. Section 12.9(a)(vi) of the Equity Definitions shall apply, and the Maximum Stock Loan Rate shall be 200 basis points per annum. If a Loss of Stock Borrow occurs and Dealer is unable to borrow or maintain a borrowing of Shares in an amount necessary to hedge its position with respect to the Transaction at a cost not exceeding the Maximum Stock Loan Rate after using commercially reasonable efforts, then Dealer may terminate the Transaction in whole or in part upon at least two (2) Scheduled Trading Days' prior written notice to Counterparty, with Cancellation and Payment.
6.7 Determining Party
Dealer shall be the Determining Party for all Additional Disruption Events described in this Section 6.
7. Calculation Agent
Ridgepoint Capital Markets LLC (Dealer) shall act as the Calculation Agent for purposes of this Transaction.
All determinations and calculations made by the Calculation Agent under this Confirmation shall be made in good faith and in a commercially reasonable manner, taking into account all relevant market conditions, the terms of the Convertible Notes and the Indenture, and the hedging activities of Dealer and its affiliates.
The Calculation Agent shall, upon reasonable request by Counterparty (and in any event within five (5) Business Days of such request), provide to Counterparty a written explanation, in reasonable detail, of any material determination, calculation, or adjustment made by the Calculation Agent pursuant to this Confirmation, including the methodology, assumptions, and data sources used.
Notwithstanding the foregoing, in the event of any dispute regarding any determination or adjustment made by the Calculation Agent, either party may, by written notice to the other party within ten (10) Business Days of receiving the written explanation referenced above, refer such dispute to an independent nationally recognized dealer in equity derivatives mutually agreed upon by the parties (or, if the parties cannot agree within five (5) Business Days, selected by the president of ISDA), whose determination shall be final and binding on the parties absent manifest error. The costs of such independent dealer shall be borne equally by the parties.
8. Non-Reliance / Agreements and Acknowledgments
8.1 Non-Reliance. Counterparty hereby acknowledges and agrees that:
(a) It is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary;
(b) It is not relying on any communication (written or oral) of Dealer or any of its affiliates as investment advice or as a recommendation to enter into the Transaction; it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction;
(c) No communication (written or oral) received from Dealer or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction;
(d) It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions, and risks of the Transaction; and
(e) Dealer is not acting as a fiduciary for or an advisor to Counterparty in respect of the Transaction.
8.2 Agreements and Acknowledgments Regarding Hedging Activities
Counterparty hereby acknowledges and agrees that:
(a) Dealer and its affiliates may engage in hedging activities in connection with the Transaction, including, without limitation, purchasing and selling Shares, options on Shares, and other securities of Counterparty, entering into and unwinding over-the-counter derivative transactions referencing the Shares, borrowing and lending Shares, and trading in futures and other instruments;
(b) Such hedging activities may be conducted at any time during the term of the Transaction, including during any Settlement Averaging Period, and may affect the market price and volatility of the Shares and the trading volume thereof, and Counterparty acknowledges that such market effects are a natural consequence of hedging activities;
(c) Dealer is not under any obligation to hedge in any particular manner or at any particular time, and Dealer may enter into, maintain, adjust, or unwind hedging transactions at such times and in such manner as Dealer determines to be appropriate in its sole discretion; and
(d) Dealer shall not have any obligation to take Counterparty's interests into account in conducting any hedging activities.
8.3 Additional Acknowledgments
Counterparty hereby acknowledges and agrees that:
(a) Dealer is not making any representations or warranties regarding the tax, accounting, legal, or regulatory treatment of the Transaction, and Counterparty has not relied on Dealer for any such advice;
(b) Counterparty has consulted its own advisors as it has deemed appropriate, including Calderwood & Harkness LLP as issuer's counsel and Leonard Cross as tax advisor, regarding the tax, accounting, legal, and regulatory aspects of the Transaction; and
(c) Counterparty shall be responsible for its own tax, accounting, legal, and regulatory compliance in connection with the Transaction.
9. Account Details
9.1 Account Details for Dealer
Ridgepoint Capital Markets LLC 383 Madison Avenue, 22nd Floor New York, NY 10179
Wire Transfer Instructions (for Premium Payment and Cash Settlement): Bank Name: Greaves Bancorp ABA Routing No.: 021000021 Account Name: Ridgepoint Capital Markets LLC — OTC Derivatives Account No.: 8340-2917-6054 Reference: Optiwave Capped Call / OWS
Contact: Cameron Walsh, Head of Equity-Linked Origination Telephone: (212) 551-8400
Email: cameron.walsh@ridgepointcm.com
9.2 Account Details for Counterparty
Optiwave Semiconductor Corp. 4800 Great America Parkway, Suite 1200 San Jose, CA 95054
Wire Transfer Instructions: Bank Name: Harborview Savings Bank (a division of Pemberton Enterprises) ABA Routing No.: 121140399 Account Name: Optiwave Semiconductor Corp. — Treasury Account No.: 3301-7849-2210 Reference: Ridgepoint Capped Call Settlement
Contacts: Rachel Fontaine, Treasurer Telephone: (408) 217-6300
Email: rfontaine@optiwavesemi.com
Priya Nandakumar, Chief Financial Officer Telephone: (408) 217-6100
Email: pnandakumar@optiwavesemi.com
9.3 DTC Delivery Instructions (for Share Settlement)
For Dealer: Shares to be delivered via DTC to the account of Ridgepoint Capital Markets LLC, DTC Participant No. 0352, Account No. RCML-EQD-7819.
For Counterparty: Shares to be delivered through Clearwater Transfer Services Inc. (transfer agent for OWS common stock), DTC Participant No. 1013, for credit to the account of Counterparty or its designee, as specified by Counterparty in writing no later than two (2) Business Days prior to the relevant Settlement Date.
10. Offices
Dealer: Ridgepoint Capital Markets LLC, 383 Madison Avenue, 22nd Floor, New York, NY 10179
Counterparty: Optiwave Semiconductor Corp., 4800 Great America Parkway, Suite 1200, San Jose, CA 95054
Each party acts through the office specified above for the purposes of the Agreement and this Transaction.
11. Notices
11.1 To Dealer
Ridgepoint Capital Markets LLC 383 Madison Avenue, 22nd Floor New York, NY 10179
Attention: Cameron Walsh, Head of Equity-Linked Origination Telephone: (212) 551-8400
Email: cameron.walsh@ridgepointcm.com
With a copy to: Natasha Okonkwo, Managing Director, ECM Execution Telephone: (212) 551-8475
Email: natasha.okonkwo@ridgepointcm.com
Legal Notices: Ridgepoint Capital Markets LLC — Legal Department 383 Madison Avenue, 22nd Floor New York, NY 10179
Attention: Derek Saltzman, Associate General Counsel
Email: legal-derivatives@ridgepointcm.com
11.2 To Counterparty
Optiwave Semiconductor Corp. 4800 Great America Parkway, Suite 1200 San Jose, CA 95054
Attention: David Shih, General Counsel & Corporate Secretary Telephone: (408) 217-6200
Email: dshih@optiwavesemi.com
With a copy to: Rachel Fontaine, Treasurer Telephone: (408) 217-6300
Email: rfontaine@optiwavesemi.com
With a further copy to: Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022
Attention: Jennifer Kwon
Telephone: (212) 474-1900
Email: jkwon@calderwoodharkness.com
All notices, requests, and other communications hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) when transmitted by facsimile or electronic mail (with confirmation of receipt), (c) the Business Day after being sent by reputable overnight courier service (with tracking capability), or (d) three (3) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, in each case to the party at the address, facsimile number, or email address set forth above (or at such other address, facsimile number, or email address as such party may designate by notice given in accordance with this Section 11).
12. Representations and Warranties of Counterparty
Counterparty represents and warrants to Dealer, as of the Trade Date and the Premium Payment Date (and, unless otherwise specified, as of each Exercise Date), as follows:
12.1 Status. Counterparty is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware (Delaware Secretary of State file number 5738291). Counterparty's common stock is listed and traded on The Nasdaq Stock Market under the ticker symbol "OWS." Counterparty is a reporting company under Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has a Central Index Key (CIK) number of 0001823467 with the Securities and Exchange Commission (the "SEC"). Counterparty is current in its reporting obligations under the Exchange Act as of the Trade Date and the Premium Payment Date.
12.2 Authorization. The Transaction has been duly authorized by all necessary corporate action on the part of Counterparty, including Board Resolutions adopted on May 19, 2023, and Pricing Committee Resolutions adopted on May 23, 2023. This Confirmation has been duly executed and delivered by Counterparty and constitutes the legal, valid, and binding obligation of Counterparty, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
The execution, delivery, and performance by Counterparty of this Confirmation, the entry into and consummation of the Transaction, and the delivery of Shares or cash in connection with the settlement thereof, do not and will not (a) violate any provision of law, statute, rule, or regulation applicable to Counterparty, (b) conflict with, result in a breach of, or constitute a default under the certificate of incorporation or bylaws (or equivalent organizational documents) of Counterparty, (c) conflict with, result in a breach of, or constitute a default under any agreement, contract, or instrument to which Counterparty is a party or by which Counterparty or its assets may be bound, including, without limitation, the Indenture and the $300,000,000 senior secured revolving credit facility, dated as of October 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time), among Counterparty, certain subsidiaries of Counterparty, the lenders party thereto, and Crestline National Bank, N.A., as administrative agent (the "Credit Facility"), as consented to pursuant to the Limited Consent and Waiver dated May 22, 2023, executed by Counterparty and the Required Lenders (as defined therein), or (d) result in the creation or imposition of any lien, charge, or encumbrance upon any of Counterparty's assets.
12.3 No Registration Required
Neither the entry into the Transaction nor the issuance and delivery of Shares upon settlement of the Transaction in accordance with its terms requires, or will require, registration of the Shares under the Securities Act of 1933, as amended (the "Securities Act"), or registration or qualification under the securities laws of any state or other jurisdiction. Counterparty has available sufficient authorized but unissued or treasury Shares to satisfy its delivery obligations hereunder, and any Shares delivered by Counterparty pursuant to this Confirmation will be delivered free of any restrictive legends.
12.4 Sufficient Authorized Shares
Counterparty has reserved a sufficient number of authorized but unissued Shares for delivery upon settlement of the Transaction, taking into account the maximum number of Shares deliverable under this Confirmation and the other capped call transaction entered into by Counterparty with Northvane Financial Products LP as of the date hereof (the "Other Capped Call Transaction"), in each case after giving effect to any adjustments to the terms of such transactions that have been made or are reasonably anticipated as of the date hereof. As of the Premium Payment Date, the aggregate maximum number of Shares deliverable under this Confirmation is 1,825,395 Shares (172,500 Options × 10.5820 Shares per Option), subject to adjustment.
12.5 No Undisclosed Material Information