TRANSITION SERVICES AGREEMENT
by and between
CARDINAL PEAK INDUSTRIES, INC.
("Provider" or "Seller")
and
ARDENT HEALTHCARE ACQUISITION CORP.
("Recipient" or "Purchaser")
Dated as of June 30, 2024
TRANSITION SERVICES AGREEMENT
June 30, 2024
This TRANSITION SERVICES AGREEMENT (this "Agreement" or "TSA") is entered into as of June 30, 2024 (the "Effective Date"), by and between:
CARDINAL PEAK INDUSTRIES, INC., a Delaware corporation, with its principal offices located at 8400 Crescent Ridge Parkway, Suite 200, Nashville, TN 37215 (together with its permitted successors and assigns, the "Provider" or "Seller");
and
ARDENT HEALTHCARE ACQUISITION CORP., a Delaware corporation, with its registered office c/o National Registered Services, Inc., 1209 Orange Street, Wilmington, DE 19801, and its principal offices located at 590 Madison Avenue, 34th Floor, New York, NY 10022 (together with its permitted successors and assigns, the "Recipient" or "Purchaser").
Provider and Recipient are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Provider and Recipient are parties to that certain Asset Purchase Agreement dated as of April 2, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, the "APA"), pursuant to which Recipient acquired substantially all of the assets of Provider relating to Provider's outpatient rehabilitation and behavioral health business (the "Acquired Business") for a base purchase price of Six Hundred Twenty Million Dollars ($620,000,000), subject to customary adjustments as set forth therein. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the APA;
WHEREAS, the closing of the transactions contemplated by the APA occurred on June 30, 2024 (the "Closing Date"), and all conditions precedent to the Closing under the APA have been satisfied or waived;
WHEREAS, Recipient is a wholly owned subsidiary of Ardent Capital Partners III LP, a Delaware limited partnership, formed for the purpose of consummating the transactions contemplated by the APA and the other Transaction Documents;
WHEREAS, in connection with the APA and to facilitate an orderly transition of the Acquired Business from Provider to Recipient, Provider has agreed to provide, and Recipient has agreed to receive, certain transitional back-office, information technology, and administrative services for a limited period following the Closing Date, upon the terms and conditions set forth herein; and
WHEREAS, the Acquired Business includes the operation of thirty-seven (37) outpatient rehabilitation and behavioral health clinic locations across the states of Tennessee, Georgia, Alabama, North Carolina, South Carolina, Virginia, and Kentucky (collectively, the "Facilities"), which Facilities were formerly operated by Provider and are now operated by Recipient as of the Closing Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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ARTICLE I — DEFINITIONS
Section 1.1 — Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquired Business" means the outpatient rehabilitation and behavioral health business and the related assets acquired by Recipient under the APA, including without limitation the Facilities, the Transferred Employees, the Assumed Contracts, and the intellectual property transferred pursuant to the intellectual Property Assignment Agreement.
"APA" means that certain Asset Purchase Agreement dated as of April 2, 2024, by and between Provider and Recipient, as amended, restated, supplemented, or otherwise modified from time to time.
"Closing Date" means June 30, 2024, the date on which the closing of the transactions contemplated by the APA occurred.
"Confidential Information" has the meaning set forth in Section 5.1.
"Expiration Date" means March 31, 2025, which is nine (9) months after the Closing Date, unless this Agreement is earlier terminated in accordance with Article III.
"Facilities" means the thirty-seven (37) outpatient rehabilitation and behavioral health clinic locations across the states of Tennessee, Georgia, Alabama, North Carolina, South Carolina, Virginia, and Kentucky, as more particularly described in the APA, which were formerly operated by Provider and are now operated by Recipient.
"Force Majeure Event" means any event or circumstance beyond the reasonable control of the affected Party, including without limitation acts of God, floods, earthquakes, hurricanes, tornadoes, or other natural disasters; epidemics, pandemics, or quarantine restrictions; acts of war, terrorism, civil unrest, or armed conflict; governmental actions, orders, regulations, embargoes, or sanctions; strikes, lockouts, or other labor disturbances (other than those involving Provider Personnel); power failures or interruptions to telecommunications or internet services; cyberattacks by unaffiliated third parties (to the extent not caused by the affected Party's failure to maintain reasonable security measures); and any other event of a similar nature or force, in each case to the extent such event prevents or materially impedes the affected Party's performance of its obligations hereunder.
"Monthly Service Fee" means, with respect to each Service or category of Services, the monthly fee set forth in Schedule A for the provision of such Service.
"PeakConnect" means the proprietary patient-engagement software platform developed by Provider in connection with the Acquired Business, registered with the United States Patent and Trademark Office under Registration No. 5,412,887, and assigned to Recipient pursuant to the intellectual Property Assignment Agreement executed in connection with the APA.
"Provider Personnel" means the employees, consultants, independent contractors, and other personnel of Provider or its affiliates who are engaged in the provision of the Services under this Agreement.
"Provider Representative" means Elaine Whitfield-Torres, Chief Clinical Officer of Cardinal Peak Industries, Inc., or such other person as may be designated by Provider in accordance with Section 2.3.
"Recipient Representative" means Connor Briggs, Vice President, Healthcare Deal Team, Ardent Capital Management LLC, or such other person as may be designated by Recipient in accordance with Section 2.3.
"Service Commencement Date" means July 1, 2024, the day immediately following the Closing Date.
"Service Period" means the period commencing on the Service Commencement Date and continuing through the earlier of (a) the Expiration Date or (b) the date on which this Agreement is terminated in its entirety in accordance with Article III.
"Services" means the transitional services described in Schedule A attached hereto and incorporated herein by reference, as such services may be modified, reduced, or terminated from time to time in accordance with this Agreement.
"SummitCare" means SummitCare Health Plans, Inc., a commercial payor that, as of the Closing Date, constitutes the largest single payor for the Acquired Business, representing approximately twenty-two percent (22%) of the Acquired Business's net revenue.
"Transferred Employees" has the meaning set forth in the APA.
"TSA" means this Transition Services Agreement.
Section 1.2 — APA Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings ascribed to such terms in the APA. For the avoidance of doubt, the following terms shall have the meanings set forth in the APA: "Assumed Contracts," "Earnout Agreement," "Escrow Agreement," "Excluded Liabilities," "Intellectual Property Assignment Agreement," "Transaction Documents," and "Transferred Employees."
Section 1.3 — Interpretation. Unless the context otherwise requires:
(a) References to "Articles," "Sections," and "Schedules" are to Articles, Sections, and Schedules of this Agreement, unless otherwise specified.
(b) The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(d) References to any law, statute, regulation, or rule include any amendment, modification, or successor thereto.
(e) References to "days" mean calendar days unless "business days" is expressly specified.
(f) References to a "person" include any individual, corporation, partnership, limited liability company, trust, governmental authority, or other entity.
(g) The headings and captions in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
(h) Words in the singular include the plural and vice versa, and words of one gender include the other gender, as applicable.
(i) The Parties have participated jointly in the negotiation and drafting of this Agreement; accordingly, in the event of any ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any provision.
ARTICLE II — SERVICES
Section 2.1 — Provision of Services. Commencing on the Service Commencement Date and continuing through the Service Period, Provider agrees to provide, or cause to be provided, to Recipient the transitional services described in Schedule A attached hereto (collectively, the "Services"). The Services shall be provided in a manner substantially consistent with the manner and level of quality at which such services were provided by Provider to the Acquired Business during the twelve (12)-month period immediately prior to the Closing Date. Provider shall use commercially reasonable efforts and shall devote substantially the same level of resources, personnel, and attention to the provision of the Services as Provider devoted to the performance of such functions for the Acquired Business in the ordinary course of its operations prior to the Closing Date. Nothing in this Agreement shall require Provider to provide Services in a manner that would violate applicable law or the terms of any third-party agreement to which Provider is bound.
Section 2.2 — Service Categories. The Services shall be organized into the following categories, with detailed descriptions, durations, fees, and dependencies as set forth in Schedule A:
(a) Financial and Accounting Services. General ledger maintenance and monthly close support for the Acquired Business; accounts payable processing (including trade payables assumed under the APA); accounts receivable processing and collections support; payroll processing for Transferred Employees during the transitional period until migration to Recipient's payroll provider; and preparation and delivery of monthly financial reporting packages.
(b) Information Technology Services. IT infrastructure support (including servers, networking, and telephony) for the thirty-seven (37) Facilities; migration of email from Provider's domain to Recipient's domain; electronic health record (EHR) system administration and support; hosting, maintenance, and migration support for the PeakConnect platform during the migration period; data backup and disaster recovery support; and cybersecurity monitoring and incident response support.
(c) Human Resources and Benefits Administration. Benefits administration for Transferred Employees (approximately 2,100 employees in total, including approximately 1,450 licensed clinicians and approximately 650 administrative and support personnel) during the transition to Recipient's benefit plans; coordination with Recipient regarding new 401(k) plan enrollment (for the avoidance of doubt, Provider's 401(k) plan is an Excluded Liability under the APA, and Provider's obligations hereunder are limited to administrative transition assistance); COBRA administration for non-transferred employees of Provider; and workers' compensation claims administration transition.
(d) Revenue Cycle Management. Medical billing and coding for services rendered at the thirty-seven (37) Facilities; claims submission and follow-up with payors, including SummitCare Health Plans, Inc. (approximately 22% of net revenue), Medicare and Medicaid (approximately 31% of net revenue on a combined basis), and remaining commercial payors; denial management and appeals; patient collections support; and credentialing support for clinicians during payor enrollment transition.
(e) Regulatory and Compliance Support. Support for state healthcare licensing transitions across the seven (7) states in which the Facilities are located (Tennessee, Georgia, North Carolina, South Carolina, Alabama, Virginia, and Kentucky); Medicare and Medicaid provider enrollment transition assistance; follow-up on change-of-ownership applications (filings were made on March 4, 2024 for Tennessee, Georgia, and North Carolina; filings for South Carolina, Alabama, Virginia, and Kentucky are to be completed post-Closing); and HIPAA compliance support during the transition period.
(f) Facilities and Administrative Support. Lease administration support for the thirty-seven (37) clinic locations, including coordination with landlords and monitoring of lease obligations (noting that landlord consents are required for twenty-nine (29) of the thirty-seven (37) leases); vendor relationship transition and procurement support; mail forwarding; and general administrative support.
Section 2.3 — Service Coordinators. Each Party shall designate a representative to serve as the primary point of contact for day-to-day management, coordination, and oversight of the Services (each, a "Service Coordinator"). As of the Effective Date:
(a) The Provider Representative and Service Coordinator for Provider shall be Elaine Whitfield-Torres, Chief Clinical Officer, Cardinal Peak Industries, Inc.
(b) The Recipient Representative and Service Coordinator for Recipient shall be Connor Briggs, Vice President, Healthcare Deal Team, Ardent Capital Management LLC.
The Service Coordinators shall meet (in person or by video or telephone conference) no less frequently than bi-weekly during the first ninety (90) days following the Service Commencement Date, and no less frequently than monthly thereafter, to review the status of the Services, discuss any issues or concerns, and coordinate transition activities. Either Party may replace its Service Coordinator upon not less than ten (10) business days' prior written notice to the other Party, which notice shall identify the replacement designee and such person's title and contact information.
Section 2.4 — Standard of Service. Provider shall perform the Services with the same degree of care, skill, and diligence as Provider exercised in performing such functions for its own business and for the Acquired Business during the twelve (12)-month period immediately preceding the Closing Date. Without limiting the foregoing, Provider shall comply with all applicable laws, rules, and regulations in the performance of the Services. Notwithstanding anything to the contrary in this Agreement, Provider shall not be required to (a) hire additional personnel, (b) acquire additional equipment, software, or other resources, or (c) maintain resources beyond those used by Provider in the ordinary course of business prior to the Closing Date, in each case solely for the purpose of providing the Services, unless Recipient agrees in writing to bear the incremental cost thereof.
Section 2.5 — Provider Personnel. Provider shall make available Provider Personnel with appropriate qualifications and experience to perform the Services. Provider retains full authority over the employment, assignment, reassignment, compensation, discipline, and termination of all Provider Personnel, and all such Provider Personnel shall at all times remain employees or contractors of Provider (and not of Recipient). Provider shall be solely responsible for the compensation, benefits, payroll taxes, and other employment-related obligations with respect to Provider Personnel performing Services hereunder. Recipient shall have no liability for any claims by or on behalf of Provider Personnel arising out of or relating to their employment by Provider.
Section 2.6 — Cooperation. Recipient shall reasonably cooperate with Provider in connection with Provider's provision of the Services, including by (a) providing timely and accurate information, data, and documentation reasonably required by Provider to perform the Services; (b) granting Provider and Provider Personnel reasonable access to Recipient's systems, networks, and the Facilities to the extent necessary for Provider to perform the Services; (c) making available Recipient's own personnel as reasonably required to facilitate the Services; and (d) responding promptly to requests for decisions, approvals, or information from Provider in connection with the Services. Recipient shall not take any action, or fail to take any action, that would materially interfere with Provider's ability to provide the Services in accordance with this Agreement.
Section 2.7 — Third-Party Consents and Licenses. The Parties acknowledge that Provider's obligation to provide certain Services may be contingent upon obtaining or maintaining consents, authorizations, or licenses from third-party vendors, licensors, or other parties (each, a "Third-Party Consent"). Provider shall use commercially reasonable efforts to obtain or maintain any Third-Party Consents necessary for the provision of the Services. If, despite such commercially reasonable efforts, Provider is unable to obtain or maintain any required Third-Party Consent, Provider shall promptly notify Recipient and shall use commercially reasonable efforts to provide a commercially reasonable alternative arrangement to deliver the applicable Service or the functional equivalent thereof. Any incremental costs incurred by Provider in obtaining Third-Party Consents or implementing alternative arrangements shall be treated as out-of-pocket expenses subject to Section 4.5. Provider shall not be deemed in breach of this Agreement to the extent that the failure to provide a Service results from the inability to obtain or maintain a Third-Party Consent, provided that Provider has complied with its obligations under this Section 2.7.
Section 2.8 — Excluded Services. Provider is not obligated to provide, and this Agreement does not cover, any services that are not expressly described in Schedule A. Without limiting the generality of the foregoing, the following are expressly excluded from the scope of the Services:
(a) Legal advisory services, including litigation support, regulatory counsel, or legal compliance advice (other than the factual regulatory and compliance support described in Section 2.2(e) and Schedule A);
(b) Investment banking, financial advisory, or valuation services;
(c) Tax advisory, tax planning, or tax return preparation services;
(d) Any services relating to the Excluded Liabilities under the APA, including without limitation any services in connection with the pending litigation captioned Dawson v. Cardinal Peak Industries, Inc., Case No. 3:23-cv-01847 (M.D. Tenn.), or any pre-Closing tax matters of Provider; and
(e) Any other services not expressly enumerated in Schedule A.
If Recipient requests that Provider provide additional services beyond those described in Schedule A, the Parties may mutually agree in writing to add such services to this Agreement, including the applicable fees, duration, and other terms for such additional services.
ARTICLE III — SERVICE PERIOD AND TERMINATION
Section 3.1 — Service Period. The Services shall commence on July 1, 2024 (the "Service Commencement Date") and, unless earlier terminated in accordance with this Article III, shall continue through March 31, 2025 (the "Expiration Date"), a period of nine (9) months following the Closing Date. Individual Services or categories of Services may have shorter durations as specified in Schedule A, and each such Service shall terminate upon the earlier of (a) the expiration of the duration specified for such Service in Schedule A, (b) the early termination of such Service by Recipient in accordance with Section 3.2, (c) the termination of this Agreement in its entirety in accordance with Section 3.3 or Section 3.4, or (d) the Expiration Date.
Section 3.2 — Early Termination of Individual Services by Recipient. Recipient may terminate any individual Service or category of Services at any time upon not less than thirty (30) days' prior written notice to Provider, which notice shall identify the specific Service(s) to be terminated and the requested effective date of termination. Upon the effective date of such termination, Provider's obligation to provide the terminated Service(s) shall cease, and the applicable Monthly Service Fee for such terminated Service(s) shall cease to accrue as of such effective termination date. No penalty, early termination fee, or other charge shall be imposed on Recipient in connection with any early termination of individual Services pursuant to this Section 3.2. For the avoidance of doubt, the early termination of one or more individual Services pursuant to this Section 3.2 shall not affect Provider's obligation to continue providing the remaining Services that have not been terminated.
Section 3.3 — Termination for Cause. Either Party may terminate this Agreement, in whole or with respect to any individual Service(s), upon thirty (30) days' prior written notice to the other Party if the other Party has materially breached any of its obligations under this Agreement and has failed to cure such breach within such thirty (30)-day notice period. The notice of termination shall describe the material breach in reasonable detail and identify the specific provision(s) of this Agreement that have been breached. If the breach is capable of cure and the breaching Party diligently commences cure within the thirty (30)-day notice period but reasonably requires additional time to complete the cure, the cure period shall be extended for an additional fifteen (15) days, provided the breaching Party continues to diligently pursue such cure. If the breach relates to only certain Services, the non-breaching Party may elect to terminate only those affected Services rather than this Agreement in its entirety.
Section 3.4 — Termination for Insolvency. Either Party may terminate this Agreement immediately upon written notice to the other Party if the other Party (a) files a voluntary petition in bankruptcy or is adjudicated bankrupt or insolvent; (b) files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal, state, or other statute, law, or regulation; (c) seeks or consents to or acquiesces in the appointment of any trustee, receiver, custodian, or liquidator of such Party or of all or any substantial part of its properties or assets; (d) makes an assignment for the benefit of creditors; or (e) admits in writing its inability to pay its debts generally as they become due.
Section 3.5 — Effect of Termination. Upon termination or expiration of this Agreement (in whole or in part):
(a) Provider's obligation to provide the terminated or expired Services shall cease as of the effective date of termination or expiration.
(b) All accrued payment obligations of Recipient for Services performed through the effective date of termination or expiration shall survive and remain payable in accordance with Article IV.
(c) Provider shall cooperate in good faith with Recipient in an orderly wind-down and transfer of the terminated or expired Services to Recipient or its designee, including by providing reasonable knowledge transfer, documentation of processes and procedures, and transitional assistance as contemplated by Schedule D. Such wind-down cooperation shall be provided for a period not to exceed thirty (30) days following the effective date of termination or expiration (or such longer period as the Parties may mutually agree in writing), and Provider shall be entitled to compensation for such wind-down assistance at the applicable Monthly Service Fee rates, prorated on a daily basis.
(d) The obligations of the Parties under Article V (Confidentiality), Article VI (Intellectual Property), Article VII (Data Protection and Privacy), Article VIII (Representations and Warranties), Article IX (Indemnification and Limitation of Liability), Article X (Dispute Resolution), and Article XI (Miscellaneous), as well as any other provisions that by their nature are intended to survive, shall survive any termination or expiration of this Agreement.
Section 3.6 — Extension. Recipient may request a one-time extension of the Service Period with respect to any individual Service for an additional period of up to three (3) months (through June 30, 2025) by delivering written notice to Provider no later than sixty (60) days prior to the then-applicable expiration date for such Service. Any such extension shall be subject to Provider's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. During any such extension period, the Monthly Service Fee for the extended Service(s) shall be one hundred ten percent (110%) of the Monthly Service Fee otherwise applicable to such Service(s) as set forth in Schedule A, reflecting a ten percent (10%) premium for the extension period. All other terms and conditions of this Agreement shall continue to apply during any extension period. For the avoidance of doubt, Recipient may exercise this extension right with respect to one or more individual Services without being required to extend all Services.
ARTICLE IV — COMPENSATION AND PAYMENT
Section 4.1 — Service Fees. In consideration of Provider's provision of the Services, Recipient shall pay Provider the Monthly Service Fees for each Service or category of Services as specified in Schedule A. The aggregate estimated Monthly Service Fee during the initial period is approximately Four Hundred Seventy-Five Thousand Dollars ($475,000) per month, subject to adjustment based on the actual Services utilized and the termination of individual Services in accordance with this Agreement. The Monthly Service Fees set forth in Schedule A represent the entirety of Provider's compensation for the Services (other than reimbursable out-of-pocket expenses pursuant to Section 4.5), and no additional fees or charges shall be imposed unless mutually agreed in writing by the Parties.
Section 4.2 — Invoicing. Provider shall submit monthly invoices to Recipient within fifteen (15) business days after the end of each calendar month during the Service Period. Each invoice shall include reasonable detail regarding the Services performed during the applicable month, including (a) an itemization of charges by Service category; (b) the hours, units, or other applicable measure of Services performed (to the extent Services are measured on other than a flat-fee basis); (c) the applicable Monthly Service Fee for each Service category; and (d) a summary of any reimbursable out-of-pocket expenses incurred during the applicable month, together with reasonable supporting documentation. Invoices shall be submitted to the Recipient Representative at the address specified in Section 11.3 or to such other address or electronic mail address as Recipient may designate in writing from time to time.
Section 4.3 — Payment Terms. Recipient shall pay all undisputed amounts reflected on each invoice within thirty (30) days of Recipient's receipt of such invoice. All payments shall be made by wire transfer of immediately available funds to such bank account as Provider may designate in writing from time to time. Payments not received by the due date shall bear interest from the due date until paid at the rate of the lesser of (a) one percent (1.0%) per month (twelve percent (12%) per annum), compounded monthly, or (b) the maximum rate permitted by applicable law.
Section 4.4 — Disputed Invoices. If Recipient disputes any amount reflected on an invoice, Recipient shall provide written notice to Provider within fifteen (15) days of receipt of the invoice, identifying the disputed amount and the basis for the dispute in reasonable detail. The undisputed portion of any invoice shall remain payable in accordance with Section 4.3 notwithstanding any such dispute. Following receipt of a dispute notice, Provider and Recipient shall negotiate in good faith to resolve the disputed amount. Any unresolved dispute shall be escalated to the Service Coordinators. If the Service Coordinators are unable to resolve the dispute within thirty (30) days after the dispute is first raised, the dispute shall be subject to the dispute resolution procedures set forth in Article X. Upon resolution of any disputed amount, the applicable Party shall pay or refund, as the case may be, the resolved amount within ten (10) business days, together with interest at the rate specified in Section 4.3 from the original due date.
Section 4.5 — Out-of-Pocket Expenses. In addition to the Monthly Service Fees, Provider shall be entitled to reimbursement for reasonable, documented, out-of-pocket expenses actually incurred by Provider in connection with the provision of the Services, including without limitation third-party software license fees, shipping and courier charges, travel expenses (to the extent travel is required and pre-approved by Recipient), and other similar costs. Any individual out-of-pocket expense in excess of Ten Thousand Dollars ($10,000) shall require Recipient's prior written consent before being incurred. Provider shall include all reimbursable out-of-pocket expenses on the monthly invoices described in Section 4.2, together with reasonable supporting documentation. Reimbursable expenses shall be payable on the same terms as Monthly Service Fees under Section 4.3.
Section 4.6 — Taxes. All Monthly Service Fees and other amounts payable under this Agreement are exclusive of any sales, use, value-added, goods and services, or similar taxes, duties, or governmental charges ("Transaction Taxes"). Recipient shall be responsible for all Transaction Taxes imposed on or with respect to the Services, other than taxes imposed on or measured by Provider's net income, capital, or franchise. If Provider is required by law to collect any Transaction Taxes, Provider shall include such taxes on the applicable invoice, and Recipient shall pay such taxes in addition to the Monthly Service Fees. Each Party shall cooperate in good faith to minimize Transaction Taxes to the extent permitted by applicable law.
Section 4.7 — Set-Off. Recipient shall not set off, deduct, or withhold any amounts owed to Provider under this Agreement against any amounts that Recipient may claim are owed by Provider under the APA, the Escrow Agreement, or otherwise, except as expressly agreed in writing by both Parties. This Section 4.7 is without prejudice to any rights or remedies that either Party may have under the APA or any other Transaction Document.
ARTICLE V — CONFIDENTIALITY
Section 5.1 — Confidential Information. As used in this Agreement, "Confidential Information" means all proprietary and confidential information disclosed by or on behalf of one Party (the "Disclosing Party") to the other Party (the "Receiving Party") in connection with the negotiation, execution, or performance of this Agreement or the provision or receipt of the Services, whether disclosed in written, oral, electronic, visual, or other form. Confidential Information includes, without limitation, (a) proprietary business information, including business plans, strategies, financial data, projections, and forecasts; (b) trade secrets, know-how, inventions, processes, and techniques; (c) patient health information (PHI) and individually identifiable health information, as defined under HIPAA (defined below); (d) employee information, including personnel records, compensation data, and benefits information; (e) customer and payor information, including contracts, pricing, and reimbursement rates; (f) operational data relating to the Acquired Business and the Facilities; and (g) the terms and conditions of this Agreement. Confidential Information expressly includes Protected Health Information as defined under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (collectively, "HIPAA"), and the regulations promulgated thereunder at 45 C.F.R. Parts 160 and 164.
Section 5.2 — Obligations. The Receiving Party shall (a) protect the Confidential Information of the Disclosing Party with at least the same degree of care that the Receiving Party uses to protect its own confidential information of like nature, and in no event less than a reasonable degree of care; (b) use the Confidential Information solely for the purpose of performing its obligations or exercising its rights under this Agreement, including the provision and receipt of the Services; and (c) not disclose the Confidential Information to any person except to those employees, officers, directors, agents, consultants, advisors, and representatives of the Receiving Party and its affiliates who have a need to know such information in connection with the performance of this Agreement and who are bound by confidentiality obligations at least as restrictive as those set forth in this Article V. The Receiving Party shall be responsible for any breach of this Article V by any of its employees, officers, directors, agents, consultants, advisors, or representatives.
Section 5.3 — Exceptions. The obligations of confidentiality set forth in Section 5.2 shall not apply to any information that (a) is or becomes generally available to the public other than as a result of a disclosure by the Receiving Party or its representatives in violation of this Agreement; (b) was already known to the Receiving Party on a non-confidential basis prior to its disclosure by the Disclosing Party, as evidenced by the Receiving Party's contemporaneous written records; (c) is received by the Receiving Party from a third party who is not, to the Receiving Party's knowledge, bound by any obligation of confidentiality to the Disclosing Party with respect to such information; or (d) is independently developed by the Receiving Party without reference to or use of the Disclosing Party's Confidential Information, as evidenced by the Receiving Party's contemporaneous written records. In addition, the Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, legal process, or governmental order, provided that the Receiving Party (i) provides prompt written notice to the Disclosing Party (to the extent legally permissible) so that the Disclosing Party may seek a protective order or other appropriate remedy, and (ii) discloses only that portion of the Confidential Information that is legally required to be disclosed.
Section 5.4 — HIPAA Compliance. The Parties acknowledge and agree that the provision of certain Services under this Agreement may involve Provider's access to, use of, or creation of Protected Health Information ("PHI") on behalf of Recipient in its capacity as a covered entity under HIPAA. Provider shall comply with all applicable requirements of HIPAA, the HITECH Act, and the regulations promulgated thereunder, including without limitation the HIPAA Privacy Rule (45 C.F.R. Part 164, Subpart E), the HIPAA Security Rule (45 C.F.R. Part 164, Subpart C), and the HIPAA Breach Notification Rule (45 C.F.R. Part 164, Subpart D), in each case to the extent applicable to Provider's activities under this Agreement. In furtherance of the foregoing, the Parties shall execute a Business Associate Agreement in the form attached hereto as Schedule C (the "BAA"), which BAA shall be effective as of the Service Commencement Date and shall govern the use and disclosure of PHI by Provider in connection with the Services. In the event of a conflict between the terms of this Agreement and the terms of the BAA with respect to the use or disclosure of PHI, the terms of the BAA shall control.
Section 5.5 — Return and Destruction. Upon the termination or expiration of this Agreement (in whole or with respect to any individual Service), and upon the Disclosing Party's written request, the Receiving Party shall, at the Disclosing Party's election, promptly return or destroy all Confidential Information of the Disclosing Party in the Receiving Party's possession or control, together with all copies, summaries, and extracts thereof, and shall certify such return or destruction in writing to the Disclosing Party. Notwithstanding the foregoing, (a) the Receiving Party may retain copies of Confidential Information to the extent required by applicable law, regulation, or professional standards, or as required under the terms of the BAA, and (b) the Receiving Party shall not be required to delete Confidential Information from backup tapes or similar disaster recovery media created in the ordinary course of business, provided that such retained Confidential Information shall remain subject to the confidentiality obligations of this Article V for so long as it is retained.
ARTICLE VI — INTELLECTUAL PROPERTY
Section 6.1 — Ownership. The Parties acknowledge and agree that, as of the Closing Date, all intellectual property rights in and to the Acquired Business, including without limitation the PeakConnect platform (U.S. Registration No. 5,412,887), associated trade names, trademarks, copyrights, patents, domain names, proprietary software, and related goodwill, are owned exclusively by Recipient pursuant to the intellectual Property Assignment Agreement executed in connection with the APA. Provider retains no ownership interest in the PeakConnect platform or in any other intellectual property transferred to Recipient under the intellectual Property Assignment Agreement, except for the limited license rights expressly granted to Provider in Section 6.2 for the sole purpose of performing the Services during the Service Period.
Section 6.2 — License to Provider. Subject to the terms and conditions of this Agreement, Recipient hereby grants to Provider a limited, non-exclusive, non-transferable, non-sublicensable, royalty-free license during the Service Period to access and use the PeakConnect platform and other intellectual property forming part of the Acquired Business, solely to the extent necessary for Provider to perform the Services. Provider shall not use the PeakConnect platform or any other Acquired Business intellectual property for any purpose other than the performance of the Services. Provider shall not modify, adapt, create derivative works of, reverse engineer, decompile, or disassemble any intellectual property licensed to it under this Section 6.2 without Recipient's prior written consent. The license granted under this Section 6.2 shall terminate automatically, without further action by either Party, upon the expiration or termination of this Agreement.
Section 6.3 — CPI Corporate Name License. Consistent with the terms of the APA and the intellectual Property Assignment Agreement, Provider hereby grants to Recipient a limited, non-exclusive, non-transferable license to use the "Cardinal Peak Industries" corporate name and associated marks for a period of twelve (12) months following the Closing Date (i.e., through June 30, 2025), solely for transitional purposes in connection with the operation of the Acquired Business, including without limitation use on correspondence, signage, invoices, patient communications, and payor communications. Recipient shall use such corporate name in a manner that is consistent with Provider's brand standards as communicated to Recipient in writing, and shall not use such corporate name in any manner that is misleading or that could reasonably be expected to bring Provider into disrepute. Upon expiration of the twelve (12)-month license period, Recipient shall cease all use of the "Cardinal Peak Industries" corporate name and shall remove or replace all signage, materials, and other items bearing such name within a commercially reasonable time, not to exceed ninety (90) days.
Section 6.4 — No Other IP Rights. Except as expressly set forth in this Article VI, nothing in this Agreement shall be construed to grant either Party any right, title, interest, or license in or to the other Party's intellectual property, whether by implication, estoppel, or otherwise. All rights not expressly granted herein are reserved by the respective owner.
ARTICLE VII — DATA PROTECTION AND PRIVACY
Section 7.1 — Data Handling. Provider shall handle, process, store, and transmit all data of Recipient, including without limitation patient data, employee data, financial data, and operational data (collectively, "Recipient Data"), in compliance with all applicable federal, state, and local laws, rules, and regulations, including without limitation HIPAA, the HITECH Act, and the privacy and data protection laws and regulations of the states of Tennessee, Georgia, North Carolina, South Carolina, Alabama, Virginia, and Kentucky. Provider shall process Recipient Data only to the extent necessary for the performance of the Services and shall not use Recipient Data for any purpose other than the provision of the Services.
Section 7.2 — Security Standards. Provider shall maintain administrative, technical, and physical safeguards designed to protect the confidentiality, integrity, and availability of Recipient Data against unauthorized access, acquisition, use, disclosure, alteration, or destruction. Such safeguards shall be consistent with industry standards (including applicable NIST Cybersecurity Framework guidelines) and shall be at least equal to those safeguards maintained by Provider in connection with the Acquired Business prior to the Closing Date. Provider shall, upon reasonable request by Recipient and not more than once during the Service Period (unless a data breach or security incident has occurred), provide Recipient with a summary of its information security policies and practices applicable to the Services, and shall permit Recipient to conduct or commission a reasonable security assessment of Provider's systems and facilities used to provide the Services, at Recipient's expense.
Section 7.3 — Breach Notification. Provider shall notify Recipient in writing (which may include electronic mail to the Recipient Representative) within forty-eight (48) hours of Provider's discovery of any actual or reasonably suspected unauthorized access to, acquisition of, use of, or disclosure of Recipient Data, or any other data breach or security incident involving Recipient Data (each, a "Security Incident"). Such notification shall include, to the extent then known, (a) a description of the nature and scope of the Security Incident; (b) the categories and approximate number of individuals and data records affected; (c) the likely consequences of the Security Incident; and (d) the measures taken or proposed to be taken by Provider to address the Security Incident and mitigate its effects. Provider shall cooperate fully with Recipient's investigation and remediation of any Security Incident, shall take all reasonable steps to contain and remediate the Security Incident, and shall provide updated information to Recipient as additional facts become known. Provider shall bear the costs of any investigation, remediation, notification, or other corrective action to the extent the Security Incident resulted from Provider's breach of its obligations under this Article VII or the BAA.
Section 7.4 — Business Associate Agreement. The rights and obligations of the Parties with respect to the use and disclosure of Protected Health Information are further set forth in the Business Associate Agreement attached hereto as Schedule C. The BAA is incorporated herein by reference and shall govern all uses and disclosures of PHI in connection with the Services. In the event of a conflict between this Article VII and the BAA with respect to PHI, the BAA shall control.
ARTICLE VIII — REPRESENTATIONS AND WARRANTIES
Section 8.1 — Mutual Representations. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows:
(a) Organization and Good Standing. Such Party is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.
(b) Authority. Such Party has full corporate power and authority to execute, deliver, and perform this Agreement. The execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary corporate action, including the approval of its board of directors (or equivalent governing body), and no other corporate proceedings on the part of such Party are necessary to authorize the execution, delivery, and performance of this Agreement.
(c) Enforceability. This Agreement has been duly executed and delivered by such Party and constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(d) No Conflict. The execution, delivery, and performance of this Agreement by such Party do not and will not (i) violate or conflict with the certificate of incorporation, bylaws, or other governing documents of such Party; (ii) violate or conflict with any material law, rule, regulation, order, judgment, or decree applicable to such Party; or (iii) result in a breach of, or constitute a default under, any material agreement, contract, or instrument to which such Party is a party or by which such Party or its assets are bound.
Section 8.2 — Provider's Additional Representations. Provider additionally represents and warrants to Recipient as of the Effective Date as follows:
(a) Provider has the personnel, resources, and capability to provide the Services as of the Service Commencement Date in the manner described in this Agreement and Schedule A.
(b) As of the Effective Date, Provider is not aware of any pending or, to Provider's knowledge, threatened action, suit, proceeding, investigation, or claim that would materially impair Provider's ability to perform the Services as contemplated by this Agreement.
(c) Provider shall perform the Services in compliance with all applicable laws, rules, and regulations, including without limitation HIPAA, the HITECH Act, and the healthcare regulatory requirements of the states of Tennessee, Georgia, North Carolina, South Carolina, Alabama, Virginia, and Kentucky.
Section 8.3 — Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE VIII, PROVIDER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SERVICES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, ACCURACY, COMPLETENESS, OR RESULTS. THE SERVICES ARE PROVIDED ON AN "AS-IS" BASIS TO THE EXTENT NOT OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT. THIS DISCLAIMER SHALL NOT BE CONSTRUED TO LIMIT PROVIDER'S OBLIGATIONS UNDER THE STANDARD OF SERVICE SET FORTH IN SECTION 2.4 OR PROVIDER'S OBLIGATIONS UNDER THE BAA.
ARTICLE IX — INDEMNIFICATION AND LIMITATION OF LIABILITY
Section 9.1 — Indemnification by Provider. Provider shall indemnify, defend, and hold harmless Recipient and its affiliates, and their respective officers, directors, employees, agents, successors, and assigns (collectively, the "Recipient Indemnified Parties"), from and against any and all losses, damages, liabilities, claims, demands, actions, suits, proceedings, judgments, settlements, penalties, fines, costs, and expenses (including reasonable attorneys' fees and expenses) (collectively, "Losses") arising out of or resulting from:
(a) Provider's gross negligence or willful misconduct in performing or failing to perform the Services;
(b) any material breach by Provider of its representations, warranties, covenants, or obligations under this Agreement;
(c) Provider's violation of any applicable law, rule, or regulation (including without limitation HIPAA and the HITECH Act) in connection with the provision of the Services; or
(d) any claims by Provider Personnel (including claims relating to employment, compensation, benefits, or workers' compensation) arising out of or relating to Provider Personnel's performance of the Services, except to the extent such claims result from the acts or omissions of Recipient.
Section 9.2 — Indemnification by Recipient. Recipient shall indemnify, defend, and hold harmless Provider and its affiliates, and their respective officers, directors, employees, agents, successors, and assigns (collectively, the "Provider Indemnified Parties"), from and against any and all Losses arising out of or resulting from:
(a) Recipient's gross negligence or willful misconduct in connection with this Agreement;
(b) any material breach by Recipient of its representations, warranties, covenants, or obligations under this Agreement; or
(c) claims arising out of or relating to the operation of the Acquired Business following the Closing Date, other than to the extent such claims are caused by Provider's breach of this Agreement, Provider's gross negligence, or Provider's willful misconduct.
Section 9.3 — Limitation of Liability. EXCEPT IN THE CASE OF FRAUD, WILLFUL MISCONDUCT, OR BREACHES OF ARTICLE V (CONFIDENTIALITY) OR ARTICLE VII (DATA PROTECTION AND PRIVACY):
(a) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES, OR FOR ANY LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF BUSINESS, LOSS OF DATA, OR DIMINUTION IN VALUE, ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) PROVIDER'S AGGREGATE LIABILITY UNDER THIS AGREEMENT FOR ALL CLAIMS, WHETHER ARISING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, SHALL NOT EXCEED THE TOTAL AMOUNT OF SERVICE FEES ACTUALLY PAID OR PAYABLE BY RECIPIENT TO PROVIDER DURING THE TWELVE (12)-MONTH PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO THE CLAIM (WHICH, BASED ON THE ESTIMATED NINE (9)-MONTH SERVICE PERIOD AT APPROXIMATELY $475,000 PER MONTH, IS ESTIMATED TO BE A MAXIMUM OF APPROXIMATELY $4,275,000).
For the avoidance of doubt, the limitation of liability set forth in this Section 9.3 is separate from, and in addition to, the indemnification provisions of the APA (which provide, among other things, a cap on general indemnification obligations equal to twenty percent (20%) of the base purchase price, or $124,000,000, and an eighteen (18)-month survival period for general representations and warranties). Nothing in this Section 9.3 is intended to limit or supersede either Party's rights or obligations under the APA.
Section 9.4 — Exclusive Remedy. Subject to the provisions of this Section 9.4, the indemnification provisions set forth in this Article IX shall be the sole and exclusive remedy of the Parties for any claims, losses, or damages arising under or relating to this Agreement. Notwithstanding the foregoing, (a) nothing in this Article IX shall preclude either Party from seeking equitable relief, including injunctive relief or specific performance, with respect to any actual or threatened breach of Article V (Confidentiality), Article VI (Intellectual Property), or Article VII (Data Protection and Privacy); and (b) nothing in this Agreement shall limit or restrict any Party's rights or remedies under the APA, the Escrow Agreement, or any other Transaction Document.
ARTICLE X — DISPUTE RESOLUTION
Section 10.1 — Escalation. Any dispute, controversy, or claim arising out of or relating to this Agreement, including the breach, termination, or validity thereof (each, a "Dispute"), shall first be referred to the Service Coordinators for resolution. The Service Coordinators shall meet (in person, by telephone, or by video conference) within five (5) business days of written notice of the Dispute and shall negotiate in good faith to resolve the Dispute. If the Service Coordinators are unable to resolve the Dispute within fifteen (15) business days of such referral, the Dispute shall be escalated to the following senior executives for resolution:
(a) For Provider: Dr. Randall J. Whitfield, Chairman and Chief Executive Officer, Cardinal Peak Industries, Inc.
(b) For Recipient: Priya Mehta-Sullivan, Partner, Head of Healthcare Investments, Ardent Capital Management LLC.
The senior executives shall meet (in person, by telephone, or by video conference) within ten (10) business days of escalation and shall negotiate in good faith to resolve the Dispute within thirty (30) days of escalation.
Section 10.2 — Mediation. If the senior executives are unable to resolve the Dispute within thirty (30) days of escalation pursuant to Section 10.1, either Party may initiate non-binding mediation by providing written notice to the other Party. Mediation shall be conducted in Nashville, Tennessee, before a single mediator mutually agreed upon by the Parties (or, if the Parties are unable to agree on a mediator within ten (10) business days, a mediator selected by the American Arbitration Association). The costs of the mediation shall be shared equally by the Parties, and each Party shall bear its own attorneys' fees and expenses. The Parties shall participate in the mediation in good faith and shall endeavor to resolve the Dispute within sixty (60) days of the initiation of mediation.
Section 10.3 — Litigation. If mediation is unsuccessful or if the Dispute remains unresolved within sixty (60) days of the initiation of mediation (or such longer period as the Parties may agree in writing), either Party may pursue litigation in accordance with the governing law and forum provisions of Article XI. Nothing in this Article X shall prevent either Party from seeking temporary or preliminary injunctive relief or other equitable relief from a court of competent jurisdiction at any time to the extent necessary to prevent irreparable harm.
ARTICLE XI — MISCELLANEOUS
Section 11.1 — Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The Parties acknowledge that the selection of Delaware law is consistent with the governing law provisions of the APA and the Escrow Agreement.
Section 11.2 — Jurisdiction and Venue. Each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (a) the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines to accept jurisdiction, any state court of the State of Delaware or the United States District Court for the District of Delaware) for the purposes of any action, suit, or proceeding arising out of or relating to this Agreement. Each Party hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim, or otherwise, in any action, suit, or proceeding arising out of or relating to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason; (ii) any claim that it or its property is exempt or immune from jurisdiction or from legal process; and (iii) any claim that such action, suit, or proceeding is brought in an inconvenient forum.
Section 11.3 — Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand; (b) sent by registered or certified mail, return receipt requested, postage prepaid; (c) sent by nationally recognized overnight courier service, with delivery confirmed; or (d) transmitted by electronic mail (with confirmation of receipt), addressed as follows:
If to Provider:
Cardinal Peak Industries, Inc. 8400 Crescent Ridge Parkway, Suite 200 Nashville, TN 37215
Attention: Dr. Randall J. Whitfield, Chairman and Chief Executive Officer
Email: rwhitfield@cardinalpeakindustries.com
With a copy (which shall not constitute notice) to:
Barrow, Kensington & Pratt LLP 1201 Demonbreun Street, Suite 1800 Nashville, TN 37203
Attention: Catherine Barrow
Email: cbarrow@bkplaw.com
If to Recipient:
Ardent Healthcare Acquisition Corp. c/o Ardent Capital Management LLC 590 Madison Avenue, 34th Floor New York, NY 10022
Attention: Priya Mehta-Sullivan, Partner, Head of Healthcare Investments
Email: pmehta-sullivan@ardentcapital.com
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One World Financial Center 200 Liberty Street, 40th Floor New York, NY 10281
Attention: Beatrice Holloway
Email: bholloway@calderwoodharkness.com
Either Party may change its notice address by providing written notice to the other Party in accordance with this Section 11.3.
Section 11.4 — Entire Agreement. This Agreement, together with the Schedules attached hereto and incorporated herein by reference, and together with the APA and the other Transaction Documents (including the Escrow Agreement, the Earnout Agreement, the intellectual Property Assignment Agreement, and the Employment Agreements), constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, offers, and agreements (whether written or oral) with respect to such subject matter.
Section 11.5 — Amendment and Waiver. No provision of this Agreement may be amended, modified, supplemented, or waived except by a written instrument duly executed by both Parties. No waiver of any breach or default under this Agreement shall constitute a waiver of any other or subsequent breach or default. No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
Section 11.6 — Assignment. Neither Party may assign, delegate, or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Recipient may, without the prior written consent of Provider, assign this Agreement to (a) any affiliate of Recipient, or (b) any successor in connection with a merger, consolidation, or sale of all or substantially all of the assets of the Acquired Business, in each case provided tha