1014-00006 · Meridian Design Systems, Inc · Correspondence

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CONFIDENTIAL — SETTLEMENT COMMUNICATION — WITHOUT PREJUDICE

CALDERWOOD & HARKNESS LLP Attorneys at Law

One Market Plaza, Spear Tower, 42nd Floor San Francisco, California 94105

Telephone: (415) 726-8300 Facsimile: (415) 726-8301 www.calderwoodharkness.com

November 15, 2025

VIA EMAIL AND Sundial Data Systems

Rachel Endo, Esq. Partner, Technology Transactions Bexley Weir & Daly LLP 525 University Avenue, Suite 1400 Palo Alto, CA 94301

Re: Amended and Restated Enterprise License Agreement (Proposed Agreement No. MDS-ELA-2026-01192) between Optiwave Semiconductor Corp. and Meridian Design Systems, Inc.

Original ELA: Agreement No. MDS-ELA-2023-00487, dated February 1, 2023

Calderwood & Harkness Matter No. 1014-00006

Dear Ms. Endo:

I am writing on behalf of Calderwood & Harkness LLP, outside counsel to Optiwave Semiconductor Corp. ("OWS"), a Delaware corporation headquartered at 4850 Great America Parkway, Suite 300, Santa Clara, California 95054. The purpose of this letter is to transmit OWS's first redline markup of the proposed Amended and Restated Enterprise License Agreement (proposed Agreement No. MDS-ELA-2026-01192) (the "Proposed Agreement"), which was initially drafted and circulated by your client, Meridian Design Systems, Inc. ("Meridian"), to OWS on October 15, 2025.

As you are aware, the redline amends and restates the parties' existing Enterprise License Agreement (Agreement No. MDS-ELA-2023-00487), dated February 1, 2023 (the "Original ELA"), which by its terms expires on January 31, 2026. The Proposed Agreement, as revised in OWS's enclosed redline, contemplates a renewal term of five (5) years, effective February 1, 2026 through January 31, 2031. Enclosed with this letter please find: (1) the redline markup of the Proposed Agreement in Microsoft Word format with tracked changes reflecting all of OWS's revisions; and (2) a clean comparison copy of the Proposed Agreement incorporating all such revisions for ease of reference.

Summary of Engagement Context

OWS received Meridian's initial renewal and expansion quotation on October 15, 2025, together with the Proposed Agreement in its original form as drafted by Meridian's counsel. Since that time, OWS's commercial and technical teams have undertaken a thorough review of both the commercial terms set forth in the quotation and the legal provisions of the Proposed Agreement. The parties are currently negotiating a renewal and expansion of the existing enterprise license, with OWS seeking both additional product modules and an expansion of the authorized seat counts to support OWS's growing design engineering organization.

OWS appreciates the longstanding commercial relationship it has maintained with Meridian since the execution of the Original ELA in February 2023, and OWS remains committed to working efficiently and in good faith toward mutually acceptable terms well ahead of the January 31, 2026 expiration of the Original ELA. It is our hope that the positions set forth in the enclosed redline will serve as a constructive basis for productive discussions between the parties and their respective counsel.

Summary of Key OWS Positions in the Redline

Set forth below is a summary of the principal areas of revision reflected in OWS's redline markup of the Proposed Agreement. This summary is intended to provide a high-level overview of OWS's key positions and to facilitate your initial review; the full detail of each revision is visible in the enclosed tracked-changes document, which should be treated as controlling in the event of any inconsistency with this summary.

1. Term and Effective Date

OWS has accepted Meridian's proposed five-year renewal term, running from February 1, 2026 through January 31, 2031. OWS does not object to the length of the term as proposed.

However, OWS's redline includes important transition language designed to ensure that there is no gap in license coverage between the expiration of the Original ELA on January 31, 2026 and the effective date of the Proposed Agreement on February 1, 2026. Specifically, OWS has inserted provisions confirming that: (a) all rights and obligations under the Original ELA shall survive and remain in full force and effect through 11:59 p.m. Pacific Time on January 31, 2026; (b) the Proposed Agreement shall become effective as of 12:00 a.m. Pacific Time on February 1, 2026; and (c) in the event execution of the Proposed Agreement is delayed beyond February 1, 2026, the parties shall enter into a bridge arrangement on terms no less favorable to OWS than those set forth in the Original ELA, to remain in effect until the Proposed Agreement is fully executed. OWS considers this seamless transition language to be essential to avoiding any disruption to its ongoing design operations.

2. Licensed Products — Scope Expansion

Under the Original ELA, OWS is licensed to use the following three Meridian product modules: (i) Meridian Marlowe Asset Management™ (digital integrated circuit design suite); (ii) Meridian SignalForge™ (signal integrity analysis); and (iii) Meridian VerifyPro™ (formal verification). These three product modules have been integral to OWS's design workflows since the inception of the Original ELA, and OWS intends to continue licensing all three under the Proposed Agreement.

In addition, OWS requests the inclusion of two new product modules in the scope of the Proposed Agreement:

(a) Meridian AnalogEdge™ — Meridian's analog and mixed-signal design environment. OWS's expanding portfolio of mixed-signal semiconductor products requires access to an integrated analog design toolset, and OWS has determined that AnalogEdge™ is well suited to its technical requirements.

(b) Meridian PhotonX™ — Meridian's silicon photonics design kit integration platform. OWS is actively developing silicon photonics capabilities and requires access to PhotonX™ to support design and simulation workflows for its next-generation optical interconnect products.

OWS's redline includes product-specific definitions, license grants, delivery milestones, and acceptance testing provisions for each of the two additional modules, consistent in form and structure with the corresponding provisions for the three existing modules. OWS has also proposed updated product descriptions in Schedule A to reflect the full suite of five licensed products.

With respect to PhotonX™ specifically, OWS has included a conditional activation clause in the redline that ties certain advanced uses of PhotonX™ (including third-party process design kit integration) to OWS's satisfaction that applicable third-party interoperability qualification requirements have been met. OWS recognizes that this provision may warrant discussion, and OWS is prepared to explain the commercial and technical rationale underlying this clause at your convenience.

3. Seat Count Expansion

The Original ELA authorizes a total of one hundred ninety (190) seats, allocated as follows: one hundred fifty (150) named-user seats and forty (40) floating/concurrent-use seats. The enclosed redline reflects OWS's proposed expansion of the authorized seat count to a total of two hundred eighty (280) seats, allocated as follows:

This represents a ninety-seat increase, or an approximately 47.4% expansion of the total seat count. The expansion is driven by OWS's growth in engineering headcount and the addition of the two new product modules described above.

OWS's redline includes a revised Schedule A reflecting the updated seat allocation across all five licensed product modules. In addition, OWS has proposed flexibility provisions permitting seat-type conversion (from named-user seats to floating/concurrent-use seats, and vice versa) on a defined ratio basis (proposed at 1 floating seat for every 1.5 named-user seats), subject to reasonable advance notice to Meridian. OWS believes this conversion mechanism is important to accommodate evolving usage patterns across OWS's design teams without requiring a formal amendment each time a reallocation is needed.

4. Pricing and Volume discount

OWS has reviewed Meridian's initial renewal quotation proposing a total contract value ("TCV") of Seventy-One Million Five Hundred Thousand Dollars ($71,500,000.00) over the five-year term, equivalent to Fourteen Million Three Hundred Thousand Dollars ($14,300,000.00) per annum. This represents an approximately 55.4% increase over the current annual fees of Nine Million Two Hundred Thousand Dollars ($9,200,000.00) under the Original ELA.

While OWS acknowledges that the expanded product scope (from three to five modules) and the increased seat count (from 190 to 280 seats) justify an increase in annual fees relative to the Original ELA, OWS respectfully submits that Meridian's proposed pricing does not adequately reflect the significant volume commitment OWS is prepared to make over a five-year term with 280 seats. OWS is one of Meridian's largest enterprise customers in the semiconductor design space, and OWS believes that the scale and duration of its commitment warrant meaningful volume-based pricing concessions.

Accordingly, OWS's redline proposes revised pricing reflecting a volume discount of at least fifteen percent (15%) off Meridian's published list price for all five licensed modules. OWS's target annual fee amount and corresponding five-year TCV are set forth in the redlined fee schedule (Schedule B) enclosed with this letter. OWS looks forward to discussing pricing in detail with Meridian's commercial team and is prepared to provide supporting data regarding comparable pricing in the EDA market.

In addition to the volume discount, OWS's redline includes two further pricing protections:

(a) Annual Escalator Cap. OWS has proposed a cap on annual fee increases of three percent (3%) per annum, applicable to any fees that are subject to annual adjustment during the five-year term. OWS considers this cap to be appropriate given the length of the commitment and the need for budgetary predictability.

(b) Most-Favored-Customer Pricing. OWS has proposed a most-favored-customer ("MFC") clause providing that, if Meridian offers materially more favorable pricing to any other customer of comparable size and commitment level for the same or substantially similar products and seat counts, Meridian shall promptly offer equivalent pricing to OWS. OWS recognizes that MFC provisions require careful scoping, and OWS is open to discussing appropriate guardrails and carve-outs.

5. Audit Rights

Under Section 8.3 of the Original ELA, Meridian currently retains the right to conduct up to two (2) software license audits per calendar year with only fifteen (15) calendar days' prior written notice. OWS has found this audit frequency and notice period to be operationally burdensome in practice, as each audit requires substantial coordination across OWS's IT infrastructure and engineering operations teams, including the allocation of personnel and system resources to support the audit process.

OWS's redline proposes the following revisions to the audit provisions:

(a) Meridian shall be permitted to conduct no more than one (1) audit per calendar year, with no more than one (1) audit during any rolling twelve-month period.

(b) Meridian shall provide OWS with a minimum of thirty (30) business days' prior written notice before commencing any audit.

(c) All audits shall be conducted by an independent third-party auditor selected by Meridian and reasonably acceptable to OWS. The auditor shall not be engaged on a contingency-fee basis or otherwise compensated based on the findings or outcomes of the audit.

(d) All audit findings shall be treated as Confidential Information of OWS under the confidentiality provisions of the Proposed Agreement, and the auditor shall be required to execute a nondisclosure agreement in form reasonably acceptable to OWS prior to commencing the audit.

(e) OWS shall not be obligated to pay any true-up amounts, penalties, or fees arising from an audit unless the audit reveals an underpayment or over-deployment in excess of five percent (5%) of the authorized seat count or applicable fees (the "Materiality Threshold"). Below this Materiality Threshold, any discrepancies would be corrected prospectively without penalty.

OWS believes these revisions strike a fair balance between Meridian's legitimate interest in compliance verification and OWS's need to manage the operational burden of audit activities.

6. Intellectual Property Indemnification

OWS's redline includes significant revisions to the intellectual property indemnification provisions set forth in Article 11 of the Proposed Agreement. These revisions are informed by a detailed analysis of IP indemnification scope and market benchmarking that OWS has undertaken with the assistance of outside counsel. OWS is prepared to share relevant market data and comparable transaction terms with Meridian to facilitate a productive discussion on this topic.

The principal revisions are as follows:

(a) Scope of Indemnification. OWS seeks uncapped indemnification from Meridian for any and all third-party claims alleging that OWS's authorized use of the licensed tools in accordance with the Proposed Agreement and applicable documentation infringes or misappropriates any patent, copyright, trade secret, trademark, or other intellectual property right of any third party.

(b) Broadened Definition of "Losses." OWS's redline expands the definition of "Losses" covered by Meridian's indemnification obligation to include: (i) direct damages incurred by OWS; (ii) reasonable attorneys' fees and costs of defense; (iii) amounts paid in settlement of claims, provided such settlements are approved by OWS (such approval not to be unreasonably withheld); and (iv) costs incurred by OWS in connection with injunctive-relief-related remediation, including the procurement and implementation of replacement technology if continued use of the infringing product is enjoined.

(c) Duty to Defend. OWS has added an express duty-to-defend obligation requiring Meridian to assume the defense of any covered IP infringement claim upon OWS's written request, using counsel reasonably acceptable to OWS, and to bear all costs of such defense regardless of the ultimate outcome of the claim.

(d) Narrowed Exclusions. OWS has proposed narrowing the exclusions to Meridian's indemnification obligation. In particular, OWS has removed the broad exclusion for claims arising from "use of the licensed products in combination with third-party products" to the extent that such combination is reasonably foreseeable, documented by Meridian, or expressly contemplated in the applicable product documentation. OWS has retained exclusions for claims arising from OWS's unauthorized modifications to the licensed products or OWS's continued use of a product version after Meridian has provided a non-infringing replacement at no additional cost.

As noted above, OWS's positions on IP indemnification are supported by a separate memorandum analyzing indemnification scope across comparable enterprise EDA license agreements. OWS is prepared to discuss this analysis in detail and to share relevant market data on a confidential basis.

7. Limitation of Liability

Meridian's draft of the Proposed Agreement proposes a general aggregate liability cap equal to one times (1×) the annual fees paid by OWS in the most recent year. OWS considers this cap to be insufficient given the magnitude of the overall transaction, the criticality of Meridian's tools to OWS's semiconductor design operations, and the potential consequences of a material breach or product failure.

OWS's redline proposes the following revisions to the limitation of liability provisions:

(a) General Aggregate Cap. OWS proposes a general aggregate liability cap equal to two times (2×) the annual fees actually paid by OWS in the twelve (12) months immediately preceding the event or claim giving rise to liability.

(b) Uncapped Carve-Outs. OWS's redline carves out from the general aggregate liability cap the following categories of liability, for which each party's liability shall be uncapped:

(i) intellectual property indemnification obligations under Article 11 of the Proposed Agreement;

(ii) Liability arising from a data breach or unauthorized disclosure of OWS's Confidential Information, including OWS's proprietary design data processed through or stored in connection with the licensed tools;

(iii) Liability arising from willful misconduct, gross negligence, or fraud by either party.

OWS believes that these carve-outs are market-standard for enterprise EDA license agreements of this magnitude and duration. OWS is prepared to discuss the rationale for each carve-out and to consider alternative formulations that achieve equivalent protections.

8. Source Code Escrow

OWS's redline introduces a new requirement for a technology escrow arrangement with a neutral, independent escrow agent. This provision is designed to protect OWS's business continuity in the event of certain adverse circumstances affecting Meridian's ability to support the licensed products.

The key elements of the proposed escrow arrangement are as follows:

(a) Escrow Agent. OWS proposes Iron Vault Escrow Services, Inc. (1700 Lincoln Street, Suite 2100, Denver, Colorado 80203) as the escrow agent. Iron Vault is a recognized industry leader in technology escrow services and has significant experience administering software escrow arrangements for enterprise EDA and semiconductor design tool licenses.

(b) Escrow Deposits. Meridian would be required to deposit and maintain in escrow the complete source code and build instructions for all five licensed products: Meridian Marlowe Asset Management™, Meridian SignalForge™, Meridian VerifyPro™, Meridian AnalogEdge™, and Meridian PhotonX™. Deposits would be required to be updated within thirty (30) days of each major release or update of any licensed product.

(c) Release Conditions. The escrow materials would be released to OWS upon the occurrence of any of the following triggering events: (i) Meridian's insolvency, voluntary or involuntary bankruptcy, or assignment for the benefit of creditors; (ii) a material breach by Meridian of its obligations under the Proposed Agreement that remains uncured following the applicable notice and cure period; or (iii) Meridian's discontinuation of any licensed product line without providing a commercially reasonable successor product.

(d) Three-Party Escrow Agreement. A draft three-party Technology Escrow Agreement among OWS, Meridian, and Iron Vault Escrow Services, Inc. is currently being prepared by Calderwood & Harkness and will be circulated under separate cover within approximately ten (10) business days. OWS's redline of the Proposed Agreement includes a covenant requiring Meridian to execute the escrow agreement within thirty (30) days of execution of the Proposed Agreement.

OWS considers the source code escrow requirement to be a critical business continuity protection, particularly given the five-year term of the Proposed Agreement and OWS's deep integration of Meridian's tools into its design workflows.

9. Cloud Services — SLA and Data Security

Recognizing that Meridian's product offerings increasingly include cloud-hosted components — including Meridian CloudVerify™ — OWS's redline includes a supplemental Data Security and Cloud Services Rider (the "Cloud Rider"), which would be attached as an exhibit to the Proposed Agreement and govern all cloud-hosted services and components provided by Meridian.

The Cloud Rider sets forth the following key requirements:

(a) Availability SLA. A minimum availability commitment of 99.5% uptime, measured on a monthly basis, with tiered service credits for downtime below the committed threshold. The tiered credit structure provides for escalating credits at the 99.0%, 98.0%, and 95.0% availability levels, with a termination right triggered if availability falls below 95.0% in any two (2) consecutive months.

(b) SOC 2 Type II Compliance. Meridian shall maintain and provide to OWS current SOC 2 Type II compliance certification for all cloud-hosted environments used to process or store OWS data. OWS acknowledges receipt of Meridian's most recent SOC 2 Type II report, dated June 30, 2025. Meridian shall renew its SOC 2 Type II certification annually, and OWS shall have the right to review each annual report within thirty (30) days of its issuance.

(c) Encryption Standards. All OWS data shall be encrypted using AES-256 encryption at rest and TLS 1.3 (or successor protocol) in transit.

(d) Data Localization. All OWS design data, metadata, and derived outputs shall be processed and stored exclusively within data centers physically located in the United States. No OWS data shall be transferred to, accessed from, or stored in any facility outside the United States without OWS's prior written consent.

(e) Incident Notification. Meridian shall notify OWS in writing within seventy-two (72) hours of discovery of any security breach, unauthorized access, or data incident affecting OWS data, and shall cooperate fully with OWS in investigating and remediating any such incident.

(f) Penetration Testing. Meridian shall conduct annual penetration testing of all cloud-hosted environments used to process or store OWS data, using a qualified independent testing firm. Meridian shall share a summary of penetration testing results with OWS within thirty (30) days of completion of each annual test, together with a remediation plan for any material findings.

A draft of the Cloud Rider is enclosed with the redline for Meridian's review and comment. OWS considers data security to be a matter of paramount importance, given the highly sensitive and proprietary nature of the semiconductor design data that is processed through Meridian's tools, and OWS anticipates that Meridian shares this perspective.

10. Governing Law and Dispute Resolution

OWS has accepted California as the governing law for the Proposed Agreement, consistent with the choice of law provision in the Original ELA.

OWS's redline retains binding arbitration administered by JAMS in Santa Clara County, California as the dispute resolution mechanism, also consistent with the Original ELA. However, OWS has proposed certain procedural revisions to the arbitration clause to enhance the efficiency and fairness of the dispute resolution process:

(a) Expedited Procedures. For disputes in which the amount in controversy does not exceed Five Hundred Thousand Dollars ($500,000.00), the parties would utilize JAMS Streamlined Arbitration Rules and Procedures, with a single arbitrator and an accelerated hearing schedule.

(b) Provisional Remedies. OWS has proposed a carve-out from the arbitration requirement for applications for temporary restraining orders, preliminary injunctions, or other provisional remedies in connection with intellectual property disputes, to be sought in any court of competent jurisdiction without the requirement of posting a bond.

11. Other Notable Revisions

In addition to the principal areas summarized above, OWS's redline includes revisions in the following areas:

(a) Confidentiality. OWS has proposed enhanced confidentiality protections for OWS's proprietary design data that is processed through or generated using Meridian's licensed tools. The revised confidentiality provisions include express return-or-destruction obligations upon termination or expiration of the Proposed Agreement, with certification of destruction to be provided by an authorized officer of Meridian within thirty (30) days of the effective date of termination or expiration.

(b) Termination for Convenience. OWS has proposed a termination-for-convenience right exercisable by OWS at any time after the third anniversary of the effective date (i.e., after February 1, 2029), subject to OWS's payment of a defined early-termination fee. The early-termination fee schedule is set forth in the redlined Schedule B.

(c) Assignment. OWS has proposed that the consent-to-assignment provision be revised to provide that neither party's consent to assignment shall be unreasonably withheld, conditioned, or delayed in connection with a change of control of OWS, whether by merger, acquisition, consolidation, or sale of substantially all assets.

(d) Force Majeure. OWS has proposed a mutual force majeure clause providing that neither party shall be liable for failure to perform its obligations to the extent caused by force majeure events beyond its reasonable control. Critically, OWS has included a termination right exercisable by either party if a force majeure event continues for a period exceeding ninety (90) consecutive days.

(e) Notices. OWS's redline includes updated notice addresses for both parties to reflect current principal offices and designated legal contacts.

Enclosed Documents

Enclosed with this letter for your review are the following documents:

1. Redline markup of the Amended and Restated Enterprise License Agreement (proposed Agreement No. MDS-ELA-2026-01192) — tracked-changes Microsoft Word document;

2. Clean comparison copy of the Amended and Restated Enterprise License Agreement incorporating all of OWS's revisions;

3. Draft Data Security and Cloud Services Rider (proposed Exhibit to the Proposed Agreement); and

4. Updated Schedule A (Seat Allocation) and Schedule B (Fee Schedule) — redlined.

Requested Response Timeline and Proposed Next Steps

Given the parties' mutual interest in completing these negotiations well in advance of the January 31, 2026 expiration of the Original ELA, OWS respectfully requests that Meridian and Bexley Weir & Daly provide a written response to OWS's redline — whether in the form of a counter-redline, written comments, or a combination thereof — by December 1, 2025.

Following receipt of Meridian's response, OWS proposes scheduling a negotiation call among counsel and the parties' respective commercial teams for the week of December 8, 2025, to discuss key open terms and work toward resolution of the principal commercial and legal issues. OWS's objective is to reach substantially agreed commercial terms by December 15, 2025, with execution-ready drafts targeted for circulation shortly thereafter.

The parties' shared target is to execute the Proposed Agreement by January 15, 2026, thereby allowing a reasonable period of approximately two weeks before the January 31, 2026 expiration of the Original ELA for administrative and operational transition activities.

I am available to coordinate scheduling for the proposed negotiation call and to discuss any preliminary questions you or your client may have regarding OWS's redline. My direct contact information is provided in the signature block below.

Reservation of Rights

This letter and the enclosed redline are transmitted on a confidential, without-prejudice basis for purposes of settlement negotiations between the parties. Nothing contained in this letter or in the enclosed redline markup shall constitute or be construed as an admission of any fact or liability, a waiver of any right or remedy available to OWS under the Original ELA or applicable law, or a binding commitment by OWS to enter into the Proposed Agreement on any particular terms.

OWS expressly reserves all of its rights, remedies, and defenses under the Original ELA, which remains in full force and effect through January 31, 2026, and under applicable law. All communications between the parties and their respective counsel in connection with the negotiation of the Proposed Agreement are subject to the protections afforded to settlement communications under Federal Rule of Evidence 408 and California Evidence Code Section 1152.

We look forward to working with you and your client toward a mutually beneficial agreement. Please do not hesitate to contact me should you have any questions or wish to discuss any aspect of OWS's redline in advance of your formal response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Aaron Liu Associate One Market Plaza, Spear Tower, 42nd Floor San Francisco, California 94105 Telephone: (415) 726-8347

Email: aliu@calderwoodharkness.com

cc:

Conrad Ashby, Esq., Partner, Calderwood & Harkness LLP (Responsible Partner) Douglas Tran, General Counsel, Optiwave Semiconductor Corp. Priya Venkatesh, Vice President of Engineering Operations, Optiwave Semiconductor Corp. Kevin Matsuda, Esq., Bexley Weir & Daly LLP

Enclosures (4)

Seat Type	Current (Original ELA)	Proposed (Renewal ELA)	Increase
Named-User Seats	150	220	+70
Floating/Concurrent-Use Seats	40	60	+20
Total	190	280	+90

CONFIDENTIAL — SETTLEMENT COMMUNICATION — WITHOUT PREJUDICE
CALDERWOOD & HARKNESS LLP Attorneys at Law
One Market Plaza, Spear Tower, 42nd Floor San Francisco, California 94105
Telephone: (415) 726-8300 Facsimile: (415) 726-8301 www.calderwoodharkness.com
November 15, 2025
VIA EMAIL AND Sundial Data Systems
Rachel Endo, Esq. Partner, Technology Transactions Bexley Weir & Daly LLP 525 University Avenue, Suite 1400 Palo Alto, CA 94301
Re: Amended and Restated Enterprise License Agreement (Proposed Agreement No. MDS-ELA-2026-01192) between Optiwave Semiconductor Corp. and Meridian Design Systems, Inc.
Original ELA: Agreement No. MDS-ELA-2023-00487, dated February 1, 2023
Calderwood & Harkness Matter No. 1014-00006
Dear Ms. Endo:
I am writing on behalf of Calderwood & Harkness LLP, outside counsel to Optiwave Semiconductor Corp. ("OWS"), a Delaware corporation headquartered at 4850 Great America Parkway, Suite 300, Santa Clara, California 95054. The purpose of this letter is to transmit OWS's first redline markup of the proposed Amended and Restated Enterprise License Agreement (proposed Agreement No. MDS-ELA-2026-01192) (the "Proposed Agreement"), which was initially drafted and circulated by your client, Meridian Design Systems, Inc. ("Meridian"), to OWS on October 15, 2025.
As you are aware, the redline amends and restates the parties' existing Enterprise License Agreement (Agreement No. MDS-ELA-2023-00487), dated February 1, 2023 (the "Original ELA"), which by its terms expires on January 31, 2026. The Proposed Agreement, as revised in OWS's enclosed redline, contemplates a renewal term of five (5) years, effective February 1, 2026 through January 31, 2031. Enclosed with this letter please find: (1) the redline markup of the Proposed Agreement in Microsoft Word format with tracked changes reflecting all of OWS's revisions; and (2) a clean comparison copy of the Proposed Agreement incorporating all such revisions for ease of reference.
Summary of Engagement Context
OWS received Meridian's initial renewal and expansion quotation on October 15, 2025, together with the Proposed Agreement in its original form as drafted by Meridian's counsel. Since that time, OWS's commercial and technical teams have undertaken a thorough review of both the commercial terms set forth in the quotation and the legal provisions of the Proposed Agreement. The parties are currently negotiating a renewal and expansion of the existing enterprise license, with OWS seeking both additional product modules and an expansion of the authorized seat counts to support OWS's growing design engineering organization.
OWS appreciates the longstanding commercial relationship it has maintained with Meridian since the execution of the Original ELA in February 2023, and OWS remains committed to working efficiently and in good faith toward mutually acceptable terms well ahead of the January 31, 2026 expiration of the Original ELA. It is our hope that the positions set forth in the enclosed redline will serve as a constructive basis for productive discussions between the parties and their respective counsel.
Summary of Key OWS Positions in the Redline
Set forth below is a summary of the principal areas of revision reflected in OWS's redline markup of the Proposed Agreement. This summary is intended to provide a high-level overview of OWS's key positions and to facilitate your initial review; the full detail of each revision is visible in the enclosed tracked-changes document, which should be treated as controlling in the event of any inconsistency with this summary.
1. Term and Effective Date
OWS has accepted Meridian's proposed five-year renewal term, running from February 1, 2026 through January 31, 2031. OWS does not object to the length of the term as proposed.
However, OWS's redline includes important transition language designed to ensure that there is no gap in license coverage between the expiration of the Original ELA on January 31, 2026 and the effective date of the Proposed Agreement on February 1, 2026. Specifically, OWS has inserted provisions confirming that: (a) all rights and obligations under the Original ELA shall survive and remain in full force and effect through 11:59 p.m. Pacific Time on January 31, 2026; (b) the Proposed Agreement shall become effective as of 12:00 a.m. Pacific Time on February 1, 2026; and (c) in the event execution of the Proposed Agreement is delayed beyond February 1, 2026, the parties shall enter into a bridge arrangement on terms no less favorable to OWS than those set forth in the Original ELA, to remain in effect until the Proposed Agreement is fully executed. OWS considers this seamless transition language to be essential to avoiding any disruption to its ongoing design operations.
2. Licensed Products — Scope Expansion
Under the Original ELA, OWS is licensed to use the following three Meridian product modules: (i) Meridian Marlowe Asset Management™ (digital integrated circuit design suite); (ii) Meridian SignalForge™ (signal integrity analysis); and (iii) Meridian VerifyPro™ (formal verification). These three product modules have been integral to OWS's design workflows since the inception of the Original ELA, and OWS intends to continue licensing all three under the Proposed Agreement.
In addition, OWS requests the inclusion of two new product modules in the scope of the Proposed Agreement:
(a) Meridian AnalogEdge™ — Meridian's analog and mixed-signal design environment. OWS's expanding portfolio of mixed-signal semiconductor products requires access to an integrated analog design toolset, and OWS has determined that AnalogEdge™ is well suited to its technical requirements.
(b) Meridian PhotonX™ — Meridian's silicon photonics design kit integration platform. OWS is actively developing silicon photonics capabilities and requires access to PhotonX™ to support design and simulation workflows for its next-generation optical interconnect products.
OWS's redline includes product-specific definitions, license grants, delivery milestones, and acceptance testing provisions for each of the two additional modules, consistent in form and structure with the corresponding provisions for the three existing modules. OWS has also proposed updated product descriptions in Schedule A to reflect the full suite of five licensed products.
With respect to PhotonX™ specifically, OWS has included a conditional activation clause in the redline that ties certain advanced uses of PhotonX™ (including third-party process design kit integration) to OWS's satisfaction that applicable third-party interoperability qualification requirements have been met. OWS recognizes that this provision may warrant discussion, and OWS is prepared to explain the commercial and technical rationale underlying this clause at your convenience.
3. Seat Count Expansion
The Original ELA authorizes a total of one hundred ninety (190) seats, allocated as follows: one hundred fifty (150) named-user seats and forty (40) floating/concurrent-use seats. The enclosed redline reflects OWS's proposed expansion of the authorized seat count to a total of two hundred eighty (280) seats, allocated as follows:
This represents a ninety-seat increase, or an approximately 47.4% expansion of the total seat count. The expansion is driven by OWS's growth in engineering headcount and the addition of the two new product modules described above.
OWS's redline includes a revised Schedule A reflecting the updated seat allocation across all five licensed product modules. In addition, OWS has proposed flexibility provisions permitting seat-type conversion (from named-user seats to floating/concurrent-use seats, and vice versa) on a defined ratio basis (proposed at 1 floating seat for every 1.5 named-user seats), subject to reasonable advance notice to Meridian. OWS believes this conversion mechanism is important to accommodate evolving usage patterns across OWS's design teams without requiring a formal amendment each time a reallocation is needed.
4. Pricing and Volume discount
OWS has reviewed Meridian's initial renewal quotation proposing a total contract value ("TCV") of Seventy-One Million Five Hundred Thousand Dollars ($71,500,000.00) over the five-year term, equivalent to Fourteen Million Three Hundred Thousand Dollars ($14,300,000.00) per annum. This represents an approximately 55.4% increase over the current annual fees of Nine Million Two Hundred Thousand Dollars ($9,200,000.00) under the Original ELA.
While OWS acknowledges that the expanded product scope (from three to five modules) and the increased seat count (from 190 to 280 seats) justify an increase in annual fees relative to the Original ELA, OWS respectfully submits that Meridian's proposed pricing does not adequately reflect the significant volume commitment OWS is prepared to make over a five-year term with 280 seats. OWS is one of Meridian's largest enterprise customers in the semiconductor design space, and OWS believes that the scale and duration of its commitment warrant meaningful volume-based pricing concessions.
Accordingly, OWS's redline proposes revised pricing reflecting a volume discount of at least fifteen percent (15%) off Meridian's published list price for all five licensed modules. OWS's target annual fee amount and corresponding five-year TCV are set forth in the redlined fee schedule (Schedule B) enclosed with this letter. OWS looks forward to discussing pricing in detail with Meridian's commercial team and is prepared to provide supporting data regarding comparable pricing in the EDA market.
In addition to the volume discount, OWS's redline includes two further pricing protections:
(a) Annual Escalator Cap. OWS has proposed a cap on annual fee increases of three percent (3%) per annum, applicable to any fees that are subject to annual adjustment during the five-year term. OWS considers this cap to be appropriate given the length of the commitment and the need for budgetary predictability.
(b) Most-Favored-Customer Pricing. OWS has proposed a most-favored-customer ("MFC") clause providing that, if Meridian offers materially more favorable pricing to any other customer of comparable size and commitment level for the same or substantially similar products and seat counts, Meridian shall promptly offer equivalent pricing to OWS. OWS recognizes that MFC provisions require careful scoping, and OWS is open to discussing appropriate guardrails and carve-outs.
5. Audit Rights
Under Section 8.3 of the Original ELA, Meridian currently retains the right to conduct up to two (2) software license audits per calendar year with only fifteen (15) calendar days' prior written notice. OWS has found this audit frequency and notice period to be operationally burdensome in practice, as each audit requires substantial coordination across OWS's IT infrastructure and engineering operations teams, including the allocation of personnel and system resources to support the audit process.
OWS's redline proposes the following revisions to the audit provisions:
(a) Meridian shall be permitted to conduct no more than one (1) audit per calendar year, with no more than one (1) audit during any rolling twelve-month period.
(b) Meridian shall provide OWS with a minimum of thirty (30) business days' prior written notice before commencing any audit.
(c) All audits shall be conducted by an independent third-party auditor selected by Meridian and reasonably acceptable to OWS. The auditor shall not be engaged on a contingency-fee basis or otherwise compensated based on the findings or outcomes of the audit.
(d) All audit findings shall be treated as Confidential Information of OWS under the confidentiality provisions of the Proposed Agreement, and the auditor shall be required to execute a nondisclosure agreement in form reasonably acceptable to OWS prior to commencing the audit.
(e) OWS shall not be obligated to pay any true-up amounts, penalties, or fees arising from an audit unless the audit reveals an underpayment or over-deployment in excess of five percent (5%) of the authorized seat count or applicable fees (the "Materiality Threshold"). Below this Materiality Threshold, any discrepancies would be corrected prospectively without penalty.
OWS believes these revisions strike a fair balance between Meridian's legitimate interest in compliance verification and OWS's need to manage the operational burden of audit activities.
6. Intellectual Property Indemnification
OWS's redline includes significant revisions to the intellectual property indemnification provisions set forth in Article 11 of the Proposed Agreement. These revisions are informed by a detailed analysis of IP indemnification scope and market benchmarking that OWS has undertaken with the assistance of outside counsel. OWS is prepared to share relevant market data and comparable transaction terms with Meridian to facilitate a productive discussion on this topic.
The principal revisions are as follows:
(a) Scope of Indemnification. OWS seeks uncapped indemnification from Meridian for any and all third-party claims alleging that OWS's authorized use of the licensed tools in accordance with the Proposed Agreement and applicable documentation infringes or misappropriates any patent, copyright, trade secret, trademark, or other intellectual property right of any third party.
(b) Broadened Definition of "Losses." OWS's redline expands the definition of "Losses" covered by Meridian's indemnification obligation to include: (i) direct damages incurred by OWS; (ii) reasonable attorneys' fees and costs of defense; (iii) amounts paid in settlement of claims, provided such settlements are approved by OWS (such approval not to be unreasonably withheld); and (iv) costs incurred by OWS in connection with injunctive-relief-related remediation, including the procurement and implementation of replacement technology if continued use of the infringing product is enjoined.
(c) Duty to Defend. OWS has added an express duty-to-defend obligation requiring Meridian to assume the defense of any covered IP infringement claim upon OWS's written request, using counsel reasonably acceptable to OWS, and to bear all costs of such defense regardless of the ultimate outcome of the claim.
(d) Narrowed Exclusions. OWS has proposed narrowing the exclusions to Meridian's indemnification obligation. In particular, OWS has removed the broad exclusion for claims arising from "use of the licensed products in combination with third-party products" to the extent that such combination is reasonably foreseeable, documented by Meridian, or expressly contemplated in the applicable product documentation. OWS has retained exclusions for claims arising from OWS's unauthorized modifications to the licensed products or OWS's continued use of a product version after Meridian has provided a non-infringing replacement at no additional cost.
As noted above, OWS's positions on IP indemnification are supported by a separate memorandum analyzing indemnification scope across comparable enterprise EDA license agreements. OWS is prepared to discuss this analysis in detail and to share relevant market data on a confidential basis.
7. Limitation of Liability
Meridian's draft of the Proposed Agreement proposes a general aggregate liability cap equal to one times (1×) the annual fees paid by OWS in the most recent year. OWS considers this cap to be insufficient given the magnitude of the overall transaction, the criticality of Meridian's tools to OWS's semiconductor design operations, and the potential consequences of a material breach or product failure.
OWS's redline proposes the following revisions to the limitation of liability provisions:
(a) General Aggregate Cap. OWS proposes a general aggregate liability cap equal to two times (2×) the annual fees actually paid by OWS in the twelve (12) months immediately preceding the event or claim giving rise to liability.
(b) Uncapped Carve-Outs. OWS's redline carves out from the general aggregate liability cap the following categories of liability, for which each party's liability shall be uncapped:
(i) intellectual property indemnification obligations under Article 11 of the Proposed Agreement;
(ii) Liability arising from a data breach or unauthorized disclosure of OWS's Confidential Information, including OWS's proprietary design data processed through or stored in connection with the licensed tools;
(iii) Liability arising from willful misconduct, gross negligence, or fraud by either party.
OWS believes that these carve-outs are market-standard for enterprise EDA license agreements of this magnitude and duration. OWS is prepared to discuss the rationale for each carve-out and to consider alternative formulations that achieve equivalent protections.
8. Source Code Escrow
OWS's redline introduces a new requirement for a technology escrow arrangement with a neutral, independent escrow agent. This provision is designed to protect OWS's business continuity in the event of certain adverse circumstances affecting Meridian's ability to support the licensed products.
The key elements of the proposed escrow arrangement are as follows:
(a) Escrow Agent. OWS proposes Iron Vault Escrow Services, Inc. (1700 Lincoln Street, Suite 2100, Denver, Colorado 80203) as the escrow agent. Iron Vault is a recognized industry leader in technology escrow services and has significant experience administering software escrow arrangements for enterprise EDA and semiconductor design tool licenses.
(b) Escrow Deposits. Meridian would be required to deposit and maintain in escrow the complete source code and build instructions for all five licensed products: Meridian Marlowe Asset Management™, Meridian SignalForge™, Meridian VerifyPro™, Meridian AnalogEdge™, and Meridian PhotonX™. Deposits would be required to be updated within thirty (30) days of each major release or update of any licensed product.
(c) Release Conditions. The escrow materials would be released to OWS upon the occurrence of any of the following triggering events: (i) Meridian's insolvency, voluntary or involuntary bankruptcy, or assignment for the benefit of creditors; (ii) a material breach by Meridian of its obligations under the Proposed Agreement that remains uncured following the applicable notice and cure period; or (iii) Meridian's discontinuation of any licensed product line without providing a commercially reasonable successor product.
(d) Three-Party Escrow Agreement. A draft three-party Technology Escrow Agreement among OWS, Meridian, and Iron Vault Escrow Services, Inc. is currently being prepared by Calderwood & Harkness and will be circulated under separate cover within approximately ten (10) business days. OWS's redline of the Proposed Agreement includes a covenant requiring Meridian to execute the escrow agreement within thirty (30) days of execution of the Proposed Agreement.
OWS considers the source code escrow requirement to be a critical business continuity protection, particularly given the five-year term of the Proposed Agreement and OWS's deep integration of Meridian's tools into its design workflows.
9. Cloud Services — SLA and Data Security
Recognizing that Meridian's product offerings increasingly include cloud-hosted components — including Meridian CloudVerify™ — OWS's redline includes a supplemental Data Security and Cloud Services Rider (the "Cloud Rider"), which would be attached as an exhibit to the Proposed Agreement and govern all cloud-hosted services and components provided by Meridian.
The Cloud Rider sets forth the following key requirements:
(a) Availability SLA. A minimum availability commitment of 99.5% uptime, measured on a monthly basis, with tiered service credits for downtime below the committed threshold. The tiered credit structure provides for escalating credits at the 99.0%, 98.0%, and 95.0% availability levels, with a termination right triggered if availability falls below 95.0% in any two (2) consecutive months.
(b) SOC 2 Type II Compliance. Meridian shall maintain and provide to OWS current SOC 2 Type II compliance certification for all cloud-hosted environments used to process or store OWS data. OWS acknowledges receipt of Meridian's most recent SOC 2 Type II report, dated June 30, 2025. Meridian shall renew its SOC 2 Type II certification annually, and OWS shall have the right to review each annual report within thirty (30) days of its issuance.
(c) Encryption Standards. All OWS data shall be encrypted using AES-256 encryption at rest and TLS 1.3 (or successor protocol) in transit.
(d) Data Localization. All OWS design data, metadata, and derived outputs shall be processed and stored exclusively within data centers physically located in the United States. No OWS data shall be transferred to, accessed from, or stored in any facility outside the United States without OWS's prior written consent.
(e) Incident Notification. Meridian shall notify OWS in writing within seventy-two (72) hours of discovery of any security breach, unauthorized access, or data incident affecting OWS data, and shall cooperate fully with OWS in investigating and remediating any such incident.
(f) Penetration Testing. Meridian shall conduct annual penetration testing of all cloud-hosted environments used to process or store OWS data, using a qualified independent testing firm. Meridian shall share a summary of penetration testing results with OWS within thirty (30) days of completion of each annual test, together with a remediation plan for any material findings.
A draft of the Cloud Rider is enclosed with the redline for Meridian's review and comment. OWS considers data security to be a matter of paramount importance, given the highly sensitive and proprietary nature of the semiconductor design data that is processed through Meridian's tools, and OWS anticipates that Meridian shares this perspective.
10. Governing Law and Dispute Resolution
OWS has accepted California as the governing law for the Proposed Agreement, consistent with the choice of law provision in the Original ELA.
OWS's redline retains binding arbitration administered by JAMS in Santa Clara County, California as the dispute resolution mechanism, also consistent with the Original ELA. However, OWS has proposed certain procedural revisions to the arbitration clause to enhance the efficiency and fairness of the dispute resolution process:
(a) Expedited Procedures. For disputes in which the amount in controversy does not exceed Five Hundred Thousand Dollars ($500,000.00), the parties would utilize JAMS Streamlined Arbitration Rules and Procedures, with a single arbitrator and an accelerated hearing schedule.
(b) Provisional Remedies. OWS has proposed a carve-out from the arbitration requirement for applications for temporary restraining orders, preliminary injunctions, or other provisional remedies in connection with intellectual property disputes, to be sought in any court of competent jurisdiction without the requirement of posting a bond.
11. Other Notable Revisions
In addition to the principal areas summarized above, OWS's redline includes revisions in the following areas:
(a) Confidentiality. OWS has proposed enhanced confidentiality protections for OWS's proprietary design data that is processed through or generated using Meridian's licensed tools. The revised confidentiality provisions include express return-or-destruction obligations upon termination or expiration of the Proposed Agreement, with certification of destruction to be provided by an authorized officer of Meridian within thirty (30) days of the effective date of termination or expiration.
(b) Termination for Convenience. OWS has proposed a termination-for-convenience right exercisable by OWS at any time after the third anniversary of the effective date (i.e., after February 1, 2029), subject to OWS's payment of a defined early-termination fee. The early-termination fee schedule is set forth in the redlined Schedule B.
(c) Assignment. OWS has proposed that the consent-to-assignment provision be revised to provide that neither party's consent to assignment shall be unreasonably withheld, conditioned, or delayed in connection with a change of control of OWS, whether by merger, acquisition, consolidation, or sale of substantially all assets.
(d) Force Majeure. OWS has proposed a mutual force majeure clause providing that neither party shall be liable for failure to perform its obligations to the extent caused by force majeure events beyond its reasonable control. Critically, OWS has included a termination right exercisable by either party if a force majeure event continues for a period exceeding ninety (90) consecutive days.
(e) Notices. OWS's redline includes updated notice addresses for both parties to reflect current principal offices and designated legal contacts.
Enclosed Documents
Enclosed with this letter for your review are the following documents:
1. Redline markup of the Amended and Restated Enterprise License Agreement (proposed Agreement No. MDS-ELA-2026-01192) — tracked-changes Microsoft Word document;
2. Clean comparison copy of the Amended and Restated Enterprise License Agreement incorporating all of OWS's revisions;
3. Draft Data Security and Cloud Services Rider (proposed Exhibit to the Proposed Agreement); and
4. Updated Schedule A (Seat Allocation) and Schedule B (Fee Schedule) — redlined.
Requested Response Timeline and Proposed Next Steps
Given the parties' mutual interest in completing these negotiations well in advance of the January 31, 2026 expiration of the Original ELA, OWS respectfully requests that Meridian and Bexley Weir & Daly provide a written response to OWS's redline — whether in the form of a counter-redline, written comments, or a combination thereof — by December 1, 2025.
Following receipt of Meridian's response, OWS proposes scheduling a negotiation call among counsel and the parties' respective commercial teams for the week of December 8, 2025, to discuss key open terms and work toward resolution of the principal commercial and legal issues. OWS's objective is to reach substantially agreed commercial terms by December 15, 2025, with execution-ready drafts targeted for circulation shortly thereafter.
The parties' shared target is to execute the Proposed Agreement by January 15, 2026, thereby allowing a reasonable period of approximately two weeks before the January 31, 2026 expiration of the Original ELA for administrative and operational transition activities.
I am available to coordinate scheduling for the proposed negotiation call and to discuss any preliminary questions you or your client may have regarding OWS's redline. My direct contact information is provided in the signature block below.
Reservation of Rights
This letter and the enclosed redline are transmitted on a confidential, without-prejudice basis for purposes of settlement negotiations between the parties. Nothing contained in this letter or in the enclosed redline markup shall constitute or be construed as an admission of any fact or liability, a waiver of any right or remedy available to OWS under the Original ELA or applicable law, or a binding commitment by OWS to enter into the Proposed Agreement on any particular terms.
OWS expressly reserves all of its rights, remedies, and defenses under the Original ELA, which remains in full force and effect through January 31, 2026, and under applicable law. All communications between the parties and their respective counsel in connection with the negotiation of the Proposed Agreement are subject to the protections afforded to settlement communications under Federal Rule of Evidence 408 and California Evidence Code Section 1152.
We look forward to working with you and your client toward a mutually beneficial agreement. Please do not hesitate to contact me should you have any questions or wish to discuss any aspect of OWS's redline in advance of your formal response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Aaron Liu Associate One Market Plaza, Spear Tower, 42nd Floor San Francisco, California 94105 Telephone: (415) 726-8347
Email: aliu@calderwoodharkness.com
cc:
Conrad Ashby, Esq., Partner, Calderwood & Harkness LLP (Responsible Partner) Douglas Tran, General Counsel, Optiwave Semiconductor Corp. Priya Venkatesh, Vice President of Engineering Operations, Optiwave Semiconductor Corp. Kevin Matsuda, Esq., Bexley Weir & Daly LLP
Enclosures (4)
Seat Type | Current (Original ELA) | Proposed (Renewal ELA) | Increase
Named-User Seats | 150 | 220 | +70
Floating/Concurrent-Use Seats | 40 | 60 | +20
Total | 190 | 280 | +90

CONFIDENTIAL — SETTLEMENT COMMUNICATION — WITHOUT PREJUDICE

CALDERWOOD & HARKNESS LLP

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