Contract analysis

I. Engagement Overview Calderwood & Harkness LLP has been retained by Ardent Capital Partners III LP ("Ardent Capital" or "Fund III"), a Delaware limited partnership headquartered at 600 Lexington Avenue, 38th Floor, New York, NY 10022, to serve as tax counsel in connection with Fund III's proposed acquisition of Pinnacle Health Services Group LLC ("Pinnacle" or "PHSG"), a Delaware limited liability company taxed as

II. Staffing Plan A. Team Composition The engagement team consists of four timekeepers: two partners and two associates. Set forth below is a detailed description of each team member's role, hourly rate, estimated hours, and key responsibilities. Leonard Cross — Responsible Partner, Tax Leonard Cross will serve as the responsible partner for this engagement and will be the lead client interface for all structuring ma

1. Lead development of the preliminary tax structure memorandum, including entity selection for the acquisition vehicle, partnership versus corporate classification analysis, and blocker entity considerations;

2. Section 338(h)(10) versus Section 754 election analysis, including quantification of the after-tax economic impact of each alternative on Fund III and the rollover participants;

3. Earnout characterization guidance, including determination of appropriate treatment under the open transaction doctrine, the installment method, and the closed transaction method, with consideration of imputed interest under Section 483;

4. Drafting and execution of the tax opinion letter to be delivered at closing;

5. Oversight of the purchase price allocation methodology and review of the Section 1060 allocation schedule and the Section 743(b) step-up computation;

6. Development of state tax strategy, including review and approval of the state and local tax memorandum prepared by Ms. Hartwell;

7. Review and approval of all merger agreement tax provision markups, including representations and warranties, pre-closing covenants, tax indemnification provisions, and escrow mechanics;

8. Direct coordination with Thomas Kundra and Allison Cho at Harcourt Shaw & DeVries LLP on the integration of tax provisions into the merger agreement and ancillary transaction documents;

9. Participation in key client calls and structuring meetings throughout the engagement. Sylvia Hartwell — Billing Partner, Tax Sylvia Hartwell will serve as the billing partner for this engagement and will lead the state and local tax analysis work stream. Ms. Hartwell has extensive experience in multi-state tax planning for private equity portfolio companies in the healthcare sector, including prior engagements inv

1. Preparation of the state and local tax memorandum, addressing the tax implications of the proposed acquisition structure in each of Pennsylvania, Virginia, Maryland, North Carolina, and Georgia;

2. Development of state tax structuring recommendations, including optimization of the holding company structure to minimize aggregate state tax liability;

3. Analysis of Philadelphia Business Income and Receipts Tax ("BIRT") exposure arising from Pinnacle's operations in Philadelphia and surrounding suburbs;

4. Analysis of potential New York nexus for the proposed Holdings LLC, given Fund III's New York-based operations and the Managing Partners' New York residency;

5. Budget and staffing management for the engagement, including review of all pre-bills, monitoring of actual hours against budget, and escalation of budget concerns;

6. Review of nonresident withholding computations for selling partners who are residents of states imposing withholding on pass-through entity distributions or sales of partnership interests;

7. Coordination with Ardent Capital's internal accounting team and with Caldwell Pratt & Moorehouse LLP on state tax compliance matters;

8. Secondary partner-level review of selected deliverables, including the rollover equity memorandum and the purchase price allocation schedule. Robert Jansen — Lead Associate (Senior Associate), Tax Robert Jansen will serve as the lead associate and day-to-day project manager for this engagement. Mr. Jansen is in his seventh year of practice and has significant experience in private equity M&A tax matters, having wo

1. First drafts of all substantive memoranda, including: (a) Preliminary Tax Structure Memorandum; (b) Section 338(h)(10) versus Section 754 Election Analysis Memorandum; (c) Rollover Equity Tax Memorandum (Section 721 versus Section 351 analysis); (d) Earnout Tax Characterization Memorandum; (e) Open Transaction versus Closed Transaction / Installment Method Memorandum; (f) blocker Entity Analysis Memorandum; (g) Pu

2. Drafting of tax provisions markups for the merger agreement, including representations and warranties, pre-closing covenants, and tax indemnification provisions;

3. Drafting of the Tax Receivable Agreement, including computation methodology, dispute resolution mechanisms, and termination provisions;

4. Drafting of the Section 754 election for the target entity;

5. Preparation of Section 83(b) election forms and transmittal letters for each rollover participant;

6. Markup of the LLC agreement tax provisions (distribution waterfall, tax allocation provisions, tax matters partner designation, withholding provisions);

7. Preparation of the IRS Reporting Obligations Checklist;

8. Preparation of the state withholding computation schedule, in coordination with Ms. Hartwell;

9. Coordination with Kevin Driscoll and Patricia Engelman at Whitford & Gaines LLP on seller-side tax matters, including purchase price allocation, earnout characterization, and nonresident withholding;

10. Day-to-day project management, including tracking of deliverable deadlines, coordination of internal reviews, and management of the engagement work plan. Garrett Simmons — Working Associate, Tax Garrett Simmons will serve as the working associate on this engagement, providing research and computational support. Mr. Simmons is in his fourth year of practice and has experience in partnership tax, including Section

1. Tax research and citation for all substantive memoranda, including research of relevant authorities under Subchapter K, Subchapter C, and the applicable Treasury Regulations;

2. Computational analyses, including: (a) Section 743(b) inside basis step-up computation of approximately $224.4 million, including allocation of step-up to individual assets and amortizable intangibles; (b) Amortization schedules for Section 197 intangibles and other stepped-up assets; (c) Tax Receivable Agreement payment modeling, based on 85% sharing of an estimated $5.01 million annual tax benefit stream, includ

3. Entity formation checklist and filing instructions for the three acquisition entities: (a) Holdings LLC (Delaware File No. 7834219, EIN 93-2187445); (b) Intermediate Inc. (Delaware File No. 7834223, EIN 93-2187512); (c) Merger Sub LLC (Delaware File No. 7834227);

4. Preparation of FIRPTA certificate templates for use at closing;

5. Analysis of Form 8308 (Report of a Sale or Exchange of Certain Partnership Interests) and Form 8594 (Asset Acquisition Statement Under Section 1060) filing requirements;

6. Proofreading and cite-checking of all substantive memoranda prior to partner review;

7. Assembly of the closing binder, including organization and indexing of all tax-related closing deliverables. B. Staffing Rationale The staffing plan reflects the complexity and scope of this engagement, which involves a number of discrete but interrelated tax structuring challenges. Healthcare services M&A tax structuring requires significant partner involvement due to the complexity inherent in multi-state operat

III. Budget Estimate A. Estimated Fee Breakdown by Timekeeper The following table sets forth the estimated professional fees for this engagement, broken down by timekeeper, based on the estimated hours set forth in Section II.A above: The blended hourly rate across the team is approximately $1,088 per hour at the low end of the range and approximately $1,090 per hour at the high end. This blended rate is consistent w

IV. Anticipated Deliverable Timeline The following table sets forth the anticipated delivery dates for the principal deliverables of the engagement. All dates are targets and are subject to adjustment based on the overall transaction timetable, the pace of negotiations with counterparties, and the receipt of information from the client, the target, and other advisors. Any material changes to the deliverable timeline

V. Billing Procedures The following billing procedures will govern this engagement: Monthly Billing. Invoices will be prepared and submitted monthly, in arrears, for professional fees incurred and disbursements advanced during the preceding calendar month. All invoices will be directed to Marcus Pellegrino at Ardent Capital Partners III LP, 600 Lexington Avenue, 38th Floor, New York, NY 10022, or to such other addres

VI. Risk and Scope Considerations Potential Scope Expansion Areas. While the engagement scope set forth in Section I above is intended to be comprehensive, the following areas present potential for scope expansion that could increase the total engagement cost beyond the core scope estimates: (i) Additional State Tax Filings or Audits. Diligence may reveal additional state tax filing obligations, unreported nexus in s

VII. Approval This memorandum sets forth the staffing plan, budget estimate, deliverable timeline, billing procedures, and risk and scope considerations for the Ardent Capital Partners III LP / Pinnacle Health Services Group LLC tax structuring engagement. By signing below, the undersigned confirm their review and approval of this memorandum and authorize the engagement team to proceed on the terms described herein.

Section 338(h)(10) vs. Section 754 election analysis | $120,000–$150,000 | Cross, Jansen, Simmons Rollover equity / profits interest / Section 83(b) analysis and documentation | $150,000–$185,000 | Cross, Jansen, Simmons Earnout tax characterization and reporting (including Section 483, installment method, open/closed transaction) | $100,000–$130,000 | Cross, Jansen Purchase price allocation (Section 1060 / 743(b)) a