Contract analysis

From: Aaron Liu <aliu@calderwoodharkness.com> To: Douglas Tran <dtran@optiwavesemi.com> Cc: Nadia Petrov <npetrov@ridgelinecap.com> Date: Tue, 18 Nov 2025 04:47:00 -0000 Subject: Meridian EDA License Renewal — Negotiation Status Update [C&H Matter No. 1014-00006]

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL

I am writing to provide a status update on the negotiation of the Amended and Restated Enterprise License Agreement (proposed Agreement No. MDS-ELA-2026-01192) between Optiwave Semiconductor Corp. ("OWS") and Meridian Design Systems, Inc. ("Meridian"). I have copied Nadia Petrov from Ridgeline Capital Partners and Conrad Ashby from our team for visibility. As you know, this renewal and expansion covers the five-year

We delivered OWS's first redline of the proposed Amended and Restated ELA to Rachel Endo at Bexley Weir & Daly LLP ("BWD"), Meridian's outside counsel, on November 15, 2025. The redline was accompanied by a cover letter summarizing OWS's key positions across commercial and legal terms. We have requested that BWD return Meridian's response by December 1, 2025, and have proposed a negotiation call for the week of Decem

**2. Key Open Issues — Commercial Terms**

*Pricing Gap.* The most significant open issue remains the gap between Meridian's initial renewal quote and OWS's target:

- Meridian's proposed pricing: $14.3M/yr (TCV of $71.5M over 5 years) - OWS's target pricing: $11.8M/yr (TCV of $59.0M over 5 years) - Current annual spend under the Original ELA: $9.2M/yr

Meridian's quote represents a 55.4% increase over OWS's current annual spend. However, OWS is increasing from 190 total seats to 280 total seats (a 47.4% increase, adding 220 named-user and 60 floating licenses), which should support a meaningful volume discount argument. OWS is seeking at least a 15% discount off list price for all modules, which would bring the effective per-seat annual cost closer to OWS's target

*Product Scope.* The renewal adds Meridian AnalogEdge™ (analog/mixed-signal design) and Meridian PhotonX™ (silicon photonics design kit integration) to the existing licensed products (Marlowe Asset Management™, SignalForge™, and VerifyPro™). While Meridian's pricing reflects these additions, we believe the incremental cost should be moderated by the volume commitment OWS is making.

*IP Indemnification.* OWS is seeking uncapped IP indemnification from Meridian for third-party infringement claims arising from OWS's authorized use of the licensed tools. Meridian's current position is to cap aggregate liability at 1× annual fees (i.e., $14.3M at their proposed pricing). OWS's counter-position is a general liability cap of 2× annual fees, with IP indemnity, data breach, and willful misconduct carved

*Audit Rights.* Under the Original ELA, Meridian may conduct up to two software audits per year with only 15 calendar days' notice. OWS's redline proposes a maximum of one audit per calendar year with 30 business days' prior written notice, and no more than one audit during any rolling 12-month period. We expect this issue to be negotiable.

*Source Code Escrow.* OWS's redline includes a requirement for a technology escrow arrangement with Iron Vault Escrow Services, Inc. as the neutral escrow agent. Release would be triggered upon Meridian insolvency, material breach, or discontinuation of a licensed product line. We have prepared a draft three-party escrow agreement for circulation once the principal terms are agreed in the ELA.

*Limitation of Liability.* As noted above, Meridian proposes 1× annual fees as an aggregate cap. OWS seeks 2× annual fees with uncapped carve-outs for IP indemnity, data breach, and willful misconduct.

**4. PhotonX™ / Brindoval AEPL Conditionality**

I want to flag again the compliance issue we have previously raised with you: Meridian PhotonX™ is not yet on Brindoval Foundry Services Ltd.'s Approved EDA Platform List ("AEPL"). Qualification is expected in Q1 2026.

Under Section 4.7 of OWS's Brindoval PDK License Agreement (Ref. No. CFS-PDK-2023-US-0034, dated March 15, 2023), OWS must ensure that any third-party EDA tools interfacing with Brindoval PDKs are on the AEPL. Deploying PhotonX™ with Brindoval PDKs before AEPL approval would constitute a breach of that agreement. For reference, Marlowe Asset Management™ and SignalForge™ are currently on the AEPL, and AnalogEdge™ was

Our redline includes a conditional activation clause tying OWS's use of PhotonX™ with Brindoval PDKs to AEPL approval, along with a fee-abatement mechanism if PhotonX™ qualification is materially delayed beyond the anticipated Q1 2026 timeline. We will need Meridian's buy-in on the fee abatement concept, and I expect this will be an active discussion point. The Brindoval PDK interoperability analysis memo previously

The renewal includes Meridian CloudVerify™ (cloud-hosted verification compute). OWS's redline requires a 99.5% availability SLA with service credits. In addition, we have prepared a supplemental Data Security and Cloud Services Rider that would require:

- SOC 2 Type II compliance (Meridian's most recent report is dated June 30, 2025) - AES-256 encryption at rest - TLS 1.3 in transit - U.S. data localization - 72-hour incident notification - Annual penetration testing

We intend to circulate the rider as an exhibit to the ELA once the principal agreement terms are closer to resolution.

- **December 1, 2025:** Requested deadline for BWD / Meridian to return their counter-redline - **Week of December 8, 2025:** Proposed negotiation call between the parties and counsel - **December 15, 2025:** Target for substantially agreed commercial terms - **January 15, 2026:** Target for execution of the renewal ELA - **January 31, 2026:** Expiration of the Original ELA - **February 1, 2026:** Proposed effective

The January 31 expiration date underscores the importance of staying on schedule to avoid any gap in coverage. If negotiations extend beyond January 15, we may need to discuss a short-term extension or tolling arrangement with Meridian to ensure continuity of the existing license through execution.

Please let me know if you or Nadia would like to schedule a call to discuss any of the above in further detail. Conrad is also available for any strategic questions. I would also note that Priya Venkatesh has been extremely helpful in providing the technical and operational context supporting OWS's seat-count and product-scope requirements, and we may want to loop her in on the next call with Meridian's team to addre

**Aaron Liu** Associate Calderwood & Harkness LLP One Market Plaza, Spear Tower, 42nd Floor San Francisco, CA 94105 T: (415) 773-6200 E: aliu@calderwoodharkness.com

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