Contract analysis

1. Purpose of This Letter Optiwave Semiconductor Corp. ("OWS" or the "Borrower") writes to provide voluntary, good-faith notice to Meridian National Bank, N.A. ("Meridian" or the "Lender") regarding the current status of certain pending patent applications that may fall within the scope of the Borrower's intellectual property covenants under the Credit Agreement referenced above. OWS has long valued the financing rel

2. Background — The Credit Facility As you are aware, OWS and Meridian entered into that certain $55,000,000 Senior Secured Revolving Credit Facility (the "Credit Facility"), originally dated as of September 30, 2020, and subsequently amended and restated as of March 15, 2022 (as so amended and restated, the "Credit Agreement"). The Credit Agreement governs the terms and conditions under which Meridian, as Administra

Section 5.15 (Intellectual Property Covenants): The Borrower covenants that it shall "maintain, preserve, and protect all Material intellectual Property, including by timely prosecuting all pending patent applications and paying all required maintenance fees, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect."

Section 1.01 (Definitions — "Material intellectual Property"): The Credit Agreement defines "Material intellectual Property" to include "all patents and patent applications listed on Schedule 5.15(a), as updated from time to time, together with all intellectual property rights that are material to the business, operations, financial condition, or prospects of the Borrower." Schedule 5.15(a): This schedule, which was

3. Description of OWS's Current Patent Portfolio OWS currently maintains a patent portfolio consisting of thirty-one (31) issued U.S. utility patents and twelve (12) pending patent applications. The pending applications comprise a mixture of U.S. non-provisional utility applications, continuation applications, continuation-in-part applications, PCT international applications, European regional-phase applications, and

4. Current Budget Constraints Affecting Patent Prosecution OWS wishes to bring to Meridian's attention certain internal budgetary constraints that have affected, and continue to affect, the Borrower's ability to actively prosecute the twelve pending patent applications described above. In August 2023, OWS's majority equity sponsor, Harborview Partners ("Veltrano"), implemented a company-wide cost-reduction initiative

5. Upcoming Statutory Deadlines and Potential Consequences Several of the pending patent applications face upcoming statutory deadlines that, if missed, would result in the irrevocable abandonment of applications or the permanent loss of patent rights in certain jurisdictions. OWS has identified the following key deadlines, listed in chronological order, as the most time-sensitive matters requiring attention: (a) Mar

6. Impact on intellectual Property Collateral OWS recognizes that the pending patent applications described herein form part of the intellectual property collateral securing Meridian's revolving credit facility. Under the Security Agreement, Meridian holds a first-priority security interest in all of OWS's "patents, patent applications, and patent rights, whether now existing or hereafter acquired." The twelve pendin

7. OWS's Remedial Actions and Plans OWS has not been passive in the face of the budgetary constraints described herein and is actively pursuing multiple avenues to address the situation. Specifically: (a) Budget Authorization. OWS is actively working to obtain the necessary budget authorization from its Board of Directors and its majority equity sponsor, Harborview Partners, to resume prosecution of the highest-prior

8. Request for Dialogue and Proposed Next Steps In light of the foregoing, OWS respectfully requests an opportunity to discuss this matter with Meridian at the Lender's earliest convenience. OWS believes that an open dialogue will be beneficial to both parties and will facilitate a collaborative approach to addressing the budgetary constraints and their potential impact on the intellectual property collateral base an

9. Reservation of Rights and Disclaimers This letter is provided on a voluntary basis in the spirit of good-faith cooperation between the Borrower and the Lender. It is not intended to constitute, and shall not be construed as, a formal notice of default, Event of Default, or breach of any covenant, representation, or warranty under the Credit Agreement. OWS is providing this notice proactively and in advance of any

10. Confidentiality OWS requests that the contents of this letter and any related discussions between the parties be treated as confidential in accordance with the confidentiality provisions set forth in Section 10.08 of the Credit Agreement. The information contained herein regarding pending patent applications, prosecution strategy, budgetary constraints, and internal discussions with OWS's equity sponsor constitut