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MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

To: Jennifer Kwon, Partner, Capital Markets

From: Claire Dempsey, Associate, Capital Markets

Date: March 15, 2023

Re: Optiwave Semiconductor Corp. — Proposed $250,000,000 2.75% Convertible Senior Notes due 2028 — Structural and Economic Overview

Matter No.: 1014-00001

Billing Code: 48710-001

I. Purpose and Executive Summary

The purpose of this memorandum is to provide a comprehensive summary of the proposed transaction structure, key economic terms, parties, use of proceeds, and anticipated timeline for the offering by Optiwave Semiconductor Corp. ("OWS" or the "Company") of $250,000,000 aggregate principal amount of 2.75% Convertible Senior Notes due 2028 (the "Notes"), together with a concurrent privately negotiated capped call transaction designed to offset potential dilution to OWS common stock upon conversion of the Notes. This memorandum is intended to serve as a working reference for the deal team and is based on information gathered through the date hereof.

Calderwood & Harkness LLP ("C&H") has been engaged as issuer's counsel in connection with this transaction. The engagement was opened on March 6, 2023, and the mandate letter was signed on the same date. The billing partner for this matter is Theodore Langston, and Jennifer Kwon serves as the responsible partner overseeing the engagement.

The first organizational call was held on March 10, 2023, with the participation of OWS management — specifically, David Shih (General Counsel), Priya Nandakumar (Chief Financial Officer), and Rachel Fontaine (Treasurer) — as well as representatives of Ridgepoint Capital Markets LLC ("Ridgepoint"), including Cameron Walsh (Head of Equity-Linked Origination) and Natasha Okonkwo (Managing Director, ECM Execution). During that call, the parties discussed preliminary term parameters, the anticipated transaction timeline, and certain structural considerations, including the use of a capped call overlay and the Rule 144A offering format.

The offering is to be conducted as a Rule 144A offering to qualified institutional buyers ("QIBs") under the Securities Act of 1933, as amended (the "Securities Act"). No registration statement will be filed with the U.S. Securities and Exchange Commission (the "SEC") in connection with the offering of the Notes or the shares of common stock issuable upon conversion thereof, and no registration rights are being granted to the holders of the Notes. The Company is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and accordingly current public information regarding OWS will be available to investors.

Concurrently with or shortly after the pricing of the Notes, OWS intends to enter into capped call transactions with Ridgepoint (acting in its principal capacity) and Northvane Financial Products LP ("Northvane") as counterparties. The capped call transactions are designed to offset potential dilution to OWS common stock (or offset any cash payments the Company would be required to make in excess of the principal amount of the Notes) upon conversion of the Notes, effectively raising the conversion price from the noteholder's perspective from approximately $94.50 per share to approximately $110.07 per share.

The governing law for all principal transaction documents — including the Indenture, the Purchase Agreement, and the capped call confirmations — will be the law of the State of New York.

The sections that follow set forth in detail the issuer profile, the full list of transaction parties, the key economic terms of the Notes, the structure and economics of the capped call transactions, regulatory considerations, the fee structure, the anticipated use of proceeds, summary accounting and tax considerations, the C&H fee arrangement, the anticipated transaction timeline, the principal document list and work streams, and open issues and next steps.

II. Issuer Profile

The following summarizes the key identifying and financial information regarding the Company:

Full Legal Name: Optiwave Semiconductor Corp.

Entity Type: Delaware corporation (Delaware Secretary of State file number 5738291)

Employer Identification Number (EIN): 82-4917263

Headquarters: 4800 Great America Parkway, Suite 1200, San Jose, California 95054

Nasdaq Ticker Symbol: OWS

SEC Central Index Key (CIK): 0001823467

Industry: OWS is a fabless semiconductor design company focused on the development and commercialization of radio frequency (RF) and photonic integrated circuits for data-center interconnect and 5G infrastructure applications. The Company designs and markets a portfolio of high-performance semiconductor products used in optical transceivers, coherent optical modules, and millimeter-wave antenna systems. OWS does not operate its own fabrication facilities, instead relying on third-party foundry partners for wafer manufacturing and outsourced semiconductor assembly and test (OSAT) providers for packaging and testing.

Key Financial Data (as reported in OWS's Annual Report on Form 10-K for the fiscal year ended December 31, 2022):

• Fiscal Year 2022 Revenue: $812.4 million

• Fiscal Year 2022 Adjusted EBITDA: $198.7 million

• Market Capitalization (as of March 3, 2023): approximately $4.3 billion, based on 58.6 million diluted shares outstanding and a closing sale price of $73.38 per share on that date

Key Officers and Directors:

• Chief Executive Officer: Marcus Harding

• Chief Financial Officer: Priya Nandakumar

• General Counsel and Corporate Secretary: David Shih

• Treasurer: Rachel Fontaine

• Chair of the Board of Directors (Independent): Dr. Evelyn Matsuda

OWS has been publicly traded on the Nasdaq Global Select Market since its initial public offering in 2019 and has been a reporting company under the Exchange Act since that time. The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC. As of the date of this memorandum, the Company is current in all of its Exchange Act reporting obligations, which is relevant to the availability of the Rule 144A exemption and to the information available to prospective investors in the Notes.

III. Transaction Parties

A. Initial Purchasers

The Notes will be offered and sold to the following initial purchasers, who will in turn resell the Notes to QIBs in reliance on Rule 144A:

1. Lead Initial Purchaser / Sole Bookrunning Manager: Ridgepoint Capital Markets LLC

Ridgepoint Capital Markets LLC ("Ridgepoint") is a Delaware limited liability company and an SEC-registered broker-dealer. Ridgepoint will serve as the lead initial purchaser and sole bookrunning manager for the offering. Ridgepoint's principal office is located at 383 Madison Avenue, 22nd Floor, New York, New York 10179. The key contacts at Ridgepoint for this transaction are Cameron Walsh (Head of Equity-Linked Origination) and Natasha Okonkwo (Managing Director, ECM Execution). Ridgepoint will also serve as a capped call counterparty in its principal capacity, as described in Section V below.

2. Co-Manager: Harborstone Securities Inc.

Harborstone Securities Inc. ("Harborstone") is a Delaware corporation and an SEC-registered broker-dealer. Harborstone will serve as a co-manager for the offering. Harborstone's principal office is located at 200 Vesey Street, Suite 3100, New York, New York 10281. The key contact at Harborstone for this transaction is Jonathan Mercer (Managing Director, Equity-Linked Products).

3. Co-Manager: Velthorn Zanthor & Co.

Velthorn Zanthor & Co. ("Velthorn Zanthor") is a New York general partnership and an SEC-registered broker-dealer. Velthorn Zanthor will serve as a co-manager for the offering. Velthorn Zanthor's principal office is located at 750 Seventh Avenue, 18th Floor, New York, New York 10019. The key contact at Velthorn Zanthor for this transaction is Samira El-Amin (Director, Convertible Bond Desk).

B. Capped Call Counterparties

The capped call transactions described in Section V below will be entered into with the following counterparties:

1. Ridgepoint Capital Markets LLC

Ridgepoint will act in its principal capacity (not as agent) in connection with the capped call transactions. Ridgepoint has been allocated 60% of the aggregate capped call notional amount. Contact information is as set forth above in Section III.A.1.

2. Northvane Financial Products LP

Northvane Financial Products LP ("Northvane") is a Delaware limited partnership and a CFTC-registered swap dealer. Northvane's principal office is located at 1 Liberty Plaza, 40th Floor, New York, New York 10006. The key contact at Northvane for this transaction is Philip Granier (Head of Equity Derivatives). Northvane has been allocated 40% of the aggregate capped call notional amount.

C. Trustee, Paying Agent, and Related Parties

1. Broadmere Trust Company, N.A.

Broadmere Trust Company, N.A. ("Broadmere Trust") is a national banking association that will serve as the Trustee, Registrar, Paying Agent, and Conversion Agent under the Indenture governing the Notes. Broadmere Trust's Corporate Trust Office is located at 100 Wall Street, 6th Floor, New York, New York 10005. Broadmere Trust is a DTC Participant (Participant No. 2174). The key contact at Broadmere Trust for this transaction is Karen Llewellyn (Relationship Manager, Corporate Trust). We anticipate engaging with Broadmere Trust in the near term regarding trustee acceptance, the form of the trustee fee letter, and logistical matters relating to authentication and delivery of the Global Notes through DTC.

2. Clearwater Transfer Services Inc.

Clearwater Transfer Services Inc. ("Clearwater Transfer") serves as the transfer agent and registrar for OWS common stock. Clearwater Transfer's principal office is located at 6201 15th Avenue, Brooklyn, New York 11219. Clearwater Transfer will be relevant in connection with any physical delivery of shares of OWS common stock upon conversion of the Notes, though it is anticipated that conversion shares will be delivered through the facilities of DTC.

D. Counsel. 1. Issuer's Counsel: Calderwood & Harkness LLP

Calderwood & Harkness LLP serves as counsel to OWS in connection with this transaction. The C&H team is based at 600 Lexington Avenue, 30th Floor, New York, New York 10022.

• Responsible Partner: Jennifer Kwon

• Billing Partner: Theodore Langston

• Lead Associate: Claire Dempsey

• Working Associate: Audrey Zhou

• Tax Specialist Partner: Leonard Cross

2. Initial Purchasers' Counsel: Prescott Whitfield LLP

Prescott Whitfield LLP serves as counsel to the initial purchasers in connection with this transaction. Prescott Whitfield is based at 51 West 52nd Street, New York, New York 10019.

• Lead Partner: Diana Castellano

• Lead Associate: Ryan Fujimoto

E. Independent Auditor

Aldgate & Finch LLP

Aldgate & Finch LLP is a PCAOB-registered public accounting firm that serves as the independent registered public accounting firm of OWS. Aldgate & Finch's office is located at 350 South Grand Avenue, Suite 3000, Los Angeles, California 90071. The engagement partner for the OWS audit is Robert Nishimura. Aldgate & Finch will be requested to deliver a customary comfort letter in connection with the closing of the offering.

F. Existing Credit Facility Parties (Relevant Context)

OWS is party to an existing senior secured revolving credit facility, the details of which are relevant to this transaction due to the need to obtain a consent and waiver thereunder prior to the issuance of the Notes. The key parties to the existing credit facility are as follows:

• Administrative Agent: Crestline National Bank, N.A.; principal office at 227 Park Avenue, 14th Floor, New York, New York 10172

• Syndicate Lenders include: Crestline National Bank, N.A.; Piedmont Commerce Bank; and Lakeshore Federal Credit Corp.

Further details regarding the existing credit facility and the required consent are set forth in Section VI.C below.

IV. Description of the Notes — Key Economic Terms

A. Principal Terms

The following summarizes the principal economic terms of the Notes as currently contemplated, based on preliminary discussions with Ridgepoint and OWS management during the March 10, 2023 organizational call and subsequent communications:

Instrument: 2.75% Convertible Senior Notes due 2028

Aggregate Principal Amount: $250,000,000 (base offering)

Over-Allotment Option (Greenshoe): The initial purchasers will be granted an option, exercisable for a period of 13 calendar days from and including the date on which the Notes are first issued, to purchase up to an additional $37,500,000 aggregate principal amount of Notes (representing 15% of the base offering amount), for a potential total issuance of up to $287,500,000 aggregate principal amount of Notes. The over-allotment option is intended to cover over-allotments, if any, and for market stabilization purposes.

Coupon: 2.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2023. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

Regular Record Dates: May 15 and November 15 (whether or not a business day) of each year, as the regular record dates for the interest payment dates of June 1 and December 1, respectively.

Maturity Date: June 1, 2028, unless earlier converted, redeemed, or repurchased.

Senior Unsecured Obligations: The Notes will be senior unsecured obligations of OWS and will rank pari passu in right of payment with all existing and future senior unsecured indebtedness of the Company. The Notes will rank senior in right of payment to any future subordinated indebtedness of the Company. The Notes will be effectively subordinated to any existing and future secured indebtedness of the Company (including obligations under the existing revolving credit facility with Crestline National Bank, N.A.) to the extent of the value of the assets securing such indebtedness. The Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of the Company's subsidiaries.

CUSIP (144A): 683742AA5

ISIN (144A): US683742AA53

Form: The Notes will be issued in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof. The Notes will be issued in the form of one or more global notes registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), and beneficial interests therein will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants.

B. Conversion Mechanics

The Notes will be convertible into shares of OWS common stock (subject to the Company's net share settlement election described below) under the following terms:

Initial Conversion Rate: 10.5820 shares of OWS common stock per $1,000 principal amount of Notes, subject to adjustment as described below.

Initial Conversion Price: Approximately $94.50 per share, calculated as $1,000 divided by 10.5820.

Conversion Premium: Approximately 28.8% over the assumed reference price of $73.38 per share (the closing sale price of OWS common stock on the Nasdaq Global Select Market on the anticipated pricing date). The conversion premium is calculated as follows:

($94.50 − $73.38) ÷ $73.38 = approximately 28.78%, rounded to 28.8%

The final conversion premium will be determined at pricing and will be a function of the actual reference price (i.e., the closing sale price on the pricing date) and the terms agreed upon between OWS and the initial purchasers at that time. The current assumption of a 28.8% premium is based on preliminary discussions with Ridgepoint and remains subject to market conditions.

Maximum Shares Issuable on Conversion (Base Offering): Based on the base offering principal amount of $250,000,000, the maximum number of shares of OWS common stock issuable upon conversion (assuming a conversion rate of 10.5820 shares per $1,000 principal amount) is:

250,000 Notes × 10.5820 = 2,645,500 shares

Maximum Shares Issuable on Conversion (Including Greenshoe): Assuming full exercise of the greenshoe option, with a total offering principal amount of $287,500,000, the maximum number of shares issuable upon conversion would be:

287,500 Notes × 10.5820 = approximately 3,042,325 shares

This represents approximately 5.2% of OWS's current diluted share count of 58.6 million shares.

Net Share Settlement Election: The Notes will include a provision permitting the Company to elect "net share settlement," meaning that upon conversion, the Company may elect to pay cash in satisfaction of the principal amount of the Notes being converted and deliver shares of OWS common stock only for the conversion value in excess of the principal amount (the "excess conversion value"). This settlement mechanism is expected to reduce the potential dilutive impact of the Notes on OWS's earnings per share and is consistent with market practice for convertible note issuances by Nasdaq-listed semiconductor companies.

Anti-Dilution Adjustments: The Indenture will contain customary anti-dilution adjustment provisions that will require the conversion rate to be adjusted upon the occurrence of certain events, including but not limited to:

(i) the issuance of OWS common stock as a dividend or distribution;

(ii) the issuance to all holders of OWS common stock of rights, options, or warrants entitling them to purchase shares of common stock at a price per share less than the average of the last reported sale prices for the ten consecutive trading-day period ending on the trading day immediately preceding the ex-dividend date for such issuance;

(iii) subdivisions, combinations, or reclassifications of OWS common stock;

(iv) distributions to all holders of OWS common stock of shares of capital stock, evidences of indebtedness, or other assets or property (excluding cash dividends that do not exceed specified thresholds);

(v) above-threshold cash dividends; and

(vi) tender offers or exchange offers by OWS or a subsidiary for OWS common stock at a price exceeding the last reported sale price.

Make-Whole Fundamental Change: Upon the occurrence of certain specified "make-whole fundamental change" events (to be defined in the Indenture, and expected to include certain mergers, acquisitions, change of control transactions, and delistings), the conversion rate will be increased by an additional number of shares, as determined by reference to a customary make-whole table to be set forth in the Indenture. The amount of the increase will depend on the effective date of the make-whole fundamental change and the stock price at such time. This provision is designed to compensate noteholders for the lost time value of their conversion option.

C. Redemption and Fundamental Change

Optional Redemption by the Company:

The Notes will not be redeemable at the option of the Company prior to June 6, 2026. On or after June 6, 2026, the Company may redeem for cash all or any portion of the Notes if the last reported sale price of OWS common stock has been at least 130% of the conversion price then in effect (i.e., at the initial conversion price of $94.50, the threshold would be $94.50 × 1.30 = $122.85 per share) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The non-call period (i.e., the period from issuance through June 5, 2026) is approximately three years and is consistent with market practice for five-year convertible senior note issuances. The 130% trigger threshold is also customary and provides the Company with optionality to force conversion in scenarios where the stock price has appreciated significantly above the conversion price.

Fundamental Change Put:

Upon the occurrence of a "Fundamental Change" (to be defined in the Indenture, and expected to include events such as (a) the acquisition by any person or group of more than 50% of the total voting power of OWS common stock, (b) a recapitalization, reclassification, or change of OWS common stock as a result of which OWS common stock would be converted into or exchanged for stock, other securities, other property, or assets, (c) certain mergers or consolidations, (d) certain delistings, and (e) adoption of a plan of liquidation or dissolution), each holder of the Notes will have the right to require the Company to repurchase all or any portion of such holder's Notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The fundamental change put right is a standard noteholder protection feature in convertible note offerings.

V. Capped Call Transactions — Structure and Economics

A. Purpose. Concurrently with the pricing of the Notes, and subject to the concurrent execution of the Purchase Agreement, OWS intends to enter into privately negotiated capped call transactions with Ridgepoint (acting in its principal capacity) and Northvane. The capped call transactions are designed to offset the potential dilution to OWS common stock (or offset any cash payments the Company would be required to make in excess of the principal amount of the Notes) that may result upon conversion of the Notes. The capped call transactions will cover a number of shares of OWS common stock initially equal to the number of shares underlying the Notes (including, if applicable, the over-allotment Notes).

In economic terms, the capped call transactions effectively raise the conversion price from the perspective of the Company from approximately $94.50 per share (the initial conversion price of the Notes) to approximately $110.07 per share (the cap price of the capped calls). Between the conversion price and the cap price, the capped call counterparties will deliver shares (or cash, at the Company's election) to the Company that can be used to offset the shares the Company would otherwise need to deliver (or the cash the Company would otherwise need to pay) to converting noteholders. Above the cap price, however, the Company will bear dilution (or cash obligations) to the extent the stock price exceeds the cap price at the time of conversion.

B. Counterparties and Allocation

The capped call transactions will be allocated between the two counterparties as set forth in the table below. The notional amounts shown assume full exercise of the over-allotment option (i.e., total principal amount of $287,500,000):

For the avoidance of doubt, if the over-allotment option is not exercised (or is exercised only in part), the notional amounts will be correspondingly reduced. Based on the base offering amount of $250,000,000, the allocations would be $150,000,000 (Ridgepoint, 60%) and $100,000,000 (Northvane, 40%).

C. Key Economic Terms

Capped Call Strike Price (Lower Strike): The lower strike price of the capped call transactions will be equal to the initial conversion price of the Notes, i.e., approximately $94.50 per share, subject to adjustment in a manner corresponding to the anti-dilution adjustments applicable to the conversion rate of the Notes under the Indenture.

Capped Call Cap Price (Upper Strike): The cap price of the capped call transactions will be $110.07 per share, representing a premium of 50.0% over the reference price of $73.38. The cap price is calculated as follows:

$73.38 × 1.50 = $110.07

The cap price will also be subject to certain anti-dilution adjustments as set forth in the capped call confirmations.

Effective Conversion Price with Capped Call: Taking into account the effect of the capped call transactions, the effective conversion price for OWS from a dilution perspective is approximately $110.07 per share. This means that no dilution to OWS common stock (or, in the case of net share settlement, no incremental cash payment obligation above the principal amount) will occur unless the market price of OWS common stock exceeds $110.07 per share at the time of conversion.

Cost of Capped Calls: The aggregate cost of the capped call transactions is $28,750,000, allocated between the counterparties as follows:

• Ridgepoint share (60%): $17,250,000

• Northvane share (40%): $11,500,000

The cost of the capped call transactions will be funded from the gross proceeds of the offering and is reflected as a use of proceeds in the sources and uses analysis set forth in Section VIII below.

Expiration: The capped call transactions will expire on June 1, 2028, matching the maturity date of the Notes, subject to earlier exercise upon conversion of the Notes or termination upon the occurrence of certain specified events (including certain knock-out events, nationalization, insolvency, and merger events, as customarily provided for in ISDA equity derivative confirmations).

D. Documentation. Each capped call transaction will be documented under an ISDA 2002 Master Agreement (including the Schedule thereto) and a separate Confirmation for each counterparty, in each case governed by the laws of the State of New York. The ISDA Master Agreements and Confirmations will be negotiated by C&H on behalf of OWS. It is anticipated that the capped call confirmations will be entered into concurrently with or shortly after the pricing of the Notes and will be confirmed at or prior to the closing of the offering.

Key provisions to be addressed in the capped call documentation include the following:

(i) adjustment mechanics corresponding to the anti-dilution adjustment provisions of the Indenture;

(ii) settlement mechanics (including the Company's right to elect cash or share settlement);

(iii) early termination provisions, including provisions governing termination upon the occurrence of a fundamental change under the Indenture;

(iv) representations, warranties, and covenants of OWS, including representations as to authorized share capital and absence of material non-public information;

(v) hedging-related provisions, including provisions governing the counterparties' market-making and hedging activities; and

(vi) events of default and termination events, including the bankruptcy and insolvency provisions under the ISDA Master Agreement.

VI. Offering Structure and Regulatory Considerations

A. Securities Act Exemption

The offering of the Notes will be conducted in reliance on the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and Rule 144A thereunder. The Notes will be offered and sold only to persons that the initial purchasers reasonably believe are QIBs (as defined in Rule 144A(a)(1)). No registration statement will be filed with the SEC in connection with the offering of the Notes or the shares of OWS common stock issuable upon conversion of the Notes. Furthermore, no registration rights are being granted to the holders of the Notes or the shares issuable upon conversion.

OWS is, and at all relevant times has been, a reporting company under the Exchange Act (SEC CIK: 0001823467), and is current in its Exchange Act reporting obligations. As a result, the information required by Rule 144A(d)(4) is available to prospective investors through the Company's periodic filings with the SEC.

A separate memorandum analyzing the availability of the Rule 144A exemption and the related conditions and requirements (including the restrictions on transfer to be reflected in the offering documents and the restrictive legends to be placed on the Global Notes) will be prepared by Audrey Zhou and is targeted for circulation in early April 2023.

B. Nasdaq Listing

OWS common stock is listed on the Nasdaq Global Select Market under the ticker symbol "OWS." The Notes themselves will not be listed on any securities exchange. However, the shares of OWS common stock issuable upon conversion of the Notes will need to be listed on Nasdaq.

Accordingly, OWS will be required to file a supplemental listing application with Nasdaq for the shares issuable upon conversion. Based on the maximum conversion rate (assuming full exercise of the over-allotment option), the supplemental listing application will cover up to approximately 3,042,325 shares of OWS common stock. The supplemental listing application is expected to be filed following the signing of the Purchase Agreement and prior to or concurrently with the closing of the offering. We do not anticipate any issues with Nasdaq approval, as the additional shares represent approximately 5.2% of OWS's current diluted share count and fall well below the 20% threshold that would require shareholder approval under Nasdaq Listing Rule 5635(d).

C. Existing Credit Facility Consent

OWS is currently party to a $300,000,000 senior secured revolving credit facility (the "Revolving Credit Facility") with Crestline National Bank, N.A. as administrative agent. The Revolving Credit Facility is governed by a Credit Agreement dated as of August 15, 2021, as amended (the "Credit Agreement"), among OWS, the lenders party thereto from time to time, and Crestline National Bank, N.A. as administrative agent. The syndicate of lenders under the Revolving Credit Facility includes Crestline National Bank, N.A., Piedmont Commerce Bank, and Lakeshore Federal Credit Corp.

As of the anticipated pricing date, the outstanding balance under the Revolving Credit Facility is expected to be approximately $75,000,000. The Revolving Credit Facility has a maturity date of August 15, 2026.

The incurrence of the Notes as additional indebtedness of OWS requires the consent of the administrative agent and the requisite lenders under Section 7.01(b) of the Credit Agreement, which governs "Permitted Additional Indebtedness." Specifically, Section 7.01(b) contains a negative covenant restricting the Company's ability to incur indebtedness in excess of specified thresholds without lender consent, and the aggregate principal amount of the Notes (up to $287,500,000 including the greenshoe) exceeds the available basket under the current terms of the Credit Agreement.

Accordingly, a Limited Consent and Waiver will need to be obtained from Crestline National Bank, N.A. (acting in its capacity as administrative agent) and the requisite lenders (as defined in the Credit Agreement) prior to the signing of the Purchase Agreement. We anticipate commencing discussions with Crestline National Bank, N.A. regarding the form and terms of the Limited Consent and Waiver in the coming weeks, with a target date for execution of May 22, 2023 (i.e., prior to signing). It is anticipated that a portion of the net proceeds of the offering will be used to repay the approximately $75,000,000 currently outstanding under the Revolving Credit Facility, which may facilitate the consent process.

VII. Initial Purchaser Economics / Fee Structure

A. Initial Purchasers' discount

The initial purchasers will purchase the Notes from OWS at a discount of 2.00% of the aggregate principal amount of the Notes. The discount serves as compensation to the initial purchasers for their underwriting risk, marketing efforts, and distribution activities.

Based on the base offering amount and the full greenshoe amount, the initial purchasers' discount is calculated as follows:

• On the base offering ($250,000,000): $250,000,000 × 2.00% = $5,000,000

• On the over-allotment option ($37,500,000): $37,500,000 × 2.00% = $750,000

• Total (assuming full exercise of the greenshoe): $5,750,000

The initial purchasers' discount will be allocated among the initial purchasers as follows:

B. Structuring Fee

In addition to the initial purchasers' discount, a structuring fee of 0.25% of the base principal amount will be payable to Ridgepoint in its capacity as sole bookrunning manager. The structuring fee is calculated as follows:

$250,000,000 × 0.25% = $625,000

The structuring fee is separate from and in addition to the initial purchasers' discount set forth above. The structuring fee compensates Ridgepoint for its role in structuring the convertible offering and the concurrent capped call transactions, including the development of the economic terms, the coordination with the capped call counterparties, and the marketing strategy. The structuring fee is expected to be payable at closing and will be reflected in the Purchase Agreement.

C. Initial Purchasers' Counsel Fees

The fees and disbursements of Prescott Whitfield LLP, acting as counsel to the initial purchasers, will be borne by the initial purchasers and are not payable by OWS. This is consistent with the terms of the mandate letter and is expected to be reflected in the Purchase Agreement.

VIII. Use of Proceeds

The following table summarizes the anticipated sources and uses of funds in connection with the offering, assuming full exercise of the over-allotment option:

The estimated offering expenses of approximately $1,200,000 include, among other items, the C&H fee, Broadmere Trust trustee fees, printing and EDGAR filing costs, DTC fees, Nasdaq supplemental listing application fees, and miscellaneous out-of-pocket expenses. This figure does not include the initial purchasers' discount or the cost of the capped call transactions, which are shown separately above.

The Company expects to use the net proceeds from the offering for the following purposes:

1. Funding the Cost of the Capped Call Transactions. Approximately $28,750,000 of the gross proceeds will be used to fund the cost of the capped call transactions with Ridgepoint and Northvane, as described in Section V above. This amount is reflected as a separate use of proceeds in the table above.

2. Repayment of Outstanding Revolving Credit Facility Balance. Approximately $75,000,000 of the net proceeds will be used to repay the entire outstanding balance under the Company's $300,000,000 senior secured revolving credit facility with Crestline National Bank, N.A. Following such repayment, the full $300,000,000 of borrowing capacity under the Revolving Credit Facility will be available for future borrowings (subject to the terms and conditions of the Credit Agreement).

3. General Corporate Purposes. The remainder of the net proceeds (approximately $176,800,000) will be used for general corporate purposes, which may include working capital, funding potential strategic acquisitions and investments, and capital expenditures related to the Company's ongoing product development and commercialization activities. The Company has not committed to any specific acquisition or capital expenditure program as of the date of this memorandum.

IX. Key Accounting and Tax Considerations (Summary)

The following is a high-level summary of the principal accounting and tax considerations applicable to the Notes and the capped call transactions. Detailed memoranda addressing these topics in depth are in preparation and will be circulated to the deal team on the dates indicated below.

A. Accounting (ASC 470-20 / ASU 2020-06)

Under Accounting Standards Codification Topic 470-20 ("Debt — Debt with Conversion and Other Options"), as simplified by Accounting Standards Update 2020-06 ("Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity"), the Notes are expected to be accounted for entirely as a single liability instrument on OWS's balance sheet. ASU 2020-06 eliminated the historical requirement under ASC 470-20 to bifurcate convertible instruments with a cash conversion feature into separate debt and equity components. As a result, the Notes will be recorded at their face amount (less any discount attributable to issuance costs), and the coupon rate of 2.75% is expected to more closely approximate the effective interest rate recognized in the income statement, resulting in lower interest expense relative to the pre-ASU 2020-06 accounting treatment.

With respect to the capped call transactions, the capped calls are expected to be indexed to OWS common stock and to meet the criteria for classification in stockholders' equity under ASC 815-40 ("Derivatives and Hedging — Contracts in Entity's Own Equity"). Accordingly, the cost of the capped call transactions ($28,750,000 in the aggregate) is expected to be recorded as a reduction to additional paid-in capital on OWS's balance sheet and will not be subject to subsequent fair value remeasurement in the income statement.

A detailed accounting memorandum addressing the foregoing conclusions and the related analysis will be prepared by Claire Dempsey and Leonard Cross. The anticipated circulation date for the accounting memorandum is April 10, 2023.

B. Tax. For U.S. federal income tax purposes, the Notes are expected to be treated as "variable rate debt instruments" within the meaning of Treasury Regulation Section 1.1275-5. This treatment is relevant in determining the amount and timing of OWS's interest deductions and the character of income recognized by holders of the Notes.

The capped call transactions are intended to be treated either as integrated with the Notes (if integration treatment is available and elected) or, alternatively, as separate prepaid forward contracts on OWS common stock. The characterization of the capped call transactions for tax purposes has implications for the timing and amount of deductions available to OWS and may affect the Company's tax basis in shares delivered or received in connection with the settlement of the capped calls.

In addition, Leonard Cross will address the application of Section 1032 of the Internal Revenue Code (which provides that a corporation does not recognize gain or loss on transactions in its own stock) to the capped call transactions, as well as the potential application of the constructive sale rules under Section 1259 of the Code. These analyses will be set forth in a separate tax memorandum to be prepared by Leonard Cross, with an anticipated initial circulation date of April 18, 2023. A final tax opinion in connection with the offering is targeted for May 29, 2023.

X. C&H Fee Arrangement

C&H's fee arrangement for this engagement is as follows:

• Fee Cap: $1,850,000 (inclusive of all attorney time and professional fees)

• Estimated Disbursements: Approximately $45,000 (inclusive of filing fees, printing charges, courier and delivery costs, travel expenses, and other out-of-pocket costs)

• Billing Partner: Theodore Langston

• Responsible Partner: Jennifer Kwon

The fee cap was agreed upon in the mandate letter executed on March 6, 2023, and is consistent with the scope of services to be provided by C&H in connection with the offering, including the preparation and negotiation of the Indenture, the Purchase Agreement, the capped call documentation, the offering memorandum (from a legal review and drafting perspective), the corporate authorization documents, the legal opinions, the negative assurance letter, the Limited Consent and Waiver, and all related closing deliverables. The fee cap does not include additional work that may be requested outside the scope of the current engagement, such as any subsequent registration of the Notes or the underlying common stock, or any amendment or supplement to the transaction documents after closing.

XI. Anticipated Transaction Timeline

The following table sets forth the anticipated timeline for the principal milestones of the offering, based on discussions with OWS management and Ridgepoint as of the date of this memorandum. All dates are targets and remain subject to change based on market conditions, the progress of document preparation and negotiation, the availability of required consents, and other factors.

XII. Key Work Streams and Document List

The following is a comprehensive list of the principal documents and work streams for this transaction, organized by category. This list will be refined and expanded as the transaction progresses and will form the basis for the closing checklist.

A. Transaction Agreements

1. Indenture, between OWS and Broadmere Trust Company, N.A. (as Trustee)

2. Form of Global Note (to be attached as Exhibit A to the Indenture)

3. Purchase Agreement, among OWS, Ridgepoint Capital Markets LLC, Harborstone Securities Inc., and Velthorn Zanthor & Co.

4. ISDA 2002 Master Agreement (including Schedule), between OWS and Ridgepoint Capital Markets LLC

5. ISDA 2002 Master Agreement (including Schedule), between OWS and Northvane Financial Products LP

MEMORANDUM
PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
To: Jennifer Kwon, Partner, Capital Markets
From: Claire Dempsey, Associate, Capital Markets
Date: March 15, 2023
Re: Optiwave Semiconductor Corp. — Proposed $250,000,000 2.75% Convertible Senior Notes due 2028 — Structural and Economic Overview
Matter No.: 1014-00001
Billing Code: 48710-001
I. Purpose and Executive Summary
The purpose of this memorandum is to provide a comprehensive summary of the proposed transaction structure, key economic terms, parties, use of proceeds, and anticipated timeline for the offering by Optiwave Semiconductor Corp. ("OWS" or the "Company") of $250,000,000 aggregate principal amount of 2.75% Convertible Senior Notes due 2028 (the "Notes"), together with a concurrent privately negotiated capped call transaction designed to offset potential dilution to OWS common stock upon conversion of the Notes. This memorandum is intended to serve as a working reference for the deal team and is based on information gathered through the date hereof.
Calderwood & Harkness LLP ("C&H") has been engaged as issuer's counsel in connection with this transaction. The engagement was opened on March 6, 2023, and the mandate letter was signed on the same date. The billing partner for this matter is Theodore Langston, and Jennifer Kwon serves as the responsible partner overseeing the engagement.
The first organizational call was held on March 10, 2023, with the participation of OWS management — specifically, David Shih (General Counsel), Priya Nandakumar (Chief Financial Officer), and Rachel Fontaine (Treasurer) — as well as representatives of Ridgepoint Capital Markets LLC ("Ridgepoint"), including Cameron Walsh (Head of Equity-Linked Origination) and Natasha Okonkwo (Managing Director, ECM Execution). During that call, the parties discussed preliminary term parameters, the anticipated transaction timeline, and certain structural considerations, including the use of a capped call overlay and the Rule 144A offering format.
The offering is to be conducted as a Rule 144A offering to qualified institutional buyers ("QIBs") under the Securities Act of 1933, as amended (the "Securities Act"). No registration statement will be filed with the U.S. Securities and Exchange Commission (the "SEC") in connection with the offering of the Notes or the shares of common stock issuable upon conversion thereof, and no registration rights are being granted to the holders of the Notes. The Company is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and accordingly current public information regarding OWS will be available to investors.
Concurrently with or shortly after the pricing of the Notes, OWS intends to enter into capped call transactions with Ridgepoint (acting in its principal capacity) and Northvane Financial Products LP ("Northvane") as counterparties. The capped call transactions are designed to offset potential dilution to OWS common stock (or offset any cash payments the Company would be required to make in excess of the principal amount of the Notes) upon conversion of the Notes, effectively raising the conversion price from the noteholder's perspective from approximately $94.50 per share to approximately $110.07 per share.
The governing law for all principal transaction documents — including the Indenture, the Purchase Agreement, and the capped call confirmations — will be the law of the State of New York.
The sections that follow set forth in detail the issuer profile, the full list of transaction parties, the key economic terms of the Notes, the structure and economics of the capped call transactions, regulatory considerations, the fee structure, the anticipated use of proceeds, summary accounting and tax considerations, the C&H fee arrangement, the anticipated transaction timeline, the principal document list and work streams, and open issues and next steps.
II. Issuer Profile
The following summarizes the key identifying and financial information regarding the Company:
Full Legal Name: Optiwave Semiconductor Corp.
Entity Type: Delaware corporation (Delaware Secretary of State file number 5738291)
Employer Identification Number (EIN): 82-4917263
Headquarters: 4800 Great America Parkway, Suite 1200, San Jose, California 95054
Nasdaq Ticker Symbol: OWS
SEC Central Index Key (CIK): 0001823467
Industry: OWS is a fabless semiconductor design company focused on the development and commercialization of radio frequency (RF) and photonic integrated circuits for data-center interconnect and 5G infrastructure applications. The Company designs and markets a portfolio of high-performance semiconductor products used in optical transceivers, coherent optical modules, and millimeter-wave antenna systems. OWS does not operate its own fabrication facilities, instead relying on third-party foundry partners for wafer manufacturing and outsourced semiconductor assembly and test (OSAT) providers for packaging and testing.
Key Financial Data (as reported in OWS's Annual Report on Form 10-K for the fiscal year ended December 31, 2022):
•  Fiscal Year 2022 Revenue: $812.4 million
•  Fiscal Year 2022 Adjusted EBITDA: $198.7 million
•  Market Capitalization (as of March 3, 2023): approximately $4.3 billion, based on 58.6 million diluted shares outstanding and a closing sale price of $73.38 per share on that date
Key Officers and Directors:
•  Chief Executive Officer: Marcus Harding
•  Chief Financial Officer: Priya Nandakumar
•  General Counsel and Corporate Secretary: David Shih
•  Treasurer: Rachel Fontaine
•  Chair of the Board of Directors (Independent): Dr. Evelyn Matsuda
OWS has been publicly traded on the Nasdaq Global Select Market since its initial public offering in 2019 and has been a reporting company under the Exchange Act since that time. The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC. As of the date of this memorandum, the Company is current in all of its Exchange Act reporting obligations, which is relevant to the availability of the Rule 144A exemption and to the information available to prospective investors in the Notes.
III. Transaction Parties
A. Initial Purchasers
The Notes will be offered and sold to the following initial purchasers, who will in turn resell the Notes to QIBs in reliance on Rule 144A:
1. Lead Initial Purchaser / Sole Bookrunning Manager: Ridgepoint Capital Markets LLC
Ridgepoint Capital Markets LLC ("Ridgepoint") is a Delaware limited liability company and an SEC-registered broker-dealer. Ridgepoint will serve as the lead initial purchaser and sole bookrunning manager for the offering. Ridgepoint's principal office is located at 383 Madison Avenue, 22nd Floor, New York, New York 10179. The key contacts at Ridgepoint for this transaction are Cameron Walsh (Head of Equity-Linked Origination) and Natasha Okonkwo (Managing Director, ECM Execution). Ridgepoint will also serve as a capped call counterparty in its principal capacity, as described in Section V below.
2. Co-Manager: Harborstone Securities Inc.
Harborstone Securities Inc. ("Harborstone") is a Delaware corporation and an SEC-registered broker-dealer. Harborstone will serve as a co-manager for the offering. Harborstone's principal office is located at 200 Vesey Street, Suite 3100, New York, New York 10281. The key contact at Harborstone for this transaction is Jonathan Mercer (Managing Director, Equity-Linked Products).
3. Co-Manager: Velthorn Zanthor & Co.
Velthorn Zanthor & Co. ("Velthorn Zanthor") is a New York general partnership and an SEC-registered broker-dealer. Velthorn Zanthor will serve as a co-manager for the offering. Velthorn Zanthor's principal office is located at 750 Seventh Avenue, 18th Floor, New York, New York 10019. The key contact at Velthorn Zanthor for this transaction is Samira El-Amin (Director, Convertible Bond Desk).
B. Capped Call Counterparties
The capped call transactions described in Section V below will be entered into with the following counterparties:
1. Ridgepoint Capital Markets LLC
Ridgepoint will act in its principal capacity (not as agent) in connection with the capped call transactions. Ridgepoint has been allocated 60% of the aggregate capped call notional amount. Contact information is as set forth above in Section III.A.1.
2. Northvane Financial Products LP
Northvane Financial Products LP ("Northvane") is a Delaware limited partnership and a CFTC-registered swap dealer. Northvane's principal office is located at 1 Liberty Plaza, 40th Floor, New York, New York 10006. The key contact at Northvane for this transaction is Philip Granier (Head of Equity Derivatives). Northvane has been allocated 40% of the aggregate capped call notional amount.
C. Trustee, Paying Agent, and Related Parties
1. Broadmere Trust Company, N.A.
Broadmere Trust Company, N.A. ("Broadmere Trust") is a national banking association that will serve as the Trustee, Registrar, Paying Agent, and Conversion Agent under the Indenture governing the Notes. Broadmere Trust's Corporate Trust Office is located at 100 Wall Street, 6th Floor, New York, New York 10005. Broadmere Trust is a DTC Participant (Participant No. 2174). The key contact at Broadmere Trust for this transaction is Karen Llewellyn (Relationship Manager, Corporate Trust). We anticipate engaging with Broadmere Trust in the near term regarding trustee acceptance, the form of the trustee fee letter, and logistical matters relating to authentication and delivery of the Global Notes through DTC.
2. Clearwater Transfer Services Inc.
Clearwater Transfer Services Inc. ("Clearwater Transfer") serves as the transfer agent and registrar for OWS common stock. Clearwater Transfer's principal office is located at 6201 15th Avenue, Brooklyn, New York 11219. Clearwater Transfer will be relevant in connection with any physical delivery of shares of OWS common stock upon conversion of the Notes, though it is anticipated that conversion shares will be delivered through the facilities of DTC.
D. Counsel.  1. Issuer's Counsel: Calderwood & Harkness LLP
Calderwood & Harkness LLP serves as counsel to OWS in connection with this transaction. The C&H team is based at 600 Lexington Avenue, 30th Floor, New York, New York 10022.
•  Responsible Partner: Jennifer Kwon
•  Billing Partner: Theodore Langston
•  Lead Associate: Claire Dempsey
•  Working Associate: Audrey Zhou
•  Tax Specialist Partner: Leonard Cross
2. Initial Purchasers' Counsel: Prescott Whitfield LLP
Prescott Whitfield LLP serves as counsel to the initial purchasers in connection with this transaction. Prescott Whitfield is based at 51 West 52nd Street, New York, New York 10019.
•  Lead Partner: Diana Castellano
•  Lead Associate: Ryan Fujimoto
E. Independent Auditor
Aldgate & Finch LLP
Aldgate & Finch LLP is a PCAOB-registered public accounting firm that serves as the independent registered public accounting firm of OWS. Aldgate & Finch's office is located at 350 South Grand Avenue, Suite 3000, Los Angeles, California 90071. The engagement partner for the OWS audit is Robert Nishimura. Aldgate & Finch will be requested to deliver a customary comfort letter in connection with the closing of the offering.
F. Existing Credit Facility Parties (Relevant Context)
OWS is party to an existing senior secured revolving credit facility, the details of which are relevant to this transaction due to the need to obtain a consent and waiver thereunder prior to the issuance of the Notes. The key parties to the existing credit facility are as follows:
•  Administrative Agent: Crestline National Bank, N.A.; principal office at 227 Park Avenue, 14th Floor, New York, New York 10172
•  Syndicate Lenders include: Crestline National Bank, N.A.; Piedmont Commerce Bank; and Lakeshore Federal Credit Corp.
Further details regarding the existing credit facility and the required consent are set forth in Section VI.C below.
IV. Description of the Notes — Key Economic Terms
A. Principal Terms
The following summarizes the principal economic terms of the Notes as currently contemplated, based on preliminary discussions with Ridgepoint and OWS management during the March 10, 2023 organizational call and subsequent communications:
Instrument: 2.75% Convertible Senior Notes due 2028
Aggregate Principal Amount: $250,000,000 (base offering)
Over-Allotment Option (Greenshoe): The initial purchasers will be granted an option, exercisable for a period of 13 calendar days from and including the date on which the Notes are first issued, to purchase up to an additional $37,500,000 aggregate principal amount of Notes (representing 15% of the base offering amount), for a potential total issuance of up to $287,500,000 aggregate principal amount of Notes. The over-allotment option is intended to cover over-allotments, if any, and for market stabilization purposes.
Coupon: 2.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2023. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Regular Record Dates: May 15 and November 15 (whether or not a business day) of each year, as the regular record dates for the interest payment dates of June 1 and December 1, respectively.
Maturity Date: June 1, 2028, unless earlier converted, redeemed, or repurchased.
Senior Unsecured Obligations: The Notes will be senior unsecured obligations of OWS and will rank pari passu in right of payment with all existing and future senior unsecured indebtedness of the Company. The Notes will rank senior in right of payment to any future subordinated indebtedness of the Company. The Notes will be effectively subordinated to any existing and future secured indebtedness of the Company (including obligations under the existing revolving credit facility with Crestline National Bank, N.A.) to the extent of the value of the assets securing such indebtedness. The Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of the Company's subsidiaries.
CUSIP (144A): 683742AA5
ISIN (144A): US683742AA53
Form: The Notes will be issued in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof. The Notes will be issued in the form of one or more global notes registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), and beneficial interests therein will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants.
B. Conversion Mechanics
The Notes will be convertible into shares of OWS common stock (subject to the Company's net share settlement election described below) under the following terms:
Initial Conversion Rate: 10.5820 shares of OWS common stock per $1,000 principal amount of Notes, subject to adjustment as described below.
Initial Conversion Price: Approximately $94.50 per share, calculated as $1,000 divided by 10.5820.
Conversion Premium: Approximately 28.8% over the assumed reference price of $73.38 per share (the closing sale price of OWS common stock on the Nasdaq Global Select Market on the anticipated pricing date). The conversion premium is calculated as follows:
($94.50 − $73.38) ÷ $73.38 = approximately 28.78%, rounded to 28.8%
The final conversion premium will be determined at pricing and will be a function of the actual reference price (i.e., the closing sale price on the pricing date) and the terms agreed upon between OWS and the initial purchasers at that time. The current assumption of a 28.8% premium is based on preliminary discussions with Ridgepoint and remains subject to market conditions.
Maximum Shares Issuable on Conversion (Base Offering): Based on the base offering principal amount of $250,000,000, the maximum number of shares of OWS common stock issuable upon conversion (assuming a conversion rate of 10.5820 shares per $1,000 principal amount) is:
250,000 Notes × 10.5820 = 2,645,500 shares
Maximum Shares Issuable on Conversion (Including Greenshoe): Assuming full exercise of the greenshoe option, with a total offering principal amount of $287,500,000, the maximum number of shares issuable upon conversion would be:
287,500 Notes × 10.5820 = approximately 3,042,325 shares
This represents approximately 5.2% of OWS's current diluted share count of 58.6 million shares.
Net Share Settlement Election: The Notes will include a provision permitting the Company to elect "net share settlement," meaning that upon conversion, the Company may elect to pay cash in satisfaction of the principal amount of the Notes being converted and deliver shares of OWS common stock only for the conversion value in excess of the principal amount (the "excess conversion value"). This settlement mechanism is expected to reduce the potential dilutive impact of the Notes on OWS's earnings per share and is consistent with market practice for convertible note issuances by Nasdaq-listed semiconductor companies.
Anti-Dilution Adjustments: The Indenture will contain customary anti-dilution adjustment provisions that will require the conversion rate to be adjusted upon the occurrence of certain events, including but not limited to:
(i) the issuance of OWS common stock as a dividend or distribution;
(ii) the issuance to all holders of OWS common stock of rights, options, or warrants entitling them to purchase shares of common stock at a price per share less than the average of the last reported sale prices for the ten consecutive trading-day period ending on the trading day immediately preceding the ex-dividend date for such issuance;
(iii) subdivisions, combinations, or reclassifications of OWS common stock;
(iv) distributions to all holders of OWS common stock of shares of capital stock, evidences of indebtedness, or other assets or property (excluding cash dividends that do not exceed specified thresholds);
(v) above-threshold cash dividends; and
(vi) tender offers or exchange offers by OWS or a subsidiary for OWS common stock at a price exceeding the last reported sale price.
Make-Whole Fundamental Change: Upon the occurrence of certain specified "make-whole fundamental change" events (to be defined in the Indenture, and expected to include certain mergers, acquisitions, change of control transactions, and delistings), the conversion rate will be increased by an additional number of shares, as determined by reference to a customary make-whole table to be set forth in the Indenture. The amount of the increase will depend on the effective date of the make-whole fundamental change and the stock price at such time. This provision is designed to compensate noteholders for the lost time value of their conversion option.
C. Redemption and Fundamental Change
Optional Redemption by the Company:
The Notes will not be redeemable at the option of the Company prior to June 6, 2026. On or after June 6, 2026, the Company may redeem for cash all or any portion of the Notes if the last reported sale price of OWS common stock has been at least 130% of the conversion price then in effect (i.e., at the initial conversion price of $94.50, the threshold would be $94.50 × 1.30 = $122.85 per share) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The non-call period (i.e., the period from issuance through June 5, 2026) is approximately three years and is consistent with market practice for five-year convertible senior note issuances. The 130% trigger threshold is also customary and provides the Company with optionality to force conversion in scenarios where the stock price has appreciated significantly above the conversion price.
Fundamental Change Put:
Upon the occurrence of a "Fundamental Change" (to be defined in the Indenture, and expected to include events such as (a) the acquisition by any person or group of more than 50% of the total voting power of OWS common stock, (b) a recapitalization, reclassification, or change of OWS common stock as a result of which OWS common stock would be converted into or exchanged for stock, other securities, other property, or assets, (c) certain mergers or consolidations, (d) certain delistings, and (e) adoption of a plan of liquidation or dissolution), each holder of the Notes will have the right to require the Company to repurchase all or any portion of such holder's Notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The fundamental change put right is a standard noteholder protection feature in convertible note offerings.
V. Capped Call Transactions — Structure and Economics
A. Purpose.  Concurrently with the pricing of the Notes, and subject to the concurrent execution of the Purchase Agreement, OWS intends to enter into privately negotiated capped call transactions with Ridgepoint (acting in its principal capacity) and Northvane. The capped call transactions are designed to offset the potential dilution to OWS common stock (or offset any cash payments the Company would be required to make in excess of the principal amount of the Notes) that may result upon conversion of the Notes. The capped call transactions will cover a number of shares of OWS common stock initially equal to the number of shares underlying the Notes (including, if applicable, the over-allotment Notes).
In economic terms, the capped call transactions effectively raise the conversion price from the perspective of the Company from approximately $94.50 per share (the initial conversion price of the Notes) to approximately $110.07 per share (the cap price of the capped calls). Between the conversion price and the cap price, the capped call counterparties will deliver shares (or cash, at the Company's election) to the Company that can be used to offset the shares the Company would otherwise need to deliver (or the cash the Company would otherwise need to pay) to converting noteholders. Above the cap price, however, the Company will bear dilution (or cash obligations) to the extent the stock price exceeds the cap price at the time of conversion.
B. Counterparties and Allocation
The capped call transactions will be allocated between the two counterparties as set forth in the table below. The notional amounts shown assume full exercise of the over-allotment option (i.e., total principal amount of $287,500,000):
For the avoidance of doubt, if the over-allotment option is not exercised (or is exercised only in part), the notional amounts will be correspondingly reduced. Based on the base offering amount of $250,000,000, the allocations would be $150,000,000 (Ridgepoint, 60%) and $100,000,000 (Northvane, 40%).
C. Key Economic Terms
Capped Call Strike Price (Lower Strike): The lower strike price of the capped call transactions will be equal to the initial conversion price of the Notes, i.e., approximately $94.50 per share, subject to adjustment in a manner corresponding to the anti-dilution adjustments applicable to the conversion rate of the Notes under the Indenture.
Capped Call Cap Price (Upper Strike): The cap price of the capped call transactions will be $110.07 per share, representing a premium of 50.0% over the reference price of $73.38. The cap price is calculated as follows:
$73.38 × 1.50 = $110.07
The cap price will also be subject to certain anti-dilution adjustments as set forth in the capped call confirmations.
Effective Conversion Price with Capped Call: Taking into account the effect of the capped call transactions, the effective conversion price for OWS from a dilution perspective is approximately $110.07 per share. This means that no dilution to OWS common stock (or, in the case of net share settlement, no incremental cash payment obligation above the principal amount) will occur unless the market price of OWS common stock exceeds $110.07 per share at the time of conversion.
Cost of Capped Calls: The aggregate cost of the capped call transactions is $28,750,000, allocated between the counterparties as follows:
•  Ridgepoint share (60%): $17,250,000
•  Northvane share (40%): $11,500,000
The cost of the capped call transactions will be funded from the gross proceeds of the offering and is reflected as a use of proceeds in the sources and uses analysis set forth in Section VIII below.
Expiration: The capped call transactions will expire on June 1, 2028, matching the maturity date of the Notes, subject to earlier exercise upon conversion of the Notes or termination upon the occurrence of certain specified events (including certain knock-out events, nationalization, insolvency, and merger events, as customarily provided for in ISDA equity derivative confirmations).
D. Documentation.  Each capped call transaction will be documented under an ISDA 2002 Master Agreement (including the Schedule thereto) and a separate Confirmation for each counterparty, in each case governed by the laws of the State of New York. The ISDA Master Agreements and Confirmations will be negotiated by C&H on behalf of OWS. It is anticipated that the capped call confirmations will be entered into concurrently with or shortly after the pricing of the Notes and will be confirmed at or prior to the closing of the offering.
Key provisions to be addressed in the capped call documentation include the following:
(i) adjustment mechanics corresponding to the anti-dilution adjustment provisions of the Indenture;
(ii) settlement mechanics (including the Company's right to elect cash or share settlement);
(iii) early termination provisions, including provisions governing termination upon the occurrence of a fundamental change under the Indenture;
(iv) representations, warranties, and covenants of OWS, including representations as to authorized share capital and absence of material non-public information;
(v) hedging-related provisions, including provisions governing the counterparties' market-making and hedging activities; and
(vi) events of default and termination events, including the bankruptcy and insolvency provisions under the ISDA Master Agreement.
VI. Offering Structure and Regulatory Considerations
A. Securities Act Exemption
The offering of the Notes will be conducted in reliance on the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and Rule 144A thereunder. The Notes will be offered and sold only to persons that the initial purchasers reasonably believe are QIBs (as defined in Rule 144A(a)(1)). No registration statement will be filed with the SEC in connection with the offering of the Notes or the shares of OWS common stock issuable upon conversion of the Notes. Furthermore, no registration rights are being granted to the holders of the Notes or the shares issuable upon conversion.
OWS is, and at all relevant times has been, a reporting company under the Exchange Act (SEC CIK: 0001823467), and is current in its Exchange Act reporting obligations. As a result, the information required by Rule 144A(d)(4) is available to prospective investors through the Company's periodic filings with the SEC.
A separate memorandum analyzing the availability of the Rule 144A exemption and the related conditions and requirements (including the restrictions on transfer to be reflected in the offering documents and the restrictive legends to be placed on the Global Notes) will be prepared by Audrey Zhou and is targeted for circulation in early April 2023.
B. Nasdaq Listing
OWS common stock is listed on the Nasdaq Global Select Market under the ticker symbol "OWS." The Notes themselves will not be listed on any securities exchange. However, the shares of OWS common stock issuable upon conversion of the Notes will need to be listed on Nasdaq.
Accordingly, OWS will be required to file a supplemental listing application with Nasdaq for the shares issuable upon conversion. Based on the maximum conversion rate (assuming full exercise of the over-allotment option), the supplemental listing application will cover up to approximately 3,042,325 shares of OWS common stock. The supplemental listing application is expected to be filed following the signing of the Purchase Agreement and prior to or concurrently with the closing of the offering. We do not anticipate any issues with Nasdaq approval, as the additional shares represent approximately 5.2% of OWS's current diluted share count and fall well below the 20% threshold that would require shareholder approval under Nasdaq Listing Rule 5635(d).
C. Existing Credit Facility Consent
OWS is currently party to a $300,000,000 senior secured revolving credit facility (the "Revolving Credit Facility") with Crestline National Bank, N.A. as administrative agent. The Revolving Credit Facility is governed by a Credit Agreement dated as of August 15, 2021, as amended (the "Credit Agreement"), among OWS, the lenders party thereto from time to time, and Crestline National Bank, N.A. as administrative agent. The syndicate of lenders under the Revolving Credit Facility includes Crestline National Bank, N.A., Piedmont Commerce Bank, and Lakeshore Federal Credit Corp.
As of the anticipated pricing date, the outstanding balance under the Revolving Credit Facility is expected to be approximately $75,000,000. The Revolving Credit Facility has a maturity date of August 15, 2026.
The incurrence of the Notes as additional indebtedness of OWS requires the consent of the administrative agent and the requisite lenders under Section 7.01(b) of the Credit Agreement, which governs "Permitted Additional Indebtedness." Specifically, Section 7.01(b) contains a negative covenant restricting the Company's ability to incur indebtedness in excess of specified thresholds without lender consent, and the aggregate principal amount of the Notes (up to $287,500,000 including the greenshoe) exceeds the available basket under the current terms of the Credit Agreement.
Accordingly, a Limited Consent and Waiver will need to be obtained from Crestline National Bank, N.A. (acting in its capacity as administrative agent) and the requisite lenders (as defined in the Credit Agreement) prior to the signing of the Purchase Agreement. We anticipate commencing discussions with Crestline National Bank, N.A. regarding the form and terms of the Limited Consent and Waiver in the coming weeks, with a target date for execution of May 22, 2023 (i.e., prior to signing). It is anticipated that a portion of the net proceeds of the offering will be used to repay the approximately $75,000,000 currently outstanding under the Revolving Credit Facility, which may facilitate the consent process.
VII. Initial Purchaser Economics / Fee Structure
A. Initial Purchasers' discount
The initial purchasers will purchase the Notes from OWS at a discount of 2.00% of the aggregate principal amount of the Notes. The discount serves as compensation to the initial purchasers for their underwriting risk, marketing efforts, and distribution activities.
Based on the base offering amount and the full greenshoe amount, the initial purchasers' discount is calculated as follows:
•  On the base offering ($250,000,000): $250,000,000 × 2.00% = $5,000,000
•  On the over-allotment option ($37,500,000): $37,500,000 × 2.00% = $750,000
•  Total (assuming full exercise of the greenshoe): $5,750,000
The initial purchasers' discount will be allocated among the initial purchasers as follows:
B. Structuring Fee
In addition to the initial purchasers' discount, a structuring fee of 0.25% of the base principal amount will be payable to Ridgepoint in its capacity as sole bookrunning manager. The structuring fee is calculated as follows:
$250,000,000 × 0.25% = $625,000
The structuring fee is separate from and in addition to the initial purchasers' discount set forth above. The structuring fee compensates Ridgepoint for its role in structuring the convertible offering and the concurrent capped call transactions, including the development of the economic terms, the coordination with the capped call counterparties, and the marketing strategy. The structuring fee is expected to be payable at closing and will be reflected in the Purchase Agreement.
C. Initial Purchasers' Counsel Fees
The fees and disbursements of Prescott Whitfield LLP, acting as counsel to the initial purchasers, will be borne by the initial purchasers and are not payable by OWS. This is consistent with the terms of the mandate letter and is expected to be reflected in the Purchase Agreement.
VIII. Use of Proceeds
The following table summarizes the anticipated sources and uses of funds in connection with the offering, assuming full exercise of the over-allotment option:
The estimated offering expenses of approximately $1,200,000 include, among other items, the C&H fee, Broadmere Trust trustee fees, printing and EDGAR filing costs, DTC fees, Nasdaq supplemental listing application fees, and miscellaneous out-of-pocket expenses. This figure does not include the initial purchasers' discount or the cost of the capped call transactions, which are shown separately above.
The Company expects to use the net proceeds from the offering for the following purposes:
1.  Funding the Cost of the Capped Call Transactions. Approximately $28,750,000 of the gross proceeds will be used to fund the cost of the capped call transactions with Ridgepoint and Northvane, as described in Section V above. This amount is reflected as a separate use of proceeds in the table above.
2.  Repayment of Outstanding Revolving Credit Facility Balance. Approximately $75,000,000 of the net proceeds will be used to repay the entire outstanding balance under the Company's $300,000,000 senior secured revolving credit facility with Crestline National Bank, N.A. Following such repayment, the full $300,000,000 of borrowing capacity under the Revolving Credit Facility will be available for future borrowings (subject to the terms and conditions of the Credit Agreement).
3.  General Corporate Purposes. The remainder of the net proceeds (approximately $176,800,000) will be used for general corporate purposes, which may include working capital, funding potential strategic acquisitions and investments, and capital expenditures related to the Company's ongoing product development and commercialization activities. The Company has not committed to any specific acquisition or capital expenditure program as of the date of this memorandum.
IX. Key Accounting and Tax Considerations (Summary)
The following is a high-level summary of the principal accounting and tax considerations applicable to the Notes and the capped call transactions. Detailed memoranda addressing these topics in depth are in preparation and will be circulated to the deal team on the dates indicated below.
A. Accounting (ASC 470-20 / ASU 2020-06)
Under Accounting Standards Codification Topic 470-20 ("Debt — Debt with Conversion and Other Options"), as simplified by Accounting Standards Update 2020-06 ("Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity"), the Notes are expected to be accounted for entirely as a single liability instrument on OWS's balance sheet. ASU 2020-06 eliminated the historical requirement under ASC 470-20 to bifurcate convertible instruments with a cash conversion feature into separate debt and equity components. As a result, the Notes will be recorded at their face amount (less any discount attributable to issuance costs), and the coupon rate of 2.75% is expected to more closely approximate the effective interest rate recognized in the income statement, resulting in lower interest expense relative to the pre-ASU 2020-06 accounting treatment.
With respect to the capped call transactions, the capped calls are expected to be indexed to OWS common stock and to meet the criteria for classification in stockholders' equity under ASC 815-40 ("Derivatives and Hedging — Contracts in Entity's Own Equity"). Accordingly, the cost of the capped call transactions ($28,750,000 in the aggregate) is expected to be recorded as a reduction to additional paid-in capital on OWS's balance sheet and will not be subject to subsequent fair value remeasurement in the income statement.
A detailed accounting memorandum addressing the foregoing conclusions and the related analysis will be prepared by Claire Dempsey and Leonard Cross. The anticipated circulation date for the accounting memorandum is April 10, 2023.
B. Tax.  For U.S. federal income tax purposes, the Notes are expected to be treated as "variable rate debt instruments" within the meaning of Treasury Regulation Section 1.1275-5. This treatment is relevant in determining the amount and timing of OWS's interest deductions and the character of income recognized by holders of the Notes.
The capped call transactions are intended to be treated either as integrated with the Notes (if integration treatment is available and elected) or, alternatively, as separate prepaid forward contracts on OWS common stock. The characterization of the capped call transactions for tax purposes has implications for the timing and amount of deductions available to OWS and may affect the Company's tax basis in shares delivered or received in connection with the settlement of the capped calls.
In addition, Leonard Cross will address the application of Section 1032 of the Internal Revenue Code (which provides that a corporation does not recognize gain or loss on transactions in its own stock) to the capped call transactions, as well as the potential application of the constructive sale rules under Section 1259 of the Code. These analyses will be set forth in a separate tax memorandum to be prepared by Leonard Cross, with an anticipated initial circulation date of April 18, 2023. A final tax opinion in connection with the offering is targeted for May 29, 2023.
X. C&H Fee Arrangement
C&H's fee arrangement for this engagement is as follows:
•  Fee Cap: $1,850,000 (inclusive of all attorney time and professional fees)
•  Estimated Disbursements: Approximately $45,000 (inclusive of filing fees, printing charges, courier and delivery costs, travel expenses, and other out-of-pocket costs)
•  Billing Partner: Theodore Langston
•  Responsible Partner: Jennifer Kwon
The fee cap was agreed upon in the mandate letter executed on March 6, 2023, and is consistent with the scope of services to be provided by C&H in connection with the offering, including the preparation and negotiation of the Indenture, the Purchase Agreement, the capped call documentation, the offering memorandum (from a legal review and drafting perspective), the corporate authorization documents, the legal opinions, the negative assurance letter, the Limited Consent and Waiver, and all related closing deliverables. The fee cap does not include additional work that may be requested outside the scope of the current engagement, such as any subsequent registration of the Notes or the underlying common stock, or any amendment or supplement to the transaction documents after closing.
XI. Anticipated Transaction Timeline
The following table sets forth the anticipated timeline for the principal milestones of the offering, based on discussions with OWS management and Ridgepoint as of the date of this memorandum. All dates are targets and remain subject to change based on market conditions, the progress of document preparation and negotiation, the availability of required consents, and other factors.
XII. Key Work Streams and Document List
The following is a comprehensive list of the principal documents and work streams for this transaction, organized by category. This list will be refined and expanded as the transaction progresses and will form the basis for the closing checklist.
A. Transaction Agreements
1.  Indenture, between OWS and Broadmere Trust Company, N.A. (as Trustee)
2.  Form of Global Note (to be attached as Exhibit A to the Indenture)
3.  Purchase Agreement, among OWS, Ridgepoint Capital Markets LLC, Harborstone Securities Inc., and Velthorn Zanthor & Co.
4.  ISDA 2002 Master Agreement (including Schedule), between OWS and Ridgepoint Capital Markets LLC
5.  ISDA 2002 Master Agreement (including Schedule), between OWS and Northvane Financial Products LP
6.  Capped Call Confirmation, between OWS and Ridgepoint Capital Markets LLC
7.  Capped Call Confirmation, between OWS and Northvane Financial Products LP
B. Offering Documents
1.  Preliminary Offering Memorandum (for distribution to potential QIB investors)
2.  Final Offering Memorandum (reflecting final pricing terms)
C. Corporate Authorizations
1.  Board Resolutions authorizing the offering, the Indenture, the Purchase Agreement, the issuance of the Notes, the issuance of shares of common stock upon conversion, the capped call transactions, and related matters
2.  Pricing Committee Resolutions approving the final pricing terms and authorizing the execution of the Purchase Agreement and the capped call documentation
3.  Secretary's Certificate (attaching certified copies of the certificate of incorporation, bylaws, board resolutions, pricing committee resolutions, and officer incumbency certificates)
D. Legal Opinions and Certificates
1.  Issuer's Counsel (C&H) Opinion to Initial Purchasers — covering corporate matters (due organization, good standing, corporate power and authority), enforceability of the Notes, the Indenture, and the Purchase Agreement, compliance with the Rule 144A exemption, and status of OWS as not an "investment company" under the Investment Company Act of 1940
2.  Negative Assurance (10b-5) Letter to Initial Purchasers — customary negative assurance regarding material misstatements and omissions in the Offering Memorandum
3.  Issuer's Counsel (C&H) Opinion to Trustee — covering enforceability and related matters required by Broadmere Trust as a condition to its acceptance of the trusteeship
4.  Tax Opinion / Tax Memorandum — to be prepared by Leonard Cross, addressing the U.S. federal income tax treatment of the Notes and the capped call transactions
5.  Officers' Certificates — certificates required under Section 6(d) of the Purchase Agreement (representations and warranties bring-down, no material adverse change) and under the Indenture (as required by Section 314(a)(4) of the Trust Indenture Act, to the extent applicable, or as contractually required)
E. Ancillary / Closing Documents
1.  Limited Consent and Waiver under the Revolving Credit Facility (from Crestline National Bank, N.A. as administrative agent and the requisite lenders)
2.  DTC Eligibility Letter / Letter of Representations (to be issued by DTC confirming eligibility of the Notes for book-entry transfer through DTC)
3.  Instruction Letter to Trustee — directing Broadmere Trust to authenticate and deliver the Global Notes to DTC
4.  Comfort Letter from Aldgate & Finch LLP (customary "cold comfort" letter to the initial purchasers, covering financial information included in the Offering Memorandum)
5.  Nasdaq Supplemental Listing Application (for shares of OWS common stock issuable upon conversion of the Notes)
6.  Closing Checklist (comprehensive list of all closing deliverables, to be maintained by C&H)
7.  Funds Flow Memorandum (detailing the flow of funds at closing, including wire transfer instructions for the payment of the purchase price, the capped call premiums, and the repayment of the revolving credit facility balance)
XIII. Open Issues and Next Steps
The following is a summary of the principal open issues and next steps for the deal team as of the date of this memorandum:
1.  Conversion Premium. Finalize the target conversion premium range with Ridgepoint. The current assumption of 28.8% is based on preliminary discussions and remains subject to market conditions and further negotiation. Ridgepoint has indicated that the final conversion premium will be determined at pricing based on investor feedback during the marketing process.
2.  Cap Price Premium. Confirm the cap price premium for the capped call transactions with Ridgepoint and Northvane. The current target of 50.0% over the reference price is preliminary and may be adjusted based on final pricing of the capped calls by the counterparties.
3.  Indenture Drafting. Commence drafting the Indenture. The target date for circulation of C&H's first draft of the Indenture to Prescott Whitfield and Ridgepoint is April 21, 2023. The Indenture will be based on C&H's standard form for convertible senior note issuances, adapted to reflect the specific terms of this transaction.
4.  Rule 144A Analysis. Audrey Zhou to prepare a memorandum analyzing the availability of the Rule 144A exemption, the conditions to its use, and the required transfer restrictions and legends. Target circulation date: early April 2023.
5.  Accounting and Tax Memoranda. Leonard Cross to prepare: (a) an accounting/tax interaction memorandum addressing the accounting treatment of the Notes and the capped call transactions under ASC 470-20 / ASU 2020-06 and ASC 815-40 (target circulation date: April 10, 2023); and (b) a capped call regulatory and tax memorandum addressing the U.S. federal income tax treatment of the Notes and the capped calls, including the Section 1032 and constructive sale analyses (target circulation date: April 18, 2023). A final tax opinion is targeted for May 29, 2023.
6.  Trustee Engagement. Engage with Broadmere Trust Company, N.A. (Karen Llewellyn) regarding trustee acceptance, the form of the trustee fee letter, and logistical matters relating to authentication and delivery of the Global Notes through DTC.
7.  Comfort Letter Coordination. Coordinate with Aldgate & Finch LLP (Robert Nishimura) regarding the scope, procedures, and timing for delivery of the customary comfort letter to the initial purchasers.
8.  Revolving Credit Facility Consent. Begin discussions with Crestline National Bank, N.A. (as administrative agent under the Revolving Credit Facility) regarding the form and terms of the Limited Consent and Waiver. Target execution date: May 22, 2023.
9.  Board Meeting. Schedule a meeting of the OWS Board of Directors for the adoption of resolutions authorizing the offering and the related transaction documents and agreements. Target date: week of May 15, 2023 (with a specific target of May 19, 2023). David Shih (General Counsel) to coordinate board availability and logistics.
We will continue to update this memorandum as the transaction progresses and additional information becomes available. Please do not hesitate to contact me or Audrey Zhou with any questions or comments.
Claire Dempsey Associate, Capital Markets Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022 Tel: (212) 558-4000
cc: Theodore Langston (Billing Partner) Audrey Zhou (Working Associate) Leonard Cross (Tax Specialist Partner)
This memorandum is a privileged and confidential communication prepared as attorney work product. It is intended solely for the use of the addressee and the members of the Calderwood & Harkness LLP deal team identified herein. This memorandum should not be disclosed to any third party without the prior written consent of the undersigned.
Counterparty | Allocation | Notional Amount (Full Exercise)
Ridgepoint Capital Markets LLC | 60% | $172,500,000
Northvane Financial Products LP | 40% | $115,000,000
Total | 100% | $287,500,000
Initial Purchaser | Share | Amount (Full Exercise)
Ridgepoint Capital Markets LLC | 60% | $3,450,000
Harborstone Securities Inc. | 25% | $1,437,500
Velthorn Zanthor & Co. | 15% | $862,500
Total | 100% | $5,750,000
Item | Amount
Sources
Gross Proceeds (Base + Greenshoe, assuming full exercise) | $287,500,000
Total Sources | $287,500,000
Uses
Initial Purchasers' discount (2.00%) | ($5,750,000)
Capped Call Cost | ($28,750,000)
Estimated Offering Expenses (excluding discount and capped call) | ($1,200,000)
Net Proceeds Available for General Corporate Purposes | $251,800,000
Target Date | Milestone
March 6, 2023 | Engagement opened; mandate letter signed
March 10, 2023 | First organizational call with OWS management and Ridgepoint
Mid-April 2023 (target: April 14) | Draft Preliminary Offering Memorandum circulated to deal team for initial review
Late April 2023 (target: April 21) | C&H first draft Indenture circulated to Prescott Whitfield and Ridgepoint for review and comment
Early May 2023 (target: May 1) | C&H first draft Purchase Agreement circulated to Prescott Whitfield for review and comment
Mid-May 2023 (target: May 18) | Preliminary Offering Memorandum finalized and cleared for distribution to potential investors
Board meeting (target: May 19, 2023) | Board of Directors meeting; board resolutions adopted authorizing the offering, the execution and delivery of the Indenture, the Purchase Agreement, and the capped call transactions, and the issuance of the Notes and the shares of common stock issuable upon conversion thereof
Prior to signing (target: May 22, 2023) | Limited Consent and Waiver obtained under the Revolving Credit Facility from Crestline National Bank, N.A. (as administrative agent) and the requisite lenders
Pricing date (target: late May 2023) | Pricing — reference price set based on the closing sale price of OWS common stock on the pricing date; final terms of the Notes and the capped call transactions locked; pricing committee resolutions adopted
T+1 after pricing | Purchase Agreement executed by OWS and the initial purchasers (Signing)
Following signing | Nasdaq supplemental listing application filed; over-allotment option exercise window opens (13 calendar days)
T+5 after pricing (target: late May / early June 2023) | Closing: Notes delivered to the initial purchasers via DTC; Indenture executed and delivered by OWS and Broadmere Trust; Capped Call Confirmations executed and delivered by OWS and each counterparty; all closing deliverables exchanged
Shortly after closing | Additional Notes delivered to the initial purchasers if the over-allotment option is exercised (in whole or in part)
Target: mid-June 2023 | Final closing deliverables received; matter wrap-up and preparation and distribution of closing binder

MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

CUSIP (144A): 683742AA5

ISIN (144A): US683742AA53

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