1001-00003 · Client 1001 · Closing

officer-certificate-no-mae.docx DOCUMENT M&A / Corporate

7 / 38 ← → ✕

OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.

Certificate Regarding Absence of Material Adverse Effect

June 30, 2024

Delivered pursuant to Section 7.2(c) of the Asset Purchase Agreement, dated as of April 2, 2024 (the "APA"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation (the "Purchaser"), and Cardinal Peak Industries, Inc., a Delaware corporation (the "Seller").

RECITALS AND INTRODUCTORY STATEMENT

The undersigned, Dr. Randall J. Whitfield, in his capacity as Chairman and Chief Executive Officer of Cardinal Peak Industries, Inc., a corporation duly organized and existing under the laws of the State of Delaware (the "Seller" or "CPI"), with its principal executive offices located at 8400 Crescent Ridge Parkway, Suite 200, Nashville, Tennessee 37215, hereby certifies as follows in connection with the closing (the "Closing") of the transactions contemplated by that certain Asset Purchase Agreement, dated as of April 2, 2024 (the "APA"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation (the "Purchaser"), and the Seller.

This Officer's Certificate (this "Certificate") is being delivered by the undersigned on behalf of the Seller pursuant to the terms of the APA, as a condition precedent to the obligation of the Purchaser to consummate the Closing on the date hereof, June 30, 2024 (the "Closing Date"). The delivery of this Certificate satisfies, in part, the conditions set forth in Section 7.2(c) of the APA, which requires the Purchaser to have received a certificate of a duly authorized officer of the Seller, dated as of the Closing Date, certifying to the matters set forth herein.

Capitalized terms used but not otherwise defined in this Certificate shall have the respective meanings ascribed to such terms in the APA. All references to sections, articles, exhibits, and schedules herein shall be deemed to be references to sections, articles, exhibits, and schedules of the APA, unless otherwise expressly stated.

Section 1. Authority and Capacity

The undersigned, Dr. Randall J. Whitfield, hereby certifies that he is the duly elected, qualified, and acting Chairman and Chief Executive Officer of Cardinal Peak Industries, Inc. The undersigned has served in such capacity since the founding of the Seller and continues to hold such office as of the date of this Certificate. In his capacity as Chairman and Chief Executive Officer, the undersigned is duly authorized by the Board of Directors of the Seller to execute and deliver this Certificate on behalf of the Seller, and no further corporate action, resolution, or consent is required for the valid execution and delivery of this Certificate by the undersigned on behalf of the Seller.

The undersigned is familiar with the business, operations, properties, assets, financial condition, and affairs of the Seller and its business operations, including the operations of its thirty-seven (37) outpatient rehabilitation and behavioral health facilities located across the states of Tennessee, Georgia, North Carolina, South Carolina, Alabama, Virginia, and Kentucky (collectively, the "Acquired Business"). By virtue of his position as Chairman and Chief Executive Officer and his direct involvement in the day-to-day management and strategic oversight of the Seller, the undersigned possesses personal knowledge of, and access to information regarding, the matters addressed in this Certificate.

In preparation for the delivery of this Certificate, the undersigned has made such investigations, inquiries, and reviews as he has deemed necessary and appropriate to deliver the certifications set forth herein, including, without limitation, consultations with the Seller's Chief Financial Officer, General Counsel, Vice President of Clinical Operations, Vice President of Regulatory Affairs, and other senior management personnel of the Seller, as well as review of relevant financial, operational, legal, and regulatory records and reports pertaining to the Acquired Business during the period from April 2, 2024 through and including the Closing Date.

Section 2. Definition of Material Adverse Effect

For purposes of this Certificate, the term "Material Adverse Effect" shall have the meaning set forth in Section 1.1 of the APA, which is incorporated herein by reference in its entirety. Without limiting the foregoing incorporation by reference, the undersigned acknowledges that the term "Material Adverse Effect" as defined in the APA means any event, change, occurrence, circumstance, condition, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on:

(a) the business, assets, liabilities, financial condition, or results of operations of the Acquired Business, taken as a whole; or

(b) the ability of the Seller to consummate the transactions contemplated by the APA and the related transaction documents on a timely basis.

The undersigned further acknowledges that, as set forth in Section 1.1 of the APA, the following events, changes, occurrences, circumstances, conditions, or effects (each, an "Excluded Event") shall not, in and of themselves or in combination with one another, be deemed to constitute, and shall not be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect:

(i) changes in general economic, financial, credit, capital market, or political conditions in the United States or globally, including changes in interest rates, exchange rates, commodity prices, or securities markets generally;

(ii) changes, developments, or conditions generally affecting the healthcare industry or the outpatient rehabilitation and behavioral health services sector, including changes in competitive dynamics, patient volumes, or industry-wide reimbursement trends;

(iii) changes in applicable law, regulation, rule, order, or governmental policy or the interpretation or enforcement thereof by any governmental authority, including, without limitation, any changes to Medicare or Medicaid reimbursement rates, coverage policies, participation requirements, or audit or enforcement practices, or changes to state licensure or accreditation requirements applicable to outpatient healthcare facilities;

(iv) changes in United States Generally Accepted Accounting Principles ("GAAP") or in the authoritative interpretation thereof, or changes in regulatory accounting requirements applicable to the healthcare industry generally;

(v) natural disasters, epidemics, pandemics (including COVID-19 and any variants or mutations thereof), weather events, acts of God, acts of terrorism, cyberattacks on critical infrastructure, military action, armed hostilities, national emergencies, or other force majeure events;

(vi) the announcement, disclosure, or pendency of the APA or the transactions contemplated thereby, including any impact on relationships with employees, clinicians, independent contractors, patients, referral sources, payors, managed-care organizations, vendors, suppliers, landlords, joint venture partners, or governmental authorities resulting therefrom;

(vii) any action taken by the Seller at the express written request or with the express prior written consent of the Purchaser, or any failure to take any action that the Seller was prohibited from taking under the terms of the APA; and

(viii) any failure by the Seller to meet any internal or published projection, forecast, estimate, budget, or prediction of revenue, earnings, cash flow, or other financial or operating metrics for any period (it being understood that the underlying facts, circumstances, or events giving rise to or contributing to any such failure may be taken into account in determining whether a Material Adverse Effect has occurred, to the extent not otherwise excluded by clauses (i) through (vii) above);

provided, however, that with respect to the Excluded Events described in clauses (i) through (v) above, such events, changes, occurrences, circumstances, conditions, or effects may be taken into account in determining whether a Material Adverse Effect has occurred to the extent that they have a materially disproportionate adverse effect on the Acquired Business relative to other similarly situated businesses operating in the outpatient healthcare services industry in the geographic markets in which the Acquired Business operates.

Section 3. Certification of No Material Adverse Effect

The undersigned hereby certifies, to his knowledge after due inquiry, that since April 2, 2024 (the date of execution of the APA) through and including June 30, 2024 (the Closing Date):

(a) No Material Adverse Effect has occurred with respect to the Seller or the Acquired Business. No event, change, occurrence, circumstance, condition, or effect has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the business, assets, liabilities, financial condition, or results of operations of the Acquired Business, taken as a whole.

(b) No Material Adverse Effect on the ability to consummate the transactions has occurred. No event, change, occurrence, circumstance, condition, or effect has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the ability of the Seller to consummate the transactions contemplated by the APA and the related transaction documents, including the assignment and transfer of the Acquired Assets, the assumption of the Assumed Liabilities by the Purchaser, and the performance by the Seller of its obligations under the Transition Services Agreement, the Non-Competition Agreement, and the other ancillary agreements executed and delivered in connection with the Closing.

The undersigned has no reason to believe, and does not believe, that any event, change, occurrence, circumstance, condition, or effect exists as of the date hereof that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect on the Acquired Business or on the ability of the Seller to consummate the transactions contemplated by the APA.

Section 4. Supplemental Certifications Regarding the Interim Period

In addition to the foregoing certification regarding the absence of a Material Adverse Effect, the undersigned hereby further certifies, to his knowledge after due inquiry, with respect to the period from April 2, 2024 through and including June 30, 2024 (the "Interim Period"), as follows:

(a) Ordinary Course of Business. During the Interim Period, the Seller has operated the Acquired Business in the ordinary course of business, consistent with past practice in all material respects, in accordance with the covenants set forth in Section 5.1 of the APA. The Seller has used commercially reasonable efforts to preserve intact the business organization of the Acquired Business, to maintain the existing relationships with key payors, referral sources, patients, employees, clinicians, landlords, and vendors, and to keep available the services of its key employees and independent contractors.

(b) Continued Clinic Operations. The Seller has continued to operate its thirty-seven (37) clinic locations across seven (7) states without material disruption during the Interim Period, as follows: fourteen (14) clinics in Tennessee, eight (8) clinics in Georgia, five (5) clinics in North Carolina, four (4) clinics in South Carolina, three (3) clinics in Alabama, two (2) clinics in Virginia, and one (1) clinic in Kentucky. No clinic location has been closed, permanently shuttered, or materially curtailed in its operations during the Interim Period. Aggregate patient visit volumes across the Acquired Business have remained within the range of ordinary course historical trends, and no individual clinic has experienced a decline in patient volumes that would constitute a Material Adverse Effect.

(c) No Material Loss, Damage, or Destruction. There has been no material loss, damage, or destruction (whether or not covered by insurance) of any material asset of the Acquired Business during the Interim Period. All material tangible assets of the Acquired Business remain in good working order and condition, subject to normal wear and tear, and are sufficient for the continued operation of the Acquired Business in the ordinary course.

(d) Key Payor Relationships. There has been no material adverse change in the relationships of the Seller with its key payors during the Interim Period, including, without limitation, SummitCare Health Plans, Inc. (which accounted for approximately 22% of net patient service revenue of the Acquired Business for the fiscal year ended December 31, 2023), or Medicare and Medicaid programs administered by the Centers for Medicare & Medicaid Services or applicable state agencies. No key payor has provided written notice of its intent to terminate, materially reduce, or materially adversely modify its contractual or reimbursement arrangements with the Seller. All material claims submissions and reimbursement processes with key payors have continued in the ordinary course without material disruption or delay.

(e) Pending Litigation. There has been no material change in the status of the pending litigation matter captioned Dawson v. Cardinal Peak Industries, Inc., Case No. 3:23-cv-01847 (M.D. Tenn.), that would constitute a Material Adverse Effect. The undersigned notes that this matter is designated as an Excluded Liability under Section 2.4(b)(iii) of the APA and that the Seller will retain all liabilities and obligations arising from or relating to such matter following the Closing. No new material litigation, arbitration, or governmental investigation has been initiated or, to the knowledge of the undersigned, threatened against the Seller or the Acquired Business during the Interim Period that would, individually or in the aggregate, constitute a Material Adverse Effect.

(f) Material Contracts and Managed-Care Agreements. There has been no termination or material adverse modification of any Material Contract (as defined in Section 3.14 of the APA) or any managed-care agreement to which the Seller is a party during the Interim Period. All Material Contracts that are Assigned Contracts under the APA remain in full force and effect, and, to the knowledge of the undersigned, no counterparty to any such contract has asserted a right to terminate or materially modify such contract as a result of the transactions contemplated by the APA or otherwise.

(g) Healthcare Regulatory Compliance. No material healthcare regulatory action, suspension, revocation, limitation, or exclusion proceeding has been initiated or, to the knowledge of the undersigned, threatened against the Seller or any of its thirty-seven (37) clinic locations during the Interim Period by any federal, state, or local governmental authority, including the U.S. Department of Health and Human Services, the Office of Inspector General, the Centers for Medicare & Medicaid Services, the U.S. Department of Justice, or any state health department or professional licensing board. The Seller has not received any notice of deficiency, warning letter, or compliance determination from any governmental authority during the Interim Period that would constitute a Material Adverse Effect.

(h) Permits, Licenses, and Certifications. The Seller has maintained all material permits, licenses, accreditations, and certifications required for the lawful operation of the Acquired Business during the Interim Period, including all state facility licenses, Medicare and Medicaid provider enrollment certifications, professional licenses held by employed or contracted clinicians, and accreditations from the Commission on Accreditation of Rehabilitation Facilities (CARF) and any other applicable accrediting bodies. No material permit, license, or certification has been revoked, suspended, withdrawn, allowed to lapse, or materially modified during the Interim Period.

(i) Key Employees and Clinicians. There has been no material loss of key employees or clinicians of the Acquired Business during the Interim Period that would constitute a Material Adverse Effect. To the knowledge of the undersigned, no executive officer, regional director, clinic director, or other key employee or clinician of the Acquired Business has provided notice of his or her intention to resign or terminate employment or engagement with the Seller prior to or following the Closing, except as previously disclosed to the Purchaser and reflected on Schedule 4(i) delivered herewith.

(j) intellectual Property and Technology. The PeakConnect patient-engagement software platform, which is a proprietary technology asset of the Acquired Business registered with the U.S. Copyright Office under Registration No. 5,412,887, has remained fully operational during the Interim Period and has continued to function in all material respects in accordance with its intended design and specifications. No material intellectual property infringement, misappropriation, or other similar claim has been asserted or, to the knowledge of the undersigned, threatened against the Seller with respect to PeakConnect or any other intellectual property asset of the Acquired Business during the Interim Period. The Seller has continued to maintain and protect its intellectual property rights in the ordinary course of business consistent with past practice.

Section 5. No Undisclosed Liabilities

To the knowledge of the undersigned after due inquiry, since April 2, 2024, there have been no liabilities or obligations of any nature (whether absolute, accrued, contingent, determined, determinable, or otherwise, and whether due or to become due) of the type required to be reflected, reserved against, or disclosed in or on the Disclosure Schedules delivered by the Seller to the Purchaser pursuant to Article III of the APA that have arisen during the Interim Period and that have not been disclosed to the Purchaser in writing, other than liabilities and obligations that (a) were incurred in the ordinary course of business consistent with past practice since April 2, 2024, and (b) would not, individually or in the aggregate, constitute or reasonably be expected to constitute a Material Adverse Effect.

Without limiting the generality of the foregoing, to the knowledge of the undersigned, no contingent liability has arisen during the Interim Period relating to (i) any pending or threatened litigation, claim, or proceeding (other than the Dawson matter described in Section 4(e) above), (ii) any governmental investigation, examination, or enforcement action, (iii) any tax assessment, deficiency, or proposed adjustment, (iv) any environmental condition or claim, or (v) any breach or default under any Material Contract, that would, individually or in the aggregate, constitute or reasonably be expected to constitute a Material Adverse Effect.

Section 6. Reliance

This Certificate is being delivered to the Purchaser as a condition to the Closing under the APA, and the Purchaser is entitled to rely on the certifications and statements set forth herein in consummating the Closing on the Closing Date. The undersigned acknowledges and agrees that:

(a) The Purchaser and its affiliates, including Ardent Capital Partners III LP (the indirect parent entity of the Purchaser), and each of their respective directors, officers, managers, members, partners, employees, advisors, and representatives, are entitled to rely on the truth, accuracy, and completeness of the certifications set forth in this Certificate.

(b) The Purchaser's lenders, including Pinnacle National Bank, N.A., as Administrative Agent under that certain Senior Secured Credit Facility, dated as of June 28, 2024 (the "Credit Facility"), entered into by the Purchaser and certain of its affiliates in connection with the financing of the transactions contemplated by the APA, together with each of the syndicate lenders party thereto, are entitled to rely on the truth, accuracy, and completeness of the certifications set forth in this Certificate to the extent provided in the Credit Facility and the related loan documentation.

(c) The undersigned acknowledges that the Purchaser is entering into the Closing and consummating the transactions contemplated by the APA in material reliance upon the accuracy and completeness of this Certificate, and that the delivery of this Certificate constitutes a material inducement to the Purchaser to proceed with the Closing.

Section 7. Limitation and Qualification

The certifications set forth in this Certificate are made as of the date hereof, June 30, 2024, and, except to the extent expressly provided in the APA with respect to the survival of representations, warranties, and covenants, shall not be deemed to speak as of any other date. All certifications set forth herein are subject to the knowledge qualification stated above, and the term "knowledge" as used in this Certificate shall have the meaning ascribed to such term in Section 1.1 of the APA, which includes the actual knowledge of the individuals specified therein after reasonable inquiry of the direct reports and senior management personnel of the Seller.

Nothing in this Certificate shall be deemed to modify, limit, expand, supplement, or otherwise alter the representations, warranties, covenants, agreements, or indemnification obligations of the Seller set forth in the APA or any other transaction document executed and delivered in connection with the Closing. This Certificate is delivered for the sole purpose of satisfying the condition set forth in Section 7.2(c) of the APA and shall not be construed to create any independent or additional representations, warranties, or covenants beyond those expressly set forth in the APA.

This Certificate shall not create any obligation or liability of Dr. Randall J. Whitfield in his individual or personal capacity. All obligations and liabilities arising under or in connection with this Certificate are solely obligations and liabilities of the Seller, Cardinal Peak Industries, Inc., and no recourse shall be had against the undersigned individually for any claim arising out of or relating to this Certificate, except to the extent that the undersigned has committed fraud in the making of the certifications set forth herein.

Section 8. Governing Law

This Certificate shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of law provision, rule, or principle (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 foregoing governing law provision is consistent with, and shall be interpreted in a manner consistent with, Section 10.8 of the APA.

Any dispute, controversy, or claim arising out of or relating to this Certificate, or the breach, termination, or validity thereof, shall be resolved in accordance with the dispute resolution provisions set forth in Section 10.9 of the APA, and each of the parties and the undersigned hereby submits to the exclusive jurisdiction of the courts specified therein.

[Remainder of Page Intentionally Left Blank — Signature Page Follows]

SIGNATURE PAGE TO OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Officer's Certificate as of June 30, 2024.

CARDINAL PEAK INDUSTRIES, INC.

By: ________

Name: Dr. Randall J. Whitfield

Title: Chairman and Chief Executive Officer

Date: June 30, 2024

OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.
Certificate Regarding Absence of Material Adverse Effect
June 30, 2024
Delivered pursuant to Section 7.2(c) of the Asset Purchase Agreement, dated as of April 2, 2024 (the "APA"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation (the "Purchaser"), and Cardinal Peak Industries, Inc., a Delaware corporation (the "Seller").
RECITALS AND INTRODUCTORY STATEMENT
The undersigned, Dr. Randall J. Whitfield, in his capacity as Chairman and Chief Executive Officer of Cardinal Peak Industries, Inc., a corporation duly organized and existing under the laws of the State of Delaware (the "Seller" or "CPI"), with its principal executive offices located at 8400 Crescent Ridge Parkway, Suite 200, Nashville, Tennessee 37215, hereby certifies as follows in connection with the closing (the "Closing") of the transactions contemplated by that certain Asset Purchase Agreement, dated as of April 2, 2024 (the "APA"), by and between Ardent Healthcare Acquisition Corp., a Delaware corporation (the "Purchaser"), and the Seller.
This Officer's Certificate (this "Certificate") is being delivered by the undersigned on behalf of the Seller pursuant to the terms of the APA, as a condition precedent to the obligation of the Purchaser to consummate the Closing on the date hereof, June 30, 2024 (the "Closing Date"). The delivery of this Certificate satisfies, in part, the conditions set forth in Section 7.2(c) of the APA, which requires the Purchaser to have received a certificate of a duly authorized officer of the Seller, dated as of the Closing Date, certifying to the matters set forth herein.
Capitalized terms used but not otherwise defined in this Certificate shall have the respective meanings ascribed to such terms in the APA. All references to sections, articles, exhibits, and schedules herein shall be deemed to be references to sections, articles, exhibits, and schedules of the APA, unless otherwise expressly stated.
Section 1. Authority and Capacity
The undersigned, Dr. Randall J. Whitfield, hereby certifies that he is the duly elected, qualified, and acting Chairman and Chief Executive Officer of Cardinal Peak Industries, Inc. The undersigned has served in such capacity since the founding of the Seller and continues to hold such office as of the date of this Certificate. In his capacity as Chairman and Chief Executive Officer, the undersigned is duly authorized by the Board of Directors of the Seller to execute and deliver this Certificate on behalf of the Seller, and no further corporate action, resolution, or consent is required for the valid execution and delivery of this Certificate by the undersigned on behalf of the Seller.
The undersigned is familiar with the business, operations, properties, assets, financial condition, and affairs of the Seller and its business operations, including the operations of its thirty-seven (37) outpatient rehabilitation and behavioral health facilities located across the states of Tennessee, Georgia, North Carolina, South Carolina, Alabama, Virginia, and Kentucky (collectively, the "Acquired Business"). By virtue of his position as Chairman and Chief Executive Officer and his direct involvement in the day-to-day management and strategic oversight of the Seller, the undersigned possesses personal knowledge of, and access to information regarding, the matters addressed in this Certificate.
In preparation for the delivery of this Certificate, the undersigned has made such investigations, inquiries, and reviews as he has deemed necessary and appropriate to deliver the certifications set forth herein, including, without limitation, consultations with the Seller's Chief Financial Officer, General Counsel, Vice President of Clinical Operations, Vice President of Regulatory Affairs, and other senior management personnel of the Seller, as well as review of relevant financial, operational, legal, and regulatory records and reports pertaining to the Acquired Business during the period from April 2, 2024 through and including the Closing Date.
Section 2. Definition of Material Adverse Effect
For purposes of this Certificate, the term "Material Adverse Effect" shall have the meaning set forth in Section 1.1 of the APA, which is incorporated herein by reference in its entirety. Without limiting the foregoing incorporation by reference, the undersigned acknowledges that the term "Material Adverse Effect" as defined in the APA means any event, change, occurrence, circumstance, condition, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on:
(a) the business, assets, liabilities, financial condition, or results of operations of the Acquired Business, taken as a whole; or
(b) the ability of the Seller to consummate the transactions contemplated by the APA and the related transaction documents on a timely basis.
The undersigned further acknowledges that, as set forth in Section 1.1 of the APA, the following events, changes, occurrences, circumstances, conditions, or effects (each, an "Excluded Event") shall not, in and of themselves or in combination with one another, be deemed to constitute, and shall not be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect:
(i) changes in general economic, financial, credit, capital market, or political conditions in the United States or globally, including changes in interest rates, exchange rates, commodity prices, or securities markets generally;
(ii) changes, developments, or conditions generally affecting the healthcare industry or the outpatient rehabilitation and behavioral health services sector, including changes in competitive dynamics, patient volumes, or industry-wide reimbursement trends;
(iii) changes in applicable law, regulation, rule, order, or governmental policy or the interpretation or enforcement thereof by any governmental authority, including, without limitation, any changes to Medicare or Medicaid reimbursement rates, coverage policies, participation requirements, or audit or enforcement practices, or changes to state licensure or accreditation requirements applicable to outpatient healthcare facilities;
(iv) changes in United States Generally Accepted Accounting Principles ("GAAP") or in the authoritative interpretation thereof, or changes in regulatory accounting requirements applicable to the healthcare industry generally;
(v) natural disasters, epidemics, pandemics (including COVID-19 and any variants or mutations thereof), weather events, acts of God, acts of terrorism, cyberattacks on critical infrastructure, military action, armed hostilities, national emergencies, or other force majeure events;
(vi) the announcement, disclosure, or pendency of the APA or the transactions contemplated thereby, including any impact on relationships with employees, clinicians, independent contractors, patients, referral sources, payors, managed-care organizations, vendors, suppliers, landlords, joint venture partners, or governmental authorities resulting therefrom;
(vii) any action taken by the Seller at the express written request or with the express prior written consent of the Purchaser, or any failure to take any action that the Seller was prohibited from taking under the terms of the APA; and
(viii) any failure by the Seller to meet any internal or published projection, forecast, estimate, budget, or prediction of revenue, earnings, cash flow, or other financial or operating metrics for any period (it being understood that the underlying facts, circumstances, or events giving rise to or contributing to any such failure may be taken into account in determining whether a Material Adverse Effect has occurred, to the extent not otherwise excluded by clauses (i) through (vii) above);
provided, however, that with respect to the Excluded Events described in clauses (i) through (v) above, such events, changes, occurrences, circumstances, conditions, or effects may be taken into account in determining whether a Material Adverse Effect has occurred to the extent that they have a materially disproportionate adverse effect on the Acquired Business relative to other similarly situated businesses operating in the outpatient healthcare services industry in the geographic markets in which the Acquired Business operates.
Section 3. Certification of No Material Adverse Effect
The undersigned hereby certifies, to his knowledge after due inquiry, that since April 2, 2024 (the date of execution of the APA) through and including June 30, 2024 (the Closing Date):
(a) No Material Adverse Effect has occurred with respect to the Seller or the Acquired Business. No event, change, occurrence, circumstance, condition, or effect has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the business, assets, liabilities, financial condition, or results of operations of the Acquired Business, taken as a whole.
(b) No Material Adverse Effect on the ability to consummate the transactions has occurred. No event, change, occurrence, circumstance, condition, or effect has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the ability of the Seller to consummate the transactions contemplated by the APA and the related transaction documents, including the assignment and transfer of the Acquired Assets, the assumption of the Assumed Liabilities by the Purchaser, and the performance by the Seller of its obligations under the Transition Services Agreement, the Non-Competition Agreement, and the other ancillary agreements executed and delivered in connection with the Closing.
The undersigned has no reason to believe, and does not believe, that any event, change, occurrence, circumstance, condition, or effect exists as of the date hereof that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect on the Acquired Business or on the ability of the Seller to consummate the transactions contemplated by the APA.
Section 4. Supplemental Certifications Regarding the Interim Period
In addition to the foregoing certification regarding the absence of a Material Adverse Effect, the undersigned hereby further certifies, to his knowledge after due inquiry, with respect to the period from April 2, 2024 through and including June 30, 2024 (the "Interim Period"), as follows:
(a) Ordinary Course of Business. During the Interim Period, the Seller has operated the Acquired Business in the ordinary course of business, consistent with past practice in all material respects, in accordance with the covenants set forth in Section 5.1 of the APA. The Seller has used commercially reasonable efforts to preserve intact the business organization of the Acquired Business, to maintain the existing relationships with key payors, referral sources, patients, employees, clinicians, landlords, and vendors, and to keep available the services of its key employees and independent contractors.
(b) Continued Clinic Operations. The Seller has continued to operate its thirty-seven (37) clinic locations across seven (7) states without material disruption during the Interim Period, as follows: fourteen (14) clinics in Tennessee, eight (8) clinics in Georgia, five (5) clinics in North Carolina, four (4) clinics in South Carolina, three (3) clinics in Alabama, two (2) clinics in Virginia, and one (1) clinic in Kentucky. No clinic location has been closed, permanently shuttered, or materially curtailed in its operations during the Interim Period. Aggregate patient visit volumes across the Acquired Business have remained within the range of ordinary course historical trends, and no individual clinic has experienced a decline in patient volumes that would constitute a Material Adverse Effect.
(c) No Material Loss, Damage, or Destruction. There has been no material loss, damage, or destruction (whether or not covered by insurance) of any material asset of the Acquired Business during the Interim Period. All material tangible assets of the Acquired Business remain in good working order and condition, subject to normal wear and tear, and are sufficient for the continued operation of the Acquired Business in the ordinary course.
(d) Key Payor Relationships. There has been no material adverse change in the relationships of the Seller with its key payors during the Interim Period, including, without limitation, SummitCare Health Plans, Inc. (which accounted for approximately 22% of net patient service revenue of the Acquired Business for the fiscal year ended December 31, 2023), or Medicare and Medicaid programs administered by the Centers for Medicare & Medicaid Services or applicable state agencies. No key payor has provided written notice of its intent to terminate, materially reduce, or materially adversely modify its contractual or reimbursement arrangements with the Seller. All material claims submissions and reimbursement processes with key payors have continued in the ordinary course without material disruption or delay.
(e) Pending Litigation. There has been no material change in the status of the pending litigation matter captioned Dawson v. Cardinal Peak Industries, Inc., Case No. 3:23-cv-01847 (M.D. Tenn.), that would constitute a Material Adverse Effect. The undersigned notes that this matter is designated as an Excluded Liability under Section 2.4(b)(iii) of the APA and that the Seller will retain all liabilities and obligations arising from or relating to such matter following the Closing. No new material litigation, arbitration, or governmental investigation has been initiated or, to the knowledge of the undersigned, threatened against the Seller or the Acquired Business during the Interim Period that would, individually or in the aggregate, constitute a Material Adverse Effect.
(f) Material Contracts and Managed-Care Agreements. There has been no termination or material adverse modification of any Material Contract (as defined in Section 3.14 of the APA) or any managed-care agreement to which the Seller is a party during the Interim Period. All Material Contracts that are Assigned Contracts under the APA remain in full force and effect, and, to the knowledge of the undersigned, no counterparty to any such contract has asserted a right to terminate or materially modify such contract as a result of the transactions contemplated by the APA or otherwise.
(g) Healthcare Regulatory Compliance. No material healthcare regulatory action, suspension, revocation, limitation, or exclusion proceeding has been initiated or, to the knowledge of the undersigned, threatened against the Seller or any of its thirty-seven (37) clinic locations during the Interim Period by any federal, state, or local governmental authority, including the U.S. Department of Health and Human Services, the Office of Inspector General, the Centers for Medicare & Medicaid Services, the U.S. Department of Justice, or any state health department or professional licensing board. The Seller has not received any notice of deficiency, warning letter, or compliance determination from any governmental authority during the Interim Period that would constitute a Material Adverse Effect.
(h) Permits, Licenses, and Certifications. The Seller has maintained all material permits, licenses, accreditations, and certifications required for the lawful operation of the Acquired Business during the Interim Period, including all state facility licenses, Medicare and Medicaid provider enrollment certifications, professional licenses held by employed or contracted clinicians, and accreditations from the Commission on Accreditation of Rehabilitation Facilities (CARF) and any other applicable accrediting bodies. No material permit, license, or certification has been revoked, suspended, withdrawn, allowed to lapse, or materially modified during the Interim Period.
(i) Key Employees and Clinicians. There has been no material loss of key employees or clinicians of the Acquired Business during the Interim Period that would constitute a Material Adverse Effect. To the knowledge of the undersigned, no executive officer, regional director, clinic director, or other key employee or clinician of the Acquired Business has provided notice of his or her intention to resign or terminate employment or engagement with the Seller prior to or following the Closing, except as previously disclosed to the Purchaser and reflected on Schedule 4(i) delivered herewith.
(j) intellectual Property and Technology. The PeakConnect patient-engagement software platform, which is a proprietary technology asset of the Acquired Business registered with the U.S. Copyright Office under Registration No. 5,412,887, has remained fully operational during the Interim Period and has continued to function in all material respects in accordance with its intended design and specifications. No material intellectual property infringement, misappropriation, or other similar claim has been asserted or, to the knowledge of the undersigned, threatened against the Seller with respect to PeakConnect or any other intellectual property asset of the Acquired Business during the Interim Period. The Seller has continued to maintain and protect its intellectual property rights in the ordinary course of business consistent with past practice.
Section 5. No Undisclosed Liabilities
To the knowledge of the undersigned after due inquiry, since April 2, 2024, there have been no liabilities or obligations of any nature (whether absolute, accrued, contingent, determined, determinable, or otherwise, and whether due or to become due) of the type required to be reflected, reserved against, or disclosed in or on the Disclosure Schedules delivered by the Seller to the Purchaser pursuant to Article III of the APA that have arisen during the Interim Period and that have not been disclosed to the Purchaser in writing, other than liabilities and obligations that (a) were incurred in the ordinary course of business consistent with past practice since April 2, 2024, and (b) would not, individually or in the aggregate, constitute or reasonably be expected to constitute a Material Adverse Effect.
Without limiting the generality of the foregoing, to the knowledge of the undersigned, no contingent liability has arisen during the Interim Period relating to (i) any pending or threatened litigation, claim, or proceeding (other than the Dawson matter described in Section 4(e) above), (ii) any governmental investigation, examination, or enforcement action, (iii) any tax assessment, deficiency, or proposed adjustment, (iv) any environmental condition or claim, or (v) any breach or default under any Material Contract, that would, individually or in the aggregate, constitute or reasonably be expected to constitute a Material Adverse Effect.
Section 6. Reliance
This Certificate is being delivered to the Purchaser as a condition to the Closing under the APA, and the Purchaser is entitled to rely on the certifications and statements set forth herein in consummating the Closing on the Closing Date. The undersigned acknowledges and agrees that:
(a) The Purchaser and its affiliates, including Ardent Capital Partners III LP (the indirect parent entity of the Purchaser), and each of their respective directors, officers, managers, members, partners, employees, advisors, and representatives, are entitled to rely on the truth, accuracy, and completeness of the certifications set forth in this Certificate.
(b) The Purchaser's lenders, including Pinnacle National Bank, N.A., as Administrative Agent under that certain Senior Secured Credit Facility, dated as of June 28, 2024 (the "Credit Facility"), entered into by the Purchaser and certain of its affiliates in connection with the financing of the transactions contemplated by the APA, together with each of the syndicate lenders party thereto, are entitled to rely on the truth, accuracy, and completeness of the certifications set forth in this Certificate to the extent provided in the Credit Facility and the related loan documentation.
(c) The undersigned acknowledges that the Purchaser is entering into the Closing and consummating the transactions contemplated by the APA in material reliance upon the accuracy and completeness of this Certificate, and that the delivery of this Certificate constitutes a material inducement to the Purchaser to proceed with the Closing.
Section 7. Limitation and Qualification
The certifications set forth in this Certificate are made as of the date hereof, June 30, 2024, and, except to the extent expressly provided in the APA with respect to the survival of representations, warranties, and covenants, shall not be deemed to speak as of any other date. All certifications set forth herein are subject to the knowledge qualification stated above, and the term "knowledge" as used in this Certificate shall have the meaning ascribed to such term in Section 1.1 of the APA, which includes the actual knowledge of the individuals specified therein after reasonable inquiry of the direct reports and senior management personnel of the Seller.
Nothing in this Certificate shall be deemed to modify, limit, expand, supplement, or otherwise alter the representations, warranties, covenants, agreements, or indemnification obligations of the Seller set forth in the APA or any other transaction document executed and delivered in connection with the Closing. This Certificate is delivered for the sole purpose of satisfying the condition set forth in Section 7.2(c) of the APA and shall not be construed to create any independent or additional representations, warranties, or covenants beyond those expressly set forth in the APA.
This Certificate shall not create any obligation or liability of Dr. Randall J. Whitfield in his individual or personal capacity. All obligations and liabilities arising under or in connection with this Certificate are solely obligations and liabilities of the Seller, Cardinal Peak Industries, Inc., and no recourse shall be had against the undersigned individually for any claim arising out of or relating to this Certificate, except to the extent that the undersigned has committed fraud in the making of the certifications set forth herein.
Section 8. Governing Law
This Certificate shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of law provision, rule, or principle (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 foregoing governing law provision is consistent with, and shall be interpreted in a manner consistent with, Section 10.8 of the APA.
Any dispute, controversy, or claim arising out of or relating to this Certificate, or the breach, termination, or validity thereof, shall be resolved in accordance with the dispute resolution provisions set forth in Section 10.9 of the APA, and each of the parties and the undersigned hereby submits to the exclusive jurisdiction of the courts specified therein.
[Remainder of Page Intentionally Left Blank — Signature Page Follows]
SIGNATURE PAGE TO OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Officer's Certificate as of June 30, 2024.
CARDINAL PEAK INDUSTRIES, INC.
By: ________
Name: Dr. Randall J. Whitfield
Title: Chairman and Chief Executive Officer
Date: June 30, 2024

OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.

RECITALS AND INTRODUCTORY STATEMENT

SIGNATURE PAGE TO OFFICER'S CERTIFICATE OF CARDINAL PEAK INDUSTRIES, INC.

CARDINAL PEAK INDUSTRIES, INC.

Record

Parties

Dates

Amounts