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DISCLOSURE SCHEDULES

to the

ASSET PURCHASE AGREEMENT

dated as of April 2, 2024

by and between

ARDENT HEALTHCARE ACQUISITION CORP. (as Purchaser)

and

CARDINAL PEAK INDUSTRIES, INC. (as Seller)

IMPORTANT NOTICES AND LIMITATIONS

These Disclosure Schedules (these "Schedules") are delivered pursuant to Article X of that certain Asset Purchase Agreement, dated as of April 2, 2024 (the "Agreement"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation ("Purchaser"), and Cardinal Peak Industries, Inc., a Delaware corporation ("Seller" or "CPI"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

The information disclosed in these Schedules is disclosed solely for the purposes of the Agreement and shall not be deemed to constitute an admission or acknowledgment by any party of the materiality of any item disclosed herein. Nothing in these Schedules is intended to broaden the scope of any representation or warranty contained in the Agreement or to create any covenant, standard, or obligation not independently contained in the Agreement.

Matters disclosed in any particular Schedule shall be deemed disclosed with respect to any other Schedule to the extent the relevance of such disclosure to such other Schedule is reasonably apparent on the face of such disclosure. The inclusion of any information in these Schedules shall not be deemed an admission that such information is required to be disclosed or that such information is material to the business, financial condition, operations, or results of operations of CPI. Without limiting the foregoing, the disclosure of any matter in these Schedules does not imply that any other undisclosed matter having a greater or lesser value or significance is material for purposes of the Agreement.

The section and subsection references herein correspond to the sections and subsections of the Agreement. Any description of any agreement, document, instrument, plan, arrangement, or other item set forth herein is qualified in its entirety by reference to such agreement, document, instrument, plan, arrangement, or other item itself, copies of which have been made available to Purchaser and its representatives in the electronic data room maintained by Fenmore Systems (Project Cardinal Data Room, Room ID 24-AH-CPI-0331).

The information contained in these Schedules is as of April 2, 2024, the date of the Agreement, unless otherwise noted. Seller has an obligation to update and supplement these Schedules through the Closing Date of June 30, 2024, as set forth in Section 5.5 of the Agreement.

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PART I — SELLER'S DISCLOSURE SCHEDULES

Schedule 1.1(a) — Acquired Assets

The following sets forth a description of substantially all of the assets of Cardinal Peak Industries, Inc. to be acquired by Purchaser pursuant to Section 1.1(a) of the Agreement (collectively, the "Acquired Assets"). The Acquired Assets include all right, title, and interest of Seller in and to the following categories of assets, in each case, other than the Excluded Assets described in Schedule 1.1(b):

1. Tangible Personal Property

All furniture, fixtures, equipment, medical devices, information technology hardware, telecommunications equipment, leasehold improvements, and other tangible personal property owned by Seller and used in, held for use in, or arising out of the operation of the Business, wherever located, including all items at each of the thirty-seven (37) clinic locations operated by Seller across seven (7) states, as more particularly described below:

(a) Tennessee (14 locations): All tangible personal property situated at each of the fourteen clinic facilities operated by Seller in the State of Tennessee, including the headquarters facility located at 8400 Crescent Ridge Parkway, Suite 200, Nashville, TN 37215, and the thirteen additional clinic locations identified on Schedule 3.10 hereto.

(b) Georgia (8 locations): All tangible personal property situated at each of the eight clinic facilities operated by Seller in the State of Georgia, including locations in the Atlanta, Savannah, Augusta, and Macon metropolitan areas, as identified on Schedule 3.10 hereto.

(c) North Carolina (5 locations): All tangible personal property situated at each of the five clinic facilities operated by Seller in the State of North Carolina, including locations in the Charlotte, Raleigh-Durham, and Greensboro metropolitan areas, as identified on Schedule 3.10 hereto.

(d) South Carolina (4 locations): All tangible personal property situated at each of the four clinic facilities operated by Seller in the State of South Carolina, including locations in the Charleston, Columbia, and Greenville metropolitan areas, as identified on Schedule 3.10 hereto.

(e) Alabama (3 locations): All tangible personal property situated at each of the three clinic facilities operated by Seller in the State of Alabama, including locations in the Birmingham and Huntsville metropolitan areas, as identified on Schedule 3.10 hereto.

(f) Virginia (2 locations): All tangible personal property situated at each of the two clinic facilities operated by Seller in the Commonwealth of Virginia, including locations in the Richmond and Virginia Beach metropolitan areas, as identified on Schedule 3.10 hereto.

(g) Kentucky (1 location): All tangible personal property situated at the single clinic facility operated by Seller in the Commonwealth of Kentucky, located in the Louisville metropolitan area, as identified on Schedule 3.10 hereto.

A detailed inventory of material items of tangible personal property, including medical and therapeutic equipment, office furniture and fixtures, computer hardware, networking infrastructure, and leasehold improvements at each location, is set forth in the Personal Property Inventory prepared as of March 15, 2024, by CPI's Director of Operations, a copy of which has been made available to Purchaser in Data Room Folder 2.3.1.

2. Accounts Receivable

All accounts receivable and notes receivable of Seller outstanding as of the Closing Date, whether billed or unbilled, arising from the operation of the Business, including all amounts owed to Seller by managed-care payors, Medicare, Medicaid, patients, and any other third-party payors, together with any security held by Seller for the payment thereof, and the full benefit of all rights related thereto, including the right to sue for, collect, or otherwise enforce any and all such accounts receivable and notes receivable.

3. Inventory

All inventories of medical supplies, pharmaceutical supplies, therapeutic equipment supplies, orthotic and prosthetic supplies, and office supplies maintained by Seller at each of the thirty-seven (37) clinic locations and at any off-site storage facilities, in each case as of the Closing Date.

4. Contracts

All of Seller's right, title, and interest in and to all Assumed Contracts, as listed and described in Schedule 2.4 hereto, including all managed-care and payor agreements, real property leases, vendor and service agreements, employment agreements (to the extent specified in Schedule 2.4), insurance policies (to the extent assignable), and IT and software license agreements.

5. Intellectual Property

All intellectual property assets owned by or licensed to Seller and used in or held for use in the operation of the Business (other than the CPI Corporate Name, which is an Excluded Asset), as described in Schedule 3.12 hereto, including:

(a) The PeakConnect patient-engagement software platform, including all source code, object code, documentation, databases, user interfaces, and related materials;

(b) All registered trademarks, including U.S. Registration No. 5,412,887 for the mark PEAKCONNECT;

(d) All unregistered intellectual property, including clinical protocols, training materials, proprietary methodologies, and trade secrets;

(e) All rights under inbound and outbound intellectual property licenses used in or related to the Business; and

(f) All goodwill associated with the foregoing intellectual property.

6. Permits and Licenses

All transferable governmental permits, licenses, certifications, approvals, registrations, and authorizations used in or related to the operation of the Business, as described in Schedule 3.16 hereto, including all state healthcare facility licenses, Medicare and Medicaid provider enrollments, and any other permits necessary for the operation of the thirty-seven (37) clinic locations, to the extent transferable under applicable law.

7. Books and Records

(a) All patient records, charts, files, and medical records (subject to applicable provisions of the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder ("HIPAA")), and to the extent their transfer is permitted by applicable law;

(b) All financial records, general ledgers, journals, accounting records, and tax records (other than those relating solely to Excluded Liabilities or Excluded Assets);

(c) All employee records for Transferred Employees, including personnel files, payroll records, benefits records, and immigration and employment eligibility verification records (Form I-9), to the extent their transfer is permitted by applicable law;

(d) All operating records, customer lists, supplier lists, referral source records, patient demographic information, marketing materials, promotional materials, and advertising materials; and

(e) All correspondence, files, and records relating to the Acquired Assets or the Business generally, wherever located.

8. Goodwill

All goodwill of Seller associated with the Business, including the going-concern value, patient relationships, referral source relationships, payor relationships, and reputation of the Business.

9. Prepaid Expenses

All prepaid expenses, deposits, advance payments, security deposits (including lease security deposits), prepaid insurance premiums (to the extent related to assigned policies), and other similar items paid by Seller in connection with the operation of the Business and existing as of the Closing Date.

10. Claims and Causes of Action

All claims, rights, and causes of action of Seller relating to the Acquired Assets or the Business arising after the Closing Date, including all rights of indemnity, warranty rights, rights of contribution, rights to refunds, and rights of set-off, together with any and all related documents and materials.

11. Insurance Proceeds

All rights to insurance proceeds relating to the Acquired Assets or Assumed Liabilities, including any proceeds receivable with respect to damage to or loss of any Acquired Asset occurring prior to the Closing Date and any insurance proceeds relating to Assumed Liabilities.

12. Telephone Numbers, Websites, Domain Names, and Social Media Accounts

All telephone numbers, facsimile numbers, email addresses, uniform resource locators (URLs), internet domain names, social media accounts (including accounts on Westmark Health IT, Kestrel Services Inc., Northpoint Services Inc., X (formerly Fenmore Solutions), and Crowne Albany Partners LLC), and any other electronic or digital identifiers used by Seller in connection with the operation of the Business.

Schedule 1.1(b) — Excluded Assets

The following assets of Cardinal Peak Industries, Inc. are excluded from the Acquired Assets and shall be retained by Seller following the Closing (collectively, the "Excluded Assets"):

1. Cash and Cash Equivalents

All cash on hand, bank deposits, certificates of deposit, money market accounts, commercial paper, treasury bills, and other cash equivalents of CPI, wherever deposited or held, as of the Closing Date, including all cash and cash equivalents held in the bank accounts listed on Schedule 3.21 hereto.

2. Tax Refunds

All refunds, credits, rebates, or similar benefits of Taxes (including interest thereon) attributable to Pre-Closing Tax Periods or to the pre-closing portion of any Straddle Period, as determined in accordance with Section 9.3 of the Agreement, whether such refunds, credits, rebates, or benefits are received as a payment, credited against future Tax obligations, or otherwise realized.

3. Personal Property of Dr. Randall J. Whitfield

The following specifically identified personal effects of Dr. Randall J. Whitfield located at CPI's Nashville headquarters at 8400 Crescent Ridge Parkway, Suite 200, Nashville, TN 37215:

(a) Personal artwork, including three framed original paintings and two limited-edition prints displayed in the CEO's office suite;

(b) Personal memorabilia, including framed diplomas, awards, photographs, and other items of a personal nature located in the CEO's office suite;

(c) Personal computing equipment, including one Tidewater Industries MacBook Pro laptop (Serial No. C02Z_), one Tidewater Industries iPad Pro (Serial No. DM_), and associated personal peripherals; and

(d) Any and all other items of tangible personal property owned by Dr. Whitfield personally (as opposed to CPI) located at the Nashville headquarters or any other CPI facility.

4. CPI Corporate Name

The name "Cardinal Peak Industries" and all related trade names, trade dress, logos, and corporate identifiers incorporating the words "Cardinal Peak Industries" (including the registered trademark CARDINAL PEAK INDUSTRIES (design + word), U.S. Registration No. 5,891,203), are Excluded Assets and shall be retained by Seller. Notwithstanding the foregoing, Purchaser shall have a limited, non-exclusive, royalty-free license to use the "Cardinal Peak Industries" name and related marks for a period of twelve (12) months following the Closing Date, solely for transitional purposes, as more particularly set forth in the intellectual Property Assignment Agreement to be executed and delivered at Closing.

5. Equity Interests in Cardinal Peak Labs, Inc.

All equity interests in Cardinal Peak Labs, Inc., a Delaware corporation (DE File No. 6021847), and a wholly owned subsidiary of CPI. Cardinal Peak Labs, Inc. is a dormant entity formed in 2015 for research and development purposes that were never pursued. As of the date hereof, Cardinal Peak Labs, Inc. has no employees, no active operations, and no assets or liabilities of material value. The equity interests in Cardinal Peak Labs, Inc. shall be retained by Seller.

6. Seller's Rights Under the Agreement

CPI's rights under the Agreement and the other Transaction Documents, including CPI's right to receive the Purchase Price, the Earnout Payments (if any), the Closing Date Net Working Capital adjustment (if applicable), and any other payments to which CPI may become entitled under the Agreement or the Transaction Documents.

7. Employee Benefit Plan Assets

All assets held in trust or otherwise set aside or maintained in connection with CPI's 401(k) retirement plan, group health insurance plans, and all other employee benefit plans, programs, arrangements, and policies maintained by CPI, including all assets of the Cardinal Peak Industries, Inc. 401(k) Savings Plan (Plan ID No. 001, EIN 82-3947561).

8. Minute Books and Organizational Records

CPI's certificate of incorporation, bylaws, minute books, stock transfer ledgers, corporate seal, and all other organizational records of CPI, including all resolutions of the board of directors and shareholders, stock certificates, and corporate governance documents. For the avoidance of doubt, Seller shall retain copies of all such organizational records.

Schedule 1.2(a) — Assumed Liabilities

The following liabilities and obligations of Cardinal Peak Industries, Inc. shall be assumed by Purchaser at the Closing (collectively, the "Assumed Liabilities"):

1. Trade Payables

All accounts payable, accrued trade payables, and other trade obligations of Seller arising in the ordinary course of business within ninety (90) days prior to the Closing Date and remaining outstanding as of the Closing Date, including amounts owed to medical supply vendors, service providers, landlords (for current-period rent), and other trade creditors. The aggregate amount of trade payables and accrued expenses as of the estimated Closing Date is expected to be reflected in the Estimated Closing Statement delivered pursuant to Section 1.5 of the Agreement.

2. Assumed Contract Obligations

All obligations and liabilities of Seller arising under the Assumed Contracts listed on Schedule 2.4 hereto, to the extent such obligations relate to performance due after the Closing Date and do not arise from any breach, default, or violation by Seller occurring prior to the Closing Date. For the avoidance of doubt, Purchaser shall not assume any liability for any breach or default by Seller under any Assumed Contract that occurred on or prior to the Closing Date.

3. Accrued Employee Paid Time Off (PTO)

All accrued but unused paid time off for Transferred Employees as of the Closing Date, as determined in accordance with CPI's paid time off policies in effect as of the Closing Date. As of March 31, 2024, the aggregate estimated accrued PTO liability for all CPI employees (including both Transferred Employees and non-Transferred Employees) is approximately $3,800,000. The final amount of accrued PTO to be assumed by Purchaser shall include only the accrued PTO attributable to Transferred Employees as of the Closing Date and shall be reflected in the Closing Statement and included as a component of the Net Working Capital calculation.

4. Patient-Related Liabilities

All liabilities arising from patient care provided after the Closing Date, including professional malpractice claims and patient complaints arising from treatment rendered at any of the thirty-seven (37) clinic locations on or after the Closing Date. For the avoidance of doubt, Purchaser shall not assume any liability for malpractice claims or patient complaints arising from treatment rendered prior to the Closing Date.

Schedule 1.2(b) — Excluded Liabilities

The following liabilities and obligations of Cardinal Peak Industries, Inc. are excluded from the Assumed Liabilities and shall be retained by Seller following the Closing (collectively, the "Excluded Liabilities"):

1. Pre-Closing Litigation — *Dawson v. Cardinal Peak Industries, Inc.*

All liabilities arising from or related to Dawson v. Cardinal Peak Industries, Inc., Case No. 3:23-cv-01847, pending in the United States District Court for the Middle District of Tennessee (Nashville Division). This action is a putative class action alleging wage-and-hour violations under the Fair Labor Standards Act of 1938, as amended ("FLSA"), specifically claiming that CPI improperly classified certain rehabilitation aides and patient care coordinators as exempt employees under the FLSA's administrative and professional exemptions, and that CPI failed to pay overtime compensation to such employees. Plaintiff Karen Dawson, individually and on behalf of all others similarly situated, filed the complaint on September 15, 2023. The plaintiff seeks to certify a class of similarly situated current and former employees across CPI's Tennessee and Georgia clinic locations.

Estimated Exposure: $2,800,000 to $5,100,000, as estimated by Seller's outside litigation counsel, Barrow, Kensington & Pratt LLP (Daniel S. Kensington, Partner), 1001 Pennsylvania Avenue NW, Suite 800, Washington, DC 20004. This estimate takes into account the potential range of damages if the class is certified, the number of putative class members (estimated at 180 to 260 individuals), and the potential for liquidated damages under the FLSA.

Current Status: As of April 2, 2024, the plaintiff's motion for conditional certification under 29 U.S.C. § 216(b) is pending before the Honorable Judge Patricia M. Caldwell. Discovery is ongoing, with a written discovery cut-off of August 30, 2024, and depositions scheduled for September and October 2024. No trial date has been set.

Treatment Under the Agreement: CPI retains all obligations and liabilities associated with this litigation. CPI has agreed to indemnify Purchaser with respect to any and all losses, costs, damages, and expenses arising from or related to this matter, as set forth in Article VIII of the Agreement.

2. Pre-Closing Tax Liabilities

All Taxes of CPI or any of its affiliates (including Cardinal Peak Labs, Inc.) for any Pre-Closing Tax Period, including all federal income taxes, state and local income taxes, franchise taxes, employment and payroll taxes, sales and use taxes, property taxes (for periods prior to the Closing Date), and any penalties, interest, additions to tax, or additional amounts imposed with respect thereto. For the avoidance of doubt, the allocation of Taxes for any Straddle Period shall be determined in accordance with Section 9.3 of the Agreement.

3. 401(k) Plan Liabilities

All liabilities arising under or related to the Cardinal Peak Industries, Inc. 401(k) Savings Plan (Plan ID No. 001, EIN 82-3947561), including any unfunded obligations, matching contribution obligations accrued but not yet remitted, plan administration costs, fiduciary liabilities, excise taxes, penalties, and any other liabilities arising under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code"), or other applicable law with respect to such plan.

4. Existing Indebtedness — Velthorn Merchant Bank, N.A.

All obligations of CPI under that certain Credit Agreement, dated as of March 15, 2018, as amended by the First Amendment dated October 1, 2019, the Second Amendment dated April 15, 2021, and the Third Amendment dated January 10, 2023, by and among CPI, as borrower, and Velthorn Merchant Bank, N.A., as administrative agent and lender (the "Velthorn Credit Agreement"). As of the anticipated Closing Date of June 30, 2024, the outstanding principal balance under the Velthorn Credit Agreement is $87,400,000, together with accrued and unpaid interest and any applicable prepayment premiums. This indebtedness is to be repaid in full at Closing from Seller's proceeds pursuant to the Payoff Letter dated June 26, 2024, issued by Velthorn Merchant Bank, N.A. (Attn: Gregory Halderman, Senior Vice President), a copy of which has been delivered to Purchaser. Upon such repayment, all liens and security interests granted by CPI to Velthorn Merchant Bank, N.A. under the Velthorn Credit Agreement and related security documents shall be released and terminated.

5. Environmental Liabilities (Pre-Closing)

Any and all environmental liabilities, obligations, claims, remediation costs, cleanup costs, investigation costs, and related expenses arising from or related to environmental conditions existing at any of the thirty-seven (37) leased clinic locations or any other property formerly owned, operated, leased, or used by CPI, in each case, to the extent such conditions existed or were caused prior to the Closing Date, including any liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and any comparable state environmental laws.

6. Pre-Closing Employee Claims

All liabilities for employment claims, labor claims, workers' compensation claims, discrimination claims, harassment claims, wrongful termination claims, wage-and-hour claims (including the Dawson litigation referenced above), and any other claims of employees or former employees of CPI arising from acts, omissions, events, or conditions occurring prior to the Closing Date, other than the accrued PTO for Transferred Employees (which is an Assumed Liability as described in Schedule 1.2(a)).

7. Intercompany Payables

All intercompany balances, payables, receivables, advances, and other intercompany obligations between CPI and Cardinal Peak Labs, Inc., which shall be settled, forgiven, or otherwise eliminated by Seller prior to or concurrently with the Closing.

Schedule 2.4 — Material Contracts / Assumed Contracts

Set forth below is a list of all material contracts of Cardinal Peak Industries, Inc. to be assumed by Purchaser at the Closing pursuant to Section 2.4 of the Agreement (collectively, the "Assumed Contracts"), organized by category. Copies of all Assumed Contracts, including all amendments, supplements, and modifications thereto, have been made available to Purchaser in the Data Room.

A. Managed-Care / Payor Agreements

CPI is party to provider agreements with twelve (12) major managed-care payors, as set forth in the table below. These agreements, together with the Medicare and Medicaid program participation agreements described in Schedule 3.16, account for substantially all of CPI's net revenue.

Summary: Of the twelve (12) major managed-care payor agreements, seven (7) require consent or notice in connection with the assignment contemplated by the Agreement. Specifically, four (4) require affirmative prior written consent, and three (3) require written notice within specified time periods. The remaining five (5) agreements either contain no assignment or change-of-control restrictions, or expressly permit assignment to a successor in interest.

Note: Medicare and Medicaid program participation agreements represent approximately 31% of net revenue combined (Medicare ~19%; Medicaid ~12%). These agreements are governed by federal and state program participation requirements and are addressed in Schedule 3.16 (Permits and Regulatory Matters / Healthcare Regulatory), including the required change-of-ownership (CHOW) applications.

B. Real Property Leases (37 Locations)

All real property leases for the thirty-seven (37) clinic locations operated by CPI are Assumed Contracts. A complete list of all real property leases, including the identity of each landlord, the lease commencement and expiration dates, monthly rent, renewal options, and consent requirements, is set forth on Schedule 3.10 hereto, which is incorporated herein by reference.

C. Vendor and Service Agreements

The following categories of vendor and service agreements are Assumed Contracts:

(i) IT Services and EHR Licensing Agreements:

• Master Services Agreement with HealthBridge Technologies, Inc., dated January 1, 2022, for electronic health record (EHR) system licensing and support services (term through December 31, 2026; annual fees of approximately $2,400,000);

• Managed IT Services Agreement with NetPoint Solutions Group, LLC, dated July 1, 2021, for network infrastructure management, cybersecurity monitoring, and helpdesk support at all thirty-seven clinic locations (term through June 30, 2025; annual fees of approximately $1,800,000);

• Cloud Hosting Agreement with Meridian Technologies (Ridgeway Industries), effective March 15, 2020 (month-to-month; average monthly spend of approximately $85,000).

(ii) Medical Supply Contracts:

• Preferred Vendor Agreement with MedSource Supply Co., dated April 1, 2023, for supply of physical therapy and rehabilitation supplies and equipment (term through March 31, 2026; estimated annual spend of approximately $3,200,000);

• Purchase Agreement with Orthokinetics Medical, Inc., dated September 1, 2022, for orthotic devices and bracing supplies (term through August 31, 2025; estimated annual spend of approximately $1,100,000).

(iii) Billing and Revenue Cycle Management Agreements:

• Revenue Cycle Services Agreement with Clearwater Revenue Partners, LLC, dated October 1, 2020 (as amended May 1, 2023), for third-party billing, coding, and revenue cycle management services (term through September 30, 2025; fee structure based on percentage of collections);

• Coding Compliance Consulting Agreement with Brightline Compliance Group, Inc., dated January 15, 2023, for ongoing coding audit and compliance monitoring services (term through January 14, 2026; fixed annual fee of $420,000).

(iv) Janitorial and Facilities Maintenance Contracts:

• Master Facilities Services Agreement with ServicePro National, Inc., dated March 1, 2022, for janitorial, HVAC maintenance, and general facilities maintenance services at all thirty-seven clinic locations (term through February 28, 2025, with automatic one-year renewals; estimated annual spend of approximately $1,600,000).

(v) Professional Staffing and Temporary Labor Agreements:

• Temporary Staffing Agreement with Allied Rehabilitation Staffing, Inc., dated May 1, 2023, for temporary physical therapist, occupational therapist, and speech-language pathologist staffing (term through April 30, 2025; spend variable based on utilization);

• Professional Staffing Services Agreement with Keystone Healthcare Staffing, LLC, dated August 1, 2022, for temporary clinical and administrative staffing (term through July 31, 2025).

D. Employment Agreements

The following employment agreements are Assumed Contracts (each to be superseded by a new post-closing employment agreement as indicated):

(i) Employment Agreement with Dr. Randall J. Whitfield, dated January 1, 2018 (as amended March 1, 2020 and January 1, 2023), pursuant to which Dr. Whitfield serves as Chairman and Chief Executive Officer of CPI. This agreement is to be superseded at Closing by a new Employment Agreement between Purchaser and Dr. Whitfield, substantially in the form attached as Exhibit F to the Agreement.

(ii) Employment Agreement with Elaine Whitfield-Torres, dated March 15, 2018 (as amended June 1, 2021), pursuant to which Ms. Whitfield-Torres serves as Chief Clinical Officer of CPI. This agreement is to be superseded at Closing by a new Employment Agreement between Purchaser and Ms. Whitfield-Torres, substantially in the form attached as Exhibit G to the Agreement.

(iii) Employment Agreement with Kevin R. Boatwright, dated September 1, 2019, pursuant to which Mr. Boatwright serves as Chief Financial Officer of CPI. This agreement is to be superseded at Closing by a new offer letter from Purchaser.

(iv) Employment Agreement with Dr. Sarah Langford-Choi, dated February 1, 2021, pursuant to which Dr. Langford-Choi serves as Vice President of Clinical Operations. This agreement is to be superseded at Closing by a new offer letter from Purchaser.

(v) Employment Agreement with Marcus T. Ellison, dated November 1, 2020, pursuant to which Mr. Ellison serves as Vice President of Payor Relations. This agreement is to be superseded at Closing by a new offer letter from Purchaser.

E. Insurance Policies

All insurance policies maintained by CPI in connection with the operation of the Business, to the extent such policies are assignable, are Assumed Contracts. A complete list of all insurance policies is set forth on Schedule 3.15 hereto, which is incorporated herein by reference. Certain policies (including directors and officers liability and employment practices liability policies, which are claims-made policies) may require tail coverage to be procured by Seller at or prior to Closing.

F. IT and Software Licenses

(i) PeakConnect Platform: Internal maintenance, hosting, and development agreements related to the PeakConnect patient-engagement software platform are not subject to third-party licensing as the platform is proprietary to CPI. Internal support and maintenance obligations transfer to Purchaser with the platform.

(ii) Third-Party Software Licenses:

• HealthBridge EHR License Agreement (see Section C(i) above);

• Scheduling system license with ClinicFlow Software, Inc., dated April 1, 2021 (term through March 31, 2026; annual license fee of $360,000);

• Practice management software license with RehabAdmin Pro, LLC, dated January 1, 2022 (term through December 31, 2025; annual license fee of $275,000);

• Ashbury Holdings Enterprise Agreement for Ashbury Software and related services (annual spend of approximately $520,000);

• Various other third-party software licenses for data analytics, compliance management, and human resources systems, as detailed in Data Room Folder 4.7.2.

Schedule 3.1 — Organization and Qualification

Cardinal Peak Industries, Inc.

• State of Incorporation: Delaware

• Date of Incorporation: September 14, 2011

• Delaware File Number: 5487231

• Federal Employer Identification Number (EIN): 82-3947561

• Principal Executive Offices: 8400 Crescent Ridge Parkway, Suite 200, Nashville, Tennessee 37215

• Registered Agent in Delaware: Pemberton Industries, 251 Little Falls Drive, Wilmington, DE 19808

• Authorized Capital: 10,000,000 shares of common stock, $0.001 par value per share; no preferred stock authorized

Foreign Qualifications: CPI is qualified to do business as a foreign corporation and is in good standing (or the equivalent) in each of the following jurisdictions:

Updated certificates of good standing in each jurisdiction will be obtained not more than five (5) business days prior to the Closing Date and delivered to Purchaser at Closing, as required by Section 6.2(c) of the Agreement.

Subsidiary — Cardinal Peak Labs, Inc.

• State of Incorporation: Delaware

• Date of Incorporation: April 10, 2015

• Delaware File Number: 6021847

• Federal Employer Identification Number (EIN): 82-4183920

• Status: Dormant. Cardinal Peak Labs, Inc. was formed in 2015 for research and development purposes that were never pursued. The entity has no employees, no active operations, no material assets, and no material liabilities. It has maintained its corporate franchise and filed required annual reports with the Delaware Secretary of State, but has conducted no business activities.

• Ownership: Wholly owned by CPI (100% of the issued and outstanding shares of common stock).

• Treatment under the Agreement: The equity interests in Cardinal Peak Labs, Inc. are Excluded Assets and shall be retained by Seller.

Other than Cardinal Peak Labs, Inc., CPI does not own, directly or indirectly, any equity interest in any other person or entity.

Schedule 3.3 — Capitalization

Set forth below is the capitalization of Cardinal Peak Industries, Inc. as of the date of the Agreement:

Authorized Capital: 10,000,000 shares of common stock, $0.001 par value per share. No shares of preferred stock are authorized.

Issued and Outstanding Shares: 5,000,000 shares of common stock, $0.001 par value per share, issued and outstanding, held as follows:

Notes:

(a) Ridgeline Growth Equity Fund II LP has been a minority investor in CPI since October 2018, when it acquired its shares in connection with a growth equity investment in CPI. The general partner of Ridgeline Growth Equity Fund II LP is Ridgeline Growth Equity Advisors LLC, a Delaware limited liability company, whose managing members are Jonathan R. Ainsworth and David C. Sterling.

(b) There are no outstanding options, warrants, convertible securities, stock appreciation rights, phantom equity, or other rights to acquire shares of CPI's capital stock, nor any agreements, arrangements, or commitments of any kind obligating CPI to issue any additional shares of its capital stock or any securities convertible into or exercisable for shares of its capital stock.

(c) All shareholders are parties to that certain Shareholders' Agreement, dated as of October 15, 2018, by and among CPI, Dr. Randall J. Whitfield, Elaine Whitfield-Torres, Ridgeline Growth Equity Fund II LP, and the other shareholders identified therein (the "Shareholders' Agreement"). The Shareholders' Agreement contains, among other things, drag-along provisions that have been triggered by this transaction, requiring all shareholders to consent to and support the sale of assets contemplated by the Agreement.

(d) All shareholders have executed shareholder consents dated April 1, 2024, approving the Asset Purchase Agreement and the transactions contemplated thereby. Copies of such shareholder consents have been made available to Purchaser in Data Room Folder 1.2.3.

Schedule 3.5 — No Conflicts; Consents Required

Set forth below is a list of all consents, approvals, authorizations, notices, filings, and registrations required to be obtained or made in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:

1. Landlord Consents

Twenty-nine (29) of the thirty-seven (37) real property leases for CPI's clinic locations require the prior written consent of the applicable landlord in connection with the assignment of such leases to Purchaser or contain provisions treating the asset purchase as a change of control requiring landlord consent. The eight (8) remaining leases either do not contain assignment or change-of-control restrictions or expressly permit assignment to a successor in interest upon written notice to the landlord. A complete list of the leases requiring landlord consent and the status of each consent request is set forth on Schedule 3.10 hereto and in the Lease Consent Tracker maintained by Calderwood & Harkness LLP (Tiffany Rosenthal, Partner).

2. Managed-Care Payor Consents and Notices

Seven (7) of the twelve (12) major managed-care payor agreements require consent or notice in connection with the assignment of such agreements to Purchaser. A complete list of the payors requiring consent or notice and the status of each is set forth on Schedule 2.4 hereto. Particular attention is directed to the SummitCare Health Plans, Inc. agreement, which requires prior written consent and which has been specifically identified as a material consent.

3. State Healthcare Change-of-Ownership Filings

(a) Filed: Change-of-ownership filings were submitted on March 4, 2024, with the appropriate state healthcare regulatory authorities in the following states:

• Tennessee Department of Health

• Georgia Department of Community Health

• North Carolina Department of Health and Human Services

(b) Pending or To Be Filed: Change-of-ownership filings in the following states are either pending, to be filed at or around the time of Closing, or not required under applicable state law:

• South Carolina Department of Health and Environmental Control (filing to be submitted approximately 30 days prior to Closing)

• Alabama Department of Public Health (filing to be submitted approximately 30 days prior to Closing)

• Virginia Department of Health (filing requirements under review by regulatory counsel; believed to be required and to be submitted prior to Closing)

• Kentucky Cabinet for Health and Family Services (notice filing to be submitted concurrent with Closing; no advance approval required under applicable Kentucky law)

4. Medicare / Medicaid Change of Ownership Enrollment

DISCLOSURE SCHEDULES
to the
ASSET PURCHASE AGREEMENT
dated as of April 2, 2024
by and between
ARDENT HEALTHCARE ACQUISITION CORP. (as Purchaser)
and
CARDINAL PEAK INDUSTRIES, INC. (as Seller)
IMPORTANT NOTICES AND LIMITATIONS
These Disclosure Schedules (these "Schedules") are delivered pursuant to Article X of that certain Asset Purchase Agreement, dated as of April 2, 2024 (the "Agreement"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation ("Purchaser"), and Cardinal Peak Industries, Inc., a Delaware corporation ("Seller" or "CPI"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
The information disclosed in these Schedules is disclosed solely for the purposes of the Agreement and shall not be deemed to constitute an admission or acknowledgment by any party of the materiality of any item disclosed herein. Nothing in these Schedules is intended to broaden the scope of any representation or warranty contained in the Agreement or to create any covenant, standard, or obligation not independently contained in the Agreement.
Matters disclosed in any particular Schedule shall be deemed disclosed with respect to any other Schedule to the extent the relevance of such disclosure to such other Schedule is reasonably apparent on the face of such disclosure. The inclusion of any information in these Schedules shall not be deemed an admission that such information is required to be disclosed or that such information is material to the business, financial condition, operations, or results of operations of CPI. Without limiting the foregoing, the disclosure of any matter in these Schedules does not imply that any other undisclosed matter having a greater or lesser value or significance is material for purposes of the Agreement.
The section and subsection references herein correspond to the sections and subsections of the Agreement. Any description of any agreement, document, instrument, plan, arrangement, or other item set forth herein is qualified in its entirety by reference to such agreement, document, instrument, plan, arrangement, or other item itself, copies of which have been made available to Purchaser and its representatives in the electronic data room maintained by Fenmore Systems (Project Cardinal Data Room, Room ID 24-AH-CPI-0331).
The information contained in these Schedules is as of April 2, 2024, the date of the Agreement, unless otherwise noted. Seller has an obligation to update and supplement these Schedules through the Closing Date of June 30, 2024, as set forth in Section 5.5 of the Agreement.
TABLE OF CONTENTS
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PART I — SELLER'S DISCLOSURE SCHEDULES
Schedule 1.1(a) — Acquired Assets
The following sets forth a description of substantially all of the assets of Cardinal Peak Industries, Inc. to be acquired by Purchaser pursuant to Section 1.1(a) of the Agreement (collectively, the "Acquired Assets"). The Acquired Assets include all right, title, and interest of Seller in and to the following categories of assets, in each case, other than the Excluded Assets described in Schedule 1.1(b):
1. Tangible Personal Property
All furniture, fixtures, equipment, medical devices, information technology hardware, telecommunications equipment, leasehold improvements, and other tangible personal property owned by Seller and used in, held for use in, or arising out of the operation of the Business, wherever located, including all items at each of the thirty-seven (37) clinic locations operated by Seller across seven (7) states, as more particularly described below:
(a) Tennessee (14 locations): All tangible personal property situated at each of the fourteen clinic facilities operated by Seller in the State of Tennessee, including the headquarters facility located at 8400 Crescent Ridge Parkway, Suite 200, Nashville, TN 37215, and the thirteen additional clinic locations identified on Schedule 3.10 hereto.
(b) Georgia (8 locations): All tangible personal property situated at each of the eight clinic facilities operated by Seller in the State of Georgia, including locations in the Atlanta, Savannah, Augusta, and Macon metropolitan areas, as identified on Schedule 3.10 hereto.
(c) North Carolina (5 locations): All tangible personal property situated at each of the five clinic facilities operated by Seller in the State of North Carolina, including locations in the Charlotte, Raleigh-Durham, and Greensboro metropolitan areas, as identified on Schedule 3.10 hereto.
(d) South Carolina (4 locations): All tangible personal property situated at each of the four clinic facilities operated by Seller in the State of South Carolina, including locations in the Charleston, Columbia, and Greenville metropolitan areas, as identified on Schedule 3.10 hereto.
(e) Alabama (3 locations): All tangible personal property situated at each of the three clinic facilities operated by Seller in the State of Alabama, including locations in the Birmingham and Huntsville metropolitan areas, as identified on Schedule 3.10 hereto.
(f) Virginia (2 locations): All tangible personal property situated at each of the two clinic facilities operated by Seller in the Commonwealth of Virginia, including locations in the Richmond and Virginia Beach metropolitan areas, as identified on Schedule 3.10 hereto.
(g) Kentucky (1 location): All tangible personal property situated at the single clinic facility operated by Seller in the Commonwealth of Kentucky, located in the Louisville metropolitan area, as identified on Schedule 3.10 hereto.
A detailed inventory of material items of tangible personal property, including medical and therapeutic equipment, office furniture and fixtures, computer hardware, networking infrastructure, and leasehold improvements at each location, is set forth in the Personal Property Inventory prepared as of March 15, 2024, by CPI's Director of Operations, a copy of which has been made available to Purchaser in Data Room Folder 2.3.1.
2. Accounts Receivable
All accounts receivable and notes receivable of Seller outstanding as of the Closing Date, whether billed or unbilled, arising from the operation of the Business, including all amounts owed to Seller by managed-care payors, Medicare, Medicaid, patients, and any other third-party payors, together with any security held by Seller for the payment thereof, and the full benefit of all rights related thereto, including the right to sue for, collect, or otherwise enforce any and all such accounts receivable and notes receivable.
3. Inventory
All inventories of medical supplies, pharmaceutical supplies, therapeutic equipment supplies, orthotic and prosthetic supplies, and office supplies maintained by Seller at each of the thirty-seven (37) clinic locations and at any off-site storage facilities, in each case as of the Closing Date.
4. Contracts
All of Seller's right, title, and interest in and to all Assumed Contracts, as listed and described in Schedule 2.4 hereto, including all managed-care and payor agreements, real property leases, vendor and service agreements, employment agreements (to the extent specified in Schedule 2.4), insurance policies (to the extent assignable), and IT and software license agreements.
5. Intellectual Property
All intellectual property assets owned by or licensed to Seller and used in or held for use in the operation of the Business (other than the CPI Corporate Name, which is an Excluded Asset), as described in Schedule 3.12 hereto, including:
(a) The PeakConnect patient-engagement software platform, including all source code, object code, documentation, databases, user interfaces, and related materials;
(b) All registered trademarks, including U.S. Registration No. 5,412,887 for the mark PEAKCONNECT;
(c) All domain names, including cardinalpeakindustries.com and peakconnect.com;
(d) All unregistered intellectual property, including clinical protocols, training materials, proprietary methodologies, and trade secrets;
(e) All rights under inbound and outbound intellectual property licenses used in or related to the Business; and
(f) All goodwill associated with the foregoing intellectual property.
6. Permits and Licenses
All transferable governmental permits, licenses, certifications, approvals, registrations, and authorizations used in or related to the operation of the Business, as described in Schedule 3.16 hereto, including all state healthcare facility licenses, Medicare and Medicaid provider enrollments, and any other permits necessary for the operation of the thirty-seven (37) clinic locations, to the extent transferable under applicable law.
7. Books and Records
(a) All patient records, charts, files, and medical records (subject to applicable provisions of the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder ("HIPAA")), and to the extent their transfer is permitted by applicable law;
(b) All financial records, general ledgers, journals, accounting records, and tax records (other than those relating solely to Excluded Liabilities or Excluded Assets);
(c) All employee records for Transferred Employees, including personnel files, payroll records, benefits records, and immigration and employment eligibility verification records (Form I-9), to the extent their transfer is permitted by applicable law;
(d) All operating records, customer lists, supplier lists, referral source records, patient demographic information, marketing materials, promotional materials, and advertising materials; and
(e) All correspondence, files, and records relating to the Acquired Assets or the Business generally, wherever located.
8. Goodwill
All goodwill of Seller associated with the Business, including the going-concern value, patient relationships, referral source relationships, payor relationships, and reputation of the Business.
9. Prepaid Expenses
All prepaid expenses, deposits, advance payments, security deposits (including lease security deposits), prepaid insurance premiums (to the extent related to assigned policies), and other similar items paid by Seller in connection with the operation of the Business and existing as of the Closing Date.
10. Claims and Causes of Action
All claims, rights, and causes of action of Seller relating to the Acquired Assets or the Business arising after the Closing Date, including all rights of indemnity, warranty rights, rights of contribution, rights to refunds, and rights of set-off, together with any and all related documents and materials.
11. Insurance Proceeds
All rights to insurance proceeds relating to the Acquired Assets or Assumed Liabilities, including any proceeds receivable with respect to damage to or loss of any Acquired Asset occurring prior to the Closing Date and any insurance proceeds relating to Assumed Liabilities.
12. Telephone Numbers, Websites, Domain Names, and Social Media Accounts
All telephone numbers, facsimile numbers, email addresses, uniform resource locators (URLs), internet domain names, social media accounts (including accounts on Westmark Health IT, Kestrel Services Inc., Northpoint Services Inc., X (formerly Fenmore Solutions), and Crowne Albany Partners LLC), and any other electronic or digital identifiers used by Seller in connection with the operation of the Business.
Schedule 1.1(b) — Excluded Assets
The following assets of Cardinal Peak Industries, Inc. are excluded from the Acquired Assets and shall be retained by Seller following the Closing (collectively, the "Excluded Assets"):
1. Cash and Cash Equivalents
All cash on hand, bank deposits, certificates of deposit, money market accounts, commercial paper, treasury bills, and other cash equivalents of CPI, wherever deposited or held, as of the Closing Date, including all cash and cash equivalents held in the bank accounts listed on Schedule 3.21 hereto.
2. Tax Refunds
All refunds, credits, rebates, or similar benefits of Taxes (including interest thereon) attributable to Pre-Closing Tax Periods or to the pre-closing portion of any Straddle Period, as determined in accordance with Section 9.3 of the Agreement, whether such refunds, credits, rebates, or benefits are received as a payment, credited against future Tax obligations, or otherwise realized.
3. Personal Property of Dr. Randall J. Whitfield
The following specifically identified personal effects of Dr. Randall J. Whitfield located at CPI's Nashville headquarters at 8400 Crescent Ridge Parkway, Suite 200, Nashville, TN 37215:
(a) Personal artwork, including three framed original paintings and two limited-edition prints displayed in the CEO's office suite;
(b) Personal memorabilia, including framed diplomas, awards, photographs, and other items of a personal nature located in the CEO's office suite;
(c) Personal computing equipment, including one Tidewater Industries MacBook Pro laptop (Serial No. C02Z_), one Tidewater Industries iPad Pro (Serial No. DM_), and associated personal peripherals; and
(d) Any and all other items of tangible personal property owned by Dr. Whitfield personally (as opposed to CPI) located at the Nashville headquarters or any other CPI facility.
4. CPI Corporate Name
The name "Cardinal Peak Industries" and all related trade names, trade dress, logos, and corporate identifiers incorporating the words "Cardinal Peak Industries" (including the registered trademark CARDINAL PEAK INDUSTRIES (design + word), U.S. Registration No. 5,891,203), are Excluded Assets and shall be retained by Seller. Notwithstanding the foregoing, Purchaser shall have a limited, non-exclusive, royalty-free license to use the "Cardinal Peak Industries" name and related marks for a period of twelve (12) months following the Closing Date, solely for transitional purposes, as more particularly set forth in the intellectual Property Assignment Agreement to be executed and delivered at Closing.
5. Equity Interests in Cardinal Peak Labs, Inc.
All equity interests in Cardinal Peak Labs, Inc., a Delaware corporation (DE File No. 6021847), and a wholly owned subsidiary of CPI. Cardinal Peak Labs, Inc. is a dormant entity formed in 2015 for research and development purposes that were never pursued. As of the date hereof, Cardinal Peak Labs, Inc. has no employees, no active operations, and no assets or liabilities of material value. The equity interests in Cardinal Peak Labs, Inc. shall be retained by Seller.
6. Seller's Rights Under the Agreement
CPI's rights under the Agreement and the other Transaction Documents, including CPI's right to receive the Purchase Price, the Earnout Payments (if any), the Closing Date Net Working Capital adjustment (if applicable), and any other payments to which CPI may become entitled under the Agreement or the Transaction Documents.
7. Employee Benefit Plan Assets
All assets held in trust or otherwise set aside or maintained in connection with CPI's 401(k) retirement plan, group health insurance plans, and all other employee benefit plans, programs, arrangements, and policies maintained by CPI, including all assets of the Cardinal Peak Industries, Inc. 401(k) Savings Plan (Plan ID No. 001, EIN 82-3947561).
8. Minute Books and Organizational Records
CPI's certificate of incorporation, bylaws, minute books, stock transfer ledgers, corporate seal, and all other organizational records of CPI, including all resolutions of the board of directors and shareholders, stock certificates, and corporate governance documents. For the avoidance of doubt, Seller shall retain copies of all such organizational records.
Schedule 1.2(a) — Assumed Liabilities
The following liabilities and obligations of Cardinal Peak Industries, Inc. shall be assumed by Purchaser at the Closing (collectively, the "Assumed Liabilities"):
1. Trade Payables
All accounts payable, accrued trade payables, and other trade obligations of Seller arising in the ordinary course of business within ninety (90) days prior to the Closing Date and remaining outstanding as of the Closing Date, including amounts owed to medical supply vendors, service providers, landlords (for current-period rent), and other trade creditors. The aggregate amount of trade payables and accrued expenses as of the estimated Closing Date is expected to be reflected in the Estimated Closing Statement delivered pursuant to Section 1.5 of the Agreement.
2. Assumed Contract Obligations
All obligations and liabilities of Seller arising under the Assumed Contracts listed on Schedule 2.4 hereto, to the extent such obligations relate to performance due after the Closing Date and do not arise from any breach, default, or violation by Seller occurring prior to the Closing Date. For the avoidance of doubt, Purchaser shall not assume any liability for any breach or default by Seller under any Assumed Contract that occurred on or prior to the Closing Date.
3. Accrued Employee Paid Time Off (PTO)
All accrued but unused paid time off for Transferred Employees as of the Closing Date, as determined in accordance with CPI's paid time off policies in effect as of the Closing Date. As of March 31, 2024, the aggregate estimated accrued PTO liability for all CPI employees (including both Transferred Employees and non-Transferred Employees) is approximately $3,800,000. The final amount of accrued PTO to be assumed by Purchaser shall include only the accrued PTO attributable to Transferred Employees as of the Closing Date and shall be reflected in the Closing Statement and included as a component of the Net Working Capital calculation.
4. Patient-Related Liabilities
All liabilities arising from patient care provided after the Closing Date, including professional malpractice claims and patient complaints arising from treatment rendered at any of the thirty-seven (37) clinic locations on or after the Closing Date. For the avoidance of doubt, Purchaser shall not assume any liability for malpractice claims or patient complaints arising from treatment rendered prior to the Closing Date.
Schedule 1.2(b) — Excluded Liabilities
The following liabilities and obligations of Cardinal Peak Industries, Inc. are excluded from the Assumed Liabilities and shall be retained by Seller following the Closing (collectively, the "Excluded Liabilities"):
1. Pre-Closing Litigation — *Dawson v. Cardinal Peak Industries, Inc.*
All liabilities arising from or related to Dawson v. Cardinal Peak Industries, Inc., Case No. 3:23-cv-01847, pending in the United States District Court for the Middle District of Tennessee (Nashville Division). This action is a putative class action alleging wage-and-hour violations under the Fair Labor Standards Act of 1938, as amended ("FLSA"), specifically claiming that CPI improperly classified certain rehabilitation aides and patient care coordinators as exempt employees under the FLSA's administrative and professional exemptions, and that CPI failed to pay overtime compensation to such employees. Plaintiff Karen Dawson, individually and on behalf of all others similarly situated, filed the complaint on September 15, 2023. The plaintiff seeks to certify a class of similarly situated current and former employees across CPI's Tennessee and Georgia clinic locations.
Estimated Exposure: $2,800,000 to $5,100,000, as estimated by Seller's outside litigation counsel, Barrow, Kensington & Pratt LLP (Daniel S. Kensington, Partner), 1001 Pennsylvania Avenue NW, Suite 800, Washington, DC 20004. This estimate takes into account the potential range of damages if the class is certified, the number of putative class members (estimated at 180 to 260 individuals), and the potential for liquidated damages under the FLSA.
Current Status: As of April 2, 2024, the plaintiff's motion for conditional certification under 29 U.S.C. § 216(b) is pending before the Honorable Judge Patricia M. Caldwell. Discovery is ongoing, with a written discovery cut-off of August 30, 2024, and depositions scheduled for September and October 2024. No trial date has been set.
Treatment Under the Agreement: CPI retains all obligations and liabilities associated with this litigation. CPI has agreed to indemnify Purchaser with respect to any and all losses, costs, damages, and expenses arising from or related to this matter, as set forth in Article VIII of the Agreement.
2. Pre-Closing Tax Liabilities
All Taxes of CPI or any of its affiliates (including Cardinal Peak Labs, Inc.) for any Pre-Closing Tax Period, including all federal income taxes, state and local income taxes, franchise taxes, employment and payroll taxes, sales and use taxes, property taxes (for periods prior to the Closing Date), and any penalties, interest, additions to tax, or additional amounts imposed with respect thereto. For the avoidance of doubt, the allocation of Taxes for any Straddle Period shall be determined in accordance with Section 9.3 of the Agreement.
3. 401(k) Plan Liabilities
All liabilities arising under or related to the Cardinal Peak Industries, Inc. 401(k) Savings Plan (Plan ID No. 001, EIN 82-3947561), including any unfunded obligations, matching contribution obligations accrued but not yet remitted, plan administration costs, fiduciary liabilities, excise taxes, penalties, and any other liabilities arising under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code"), or other applicable law with respect to such plan.
4. Existing Indebtedness — Velthorn Merchant Bank, N.A.
All obligations of CPI under that certain Credit Agreement, dated as of March 15, 2018, as amended by the First Amendment dated October 1, 2019, the Second Amendment dated April 15, 2021, and the Third Amendment dated January 10, 2023, by and among CPI, as borrower, and Velthorn Merchant Bank, N.A., as administrative agent and lender (the "Velthorn Credit Agreement"). As of the anticipated Closing Date of June 30, 2024, the outstanding principal balance under the Velthorn Credit Agreement is $87,400,000, together with accrued and unpaid interest and any applicable prepayment premiums. This indebtedness is to be repaid in full at Closing from Seller's proceeds pursuant to the Payoff Letter dated June 26, 2024, issued by Velthorn Merchant Bank, N.A. (Attn: Gregory Halderman, Senior Vice President), a copy of which has been delivered to Purchaser. Upon such repayment, all liens and security interests granted by CPI to Velthorn Merchant Bank, N.A. under the Velthorn Credit Agreement and related security documents shall be released and terminated.
5. Environmental Liabilities (Pre-Closing)
Any and all environmental liabilities, obligations, claims, remediation costs, cleanup costs, investigation costs, and related expenses arising from or related to environmental conditions existing at any of the thirty-seven (37) leased clinic locations or any other property formerly owned, operated, leased, or used by CPI, in each case, to the extent such conditions existed or were caused prior to the Closing Date, including any liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and any comparable state environmental laws.
6. Pre-Closing Employee Claims
All liabilities for employment claims, labor claims, workers' compensation claims, discrimination claims, harassment claims, wrongful termination claims, wage-and-hour claims (including the Dawson litigation referenced above), and any other claims of employees or former employees of CPI arising from acts, omissions, events, or conditions occurring prior to the Closing Date, other than the accrued PTO for Transferred Employees (which is an Assumed Liability as described in Schedule 1.2(a)).
7. Intercompany Payables
All intercompany balances, payables, receivables, advances, and other intercompany obligations between CPI and Cardinal Peak Labs, Inc., which shall be settled, forgiven, or otherwise eliminated by Seller prior to or concurrently with the Closing.
Schedule 2.4 — Material Contracts / Assumed Contracts
Set forth below is a list of all material contracts of Cardinal Peak Industries, Inc. to be assumed by Purchaser at the Closing pursuant to Section 2.4 of the Agreement (collectively, the "Assumed Contracts"), organized by category. Copies of all Assumed Contracts, including all amendments, supplements, and modifications thereto, have been made available to Purchaser in the Data Room.
A. Managed-Care / Payor Agreements
CPI is party to provider agreements with twelve (12) major managed-care payors, as set forth in the table below. These agreements, together with the Medicare and Medicaid program participation agreements described in Schedule 3.16, account for substantially all of CPI's net revenue.
Summary: Of the twelve (12) major managed-care payor agreements, seven (7) require consent or notice in connection with the assignment contemplated by the Agreement. Specifically, four (4) require affirmative prior written consent, and three (3) require written notice within specified time periods. The remaining five (5) agreements either contain no assignment or change-of-control restrictions, or expressly permit assignment to a successor in interest.
Note: Medicare and Medicaid program participation agreements represent approximately 31% of net revenue combined (Medicare ~19%; Medicaid ~12%). These agreements are governed by federal and state program participation requirements and are addressed in Schedule 3.16 (Permits and Regulatory Matters / Healthcare Regulatory), including the required change-of-ownership (CHOW) applications.
B. Real Property Leases (37 Locations)
All real property leases for the thirty-seven (37) clinic locations operated by CPI are Assumed Contracts. A complete list of all real property leases, including the identity of each landlord, the lease commencement and expiration dates, monthly rent, renewal options, and consent requirements, is set forth on Schedule 3.10 hereto, which is incorporated herein by reference.
C. Vendor and Service Agreements
The following categories of vendor and service agreements are Assumed Contracts:
(i) IT Services and EHR Licensing Agreements:
• Master Services Agreement with HealthBridge Technologies, Inc., dated January 1, 2022, for electronic health record (EHR) system licensing and support services (term through December 31, 2026; annual fees of approximately $2,400,000);
• Managed IT Services Agreement with NetPoint Solutions Group, LLC, dated July 1, 2021, for network infrastructure management, cybersecurity monitoring, and helpdesk support at all thirty-seven clinic locations (term through June 30, 2025; annual fees of approximately $1,800,000);
• Cloud Hosting Agreement with Meridian Technologies (Ridgeway Industries), effective March 15, 2020 (month-to-month; average monthly spend of approximately $85,000).
(ii) Medical Supply Contracts:
• Preferred Vendor Agreement with MedSource Supply Co., dated April 1, 2023, for supply of physical therapy and rehabilitation supplies and equipment (term through March 31, 2026; estimated annual spend of approximately $3,200,000);
• Purchase Agreement with Orthokinetics Medical, Inc., dated September 1, 2022, for orthotic devices and bracing supplies (term through August 31, 2025; estimated annual spend of approximately $1,100,000).
(iii) Billing and Revenue Cycle Management Agreements:
• Revenue Cycle Services Agreement with Clearwater Revenue Partners, LLC, dated October 1, 2020 (as amended May 1, 2023), for third-party billing, coding, and revenue cycle management services (term through September 30, 2025; fee structure based on percentage of collections);
• Coding Compliance Consulting Agreement with Brightline Compliance Group, Inc., dated January 15, 2023, for ongoing coding audit and compliance monitoring services (term through January 14, 2026; fixed annual fee of $420,000).
(iv) Janitorial and Facilities Maintenance Contracts:
• Master Facilities Services Agreement with ServicePro National, Inc., dated March 1, 2022, for janitorial, HVAC maintenance, and general facilities maintenance services at all thirty-seven clinic locations (term through February 28, 2025, with automatic one-year renewals; estimated annual spend of approximately $1,600,000).
(v) Professional Staffing and Temporary Labor Agreements:
• Temporary Staffing Agreement with Allied Rehabilitation Staffing, Inc., dated May 1, 2023, for temporary physical therapist, occupational therapist, and speech-language pathologist staffing (term through April 30, 2025; spend variable based on utilization);
• Professional Staffing Services Agreement with Keystone Healthcare Staffing, LLC, dated August 1, 2022, for temporary clinical and administrative staffing (term through July 31, 2025).
D. Employment Agreements
The following employment agreements are Assumed Contracts (each to be superseded by a new post-closing employment agreement as indicated):
(i) Employment Agreement with Dr. Randall J. Whitfield, dated January 1, 2018 (as amended March 1, 2020 and January 1, 2023), pursuant to which Dr. Whitfield serves as Chairman and Chief Executive Officer of CPI. This agreement is to be superseded at Closing by a new Employment Agreement between Purchaser and Dr. Whitfield, substantially in the form attached as Exhibit F to the Agreement.
(ii) Employment Agreement with Elaine Whitfield-Torres, dated March 15, 2018 (as amended June 1, 2021), pursuant to which Ms. Whitfield-Torres serves as Chief Clinical Officer of CPI. This agreement is to be superseded at Closing by a new Employment Agreement between Purchaser and Ms. Whitfield-Torres, substantially in the form attached as Exhibit G to the Agreement.
(iii) Employment Agreement with Kevin R. Boatwright, dated September 1, 2019, pursuant to which Mr. Boatwright serves as Chief Financial Officer of CPI. This agreement is to be superseded at Closing by a new offer letter from Purchaser.
(iv) Employment Agreement with Dr. Sarah Langford-Choi, dated February 1, 2021, pursuant to which Dr. Langford-Choi serves as Vice President of Clinical Operations. This agreement is to be superseded at Closing by a new offer letter from Purchaser.
(v) Employment Agreement with Marcus T. Ellison, dated November 1, 2020, pursuant to which Mr. Ellison serves as Vice President of Payor Relations. This agreement is to be superseded at Closing by a new offer letter from Purchaser.
E. Insurance Policies
All insurance policies maintained by CPI in connection with the operation of the Business, to the extent such policies are assignable, are Assumed Contracts. A complete list of all insurance policies is set forth on Schedule 3.15 hereto, which is incorporated herein by reference. Certain policies (including directors and officers liability and employment practices liability policies, which are claims-made policies) may require tail coverage to be procured by Seller at or prior to Closing.
F. IT and Software Licenses
(i) PeakConnect Platform: Internal maintenance, hosting, and development agreements related to the PeakConnect patient-engagement software platform are not subject to third-party licensing as the platform is proprietary to CPI. Internal support and maintenance obligations transfer to Purchaser with the platform.
(ii) Third-Party Software Licenses:
• HealthBridge EHR License Agreement (see Section C(i) above);
• Scheduling system license with ClinicFlow Software, Inc., dated April 1, 2021 (term through March 31, 2026; annual license fee of $360,000);
• Practice management software license with RehabAdmin Pro, LLC, dated January 1, 2022 (term through December 31, 2025; annual license fee of $275,000);
• Ashbury Holdings Enterprise Agreement for Ashbury Software and related services (annual spend of approximately $520,000);
• Various other third-party software licenses for data analytics, compliance management, and human resources systems, as detailed in Data Room Folder 4.7.2.
Schedule 3.1 — Organization and Qualification
Cardinal Peak Industries, Inc.
• State of Incorporation: Delaware
• Date of Incorporation: September 14, 2011
• Delaware File Number: 5487231
• Federal Employer Identification Number (EIN): 82-3947561
• Principal Executive Offices: 8400 Crescent Ridge Parkway, Suite 200, Nashville, Tennessee 37215
• Registered Agent in Delaware: Pemberton Industries, 251 Little Falls Drive, Wilmington, DE 19808
• Authorized Capital: 10,000,000 shares of common stock, $0.001 par value per share; no preferred stock authorized
Foreign Qualifications: CPI is qualified to do business as a foreign corporation and is in good standing (or the equivalent) in each of the following jurisdictions:
Updated certificates of good standing in each jurisdiction will be obtained not more than five (5) business days prior to the Closing Date and delivered to Purchaser at Closing, as required by Section 6.2(c) of the Agreement.
Subsidiary — Cardinal Peak Labs, Inc.
• State of Incorporation: Delaware
• Date of Incorporation: April 10, 2015
• Delaware File Number: 6021847
• Federal Employer Identification Number (EIN): 82-4183920
• Status: Dormant. Cardinal Peak Labs, Inc. was formed in 2015 for research and development purposes that were never pursued. The entity has no employees, no active operations, no material assets, and no material liabilities. It has maintained its corporate franchise and filed required annual reports with the Delaware Secretary of State, but has conducted no business activities.
• Ownership: Wholly owned by CPI (100% of the issued and outstanding shares of common stock).
• Treatment under the Agreement: The equity interests in Cardinal Peak Labs, Inc. are Excluded Assets and shall be retained by Seller.
Other than Cardinal Peak Labs, Inc., CPI does not own, directly or indirectly, any equity interest in any other person or entity.
Schedule 3.3 — Capitalization
Set forth below is the capitalization of Cardinal Peak Industries, Inc. as of the date of the Agreement:
Authorized Capital: 10,000,000 shares of common stock, $0.001 par value per share. No shares of preferred stock are authorized.
Issued and Outstanding Shares: 5,000,000 shares of common stock, $0.001 par value per share, issued and outstanding, held as follows:
Notes:
(a) Ridgeline Growth Equity Fund II LP has been a minority investor in CPI since October 2018, when it acquired its shares in connection with a growth equity investment in CPI. The general partner of Ridgeline Growth Equity Fund II LP is Ridgeline Growth Equity Advisors LLC, a Delaware limited liability company, whose managing members are Jonathan R. Ainsworth and David C. Sterling.
(b) There are no outstanding options, warrants, convertible securities, stock appreciation rights, phantom equity, or other rights to acquire shares of CPI's capital stock, nor any agreements, arrangements, or commitments of any kind obligating CPI to issue any additional shares of its capital stock or any securities convertible into or exercisable for shares of its capital stock.
(c) All shareholders are parties to that certain Shareholders' Agreement, dated as of October 15, 2018, by and among CPI, Dr. Randall J. Whitfield, Elaine Whitfield-Torres, Ridgeline Growth Equity Fund II LP, and the other shareholders identified therein (the "Shareholders' Agreement"). The Shareholders' Agreement contains, among other things, drag-along provisions that have been triggered by this transaction, requiring all shareholders to consent to and support the sale of assets contemplated by the Agreement.
(d) All shareholders have executed shareholder consents dated April 1, 2024, approving the Asset Purchase Agreement and the transactions contemplated thereby. Copies of such shareholder consents have been made available to Purchaser in Data Room Folder 1.2.3.
Schedule 3.5 — No Conflicts; Consents Required
Set forth below is a list of all consents, approvals, authorizations, notices, filings, and registrations required to be obtained or made in connection with the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby:
1. Landlord Consents
Twenty-nine (29) of the thirty-seven (37) real property leases for CPI's clinic locations require the prior written consent of the applicable landlord in connection with the assignment of such leases to Purchaser or contain provisions treating the asset purchase as a change of control requiring landlord consent. The eight (8) remaining leases either do not contain assignment or change-of-control restrictions or expressly permit assignment to a successor in interest upon written notice to the landlord. A complete list of the leases requiring landlord consent and the status of each consent request is set forth on Schedule 3.10 hereto and in the Lease Consent Tracker maintained by Calderwood & Harkness LLP (Tiffany Rosenthal, Partner).
2. Managed-Care Payor Consents and Notices
Seven (7) of the twelve (12) major managed-care payor agreements require consent or notice in connection with the assignment of such agreements to Purchaser. A complete list of the payors requiring consent or notice and the status of each is set forth on Schedule 2.4 hereto. Particular attention is directed to the SummitCare Health Plans, Inc. agreement, which requires prior written consent and which has been specifically identified as a material consent.
3. State Healthcare Change-of-Ownership Filings
(a) Filed: Change-of-ownership filings were submitted on March 4, 2024, with the appropriate state healthcare regulatory authorities in the following states:
• Tennessee Department of Health
• Georgia Department of Community Health
• North Carolina Department of Health and Human Services
(b) Pending or To Be Filed: Change-of-ownership filings in the following states are either pending, to be filed at or around the time of Closing, or not required under applicable state law:
• South Carolina Department of Health and Environmental Control (filing to be submitted approximately 30 days prior to Closing)
• Alabama Department of Public Health (filing to be submitted approximately 30 days prior to Closing)
• Virginia Department of Health (filing requirements under review by regulatory counsel; believed to be required and to be submitted prior to Closing)
• Kentucky Cabinet for Health and Family Services (notice filing to be submitted concurrent with Closing; no advance approval required under applicable Kentucky law)
4. Medicare / Medicaid Change of Ownership Enrollment
CPI and Purchaser are required to submit CMS-855A change-of-information applications to the Centers for Medicare & Medicaid Services ("CMS") to effect the transfer of CPI's Medicare provider enrollment to Purchaser. In addition, state Medicaid change-of-ownership applications must be submitted in each of the seven (7) states in which CPI is enrolled as a Medicaid provider. These applications are being prepared in coordination with Hargrove, Sinclair & Demarest LLP (Angela Demarest, Healthcare Regulatory Counsel).
5. Velthorn Merchant Bank, N.A.
Under the terms of the Velthorn Credit Agreement, the consent of Velthorn Merchant Bank, N.A. is required in connection with the sale of substantially all of CPI's assets. This consent requirement will be rendered moot by the repayment in full of all outstanding obligations under the Velthorn Credit Agreement at Closing pursuant to the Payoff Letter dated June 26, 2024.
6. Hart-Scott-Rodino Act
No filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), is required in connection with the transactions contemplated by the Agreement. This determination has been confirmed by antitrust counsel at Calderwood & Harkness LLP based on an analysis of the applicable size-of-person and size-of-transaction thresholds, including the exemption for asset purchases of healthcare clinics that do not meet the adjusted dollar thresholds in effect for the calendar year 2024.
7. Shareholder Approval
All shareholders of CPI have executed shareholder consents approving the Agreement and the transactions contemplated thereby, as described in Schedule 3.3 above. No additional shareholder vote or approval is required.
Schedule 3.6 — Financial Statements
Set forth below is a description of the financial statements of Cardinal Peak Industries, Inc. delivered to Purchaser in connection with the Agreement:
1. Audited Financial Statements
CPI has delivered to Purchaser complete copies of the following audited financial statements, each consisting of a balance sheet, statement of income, statement of changes in stockholders' equity, statement of cash flows, and accompanying notes (collectively, the "Audited Financial Statements"):
(a) Audited Financial Statements for the fiscal year ended December 31, 2021;
(b) Audited Financial Statements for the fiscal year ended December 31, 2022; and
(c) Audited Financial Statements for the fiscal year ended December 31, 2023.
The Audited Financial Statements were audited by Linden Hayes & Co., P.C., an independent registered public accounting firm, located at 500 Church Street, Suite 1400, Nashville, TN 37219 (Roberta Chen, CPA, Audit Partner). Each set of Audited Financial Statements was accompanied by an unqualified audit opinion issued by Linden Hayes & Co., P.C. The Audited Financial Statements were prepared in accordance with United States generally accepted accounting principles ("GAAP"), applied on a consistent basis throughout the periods presented, and present fairly, in all material respects, the financial position of CPI as of the dates thereof and the results of operations and cash flows of CPI for the periods covered thereby.
2. Unaudited Interim Financial Statements
CPI has delivered to Purchaser complete copies of the unaudited balance sheet and statement of income of CPI for the three-month period ended March 31, 2024 (collectively, the "Interim Financial Statements"). The Interim Financial Statements were prepared by CPI's internal accounting department and have been reviewed (but not audited) by Linden Hayes & Co., P.C. The Interim Financial Statements were prepared in accordance with GAAP, subject to normal year-end adjustments and the absence of footnote disclosures, and present fairly, in all material respects, the financial position of CPI as of March 31, 2024, and the results of operations for the three-month period then ended.
3. Key Financial Metrics
LTM Revenue (fiscal year ended December 31, 2023): $412,000,000.
LTM Adjusted EBITDA (fiscal year ended December 31, 2023): $74,160,000, representing an Adjusted EBITDA margin of 18.0%.
4. Exceptions to GAAP Compliance
None. The Seller has not identified any exceptions to GAAP compliance in the preparation of the Audited Financial Statements or the Interim Financial Statements.
Schedule 3.7 — Undisclosed Liabilities
Except as set forth below, CPI has no liabilities, obligations, or commitments of a type that would be required to be disclosed on a balance sheet prepared in accordance with GAAP that are not reflected in or reserved against in the Audited Financial Statements for the fiscal year ended December 31, 2023, or the Interim Financial Statements for the three-month period ended March 31, 2024, other than liabilities incurred in the ordinary course of business since March 31, 2024, that are not, individually or in the aggregate, material:
1. Accrued PTO Liability: CPI has an aggregate accrued but unused paid time off liability for all employees estimated at approximately $3,800,000 as of March 31, 2024. This liability is reflected in the Interim Financial Statements and is an Assumed Liability to the extent attributable to Transferred Employees (see Schedule 1.2(a)).
2. Dawson Litigation Contingent Liability: CPI has a contingent liability arising from the pending Dawson v. Cardinal Peak Industries, Inc. litigation, with estimated exposure in the range of $2,800,000 to $5,100,000, as described in greater detail on Schedule 3.14. This contingent liability has been disclosed in the notes to the Audited Financial Statements for the fiscal year ended December 31, 2023, and in the Interim Financial Statements for the three-month period ended March 31, 2024. The Dawson litigation is an Excluded Liability (see Schedule 1.2(b)).
3. No other undisclosed liabilities have been identified by Seller as of the date hereof.
Schedule 3.8 — Absence of Certain Changes
Except as set forth below, since December 31, 2023 (the date of the most recent Audited Financial Statements), CPI has conducted the Business in the ordinary course of business consistent with past practice, and there has not occurred any Material Adverse Effect or any event, occurrence, development, or state of circumstances that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect:
1. No Material Adverse Effect: Seller represents that no Material Adverse Effect has occurred since December 31, 2023, and no event has occurred that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.
2. Ordinary Course Operations: CPI has continued to operate all thirty-seven (37) clinic locations in the ordinary course of business. No clinics have been opened or closed since December 31, 2023.
3. Key Employee Departures: No executive officers or members of senior management have resigned, been terminated, or otherwise departed since December 31, 2023. All key employees identified in Schedule 3.13 remain employed by CPI as of the date hereof.
4. Capital Expenditures: CPI has made capital expenditures in the ordinary course of business since December 31, 2023, totaling approximately $4,200,000, consisting primarily of medical equipment purchases, leasehold improvement projects at three Tennessee clinic locations, and IT infrastructure upgrades. All such capital expenditures were within the scope of CPI's approved capital budget for fiscal year 2024.
5. No Material Changes to Payor Agreements: No managed-care payor agreements have been terminated, materially modified, or subject to material rate reductions since December 31, 2023. The SummitCare Health Plans, Inc. agreement was not amended during this period.
6. No Material Regulatory Events: CPI has not received any material citations, sanctions, notices of violations, or enforcement actions from any healthcare regulatory authority since December 31, 2023.
Schedule 3.9 — Taxes
1. Employer Identification Number
CPI's Federal Employer Identification Number (EIN) is 82-3947561.
2. Tax Return Filing Jurisdictions
CPI files (or is required to file) income, franchise, sales and use, employment, and/or other tax returns in the following jurisdictions:
3. Open Tax Years and Audits
(a) Federal: CPI's federal income tax returns for tax years 2021 through 2023 remain open for examination under the applicable statute of limitations. Tax years 2020 and prior are closed. CPI has not received any notice of examination, audit, assessment, or proposed assessment from the Internal Revenue Service with respect to any open tax year. No federal tax audits are currently pending or, to Seller's knowledge, threatened.
(b) State: CPI's state income, franchise, and sales/use tax returns for tax years 2021 through 2023 remain open for examination in each applicable state jurisdiction. CPI received a routine sales and use tax inquiry from the Georgia Department of Revenue in October 2023 relating to tax year 2022; such inquiry was resolved in January 2024 with no additional tax assessed and no penalties imposed. No other state tax audits are currently pending or, to Seller's knowledge, threatened in any jurisdiction.
4. Tax Liens
There are no outstanding tax liens on any of CPI's assets, and no such liens have been threatened or asserted by any taxing authority.
5. Tax Sharing and Tax Indemnity Agreements
CPI is not party to any tax sharing agreement, tax indemnity agreement, tax allocation agreement, or similar arrangement, other than customary tax provisions contained in the Securities Purchase Agreement dated October 15, 2018, between CPI and Ridgeline Growth Equity Fund II LP, which are not expected to have any material effect following the Closing.
6. Treatment Under the Agreement
All Tax liabilities of CPI for Pre-Closing Tax Periods are Excluded Liabilities and shall be retained by Seller, as set forth in Schedule 1.2(b) and Article IX of the Agreement.
Schedule 3.10 — Real Property
CPI owns no real property. All thirty-seven (37) clinic locations operate under triple-net leases (or modified triple-net leases) with third-party landlords. CPI is not a party to any agreement or option to purchase real property.
Set forth below is a complete list of all leased clinic locations:
Tennessee (14 Locations)
Georgia (8 Locations)
North Carolina (5 Locations)
South Carolina (4 Locations)
Alabama (3 Locations)
Virginia (2 Locations)
Kentucky (1 Location)
Summary:
• Average remaining lease term across all 37 locations: approximately 4.2 years (weighted by monthly rent).
• Twenty-nine (29) of thirty-seven (37) leases contain provisions requiring landlord consent upon assignment or treating the asset purchase as a change of control event. Three (3) landlord consents have been obtained as of the date hereof (Locations #1, #4, and #10). The remaining twenty-six (26) are pending.
• Eight (8) leases either do not require consent for assignment or permit assignment without consent upon written notice to the landlord (Locations #6, #11, #18, #21, #26, #31, #34, and one additional).
• The Lease Consent Tracker is maintained by Calderwood & Harkness LLP (Tiffany Rosenthal, Partner, 1177 Avenue of the Americas, New York, NY 10036) and is updated weekly. The most recent version of the tracker is available in Data Room Folder 3.10.1.
Schedule 3.11 — Personal Property
CPI owns tangible personal property at each of its thirty-seven (37) clinic locations. Set forth below is a summary of the principal categories of tangible personal property:
1. Medical and Therapeutic Equipment
Each clinic location is equipped with physical therapy, occupational therapy, and/or speech-language pathology equipment appropriate to the services provided at such location. Equipment includes, but is not limited to: treatment tables, therapeutic exercise equipment (including treadmills, stationary bicycles, upper body ergometers, and resistance training equipment), ultrasound therapy units, electrical stimulation devices, traction equipment, hot and cold therapy devices, balance and gait training equipment, hand therapy tools, and adaptive devices. Certain locations also maintain specialized equipment for aquatic therapy, vestibular rehabilitation, and neurological rehabilitation.
2. Office Furniture and Fixtures
Office furniture and fixtures at each location include reception desks, waiting room seating, office desks and chairs, filing cabinets, conference room furniture, and break room furnishings.
3. IT Hardware
IT hardware at each location includes desktop computers, laptop computers, monitors, printers, scanners, network routers and switches, wireless access points, telephony equipment (including VoIP systems), and point-of-sale terminals. CPI also maintains centralized IT infrastructure at its Nashville headquarters, including servers, network equipment, and data storage systems.
4. Leasehold Improvements
Leasehold improvements at each clinic location include interior build-outs, treatment room construction, reception area modifications, HVAC upgrades, lighting installations, flooring, signage, and ADA-compliant accessibility modifications. Leasehold improvements are specific to each location and are described in the lease files maintained in the Data Room.
5. Liens and Encumbrances
There are no material liens or encumbrances on any item of personal property owned by CPI, other than the UCC financing statements filed in favor of Velthorn Merchant Bank, N.A. in connection with the Velthorn Credit Agreement. The following UCC financing statements are currently on file:
(a) UCC-1 Financing Statement filed with the Delaware Secretary of State on March 20, 2018 (File No. 2018-1847291), naming CPI as debtor and Velthorn Merchant Bank, N.A. as secured party, covering all assets of CPI (blanket lien);
(b) UCC-1 Financing Statement filed with the Tennessee Secretary of State on March 20, 2018 (File No. 107-2018-004821), naming CPI as debtor and Velthorn Merchant Bank, N.A. as secured party, covering all assets of CPI located in Tennessee.
UCC-3 termination statements for both of the foregoing UCC financing statements were filed on June 28, 2024, with the Delaware Secretary of State and the Tennessee Secretary of State, respectively, to be effective upon the repayment in full of all obligations under the Velthorn Credit Agreement at Closing. Copies of the filed UCC-3 termination statements have been made available to Purchaser in Data Room Folder 3.11.2.
A detailed Personal Property Inventory, prepared as of March 15, 2024, listing all material items of personal property at each location with estimated fair market values, is available in Data Room Folder 2.3.1.
Schedule 3.12 — Intellectual Property
A. Registered intellectual Property
Note: The CARDINAL PEAK INDUSTRIES (design + word) trademark (U.S. Reg. No. 5,891,203) is an Excluded Asset and will be retained by Seller. Purchaser will receive a twelve (12) month transitional license to use this mark pursuant to the IP Assignment Agreement.
B. Unregistered intellectual Property
(i) PeakConnect Patient-Engagement Software Platform: PeakConnect is a proprietary, web-based patient-engagement software platform developed internally by CPI's information technology team beginning in 2016. The platform enables patients to access their treatment plans, schedule appointments, communicate with their care team, complete intake forms, view exercise programs, and track treatment progress. The platform also provides clinic management tools for scheduling, patient communication, outcomes tracking, and referral management. The PeakConnect platform source code is maintained internally by CPI and is stored in a private Tidewater Solutions repository. The platform was developed entirely by CPI employees within the scope of their employment, and CPI holds all right, title, and interest in and to the platform. The platform is not subject to any open-source licensing obligations that would require disclosure of source code or impose limitations on CPI's proprietary rights (e.g., no GPL, LGPL, or AGPL dependencies in the production codebase). A summary of third-party libraries used in the platform and their respective licenses (all permissive licenses, including MIT and Apache 2.0) is available in Data Room Folder 4.7.3.
(ii) Patient Engagement Methodologies: CPI has developed proprietary patient engagement methodologies, clinical treatment protocols, and quality improvement frameworks that are used across all thirty-seven clinic locations. These methodologies are documented in CPI's internal training manuals and clinical operations guides.
(iii) Trade Secrets: CPI maintains as trade secrets certain payor contracting strategies, reimbursement rate methodologies, clinical workflow optimization processes, and proprietary data analytics models. These trade secrets are subject to reasonable measures of protection, including limited access controls, confidentiality agreements with employees and contractors, and information security protocols.
C. Inbound IP Licenses
CPI is a licensee under the following material inbound intellectual property licenses:
(i) HealthBridge EHR License Agreement with HealthBridge Technologies, Inc., dated January 1, 2022, for electronic health record system software (enterprise license for all 37 clinic locations; see Schedule 2.4, Section C);
(ii) ClinicFlow scheduling software license with ClinicFlow Software, Inc., dated April 1, 2021 (see Schedule 2.4, Section F);
(iii) RehabAdmin Pro practice management software license with RehabAdmin Pro, LLC, dated January 1, 2022 (see Schedule 2.4, Section F);
(iv) Ashbury Holdings Enterprise Agreement for Ashgrove Software productivity suite and related cloud services; and
(v) Various other standard commercial software licenses for data analytics, human resources, accounting, and compliance management tools.
To Seller's knowledge, none of the foregoing inbound licenses would be materially impaired, terminated, or rendered unenforceable solely as a result of the consummation of the transactions contemplated by the Agreement.
D. Outbound IP Licenses
(i) CPI Corporate Name License-Back: The "Cardinal Peak Industries" name and the CARDINAL PEAK INDUSTRIES (design + word) trademark (U.S. Reg. No. 5,891,203) are Excluded Assets retained by Seller. Pursuant to the intellectual Property Assignment Agreement to be executed and delivered at Closing, Seller will grant Purchaser a limited, non-exclusive, royalty-free, non-transferable license to use the "Cardinal Peak Industries" name and related marks solely for transitional purposes for a period of twelve (12) months following the Closing Date.
(ii) CPI has not granted any other outbound licenses of its intellectual property to any third party.
E. IP Disputes
No intellectual property disputes, claims, proceedings, or actions are pending or, to Seller's knowledge, threatened against CPI as of the date hereof. CPI has not received any notice of infringement, misappropriation, or violation of any third party's intellectual property rights, and CPI has not sent any such notice to any third party.
Schedule 3.13 — Employees and Labor Matters
1. Employee Census
As of March 31, 2024, CPI employs approximately 2,100 individuals, including the following categories:
(a) Licensed Clinicians (approximately 1,450 employees):
• Physical Therapists (PTs): approximately 620
• Physical Therapist Assistants (PTAs): approximately 280
• Occupational Therapists (OTs): approximately 210
• Occupational Therapy Assistants (OTAs): approximately 95
• Speech-Language Pathologists (SLPs): approximately 120
• Behavioral Health Counselors (LPCs, LMFTs): approximately 75
• Licensed Clinical Social Workers (LCSWs): approximately 50
(b) Administrative and Support Staff (approximately 650 employees):
• Front office and reception staff: approximately 220
• Billing and coding specialists: approximately 110
• Clinic operations managers and supervisors: approximately 65
• Corporate headquarters staff (finance, HR, IT, compliance, marketing, payor relations): approximately 140
• Rehabilitation aides and patient care coordinators: approximately 115
2. Labor Relations
CPI is not a party to any collective bargaining agreement, and no employees of CPI are represented by any labor union or other labor organization. CPI has not experienced any work stoppage, strike, slowdown, or lockout, and no such action is pending or, to Seller's knowledge, threatened. No petition for certification or representation election is pending before the National Labor Relations Board or any state labor relations board. There are no pending or, to Seller's knowledge, threatened unfair labor practice charges against CPI before any federal, state, or local agency.
3. Pending Employment Litigation
The Dawson v. Cardinal Peak Industries, Inc. wage-and-hour litigation, as described in Schedule 3.14, constitutes the only pending employment litigation involving CPI. The Dawson matter is an Excluded Liability retained by Seller.
4. Key Employee Agreements
The following individuals have employment agreements with CPI, each of which is an Assumed Contract to be superseded at Closing by new employment agreements or offer letters with Purchaser:
(a) Dr. Randall J. Whitfield — Chairman

DISCLOSURE SCHEDULES

ASSET PURCHASE AGREEMENT

IMPORTANT NOTICES AND LIMITATIONS

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