CALDERWOOD & HARKNESS LLP Attorneys at Law
801 South Figueroa Street, Suite 4200 Los Angeles, California 90017
Telephone: (213) 555-4800 Facsimile: (213) 555-4801 www.calderwoodharkness.com
February 12, 2024
VIA EMAIL AND INTERNATIONAL COURIER
Dr. Stefan Kessler, Partner Kessler Hartmann Rechtsanwälte PartG mbB Maximilianstraße 35 80539 München Germany
Re: Channel Reseller Program Agreement between Lumos Analytics Inc. and Meridian Data Solutions GmbH Our Matter No.: 1008-00010
Dear Dr. Kessler:
On behalf of our client, Lumos Analytics Inc. ("Lumos"), a Delaware C-Corporation headquartered at 4700 Sandhill Road, Suite 300, Palo Alto, California 94304, Calderwood & Harkness LLP is pleased to transmit herewith the enclosed initial draft of the Channel Reseller Program Agreement (the "Agreement") between Lumos, in its capacity as Licensor, and Meridian Data Solutions GmbH ("Meridian"), in its capacity as Reseller. The Agreement governs the non-exclusive resale by Meridian of subscriptions to Lumos's Lumos Prism™ SaaS platform across the EMEA Territory (as defined herein). The enclosed draft is dated February 12, 2024. We trust that your team and your client will find the draft to be a sound framework for negotiation, and we look forward to receiving Meridian's comments in due course.
I. Summary of Key Commercial Terms
To facilitate your review, we provide below a brief overview of the principal commercial and legal terms reflected in the initial draft:
Licensed Product. The Agreement covers Lumos Prism™, Lumos's AI-powered financial analytics and risk-modeling SaaS platform. Lumos Prism™ offers enterprise-grade predictive analytics, portfolio risk assessment, and regulatory reporting capabilities delivered on a software-as-a-service basis. The specific subscription tiers, modules, and associated pricing are set forth in Exhibit A to the Agreement.
Territory. The territory authorized for resale under the Agreement encompasses all countries within Europe (including the United Kingdom), the Middle East, and Africa (collectively, the "EMEA Territory"). The precise geographic scope, including the identification of any restricted or sanctioned jurisdictions excluded from the EMEA Territory, is detailed in Exhibit B.
Non-Exclusivity. As structured, the Agreement is non-exclusive. Lumos expressly retains the right to appoint additional authorized resellers, distributors, and channel partners within the EMEA Territory, and to sell Lumos Prism™ subscriptions directly to end users in the EMEA Territory through its own sales organization or online channels, without restriction. Meridian acknowledges and agrees that no exclusive rights are being granted.
Initial Term and Renewal. The initial term of the Agreement is five (5) years, commencing on April 1, 2024 and expiring on March 31, 2029. Following expiration of the initial term, the Agreement will automatically renew for successive one-year periods unless either party provides the other with at least ninety (90) days' prior written notice of non-renewal before the end of the then-current term.
Total Contract Value. The aggregate total contract value over the five-year initial term is Thirty Million United States Dollars ($30,000,000), as determined by the Minimum Annual Commitment schedule described below.
Reseller discount. Meridian will receive a discount of thirty percent (30%) off Lumos's published EMEA list prices for all Lumos Prism™ subscription products. This discount represents Meridian's margin and compensation for its sales, marketing, and support activities within the EMEA Territory. Lumos retains the right to modify its published EMEA list prices upon ninety (90) days' prior written notice, provided that any such modifications shall not affect then-existing end-user subscriptions during their current subscription terms.
Minimum Annual Commitment (MAC) Schedule. The Agreement requires Meridian to achieve the following Minimum Annual Commitment thresholds during each year of the initial term:
The Minimum Annual Commitment schedule is also set forth in Exhibit F to the Agreement. The Agreement includes provisions addressing the consequences of a shortfall against the MAC, including Lumos's right to terminate the Agreement upon a material shortfall and Meridian's obligation to pay a shortfall fee under certain circumstances, each as more fully described in the draft.
Payment Terms. All amounts due from Meridian to Lumos are payable net forty-five (45) days from the date of invoice. Interest on any late payments shall accrue at a rate of one and one-half percent (1.5%) per month, equivalent to eighteen percent (18%) per annum, compounded monthly, or the maximum rate permitted by applicable law, whichever is less.
Escrow Holdback. Five percent (5%) of each quarterly payment from Meridian to Lumos will be withheld and deposited into an escrow account maintained by Evergreen Trust Company, N.A. (the "Escrow Agent") pursuant to a tri-party escrow agreement to be entered into among Lumos, Meridian, and the Escrow Agent. The escrowed funds will serve as a readily available source of recovery for indemnification claims under the Agreement. The terms governing the release, disbursement, and investment of escrowed funds are addressed in the relevant provisions of the Agreement and in the escrow agreement referenced therein.
Indemnification Cap. Each party's aggregate liability for indemnification obligations under the Agreement is capped at Fifteen Million United States Dollars ($15,000,000), representing fifty percent (50%) of the total contract value. This cap is subject to the following carve-outs, which are excluded from the aggregate liability cap and for which each party's indemnification obligations are uncapped: (i) willful misconduct; (ii) fraud; (iii) breaches of the confidentiality and data protection provisions of the Agreement; and (iv) intellectual property infringement claims. These carve-outs are intended to ensure that the limitation of liability does not inadvertently shield a party from the consequences of its most egregious conduct.
Governing Law. The Agreement is governed by and construed in accordance with the laws of the State of California, without regard to its conflict-of-laws principles.
Dispute Resolution. Any disputes arising out of or relating to the Agreement are to be resolved by binding arbitration administered by JAMS (Judicial Arbitration and Mediation Services) in Los Angeles, California, in accordance with JAMS's International Arbitration Rules then in effect. The Agreement includes a carve-out from the arbitration clause permitting either party to seek temporary, preliminary, or permanent injunctive relief, or other equitable remedies, in the state or federal courts located in Santa Clara County, California, without the necessity of posting bond or other security. The parties consent to the personal jurisdiction and venue of such courts for purposes of any such proceedings.
II. Summary of Exhibits
The enclosed draft of the Agreement is accompanied by the following exhibits, each of which is included in draft form and subject to further revision:
Exhibit A — Licensed Products & Pricing Schedule. This exhibit sets forth the specific Lumos Prism™ subscription tiers, modules, add-on features, and associated pricing applicable to the EMEA Territory, including the published EMEA list prices from which Meridian's thirty percent (30%) reseller discount is calculated.
Exhibit B — EMEA Territory & Sub-Distributor Authorization. This exhibit defines the geographic scope of the EMEA Territory and identifies the pre-approved sub-distributors through which Meridian is authorized to resell Lumos Prism™ subscriptions in designated sub-territories, specifically: (i) Meridian Data Solutions UK Ltd, authorized to resell in the United Kingdom and Ireland; and (ii) Meridian Data Solutions SARL, authorized to resell in France, Belgium, Luxembourg, and French-speaking Switzerland. All other sub-distributor appointments require Lumos's prior written consent, as discussed further below.
Exhibit C — Data Processing Agreement (DPA). This exhibit contains the data processing agreement governing the processing of personal data in connection with the Agreement, including the EU Standard Contractual Clauses (Module Two — Controller-to-Processor) as adopted by European Commission Implementing Decision (EU) 2021/914 for cross-border transfers of personal data from the European Economic Area and the United Kingdom to the United States. The DPA specifies that personal data processed in connection with the Lumos Prism™ platform will be hosted and stored at the Stratos Cloud Services AG data center located in Frankfurt am Main, Germany, in order to satisfy data localization requirements under applicable EU and member-state data protection laws.
Exhibit D — Trademark License & Brand Guidelines. This exhibit grants Meridian a limited, non-exclusive, non-transferable, revocable license to use the Lumos Prism™ name, logo, and approved marketing materials solely in connection with Meridian's authorized resale activities under the Agreement, subject to compliance with Lumos's brand guidelines as set forth therein.
Exhibit E — Service Level Agreement (SLA). This exhibit sets forth the service levels applicable to the Lumos Prism™ platform, including a monthly uptime commitment of ninety-nine and ninety-five hundredths percent (99.95%), together with the methodology for measuring availability, the applicable service level credits for downtime events, and the exclusions from the SLA (including scheduled maintenance windows and force majeure events).
Exhibit F — Minimum Annual Commitment Schedule. This exhibit replicates and supplements the MAC schedule summarized in Section I above, setting forth the annual and quarterly payment milestones and the mechanics for calculating shortfall fees.
III. Key Provisions Warranting Particular Attention
We anticipate that several provisions of the initial draft will be of particular interest to Meridian's counsel and may require substantive discussion during the negotiation process. We flag the following for your initial review:
Anti-Corruption, Sanctions, and Export Control Compliance. The Agreement contains extensive representations, warranties, and covenants relating to compliance with applicable anti-corruption laws, including the United States Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), and the United Kingdom Bribery Act 2010 (the "UK Bribery Act"). Meridian is required to represent that neither it nor any of its officers, directors, employees, agents, or sub-distributors has made or will make any payment, offer, or promise of anything of value to any government official or other person in violation of the FCPA, the UK Bribery Act, or any analogous anti-corruption legislation in any jurisdiction within the EMEA Territory. In addition, the Agreement imposes export control obligations under the U.S. Export Administration Regulations ("EAR") and the EU Dual-Use Regulation (Regulation (EU) 2021/821), and requires compliance with all applicable economic sanctions programs administered by the U.S. Office of Foreign Assets Control ("OFAC"), including restrictions on resale into OFAC-restricted territories. We expect that these provisions may warrant careful review given the breadth of the EMEA Territory and the diversity of regulatory regimes encompassed therein.
EU Competition Law Compliance. The Agreement has been structured with a view to compliance with Article 101 of the Treaty on the Functioning of the European Union ("TFEU") and the Vertical Block Exemption Regulation (Commission Regulation (EU) 2022/720). The non-exclusivity of the arrangement, the absence of any resale price maintenance provisions (Meridian retains full discretion to set its own resale prices to end users), and the territorial scope of the Agreement have been designed to fall within the safe harbor of the Vertical Block Exemption Regulation, provided that neither party's market share in the relevant product and geographic markets exceeds thirty percent (30%). We welcome your views on the competition law analysis and are prepared to discuss any adjustments that may be warranted to ensure full compliance with applicable EU and member-state competition laws.
Insurance Requirements. The Agreement requires Meridian to obtain and maintain, at its own expense, throughout the term of the Agreement, the following minimum insurance coverages: (i) commercial general liability insurance with per-occurrence and aggregate limits of not less than Five Million Euros (€5,000,000); (ii) professional indemnity (errors and omissions) insurance with per-occurrence and aggregate limits of not less than Ten Million Euros (€10,000,000); and (iii) cyber liability insurance with per-occurrence and aggregate limits of not less than Five Million Euros (€5,000,000). Certificates of insurance naming Lumos as an additional insured must be delivered to Lumos within thirty (30) days of execution of the Agreement and annually thereafter.
Sub-Distributor Appointment. Other than the two pre-approved sub-distributors identified in Exhibit B (Meridian Data Solutions UK Ltd and Meridian Data Solutions SARL), any additional appointment by Meridian of sub-distributors, sub-resellers, or other downstream channel partners within the EMEA Territory is subject to Lumos's prior written consent, which may be withheld or conditioned in Lumos's reasonable discretion. Each approved sub-distributor must enter into a written sub-distribution agreement that contains terms no less protective of Lumos's rights and intellectual property than the terms of the Agreement.
Post-Termination Wind-Down. Upon termination or expiration of the Agreement, Meridian shall be entitled to a wind-down period of up to twelve (12) months during which Meridian may continue to fulfill and support existing end-user subscriptions that were entered into prior to the effective date of termination or expiration. During this wind-down period, the terms and conditions of the Agreement (including Meridian's payment obligations, confidentiality obligations, and data protection obligations) shall continue to apply in full. Meridian may not enter into any new end-user subscriptions during the wind-down period.
Feedback License. The Agreement includes a provision under which any suggestions, ideas, enhancement requests, feature recommendations, or other feedback provided by Meridian or its end users to Lumos in connection with the Lumos Prism™ platform (collectively, "Feedback") shall become the sole and exclusive property of Lumos, and Lumos shall be free to use, incorporate, and exploit such Feedback without restriction, attribution, or compensation. We recognize that this provision is common in software channel agreements but acknowledge that it may be a point of negotiation.
Restrictions on Use. The Agreement does not grant Meridian or any end user the right to modify, adapt, translate, reverse-engineer, decompile, disassemble, or create derivative works of the Lumos Prism™ platform or any component thereof. These restrictions are consistent with Lumos's standard intellectual property protection terms and are intended to preserve the integrity of the platform and Lumos's proprietary technology.
IV. Reservation of Rights; Draft Subject to Further Review
We wish to note that this initial draft remains subject to further review and comment by Lumos, including by Daniel Ostroff, Vice President, Legal & Compliance, and Tomoko Ishikawa, Senior Vice President, Global Partnerships. Lumos expressly reserves the right to propose additional revisions, modifications, or supplements to the draft at any time prior to execution.
In addition, the draft remains subject to ongoing coordination with Lumos's UK and EU regulatory counsel, Thornbridge Whitaker LLP (Alistair Drummond, Partner, London), regarding data protection matters, including the adequacy of the Standard Contractual Clauses and any supplementary measures required in light of the European Data Protection Board's guidance and relevant supervisory authority decisions. The draft is also subject to coordination with Lumos's transfer pricing advisor, Caldwell & Pryce Advisory LLC, regarding the arm's-length pricing analysis applicable to the intercompany aspects of the reseller arrangement and the reseller discount, to ensure compliance with applicable transfer pricing regulations in the United States and relevant EMEA jurisdictions.
The circulation of this initial draft to your firm and to Meridian does not constitute a binding offer, commitment, or undertaking by Lumos. No binding obligations shall arise between Lumos and Meridian unless and until a definitive Agreement is executed and delivered by duly authorized representatives of both parties.
V. Request for Meridian's Comments
We respectfully request that Kessler Hartmann provide Meridian's markup, comments, and any counterproposals to the enclosed draft by Friday, February 23, 2024. We believe that this timeline will allow for a thorough initial review while keeping the parties on track for a target execution date in advance of the April 1, 2024 commencement date.
Should Meridian's counsel have any preliminary questions or wish to discuss any aspect of the draft prior to submitting a formal markup, we are happy to arrange a call between the legal teams at a mutually convenient time. My associate, Leila Nazari, will be available to coordinate scheduling.
Additionally, to the extent that Meridian wishes to address certain commercial terms—such as the Minimum Annual Commitment thresholds, the reseller discount, or pricing-related matters—in parallel with the legal negotiation, we would suggest that the parties' respective commercial leads coordinate directly. On the Lumos side, the commercial leads are Tomoko Ishikawa (SVP, Global Partnerships) and Henrik Dalmqvist (Director, EMEA Channel Sales). We understand that Meridian's commercial leads are Katarina Voss (Managing Director, EMEA) and Jean-Philippe Moreau (Head of Strategic Partnerships). We would ask that the legal teams be kept informed of and copied on any such commercial discussions to ensure alignment between the commercial and legal workstreams.
VI. Confidentiality
We remind you that the enclosed draft, this transmittal letter, and all related communications, notes, and materials exchanged between the parties and their respective counsel in connection with the negotiation of the Agreement are strictly confidential. These materials are subject to attorney-client privilege and work product protections, as applicable, and are intended solely for use by the parties and their authorized representatives in connection with the negotiation and execution of the Agreement. We request that the enclosed materials not be disclosed, distributed, or made available to any third party without the prior written consent of Calderwood & Harkness LLP and Lumos.
We look forward to working with you and your team toward the successful conclusion of this transaction. Please do not hesitate to contact me directly with any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner — Antitrust & Competition Direct: (213) 555-4837
Email: h.bellamy@calderwoodharkness.com
cc: Daniel Ostroff, Vice President, Legal & Compliance, Lumos Analytics Inc. (via email) cc: Leila Nazari, Associate, Calderwood & Harkness LLP (via email) cc: Robert Jansen, Associate, Calderwood & Harkness LLP (via email) cc: Dr. Anneliese Brandt, General Counsel, Meridian Data Solutions GmbH (via email) cc: Laura Pfeiffer, Associate, Kessler Hartmann Rechtsanwälte PartG mbB (via email)
Enclosures:
(1) Initial Draft — Channel Reseller Program Agreement between Lumos Analytics Inc. and Meridian Data Solutions GmbH, dated February 12, 2024, with Exhibits A through F (Exhibit A — Licensed Products & Pricing Schedule; Exhibit B — EMEA Territory & Sub-Distributor Authorization; Exhibit C — Data Processing Agreement (DPA); Exhibit D — Trademark License & Brand Guidelines; Exhibit E — Service Level Agreement; Exhibit F — Minimum Annual Commitment Schedule)
This communication is from Calderwood & Harkness LLP and may contain information that is confidential, privileged, or otherwise protected from disclosure. If you are not the intended recipient, please notify the sender immediately and delete this communication. Any unauthorized use, disclosure, or distribution of this communication is strictly prohibited.
| Contract Year | Period | Minimum Annual Commitment |
| Year 1 | April 1, 2024 – March 31, 2025 | $4,500,000 |
| Year 2 | April 1, 2025 – March 31, 2026 | $5,400,000 |
| Year 3 | April 1, 2026 – March 31, 2027 | $6,300,000 |
| Year 4 | April 1, 2027 – March 31, 2028 | $6,900,000 |
| Year 5 | April 1, 2028 – March 31, 2029 | $6,900,000 |
| Total | $30,000,000 |