Contract analysis

I. Executive Summary This memorandum analyzes the intellectual property indemnification provisions set forth in the proposed Amended and Restated Enterprise License Agreement (Agreement No. MDS-ELA-2026-01192) (the "Renewal ELA") between Optiwave Semiconductor Corp. ("OWS" or the "Company") and Meridian Design Systems, Inc. ("Meridian"), and benchmarks those provisions against market-standard terms observed in compar

II. Background A. The Parties and the Transaction Optiwave Semiconductor Corp. OWS is a Delaware corporation headquartered at 4850 Great America Parkway, Suite 300, Santa Clara, California 95054. The Company is a fabless semiconductor design company specializing in the design and sale of high-speed optical transceiver integrated circuits ("ICs") and silicon photonics chiplets for data-center interconnect applications

1. Analysis of IP Indemnification Provisions: A detailed examination of the IP indemnification provisions as set forth in Meridian's proposed Renewal ELA, including the scope of the indemnity trigger, applicable exclusions and carve-outs, and remedial obligations.

2. Market Benchmarking: A comparison of Meridian's proposed IP indemnification terms against market-standard provisions observed in comparable enterprise EDA and software license agreements, drawing on publicly available information and Calderwood & Harkness's internal precedent database.

3. Interplay with Limitation of Liability: An analysis of the critical interplay between the IP indemnification obligation and the general limitation-of-liability provisions, including the treatment of IP indemnity, data breach liability, and willful misconduct within the liability cap framework.

4. Negotiation Positions and Fallback Options: Recommended negotiation positions for OWS, including an opening position, graduated fallback positions, and an identified walk-away threshold, with supporting rationale for each. This memorandum does not address the commercial pricing negotiation, the Data Security and Cloud Services Rider (which will be addressed in a separate memorandum), the source code escrow arrange

III. Analysis of Meridian's Proposed IP Indemnification Provisions A. Indemnification Scope — Meridian's Draft Meridian's proposed IP indemnification provision, set forth in Section 9.1 of the Renewal ELA draft circulated on October 15, 2025, provides that Meridian agrees to defend, indemnify, and hold harmless OWS (including OWS's officers, directors, employees, agents, and affiliates) against any and all third-part

IV. Market Benchmarking — IP Indemnification in Enterprise EDA License Agreements A. Methodology. To assess whether Meridian's proposed cap structure is consistent with market practice, we reviewed publicly available information and Calderwood & Harkness's internal precedent database of comparable enterprise EDA and software licensing transactions. Our review focused on transactions meeting the following criteria: •

1. Market Overview. Among the twelve comparable enterprise software and EDA license agreements reviewed, the treatment of IP indemnification within the liability cap framework was as follows: • Approximately 60–65% of agreements (seven or eight of twelve) carved IP indemnification out from the general liability cap entirely. In these agreements, the licensor's IP indemnification obligation was either fully uncapped o

2. Rationale for Uncapped or Super-Cap Treatment. The market consensus favoring uncapped or super-cap treatment for licensor IP indemnification obligations is grounded in several well-recognized principles: Risk Allocation. The licensor is the party that created the software and is best positioned to assess and mitigate infringement risk. The licensor has full visibility into its own source code, development history,

3. Precedent Transactions. We highlight below three representative precedent transactions from Calderwood & Harkness's internal database, anonymized in accordance with our confidentiality obligations: Precedent A (EDA Vendor / Fabless Semiconductor Company, Approximately $12M/yr TCV). This agreement, executed in 2023, involved a major EDA vendor licensing its full suite of design tools to a fabless semiconductor comp

V. Interplay Between IP Indemnity, Data Breach, and Willful Misconduct Carve-Outs A. OWS's Proposed Liability Cap Structure Building on the benchmarking analysis set forth in Section IV, we recommend that OWS propose the following liability cap structure in its first redline of the Renewal ELA: General Aggregate Liability Cap: 2× the annual fees actually paid (or payable) by OWS in the twelve (12) months immediately

VI. Specific Drafting Recommendations Based on the foregoing analysis, we recommend the following specific drafting changes for inclusion in OWS's first redline of the Renewal ELA (target delivery: November 15, 2025). A. IP Indemnification Provision — Proposed OWS Redline We recommend maintaining Meridian's general indemnification scope (coverage for third-party claims alleging infringement of U.S. Intellectual prope

1. Narrow the Combination-Claims Exclusion. The combination-claims exclusion in Section 9.2(b) should be revised to exclude from indemnification only claims arising from the use of the licensed software in combination with third-party products or technologies that are "not reasonably foreseeable" or "not described in Meridian's documentation, published interoperability specifications, or published compatibility guide

2. Narrow the Modification Exclusion. The modification exclusion in Section 9.2(a) should be revised to cover only modifications made by OWS "without the written consent, direction, or involvement of Meridian." This narrowing ensures that customizations made by OWS with Meridian's guidance, assistance, or professional services support are not excluded from indemnity coverage. This is particularly important given that

3. Add Transition Cost Reimbursement Remedy. A fourth remedial tier should be added to the infringement remedies in Section 9.3, providing that if Meridian exercises the terminate-and-refund option (because it is unable to procure continued use rights or provide a non-infringing replacement), Meridian shall also reimburse OWS for its reasonable, documented transition costs incurred in migrating to an alternative EDA

4. Carve Out IP Indemnification from the General Liability Cap. Section 10 (Limitation of Liability) should expressly state that Meridian's IP indemnification obligations under Section 9 are not subject to, and shall not be limited by, the general aggregate liability cap set forth in Section 10.1. This is the single most important drafting change in this negotiation and is the subject of the detailed analysis and mar

VII. Fallback Positions Recognizing that negotiations are iterative and that Meridian may not accept OWS's opening position in full, we have developed the following graduated negotiation framework. Each fallback position represents the next-best commercially acceptable outcome if OWS is unable to secure its preferred position. A. Preferred Position (Opening) • IP Indemnification: Fully uncapped (no dollar limit on Me