SUBORDINATED NOTE PURCHASE AGREEMENT
dated as of March 24, 2025
by and between
ARDENT APEX HOLDINGS INC.
a Delaware corporation
as Issuer
and
CRESTLINE MEZZANINE PARTNERS II LP
a Delaware limited partnership
as Purchaser
$300,000,000 Subordinated Notes
CONFIDENTIAL — THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISCLOSED TO ANY PERSON OTHER THAN THE PARTIES HERETO AND THEIR RESPECTIVE ADVISORS WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY.
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SUBORDINATED NOTE PURCHASE AGREEMENT
This SUBORDINATED NOTE PURCHASE AGREEMENT (this "Agreement") is dated as of March 24, 2025, by and between:
ARDENT APEX HOLDINGS INC., a Delaware corporation (the "Issuer" or "Holdings"), with its principal address at c/o Ardent Capital Partners III LP, 399 Park Avenue, 42nd Floor, New York, New York 10022 (EIN: 93-2178435; incorporated on March 5, 2025 under the laws of the State of Delaware; Registered Agent: National Registered Agents of Delaware, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904),
and
CRESTLINE MEZZANINE PARTNERS II LP, a Delaware limited partnership (the "Purchaser"), with its principal address at 1345 Avenue of the Americas, 32nd Floor, New York, New York 10105 (Lead Contact: Vanessa Hartley, Partner).
The Issuer and the Purchaser are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Issuer is a newly formed wholly owned subsidiary of Ardent Capital Partners III LP, a Delaware limited partnership (the "Sponsor"), formed for the sole purpose of acquiring, directly and indirectly, all of the outstanding equity interests of Luminex Systems Holdings Inc., a Delaware corporation (the "Company" or the "Target") (EIN: 86-2547193; incorporated on June 14, 2021), with operational headquarters located at 2100 Reston Gateway Drive, Suite 800, Reston, Virginia 20191;
WHEREAS, the acquisition of the Company will be effected by a reverse triangular merger (the "Merger") pursuant to the Agreement and Plan of Merger, dated as of March 24, 2025 (the "Merger Agreement"), among the Issuer, Ardent Apex Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Issuer ("Merger Sub"), and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of the Issuer;
WHEREAS, the aggregate equity value of the Merger is $2,800,000,000, and the per-share merger consideration is $20.00 per share based on 140,000,000 fully diluted shares of common stock of the Company;
WHEREAS, in connection with the Merger, the Issuer desires to issue and sell, and the Purchaser desires to purchase, $300,000,000 aggregate principal amount of Subordinated Notes (as defined herein) to partially finance the Merger and the related transactions contemplated hereby;
WHEREAS, the Subordinated Notes will be contractually subordinated in right of payment to the Senior Secured Credit Facility (as defined herein) pursuant to the terms and conditions of the Intercreditor Agreement (as defined herein); and
WHEREAS, in connection with the purchase of the Subordinated Notes, the Issuer will issue to the Purchaser the Warrants (as defined herein) to purchase shares of common stock of the Issuer representing 2.0% of the fully diluted equity of the Issuer at the closing of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquisition" means the Merger and the transactions contemplated by the Merger Agreement.
"Administrative Agent" means Stonebridge Credit Partners LLC, in its capacity as administrative agent under the Senior Credit Agreement, and any successor administrative agent appointed thereunder.
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Subordinated Note Purchase Agreement, including all Exhibits and Schedules hereto, as the same may be amended, modified, restated, or supplemented from time to time in accordance with the terms hereof.
"Board" means the board of directors of the Issuer.
"blockage Period" has the meaning set forth in Section 3.02.
"Business Day" means any day that is not a Saturday, Sunday, or other day on which commercial banks in the City of New York, New York are authorized or required by law to remain closed.
"Cash Interest" has the meaning set forth in Section 2.03.
"Change of Control" means any transaction or series of related transactions as a result of which (a) the Sponsor and its Affiliates cease to hold, directly or indirectly, at least 50% of the voting equity interests of the Issuer, (b) any Person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than the Sponsor and its Affiliates, becomes the beneficial owner of more than 50% of the voting equity interests of the Issuer, or (c) the sale, lease, or other disposition of all or substantially all of the assets of the Issuer and its Subsidiaries, taken as a whole, to any Person other than the Sponsor or an Affiliate of the Sponsor.
"Closing" means the closing of the purchase and sale of the Notes and the Warrants under this Agreement.
"Closing Date" means the date on which the Merger is consummated and the Closing occurs, which is anticipated to occur during the period of July through August 2025.
"Co-Investors" means, collectively, (a) Northvale Sovereign Holdings Ltd., a Cayman Islands exempted limited company (PO Box 309, Ugland House, George Town, Grand Cayman, KY1-1104, Cayman Islands; Contact: Ahmad Al-Rashid), which has committed to invest $200,000,000 in equity of the Issuer, and (b) Summit Ridge Capital Partners LP, a Delaware limited partnership (161 North Clark Street, Suite 4700, Chicago, Illinois 60601; Contact: Karen Lindstrom), which has committed to invest $100,000,000 in equity of the Issuer.
"Collateral Agent" means Stonebridge Credit Partners LLC, in its capacity as collateral agent under the Guarantee and Collateral Agreement, and any successor collateral agent appointed thereunder.
"Company" or "Target" means Luminex Systems Holdings Inc., a Delaware corporation (EIN: 86-2547193), with its operational headquarters at 2100 Reston Gateway Drive, Suite 800, Reston, Virginia 20191.
"Compliance Certificate" means a certificate substantially in the form attached hereto as Exhibit E.
"Default" means any event that, with the giving of notice, the lapse of time, or both, would constitute an Event of Default.
"Default Rate" means the applicable interest rate under the Notes plus 2.0% per annum (i.e., 13.5% per annum based on the Coupon Rate of 11.5% per annum).
"EBITDA" means, for any period, the consolidated net income (or net loss) of the Issuer and its Subsidiaries for such period, plus, to the extent deducted in calculating such consolidated net income, (a) interest expense, (b) income tax expense, (c) depreciation expense, and (d) amortization expense, in each case determined on a consolidated basis in accordance with GAAP, and further adjusted in a manner consistent with the definition of "Adjusted EBITDA" or "EBITDA" in the Senior Credit Agreement, as applicable. For reference purposes, the Company's Adjusted EBITDA for the fiscal year ended December 31, 2024 was $121,800,000, representing a 25.0% margin on revenue of $487,000,000.
"Equity Commitment Letter" means the equity commitment letter, dated as of March 24, 2025, from Ardent Capital Partners III LP to the Issuer, pursuant to which the Sponsor has committed to fund $695,980,000 in equity at or prior to the Closing in connection with the Merger.
"Event of Default" has the meaning set forth in Section 8.01.
"Excess Cash Flow" means, for any period, the excess of (a) EBITDA for such period over (b) the sum of (i) cash interest expense paid during such period, (ii) scheduled principal repayments of Indebtedness during such period, (iii) capital expenditures made during such period (to the extent not financed with Indebtedness), (iv) cash income taxes paid during such period, and (v) changes in working capital for such period, in each case calculated on a consolidated basis and consistent with the definition of "Excess Cash Flow" in the Senior Credit Agreement.
"GAAP" means generally accepted accounting principles in the United States of America in effect from time to time, applied on a consistent basis.
"Guarantee and Collateral Agreement" means the guarantee and collateral agreement, to be executed on or about the Closing Date, among the Issuer, the Company, each domestic Subsidiary of the Company party thereto, and the Collateral Agent, granting a first-priority lien on substantially all assets of the Company and its domestic Subsidiaries and a pledge of 65% of the equity interests of each first-tier foreign Subsidiary of the Company, in each case in favor of the Collateral Agent for the benefit of the lenders under the Senior Credit Agreement.
"Indebtedness" means, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements, (d) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business and not past due for more than sixty (60) days), (e) all indebtedness of others guaranteed by such Person, (f) all obligations, contingent or otherwise, of such Person in respect of letters of credit, bankers' acceptances, surety bonds, and similar instruments, (g) all capital lease obligations of such Person, (h) all net obligations of such Person under swap agreements, and (i) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person.
"Intercreditor Agreement" means the intercreditor agreement, dated as of the Closing Date, between Stonebridge Credit Partners LLC (in its capacity as senior representative) and Crestline Mezzanine Partners II LP (in its capacity as subordinated representative), governing the relative rights and priorities of the holders of Senior Indebtedness and the holders of the Notes.
"Interest Payment Date" has the meaning set forth in Section 2.03.
"Interest Period" means each semi-annual period commencing on the day immediately following an Interest Payment Date (or, in the case of the first Interest Period, on the Closing Date) and ending on (and including) the next succeeding Interest Payment Date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority, or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).
"Majority Holders" means, at any time, holders of more than 50% of the aggregate outstanding principal amount of the Notes at such time.
"Material Adverse Effect" has the meaning ascribed to such term in the Merger Agreement, which generally means any change, event, occurrence, circumstance, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, results of operations, assets, liabilities, or financial condition of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate the Merger; provided, however, that no change, event, occurrence, circumstance, or effect resulting from or arising out of any of the following shall be deemed to constitute or be taken into account in determining whether a Material Adverse Effect has occurred: (i) general economic, financial, or market conditions in the United States or globally, (ii) conditions generally affecting the industries in which the Company operates, (iii) changes in applicable laws or regulations, (iv) changes in GAAP or the interpretation thereof, (v) pandemics, epidemics, or public health emergencies, (vi) the announcement or pendency of the Merger or the identity of the Sponsor, or (vii) any failure by the Company to meet any projections, forecasts, or estimates (provided that the underlying causes of any such failure may be taken into account), in each case of clauses (i) through (v), except to the extent such change, event, occurrence, circumstance, or effect disproportionately affects the Company and its Subsidiaries relative to other companies operating in the same industries and markets.
"Maturity Date" means the eighth (8th) anniversary of the Closing Date; provided that if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.
"Merger" means the merger of Merger Sub with and into the Company, with the Company surviving as a wholly owned subsidiary of the Issuer, pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of March 24, 2025, among the Issuer, Merger Sub, and the Company, as the same may be amended, modified, or supplemented from time to time in accordance with its terms.
"Merger Sub" means Ardent Apex Merger Sub Inc., a Delaware corporation (EIN: 93-2178502; incorporated on March 7, 2025) and a wholly owned subsidiary of the Issuer.
"Mezzanine Warrants" or "Warrants" means the warrants to be issued to the Purchaser pursuant to the Warrant Agreement, entitling the Purchaser to purchase shares of common stock of the Issuer representing 2.0% of the fully diluted equity of the Issuer at the Closing.
"Net Cash Proceeds" means, with respect to any sale, transfer, or other disposition of any asset, the cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise) received by the Issuer or any Subsidiary from such sale, transfer, or disposition, net of (a) brokerage commissions and other reasonable fees and expenses related thereto, (b) provisions for taxes resulting therefrom, and (c) amounts required to be applied to repay Senior Indebtedness.
"Notes" means the Subordinated Notes in the aggregate principal amount of $300,000,000 (as such amount may be increased by any PIK Interest capitalized thereto) to be issued by the Issuer pursuant to this Agreement, substantially in the form attached hereto as Exhibit A.
"Obligations" means all amounts owing or payable by the Issuer under this Agreement and the Notes, including principal, interest (including PIK Interest), fees, expenses, indemnification obligations, and all other amounts payable hereunder or thereunder.
"Officer's Certificate" means a certificate signed by a Responsible Officer of the Issuer, substantially in the form attached hereto as Exhibit C.
"Outside Date" means September 10, 2025; provided that if the sole condition to the Closing that remains unsatisfied as of such date is the receipt of one or more regulatory approvals required for the consummation of the Merger, the Outside Date shall be automatically extended to December 10, 2025.
"Permitted Indebtedness" has the meaning set forth in Section 7.01.
"Permitted Liens" has the meaning set forth in Section 7.02.
"Person" means any individual, partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust, foreign business organization, governmental authority, or other entity.
"PIK Interest" means interest payable by the Issuer by adding the amount of such interest to the outstanding principal amount of the Notes in lieu of cash payment, as more fully described in Section 2.03.
"PIK Period" has the meaning set forth in Section 2.03.
"Purchase Price" means $300,000,000.
"Purchaser" means Crestline Mezzanine Partners II LP, a Delaware limited partnership, and its permitted successors and assigns.
"Responsible Officer" means the Chief Executive Officer, the Chief Financial Officer, or any Vice President of the Issuer.
"Revolving Credit Facility" means the $200,000,000 revolving credit facility provided under the Senior Credit Agreement, with a five (5)-year maturity and an interest rate of SOFR plus 425 basis points, which is expected to be undrawn at the Closing.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Senior Credit Agreement" means the credit agreement, to be dated as of the Closing Date, among the Company (as borrower), the Issuer (as holdings), the lenders party thereto (including Stonebridge Credit Partners LLC, Birchwood Capital Finance LLC, and Ironvale Credit Fund III LP), and Stonebridge Credit Partners LLC (as administrative agent), providing for the Senior Secured Credit Facility, as the same may be amended, restated, supplemented, or otherwise modified from time to time (subject to Section 7.07).
"Senior Indebtedness" means all Indebtedness of the Issuer and its Subsidiaries arising under or in connection with the Senior Credit Agreement and the Guarantee and Collateral Agreement, including all principal, interest (including post-petition interest), fees, expenses, indemnification obligations, and other amounts payable thereunder, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred.
"Senior Secured Credit Facility" means the $1,400,000,000 senior secured credit facility to be provided under the Senior Credit Agreement, comprised of (a) the Term Loan B in an aggregate principal amount of $1,200,000,000, with a seven (7)-year maturity, an interest rate of SOFR plus 475 basis points, a 1.00% original issue discount, and 1% per annum amortization, and (b) the Revolving Credit Facility in an aggregate committed amount of $200,000,000, with a five (5)-year maturity and an interest rate of SOFR plus 425 basis points.
"SOFR" means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator) and published on the Federal Reserve Bank of New York's website, or any successor rate thereto as determined in accordance with the Senior Credit Agreement.
"Sponsor" means Ardent Capital Partners III LP, a Delaware limited partnership (399 Park Avenue, 42nd Floor, New York, New York 10022; EIN: 87-3941026; formed January 15, 2023; Fund III vintage year 2023; fund size $12,500,000,000; General Partner: Ardent Capital GP III LLC; Managing Partners: Theodore "Ted" Hargrove and Victoria Langford).
"Stockholders Agreement" means the stockholders agreement to be entered into on or about the Closing Date among the Issuer, the Sponsor, the Co-Investors, the Purchaser, and the management stockholders, governing the rights and obligations of the equity holders of the Issuer.
"Subordinated Obligations" means all Obligations of the Issuer under this Agreement and the Notes, including all principal, interest (including PIK Interest), fees, expenses, indemnification obligations, and other amounts payable hereunder or thereunder, in each case as subordinated pursuant to Article III and the Intercreditor Agreement.
"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, joint venture, or other entity of which such Person (either alone or through or together with any other Subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such entity. The Subsidiaries of the Issuer following the Merger shall include, without limitation, Luminex Systems Holdings Inc. (Delaware corporation, EIN: 86-2547193, Reston, Virginia), Luminex Systems Inc. (Delaware corporation, EIN: 86-2547210, Reston, Virginia), Luminex Systems AG (Swiss AG, CHE-284.391.057, Zürich, Switzerland), Luminex Systems UK Ltd. (Company No. 12847362, London, England and Wales), Luminex Systems GmbH (HRB 247891, Munich, Germany), and Luminex Systems Pte. Ltd. (UEN: 201924781K, Singapore).
"Term Loan B" means the $1,200,000,000 term loan B facility provided under the Senior Credit Agreement.
"Warrant Agreement" means the warrant agreement, dated as of the Closing Date, between the Issuer and the Purchaser, substantially in the form attached hereto as Exhibit B, pursuant to which the Issuer shall issue the Warrants to the Purchaser.
"Warrant Coverage" means 2.0% of the fully diluted equity of the Issuer at the Closing.
Section 1.02 — Rules of Interpretation
Unless the context otherwise requires:
(a) The words "hereof," "herein," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b) The terms defined in Section 1.01 shall have the meanings therein ascribed to them, whether used in the singular or plural and regardless of gender.
(c) References to any agreement, instrument, or other document shall mean such agreement, instrument, or other document as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein).
(d) References to any statute or regulation shall be deemed to refer to such statute or regulation as amended, re-enacted, or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated thereunder), unless otherwise specifically stated.
(e) The word "including" (and any variation thereof) shall mean "including, without limitation."
(f) References to "Sections," "Articles," "Exhibits," and "Schedules" shall, unless otherwise indicated, refer to sections and articles of, and exhibits and schedules to, this Agreement.
(g) Headings and captions used in this Agreement are included for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
(h) All accounting terms not specifically defined herein shall be construed in accordance with GAAP.
(i) The words "shall" and "will" have equal force and effect.
(j) References to "dollars" or "$" shall mean the lawful currency of the United States of America.
Section 1.03 — Computation of Time
(a) When the last day for the exercise of any right or the performance of any obligation under this Agreement falls on a day that is not a Business Day, such right may be exercised or such obligation shall be performed on the next succeeding Business Day, unless otherwise expressly provided herein.
(b) All references to times of day in this Agreement shall refer to New York City time, unless otherwise specified.
(c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II — PURCHASE AND SALE OF NOTES; INTEREST
Section 2.01 — Authorization and Issuance
The Issuer has duly authorized the creation and issuance of $300,000,000 aggregate principal amount of its Subordinated Notes due on the Maturity Date (such notes, together with any PIK Interest capitalized thereto, the "Notes"), in registered form, substantially in the form set forth in Exhibit A attached hereto. The Notes shall be issued in minimum denominations of $1,000,000 and integral multiples of $1,000 in excess thereof. The Notes shall be dated the Closing Date and shall bear interest from the Closing Date as provided in Section 2.03.
Section 2.02 — Purchase and Sale
(a) Subject to the terms and conditions of this Agreement and the satisfaction or waiver of the conditions set forth in Article VI, on the Closing Date, the Purchaser hereby agrees to purchase, and the Issuer hereby agrees to sell, issue, and deliver to the Purchaser, Notes in the aggregate principal amount of $300,000,000.
(b) The purchase price for the Notes shall be $300,000,000 (the "Purchase Price"), payable at par and without any original issue discount.
(c) On the Closing Date, the Purchaser shall pay the Purchase Price by wire transfer of immediately available funds in United States dollars to an account of the Issuer designated in writing by the Issuer to the Purchaser not less than two (2) Business Days prior to the Closing Date.
(d) In consideration of the Purchaser's agreement to purchase the Notes, and concurrently with the issuance of the Notes on the Closing Date, the Issuer shall issue to the Purchaser the Warrants in accordance with Article IX and the Warrant Agreement.
Section 2.03 — Interest
(a) Coupon Rate. The outstanding principal amount of the Notes shall bear interest at the rate of 11.5% per annum (the "Coupon Rate").
(b) PIK Toggle Feature.
(i) During the period commencing on the Closing Date and ending on the second (2nd) anniversary of the Closing Date (the "PIK Period"), interest on the Notes shall be payable, at the sole election of the Issuer (exercisable with respect to each Interest Payment Date by delivery of written notice to the Purchaser not less than fifteen (15) Business Days prior to the applicable Interest Payment Date), either (A) entirely in cash ("Cash Interest"), (B) entirely by adding the amount of such interest to the outstanding principal amount of the Notes ("PIK Interest"), or (C) any combination of Cash Interest and PIK Interest, as the Issuer may determine in its sole discretion. In the absence of a timely election by the Issuer, interest shall be deemed to be payable as PIK Interest during the PIK Period.
(ii) Following the expiration of the PIK Period, all interest on the Notes shall be payable in cash on each Interest Payment Date; provided, however, that the Issuer shall retain the option to pay interest as PIK Interest (in whole or in part) following the PIK Period solely upon the occurrence and during the continuance of any of the following conditions: (A) the Issuer's consolidated liquidity (defined as unrestricted cash and cash equivalents plus available and unused commitments under the Revolving Credit Facility) is less than $50,000,000, (B) the springing financial covenant under the Revolving Credit Facility is then being tested, or (C) a Default or Event of Default has occurred and is continuing under the Senior Credit Agreement.
(iii) To the extent that any interest on the Notes is paid as PIK Interest, the outstanding principal amount of the Notes shall be automatically increased by the amount of such PIK Interest on the applicable Interest Payment Date, and such increased principal amount shall thereafter bear interest in accordance with this Section 2.03. The Issuer shall promptly annotate its books and records, and the Notes Register, to reflect any increase in the principal amount of the Notes resulting from the capitalization of PIK Interest.
(c) Interest Payment Dates. Interest on the Notes shall be payable semi-annually in arrears on each June 30 and December 31 of each year (each, an "Interest Payment Date"), commencing on the first such date occurring after the Closing Date. Interest shall accrue from and including the Closing Date (or, with respect to any Interest Period other than the initial Interest Period, from and including the day immediately following the immediately preceding Interest Payment Date) to but excluding the applicable Interest Payment Date.
(d) Computation. Interest on the Notes shall be computed on the basis of a 360-day year consisting of twelve (12) months of thirty (30) days each and, in the case of an incomplete month, the actual number of days elapsed.
(e) Default Interest. Upon the occurrence and during the continuance of an Event of Default, all overdue amounts (including, without limitation, overdue principal and, to the extent permitted by applicable law, overdue interest) shall bear interest at the Default Rate (i.e., 13.5% per annum, being the Coupon Rate of 11.5% plus 2.0%), payable on demand. Default interest shall accrue from the date on which such Event of Default first occurs until such Event of Default is cured or waived, and shall be payable in cash, unless the payment of cash interest is then prohibited by the subordination provisions of Article III or the Intercreditor Agreement, in which case default interest shall be capitalized as PIK Interest.
Section 2.04 — Maturity
All outstanding principal of the Notes (including any PIK Interest theretofore capitalized to the principal amount thereof), together with all accrued and unpaid interest thereon and all other amounts payable by the Issuer under this Agreement and the Notes, shall be due and payable in full on the Maturity Date. The Maturity Date shall be the eighth (8th) anniversary of the Closing Date. For the avoidance of doubt, the Notes do not require any scheduled amortization or sinking fund payments prior to the Maturity Date.
Section 2.05 — Optional Prepayment
(a) Right of Prepayment. Subject to the subordination provisions of Article III and the Intercreditor Agreement, the Issuer may, at its option, prepay the Notes in whole or in part at any time, subject to the call protection premiums and other terms set forth in this Section 2.05.
(b) Call Protection. Any optional prepayment of the Notes shall be made at the following prices (expressed as a percentage of the principal amount of the Notes being prepaid), together in each case with accrued and unpaid interest on the principal amount being prepaid to (but excluding) the date of prepayment:
(i) During the first year following the Closing Date: the Notes shall be non-callable and may not be optionally prepaid.
(ii) During the second year following the Closing Date: 105.0% of the principal amount being prepaid.
(iii) During the third year following the Closing Date: 103.0% of the principal amount being prepaid.
(iv) During the fourth year following the Closing Date: 101.0% of the principal amount being prepaid.
(v) At any time thereafter: 100.0% of the principal amount being prepaid (i.e., at par).
(c) Minimum Prepayment Amount. Any partial optional prepayment of the Notes shall be in an aggregate principal amount of not less than $10,000,000 and in integral multiples of $1,000,000 in excess thereof.
(d) Notice of Prepayment. The Issuer shall provide the Purchaser with prior written notice of any optional prepayment not less than thirty (30) days and not more than sixty (60) days prior to the proposed date of prepayment. Each such notice shall be irrevocable and shall specify the date of prepayment, the aggregate principal amount to be prepaid, and the applicable prepayment premium, if any.
(e) Application. Any partial optional prepayment of the Notes shall be applied to the principal installments of the Notes in inverse order of maturity.
Section 2.06 — Mandatory Prepayment
Subject in all cases to the subordination provisions of Article III and the Intercreditor Agreement (including, without limitation, the requirement that all Senior Indebtedness be paid in full before any mandatory prepayment is made on account of the Notes), the following mandatory prepayment provisions shall apply:
(a) Excess Cash Flow Sweep. Commencing with the fiscal year of the Issuer and its Subsidiaries ending on the first anniversary of the Closing Date and for each fiscal year thereafter, the Issuer shall, within ten (10) Business Days after the delivery of the annual audited financial statements for such fiscal year, prepay the Notes in an aggregate principal amount equal to (i) 50% of Excess Cash Flow for such fiscal year, less (ii) the amount of any voluntary prepayments of the Notes or the Senior Indebtedness made during such fiscal year (to the extent accompanied by a permanent reduction in commitments, in the case of revolving loans); provided that the applicable percentage shall be reduced from 50% to 25% if the total net leverage ratio of the Issuer and its Subsidiaries (calculated on a consolidated basis in a manner consistent with the Senior Credit Agreement) as of the last day of such fiscal year is less than 5.0 to 1.0. For the avoidance of doubt, any mandatory prepayment of the Notes under this Section 2.06(a) shall be subordinated to, and shall not be made until after, all mandatory prepayments of Senior Indebtedness from Excess Cash Flow required under the Senior Credit Agreement have been made in full.
(b) Asset Sale Proceeds. In the event that the Issuer or any of its Subsidiaries consummates any sale, transfer, or other disposition of assets (other than sales in the ordinary course of business) the Net Cash Proceeds of which exceed $10,000,000 individually or $25,000,000 in the aggregate in any fiscal year, the Issuer shall prepay the Notes in an aggregate principal amount equal to 100% of the Net Cash Proceeds of such asset sale, net of amounts required to be applied to repay Senior Indebtedness; provided that the Issuer shall not be required to make any such prepayment to the extent that (i) the Net Cash Proceeds are reinvested (or committed to be reinvested) in assets useful in the business of the Issuer and its Subsidiaries within 365 days of the receipt of such Net Cash Proceeds, and (ii) such reinvestment is actually completed within 180 days following the expiration of such 365-day period.
(c) Equity Issuance Proceeds. No mandatory prepayment shall be required from the proceeds of any issuance of equity securities by the Issuer.
(d) Change of Control. Upon the occurrence of a Change of Control, the Issuer shall offer to prepay the Notes at a price equal to 101% of the outstanding principal amount thereof, plus all accrued and unpaid interest thereon to (but excluding) the date of prepayment. Such offer shall be made by written notice to the Purchaser within thirty (30) days after the occurrence of such Change of Control and shall remain open for acceptance for a period of not less than thirty (30) days. Any prepayment pursuant to this Section 2.06(d) shall be subject to the subordination provisions of Article III and the Intercreditor Agreement, and shall not be made until all Senior Indebtedness has been paid in full or provision for such payment satisfactory to the Administrative Agent has been made.
(e) Subordination. Notwithstanding anything to the contrary in this Section 2.06, all mandatory prepayments of the Notes are expressly subject to the subordination provisions of Article III and the terms and conditions of the Intercreditor Agreement. No mandatory prepayment shall be made on account of the Notes at any time when such payment is prohibited by Article III or the Intercreditor Agreement.
Section 2.07 — Payments Generally
(a) All payments of principal, interest, premiums, and other amounts due under this Agreement and the Notes shall be made in United States dollars in immediately available funds to an account of the Purchaser designated in writing to the Issuer from time to time.
(b) If any payment of principal, interest, or other amount under this Agreement or the Notes becomes due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest, if applicable.
(c) Withholding Taxes. All payments made by the Issuer under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, duties, deductions, charges, or withholdings imposed by any governmental authority (collectively, "Taxes"), unless such deduction or withholding is required by applicable law. If the Issuer is required to deduct or withhold any Taxes from any payment, the Issuer shall (i) make such deduction or withholding, (ii) pay the full amount deducted or withheld to the relevant governmental authority in accordance with applicable law, and (iii) pay to the Purchaser such additional amounts as may be necessary so that the net amount received by the Purchaser after such deduction or withholding (including any deduction or withholding on any additional amounts payable under this clause (iii)) equals the amount the Purchaser would have received had no such deduction or withholding been required, subject to customary exceptions for Taxes attributable to the Purchaser's failure to provide applicable tax forms.
Section 2.08 — Notes Register
The Issuer shall maintain a register (the "Notes Register") in which the Issuer shall record the name and address of each holder of the Notes, the principal amount (including any PIK Interest capitalized thereto) of the Notes held by each holder, and all transfers and exchanges of the Notes. The entries in the Notes Register shall be conclusive and binding for all purposes, absent manifest error. The Person in whose name a Note is registered in the Notes Register shall be treated as the owner thereof for all purposes.
ARTICLE III — SUBORDINATION
Section 3.01 — Agreement to Subordinate
The Issuer, for itself, its successors, and its assigns, and the Purchaser, by its acceptance of the Notes, agree that the payment of all Subordinated Obligations is hereby expressly subordinated and made junior in right of payment to the prior payment in full in cash of all Senior Indebtedness. Until all Senior Indebtedness has been paid in full in cash and all commitments under the Senior Credit Agreement have been permanently terminated, no payment of principal of, or premium (if any) or interest on, or any other amount in respect of, the Notes or any other Subordinated Obligations shall be made by or on behalf of the Issuer, directly or indirectly, except as expressly permitted by the Intercreditor Agreement, dated as of the Closing Date, between Stonebridge Credit Partners LLC (in its capacity as senior representative) and Crestline Mezzanine Partners II LP (in its capacity as subordinated representative). For the avoidance of doubt, the capitalization of PIK Interest (i.e., the addition of interest to the principal amount of the Notes) shall not constitute a "payment" for purposes of this Article III.
Section 3.02 — Payment blockage
(a) Upon the occurrence and during the continuance of a default or an event of default under the Senior Credit Agreement, the Administrative Agent may deliver a written notice (a "Payment blockage Notice") to the Purchaser directing that no payment of principal of, premium (if any), or interest on the Notes or any other Subordinated Obligations shall be made.
(b) Upon receipt of a Payment blockage Notice, no payment of principal of, premium (if any), or interest on the Notes or any other Subordinated Obligations (other than PIK Interest, which may be capitalized to the principal amount of the Notes during a blockage Period) shall be made by or on behalf of the Issuer for a period (the "Blockage Period") commencing on the date of receipt of such Payment blockage Notice and continuing for the shorter of (i) 179 days and (ii) the date on which the default or event of default giving rise to such Payment blockage Notice is cured, waived, or otherwise ceases to exist.
(c) Notwithstanding the foregoing, there shall not be more than one (1) blockage Period in any consecutive 360-day period. If a blockage Period terminates without the Senior Indebtedness being accelerated, the Issuer shall resume payments on the Notes in accordance with this Agreement, including payment of any interest that accrued during the blockage Period (subject to the other provisions of this Article III).
(d) For the avoidance of doubt, the capitalization of PIK Interest to the principal amount of the Notes shall be permitted at all times, including during any blockage Period, and shall not be considered a payment for purposes of any Payment blockage Notice.
Section 3.03 — Liquidation; Dissolution; Bankruptcy
In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization, assignment for the benefit of creditors, or any similar case or proceeding relative to the Issuer, the Company, or any material Subsidiary, or their respective assets, or any liquidation, dissolution, or other winding up of the Issuer, the Company, or any material Subsidiary, whether voluntary or involuntary, including any such case or proceeding under the United States Bankruptcy Code (Title 11 of the United States Code) or any successor statute:
(a) All Senior Indebtedness shall be paid in full in cash before any payment or distribution, whether in cash, securities, or other property, shall be made to the holders of the Notes or any other Subordinated Obligations on account thereof.
(b) Any payment or distribution of any kind or character (whether in cash, securities, or other property) to which the holders of the Notes or any other Subordinated Obligations would otherwise be entitled shall be paid or delivered by the Person making such payment or distribution directly to the Administrative Agent for application to the payment of Senior Indebtedness remaining unpaid until all Senior Indebtedness shall have been paid in full in cash.
(c) In the event that, notwithstanding the foregoing provisions of this Section 3.03, any payment or distribution of any kind or character (whether in cash, securities, or other property) shall be received by the Purchaser or any other holder of the Notes on account of any Subordinated Obligation before all Senior Indebtedness is paid in full in cash, such payment or distribution shall be held in trust for the benefit of, and shall be immediately paid over and delivered to, the Administrative Agent for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash.
Section 3.04 — Subrogation
After all Senior Indebtedness has been paid in full in cash and all commitments under the Senior Credit Agreement have been permanently terminated, the Purchaser (and any other holder of the Notes) shall be subrogated (equally and ratably with the holders of all other Indebtedness that by its express terms ranks pari passu with the Notes and is entitled to the benefit of this Section 3.04) to the rights of the holders of Senior Indebtedness to receive payments and distributions from or on behalf of the Issuer applicable to Senior Indebtedness until all amounts owing under the Notes shall have been paid in full. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property, or securities to which the Purchaser would otherwise be entitled, and no payment pursuant to the provisions of this Article III to the holders of Senior Indebtedness by the Purchaser, shall, as between the Issuer, its creditors other than the holders of Senior Indebtedness, and the Purchaser, be deemed to be a payment by the Issuer to or on account of the Senior Indebtedness.
Section 3.05 — Relative Rights
Nothing contained in this Article III or elsewhere in this Agreement is intended to or shall impair, as between the Issuer and the Purchaser, the obligation of the Issuer, which is absolute and unconditional, to pay to the Purchaser the principal of, premium (if any), and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Purchaser and the creditors of the Issuer other than the holders of Senior Indebtedness, nor shall anything herein prevent the Purchaser from exercising all remedies otherwise permitted by applicable law upon an Event of Default under this Agreement, subject to the rights, if any, under this Article III and the Intercreditor Agreement of the holders of Senior Indebtedness in respect of cash, property, or securities of the Issuer received upon the exercise of any such remedy. The subordination provisions of this Article III are and are intended solely for the purpose of defining the relative rights of the holders of Senior Indebtedness, on the one hand, and the holders of the Notes, on the other hand.
Section 3.06 — Intercreditor Agreement
The rights and obligations of the Parties hereto, the Administrative Agent, the Collateral Agent, the lenders under the Senior Credit Agreement, and the holders of the Notes with respect to the subordination of the Subordinated Obligations to the Senior Indebtedness are further defined in and governed by the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of this Article III and the provisions of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall govern and control. Each of the Issuer and the Purchaser hereby agrees to be bound by, and to comply with, the terms and conditions of the Intercreditor Agreement.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date (except to the extent that any representation or warranty expressly relates to an earlier date, in which case as of such earlier date) as follows:
Section 4.01 — Organization and Good Standing
The Issuer is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware (EIN: 93-2178435; incorporated on March 5, 2025). The Issuer has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as now conducted and as proposed to be conducted. The sole shareholder of the Issuer is Ardent Capital Partners III LP. The Issuer is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.02 — Authorization; Enforceability
The execution, delivery, and performance by the Issuer of this Agreement, the Notes, the Warrant Agreement, and each other document contemplated hereby to which the Issuer is a party have been duly authorized by all necessary corporate action of the Issuer, including the approval of the Board. No other corporate proceeding on the part of the Issuer is necessary to authorize the execution, delivery, and performance of this Agreement, the Notes, the Warrant Agreement, or any other document contemplated hereby. This Agreement has been, and as of the Closing Date the Notes and the Warrant Agreement will have been, duly executed and delivered by the Issuer and constitutes (or, in the case of the Notes and the Warrant Agreement, will constitute upon execution and delivery) a legal, valid, and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and (b) general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 4.03 — No Conflicts
The execution, delivery, and performance by the Issuer of this Agreement, the Notes, and the Warrant Agreement, and the consummation of the transactions contemplated hereby and thereby, do not and will not (a) violate or conflict with the certificate of incorporation, bylaws, or other organizational documents of the Issuer, (b) violate or conflict with any applicable law, rule, regulation, order, writ, judgment, injunction, decree, or determination applicable to the Issuer, (c) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any right of termination, cancellation, amendment, or acceleration of, any material agreement or instrument to which the Issuer is a party or by which any of its assets are bound, including the Merger Agreement and the Senior Credit Agreement, or (d) result in the creation or imposition of any Lien on any asset of the Issuer, other than Permitted Liens.
Section 4.04 — Governmental Approvals
No consent, approval, authorization, order, registration, qualification, or filing with any governmental authority is required for the execution, delivery, and performance by the Issuer of this Agreement, the Notes, or the Warrant Agreement, or the consummation of the transactions contemplated hereby or thereby, other than:
(a) any filings required under the Securities Act or the Securities Exchange Act of 1934, as amended;
(b) the filing required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (Transaction No. HSR-20250328-4192, filed March 28, 2025; initial 30-day waiting period expiring April 27, 2025; the Issuer anticipates that the Federal Trade Commission or the Antitrust Division of the United States Department of Justice may issue a request for additional information (a "Second Request"));
(c) the voluntary notice to the Committee on Foreign Investment in the United States ("CFIUS") (Tracking No. CFIUS-2025-0087, filed April 4, 2025);
(d) the notification to the Swiss Financial Market Supervisory Authority ("FINMA") and the State Secretariat for Economic Affairs ("SECO") under Swiss law (File No. 32-0973, filed April 7, 2025);
(e) the filing with the German Federal Cartel Office (Bundeskartellamt) (File No. B6-34/25, filed April 9, 2025);
(f) the notification under the European Union Foreign Subsidies Regulation ("EU FSR") (Case No. FSR.M.2025-0412, filed April 11, 2025); and
(g) such other consents, approvals, authorizations, orders, registrations, qualifications, or filings the failure of which to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.05 — Capitalization
After giving effect to the Merger and the transactions contemplated hereby as of the Closing Date, the capitalization of the Issuer is as set forth on Schedule I hereto, and shall consist of the following:
(a) Ardent Capital Partners III LP equity contribution: $695,980,000;
(b) Management rollover equity: $405,020,000, contributed by Dr. Stefan Kessler ($142,800,000), Annelise Gruber ($58,800,000), Dr. Markus Vogt ($58,520,000), and other management employees ($144,900,000);
(c) Co-Investor equity: Northvale Sovereign Holdings Ltd. ($200,000,000) and Summit Ridge Capital Partners LP ($100,000,000);
(d) Warrants: 2.0% of the fully diluted equity of the Issuer, to be issued to the Purchaser under the Warrant Agreement; and
(e) No other equity securities, options, warrants, convertible securities, or other rights to acquire equity of the Issuer are outstanding or authorized as of the Closing Date, other than (i) those set forth in clauses (a) through (d) above and (ii) awards to be granted following the Closing under the Issuer's management equity incentive plan (to be established post-Closing).
Section 4.06 — Subsidiaries
Following the consummation of the Merger, the Issuer's direct Subsidiary shall be Luminex Systems Holdings Inc. (the surviving corporation in the Merger), and the Issuer's indirect Subsidiaries shall include Luminex Systems Inc. (Delaware), Luminex Systems AG (Canton of Glenrock Assurance, Switzerland), Luminex Systems UK Ltd. (England and Wales), Luminex Systems GmbH (Munich, Germany), and Luminex Systems Pte. Ltd. (Singapore), each as more fully described in Schedule IV hereto. All of such Subsidiaries are duly organized, validly existing, and in good standing (or the equivalent status) under the laws of their respective jurisdictions of organization. All of the outstanding equity interests of each such Subsidiary are validly issued, fully paid, and nonassessable (to the extent such concepts are applicable under the relevant jurisdiction's laws) and are owned, directly or indirectly, by the Issuer free and clear of all Liens, other than Liens under the Guarantee and Collateral Agreement.
Section 4.07 — Financial Statements
The Issuer has made available to the Purchaser true and complete copies of the audited consolidated financial statements of the Company and its Subsidiaries for the fiscal year ended December 31, 2024 (including the consolidated balance sheet, consolidated statement of income, consolidated statement of cash flows, and consolidated statement of stockholders' equity, and the notes thereto), audited by Hargrove Thornton LLP (Lead Audit Partner: Margaret Dawson) in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "2024 Financial Statements"). The 2024 Financial Statements have been prepared in conformity with GAAP applied on a consistent basis during the periods involved and fairly present in all material respects the consolidated financial position, results of operations, and cash flows of the Company and its Subsidiaries as of the dates and for the periods indicated. The Company's revenue for the fiscal year ended December 31, 2024 was $487,000,000 (consisting of $441,000,000 in annual recurring revenue and $46,000,000 in professional services revenue), and the Company's Adjusted EBITDA for the same period was $121,800,000, representing a 25.0% adjusted EBITDA margin.
Section 4.08 — Absence of Material Adverse Effect
Since December 31, 2024, there has not been any change, event, occurrence, circumstance, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect with respect to the Company and its Subsidiaries, taken as a whole.
Section 4.09 — Litigation