1008-00010 · Lumos Analytics Inc · Correspondence

letter-kessler-hartmann-revised-draft.docx DOCUMENT Funds

12 / 36 ← → ✕

CALDERWOOD & HARKNESS LLP Attorneys at Law

801 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7400 Facsimile: (213) 555-7401 www.calderwoodharkness.com

March 4, 2024

VIA EMAIL (s.kessler@kesslerhartmann.de)

Dr. Stefan Kessler, Partner Kessler Hartmann Rechtsanwälte PartG mbB Maximilianstraße 35 80539 München Germany

Re: Revised Draft — Channel Reseller Program Agreement between Lumos Analytics Inc. and Meridian Data Solutions GmbH Matter No. 1008-00010

Dear Dr. Kessler:

On behalf of our client, Lumos Analytics Inc. ("Lumos"), we are pleased to transmit herewith the revised draft of the Channel Reseller Program Agreement (the "Agreement") between Lumos and Meridian Data Solutions GmbH ("Meridian"), dated March 4, 2024. This revised draft reflects Lumos's careful and thorough consideration of the first markup submitted by Meridian on February 23, 2024. The revised draft is provided in both clean format and blackline format (redlined against the initial draft circulated on February 12, 2024) for your convenience in reviewing the changes made. We would note at the outset that this draft remains subject to further review and approval by Lumos's management team, including Daniel Ostroff (VP, Legal & Compliance) and Tomoko Ishikawa (SVP, Global Partnerships), and Lumos reserves the right to propose additional modifications as that review is completed.

While Lumos has endeavored to accommodate a significant number of Meridian's proposed revisions — and has, as described further below, accepted numerous drafting clarifications and non-substantive edits — several positions reflected in Meridian's markup cannot be accepted. Set forth below is a summary of Lumos's positions on the principal open issues, together with a brief explanation of the rationale underlying each position. We trust this summary will be helpful as you and your colleagues evaluate the revised draft.

1. Indemnification Cap (Section 11)

Lumos's position is that the aggregate indemnification liability cap of $15,000,000 — representing fifty percent (50%) of the Total Contract Value of $30,000,000 over the five-year initial term — is appropriate and market-standard for a transaction of this size and nature. We have reviewed comparable channel reseller arrangements in the enterprise software sector and believe this cap falls well within the range of customary practice. Meridian's markup proposed a reduction to this cap; however, Lumos has maintained the $15,000,000 figure in the revised draft and respectfully declines to reduce it.

The existing carve-outs for liabilities arising from (i) willful misconduct or fraud, (ii) breaches of the confidentiality obligations set forth in Section 9, and (iii) intellectual property infringement — all of which remain uncapped — have been retained in the revised draft. Lumos views these carve-outs as both customary and necessary to ensure adequate protection for claims that, by their nature, should not be subject to an artificial ceiling.

The indemnification notice period remains at thirty (30) days following a party's becoming aware of a claim giving rise to an indemnification obligation. The indemnifying party retains the right to assume control of the defense of any such claim, and consent to settlement by the indemnified party shall not be unreasonably withheld, conditioned, or delayed. These provisions are unchanged from the initial draft and reflect a balanced allocation of procedural rights.

Additionally, the five percent (5%) escrow holdback mechanism with Evergreen Trust Company, N.A. for indemnification claims is maintained as drafted. Under this mechanism, during Year 1 of the initial term, a quarterly holdback of $56,250 (calculated as 5% of the quarterly Minimum Annual Commitment of $1,125,000) will be deposited into the escrow account. The escrow agreement, to be entered into as a condition to closing, will govern the terms of release and disbursement of holdback funds. Lumos believes this mechanism provides Meridian with meaningful security while avoiding the administrative complexity of alternative arrangements such as letters of credit or parent company guarantees.

2. Non-Exclusivity (Section 2.2)

Lumos has declined Meridian's request for exclusive reseller rights in the EMEA Territory. The Agreement remains structured as a non-exclusive arrangement, under which Lumos retains the unfettered right to appoint additional resellers, distributors, or channel partners in the EMEA Territory and to sell directly to end users within the EMEA Territory through its own sales organization. This is a fundamental commercial term for Lumos and is not subject to further negotiation.

Beyond the commercial rationale, the non-exclusive structure is also important from a regulatory perspective. As we have discussed separately, an exclusive territory allocation of the type Meridian has proposed would raise significant concerns under Article 101 of the Treaty on the Functioning of the European Union ("TFEU") and would likely fall outside the safe harbor provided by the Vertical Block Exemption Regulation (EU) 2022/720 (the "VBER"), particularly in light of the aggregate value of the arrangement and Lumos's market position in the analytics software sector. Lumos's regulatory counsel has confirmed that the non-exclusive structure as drafted is consistent with the VBER and minimizes the risk of challenge by competition authorities in the European Union or the United Kingdom.

That said, Lumos is open to discussing performance-based incentives or preferential pricing tiers that may address Meridian's underlying commercial concerns — including enhanced margin structures, marketing development funds, or priority access to new product releases — while preserving the non-exclusive nature of the arrangement. We would welcome a call with you and your client to explore these options in greater detail.

3. Minimum Annual Commitment (MAC) Schedule (Section 4.1 and Exhibit A)

Lumos has maintained the Minimum Annual Commitment schedule as proposed in the initial draft, which is summarized in the table below:

Meridian's markup requested a reduced Year 1 commitment and a flatter ramp trajectory across the initial term. Lumos has considered this request carefully but respectfully declines. The Year 1 commitment of $4,500,000 already reflects a meaningful ramp discount of twenty-five percent (25%) from the annualized contract value of $6,000,000 (i.e., $30,000,000 divided by five years), and the graduated ramp structure is designed to allow Meridian a reasonable period in which to develop its sales pipeline and establish market presence with Lumos's product suite before reaching the steady-state commitment level in Years 4 and 5.

Payment terms remain Net 45 days from the date of Lumos's invoice for each quarterly installment. Late payment interest of 1.5% per month (equivalent to 18% per annum), calculated on a simple interest basis on the outstanding balance from the due date until the date of payment in full, has been retained. All amounts payable under the Agreement are denominated in United States dollars (USD), and Meridian continues to bear the foreign exchange risk as between the euro (EUR) and USD. Lumos has not accepted Meridian's proposal to introduce a currency adjustment mechanism or to denominate any portion of the payment obligations in euros.

4. Data Localization Requirements (Sections 7.3–7.5 and Exhibit C)

Lumos has accepted Meridian's request for a contractual commitment to maintain EMEA customer data on EU-based cloud infrastructure. This was a point of particular importance to Meridian, and Lumos has worked with its infrastructure team to ensure that the revised draft addresses Meridian's concerns in a manner that is both operationally feasible and legally robust.

The revised draft now expressly provides that all EMEA customer data will be hosted at the Frankfurt, Germany data center operated by Stratos Cloud Services AG (headquarters: Bahnhofstrasse 42, 8001 Zürich, Switzerland). This data center is a Tier IV facility with ISO 27001, ISO 27017, and ISO 27018 certifications, and its use is consistent with the data residency expectations of Meridian's EMEA customer base.

The Data Processing Agreement attached as Exhibit C to the Agreement has been updated to incorporate the Standard Contractual Clauses (Commission Implementing Decision (EU) 2021/914, Module Two — Controller-to-Processor) for any cross-border transfers of personal data from the European Economic Area ("EEA") or the United Kingdom to the United States, consistent with the requirements of the General Data Protection Regulation (Regulation (EU) 2016/679) (the "GDPR") and the UK GDPR (as supplemented by the International Data Transfer Addendum to the EU Commission Standard Contractual Clauses issued by the UK Information Commissioner's Office). The transfer impact assessment referenced in Clause 14 of the Standard Contractual Clauses has been completed by Lumos and is available for Meridian's review upon request.

Sub-processor changes remain subject to thirty (30) days' prior written notice to Meridian, with a right of objection on reasonable grounds. A pre-approved sub-processor list is set forth in Annex III to the DPA, and any additions to or changes in that list will be subject to the notice and objection procedure described therein.

We would also note that Lumos's UK and EU regulatory counsel, Thornbridge Whitaker LLP (specifically, Alistair Drummond, Partner, Data Privacy & Regulatory), has reviewed and confirmed the adequacy of the data localization and data transfer provisions in the revised draft, including the DPA and the Standard Contractual Clauses incorporated therein.

5. Resale Price Maintenance — Clarification (Section 4.4)

To address a concern raised in Meridian's markup regarding the potential for the pricing structure to be construed as resale price maintenance, the revised draft now includes express language confirming that Meridian is free to set its own resale prices to end users at its sole discretion. Lumos may provide recommended resale prices as non-binding guidance only, and Meridian is under no obligation to adhere to any such recommendations. This language is intended to ensure full consistency with the requirements of the VBER and applicable EU and national competition law, under which resale price maintenance constitutes a "by object" restriction of competition and a hardcore restriction that would cause the entire arrangement to fall outside the safe harbor of the VBER.

For the avoidance of doubt, the thirty percent (30%) reseller discount off Lumos's published EMEA list prices constitutes the wholesale transfer price payable by Meridian to Lumos and does not constitute, and should not be construed as, any restriction on Meridian's ability to determine its downstream pricing to end users. Meridian remains free to apply any margin, discount, or pricing strategy it deems commercially appropriate.

6. Sub-Distribution Rights (Section 2.4)

The revised draft maintains the requirement that Meridian obtain Lumos's prior written consent before appointing any sub-distributors or sub-resellers, such consent not to be unreasonably withheld, conditioned, or delayed. This consent requirement is important to Lumos's ability to maintain quality control, brand integrity, and compliance oversight across the channel.

The following sub-distributors are pre-approved in the Agreement and will not require separate consent at the time of closing:

(a) Meridian Data Solutions UK Ltd — authorized territory: United Kingdom and Ireland; Companies House Registration No. 12847391; Director: Katarina Voss; and

(b) Meridian Data Solutions SARL — authorized territory: France, Belgium, Luxembourg, and French-speaking Switzerland; SIREN 912 483 057; Gérant: Jean-Philippe Moreau.

Separate sub-distributor consent letters, in substantially the form attached as Exhibit F to the Agreement, will be prepared for execution at closing. Each such consent letter will incorporate by reference the material terms and conditions of the Agreement and will require the applicable sub-distributor to comply with all obligations applicable to Meridian under the Agreement, including the anti-corruption, sanctions, export control, and data protection provisions.

7. Term and Termination (Section 12)

The five-year initial term commencing April 1, 2024 and expiring March 31, 2029, with automatic successive one-year renewal periods, remains as drafted. The key termination provisions are summarized below:

(a) Non-Renewal. Either party may elect not to renew the Agreement by providing written notice of non-renewal no fewer than ninety (90) days prior to the expiration of the then-current term. For the initial term, this means that a notice of non-renewal must be delivered on or before December 31, 2028.

(b) Termination for Convenience. Either party may terminate the Agreement for convenience upon one hundred eighty (180) days' prior written notice to the other party, subject to the wind-down obligations set forth in Section 12.5.

(c) Termination for Cause. Either party may terminate the Agreement upon written notice following a material breach by the other party that remains uncured for a period of thirty (30) days after receipt of written notice specifying the breach in reasonable detail. The Agreement may be terminated immediately, without opportunity to cure, upon the occurrence of (i) an insolvency event (as defined in Section 12.3(b)), (ii) a violation of the sanctions or export control provisions set forth in Section 14, or (iii) a violation of the anti-corruption provisions set forth in Section 13.

(d) Post-Termination Fulfillment. Following the expiration or termination of the Agreement for any reason, Meridian shall be entitled to fulfill existing end-user subscription agreements for a period of up to twelve (12) months following the effective date of expiration or termination, subject to the terms and conditions of the Agreement (including the payment obligations and reporting requirements) continuing to apply during such fulfillment period.

(e) Escrow Holdback Release. Unreleased escrow holdback funds deposited with Evergreen Trust Company, N.A. shall be released to Meridian twelve (12) months after the effective date of expiration or termination, net of any amounts subject to pending, unresolved indemnification claims. Any amounts retained on account of pending claims shall be released promptly upon the final resolution of such claims.

Lumos has accepted the minor wording changes that Meridian proposed regarding the wind-down mechanics in Section 12.5, including clarification of the process for transitioning end-user relationships and the allocation of responsibility for customer communications during the wind-down period. These changes are reflected in the blackline.

8. Anti-Corruption, Sanctions, and Export Control (Sections 13 and 14)

The compliance representations and covenants regarding the United States Foreign Corrupt Practices Act of 1977 (the "FCPA"), the United Kingdom Bribery Act 2010, and applicable local anti-corruption laws in the jurisdictions in which Meridian and its sub-distributors operate are retained in their current form. Meridian's obligation to maintain adequate anti-corruption compliance policies and training programs, and to certify compliance annually, remains unchanged.

The export control provisions — covering the Export Administration Regulations ("EAR"), the EU Dual-Use Regulation (Regulation (EU) 2021/821), and applicable OFAC sanctions programs — are likewise retained without modification. The restricted territory list (comprising Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk, and Luhansk regions of Ukraine) remains unchanged. Meridian is prohibited from directly or indirectly exporting, re-exporting, or otherwise transferring any Lumos products, technology, or technical data to any person, entity, or destination on the restricted territory list or to any person or entity designated on any applicable restricted party list (including the OFAC SDN List, the BIS Entity List, and the EU Consolidated Financial Sanctions List).

The immediate termination right for any violation of the sanctions or export control provisions has been maintained. As noted above, this termination right is not subject to a cure period.

9. Governing Law and Dispute Resolution (Section 17)

The governing law provision, which provides that the Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict-of-laws principles, is retained in the revised draft.

The dispute resolution mechanism remains binding arbitration administered by JAMS in Los Angeles, California, with the number of arbitrators to be determined in accordance with the JAMS Comprehensive Arbitration Rules and Procedures. A carve-out is maintained for actions seeking injunctive or other equitable relief, which may be brought in the state or federal courts located in Santa Clara County, California, and each party irrevocably consents to the personal jurisdiction of such courts for purposes of any such action.

Lumos has considered Meridian's proposal to shift to ICC arbitration seated in Frankfurt, Germany, but has declined to accept that proposal. Lumos's preference for JAMS arbitration in Los Angeles reflects both familiarity with the forum and the availability of arbitrators with relevant expertise in technology licensing and channel distribution disputes. We would note that JAMS arbitration is widely recognized and enforced internationally under the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958), and we do not anticipate any enforceability concerns.

Other Accepted Changes

In addition to the positions outlined above, we note that the revised draft incorporates numerous drafting clarifications and non-substantive editorial changes proposed by Meridian, which Lumos has accepted. These include conforming cross-references, clarifying defined terms, and correcting minor typographical errors throughout the Agreement.

The following additional substantive revisions have also been accepted:

(a) Trademark License Provisions (Exhibit D). The trademark license provisions have been updated to incorporate additional specificity around the co-branded marketing material approval process, as requested by Meridian. The revised provisions now set forth a clear timeline and procedure for the submission, review, and approval (or rejection) of co-branded materials, including a deemed-approval mechanism if Lumos fails to respond within fifteen (15) business days of submission.

(b) Service Level Agreement (Exhibit E). The SLA language has been refined to confirm the 99.95% uptime commitment with specific reference to the Stratos Cloud Services AG Frankfurt data center, and to clarify the methodology for calculating downtime and the remedies available to Meridian (in the form of service credits) in the event that the uptime commitment is not met in any given calendar month.

(c) Insurance Requirements (Section 15.2). The insurance requirements section now cross-references Meridian's required coverages in greater detail, as follows:

(i) Commercial General Liability: not less than €5,000,000 per occurrence;

(ii) Professional Indemnity (Errors & Omissions): not less than €10,000,000 per occurrence; and

(iii) Cyber Liability (including network security and privacy liability): not less than €5,000,000 per occurrence.

All required coverages are to be evidenced by certificates of insurance issued by Rheinland Versicherung AG (or another insurer with an equivalent or better financial strength rating) and delivered to Lumos at or prior to closing.

Transfer Pricing Note

We wish to bring to your attention that Lumos's transfer pricing advisor, Caldwell & Pryce Advisory LLC (Ingrid Svensson, Managing Director), is currently preparing a transfer pricing memorandum supporting the arm's-length nature of the thirty percent (30%) reseller discount under the Comparable Uncontrolled Price ("CUP") method, consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022 edition). The memorandum will document the economic analysis undertaken and the comparability factors considered in establishing that the reseller discount reflects arm's-length pricing for the functions performed, assets used, and risks assumed by Meridian.

The transfer pricing memorandum is expected to be finalized by March 15, 2024. Lumos will share relevant conclusions with Meridian to the extent appropriate and necessary for Meridian's own tax compliance and documentation needs, subject to any applicable privilege or confidentiality considerations.

Request for Comments and Next Steps

We respectfully request that Meridian provide its second markup of the revised draft by no later than Monday, March 11, 2024. Adhering to this timeline will enable the parties to target finalization of the Agreement during the week of March 18, 2024, with signing and closing targeted for the week of March 22, 2024. The effective date of Meridian's reseller rights under the Agreement is April 1, 2024, and maintaining the proposed schedule will ensure that all conditions precedent to closing (including execution of the escrow agreement, delivery of insurance certificates, and completion of sub-distributor consent letters) can be satisfied in advance of that date.

We remain willing and available to schedule a call between you, Laura Pfeiffer, and our team to discuss any remaining issues, whether on the points addressed in this letter or on any other provisions of the revised draft. Please do not hesitate to suggest a time that is convenient for you and your colleagues.

A copy of the revised draft — in both clean and blackline formats — is enclosed with this letter in electronic form. Should you require hard copies or have any difficulty accessing the enclosed documents, please let us know. Howard Bellamy can be reached at the firm's address set forth above, by telephone at (213) 555-7412, or by email at h.bellamy@calderwoodharkness.com.

With your concurrence, we would propose to copy Dr. Anneliese Brandt, General Counsel of Meridian, on future correspondence in this matter for her reference. Please let us know if you have any preference in that regard.

We thank you for your continued collegiality and look forward to bringing this transaction to a successful conclusion.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Calderwood & Harkness LLP 801 South Figueroa Street, Suite 4200 Los Angeles, CA 90017 Direct: (213) 555-7412

Email: h.bellamy@calderwoodharkness.com

Enclosures:

1. Revised Draft — Channel Reseller Program Agreement (Clean), dated March 4, 2024

2. Blackline of Revised Draft Against Initial Draft (February 12, 2024)

cc (via email):

Daniel Ostroff, VP, Legal & Compliance, Lumos Analytics Inc. (d.ostroff@lumosanalytics.com) Leila Nazari, Associate, Calderwood & Harkness LLP (l.nazari@calderwoodharkness.com) Robert Jansen, Associate, Calderwood & Harkness LLP (r.jansen@calderwoodharkness.com) Laura Pfeiffer, Associate, Kessler Hartmann Rechtsanwälte PartG mbB (l.pfeiffer@kesslerhartmann.de)

This letter and any accompanying documents are confidential, may be protected by the attorney-client privilege and/or work product doctrine, and are intended solely for the use of the individual or entity to whom they are addressed. If you are not the intended recipient, please notify the sender immediately and delete this communication. Any unauthorized review, use, disclosure, or distribution is 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 (Initial Term)	$30,000,000

CALDERWOOD & HARKNESS LLP Attorneys at Law
801 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7400 Facsimile: (213) 555-7401 www.calderwoodharkness.com
March 4, 2024
VIA EMAIL (s.kessler@kesslerhartmann.de)
Dr. Stefan Kessler, Partner Kessler Hartmann Rechtsanwälte PartG mbB Maximilianstraße 35 80539 München Germany
Re: Revised Draft — Channel Reseller Program Agreement between Lumos Analytics Inc. and Meridian Data Solutions GmbH Matter No. 1008-00010
Dear Dr. Kessler:
On behalf of our client, Lumos Analytics Inc. ("Lumos"), we are pleased to transmit herewith the revised draft of the Channel Reseller Program Agreement (the "Agreement") between Lumos and Meridian Data Solutions GmbH ("Meridian"), dated March 4, 2024. This revised draft reflects Lumos's careful and thorough consideration of the first markup submitted by Meridian on February 23, 2024. The revised draft is provided in both clean format and blackline format (redlined against the initial draft circulated on February 12, 2024) for your convenience in reviewing the changes made. We would note at the outset that this draft remains subject to further review and approval by Lumos's management team, including Daniel Ostroff (VP, Legal & Compliance) and Tomoko Ishikawa (SVP, Global Partnerships), and Lumos reserves the right to propose additional modifications as that review is completed.
While Lumos has endeavored to accommodate a significant number of Meridian's proposed revisions — and has, as described further below, accepted numerous drafting clarifications and non-substantive edits — several positions reflected in Meridian's markup cannot be accepted. Set forth below is a summary of Lumos's positions on the principal open issues, together with a brief explanation of the rationale underlying each position. We trust this summary will be helpful as you and your colleagues evaluate the revised draft.
1. Indemnification Cap (Section 11)
Lumos's position is that the aggregate indemnification liability cap of $15,000,000 — representing fifty percent (50%) of the Total Contract Value of $30,000,000 over the five-year initial term — is appropriate and market-standard for a transaction of this size and nature. We have reviewed comparable channel reseller arrangements in the enterprise software sector and believe this cap falls well within the range of customary practice. Meridian's markup proposed a reduction to this cap; however, Lumos has maintained the $15,000,000 figure in the revised draft and respectfully declines to reduce it.
The existing carve-outs for liabilities arising from (i) willful misconduct or fraud, (ii) breaches of the confidentiality obligations set forth in Section 9, and (iii) intellectual property infringement — all of which remain uncapped — have been retained in the revised draft. Lumos views these carve-outs as both customary and necessary to ensure adequate protection for claims that, by their nature, should not be subject to an artificial ceiling.
The indemnification notice period remains at thirty (30) days following a party's becoming aware of a claim giving rise to an indemnification obligation. The indemnifying party retains the right to assume control of the defense of any such claim, and consent to settlement by the indemnified party shall not be unreasonably withheld, conditioned, or delayed. These provisions are unchanged from the initial draft and reflect a balanced allocation of procedural rights.
Additionally, the five percent (5%) escrow holdback mechanism with Evergreen Trust Company, N.A. for indemnification claims is maintained as drafted. Under this mechanism, during Year 1 of the initial term, a quarterly holdback of $56,250 (calculated as 5% of the quarterly Minimum Annual Commitment of $1,125,000) will be deposited into the escrow account. The escrow agreement, to be entered into as a condition to closing, will govern the terms of release and disbursement of holdback funds. Lumos believes this mechanism provides Meridian with meaningful security while avoiding the administrative complexity of alternative arrangements such as letters of credit or parent company guarantees.
2. Non-Exclusivity (Section 2.2)
Lumos has declined Meridian's request for exclusive reseller rights in the EMEA Territory. The Agreement remains structured as a non-exclusive arrangement, under which Lumos retains the unfettered right to appoint additional resellers, distributors, or channel partners in the EMEA Territory and to sell directly to end users within the EMEA Territory through its own sales organization. This is a fundamental commercial term for Lumos and is not subject to further negotiation.
Beyond the commercial rationale, the non-exclusive structure is also important from a regulatory perspective. As we have discussed separately, an exclusive territory allocation of the type Meridian has proposed would raise significant concerns under Article 101 of the Treaty on the Functioning of the European Union ("TFEU") and would likely fall outside the safe harbor provided by the Vertical Block Exemption Regulation (EU) 2022/720 (the "VBER"), particularly in light of the aggregate value of the arrangement and Lumos's market position in the analytics software sector. Lumos's regulatory counsel has confirmed that the non-exclusive structure as drafted is consistent with the VBER and minimizes the risk of challenge by competition authorities in the European Union or the United Kingdom.
That said, Lumos is open to discussing performance-based incentives or preferential pricing tiers that may address Meridian's underlying commercial concerns — including enhanced margin structures, marketing development funds, or priority access to new product releases — while preserving the non-exclusive nature of the arrangement. We would welcome a call with you and your client to explore these options in greater detail.
3. Minimum Annual Commitment (MAC) Schedule (Section 4.1 and Exhibit A)
Lumos has maintained the Minimum Annual Commitment schedule as proposed in the initial draft, which is summarized in the table below:
Meridian's markup requested a reduced Year 1 commitment and a flatter ramp trajectory across the initial term. Lumos has considered this request carefully but respectfully declines. The Year 1 commitment of $4,500,000 already reflects a meaningful ramp discount of twenty-five percent (25%) from the annualized contract value of $6,000,000 (i.e., $30,000,000 divided by five years), and the graduated ramp structure is designed to allow Meridian a reasonable period in which to develop its sales pipeline and establish market presence with Lumos's product suite before reaching the steady-state commitment level in Years 4 and 5.
Payment terms remain Net 45 days from the date of Lumos's invoice for each quarterly installment. Late payment interest of 1.5% per month (equivalent to 18% per annum), calculated on a simple interest basis on the outstanding balance from the due date until the date of payment in full, has been retained. All amounts payable under the Agreement are denominated in United States dollars (USD), and Meridian continues to bear the foreign exchange risk as between the euro (EUR) and USD. Lumos has not accepted Meridian's proposal to introduce a currency adjustment mechanism or to denominate any portion of the payment obligations in euros.
4. Data Localization Requirements (Sections 7.3–7.5 and Exhibit C)
Lumos has accepted Meridian's request for a contractual commitment to maintain EMEA customer data on EU-based cloud infrastructure. This was a point of particular importance to Meridian, and Lumos has worked with its infrastructure team to ensure that the revised draft addresses Meridian's concerns in a manner that is both operationally feasible and legally robust.
The revised draft now expressly provides that all EMEA customer data will be hosted at the Frankfurt, Germany data center operated by Stratos Cloud Services AG (headquarters: Bahnhofstrasse 42, 8001 Zürich, Switzerland). This data center is a Tier IV facility with ISO 27001, ISO 27017, and ISO 27018 certifications, and its use is consistent with the data residency expectations of Meridian's EMEA customer base.
The Data Processing Agreement attached as Exhibit C to the Agreement has been updated to incorporate the Standard Contractual Clauses (Commission Implementing Decision (EU) 2021/914, Module Two — Controller-to-Processor) for any cross-border transfers of personal data from the European Economic Area ("EEA") or the United Kingdom to the United States, consistent with the requirements of the General Data Protection Regulation (Regulation (EU) 2016/679) (the "GDPR") and the UK GDPR (as supplemented by the International Data Transfer Addendum to the EU Commission Standard Contractual Clauses issued by the UK Information Commissioner's Office). The transfer impact assessment referenced in Clause 14 of the Standard Contractual Clauses has been completed by Lumos and is available for Meridian's review upon request.
Sub-processor changes remain subject to thirty (30) days' prior written notice to Meridian, with a right of objection on reasonable grounds. A pre-approved sub-processor list is set forth in Annex III to the DPA, and any additions to or changes in that list will be subject to the notice and objection procedure described therein.
We would also note that Lumos's UK and EU regulatory counsel, Thornbridge Whitaker LLP (specifically, Alistair Drummond, Partner, Data Privacy & Regulatory), has reviewed and confirmed the adequacy of the data localization and data transfer provisions in the revised draft, including the DPA and the Standard Contractual Clauses incorporated therein.
5. Resale Price Maintenance — Clarification (Section 4.4)
To address a concern raised in Meridian's markup regarding the potential for the pricing structure to be construed as resale price maintenance, the revised draft now includes express language confirming that Meridian is free to set its own resale prices to end users at its sole discretion. Lumos may provide recommended resale prices as non-binding guidance only, and Meridian is under no obligation to adhere to any such recommendations. This language is intended to ensure full consistency with the requirements of the VBER and applicable EU and national competition law, under which resale price maintenance constitutes a "by object" restriction of competition and a hardcore restriction that would cause the entire arrangement to fall outside the safe harbor of the VBER.
For the avoidance of doubt, the thirty percent (30%) reseller discount off Lumos's published EMEA list prices constitutes the wholesale transfer price payable by Meridian to Lumos and does not constitute, and should not be construed as, any restriction on Meridian's ability to determine its downstream pricing to end users. Meridian remains free to apply any margin, discount, or pricing strategy it deems commercially appropriate.
6. Sub-Distribution Rights (Section 2.4)
The revised draft maintains the requirement that Meridian obtain Lumos's prior written consent before appointing any sub-distributors or sub-resellers, such consent not to be unreasonably withheld, conditioned, or delayed. This consent requirement is important to Lumos's ability to maintain quality control, brand integrity, and compliance oversight across the channel.
The following sub-distributors are pre-approved in the Agreement and will not require separate consent at the time of closing:
(a) Meridian Data Solutions UK Ltd — authorized territory: United Kingdom and Ireland; Companies House Registration No. 12847391; Director: Katarina Voss; and
(b) Meridian Data Solutions SARL — authorized territory: France, Belgium, Luxembourg, and French-speaking Switzerland; SIREN 912 483 057; Gérant: Jean-Philippe Moreau.
Separate sub-distributor consent letters, in substantially the form attached as Exhibit F to the Agreement, will be prepared for execution at closing. Each such consent letter will incorporate by reference the material terms and conditions of the Agreement and will require the applicable sub-distributor to comply with all obligations applicable to Meridian under the Agreement, including the anti-corruption, sanctions, export control, and data protection provisions.
7. Term and Termination (Section 12)
The five-year initial term commencing April 1, 2024 and expiring March 31, 2029, with automatic successive one-year renewal periods, remains as drafted. The key termination provisions are summarized below:
(a) Non-Renewal. Either party may elect not to renew the Agreement by providing written notice of non-renewal no fewer than ninety (90) days prior to the expiration of the then-current term. For the initial term, this means that a notice of non-renewal must be delivered on or before December 31, 2028.
(b) Termination for Convenience. Either party may terminate the Agreement for convenience upon one hundred eighty (180) days' prior written notice to the other party, subject to the wind-down obligations set forth in Section 12.5.
(c) Termination for Cause. Either party may terminate the Agreement upon written notice following a material breach by the other party that remains uncured for a period of thirty (30) days after receipt of written notice specifying the breach in reasonable detail. The Agreement may be terminated immediately, without opportunity to cure, upon the occurrence of (i) an insolvency event (as defined in Section 12.3(b)), (ii) a violation of the sanctions or export control provisions set forth in Section 14, or (iii) a violation of the anti-corruption provisions set forth in Section 13.
(d) Post-Termination Fulfillment. Following the expiration or termination of the Agreement for any reason, Meridian shall be entitled to fulfill existing end-user subscription agreements for a period of up to twelve (12) months following the effective date of expiration or termination, subject to the terms and conditions of the Agreement (including the payment obligations and reporting requirements) continuing to apply during such fulfillment period.
(e) Escrow Holdback Release. Unreleased escrow holdback funds deposited with Evergreen Trust Company, N.A. shall be released to Meridian twelve (12) months after the effective date of expiration or termination, net of any amounts subject to pending, unresolved indemnification claims. Any amounts retained on account of pending claims shall be released promptly upon the final resolution of such claims.
Lumos has accepted the minor wording changes that Meridian proposed regarding the wind-down mechanics in Section 12.5, including clarification of the process for transitioning end-user relationships and the allocation of responsibility for customer communications during the wind-down period. These changes are reflected in the blackline.
8. Anti-Corruption, Sanctions, and Export Control (Sections 13 and 14)
The compliance representations and covenants regarding the United States Foreign Corrupt Practices Act of 1977 (the "FCPA"), the United Kingdom Bribery Act 2010, and applicable local anti-corruption laws in the jurisdictions in which Meridian and its sub-distributors operate are retained in their current form. Meridian's obligation to maintain adequate anti-corruption compliance policies and training programs, and to certify compliance annually, remains unchanged.
The export control provisions — covering the Export Administration Regulations ("EAR"), the EU Dual-Use Regulation (Regulation (EU) 2021/821), and applicable OFAC sanctions programs — are likewise retained without modification. The restricted territory list (comprising Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk, and Luhansk regions of Ukraine) remains unchanged. Meridian is prohibited from directly or indirectly exporting, re-exporting, or otherwise transferring any Lumos products, technology, or technical data to any person, entity, or destination on the restricted territory list or to any person or entity designated on any applicable restricted party list (including the OFAC SDN List, the BIS Entity List, and the EU Consolidated Financial Sanctions List).
The immediate termination right for any violation of the sanctions or export control provisions has been maintained. As noted above, this termination right is not subject to a cure period.
9. Governing Law and Dispute Resolution (Section 17)
The governing law provision, which provides that the Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict-of-laws principles, is retained in the revised draft.
The dispute resolution mechanism remains binding arbitration administered by JAMS in Los Angeles, California, with the number of arbitrators to be determined in accordance with the JAMS Comprehensive Arbitration Rules and Procedures. A carve-out is maintained for actions seeking injunctive or other equitable relief, which may be brought in the state or federal courts located in Santa Clara County, California, and each party irrevocably consents to the personal jurisdiction of such courts for purposes of any such action.
Lumos has considered Meridian's proposal to shift to ICC arbitration seated in Frankfurt, Germany, but has declined to accept that proposal. Lumos's preference for JAMS arbitration in Los Angeles reflects both familiarity with the forum and the availability of arbitrators with relevant expertise in technology licensing and channel distribution disputes. We would note that JAMS arbitration is widely recognized and enforced internationally under the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958), and we do not anticipate any enforceability concerns.
Other Accepted Changes
In addition to the positions outlined above, we note that the revised draft incorporates numerous drafting clarifications and non-substantive editorial changes proposed by Meridian, which Lumos has accepted. These include conforming cross-references, clarifying defined terms, and correcting minor typographical errors throughout the Agreement.
The following additional substantive revisions have also been accepted:
(a) Trademark License Provisions (Exhibit D). The trademark license provisions have been updated to incorporate additional specificity around the co-branded marketing material approval process, as requested by Meridian. The revised provisions now set forth a clear timeline and procedure for the submission, review, and approval (or rejection) of co-branded materials, including a deemed-approval mechanism if Lumos fails to respond within fifteen (15) business days of submission.
(b) Service Level Agreement (Exhibit E). The SLA language has been refined to confirm the 99.95% uptime commitment with specific reference to the Stratos Cloud Services AG Frankfurt data center, and to clarify the methodology for calculating downtime and the remedies available to Meridian (in the form of service credits) in the event that the uptime commitment is not met in any given calendar month.
(c) Insurance Requirements (Section 15.2). The insurance requirements section now cross-references Meridian's required coverages in greater detail, as follows:
(i) Commercial General Liability: not less than €5,000,000 per occurrence;
(ii) Professional Indemnity (Errors & Omissions): not less than €10,000,000 per occurrence; and
(iii) Cyber Liability (including network security and privacy liability): not less than €5,000,000 per occurrence.
All required coverages are to be evidenced by certificates of insurance issued by Rheinland Versicherung AG (or another insurer with an equivalent or better financial strength rating) and delivered to Lumos at or prior to closing.
Transfer Pricing Note
We wish to bring to your attention that Lumos's transfer pricing advisor, Caldwell & Pryce Advisory LLC (Ingrid Svensson, Managing Director), is currently preparing a transfer pricing memorandum supporting the arm's-length nature of the thirty percent (30%) reseller discount under the Comparable Uncontrolled Price ("CUP") method, consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022 edition). The memorandum will document the economic analysis undertaken and the comparability factors considered in establishing that the reseller discount reflects arm's-length pricing for the functions performed, assets used, and risks assumed by Meridian.
The transfer pricing memorandum is expected to be finalized by March 15, 2024. Lumos will share relevant conclusions with Meridian to the extent appropriate and necessary for Meridian's own tax compliance and documentation needs, subject to any applicable privilege or confidentiality considerations.
Request for Comments and Next Steps
We respectfully request that Meridian provide its second markup of the revised draft by no later than Monday, March 11, 2024. Adhering to this timeline will enable the parties to target finalization of the Agreement during the week of March 18, 2024, with signing and closing targeted for the week of March 22, 2024. The effective date of Meridian's reseller rights under the Agreement is April 1, 2024, and maintaining the proposed schedule will ensure that all conditions precedent to closing (including execution of the escrow agreement, delivery of insurance certificates, and completion of sub-distributor consent letters) can be satisfied in advance of that date.
We remain willing and available to schedule a call between you, Laura Pfeiffer, and our team to discuss any remaining issues, whether on the points addressed in this letter or on any other provisions of the revised draft. Please do not hesitate to suggest a time that is convenient for you and your colleagues.
A copy of the revised draft — in both clean and blackline formats — is enclosed with this letter in electronic form. Should you require hard copies or have any difficulty accessing the enclosed documents, please let us know. Howard Bellamy can be reached at the firm's address set forth above, by telephone at (213) 555-7412, or by email at h.bellamy@calderwoodharkness.com.
With your concurrence, we would propose to copy Dr. Anneliese Brandt, General Counsel of Meridian, on future correspondence in this matter for her reference. Please let us know if you have any preference in that regard.
We thank you for your continued collegiality and look forward to bringing this transaction to a successful conclusion.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Calderwood & Harkness LLP 801 South Figueroa Street, Suite 4200 Los Angeles, CA 90017 Direct: (213) 555-7412
Email: h.bellamy@calderwoodharkness.com
Enclosures:
1. Revised Draft — Channel Reseller Program Agreement (Clean), dated March 4, 2024
2. Blackline of Revised Draft Against Initial Draft (February 12, 2024)
cc (via email):
Daniel Ostroff, VP, Legal & Compliance, Lumos Analytics Inc. (d.ostroff@lumosanalytics.com) Leila Nazari, Associate, Calderwood & Harkness LLP (l.nazari@calderwoodharkness.com) Robert Jansen, Associate, Calderwood & Harkness LLP (r.jansen@calderwoodharkness.com) Laura Pfeiffer, Associate, Kessler Hartmann Rechtsanwälte PartG mbB (l.pfeiffer@kesslerhartmann.de)
This letter and any accompanying documents are confidential, may be protected by the attorney-client privilege and/or work product doctrine, and are intended solely for the use of the individual or entity to whom they are addressed. If you are not the intended recipient, please notify the sender immediately and delete this communication. Any unauthorized review, use, disclosure, or distribution is 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 (Initial Term) | $30,000,000

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts