PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP personnel assigned to Matter No. 1001-00004. Do not distribute externally without prior approval of the Responsible Partner.
MEMORANDUM
TO: James Prentice, Responsible Partner Sandra Tung, Billing Partner
FROM: Ryan Kowalski, Lead Associate
DATE: March 10, 2025
RE: Staffing Plan & Budget Estimate — Ardent Capital Partners III LP Acquisition of Luminex Systems Holdings Inc.
MATTER NO.: 1001-00004
CLIENT: Ardent Capital Partners III LP 399 Park Avenue, 42nd Floor New York, NY 10022
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I. Executive Summary
The purpose of this memorandum is to set forth the proposed staffing plan, workstream assignments, and estimated budget for Calderwood & Harkness LLP's representation of Ardent Capital Partners III LP ("Ardent Capital" or the "Buyer") in its proposed acquisition of Luminex Systems Holdings Inc. ("Luminex Holdings" or the "Target") for an aggregate equity value of $2,800,000,000 (the "Transaction"). The Transaction is structured as a reverse triangular merger under the Delaware General Corporation Law, pursuant to which a newly formed merger subsidiary of the Buyer's intermediate holding company will merge with and into Luminex Holdings, with Luminex Holdings surviving as a wholly owned subsidiary of the Buyer's holding company.
The engagement was formally opened on March 10, 2025, following execution of the engagement letter between Calderwood & Harkness LLP and Ardent Capital Partners III LP. The parties are targeting execution of the Agreement and Plan of Merger (the "Merger Agreement") on or about March 24, 2025. Based on the anticipated regulatory timeline, including the filing of the premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), a voluntary joint notice with the Committee on Foreign Investment in the United States ("CFIUS"), and multiple foreign regulatory filings, the estimated closing date is in Q3 2025 (July–August 2025). The Merger Agreement will provide for an outside date of September 10, 2025, with an automatic extension to December 10, 2025 in the event of regulatory delays.
This Transaction presents a high degree of complexity across multiple dimensions. The Target operates through subsidiaries in five jurisdictions (the United States, Switzerland, Germany, the United Kingdom, and Singapore), which will necessitate coordination with local counsel in each jurisdiction outside the United States. The financing structure involves a senior secured credit facility, a mezzanine tranche with PIK toggle and warrant coverage, equity co-investment from two institutional co-investors, and a significant management rollover. On the regulatory front, the Transaction will require multiple filings, including under the HSR Act, with CFIUS, with the Swiss Competition Commission (WEKO) and SECO, with the German Bundeskartellamt, and under the EU Foreign Subsidies Regulation. There is a meaningful probability of an HSR Second Request due to the combined market share of approximately 25% in the procurement-automation SaaS market between Luminex Holdings (approximately 18%) and Ardent Capital's existing portfolio company, Vectis Solutions LLC (approximately 7%).
Ardent Capital has established a total estimated buyer transaction expenses budget of $62,000,000, inclusive of all legal, financial advisory, accounting, insurance, and regulatory filing costs. The estimated Calderwood & Harkness legal fees are set forth in detail in Section V below and range from $14,550,000 to $21,400,000, depending on regulatory outcomes and deal complexity.
This memorandum is organized as follows: Section II provides a detailed transaction overview; Section III identifies the principal legal workstreams; Section IV sets forth the proposed staffing plan, including core team members, anticipated additional resources, and local counsel; Section V presents the detailed fee estimate by workstream; Section VI summarizes the total buyer transaction expense budget; Section VII describes billing arrangements; Section VIII identifies key assumptions and risk factors that could affect the budget; Section IX addresses staffing governance and reporting protocols; and Section X addresses approval and distribution.
II. Transaction Overview
Set forth below is a summary of the principal terms and parties to the Transaction, as currently understood, for the purpose of informing staffing assignments and budget estimates.
Buyer. Ardent Capital Partners III LP is a Delaware limited partnership (Fund III, vintage 2023, with total committed capital of $12.5 billion). The general partner of Ardent Capital Partners III LP is Ardent Capital GP III LLC, a Delaware limited liability company. The managing partners of Ardent Capital are Theodore "Ted" Hargrove and Victoria Langford. The Buyer's investment team for this Transaction includes Marcus Ellison (Managing Director), Priya Chandrasekaran (Vice President), and David Ng (Chief Financial Officer).
Acquisition Vehicle. The Transaction will be consummated through two newly formed entities. Ardent Apex Holdings Inc. is a Delaware corporation incorporated on March 5, 2025, which will serve as the intermediate holding company and "Parent" under the Merger Agreement. Ardent Apex Merger Sub Inc. is a Delaware corporation incorporated on March 7, 2025, which will serve as the transitory merger subsidiary ("Merger Sub"). Merger Sub is a wholly owned subsidiary of Apex Holdings, and Apex Holdings is a wholly owned subsidiary of Ardent Capital Partners III LP (subject to co-investment and rollover equity to be issued at or prior to closing).
Target. Luminex Systems Holdings Inc. is a Delaware corporation (incorporated June 14, 2021) that serves as the U.S. intermediate holding company for a group of operating companies. The principal operating entity is Luminex Systems AG, a Swiss stock corporation (Aktiengesellschaft) organized under the laws of the Canton of Glenrock Assurance (CHE-284.391.057). The operational headquarters of the Luminex group are located at 2100 Reston Gateway Drive, Suite 800, Reston, VA 20191. Luminex Holdings was formed in connection with a 2021 reorganization in which the Swiss parent entity (Luminex Systems AG) was placed below a Delaware holding company to facilitate institutional investment and governance.
Target Subsidiaries. Luminex Holdings' corporate structure includes the following material subsidiaries, each of which will require diligence and, in certain cases, local counsel involvement:
• Luminex Systems AG — Canton of Glenrock Assurance, Switzerland (CHE-284.391.057); principal operating entity; holds global intellectual property.
• Luminex Systems Inc. — Delaware; U.S. operating subsidiary; employs the majority of U.S.-based personnel.
• Luminex Systems UK Ltd. — England and Wales (Company No. 12847362); UK sales, support, and limited development operations.
• Luminex Systems GmbH — Munich, Germany (HRB 247891); German sales, support, and development operations; subject to German works council requirements.
• Luminex Systems Pte. Ltd. — Singapore (UEN 201924781K); Asia-Pacific sales and support operations.
Structure. The Transaction is structured as a reverse triangular merger under Section 251 of the Delaware General Corporation Law. Merger Sub will merge with and into Luminex Holdings, with Luminex Holdings surviving as a wholly owned subsidiary of Apex Holdings. This structure has been selected to preserve Luminex Holdings' existing contracts, licenses, permits, and other arrangements by operation of law and to minimize the number of third-party consents required. Upon consummation of the merger, each outstanding share of Luminex Holdings common stock (other than rollover shares, treasury shares, and dissenting shares, if any) will be converted into the right to receive the per-share merger consideration.
Consideration. The aggregate equity value is $2,800,000,000, representing a per-share merger consideration of $20.00 based on 140,000,000 fully diluted shares of Luminex Holdings common stock. All consideration will be paid in cash, except for the management rollover equity described below (aggregate rollover value of $405,020,000). The implied enterprise value, after adjusting for target net debt and working capital, will be determined at closing pursuant to customary adjustment mechanisms.
Sellers. The principal selling shareholders and their respective ownership interests and estimated proceeds are as follows:
Tarvex Financials. Based on preliminary diligence materials provided by the Target, the key financial metrics for the fiscal year ended December 31, 2024 are as follows:
• Total Revenue: $487,000,000
• Annual Recurring Revenue (ARR): $441,000,000
• Professional Services Revenue: $46,000,000
• Adjusted EBITDA: $121,800,000 (25.0% margin)
• Global Headcount: approximately 4,200 employees (approximately 1,650 based in the United States)
The implied purchase price represents approximately 23.0x 2024 Adjusted EBITDA and approximately 6.3x 2024 ARR, consistent with recent comparable transactions in the enterprise procurement-automation SaaS sector.
Key Dates. The following key dates and milestones are currently anticipated:
III. Workstream Identification
Set forth below is an outline of the principal legal workstreams that Calderwood & Harkness will handle or coordinate in connection with the Transaction. Each workstream is described in sufficient detail to inform staffing assignments and budget estimation. The workstreams are interrelated, and staffing assignments will require close coordination among team members, as described further in Section IV.
A. Core M&A / Transaction Structuring
This workstream encompasses the principal transaction documentation and related corporate mechanics, including:
1. Agreement and Plan of Merger. Negotiation and drafting of the Merger Agreement, including representations and warranties, covenants (interim operating covenants, efforts covenants for regulatory approvals, cooperation covenants, access covenants), conditions to closing, termination provisions (including reverse termination fee and expense reimbursement mechanics), indemnification (to the extent not subsumed by R&W insurance), and related definitions and schedules. Calderwood & Harkness will prepare the initial Buyer's draft. We anticipate multiple rounds of negotiation with seller's counsel, Caldwell, Raines & Sheppard LLP (lead partner Patricia Okonkwo; associate Daniel Feinberg).
2. Disclosure Schedules. Preparation and negotiation of the Buyer's disclosure schedules to the Merger Agreement. While the Target will prepare its own disclosure schedules, Calderwood & Harkness will coordinate the Buyer's review and negotiation of the Target's schedules and will prepare the Buyer's schedules (principally relating to the organization and authority of Apex Holdings and Merger Sub, financing, and required regulatory filings).
3. Ancillary Corporate Documents. Preparation of the Certificate of Merger to be filed with the Secretary of State of the State of Delaware; the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of the surviving corporation; board resolutions and written consents of the sole stockholder of Merger Sub (Apex Holdings) and the sole stockholder of Apex Holdings (Ardent Capital Partners III LP, or such other equity holders as may hold equity at closing following co-investment and rollover).
4. No-Shop Compliance Procedures and Fiduciary-Out Monitoring. The Merger Agreement is expected to contain customary no-shop provisions governing the Target's conduct with respect to competing acquisition proposals. While the primary compliance obligation rests with the Target and its counsel, Calderwood & Harkness will advise the Buyer with respect to monitoring compliance, evaluating any "superior proposal" notifications received, and exercising matching rights.
5. Escrow Agreement. Negotiation and drafting of the Escrow Agreement with Continental Fiduciary Trust Company as escrow agent, providing for a $140,000,000 escrow fund (representing 5.0% of the aggregate equity value) for an 18-month post-closing period to support indemnification claims. The account reference is CFT-ESC-2025-7894. The escrow fund, together with the R&W insurance policy, will serve as the primary recovery mechanisms for any post-closing breach claims.
6. Paying Agent Agreement. Negotiation and drafting of the Paying Agent Agreement with Atlas Shareholder Services Inc. as paying agent, governing the exchange of Target shares for the per-share merger consideration and the processing of letters of transmittal.
7. Letter of Transmittal. Preparation of the form of letter of transmittal to be distributed to Target stockholders in connection with the exchange of their shares for merger consideration.
8. Closing Deliverables. Preparation of all Buyer-side closing deliverables, including officer's certificates, secretary's certificates, certified copies of organizational documents, good standing certificates for Apex Holdings and Merger Sub, the FIRPTA certificate, W-9 coordination for the paying agent, and other customary closing deliverables.
9. Funds Flow Preparation and Closing Mechanics. Coordination and preparation of the funds flow memorandum, detailing the sources and uses of funds at closing, wire transfer instructions, and the sequencing of all closing payments (including financing proceeds, equity contributions, rollover share exchanges, escrow deposits, expense payments, and paying agent funding).
10. Seller's Counsel Correspondence. Day-to-day correspondence and negotiation with seller's counsel at Caldwell, Raines & Sheppard LLP, led by Patricia Okonkwo and Daniel Feinberg, including turn management, issues lists, and resolution of open points.
11. Financial Advisor Coordination. Coordination with the Buyer's financial advisor, Whitfield Partners LLC (Christopher Brennan), including review of sources and uses, transaction economics, and financial advisor deliverables.
B. Due Diligence
This workstream encompasses the comprehensive legal due diligence investigation of the Target and its subsidiaries, including:
1. Due Diligence Request List. Preparation and delivery of a comprehensive due diligence request list to the Target and its counsel, covering all standard categories as well as deal-specific areas of focus (procurement-automation technology, government contracts, data security, international operations).
2. Corporate and Organizational Diligence. Review of the corporate organizational documents, minute books, stockholder records, equity capitalization tables, and organizational charts for Luminex Holdings and each of its subsidiaries across all five jurisdictions. This will include verification of the 2021 reorganization pursuant to which Luminex Systems AG was placed below Luminex Holdings as a Delaware holding company, and confirmation that all intercompany equity transfers and share exchanges were properly documented.
3. intellectual Property and Technology Diligence. Review of the Target's intellectual property portfolio, including the Luminex One platform (the principal SaaS product), registered and pending patents, trademarks, and copyrights, domain names, trade secrets, and know-how. This will include a review of open-source software usage and compliance, intercompany intellectual property licensing arrangements (currently structured as a 4.5% royalty on U.S. net revenues paid by Luminex Systems Inc. to Luminex Systems AG), and any third-party IP licenses material to the Target's business.
4. Material Contracts Review. Review of approximately 340 commercial contracts, with particular focus on the approximately 26 enterprise license agreements that contain change of control provisions. This review will be conducted in coordination with the change of control consent tracker described below and will also encompass vendor contracts, partnership agreements, reseller arrangements, and government contracts.
5. Change of Control / Consent Tracker. Preparation and maintenance of a comprehensive tracker identifying all contracts, licenses, permits, and other arrangements that contain change of control provisions, anti-assignment clauses, or consent requirements triggered by the Transaction. The tracker will categorize items by risk level (critical path, high priority, moderate priority, low risk) and will be used to coordinate consent solicitation efforts.
6. Employment and Benefits Diligence. Review of employment arrangements across all jurisdictions, including executive employment agreements, offer letter templates, employee handbooks, equity incentive plans (including option and RSU plans and award agreements), severance and change of control arrangements, Swiss social insurance compliance, German works council consultation requirements, and global benefit plans.
7. Litigation and Regulatory Diligence. Review of pending and threatened litigation, governmental investigations, consent decrees, and regulatory compliance matters, including data privacy and security compliance (GDPR, CCPA, PDPA) and government contract compliance.
8. Real Property and Leases Diligence. Review of the Target's real property interests, including the headquarters lease at 2100 Reston Gateway Drive, Suite 800, Reston, VA 20191, and office leases in Zürich, Munich, London, and Singapore. This will include review of lease terms, assignment and subletting restrictions, renewal options, and any change of control provisions.
C. Antitrust and Regulatory
This workstream encompasses all antitrust and regulatory filings and approvals required for the Transaction, including:
1. HSR Act Premerger Notification. Preparation and filing of the HSR premerger notification form with the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice ("DOJ"). The anticipated filing date is March 28, 2025. The assigned transaction number is HSR-20250328-4192. The filing fee, based on the 2025 HSR fee schedule and the $2.8 billion transaction value tier, is $2,390,000.
2. Second Request Preparation and Response Strategy. Based on the combined market share of approximately 25% in the procurement-automation SaaS market (Luminex Holdings approximately 18% and Vectis Solutions LLC approximately 7%), we anticipate a meaningful probability that the FTC will issue a Second Request for additional information and documentary material. We estimate that a Second Request, if issued, would likely be served on or about April 25, 2025 (approximately 28 days after the initial HSR filing). Calderwood & Harkness will lead the preparation of a Second Request response strategy, including custodian identification, document collection and review protocols, and compliance timeline.
3. FTC Timing Agreement Negotiation. If a Second Request is issued, Calderwood & Harkness will negotiate a timing agreement with FTC staff governing the process and timeline for substantial compliance, including any pull-and-refile strategy if appropriate.
4. Antitrust Risk Assessment and Remedies/Divestiture Analysis. Calderwood & Harkness will prepare a comprehensive antitrust risk assessment addressing the competitive overlap between Luminex Holdings and Vectis Solutions LLC, an existing Ardent Capital portfolio company (CEO Michael Parekh; 2024 revenue of $68,000,000). If remedies are required to obtain regulatory clearance, Calderwood & Harkness will advise on potential divestiture options, including the possible divestiture of all or a portion of Vectis Solutions LLC, and will prepare or review any necessary divestiture documentation.
5. CFIUS Voluntary Joint Notice. Preparation and filing of a voluntary joint notice with the Committee on Foreign Investment in the United States. The anticipated filing date is April 4, 2025, and the assigned tracking number is CFIUS-2025-0087. The initial 45-day review period is expected to expire on or about May 19, 2025. CFIUS review is warranted due to the Target's contracts with the U.S. Department of Defense ("DOD"), Department of Energy ("DOE"), and General Services Administration ("GSA"), which may raise national security considerations.
6. CFIUS Mitigation Strategy. If CFIUS identifies national security concerns, Calderwood & Harkness will advise on and negotiate any mitigation measures, which could include proxy board arrangements, data security protocols, access restrictions for non-U.S. personnel, and compliance monitoring mechanisms.
7. Coordination of Foreign Filings with Local Counsel. Calderwood & Harkness will coordinate the following foreign regulatory filings through local counsel:
• Swiss FINMA/SECO / Competition Filing (File No. 32-0973). Breitfeld Hess & Partner AG (Dr. Lukas Breitfeld, lead partner) will prepare and file the Swiss competition notification under the Swiss Cartel Act (KartG) and the SECO/Lex Koller notification. Breitfeld Hess will also handle any Swiss corporate matters in connection with the Luminex Systems AG subsidiary.
• Bundeskartellamt Filing (File No. B6-34/25). Wendt Schäfer Rechtsanwälte PartG mbB (Dr. Katarina Wendt, lead partner) will prepare and file the German merger control notification with the Bundeskartellamt. Wendt Schäfer will also advise on German corporate, employment (including works council consultation), and data privacy matters.
• EU Foreign Subsidies Regulation Notification (Case No. FSR.M.2025-0412). Breitfeld Hess & Partner AG will prepare and file the notification under the EU Foreign Subsidies Regulation, which applies because the aggregate transaction value exceeds €500 million and the parties have sufficient EU turnover to trigger the notification thresholds.
8. Regulatory Conditions and Timetable Tracking. Calderwood & Harkness will prepare and maintain a comprehensive regulatory conditions and timetable tracker, monitoring all filing deadlines, review periods, waiting periods, and clearance milestones across all jurisdictions.
D. Financing. This workstream encompasses all debt and equity financing documentation for the Transaction, including:
1. Commitment Letter. Review and negotiation of the commitment letter from Stonebridge Credit Partners LLC (Reference No. SC-2025-0312-AC, dated March 8, 2025) committing to provide the senior secured credit facility described below. Calderwood & Harkness will ensure that the "certain funds" provisions, market flex terms, and conditions to funding are appropriately aligned with the conditions to closing under the Merger Agreement.
2. Fee Letter. Review of the fee letter associated with the commitment letter, including arrangement fees, upfront fees, and syndication economics.
3. Credit Agreement. Drafting and negotiation of the definitive credit agreement governing the $1,400,000,000 senior secured credit facility, consisting of (a) a $1,200,000,000 Term Loan B bearing interest at SOFR plus 475 basis points, with a seven-year maturity and 1.00% original issue discount, and (b) a $200,000,000 revolving credit facility bearing interest at SOFR plus 425 basis points, with a five-year maturity. The revolving credit facility will include a springing financial maintenance covenant tested at 6.50x first-lien net leverage when revolving loans outstanding exceed 40% of the revolving commitment.
4. Guarantee and Collateral Agreement. Drafting and negotiation of the guarantee and collateral agreement providing for a first-priority lien on substantially all domestic assets of the surviving corporation and its domestic subsidiaries, together with a 65% pledge of the equity interests in first-tier foreign subsidiaries.
5. Intercreditor Agreement. Drafting and negotiation of the intercreditor agreement between Stonebridge Credit Partners LLC (as senior representative) and Crestline Mezzanine Partners II LP (as subordinated representative), establishing the priority, standstill, and turnover provisions governing the relationship between the senior secured credit facility and the mezzanine facility described below.
6. Subordinated Note Purchase Agreement. Drafting and negotiation of the note purchase agreement governing the $300,000,000 subordinated mezzanine facility provided by Crestline Mezzanine Partners II LP, bearing interest at 11.5% with PIK toggle, with an eight-year maturity and 2.0% warrant coverage.
7. Mezzanine Warrant Agreement. Drafting and negotiation of the warrant agreement to be issued to Crestline Mezzanine Partners II LP in connection with the mezzanine facility, providing for warrants to purchase 2.0% of the fully diluted equity of Apex Holdings on a post-closing basis.
8. Equity Commitment Letter. Drafting and negotiation of the equity commitment letter from Ardent Capital Partners III LP committing to fund $695,980,000 in equity to Apex Holdings at closing.
9. Co-Investment Agreements. Drafting and negotiation of the co-investment agreements with the following co-investors:
• Northvale Sovereign Holdings Ltd. — $200,000,000 equity co-investment; contact: Ahmad Al-Rashid
• Summit Ridge Capital Partners LP — $100,000,000 equity co-investment; contact: Karen Lindstrom
10. Conditions Precedent Tracking and Lender Communication. Preparation and maintenance of a conditions precedent checklist for the financing, and ongoing communication with counsel for the lenders (to be identified) regarding satisfaction of funding conditions.
E. Rollover and Equity / Employment
This workstream encompasses the management rollover arrangements, post-closing equity governance, and key employment agreements, including:
1. Rollover Agreements. Drafting and negotiation of the form of rollover agreement for management participants who will contribute a portion of their Luminex Holdings equity to Apex Holdings in exchange for equity in the post-closing entity rather than receiving cash merger consideration. The principal rollover participants are as follows:
2. Post-Closing Stockholders Agreement. Drafting and negotiation of the stockholders agreement for Ardent Apex Holdings Inc. that will govern the equity relationships among Ardent Capital Partners III LP, the management rollover participants, Northvale Sovereign Holdings Ltd., and Summit Ridge Capital Partners LP following the closing. The stockholders agreement will address governance (board composition, observer rights, voting arrangements), transfer restrictions (lock-up, ROFR, tag-along, drag-along, co-sale), information rights, and exit mechanics.
3. Registration Rights Agreement. Drafting and negotiation of the registration rights agreement providing the equity holders with customary demand, piggyback, and S-3 shelf registration rights in connection with any future public offering or other registered transaction.
4. Management Equity Incentive Plan. Drafting and negotiation of the post-closing management equity incentive plan, which is expected to include options and/or profits interests representing approximately 8–10% of the fully diluted equity of Apex Holdings, with customary time-based and performance-based vesting schedules.
5. Employment Agreements. Drafting and negotiation of the employment agreements for Dr. Stefan Kessler (CEO) and Annelise Gruber (CFO), setting forth the terms of their continued employment with the surviving corporation and its subsidiaries following the closing, including base compensation, annual bonus, long-term incentive awards, benefits, severance protections, restrictive covenants (non-competition, non-solicitation, confidentiality), and change of control provisions.
F. Tax. This workstream encompasses all tax structuring, analysis, and documentation, including:
1. Section 338(h)(10) Election Analysis. Analysis of the availability and advisability of a joint election under Section 338(h)(10) of the Internal Revenue Code, which would treat the stock acquisition as a deemed asset purchase for federal income tax purposes. Based on preliminary analysis, the election would result in an estimated tax basis step-up of approximately $620,000,000 in amortizable intangible assets, generating estimated annual federal tax savings of approximately $8,680,000 (assuming a 21% corporate rate and 15-year amortization) and a present value of approximately $195,000,000 at an 8% discount rate. The analysis will address the allocation of the deemed purchase price among asset classes under Section 1060 and the interaction with the rollover equity structure.
2. Swiss Withholding Tax Analysis. Analysis of Swiss withholding tax implications, including the statutory 35% withholding rate on dividends and other distributions from Luminex Systems AG, the reduced 5% treaty rate available under the U.S.-Switzerland Income Tax Treaty (assuming eligibility), and the limitation-on-benefits article requirements that Apex Holdings must satisfy to claim treaty benefits.
3. Transfer Pricing Restructuring. Analysis and implementation of a revised intercompany transfer pricing structure, pursuant to which the existing royalty rate of 4.5% of U.S. net revenues (paid by Luminex Systems Inc. to Luminex Systems AG for the use of intellectual property) would be adjusted to 6.0% of U.S. net revenues. This adjustment will be supported by a benchmark study to be prepared by Pendleton & Associates LLP (Richard Chow, engagement partner). Calderwood & Harkness's tax team will review and advise on the legal aspects of the transfer pricing restructuring, including documentation requirements under Section 482 and the OECD Transfer Pricing Guidelines.
4. State and Local Tax Considerations. Analysis of state and local tax implications of the Transaction structure, including considerations in Delaware, Virginia, California, and any other states in which the Target or its subsidiaries have nexus.
5. FIRPTA / NRA Withholding Analysis. Analysis of Foreign Investment in Real Property Tax Act ("FIRPTA") withholding obligations and nonresident alien withholding requirements in connection with payments to any non-U.S. holders of Luminex Holdings common stock.
6. Tax Provisions Review and Markup in Merger Agreement. Review and negotiation of all tax-related provisions in the Merger Agreement, including tax representations and warranties, pre-closing tax covenants, tax indemnification provisions, and post-closing tax cooperation. The tax survival period in the Merger Agreement is expected to be set at 60 days following the expiration of the applicable statute of limitations.
7. Coordination with Pendleton & Associates LLP. Close coordination with Pendleton & Associates LLP (Richard Chow, engagement partner), which serves as the Buyer's tax and accounting advisor, on purchase price allocation, Section 338(h)(10) election mechanics, transfer pricing benchmarking, and quality of earnings analysis.
G. Insurance. This workstream encompasses the placement and documentation of transaction-related insurance policies, including:
1. Representations and Warranties Insurance. Coordination with Ashbury Risk Advisors LLC (Philip Navarro), the Buyer's insurance broker, on the placement of a buyer-side representations and warranties insurance policy. The carrier is Grandview Specialty Insurance Company (Policy No. GSI-RWI-2025-04821). The key terms are as follows: aggregate policy limit of $420,000,000 (representing 15.0% of the aggregate equity value); retention of $14,000,000, split 50/50 between the Buyer ($7,000,000) and the Sellers ($7,000,000); estimated premium of $8,400,000 (representing 2.0% of the policy limit). Calderwood & Harkness will review the policy form, negotiate material terms and exclusions, and coordinate the diligence process required by the carrier's underwriters.
2. Directors and Officers Tail Policy. Procurement of a D&O tail policy for the Target's pre-closing directors and officers, as required under the Merger Agreement. The carrier is Palisade Mutual Insurance Co. (Policy No. PAL-DO-2025-11473), with an aggregate limit of $50,000,000 and a six-year tail period. Calderwood & Harkness will review the policy terms and ensure compliance with the Merger Agreement's indemnification and insurance covenants.
H. Legal Opinions and Formal Deliverables
This workstream encompasses the preparation of legal opinions and other formal deliverables required at closing, including:
1. Calderwood & Harkness Legal Opinion. Preparation and delivery of Calderwood & Harkness's legal opinion to the Target and the Sellers at closing, addressing the enforceability of the Merger Agreement, due authorization and execution by Apex Holdings and Merger Sub, and the organization and good standing of Apex Holdings and Merger Sub under Delaware law.
2. 10b-5 Negative Assurance Letter. If required by Stonebridge Credit Partners LLC under the definitive credit agreement (as is customary in broadly syndicated credit facilities), Calderwood & Harkness will deliver a 10b-5 negative assurance letter in connection with the offering materials for the Term Loan B syndication.
3. Solvency Certificate. Preparation of the form of solvency certificate to be delivered by the Chief Financial Officer of the surviving corporation at closing, certifying the solvency of the surviving corporation and its subsidiaries on a consolidated basis after giving effect to the Transaction and the related financing.
IV. Staffing Plan
A. Core Team — Calderwood & Harkness LLP, New York Office
The following table sets forth the core team members assigned to the Transaction, together with their primary workstream responsibilities, estimated hours, and billing rates. All core team members are based in Calderwood & Harkness's New York office at 7 Times Square, New York, NY 10036. The estimated hours represent the total hours anticipated from the date of this memorandum through closing and a reasonable period of post-closing work (estimated at 30 days).
Total estimated core team hours: 2,300–3,100 hours.
It is important to note that the above estimates reflect the anticipated scope of the Transaction based on currently available information. Actual hours may vary depending on the outcomes of regulatory filings (particularly whether a Second Request is issued), the volume and complexity of due diligence findings, and the number of negotiation rounds required for the principal transaction documents. The estimates will be revisited and adjusted at each of the budget reforecast milestones identified in Section IX below.
Additional associate and paralegal support will be drawn from the M&A, Tax, and Antitrust practice groups on an as-needed basis, as described in the following section.
B. Additional Calderwood & Harkness Resources (Anticipated)
In addition to the core team members identified above, the following additional resources are anticipated to be required. Specific individuals will be identified and assigned within the first week following engagement opening, subject to availability and conflicts clearance.
Total estimated additional resource hours: 1,250–2,050 hours.
The combined total estimated hours across all Calderwood & Harkness timekeepers and support personnel is therefore 3,550–5,150 hours, with the range driven primarily by regulatory outcomes as described in Section VIII.
C. Local Counsel — Coordination and Budgets
Calderwood & Harkness will coordinate with the following local counsel firms for jurisdiction-specific legal work outside the United States. Fee estimates have been obtained from each firm based on preliminary scope descriptions and are set forth below. All local counsel will report to and take direction from the Calderwood & Harkness core team (principally Ryan Kowalski and Megan Chu for day-to-day coordination, and the relevant practice-area partners for substantive matters).
Total estimated local counsel fees: $1,225,000–$2,050,000.
We note that UK counsel has not been separately engaged at this time, as the UK competition filing thresholds are not expected to be met and the scope of UK-specific legal work is anticipated to be limited. If UK-specific issues arise during due diligence (e.g., UK employment matters or data privacy issues), we will recommend engagement of UK local counsel at that time and provide an updated budget estimate.
V. Budget Estimate — Calderwood & Harkness Legal Fees
A. Fee Estimate by Workstream
Set forth below is the estimated range of Calderwood & Harkness legal fees by workstream for the Transaction, from engagement opening through closing and a reasonable post-closing period. The fee estimates are based on the staffing plan described in Section IV and the workstream descriptions in Section III, and reflect the billing rates set forth in the Billing Rate Schedule delivered concurrently with the engagement letter.
Key Notes on the Fee Range:
The range between the low and high estimates (a spread of approximately $6,850,000) is driven primarily by the following factors:
• Antitrust and Regulatory Outcomes. The single largest variable is whether the FTC issues a Second Request and, if so, the scope and duration of the Second Request compliance process. The low estimate assumes that most filings receive Phase I clearance (i.e., the HSR waiting period expires or is terminated without a Second Request, and CFIUS clears within the initial review period). The high estimate assumes a full Second Request with extensive document review and custodian productions, extended FTC negotiations, and a potential investigation period extending through the Outside Date extension to December 10, 2025. If remedies or divestiture of Vectis Solutions LLC is required, additional fees would be incurred for the divestiture workstream, which are not fully reflected in the high estimate.
• Financing Complexity. The high estimate accounts for the possibility of additional negotiation rounds in connection with the credit agreement syndication process and the intercreditor agreement, as well as any flex exercises by the commitment parties.
• Due Diligence Volume. The high estimate reflects the possibility that the volume and complexity of due diligence findings (particularly with respect to the approximately 340 commercial contracts and 26 enterprise license agreements with change of control provisions) may require additional associate and paralegal time.
The budget will be revisited and updated upon each of the three reforecast milestones identified in Section IX: (1) Merger Agreement execution; (2) receipt of any Second Request; and (3) regulatory clearance / pre-closing.
B. Estimated Disbursements (Calderwood & Harkness)
In addition to legal fees, Calderwood & Harkness anticipates incurring the following categories of disbursements in connection with the Transaction:
VI. Estimated Total Buyer Transaction Expenses
Ardent Capital's estimated total buyer transaction expenses budget is $62,000,000, inclusive of all legal, financial advisory, accounting, insurance, regulatory filing, and related costs. The estimated allocation of this budget across expense categories is set forth in the following table. This section is provided for context to allow the Calderwood & Harkness team to understand the overall economics and the Buyer's cost sensitivity.
Additional Notes:
• Seller's Transaction Expenses. The Sellers' estimated transaction expenses of approximately $29,000,000 (including fees for Caldwell, Raines & Sheppard LLP as Sellers' legal counsel, Pinehurst Rothwell & Co. as Sellers' financial advisor, Hargrove Thornton LLP as additional Sellers' counsel, and other seller-side costs) are borne by the selling shareholders and will be deducted from the merger consideration payable to the Sellers at closing. These expenses are not included in the Buyer's transaction expense budget.
• Debt Financing Fees. Original issue discount and arrangement fees on the senior secured credit facility, estimated at $24,000,000 in the aggregate, are separately budgeted in the sources and uses as a non-advisory financing cost and are not included in the $62,000,000 buyer transaction expense budget described above.
VII. Billing Arrangements
The billing arrangements for this engagement are governed by the engagement letter between Calderwood & Harkness LLP and Ardent Capital Partners III LP dated March 10, 2025, and are summarized below for reference.
Billing Partner. Sandra Tung is the designated billing partner for this matter. All invoices will be reviewed and approved by Sandra Tung prior to delivery to the client.
Billing Cycle. Calderwood & Harkness will issue invoices on a monthly billing cycle, with invoices delivered on or about the 15th of each month for services rendered during the prior calendar month.
Payment Terms. Invoices are due and payable within 30 days of the invoice date (net 30).
Client Billing Contact. The designated contact for billing matters at Ardent Capital is David Ng, Chief Financial Officer, Ardent Capital Partners III LP, 399 Park Avenue, 42nd Floor, New York, NY 10022.
Matter Number. All time entries and disbursements are to be recorded under Matter No. 1001-00004. Timekeepers should use the workstream task codes established for this matter in the firm's time and billing system.
Monthly Accrual Reporting. In addition to monthly invoices, Calderwood & Harkness will provide monthly accrual estimates to David Ng for Ardent Capital's fund-level financial reporting purposes. These accrual reports will include fees incurred during the current month, estimated unbilled work in progress, and a comparison of actual fees against the workstream budget.
Alternative Fee Arrangements. No alternative fee arrangements (such as success fees, fee caps, or blended rates) are currently in place for this engagement. All work will be billed at the standard hourly rates set forth in the Billing Rate Schedule delivered concurrently with the engagement letter. If the client requests a fee cap or alternative fee arrangement, such request will be evaluated by James Prentice and Sandra Tung in consultation with the firm's Pricing Committee and communicated to the client promptly.
VIII. Key Assumptions and Risk Factors Affecting Budget
The budget estimates set forth in this memorandum are based on a number of assumptions regarding the scope and complexity of the Transaction, as well as the regulatory and deal-execution timeline. Set forth below are the principal risk factors that could cause actual fees and expenses to exceed the budget estimates.
A. Regulatory Risk
The most significant source of budget uncertainty is the regulatory workstream, and specifically the HSR Act filing and the possibility of a Second Request from the FTC.
• HSR Second Request. Based on preliminary analysis of the competitive landscape, the combined market share of Luminex Holdings (approximately 18%) and Vectis Solutions LLC (approximately 7%) in the procurement-automation SaaS market is approximately 25%, which exceeds the threshold at which a Second Request is typically considered likely. Calderwood & Harkness's antitrust team, led by Elaine Forsythe, has assessed the probability of a Second Request as moderate-to-high. If a Second Request is issued, we estimate that compliance could add $3,000,000 to $6,000,000 to Calderwood & Harkness's legal fees and an additional $500,000 or more in e-discovery and document review platform costs. The Second Request compliance timeline would also extend the overall deal timeline, increasing run-rate advisory costs for all workstreams.
• Remedies / Divestiture. If the FTC determines that the Transaction, as structured, would substantially lessen competition in the procurement-automation SaaS market, it may require remedies as a condition to clearance. The most likely remedy scenario would involve the divestiture of all or a portion of Vectis Solutions LLC (CEO Michael Parekh; 2024 revenue $68,000,000). If a divestiture is required, Calderwood & Harkness would undertake an additional workstream for the preparation and negotiation of divestiture transaction documentation, including a purchase agreement, consent decree, and related regulatory submissions. The cost of this additional workstream is not fully reflected in the budget estimates above.
• CFIUS Mitigation. If CFIUS identifies national security concerns arising from the Target's contracts with DOD, DOE, and GSA, a mitigation agreement may be required. Potential mitigation measures could include proxy board arrangements, data security protocols, restrictions on access by non-U.S. personnel to classified or sensitive government information, and ongoing compliance monitoring. Negotiation and documentation of a CFIUS mitigation agreement would add an estimated $500,000 to $1,000,000 to Calderwood & Harkness's legal fees.
• Extended Regulatory Timeline. If the regulatory review process extends beyond the initial Outside Date of September 10, 2025, the parties may invoke the extension provision to December 10, 2025. An extended timeline would increase run-rate advisory costs across all workstreams, including ongoing local counsel fees, monthly accruals, and travel expenses.
B. Financing Complexity
• Syndication Process. The syndication of the senior secured credit facility among Stonebridge Credit Partners LLC (as lead arranger and administrative agent), Birchwood Capital Finance LLC, and Ironvale Credit Fund III LP may require additional rounds of negotiation and documentation, particularly if market conditions deteriorate or the syndication participants seek enhanced flex terms, modified covenant packages, or additional collateral protections. Each additional round of negotiation on the credit agreement or related financing documents would increase the estimated hours for the junior associate assigned to the financing workstream.
• Intercreditor Agreement. The intercreditor arrangement between the senior lender group (with Stonebridge as senior representative) and the mezzanine lender (Crestline Mezzanine Partners II LP as subordinated representative) requires careful coordination to ensure that the priority, standstill, turnover, and enforcement provisions are appropriately structured. Intercreditor agreements in multi-tranche financing structures of this nature frequently require multiple rounds of negotiation and can be a significant source of additional legal hours.
C. Multi-Jurisdictional Scope
• Five Operating Jurisdictions. The Target's operations in the United States, Switzerland, Germany, the United Kingdom, and Singapore require coordination across four local counsel firms (Breitfeld Hess, Wendt Schäfer, Tan Liang, and potentially UK counsel if engaged). Time zone differences, translation requirements, and divergent legal regimes create inherent coordination costs.
• German Works Council. Under German law, the works council (Betriebsrat) at Luminex Systems GmbH has consultation and information rights in connection with the Transaction and certain post-closing operational changes. Works council consultation can be time-consuming and may extend the employment and benefits diligence timeline, particularly if the works council raises concerns or requests additional information.
• Swiss Corporate Formalities. The 2021 reorganization pursuant to which Luminex Systems AG was placed below Luminex Holdings as a Delaware holding company involved share exchanges and intercompany restructuring that will require careful review during due diligence. In addition, Swiss corporate formalities for any post-closing changes to the Luminex Systems AG board or governance structure will require local counsel involvement.
D. Change of Control Consents
• Volume of Consent Solicitations. The Target has approximately 340 commercial contracts and 26 enterprise license agreements containing change of control provisions, anti-assignment clauses, or consent requirements that may be triggered by the Transaction. The volume of consent solicitations may require additional associate and paralegal time beyond that currently estimated, depending on the responsiveness of counterparties and the complexity of any required amendments or waivers. If a material number of counterparties decline to grant consent or seek to renegotiate contract terms, additional partner-level involvement may be required.
IX. Staffing Governance and Reporting
To ensure effective management of this engagement, the following governance and reporting protocols will be observed:
Client Communication. James Prentice, as Responsible Partner, will conduct bi-weekly status calls with the Ardent Capital deal team, including Ted Hargrove (Managing Partner), Victoria Langford (Managing Partner), and/or the following Investment Committee and operational members as appropriate: Marcus Ellison (Managing Director), Priya Chandrasekaran (Vice President), and David Ng (Chief Financial Officer). The bi-weekly calls will cover transaction status, regulatory developments, key negotiation issues, and budget updates. Additional calls or meetings will be scheduled as needed around critical milestones (e.g., Merger Agreement execution, Second Request receipt, regulatory clearance).
Internal Team Meetings. Ryan Kowalski, as Lead Associate, is responsible for scheduling and leading weekly internal team status meetings with all Calderwood & Harkness team members assigned to the Transaction. These meetings will cover workstream updates, open issues and action items, upcoming deadlines, and resource allocation. Ryan Kowalski will prepare and distribute a written workstream status report following each weekly meeting.
Budget Monitoring. Sandra Tung, as Billing Partner, will review monthly accruals against the workstream budget and provide variance reports to James Prentice. Any actual or projected variance exceeding 15% of the workstream budget for any individual workstream will be flagged for discussion with the Responsible Partner and, if appropriate, communicated to the client.
Regulatory Timetable and Closing Checklist. Megan Chu will prepare and maintain the regulatory timetable tracker (covering all U.S. and foreign regulatory filings, review periods, and clearance milestones) and the closing checklist (covering all closing conditions, deliverables, and action items). These documents will be circulated to the full team on a weekly basis and updated in real time as developments occur.
Budget Reforecast Milestones. The budget will be formally reforecast at the following three milestones:
1. Merger Agreement Execution (Target: March 24, 2025). Following execution of the Merger Agreement, the budget will be updated to reflect the final terms of the transaction documents, the scope of regulatory filings, and any changes to the anticipated timeline.
2. Receipt of Any Second Request (Estimated: ~April 25, 2025). If a Second Request is issued by the FTC, the budget will be substantially reforecast to reflect the additional costs of Second Request compliance, including document review platform costs, custodian identification, and the extended regulatory timeline.
3. Regulatory Clearance / Pre-Closing (Estimated: ~30 Days Before Closing). Approximately 30 days before the estimated closing date, the budget will be updated to reflect actual costs incurred to date, the remaining scope of pre-closing and closing work, and any post-closing deliverables.
X. Approval and Distribution
This memorandum is prepared for internal Calderwood & Harkness LLP use only and contains confidential attorney work product, including internal staffing details, billing rates, and fee estimates that are not intended for external distribution.
Approval. This memorandum has been reviewed and approved by:
• James Prentice, Responsible Partner
• Sandra Tung, Billing Partner
Distribution. This memorandum is authorized for distribution to the following individuals only:
• James Prentice, Partner, M&A
• Sandra Tung, Partner, M&A
• Sylvia Hartwell, Partner, Tax
• Elaine Forsythe, Partner, Antitrust & Competition
• Ryan Kowalski, Lead Associate, M&A
• Megan Chu, Working Associate, M&A
• Legal Project Manager (to be assigned)
• Calderwood & Harkness Finance Department (for matter setup, billing code creation, and rate table entry)
Client-Facing Summary. A client-facing budget summary, redacted of internal staffing details, individual hourly rate information, and individual hour estimates, may be prepared and shared with David Ng upon his request. Any such client-facing summary must be reviewed and approved by James Prentice and Sandra Tung prior to delivery. The client-facing summary will present aggregate fee estimates by workstream without disclosing individual timekeeper utilization data.
Prepared by:
________________________________________
Ryan Kowalski Lead Associate, Mergers & Acquisitions Calderwood & Harkness LLP 7 Times Square New York, NY 10036
Date: March 10, 2025
Approved:
________________________________________
James Prentice Responsible Partner, Mergers & Acquisitions Calderwood & Harkness LLP
Date: ________