10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2014

or

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35520

GIGOPTIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-2439072
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

130 Baytech Drive

San Jose, CA  95134

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting Company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨   No  x

The number of shares of Common Stock outstanding as of May 2, 2014, the most recent practicable date prior to the filing of this Quarterly Report on Form 10-Q, was 32,178,899 shares.

Table of Contents

		PAGE NO
PART I FINANCIAL INFORMATION
ITEM 1	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 30, 2014 and December 31, 2013	3
	Condensed Consolidated Statements of Operations for the three months ended March 30, 2014 and March 31, 2013	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 30, 2014 and March 31, 2013	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 30, 2014 and March 31, 2013	6
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	25
ITEM 4	Controls and Procedures	25
PART II OTHER INFORMATION
ITEM 1	Legal Proceedings	25
ITEM 1A	Risk Factors	26
ITEM 6	Exhibits	27

2

PART I

FINANCIAL INFORMATION

GIGOPTIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 30,			December 31,
	2014			2013
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	19,865		$	20,377
Accounts receivable, net		6,065			5,021
Inventories		4,753			4,617
Prepaid and other current assets		308			434
Total current assets		30,991			30,449
Property and equipment, net		2,958			2,999
Intangible assets, net		3,064			3,287
Goodwill		9,860			9,860
Restricted cash		284			284
Other assets		159			183
Total assets	$	47,316		$	47,062
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,527		$	831
Accrued compensation		1,046			1,170
Other current liabilities		2,420			2,746
Total current liabilities		5,993			4,747
Pension liabilities		141			140
Deferred rent, noncurrent		162			177
Other long term liabilities		422			418
Total liabilities		6,718			5,482
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding as of March 30, 2014 and December 31, 2013		-			-
Common stock, $0.001 par value; 50,000,000 shares authorized as of March 30, 2014 and December 31, 2013; 32,178,795 and 32,067,616 shares issued and outstanding as of March 30, 2014 and December 31, 2013, respectively		32			32
Additional paid-in capital		140,627			139,710
Treasury stock, at cost; 701,754 shares as of March 30, 2014 and December 31, 2013, respectively		(2,209	)		(2,209	)
Accumulated other comprehensive income		488			490
Accumulated deficit		(98,340	)		(96,443	)
Total stockholders’ equity		40,598			41,580
Total liabilities and stockholders’ equity	$	47,316		$	47,062

See accompanying Notes to Condensed Consolidated Financial Statements

(1) The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

3

GIGOPTIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 30, 2014			March 31, 2013
Total revenue	$	7,386		$	6,921
Total cost of revenue		3,126			2,636
Gross profit		4,260			4,285
Research and development expense		3,742			3,236
Selling, general and administrative expense		2,398			2,353
Restructuring expense		-			950
Special litigation-related expense		-			415
Total operating expenses		6,140			6,954
Loss from operations		(1,880	)		(2,669	)
Interest expense, net		(17	)		(54	)
Other income, net		10			168
Loss before provision for income taxes		(1,887	)		(2,555	)
Provision for income taxes		10			13
Net loss	$	(1,897	)	$	(2,568	)
Net loss per share—basic and diluted	$	(0.06	)	$	(0.12	)
Weighted average number of shares used in per share calculations - basic and diluted		31,435			21,547

See accompanying Notes to Condensed Consolidated Financial Statements

4

GIGOPTIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended
	March 30, 2014			March 31, 2013
Net loss	$	(1,897	)	$	(2,568	)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment		(2	)		8
Other comprehensive income (loss), net of tax		(2	)		8
Comprehensive loss	$	(1,899	)	$	(2,560	)

See accompanying Notes to Condensed Consolidated Financial Statements

5

GIGOPTIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	March 30,			March 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(1,897	)	$	(2,568	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		917			914
Stock-based compensation		1,010			1,770
Change in fair value of warrants		2			(15	)
Gain on sale of property and equipment		-			(131	)
Changes in operating assets and liabilities:
Accounts receivable, net		(1,044	)		(1,574	)
Inventories		(136	)		(226	)
Prepaid and other current assets		(25	)		(280	)
Other assets		25			12
Accounts payable		1,595			(12	)
Accrued restructuring		(29	)		13
Accrued compensation		(125	)		129
Other current liabilities		(487	)		(101	)
Other long-term liabilities		(13	)		(39	)
Net cash used in operating activities		(207	)		(2,108	)
Cash flows from investing activities:
Purchases of property and equipment		(123	)		(883	)
Proceeds from sale of property and equipment		-			131
Net cash used in investing activities		(123	)		(752	)
Cash flows from financing activities:
Proceeds from issuance of stock		10			-
Taxes paid related to net share settlement of equity awards		(103	)		(75	)
Net borrowings on line of credit		-			2,300
Repayment of capital lease		(89	)		(117	)
Net cash provided by (used in) financing activities		(182	)		2,108
Effect of exchange rates on cash and cash equivalents		-			58
Net decrease in cash and cash equivalents		(512	)		(694	)
Cash and cash equivalents at beginning of period		20,377			10,147
Cash and cash equivalents at end of period	$	19,865		$	9,453
Supplemental disclosure of cash flow information
Interest paid	$	17		$	54
Property, plant and equipment acquired with accounts payable	$	406		$	25

See accompanying Notes to Condensed Consolidated Financial Statements

6

GIGOPTIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

Organization

GigOptix Inc.(“GigOptix” or the “Company”) is a leading fabless supplier of high speed semiconductorcomponentsthat enable end-to-end information streaming over optical and wireless networks and address long haul and metro telecommunications applications as well as emerging high-growth opportunities for Cloud and datacenter connectivity, interactive applications for consumer electronics and the industrial, defense and avionics industries.  The business is made up of two product lines: the High-Speed Communications (“HSC”) product line and the Industrial product line.

The HSC product line offers a broad portfolio of high performance optical and wireless components to telecommunications (“telecom”) and data communications (“datacom”) customers, i) mixed signal radio frequency integrated circuits (“RFIC”), including 10 to 400 gigabit per second (“Gbps”) laser and optical drivers and trans-impedance amplifiers (“TIA”) for telecom, datacom, and consumer electronic fiber-optic applications; ii) power amplifiers and transceivers for microwave and millimeter monolithic microwave integrated circuit (“MMIC”) wireless applications including 73 Ghz and 83 GHz power amplifiers and transceiver chips; and iii) integrated systems in a package (“SIP”) solutions for both fiber-optic and wireless applications.  The HSC product line also partners with key customers on development projects that generate engineering project revenue for the Company while helping to position the Company for future product revenues with these key customers.

The Industrial product line offers a wide range of digital and mixed-signal application specific integrated circuit (“ASIC”) solutions for industrial, military, avionics, medical and communications markets. The Industrial product line partners with ASIC customers on development projects that generate engineering project revenue for the Company which generally leads to future product revenues with these ASIC customers.

The Company’s products focus on the specification, design, development and sale of analog semiconductor integrated circuits (“ICs”), multi-chip module (“MCM”) solutions, and digital and mixed signal ASICs, as well as wireless communications MMICs and modules.

GigOptix, Inc., the successor to GigOptix LLC, was formed as a Delaware corporation in March 2008 in order to facilitate a combination between GigOptix LLC and Lumera Corporation (“Lumera”). Before the combination, GigOptix LLC acquired the assets of iTerra Communications LLC in July 2007 (“iTerra”) and Helix Semiconductors AG (“Helix”) in January 2008. On November 9, 2009, GigOptix acquired ChipX, Incorporated (“ChipX”). On June 17, 2011, GigOptix acquired Endwave Corporation (“Endwave”). As a result of the acquisitions, Helix, Lumera, ChipX and Endwave all became wholly owned subsidiaries of GigOptix.  In March 2013, the Company established a German subsidiary, GigOptix GmbH. The subsidiary is engaged in research and development for the Company’s HSC product line including electro-optical products.

In February 2014, together with Fundação CPqD – Centro De Pesquisa e Desenvolvimento em Telecomunicações (“CPqD”), the Company incepted a new joint venture of which the Company owns 49% and CPqD owns 51%, BrPhotonics Produtos Optoeletrônicos LTDA. (“BrP”), based in Campinas, Brazil, which will be a provider of advanced high-speed devices for optical communications and integrated transceiver components that enable information streaming over communications networks. This joint venture is engaged in research and development of Silicon-Photonics (“SiPh”) advanced electro-optical products.  As noted in the Company’s Annual Report for the year ended December 31, 2013 on Form 10-K (the “2013 Form 10-K”), the Company is transferring into BrP its knowledge-base and intellectual property of Thin Film Polymer on Silicon (“TFPS^TM”) technology, inventory related to the TFPS^TM platform, as well as the complete production line equipment that previously resided at its Bothell, Washington, facility.  Currently, BrP holds the rights to the Company’s TFPS^TM technology.   As of March 30, 2014, the Company had not transferred its inventory related to the TFPS^TM platform, or the production line equipment into BrP.

Basis of Presentation

The Company’s fiscal year ends on December 31. For quarterly reporting, the Company employs a five-week, four-week, four-week, reporting period. The first quarter of 2014 ended on Sunday, March 30, 2014. The first quarter of 2013 ended on Sunday, March 31, 2013. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements as of March 30, 2014 and for the three months ended March 30, 2014 and March 31, 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X, and include the accounts of the Company and all of its subsidiaries. Accordingly, they do not include all of the information and footnotes required by such accounting principles for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of March 30, 2014 and the results of operations and cash flows for the three months ended March 30, 2014 and March 31, 2013. The condensed consolidated results of operations for the three months ended March 30, 2014 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2014. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s 2013 Form 10-K.

7

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. These judgments can be subjective and complex, and consequently, actual results could differ materially from those estimates and assumptions. Descriptions of these estimates and assumptions are included in the 2013 Form 10-K and the Company encourages you to read its 2013 Form 10-K for more information about such estimates and assumptions.

NOTE 2—BALANCE SHEET COMPONENTS

Accounts receivable, net consisted of the following (in thousands):

	March 30,			December 31,
	2014			2013
Accounts receivable	$	6,130		$	5,241
Allowance for doubtful accounts		(65	)		(220	)
	$	6,065		$	5,021

Property and equipment, net consisted of the following (in thousands, except depreciable life):

	Life		March 30,			December 31,
	(In years)		2014			2013
Network and laboratory equipment		3 – 5	$	11,676		$	11,250
Computer software and equipment		2 – 3		4,018			3,928
Furniture and fixtures		3 – 7		176			176
Office equipment		3 – 5		137			137
Leasehold improvements		1 – 5		378			378
				16,385			15,869
Accumulated depreciation and amortization				(13,427	)		(12,870	)
Property and equipment, net			$	2,958		$	2,999

For the three months ended March 30, 2014 and March 31, 2013, depreciation expense related to property and equipment was $543,000 and $572,000, respectively.

In addition to the property and equipment above, the Company has prepaid licenses. For the three months ended March 30, 2014 and March 31, 2013, amortization related to these prepaid licenses was $151,000 and $89,000, respectively.

8

Inventories consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Raw materials	$	2,278	$	2,103
Work in process		734		780
Finished goods		1,741		1,734
	$	4,753	$	4,617

Accrued and other current liabilities consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Amounts billed to the U.S. government in excess of approved rates	$	191	$	191
Warranty liability		315		330
Customer deposits		355		313
Capital lease obligations, current portion		196		284
Restructuring liabilities, current portion		-		30
Sales return reserve		196		151
Other		1,167		1,447
	$	2,420	$	2,746

The Company generally offers a one year warranty on its products. The Company records a liability based on estimates of the costs that may be incurred under its warranty obligations and charges to the cost of product revenue the amount of such costs at the time revenues are recognized. The warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. The estimates of anticipated rates of warranty claims and costs per claim are primarily based on historical information and future forecasts.

Changes in the Company’s product warranty liability during the three months ended March 30, 2014 and March 31, 2013 are as follows (in thousands):

	Three months ended
	March 30, 2014			March 31, 2013
Beginning balance	$	330		$	612
Warranties accrued		112			127
Warranties settled or reversed		(127	)		(253	)
Ending balance	$	315		$	486

9

NOTE 3—FAIR VALUE

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 30, 2014:
Assets:
Cash equivalents:
Money market funds	$	16,357	$	16,357	$	-	$	-
	$	16,357	$	16,357	$	-	$	-
Current liabilities:
Liability warrants	$	17	$	-	$	-	$	17
December 31, 2013:
Assets:
Cash equivalents:
Money market funds	$	1,356	$	1,356	$	-	$	-
	$	1,356	$	1,356	$	-	$	-
Current liabilities:
Liability warrants	$	15	$	-	$	-	$	15

 The Company’s financial assets and liabilities are valued using market prices on active markets (“Level 1”), less active markets (“Level 2”) and unobservable markets (“Level 3”). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments.  Level 3 instruments are valued using unobservable market values in which there is little or no market data, and which require the Company to apply judgment to determine the fair value.

For the period ended March 30, 2014, the Company did not have any significant transfers between Level 1, Level 2 and Level 3.

The amounts reported as cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and other current liabilities approximate fair value due to their short-term maturities. The carrying value of the Company’s line of credit and capital lease obligations approximates fair value and is based upon borrowing rates currently available to the Company for loans and capital leases with similar terms.

Liability Warrants

The Company issued warrants to Bridge Bank in connection with a waiver of certain events of default that arose under a November 2009 loan and security agreement with Bridge Bank. Certain provisions in the warrant agreements provided for down-round protection if the Company raised equity capital at a per share price which was less than the per share price of the warrants. Such down-round protection also requires the Company to classify the value of the warrants as a liability on the issuance date and then record changes in the fair value through the consolidated statements of operations for each reporting period until the warrants are either exercised or cancelled. The fair value of the liability is recalculated and adjusted each quarter with the differences being charged to other income (expense), net on the consolidated statements of operations. The fair value of these warrants was determined using a Black-Scholes option-pricing model, which requires the use of significant unobservable market values.  As a result, these warrants are classified as Level 3 financial instruments. On July 7, 2010, the Company raised additional equity through an offering of 2,760,000 shares at $1.75 per share, thus triggering the down-round protection and adjustment of the number of warrants issued to Bridge Bank. On December 24, 2013, the Company raised additional equity through an offering of 9,573,750 shares at $1.42 per share, thus triggering the down-round protection and adjustment of the number of warrants issued to Bridge Bank.

10

The fair value of the warrants was estimated using the following assumptions:

	As of March 30, 2014			As of December 31, 2013
Stock price	$	1.67		$	1.53
Strike price	$	2.51		$	2.51
Expected life	3.30 years			3.55 years
Risk-free interest rate		0.90	%		1.30	%
Volatility		65	%		65	%
Fair value per share	$	0.57		$	0.52

The following table summarizes the warrants subject to liability accounting as of March 30, 2014 and December 31, 2013 (in thousands, except share and per share amounts) (see also Note 6):

													Three Months Ended March 30, 2014				Three Months Ended March 31, 2013
Holder	Original Warrants		Adjusted Warrants		Grant Date	Expiration Date	Price per Share		Fair Value March 30, 2014		Fair Value December 31, 2013		Exercise of Warrants		Change in Fair Value		Exercise of Warrants		Change in Fair Value			Related Agreement
Bridge Bank		20,000		29,115	4/7/2010	7/7/2017	$	2.51	$	17	$	15		-	$	2		-	$	(15	)	Credit Agreement

The change in the fair value of the Level 3 liability warrants during the three months ended March 30, 2014 is as follows (in thousands):

Fair value at December 31, 2013	$	15
Exercise of warrants		-
Change in fair value		2
Fair value at March 30, 2014	$	17

The warrant liability is included in other current liabilities on the condensed consolidated balance sheets.

NOTE 4—INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following (in thousands):

	March 30, 2014							December 31, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer relationships	$	3,277	$	(1,803	)	$	1,474	$	3,277	$	(1,697	)	$	1,580
Existing technology		3,783		(2,575	)		1,208		3,783		(2,473	)		1,310
Order backlog		732		(732	)		-		732		(732	)		-
Patents		457		(398	)		59		457		(397	)		60
Trade name		659		(336	)		323		659		(322	)		337
Total	$	8,908	$	(5,844	)	$	3,064	$	8,908	$	(5,621	)	$	3,287

For the three months ended March 30, 2014 and March 31, 2013, amortization of intangible assets was as follows (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	103	$	122
Selling, general and administrative expense		120		131
	$	223	$	253

11

Estimated future amortization expense related to intangible assets as of March 30, 2014 is as follows (in thousands):

Years ending December 31,
2014	$	670
2015		893
2016		869
2017		487
2018		145
Total	$	3,064

As of March 30, 2014, the Company had $9.9 million of goodwill in connection with the acquisitions of ChipX and Endwave. In addition to its annual review, the Company also performs a review of the carrying value of its intangible assets if the Company believes that indicators of impairment exist. During the first quarter of 2014, there were no factors which indicated impairment. The Company did not record impairment on any intangibles, including goodwill, for the three months ended March 30, 2014.  In addition, the Company did not record an impairment of goodwill for the year ended December 31, 2013.

NOTE 5—CREDIT FACILITIES

On March 25, 2013, the Company entered into a second amended and restated loan and security agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”) to replace the amended and restated loan and security agreement entered on December 9, 2011. Pursuant to the Loan Agreement, the total aggregate amount that the Company is entitled to borrow from SVB has increased to $7 million, which is now split into two different credit facilities, comprised of (i) the existing Revolving Loan facility which was amended to provide that the Company is entitled to borrow from SVB up to $3.5 million, based on net eligible accounts receivable after an 80% advance rate and subject to limits based on the Company’s eligible accounts as determined by SVB and (ii) a new facility under which the Company is entitled to borrow from SVB up to $3.5 million without reference to accounts receivable under which the principal balance and accrued interest must be repaid within 3 business days after the date of any advance under the facility. In addition, the Loan Agreement eliminates the financial covenants contained in the previous loan agreement.

The Loan Agreement with SVB is secured by all of the Company’s assets, including all accounts, equipment, inventory, receivables, and general intangibles. The Loan Agreement contains certain restrictive covenants that will impose significant operating and financial restrictions on its operations, including, but not limited to restrictions that limit its ability to:

• Sell, lease, or otherwise transfer, or permit any of its subsidiaries to sell, lease or otherwise transfer, all or any part of its business or property, except in the ordinary course of business or in connection with certain indebtedness or investments permitted under the amended and restated loan agreement;

• Merge or consolidate, or permit any of its subsidiaries to merge or consolidate, with or into any other business organization, or acquire, or permit any of its subsidiaries to acquire, all or substantially all of the capital stock or property of another person;

• Create, incur, assume or be liable for any indebtedness, other than certain indebtedness permitted under the amended and restated loan and security agreement;

• Pay any dividends or make any distribution or payment on, or redeem, retire, or repurchase, any capital stock; and

• Make any investment, other than certain investments permitted under the amended and restated loan and security agreement.

The Company had no outstanding balance on its line of credit as of March 30, 2014.

NOTE 6—STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Public Offering

On December 19, 2013, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC as representative of several underwriters to the Underwriting Agreement relating to a public offering of an aggregate of 8,325,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share at a public offering price of $1.42 per share. The Shares are accompanied by the associated rights to purchase shares of Series A Junior Preferred Stock, par value $0.001 per share, of the Company created by the Rights Agreement, dated December 16, 2011, between the Company and the American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agreement”).  Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30 day option to purchase up to an additional 1,248,750 shares of common stock to cover over-allotments.

12

On December 24, 2013, the Company completed its public offering of 9,573,750 newly issued shares of common stock at a price to the public of $1.42 per share. The number of shares sold in the offering included the underwriter’s full exercise on December 24, 2013 of their over-allotment option of 1,248,750 shares of common stock. The net proceeds to the Company from the offering was approximately $12.3 million which consisted of $12.5 million after underwriting discounts, commissions and expenses less an additional $250,000 for legal, accounting, registration and other transaction costs related to the public offering.

Common and Preferred Stock

In December 2008, the Company’s stockholders approved an amendment to the Certificate of Incorporation to authorize 50,000,000 shares of common stock of par value $0.001. In addition, the Company is authorized to issue 1,000,000 shares of preferred stock of $0.001 par value of which 300,000 shares have been designated Series A Junior Preferred Stock with powers, preferences and rights as set forth in the certificate of designation dated December 16, 2011; the remainder of the shares of preferred stock are undesignated, for which the Board of Directors is authorized to fix the designation, powers, preferences and rights. As of March 30, 2014 and December 31, 2013, there were no shares of preferred stock issued or outstanding.

2008 Equity Incentive Plan

In December 2008, the Company adopted the 2008 Equity Incentive Plan (the “2008 Plan”) for directors, employees, consultants and advisors to the Company or its affiliates. Under the 2008 Plan, 2,500,000 shares of common stock were reserved for issuance upon the completion of a merger with Lumera Corporation (“Lumera”) on December 9, 2008. On January 1 of each year, starting in 2009, the aggregate number of shares reserved for issuance under the 2008 Plan increase automatically by the lesser of (i) 5% of the number of shares of common stock outstanding as of the Company’s immediately preceding fiscal year, or (ii) a number of shares determined by the Board of Directors. The maximum number of shares of common stock to be granted is up to 21,000,000 shares. Forfeited options or awards generally become available for future awards.As of December 31, 2013, the stockholders had approved 15,021,253 shares for future issuance. On January 1, 2014, there was an automatic increase of 1,603,381 shares. As of March 30, 2014, 12,255,761 options to purchase common stock and restricted stock were outstanding and 3,379,835 shares are authorized for future issuance under the 2008 equity incentive plan.

Under the 2008 Plan, the exercise price of a stock option is at least 100% of the stock’s fair market value on the date of grant, and if an ISO is granted to a 10% stockholder at least 110% of the stock’s fair market value on the date of grant. Vesting periods for awards are recommended by the chief executive officer and generally provide for stock options to vest over a four-year period, with a one year vesting cliff of 25%, and have a maximum life of ten years from the date of grant. The Company has also issued restricted stock units (“RSUs”) which generally vest over a one to four-year period.

2007 Equity Incentive Plan

In August 2007, GigOptix LLC adopted the GigOptix LLC Equity Incentive Plan (the "2007 Plan"). The 2007 Plan provided for grants of options to purchase membership units, membership awards and restricted membership units to employees, officers and non-employee directors, and upon the completion of the merger with Lumera were converted into grants of up to 632,500 shares of stock. Vesting periods are determined by the Board of Directors and generally provide for stock options to vest over a four-year period and expire ten years from date of grant. Vesting for certain shares of restricted stock is contingent upon both service and performance criteria. The 2007 Plan was terminated upon the completion of merger with Lumera on December 9, 2008 and the remaining 864 stock options not granted under the 2007 Plan were cancelled. No shares of the Company’s common stock remain available for issuance of new grants under the 2007 Plan other than for satisfying exercises of stock options granted under this plan prior to its termination. As of March 30, 2014, options to purchase a total of 414,936 shares of common stock and 4,125 warrants to purchase common stock were outstanding.

Lumera 2000 and 2004 Stock Option Plan

In December 2008, in connection with the merger with Lumera, the Company assumed the existing Lumera 2000 Equity Incentive Plan and the Lumera 2004 Stock Option Plan (the “Lumera Plan”). All unvested options granted under the Lumera Plan were assumed by the Company as part of the merger. All contractual terms of the assumed options remain the same, except for the converted number of shares and exercise price based on merger conversion ratio of 0.125. As of March 30, 2014, no additional options can be granted under the Lumera Plan, and options to purchase a total of 72,428 shares of common stock were outstanding.

Warrants

As of December 31, 2013, the Company had a total of 1,468,239 warrants to purchase common stock outstanding under all warrant arrangements. During the three months ended March 30, 2014, no warrants were exercised and 284,999 warrants expired. As a result, as of March 30, 2014, the Company had 1,183,240 warrants to purchase common stock outstanding under all warrant arrangements. Some of the warrants have anti-dilution provisions which adjust the number of warrants available to the holder such as, but not limited to, stock dividends, stock splits and certain reclassifications, exchanges, combinations or substitutions. These provisions are specific to each warrant agreement.

13

Stock-based Compensation Expense

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 30, 2014 and March 31, 2013 (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	76	$	80
Research and development expense		275		323
Selling, general and administrative expense		659		705
Restructuring expense		-		662
	$	1,010	$	1,770

 For the three months ended March 31, 2013, included in the $1.8 million of stock-based compensation expense was $662,000 in restructuring expense to modify the exercise period and accelerate the vesting of stock options and RSUs (see Note 7).

The Company did not grant any options during the three months ended March 30, 2014 and March 31, 2013.

During the three months ended March 30, 2014, the Company granted 1,405,085 RSUs with a grant-date fair value of $2.4 million or $1.70 per share. The Company did not grant any RSUs during the three months ended March 31, 2013.

As of March 30, 2014, the total compensation cost not yet recognized in connection with unvested stock options and RSUs under the Company’s equity compensation plans was approximately $3.3 million and $3.3 million, respectively. Unrecognized compensation will be amortized on a straight-line basis over a weighted-average period of approximately 1.9 years for stock options and approximately 2.33 years for RSUs.

Stock Option and RSU Activity

The following is a summary of option activity for the Company’s equity incentive plans, including both the 2008 Plan and other prior plans for which there are outstanding options but no new grants since the 2008 Plan was adopted:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term, in Years
Outstanding, December 31, 2013		10,306,671		$	2.34		6.96
Granted		-
Exercised		(9,075	)	$	1.08
Forfeited/Expired		(98,309	)	$	2.71
Ending balance, March 30, 2014		10,199,287					6.71
Vested and exercisable and expected to vest, March 30, 2014		10,024,189		$	2.34		6.68
Vested and exercisable, March 30, 2014		7,629,091		$	2.39		6.27

The aggregate intrinsic value of options vested, exercisable and expected to vest, based on the fair value of the underlying stock options as of March 30, 2014 was approximately $1.7 million. The aggregate intrinsic value reflects the difference between the exercise price of the underlying stock options and the Company’s closing share price of $1.67 as of March 28, 2014.

The total intrinsic value of options exercised during the three months ended March 30, 2014 was $5,000. During the three months ended March 31, 2013, the Company did not have any options exercised.

RSUs are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Typically, vesting of RSUs is subject to the employee’s continuing service to the Company. RSUs generally vest over a period of one to four years and are expensed ratably on a straight line basis over their respective vesting period net of estimated forfeitures. The fair value of the RSUs granted is the product of the number of shares granted and the grant date fair value of the Company’s common stock.

14

The following is a summary of RSU activity for the indicated periods:

	Number of Shares			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Vesting Term, Years		Aggregate Intrinsic Value
								(In thousands)
Outstanding, December 31, 2013		1,313,801		$	1.19		1.85	$	2,010
Granted		1,405,085			1.70
Released		(161,700	)		1.14
Forfeited/expired		(13,348	)		0.86
Outstanding, March 30, 2014		2,543,838		$	1.48		2.33	$	4,248

The majority of the RSUs that vested in the three months ended March 30, 2014 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were based on the value of the RSUs on their vesting date as determined by the Company’s closing stock price. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company. For the three months ended March 30, 2014, 161,700 shares of RSUs vested with an intrinsic value of approximately $270,000. The Company withheld 60,000 shares to satisfy approximately $103,000 of employees’ minimum tax obligation on the vested RSUs.

NOTE 7—RESTRUCTURING

During the first of quarter of 2013, the Company undertook restructuring activities to reduce its expenses.  The components of the restructuring charge included $662,000 of non-cash expenses associated with the acceleration of stock options and RSUs, $288,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations.  The net charge for these restructuring activities was $950,000. The Company had no restructuring activities during the three months ended March 30, 2014.

The following is a summary of the restructuring activity (in thousands):

	Three Months Ended
	March 30, 2014			March 31, 2013
Beginning balance	$	30		$	168
Charges		-			950
Uses and adjustments		(30	)		(936	)
Ending balance	$	-		$	182

During the three months ended March 30, 2014, the Company paid out its remaining balance in accrued restructuring, which was the deposit for the Palo Alto facilities. As of March 30, 2014, the Company had no balance in accrued restructuring.

As of March 31, 2013, the Company had $182,000 in accrued restructuring, which was included in other current liabilities.

NOTE 8—INCOME TAXES

The Company recorded a provision for income taxes of $10,000 for the three months ended March 30, 2014, and $13,000 for the three months ended March 31, 2013. The Company's effective tax rate was less than 1% for the three months ended March 30, 2014 and March 31, 2013.

The income tax provision for the three months ended March 30, 2014 and March 31, 2013 was due primarily to state taxes and foreign taxes due. The Company has incurred book losses in all tax jurisdictions and has a full valuation allowance against such losses.

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. In order to support a conclusion that a valuation allowance is not needed, positive evidence of sufficient quantity and quality is necessary to overcome negative evidence. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance has been recorded for the entire deferred tax asset as a result of uncertainties regarding realization of the asset including lack of profitability through March 30, 2014 and the uncertainty over future operating profitability and taxable income. The Company will continue to evaluate the potential realization of the deferred tax assets on a quarterly basis.

15

The Company files tax returns as prescribed by the tax laws of the jurisdictions it operates which include U.S. federal, U.S. state and foreign tax returns.  The Company’s major tax jurisdictions are the U.S., California, Switzerland, Germany and Israel. The Company’s federal and state tax returns for the years 2000 through 2013 remain subject to examination.

NOTE 9—NET LOSS PER SHARE

The following table summarizes total securities outstanding which were not included in the calculation of diluted net loss per share because to do so would have been anti-dilutive:

	March 30,		December 31,
	2014		2013
Stock options and RSUs		12,743,125		11,620,472
Common stock warrants		1,183,240		1,468,239
Total		13,926,365		13,088,711

NOTE 10—SEGMENT AND GEOGRAPHIC INFORMATION

The Company has determined that it operates as a single operating and reportable segment. The following tables reflect the results of the Company’s reportable segment consistent with the management system used by the Company’s Chief Executive Officer, the chief operating decision maker.

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended
	March 30, 2014				March 31, 2013
North America	$	2,227	30	%	$	1,979	29	%
Asia		2,158	29	%		2,280	33	%
Europe		2,909	40	%		2,163	31	%
Other		92	1	%		499	7	%
	$	7,386	100	%	$	6,921	100	%

The Company determines geographic location of its revenue based upon the destination of shipments of its products.

For the three months ended March 30, 2014, one customer accounted for 28% of total revenue. For the three months ended March 31, 2013, one customer accounted for 26% of our total revenue. No other customers accounted for more than 10% of total revenue during the periods presented.

During three months ended March 30, 2014, Italy, the United States, and Japan accounted for 36%, 28%, and 15% of revenue, respectively. During three months ended March 31, 2013 the United States, Italy, and Japan accounted for 29%, 26%, and 13% of revenue, respectively. No other countries accounted for more than 10% of the Company’s consolidated revenue during the periods presented.

The following table summarizes revenue by product line (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
HSC	$	5,282	$	4,565
Industrial		2,104		2,356
Total revenue	$	7,386	$	6,921

16

The following table summarizes long-lived assets by country (in thousands):

	March 30, 2014		December 31, 2013
United States	$	2,181	$	2,004
Switzerland		777		995
	$	2,958	$	2,999

Long-lived assets, comprised of property and equipment, are reported based on the location of the assets at each balance sheet date.

NOTE 11—COMMITMENTS AND CONTINGENCIES

Commitments

Leases

The Company leases its domestic and foreign sales offices under non-cancelable operating leases. These leases contain various expiration dates and renewal options.  The Company also leases certain software licenses under operating leases. Total facilities rent expense for the three months ended March 30, 2014 was $141,000, and for the three months ended March 31, 2013 was $140,000.

As of April 2014, the Company moved out of its Bothell, Washington facility which comprised 11,666 square feet and entered into a new one-year lease located in Bellevue, Washington which comprises approximately 2,100 square feet.

Aggregate non-cancelable future minimum rental payments under capital and operating leases are as follows (in thousands):

	Capital Leases			Operating Leases
Years ending December 31,	Minimum lease  payments			Minimum lease payments
2014	$	209		$	358
2015		4			432
2016		3			339
2017		3			57
Total minimum lease payments		219		$	1,186
Less: Amount representing interest		(14	)
Total capital lease obligations		205
Less: current portion		(196	)
Long-term portion of capital lease obligations	$	9

Legal Contingencies

From time to time, the Company may become involved in legal proceedings, claims and litigation arising in the ordinary course of business. When the Company believes a loss is probable and can be reasonably estimated, the Company accrues the estimated loss in the consolidated financial statements. Where the outcome of these matters is not determinable, the Company does not make a provision in the financial statements until the loss, if any, is probable and can be reasonably estimated or the outcome becomes known.  There are no known losses at this time.

17

NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS

In April 2014, the Financial Accounting Standards Board issued an accounting standards update improving the definition of discontinued operation and expanding the related disclosure. The discontinued operations reporting is limited to the disposals of components of an entity, which can be a business, a nonprofit activity, or an equity method investment, that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. The additional disclosures include major classes of line items constituting the pretax profit and loss, cash flows, and assets and liabilities. An entity also needs to disclose the pretax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. This standard is effective for beginning after December 15, 2014 and early adoption is permitted if disposals or classifications as held for sale have not been reported previously. The Company does not expect the adoption will have a material impact on the Company’s condensed consolidated financial statements.

NOTE 13—SUBSEQUENT EVENTS

During the second quarter of 2014, the Company undertook restructuring activities to reduce its expenses.  In conjunction with the creation of the BrP joint venture and the subsequent relocation of the related manufacturing activities to BrP, the Company ended its lease in the Bothell, Washington location and reduced its headcount.  The Company estimates that its restructuring charges will be approximately $300,000 which will include expenses to move out of the facility and expenses for severance, benefits and payroll taxes and other costs associated with employee terminations.

18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes included elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2013. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2013 and this Quarterly Report on Form 10-Q. We assume no obligation to update the forward-looking statements or such risk factors.

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference include forward-looking statements within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are also made in reliance upon the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Overview

We are a leading fabless supplier of high speed semiconductorcomponentsthat enable end-to-end information streaming over optical and wireless networks.  Our products address long haul and metro telecommunications applications as well as emerging high-growth opportunities for Cloud and datacenter connectivity, interactive applications for consumer electronics and the industrial, defense and avionics industries. The business is made up of two product lines: High-Speed Communications (HSC) product line and Industrial product line.

Through our HSC product line we offer a broad portfolio of high performance optical and wireless components to telecommunications (telecom) and data communications (datacom) customers, including i) mixed signal radio frequency integrated circuits (RFIC), including 10 to 400 gigabit per second (Gbps) laser and optical drivers and trans-impedance amplifiers (TIA) for telecom, datacom, and consumer electronic fiber-optic applications; ii) power amplifiers and transceivers for microwave and millimeter monolithic microwave integrated circuit (MMIC) wireless applications including 71 to 73 Ghz and 81 to 83 Ghz power amplifiers and transceiver chips; and iii) integrated systems in a package (SIP) solutions for both fiber-optic and wireless applications.  The HSC product line also partners with key customers on development projects that generate engineering project revenue and helps to position us for future product revenues with these key customers.

Through our Industrial product line, we offer a wide range of digital and mixed-signal application specific integrated circuit (ASIC) solutions for industrial, military, avionics, medical and communications markets. The Industrial product line partners with ASIC customers on development projects that generate engineering project revenue and which generally lead to future product revenues with these ASIC customers.

We focus on the specification, design, development and sale of analog semiconductor integrated circuits (ICs), multi-chip module (MCM) solutions, and digital and mixed signal ASICs, as well as wireless communications MMICs and modules. We believe we are an industry leader in the fast growing market for electronic solutions that enable high-bandwidth optical connections found in telecom, datacom and storage systems, and, increasingly, in consumer electronics and computing systems.

Since inception, we have expanded our customer base with the acquisition and integration of five businesses with complementary products and customers. In so doing, we have expanded our product line from a few leading 10Gbps ultra-long haul optical drivers at our inception in July 2007 to a line of products today that include: drivers, receivers and TIAs for 10 to 400Gbps optical applications; power amplifiers; and custom ASICs spanning 0.6um to 65nm technology nodes. Our direct sales force is based in three countries and is supported by a significant number of channel representatives and distributors that sell our products throughout North America, Europe, Japan and Asia.

Historically, we have incurred net losses. For the three months ended March 30, 2014 and the year ended December 31, 2013, we incurred net losses of $1.9 million and $1.9 million, respectively. For the three months ended March 30, 2014, we had cash outflows from operations of $207,000. For the year ended December 31, 2013, we had cash inflows from operations of $3.3 million. As of March 30, 2014 and December 31, 2013, we had an accumulated deficit of $98.3 million and $96.4 million, respectively.

19

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board issued an accounting standards update improving the definition of discontinued operation and expanding the related disclosure. The discontinued operations reporting is limited to the disposals of components of an entity, which can be a business, a nonprofit activity, or an equity method investment, that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. The additional disclosures include major classes of line items constituting the pretax profit and loss, cash flows, and assets and liabilities. An entity also needs to disclose the pretax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. This standard is effective for beginning after December 15, 2014 and early adoption is permitted if disposals or classifications as held for sale have not been reported previously. We do not expect the adoption will have a material impact on our condensed consolidated financial statements.

Results of Operations

Revenue

Revenue for the periods reported was as follows (in thousands, except percentages):

	Three Months Ended
	March 30, 2014			March 31, 2013
Product	$	6,679		$	5,684
Development fees and other		707			1,237
Total revenue	$	7,386		$	6,921
Increase period over period	$	465
Percentage increase, period over period		7	%

Total revenue for the three months ended March 30, 2014 was $7.4 million, an increase of $0.5 million or 7%, compared with $6.9 million for the three months ended March 31, 2013. For the three months ended March 30, 2014, 90% of our revenue was contributed by product revenue and 10% of our revenue was contributed by development fees and other revenue.For the three months ended March 31, 2013, 82% of our revenue was contributed by product revenue and 18% of our revenue was contributed by development fees and other revenue.

Product revenue for the three months ended March 30, 2014 was $6.7 million, an increase of $1.0 million or 18%, compared with $5.7 million for the three months ended March 31, 2013. The increase in product revenue during the three months ended March 30, 2014 was primarily due to the increased demand for our HSC product line, including both our Optics and RF E-band products, which was partially offset by a decrease in revenue from our Industrial ASIC product line

Development fees and other revenue for the three months ended March 30, 2014 was $0.7 million, a decrease of $0.5 million or 43%, compared with $1.2 million for the three months ended March 31, 2013. We experienced a decrease in development fees and other revenue due to a decrease in the number and size of development projects in our HSC and Industrial product lines.

Cost of Revenue and Gross Profit

 Cost of revenue and gross profit for the periods presented was as follows (in thousands, except percentages):

	Three Months Ended
	March 30, 2014			March 31, 2013
Total cost of revenue	$	3,126		$	2,636
Gross profit	$	4,260		$	4,285
Gross margin		58	%		62	%
Decrease, period over period		(25	)
Percentage decrease, period over period		-1	%

Gross profit consists of revenue less cost of revenue. Cost of revenue consists primarily of the costs to manufacture saleable chips, including outsourced wafer fabrication and testing; costs of direct materials; equipment depreciation; costs associated with procurement, production control and quality assurance; fees paid to our offshore manufacturing vendors; reserves for potential excess or obsolete material; costs related to stock-based compensation; accrued costs associated with potential warranty returns; and amortization of certain identified intangible assets. Amortization expense of identified intangible assets, namely existing technology, is presented within cost of revenue, as the intangible assets were determined to be directly attributable to revenue generating activities.

20

Gross profit for the three months ended March 30, 2014 was $4.3 million, or a gross margin of 58%, compared to a gross profit of $4.3 million, or a gross margin of 62%, for the three months ended March 31, 2013. The decrease in gross margin is primarily due to a change in product mix and lower revenue from development projects.

We record revenue from non-recurring engineering projects associated with product development that we enter into with certain customers. In general, these projects are associated with complex technology development, and as such we do not have certainty about our ability to achieve the program milestones. Achievement of the milestone is dependent on our performance and is typically accepted by the customer. The payment associated with achieving the milestone is generally commensurate with our effort or the value of the deliverable and is nonrefundable. Therefore, we record the expenses related to these projects in the periods incurred and recognize revenue only when we have earned the revenue and achieved the development milestones. Revenue from these projects is typically recorded at 100% gross margin because the costs associated with these projects are expensed as incurred and generally included in research and development expense. These efforts generally benefit our overall product development programs beyond the specific project requested by our customer.

Development project revenue and other non-product revenue for the three months ended March 30, 2014 was $0.7 million compared with $1.2 million for the three months ended March 31, 2013. Excluding the revenue and gross profit associated with development programs and other non-product revenue, gross margin was 53% and 54% for the three months ended March 30, 2014 and March 31, 2013, respectively.

Research and Development Expense

Research and development expense for the periods presented was as follows (in thousands, except percentages):

	Three Months Ended
	March 30, 2014			March 31, 2013
Research and development expense	$	3,742		$	3,236
Percentage of revenue		51	%		47	%
Increase, period over period	$	506
Percentage increase, period over period		16	%

Research and development expenses are expensed as incurred. Research and development expense consists primarily of salaries and related expenses for research and development personnel, consulting and engineering design, non-capitalized tools and equipment, engineering related semiconductor masks, depreciation for equipment, engineering expenses paid to outside technology development suppliers, allocated facilities costs and expenses related to stock-based compensation.

Research and development expense for the three months ended March 30, 2014 was $3.7 million compared to $3.2 million for the three months ended March 31, 2013, an increase of $506,000 or 16%. Research and development costs increased as compared to the first quarter of 2013 primarily due to a $526,000 increase in expenses for materials and project-related services for developing new products.

We expect research and development expense to moderately decrease from the first quarter of 2014 to the second quarter of 2014.

Selling, General and Administrative Expense

Selling, general and administrative expense for the periods presented was as follows (in thousands, except percentages):

	Three Months Ended
	March 30, 2014			March 31, 2013
Selling, general and administrative expense	$	2,398		$	2,353
Percentage of revenue		32	%		34	%
Increase, period over period	$	45
Percentage increase, period over period		2	%

Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, accounting, finance, sales, marketing and administration personnel, professional fees, allocated facilities costs, promotional activities and expenses related to stock-based compensation.

21

Selling, general and administrative expense for the three months ended March 30, 2014 and March 31, 2013 was flat at $2.4 million. During the three months ended March 30, 2014 compared to March 31, 2013, a $76,000 increase in professional services relating to our newly established joint venture, BrPhotonics Produtos Optoeletrônicos LTDA in Campinas, Sao Paolo, Brazil, was partially offset by a $46,000 decrease in stock based compensation.

We expect selling, general and administrative expense to moderately decrease from the first quarter of 2014 to the second quarter of 2014.

Restructuring Expense, Net

During the three months ended March 30, 2014, we did not incur any restructuring expense.

During the three months ended March 31, 2013, we recorded a restructuring expense of $950,000 to reduce our expenses.  The components of the restructuring charge included $662,000 of non-cash expenses associated with the acceleration of stock options and restricted stock units and $288,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations.

Special Litigation-Related Expense

During the three months ended March 30, 2014, we did not incur any special litigation-related expense.

During the three months ended March 31, 2013, we incurred special litigation-related expenses of $415,000, which was primarily due to $298,000 of legal fees associated with the misappropriation of trade secrets and breach of contract case against M/A-COM Technology Solutions, Inc. (“MACOM”), MACOM’s wholly-owned subsidiary Optomai, Inc., and three former employees of GigOptix who founded Optomai, and $108,000 of legal fees associated with the case against Advantech, the parent company of Allgon Microwave Corporation AB, or Allgon, for breach of contract.

Interest Expense, Net and Other Income, Net

	Three Months Ended
	March 30, 2014			March 31, 2013
Interest expense, net	$	(17	)	$	(54	)
Other income (expense), net		10			168
Total	$	(7	)	$	114

Interest expense, net and other income, net consist primarily of gains and losses related to foreign currency transactions, gains and losses related to property and equipment disposals, interest on line of credit, interest on capital leases and amortization of loan fees in connection with our Silicon Valley Bank line of credit and loan.

Interest expense, net for the three months ended March 30, 2014 was $17,000 compared to $54,000 for the three months ended March 31, 2013. Interest expense, net decreased as compared to the first quarter of 2013 primarily due to a $19,000 decrease in loan fees and an $11,000 decrease in interest on capital leases.

Other income, net for the three months ended March 30, 2014 was income of $10,000. Other income, net for the three months ended March 31, 2013 was income of $168,000, which primarily consisted of $131,000 gain on the sale of property and equipment.

Provision for Income Taxes

	Three Months Ended
	March 30, 2014			March 31, 2013
Provision for income taxes	$	10		$	13
Percentage of revenue		0	%		0	%
Decrease, period over period	$	(3	)
Percentage decrease, period over period		-23	%

Income tax expense was $10,000 and $13,000 for three months ended March 30, 2014 and March 31, 2013, respectively, and our effective tax rate was less than 1% for those periods. The income tax provision for the three months ended March 30, 2014 and March 31, 2013 were due primarily to state taxes and foreign taxes due. We have incurred book losses in all tax jurisdictions and have a full valuation allowance against such losses.

22

Liquidity and Capital Resources

 Cash and cash equivalents and cash flow data for the periods presented were as follows (in thousands):

	March 30, 2014		December 31, 2013
Cash and cash equivalents	$	19,865	$	20,377

	Three Months Ended
	March 30, 2014			March 31, 2013
Net cash used in operating activities	$	(207	)	$	(2,108	)
Net cash used in investing activities	$	(123	)	$	(752	)
Net cash provided by (used in) financing activities	$	(182	)	$	2,108

Public Offering

On December 19, 2013, we entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC as representative of several underwriters to the Underwriting Agreement relating to a public offering of an aggregate of 8,325,000 shares (the “Shares”) of our common stock, par value $0.001 per share at a public offering price of $1.42 per share. The Shares are accompanied by the associated rights to purchase shares of Series A Junior Preferred Stock, par value $0.001 per share, created by the Rights Agreement, dated December 16, 2011, between us and the American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agreement”).  Under the terms of the Underwriting Agreement, we granted the underwriters a 30 day option to purchase up to an additional 1,248,750 shares of common stock to cover over-allotments.

On December 24, 2013, we completed our public offering of 9,573,750 newly issued shares of common stock at a price to the public of $1.42 per share. The number of shares sold in the offering included the underwriter’s full exercise on December 24, 2013 of their over-allotment option of 1,248,750 shares of common stock. The net proceeds from the offering was approximately $12.3 million which consisted of $12.5 million after underwriting discounts, commissions and expenses less an additional $250,000 for legal, accounting, registration and other transaction costs related to the public offering.

Operating Activities

Operating activities used cash of $207,000 in the three months ended March 30, 2014. Our net loss from continuing operations, adjusted for depreciation, stock-based compensation and other non-cash items, was an income of $32,000. The remaining use of $239,000 of cash was primarily due to an increase in accounts receivable, net of $1.0 million, a decrease in other current liabilities of $487,000, an increase in inventories of $136,000, and a decrease in accrued compensation of $125,000 which were partially offset by an increase in accounts payable of $1.6 million.

Operating activities used cash of $2.1 million in the three months ended March 31, 2013. This resulted from a net loss of $2.6 million and we experienced cash usage for working capital for an increase in accounts receivable, net of $1.6 million, an increase in inventories of $226,000, an increase in prepaid and other current assets of $280,000, and a decrease in other current liabilities of $101,000. These decreases were partially offset by an increase in accrued compensation of $129,000. In addition, these uses were partially offset by non-cash expenses of stock based compensation of $1.8 million and depreciation and amortization of $914,000.

Investing Activities

Net cash used in investing activities for the three months ended March 30, 2014 was $123,000 from purchases of property and equipment.

Net cash used in investing activities for the three months ended March 31, 2013 was $752,000 and consisted of $883,000 of purchases of fixed assets partially offset by $131,000 proceeds from sale of property and equipment.

Financing Activities

Net cash used in financing activities for the three months ended March 30, 2014 was $182,000 and consisted primarily of $103,000 taxes paid related to net share settlement of equity awards and $89,000 for capital lease payments.

23

Net cash provided by financing activities for the three months ended March 31, 2013 was $2.1 million and consisted primarily of $2.3 million of net borrowings on our line of credit facilities with Silicon Valley Bank partially offset by $117,000 for capital lease payments.

Material Commitments

The following table summarizes our future net cash obligations for current debt, operating leases, and capital leases, in thousands of dollars, as of March 30, 2014:

Contractual Obligations at March 30, 2014:	Total		Less than One Year		One to Three Years		More than Three Years
Operating lease obligations		1,186		358		771		57
Capital lease obligations (including interest)		219		209		7		3
Total	$	1,405	$	567	$	778	$	60

GigOptix did not have any material commitments for capital expenditures as of March 30, 2014.

Impact of Inflation and Changing Prices on Net Sales, Revenue and Income

Inflation and changing prices have not had a material impact on the materials used in our production process during the periods and at balance sheet dates presented in this report.

Off-Balance Sheet Arrangements

GigOptix does not use off-balance-sheet arrangements with unconsolidated entities, nor does it use other forms of off-balance-sheet arrangements such as special purpose entities and research and development arrangements. Accordingly, GigOptix is not exposed to any financing or other risks that could arise if it had such relationships.

WHERE YOU CAN FIND MORE INFORMATION

Our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended are available on our website at http://www.gigoptix.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with the SEC. The information contained on our website is not a part of this Quarterly Report on Form 10-Q.

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to also use the following social media channels as a means of disclosing information about the company, our services and other matters and for complying with our disclosure obligations under Regulation FD:

• GigOptix Twitter Account (https://twitter.com/GigOptix)

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q.  Further, the references to the URLs for these websites are intended to be inactive textual references only.

You can also read and copy any document that we file, including this Annual Report on Form 10-K, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can electronically access our SEC filings there.  Additionally, the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, by our predecessor registrant Lumera are also available at http://www.sec.gov.

24

ITEM 3. QUANTITATIVE AND QUALTATIVE DISCLOSURES ABOUT MARKET RISK

This item has been omitted based on GigOptix’ status as a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining our disclosure controls and procedures. Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have evaluated the effectiveness of our disclosure controls and procedures as of March 30, 2014. Our CEO and CFO have concluded that our disclosure controls and procedures were effective as of that date and have also concluded that our consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in legal proceedings, claims and litigation arising in the ordinary course of business. When we believe a loss is probable and can be reasonably estimated, we accrue the estimated loss in our consolidated financial statements. Where the outcome of these matters is not determinable, we do not make a provision in our financial statements until the loss, if any, is probable and can be reasonably estimated or the outcome becomes known.

25

ITEM 1A. RISK FACTORS

We have revised the risk factors that relate to our business, as set forth below. These risks include any material changes to and supersede any similar the risks previously disclosed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013 and otherwise supplement those risks. We encourage investors to review the risk factors and uncertainties relating to our business disclosed in that Form 10-K, as well as those contained in Part 1, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, above.

We have incurred substantial operating losses in the past and we may not be able to achieve profitability in the future.

Historically, we have incurred net losses. For the three months ended March 30, 2014 and the years ended December 31, 2013 and 2012, we incurred net losses of $1.9 million, $1.9 million and $7.0 million, respectively. For the three months ended March 30, 2014, we had cash outflows from operations of $207,000. For the year ended December 31, 2013, we had cash inflows from operations of $3.3 million. For the year ended December 31, 2012, we had cash outflows from operations of $2.0 million. As of March 30, 2014, we had an accumulated deficit of $98.3 million. We expect development, sales and other operating expenses to increase in the future as we expand our business. If our revenue does not grow to offset these current expenses, we may not be profitable. In fact, in future quarters we may not have any revenue growth and our revenues could decline. Furthermore, if our operating expenses exceed expectations, financial performance will be adversely affected and we may continue to incur significant losses in the future.

We derive a significant portion of our revenue from a small number of customers and the loss of one or more of these key customers, the diminished demand for our products from a key customer, or the failure to obtain certifications from a key customer or its distribution channel could significantly reduce our revenue and profits.

A relatively small number of customers account for a significant portion of our revenue in any particular period. One or more of our key customers may discontinue operations as a result of consolidation, liquidation or otherwise, or reduce significantly its business with us due to the current economic conditions or their current situation. Reductions, delays and cancellation of orders from our key customers or the loss of one or more key customers could significantly reduce our revenue and profits. There is no assurance that our current customers will continue to place orders with us, that orders by existing customers will continue at current or historical levels or that we will be able to obtain orders from new customers.

For the three months ended March 30, 2014, one customer accounted for 28% of total revenue. For the three months ended March 31, 2013, one customer accounted for 26% of our total revenue. No other customers accounted for more than 10% of total revenue during the periods presented.

We could suffer unrecoverable losses on our customers’ accounts receivable, which would adversely affect our financial results.

Our operating cash flows are dependent on the continued collection of receivables. Although our accounts receivable as of March 30, 2014 increased by $1.0 million or 21% compared to the balance as of December 31, 2013, we have not had significant uncollectable accounts. However, if a customer is unable or refuses to pay we could suffer additional accounting losses as well as a reduction in liquidity. A significant increase in uncollectible accounts would have an adverse impact on our business, liquidity and financial results.

Our business is subject to foreign currency risk.

Sales to customers located outside the United States comprised 72% and 71% of our revenue for the three months ended March 30, 2014 and March 31, 2013, respectively. In addition, we have two subsidiaries overseas (Switzerland and Germany) that record their operating expenses in a foreign currency.  Since sales of our products have been denominated to date primarily in U.S. dollars, increases in the value of the U.S. dollar could increase the price of our products so that they become relatively more expensive to customers in the local currency of a particular country, leading to a reduction in sales. Future international activity may result in increased foreign currency denominated sales. Gains and losses on the conversion to U.S. dollars of accounts receivable, accounts payable and other monetary assets and liabilities arising from international operations may contribute to fluctuations in GigOptix’ results of operations. We currently do not have hedging or other programs in place to protect against adverse changes in the value of the U.S. dollar as compared to other currencies to minimize potential adverse effects.

26

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number	Description
10.1*	First Amendment to the Articles of Association of BrPhotonics Produtos Optoeletrônicos LTDA.
10.2*	Joint Venture and Quotaholders Agreement by and between GigOptix, Inc., Fundação CPqD – Centro De Pesquisa e Desenvolvimento em Telecomunicações (CPqD), and BrPhotonics Produtos Optoeletrônicos LTDA.
31.1*	Chief Executive Officer certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Chief Financial Officer certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Chief Executive Officer certification pursuant to Rule 13a-14(b) or Rule 13d-14(b) and Section 1350, Chapter 63 of Title 18 United States Code (18 U.S.C. 1350) as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2*	Chief Financial Officer certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350, Chapter 63 of Title 18 United States Code (18 U.S.C. 1350) as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101.INS*	Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*           Filed herewith

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GIGOPTIX, INC.
Date: May 9, 2014	/S/    AVI S. KATZ
	Dr. Avi S. Katz
	Chief Executive Officer and Chairman of the Board
Date: May 9, 2014	/S/ CURT P. SACKS
	Curt P. Sacks
	Chief Financial Officer

28

EX-10.1

Exhibit 10.1

BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA.

NIRE  35.2.28048795

CNPJ/MF  19.455.907/0001-73

1ª ALTERAÇÃO DO CONTRATO SOCIAL

Pelo presente instrumento particular, as partes abaixo indicadas:

FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, pessoa jurídica de direito privado sem fins lucrativos, com sede na Rua Dr. Ricardo Benetton Martins s/nº, Parque Polo II de Alta Tecnologia, Município de Campinas, Estado de São Paulo, CEP 13086-510, inscrita no CNPJ/MF sob o nº. 02.641.663/0001-10, com Estatuto Social registrado no Primeiro Cartório de Registro Civil de Pessoa Jurídica de Campinas-SP, microfilmado sob o nº. 5529 em 23/12/2004, neste ato representada pelo seu Presidente, Sr. Hélio Marcos Machado Graciosa, brasileiro, casado, engenheiro, CREA nº. 19.370-0, com endereço profissional no Município de Campinas, Estado de São Paulo, na Rua Dr. Ricardo Benetton Martins s/nº, Parque Polo II de Alta Tecnologia, CEP 13086-510, portador da cédula de identidade RG nº. 1.995.913-9-SSP/RJ e inscrito no CPF/MF sob o nº. 239.045.427-53;

JULIO CEZAR RODRIGUES MARTORANO, brasileiro, divorciado, pesquisador de telecomunicações, portador da cédula de identidade RG nº. 9.962.500 (SSP-SP) e inscrito no CPF/MF sob nº. 081.561.288-50, com endereço profissional no Município de Campinas, Estado de São Paulo, na Rua Dr. Ricardo Benetton Martins s/nº, Parque Polo II de Alta Tecnologia, CEP 13086-510; e

CARLOS EDUARDO SALLA, brasileiro, casado, matemático, portador da cédula de identidade RG nº. 13.292.325-7 (SSP-SP) e inscrito no CPF/MF sob o nº. 068.626.318-96, com endereço profissional no Município de Campinas, Estado de São Paulo, na Rua Dr. Ricardo Benetton Martins s/nº, Parque Polo II de Alta Tecnologia, CEP 13086-510;

sócios detentoras da totalidade do capital social da sociedade empresária limitada denominada BRPhotonics Produtos Optoeletrônicos LTDA., com sede no Município de Campinas, Estado de São Paulo, na Rua Doutor Ricardo Benetton Martins s/nº., Polo II de Alta Tecnologia, CEP 13086-510, inscrita no CNPJ/MF sob o nº. 19.455.907/0001-73 (“Sociedade”), com seus atos constitutivos devidamente arquivados na Junta Comercial do Estado de São Paulo (JUCESP) sob o NIRE 35.2.28048795, em sessão de 30 de dezembro de 2013 (“Contrato Social”);

têm entre si, justo e acordado, deliberar, alterar e consolidar o Contrato Social, de acordo com os seguintes termos e condições:

1

I - CESSÃO E TRANSFERÊNCIA DE QUOTAS; AUMENTO DE CAPITAL

1.1.Os sócios Julio Cezar Rodrigues Martorano e Carlos Eduardo Salla (anteriormente qualificados), neste ato, cedem e transferem à sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações (anteriormente qualificada), a título gratuito e em caráter irrevogável e irretratável, a totalidade de suas respectivas participações no capital social da Sociedade, totalizando 20 (vinte) quotas totalmente subscritas e integralizadas em moeda corrente nacional, no valor nominal de R$ 1,00 (um real) cada, perfazendo o montante de R$ 20,00 (vinte reais), passando a sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações, assim, a deter a totalidade das quotas representativas do capital social da Sociedade.

1.1.1.Os sócios retirantes Julio Cezar Rodrigues Martorano e Carlos Eduardo Salla, de um lado, e a sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações, de outro lado, dão-se, mútua e reciprocamente, a mais plena, rasa, geral e irrevogável quitação com relação à cessão e transferência de quotas pactuada no item 1.1 anterior, para nada mais reclamarem entre si, a qualquer tempo e título.

1.2.Ato contínuo à cessão e transferência de quotas pactuada no item 1.1 anterior, a sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações admite como nova sócia da Sociedade, GigOptix, Inc., sociedade devidamente constituída e existente de acordo com as leis do Estado de Delaware, Estados Unidos da América, com sede em 2711 Centerville Road, Wilmington, New Castle County, Delaware, Estados Unidos da América, inscrita no CNPJ/MF sob nº 19.665.035/0001-78, neste ato representada por seus procuradores, (i) Sra. Natália Cibele Correia da Silva, brasileira, solteira, advogada, portadora da cédula de identidade RG nº. 33.472.475-2/SSP-SP, inscrita na Ordem dos Advogados do Brasil, Seção de São Paulo (“OAB/SP”), sob o nº. 290.416 e no CPF/MF sob o nº. 316.825.008-29, e (ii) Sr. Darcio Siqueira de Sousa, brasileiro, casado, advogado, portador da cédula de identidade RG nº. 26.630.255-5/SSP-SP, inscrito na OAB/SP sob o nº. 240.530 e no CPF/MF sob o nº. 157.093.498-36, ambos com endereço profissional no Município de São Paulo, Estado de São Paulo, na Rua Líbero Badaró nº. 293, 27º andar, salas C e D (procuração anexa).

1.3.Neste ato, a sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações e a nova sócia GigOptix, Inc. (anteriormente qualificada) deliberam aumentar o capital social da Sociedade em R$ 10.000,00 (dez mil reais), mediante a subscrição de 10.000 (dez mil) novas quotas representativas do capital social da Sociedade, no valor nominal de R$ 1,00 (um real) cada uma, sendo que:

(a) a sócia Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações subscreve neste ato 200 (duzentas) novas quotas representativas do capital social da Sociedade, no valor nominal de R$ 1,00 (um real) cada, perfazendo o montante de R$ 200,00 (duzentos reais), a serem integralizadas em bens e/ou moeda corrente nacional até 31 de dezembro de 2014; e

(b) a sócia ingressante GigOptix, Inc. subscreve neste ato 9.800 (nove mil e oitocentas) novas quotas representativas do capital social da Sociedade, no valor nominal de R$ 1,00 (um real) cada, perfazendo o montante de R$ 9.800,00 (nove mil e oitocentos reais), a serem integralizadas em bens e/ou moeda corrente até 31 de dezembro de 2014.

2

1.4.Em virtude do aumento de capital previsto no item 1.3 anterior, o capital social da Sociedade passa dos atuais R$ 10.000,00 (dez mil reais) para R$ 20.000,00 (vinte mil reais), representado por 20.000 quotas no valor nominal de R$ 1,00 (um real) cada, sendo 10.000 (dez mil) quotas já integralizadas em moeda corrente nacional, e 10.000 (dez mil) quotas a serem integralizadas em bens e moeda corrente nacional até 31 de dezembro de 2014.

1.5.Em virtude do disposto nos itens 1.3 e 1.4 acima, a Cláusula 4ª do Contrato Social passa a vigorar com a seguinte redação:

“Cláusula 4ª - O capital social da Sociedade é de R$ 20.000,00 (vinte mil reais), dividido em 20.000 (vinte mil) quotas no valor nominal de R$ 1,00 (um real) cada, sendo 10.000 (dez mil) quotas, no valor total de R$ 10.000,00 (dez mil reais), já integralizadas em moeda corrente nacional, e 10.000 (dez mil) quotas, no valor total de R$ 10.000,00 (dez mil reais), a serem integralizadas até 31 de dezembro de 2014, assim distribuídas entre as sócias:

Sócia	Quotas a integralizar	Quotas integralizadas	Valor (R$)	Participação
Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações	200	10.000	10.200,00	51%
GigOptix, Inc	9.800	-	9.800,00	49%
TOTAL	10.200	10.000	20.000,00	100%

Parágrafo 1º - De acordo com o artigo 1.052 da Lei nº. 10.406/2002 (“Código Civil”), a responsabilidade das sócias é restrita ao valor de suas quotas.

Parágrafo 2º - Cada quota concede ao seu respectivo titular o direito a 1 (um) voto nas reuniões de sócios da Sociedade.

Parágrafo 3º - De acordo com o artigo 1.056 do Código Civil, as quotas da Sociedade são indivisíveis.”

II - ADMINISTRAÇÃO

2.1.Deliberam as sócias alterar a forma de administração da Sociedade, que passará a ser conduzida pelo Conselho de Administração e pelos Diretores.

2.2.Em virtude do disposto no item 2.1 anterior, deliberam as sócias promover a criação de um Conselho de Administração que será constituído por 4 (quatro) membros eleitos pelas sócias em ato separado, para um mandato de 2 (dois) anos, cabendo a cada uma das sócias a indicação e nomeação de 2 (dois) membros.

3

2.3.A Sociedade terá até 3 (três) administradores, eleitos pelas sócias a qualquer tempo para um mandato por tempo indeterminado, sendo um deles designado Diretor Presidente, e os demais, se houver, individualmente designado Diretor. O Diretor Presidente e os demais, se houver, serão designados em conjunto Diretores.

2.4.As sócias, neste ato, nomeiam como Diretor Presidente o Sr. Julio César Rodrigues Fernandes de Oliveira, brasileiro, casado, engenheiro, portador da cédula de identidade RG nº. 2445690 (SSP/PB) e inscrito no CPF/MF sob o nº. 034.687.214-63, com endereço profissional no Município de Campinas, Estado de São Paulo na Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

2.5.O Diretor Presidente acima nomeado e qualificado declara, sob as penas da lei, que não se encontra impedido de exercer a administração da Sociedade, por lei especial ou mesmo em virtude de condenação criminal nas hipóteses previstas no artigo 1.011, § 1º, do Código Civil Brasileiro.

2.6.Em virtude do disposto nos itens 2.1 a 2.5 acima, o Capítulo VI, Capítulo VII e Capítulo VIII do Contrato Social, referentes, respectivamente, à Administração, Conselho de Administração e Diretores, passam a vigorar com a seguinte redação:

“VI - Administração

Cláusula 8ª - A sociedade será administrada por um Conselho de Administração e pelos Diretores. Os negócios e assuntos da Sociedade serão geridos e conduzidos pelos Diretores, eleitos nos termos deste Contrato Social, os quais deverão respeitar o disposto na legislação aplicável e neste Contrato Social.

Cláusula 9ª - É vedado às sócias, diretores e procuradores, a prática de quaisquer atos a favor ou em nome da Sociedade que não sejam relacionados ao objeto social da Sociedade. Quaisquer atos que resultem em gravames sobre quaisquer ativos da Sociedade em benefício dos interesses pessoais dos diretores e/ou de terceiros, ou que envolvam transações que não relacionadas ao objeto social da Sociedade, serão nulas e ineficazes, exceto se expressamente aprovados ou ratificados pelo órgão competente de acordo com os termos deste Contrato Social. Quaisquer pessoas envolvidas nos atos mencionados acima serão responsabilizadas pessoalmente.

VII - Conselho de Administração

Cláusula 10 - O Conselho de Administração será constituído por 4 (quatro) pessoas naturais, eleitas pelas sócias em ato separado para um mandato de 2 (dois) anos, sendo permitida a reeleição.

Parágrafo 1º - O cargo de membro do Conselho de Administração vago em razão de morte, renúncia, destituição ou qualquer outra causa deverá ser preenchido pela reunião de sócios em até 30 (trinta) dias da data da vacância.

Parágrafo 2º - Qualquer membro poderá renunciar a seu cargo a qualquer tempo mediante notificação à Sociedade, sendo que a renúncia produzirá efeitos a partir do recebimento de da respectiva notificação pela Sociedade, ficando certo que, exceto se de outro modo especificado, a aceitação de tal renúncia não será necessária para torná-la efetiva. Qualquer membro do Conselho de Administração poderá ser destituído a qualquer tempo, com ou sem justa causa pela aprovação da reunião de sócios.

4

Parágrafo 3º - Caso qualquer membro do Conselho de Administração seja residente e domiciliado no exterior, a sua investidura estará sujeita à outorga de procuração para uma pessoa natural residente e domiciliada no Brasil, concedendo a essa pessoa poderes para receber citação a favor de tal membro.

Cláusula 11 - O Conselho de Administração deverá realizar reuniões ordinárias em uma periodicidade quadrimestral no horário e local a ser determinado pelo Conselho de Administração. Reuniões extraordinárias do Conselho de Administração poderão ser convocadas a qualquer por qualquer membro. Exceto se houver renúncia de todos os membros por escrito (anteriormente a respectiva reunião), deverá ser enviada convocação prévia e por escrito, quer pessoalmente, por fac-símile ou correio internacional, à reunião do Conselho de Administração com no mínimo 15 (quinze) dias úteis de antecedência à data da respectiva reunião, sendo que tal convocação deverá especificar o local, data, horário e ordem do dia da respectiva reunião. A convocação por escrito à reunião não precisará ser enviada a eventual membro que concorde, seja anterior ou posteriormente a respectiva reunião, a renunciar a esta convocação escrita. A presença de um membro na reunião constituirá em renúncia à convocação por escrito à respectiva reunião, exceto quando tal membro participe da reunião com o objetivo explícito de se opor à sua instalação ou a qualquer deliberação em razão de tal reunião não ser sido devidamente convocada.

Parágrafo 1º - Cada membro do Conselho de Administração terá o direito a 1 (um) voto nas reuniões do Conselho de Administração.

Parágrafo 2º - O membro do Conselho de Administração que não puder comparecer pessoalmente por qualquer motivo poderá (a) participar na reunião do Conselho de Administração conferência telefônica ou por outros equipamentos de comunicação através dos quais todas as pessoas participantes da reunião possam ouvir umas as outras, sendo que por tal participação a pessoa será considerada como se estivesse presente pessoalmente na respectiva reunião; (b) de acordo com a legislação aplicável e com este Contrato Social, outorgar procuração para (i) outro membro do Conselho de Administração eleito pelo mesmo sócio que elegeu tal membro ou (ii) outro individuo aprovado pelo sócio que elegeu tal membro, para servir como seu suplente para os fins da respectiva reunião mediante o envio de notificação por escrito para a Sociedade e demais sócias, sendo que, em qualquer dos casos acima, o membro que não puder comparecer à reunião será devidamente representado na respectiva reunião, bem como o outro membro do Conselho de Administração ou o suplente (conforme aplicável) poderá exercer o direito de voto a favor do membro representado sobre qualquer matéria objeto de decisão de tal reunião.

Cláusula 12 - Nenhuma decisão poderá ser tomada em reunião do Conselho de Administração exceto se ao menos 3 (três) membros do Conselho de Administração estiverem presentes. No caso deste quorum não ser atingido, os membros presentes postergarão tal reunião para uma nova data correspondente a no mínimo 5 (cinco) dias úteis posteriores da data inicialmente prevista, e prontamente enviarão uma notificação por escrito sobre a data, horário e local em que a reunião deverá ser conduzida.

5

Parágrafo 1º - Sem prejuízo das demais disposições deste Contrato Social, caso ao menos 2 (dois) membros deixem de comparecer em 3 (três) reuniões consecutivas do Conselho de Administração que tenham sido devidamente convocadas, então (i) a reunião será validamente instalada em terceira convocação sem qualquer quorum; e (ii) qualquer deliberação (inclusive relativamente às matérias listadas na Cláusula 7ª) da ordem do dia será validamente tomada mediante a aprovação da maioria dos votos dos membros presentes.

Parágrafo 2º - Apenas as matérias especificadas na ordem do dia da reunião do Conselho de Administração serão discutidas na respectiva reunião, exceto se todos os seus membros concordem incluir outras matérias na ordem do dia.

Parágrafo 3º - Qualquer decisão que deva ou possa ser tomada em reunião de Conselho de Administração poderá ser tomada sem a realização de reunião, sem a convocação prévia e sem o voto presencial caso um voto escrito, especificando todas as decisões, seja assinado por todos os membros do Conselho de Administração. O voto escrito elaborado de acordo com este parágrafo deverá ser protocolado com as atas dos trabalhos do Conselho de Administração.

Parágrafo 4º - O Conselho de Administração manterá um livro de registro de atas em que deverão ser registrados (i) com relação a cada reunião do Conselho de Administração, a data, horário e local de tal reunião, seja ordinária ou extraordinária (e se extraordinária, como foi convocada), os nomes dos membros presentes e os trabalhos conduzidos; e (ii) todos os atos aprovados por voto escrito nos termos do Parágrafo 3º anterior.

Cláusula 13 - O Conselho de Administração decidirá mediante o voto da maioria simples dos membros. Adicionalmente às matérias que eventualmente as sócias decidam sujeitar ao Conselho de Administração, as seguintes matérias deverão ser decididas pelo Conselho de Administração:

(a) a definição da estratégia geral da Sociedade e de suas subsidiárias, para monitorar o desenvolvimento de tal estratégia e orientar os diretores;

(b) a revisão, aprovação e modificação das estratégias empresariais da Sociedade;

(c) a revisão e aprovação do orçamento anual da Sociedade, bem como a supervisão e acompanhamento do orçamento anual da Sociedade;

(d) exceto se já aprovado no orçamento trimestral da Sociedade, a celebração pela Sociedade de qualquer acordo (ou qualquer aditivo, renúncia ou modificação subsequente): (i) cuja outra parte seja sócio ou parte relacionada; (ii) cujo valor principal dos pagamentos ou a que a Sociedade de outro modo se responsabilize seja superior ao valor correspondente US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional; (iii) que possa restringir a habilidade da Sociedade de competir no Brasil ou em qualquer outro local do mundo; (iv) que possa causar a Sociedade a descumprir quaisquer de suas obrigações assumidas em outros contratos por ela celebrados; (v) com empresa que seja competidora de quaisquer das sócias, ou suas respectivas afilias ou partes relacionadas; (vi) que envolva qualquer direito intelectual que seja substancial à Sociedade;

6

(e) celebração pela Sociedade de qualquer parceria estratégica;

(f) qualquer aquisição, investimento, ou liquidação de um investimento em uma pessoa ou negócio (que não os ativos adquiridos no curso normal dos negócios da Sociedade), incluindo investimentos minoritários ou acordos de joint venture pela Sociedade;

(g) assunção de dívidas, incluindo leasings financeiros, garantias, ônus, gravames e outras obrigações similares, cujo valor principal seja superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional, exceto se já aprovado no orçamento trimestral da Sociedade;

(h) assunção de quaisquer empréstimos, adiantamentos ou garantias a favor de qualquer pessoa, que não no curso normal dos negócios da Sociedade;

(i) transferência (conforme definida pela Cláusula 15 abaixo) de quaisquer ativos relevantes da Sociedade que não no curso normal dos negócios da Sociedade; e

(j) a realização de acordo ou compromisso em qualquer litígio (incluindo litígio com medida cautelar ou processo penal) cujo valor, quando considerado em conjunto com todos os valores relacionados ao acordo ou compromisso, seja superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional, ou para iniciar qualquer litígio envolvendo quantia superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional.

Parágrafo único - No caso de empate, nas decisões, a matéria deverá ser submetida às sócias, que deverão realizar uma reunião para revisar a matéria.

VIII - Diretores

Cláusula 14 - Compete aos administradores a representação da Sociedade, em juízo e fora dele, bem como a prática de todos e quaisquer atos necessários ao seu regular funcionamento, os quais deverão observar, no exercício de sua função, a determinação de políticas e negócios fixados pelo Conselho de Administração da Sociedade. A Sociedade terá até 3 (três) administradores, que serão nomeados e poderão ser destituídos, a qualquer tempo, pelas sócias conforme a Cláusula 7ª(a) deste Contrato Social. Um dos administradores terá a designação de Diretor Presidente, e os demais de Diretor. Diretor Presidente e os demais, se houver, serão designados em conjunto Diretores.

7

Parágrafo 1º - A Sociedade é administrada pelo Diretor Presidente Sr. Julio César Rodrigues Fernandes de Oliveira, brasileiro, casado, engenheiro, portador da cédula de identidade RG nº. 2445690 (SSP/PB) e inscrito no CPF/MF sob o nº. 034.687.214-63, com endereço profissional no Município de Campinas, Estado de São Paulo na Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

Parágrafo 2º - Os Diretores terão os poderes e autoridade conforme as atribuições que lhes forem determinadas na legislação aplicável e neste Contrato Social.

Parágrafo 3º - Os Diretores deverão ser residentes no Brasil e terão mandato por tempo indeterminado.

Parágrafo 4º - A Sociedade será validamente representada mediante as assinaturas:

(i) de 2 (dois) Diretores em conjunto;

(ii) do Diretor Presidente ou de 1 (um) Diretor, em conjunto com 1 (um) procurador; ou

(iii) de 2 (dois) procuradores agindo em conjunto.

Parágrafo 5º - Sem prejuízo do disposto nas Cláusulas 7ª e 13 deste Contrato Social, os Diretores terão poderes e estarão autorizados a realizar quaisquer atos e assinar quaisquer documentos pela qual a Sociedade se obrigue, inclusive (porém não se limitando) a abrir e operar contas bancárias, realizar operações de crédito, dar aceite ou endossar de títulos, firmar contratos de compra, venda ou locação de bens móveis ou imóveis, e assinar outros documentos relacionados à Sociedade, inclusive cheques. É expressamente vedado aos Diretores, no entanto, assumir quaisquer obrigações a favor de qualquer das sócias, bem como estabelecer ônus ou dispor de qualquer bem imóvel ou ativo permanente da Sociedade sem o consentimento prévio das sócias de acordo com a Cláusula 13 deste Contrato Social.

Parágrafo 6º - As procurações deverão ser assinadas por 2 (dois) Diretores e outorgadas com poderes especiais. As procurações não poderão ter prazo superior a 1 (um) ano, exceto pelas procurações com poderes ad judicia para fins de defesa dos interesses da Sociedade em qualquer processo judicial ou administrativo, quepoderão ser outorgadas por tempo indeterminado.”

III - OBJETO SOCIAL

3.1.Deliberam as sócias alterar o objeto social da Sociedade, de modo que a Sociedade passe a desenvolver as atividades de prestação de serviços para desenvolvimento de produtos relacionados a dispositivos fotônicos de silício para transmissão de informações em alta velocidade através de rede .

3.2.Diante da deliberação prevista no item 3.1 acima, a Cláusula 2º do Contrato Social passa a vigorar com a seguinte redação:

8

“Cláusula 2ª - O objeto social da Sociedade consiste na prestação de serviços para desenvolvimento de produtos relacionados a dispositivos fotônicos de silício para transmissão de informações em alta velocidade através de rede.”

IV.ADEQUAÇÃO DE CLÁUSULAS E CONSOLIDAÇÃO DO CONTRATO SOCIAL.

4.1.Deliberam as sócias, adicionalmente, promover a adaptação dos títulos do Contrato Social referentes à(s)(ao) (i) Reunião de Sócios, (ii) Conselho de Administração, (iii) Retirada, Exclusão e Morte, entre outros, tudo conforme nova redação consolidada do Contrato Social da Sociedade, dispensando as sócias a transcrição das cláusulas alteradas, optando pela consolidação direta do Contrato Social, conforme abaixo.

4.2.Ratificam as sócias todas as demais disposições do Contrato Social, as quais permanecem inalteradas com relação ao seu teor.

4.3.Tendo em vista as alterações do Contrato Social acima previstas, as sócias resolvem, por unanimidade, consolidar o Contrato Social da Sociedade conforme segue:

BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA.

NIRE  35.2.28048795

CNPJ/MF  19.455.907/0001-73

CONTRATO SOCIAL

Quadro de Sócios

FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, pessoa jurídica de direito privado sem fins lucrativos, com sede na Rua Dr. Ricardo Benetton Martins s/nº, Parque Polo II de Alta Tecnologia, Município de Campinas, Estado de São Paulo, CEP 13086-510, inscrita no CNPJ/MF sob o nº. 02.641.663/0001-10, com Estatuto Social registrado no Primeiro Cartório de Registro Civil de Pessoa Jurídica de Campinas-SP, microfilmado sob o nº. 5529 em 23/12/2004; e

GigOptix, Inc., sociedade devidamente constituída e existente de acordo com as leis do Estado de Delaware, Estados Unidos da América, com sede em 2711 Centerville Road, Wilmington, New Castle County, Delaware, Estados Unidos da América, inscrita no CNPJ/MF sob nº 19.665.035/0001-78.

I - Denominação e Sede

Cláusula 1ª - A sociedade é organizada como sociedade empresária limitada sob a denominação de “BRPhotonics Produtos Optoeletrônicos LTDA”, com sede na Rua Doutor Ricardo Benetton Martins s/n.º, Pólo II de Alta Tecnologia,Município de Campinas, Estado de São Paulo, CEP 13086-510.

9

Parágrafo único - A Sociedade poderá abrir ou encerrar filiais, agências, escritórios ou subsidiárias em qualquer parte do território nacional ou internacional, mediante a aprovação das sócias de acordo com as disposições deste Contrato Social.

II - Objeto Social

Cláusula 2ª - O objeto social da Sociedade consiste na prestação de serviços para desenvolvimento de produtos relacionados a dispositivos fotônicos de silício para transmissão de informações em alta velocidade através de rede.

III - Prazo

Cláusula 3ª - A Sociedade existirá por um prazo de duração indeterminado.

IV - Capital Social

Cláusula 4ª - O capital social da Sociedade é de R$ 20.000,00 (vinte mil reais), dividido em 20.000 (vinte mil) quotas no valor nominal de R$ 1,00 (um real) cada, sendo 10.000 (dez mil) quotas, no valor total de R$ 10.000,00 (dez mil reais), já integralizadas em moeda corrente nacional, e 10.000 (dez mil) quotas, no valor total de R$ 10.000,00 (dez mil reais), a serem integralizadas até 31 de dezembro de 2014, assim distribuídas entre as sócias:

Sócia	Quotas a integralizar	Quotas integralizadas	Valor (R$)	Participação
Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações	200	10.000	10.200,00	51%
GigOptix, Inc	9.800	-	9.800,00	49%
TOTAL	10.200	10.000	20.000,00	100%

Parágrafo 1º - De acordo com o artigo 1.052 da Lei nº. 10.406/2002 (“Código Civil”), a responsabilidade das sócias é restrita ao valor de suas quotas.

Parágrafo 2º - Cada quota concede ao seu respectivo titular o direito a 1 (um) voto nas reuniões de sócios da Sociedade.

Parágrafo 3º - De acordo com o artigo 1.056 do Código Civil, as quotas da Sociedade são indivisíveis.

10

V - Reunião de Sócios

Cláusula 5ª - As reuniões de sócios serão convocadas a qualquer momento por qualquer das sócias ou pelo Conselho de Administração e serão realizadas nos horários que as sócias de tempos em tempos mutuamente acordarem ou conforme de outro modo determinado pela legislação aplicável.

Parágrafo 1º - Uma notificação por escrito deverá ser enviada a cada sócia relativamente a cada reunião de sócios, sendo que a notificação deverá especificar o local, data, horário e ordem do dia de tal reunião. Referida notificação deverá ser enviada por escrito com no mínimo 8 (oito) dias de antecedência da data prevista para realização da respectiva reunião de ócios. Mediante o consentimento unânime das sócias, a reunião de sócios poderá deliberar sobre outros assuntos que não tenham sido incluídos na ordem do dia. Será dispensada a notificação anteriormente prevista caso as sócias detentores da totalidade do capital social da Sociedade estiverem presentes à reunião de sócios.

Parágrafo 2º - As sócias poderão realizar as reuniões em qualquer local conforme acordado entre as sócias, incluindo através de teleconferência ou videoconferência.

Parágrafo 3º - Os quoruns aplicáveis às deliberações das reuniões de sócios serão aqueles previstos na legislação aplicável. Caso o quorum não seja atendido em uma reunião de sócios devidamente convocada, as sócias presentes postergarão tal reunião para uma nova data correspondente a, no mínimo, 5 (cinco) dias úteis posteriores à data inicialmente prevista, e prontamente enviarão uma notificação por escrito sobre a data, horário e local em que a nova reunião deverá ser conduzida.

Parágrafo 4º - Sem prejuízo das demais disposições deste Contrato Social, a reunião instalada em segunda convocação será validamente instaurada mediante a presença de qualquer número de sócias e as deliberações da ordem do dia (inclusive relativamente às matérias listadas na Cláusula 7ª) serão validamente tomadas mediante a aprovação da maioria dos votos de acordo com a legislação aplicável.

Parágrafo 5º - As sócias realizarão reuniões anuais em caráter ordinário até 30 de abril de cada ano para: (i) revisar as contas da administração e os balanços da Sociedade; (ii) nomear novos administradores, se aplicável; e (iii) decidir sobre a declaração ou pagamento de dividendos ou quaisquer outras distribuições.

Parágrafo 6º - As sócias e membros do Conselho de Administração poderão participar das respectivas reuniões por conferência telefônica ou por outros equipamentos de comunicação através dos quais todas as pessoas participantes da reunião possam ouvir umas as outras, sendo que por tal participação a pessoa será considerada como se estivesse presente pessoalmente na respectiva reunião.

Parágrafo 7º - As sócias ausentes poderão ser representados na reunião de sócios por um procurador constituído com poderes especiais e por um prazo máximo de 1 (um) ano, sendo certo que tal procurador deverá ser uma das sócias ou qualquer pessoa indicada pelas sócias.

11

Parágrafo 8º - As decisões tomadas pelas sócias nas reuniões de sócios deverão ser transcritas em atas, que deverão ser assinadas pelas sócias presentes na respectiva reunião. Caso as decisões devam produzir efeitos contra terceiros, as atas deverão ser registradas na Junta Comercial respectiva.

Cláusula 6ª - Exceto pelas matérias referidas na Cláusula 7ª deste Contrato Social e pelas matérias sobre as quais a legislação aplicável exija quorum maior, as deliberações das reuniões de sócios serão tomadas mediante a aprovação de sócias representando a maioria do capital social da Sociedade.

Cláusula 7ª - As deliberações relativas aos assuntos indicados abaixo serão tomadas em reunião de sócios da Sociedade e sua aprovação exigirá o voto de sócias representando no mínimo 75% (setenta e cinco por cento) das quotas da Sociedade:

(a) a nomeação, destituição e remuneração dos membros do Conselho de Administração e diretores da Sociedade;

(b) a aprovação de quaisquer contribuições cujo valor seja superior ao capital social da Sociedade;

(c) a incorporação, fusão ou quaisquer outras combinações societárias envolvendo a Sociedade;

(d) a liquidação, dissolução, recapitalização ou reorganização da Sociedade;

(e) qualquer cessão em benefício de credores, protocolo de pedido de falência, recuperação judicial ou extrajudicial, submissão a qualquer tribunal para nomeação de administrador de falência ou recuperação judicial ou extrajudicial, ou ainda a nomeação de liquidante para a liquidação da Sociedade ou de uma parte substancial dos ativos da Sociedade, reajuste de débitos, dissolução ou liquidação em razão da legislação vigente aplicável;

(f) qualquer modificação do objeto social da Sociedade ou sua sede;

(g) sujeitas as demais disposições deste Contrato Social, qualquer declaração ou pagamento de dividendos ou sua distribuição com relação a qualquer rendimento da Sociedade;

(h) a emissão/criação de novas quotas da Sociedade;

(i) o resgate ou aquisição das próprias quotas;

(j) a nomeação de um liquidante para a Sociedade;

(k) a admissão de qualquer pessoa ou entidade como sócia da Sociedade;

(l) qualquer alteração, modificação ou renúncia a qualquer ato societário da Sociedade, incluindo este Contrato Social;

12

(m) qualquer matéria submetida às sócias pelo Conselho de Administração em razão de empate do Conselho de Administração, conforme a Cláusula 13, Parágrafo Único deste Contrato Social; e

(n) a constituição de qualquer subsidiária ou joint venture.

VI - Administração

Cláusula 8ª - A sociedade será administrada por um Conselho de Administração e pelos Diretores. Os negócios e assuntos da Sociedade serão geridos e conduzidos pelos Diretores, eleitos nos termos deste Contrato Social, os quais deverão respeitar o disposto na legislação aplicável e neste Contrato Social.

Cláusula 9ª - É vedado às sócias, diretores e procuradores, a prática de quaisquer atos a favor ou em nome da Sociedade que não sejam relacionados ao objeto social da Sociedade. Quaisquer atos que resultem em gravames sobre quaisquer ativos da Sociedade em benefício dos interesses pessoais dos diretores e/ou de terceiros, ou que envolvam transações que não relacionadas ao objeto social da Sociedade, serão nulas e ineficazes, exceto se expressamente aprovados ou ratificados pelo órgão competente de acordo com os termos deste Contrato Social. Quaisquer pessoas envolvidas nos atos mencionados acima serão responsabilizadas pessoalmente.

VII - Conselho de Administração

Cláusula 10 - O Conselho de Administração será constituído por 4 (quatro) pessoas naturais, eleitas pelas sócias em ato separado para um mandato de 2 (dois) anos, sendo permitida a reeleição.Parágrafo 1º - O cargo de membro do Conselho de Administração vago em razão de morte, renúncia, destituição ou qualquer outra causa deverá ser preenchido pela reunião de sócios em até 30 (trinta) dias da data da vacância.

Parágrafo 2º - Qualquer membro poderá renunciar a seu cargo a qualquer tempo mediante notificação à Sociedade, sendo que a renúncia produzirá efeitos a partir do recebimento de da respectiva notificação pela Sociedade, ficando certo que, exceto se de outro modo especificado, a aceitação de tal renúncia não será necessária para torná-la efetiva. Qualquer membro do Conselho de Administração poderá ser destituído a qualquer tempo, com ou sem justa causa pela aprovação da reunião de sócios.

Parágrafo 3º - Caso qualquer membro do Conselho de Administração seja residente e domiciliado no exterior, a sua investidura estará sujeita à outorga de procuração para uma pessoa natural residente e domiciliada no Brasil, concedendo a essa pessoa poderes para receber citação a favor de tal membro.

Cláusula 11 - O Conselho de Administração deverá realizar reuniões ordinárias em uma periodicidade quadrimestral no horário e local a ser determinado pelo Conselho de Administração. Reuniões extraordinárias do Conselho de Administração poderão ser convocadas a qualquer por qualquer membro. Exceto se houver renúncia de todos os membros por escrito (anteriormente a respectiva reunião), deverá ser enviada convocação prévia e por escrito, quer pessoalmente, por fac-símile ou correio internacional, à reunião do Conselho de Administração com no mínimo 15 (quinze) dias úteis de antecedência à data da respectiva reunião, sendo que tal convocação deverá especificar o local, data, horário e ordem do dia da respectiva reunião. A convocação por escrito à reunião não precisará ser enviada a eventual membro que concorde, seja anterior ou posteriormente a respectiva reunião, a renunciar a esta convocação escrita. A presença de um membro na reunião constituirá em renúncia à convocação por escrito à respectiva reunião, exceto quando tal membro participe da reunião com o objetivo explícito de se opor à sua instalação ou a qualquer deliberação em razão de tal reunião não ser sido devidamente convocada.

13

Parágrafo 1º - Cada membro do Conselho de Administração terá o direito a 1 (um) voto nas reuniões do Conselho de Administração.

Parágrafo 2º - O membro do Conselho de Administração que não puder comparecer pessoalmente por qualquer motivo poderá (a) participar na reunião do Conselho de Administração conferência telefônica ou por outros equipamentos de comunicação através dos quais todas as pessoas participantes da reunião possam ouvir umas as outras, sendo que por tal participação a pessoa será considerada como se estivesse presente pessoalmente na respectiva reunião; (b) de acordo com a legislação aplicável e com este Contrato Social, outorgar procuração para (i) outro membro do Conselho de Administração eleito pelo mesmo sócio que elegeu tal membro ou (ii) outro individuo aprovado pelo sócio que elegeu tal membro, para servir como seu suplente para os fins da respectiva reunião mediante o envio de notificação por escrito para a Sociedade e demais sócias, sendo que, em qualquer dos casos acima, o membro que não puder comparecer à reunião será devidamente representado na respectiva reunião, bem como o outro membro do Conselho de Administração ou o suplente (conforme aplicável) poderá exercer o direito de voto a favor do membro representado sobre qualquer matéria objeto de decisão de tal reunião.

Cláusula 12 - Nenhuma decisão poderá ser tomada em reunião do Conselho de Administração exceto se ao menos 3 (três) membros do Conselho de Administração estiverem presentes. No caso deste quorum não ser atingido, os membros presentes postergarão tal reunião para uma nova data correspondente a no mínimo 5 (cinco) dias úteis posteriores da data inicialmente prevista, e prontamente enviarão uma notificação por escrito sobre a data, horário e local em que a reunião deverá ser conduzida.

Parágrafo 1º - Sem prejuízo das demais disposições deste Contrato Social, caso ao menos 2 (dois) membros deixem de comparecer em 3 (três) reuniões consecutivas do Conselho de Administração que tenham sido devidamente convocadas, então (i) a reunião será validamente instalada em terceira convocação sem qualquer quorum; e (ii) qualquer deliberação (inclusive relativamente às matérias listadas na Cláusula 7ª) da ordem do dia será validamente tomada mediante a aprovação da maioria dos votos dos membros presentes.

Parágrafo 2º - Apenas as matérias especificadas na ordem do dia da reunião do Conselho de Administração serão discutidas na respectiva reunião, exceto se todos os seus membros concordem incluir outras matérias na ordem do dia.

Parágrafo 3º - Qualquer decisão que deva ou possa ser tomada em reunião de Conselho de Administração poderá ser tomada sem a realização de reunião, sem a convocação prévia e sem o voto presencial caso um voto escrito, especificando todas as decisões, seja assinado por todos os membros do Conselho de Administração. O voto escrito elaborado de acordo com este parágrafo deverá ser protocolado com as atas dos trabalhos do Conselho de Administração.

14

Parágrafo 4º - O Conselho de Administração manterá um livro de registro de atas em que deverão ser registrados (i) com relação a cada reunião do Conselho de Administração, a data, horário e local de tal reunião, seja ordinária ou extraordinária (e se extraordinária, como foi convocada), os nomes dos membros presentes e os trabalhos conduzidos; e (ii) todos os atos aprovados por voto escrito nos termos do Parágrafo 3º anterior.

Cláusula 13 - O Conselho de Administração decidirá mediante o voto da maioria simples dos membros. Adicionalmente às matérias que eventualmente as sócias decidam sujeitar ao Conselho de Administração, as seguintes matérias deverão ser decididas pelo Conselho de Administração:

(a) a definição da estratégia geral da Sociedade e de suas subsidiárias, para monitorar o desenvolvimento de tal estratégia e orientar os diretores;

(b) a revisão, aprovação e modificação das estratégias empresariais da Sociedade;

(c) a revisão e aprovação do orçamento anual da Sociedade, bem como a supervisão e acompanhamento do orçamento anual da Sociedade;

(d) exceto se já aprovado no orçamento trimestral da Sociedade, a celebração pela Sociedade de qualquer acordo (ou qualquer aditivo, renúncia ou modificação subsequente): (i) cuja outra parte seja sócio ou parte relacionada; (ii) cujo valor principal dos pagamentos ou a que a Sociedade de outro modo se responsabilize seja superior ao valor correspondente US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional; (iii) que possa restringir a habilidade da Sociedade de competir no Brasil ou em qualquer outro local do mundo; (iv) que possa causar a Sociedade a descumprir quaisquer de suas obrigações assumidas em outros contratos por ela celebrados; (v) com empresa que seja competidora de quaisquer das sócias, ou suas respectivas afilias ou partes relacionadas; (vi) que envolva qualquer direito intelectual que seja substancial à Sociedade;

(e) celebração pela Sociedade de qualquer parceria estratégica;

(f) qualquer aquisição, investimento, ou liquidação de um investimento em uma pessoa ou negócio (que não os ativos adquiridos no curso normal dos negócios da Sociedade), incluindo investimentos minoritários ou acordos de joint venture pela Sociedade;

(g) assunção de dívidas, incluindo leasings financeiros, garantias, ônus, gravames e outras obrigações similares, cujo valor principal seja superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional, exceto se já aprovado no orçamento trimestral da Sociedade;

15

(h) assunção de quaisquer empréstimos, adiantamentos ou garantias a favor de qualquer pessoa, que não no curso normal dos negócios da Sociedade;

(i) transferência (conforme definida pela Cláusula 15 abaixo) de quaisquer ativos relevantes da Sociedade que não no curso normal dos negócios da Sociedade; e

(j) a realização de acordo ou compromisso em qualquer litígio (incluindo litígio com medida cautelar ou processo penal) cujo valor, quando considerado em conjunto com todos os valores relacionados ao acordo ou compromisso, seja superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional, ou para iniciar qualquer litígio envolvendo quantia superior ao valor correspondente a US$ 10.000,00 (dez mil dólares dos Estados Unidos da América) em moeda corrente nacional.

Parágrafo único - No caso de empate, nas decisões, a matéria deverá ser submetida às sócias, que deverão realizar uma reunião para revisar a matéria.

VIII - Diretores

Cláusula 14 - Compete aos administradores a representação da Sociedade, em juízo e fora dele, bem como a prática de todos e quaisquer atos necessários ao seu regular funcionamento, os quais deverão observar, no exercício de sua função, a determinação de políticas e negócios fixados pelo Conselho de Administração da Sociedade. A Sociedade terá até 3 (três) administradores, que serão nomeados e poderão ser destituídos, a qualquer tempo, pelas sócias conforme a Cláusula 7ª(a) deste Contrato Social. Um dos administradores terá a designação de Diretor Presidente, e os demais de Diretor. Diretor Presidente e os demais, se houver, serão designados em conjunto Diretores.

Parágrafo 1º - A Sociedade é administrada pelo Diretor Presidente Sr. Julio César Rodrigues Fernandes de Oliveira, brasileiro, casado, engenheiro, portador da cédula de identidade RG nº. 2445690 (SSP/PB) e inscrito no CPF/MF sob o nº. 034.687.214-63, com endereço profissional no Município de Campinas, Estado de São Paulo na Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

Parágrafo 2º - Os Diretores terão os poderes e autoridade conforme as atribuições que lhes forem determinadas na legislação aplicável e neste Contrato Social.

Parágrafo 3º - Os Diretores deverão ser residentes no Brasil e terão mandato por tempo indeterminado.

Parágrafo 4º - A Sociedade será validamente representada mediante as assinaturas:

(i) de 2 (dois) Diretores em conjunto;

(ii) do Diretor Presidente ou de 1 (um) Diretor, em conjunto com 1 (um) procurador; ou

(iii) de 2 (dois) procuradores agindo em conjunto.

16

Parágrafo 5º - Sem prejuízo do disposto nas Cláusulas 7ª e 13 deste Contrato Social, os Diretores terão poderes e estarão autorizados a realizar quaisquer atos e assinar quaisquer documentos pela qual a Sociedade se obrigue, inclusive (porém não se limitando) a abrir e operar contas bancárias, realizar operações de crédito, dar aceite ou endossar de títulos, firmar contratos de compra, venda ou locação de bens móveis ou imóveis, e assinar outros documentos relacionados à Sociedade, inclusive cheques. É expressamente vedado aos Diretores, no entanto, assumir quaisquer obrigações a favor de qualquer das sócias, bem como estabelecer ônus ou dispor de qualquer bem imóvel ou ativo permanente da Sociedade sem o consentimento prévio das sócias de acordo com a Cláusula 13 deste Contrato Social.

Parágrafo 6º - As procurações deverão ser assinadas por 2 (dois) Diretores e outorgadas com poderes especiais. As procurações não poderão ter prazo superior a 1 (um) ano, exceto pelas procurações com poderes ad judicia para fins de defesa dos interesses da Sociedade em qualquer processo judicial ou administrativo, quepoderão ser outorgadas por tempo indeterminado.

IX - Cessão e Transferência de Quotas

Cláusula 15 - Exceto se de outro modo determinado neste Contrato Social ou no Acordo de Quotistas, nenhum sócio terá o direito de, quer voluntariamente ou involuntariamente, transferir, doar, vender, ceder, penhorar, onerar, hipotecar, conceder em garantia ou, por qualquer outro modo, dispor, seja através uma ou várias transações sucessivas (“Transferência”), todas ou parte de suas quotas sem o consentimento prévio e por escrito das demais sócias. Se, não obstante as disposições desta Cláusula, todas ou parte das quotas de um sócio forem transferidas em violação a esta Cláusula, involuntariamente, por força de lei ou por outro motivo, o cessionário de tais quotas não será admitido pela Sociedade como sócio, exceto se cada uma das sócias aprovarem por escrito sobre sua admissão, sendo certo que a aprovação ou reprovação ficará a critério exclusivo de cada sócio. Qualquer Transferência consumada ou tentada de todas ou parte das quotas de uma das sócias em violação a esta Cláusula será nula de pleno direito e não produzirá quaisquer efeitos.

Cláusula 16 - As restrições previstas na Cláusula 15 acima não serão aplicáveis às Transferências para empresas controladas por qualquer das sócias.

X - Dissolução e Liquidação da Sociedade

Cláusula 17 - A Sociedade será dissolvida e seus negócios serão terminados na ocorrência de quaisquer dos seguintes eventos:

(a) a qualquer tempo, mediante o consentimento por escrito das sócias;

(b) em caso de inadimplência de um sócio para integralizar os valores correspondentes à sua quota, a critério do sócio adimplente;

(c) em caso de cessão pela Sociedade a benefício de credores, a apresentação de pedido de falência, submissão a qualquer tribunal para nomeação de administrador de falência, recuperação judicial ou extrajudicial, ou a liquidação da Sociedade ou de parte substancial dos ativos da Sociedade.

17

Cláusula 18 - Diante da dissolução da Sociedade pelas hipóteses descritas na Cláusula 17 “a” e “b”, os negócios da Sociedade serão encerrados por um liquidante a ser escolhido pelas sócias conforme a Cláusula 7 acima. O liquidante terá plenos poderes e autoridade para vender, ceder, onerar todos e quaisquer ativos da Sociedade e dissolver e liquidar os negócios da Sociedade.

Cláusula 19 - A dissolução e liquidação da Sociedade causada por qualquer motivo, não eximirá as sócias de qualquer responsabilidade ou obrigação que ao tempo da dissolução ou liquidação já existia ou que, posteriormente, venha a existir em razão de qualquer ação ou omissão de qualquer sócio realizada antes da dissolução ou liquidação da Sociedade.

XI - Retirada, Exclusão e Falecimento De Sócio

Cláusula 20 - A retirada ou exclusão de qualquer das sócias, não acarretará na dissolução da Sociedade que, a critério do sócio remanescente poderá continuar com a operação regular da Sociedade.

Parágrafo único - O sócio que cometer falta grave poderá ser excluído judicialmente da Sociedade, devendo a sua respectiva quota ser liquidada na mesma forma a condições previstas para a retirada.

Cláusula 21 - Qualquer sócio poderá retirar-se da Sociedade mediante envio de notificação às demais sócias e à Sociedade declarando sua intenção de voluntariamente se retirar da Sociedade, depois de 90 (noventa) dias a contar da data de entrega de aludida notificação. Cada uma das demais sócias concorda, caso venham a ser notificados nos termos desta Cláusula, em fazer com que a Sociedade promova a retirada do sócio, com o cancelamento das respectivas quotas e restituição ao sócio retirante do valor patrimonial das quotas, conforme venha a ser apurado em balanço especialmente levantado para este fim na data da retirada, a ser pago no prazo de 24 (vinte e quatro) meses após tal retirada.

XII - Exercício Social e Distribuição de Lucros

Cláusula 22 - O exercício social se inicia em 1º de Janeiro e se encerra no dia 31 de dezembro de cada ano, data em que as demonstrações financeiras exigidas por lei serão levantadas e submetidas à aprovação das sócias.

Parágrafo 1º - As sócias dividirão eventuais prejuízos incorridos pela Sociedade, e distribuirão eventuais lucros da Sociedade na proporção de suas respectivas participações na Sociedade quando da decisão de distribuição, sendo certo que serão distribuídos no mínimo 25% (vinte e cinco por cento) do lucro líquido, a título de dividendos.

18

Parágrafo 2º - Sem prejuízo das exigências legais, as sócias poderão aprovar a distribuição de lucros baseando-se em balanços levantados, em período inferior a 12 (doze) meses especificamente para esta finalidade, desde que não haja qualquer prejuízo aos negócios da Sociedade.

Cláusula 23 - As sócias em reunião de sócios poderão também decidir pagar juros sobre capital próprio e considerar os valores pagos sob juros de capital próprio como distribuição de dividendos.

XIII - Acordo de Quotistas

Cláusula 24 - A Sociedade estará sujeita aos acordos firmados entre as sócias relativamente à compra e venda de quotas, direitos de preferência e/ou exercício de direito de voto desde que registrados na sede da Sociedade, conforme determinado pelo Art. 118 da Lei nº 6.404/76 (“Acordo de Quotistas”). Em caso de eventuais conflitos entre as disposições deste Contrato Social e o Acordo de Quotistas, as disposições do Acordo de Quotistas prevalecerão. As sócias exercerão todos os votos e outros direitos e poderes a eles disponíveis para dar efeito às disposições do Acordo de Quotistas, e providenciarão eventuais aditivos a este Contrato Social que sejam necessários para dar efeitos às disposições do Acordo de Quotistas.

XIV - Disposições Finais

Cláusula 25 - Eventuais eventos que não estejam previstos neste Contrato Social serão regidos pelas disposições do Código Civil relativamente às sociedades empresárias limitadas, e supletivamente pelas disposições da Lei nº. 6.404/1976 conforme alterações subsequentes aplicáveis.

Cláusula 26 - Todas as disputas não resolvidas serão submetidas e finalmente resolvidas por arbitragem de acordo com as leis de mediação e arbitragem da Câmara de Comércio Brasil-Canadá (“CCBC”), no contexto de uma arbitragem conduzida pela CCBC, por 3 (três) árbitros.

XV - Declaração de Desimpedimento

Cláusula 27 - O Diretor Presidente declara, sob as penas da lei, que não está impedido de exercer a administração da Sociedade, por lei especial, em virtude de condenação criminal, ou por se encontrar sob os efeitos dela a pena que vede, ainda que temporariamente, o acesso a cargos públicos, ou por crime falimentar, de prevaricação, peita ou suborno, concussão, peculato, ou contra a economia popular, contra o sistema financeiro nacional, contra normas de defesa concorrência, contra as relações de consumo, fé publica ou a propriedade.

19

E por assim estarem justas e contratadas, assinam o presente Contrato Social em 3 (três) vias de igual teor e forma, para que produza os efeitos legais.

Campinas/SP, 10 de fevereiro de 2014.

Sócio:

/s/ Hélio Marcos Machado Graciosa

FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES

Hélio Marcos Machado Graciosa - Presidente

Sócia Ingressante:

/s/ Natália Cibele Correia da Silva /s/ Darcio Siqueira de Sousa

GigOptix, Inc

p/p: Natália Cibele Correia da Silva / Darcio Siqueira de Sousa

Sócios Retirantes:

/s/ Julio Cezar Rodrigues Martorano	/s/ Carlos Eduardo Salla
Julio Cezar Rodrigues Martorano	Carlos Eduardo Salla

Diretor Presidente:

/s/ Julio César Rodrigues Fernandes de Oliveira

Julio César Rodrigues Fernandes de Oliveira

Testemunhas:

Nome:	Nome:
RG:	RG:

20

BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA.

NIRE  35.2.28048795

CNPJ/MF  19.455.907/0001-73

1^st AMENDMENT TO THE ARTICLES OF ASSOCIATION

This agreement is entered by and between the parties below indicated:

FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, a nonprofit private legal entity, with its registered offices in the city of Campinas, State of São Paulo at Rua Dr. Ricardo Benetton Martins s/n, Parque Polo II de Alta Tecnologia - CEP 13086-510, enrolled with the National Registry of Legal Entities (“CNPJ/MF”) under No. 02.641.663/0001-10, with its Bylaws duly registered before the 1^st Registry of Legal Entities of the city of Campinas, State of São Paulo, under no. 5529 on 12/23/2004, herein duly represented by its President, Mr. Hélio Marcos Machado Graciosa, a Brazilian citizen, married, engineer, enrolled before CREA under No. 19.370-0, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902, Jardim Paraíso, bearer of the identification card (RG) No. 1.995.913-9-SSP/RJ and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 239.045.427-53;

JULIO CEZAR RODRIGUES MARTORANO, Brazilian, divorced, pesquisador de telecomunicações, bearer of the identification card (RG) No. 9.962.500 (SSP-SP) and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 081.561.288-50, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902; and

CARLOS EDUARDO SALLA, Brazilian, married, mathematician, bearer of the identification card (RG) No. 13.292.325-7 (SSP-SP) and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 068.626.318-96, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902;

owners of all quotas representing the corporate capital of the limited liability company named BRPhotonics Produtos Optoeletrônicos LTDA., with its headquarters in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/nº. - Polo II de Alta Tecnologia, CEP 13086-510, enrolled before CNPJ/MF under No.19.455.907/0001-73 (the “Company”), with its corporate documents duly registered before the Board of Trade of the State of São Paulo (JUCESP) under NIRE 35.2.28048795, on December 30, 2013 (“Articles of Association”);

hereby duly agree to deliberate, amend and consolidate the Articles of Association according to the following terms and conditions:

- 1 -

I - ASSIGNMENT AND TRANSFER OF QUOTAS; CORPORATE CAPITAL’S INCREASE

1.1.The quotaholders Julio Cezar Rodrigues Martorano and Carlos Eduardo Salla (as qualified herein) assigns and transfer to the quotaholder Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações (as qualified herein), for free and in an irrevocable and irretractable basis, the totality of their quotas in the Company’s corporate capital equivalent to twenty (20) quotas, which are subscribed and fully paid up in Brazilian currency, with the par value of one Real (R$ 1.00) each, corresponding to twenty Reais (R$ 20.00), provided that with such assignment and transferring the quotaholder CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações will own all the quotas representing Company’s corporate capital.

1.1.1The former quotaholders, Julio Cezar Rodrigues Martorano and Carlos Eduardo Salla, on one hand, and the quotaholder CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações, on the other hand, mutually grant to each other full, general, irrevocable and irreversible acquittance with regards to the assignment and transferring of the quotas as established in section 1.1 herein, so the parties cannot require or request, in or out of Court, at any time and title, the payment of any compensation in connection therewith.

1.2.Upon the assignment and transferring verified in section 1.1 herein, the quotaholder Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações admits as a Company’s new quotaholder GigOptix, Inc., a company duly organized and existing under the laws of the State of Delaware, with its registered offices at 2711 Centerville Road, Wilmington, New Castle County, Delaware, U.S.A. (“GigOptix”)., enrolled before CNPJ/MF under No. 19.665.035/0001-78, herein represented by its attorneys-in-fact, (i) Mrs. Natália Cibele Correia da Silva, Brazilian, single, attorney at law, enrolled with the Individual’s Taxpayers’ Registry of the Ministry of Finance (CPF/MF) under No. 316.825.008-29 and with the State of São Paulo Section of the Brazilian Bar Association (“OAB/SP”) under No. 290.416, and (ii) Mr. Darcio Siqueira de Sousa, Brazilian, married, attorney-at-law, enrolled with the CPF/MF under No. 157.093.498-36 and with the OAB/SP under No. 240.530, all of whom are resident and domiciled in the City of São Paulo, in the State of São Paulo, with offices at Rua Líbero Badaró No. 293, 27th floor, suites C and D (power of attorney attached hereto)

1.3.The quotaholder Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações and the new quotaholder GigOptix, Inc. (as qualified herein) decides to increase Company’s corporate capital in ten thousand Reais (R$ 10,000.00) with the subscription of ten thousand (10,000) new quotas representing Company’s corporate capital with the par value of one Real (R$ 1.00) each, as follows:

(a) the quotaholder Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações subscribes two hundred (200) quotas with the par value of one Real (R$ 1.00) each, corresponding to two hundred Reais (R$ 200.00), to be paid up in goods and/or Brazilian currency until December 31, 2014; and

(b) the quotaholder GigOptix, Inc. subscribes nine thousand and eighty hundred (9,800) quotas with the par value of one Real (R$ 1.00) each, corresponding to nine thousand and eighty hundred Reais (R$ 9,800.00), to be paid up in goods and/or Brazilian currency until December 31, 2014.

1.4.As a consequence of the increase of Company’s corporate capital established in section 1.3 herein, Company’s current corporate capital equivalent to ten thousand Reais (R$ 10,000.00) is increased to twenty thousand Reais (R$ 20,000.00), represented by twenty thousand (20,000) quotas with the par value of one Real (R$ 1.00) each, provided that ten thousand (10,000) quotas are already paid up in Brazilian currency, and ten thousand (10,000) quotas with the par value of one Real (R$ 1.00) each to be paid up until December 31, 2014.

- 2 -

1.5.As a consequence of sections 1.1 to 1.4 herein, the Article 4 of the Articles of Association is amended as follows:

“Article 4 - The corporate capital of the Company is twenty thousand Reais (R$ 20,000.00), divided into twenty thousand (20,000) quotas with a par value of R$ 1.00 (one real) each, provided that ten thousand (10,000) quotas equivalent to ten thousand Reais (R$ 10,000.00) is already paid up in Brazilian currency, and ten thousand (10,000) quotas equivalent to ten thousand Reais (R$ 10,000.00) shall be paid up until December 31, 2014, according to the following:

Quotaholder	Quotas to be paid up	Quotas paid up	Value (R$)	Interest
Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações	200	10,000	10,200.00.00	51%
GigOptix, Inc.	9,800	-	9,800.00.00	49%
TOTAL	10,200	10,000	20,000.00	100%

Paragraph 1 - In accordance with Article 1,052 of Law No. 10,406/2002, the liability of the quotaholders is limited to the amount of the quotas they hold.

Paragraph 2 - Each quota shall correspond to one (1) vote at the quotaholders’ meetings.

Paragraph 3 - In accordance with Article 1,055 of Law No. 10,406/2002, the quotas of the Company are indivisible.”

II - ADMINISTRATION

2.1.The quotaholders resolve to change the Company’s administration, which shall be conducted for a Board of Directors and by the Officers.

2.2.As a consequence of section 2.1 above, the quotaholders resolve to create a Board of Directors which shall consist of four (4) members appointed by the quotaholders in a separate document/act, for a mandate of two (2) years, provided that each quotaholder may appoint and nominate two (2) members of the Board of Directors.

2.3.The Company shall have up to three (3) officers appointed by the quotaholders, at any time, for an undetermined period. One of the officers shall be designated as Chief Executive Officer, and the others, if applicable, shall be individually designated as Officer. The Chief Executive Officer and the others, if applicable, shall be jointly designated as Officers.

2.4.The quotaholder resolve to appoint as Chief Executive Officer Mr. Julio César Rodrigues Fernandes de Oliveira, Brazilian, married, engineer, bearer of the identity card (RG) No. 2445690 (SSP/PB) and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 034.687.214-63, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

- 3 -

2.5.The Chief Executive Officer appointed herein hereby declares under the penalties of law, that they are not preventedfrom exercising the Company’s management, due to any special law, ordue to criminal condemnation,as established in Article 1,011, paragraph 1º, of the Brazilian Civil Code.

2.6.As a consequence of sections 2.1 to 2.5 herein, the Chapter VI, Chapter VII and Chapter VIII of the Articles of Association, related to the Company’s Administration, Board of Directors and Officers are amended as follows:

“VI - Management

Article 8 - The Company shall be managed by the Board of Trade and the officers. The Company’s business and affairs shall be managed and conducted by the officers elected as established in this Articles of Association, who shall obey the applicable legislation and this Articles of Association.

Article 9 - None of the quotaholders, managers, or attorneys-in-fact may perform acts on behalf of or in the name of the Company outside the Company’s purpose. Any acts which result in any encumbrances on any of the Company’s assets to the benefit of personal interests or interests of third parties or which involve transactions outside the Company’s purpose will be null and void, unless expressly approved by the competent body according to the terms of these Articles of Association. Any persons involved in said acts will be held personally liable.

VII - Board of Directors

Article 10 - The Board of Directors shall consist of four (4) members elected by the Quotaholders for a term in office of two (2) years, reelection permitted.

Paragraph 1 - A vacancy on the Board of Directors because of death, resignation, removal or any other cause shall be filled by the quotaholders’ meeting within thirty (30) days from the date of the vacancy.

Paragraph 2 - Any member may resign at any time by so notifying the Company and such resignation shall take effect upon receipt of such notice by the Company, and unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. Any member of the Board of Director may be removed at any time, with or without cause, by the quotaholders’ meeting.

Paragraph 3 - Should any member of the Board of Directors be resident and domiciled abroad, his or her investiture shall be conditioned to the granting of a power-of-attorney to an individual resident and domiciled in Brazil, authorizing such person to receive service of process and summons on his or her behalf.

Article 11 - The Board of Directors shall hold ordinary meetings on a quarterly basis at such time and place as shall be determined by the Board of Directors. Special meetings of the Board of Directors may be called at any time by any member. Unless waived by all of the members in writing (before or after a meeting), prior written notice, either personally, by facsimile or by international mail, of any meeting of the Board of Directors shall be given to each member at least fifteen (15) business days before the date of such meeting, which notice shall specify the place, date, time and purpose of the meeting. Written notice of any meeting need not be given to any member who shall agree, either before or after such meeting, to a waiver of such written notice. Attendance of a member at a meeting shall constitute a waiver of notice of such meeting, except when the member attends the meeting for the express purpose of objecting at the beginning thereof to the transaction of any business because the meeting is not properly called or convened.

- 4 -

Paragraph 1 - Each member of the Board of Director shall have the right to one (1) vote at the meetings of the Board of Directors.

Paragraph 2 - Any member of the Board of Directors unable to attend in person for any reason may (A) participate in a meeting of the Board of Directors or by telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear one another, and such participation shall constitute presence in person at such meeting or, (B) in accordance with the applicable law and these Articles of Association, give a proxy to (i) another member of the Board of Directors designated by the same quotaholder that appointed such member or (ii) another individual approved by the quotaholder that appointed such member, to serve as its alternate for the purposes of such meeting by giving written notice thereof to the Company and the other quotaholders  and, in either case, the member unable to attend the meeting shall be deemed to be represented at such meeting, and the other member of the Board of Directors or the appointed alternate member, as applicable, shall be entitled to vote on behalf of such represented member on any decision on the agenda of such meeting.

Article 12 - No decision may be taken at a meeting of the Board of Directors unless at least three (3) members of the Board of Directors are present. In case of lack of quorum, the members present shall adjourn the meeting to a time not less than five (5) business days from the time of such adjournment, and shall promptly give written notice to the members of the Board of Directors of the time and place at which the meeting shall reconvene to the members.

Paragraph 1 - Notwithstanding any other provision herein, if at least two (2) members fail to be present at three (3) consecutive duly called meetings of the Board of Directors, then (i) the third such meeting may be validly held without a quorum and (ii) any decision (including in respect of any matters listed in Article 13 on the agenda may be validly taken at such meeting at the simple majority vote of the members present or duly represented.

Paragraph 2 - Only the matters on the agenda of a meeting of the Board of Directors shall be discussed at such meeting, unless all its members agree otherwise.

Paragraph 3 - Any decision required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the decisions, is signed by all of the directors.A written consent delivered pursuant to this Paragraph shall be filed with the minutes of the proceedings of the Board of Directors.

Paragraph 4 - The Board of Directors shall keep a book of minutes in which there shall be recorded (i) with respect to each meeting of the Board of Directors the time and place of such meeting, whether regular or special (and if special, how called), the names of those present and the proceedings thereof and (ii) all of its actions by written consent.

Article 13 - The Board of Directors shall decide upon a simple majority vote of the members. In addition to any other matters that the quotaholders may decide to submit to the Board of Directors, the following matters shall be decided by the Board of Directors:

(a) the definition of the general strategy for the Company and for its subsidiaries, in order to monitor the development of such strategies and orientate the officers;

- 5 -

(b) review, approval and modifications to the Company’s corporate strategies;

(c) approval and review of the annual budget of Company, and supervision and control of the execution of the budget;

(d) except if approved in the Company’s quarterly budget, entry (or any subsequent amendment, waiver or other modification) by the Company into any agreement: (i) with a quotaholder or a quotaholder’s related party, (ii) providing for payments to or liability for the Company in an aggregate principal amount in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00); (iii) that may restrict the ability of the Company to compete in Brazil or anywhere in the world, (iv) that may cause the Company to breach any of the Company’s obligations under any agreements it has entered into, (v) with a competitor of either quotaholder or any of their respective affiliates or related parties, (vi) involving any intellectual property rights that are material to the Company.

(e) entry by the Company into any strategic partnership arrangement;

(f) any acquisition of, or investment in, or the liquidation of any investment in, any other person or business (other than assets acquired in the ordinary course of business), including, a minority investment or joint venture arrangements by the Company;

(g) the incurrence of indebtedness, including capital leases, guarantees, liens, encumbrances and other similar obligations, in an aggregate principal amount in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00), except if approved in the Company’s quarterly budget;

(h) the making of any loans, advances to or guarantees for the benefit of any person, not in the ordinary course of business of the Company;

(i) Transfer (as defined in Section 15 below) of any significant assets of the Company outside the ordinary course of business; and

(j) the settlement or compromise of any litigation claims (including litigation seeking injunctive relief or criminal proceedings) for an amount, that when taken together with any related settlement, is in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00), or the commencement of any such claims involving a superior amount of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00).

Sole Paragraph – In case of a decision deadlock, the matter should be submitted to the quotaholders who shall convene a meeting to review the matter.

VIII - Officers

Article 14 - It is entitled to the officers of the Company’s representation, in court or not, as well as the practice of all actions deemed necessary to the Company’s regular operation, who shall, during the exercise of their roles, follow the determination of politics and businesses settled by the Board of Directors. The Company shall have three (3) officers, who shall be appointed and may be removed at any time by the quotaholders as determined in Article 7(a) of these Articles of Association. One of the officers shall be designated as Chief Executive Officer, and the others, if any, individually Director. Chief Executive Officer and the others, if any, shall be jointly referred to as Directors.

- 6 -

Paragraph 1 - The Company is administrated by the Chief Executive Officer, Mr. Julio César Rodrigues Fernandes de Oliveira, Brazilian, married, engineer, bearer of the identity card (RG) No. 2445690 (SSP/PB) and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 034.687.214-63, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

Paragraph 2 - The officers shall have the power and authority to perform all acts set forth in the applicable legislation and in this Articles of Association.

Paragraph 3 - Each officer, who shall be an individual resident in Brazil, shall serve for undetermined period.

Paragraph 4 - The Company shall be validly represented by the signatures of:

(i) two (2) Officers, jointly; or

(ii) one (1) Officer jointly with an attorney in fact; or

(iii) two (2) attorneys in fact, jointly.

Paragraph 5 - Subject to the provisions of Articles 7 and 13 hereof, the officers shall be empowered and authorized to perform any acts and to sign any documents which result in liability for the Company, including but not limited to the opening and operation of bank accounts; credit transactions; acceptance or endorsement of securities; agreements for the purchase, sale, or rent of movable assets, real property, personal property; and other documents related to the Company, including the signature of checks. It is expressly prohibited for them, however, to undertake any obligations on behalf of any of the quotaholders, to establish any encumbrances on or to dispose of any real property or permanent assets of the Company without the prior consent of the quotaholders taken pursuant to Article 13 hereof.

Paragraph 6 - The powers-of-attorney must be signed by two (2) officers and specify the powers therein granted. Said powers-of-attorney may not exceed the term of one (1) year, except for powers-of-attorney ad judicia for the purposes of defending the interests of the Company before the courts or in administrative law proceedings, which will be granted for an undetermined period of duration.”

III - CORPORATE PURPOSE

3.1.The quotaholders resolve to amend Company’s corporate purpose, provided that the Company will develop/perform the rendering of services for the development of products related to silicon photonic devices to enable high speed information streaming end-to-end over the network.

3.2.As a consequence of Section 3.1 herein, the Article 2 of the Articles of Association is amended as follows:

“Article 2 - The purpose of the Company is the rendering of services for the development of products related to silicon photonic devices to enable high speed information streaming end-to-end over the network.”

- 7 -

IV - AMENDMENT TO THE OTHER PROVISIONS OF THE ARTICLE OF ASSOCIATION

4.1.In addition to the aforementioned, the quotaholders resolve to adapt the Articles of Association’s Chapters related to (i) Quotaholders` meeting, (ii) Board of Directors, (iii) Withdrawal, Exclusion and Death, among others, according to the new consolidated version of the Articles of Association below.

4.2.The quotaholders ratify all other provisions of the Articles of Association which were not expressly amended, which remain in full force and effect.

4.3.According to the aforementioned amendments to the Articles of Association, the quotaholders resolve, unanimously, to consolidate the Articles of Association as follows:

BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA.

NIRE  35.2.28048795

CNPJ/MF  19.455.907/0001-73

ARTICLES OF ASSOCIATION

Quotaholders

FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, a nonprofit private legal entity, with its registered offices in the city of Campinas, State of São Paulo at Rua: Dr. Ricardo Benetton Martins s/n, Parque Polo II de Alta Tecnologia - CEP 13086-510, enrolled with the National Registry of Legal Entities (“CNPJ/MF”) under No. 02.641.663/0001-10, with its Bylaws duly registered before the 1^st Registry of Legal Entities of the city of Campinas, State of São Paulo, under no. 5529 on 12/23/2004; and

GigOptix, Inc., a company duly organized and existing under the laws of the State of Delaware, with its registered offices at 2711 Centerville Road, Wilmington, New Castle County, Delaware, U.S.A., enrolled before CNPJ/MF under no. 19.665.035/0001-78.

I - Company Name and Principal Place of Business

Article 1 - The Company is established as a business limited liability company (“sociedade empresária limitada”) under the name BRPhotonics Produtos Optoeletrônicos LTDA., with its principal place of business at Rua Doutor Ricardo Benetton Martins, s/n.º - Pólo II de Alta Tecnologia, in the City of Campinas, State of São Paulo, ZIP Code 13086-510.

Sole Paragraph - The Company may open or close branches, agencies, offices or subsidiaries, in any location in the country or abroad, upon decision of the quotaholders in accordance with the provisions of these Articles of Association.

II - Purpose

Article 2 - The purpose of the Company is the rendering of services for the development of products related to silicon photonic devices to enable high speed information streaming end-to-end over the network.

- 8 -

III - Term

Article 3 - The Company shall exist for an undetermined period of duration.

IV - Capital

Article 4 - The corporate capital of the Company is twenty thousand Reais (R$ 20,000.00), divided into twenty thousand (20,000) quotas with a par value of R$ 1.00 (one real) each, provided that ten thousand (10,000) quotas equivalent to ten thousand Reais (R$ 10,000.00) is already paid up in Brazilian currency, and ten thousand (10,000) quotas equivalent to ten thousand Reais (R$ 10,000.00) shall be paid up until December 31, 2014, according to the following:

Quotaholder	Quotas to be paid up	Quotas paid up	Value (R$)	Interest
Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações	200	10,000	10,200.00.00	51%
GigOptix, Inc.	9,800	-	9,800.00.00	49%
TOTAL	10,200	10,000	20,000.00	100%

Paragraph 1 - In accordance with Article 1,052 of Law No. 10,406/2002, the liability of the quotaholders is limited to the amount of the quotas they hold.

Paragraph 2 - Each quota shall correspond to one (1) vote at the quotaholders’ meetings.

Paragraph 3 - In accordance with Article 1,055 of Law No. 10,406/2002, the quotas of the Company are indivisible.

V – Quotaholders’ Meeting

Article 5 - Meetings of the quotaholders may be called at any time by any quotaholder or by the Board of Directors and shall be held at such times as the quotaholders shall from time to time mutually agree or as otherwise required by Law.

Paragraph 1 - Written notice shall be given to each quotaholder of each meeting of the quotaholders, which notice shall state the place, date, time and purpose of such meeting. Notice of each such meeting shall be given to each quotaholder, in writing, not less than eight (8) days before the day on which such meeting is to be held. By unanimous consent, a quotaholders’ meeting may decide on any matter not otherwise included in the agenda. The call notice shall not be necessary if the quotaholders present at the meeting represent the entire capital of the Company.

Paragraph 2 - The quotaholders may hold meetings at any place as the quotaholders may mutually agree, including via teleconference or videoconference.

- 9 -

Paragraph 3 - The quorum for the quotaholders’ meetings shall be as provided for under applicable law. If a quorum is not reached at a duly called quotaholders’ meeting the quotaholders present shall adjourn the meeting to a time not less than five business days from the time of such adjournment, and shall promptly give written notice of the time and place at which the meeting shall reconvene.

Paragraph 4 - Notwithstanding any other provision herein, the second called meeting may be validly held with any number of quotaholders and any decision (including in respect of any matters listed in Article 7) on the agenda may be validly taken at the majority required for such decision under applicable law.

Paragraph 5 - The quotaholders shall hold an annual meeting no later than April 30of each year to (i) review management accounts and the financial statements of the Company, (ii) to appoint new managers, if applicable, and (iii) to decide on any declaration or payment of any dividends or other distributions.

Paragraph 6 - Quotaholders and the members of the Board of Directors may participate in the meetings by telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear one another, and such participation shall constitute presence in person at such meeting.

Paragraph 7 - Absent quotaholders may be represented at a quotaholders’ meeting by a proxy having specific powers, and granted for a maximum period of one year. The proxy must be granted to another quotaholder or to any third party appointed by the quotaholders.

Paragraph 8 - The decisions taken by the quotaholders at quotaholders’ meetings will be recorded in minutes, which must be signed by the quotaholders present. Should the decisions taken produce effect to any third parties, the minutes will be registered with the Board of Trade.

Article 6 - Except for the matters referred to in Article 7 of these Articles of Association and for those matters for which the law requires a higher quorum, quotaholders’ meetings decisions shall be taken by the approval of quotaholders holding the majority of the capital of the Company.

Article 7 - The decisions on the matters indicated below shall be taken by the quotaholders’ meeting of the Company and their adoption shall require the affirmative vote ofquotaholders representing seventy-five percent (75%) of the quotas of the Company:

(a) the appointment, removal and compensation of the directors and officers of the Company;

(b) the approval of any capital contributions in excess of the issued capital of the Company;

(c) any merger, consolidation or other business combination involving the Company;

(d) the liquidation, dissolution, recapitalization or reorganization of the Company;

(e) any assignment for the benefit of creditors, filing of a petition in bankruptcy or application to any tribunal for the appointment of a custodian, receiver or any liquidator for the Company or a substantial part of the assets of the Company, or if any commencement of any proceeding under any bankruptcy reorganization arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction whether now or hereinafter in effect;

- 10 -

(f) any change to the corporate purpose of the Company or its main business;

(g) subject to provisions of these Articles of Association, any declaration or payment of any dividends or other distributions (without prejudice to requireddistributions of excess net cash) in respect of any interest in the Company;

(h) the issuance of any additional equity interest of the Company;

(i) the redemption or repurchase of any quotas;

(j) the selection of a liquidator for the Company;

(k) the admittance of any person or entity as a quotaholder of the Company;

(l) any amendment, modification or waiver to any corporate document of the Company, including these Articles of Association;

(m) any matter submitted to the quotaholders by the Board of Directors resulting from a deadlock of the Board of Directors, pursuant to Article 13, Sole Paragraph; and

(n) formation of any subsidiary or joint venture.

VI - Management

Article 8 - The Company shall be managed by the Board of Trade and the officers. The Company’s business and affairs shall be managed and conducted by the officers elected as established in this Articles of Association, who shall obey the applicable legislation and this Articles of Association.

Article 9 - None of the quotaholders, managers, or attorneys-in-fact may perform acts on behalf of or in the name of the Company outside the Company’s purpose. Any acts which result in any encumbrances on any of the Company’s assets to the benefit of personal interests or interests of third parties or which involve transactions outside the Company’s purpose will be null and void, unless expressly approved by the competent body according to the terms of these Articles of Association. Any persons involved in said acts will be held personally liable.

VII - Board of Directors

Article 10 - The Board of Directors shall consist of four (4) members elected by the Quotaholders for a term in office of two (2) years, reelection permitted.

Paragraph 1 - A vacancy on the Board of Directors because of death, resignation, removal or any other cause shall be filled by the quotaholders’ meeting within thirty (30) days from the date of the vacancy.

Paragraph 2 - Any member may resign at any time by so notifying the Company and such resignation shall take effect upon receipt of such notice by the Company, and unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. Any member of the Board of Director may be removed at any time, with or without cause, by the quotaholders’ meeting.

Paragraph 3 - Should any member of the Board of Directors be resident and domiciled abroad, his or her investiture shall be conditioned to the granting of a power-of-attorney to an individual resident and domiciled in Brazil, authorizing such person to receive service of process and summons on his or her behalf.

- 11 -

Article 11 - The Board of Directors shall hold ordinary meetings on a quarterly basis at such time and place as shall be determined by the Board of Directors. Special meetings of the Board of Directors may be called at any time by any member. Unless waived by all of the members in writing (before or after a meeting), prior written notice, either personally, by facsimile or by international mail, of any meeting of the Board of Directors shall be given to each member at least fifteen (15) business days before the date of such meeting, which notice shall specify the place, date, time and purpose of the meeting. Written notice of any meeting need not be given to any member who shall agree, either before or after such meeting, to a waiver of such written notice. Attendance of a member at a meeting shall constitute a waiver of notice of such meeting, except when the member attends the meeting for the express purpose of objecting at the beginning thereof to the transaction of any business because the meeting is not properly called or convened.

Paragraph 1 - Each member of the Board of Director shall have the right to one (1) vote at the meetings of the Board of Directors.

Paragraph 2 - Any member of the Board of Directors unable to attend in person for any reason may (A) participate in a meeting of the Board of Directors or by telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear one another, and such participation shall constitute presence in person at such meeting or, (B) in accordance with the applicable law and these Articles of Association, give a proxy to (i) another member of the Board of Directors designated by the same quotaholder that appointed such member or (ii) another individual approved by the quotaholder that appointed such member, to serve as its alternate for the purposes of such meeting by giving written notice thereof to the Company and the other quotaholders  and, in either case, the member unable to attend the meeting shall be deemed to be represented at such meeting, and the other member of the Board of Directors or the appointed alternate member, as applicable, shall be entitled to vote on behalf of such represented member on any decision on the agenda of such meeting.

Article 12 - No decision may be taken at a meeting of the Board of Directors unless at least three (3) members of the Board of Directors are present. In case of lack of quorum, the members present shall adjourn the meeting to a time not less than five (5) business days from the time of such adjournment, and shall promptly give written notice to the members of the Board of Directors of the time and place at which the meeting shall reconvene to the members.

Paragraph 1 - Notwithstanding any other provision herein, if at least two (2) members fail to be present at three (3) consecutive duly called meetings of the Board of Directors, then (i) the third such meeting may be validly held without a quorum and (ii) any decision (including in respect of any matters listed in Article 13 on the agenda may be validly taken at such meeting at the simple majority vote of the members present or duly represented.

Paragraph 2 - Only the matters on the agenda of a meeting of the Board of Directors shall be discussed at such meeting, unless all its members agree otherwise.

Paragraph 3 - Any decision required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the decisions, is signed by all of the directors.A written consent delivered pursuant to this Paragraph shall be filed with the minutes of the proceedings of the Board of Directors.

- 12 -

Paragraph 4 - The Board of Directors shall keep a book of minutes in which there shall be recorded (i) with respect to each meeting of the Board of Directors the time and place of such meeting, whether regular or special (and if special, how called), the names of those present and the proceedings thereof and (ii) all of its actions by written consent.

Article 13 - The Board of Directors shall decide upon a simple majority vote of the members. In addition to any other matters that the quotaholders may decide to submit to the Board of Directors, the following matters shall be decided by the Board of Directors:

(a) the definition of the general strategy for the Company and for its subsidiaries, in order to monitor the development of such strategies and orientate the officers;

(b) review, approval and modifications to the Company’s corporate strategies;

(c) approval and review of the annual budget of Company, and supervision and control of the execution of the budget;

(d) except if approved in the Company’s quarterly budget, entry (or any subsequent amendment, waiver or other modification) by the Company into any agreement: (i) with a quotaholder or a quotaholder’s related party, (ii) providing for payments to or liability for the Company in an aggregate principal amount in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00); (iii) that may restrict the ability of the Company to compete in Brazil or anywhere in the world, (iv) that may cause the Company to breach any of the Company’s obligations under any agreements it has entered into, (v) with a competitor of either quotaholder or any of their respective affiliates or related parties, (vi) involving any intellectual property rights that are material to the Company.

(e) entry by the Company into any strategic partnership arrangement;

(f) any acquisition of, or investment in, or the liquidation of any investment in, any other person or business (other than assets acquired in the ordinary course of business), including, a minority investment or joint venture arrangements by the Company;

(g) the incurrence of indebtedness, including capital leases, guarantees, liens, encumbrances and other similar obligations, in an aggregate principal amount in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00), except if approved in the Company’s quarterly budget;

(h) the making of any loans, advances to or guarantees for the benefit of any person, not in the ordinary course of business of the Company;

(i) Transfer (as defined in Section 15 below) of any significant assets of the Company outside the ordinary course of business; and

(j) the settlement or compromise of any litigation claims (including litigation seeking injunctive relief or criminal proceedings) for an amount, that when taken together with any related settlement, is in excess of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00), or the commencement of any such claims involving a superior amount of the corresponding amount in Reais of ten thousand US Dollars (US$ 10,000.00).

- 13 -

Sole Paragraph – In case of a decision deadlock, the matter should be submitted to the quotaholders who shall convene a meeting to review the matter.

VIII - Officers

Article 14 - It is entitled to the officers of the Company’s representation, in court or not, as well as the practice of all actions deemed necessary to the Company’s regular operation, who shall, during the exercise of their roles, follow the determination of politics and businesses settled by the Board of Directors. The Company shall have three (3) officers, who shall be appointed and may be removed at any time by the quotaholders as determined in Article 7(a) of these Articles of Association. One of the officers shall be designated as Chief Executive Officer, and the others, if any, individually Director. Chief Executive Officer and the others, if any, shall be jointly referred to as Directors.

Paragraph 1 - The Company is administrated by the Chief Executive Officer, Mr. Julio César Rodrigues Fernandes de Oliveira, Brazilian, married, engineer, bearer of the identity card (RG) No. 2445690 (SSP/PB) and enrolled before the Registry of Individual Taxpayers’ Registry issued by the Ministry of Finance (CPF/MF) under No. 034.687.214-63, with offices in the City of Campinas, State of São Paulo, at Rua Doutor Ricardo Benetton Martins s/n, Polo II de Alta Tecnologia, CEP 13086-902.

Paragraph 2 - The officers shall have the power and authority to perform all acts set forth in the applicable legislation and in this Articles of Association.

Paragraph 3 - Each officer, who shall be an individual resident in Brazil, shall serve for undetermined period.

Paragraph 4 - The Company shall be validly represented by the signatures of:

(i) two (2) Officers, jointly; or

(ii) one (1) Officer jointly with an attorney in fact; or

(iii) two (2) attorneys in fact, jointly.

Paragraph 5 - Subject to the provisions of Articles 7 and 13 hereof, the officers shall be empowered and authorized to perform any acts and to sign any documents which result in liability for the Company, including but not limited to the opening and operation of bank accounts; credit transactions; acceptance or endorsement of securities; agreements for the purchase, sale, or rent of movable assets, real property, personal property; and other documents related to the Company, including the signature of checks. It is expressly prohibited for them, however, to undertake any obligations on behalf of any of the quotaholders, to establish any encumbrances on or to dispose of any real property or permanent assets of the Company without the prior consent of the quotaholders taken pursuant to Article 13 hereof.

Paragraph 6 - The powers-of-attorney must be signed by two (2) officers and specify the powers therein granted. Said powers-of-attorney may not exceed the term of one (1) year, except for powers-of-attorney ad judicia for the purposes of defending the interests of the Company before the courts or in administrative law proceedings, which will be granted for an undetermined period of duration.

- 14 -

IX - Assignment and Transfer of Quotas

Article 15 - Except as otherwise provided in these Articles of Association or in a Quotaholders Agreement, no quotaholder shall be entitled to transfer, whether voluntarily or involuntarily, to give, sell, assign, pledge, encumber, hypothecate, grant a security interest in or otherwise dispose or convey, whether in one transaction or a series of related transactions (“Transfer”), all or any portion of its quotas without the prior written consent of the other quotaholders. If, notwithstanding the provisions of this Article, all or any portion of a quotaholder’s quotas are transferred in violation of this Article, involuntarily or by operation of law or otherwise, the transferee of such quota (or portion thereof) shall not be admitted to the Company as a quotaholder unless each of the quotaholders consents in writing to such admission, which consent shall be granted or withheld in each such quotaholder’s sole discretion. Any attempted or purported Transfer of all or a portion of a quotaholder’s quotas in violation of this Article shall be null and void and of no force or effect whatsoever.

Article 16 - The limitations of Article 15 shall not apply to Transfers to companies controlled by the quotaholders.

X - Liquidation and Dissolution

Article 17 - The Company shall be dissolved and its affairs wound up upon the occurrence of one of the following events:

(a) at any time upon the written consent of the quotaholders;

(b) in case of default by a quotaholder to fully pay the amounts corresponding to their quotas, at the option of the non-defaulting quotaholder; and

(c) in case of assignment by the Company for the benefit of creditors, filing a petition in bankruptcy, application to any tribunal for the appointment of a custodian, receiver or any liquidator for it or a substantial part of its assets or commencement of any proceeding under any bankruptcy reorganization arrangement, readjustment of debt, dissolution or liquidation law.

Article 18 - Upon the dissolution of the Company in case described in Article 17(a) and Article 17(b), the Company’s affairs shall be wound up by a liquidator chosen by the quotaholders pursuant to Article 7 above. The liquidator shall have full power and authority to sell, assign and encumber any or all of the Company’s assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner.

Article 19 - The dissolution or winding up of the Company for any reason shall not release any quotaholder from any liability or obligation which at the time of such dissolution or winding up already had accrued to any other quotaholder or which thereafter may accrue in respect of any act or omission prior to such dissolution or winding up.

XI – Withdrawal, Exclusion And Death

Article 20 – The withdrawal or exclusion of any of the quotaholders shall not result in the Company’s dissolution, provided that at its sole discretion the remaining quotaholders shall be able to continue the Company’s regular operation.

- 15 -

Sole Paragraph – In case a quotaholder commits a just cause, he may be judicially excluded from the Company, and his quotas shall be liquidated under the same conditions applicable to just cause.

Article 21 – Any quotaholder is entitled to withdraw from the Company upon the delivery of a written notification to the other quotaholders and to the Company by which he should declare his intention to voluntarily withdraw from the Company after ninety (90) days from the receipt of such notification. Each of the remaining quotaholders agree, in case they are notified with regards to the matters set forth in this Article, to make the Company to implement the quotaholder’s withdraw, upon the cancellation of his relevant quotas and the restitution to such quotaholder of the quotaholders amount, as calculated in a balance sheet to be made exclusively for the purposes herein in the withdraw date, which shall be paid within twenty-four (24) months from such withdraw.

XII - Fiscal Year and Distribution of Profits

Article 22 - The fiscal year will begin on January 1st and will end on December 31st of each year, when the financial statements required by the law shall be prepared and submitted to the quotaholders.

Paragraph 1 - The quotaholders shall share any losses incurred by the Company, and distribute any profits made by the Company in proportion to their respective interests in the Company at the time the decision to distribute is made, herein being duly agreed that there shall be distributed a minimum of 25% of the net incomes as dividend distribution.

Paragraph 2 - Subject to the legal provisions, the quotaholders may approve the distribution of profits based on special balance sheet drawn for this purpose in periods lower than twelve (12) months, provided that the quotaholders do not foresee any damage towards the Company’s business

Article 23 - The quotaholders at a quotaholders’ meeting may also decide to make payment of Interest on the Company’s Capital [“Juros sobre Capital Próprio”] and consider any amounts so paid as a distribution of dividends.

XIII - Quotaholders Agreement

Article 24 - The Company shall abide by any agreements between the quotaholders regarding the purchase and sale of quotas, preemptive rights and/or the exercise of voting rights whenever filed in its head office as provided for in Article 118 of Law 6404/76, as amended (“Quotaholders Agreement”). In the event of any conflict between the provisions of these Articles of Association and the Quotaholders Agreement, the provisions of the Quotaholders’ Agreement shall prevail. The quotaholders shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of the Quotaholders Agreement, and shall further procure any amendment(s) to the Articles of Association which may be required in order to give full effect to the provisions thereof.

XIV – Final Matters

Article 25 - Any events not foreseen in these Articles of Association will be governed by the provisions of Law no. 10,406/2002 regarding the business limited liability companies [“sociedades empresárias limitadas”] and supplementarily by the provisions of Law no. 6,404/1976 and subsequent amendments as applicable, provided that the Company is not obliged to make public any of its call notices, balance sheets, and other documents provided for in said law.

- 16 -

Article 26 - All disputes which are unresolved shall be referred to and finally settled by arbitration under the Rules of Mediation and Arbitration of the Brazil-Canada Chamber of Commerce (“CCBC”), in the context of an arbitration administered by CCBC, by three (3) arbitrators.

XV – Compliance Declaration

Article 27 - The Chef Executive Officer declares, under the penalties of law, that he is not preventedfrom exercising the Company’s management, due to any special law, ordue to criminal condemnation,due to penalty that permanently or temporarily, suspend them to take public office roles, due to crimes related to bankruptcy,malfeasance,bribery,embezzlement, oragainst the economy, against the national financialsystem, againstcompetition rulesdefense nor againstconsumer relations, publicfaithor property.

In witness hereof, the parties execute this instrument in three (3) counterparts, with purposes to have its legal effects.

Campinas/SP, February 10, 2014.

/s/ Hélio Marcos Machado Graciosa

FUNDAÇÃO CPqD- CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES

By: Hélio Marcos Machado Graciosa

/s/ Natália Cibele Correia da Silva / /s/ Darcio Siqueira de Sousa

GigOptix, Inc

By: Natália Cibele Correia da Silva / Darcio Siqueira de Sousa

Former Quotaholders:

/s/ Julio Cezar Rodrigues Martorano	/s/ Carlos Eduardo Salla
Julio Cezar Rodrigues Martorano	Carlos Eduardo Salla

- 17 -

Chef Executive Officer:

/s/ Julio César Rodrigues Fernandes de Oliveira

Julio César Rodrigues Fernandes de Oliveira

Witnesses

Name: ID: Name: ID:

- 18 -

EX-10.2

[EXECUTION VERSION]

Exhibit 10.2

JOINT VENTURE AND QUOTAHOLDERS AGREEMENT	CONTRATO DE JOINT VENTURE E ACORDO DE QUOTISTAS
This JOINT VENTURE AND QUOTAHOLDERS AGREEMENT (the “Agreement”) is made and entered into as of February 10, 2014, by and between:	Este CONTRATO DE JOINT VENTURE E ACORDO DE QUOTISTAS (o “Acordo”)é feito e celebrado em 10 de fevereiro de 2014, por e entre:
(a)GigOptix, Inc., a company duly organized and existing under the laws of the State of Delaware, with its registered offices at 2711 Centerville Road, Wilmington, New Castle County, Delaware, U.S.A. (“GigOptix”); and	(a)GigOptix, Inc., uma sociedade devidamente constituída e existente sob as leis do Estado de Delaware, com sede em 2711 Centerville Road, Wilmington, New Castle County, Delaware, U.S.A. (“GigOptix”); e
(b)FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, a foundation duly organized and existing under the laws of Brazil, with its registered offices in the city of Campinas, State of São Paulo at Rua Dr. Ricardo Benetton Martins s/No., Parque Polo II de Alta Tecnologia, CEP 13086-510, enrolled with the Corporate Taxpayers’ Registry of the Ministry of Finance (“CNPJ/MF”) under No. 02.641.663/0001-10, with its corporate documents registered before the 1st Public Civil Registry of Legal Entities of Campinas under No. 5529 on December 23, 2004 (“CPqD”);	(b)FUNDAÇÃO CPqD - CENTRO DE PESQUISA E DESENVOLVIMENTO EM TELECOMUNICAÇÕES, pessoa jurídica de direito privado, sem fins lucrativos, com sede na Rua Dr. Ricardo Benetton Martins s/nº., Parque Polo II de Alta Tecnologia, CEP 13086-510, neste Município de Campinas, Estado de São Paulo, inscrita no Cadastro Nacional de Pessoas Jurídicas (“CNPJ/MF”) sob o nº. 02.641.663/0001-10, com Estatuto Social registrado no Primeiro Cartório de Registro Civil de Pessoa Jurídica de Campinas-SP, microfilmado sob o nº. 5529, em 23 de dezembro de 2004 (“CPqD”);
(CPqD and GigOptix jointly called “Quotaholders”);	(CPqD e GigOptix designadas em conjunto “Quotistas”);
and, as Intervening and Consenting Party:	e, como Parte Interveniente e Anuente:
(c)BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA., a company duly organized and existing under the laws of Brazil, with its registered offices in the city of Campinas, State of São Paulo at Rua Dr. Ricardo Benetton Martins s/No., Parque Polo II de Alta Tecnologia, CEP 13086-510, enrolled with the CNPJ/MF under No. 19.455.907/0001-73 (“Company”);	(c)BRPHOTONICS PRODUTOS OPTOELETRÔNICOS LTDA., uma sociedade devidamente constituída e existente sob as leis do Brasil, com sede na cidade de Campinas, Estado de São Paulo, na Rua Doutor Ricardo Benetton Martins s/nº., Pólo II de Alta Tecnologia, Município de Campinas, Estado de São Paulo, CEP 13086-510, registrada no CNPJ/MF sob o nº. 19.455.907/0001-73 (“Sociedade”);

- 1 -

[EXECUTION VERSION]

the Quotaholders also being hereinafter referred to as “Parties” where mentioned collectively or “Party” where mentioned individually.	as Quotistas também sendo doravante designadas como “Partes” quando em conjunto, ou como “Parte” quando designadas individualmente.
WHEREAS, the Quotaholders are the owners of all the outstanding quotas of the capital of the Company;	CONSIDERANDO QUE, as Quotistas são proprietárias de todas as quotas do capital da Sociedade;
WHEREAS, the Quotaholders acknowledge that there is a business risk in the development and the exploitation of the Company’s activities, and agree to endeavor the best efforts and act in good faith to the better performance of the Company’s corporate purpose;	CONSIDERANDO QUE, as Quotistas reconhecem o risco negocial existente no desenvolvimento e exploração das atividades da Sociedade, e concordam em envidar seus melhores esforços e atuar com boa-fé na melhor consecução do objeto social da Sociedade;
WHEREAS, the Quotaholders decided to enter into this Agreement to establish their respective rights and obligations in respect of the Quotas (as defined below), the management and conduct of Company’s and the Company’s business and various other matters hereinafter set forth.	CONSIDERANDO QUE, as Quotistas decidiram celebrar este Acordo para estabelecer seus respectivos direitos e obrigações com relação às Quotas (como definido abaixo), à gestão e condução da Sociedade e do negócio da Sociedade e de diversos outros assuntos doravante estabelecidos.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:	ISTO POSTO, em consideração aos compromissos, declarações, garantias e acordos aqui contidos, e com a intenção de estar legalmente vinculados por este Acordo, as Partes ajustam o que segue:
ARTICLE I DEFINITIONS	ARTIGO I DEFINIÇÕES
1.1.When used in this Agreement or in the exhibits to this Agreement, in capitalized initial letters, in the singular or plural, as the case may be, the following terms and expressions shall have the meanings assigned to them in this Section 1.1. Any reference to a Section shall include any and all of the Subsections thereof. Notwithstanding the definitions below, other terms not listed below shall have the meanings ascribed to them herein and in the Schedules hereto.	1.1.Quando usados neste Acordo ou nos anexos deste Acordo, em letras maiúsculas, no singular ou no plural, conforme o caso, os termos e expressões a seguir deverão ter os significados atribuídos aos mesmos nesta Cláusula 1.1. Qualquer referência a uma Cláusula deverá incluir todas e quaisquer Subcláusulas da mesma. Independentemente das definições abaixo, outros termos que não tenham sido listados abaixo deverão ter os significados atribuídos aos mesmos neste ato e nos Anexos deste Acordo.

- 2 -

[EXECUTION VERSION]

“Agreement” shall mean this Joint Venture and Quotaholders Agreement and all its exhibits.	“Acordo” significa este Contrato de Joint Venture e Acordo de Quotistas e todos os seus anexos.
“Articles of Association” shall mean the articles of association of Company approved on the date of this Agreement and attached hereto as Exhibit I, as amended from time to time.	“Contrato Social” significa o contrato social da Sociedade aprovado na data deste Acordo e em anexo a este como Anexo I, e periodicamente alterado.
“Board of Directors” shall mean the Conselho de Administração of the Company.	“Conselho de Administração” significa o Conselho de Administração da Sociedade.
“Brazilian Reais” or “R$” shall mean the lawful currency of Brazil.	“Reais do Brasil” ou “R$” significa a moeda oficial do Brasil.
“Business” shall mean the business developed by the Company.	“Negócio” significa o negócio desenvolvido pela Sociedade.
“Business Day” shall mean any day other than a Saturday, a Sunday or other day on which commercial banks in the city of Campinas, State of São Paulo, Brazil and San Francisco, CA, USA, are required or authorized by law to remain closed or otherwise closed because of force majeure.	“Dia Útil” significa qualquer dia que não um sábado, domingo ou outro dia em que os bancos comerciais na cidade de Campinas, Estado de São Paulo, Brasil, e São Francisco, Califórnia, Estados Unidos da América, tenham de estar fechados ou estejam autorizados por lei a permanecerem fechados, ou de outra forma estejam fechados por motivo de força maior.
“Company” shall have the meaning set forth in the preamble to this Agreement.	“Sociedade” tem o significado estabelecido no preâmbulo deste Acordo.
“Confidential Information” shall mean all written and unwritten data related to the Business and/or to the Company, including, without limitation, any information related to any legal, financial, commercial, economic or accounting data; information on customers’ relations, marketing, sales and dispute proceedings; information on industrial processes, plans or projects; technical data or knowledge; trade secrets; market opportunities and strategies, except for such data that is already generally known or available to the public in general, without a breach of any confidentiality agreement.	“Informações Confidenciais” significa todos os dados, por escrito ou não, relacionados ao Negócio e/ou à Sociedade, incluindo, sem limitação, quaisquer informações relacionadas a quaisquer dados legais, financeiros, comerciais, econômicos ou contábeis; informações sobre relações com os clientes, marketing, vendas ou processos de contestação; informações sobre processos, planos ou projetos industriais; dados ou conhecimento técnico; segredos comerciais; oportunidades e estratégias de mercado, exceto pelos dados que já forem de conhecimento geral ou estiverem disponíveis ao público em geral sem que tenha havido quebra de qualquer contrato de confidencialidade.

- 3 -

[EXECUTION VERSION]

“Control”, when used with respect to any Person, shall mean the power, directly or indirectly, to direct, determine, manage, control or cause the direction of the management, business, operations, activities, investments or policies of such Person, whether through the ownership of equity in such Person, by contract or otherwise, and the terms “controlling,” “controlled by” and “under common control with” shall be construed accordingly.	“Controle”, quando usado com relação a qualquer Pessoa, significa o poder, direta ou indiretamente, de orientar, determinar, gerir, controlar ou motivar a orientação da gestão, negócio, operações, atividades, investimentos ou políticas dessa Pessoa, seja por meio da posse de patrimônio dessa Pessoa, por contrato ou de outra forma, e os termos “controlando,” “controlado por” e “sob o controle comum de” serão interpretados de acordo.
“CPqD” shall have the meaning set forth in the preamble to this Agreement.	“CPqD” tem o significado estabelecido no preâmbulo deste Acordo.
“CPqD IP” shall have the meaning set forth in Section 5.1.	“CPqD PI” tem o significado estabelecido na Cláusula 5.1.
“Director” shall mean a member of the Board of Directors (Conselheiro de Administração).	“Conselheiro” significa um membro do Conselho de Administração.
“Encumbrances” shall mean any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever.	“Gravames” significa todos e quaisquer ônus, encargos, direitos reais de garantia, opções, reclamações, hipotecas, penhores, procurações, exercício do direito de voto ou outras restrições ao título ou transferência de qualquer natureza.
“Execution Date” shall mean the date of execution of this Agreement.	“Data da Assinatura” significa a data da assinatura deste Acordo.
“Chairman of the Board of Directors” shall mean the chairman of the Board of Directors to be appointed by the Quotaholders pursuant to Section 3.2.	“Presidente do Conselho” significa o presidente do Conselho de Administração a ser nomeado pelas Quotistas conforme a Cláusula 3.2.
“Exercise Notice” shall have the meaning set forth in Section 4.4.	“Notificação de Exercício” tem o significado estabelecido na Cláusula 4.4.
“GigOptix” shall have the meaning set forth in the preamble to this Agreement.	“GigOptix” tem o significado estabelecido no preâmbulo deste Acordo.
“GigOptix IP” shall have the meaning set forth in Section 5.2.	“GigOptix PI” tem o significado estabelecido na Cláusula 5.2.

- 4 -

[EXECUTION VERSION]

“INPI” shall mean the Instituto Nacional da Propriedade Industrial, the Brazilian patent and trademark office.	“INPI” significa o Instituto Nacional da Propriedade Industrial, o escritório de registro de marcas e patentes do Brasil.
“Offer” shall have the meaning set forth in Section 4.3(b).	“Oferta” tem o significado estabelecido na Cláusula 4.3(b).
“Offer Notice” shall have the meaning set forth in Section 4.2.	“Notificação de Oferta” tem o significado estabelecido na Cláusula 4.2.
“Offered Quotaholder” shall have the meaning set forth in Section 4.2.	“Quotista Ofertada” tem o significado estabelecido na Cláusula 4.2.
“Offered Quotas” shall have the meaning set forth in Section 4.2.	“Quotas Ofertadas” tem o significado estabelecido na Cláusula 4.2.
“Offering Quotaholder” shall have the meaning set forth in Section 4.2.	“Quotista Ofertante” tem o significado estabelecido na Cláusula 4.2.
“Officer” shall mean an officer (diretor) of the Company.	“Diretor” significa um diretor da Sociedade.
“Party” or “Parties” shall have the meaning set forth in the recitals to this Agreement.	“Parte” ou “Partes” tem o significado estabelecido nas premissas deste Acordo.
“Person” shall mean any individual, corporation, partnership, firm, joint venture, association, organization, trust, unincorporated organization or other entity and shall include any successor (by merger or otherwise) of such entity, organization or individual.	“Pessoa” significa qualquer indivíduo, empresa, sociedade, firma, associação, organização, truste, entidade despersonificada, ou qualquer outra entidade, e deverá incluir qualquer sucessor (por incorporação ou de outra forma) dessa entidade, organização ou indivíduo.
“Purchasing Third Party” shall have the meaning set forth in Section 4.2.	“Terceiro Comprador” tem o significado estabelecido na Cláusula 4.2.
“Quotas” shall mean the quotas of the capital of the Company.	“Quotas” significa as quotas do capital da Sociedade.
“Quotaholder” shall have the meaning set forth in the recitals to this Agreement.	“Quotista” tem o significado estabelecido nas premissas deste Acordo.
“Related Party” shall mean any Person that directly, or indirectly through one or more intermediaries, Controls, or is under common Control with any of the Parties.	“Parte Relacionada” significa qualquer Pessoa que direta, ou indiretamente por meio de um ou mais intermediários, Controle, ou esteja sob Controle comum com quaisquer das Partes.

- 5 -

[EXECUTION VERSION]

“Right of First Refusal” shall have the meaning set forth in Section 4.2.	“Direito de Preferência” tem o significado estabelecido na Cláusula 4.2.
“Subscription Rights” shall mean the preemptive right of a Quotaholder to subscribe for newly issued Quotas of the Company	“Direitos de Subscrição” significa o direito de preempção de um Quotista de subscrever novas Quotas emitidas pela Sociedade.
“TFPS Equipment” shall have the meaning set forth in Section 5.2.	“Equipamento TFPS” deverá ter o significado estabelecido na Cláusula 5.2.
“Transfer” means, with respect to the Quotas, whether voluntarily or involuntarily, to give, sell, issue, assign, pledge, encumber, hypothecate, grant a security interest in or otherwise dispose or convey, whether in one transaction or a series of related transactions any or all Quotas, except for the Encumbrance (i) that GigOptix will create over all the Quotas it owns in favor of Silicon Valley Bank or any successor or subsequent lender obtaining a lien on substantially all of the assets of GigOptix, and any action taken by any such lender with regard to such Encumbrance, which are hereby authorized and will not be considered a Transfer for purposes of this Agreement, and (ii) that CPqD may create over all the Quotas it owns in favor of a financial institution. The terms “Transferee”, “Transferor”, “Transferred” and other forms of the word “Transfer” shall have the correlative meanings.	“Transferência” significa, com relação às Quotas, seja voluntária ou involuntariamente, dar, vender emitir, ceder, empenhar, criar gravame, hipotecar, conceder um direito real de garantia ou de outra forma dispor ou alienar, seja em uma transação ou em uma série de transações relacionadas todas ou quaisquer Quotas exceto pelo Gravame (i) que a GigOptix criará sobre todas as Quotas que possui a favor do Silicon Valley Bank ou qualquer sucessor ou credor subsequente que obtenha um ônus sobre substancialmente todos os ativos da GigOptix, e qualquer ação tomada por esse credor com relação a esse Gravame, que são neste ato autorizadas e não serão consideradas uma Transferência para os fins deste Acordo, e (ii) que o CPqD poderá criar sobre todas as Quotas que possui em favor de uma instituição financeira. Os termos “Cessionário”, “Cedente”, “Transferido” e outras formas da palavra “Transferência” terão significados correlatos.
ARTICLE II COMPANY	ARTIGO II SOCIEDADE
2.1.Current Quotaholders. There are twenty thousand (20,000) Quotas, all of which are free and clear of any Encumbrances (other than with regard to the Quotas owned by GigOptix and CPqD as set forth in the definition of the term “Transfer”), distributed among the quotaholders as follows: GigOptix owns nine thousand and eight hundred (9,800) Quotas and CPqD owns ten thousand and two hundred (10,200) Quotas.	2.1.Quotistas Atuais. Há 20.000 (vinte mil) Quotas, todas elas livres e isentas de quaisquer Gravames (que não com relação às Quotas de propriedade da GigOptix e CPqD, como estabelecido na definição do termo “Transferência”), distribuídas entre as Quotistas da seguinte forma: GigOptix possui 9.800 (nove mil e oitocentas) Quotas, o CPqD possui 10.200 (dez mil e duzentas) Quotas.

- 6 -

[EXECUTION VERSION]

2.2.Office; Subsidiaries; Branches. Company has its principal office in the city of Campinas, state of São Paulo, and by decision of the Quotaholders can open branches or establish subsidiaries in or out of the country.	2.2.Sede; Subsidiárias; Filiais. A Sociedade tem sua sede na cidade de Campinas, estado de São Paulo, e por decisão dos sócios pode abrir filiais ou estabelecer subsidiárias dentro ou fora do país.
ARTICLE III MANAGEMENT OF COMPANY	ARTIGO III ADMINISTRAÇÃO DA SOCIEDADE
3.1.General Matters. The management of the Company shall be performed by the Board of Directors and the Officers. The acts of the Company shall be performed by the Officers, under the direction of the Board of Directors and the Quotaholders, in accordance with the provisions of this Agreement, the Articles of Association and the applicable legislation.	3.1.Assuntos Gerais. A Sociedade será administrada por um Conselho de Administração e pelos Diretores. A representação da Sociedade competirá aos Diretores, conforme as diretrizes do Conselho de Administração e das Quotistas, bem como conforme as disposições deste Acordo, do Contrato Social e da legislação aplicável.
3.1.1.Compensation. As from the Execution Date and until the first (1st) anniversary of the date when the Agreement takes force and effect pursuant to Section 7.2 hereof, the members of the Board of Directors and the Officers shall not be entitled to receive any compensation from the Company.	3.1.1.Remuneração. A partir da Data de Assinatura e até o primeiro (1º) aniversário da data em que este Acordo estiver válido e eficaz, conforme previsto na Cláusula 7.2, os Conselheiros e os Diretores não terão direito a qualquer remuneração por parte da Sociedade.
3.2.The Board of Directors.	3.2.O Conselho de Administração.
(a)The Board of Directors shall consist of four (4) members, two (2) nominated by CPqD and two (2) by GigOptix. One of the Directors will be appointed the Chairman of the Board of Directors for a period of two (2) years. Each Quotaholder will alternate appointing the Chairman of the Board of Directors. GigOptix will appoint the first Chairman of the Board of Directors.	(a)O Conselho de Administração consistirá de 4 (quatro) membros, 2 (dois) nomeados pela CPqD e 2 (dois) pela GigOptix. Um dos Conselheiros será nomeado Presidente do Conselho de Administração por um período de 2 (dois) anos. Cada Quotista alternará na nomeação do Presidente do Conselho de Administração. GigOptix nomeará o primeiro Presidente do Conselho de Administração.
(b)Each Director shall serve for a period of two (2) years, and may be reelected for additional periods of two (2) years each, and have the attributions and obligations set forth in the Company’s Articles of Association. A vacancy on the Board of Directors because of death, resignation, removal or any other cause shall be filled by the Quotaholders’ meeting upon designation by the Quotaholder that appointed such Director.	(b)Cada Conselheiro permanecerá no cargo por um mandato de 2 (dois) anos, podendo ser reeleito por iguais períodos, e terá as atribuições e obrigações estabelecidas no Contrato Social da Sociedade. Uma vaga no Conselho de Administração devido à morte, pedido de demissão, remoção ou qualquer outra causa será preenchida pela Reunião de Sócios mediante indicação pela Quotista que nomeou referido Conselheiro.

- 7 -

[EXECUTION VERSION]

(c)Any Director may resign at any time by so notifying both Company and the Quotaholder which appointed such Director in writing. Such resignation shall take effect upon receipt of such notice by Company and the Quotaholder which appointed such Director or at such later time as is therein specified, and unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. Any Director may be removed, with or without cause, by the Quotaholders’ meeting, at the direction of the Quotaholder who appointed such Director to the Board of Directors.	(c)Qualquer Conselheiro poderá pedir demissão a qualquer momento por meio de notificação por escrito para a Sociedade e para a Quotista que nomeou referido Conselheiro. Esse pedido de demissão terá efeito quando do recebimento da referida notificação pela Sociedade e pela Quotista que nomeou referido Conselheiro ou mais tarde como lá especificado, e a não ser que especificado em contrário, o aceite do pedido de demissão não será necessário para torná-lo efetivo. Qualquer Conselheiro poderá ser destituído, com ou sem justa causa, por uma Reunião de Sócios, por orientação da Quotista que nomeou referido Conselheiro para o Conselho de Administração.
(d)Each Quotaholder agrees to exercise its voting rights at the Quotaholders’ meeting in order to approve the appointment or removal of any Director who has been appointed, or whose removal has been directed by, the relevant Quotaholder in accordance with this Agreement.	(d)Cada Quotista concorda em exercer seus direitos de voto na Reunião de Sócios para aprovar a nomeação ou destituição de qualquer Conselheiro que tenha sido nomeado, ou cuja remoção tenha sido orientada, pela respectiva Quotista conforme este Acordo.
3.3.Voting. Each Director shall have the right to one (1) vote on all matters to be decided by the Board of Directors. Unless otherwise expressly stated herein, matters submitted to the Board of Directors shall be approved by a simple majority vote of the Directors. In case of a deadlock, the matter shall be submitted to the approval of the Quotaholders.	3.3.Votação. Cada Conselheiro deverá ter direito a 1 (um) voto sobre todos os assuntos a serem decididos pelo Conselho de Administração. A não ser que expressamente declarado em contrário, os assuntos submetidos ao Conselho de Administração serão aprovados por maioria simples dos votos dos Conselheiros. No caso de um impasse, o assunto será submetido à aprovação das Quotistas.

- 8 -

[EXECUTION VERSION]

3.4.Procedural Matters of the Board of Directors.	3.4.Assuntos relativos aos Procedimentos do Conselho de Administração.
(a)Any decision required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, without prior notice and without the consent in writing setting forth the decision to be taken, if this decision is signed by all the Directors. A written consent delivered pursuant to this Section shall be established into the minutes of the Board of Directors` meeting, and filed with the Board of Trade, as applicable.	(a)Qualquer decisão exigida ou permitida que tenha de ser tomada em qualquer reunião do Conselho de Administração poderá ser tomada sem a realização de uma reunião, sem notificação prévia e sem o consentimento por escrito estabelecendo a decisão a ser tomada, se esta for assinada por todos os Conselheiros. Um consentimento por escrito entregue conforme esta Cláusula deverá ser transcrita em ata do Conselho de Administração e arquivada na Junta Comercial, quando aplicável/necessário.
(b)The Board of Directors shall cause to be kept a book of minutes in which there shall be recorded (i) with respect to each meeting of the Board of Directors, the time and place of such meeting, whether regular or special (and if special, how called), the names of those present and the proceedings thereof and (ii) all of its decisions by written consent. The Board of Directors` minutes of meeting containing decisions which may affect third parties shall be filed with the Board of Trade.	(b)O Conselho de Administração deverá fazer com que sejam mantidos livros de atas nos quais serão registrados (i) com relação a cada reunião do Conselho de Administração, a hora e o local da reunião, se a mesma foi regular ou especial (e se especial, como foi convocada), os nomes daqueles presentes e os procedimentos da mesma e (ii) todas as suas decisões por consentimento por escrito. As atas de reunião do Conselho de Administração que contiverem decisões que afetem terceiros deverão ser arquivadas na Junta Comercial competente.
(c)Board of Directors’ meeting shall be held in the headquarters of the Company in Campinas, unless otherwise agreed by a minimum of three (3) Directors.	(c)A reuniões do Conselho de Administração serão realizadas na sede da Sociedade em Campinas, a menos que acordado de outra forma por no mínimo 3 (três) Conselheiros.
3.5.Officers. The Company may have up to three (3) Officers, one referred to as the Chief Executive Officer, and the others individually referred to as Officer. CPqD shall designate the Chief Executive Officer and his/her successors, who will designate the other Officers. Officers shall be nominated and/or dismissed in/from their positions after the approval by the Board of Directors, as set forth in Section 3.5(a) hereof. The Officers, by performing the acts of the Company, shall obey the decisions of the Quotaholders and the Board of Directors and shall have the powers and authority set forth in the Articles of Association, applied as the Board of Directors may grant to them. The Officers will be responsible for the ordinary management of Company.	3.5.Diretores. A Sociedade poderá ter até três (3) Diretores, um designado Diretor Presidente (CEO), e os demais designados individualmente Diretor. O CPqD indicará o Diretor Presidente (CEO), e seus eventuais sucessores, enquanto o Diretor Presidente (CEO) indicará os demais Diretores. Os Diretores serão nomeados e/ou destituídos em/de suas funções/posições após a aprovação pelo Conselho de Administração, conforme previsto na Cláusula 3.5(a) deste Acordo. Os Diretores deverão, na prática dos atos da Sociedade, respeitar as decisões das Quotistas e do Conselho de Administração e deverão ter os poderes e a autoridade estabelecidos no Contrato Social, aplicados na forma como o Conselho de Administração venha a lhes definir. Os Diretores serão responsáveis pela administração ordinária e regular da Sociedade.

- 9 -

[EXECUTION VERSION]

(a)The candidates to occupy the Officer positions will be interviewed and selected by the Board of Directors. Once the Board of Directors submits the corresponding names for the Quotaholders, a Quotaholders meeting should be called to elect such individuals.	(a)Os candidatos a ocupar cargos de Diretor serão entrevistados e selecionados pelo Conselho de Administração. Uma vez que o Conselho de Administração submeta os  respectivos nomes às Quotistas, uma Reunião de Sócios deverá ser convocada para eleger esses indivíduos.
(b)In case of death, resignation, removal or a vacancy for any other reason, the Board of Directors shall select and submit to the Quotaholders another individual to fill in the position, in accordance with the corresponding designations.	(b)No caso de morte, pedido de demissão, demissão ou vaga por qualquer outro motivo, o Conselho de Administração deverá selecionar e submeter às Quotistas outro indivíduo para preencher o cargo, respeitadas as competentes indicações.
(c)Each Quotaholder undertakes to exercise its voting rights at the Quotaholders’ meeting of Company in order to approve the appointment or removal of any Officer who has been designated, or whose removal has been directed by, the Board of Directors in accordance with this Agreement.	(c)Cada Quotista se compromete a exercer seus direitos de voto na Reunião de Sócios da Sociedade para aprovar a nomeação ou destituição de qualquer Diretor que tenha sido indicado, ou cuja destituição tenha sido orientada pelo Conselho de Administração conforme este Acordo.
ARTICLE IV TRANSFER OF QUOTAS	ARTIGO IV TRANSFERÊNCIA DE QUOTAS
4.1.Lock-up Period. The Parties agree not to Transfer in any way or form any of the Quotas during the period of three (3) years from the Execution Date.	4.1.Período de Permanência (Lock-up). As Partes concordam em não transferir de nenhuma maneira ou forma quaisquer das Quotas durante um período de 3 (três) anos a partir da Data da Assinatura.
4.2.Right of First Refusal. After the lock-up period above, any Quotaholder who wishes to Transfer (“Offering Quotaholder”) part or the totality of its Quotas (the “Offered Quotas”) to a third party (the “Purchasing Third Party”) which has made a firm offer for the Offered Quotas, may do so only upon the prior written notice (the “Offer Notice”) to the other Quotaholder (the “Offered Quotaholder”) who will have the right of first refusal to purchase the Offered Quotas at the same price/economic conditions, by payment in lawful currency, and under the same conditions as offered by such Purchasing Third Party, according to procedures established below (the “Right of First Refusal”).	4.2.Direito de Preferência, e de Recusa. Após o período de permanência (lock-up), qualquer Quotista que deseje Transferir (“Quotista Ofertante”) parte ou a totalidade de suas Quotas (as “Quotas Ofertadas”) para um terceiro (o “Terceiro Comprador”) que tenha feito uma oferta firme pelas Quotas Ofertadas, assim poderá fazer mediante notificação prévia e por escrito (a “Notificação de Oferta”) para a outra Quotista (a “Quotista Ofertada”), a qual terá o direito de preferência e de recusa para comprar as Quotas Ofertadas pelo mesmo preço/valor econômico, mediante pagamento em moeda corrente, e sob as mesmas condições como oferecidas ao referido Terceiro Comprador, conforme os procedimentos estabelecidos abaixo (o “Direito de Preferência e de Recusa”).

- 10 -

[EXECUTION VERSION]

4.3.Offer Notice. The Offer Notice shall:	4.3.Notificação de Oferta. A Notificação de Oferta deverá:
(a)indicate the name of the Purchasing Third Party and all the material terms and conditions of the proposed Transfer, including the price, payment terms and other business conditions as applicable; and	(a)indicar o nome do Terceiro Comprador e todos os termos e condições relevantes da Transferência proposta, incluindo o preço, termos de pagamento e outras condições comerciais como aplicáveis; e
(b)attach a copy of the offer from the Purchasing Third Party (“Offer”).	(b)anexar uma cópia da oferta do Terceiro Comprador (“Oferta”).
4.4.Exercise Period. The Offered Quotaholder will have the irrevocable right, exercisable by written notice given to the Offering Quotaholder within thirty (30) calendar days after the receipt of the Offer Notice (“Exercise Notice”), to indicate if it intends to exercise its Right of First Refusal over all, and no less than all, of the Offered Quotas.	4.4.Período de Exercício. A Quotista Ofertada terá o direito irrevogável, exercível por meio de notificação por escrito dada à Quotista Ofertante dentro de 30 (trinta) dias corridos após o recebimento da Notificação de Oferta (“Notificação de Exercício”), para indicar se pretende exercer seu Direito de Preferência e de Recusa sobre todas, e não menos do que todas, as Quotas Ofertadas.
4.5.Transfer. In the event the Offered Quotaholder exercises its Right of First Refusal, the Offering Quotaholder shall Transfer the Offered Quotas in accordance with the terms of the Offer Notice within no more than thirty (30) days from the date of the Exercise Notice. In case the Offered Quotaholder does not exercise its Right of First Refusal, the Offering Quotaholder will have the right to sell the Offered Quotas to the Purchasing Third Party within an additional thirty (30) days from the date the Offered Quotaholder refused to exercise its Right of First Refusal or from the lapse of the term the Offered Quotaholder had to exercise its Right of First Refusal. The Right of First Refusal cannot be partially exercised. The Quotas so transferred to the Purchasing Third Party will continue to be bound by this Agreement. Any of the Quotaholders shall not offer for Transfer its Quotas to any company which competes with the Company and/or the other Quotaholder, unless: (i) the other Quotaholder exercises the tag along, as set forth in Section 4.6 hereof; or (ii) the other Quotaholder gives its prior consent to such Transfer of Quotas by the Offering Quotaholder.	4.5.Transferência. No caso da Quotista Ofertada exercer seu Direito de Preferência ou de Recusa, a Quotista Ofertante deverá Transferir as Quotas Ofertadas conforme os termos da Notificação de Oferta dentro de no máximo trinta (30) dias a partir da data da Notificação de Exercício. Caso a Quotista Ofertada não exerça o seu Direito de Preferência e de Recusa, a Quotista Ofertante terá o direito de vender as Quotas Ofertadas para o Terceiro Comprador dentro de um período adicional de 30 (trinta) dias a partir da data em que a Quotista Ofertada se recusou a exercer seu Direito de Preferência e de Recusa ou a partir da prescrição do período que a Quotista Ofertada tinha para exercer seu Direito de Preferência e de Recusa. O Direito de Preferência e de Recusa não pode ser exercido parcialmente. As Quotas transferidas dessa forma ao Terceiro Comprador continuarão a estar vinculadas por este Acordo. Os Quotistas se comprometem a não oferecer para Transferência suas Quotas a empresas concorrentes da outra sócia, ou da Sociedade, exceto se: (i) o Quotista remanescente optar pela venda conjunta, conforme previsto na Cláusula 4.6 deste Acordo; ou (ii) houver a concordância prévia da Quotista remanescente com relação à Transferência pela Quotista Ofertante.

- 11 -

[EXECUTION VERSION]

4.6.Tag Along. In the event the Quotas are under sale, on which the other Quotaholder does not choose to acquire the Offered Quotas, such Quotaholder may exercise the tag along, offering its Quotas to be acquired together with the Offered Quotas above by the same interested party. Upon the Quotaholder manifest its interest to exercise the right to tag along, the Quotas shall only be negotiated in case they correspond to all the Company’s Quotas, provided that there should be considered the same price and payment conditions per Quota to the entire sale/transaction. For the purpose of this Section 4.6, any sale of Quotas shall be done by cash.

4.6.Direito de Venda Conjunta. Na hipótese de venda das Quotas, em que a outra Quotista não optar pela aquisição das Quotas Ofertadas, essa Quotista poderá exercer o direito de venda conjunta, ofertando as suas Quotas para que sejam adquiridas em conjunto pelo mesmo interessado. Manifestado o interesse da Quotista em exercer o direito de venda conjunta, as quotas somente poderão ser negociadas se forem pela totalidade das Quotas da Sociedade, sendo considerado o mesmo valor, e condições de pagamento, por Quota para toda a transação. Para todos os efeitos desta cláusula a venda das quotas somente poderá ser considerada se for efetuada em moeda corrente nacional.

4.7.Lack of Exercise. In case neither the Offered Quotaholder nor the Purchasing Third Party completes the purchase of the Offered Quotas within ninety (90) calendar days from the receipt of the Offer Notice by the Offered Quotaholder, the mechanism of the Right of First Refusal will reset, and have to be performed again, as per the provisions of this Agreement.

4.7.Ausência de Exercício. Caso nem a Quotista Ofertada nem o Terceiro Comprador conclua a compra das Quotas Ofertadas dentro de noventa (90) dias corridos a partir do recebimento da Notificação de Oferta pela Quotista Ofertada, o mecanismo do Direito de Preferência e de Recusa será reinicializado, e terá de ser cumprido novamente, conforme as disposições deste Acordo.

- 12 -

[EXECUTION VERSION]

4.8.Subscription Rights. Subscription Rights cannot be transferred to third parties.	4.8.Direito de Subscrição. Os Direitos de Subscrição, quando aplicáveis, não podem ser transferidos a terceiros.
4.9.Quota Option Plans. In case the Quotaholders decide to implement a Quota Option Plan for the Company’s Officers, Directors and key employees, the Quotaholders will share pro rata any dilution to their equity ownership of the capital of the Company.	4.9.Planos de Opção de Quota. Caso os Quotistas decidam implementar um “Plano de Opção de Quota” para os Diretores, Conselheiros e empregados chave da Sociedade, as Quotistas compartilharão proporcionalmente qualquer diluição de sua participação do capital da Sociedade.
SECTION V CAPITALIZATION OF THE COMPANY	CLÁUSULA V CAPITALIZAÇÃO DA SOCIEDADE
5.1.CPqD. CPqD shall pay up its Quotas of the Company (i) in cash by the amount which it has already paid up into the Company, and (ii) in kind with the transfer of all silicon photonics and related technology to optical communication, know how, trade secrets and related intellectual property licenses (“CPqD IP”), which will be identified and defined within thirty (30) days as from the Execution Date.	5.1.CPqD. O CPqD deverá integralizar suas Quotas da Sociedade (i) em dinheiro pelo valor já integralizado na Sociedade, e (ii) com a transferência da tecnologia de fotônica de silício e tecnologia relacionada a comunicação óptica, know-how, segredos comerciais e licenças de propriedade intelectual relacionadas (“CPqD PI”), que serão identificadas e definidas dentro de 30 (trinta) dias a partir da Data de Assinatura.
5.2.GigOptix. GigOptix shall pay up its Quotas of the Company in kind with (i) the assignment of the ownership of all Patents or licenses to the Thin Film Polymer on Silicon (TFPSTM) modulators and related technology, know how, trade secrets and related intellectual property licenses(“GigOptix IP”), which will identified and defined in the patents filing, as well as in the technology transfer agreements within thirty (30) days as from the Execution Date.	5.2.GigOptix. A GigOptix deverá integralizar suas Quotas da Sociedade em espécie com (i) a cessão da titularidade de todas as Patentes, de todos os [moduladores TFPS] e tecnologia relacionada, know-how, segredos comerciais e licenças de propriedade intelectual relacionadas (“GigOptix PI”), que serão identificadas e definidas nos pedidos de registro de patentes, bem como nos contratos de transferência de tecnologia, em 30 (trinta) dias a partir da Data de Assinatura.
5.3.Intellectual Property. For purposes of transferring the CPqD IP and the GigOptix IP to the Company, each of the Parties shall execute the necessary assignment documents and file the appropriate documents with the INPI within no more than two (2) months from the Execution Date, as applicable.	5.3.Propriedade Intelectual. Com a finalidade de transferir a CPqD PI e a GigOptix PI para a Sociedade, cada uma das Partes deverá assinar os documentos de cessão necessários e registrá-los junto ao INPI dentro de no máximo 2 (dois) meses a partir da Data da Assinatura, conforme aplicável.

- 13 -

[EXECUTION VERSION]

5.4.TFPS Equipment. The TFPS processing, testing and alignment station equipments (“TFPS Equipment”) shall be donated from GigOptix to CPqD, provided that CPqD shall be subject to transfer to the Company any and all technology, and intellectual property, which will be identified and defined within thirty (30) days as from the Execution Date.	5.4.Equipamento TFPS. Os equipamentos de processamento, teste e alinhamento da estação [TFPS] (o “Equipamento TFPS”) serão doados pela GigOptix ao CPqD, ficando o CPqD obrigado a transferir à Sociedade a tecnologia e direitos de propriedade intelectual, que serão identificados e definidos dentro de 30 (trinta) dias a partir da Data de Assinatura.
5.5.GigOptix shall start the process for transferring the TFPS Equipment to CPqD within 30 (thirty) days as from this Agreement is in full force and effect, as set forth in Section 7.2 hereof, provided that the Company has the necessary import license to receive the TFPS Equipment.	5.5.A GigOptix deverá iniciar o processo de transferência do Equipamento TFPS para o CPqD dentro de 30 (trinta) dias a partir da data em que este Acordo esteja válido e eficaz, nos termos previstos na Cláusula 7.2, desde que o CPqD tenha as licenças de importação necessárias para receber o Equipamento TFPS.
5.6.CPqD is committed to support all expenses necessary for the establishing of the facilities to be leased to/used by the Company, and the research and development (R&D) activities until the first (1ST) anniversary of the date when the Agreement takes force and effect pursuant to Section 7.2 hereof.	5.6CPqD está obrigado a suportar/custear todas as despesas necessárias para a execução e conclusão das instalações a serem alugadas para/utilizadas pela Sociedade, bem como para as atividades de pesquisa e desenvolvimento (R&D) até a data do primeiro aniversário em que este acordo estiver válido e eficaz, nos termos previstos na Cláusula 7.2.
SECTION VI QUOTAHOLDERS’ OBLIGATIONS	CLÁUSULA VI OBRIGAÇÕES DAS QUOTISTAS
6.1.Non-Solicitation. For each period commencing on the Execution Date and ending on the date which is twelve (12) months from the date which each Quotaholder is no longer partner either as a quotaholder or employee or non-employee manager with the Company, such Quotaholder shall not, directly or indirectly, (i) hire for employment any person then employed by the Company, unless such employee, by consent of the Quotaholders, has previously left the corresponding Quotaholder to be hired by the Company, or (ii) persuade or attempt to persuade any employee or contractor of the Company, to leave such employment or contract or to become employed or contracted by anyone other than the Company, or (iii) persuade or attempt to persuade any client of the Company, to transfer its business to anyone other than the Company.	6.1.Ausência de Captação. Para cada período com início na Data da Assinatura e encerrando na data que for 12 (doze) meses a partir da data em que a Quotista deixar de ser sócia seja como uma quotista ou empregado ou gerente não empregado da Sociedade, essa Quotista não deverá, direta ou indiretamente, (i) assinar contrato de trabalho com qualquer pessoa então empregada pela Sociedade, a menos que esse empregado, por acordo entre as Quotistas, tenha se desligado anteriormente da respectiva Quotista para ser contratado pela Sociedade, ou (ii) persuadir ou tentar persuadir qualquer empregado ou contratado da Sociedade, a deixar seu contrato de trabalho ou contrato ou a se tornar empregado ou contratado por qualquer outra pessoa que não a Sociedade, ou (iii) persuadir ou tentar persuadir qualquer cliente da Sociedade, a transferir seu negócio a qualquer pessoa que não a Sociedade.

- 14 -

[EXECUTION VERSION]

6.2.Non-compete. For each period commencing on the Execution Date and ending on the date which is twelve (12) months from the date which each Quotaholder is no longer partner with the Company either as a Quotaholder or employee or non-employee manager (the “Non-Compete Period”), such Quotaholder shall not on its own behalf or on behalf of or in connection with any person, directly or indirectly, in any capacity whatsoever carry on, be engaged in, have any financial or other interest in or be otherwise commercially involved in any activity or business which is substantially the same as or in competition with the Business.

6.2.Não Concorrência. Para cada período com início na Data da Assinatura e encerramento na data que for 12 (doze) meses a partir da data em que cada deixar de ser sócia seja como uma quotista ou empregado ou gerente não empregado da Sociedade (o “Período de Não Concorrência”), tal Quotista não deverá em seu próprio nome ou em nome de ou com relação a qualquer outra pessoa, direta ou indiretamente, em qualquer capacidade de qualquer maneira realizar, estar envolvida, ter qualquer interesse financeiro ou outro tipo de interesse ou de outra forma estar comercialmente envolvida em qualquer atividade ou negócio que seja substancialmente o mesmo que ou que concorra com o Negócio.

6.3.Confidential Information. Each of the Quotaholders hereby irrevocably and irreversibly undertake to, directly or indirectly through a Related Party: (i)keep all Confidential Information related to the activities of Company strictly confidential; (ii) refrain from disclosing the Confidential Information to third parties, except upon the prior written consent of the Party to which the Confidential Information relates, or if required by law or administrative process; and (iii) directly or indirectly avail itself of Confidential Information. The confidentiality obligation set forth in this Section 6.3 shall be valid for an undetermined period of duration and shall survive the termination of this Agreement, for any reason.

6.3.Informações Confidenciais. Cada uma das Quotistas neste ato irrevogavelmente e irreversivelmente se compromete a, direta ou indiretamente por meio de uma Parte Relacionada: (i) manter todas asInformações Confidenciais relacionadas às atividades da Sociedade sob rígido sigilo; (ii) evitar divulgar as Informações Confidenciais a terceiros, exceto mediante consentimento prévio e por escrito da Parte à qual as Informações Confidenciais se referem, ou se exigido por lei ou por processo administrativo; e (iii) direta ou indiretamente se beneficiar das Informações Confidenciais. A obrigação de confidencialidade estabelecida nesta Cláusula 6.3 será válida por um período indeterminado de tempo e sobreviverá ao encerramento deste Acordo, seja por qual motivo for.

- 15 -

[EXECUTION VERSION]

SECTION VII TERM	CLÁUSULA VII VIGÊNCIA
7.1.Term. Subject to Sections 7.2 and 7.3 below, this Agreement shall enter into full force and effect upon its execution and shall continue in full force and effect for thirty (30) years after such date.	7.1.Vigência. Sujeito às Cláusulas 7.2 e 7.3 abaixo, este Acordo entrará em pleno vigor e efeito quando de sua assinatura e continuará em plena vigência e validade por 30 (trinta) anos a partir dessa data.
7.2.Condition Precedent. This Agreement shall enter in force and take effect to CPqD only after (i) its terms and conditions are approved by CPqD’s Oversight Board, which shall occur in March, 2014, and (ii) the release of the amount regarding the loan requested by CPqD before FINEP - Agência Brasileira da Inovação to support the establishment of the Company and the development of its corporate purpose/activities.	7.2.Condição Suspensiva. Este Acordo entrará em vigor e produzirá seus efeitos em relação ao CPqD somente após (i) a aprovação dos seus termos e condições pelo Conselho Curador do CPqD, que deverá ocorrer no mês de março de 2014, e (ii) a liberação dos valores referentes ao empréstimo solicitado pelo CPqD junto à FINEP - Agência Brasileira da Inovação, referente à criação da Sociedade e ao desenvolvimento do seu objeto social/suas atividades.
7.3.Renewal. After the expiration of the initial term set forth in Section 7.1 above, this Agreement shall be renewed for one additional period of twenty (20) years, unless either Party gives the other Party a written notice at least fifteen (15) months and no later than twelve (12) months before the expiration of the relevant period indicating that it wishes to terminate this Agreement.	7.3.Renovação. Após o encerramento da vigência inicial estabelecida na Cláusula 7.1 acima, este Acordo será renovado por um período adicional de 20 (vinte) anos, a não ser que qualquer Parte dê para a outra Parte uma notificação por escrito no máximo 15 (quinze) meses e no mínimo 12 (doze) meses antes do encerramento da vigência relevante indicando que deseja rescindir este Acordo.
SECTION VIII ARTICLES OF ASSOCIATION	CLÁUSULA VIII CONTRATO SOCIAL
8.1.Articles of Association. Simultaneously with the execution of this Agreement, the Quotaholders shall execute the First (1st) Amendment to the Articles of Association to Company.	8.1.Contrato Social. Simultaneamente à assinatura deste Acordo, as Quotistas firmarão a 1ª (Primeira) Alteração do Contrato Social da Sociedade.
8.2.Inconsistencies. In the event of any ambiguity or discrepancy between the provisions of this Agreement and the Articles of Association, the provisions of this Agreement shall prevail between the Quotaholders. Each of the Quotaholders shall exercise all voting and other rights and powers available to it so as to give effect to the provisions of this Agreement and, if necessary, to procure any required amendment of the Articles of Association.	8.2.Inconsistências. No caso de qualquer ambiguidade ou discrepância entre as disposições deste Acordo e do Contrato Social, as disposições deste Acordo prevalecerão entre as Quotistas. Cada uma das Quotistas deverá exercer todos os seus direitos de voto e outros direitos e poderes disponíveis a ela de forma a dar efeito às disposições deste Acordo e, se necessário, providenciar qualquer alteração exigida ao Contrato Social.

- 16 -

[EXECUTION VERSION]

SECTION IX SPECIFIC PERFORMANCE	CLÁUSULA IX EXECUÇÃO ESPECÍFICA
9.1.Specific Performance of this Agreement. The Parties agree that any and all of their obligations and agreements set forth in this Agreement are irrevocable and are subject to specific performance. The breach of any provision of this Agreement will allow the other Quotaholders to request the performance of such obligation.	9.1.Execução Específica deste Acordo. As Partes concordam que todas e quaisquer de suas obrigações e acordos estabelecidos neste Acordo são irrevogáveis e estão sujeitos a execução específica. A quebra de qualquer disposição deste Acordo permitirá às outras Quotistas solicitar a execução da referida obrigação.
SECTION X APPLICABLE LAW, ARBITRATION AND JURISDICTION	CLÁUSULA X LEI APLICÁVEL, ARBITRAGEM E JURISDIÇÃO
10.1.Governing Law. This Agreement shall be construed and governed according to the laws of Brazil.	10.1.Lei Regente. Este Acordo será interpretado e regido conforme as leis do Brasil.
10.2.Disputes. Any disputes arising from or in connection with this Agreement shall be communicated by one side to the other, and the Parties agree to undertake their reasonable efforts in order to settle such disputes, by means of direct negotiations and in good-faith, within a term of thirty (30) consecutive days from the date of receipt of such notice.	10.2.Litígios. Quaisquer litígios que resultem de ou com relação a este Acordo deverão ser comunicados por uma parte para a outra parte, e as Partes concordam em envidar seus mais razoáveis esforços para liquidar tais litígios, por meio de negociações diretas e em boa-fé, dentro de um prazo de 30 (trinta) dias consecutivos a partir da data do recebimento da referida notificação.
10.3.Arbitration. Any and all doubts, disputes or claims arising from or relating to this Agreement not settled pursuant to Section 10.2 above, shall be settled by arbitration in accordance with the Rules of Mediation and Arbitration of the Brazil-Canada Chamber of Commerce (“CCBC”), in the context of an arbitration administered by CCBC.	10.3.Arbitragem. Todas e quaisquer dúvidas, litígios ou reclamações que resultem de ou se refiram a este Acordo que não tenham sido liquidadas conforme a Cláusula 10.2 acima, deverão ser liquidadas por arbitragem conforme as Normas de Mediação e Arbitragem da Câmara de Comércio Brasil-Canadá (“CCBC”), no contexto de uma arbitragem administrada pela CCBC.

- 17 -

[EXECUTION VERSION]

(a)If the rules established by CCBC are silent on any procedural aspect, they shall be supplemented by the relevant provisions of Federal Law No. 9,307, of September 23, 1996.	(a)Se as normas estabelecidas pela CCBC não mencionarem qualquer aspecto processual, elas deverão ser suplementadas pelas disposições relevantes da Lei Federal No. 9.307, de 23 de setembro de 1996.
(b)The arbitration tribunal shall be empowered to resolve any and all controversies relating to the dispute, including ancillary matters, and shall be empowered to issue any necessary orders to the parties, including injunctions and intermediate orders prior to a final decision. The arbitrators are not authorized to act as amiable compositeur or to decide ex aequo et bono.	(b)O tribunal de arbitragem terá poder de resolver todas e quaisquer controvérsias com relação ao litígio, incluindo assuntos adicionais, e terá o poder de emitir quaisquer ordens necessárias para as partes, incluindo recursos judiciais e ordens temporárias antes de uma decisão final. Os árbitros não estão autorizados a agir como amiable compositeur ou a decidir ex aequo et bono.
(c)The arbitration tribunal shall be composed of three (3) arbitrators, who shall be appointed according to the following procedure. The claimant side which decided to call the arbitration, shall appoint one arbitrator. The respondent side against which the arbitration was called, shall appoint the second arbitrator. Thethird, who shall serve as chairman, shall be chosen by the two Party-appointed arbitrators. If either side fails to make its appointment within ten (10) days, or in the event the Party-appointed arbitrators are unable to appoint the arbitrator whose appointment is pending, the third arbitrator shall be appointed within the subsequent period of ten (10) days in accordance with the rules of CCBC.	(c)O tribunal de arbitragem será composto por 3 (três) árbitros, que serão nomeados de acordo com o seguinte procedimentos. O lado reclamante que decidiu convocar a arbitragem nomeará um árbitro. O lado do réu contra quem se convocou a arbitragem nomeará o segundo árbitro. O terceiro, que atuará como presidente será escolhido pelos árbitros nomeados pelas Partes. Se qualquer um dos lados deixar de nomear dentro de 10 (dez) dias, ou no caso dos árbitros nomeados pelas Partes não serem capazes de designar o árbitro cuja nomeação está pendente, o terceiro árbitro será nomeado dentro do período subsequente de 10 (dez) dias conforme as normas da CCBC.
(d)The place of arbitration shall be São Paulo, SP, Brazil, and the arbitration award shall be issued in São Paulo, SP, Brazil. The language of the arbitration shall be Portuguese.	(d)O local da arbitragem será São Paulo, SP, Brasil, e a sentença da arbitragem será emitida em São Paulo, SP, Brasil. O idioma da arbitragem será o português.

- 18 -

[EXECUTION VERSION]

(e)The arbitration proceedings and any documents and information disclosed therein shall be subject to confidentiality.	(e)Os procedimentos da arbitragem e quaisquer documentos e informações divulgadas nos mesmos estarão sujeitos a confidencialidade.
(f)The arbitration award may be enforced in any court of competent jurisdiction. The arbitration award shall be final and binding, and the Parties waive any right to appeal, except for the clarification request provided by Section 30 of Federal Law No. 9,307, of September 23, 1996.	(f)A sentença da arbitragem poderá ser executada em qualquer tribunal de jurisdição competente. A sentença da arbitragem será final e vinculativa, e as Partes renunciam a qualquer direito de apelar, exceto pela solicitação de esclarecimento disposta pela Cláusula 30 da Lei Federal No. 9.307, de 23 de setembro de 1996.
(g)Each Party retains the right to seek judicial assistance: (i) to compel arbitration; (ii) to obtain interim measures for protection of rights prior to institution of arbitration, and any such action shall not be construed as a waiver of arbitration as the only means of dispute resolution selected by the Parties, (iii) to enforce any decision of the arbitration tribunal, including the arbitration award, and (iv) to seek annulment of the arbitration award when permitted by law. In case the parties seek judicial assistance in the circumstances provided above, the courts of São Paulo, SP, Brazil, shall have jurisdiction.	(g)Cada Parte mantém o direito de buscar assistência legal: (i) para obrigar a arbitragem; (ii) para obter medidas temporárias para a proteção dos direitos antes da instituição da arbitragem, e qualquer uma dessas quotas não deverá ser interpretada como uma renúncia à arbitragem como sendo o único meio de resolução de litígio escolhido pelas Partes, (iii) para executar qualquer decisão do tribunal de arbitragem, incluindo a sentença de arbitragem, e (iv) para buscar a anulação da sentença da arbitragem quando permitido pela lei. Caso as partes busquem assistência legal nas circunstâncias dispostas acima, os tribunais de São Paulo, SP, Brasil, terão a jurisdição.
(h)The Party who loses the arbitration procedure shall pay for the other Party’s attorneys’ fees which shall be established by the arbitration panel.	(h)A Parte que perder o processo de arbitragem deverá pagar os honorários advocatícios da outra Parte que serão estabelecidos pelo painel de arbitragem.
SECTION XI GENERAL PROVISIONS	CLÁUSULA XI DISPOSIÇÕES GERAIS
11.1.Recordation. This Agreement shall be recorded and kept in file at the Company’s head offices and the Company shall abide by, and cause compliance with, its provisions and refrain from performing any and all acts arising out of non-compliance with any obligation assumed under this Agreement.	11.1.Registro. Este Acordo será registrado e mantido em arquivo na sede da Sociedade e a Sociedade deverá cumprir, e causar o cumprimento de suas disposições e evitar realizar todos e quaisquer atos que resultem do não cumprimento de qualquer obrigação assumida sob este Acordo.

- 19 -

[EXECUTION VERSION]

11.2.Other Arrangements.	11.2.Outras Avenças.
(a)GigOptix will be the sole and exclusive global marketing and sales organization, except in the Brazilian market and with regard to any sale to Civcom Devices & Systems LTD (while a Related Party of Padtec S/A and CPqD), which shall be explored by the Company for all products of the Company through December 31, 2018, and by a written agreement by the Parties no later than September 30, 2018, such term can be extended.	(a)GigOptix será a única e exclusiva organização de marketing e vendas mundial, exceto no mercado brasileiro e nas vendas para a Civcom Devices & Systems LTD (enquanto for uma Parte Relacionada da Padtec S/A e do CPqD), cuja exploração será feita diretamente pela Sociedade, de todos os produtos da Sociedade até 31 de dezembro de 2018, e por acordo escrito entre as Partes a ser firmado até 30 de setembro de 2018, esse prazo poderá ser prorrogado.
(b)During the Non-Compete Periods, the Company will be the sole and exclusive production and commercial partner for each of CPqD and GigOptix for technology and products that use GigOptix IP and CPQD IP, and further defined as purpose in the Company’s Articles of Association.	(b)Durante os Períodos de Não Concorrência, a Sociedade será a única e exclusiva parceira de produção e comercial do CPqD e da GigOptix, com relação à tecnologia e produtos que utilizem GigOptix PI e CPqD PI, e como definido no objeto social da Sociedade em seu Contrato Social.
(c)CPqD shall rent a physical space for the operation of the Company at CPqD facilities in Campinas, including a clean room of seventy (70) square meters, class 100 cleanroom.	(c)O CPqD deverá locar o espaço físico para a operação da Sociedade nas instalações da CPqD em Campinas, incluindo um espaço denominado de câmara limpa de 70 (setenta) metros quadrados, classe 100.
(d)       The Company shall provide and deliver to GigOptix and CPqD, the Company`s quarter financial statements, as follows: (i) for the first three (3) quarters of the year - within twenty (20) days as from the end of each quarter; and (ii) for the final quarter of the year - within thirty (30) days as from the end of such quarter.	(d)A Sociedade deverá providenciar e apresentar à GigOptix e CPqD , as demonstrações financeiras trimestrais da Sociedade, conforme segue: (i) para os primeiros 3 (três) trimestres do ano - em até 20 (vinte) dias contados do término de cada trimestre; e (ii) para o último trimestre do ano - em até 30 (trinta) dias contados do término do último trimestre.

- 20 -

[EXECUTION VERSION]

11.3.Ancillary Agreements. Within ninety (90) days from the Execution Date the Parties shall enter into additional agreements necessary to implement the operations of the Company and the arrangements set forth in Section 11.2 above, including but not limited to a transitional rendering of services agreement, GigOptix IP transfer agreement, CPqD IP transfer agreement, lease agreement for the Company, etc.	11.3.Contratos Suplementares. Dentro de 90 (noventa) dias a partir da Data da Assinatura, as Partes deverão celebrar os contratos adicionais necessários para implementar as operações da Sociedade e os arranjos estabelecidos na Cláusula 11.2 acima, incluindo, sem limitação, um contrato de prestação de serviços transitórios, contrato de transferência de PI GigOptix, contrato de transferência de PI CPqD, contrato de locação para a Sociedade, etc.
11.4.Expenses. Subject to Section 5.1 above, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.	11.4.Despesas. Sujeito à Cláusula 5.1 acima, todos os custos e despesas incorridos com relação a este Acordo e às transações contempladas neste ato deverão ser pagos pela Parte que incorrer em tais custos e despesas.
11.5.Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, e-mailed (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a Party as shall be specified by like notice):	11.5.Notificações. Todas as notificações e outras comunicações aqui mencionadas deverão ser feitas por escrito e serão consideradas como tendo sido dadas se entregues pessoalmente, enviadas por e-mail (com confirmação), postadas por carta comercial registrada (com aviso de recebimento) ou entregues por serviço de mensageiro (com confirmação) para as partes nos seguintes endereços (ou para outro endereço como a Parte venha a especificar por notificação semelhante):
(a)        if to GigOptix: Dr. Avi Katz Chief Executive Officer and Chairman of the Board of Directors GigOptix, Inc. 130 Baytech Drive San Jose, CA 95134	(a)Se para a GigOptix: Dr. Avi Katz CEO e Presidente do Conselho de Administração GigOptix, Inc. 130 Baytech Drive San Jose, CA 95134
(b)        if to CPqD: Hélio Marcos Machado Graciosa President Rua Dr. Ricardo Benetton Martins s/nº., Parque Polo II de Alta Tecnologia Campinas/SP - CEP 13086-510	(b)Se para a CPqD: Hélio Marcos Machado Graciosa Presidente Rua Dr. Ricardo Benetton Martins s/nº., Parque Polo II de Alta Tecnologia Campinas/SP - CEP 13086-510

- 21 -

[EXECUTION VERSION]

11.6.Entire Agreement. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof.	11.6.Totalidade do Acordo. Este Acordo (incluindo os documentos e instrumentos aqui mencionados) constitui a totalidade do acordo e substitui todos os acordos e entendimentos anteriores, tanto verbais quanto por escrito, entre as Partes com relação ao assunto do mesmo.
11.7.Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.	11.7.Autonomia. Qualquer termo ou disposição deste Acordo que for inválido ou inexequível em qualquer jurisdição deverá ser, com relação àquela jurisdição, sem efeito na medida da referida invalidade ou inexequibilidade sem com isso tornar inválidos ou inexequíveis os termos e disposições restantes deste Acordo ou afetar a validade ou exequibilidade de quaisquer dos termos ou disposições deste Acordo em qualquer outra jurisdição. Se qualquer disposição deste Acordo for tão ampla que se tornar inexequível, a disposição deverá ser interpretada somente na amplitude em que for exequível.
11.8.Assignment; No Third Party Beneficiaries. Except as otherwise expressly provided herein, (i) neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by any of the Quotaholders hereto (whether by operation of law or otherwise) without the prior written consent of the other Quotaholders; and (ii) this Agreement (including the documents and instruments referred to herein) is not intended to confer upon any person other than the Quotaholders any rights or remedies hereunder.	11.8.Cessão; Ausência de Terceiros Beneficiários. Exceto como expressamente disposto em contrário neste ato, (i) nem este Acordo nem qualquer um de seus direitos, interesses ou obrigações aqui descritos deverá ser cedido, direta ou indiretamente, por qualquer uma das Quotistas deste Acordo (seja por força de lei ou de outra forma) sem o consentimento prévio e por escrito das outras Quotistas; e (ii) este Acordo (incluindo os documentos e instrumentos aqui mencionados) não tem a intenção de conferir a qualquer outra pessoa que não às Quotistas quaisquer direitos ou recursos aqui descritos.
11.9.Amendments. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is (i) in writing and (ii) signed by or on behalf of each of the Quotaholders. Unless expressly agreed, no amendment shall constitute a general waiver of any provisions of this Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to this Agreement which have already accrued up to the date of amendment, and the rights and obligations of the Quotaholders under or pursuant to this Agreement shall remain in full force and effect, except and only to the extent that they are so amended.	11.9.Alterações. Qualquer disposição deste Acordo poderá ser alterada ou renunciada se, e somente se, essa alteração ou renúncia for (i) feita por escrito e (ii) assinada por ou em nome de cada uma das Quotistas. A não ser que expressamente acordado, nenhuma alteração deverá constituir uma renúncia em geral a quaisquer disposições deste Acordo, nem deverá afetar quaisquer direitos, obrigações ou passivos sob ou conforme este Acordo que já tenham se acumulado até a data da alteração, e os direitos e obrigações das Quotistas sob ou conforme este Acordo permanecerão em plena vigência e validade, exceto e somente na medida em que sejam alteradas dessa forma.

- 22 -

[EXECUTION VERSION]

11.10.No Constructive Waiver of Rights. No delay or failure on the part of any Quotaholder in exercising any right hereunder shall operate as a waiver thereof, nor shall any waiver, express or implied, by any Quotaholder of any right hereunder or of any failure to perform or breach hereof by any other Quotaholder constitute or be deemed a waiver of any other right hereunder or of any other failure to perform or breach hereof by the same or any other Quotaholder, whether of a similar or dissimilar nature.	11.10.Ausência de Presunção de Renúncia de Direitos. Nenhum atraso ou falha da parte de qualquer Quotista em exercer qualquer direito aqui descrito deverá operar como uma renúncia ao mesmo, nem qualquer renúncia, explícita ou implícita, por parte de qualquer Quotista a qualquer direito aqui contida ou de qualquer falha em cumprir ou quebra do mesmo por qualquer outra Quotista constitui ou será considerada uma renuncia a qualquer outro direito aqui contido ou de qualquer outra falha em cumprir ou quebra do mesmo pela mesma ou por qualquer outra Quotista, seja de natureza semelhante ou não.
11.11.Language. This Agreement is drafted and executed in English and Portuguese languages. In case of a discrepancy between such languages, the Portuguese language version shall prevail.	11.11.Idioma. Este Acordo é redigido e celebrado nos idiomas inglês e português. Em caso de qualquer discrepância entre tais idiomas, a versão no idioma português deverá prevalecer.
11.12.Further Assurances. The Parties hereby covenant and agree to execute and deliver such further and other instruments, agreements and writings and do and perform, and cause to be done and performed, such further and other acts and things that may be necessary or desirable in order to give full effect to this Agreement.	11.12.Garantias Adicionais. As Partes neste ato se comprometem e concordam em assinar e entregar todos os instrumentos adicionais e outros instrumentos, contratos e documentos por escrito e em fazer e realizar, e fazer com que sejam feitos e realizados, os atos e coisas adicionais que possam ser necessárias ou desejáveis para dar total efeito a este Acordo.
11.13.Waiver Section. The Quotaholders agree that any of the Quotaholders may waive, at its sole discretion, in favor of the other Quotaholder, all rights arising from the ownership of its Quotas in the Company. Such waiver shall be accepted by the other Quotaholder provided that the waiving Quotaholder written notify its decision to the other Quotaholder within six (6) months as from the Execution Date.	11.13.Cláusula de Renúncia. As Quotistas acordam que qualquer delas poderá renunciar, a seu exclusivo critério, em favor da outra Quotista, todos os seus direitos decorrentes da titularidade de suas Quotas na Sociedade. Tal renúncia será aceita pela outra Quotista desde que a Quotista renunciante notifique por escrito a outra Quotista de tal decisão, em até 6 (seis) meses contados da Data da Assinatura.

- 23 -

[EXECUTION VERSION]

11.13.1.No liens shall affect the waiving Quotaholder who express itself according to Section 11.13 herein and such Quotaholder shall no longer integrate the Company’s corporate structure and shall not receive any amount for its Quotas. Waiving Quotaholder’s Quotas shall be converted, by assignment and with no cost, in favor of the remaining Quotaholder, who will be liable for all Company’s liens and shall be entitled to all right of the Company.	11.13.1.Nenhum ônus incidirá sobre a Parte renunciante que se manifestar na forma prevista na Cláusula 11.13, a qual deixará de integrar o quadro societário da Sociedade sem receber qualquer valor pelas suas Quotas. As Quotas da Quotista renunciante serão revertidas integralmente, por cessão gratuita, à Quotista remanescente, a qual também assumirá todos os ônus e direitos da/sobre a Sociedade.
11.13.2.In case of Section 11.13, the remaining Quotaholder, at its sole discretion, may proceed with the winding-up of the Company instead of keep conducting its activities, and in this situation the waiving Quotaholder shall remain in the Company, jointly with the remaining Quotaholder, until the completion of the winding-up, having rights and obligations in connection therewith.	11.13.2.Na hipótese prevista na Cláusula 11.13, a Quotista remanescente, a seu exclusivo critério, poderá optar por liquidar a Sociedade, em vez de continuar a operá-la, hipótese em que a Quotista renunciante, juntamente com a Quotista remanescente, se manterá na Sociedade até a sua liquidação total, fazendo, cada qual, jus aos direitos e obrigações que daí decorrerem.
IN WITNESS WHEREOF, the parties have executed this Agreement on this February 10, 2014.	EM TESTEMUNHO DO QUÊ, as partes assinaram este Acordo neste dia 10 de fevereiro de 2014.

/s/ Avi Katz

GigOptix, Inc.

Avi Katz - CEO

/s/ Hélio Marcos Machado Graciosa 

Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações

Hélio Marcos Machado Graciosa - Presidente

/s/ Carlos Eduardo Salla

BRPhotonics Produtos Optoeletrônicos Ltda.

Carlos Eduardo Salla

 

- 24 -

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED

I, Dr. Avi S. Katz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GigOptix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/	DR. AVI S. KATZ
Dr. Avi S. Katz
Chief Executive Officer and Principal Executive Officer
Date: May 9, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED

I, Curt Sacks, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GigOptix, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/	CURT SACKS
Curt Sacks
Chief Financial Officer and Principal Financial and Principal Accounting Officer
Date: May 9, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of GigOptix, Inc. (the "Company"), does hereby certify that to the undersigned's knowledge:

1) the Company's Quarterly Report on Form 10-Q for the period ended March 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DR. AVI S. KATZ

Dr. Avi S. Katz

Chief Executive Officer and Principal Executive Officer

Dated: May 9, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Acting Chief Financial Officer and Principal Accounting Officer of GigOptix, Inc. (the "Company"), does hereby certify that to the undersigned's knowledge:

1) the Company's Quarterly Report on Form 10-Q for the period ended March 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Curt Sacks

Curt Sacks

Chief Financial Officer and Principal Financial and Principal Accounting Officer

Dated: May 9, 2014

XML

RESTRUCTURING (Details) (USD $)	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
RESTRUCTURING [Abstract]
Restructuring reserve settled without cash		$ 662,000
Restructuring reserve settled with cash		288,000
Summary of restructuring activity [Roll forward]
Beginning balance	30,000	168,000
Charges	0	950,000
Uses and adjustments	(30,000)	(936,000)
Ending balance	$ 0	$ 182,000

XML

INTANGIBLE ASSETS AND GOODWILL, Schedule of Acquired Finite-Lived Intangible Asset by Major Class (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 30, 2014	Dec. 31, 2013
Future amortization expense [Abstract]
2014	$ 670
2015	893
2016	869
2017	487
2018	145
Total	3,064
Goodwill related to acquisition	9,860	9,860	[1]
Impairment of goodwill	$ 0	$ 0

[1] The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

XML

RESTRUCTURING (Tables)

3 Months Ended

Mar. 30, 2014

RESTRUCTURING [Abstract]

Summary of restructuring activity

The following is a summary of the restructuring activity (in thousands):

	Three Months Ended
	March 30, 2014			March 31, 2013
Beginning balance	$	30		$	168
Charges		-			950
Uses and adjustments		(30	)		(936	)
Ending balance	$	-		$	182

XML

SEGMENT AND GEOGRAPHIC INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014 Customer	Mar. 31, 2013 Customer	Dec. 31, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 7,386	$ 6,921
Revenue by geographic region (in hundredths)	100.00%	100.00%
Number of customers	1	1
Long-lived assets	2,958		2,999
HSC [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	5,282	4,565
Industrial [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	2,104	2,356
Customer One [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Major customer percentage (in hundredths)	28.00%	26.00%
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	2,227	1,979
Revenue by geographic region (in hundredths)	30.00%	29.00%
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	2,158	2,280
Revenue by geographic region (in hundredths)	29.00%	33.00%
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	2,909	2,163
Revenue by geographic region (in hundredths)	40.00%	31.00%
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	92	499
Revenue by geographic region (in hundredths)	1.00%	7.00%
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by geographic region (in hundredths)	28.00%	29.00%
Long-lived assets	2,181		2,004
Switzerland [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 777		$ 995
Italy [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by geographic region (in hundredths)	36.00%	26.00%
Japan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by geographic region (in hundredths)	15.00%	13.00%

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Share-based Compensation Arrangements by Share-based Payment Award (Details) (USD $)						3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended			3 Months Ended		12 Months Ended			3 Months Ended		3 Months Ended		3 Months Ended
	Mar. 30, 2014	Dec. 31, 2013	Dec. 24, 2013	Jul. 07, 2010	Dec. 31, 2008	Mar. 30, 2014 Stock Options [Member]	Dec. 31, 2013 Stock Options [Member]	Mar. 30, 2014 Restricted Stock Units (RSUs) [Member]	Dec. 31, 2013 Restricted Stock Units (RSUs) [Member]	Mar. 30, 2014 Restricted Stock Units (RSUs) [Member] Minimum [Member]	Mar. 30, 2014 Restricted Stock Units (RSUs) [Member] Maximum [Member]	Mar. 30, 2014 2007 Equity Incentive Plan [Member]	Mar. 30, 2014 2007 Equity Incentive Plan [Member] Stock Options [Member]	Mar. 30, 2014 2007 Equity Incentive Plan [Member] Warrant [Member]	Dec. 31, 2013 2008 Equity Incentive Plan [Member]	Dec. 31, 2008 2008 Equity Incentive Plan [Member]	Dec. 31, 2013 2008 Equity Incentive Plan [Member] Maximum [Member]	Mar. 30, 2014 2008 Equity Incentive Plan [Member] Stock Options [Member]	Mar. 30, 2014 2008 Equity Incentive Plan [Member] Stock Options [Member] Minimum [Member]	Mar. 30, 2014 2008 Equity Incentive Plan [Member] Restricted Stock Units (RSUs) [Member]	Mar. 30, 2014 2008 Equity Incentive Plan [Member] 10% Stockholder [Member] Stock Options [Member] Minimum [Member]	Mar. 30, 2014 Lumera 2000 and 2004 Stock Option Plan [Member]	Mar. 30, 2014 Lumera 2000 and 2004 Stock Option Plan [Member] Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)					2,500,000							632,500			15,021,253		21,000,000			3,379,835
Automatic annual increase in shares authorized																lesser of (i) 5% of the number of shares of common stock outstanding as of the Company's immediately preceding fiscal year, or (ii) a number of shares determined by the Board of Directors
Automatic increase in number of shares reserved for future issuance (in shares)															1,603,381
Exercise price of stock options as percentage of fair market value on date of grant (in hundredths)																			100.00%		110.00%
Vesting period										1 year	4 years		4 years					4 years		1 year
Life from date of grant													10 years					10 years
Stock options cancelled (in shares)													864
Number of options outstanding (in shares)						10,199,287	10,306,671						414,936					12,255,761					72,428
Warrants outstanding (in shares)	1,183,240	1,468,239												4,125
Merger conversion ratio (in hundredths)																						12.50%
Restricted stock units total grant date fair value								$ 2,400,000
Unrecognized compensation expense						3,300,000		3,300,000
Weighted average period of recognition for unrecognized compensation cost						1 year 10 months 24 days		2 years 3 months 29 days
Stock price (in dollars per share)	$ 1.67	$ 1.53	$ 1.42	$ 1.75		$ 1.67
Stock options activity, number of shares [Roll Forward]
Outstanding, beginning of year (in shares)						10,306,671																	72,428
Granted (in shares)						0
Exercised (in shares)						(9,075)
Forfeited/Expired (in shares)						(98,309)
Outstanding, ending balance (in shares)						10,199,287	10,306,671						414,936					12,255,761					72,428
Vested and exercisable and expected to vest (in shares)						10,024,189
Vested and exercisable (in shares)						7,629,091
Stock option activity, weighted-average exercise price [Roll Forward]
Weighted average exercise price, beginning balance (in dollars per shares)						$ 2.34
Weighted average exercise price, exercised (in dollars per shares)						$ 1.08
Weighted average exercise price, forfeited/expired (in dollars per shares)						$ 2.71
Weighted average exercise price, vested and expected to vest (in dollars per share)						$ 2.34
Weighted average exercise price, exercisable (in dollars per share)						$ 2.39
Weighted average remaining contractual term [Abstract]
Weighted average remaining contractual term, beginning balance						6 years 8 months 16 days	6 years 11 months 16 days
Weighted average remaining contractual term, expected to vest						6 years 8 months 5 days
Weighted average remaining contractual term, exercisable						6 years 3 months 7 days
Weighted average remaining contractual term, ending balance						6 years 8 months 16 days	6 years 11 months 16 days
Aggregate Intrinsic Value [Abstract]
Aggregate intrinsic value, exercised						5,000
Aggregate intrinsic value, vested and expected to vest						1,700,000
Restricted stock activity, number of shares [Roll Forward]
Outstanding, beginning of period (in shares)								1,313,801
Granted (in shares)								1,405,085
Released (in shares)								(161,700)
Forfeited/expired (in shares)								(13,348)
Outstanding, end of period (in shaers)								2,543,838	1,313,801
Restricted stock activity, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning of period (in dollars per share)								$ 1.19
Granted (in dollars per share)								$ 1.70
Released (in dollars per share)								$ 1.14
Forfeited/expired (in dollars per share)								$ 0.86
Outstanding, end of period (in dollars per share)								$ 1.48	$ 1.19
Restricted stock activity, Weighted-average Remaining Contractual Term, Years [Abstract]
Weighted-average remaining contractual term								2 years 3 months 29 days	1 year 10 months 6 days
Weighted-average remaining contractual term								2 years 3 months 29 days	1 year 10 months 6 days
Restricted stock activity, Aggregate Intrinsic Value [Roll Forward]
Aggregate intrinsic value outstanding beginning balance								2,010,000
Aggregate intrinsic value outstanding ending balance								4,248,000	2,010,000
Aggregate intrinsic value of vested and expected to vest awards								270,000
Shares withheld to satisfy minimum tax obligation (in shares)								60,000
Amount withheld to satisfy minimum tax obligation								$ 103,000

XML

FAIR VALUE

3 Months Ended

Mar. 30, 2014

FAIR VALUE [Abstract]

FAIR VALUE

NOTE 3—FAIR VALUE

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 30, 2014:
Assets:
Cash equivalents:
Money market funds	$	16,357	$	16,357	$	-	$	-
	$	16,357	$	16,357	$	-	$	-
Current liabilities:
Liability warrants	$	17	$	-	$	-	$	17
December 31, 2013:
Assets:
Cash equivalents:
Money market funds	$	1,356	$	1,356	$	-	$	-
	$	1,356	$	1,356	$	-	$	-
Current liabilities:
Liability warrants	$	15	$	-	$	-	$	15

 The Company’s financial assets and liabilities are valued using market prices on active markets (“Level 1”), less active markets (“Level 2”) and unobservable markets (“Level 3”). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments.  Level 3 instruments are valued using unobservable market values in which there is little or no market data, and which require the Company to apply judgment to determine the fair value.

For the period ended March 30, 2014, the Company did not have any significant transfers between Level 1, Level 2 and Level 3.

The amounts reported as cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and other current liabilities approximate fair value due to their short-term maturities. The carrying value of the Company’s line of credit and capital lease obligations approximates fair value and is based upon borrowing rates currently available to the Company for loans and capital leases with similar terms.

Liability Warrants

The Company issued warrants to Bridge Bank in connection with a waiver of certain events of default that arose under a November 2009 loan and security agreement with Bridge Bank. Certain provisions in the warrant agreements provided for down-round protection if the Company raised equity capital at a per share price which was less than the per share price of the warrants. Such down-round protection also requires the Company to classify the value of the warrants as a liability on the issuance date and then record changes in the fair value through the consolidated statements of operations for each reporting period until the warrants are either exercised or cancelled. The fair value of the liability is recalculated and adjusted each quarter with the differences being charged to other income (expense), net on the consolidated statements of operations. The fair value of these warrants was determined using a Black-Scholes option-pricing model, which requires the use of significant unobservable market values.  As a result, these warrants are classified as Level 3 financial instruments. On July 7, 2010, the Company raised additional equity through an offering of 2,760,000 shares at $1.75 per share, thus triggering the down-round protection and adjustment of the number of warrants issued to Bridge Bank. On December 24, 2013, the Company raised additional equity through an offering of 9,573,750 shares at $1.42 per share, thus triggering the down-round protection and adjustment of the number of warrants issued to Bridge Bank.

The fair value of the warrants was estimated using the following assumptions:

	As of March 30, 2014			As of December 31, 2013
Stock price	$	1.67		$	1.53
Strike price	$	2.51		$	2.51
Expected life	3.30 years			3.55 years
Risk-free interest rate		0.90	%		1.30	%
Volatility		65	%		65	%
Fair value per share	$	0.57		$	0.52

The following table summarizes the warrants subject to liability accounting as of March 30, 2014 and December 31, 2013 (in thousands, except share and per share amounts) (see also Note 6):

													Three Months Ended March 30, 2014				Three Months Ended March 31, 2013
Holder	Original Warrants		Adjusted Warrants		Grant Date	Expiration Date	Price per Share		Fair Value March 30, 2014		Fair Value December 31, 2013		Exercise of Warrants		Change in Fair Value		Exercise of Warrants		Change in Fair Value			Related Agreement
Bridge Bank		20,000		29,115	4/7/2010	7/7/2017	$	2.51	$	17	$	15		-	$	2		-	$	(15	)	Credit Agreement

The change in the fair value of the Level 3 liability warrants during the three months ended March 30, 2014 is as follows (in thousands):

Fair value at December 31, 2013	$	15
Exercise of warrants		-
Change in fair value		2
Fair value at March 30, 2014	$	17

The warrant liability is included in other current liabilities on the condensed consolidated balance sheets.

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Dec. 31, 2013
COMMITMENTS AND CONTINGENCIES [Abstract]
Facilities rent expense	$ 141,000	$ 140,000
Aggregate non-cancelable future minimum rental payments under capital leases [Abstract]
Capital leases, 2014	209,000
Capital leases, 2015	4,000
Capital leases, 2016	3,000
Capital leases, 2017	3,000
Capital leases, total minimum lease payments	219,000
Less: Amount representing interest	(14,000)
Total capital lease obligations	205,000
Less: current portion	(196,000)		(284,000)
Long-term portion of capital lease obligations	9,000
Aggregate non-cancelable future minimum rental payments under operating leases [Abstract]
Operating leases, 2014	358,000
Operating leases, 2015	432,000
Operating leases, 2016	339,000
Operating leases, 2017	57,000
Operating leases, total minimum lease payments	$ 1,186,000

XML

ORGANIZATION AND BASIS OF PRESENTATION (Details)	3 Months Ended
	Mar. 30, 2014 ProductLine
Organization [Abstract]
Number of product lines	2

XML

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 30, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

Aggregate non-cancelable future minimum rental payments

Aggregate non-cancelable future minimum rental payments under capital and operating leases are as follows (in thousands):

	Capital Leases			Operating Leases
Years ending December 31,	Minimum lease  payments			Minimum lease payments
2014	$	209		$	358
2015		4			432
2016		3			339
2017		3			57
Total minimum lease payments		219		$	1,186
Less: Amount representing interest		(14	)
Total capital lease obligations		205
Less: current portion		(196	)
Long-term portion of capital lease obligations	$	9

XML

SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Jun. 29, 2014 Subsequent Event [Member]
Subsequent Event [Line Items]
Restructuring Charges	$ 0	$ 950,000	$ 300,000

XML

BALANCE SHEET COMPONENTS (Details) (USD $)	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Dec. 31, 2013
BALANCE SHEET COMPONENTS [Abstract]
Accounts receivable	$ 6,130,000		$ 5,241,000
Allowance for doubtful accounts	(65,000)		(220,000)
Accounts receivable, net	6,065,000		5,021,000	[1]
Property and equipment [Line Items]
Property and equipment, gross	16,385,000		15,869,000
Accumulated depreciation and amortization	(13,427,000)		(12,870,000)
Property and equipment, net	2,958,000		2,999,000	[1]
Depreciation and amortization expense related to property and equipment	543,000	572,000
Amortization	151,000	89,000
Inventory, net [Abstract]
Raw materials	2,278,000		2,103,000
Work in process	734,000		780,000
Finished goods	1,741,000		1,734,000
Inventories	4,753,000		4,617,000	[1]
Accrued and other current liabilities [Abstract]
Amounts billed to the U.S. government in excess of approved rates	191,000		191,000
Warranty liability	315,000		330,000
Customer deposits	355,000		313,000
Capital lease obligation, current portion	196,000		284,000
Restructuring liabilities, current portion	0		30,000
Sales return reserve	196,000		151,000
Other	1,167,000		1,447,000
Accrued and other current liabilities	2,420,000		2,746,000	[1]
Period of product warranty	1 year
Movement in product warranty liability [Roll Forward]
Beginning balance	330,000	612,000
Warranties accrued	112,000	127,000
Warranties settled or reversed	(127,000)	(253,000)
Ending balance	315,000	486,000
Network and Laboratory Equipment [Member]
Property and equipment [Line Items]
Property and equipment, gross	11,676,000		11,250,000
Network and Laboratory Equipment [Member] | Minimum [Member]
Property and equipment [Line Items]
Life	3 years
Network and Laboratory Equipment [Member] | Maximum [Member]
Property and equipment [Line Items]
Life	5 years
Computer Software and Equipment [Member]
Property and equipment [Line Items]
Property and equipment, gross	4,018,000		3,928,000
Computer Software and Equipment [Member] | Minimum [Member]
Property and equipment [Line Items]
Life	2 years
Computer Software and Equipment [Member] | Maximum [Member]
Property and equipment [Line Items]
Life	3 years
Furniture And Fixtures [Member]
Property and equipment [Line Items]
Property and equipment, gross	176,000		176,000
Furniture And Fixtures [Member] | Minimum [Member]
Property and equipment [Line Items]
Life	3 years
Furniture And Fixtures [Member] | Maximum [Member]
Property and equipment [Line Items]
Life	7 years
Office Equipment [Member]
Property and equipment [Line Items]
Property and equipment, gross	137,000		137,000
Office Equipment [Member] | Minimum [Member]
Property and equipment [Line Items]
Life	3 years
Office Equipment [Member] | Maximum [Member]
Property and equipment [Line Items]
Life	5 years
Leasehold Improvements [Member]
Property and equipment [Line Items]
Property and equipment, gross	$ 378,000		$ 378,000
Leasehold Improvements [Member] | Minimum [Member]
Property and equipment [Line Items]
Life	1 year
Leasehold Improvements [Member] | Maximum [Member]
Property and equipment [Line Items]
Life	5 years

[1] The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

XML

FAIR VALUE MEASUREMENTS (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended		3 Months Ended	12 Months Ended	3 Months Ended
	Dec. 24, 2013	Jul. 07, 2010	Mar. 30, 2014	Dec. 31, 2013	Mar. 30, 2014 Liability Warrants [Member]	Mar. 31, 2013 Liability Warrants [Member]	Mar. 30, 2014 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]	Dec. 31, 2013 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]	Mar. 30, 2014 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] Money Market Funds [Member]	Dec. 31, 2013 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] Money Market Funds [Member]	Mar. 30, 2014 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] Liability Warrants [Member]	Dec. 31, 2013 Recurring [Member] Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] Liability Warrants [Member]	Mar. 30, 2014 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member]	Dec. 31, 2013 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member]	Mar. 30, 2014 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member] Money Market Funds [Member]	Dec. 31, 2013 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member] Money Market Funds [Member]	Mar. 30, 2014 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member] Liability Warrants [Member]	Dec. 31, 2013 Recurring [Member] Significant Other Observable Inputs (Level 2) [Member] Liability Warrants [Member]	Mar. 30, 2014 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member]	Dec. 31, 2013 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member]	Mar. 30, 2014 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member] Money Market Funds [Member]	Dec. 31, 2013 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member] Money Market Funds [Member]	Mar. 30, 2014 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member] Liability Warrants [Member]	Dec. 31, 2013 Recurring [Member] Significant Unobservable Inputs (Level 3) [Member] Liability Warrants [Member]	Mar. 30, 2014 Carrying Value [Member] Recurring [Member]	Dec. 31, 2013 Carrying Value [Member] Recurring [Member]	Mar. 30, 2014 Carrying Value [Member] Recurring [Member] Money Market Funds [Member]	Dec. 31, 2013 Carrying Value [Member] Recurring [Member] Money Market Funds [Member]	Mar. 30, 2014 Carrying Value [Member] Recurring [Member] Liability Warrants [Member]	Dec. 31, 2013 Carrying Value [Member] Recurring [Member] Liability Warrants [Member]
Cash equivalents [Abstract]
Cash equivalents									$ 16,357	$ 1,356					$ 0	$ 0					$ 0	$ 0					$ 16,357	$ 1,356
Total assets, fair value							16,357	1,356					0	0					0	0					16,357	1,356
Current liabilities [Abstract]
Liability warrants											0	0					0	0					17	15					17	15
Class of Warrant or Right [Line Items]
Additional equity shares issued (in shares)	9,573,750	2,760,000
Share price of additional equity offering (in dollars per share)	$ 1.42	$ 1.75	$ 1.67	$ 1.53
Fair value assumptions
Stock price (in dollars per share)	$ 1.42	$ 1.75	$ 1.67	$ 1.53
Strike price (in dollars per share)			$ 2.51	$ 2.51
Expected life			3 years 3 months 18 days	3 years 6 months 18 days
Risk-free interest rate (in hundredths)			0.90%	1.30%
Volatility (in hundredths)			65.00%	65.00%
Fair value per share (in dollars per share)			$ 0.57	$ 0.52
Warrants subject to liability accounting [Abstract]
Holder			Bridge Bank
Original warrants (in shares)					20,000
Adjusted warrants (in shares)			1,183,240	1,468,239	29,115
Grant date					Apr. 07, 2010
Expiration date					Jul. 07, 2017
Price per share (in dollars per share)					$ 2.51
Fair value					17
Exercise of warrants					0	0
Change in fair value					2	(15)
Related agreement					Credit Agreement
Change in fair value of Level 3 liability warrants [Roll Forward]
Fair value, beginning of period					15
Exercise of warrants					0	0
Change in fair value					2	(15)
Fair value, end of period					$ 17

XML

BALANCE SHEET COMPONENTS

3 Months Ended

Mar. 30, 2014

BALANCE SHEET COMPONENTS [Abstract]

BALANCE SHEET COMPONENTS

NOTE 2—BALANCE SHEET COMPONENTS

Accounts receivable, net consisted of the following (in thousands):

	March 30,			December 31,
	2014			2013
Accounts receivable	$	6,130		$	5,241
Allowance for doubtful accounts		(65	)		(220	)
	$	6,065		$	5,021

Property and equipment, net consisted of the following (in thousands, except depreciable life):

	Life		March 30,			December 31,
	(In years)		2014			2013
Network and laboratory equipment		3 – 5	$	11,676		$	11,250
Computer software and equipment		2 – 3		4,018			3,928
Furniture and fixtures		3 – 7		176			176
Office equipment		3 – 5		137			137
Leasehold improvements		1 – 5		378			378
				16,385			15,869
Accumulated depreciation and amortization				(13,427	)		(12,870	)
Property and equipment, net			$	2,958		$	2,999

For the three months ended March 30, 2014 and March 31, 2013, depreciation expense related to property and equipment was $543,000 and $572,000, respectively.

In addition to the property and equipment above, the Company has prepaid licenses. For the three months ended March 30, 2014 and March 31, 2013, amortization related to these prepaid licenses was $151,000 and $89,000, respectively.

Inventories consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Raw materials	$	2,278	$	2,103
Work in process		734		780
Finished goods		1,741		1,734
	$	4,753	$	4,617

Accrued and other current liabilities consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Amounts billed to the U.S. government in excess of approved rates	$	191	$	191
Warranty liability		315		330
Customer deposits		355		313
Capital lease obligations, current portion		196		284
Restructuring liabilities, current portion		-		30
Sales return reserve		196		151
Other		1,167		1,447
	$	2,420	$	2,746

The Company generally offers a one year warranty on its products. The Company records a liability based on estimates of the costs that may be incurred under its warranty obligations and charges to the cost of product revenue the amount of such costs at the time revenues are recognized. The warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. The estimates of anticipated rates of warranty claims and costs per claim are primarily based on historical information and future forecasts.

Changes in the Company’s product warranty liability during the three months ended March 30, 2014 and March 31, 2013 are as follows (in thousands):

	Three months ended
	March 30, 2014			March 31, 2013
Beginning balance	$	330		$	612
Warranties accrued		112			127
Warranties settled or reversed		(127	)		(253	)
Ending balance	$	315		$	486

XML

INTANGIBLE ASSETS AND GOODWILL (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	$ 8,908		$ 8,908
Accumulated amortization	(5,844)		(5,621)
Net intangible asset	3,064		3,287	[1]
Amortization of intangible assets	223	253
Cost of Revenue [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	103	122
Selling, General and Administrative Expenses [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	120	131
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	3,277		3,277
Accumulated amortization	(1,803)		(1,697)
Net intangible asset	1,474		1,580
Existing Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	3,783		3,783
Accumulated amortization	(2,575)		(2,473)
Net intangible asset	1,208		1,310
Order Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	732		732
Accumulated amortization	(732)		(732)
Net intangible asset	0		0
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	457		457
Accumulated amortization	(398)		(397)
Net intangible asset	59		60
Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross intangible asset	659		659
Accumulated amortization	(336)		(322)
Net intangible asset	$ 323		$ 337

[1] The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

XML

INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
INCOME TAXES [Abstract]
Provision for income taxes	$ 10	$ 13
Effective tax rate (in hundredths)	1.00%	1.00%

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 19,865	$ 20,377	[1]
Accounts receivable, net	6,065	5,021	[1]
Inventories	4,753	4,617	[1]
Prepaid and other current assets	308	434	[1]
Total current assets	30,991	30,449	[1]
Property and equipment, net	2,958	2,999	[1]
Intangible assets, net	3,064	3,287	[1]
Goodwill	9,860	9,860	[1]
Restricted cash	284	284	[1]
Other assets	159	183	[1]
Total assets	47,316	47,062	[1]
Current liabilities:
Accounts payable	2,527	831	[1]
Accrued compensation	1,046	1,170	[1]
Other current liabilities	2,420	2,746	[1]
Total current liabilities	5,993	4,747	[1]
Pension liabilities	141	140	[1]
Deferred rent, noncurrent	162	177	[1]
Other long term liabilities	422	418	[1]
Total liabilities	6,718	5,482	[1]
Commitments and contingencies (Note 11)			[1]
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding as of March 30, 2014 and December 31, 2013	0	0	[1]
Common stock, $0.001 par value; 50,000,000 shares authorized as of March 30, 2014 and December 31, 2013; 32,178,795 and 32,067,616 shares issued and outstanding as of March 30, 2014 and December 31, 2013, respectively	32	32	[1]
Additional paid-in capital	140,627	139,710	[1]
Treasury stock, at cost; 701,754 shares as of March 30, 2014 and December 31, 2013, respectively	(2,209)	(2,209)	[1]
Accumulated other comprehensive income	488	490	[1]
Accumulated deficit	(98,340)	(96,443)	[1]
Total stockholders' equity	40,598	41,580	[1]
Total liabilities and stockholders' equity	$ 47,316	$ 47,062	[1]

[1] The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014		Mar. 31, 2013
Cash flows from operating activities:
Net loss	$ (1,897)		$ (2,568)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	917		914
Stock-based compensation	1,010		1,770
Change in fair value of warrants	2		(15)
Gain on sale of property and equipment	0		(131)
Changes in operating assets and liabilities
Accounts receivable, net	(1,044)		(1,574)
Inventories	(136)		(226)
Prepaid and other current assets	(25)		(280)
Other assets	25		12
Accounts payable	1,595		(12)
Accrued restructuring	(29)		13
Accrued compensation	(125)		129
Other current liabilities	(487)		(101)
Other long-term liabilities	(13)		(39)
Net cash used in operating activities	(207)		(2,108)
Cash flows from investing activities:
Purchases of property and equipment	(123)		(883)
Proceeds from sale of property and equipment	0		131
Net cash used in investing activities	(123)		(752)
Cash flows from financing activities:
Proceeds from issuance of stock	10		0
Taxes paid related to net share settlement of equity awards	(103)		(75)
Net borrowings on line of credit	0		2,300
Repayment of capital lease	(89)		(117)
Net cash provided by (used in) financing activities	(182)		2,108
Effect of exchange rates on cash and cash equivalents	0		58
Net decrease in cash and cash equivalents	(512)		(694)
Cash and cash equivalents at beginning of period	20,377	[1]	10,147
Cash and cash equivalents at end of period	19,865		9,453
Supplemental disclosure of cash flow information
Interest paid	17		54
Property, plant and equipment acquired with accounts payable	$ 406		$ 25

[1] The condensed consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date.

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2010	Mar. 30, 2014	Dec. 31, 2008
Subsidiary, Sale of Stock [Line Items]
Date of transaction	Dec. 24, 2013
Number of shares issued in transaction (in shares)	9,573,750
Par value on common stock in public offering (in dollars per share)	$ 0.001		$ 0.001	$ 0.001
Public offering price per share (in dollars per share)	$ 1.42
Proceeds from the sale of stock	$ 12,500,000	$ 4,800,000
Costs related to public offering	250,000
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Preferred stock, authorized (in shares)	1,000,000		1,000,000	1,000,000
Common and preferred stock [Abstract]
Common stock, authorized (in shares)	50,000,000		50,000,000	50,000,000
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001	$ 0.001
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001	$ 0.001
Preferred stock, issued (in shares)	0		0
Preferred stock, outstanding (in shares)	0		0
Series A Junior Preferred Stock [Member]
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Preferred stock, authorized (in shares)				300,000
Public offering [Member]
Subsidiary, Sale of Stock [Line Items]
Date of transaction	Dec. 19, 2013
Number of shares issued in transaction (in shares)	8,325,000
Par value on common stock in public offering (in dollars per share)	$ 0.001
Public offering price per share (in dollars per share)	$ 1.42
Proceeds from the sale of stock	$ 12,300,000
Common and preferred stock [Abstract]
Common stock, par value (in dollars per share)	$ 0.001
Over allotment [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares)	1,248,750

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 30, 2014

FAIR VALUE [Abstract]

Financial assets and liabilities measured at fair value, recurring basis

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2014 and December 31, 2013 (in thousands):

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 30, 2014:
Assets:
Cash equivalents:
Money market funds	$	16,357	$	16,357	$	-	$	-
	$	16,357	$	16,357	$	-	$	-
Current liabilities:
Liability warrants	$	17	$	-	$	-	$	17
December 31, 2013:
Assets:
Cash equivalents:
Money market funds	$	1,356	$	1,356	$	-	$	-
	$	1,356	$	1,356	$	-	$	-
Current liabilities:
Liability warrants	$	15	$	-	$	-	$	15

Estimate of fair value for warrants assumptions

The fair value of the warrants was estimated using the following assumptions:

	As of March 30, 2014			As of December 31, 2013
Stock price	$	1.67		$	1.53
Strike price	$	2.51		$	2.51
Expected life	3.30 years			3.55 years
Risk-free interest rate		0.90	%		1.30	%
Volatility		65	%		65	%
Fair value per share	$	0.57		$	0.52

Warrants subject to liability accounting

The following table summarizes the warrants subject to liability accounting as of March 30, 2014 and December 31, 2013 (in thousands, except share and per share amounts) (see also Note 6):

													Three Months Ended March 30, 2014				Three Months Ended March 31, 2013
Holder	Original Warrants		Adjusted Warrants		Grant Date	Expiration Date	Price per Share		Fair Value March 30, 2014		Fair Value December 31, 2013		Exercise of Warrants		Change in Fair Value		Exercise of Warrants		Change in Fair Value			Related Agreement
Bridge Bank		20,000		29,115	4/7/2010	7/7/2017	$	2.51	$	17	$	15		-	$	2		-	$	(15	)	Credit Agreement

Change in the fair value of level 3 liabilities

The change in the fair value of the Level 3 liability warrants during the three months ended March 30, 2014 is as follows (in thousands):

Fair value at December 31, 2013	$	15
Exercise of warrants		-
Change in fair value		2
Fair value at March 30, 2014	$	17

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Warrants (Details)	3 Months Ended
	Mar. 30, 2014	Dec. 31, 2013
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	1,183,240	1,468,239
Number of warrants expired (in shares)	284,999

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 30, 2014

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

Schedule of stock-based compensation expense

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 30, 2014 and March 31, 2013 (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	76	$	80
Research and development expense		275		323
Selling, general and administrative expense		659		705
Restructuring expense		-		662
	$	1,010	$	1,770

Summary of option activity

The following is a summary of option activity for the Company’s equity incentive plans, including both the 2008 Plan and other prior plans for which there are outstanding options but no new grants since the 2008 Plan was adopted:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term, in Years
Outstanding, December 31, 2013		10,306,671		$	2.34		6.96
Granted		-
Exercised		(9,075	)	$	1.08
Forfeited/Expired		(98,309	)	$	2.71
Ending balance, March 30, 2014		10,199,287					6.71
Vested and exercisable and expected to vest, March 30, 2014		10,024,189		$	2.34		6.68
Vested and exercisable, March 30, 2014		7,629,091		$	2.39		6.27

Summary of restricted stock unit activity

The following is a summary of RSU activity for the indicated periods:

	Number of Shares			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Vesting Term, Years		Aggregate Intrinsic Value
								(In thousands)
Outstanding, December 31, 2013		1,313,801		$	1.19		1.85	$	2,010
Granted		1,405,085			1.70
Released		(161,700	)		1.14
Forfeited/expired		(13,348	)		0.86
Outstanding, March 30, 2014		2,543,838		$	1.48		2.33	$	4,248

XML

ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 30, 2014

ORGANIZATION AND BASIS OF PRESENTATION [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

Organization

GigOptix Inc.(“GigOptix” or the “Company”) is a leading fabless supplier of high speed semiconductorcomponentsthat enable end-to-end information streaming over optical and wireless networks and address long haul and metro telecommunications applications as well as emerging high-growth opportunities for Cloud and datacenter connectivity, interactive applications for consumer electronics and the industrial, defense and avionics industries.  The business is made up of two product lines: the High-Speed Communications (“HSC”) product line and the Industrial product line.

The HSC product line offers a broad portfolio of high performance optical and wireless components to telecommunications (“telecom”) and data communications (“datacom”) customers, i) mixed signal radio frequency integrated circuits (“RFIC”), including 10 to 400 gigabit per second (“Gbps”) laser and optical drivers and trans-impedance amplifiers (“TIA”) for telecom, datacom, and consumer electronic fiber-optic applications; ii) power amplifiers and transceivers for microwave and millimeter monolithic microwave integrated circuit (“MMIC”) wireless applications including 73 Ghz and 83 GHz power amplifiers and transceiver chips; and iii) integrated systems in a package (“SIP”) solutions for both fiber-optic and wireless applications.  The HSC product line also partners with key customers on development projects that generate engineering project revenue for the Company while helping to position the Company for future product revenues with these key customers.

The Industrial product line offers a wide range of digital and mixed-signal application specific integrated circuit (“ASIC”) solutions for industrial, military, avionics, medical and communications markets. The Industrial product line partners with ASIC customers on development projects that generate engineering project revenue for the Company which generally leads to future product revenues with these ASIC customers.

The Company’s products focus on the specification, design, development and sale of analog semiconductor integrated circuits (“ICs”), multi-chip module (“MCM”) solutions, and digital and mixed signal ASICs, as well as wireless communications MMICs and modules.

GigOptix, Inc., the successor to GigOptix LLC, was formed as a Delaware corporation in March 2008 in order to facilitate a combination between GigOptix LLC and Lumera Corporation (“Lumera”). Before the combination, GigOptix LLC acquired the assets of iTerra Communications LLC in July 2007 (“iTerra”) and Helix Semiconductors AG (“Helix”) in January 2008. On November 9, 2009, GigOptix acquired ChipX, Incorporated (“ChipX”). On June 17, 2011, GigOptix acquired Endwave Corporation (“Endwave”). As a result of the acquisitions, Helix, Lumera, ChipX and Endwave all became wholly owned subsidiaries of GigOptix.  In March 2013, the Company established a German subsidiary, GigOptix GmbH. The subsidiary is engaged in research and development for the Company’s HSC product line including electro-optical products.

In February 2014, together with Fundação CPqD – Centro De Pesquisa e Desenvolvimento em Telecomunicações (“CPqD”), the Company incepted a new joint venture of which the Company owns 49% and CPqD owns 51%, BrPhotonics Produtos Optoeletrônicos LTDA. (“BrP”), based in Campinas, Brazil, which will be a provider of advanced high-speed devices for optical communications and integrated transceiver components that enable information streaming over communications networks. This joint venture is engaged in research and development of Silicon-Photonics (“SiPh”) advanced electro-optical products.  As noted in the Company’s Annual Report for the year ended December 31, 2013 on Form 10-K (the “2013 Form 10-K”), the Company is transferring into BrP its knowledge-base and intellectual property of Thin Film Polymer on Silicon (“TFPS^TM”) technology, inventory related to the TFPS^TM platform, as well as the complete production line equipment that previously resided at its Bothell, Washington, facility.  Currently, BrP holds the rights to the Company’s TFPS^TM technology.   As of March 30, 2014, the Company had not transferred its inventory related to the TFPS^TM platform, or the production line equipment into BrP.

Basis of Presentation

The Company’s fiscal year ends on December 31. For quarterly reporting, the Company employs a five-week, four-week, four-week, reporting period. The first quarter of 2014 ended on Sunday, March 30, 2014. The first quarter of 2013 ended on Sunday, March 31, 2013. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements as of March 30, 2014 and for the three months ended March 30, 2014 and March 31, 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X, and include the accounts of the Company and all of its subsidiaries. Accordingly, they do not include all of the information and footnotes required by such accounting principles for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of March 30, 2014 and the results of operations and cash flows for the three months ended March 30, 2014 and March 31, 2013. The condensed consolidated results of operations for the three months ended March 30, 2014 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2014. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s 2013 Form 10-K.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. These judgments can be subjective and complex, and consequently, actual results could differ materially from those estimates and assumptions. Descriptions of these estimates and assumptions are included in the 2013 Form 10-K and the Company encourages you to read its 2013 Form 10-K for more information about such estimates and assumptions.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 30, 2014	Dec. 31, 2013
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	50,000,000	50,000,000
Common stock, issued (in shares)	32,178,795	32,067,616
Common stock, outstanding (in shares)	32,178,795	32,067,616
Treasury stock, at cost (in shares)	701,754	701,754

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 30, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 11—COMMITMENTS AND CONTINGENCIES

Commitments

Leases

The Company leases its domestic and foreign sales offices under non-cancelable operating leases. These leases contain various expiration dates and renewal options.  The Company also leases certain software licenses under operating leases. Total facilities rent expense for the three months ended March 30, 2014 was $141,000, and for the three months ended March 31, 2013 was $140,000.

As of April 2014, the Company moved out of its Bothell, Washington facility which comprised 11,666 square feet and entered into a new one-year lease located in Bellevue, Washington which comprises approximately 2,100 square feet.

Aggregate non-cancelable future minimum rental payments under capital and operating leases are as follows (in thousands):

	Capital Leases			Operating Leases
Years ending December 31,	Minimum lease  payments			Minimum lease payments
2014	$	209		$	358
2015		4			432
2016		3			339
2017		3			57
Total minimum lease payments		219		$	1,186
Less: Amount representing interest		(14	)
Total capital lease obligations		205
Less: current portion		(196	)
Long-term portion of capital lease obligations	$	9

Legal Contingencies

From time to time, the Company may become involved in legal proceedings, claims and litigation arising in the ordinary course of business. When the Company believes a loss is probable and can be reasonably estimated, the Company accrues the estimated loss in the consolidated financial statements. Where the outcome of these matters is not determinable, the Company does not make a provision in the financial statements until the loss, if any, is probable and can be reasonably estimated or the outcome becomes known.  There are no known losses at this time.

XML

Document and Entity Information	3 Months Ended
	Mar. 30, 2014	May 02, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	GigOptix, Inc.
Entity Central Index Key	0001432150
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		32,178,899
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 30, 2014

XML

RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 30, 2014

RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS

In April 2014, the Financial Accounting Standards Board issued an accounting standards update improving the definition of discontinued operation and expanding the related disclosure. The discontinued operations reporting is limited to the disposals of components of an entity, which can be a business, a nonprofit activity, or an equity method investment, that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. The additional disclosures include major classes of line items constituting the pretax profit and loss, cash flows, and assets and liabilities. An entity also needs to disclose the pretax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. This standard is effective for beginning after December 15, 2014 and early adoption is permitted if disposals or classifications as held for sale have not been reported previously. The Company does not expect the adoption will have a material impact on the Company’s condensed consolidated financial statements.

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) [Abstract]
Total revenue	$ 7,386	$ 6,921
Total cost of revenue	3,126	2,636
Gross profit	4,260	4,285
Research and development expense	3,742	3,236
Selling, general and administrative expense	2,398	2,353
Restructuring expense	0	950
Special litigation-related expense	0	415
Total operating expenses	6,140	6,954
Loss from operations	(1,880)	(2,669)
Interest expense, net	(17)	(54)
Other income, net	10	168
Loss before provision for income taxes	(1,887)	(2,555)
Provision for income taxes	10	13
Net loss	$ (1,897)	$ (2,568)
Net loss per share-basic and diluted (in dollars per share)	$ (0.06)	$ (0.12)
Weighted average number of shares used in per share calculations - basic and diluted (in shares)	31,435	21,547

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

3 Months Ended

Mar. 30, 2014

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

NOTE 6—STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Public Offering

On December 19, 2013, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC as representative of several underwriters to the Underwriting Agreement relating to a public offering of an aggregate of 8,325,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share at a public offering price of $1.42 per share. The Shares are accompanied by the associated rights to purchase shares of Series A Junior Preferred Stock, par value $0.001 per share, of the Company created by the Rights Agreement, dated December 16, 2011, between the Company and the American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agreement”).  Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30 day option to purchase up to an additional 1,248,750 shares of common stock to cover over-allotments.

On December 24, 2013, the Company completed its public offering of 9,573,750 newly issued shares of common stock at a price to the public of $1.42 per share. The number of shares sold in the offering included the underwriter’s full exercise on December 24, 2013 of their over-allotment option of 1,248,750 shares of common stock. The net proceeds to the Company from the offering was approximately $12.3 million which consisted of $12.5 million after underwriting discounts, commissions and expenses less an additional $250,000 for legal, accounting, registration and other transaction costs related to the public offering.

Common and Preferred Stock

In December 2008, the Company’s stockholders approved an amendment to the Certificate of Incorporation to authorize 50,000,000 shares of common stock of par value $0.001. In addition, the Company is authorized to issue 1,000,000 shares of preferred stock of $0.001 par value of which 300,000 shares have been designated Series A Junior Preferred Stock with powers, preferences and rights as set forth in the certificate of designation dated December 16, 2011; the remainder of the shares of preferred stock are undesignated, for which the Board of Directors is authorized to fix the designation, powers, preferences and rights. As of March 30, 2014 and December 31, 2013, there were no shares of preferred stock issued or outstanding.

2008 Equity Incentive Plan

In December 2008, the Company adopted the 2008 Equity Incentive Plan (the “2008 Plan”) for directors, employees, consultants and advisors to the Company or its affiliates. Under the 2008 Plan, 2,500,000 shares of common stock were reserved for issuance upon the completion of a merger with Lumera Corporation (“Lumera”) on December 9, 2008. On January 1 of each year, starting in 2009, the aggregate number of shares reserved for issuance under the 2008 Plan increase automatically by the lesser of (i) 5% of the number of shares of common stock outstanding as of the Company’s immediately preceding fiscal year, or (ii) a number of shares determined by the Board of Directors. The maximum number of shares of common stock to be granted is up to 21,000,000 shares. Forfeited options or awards generally become available for future awards.As of December 31, 2013, the stockholders had approved 15,021,253 shares for future issuance. On January 1, 2014, there was an automatic increase of 1,603,381 shares. As of March 30, 2014, 12,255,761 options to purchase common stock and restricted stock were outstanding and 3,379,835 shares are authorized for future issuance under the 2008 equity incentive plan.

Under the 2008 Plan, the exercise price of a stock option is at least 100% of the stock’s fair market value on the date of grant, and if an ISO is granted to a 10% stockholder at least 110% of the stock’s fair market value on the date of grant. Vesting periods for awards are recommended by the chief executive officer and generally provide for stock options to vest over a four-year period, with a one year vesting cliff of 25%, and have a maximum life of ten years from the date of grant. The Company has also issued restricted stock units (“RSUs”) which generally vest over a one to four-year period.

2007 Equity Incentive Plan

In August 2007, GigOptix LLC adopted the GigOptix LLC Equity Incentive Plan (the "2007 Plan"). The 2007 Plan provided for grants of options to purchase membership units, membership awards and restricted membership units to employees, officers and non-employee directors, and upon the completion of the merger with Lumera were converted into grants of up to 632,500 shares of stock. Vesting periods are determined by the Board of Directors and generally provide for stock options to vest over a four-year period and expire ten years from date of grant. Vesting for certain shares of restricted stock is contingent upon both service and performance criteria. The 2007 Plan was terminated upon the completion of merger with Lumera on December 9, 2008 and the remaining 864 stock options not granted under the 2007 Plan were cancelled. No shares of the Company’s common stock remain available for issuance of new grants under the 2007 Plan other than for satisfying exercises of stock options granted under this plan prior to its termination. As of March 30, 2014, options to purchase a total of 414,936 shares of common stock and 4,125 warrants to purchase common stock were outstanding.

Lumera 2000 and 2004 Stock Option Plan

In December 2008, in connection with the merger with Lumera, the Company assumed the existing Lumera 2000 Equity Incentive Plan and the Lumera 2004 Stock Option Plan (the “Lumera Plan”). All unvested options granted under the Lumera Plan were assumed by the Company as part of the merger. All contractual terms of the assumed options remain the same, except for the converted number of shares and exercise price based on merger conversion ratio of 0.125. As of March 30, 2014, no additional options can be granted under the Lumera Plan, and options to purchase a total of 72,428 shares of common stock were outstanding.

Warrants

As of December 31, 2013, the Company had a total of 1,468,239 warrants to purchase common stock outstanding under all warrant arrangements. During the three months ended March 30, 2014, no warrants were exercised and 284,999 warrants expired. As a result, as of March 30, 2014, the Company had 1,183,240 warrants to purchase common stock outstanding under all warrant arrangements. Some of the warrants have anti-dilution provisions which adjust the number of warrants available to the holder such as, but not limited to, stock dividends, stock splits and certain reclassifications, exchanges, combinations or substitutions. These provisions are specific to each warrant agreement.

Stock-based Compensation Expense

The following table summarizes the Company’s stock-based compensation expense for the three months ended March 30, 2014 and March 31, 2013 (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	76	$	80
Research and development expense		275		323
Selling, general and administrative expense		659		705
Restructuring expense		-		662
	$	1,010	$	1,770

 For the three months ended March 31, 2013, included in the $1.8 million of stock-based compensation expense was $662,000 in restructuring expense to modify the exercise period and accelerate the vesting of stock options and RSUs (see Note 7).

The Company did not grant any options during the three months ended March 30, 2014 and March 31, 2013.

During the three months ended March 30, 2014, the Company granted 1,405,085 RSUs with a grant-date fair value of $2.4 million or $1.70 per share. The Company did not grant any RSUs during the three months ended March 31, 2013.

As of March 30, 2014, the total compensation cost not yet recognized in connection with unvested stock options and RSUs under the Company’s equity compensation plans was approximately $3.3 million and $3.3 million, respectively. Unrecognized compensation will be amortized on a straight-line basis over a weighted-average period of approximately 1.9 years for stock options and approximately 2.33 years for RSUs.

Stock Option and RSU Activity

The following is a summary of option activity for the Company’s equity incentive plans, including both the 2008 Plan and other prior plans for which there are outstanding options but no new grants since the 2008 Plan was adopted:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term, in Years
Outstanding, December 31, 2013		10,306,671		$	2.34		6.96
Granted		-
Exercised		(9,075	)	$	1.08
Forfeited/Expired		(98,309	)	$	2.71
Ending balance, March 30, 2014		10,199,287					6.71
Vested and exercisable and expected to vest, March 30, 2014		10,024,189		$	2.34		6.68
Vested and exercisable, March 30, 2014		7,629,091		$	2.39		6.27

The aggregate intrinsic value of options vested, exercisable and expected to vest, based on the fair value of the underlying stock options as of March 30, 2014 was approximately $1.7 million. The aggregate intrinsic value reflects the difference between the exercise price of the underlying stock options and the Company’s closing share price of $1.67 as of March 28, 2014.

The total intrinsic value of options exercised during the three months ended March 30, 2014 was $5,000. During the three months ended March 31, 2013, the Company did not have any options exercised.

RSUs are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Typically, vesting of RSUs is subject to the employee’s continuing service to the Company. RSUs generally vest over a period of one to four years and are expensed ratably on a straight line basis over their respective vesting period net of estimated forfeitures. The fair value of the RSUs granted is the product of the number of shares granted and the grant date fair value of the Company’s common stock.

The following is a summary of RSU activity for the indicated periods:

	Number of Shares			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Vesting Term, Years		Aggregate Intrinsic Value
								(In thousands)
Outstanding, December 31, 2013		1,313,801		$	1.19		1.85	$	2,010
Granted		1,405,085			1.70
Released		(161,700	)		1.14
Forfeited/expired		(13,348	)		0.86
Outstanding, March 30, 2014		2,543,838		$	1.48		2.33	$	4,248

The majority of the RSUs that vested in the three months ended March 30, 2014 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were based on the value of the RSUs on their vesting date as determined by the Company’s closing stock price. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company. For the three months ended March 30, 2014, 161,700 shares of RSUs vested with an intrinsic value of approximately $270,000. The Company withheld 60,000 shares to satisfy approximately $103,000 of employees’ minimum tax obligation on the vested RSUs.

XML

CREDIT FACILITIES

3 Months Ended

Mar. 30, 2014

CREDIT FACILITIES [Abstract]

CREDIT FACILITIES

NOTE 5—CREDIT FACILITIES

On March 25, 2013, the Company entered into a second amended and restated loan and security agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”) to replace the amended and restated loan and security agreement entered on December 9, 2011. Pursuant to the Loan Agreement, the total aggregate amount that the Company is entitled to borrow from SVB has increased to $7 million, which is now split into two different credit facilities, comprised of (i) the existing Revolving Loan facility which was amended to provide that the Company is entitled to borrow from SVB up to $3.5 million, based on net eligible accounts receivable after an 80% advance rate and subject to limits based on the Company’s eligible accounts as determined by SVB and (ii) a new facility under which the Company is entitled to borrow from SVB up to $3.5 million without reference to accounts receivable under which the principal balance and accrued interest must be repaid within 3 business days after the date of any advance under the facility. In addition, the Loan Agreement eliminates the financial covenants contained in the previous loan agreement.

The Loan Agreement with SVB is secured by all of the Company’s assets, including all accounts, equipment, inventory, receivables, and general intangibles. The Loan Agreement contains certain restrictive covenants that will impose significant operating and financial restrictions on its operations, including, but not limited to restrictions that limit its ability to:

• Sell, lease, or otherwise transfer, or permit any of its subsidiaries to sell, lease or otherwise transfer, all or any part of its business or property, except in the ordinary course of business or in connection with certain indebtedness or investments permitted under the amended and restated loan agreement;

• Merge or consolidate, or permit any of its subsidiaries to merge or consolidate, with or into any other business organization, or acquire, or permit any of its subsidiaries to acquire, all or substantially all of the capital stock or property of another person;

• Create, incur, assume or be liable for any indebtedness, other than certain indebtedness permitted under the amended and restated loan and security agreement;

• Pay any dividends or make any distribution or payment on, or redeem, retire, or repurchase, any capital stock; and

• Make any investment, other than certain investments permitted under the amended and restated loan and security agreement.

The Company had no outstanding balance on its line of credit as of March 30, 2014.

XML

INTANGIBLE ASSETS AND GOODWILL (Tables)

3 Months Ended

Mar. 30, 2014

INTANGIBLE ASSETS AND GOODWILL [Abstract]

Intangible assets

Intangible assets consist of the following (in thousands):

	March 30, 2014							December 31, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer relationships	$	3,277	$	(1,803	)	$	1,474	$	3,277	$	(1,697	)	$	1,580
Existing technology		3,783		(2,575	)		1,208		3,783		(2,473	)		1,310
Order backlog		732		(732	)		-		732		(732	)		-
Patents		457		(398	)		59		457		(397	)		60
Trade name		659		(336	)		323		659		(322	)		337
Total	$	8,908	$	(5,844	)	$	3,064	$	8,908	$	(5,621	)	$	3,287

Amortization of intangible assets

For the three months ended March 30, 2014 and March 31, 2013, amortization of intangible assets was as follows (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	103	$	122
Selling, general and administrative expense		120		131
	$	223	$	253

Estimated future amortization expense

Estimated future amortization expense related to intangible assets as of March 30, 2014 is as follows (in thousands):

Years ending December 31,
2014	$	670
2015		893
2016		869
2017		487
2018		145
Total	$	3,064

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 30, 2014

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 13—SUBSEQUENT EVENTS

During the second quarter of 2014, the Company undertook restructuring activities to reduce its expenses.  In conjunction with the creation of the BrP joint venture and the subsequent relocation of the related manufacturing activities to BrP, the Company ended its lease in the Bothell, Washington location and reduced its headcount.  The Company estimates that its restructuring charges will be approximately $300,000 which will include expenses to move out of the facility and expenses for severance, benefits and payroll taxes and other costs associated with employee terminations.

XML

NET LOSS PER SHARE

3 Months Ended

Mar. 30, 2014

NET LOSS PER SHARE [Abstract]

NET LOSS PER SHARE

NOTE 9—NET LOSS PER SHARE

The following table summarizes total securities outstanding which were not included in the calculation of diluted net loss per share because to do so would have been anti-dilutive:

	March 30,		December 31,
	2014		2013
Stock options and RSUs		12,743,125		11,620,472
Common stock warrants		1,183,240		1,468,239
Total		13,926,365		13,088,711

XML

RESTRUCTURING

3 Months Ended

Mar. 30, 2014

RESTRUCTURING [Abstract]

RESTRUCTURING

NOTE 7—RESTRUCTURING

During the first of quarter of 2013, the Company undertook restructuring activities to reduce its expenses.  The components of the restructuring charge included $662,000 of non-cash expenses associated with the acceleration of stock options and RSUs, $288,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations.  The net charge for these restructuring activities was $950,000. The Company had no restructuring activities during the three months ended March 30, 2014.

The following is a summary of the restructuring activity (in thousands):

	Three Months Ended
	March 30, 2014			March 31, 2013
Beginning balance	$	30		$	168
Charges		-			950
Uses and adjustments		(30	)		(936	)
Ending balance	$	-		$	182

During the three months ended March 30, 2014, the Company paid out its remaining balance in accrued restructuring, which was the deposit for the Palo Alto facilities. As of March 30, 2014, the Company had no balance in accrued restructuring.

As of March 31, 2013, the Company had $182,000 in accrued restructuring, which was included in other current liabilities.

XML

INCOME TAXES

3 Months Ended

Mar. 30, 2014

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 8—INCOME TAXES

The Company recorded a provision for income taxes of $10,000 for the three months ended March 30, 2014, and $13,000 for the three months ended March 31, 2013. The Company's effective tax rate was less than 1% for the three months ended March 30, 2014 and March 31, 2013.

The income tax provision for the three months ended March 30, 2014 and March 31, 2013 was due primarily to state taxes and foreign taxes due. The Company has incurred book losses in all tax jurisdictions and has a full valuation allowance against such losses.

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. In order to support a conclusion that a valuation allowance is not needed, positive evidence of sufficient quantity and quality is necessary to overcome negative evidence. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance has been recorded for the entire deferred tax asset as a result of uncertainties regarding realization of the asset including lack of profitability through March 30, 2014 and the uncertainty over future operating profitability and taxable income. The Company will continue to evaluate the potential realization of the deferred tax assets on a quarterly basis.

The Company files tax returns as prescribed by the tax laws of the jurisdictions it operates which include U.S. federal, U.S. state and foreign tax returns.  The Company’s major tax jurisdictions are the U.S., California, Switzerland, Germany and Israel. The Company’s federal and state tax returns for the years 2000 through 2013 remain subject to examination.

XML

SEGMENT AND GEOGRAPHIC INFORMATION

3 Months Ended

Mar. 30, 2014

SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

NOTE 10—SEGMENT AND GEOGRAPHIC INFORMATION

The Company has determined that it operates as a single operating and reportable segment. The following tables reflect the results of the Company’s reportable segment consistent with the management system used by the Company’s Chief Executive Officer, the chief operating decision maker.

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended
	March 30, 2014				March 31, 2013
North America	$	2,227	30	%	$	1,979	29	%
Asia		2,158	29	%		2,280	33	%
Europe		2,909	40	%		2,163	31	%
Other		92	1	%		499	7	%
	$	7,386	100	%	$	6,921	100	%

The Company determines geographic location of its revenue based upon the destination of shipments of its products.

For the three months ended March 30, 2014, one customer accounted for 28% of total revenue. For the three months ended March 31, 2013, one customer accounted for 26% of our total revenue. No other customers accounted for more than 10% of total revenue during the periods presented.

During three months ended March 30, 2014, Italy, the United States, and Japan accounted for 36%, 28%, and 15% of revenue, respectively. During three months ended March 31, 2013 the United States, Italy, and Japan accounted for 29%, 26%, and 13% of revenue, respectively. No other countries accounted for more than 10% of the Company’s consolidated revenue during the periods presented.

The following table summarizes revenue by product line (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
HSC	$	5,282	$	4,565
Industrial		2,104		2,356
Total revenue	$	7,386	$	6,921

The following table summarizes long-lived assets by country (in thousands):

	March 30, 2014		December 31, 2013
United States	$	2,181	$	2,004
Switzerland		777		995
	$	2,958	$	2,999

Long-lived assets, comprised of property and equipment, are reported based on the location of the assets at each balance sheet date.

XML

CREDIT FACILITIES (Details) (Line of Credit - Silicon Valley Bank [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 30, 2014
Line of Credit - Silicon Valley Bank [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 7
Borrowing capacity with reference to accounts receivable	3.5
Borrowing base percentage used for maximum borrowing capacity (in hundredths)	80.00%
Borrowing capacity without reference to accounts receivable	3.5
Amount outstanding	$ 0
Number of business days to repay interest on borrowings unrelated to accounts receivable balances	3 days

XML

BALANCE SHEET COMPONENTS (Tables)

3 Months Ended

Mar. 30, 2014

BALANCE SHEET COMPONENTS [Abstract]

Accounts receivable, net

Accounts receivable, net consisted of the following (in thousands):

	March 30,			December 31,
	2014			2013
Accounts receivable	$	6,130		$	5,241
Allowance for doubtful accounts		(65	)		(220	)
	$	6,065		$	5,021

Property and equipment, net

Property and equipment, net consisted of the following (in thousands, except depreciable life):

	Life		March 30,			December 31,
	(In years)		2014			2013
Network and laboratory equipment		3 – 5	$	11,676		$	11,250
Computer software and equipment		2 – 3		4,018			3,928
Furniture and fixtures		3 – 7		176			176
Office equipment		3 – 5		137			137
Leasehold improvements		1 – 5		378			378
				16,385			15,869
Accumulated depreciation and amortization				(13,427	)		(12,870	)
Property and equipment, net			$	2,958		$	2,999

Inventories

Inventories consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Raw materials	$	2,278	$	2,103
Work in process		734		780
Finished goods		1,741		1,734
	$	4,753	$	4,617

Accrued and other current liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	March 30,		December 31,
	2014		2013
Amounts billed to the U.S. government in excess of approved rates	$	191	$	191
Warranty liability		315		330
Customer deposits		355		313
Capital lease obligations, current portion		196		284
Restructuring liabilities, current portion		-		30
Sales return reserve		196		151
Other		1,167		1,447
	$	2,420	$	2,746

Summary of changes in warranty accrual

Changes in the Company’s product warranty liability during the three months ended March 30, 2014 and March 31, 2013 are as follows (in thousands):

	Three months ended
	March 30, 2014			March 31, 2013
Beginning balance	$	330		$	612
Warranties accrued		112			127
Warranties settled or reversed		(127	)		(253	)
Ending balance	$	315		$	486

XML

NET LOSS PER SHARE (Tables)

3 Months Ended

Mar. 30, 2014

NET LOSS PER SHARE [Abstract]

Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table summarizes total securities outstanding which were not included in the calculation of diluted net loss per share because to do so would have been anti-dilutive:

	March 30,		December 31,
	2014		2013
Stock options and RSUs		12,743,125		11,620,472
Common stock warrants		1,183,240		1,468,239
Total		13,926,365		13,088,711

XML

NET LOSS PER SHARE (Details)	3 Months Ended	12 Months Ended
	Mar. 30, 2014	Dec. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding anti-dilutive securities (in shares)	13,926,365	13,088,711
Stock options and RSUs [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding anti-dilutive securities (in shares)	12,743,125	11,620,472
Common Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding anti-dilutive securities (in shares)	1,183,240	1,468,239

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) [Abstract]
Net loss	$ (1,897)	$ (2,568)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	(2)	8
Other comprehensive income (loss), net of tax	(2)	8
Comprehensive loss	$ (1,899)	$ (2,560)

XML

INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 30, 2014

INTANGIBLE ASSETS AND GOODWILL [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 4—INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following (in thousands):

	March 30, 2014							December 31, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Customer relationships	$	3,277	$	(1,803	)	$	1,474	$	3,277	$	(1,697	)	$	1,580
Existing technology		3,783		(2,575	)		1,208		3,783		(2,473	)		1,310
Order backlog		732		(732	)		-		732		(732	)		-
Patents		457		(398	)		59		457		(397	)		60
Trade name		659		(336	)		323		659		(322	)		337
Total	$	8,908	$	(5,844	)	$	3,064	$	8,908	$	(5,621	)	$	3,287

For the three months ended March 30, 2014 and March 31, 2013, amortization of intangible assets was as follows (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	103	$	122
Selling, general and administrative expense		120		131
	$	223	$	253

Estimated future amortization expense related to intangible assets as of March 30, 2014 is as follows (in thousands):

Years ending December 31,
2014	$	670
2015		893
2016		869
2017		487
2018		145
Total	$	3,064

As of March 30, 2014, the Company had $9.9 million of goodwill in connection with the acquisitions of ChipX and Endwave. In addition to its annual review, the Company also performs a review of the carrying value of its intangible assets if the Company believes that indicators of impairment exist. During the first quarter of 2014, there were no factors which indicated impairment. The Company did not record impairment on any intangibles, including goodwill, for the three months ended March 30, 2014.  In addition, the Company did not record an impairment of goodwill for the year ended December 31, 2013.

XML

SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

3 Months Ended

Mar. 30, 2014

SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]

Revenue by geographic region and long lived assets by country

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended
	March 30, 2014				March 31, 2013
North America	$	2,227	30	%	$	1,979	29	%
Asia		2,158	29	%		2,280	33	%
Europe		2,909	40	%		2,163	31	%
Other		92	1	%		499	7	%
	$	7,386	100	%	$	6,921	100	%

Revenue by product line

The following table summarizes revenue by product line (in thousands):

	Three Months Ended
	March 30, 2014		March 31, 2013
HSC	$	5,282	$	4,565
Industrial		2,104		2,356
Total revenue	$	7,386	$	6,921

Long-lived Assets by Country

The following table summarizes long-lived assets by country (in thousands):

	March 30, 2014		December 31, 2013
United States	$	2,181	$	2,004
Switzerland		777		995
	$	2,958	$	2,999

XML

STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Allocation of Recognized Period Costs (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	$ 1,010	$ 1,770
Cost of Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	76	80
Research And Development Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	275	323
Selling, General and Administrative Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	659	705
Restructuring expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense	$ 0	$ 662

XML

ORGANIZATION AND BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 30, 2014

ORGANIZATION AND BASIS OF PRESENTATION [Abstract]

Organization

Organization

GigOptix Inc.(“GigOptix” or the “Company”) is a leading fabless supplier of high speed semiconductorcomponentsthat enable end-to-end information streaming over optical and wireless networks and address long haul and metro telecommunications applications as well as emerging high-growth opportunities for Cloud and datacenter connectivity, interactive applications for consumer electronics and the industrial, defense and avionics industries.  The business is made up of two product lines: the High-Speed Communications (“HSC”) product line and the Industrial product line.

The HSC product line offers a broad portfolio of high performance optical and wireless components to telecommunications (“telecom”) and data communications (“datacom”) customers, i) mixed signal radio frequency integrated circuits (“RFIC”), including 10 to 400 gigabit per second (“Gbps”) laser and optical drivers and trans-impedance amplifiers (“TIA”) for telecom, datacom, and consumer electronic fiber-optic applications; ii) power amplifiers and transceivers for microwave and millimeter monolithic microwave integrated circuit (“MMIC”) wireless applications including 73 Ghz and 83 GHz power amplifiers and transceiver chips; and iii) integrated systems in a package (“SIP”) solutions for both fiber-optic and wireless applications.  The HSC product line also partners with key customers on development projects that generate engineering project revenue for the Company while helping to position the Company for future product revenues with these key customers.

The Industrial product line offers a wide range of digital and mixed-signal application specific integrated circuit (“ASIC”) solutions for industrial, military, avionics, medical and communications markets. The Industrial product line partners with ASIC customers on development projects that generate engineering project revenue for the Company which generally leads to future product revenues with these ASIC customers.

The Company’s products focus on the specification, design, development and sale of analog semiconductor integrated circuits (“ICs”), multi-chip module (“MCM”) solutions, and digital and mixed signal ASICs, as well as wireless communications MMICs and modules.

GigOptix, Inc., the successor to GigOptix LLC, was formed as a Delaware corporation in March 2008 in order to facilitate a combination between GigOptix LLC and Lumera Corporation (“Lumera”). Before the combination, GigOptix LLC acquired the assets of iTerra Communications LLC in July 2007 (“iTerra”) and Helix Semiconductors AG (“Helix”) in January 2008. On November 9, 2009, GigOptix acquired ChipX, Incorporated (“ChipX”). On June 17, 2011, GigOptix acquired Endwave Corporation (“Endwave”). As a result of the acquisitions, Helix, Lumera, ChipX and Endwave all became wholly owned subsidiaries of GigOptix.  In March 2013, the Company established a German subsidiary, GigOptix GmbH. The subsidiary is engaged in research and development for the Company’s HSC product line including electro-optical products.

In February 2014, together with Fundação CPqD – Centro De Pesquisa e Desenvolvimento em Telecomunicações (“CPqD”), the Company incepted a new joint venture of which the Company owns 49% and CPqD owns 51%, BrPhotonics Produtos Optoeletrônicos LTDA. (“BrP”), based in Campinas, Brazil, which will be a provider of advanced high-speed devices for optical communications and integrated transceiver components that enable information streaming over communications networks. This joint venture is engaged in research and development of Silicon-Photonics (“SiPh”) advanced electro-optical products.  As noted in the Company’s Annual Report for the year ended December 31, 2013 on Form 10-K (the “2013 Form 10-K”), the Company is transferring into BrP its knowledge-base and intellectual property of Thin Film Polymer on Silicon (“TFPS^TM”) technology, inventory related to the TFPS^TM platform, as well as the complete production line equipment that previously resided at its Bothell, Washington, facility.  Currently, BrP holds the rights to the Company’s TFPS^TM technology.   As of March 30, 2014, the Company had not transferred its inventory related to the TFPS^TM platform, or the production line equipment into BrP.

Basis of Presentation

Basis of Presentation

The Company’s fiscal year ends on December 31. For quarterly reporting, the Company employs a five-week, four-week, four-week, reporting period. The first quarter of 2014 ended on Sunday, March 30, 2014. The first quarter of 2013 ended on Sunday, March 31, 2013. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements as of March 30, 2014 and for the three months ended March 30, 2014 and March 31, 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X, and include the accounts of the Company and all of its subsidiaries. Accordingly, they do not include all of the information and footnotes required by such accounting principles for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of March 30, 2014 and the results of operations and cash flows for the three months ended March 30, 2014 and March 31, 2013. The condensed consolidated results of operations for the three months ended March 30, 2014 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2014. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s 2013 Form 10-K.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. These judgments can be subjective and complex, and consequently, actual results could differ materially from those estimates and assumptions. Descriptions of these estimates and assumptions are included in the 2013 Form 10-K and the Company encourages you to read its 2013 Form 10-K for more information about such estimates and assumptions.