Leland,
I hope this message finds you well. My name is Devon Archer, and I'm a senior associate in Calderwood & Harkness's Labor & Employment practice group in our San Francisco office. I work under Renata Vasquez (cc'd), who leads the employment side of our firm's relationship with Lumos Analytics Inc.
I'm reaching out because Camille Desrosiers, Lumos's General Counsel, suggested that we coordinate with you on certain corporate governance implications arising from a comprehensive employment agreement review and redrafting project we've been undertaking for the company. I wanted to provide some context on our engagement, summarize the key revisions we've made, and flag a number of questions where we'd really value Whitmore & Cheng's corporate-side guidance.
**Background**
Calderwood & Harkness was engaged by Lumos to conduct a California-specific review and redrafting of the confidentiality, invention-assignment, and restrictive covenant provisions across the company's employment agreement templates. The engagement was prompted following Lumos's Series C financing (which closed on February 14, 2024 — $68 million led by Ridgeline Ventures Fund IV, L.P., at a $410 million post-money valuation), during which Ridgeline's board observer, Priya Narayanan, flagged compliance concerns with the existing employment agreement templates.
As I understand it, the existing templates were last prepared by your firm in Q2 2021. Of course, the California restrictive covenant landscape has shifted materially since then — most notably with SB 699 (Bus. & Prof. Code § 16600.5) and AB 1076 (Labor Code § 432.5) both taking effect on January 1, 2024 — so an update was well overdue regardless of how the original templates were drafted.
Our review covers all 142 California-based employees (out of 187 total FTEs), organized across four tiers: executive (11 employees), senior engineer/data scientist (38), mid-level (54), and entry-level (39).
**Summary of Key Revisions**
For your reference, the principal changes we've made to the Proprietary Information & Inventions Agreements (PIIAs) are as follows:
1. **Deletion of the 12-month post-employment non-compete clause.** This provision is void under Cal. Bus. & Prof. Code § 16600 and now subjects the company to potential penalties under SB 699 (§ 16600.5) and AB 1076 (Labor Code § 432.5). We've removed it in its entirety across all tiers.
2. **Narrowing of the 18-month non-solicitation clause.** The employee non-solicitation provision has been revised to align with post-*AMN Healthcare* precedent. The customer non-solicitation provision has been removed as likely unenforceable in California.
3. **Revised invention-assignment provisions.** We've added the mandatory Cal. Labor Code § 2870 statutory notice (now included as Exhibit B to each PIIA), added a prior-invention disclosure schedule (Exhibit A), and narrowed the assignment scope to exclude inventions made entirely on the employee's own time without use of company resources.
4. **DTSA whistleblower immunity notice.** We've inserted the notice required by 18 U.S.C. § 1833(b), which was previously absent from the templates.
5. **Confidentiality duration.** We've distinguished trade secrets (indefinite protection) from non-trade-secret confidential information (3-year post-separation limit).
6. **Governing law and forum.** Changed from Delaware to California governing law, with a San Francisco County forum selection clause.
We've prepared three separate final PIIA templates — one for the executive tier, one for the senior engineer/data scientist tier, and one combined template for mid-level and entry-level employees — along with Exhibits A and B. An enforceability analysis memorandum was delivered to Camille on April 8, and revised final templates were delivered on May 13. We expect to have execution-ready versions finalized by end of month.
**Areas Where We'd Appreciate Whitmore & Cheng's Guidance**
The following items sit at the intersection of our employment work and Lumos's corporate governance framework, and we wanted to flag them for your review:
1. **Board Resolutions.** Does the Lumos board (or its compensation committee) need to adopt a resolution approving the revised PIIA templates, particularly for the executive tier? Several of the C-suite and VP-level employees may have individually negotiated employment agreements or agreements that were originally approved at the board or committee level. Additionally, are there existing board resolutions from Q2 2021 that approved the original templates and would need to be updated or superseded?
2. **Stockholder Consents.** Are any stockholder or investor consents required here? I'm thinking specifically about whether any investor rights agreement, voting agreement, or the Series C transaction documents contain protective provisions or consent rights applicable to changes in executive employment arrangements. We're aware that Ridgeline holds approximately 16.6% of Lumos's fully diluted equity post-Series C and has a board observer seat, so I wanted to make sure we're not running afoul of any consent mechanics.
3. **2020 Equity Incentive Plan.** Do the revised PIIAs interact with Lumos's 2020 Equity Incentive Plan, as amended? Our concern is that some individual equity grant agreements may cross-reference or incorporate the existing PIIA's restrictive covenant provisions — for example, forfeiture or clawback provisions triggered by a breach of the non-compete. Now that the non-compete has been deleted, we want to confirm whether any equity award terms are affected and whether the plan or any grant agreements need conforming amendments.
4. **Employment Agreements vs. Offer Letters.** For any executives who have standalone employment agreements (rather than simple offer letters with a PIIA attachment), does your firm have visibility into provisions that may need to be conformed? We're particularly focused on severance provisions that may be conditioned on compliance with restrictive covenants that will no longer exist in the revised PIIAs.
5. **SB 699 Notification Obligation.** SB 699 may require Lumos to notify both current and former employees that the previously included non-compete and certain non-solicitation provisions are void. Does Whitmore & Cheng see any corporate-level considerations or potential liability exposure related to this notification — for example, the possibility of claims from former employees who may have been subject to the unenforceable provisions?
**Coordination Call**
I'd like to propose that we schedule a call to work through these items at your convenience. Would any time this week (the week of May 20) or the following week work for you? On our end, Renata Vasquez is available to join. On the client side, Camille Desrosiers and Gerald Huang (VP of People Operations) may also wish to participate.
By way of timeline, we're targeting delivery of final execution-ready templates and an implementation memorandum to Lumos by the end of May, and the company is aiming to begin employee rollout in early-to-mid June. Gerald is also coordinating rollout logistics on the HR side with Marcus Reeves at Orion Talent Advisors, Inc. So timely coordination on the corporate governance questions would be much appreciated.
**Document Sharing**
If it would be helpful, we're happy to share the current draft templates and our enforceability analysis memo with you via our SecureShare portal (portal ID: LSA-0847), subject to Camille's authorization. Alternatively, I'll defer to Camille on how she'd prefer to share materials between the two firms — Camille, please let us know your preference on this.
Thank you for your time and willingness to coordinate on this, Leland. We appreciate the collaborative approach and want to make sure the employment-side revisions are fully aligned with Lumos's corporate governance framework before we move to execution. Please don't hesitate to reach out with any preliminary questions — I'm happy to discuss by email or phone.
Best regards,
Devon Archer Senior Associate, Labor & Employment Calderwood & Harkness LLP One Embarcadero Center, 34th Floor San Francisco, CA 94111 California Bar No. 318274 T: (415) 602-3187 E: devon.archer@calderwoodharkness.com
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