PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 7 Times Square New York, NY 10036
Matter No. 1001-00004
MEMORANDUM
TO: Board of Directors and Senior Management of Luminex Systems Holdings Inc.
FROM: James Prentice, Partner; Ryan Kowalski, Associate — Calderwood & Harkness LLP
DATE: March 25, 2025
RE: No-Shop Compliance Procedures — Agreement and Plan of Merger dated March 24, 2025, among Ardent Apex Holdings Inc. ("Parent"), Ardent Apex Merger Sub Inc. ("Merger Sub"), and Luminex Systems Holdings Inc. (the "Company" or "Target")
Right-click to update Table of Contents
I. Purpose and Background
This memorandum provides practical guidance to the board of directors (including Chairman Roland Merz) and senior management of Luminex Systems Holdings Inc. (the "Company") regarding compliance with the no-solicitation ("no-shop") provisions contained in the Agreement and Plan of Merger, dated as of March 24, 2025 (the "Merger Agreement"), among Ardent Apex Holdings Inc., a Delaware corporation ("Parent"), Ardent Apex Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), and the Company. The Merger Agreement was executed on March 24, 2025, and the no-shop obligations contained therein became immediately effective upon such execution. Accordingly, this memorandum is being distributed the following day, March 25, 2025, to ensure timely dissemination of compliance guidance to all relevant personnel and advisors.
The Merger Agreement provides for the reverse triangular merger of Merger Sub with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the "Merger"). In the Merger, each outstanding share of the Company's common stock (other than shares held by the Company in treasury, shares owned by Parent or Merger Sub, and dissenting shares) will be converted into the right to receive $20.00 per share in cash, without interest and subject to any applicable withholding taxes. Based on a fully diluted share count of approximately 140,000,000 shares, the aggregate equity value of the transaction is approximately $2,800,000,000. The ultimate buyer is Ardent Capital Partners III LP, a Delaware limited partnership, which controls Parent and Merger Sub.
The Company is being advised in connection with the Merger by Caldwell, Raines & Sheppard LLP, 51 West 52nd Street, New York, NY 10019, as lead outside legal counsel (lead partner: Patricia Okonkwo; lead associate: Daniel Feinberg), and by Pinehurst Rothwell & Co. as lead financial advisor (senior managing director: Samantha Delacroix). Parent and Merger Sub are being advised by Calderwood & Harkness LLP, 7 Times Square, New York, NY 10036 (lead partner: James Prentice; lead associate: Ryan Kowalski).
The purpose of this memorandum is to ensure that all Company directors, officers, employees, and authorized representatives — including the Company's investment bankers, accountants (Hargrove Thornton LLP; engagement partner: Margaret Dawson), attorneys, and other advisors and agents — fully understand the restrictions imposed by the no-shop provisions, the limited exceptions to those restrictions (including the fiduciary-out exception and matching-right procedures), and the required procedures governing conduct from the date of execution of the Merger Agreement through the closing of the Merger (the "Closing") or the earlier valid termination of the Merger Agreement in accordance with its terms.
Compliance with the no-shop provisions is of critical importance. Non-compliance could give rise to termination rights for Parent under the Merger Agreement, potential liability for the Company to pay the $84,000,000 termination fee (the "Termination Fee") to Parent, and claims by Parent for damages — including, in the case of a willful and material breach, damages that may exceed the Termination Fee. Moreover, individual directors and officers could face personal liability exposure in connection with any breach of their fiduciary duties if they participate in or condone conduct that violates the no-shop provisions.
All questions regarding compliance with the no-shop provisions or the procedures described in this memorandum should be directed to the Company's outside legal counsel at Caldwell, Raines & Sheppard LLP (Patricia Okonkwo or Daniel Feinberg) or to Calderwood & Harkness LLP (James Prentice or Ryan Kowalski). Directors, officers, and employees should not attempt to interpret the no-shop provisions on their own or make independent judgments about whether particular conduct is permissible without first consulting outside legal counsel.
II. Overview of the No-Shop Provision
This section summarizes the principal components of the no-shop provision set forth in Article VI of the Merger Agreement. While every effort has been made to ensure that this summary is accurate and comprehensive, this memorandum is not a substitute for the actual text of the Merger Agreement, and the specific language of the Merger Agreement controls in the event of any inconsistency. All defined terms used herein have the meanings ascribed to them in the Merger Agreement unless otherwise defined in this memorandum.
A. General Prohibition
From and after the date of the Merger Agreement (i.e., from and after 11:59 p.m. Eastern Time on March 24, 2025), the Company and its "Representatives" are prohibited from taking any of the following actions. For purposes of the no-shop provision, the term "Representatives" is defined broadly and includes all directors, officers, and employees of the Company and its subsidiaries, as well as all investment bankers (including Pinehurst Rothwell & Co. and Samantha Delacroix), attorneys (including Caldwell, Raines & Sheppard LLP), accountants (including Hargrove Thornton LLP and Margaret Dawson), and other advisors, agents, and representatives of the Company and its subsidiaries. The prohibited actions are as follows:
1. Soliciting, Initiating, Knowingly Encouraging, or Knowingly Facilitating. The Company and its Representatives shall not, directly or indirectly, solicit, initiate, knowingly encourage, or knowingly facilitate any inquiry, proposal, or offer that constitutes, or could reasonably be expected to lead to, a Competing Acquisition Proposal (as defined in Section II.C below). This prohibition extends to any action — whether overt or subtle — that has the purpose or reasonably foreseeable effect of generating interest from third parties in acquiring the Company or any significant portion of its business or assets. For the avoidance of doubt, the prohibition includes "testing the waters" with potential acquirers or their advisors, providing "market checks" to third parties, or making any public or private statements designed to solicit alternative interest.
2. Entering Into, Continuing, or Participating in Discussions or Negotiations. The Company and its Representatives shall not enter into, continue, or otherwise participate in any discussions or negotiations with any third party regarding a Competing Acquisition Proposal. This prohibition applies irrespective of whether the Company or the third party initiated the contact, and covers formal negotiations as well as informal, preliminary, or exploratory conversations.
3. Providing Non-Public Information. The Company and its Representatives shall not provide any non-public information or data concerning the Company or any of its subsidiaries to any third party in connection with, or for the purpose of facilitating, a Competing Acquisition Proposal. This includes financial statements, projections, business plans, customer lists, technology roadmaps, technical documentation, employee information, and any other information not generally available to the public.
4. Entering Into Agreements. The Company and its Representatives shall not enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement, joint venture agreement, or any other agreement, arrangement, or understanding (whether binding or non-binding, written or oral) relating to a Competing Acquisition Proposal. This prohibition covers all forms of preliminary and definitive agreements.
5. Approving, Endorsing, or Recommending. The Company and its Representatives shall not approve, endorse, or recommend any Competing Acquisition Proposal, whether publicly or privately. The Company's board of directors shall not take any action, adopt any resolution, or make any public statement that has the effect of recommending, supporting, or facilitating a Competing Acquisition Proposal, except as expressly permitted by the fiduciary-out exception described in Section III below.
The foregoing prohibitions are comprehensive and should be treated as a blanket restriction on any activity — whether active or passive, direct or indirect — that could result in, or contribute to, the emergence of a Competing Acquisition Proposal. If any director, officer, employee, or advisor has any doubt about whether a particular action or communication falls within the scope of the prohibition, the action should not be taken and outside legal counsel should be consulted immediately.
B. Immediate Cessation of Prior Activities
As a condition to the execution of the Merger Agreement, the Company represented and warranted that, effective as of the date of execution, it would take the following actions:
Cessation of Discussions. The Company and its Representatives must immediately cease and terminate all existing discussions, negotiations, and communications with any third party that, as of the date of the Merger Agreement, relate to, or could reasonably be expected to lead to, a Competing Acquisition Proposal. This obligation is absolute and immediate and applies to all parties with whom the Company or Pinehurst Rothwell & Co. may have been in contact during the sell-side process conducted prior to execution of the Merger Agreement. For the avoidance of doubt, this includes any parties that submitted preliminary indications of interest, participated in management presentations, received confidential information through the Company's virtual data room, or engaged in any form of discussions regarding a potential acquisition of the Company.
Return or Destruction of Confidential Information. The Company must promptly request the return or destruction of all confidential information previously furnished to any third party in connection with a potential alternative transaction. Such requests should be made in writing, referencing the applicable confidentiality agreement, and should specify the deadline by which the return or destruction must occur (and, where applicable, request written certification of destruction). Copies of all such requests and any responses received should be maintained in the compliance log described in Section VIII.C below.
Termination of Data Room Access. The Company must promptly terminate any existing data-room access for any third party that was granted access in connection with the sell-side process conducted by Pinehurst Rothwell & Co. Access to the virtual data room shall be maintained only for Parent and its representatives (including Calderwood & Harkness LLP, Ardent Capital Partners III LP's internal team, and any advisors authorized by Parent) for purposes of completing diligence and facilitating the Closing. The Company should confirm with its data room administrator that all third-party access credentials have been deactivated and that audit logs are preserved.
Standstill and Confidentiality Agreements. The Company must confirm that all standstill agreements and confidentiality agreements (including any "no contact" or "non-circumvention" provisions contained therein) entered into with third parties during the sell-side process remain in full force and effect. The Company shall not waive, amend, modify, terminate, or release any third party from any provision of any standstill agreement or confidentiality agreement without the prior written consent of Parent. This restriction is particularly important in light of the fact that the existence of standstill provisions may prevent certain third parties from making unsolicited approaches to the Company; the Company is not permitted to "open the door" to third parties by relaxing such standstill restrictions without Parent's consent.
These cessation and wind-down obligations should have been substantially completed by the close of business on March 24, 2025, and must be fully completed no later than the close of business on March 25, 2025. The Company's outside counsel at Caldwell, Raines & Sheppard LLP should maintain a record of all actions taken in connection with the cessation of prior activities, including copies of all written requests for the return or destruction of confidential information, confirmations of data room access termination, and any correspondence with third parties regarding the foregoing.
C. Definition of "Competing Acquisition Proposal"
The term "Competing Acquisition Proposal" is defined in the Merger Agreement to cover a broad range of potential alternative transactions. An understanding of this definition is essential to compliance with the no-shop provisions, because the restrictions described above are triggered by any inquiry, proposal, or offer that falls within this definition — or that could reasonably be expected to lead to a transaction that falls within this definition. The definition encompasses the following categories:
1. Acquisition of Assets or Revenues. Any direct or indirect acquisition (whether by merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution, joint venture, or any similar transaction) of 20% or more of the consolidated assets of the Company and its subsidiaries (measured by fair market value) or 20% or more of the consolidated revenues of the Company and its subsidiaries (measured by reference to the most recently completed fiscal year). This threshold is intentionally set at a relatively low level to capture partial asset sales and carve-out transactions that might not involve the entirety of the Company's business.
2. Acquisition of Equity Securities. Any direct or indirect acquisition of 20% or more of the outstanding equity securities (whether common stock, preferred stock, or securities convertible into or exchangeable for equity securities) of the Company or any of its significant subsidiaries. The Company's significant subsidiaries for purposes of the Merger Agreement include the following entities:
• Luminex Systems AG (Switzerland)
• Luminex Systems Inc. (United States — Delaware)
• Luminex Systems UK Ltd. (United Kingdom)
• Luminex Systems GmbH (Germany)
• Luminex Systems Pte. Ltd. (Singapore)
3. Tender Offer or Exchange Offer. Any tender offer or exchange offer that, if consummated, would result in any person or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) beneficially owning 20% or more of the outstanding equity securities of the Company.
4. Impairment of the Merger. Any other transaction, the consummation of which could reasonably be expected to prevent, materially delay, or materially impair the consummation of the transactions contemplated by the Merger Agreement, including the Merger itself and the other transactions ancillary thereto.
The definition of "Competing Acquisition Proposal" applies to inquiries, proposals, and offers from any "person" or "group" other than Parent, Merger Sub, or their respective affiliates (including Ardent Capital Partners III LP and its affiliates). The 20% threshold is designed to capture not only full-company acquisition proposals but also minority investment proposals, strategic partnership proposals involving significant equity or asset transfers, and other transactions that could interfere with or undermine the Merger.
It is important to note that the definition is triggered by an inquiry, proposal, or offer — not merely by a binding agreement. An informal expression of interest, a preliminary indication of interest, a casual conversation at an industry event, or even a vague suggestion by a third party that it might be interested in acquiring the Company could potentially constitute a Competing Acquisition Proposal or could reasonably be expected to lead to one. When in doubt, treat any third-party communication that touches on the subject of an acquisition as potentially falling within the scope of the definition and immediately report it to the Company's CEO and outside legal counsel.
III. Fiduciary-Out Exception — Handling Unsolicited Proposals
The no-shop provision contains a carefully circumscribed exception — commonly referred to as the "fiduciary-out" — that permits the Company's board of directors to engage with certain unsolicited proposals under specified conditions. This exception is designed to ensure that the no-shop provision does not prevent the Company's board from fulfilling its fiduciary duties to the Company's stockholders under Delaware law. However, the fiduciary-out is subject to strict procedural requirements, and the Company may only invoke it if each of the conditions described below is satisfied.
A. Conditions for Engaging with an Unsolicited Proposal
Notwithstanding the general no-shop restrictions described in Section II above, if at any time prior to the Company's stockholder approval of the Merger Agreement (the "Stockholder Approval"), the Company receives a bona fide, written, unsolicited Competing Acquisition Proposal that did not result from a breach of the no-shop provisions, the Company may take certain limited actions (described in Section III.B below), subject to compliance with all of the following conditions:
1. Board Determination. The Company's board of directors (or a duly authorized committee thereof, to the extent one has been designated for this purpose) must determine in good faith, after consultation with its outside legal counsel (Caldwell, Raines & Sheppard LLP) and its financial advisor (Pinehurst Rothwell & Co.), that:
(a) The Competing Acquisition Proposal constitutes, or could reasonably be expected to lead to, a Superior Proposal (as defined in Section III.C below); and
(b) Failure to take such action (i.e., failure to engage with the unsolicited proposal) would be inconsistent with the directors' fiduciary duties under applicable law, including the duties of care and loyalty under the Delaware General Corporation Law ("DGCL") and applicable judicial precedent.
This determination must be made by the board (or its authorized committee) as a collective body, acting in good faith and on a fully informed basis. Individual directors should not make independent determinations regarding whether to engage with third parties. The board's consultation with outside legal counsel and financial advisors should be documented in contemporaneous board minutes or resolutions. The standard for this determination is intentionally rigorous: it is not sufficient for the board to conclude merely that the proposal is "interesting" or "worth exploring" — the board must affirmatively determine both that the proposal could reasonably be expected to lead to a Superior Proposal and that failure to engage would be inconsistent with the board's fiduciary duties.
2. Written Notice to Parent. The Company must provide written notice to Parent (Ardent Apex Holdings Inc.) of the Company's intention to take any such action. This notice must be delivered no later than 24 hours after the board's determination to engage with the unsolicited proposal and must include the following information:
(a) The identity of the third party making the Competing Acquisition Proposal;
(b) The material terms and conditions of the Competing Acquisition Proposal, including the proposed consideration per share and in the aggregate, the form of consideration (cash, stock, or combination thereof), any conditions to the proposal (including financing contingencies, regulatory conditions, and due diligence requirements), the proposed timeline for execution and closing, and the identity of any financing sources;
(c) Copies of any draft agreements, term sheets, commitment letters, or other written materials provided by the third party in connection with the Competing Acquisition Proposal; and
(d) A statement that the board of directors has made the good-faith determination described in condition 1 above.
The notice to Parent should be delivered in accordance with the notice provisions of the Merger Agreement (see Section V.C below for delivery instructions). The notice should be prepared by or coordinated with the Company's outside counsel at Caldwell, Raines & Sheppard LLP (Patricia Okonkwo) and a copy should be delivered simultaneously to Calderwood & Harkness LLP (James Prentice) as counsel to Parent.
3. Confidentiality Agreement Requirement. Before providing any non-public information to the third party making the Competing Acquisition Proposal, the Company must enter into (or already have in place) a confidentiality agreement with such third party on terms that are no less restrictive to such third party than the terms of the confidentiality agreement between the Company and Parent (the "Buyer NDA"). The confidentiality agreement must include customary standstill provisions. In addition, any non-public information provided to the third party must be simultaneously provided to Parent (to the extent such information has not been previously provided to Parent). This requirement ensures that Parent is at no informational disadvantage relative to any competing bidder.
Each of the foregoing conditions is a prerequisite to the Company's ability to engage with an unsolicited proposal under the fiduciary-out. Failure to satisfy any one of these conditions will mean that the Company is not entitled to invoke the fiduciary-out and that any engagement with the third party would constitute a breach of the no-shop provision.
B. Permitted Actions Under the Fiduciary-Out
If, and only if, all of the conditions set forth in Section III.A above have been satisfied, the Company may take the following actions with respect to the unsolicited Competing Acquisition Proposal:
• Provide Non-Public Information. The Company may provide non-public information to the third party making the Competing Acquisition Proposal, subject to (i) the execution of a conforming confidentiality agreement as described above, and (ii) the simultaneous provision of all such information to Parent to the extent not previously provided. The Company should maintain a log of all non-public information provided to the third party and the corresponding provision of such information to Parent.
• Engage in Discussions and Negotiations. The Company and its Representatives may engage in or continue discussions and negotiations with the third party regarding the Competing Acquisition Proposal. Such discussions should be conducted in a manner that is consistent with the board's fiduciary duties and should be documented in contemporaneous records.
Important Limitation: Notwithstanding the foregoing, the Company may not enter into any agreement (whether binding or non-binding) with respect to a Competing Acquisition Proposal pursuant to the fiduciary-out exception alone. The Company may only enter into a definitive agreement with respect to a Superior Proposal in accordance with the termination provisions of the Merger Agreement, as described in Section III.D below, which requires (among other things) compliance with the matching-right procedures described in Section IV and payment of the Termination Fee.
C. Definition of "Superior Proposal"
A "Superior Proposal" is defined in the Merger Agreement as a bona fide, written Competing Acquisition Proposal that satisfies the following criteria:
• Threshold. For purposes of determining whether a Competing Acquisition Proposal constitutes a Superior Proposal, the 20% threshold references in the definition of "Competing Acquisition Proposal" (as described in Section II.C above) are deemed replaced with references to 50%. In other words, to qualify as a Superior Proposal, the proposal must relate to the acquisition of 50% or more of the Company's consolidated assets, revenues, or outstanding equity securities (or be a tender offer or exchange offer that would result in beneficial ownership of 50% or more of the Company's equity securities). This higher threshold ensures that only full-company (or substantially full-company) proposals can qualify as Superior Proposals.
• Board Determination. The Company's board of directors must determine in good faith, after consultation with its outside legal counsel (Caldwell, Raines & Sheppard LLP) and its financial advisor (Pinehurst Rothwell & Co.), and after taking into account all relevant factors deemed appropriate by the board, that the Competing Acquisition Proposal is more favorable to the Company's stockholders than the transactions contemplated by the Merger Agreement.
• Relevant Factors. The factors that the board must consider in making this determination include, without limitation:
(a) The financial terms of the proposal, including the per-share and aggregate consideration, the form of consideration (cash, stock, or combination), and the present value of any non-cash consideration;
(b) The conditionality of the proposal, including financing contingencies, regulatory conditions, due diligence conditions, and any other conditions to closing;
(c) The certainty of closing, including the financial capability of the third party, the status of any required financing commitments, and the anticipated regulatory approval timeline;
(d) The regulatory risk associated with the proposal, including antitrust, foreign investment, and other regulatory considerations;
(e) The identity and reputation of the third party, including its track record of completing announced transactions;
(f) The terms of any definitive agreement proposed by the third party, including representations, warranties, indemnification, termination provisions, and other terms; and
(g) Critically, any revisions to the terms of the Merger Agreement offered by Parent during the Matching Period (as described in Section IV below).
The determination of whether a Competing Acquisition Proposal constitutes a Superior Proposal is a holistic assessment that requires the board to weigh all relevant factors in the exercise of its good-faith business judgment. Price alone is not determinative; a higher-priced proposal that is subject to significant financing or regulatory risk, or that is otherwise unlikely to be consummated, may not constitute a Superior Proposal.
D. Termination to Accept a Superior Proposal
If, after completion of the matching-right procedures described in Section IV below, the board of directors determines that a Competing Acquisition Proposal continues to constitute a Superior Proposal, the Company may terminate the Merger Agreement to enter into a definitive agreement with respect to such Superior Proposal, provided that all of the following conditions are satisfied:
1. Compliance with No-Shop and Notice Provisions. The Company must have complied in all material respects with the no-shop provisions and all notice and matching-right obligations described in this memorandum and in the Merger Agreement.
2. Payment of Termination Fee. The Company must have paid, or must concurrently pay, the Termination Fee of $84,000,000 (representing 3% of the $2,800,000,000 aggregate deal value) to Parent by wire transfer of immediately available funds to an account designated by Parent. The Termination Fee must be paid simultaneously with or prior to the termination of the Merger Agreement; the Company may not terminate the Merger Agreement without making such payment.
3. Completion of Matching-Right Procedures. The Company must have fully complied with the matching-right procedures described in Section IV below, including the delivery of the Superior Proposal Notice, the observation of the full Matching Period, good-faith negotiation with Parent (to the extent Parent elects to negotiate), and the reassessment of the Competing Acquisition Proposal following the expiration of the Matching Period (and any extension thereof resulting from revisions to the Competing Acquisition Proposal).
These conditions are cumulative and must be satisfied in their entirety. The Company's failure to comply with any one of these conditions will render any purported termination of the Merger Agreement invalid and will constitute a breach of the Merger Agreement.
IV. Matching Right Procedures
The Merger Agreement provides Parent with a contractual "matching right" that must be observed before the Company may effect an Adverse Recommendation Change or terminate the Merger Agreement to accept a Superior Proposal. The matching-right procedures are designed to give Parent a fair opportunity to respond to any competing bid and to revise the terms of the Merger Agreement if it chooses to do so. Strict compliance with these procedures is essential.
A. Obligation to Notify Parent
Before the Company's board of directors may (i) effect an Adverse Recommendation Change (i.e., withdraw, modify, qualify, or fail to publicly reaffirm its recommendation in favor of the Merger Agreement and the Merger) or (ii) authorize the Company to terminate the Merger Agreement to accept a Superior Proposal, the Company must take the following steps:
1. Delivery of Superior Proposal Notice. The Company must provide Parent with written notice (the "Superior Proposal Notice") at least 4 business days prior to taking any such action. The Superior Proposal Notice must clearly state that the board of directors intends to effect an Adverse Recommendation Change or authorize the termination of the Merger Agreement to accept a Superior Proposal, as applicable.
2. Content of the Superior Proposal Notice. The Superior Proposal Notice must include the following information:
(a) The identity of the third party making the Superior Proposal;
(b) A copy of the relevant Competing Acquisition Proposal, including any draft definitive agreement, term sheet, commitment letter, or other material documentation;
(c) All material terms and conditions of the Superior Proposal, including the per-share and aggregate consideration, the form of consideration, financing sources (including copies of any debt commitment letters, equity commitment letters, or other financing documentation), conditions to closing, expected timeline for execution and closing, and any regulatory approvals required; and
(d) Any other information that is reasonably necessary for Parent to evaluate the Superior Proposal and formulate a response.
The Superior Proposal Notice should be prepared by or in coordination with the Company's outside counsel at Caldwell, Raines & Sheppard LLP and should be delivered in accordance with the notice provisions of the Merger Agreement (see Section V.C below for delivery instructions).
B. Matching Period
Following receipt of the Superior Proposal Notice, Parent shall have a period of 4 business days (the "Matching Period") during which to evaluate the Superior Proposal and, if it elects to do so, propose revisions to the terms of the Merger Agreement. The Matching Period is calculated from the date of receipt of the Superior Proposal Notice by Parent. The following rules and procedures govern the Matching Period:
• Parent's Right to Propose Revisions. During the Matching Period, Parent may propose any revisions to the Merger Agreement that it deems appropriate, including, without limitation, changes to the per-share merger consideration, the aggregate deal value, the structure of the Merger, closing conditions, termination provisions, regulatory commitment obligations, or any other terms. Parent is under no obligation to propose any revisions, but the Company must afford Parent the full Matching Period before taking action.
• Good-Faith Negotiation. During the Matching Period, the Company and its Representatives shall negotiate in good faith with Parent (if Parent elects to negotiate) regarding any proposed revisions to the Merger Agreement. The obligation to negotiate in good faith is a substantive obligation; the Company may not merely "go through the motions" of the Matching Period while having already effectively committed to the third party.
• Reassessment Obligation. At the end of the Matching Period, the Company's board of directors must reassess whether the Competing Acquisition Proposal still constitutes a Superior Proposal, taking into account any revisions to the Merger Agreement proposed by Parent during the Matching Period. If, after giving effect to Parent's proposed revisions, the Competing Acquisition Proposal no longer constitutes a Superior Proposal, the Company may not effect an Adverse Recommendation Change or terminate the Merger Agreement. In such case, the Merger Agreement (as revised by any mutually agreed amendments) will continue in full force and effect.
• Reset of Matching Period for Material Revisions. If, following the delivery of the initial Superior Proposal Notice and the commencement of the initial Matching Period, there is any material change, modification, or amendment to the Competing Acquisition Proposal (including any change to the proposed consideration, form of consideration, financing, conditions, or other material terms), the 4-business-day Matching Period shall reset from the date of receipt by Parent of written notice of such material change. However, for any subsequent material revision to a previously noticed Superior Proposal, the Matching Period may be shortened to 3 business days (rather than the initial 4-business-day period). The Company must promptly (and in any event within 24 hours) notify Parent in writing of any such material change.
C. Calculation of Business Days
For purposes of the Matching Period, "business days" shall mean days other than Saturdays, Sundays, and days on which commercial banks in New York, New York are authorized or required by law, regulation, or executive order to close. The following example is provided for illustrative purposes:
Example: If a Superior Proposal Notice is delivered to and received by Parent on a Monday, and there are no intervening New York banking holidays during the week, the 4-business-day Matching Period would be calculated as follows:
• Day 1: Tuesday
• Day 2: Wednesday
• Day 3: Thursday
• Day 4: Friday
The Matching Period would expire at 11:59 p.m. Eastern Time on Friday of the same week. If, however, there is an intervening New York banking holiday (for example, if Thursday is a holiday), then the Matching Period would extend to the following Monday, with expiration at 11:59 p.m. Eastern Time on that Monday.
Company counsel and management should exercise care in calculating business days and should consult with outside legal counsel in the event of any ambiguity regarding the expiration of the Matching Period.
V. Notification and Reporting Obligations
The Merger Agreement imposes affirmative notification and reporting obligations on the Company with respect to any Competing Acquisition Proposals and related activities. These obligations are ongoing and run from the date of the Merger Agreement through the Closing or earlier valid termination. Compliance with these obligations is essential, as any failure to comply could be treated as a material breach of the Merger Agreement.
A. Prompt Notification of Inquiries
The Company must promptly (and in any event within 24 hours) notify Parent in writing of the occurrence of any of the following events:
1. Receipt of a Competing Acquisition Proposal. Any receipt by the Company or any of its Representatives of a Competing Acquisition Proposal or any inquiry, proposal, or offer that could reasonably be expected to lead to a Competing Acquisition Proposal. This includes, without limitation, formal written proposals, informal oral expressions of interest, preliminary indications of interest, and any other communication that relates to a potential acquisition of the Company or any significant portion of its business or assets.
2. Request for Non-Public Information. Any request by a third party for non-public information relating to the Company or any of its subsidiaries in connection with, or for the purpose of evaluating, a potential Competing Acquisition Proposal. This includes requests for access to the Company's virtual data room, requests for financial statements or projections, and requests for management meetings or site visits.
3. Request for Discussions or Negotiations. Any request by a third party to engage in discussions or negotiations relating to a potential Competing Acquisition Proposal, whether the request is made directly to the Company, to any of its Representatives, or through intermediaries such as investment banks or financial advisors.
Each such notice must include the identity of the third party making the Competing Acquisition Proposal, inquiry, or request, together with the material terms and conditions thereof to the extent known to the Company or its Representatives. The notice should be as detailed as reasonably practicable given the circumstances and the information available to the Company at the time. If additional information becomes available after the initial notice, supplemental notices should be provided promptly.
B. Ongoing Updates
In addition to the initial notification obligations described above, the Company must keep Parent reasonably informed on a prompt basis (and in any event within 24 hours) of the following:
• Any material changes, modifications, or amendments to any previously noticed Competing Acquisition Proposal, including changes to the proposed consideration (whether price, form, or structure), changes to financing terms or sources, changes to conditions or closing timelines, and changes to any other material terms.
• Any material developments in any discussions or negotiations with a third party regarding a Competing Acquisition Proposal, including the status of due diligence, the progress of negotiations, and any significant communications or meetings.
The purpose of these ongoing reporting obligations is to ensure that Parent is kept fully informed of the competitive landscape and is able to evaluate and respond to competing proposals in a timely manner. The Company should establish internal procedures to ensure that all relevant information is promptly communicated to the Company's outside counsel for onward transmission to Parent and Parent's counsel.
C. Notices — Delivery Instructions
All notices required to be delivered to Parent pursuant to the no-shop provisions and matching-right procedures of the Merger Agreement shall be delivered in accordance with the notice provisions set forth in Article IX of the Merger Agreement. For ease of reference, the delivery instructions are as follows:
To Parent:
Ardent Apex Holdings Inc. c/o Ardent Capital Partners III LP 399 Park Avenue, 42nd Floor New York, NY 10022
Attention: Theodore Hargrove and Victoria Langford
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 7 Times Square New York, NY 10036
Attention: James Prentice
Notices from the Company should be sent by or coordinated with the Company's outside counsel at Caldwell, Raines & Sheppard LLP:
Caldwell, Raines & Sheppard LLP 51 West 52nd Street New York, NY 10019
Attention: Patricia Okonkwo and Daniel Feinberg
Notices may be delivered by hand, by nationally recognized overnight courier service, or by electronic mail (with confirmation of receipt) to the email addresses specified in the Merger Agreement. The Company should maintain copies of all notices delivered and received, along with evidence of the date and time of delivery, in the compliance log described in Section VIII.C below.
VI. Practical Compliance Guidelines for Directors, Officers, and Employees
The following practical guidelines are intended to assist the Company's directors, officers, employees, and advisors in complying with the no-shop provisions on a day-to-day basis. These guidelines supplement — but do not replace — the contractual obligations set forth in the Merger Agreement, and all personnel should review this memorandum in its entirety.
A. Centralized Point of Contact
All inquiries from third parties that could relate to a potential acquisition of the Company or any significant portion of its business or assets must be immediately referred to the following individuals:
• Dr. Stefan Kessler (Chief Executive Officer), who shall serve as the primary internal escalation point for all third-party acquisition-related inquiries; or
• Annelise Gruber (Chief Financial Officer), who shall serve as the secondary internal escalation point in the event that Dr. Kessler is unavailable.
Upon receiving any such inquiry (whether directly or through a referral from another employee), Dr. Kessler or Ms. Gruber shall promptly consult with the Company's lead outside legal counsel, Patricia Okonkwo at Caldwell, Raines & Sheppard LLP, to determine the appropriate response and to ensure compliance with the notification obligations described in Section V above.
Under no circumstances may any director, officer, employee, or agent of the Company respond to, engage with, or provide any information to any third party regarding a potential acquisition of the Company or any significant portion of its business or assets without the express prior authorization of the board of directors (or its designated committee), following consultation with outside legal counsel. This restriction applies regardless of the seniority of the individual, the identity or perceived credibility of the third party, or the nature of the relationship between the individual and the third party.
B. Prohibited Conduct — Specific Examples
To provide further clarity, the following are specific examples of conduct that is prohibited under the no-shop provisions. This list is illustrative and not exhaustive:
• Do NOT accept meetings, phone calls, video conferences, or other communications with any potential acquirer or its advisors (including investment bankers, lawyers, accountants, or consultants) regarding a potential acquisition of the Company or any of its subsidiaries or assets.
• Do NOT attend industry conferences, trade shows, or social events where acquisition discussions could arise without being mindful of the no-shop prohibition. If, at any such event, any person approaches you regarding a potential acquisition of the Company, you must immediately terminate the conversation, decline to provide any information or discuss the topic further, and promptly report the contact to Dr. Kessler or Ms. Gruber.
• Do NOT provide any financial data, financial projections, business plans, strategic plans, customer lists, vendor information, pricing data, technology roadmaps, technical documentation, employee census data, organizational charts, or any other non-public information to any third party for purposes related to a potential acquisition of the Company. This includes information provided orally, in writing, electronically, or in any other form.
• Do NOT discuss the terms of the Merger Agreement — including the per-share price, the aggregate deal value, the closing conditions, the termination provisions, or the Termination Fee — with any potential competing bidder, any investment banker or financial advisor who may represent a potential competing bidder, or any other unauthorized third party.
• Do NOT discuss the Company's willingness (or unwillingness) to consider alternatives to the Merger, or the Company's views on the likelihood of a higher bid, with any third party.
• Do NOT disclose the current status of regulatory approvals or filings relating to the Merger, including but not limited to the HSR Act filing (dated March 28, 2025), the CFIUS voluntary notice (filed April 4, 2025), the Swiss FINMA/SECO notification (filed April 7, 2025), the German Bundeskartellamt filing (dated April 9, 2025), or the EU Foreign Subsidies Regulation notification (filed April 11, 2025), to any potential competing bidder or its advisors.
• Do NOT forward, share, copy, or otherwise distribute any internal Company materials, board materials, committee materials, data room materials, advisor work product, or any other confidential or proprietary documents with any unauthorized third party.
• Do NOT "tip off" or signal availability to potential acquirers or their representatives, investment banks, advisors, or agents — whether directly or indirectly. This includes, without limitation, making statements such as "call us after the deal closes" or "there might be an opportunity if things change," or taking any other action that could reasonably be interpreted as an invitation to make a competing proposal.
If you are uncertain whether a particular action or communication could violate the no-shop provisions, do not take the action or make the communication until you have consulted with Dr. Kessler, Ms. Gruber, or outside legal counsel.
C. Interaction with Investment Bankers and Advisors
Pinehurst Rothwell & Co. (Samantha Delacroix) and all other financial advisors engaged by the Company are bound by the no-shop obligations to the same extent as the Company's officers and directors. As "Representatives" of the Company under the Merger Agreement, investment bankers and financial advisors are subject to the prohibition on solicitation, encouragement, facilitation, and engagement described in Section II.A above.
The Company should take the following specific steps with respect to its financial advisors:
1. Written Confirmation. The Company should confirm in writing with Pinehurst Rothwell & Co. (attention: Samantha Delacroix) that the firm: (i) has ceased all outreach to potential alternative bidders and has terminated all sell-side solicitation activities; (ii) has terminated all virtual data room access for parties other than Parent and its authorized representatives; and (iii) will not engage in any discussions, negotiations, or communications with any third party regarding a potential acquisition of the Company absent express authorization from the Company's board of directors following the fiduciary-out procedures described in Section III above. This confirmation should be obtained no later than March 26, 2025.
2. Reporting of Inbound Inquiries. Pinehurst Rothwell & Co. must be instructed to report immediately to the Company's CEO and outside legal counsel any third-party inquiries received by Pinehurst Rothwell relating to a potential acquisition of the Company. Such inquiries may not be responded to or engaged with by Pinehurst Rothwell absent express prior authorization from the board of directors.
3. Other Advisors. Similar confirmations and instructions should be provided to any other financial advisor, consultant, or intermediary who was involved in the sell-side process or who may receive acquisition-related inquiries.
D. Employee Communications
The Company should provide appropriate guidance to members of senior management and other employees who may be contacted by potential acquirers or their representatives. This includes, without limitation, heads of business units, vice presidents, and other individuals at or above the VP level who may have visibility in the industry or established relationships with potential strategic acquirers. The guidance should be provided in a manner that does not disclose confidential terms of the Merger Agreement beyond what is necessary for compliance purposes.
The key message to be communicated to relevant employees is as follows:
"The Company has entered into a definitive agreement with Ardent Capital Partners III LP for the acquisition of the Company. Under the terms of that agreement, the Company is not in a position to discuss or entertain any alternative acquisition proposals. If you receive any inquiry from any third party regarding a potential acquisition of the Company, you should not respond to the inquiry and should immediately refer it to the CEO's office. Any questions about this should be directed to the CEO or CFO."
This message may be communicated orally or in writing, as appropriate, and should be reinforced on an ongoing basis as needed. The Company's human resources and legal departments should coordinate to ensure that the message reaches all relevant personnel.
VII. Change of Control Consent Matters Distinguished from No-Shop
The Merger constitutes a "change of control" under a significant number of the Company's commercial contracts, enterprise license agreements, and other agreements. Based on a preliminary review by the Company's legal team and outside counsel, approximately 340 commercial contracts and 26 enterprise license agreements contain change of control provisions that are triggered by the Merger and require some form of consent, notice, or waiver from the applicable counterparty.
It is important for all directors, officers, and employees to understand that outreach to counterparties for purposes of obtaining required change of control consents and waivers is not a violation of the no-shop provisions. Such outreach is a necessary and expected part of the Merger process and is contemplated by the Merger Agreement. However, the manner in which such outreach is conducted must be carefully managed to avoid inadvertently disclosing information that could invite competing interest from counterparties or other third parties.
The following guidelines apply to change of control consent solicitations:
• Coordination with Outside Counsel. All change of control consent solicitations should be coordinated with the Company's outside legal counsel at Caldwell, Raines & Sheppard LLP and with Parent's counsel at Calderwood & Harkness LLP. This coordination is necessary to ensure consistency of messaging, to manage the timing of outreach, and to ensure that the form and substance of consent solicitation letters are appropriate.
• Use of Approved Form Letters. Consent solicitation letters should use approved form letters that have been reviewed and approved by both Caldwell, Raines & Sheppard LLP and Calderwood & Harkness LLP. These form letters are designed to convey the necessary information to counterparties without disclosing sensitive deal terms or strategic information that could be used by competitors or potential competing bidders.
• Avoid Disclosing Sensitive Information. When communicating with counterparties regarding change of control consents, the Company's personnel should limit the information provided to what is necessary to obtain the required consent. Personnel should not disclose the per-share merger consideration, the aggregate deal value, the identity of the ultimate buyer (Ardent Capital Partners III LP), the terms of the financing, or other sensitive deal terms unless such disclosure has been specifically authorized by outside counsel and is necessary for the particular consent solicitation.
• Tracking of Consents. The Company should track all consent requests and responses through the Change of Control / Consent Tracker maintained by Calderwood & Harkness LLP (Ryan Kowalski and Megan Chu). All outgoing consent solicitation letters, responses received, and the status of each consent should be recorded in this tracker, which will be updated on a regular basis and shared with the Company's outside counsel.
If any counterparty, in the course of a change of control consent discussion, expresses interest in acquiring the Company or any of its assets — or makes any inquiry that could reasonably be expected to lead to a Competing Acquisition Proposal — the Company's personnel must immediately cease the discussion (to the extent it relates to a potential acquisition), report the contact to Dr. Kessler or Ms. Gruber, and follow the notification procedures described in Section V above.
VIII. Consequences of Non-Compliance
Compliance with the no-shop provisions is not merely a contractual formality — the consequences of non-compliance are severe and could have a material adverse impact on the Company, its stockholders, and its directors and officers individually.
A. Termination Rights
A material breach of the no-shop provisions by the Company or any of its Representatives may give Parent the right to terminate the Merger Agreement pursuant to Article VIII thereof. If Parent terminates the Merger Agreement on the basis of a breach of the no-shop provisions by the Company, the Company would lose the benefit of the agreed-upon Merger, and the Company's stockholders would not receive the $20.00 per share merger consideration. In the event of such termination, the Company may be required to pay the $84,000,000 Termination Fee to Parent, which would be a direct cost to the Company and an indirect cost to its stockholders.
B. Damages Claims
Separate from and in addition to the Termination Fee, the Merger Agreement preserves Parent's right to pursue claims for damages resulting from a willful and material breach of the no-shop provisions by the Company or its Representatives. Under the Merger Agreement, the remedies available to Parent in the event of a willful breach are not limited to the Termination Fee; Parent may seek to recover actual damages, which could include the lost premium, lost deal expenses, and other consequential damages.
Moreover, individual directors and officers of the Company may face personal liability exposure in connection with any breach of their fiduciary duties under Delaware law if they participate in, authorize, or condone conduct that violates the no-shop provisions. While the Company's charter and bylaws contain customary exculpation and indemnification provisions, such provisions may not protect directors and officers against claims arising from acts not in good faith or involving intentional misconduct.
C. Importance of Documentation
In light of the foregoing consequences, and in order to ensure that the Company can demonstrate compliance with its obligations under the Merger Agreement in the event of any dispute, the Company should maintain a contemporaneous written record (the "Compliance Log") of the following:
1. Unsolicited Contacts. All unsolicited contacts, inquiries, or proposals received by the Company or any of its Representatives from any third party, including the date and time of each contact, the identity of the third party, the identity of the Company representative who received the contact, the substance of the communication, and any actions taken in response.
2. Board and Committee Deliberations. All deliberations of the board of directors (or any committee thereof) regarding any Competing Acquisition Proposal, including the date and participants of each meeting, the matters discussed, any advisors consulted, and any determinations or resolutions adopted.
3. Notices to Parent. All notices delivered to Parent pursuant to the Merger Agreement, including copies of the notices, evidence of the date and time of delivery, and confirmation of receipt.
4. Legal Counsel Consultations. All discussions with outside legal counsel (Caldwell, Raines & Sheppard LLP) regarding compliance with the no-shop provisions, including the date and substance of each consultation and any advice received.
5. Information Sharing. All instances in which non-public information is provided to any third party (in connection with the fiduciary-out exception) or to Parent (in connection with the simultaneous sharing obligation), including a description of the information provided and the date of provision.
The Compliance Log should be maintained by the General Counsel's office. If the Company does not currently have a General Counsel in place, the Compliance Log should be maintained by the CFO (Annelise Gruber) or her designee. The Compliance Log should be shared with outside counsel at Caldwell, Raines & Sheppard LLP on a regular basis (at least weekly, and more frequently during any period in which the Company is engaged with a Competing Acquisition Proposal) and should be treated as a privileged and confidential attorney-client communication.
IX. Key Definitions Reference Chart
The following table provides a summary of the key defined terms referenced in this memorandum. These summaries are provided for convenience only; in the event of any inconsistency between these summaries and the defined terms in the Merger Agreement, the Merger Agreement shall control.
X. Timeline of Compliance Milestones
The following timeline sets forth the key compliance milestones and action items arising from the no-shop provisions. This timeline should be used as a reference guide and checklist.
XI. Contact Information for Compliance Questions
The following individuals are the designated points of contact for questions regarding compliance with the no-shop provisions and the procedures described in this memorandum. All compliance-related questions should be directed to one or more of the individuals listed below.
In the event of an urgent matter outside of regular business hours (including the receipt of an unsolicited Competing Acquisition Proposal or related inquiry), please contact Patricia Okonkwo or James Prentice via the mobile telephone numbers provided separately.
XII. Disclaimer and Distribution Limitation
This memorandum has been prepared by Calderwood & Harkness LLP in its capacity as counsel to Ardent Capital Partners III LP (the "Buyer"), Ardent Apex Holdings Inc. (Parent), and Ardent Apex Merger Sub Inc. (Merger Sub) in connection with the transactions contemplated by the Merger Agreement. This memorandum is being provided to the Company's board of directors and senior management solely for informational purposes and to facilitate compliance with the no-shop provisions and related obligations set forth in the Merger Agreement.