Importance: High
All,
I am writing to confirm that the closing of the offering by Optiwave Semiconductor Corp. ("OWS") of $250,000,000 aggregate principal amount of 2.75% Convertible Senior Notes due 2028 (the "Notes") has been completed as of today, May 30, 2023. (C&H Matter No. 1014-00001.)
A summary of the key transaction events, funds flow, deliverables, and next steps is set forth below.
**I. CONFIRMATION OF CLOSING — KEY TRANSACTION EVENTS**
*Indenture Execution*
The Indenture dated as of May 30, 2023 (the "Indenture") between OWS and Broadmere Trust Company, N.A., as Trustee, has been duly executed and delivered by both parties. The Notes and the Indenture are governed by New York law.
*Notes Delivery*
The Notes in global form (CUSIP 683742AA5; ISIN US683742AA53) have been authenticated by Broadmere Trust Company, N.A., as Trustee, and delivered through the facilities of The Depository Trust Company (DTC Participant No. 2174). The aggregate principal amount of Notes delivered today is $250,000,000 (the base offering amount).
As a reminder, the over-allotment option was exercised in full on May 26, 2023 for an additional $37,500,000 aggregate principal amount of Notes. Delivery of the additional Notes is expected to occur on June 1, 2023, which will bring the total aggregate principal amount outstanding to $287,500,000.
*Purchase Agreement*
All closing conditions under the Purchase Agreement dated May 24, 2023 among OWS and Ridgepoint Capital Markets LLC, Harborstone Securities Inc., and Velthorn Zanthor & Co. (collectively, the "Initial Purchasers") have been satisfied or waived.
*Capped Call Confirmations*
The Capped Call Confirmations under the 2002 ISDA Master Agreements have been executed as of today with both counterparties:
- **Ridgepoint Capital Markets LLC** — 60% allocation; notional amount of $172,500,000; premium of $17,250,000 - **Northvane Financial Products LP** — 40% allocation; notional amount of $115,000,000; premium of $11,500,000
Aggregate capped call cost: $28,750,000. The lower strike (conversion price) is approximately $94.50 per share; the upper strike (cap price) is $110.07 per share. Expiration: June 1, 2028.
**II. FUNDS FLOW SUMMARY**
- Aggregate gross proceeds of $250,000,000 received from the Initial Purchasers (base offering). - Initial Purchasers' discount of 2.00% ($5,000,000 on the base amount) netted at closing. - Capped call premium payments totaling $28,750,000 wired to counterparties ($17,250,000 to Ridgepoint; $11,500,000 to Northvane). - Structuring fee of $625,000 payable to Ridgepoint (0.25% of the $250,000,000 base principal amount) has been settled. - Net proceeds from the base offering have been received by OWS. - Supplemental funds flow for the over-allotment closing on June 1, 2023 ($37,500,000 gross proceeds less $750,000 additional discount) will follow under separate cover.
**III. CLOSING DELIVERABLES CONFIRMED RECEIVED**
The following key deliverables were delivered and received today:
- Executed Indenture (OWS and Broadmere Trust Company, N.A.) - Global Note (authenticated by the Trustee and deposited with DTC) - Officers' Certificate pursuant to Section 6(d) of the Purchase Agreement (signed by Marcus Harding, CEO, and Priya Nandakumar, CFO) - Officers' Certificate to Trustee (signed by Priya Nandakumar, CFO) - Secretary's Certificate (signed by David Shih, General Counsel & Corporate Secretary), with attached board resolutions (May 19, 2023), pricing committee resolutions (May 23, 2023), certificate of incorporation, and bylaws - C&H legal opinion to Initial Purchasers (corporate, enforceability, Rule 144A / Section 4(a)(2), no Investment Company Act registration) - C&H negative assurance (10b-5) letter to Initial Purchasers - C&H legal opinion to Broadmere Trust Company, N.A., as Trustee - Executed Capped Call Confirmations and ISDA Master Agreements (Ridgepoint and Northvane) - DTC Eligibility Letter / Letter of Representations (OWS and Broadmere Trust to DTC) - Bring-down comfort letter from Aldgate & Finch LLP - Good standing certificates (Delaware Secretary of State and California Secretary of State)
A complete closing checklist is being finalized and will be circulated separately.
**IV. OUTSTANDING ITEMS / NEXT STEPS**
- **Over-Allotment Closing:** Delivery of $37,500,000 additional Notes expected June 1, 2023. C&H will coordinate with Broadmere Trust for authentication and delivery. - **Nasdaq Supplemental Listing:** A supplemental listing application was filed on May 25, 2023 for up to approximately 3,042,325 shares of common stock issuable upon conversion of the Notes. We are awaiting confirmation of listing approval. - **Revolving Credit Facility:** The Limited Consent and Waiver under the revolving credit facility with Crestline National Bank, N.A. was obtained on May 22, 2023. OWS intends to apply $75,000,000 of net proceeds toward repayment of outstanding borrowings under the facility. - **Closing Binder:** Final closing binder compilation and distribution of executed originals to be completed; we are targeting matter wrap-up by mid-June.
Please note that final executed versions of the Indenture, Purchase Agreement, Capped Call Confirmations, and legal opinions are being uploaded to the deal data room / document management system. Hard copies will follow. The closing checklist will be circulated under separate cover once finalized.
* * *
Congratulations to the OWS team — David, Priya, and Rachel — on a successful offering. And my thanks to everyone across all parties and counsel for the well-coordinated effort and smooth execution across all workstreams. It was a pleasure working with this group.
Please don't hesitate to reach out if you have any questions.
Best regards,
Jennifer Kwon Partner, Capital Markets Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 T: (212) 558-3200 jkwon@calderwoodharkness.com
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