Contract analysis

I. Executive Summary This memorandum analyzes the availability, mechanics, benefits, and risks of making a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), in connection with the proposed acquisition by Ardent Capital Partners III LP ("Ardent" or "Buyer") of one hundred percent (100%) of the outstanding equity of Luminex Systems Holdings Inc. ("Luminex Holdings,"

II. Transaction Overview A. Parties and Structure The Transaction involves the following principal parties and entities: Buyer. Ardent Capital Partners III LP ("Ardent" or "Fund III") is a Delaware limited partnership, employer identification number 87-3941026, with its principal offices located at 399 Park Avenue, 42nd Floor, New York, New York 10022. Ardent's general partner is Ardent Capital GP III LLC, a Delaware

III. Legal Framework — Section 338(h)(10) A. Statutory and Regulatory Overview

Section 338(a) of the Code provides, generally, that if a corporation (the "purchasing corporation") makes a "qualified stock purchase" (as defined in Section 338(d)(3)) of another corporation (the "target"), the purchasing corporation may elect to have the target treated as having sold all of its assets at the close of the "acquisition date" at fair market value in a single transaction, and as a new corporation that

Section 338(h)(10) provides for a specialized joint election that may be made where the target is a member of a selling consolidated group or an S corporation. Unlike the general Section 338(a) election (sometimes referred to as a "338(g)" election), the Section 338(h)(10) election operates in a fundamentally different manner: it treats the sale of the target's stock as if it had never occurred, and instead treats ol

1. Qualified Stock Purchase (QSP). The acquisition must constitute a "qualified stock purchase" within the meaning of Section 338(d)(3). A QSP requires that the purchasing corporation acquire, by "purchase" (as defined in Section 338(h)(3)), stock of the target possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the

2. Target Status. The target must be a domestic corporation (or, in the case of the selling group requirement, an S corporation). Luminex Holdings is confirmed to be a domestic corporation, organized under the laws of the State of Delaware with EIN 86-2547193. Luminex Holdings has elected to be treated as a C corporation for federal income tax purposes since its formation in 2021 and has never elected S corporation s

3. Selling Group Requirement. Under Section 338(h)(10)(A), the joint election is available where the target is either (a) a member of a "selling consolidated group" (i.e., the target is a member of an affiliated group filing a consolidated federal income tax return and the common parent of which disposes of the target's stock) or (b) an S corporation. Here, the majority selling shareholders are Ridgeline Growth Equit

4. Purchasing Corporation. The purchasing corporation must be a "corporation" for federal income tax purposes. Ardent Apex Holdings Inc. (through its wholly owned subsidiary, Merger Sub) is a Delaware corporation, EIN 93-2178435. Apex Holdings is confirmed to be classified as a corporation for federal income tax purposes and satisfies this requirement.

5. Impact of Reverse Triangular Merger Structure. The Transaction is structured as a reverse triangular merger in which Merger Sub merges with and into Luminex Holdings, with Luminex Holdings surviving as a wholly owned subsidiary of Apex Holdings. Under Revenue Ruling 90-95 and Treasury Regulation § 1.338-3(d), a reverse triangular merger may be treated as a qualified stock purchase for purposes of Section 338, prov

6. Management Rollover Mechanics. The management rollover is a critical structural consideration for the Section 338(h)(10) election. Approximately $405,020,000 of the total $2,800,000,000 equity value represents shares of Luminex Holdings common stock that will be contributed by rollover participants (Dr. Stefan Kessler, Annelise Gruber, Dr. Markus Vogt, and other management and key employees) to Apex Holdings in ex

IV. Purchase-Price Allocation and Basis Step-Up Analysis A. Aggregate Deemed Sale Price (ADSP) and Adjusted Grossed-Up Basis (AGUB) The economic consequences of the Section 338(h)(10) election are driven by the computation of ADSP and AGUB, which determine, respectively, the amount of gain recognized by old target on the deemed asset sale and the tax basis of new target's assets going forward. ADSP. Under Treasury Re

V. Impact on Sellers A. Treatment of Selling Shareholders Under the Section 338(h)(10) election, as described in Section III.D above, old target (Luminex Holdings) is treated as having sold all of its assets in a single deemed asset sale at the close of the acquisition date, followed by a deemed liquidation in which the proceeds of the deemed sale are distributed to the selling shareholders. Gain or loss on the deeme

VI. Interaction with Foreign Subsidiaries A. Luminex Systems AG (Swiss) The Section 338(h)(10) election applies at the Luminex Holdings level—the old target—and encompasses the deemed sale of all of old target's assets, including old target's stock in Luminex Systems AG. Luminex AG is a "controlled foreign corporation" (CFC) within the meaning of Section 957 of the Code because it is a foreign corporation more than f

Section 1248 Recharacterization. Under Section 1248 of the Code, gain recognized by a United States shareholder on the sale or exchange of CFC stock is recharacterized as a dividend to the extent of the CFC's accumulated earnings and profits (E&P) attributable to the stock sold. In the context of the Section 338(h)(10) election, the gain on the deemed sale of Luminex AG stock will be subject to Section 1248 recharact

Section 245A Dividends-Received Deduction. However, the Section 1248 dividend recharacterization may be substantially mitigated by the application of Section 245A of the Code, which provides a one hundred percent (100%) dividends-received deduction (DRD) for the "foreign-source portion" of dividends received by a domestic corporation from a "specified 10-percent owned foreign corporation." Old target (Luminex Holding

VII. Comparison of Alternatives In evaluating the Section 338(h)(10) election, it is useful to compare the election against the available structural alternatives and their respective tax consequences. We consider three alternatives: (A) no election (stock acquisition treatment), (B) a unilateral Section 338(g) election, and (C) an actual asset acquisition. A. No Election (Stock Acquisition Treatment) If Ardent does n