Margaux,
Congratulations on reaching signing — a significant milestone for the Lumos team. We are pleased to transmit the materials described below.
**Executed Merger Agreement**
Attached is the fully executed Agreement and Plan of Merger, dated April 3, 2024 (the "Merger Agreement"), among Lumos Analytics Inc. ("Lumos"), Prismyx Acquisition Sub LLC ("Merger Sub"), Prismyx Data Solutions LLC ("Prismyx"), Jonah Eberhardt, and Talia Messina. We received counterpart signature pages from all parties this afternoon, including from Sellers' counsel at Cartwright, Daugherty & Voss LLP (Sabrina Delvecchio). Please reference C&H Matter No. 1008-00008 in all correspondence.
**Summary of Signing Deliverables**
The following key items were received or exchanged concurrently with signing:
1. **Executed Merger Agreement** — fully executed by all five parties (Lumos, Merger Sub, Prismyx, Eberhardt, and Messina). 2. **Disclosure Schedules** — delivered by Sellers concurrently with execution of the Merger Agreement. 3. **HSR Filing Determination** — we have confirmed that no HSR filing is required, as the aggregate deal value of $15,000,000 falls below the applicable reporting threshold.
The complete Signing Deliverables Index is attached for your reference.
**Key Deal Terms Recap**
For convenience, a high-level summary of the principal economic and structural terms:
- **Transaction Structure:** Forward merger of Prismyx with and into Merger Sub under DLLCA § 18-209. Merger Sub will survive as a wholly owned subsidiary of Lumos. - **Aggregate Consideration:** $15,000,000 total deal value, consisting of: - $10,500,000 in closing cash consideration (70% of deal value); and - Up to $4,500,000 in contingent earnout payments, payable in two tranches of $2,250,000 each, subject to achievement of PrismLens Net New ARR milestones and continued employment of the Founders over a 30-month earnout period. - **Indemnification Escrow:** $4,500,000 (30% of deal value) to be deposited at closing with Fenwick Escrow Services LLC, serving as the exclusive source of recovery for indemnification claims (other than fraud). Net cash payable to Sellers at closing will therefore be $6,000,000 ($3,300,000 to Eberhardt; $2,700,000 to Messina). - **Working Capital Target:** $485,000, subject to a post-closing true-up mechanism with a $25,000 de minimis collar.
**Outstanding Conditions Precedent and Next Steps**
We are targeting a closing date of **May 22, 2024**. The following items must be satisfied or obtained in advance of closing:
1. **Linden Grove National Bank Consent.** Lumos must deliver notice and obtain consent under its Revolving Credit Agreement (dated September 15, 2022) for the acquisition as a permitted acquisition. We understand that Gregory Olshan (Relationship Manager, Linden Grove) has been contacted and the consent process is underway. We are targeting receipt of this consent by mid-April.
2. **Ardent Financial Technologies Customer Consent.** The Master SaaS Agreement between Prismyx and Ardent Financial Technologies, Inc. — Prismyx's largest customer, representing approximately 31% of revenue (~$1,178,000 ACV) — contains a change-of-control consent provision that must be satisfied prior to closing. CDV is coordinating directly with Ardent on this item, and we will monitor progress closely.
3. **Prismyx Member Approval.** Formal written consent of the members of Prismyx (Eberhardt and Messina, holding 100% of the 1,000 outstanding membership units) approving the merger must be documented and delivered prior to closing. We expect this to be a formality given that both members are signatories to the Merger Agreement, but we will ensure the consent is properly executed and delivered on the required timeline.
4. **Founder Employment Agreements.** Employment Agreements for Jonah Eberhardt (VP, Plugin Engineering; $275,000 base salary) and Talia Messina (VP, Data Visualization; $260,000 base salary) with Prismyx Acquisition Sub LLC are in substantially final form. These are conditions to closing and are tied to the retention earnout mechanics. Naomi Petersen is coordinating final comments with Marcus Greenbaum at CDV on certain outstanding provisions relating to non-compete scope and severance terms, and we expect to have these resolved shortly.
5. **Escrow Agreement.** The Escrow Agreement with Fenwick Escrow Services LLC (Dana Whitford, Escrow Officer) is in substantially final form and will be executed at closing concurrently with the deposit of the $4,500,000 escrow fund.
6. **Certificate of Merger.** To be filed with the Delaware Secretary of State at closing. We have prepared a draft, which is ready for finalization.
7. **Officer's and Secretary's Certificates / Good Standing Certificates.** To be delivered by both parties at closing.
8. **Bring-Down of Representations.** Required to be satisfied at closing.
9. **Legal Opinions.** Calderwood & Harkness will deliver buyer's counsel closing opinion; CDV will deliver seller's counsel closing opinion.
10. **Haverford & Keane Financial Review.** The financial review engagement with Haverford & Keane, CPAs (Lorraine Chow, Engagement Partner) is ongoing for purposes of validating Prismyx's net working capital and financial statements. We expect this to be completed well in advance of the closing date.
**Board Approval / Ridgeline Consent**
For the record, Lumos board approval — including approval by at least one Ridgeline Capital designee, as required by the Stockholders' Agreement for acquisitions exceeding $5,000,000 — was obtained prior to signing, and board resolutions are on file with us.
**Financial Advisor**
Bristow Farr Financial Advisory LLC (Arun Padmanabhan) has been kept apprised of the signing, and their valuation analysis, which supported the $15,000,000 deal value (approximately 3.95x Prismyx's 2023 revenue of ~$3.8 million), remains on file for the board's records.
**Action Items**
A few requests on our end:
- Please circulate the executed Merger Agreement internally as appropriate — we expect Priya Subramaniam and Desmond will want copies. - Please confirm that the Lumos team will coordinate directly with Linden Grove on submission of the bank consent notice, and let us know if you would like us to assist in preparing the notice letter. - We are happy to schedule a call with the broader Lumos team early next week to walk through the full closing checklist and timeline in detail. Please let us know your availability.
Going forward, Naomi Petersen and Ryan Kowalski will be managing the day-to-day closing checklist items on our side and will be in regular contact with you and Desmond.
We are confident we are well-positioned to close on the expected timeline. Please don't hesitate to reach out if you have any questions in the interim.
Best regards,
**Harrison Wexford** Partner, Mergers & Acquisitions Calderwood & Harkness LLP 101 California Street, Suite 4500 San Francisco, CA 94111 T: (415) 555-7800
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