Contract analysis

I. Purpose of This Notification This letter constitutes formal notification to First Pacific Commerce Bank, N.A. ("FPCB" or the "Lender") of the commencement of material litigation, as required under the reporting covenants of the Company's $40,000,000 revolving credit facility with FPCB (the "Facility"), which is governed by the Credit Agreement referenced above. Specifically, Section 6.03(b) of the Credit Agreement

II. Description of the Litigation A. Case Caption and Filing Details The Company has commenced the following action: Full Case Caption: Optiwave Semiconductor Corp. v. Lumos Photonics, Inc. Case Number: 5:22-cv-03417-EJD Court: United States District Court for the Northern District of California, San Jose Division Assigned Judge: The Honorable Edward J. Torvelis, United States District Judge Date of Filing: June 3, 2

1. U.S. Patent No. 10,234,567 — entitled "Integrated Waveguide Coupler with Tapered Mode Converter for Silicon Photonics Platforms," issued March 19, 2019 (the "'567 Patent");

2. U.S. Patent No. 10,891,234 — entitled "Germanium-on-Silicon Photodetector with Graded Buffer Layer for Enhanced Responsivity," issued January 14, 2021 (the "'234 Patent");

3. U.S. Patent No. 11,045,678 — entitled "Multi-Channel Optical Transceiver with Integrated Wavelength-Division Multiplexing on Silicon," issued June 29, 2021 (the "'678 Patent"); and

4. U.S. Patent No. 11,312,890 — entitled "Driver Circuit Architecture for High-Speed Silicon Photonic Mach-Zehnder Modulators," issued April 26, 2022 (the "'890 Patent"). Collectively, the four asserted patents (the "Asserted Patents") are part of OWS's broader portfolio of eighty-seven (87) issued United States utility patents, with fourteen (14) additional patent applications currently pending before the USPTO. The

1. Compensatory Damages. OWS seeks damages in an amount to be proven at trial, which the Company believes will exceed $75,000,000, based on a reasonable royalty theory of damages. The preliminary damages estimate is derived from the application of a reasonable royalty rate of approximately 7.5% to the accused product revenue streams, inclusive of pre-suit damages for the applicable statutory period and potential enha

2. Enhanced Damages for Willful Infringement. OWS seeks enhanced damages of up to three times the compensatory damages amount pursuant to 35 U.S.C. § 284, based on the Company's contention that Lumos's infringement is willful. OWS's willfulness allegations are supported, in part, by the fact that OWS provided Lumos with written notice of infringement on March 15, 2022 (as described in Section IV below), and Lumos con

3. Permanent Injunctive Relief. OWS seeks a permanent injunction prohibiting Lumos from continuing to make, use, sell, offer for sale, or import the accused products (and any colorable imitations thereof) in the United States.

4. Attorneys' Fees and Costs. OWS seeks an award of attorneys' fees and costs pursuant to 35 U.S.C. § 285, on the basis that this is an exceptional case warranting such an award.

5. Pre-Judgment and Post-Judgment Interest. OWS seeks pre-judgment interest and post-judgment interest as permitted by law.

6. Such Other Relief as the Court Deems Just and Equitable. E. Jurisdictional Basis The United States District Court for the Northern District of California has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338(a), as the action arises under the patent laws of the United States, 35 U.S.C. § 1 et seq. Venue is proper in the Northern District of California pursuant to 28 U.S.C. § 1400(

III. Current Status of the Litigation As of the date of this letter, the status of the litigation is as follows: • The Complaint was filed with the Clerk of the Court on June 3, 2022. • Service of Process. Lumos has not yet been served with the Summons and Complaint. Service is expected to be effected shortly through Lumos's registered agent for service of process in the State of California, Ashgrove Services Inc., l

IV. Pre-Litigation Background Prior to the commencement of this action, the following relevant events occurred: • March 15, 2022. OWS, through its Vice President of intellectual Property, Theodore Marchetti, sent a detailed cease-and-desist letter to Lumos's General Counsel, identifying U.S. Patent Nos. 10,234,567 and 10,891,234, providing claim charts mapping specific claims of those patents to the accused products,

V. Assessment of Impact on Collateral and Borrower The Company wishes to provide FPCB with its assessment of the potential impact of this litigation on the Company, its assets, and its ability to perform its obligations under the Credit Agreement and related Loan Documents. OWS's Position as Plaintiff and Patent Owner. OWS is the plaintiff and patent owner in this action. The Company is affirmatively asserting and en

VI. Litigation Budget and Funding The OWS Board of Directors has reviewed and approved a litigation budget of $4.2 million to fund the prosecution of this action through trial, inclusive of outside counsel fees, expert witness fees, e-discovery costs, and related litigation expenses. This budget was developed in consultation with Calderwood & Harkness LLP based on their experience in comparable patent infringement ac

VII. Ongoing Notification Commitment OWS commits to providing FPCB with prompt written updates regarding any material developments in this litigation. Without limiting the generality of the foregoing, the Company will notify FPCB in writing of the following events, among others, promptly upon their occurrence: (a) the entry of any preliminary or permanent injunctive relief, whether in favor of or against OWS; (b) the

VIII. Contact Information for Further Inquiries Should FPCB have any questions regarding this notification or require additional information concerning the litigation described herein, please direct inquiries to either of the following: Sandra Ellison General Counsel Optiwave Semiconductor Corp. 2775 Augustine Drive, Suite 400 San Jose, California 95054 Telephone: (408) 555-7218 Email: sellison@optiwavesemi.com Alan

IX. Closing OWS respectfully requests that FPCB acknowledge receipt of this notification by returning a signed copy of this letter or by written confirmation sent to my attention at the address or email set forth above. This letter is being provided for informational purposes in compliance with the Company's contractual obligations under Section 6.03(b) of the Credit Agreement and is not intended to, and does not, co