PAYING AGENT AGREEMENT
among
ARDENT APEX HOLDINGS INC.
a Delaware corporation
("Parent")
LUMINEX SYSTEMS HOLDINGS INC.
a Delaware corporation
(the "Surviving Corporation")
and
ATLAS SHAREHOLDER SERVICES INC.
a New York corporation
(the "Paying Agent" or "Exchange Agent")
Dated as of the Closing Date
(estimated July–August 2025)
Reference: Agreement and Plan of Merger dated as of March 24, 2025, among Ardent Apex Holdings Inc., Ardent Apex Merger Sub Inc., and Luminex Systems Holdings Inc.
CONFIDENTIAL — This document contains proprietary and confidential information and is subject to the attorney-client privilege. Distribution is restricted to authorized parties only.
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This PAYING AGENT AGREEMENT (this "Agreement") is entered into as of the Closing Date (as defined herein) by and among Ardent Apex Holdings Inc., a Delaware corporation ("Parent"), Luminex Systems Holdings Inc., a Delaware corporation (the "Surviving Corporation"), and Atlas Shareholder Services Inc., a New York corporation (the "Paying Agent" or "Exchange Agent"). Parent, the Surviving Corporation, and the Paying Agent are each sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Parent, Ardent Apex Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and Luminex Systems Holdings Inc., a Delaware corporation (the "Company"), entered into that certain Agreement and Plan of Merger dated as of March 24, 2025 (as it may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "Merger Agreement"), pursuant to which Merger Sub will merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent, in accordance with the applicable provisions of the Delaware General Corporation Law (the "DGCL"). The Merger is structured as a reverse triangular merger in which Merger Sub, the acquisition vehicle, will be merged with and into the Company, with the Company continuing its corporate existence as the surviving corporation of the Merger and becoming a direct, wholly owned subsidiary of Parent;
WHEREAS, pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of common stock, par value $0.001 per share, of the Company (the "Company Common Stock") issued and outstanding immediately prior to the Effective Time (other than (i) shares held by Parent, Merger Sub, or any direct or indirect wholly owned subsidiary of Parent or Merger Sub (collectively, "Excluded Shares"), (ii) shares held by stockholders who have properly exercised and perfected appraisal rights under Section 262 of the DGCL and have not effectively withdrawn or lost such rights ("Dissenting Shares"), and (iii) shares of Company Common Stock contributed to Parent by certain management stockholders pursuant to the Rollover Agreement (as defined in the Merger Agreement) (the "Rollover Shares")) will be automatically converted into the right to receive Twenty Dollars ($20.00) per share in cash, without interest thereon (the "Per Share Merger Consideration"). The aggregate merger consideration payable to cashing-out stockholders is based on approximately 140,000,000 fully diluted shares of Company Common Stock at $20.00 per share, representing an aggregate equity value of approximately Two Billion Eight Hundred Million Dollars ($2,800,000,000), less rollover equity of approximately Four Hundred Five Million Twenty Thousand Dollars ($405,020,000) contributed by certain management stockholders (including, without limitation, Dr. Stefan Kessler, Annelise Gruber, Dr. Markus Vogt, and other management participants identified in the Rollover Agreement), yielding aggregate cash-out consideration of approximately Two Billion Three Hundred Ninety-Four Million Nine Hundred Eighty Thousand Dollars ($2,394,980,000). Such management stockholders rolling over a portion of their equity into Parent will not receive the Per Share Merger Consideration with respect to their Rollover Shares;
WHEREAS, pursuant to Section 2.6 of the Merger Agreement, Parent is required to appoint a paying agent reasonably acceptable to the Company to effect the exchange of shares of Company Common Stock for the Per Share Merger Consideration, and Parent desires to appoint Atlas Shareholder Services Inc. as the paying agent and exchange agent for such purpose, and Atlas Shareholder Services Inc. desires to accept such appointment, on the terms and conditions set forth herein; and
WHEREAS, in connection with the Merger, a separate Escrow Agreement (the "Escrow Agreement") has been entered into with Continental Fiduciary Trust Company, as escrow agent (Reference: CFT-ESC-2025-7894), providing for the deposit of One Hundred Forty Million Dollars ($140,000,000) (representing approximately five percent (5%) of the aggregate deal value) into an escrow account (the "Escrow Account") for a period of eighteen (18) months following the Closing Date to secure certain indemnification obligations arising under the Merger Agreement. The Parties acknowledge and agree that amounts deposited in the Escrow Account pursuant to the Escrow Agreement are separate from, and do not reduce, the obligations of Parent under this Paying Agent Agreement to fund the Exchange Fund in full.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Book-Entry Shares" means shares of Company Common Stock held in book-entry form through the facilities of the Depository Trust Company ("DTC") or otherwise, including shares reflected on the stock ledger of the Company or its transfer agent as uncertificated shares, for which no physical Certificate has been issued.
"Certificates" means the physical stock certificates, if any, that, immediately prior to the Effective Time, represented outstanding shares of Company Common Stock.
"Closing Date" means the date on which the closing of the transactions contemplated by the Merger Agreement (the "Closing") occurs in accordance with the terms and conditions of the Merger Agreement.
"Company" means Luminex Systems Holdings Inc., a Delaware corporation incorporated on June 14, 2021, with its principal executive offices located at 2100 Reston Gateway Drive, Suite 800, Reston, Virginia 20191, and its registered agent for service of process at Capitol Corporate Services, Inc., 1675 South Ashbury Asset Advisors, Suite B, Dover, Delaware 19901.
"Dissenting Shares" means shares of Company Common Stock held by any holder who has properly exercised and perfected, and has not effectively withdrawn or lost, appraisal rights under Section 262 of the DGCL with respect to such shares.
"Effective Time" means the time at which the Certificate of Merger relating to the Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL, or such later time as Parent and the Company shall agree and as shall be specified in such Certificate of Merger.
"Exchange Fund" means the aggregate cash amount deposited by Parent with the Paying Agent pursuant to Section 3.1 hereof in order to fund the payment of the Per Share Merger Consideration to all holders of Company Common Stock entitled to receive such consideration pursuant to the Merger Agreement and this Agreement.
"Letter of Transmittal" means the form of letter of transmittal, together with accompanying instructions, to be sent to former holders of record of Company Common Stock in connection with the exchange of Certificates and Book-Entry Shares for the Per Share Merger Consideration, substantially in the form attached hereto as Exhibit A.
"Merger Agreement" means that certain Agreement and Plan of Merger dated as of March 24, 2025, by and among Ardent Apex Holdings Inc., Ardent Apex Merger Sub Inc., and Luminex Systems Holdings Inc., as the same may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Parent" means Ardent Apex Holdings Inc., a Delaware corporation incorporated on March 5, 2025, with its registered agent for service of process at National Registered Agents of Delaware, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
"Paying Agent" or "Exchange Agent" means Atlas Shareholder Services Inc., a New York corporation, with its principal offices located at 6201 15th Avenue, Brooklyn, New York 11219 (Contact: Dennis Carmichael, Director), and any successor paying agent appointed in accordance with Article IX hereof.
"Per Share Merger Consideration" means Twenty Dollars ($20.00) per share in cash, without interest, payable in respect of each share of Company Common Stock that is converted into the right to receive the Per Share Merger Consideration pursuant to the Merger Agreement.
"Rollover Shares" means shares of Company Common Stock contributed to Parent by certain management rollover participants pursuant to the Rollover Agreement (as defined in the Merger Agreement), which shares are excluded from the right to receive the Per Share Merger Consideration and are instead exchanged for equity interests in Parent or its designee.
"Surviving Corporation" means Luminex Systems Holdings Inc., as the surviving corporation of the Merger following the Effective Time, in its capacity as a direct, wholly owned subsidiary of Parent.
Section 1.2 — Terms Defined in the Merger Agreement
Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings ascribed to them in the Merger Agreement. In the event that a term is defined both in this Agreement and in the Merger Agreement, the definition set forth in this Agreement shall control for purposes of this Agreement.
Section 1.3 — Interpretation
The following rules of interpretation shall apply to this Agreement:
(a) The headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(b) Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."
(c) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other genders, in each case as the context requires.
(d) References herein to any "Article," "Section," "Exhibit," or "Schedule" shall be deemed to refer to the applicable Article, Section, Exhibit, or Schedule of or to this Agreement unless the context otherwise requires.
(e) The words "hereof," "herein," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(f) References to "dollars" or "$" shall mean United States dollars unless otherwise specified.
(g) References to any statute or regulation shall include all amendments thereto and all successor statutes and regulations.
(h) The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event of an ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
ARTICLE II — APPOINTMENT AND ACCEPTANCE
Section 2.1 — Appointment
Parent and the Surviving Corporation hereby appoint Atlas Shareholder Services Inc. as the paying agent and exchange agent for the transactions contemplated by the Merger Agreement and this Agreement, for the purpose of:
(a) receiving from former holders of record of Company Common Stock duly executed and properly completed Letters of Transmittal, Certificates representing shares of Company Common Stock, Book-Entry transfer instructions, and such other documents as may be required in connection with the exchange of shares for the Per Share Merger Consideration;
(b) exchanging such Certificates and Book-Entry Shares for the Per Share Merger Consideration, in accordance with the terms and conditions of this Agreement and the Merger Agreement; and
(c) performing such other duties and functions as are expressly set forth in this Agreement or the Merger Agreement, or as may be reasonably requested by Parent or the Surviving Corporation from time to time and agreed to by the Paying Agent, in each case in connection with the payment of the Per Share Merger Consideration to eligible former holders of Company Common Stock.
Section 2.2 — Acceptance
Atlas Shareholder Services Inc. hereby accepts its appointment as Paying Agent and Exchange Agent for the transactions contemplated hereby and agrees to perform all of the duties and obligations set forth in this Agreement faithfully and in accordance with the terms hereof, the applicable provisions of the Merger Agreement, and all applicable laws and regulations. The Paying Agent acknowledges that it has received and reviewed a copy of the Merger Agreement (including the relevant provisions thereof relating to the exchange of shares and the appointment of the paying agent) prior to the execution of this Agreement.
Section 2.3 — Paying Agent as Agent Only
The Paying Agent shall act solely as agent of Parent and the Surviving Corporation in performing its duties and obligations hereunder. Nothing contained in this Agreement shall be deemed to create or give rise to any trust, fiduciary relationship, or agency relationship between the Paying Agent and any former stockholder of the Company, any holder of Dissenting Shares, any holder of Rollover Shares, or any other person other than Parent and the Surviving Corporation. The Paying Agent shall have no duties or obligations to any person other than those expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement. Former stockholders of the Company shall have no contractual privity with the Paying Agent, except to the extent expressly provided in Section 12.10 hereof with respect to intended third-party beneficiary status.
ARTICLE III — EXCHANGE FUND
Section 3.1 — Deposit of Exchange Fund
(a) On or before the Closing Date (and in any event no later than immediately prior to the Effective Time), Parent shall deposit, or cause to be deposited, with the Paying Agent by wire transfer in immediately available funds to the account designated by the Paying Agent in writing (as set forth in Exhibit B hereto), an aggregate cash amount sufficient to pay the Per Share Merger Consideration of $20.00 per share in respect of all shares of Company Common Stock entitled to receive such consideration pursuant to the Merger Agreement (the "Exchange Fund"). The Exchange Fund shall be equal to the product of (i) $20.00, multiplied by (ii) the total number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time that are eligible for cash consideration (which shall be the total fully diluted shares of Company Common Stock (approximately 140,000,000 shares), less Rollover Shares, less any Excluded Shares held by Parent, Merger Sub, or any direct or indirect wholly owned subsidiary thereof, and less Dissenting Shares, if any). The aggregate amount of the Exchange Fund is expected to be approximately Two Billion Three Hundred Ninety-Four Million Nine Hundred Eighty Thousand Dollars ($2,394,980,000), subject to adjustment based on the final number of Rollover Shares, Excluded Shares, and Dissenting Shares as of immediately prior to the Effective Time.
(b) Parent and the Surviving Corporation hereby confirm that the sources of the Exchange Fund will be as follows, with all amounts wired through Parent to the Paying Agent in accordance with the wire instructions set forth in Exhibit B:
The foregoing amounts are subject to adjustment at Closing based on final working capital and other adjustments under the Merger Agreement. Any excess of the total funding over the required Exchange Fund amount shall be retained by Parent and shall not be deposited with the Paying Agent unless otherwise directed by Parent in writing. The Paying Agent shall have no obligation to verify the sources of funding described above and may rely solely on the wire transfers received as constituting the Exchange Fund.
(c) The Paying Agent shall hold the Exchange Fund in a segregated account for the exclusive purpose of paying the Per Share Merger Consideration to eligible former stockholders in accordance with this Agreement and the Merger Agreement. The Exchange Fund shall not be subject to any lien, attachment, levy, or other claim of any creditor of the Paying Agent or any other person (other than the former stockholders entitled to receive the Per Share Merger Consideration, Parent, or the Surviving Corporation, as applicable).
Section 3.2 — Investment of Exchange Fund
(a) Pending distribution to former stockholders in accordance with Article IV hereof, the Exchange Fund (or any portion thereof) shall be invested by the Paying Agent as directed in writing by Parent (or, if Parent has not provided written investment directions, by the Surviving Corporation); provided, however, that any such investments shall be limited exclusively to the following categories of Permitted Investments:
(i) direct obligations of the United States of America or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by the United States of America;
(ii) obligations issued or guaranteed by agencies or instrumentalities of the United States of America that are backed by the full faith and credit of the United States of America;
(iii) commercial paper that, at the time of acquisition, is rated not lower than A-1 by Standard & Poor's Ratings Services, P-1 by Moody's Investors Service, Inc., or the equivalent rating by another nationally recognized statistical rating organization; or
(iv) money market funds that invest exclusively in assets described in clauses (i), (ii), and (iii) above and that are rated Aaa or AAAm (or the equivalent) by a nationally recognized statistical rating organization.
(b) In the absence of written investment direction from Parent, the Paying Agent shall invest the Exchange Fund in a money market fund meeting the requirements of clause (iv) above that is selected by the Paying Agent in its discretion. The Paying Agent shall have no duty to solicit or obtain investment instructions from Parent.
(c) All interest, income, dividends, and other earnings on the investment of the Exchange Fund shall be for the account of the Surviving Corporation and shall not constitute part of the Per Share Merger Consideration payable to former stockholders. Such earnings shall be distributed or otherwise applied as directed in writing by Parent or the Surviving Corporation.
(d) The Paying Agent shall have no liability or responsibility for any losses on investments of the Exchange Fund made in accordance with the investment directions provided by Parent or the Surviving Corporation, or in accordance with the Paying Agent's default investment policy described in clause (b) above, except to the extent that such losses are caused by the Paying Agent's own gross negligence, willful misconduct, or bad faith.
Section 3.3 — Insufficiency of Exchange Fund
(a) If at any time the Exchange Fund held by the Paying Agent is insufficient to pay the full Per Share Merger Consideration in respect of all shares of Company Common Stock that have been duly surrendered (or are then subject to properly submitted exchange requests) in accordance with Article IV hereof, the Paying Agent shall promptly (and in any event within two (2) business days of becoming aware of such insufficiency) notify Parent and the Surviving Corporation in writing, specifying the amount of the shortfall. Parent shall, within three (3) business days following receipt of such notice, deposit with the Paying Agent additional immediately available funds in an amount sufficient to cure such shortfall.
(b) The Paying Agent shall have no obligation to make any payment of Per Share Merger Consideration in excess of the Exchange Fund (including investment earnings thereon) then held by the Paying Agent. The Paying Agent shall not be required to advance its own funds or borrow money to fund any insufficiency in the Exchange Fund. Pending receipt of additional funds from Parent, the Paying Agent shall process and pay exchange requests in the order received to the extent of available funds.
Section 3.4 — Return of Excess Funds
(a) Any portion of the Exchange Fund (including any investment earnings thereon) that remains undistributed twelve (12) months after the Effective Time shall be returned to the Surviving Corporation upon its written request to the Paying Agent, net of any amounts that the Paying Agent reasonably determines are necessary to reserve for pending exchange requests, unresolved claims, or amounts subject to escheatment.
(b) Following such return, any former stockholders of the Company who have not theretofore complied with Article IV hereof shall thereafter look solely to the Surviving Corporation (subject to applicable abandoned property, escheat, or similar laws) for payment of the Per Share Merger Consideration to which they are entitled, and neither the Paying Agent nor Parent shall have any further liability or obligation with respect thereto.
(c) None of Parent, the Surviving Corporation, or the Paying Agent shall be liable to any former stockholder for any Per Share Merger Consideration delivered to a public official or governmental authority pursuant to any applicable abandoned property, escheat, or similar law. Any amounts remaining unclaimed by former stockholders at such time as such amounts would otherwise escheat to or become the property of any governmental entity shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of any claims or interests of any person previously entitled thereto.
ARTICLE IV — EXCHANGE PROCEDURES
Section 4.1 — Letter of Transmittal
(a) Promptly after the Effective Time, and in no event later than five (5) business days following the Effective Time, the Paying Agent shall mail or cause to be mailed (by first-class mail, postage prepaid) or, if so directed in writing by Parent, make available electronically through a secure online portal or other electronic means designated by Parent, to each holder of record of Company Common Stock as of immediately prior to the Effective Time (other than holders of Rollover Shares, Parent, Merger Sub, or any direct or indirect wholly owned subsidiary thereof, and holders of Dissenting Shares):
(i) a Letter of Transmittal in substantially the form attached hereto as Exhibit A, duly prepared for completion and execution by such holder; and
(ii) instructions for use in effecting the surrender of Certificates or Book-Entry Shares in exchange for payment of the Per Share Merger Consideration, including instructions regarding the proper completion and execution of the Letter of Transmittal, delivery methods, and applicable deadlines.
(b) The Letter of Transmittal shall include customary provisions regarding, among other things:
(i) the risk of loss in delivery of Certificates and documents;
(ii) proper completion requirements, including the holder's name, address, taxpayer identification number, and the number of shares being surrendered;
(iii) signature guarantee requirements in accordance with the Paying Agent's standard medallion guarantee program;
(iv) the authority of the signatory to execute and deliver the Letter of Transmittal on behalf of the holder; and
(v) a certification as to the holder's status as a United States person or non-United States person for purposes of applicable tax withholding.
(c) The Surviving Corporation or its transfer agent shall, promptly following the Effective Time, provide the Paying Agent with a complete and accurate list of the holders of record of Company Common Stock as of immediately prior to the Effective Time, together with each such holder's name, address, and share position (including identification of Certificates and Book-Entry Shares), in a format reasonably acceptable to the Paying Agent.
Section 4.2 — Surrender and Exchange — Certificated Shares
(a) Upon surrender to the Paying Agent of a Certificate formerly representing shares of Company Common Stock, together with a duly executed and properly completed Letter of Transmittal and such other documents as the Paying Agent may reasonably require (including, without limitation, a properly completed and duly executed IRS Form W-9 or applicable IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY, as applicable), the Paying Agent shall, as promptly as practicable (and in any event within five (5) business days following receipt of all required documents in proper form), pay to the holder surrendering such Certificate the Per Share Merger Consideration of Twenty Dollars ($20.00) per share in respect of each share of Company Common Stock formerly represented by such Certificate.
(b) Payment of the Per Share Merger Consideration shall be made, at the election of the holder as indicated in the Letter of Transmittal:
(i) by check drawn on a domestic bank in United States dollars, mailed to the address specified by the holder in the Letter of Transmittal; or
(ii) by wire transfer in immediately available funds to the account specified by the holder in the Letter of Transmittal; provided that wire transfer shall be available only for aggregate payments of Fifty Thousand Dollars ($50,000) or more in respect of a single Letter of Transmittal submission.
If no payment method election is made, payment shall be made by check.
(c) From and after the Effective Time, each Certificate that was theretofore outstanding and represented shares of Company Common Stock shall represent only the right to receive the Per Share Merger Consideration, without interest, upon surrender thereof in accordance with this Section 4.2.
(d) No interest shall accrue or be payable on the Per Share Merger Consideration, regardless of the date on which a Certificate is surrendered or a payment is made.
(e) Upon payment of the Per Share Merger Consideration in respect of a Certificate, such Certificate shall be deemed cancelled and shall have no further force or effect. The Paying Agent shall retain or destroy cancelled Certificates in accordance with its customary document retention policies or as otherwise directed in writing by Parent.
Section 4.3 — Surrender and Exchange — Book-Entry Shares
(a) Holders of Book-Entry Shares shall not be required to deliver a physical Certificate in connection with the exchange of their shares for the Per Share Merger Consideration. The Paying Agent shall pay the Per Share Merger Consideration of Twenty Dollars ($20.00) per share to a holder of Book-Entry Shares upon receipt of:
(i) a duly executed and properly completed Letter of Transmittal, together with a properly completed and duly executed IRS Form W-9 or applicable IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY, as applicable; or
(ii) in the case of shares held through DTC or a nominee, delivery of an "agent's message" through DTC's Automated Tender Offer Program ("ATOP") or such other similar program or system as may be utilized by DTC, together with any required tax forms or certifications delivered through DTC's system.
(b) Payment of the Per Share Merger Consideration to holders of Book-Entry Shares shall be made in the same manner as provided in Section 4.2(b) hereof. For holders of Book-Entry Shares whose shares were held through DTC, payment may also be made by credit to the relevant DTC participant account, as directed through the ATOP process.
(c) The Paying Agent shall coordinate with DTC and the Company's transfer agent, as applicable, to ensure the orderly processing of Book-Entry Share exchanges.
Section 4.4 — Lost, Stolen, or Destroyed Certificates
If any Certificate has been lost, stolen, or destroyed, the Paying Agent shall pay the Per Share Merger Consideration in respect of the shares formerly represented by such Certificate upon receipt of:
(a) an affidavit of loss, in form and substance reasonably satisfactory to the Paying Agent and the Surviving Corporation, executed by the person claiming to be the holder of such lost, stolen, or destroyed Certificate, setting forth the circumstances of such loss, theft, or destruction;
(b) an indemnity bond or surety bond in such amount and form as the Paying Agent may reasonably require, issued by a surety company reasonably acceptable to the Paying Agent, to protect and indemnify the Paying Agent, Parent, and the Surviving Corporation against any claim that may be made against any of them with respect to such Certificate; and
(c) such other evidence and documentation as the Paying Agent or the Surviving Corporation may reasonably require in order to establish the holder's ownership of the shares and the loss, theft, or destruction of the Certificate.
The Surviving Corporation shall bear the cost of any indemnity bond required by this Section 4.4, unless the Merger Agreement provides otherwise.
Section 4.5 — Withholding
(a) Each of the Paying Agent, Parent, and the Surviving Corporation shall be entitled to deduct and withhold from the Per Share Merger Consideration otherwise payable to any former holder of Company Common Stock such amounts as are required to be deducted and withheld under the Internal Revenue Code of 1986, as amended (the "Code"), the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), the Treasury Regulations promulgated thereunder, or any other applicable federal, state, local, or foreign tax law, regulation, or governmental order.
(b) Pursuant to Section 6.3 of the Merger Agreement, the Company has agreed to deliver to Parent and the Surviving Corporation at or prior to the Closing a certification, in form and substance reasonably satisfactory to Parent, that the Company is not, and has not been at any time during the relevant period, a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Code, together with a notice to the Internal Revenue Service in accordance with Treasury Regulation Section 1.897-2(h)(2). To the extent such FIRPTA certificate is validly delivered, no withholding under FIRPTA shall be required with respect to payments made to eligible former stockholders.
(c) To the extent that amounts are so deducted and withheld by the Paying Agent, Parent, or the Surviving Corporation and are duly remitted to the applicable governmental taxing authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.
(d) The Paying Agent shall request IRS Form W-9 (for United States persons) or the applicable IRS Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY (for non-United States persons) from each payee as part of the exchange process. In the event that a payee fails to provide a properly completed IRS Form W-9 or applicable W-8 form, the Paying Agent shall apply backup withholding at the applicable rate under Section 3406 of the Code to payments made to such payee.
(e) The Paying Agent shall remit all withheld amounts to the applicable taxing authority in a timely manner in accordance with applicable law and shall provide Parent and the Surviving Corporation with evidence of such remittance upon reasonable request.
Section 4.6 — Transfer Taxes
(a) Any transfer, documentary, sales, use, stamp, registration, value added, or similar taxes or charges ("Transfer Taxes") imposed in connection with the exchange of Certificates or Book-Entry Shares for the Per Share Merger Consideration shall be paid by the Surviving Corporation.
(b) Notwithstanding the foregoing, to the extent any Transfer Tax is imposed as a result of a request to make payment to a person other than the registered holder of the shares being exchanged (including payment to an assignee, transferee, or other designee), such Transfer Tax shall be borne solely by the transferee or other person requesting such non-standard payment, and the Paying Agent shall not be required to make any such payment until evidence satisfactory to the Paying Agent of the payment of such Transfer Tax (or exemption therefrom) has been provided to the Paying Agent.
Section 4.7 — Escheatment; Abandoned Property
(a) Neither Parent, the Surviving Corporation, nor the Paying Agent shall be liable to any former stockholder of the Company for any Per Share Merger Consideration (or any portion thereof) delivered or paid over to any governmental authority pursuant to any applicable abandoned property, escheat, unclaimed property, or similar law or regulation.
(b) The Paying Agent shall comply with all applicable escheatment, unclaimed property, and abandoned property laws and regulations, including applicable reporting and remittance requirements of each state and other jurisdiction in which such obligations may arise. The Paying Agent shall provide Parent and the Surviving Corporation with periodic reports (no less frequently than semi-annually) regarding the status of any amounts that have not been claimed by former stockholders and that may become subject to escheatment or unclaimed property laws, including a summary of the number of uncashed checks, the aggregate dollar amount of such uncashed checks, and the anticipated escheatment dates applicable to such amounts.
(c) Prior to the escheatment of any amounts to any governmental authority, the Paying Agent shall, to the extent required by applicable law, undertake commercially reasonable due diligence efforts to locate the former stockholders to whom such amounts are owed, including the mailing of reminder notices and, where required, the publication of notice.
Section 4.8 — No Further Transfers on Stock Transfer Books
From and after the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers of shares of Company Common Stock on the records of the Company. If, after the Effective Time, any Certificate or Book-Entry Share is presented to the Paying Agent, the Surviving Corporation, or Parent for transfer, such Certificate or Book-Entry Share shall be cancelled and exchanged for the Per Share Merger Consideration in accordance with the procedures set forth in this Article IV, without any transfer of record ownership being effected on the stock transfer books of the Company.
ARTICLE V — DUTIES AND RESPONSIBILITIES OF THE PAYING AGENT
Section 5.1 — General Duties
(a) The Paying Agent shall perform all duties and obligations expressly set forth in this Agreement, faithfully and diligently, and in accordance with the terms hereof, the Merger Agreement, and all applicable laws and regulations. In addition, the Paying Agent shall perform such additional duties and functions as may be reasonably requested by Parent or the Surviving Corporation from time to time in writing, to the extent that the Paying Agent agrees to perform such additional duties, and subject to such additional compensation as may be mutually agreed upon by the parties.
(b) The Parties acknowledge and agree that the Paying Agent's duties and obligations under this Agreement are ministerial and administrative in nature, and the Paying Agent shall not be required to exercise any discretion or judgment with respect to the merits of any claim by any former stockholder, any dispute regarding the ownership of shares, or any matter relating to the terms of the Merger Agreement, except as expressly set forth herein.
(c) The Paying Agent shall designate a dedicated relationship manager and a backup contact to serve as the primary points of contact for Parent and the Surviving Corporation with respect to the exchange process. As of the date hereof, the designated primary contact shall be Dennis Carmichael, Director, and the designated backup contact shall be notified to Parent and the Surviving Corporation in writing within five (5) business days following the execution of this Agreement.
Section 5.2 — Record-Keeping and Reporting
(a) The Paying Agent shall establish and maintain accurate, complete, and up-to-date records with respect to all aspects of the exchange process, including:
(i) all Certificates surrendered and Book-Entry Shares for which exchange requests have been received;
(ii) all Letters of Transmittal and other exchange documentation received;
(iii) all payments of Per Share Merger Consideration made, including the date, amount, payee, and method of payment for each transaction;
(iv) all amounts deducted and withheld pursuant to Section 4.5 hereof, and evidence of remittance to the applicable taxing authority; and
(v) all correspondence with former stockholders and third parties relating to the exchange process.
(b) The Paying Agent shall provide Parent and the Surviving Corporation with written reports (in a form and with a frequency reasonably agreed upon by the Parties, but in no event less frequently than monthly during the first six (6) months following the Effective Time and quarterly thereafter) summarizing the status of the exchange process, including:
(i) the number and aggregate value of exchanges completed during the applicable reporting period;
(ii) the cumulative number and aggregate value of all exchanges completed since the Effective Time;
(iii) the amount of Exchange Fund remaining on deposit with the Paying Agent (including principal and investment earnings);
(iv) the number of shares of Company Common Stock that remain outstanding and have not yet been surrendered for exchange; and
(v) any material issues, disputes, or irregularities encountered during the reporting period.
(c) The Paying Agent shall retain all records and documents related to its performance under this Agreement for a period of not less than seven (7) years following the termination of this Agreement (or such longer period as may be required by applicable law or regulation), and shall make such records available for inspection and audit by Parent, the Surviving Corporation, or their designated representatives upon reasonable prior written notice during normal business hours.
Section 5.3 — Tax Reporting
(a) The Paying Agent shall prepare and timely file with the Internal Revenue Service, and deliver to payees, all required information returns and other tax reporting documents in connection with payments made pursuant to this Agreement, including IRS Form 1099-B, IRS Form 1099-MISC, IRS Form 1042-S, and any other applicable information returns required under the Code, the Treasury Regulations, or any other applicable federal, state, or local tax law.
(b) The Paying Agent shall cooperate fully with Parent, the Surviving Corporation, and their respective tax advisors (including Pendleton & Associates LLP, Contact: Richard Chow, Partner) in connection with any tax reporting matters arising out of or relating to the transactions contemplated by this Agreement, including providing such information, data, and documentation as may be reasonably requested in connection with the preparation of tax returns or the response to any inquiry, audit, or examination by any taxing authority.
(c) The Paying Agent shall comply with all backup withholding requirements under Section 3406 of the Code and shall properly report and remit all backup withholding amounts to the Internal Revenue Service in accordance with applicable law.
(d) The Paying Agent shall prepare and file (or assist Parent and the Surviving Corporation in filing) any state or local tax information returns required in connection with the payments made hereunder.
Section 5.4 — Compliance with Law
The Paying Agent shall perform its obligations hereunder in compliance with all applicable federal, state, and local laws and regulations, including:
(a) the Bank Secrecy Act, as amended by the USA PATRIOT Act, and all regulations promulgated thereunder, including applicable anti-money laundering ("AML") requirements;
(b) the sanctions programs administered by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC"), including the requirement to screen payees against OFAC's Specially Designated Nationals and blocked Persons List and other applicable sanctions lists;
(c) applicable "know your customer" ("KYC") requirements and customer identification program ("CIP") requirements; and
(d) all other applicable federal, state, and local laws, rules, regulations, and orders governing the activities of a paying agent or exchange agent.
In the event that the Paying Agent identifies any payee as a person or entity on the OFAC Specially Designated Nationals List or otherwise subject to sanctions, the Paying Agent shall promptly notify Parent and the Surviving Corporation and shall take all actions required by applicable law with respect to such payee, including blocking or freezing any payment due to such payee.
Section 5.5 — Cooperation
The Paying Agent shall reasonably cooperate with Parent, the Surviving Corporation, and their respective legal counsel (including Calderwood & Harkness LLP, 7 Times Square, New York, New York 10036, Attention: James Prentice, Partner, counsel to Parent; and Caldwell, Raines & Sheppard LLP, counsel to the Company) in connection with any inquiries from former stockholders of the Company regarding the exchange process, any disputes or claims relating to the exchange of shares, and any regulatory or governmental inquiries relating to the transactions contemplated by this Agreement. The Paying Agent shall promptly forward to Parent or the Surviving Corporation any correspondence or communication received by the Paying Agent from any governmental authority in connection with the transactions contemplated hereby.
ARTICLE VI — COMPENSATION AND EXPENSES
Section 6.1 — Fees
Parent shall pay to the Paying Agent a fee for its services under this Agreement in the amounts and at the times set forth in the fee schedule attached hereto as Exhibit C (the "Fee Schedule"). The initial set-up fee and the base fee for exchange services as set forth in the Fee Schedule shall be payable upon execution and delivery of this Agreement by all Parties. Ongoing service fees and per-item processing fees shall be payable on a monthly basis (or as otherwise specified in the Fee Schedule), within thirty (30) days following the Paying Agent's submission of an invoice therefor, accompanied by reasonable supporting documentation.
Section 6.2 — Reimbursement of Expenses
Parent shall reimburse the Paying Agent for all reasonable and documented out-of-pocket expenses incurred by the Paying Agent in the performance of its duties and obligations hereunder, including expenses for postage, printing, courier services, and mailing costs associated with the preparation and distribution of Letters of Transmittal and related materials; reasonable legal fees and expenses of the Paying Agent's counsel in connection with the review and negotiation of this Agreement and the provision of ongoing legal advice in connection with the Paying Agent's performance hereunder; and other reasonable and documented out-of-pocket costs and disbursements. The Paying Agent shall submit itemized expense reports to Parent on a monthly basis, and Parent shall reimburse such expenses within thirty (30) days following receipt of such reports.
Section 6.3 — Priority of Payment
The Paying Agent's fees and expenses under Sections 6.1 and 6.2 hereof shall be payable solely by Parent and shall constitute obligations of Parent separate and apart from the Exchange Fund. In no event shall the Paying Agent's fees, expenses, or other amounts payable under this Article VI be deducted from the Exchange Fund or reduce the Per Share Merger Consideration payable to any former stockholder of the Company. The Paying Agent shall not have any lien on, or right of set-off against, the Exchange Fund in respect of any fees, expenses, or other amounts payable to the Paying Agent under this Agreement.
ARTICLE VII — INDEMNIFICATION
Section 7.1 — Indemnification of Paying Agent
Parent and the Surviving Corporation shall, jointly and severally, indemnify, defend, and hold harmless the Paying Agent and each of its officers, directors, employees, agents, representatives, and affiliates (collectively, the "Paying Agent Indemnified Parties") from and against any and all losses, liabilities, claims, actions, suits, proceedings, judgments, damages, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") arising out of, relating to, or in connection with (a) the Paying Agent's acceptance of its appointment as Paying Agent and Exchange Agent hereunder, (b) the Paying Agent's performance of, or failure to perform, its duties and obligations under this Agreement, or (c) the Paying Agent's reliance on or compliance with any instruction, direction, notice, certificate, document, or other communication furnished to it by Parent, the Surviving Corporation, or any of their respective officers, directors, employees, agents, or representatives in connection with this Agreement; provided, however, that in no event shall Parent or the Surviving Corporation be obligated to indemnify any Paying Agent Indemnified Party for any Losses to the extent that such Losses are finally determined by a court of competent jurisdiction (after exhaustion of all appeals) to have resulted from the gross negligence, willful misconduct, or bad faith of such Paying Agent Indemnified Party.
Section 7.2 — Indemnification Procedures
(a) Notice. Any Paying Agent Indemnified Party seeking indemnification under this Article VII (the "Indemnified Party") shall promptly (and in any event within fifteen (15) business days after becoming aware of the facts giving rise to such claim) provide written notice to Parent and the Surviving Corporation (the "Indemnifying Parties") of any claim, action, suit, or proceeding for which indemnification is sought (a "Claim Notice"), setting forth in reasonable detail the nature and basis of the claim, the facts giving rise thereto, and the estimated amount of the Losses to the extent then reasonably ascertainable. The failure to provide timely notice shall not relieve the Indemnifying Parties of their obligations hereunder, except to the extent that the Indemnifying Parties are materially prejudiced by such failure.
(b) Defense. The Indemnifying Parties shall have the right, at their sole cost and expense, to assume and control the defense of any third-party claim for which indemnification is sought, by providing written notice of such election to the Indemnified Party within twenty (20) business days after receipt of the Claim Notice. If the Indemnifying Parties assume the defense of such claim, the Indemnified Party shall have the right to participate in (but not control) such defense at its own expense, using counsel of its own choosing. If the Indemnifying Parties do not assume the defense of such claim within such twenty (20) business day period, the Indemnified Party may defend such claim with counsel of its choosing, at the Indemnifying Parties' expense.
(c) Cooperation. The Indemnified Party shall cooperate in all reasonable respects with the Indemnifying Parties in the defense of any claim for which indemnification is sought, including providing access to relevant records and making available relevant personnel for testimony or other assistance.
(d) Settlement. The Indemnifying Parties shall not settle any claim for which indemnification is sought without the prior written consent of the Indemnified Party (such consent not to be unreasonably withheld, conditioned, or delayed), unless such settlement (i) involves only the payment of money (which is fully funded by the Indemnifying Parties), (ii) does not involve any admission of liability or wrongdoing by the Indemnified Party, and (iii) includes a full and unconditional release of the Indemnified Party from all liability with respect to such claim. The Indemnified Party shall not settle any claim for which indemnification is sought without the prior written consent of the Indemnifying Parties (such consent not to be unreasonably withheld, conditioned, or delayed).
Section 7.3 — Survival
The indemnification obligations of Parent and the Surviving Corporation under this Article VII shall survive the termination of this Agreement (regardless of the basis for such termination) and the resignation or removal of the Paying Agent for a period of three (3) years following such termination, resignation, or removal, or, in the case of any claim for which a Claim Notice has been delivered prior to the expiration of such three (3) year period, until the final resolution of such claim.
ARTICLE VIII — LIMITATION OF LIABILITY
Section 8.1 — Standard of Care
(a) The Paying Agent shall not be liable for any action taken or omitted to be taken by it in good faith in connection with the performance of its duties and obligations under this Agreement, except to the extent that such action or omission constitutes or results from the Paying Agent's own gross negligence, willful misconduct, or bad faith, as finally determined by a court of competent jurisdiction after exhaustion of all appeals.
(b) The Paying Agent may rely, and shall be fully protected in relying, conclusively and without independent verification, upon any notice, instruction, request, consent, certificate, direction, statement, opinion, report, order, or other document or instrument (whether in original, facsimile, or electronic form) believed by it in good faith to be genuine and to have been signed, presented, or delivered by the proper party or parties. The Paying Agent shall not be required to inquire into the authority of any person executing or delivering any such document or instrument.
(c) The Paying Agent may consult with legal counsel of its own selection (at the expense of Parent, to the extent such consultation is reasonable and necessary) on any matter arising in connection with this Agreement, and shall not be liable for any action taken or omitted in good faith in reliance upon the advice of such counsel.
(d) Whenever the Paying Agent is unable to decide between alternative courses of action permitted or required by this Agreement, or whenever the Paying Agent is unsure of the application of any provision of this Agreement or the Merger Agreement, the Paying Agent may request written instructions from Parent, and shall be protected in acting in accordance with such instructions, and shall not be liable for any action taken or omitted in accordance therewith.
Section 8.2 — No Consequential Damages
IN NO EVENT SHALL THE PAYING AGENT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES OF ANY KIND, INCLUDING LOST PROFITS, LOSS OF BUSINESS, OR LOSS OF DATA, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY, EVEN IF THE PAYING AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Section 8.3 — Force Majeure
The Paying Agent shall not be liable for any delay or failure in performance of its obligations under this Agreement to the extent that such delay or failure results from causes beyond its reasonable control, including acts of God, natural disasters, fires, floods, earthquakes, epidemics, pandemics, war, acts of terrorism, civil disturbances, riots, insurrections, labor disputes, strikes, shortages, governmental actions or orders (including quarantine restrictions), interruptions or failures of electrical power, telecommunications, internet, or other utility services, computer system failures or cyberattacks, or any other cause beyond the Paying Agent's reasonable control (each, a "Force Majeure Event"). In the event of a Force Majeure Event, the Paying Agent shall promptly notify Parent and the Surviving Corporation and shall use commercially reasonable efforts to resume performance as soon as practicable.
ARTICLE IX — RESIGNATION AND REMOVAL
Section 9.1 — Resignation of Paying Agent
The Paying Agent may resign and be discharged from the duties and obligations imposed on it by this Agreement by delivering written notice of its resignation to Parent and the Surviving Corporation at least thirty (30) days prior to the proposed effective date of such resignation; provided, however, that no such resignation shall become effective until (a) a successor paying agent has been duly appointed by Parent and (b) such successor paying agent has accepted such appointment in writing and has received all Exchange Fund amounts, records, documents, and other property held by the resigning Paying Agent hereunder. If no successor paying agent has been appointed and has accepted such appointment within sixty (60) days following the date of the Paying Agent's notice of resignation, the Paying Agent may petition any court of competent jurisdiction for the appointment of a successor paying agent.
Section 9.2 — Removal of Paying Agent
Parent may remove the Paying Agent at any time, with or without cause, upon delivery of written notice to the Paying Agent and the Surviving Corporation at least thirty (30) days prior to the proposed effective date of such removal. Upon such removal, Parent shall appoint a successor paying agent reasonably acceptable to the Surviving Corporation. The removal of the Paying Agent shall not become effective until a successor paying agent has been appointed and has accepted such appointment in writing.
Section 9.3 — Successor Paying Agent
(a) Upon the effective date of any resignation or removal of the Paying Agent pursuant to this Article IX, the Paying Agent shall promptly deliver to the successor paying agent all Exchange Fund amounts then held by it, together with all records, documents, data, correspondence, and other property held by it in connection with the performance of its duties hereunder, and shall execute and deliver such instruments and take such other actions as may be reasonably necessary to effectuate the transfer of its duties to the successor paying agent.