1001-00006 · Ardent Capital Partners · Engagement & Administrative

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

FROM: Leonard Cross, Partner, Tax Department, Calderwood & Harkness LLP

TO: Office of the General Counsel / Conflicts Committee, Calderwood & Harkness LLP

DATE: January 8, 2024

RE: Conflicts Check Results — Proposed Engagement: Tax Structuring Services for Ardent Capital Partners III LP in Connection with the Acquisition of Pinnacle Health Services Group LLC

MATTER NUMBER: 1001-00006

ENGAGEMENT NUMBER: 1001-00006

1. Purpose and Summary of Request

The Tax Department of Calderwood & Harkness LLP has been asked to serve as tax counsel to Ardent Capital Partners III LP, a Delaware limited partnership (the "Client" or "Ardent"), in connection with the proposed acquisition (the "Transaction") of Pinnacle Health Services Group LLC, a Delaware limited liability company taxed as a partnership for U.S. federal income tax purposes (the "Target" or "Pinnacle"), for an aggregate enterprise value of approximately $412 million. This memorandum sets forth the results of the firm's conflicts check conducted in connection with the proposed engagement.

The proposed responsible partner for this engagement is Leonard Cross, and the proposed billing partner is Sylvia Hartwell, both of the Tax Department.

The conflicts check was initiated on January 5, 2024, immediately upon receipt of the preliminary term sheet and party list from Ardent's deal counsel at Harcourt Shaw & DeVries LLP. The search was completed on January 8, 2024, following receipt of all practice group responses and finalization of the electronic database review.

In conducting the conflicts analysis, the firm's electronic conflicts database, designated as the New Matter Intake System ("NMIS"), was searched using the names, known variants, and employer identification numbers of all parties identified in Section 3 below. In addition, manual inquiries were circulated to all partners in the Tax, M&A, Healthcare, Private Equity, and Finance practice groups, requesting that each partner confirm whether he or she is aware of any current, former, or prospective representation that could give rise to a conflict of interest or potential conflict of interest in connection with this engagement.

Based on the comprehensive search described in this memorandum, no conflicts of interest or potential conflicts of interest were identified. The engagement may proceed, subject to execution of the engagement letter and compliance with the firm's standard new matter intake procedures.

2. Description of Proposed Engagement

2.1 Client. The proposed client is Ardent Capital Partners III LP, a Delaware limited partnership headquartered at 600 Lexington Avenue, 38th Floor, New York, NY 10022 (EIN 87-3491520). Ardent Capital Partners III LP is a private equity fund (Fund III, vintage 2022, with an aggregate fund size of approximately $3.2 billion) focused on investments in the healthcare services, healthcare information technology, and life sciences services sectors. Fund III is the most recent in a series of funds sponsored by the Ardent Capital platform, which was founded in 2010 and has deployed approximately $7.5 billion across three fund vehicles to date.

2.2 General Partner

The general partner of Ardent Capital Partners III LP is Ardent Capital GP III LLC, a Delaware limited liability company, located c/o Ardent Capital Partners III LP at 600 Lexington Avenue, 38th Floor, New York, NY 10022. Ardent Capital GP III LLC exercises management authority over Fund III and is responsible for directing the investment and operational activities of the fund.

2.3 Managing Partners of Ardent Capital

The co-founders and managing partners of the Ardent Capital platform are:

• Dominic Ferrera — Co-Founder & Managing Partner, Ardent Capital

• Claire Ashworth — Co-Founder & Managing Partner, Ardent Capital

Mr. Ferrera and Ms. Ashworth serve as the principal decision-makers for Fund III and will oversee the Transaction at the sponsor level.

2.4 Deal Team Lead

The Ardent Capital deal team lead for this Transaction is Marcus Pellegrino, Partner, Healthcare, who has primary responsibility for sourcing, diligence, and execution of the acquisition.

2.5 Transaction Summary

The proposed Transaction involves the acquisition of 100% of the outstanding membership interests of Pinnacle Health Services Group LLC by means of a reverse merger. In connection with the Transaction, Ardent Healthcare Merger Sub LLC (a newly formed Delaware limited liability company, the "Merger Sub") will merge with and into Pinnacle, with Pinnacle surviving the merger as a wholly owned subsidiary of Ardent Healthcare Holdings LLC (the "Holding Company"), a newly formed Delaware limited liability company that will serve as the acquisition holding company for the Transaction. Upon consummation of the merger, the existing membership interests of Pinnacle will be cancelled and converted into the right to receive merger consideration in accordance with the terms of the definitive merger agreement.

Certain members of Pinnacle's senior management team, including Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth, are expected to roll over a portion of their existing equity interests into the post-closing entity structure, the terms of which will be negotiated in connection with the definitive documentation.

2.6 Target. The Target is Pinnacle Health Services Group LLC, a Delaware limited liability company headquartered at 2200 Renaissance Boulevard, Suite 400, King of Prussia, PA 19406 (EIN 82-1947632). Pinnacle is an owner-operator of 34 urgent care clinics and 8 ambulatory surgery centers located across five states: Pennsylvania, Virginia, Maryland, North Carolina, and Georgia. The company was founded in 2016 by Dr. Raymond Carvallo and Dr. Nadia Ostrowski and currently employs approximately 1,620 individuals, including 142 employed physicians.

For the fiscal year ended December 31, 2023, Pinnacle reported total revenue of approximately $287.4 million and adjusted EBITDA of approximately $51.8 million, representing an adjusted EBITDA margin of approximately 18.0%.

2.7 Scope of Proposed Tax Structuring Services

Calderwood & Harkness's engagement as tax counsel to Ardent Capital Partners III LP in connection with the Transaction will encompass the following advisory areas:

(a) Entity selection and formation advice for the acquisition vehicle, including analysis of alternative holding company structures (partnership, disregarded entity, C corporation, and S corporation vehicles) and their respective tax consequences to the fund, its limited partners, and rollover management participants;

(b) Tax structuring for management rollover equity, including analysis of the characterization of rollover interests as profits interests, capital interests, or other equity instruments, and related Section 83 and Section 721 considerations;

(c) Earnout characterization and reporting, including analysis of whether contingent consideration payable to selling members should be characterized as purchase price adjustments, installment sale payments under Section 453, or compensation for post-closing services, and the attendant reporting obligations;

(d) Section 338(h)(10) election analysis, including evaluation of whether a protective or affirmative election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), is available and advisable in the context of the proposed reverse merger structure;

(e) Section 754 election analysis, including evaluation of whether Pinnacle should make or revoke a Section 754 election to permit basis adjustments under Sections 734(b) and 743(b) of the Code in connection with the Transaction;

(f) Purchase price allocation advisory, including assistance with the allocation of the aggregate purchase price among the assets of Pinnacle and its subsidiaries in accordance with Section 1060 of the Code and the regulations promulgated thereunder;

(g) State and local tax optimization, including analysis of the state and local tax consequences of the proposed transaction structure across Pennsylvania, Virginia, Maryland, North Carolina, Georgia, New York, Delaware, and any other relevant jurisdictions, with particular attention to transfer taxes, entity-level taxes, and withholding obligations; and

(h) Such other tax structuring advisory services as may be reasonably requested by the Client in connection with the Transaction.

3. Parties Searched

The following parties were searched in the firm's electronic conflicts database and were the subject of the manual practice group inquiries described in Section 4 below. All known name variants, abbreviations, and affiliated entity names were included in the search.

3.1 Client-Side Parties (Buyer)

3.2 Target and Seller Parties

3.3 Opposing and Co-Counsel

3.4 Financial Advisors

3.5 Lenders and Financing Sources

3.6 Other Transaction Parties

4. Search Methodology

The conflicts check was conducted in accordance with the firm's standard new matter intake procedures, as set forth in the Calderwood & Harkness LLP Conflicts of Interest Policy (revised effective September 1, 2023), and comprised the following steps:

(1) Electronic Database Search. A comprehensive search of Calderwood & Harkness's firm-wide conflicts database, the New Matter Intake System ("NMIS"), was conducted using all party names, known variants, abbreviations, trade names, and employer identification numbers listed in Section 3 above. The NMIS search encompassed (a) all current active client and matter records, (b) all closed matter records within the prior five years (January 1, 2019 through January 5, 2024), and (c) the firm's adverse party database, which includes the names of all parties adverse to firm clients in current and recently closed matters. The electronic search was performed by the firm's Conflicts & New Business Department under the supervision of Kathleen M. Duval, Director of Conflicts & New Business, on January 5 and 6, 2024. Search results were reviewed by the undersigned on January 7, 2024.

(2) Cross-Reference Against Active Client List and Adverse Party Database. In addition to the NMIS search, the names of all parties identified in Section 3 were cross-referenced against the firm's active client list (as maintained by the Finance Department) and the adverse party database (as maintained by the Office of the General Counsel) to confirm that no party on the target/seller side of the Transaction is a current client of the firm and that no party on the buyer side has previously been named as an adverse party in any matter handled by the firm.

(3) Manual Practice Group Inquiries. On January 5, 2024, a conflicts inquiry memorandum was circulated to all partners in the following practice groups: Tax, M&A, Healthcare, Private Equity, and Finance. Each partner was asked to review the list of parties set forth in Section 3 and to confirm whether he or she is aware of any current, former, or prospective representation of any such party, or any other circumstance that could give rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement. The deadline for responses was set at 5:00 p.m. Eastern Time on January 7, 2024. All responses were received by the deadline, and no partner identified a conflict or potential conflict.

(4) Review of Existing Engagement Letters and Side Letters. With respect to any party identified in Section 3 that is or has been a client of the firm, a review was conducted of the applicable engagement letters and any related side letters or supplemental agreements to determine whether any such instrument contains scope limitations, consent requirements, or other restrictive provisions that could affect the firm's ability to undertake the proposed engagement. The results of this review are discussed in Section 5 below.

All searches and inquiries described above were conducted between January 5 and January 7, 2024. Final clearance was completed on January 8, 2024, upon review and approval by the undersigned.

5. Results of Conflicts Search

5.1 No Current Client Relationships with Adverse Parties

The NMIS search and manual practice group inquiries confirm that Calderwood & Harkness LLP does not currently represent, and has no open matter for, any of the following parties:

• Pinnacle Health Services Group LLC (or any known affiliate, predecessor, or subsidiary thereof);

• Dr. Raymond Carvallo, individually or in any representative capacity;

• Dr. Nadia Ostrowski, individually or in any representative capacity;

• Jonathan Farnsworth, individually or in any representative capacity;

• Any of the 14 minority physician-investors identified on the preliminary cap table as holding, in the aggregate, a 27.5% membership interest in Pinnacle;

• Whitford & Gaines LLP, or any of its partners, associates, or counsel, including Patricia Engelman and Kevin Driscoll;

• Larchmont & Co., or any of its principals, including Sarah Quinlan; or

• Brewer Stanfield & Associates LLP.

Accordingly, no current client relationship exists between the firm and any party that is adverse to, or whose interests may be adverse to, those of the proposed client in connection with the Transaction. No consent or waiver from any existing client is required on account of any relationship with a target-side or seller-side party.

5.2 No Prior Adverse Representations

The search of the firm's closed matter records for the five-year period from January 1, 2019 through January 5, 2024, confirms that Calderwood & Harkness LLP has not previously represented any seller-side party listed in Section 3.2 above in any matter adverse to Ardent Capital Partners III LP, Ardent Capital GP III LLC, or any other Ardent-affiliated fund or entity.

In addition, the firm has not previously represented Pinnacle Health Services Group LLC, Dr. Raymond Carvallo, Dr. Nadia Ostrowski, or Jonathan Farnsworth in any capacity whatsoever — whether in matters adverse to Ardent or otherwise. No prior client relationship with any target-side or seller-side party was identified in the NMIS database or through the manual practice group inquiries.

Because the firm has no prior or current representation of any adverse party, no issues arise under Rule 1.9 (Duties to Former Clients) of the applicable Rules of Professional Conduct with respect to the proposed engagement.

5.3 Existing Client Relationships — No Conflict

The NMIS search identified the following existing or recent client relationships with parties listed in Section 3. Each such relationship has been analyzed and, as set forth below, none gives rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement.

(a) Ardent Capital Partners III LP and Affiliated Entities. The firm's Tax Department has previously provided tax structuring advice to Ardent Capital Partners II LP ("Fund II") in connection with two prior portfolio company acquisitions (Matter Nos. 3892-0011 and 4107-0019, both now closed). The firm's relationship with Fund II was limited to transaction-specific tax advice and did not involve any ongoing or general representation. Calderwood & Harkness has not previously been engaged by Fund III. Because the prior Fund II engagements were on behalf of the same sponsor platform and involved no adverse interests, these prior representations support, rather than conflict with, the proposed engagement.

(b) Harcourt Shaw & DeVries LLP. The NMIS search reflects that Calderwood & Harkness has co-counseled with Harcourt Shaw & DeVries LLP on two prior transactions in which Harcourt Shaw served as M&A counsel and Calderwood & Harkness served as tax counsel to the same buyer-side client (Matter Nos. 3741-0006 and 4213-0035). In the proposed Transaction, Harcourt Shaw & DeVries LLP is serving as M&A counsel to Ardent Capital on the buyer side, and Calderwood & Harkness would serve as tax counsel to the same client. This is a co-counsel relationship on the same side of the Transaction; it presents no adverse interest and no conflict.

(c) Graystone National Bank, N.A. The firm has represented Graystone National Bank, N.A. as borrower's counsel in connection with three revolving credit facilities obtained by firm clients (Matter Nos. 4011-0002, 4156-0028, and 4389-0007, the last of which remains active). In each instance, the firm represented the borrower, not the bank. In the proposed Transaction, Graystone is the senior lender and administrative agent providing acquisition financing to Ardent. Calderwood & Harkness's role in the Transaction is limited to tax structuring advice for the buyer; the firm will not represent any party in the negotiation of the credit facility or any financing documentation. No adverse interest exists between the firm's proposed role and any matter in which Graystone is a party. No consent or waiver is required.

(d) Ridgepoint Capital Markets LLC, Thorncrest Credit Partners LP, and Cascadia Mezzanine Fund IV LP. The NMIS search returned no current or prior client relationships with Ridgepoint Capital Markets LLC or Thorncrest Credit Partners LP. With respect to Cascadia Mezzanine Fund IV LP, the firm's Finance practice group provided regulatory advice to Cascadia Mezzanine Fund III LP (a predecessor fund under the same sponsor) in a now-closed matter (Matter No. 1001-00006, closed December 2020). The prior engagement involved regulatory compliance matters unrelated to the proposed Transaction. In the proposed Transaction, Cascadia Mezzanine Fund IV LP is a mezzanine lender on the buyer's financing side. Calderwood & Harkness's role is limited to tax structuring advice for the buyer and does not involve any representation adverse to Cascadia or any affiliated fund. No conflict exists.

(e) Caldwell Pratt & Moorehouse LLP. The NMIS search returned no current or prior client relationships with Caldwell Pratt & Moorehouse LLP. The firm has co-referred clients with Caldwell Pratt on an informal basis in the ordinary course of practice, but no formal representation or engagement has been undertaken. No conflict exists.

(f) Northmark Advisory Group LLC, Bellhaven Risk Advisors LLC, Continental Indemnity Partners Ltd., and Ironbridge Trust Company, N.A. The NMIS search returned no current or prior client relationships with any of these parties. No partner responding to the manual practice group inquiry identified any relationship with these entities. No conflict exists.

(g) Meridian Tuck Partners LLC. The NMIS search returned no current or prior client relationships with Meridian Tuck Partners LLC or Daniel Kessler. Meridian Tuck is serving as financial advisor to Ardent Capital on the buyer side of the Transaction, aligned with the proposed client. No adverse interest exists. No conflict exists.

5.4 Practice Group Confirmations

Manual conflicts inquiries were circulated on January 5, 2024, to the partners leading each of the following practice groups, with a response deadline of 5:00 p.m. Eastern Time on January 7, 2024. All responses were received timely. The results are summarized below:

Each practice group leader confirmed, after reviewing the party list set forth in Section 3 and consulting with the partners in his or her respective group, that no current, former, or prospective representation was identified that could give rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement. Copies of the individual practice group response memoranda are retained in the conflicts file for Matter No. 1001-00006.

6. Conclusion and Clearance

Based on the comprehensive conflicts search described in this memorandum — including the electronic search of the firm's New Matter Intake System, cross-referencing against the firm's active client list and adverse party database, manual inquiries to all partners in the Tax, M&A, Healthcare, Private Equity, and Finance practice groups, and review of existing engagement letters and side letters with identified parties — no conflicts of interest or potential conflicts of interest have been identified with respect to the proposed engagement of Calderwood & Harkness LLP as tax counsel to Ardent Capital Partners III LP in connection with the acquisition of Pinnacle Health Services Group LLC.

Accordingly, the Conflicts Committee is respectfully requested to grant clearance for the engagement to proceed in accordance with the firm's new matter intake procedures.

The engagement letter is being prepared for execution on or about January 10, 2024, with the following staffing:

• Responsible Partner: Leonard Cross, Partner, Tax Department

• Billing Partner: Sylvia Hartwell, Partner, Tax Department

• Lead Associate: Robert Jansen, Associate, Tax Department

• Working Associate: Garrett Simmons, Associate, Tax Department

In the event that the identity of any transaction party changes, or new parties emerge during the course of the engagement (including, without limitation, additional equity co-investors, new lenders, substitute escrow agents, or additional rollover participants), a supplemental conflicts check should be conducted promptly in accordance with the firm's Conflicts of Interest Policy. The engagement team will monitor the Transaction for any such developments and will initiate supplemental searches as warranted.

This memorandum and the conflicts analysis set forth herein are subject to the attorney-client privilege and the work product doctrine and should not be disclosed outside the firm.

7. Certification and Approval

Prepared by:

________________________________________

Robert Jansen Lead Associate, Tax Department Calderwood & Harkness LLP

Date: January 8, 2024

Reviewed and Approved by:

________________________________________

Leonard Cross Partner, Tax Department Calderwood & Harkness LLP

Date: January 8, 2024

Distribution: Conflicts Committee, Office of the General Counsel, Calderwood & Harkness LLP; Engagement File, Matter No. 1001-00006 / Engagement No. 1001-00006. This memorandum is privileged and confidential and constitutes attorney work product. It is intended solely for the internal use of Calderwood & Harkness LLP and should not be disclosed to any person or entity outside the firm without the prior written authorization of the Office of the General Counsel.

Party Name	Type	Notes
Ardent Capital Partners III LP	Entity	Client; Delaware LP; also searched under variants: "Ardent Capital," "Ardent CP," "Fund III," "Ardent Capital Partners," "ACP III"
Ardent Capital GP III LLC	Entity	General partner of Fund III; Delaware LLC; also searched under variants: "Ardent GP III," "Ardent Capital GP"
Dominic Ferrera	Individual	Co-Founder & Managing Partner, Ardent Capital
Claire Ashworth	Individual	Co-Founder & Managing Partner, Ardent Capital
Marcus Pellegrino	Individual	Partner, Healthcare, Ardent Capital
Ardent Healthcare Holdings LLC	Entity (to be formed)	Acquisition holding company
Ardent Healthcare Intermediate Inc.	Entity (to be formed)	Blocker entity for tax-exempt and foreign limited partners
Ardent Healthcare Merger Sub LLC	Entity (to be formed)	Merger subsidiary
Party Name	Type	Notes
Pinnacle Health Services Group LLC	Entity	Target; Delaware LLC; also searched under variants: "Pinnacle," "PHSG," "Pinnacle Health Services," "Pinnacle Health," "the Company"
Dr. Raymond Carvallo	Individual	Co-Founder, CEO of Pinnacle; 38.2% membership interest holder; anticipated rollover participant
Dr. Nadia Ostrowski	Individual	Co-Founder, CMO of Pinnacle; 28.5% membership interest holder; anticipated rollover participant
Jonathan Farnsworth	Individual	CFO of Pinnacle; 5.8% membership interest holder; anticipated rollover participant
Pinnacle minority physician-investors	Group (14 individuals)	Collective 27.5% membership interest holders; searched by group name "Pinnacle minority members" and by individual names to the extent provided on the preliminary cap table furnished by Harcourt Shaw & DeVries LLP
Party Name	Type	Notes
Whitford & Gaines LLP	Law Firm	Counsel to Pinnacle and the Carvallo/Ostrowski founders; 1735 Market Street, Suite 2800, Philadelphia, PA 19103
Patricia Engelman	Individual	Partner, Tax, Whitford & Gaines LLP
Kevin Driscoll	Individual	Associate, M&A/Tax, Whitford & Gaines LLP
Harcourt Shaw & DeVries LLP	Law Firm	M&A counsel to Ardent Capital on the Transaction (co-counsel, buyer side); 51 West 52nd Street, New York, NY 10019
Thomas Kundra	Individual	Partner, M&A, Harcourt Shaw & DeVries LLP
Allison Cho	Individual	Associate, M&A, Harcourt Shaw & DeVries LLP
Party Name	Type	Notes
Meridian Tuck Partners LLC	Financial Advisory Firm	Financial advisor to Ardent Capital; 399 Park Avenue, 12th Floor, New York, NY 10022
Daniel Kessler	Individual	Managing Director, Meridian Tuck Partners LLC

Larchmont & Co.	Financial Advisory Firm	Financial advisor to Pinnacle/Sellers; 1500 JFK Boulevard, Suite 1200, Philadelphia, PA 19102
Sarah Quinlan	Individual	Managing Director, Larchmont & Co.
Party Name	Type	Notes
Graystone National Bank, N.A.	Bank / Senior Lender	Senior lender and administrative agent; 277 Park Avenue, New York, NY 10172
Ridgepoint Capital Markets LLC	Syndicate Lender	New York, NY
Thorncrest Credit Partners LP	Syndicate Lender	Chicago, IL
Cascadia Mezzanine Fund IV LP	Mezzanine Lender	555 California Street, Suite 3200, San Francisco, CA 94104
Party Name	Type	Notes
Caldwell Pratt & Moorehouse LLP	Accounting/Audit Firm	Accounting and audit firm to Ardent Capital; New York, NY
Brewer Stanfield & Associates LLP	Accounting/Audit Firm	Accounting and audit firm to Pinnacle; Philadelphia, PA
Northmark Advisory Group LLC	Financial Advisory	Quality of earnings provider retained by Ardent; Chicago, IL
Bellhaven Risk Advisors LLC	Insurance Broker	R&W insurance broker; New York, NY
Continental Indemnity Partners Ltd.	Insurance Carrier	R&W insurance carrier; Hamilton, Bermuda
Ironbridge Trust Company, N.A.	Escrow Agent	Escrow agent for the Transaction; 1201 North Market Street, Wilmington, DE 19801
Practice Group	Group Leader	Response Date	Conflicts Identified
Tax	Leonard Cross	January 5, 2024	None
M&A	Victoria Langford	January 6, 2024	None
Healthcare	Priya Ramachandran	January 6, 2024	None
Private Equity	Nathan Oakes	January 7, 2024	None
Finance	Gregory Steinmetz	January 7, 2024	None

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
FROM: Leonard Cross, Partner, Tax Department, Calderwood & Harkness LLP
TO: Office of the General Counsel / Conflicts Committee, Calderwood & Harkness LLP
DATE: January 8, 2024
RE: Conflicts Check Results — Proposed Engagement: Tax Structuring Services for Ardent Capital Partners III LP in Connection with the Acquisition of Pinnacle Health Services Group LLC
MATTER NUMBER: 1001-00006
ENGAGEMENT NUMBER: 1001-00006
1. Purpose and Summary of Request
The Tax Department of Calderwood & Harkness LLP has been asked to serve as tax counsel to Ardent Capital Partners III LP, a Delaware limited partnership (the "Client" or "Ardent"), in connection with the proposed acquisition (the "Transaction") of Pinnacle Health Services Group LLC, a Delaware limited liability company taxed as a partnership for U.S. federal income tax purposes (the "Target" or "Pinnacle"), for an aggregate enterprise value of approximately $412 million. This memorandum sets forth the results of the firm's conflicts check conducted in connection with the proposed engagement.
The proposed responsible partner for this engagement is Leonard Cross, and the proposed billing partner is Sylvia Hartwell, both of the Tax Department.
The conflicts check was initiated on January 5, 2024, immediately upon receipt of the preliminary term sheet and party list from Ardent's deal counsel at Harcourt Shaw & DeVries LLP. The search was completed on January 8, 2024, following receipt of all practice group responses and finalization of the electronic database review.
In conducting the conflicts analysis, the firm's electronic conflicts database, designated as the New Matter Intake System ("NMIS"), was searched using the names, known variants, and employer identification numbers of all parties identified in Section 3 below. In addition, manual inquiries were circulated to all partners in the Tax, M&A, Healthcare, Private Equity, and Finance practice groups, requesting that each partner confirm whether he or she is aware of any current, former, or prospective representation that could give rise to a conflict of interest or potential conflict of interest in connection with this engagement.
Based on the comprehensive search described in this memorandum, no conflicts of interest or potential conflicts of interest were identified. The engagement may proceed, subject to execution of the engagement letter and compliance with the firm's standard new matter intake procedures.
2. Description of Proposed Engagement
2.1 Client.  The proposed client is Ardent Capital Partners III LP, a Delaware limited partnership headquartered at 600 Lexington Avenue, 38th Floor, New York, NY 10022 (EIN 87-3491520). Ardent Capital Partners III LP is a private equity fund (Fund III, vintage 2022, with an aggregate fund size of approximately $3.2 billion) focused on investments in the healthcare services, healthcare information technology, and life sciences services sectors. Fund III is the most recent in a series of funds sponsored by the Ardent Capital platform, which was founded in 2010 and has deployed approximately $7.5 billion across three fund vehicles to date.
2.2 General Partner
The general partner of Ardent Capital Partners III LP is Ardent Capital GP III LLC, a Delaware limited liability company, located c/o Ardent Capital Partners III LP at 600 Lexington Avenue, 38th Floor, New York, NY 10022. Ardent Capital GP III LLC exercises management authority over Fund III and is responsible for directing the investment and operational activities of the fund.
2.3 Managing Partners of Ardent Capital
The co-founders and managing partners of the Ardent Capital platform are:
•  Dominic Ferrera — Co-Founder & Managing Partner, Ardent Capital
•  Claire Ashworth — Co-Founder & Managing Partner, Ardent Capital
Mr. Ferrera and Ms. Ashworth serve as the principal decision-makers for Fund III and will oversee the Transaction at the sponsor level.
2.4 Deal Team Lead
The Ardent Capital deal team lead for this Transaction is Marcus Pellegrino, Partner, Healthcare, who has primary responsibility for sourcing, diligence, and execution of the acquisition.
2.5 Transaction Summary
The proposed Transaction involves the acquisition of 100% of the outstanding membership interests of Pinnacle Health Services Group LLC by means of a reverse merger. In connection with the Transaction, Ardent Healthcare Merger Sub LLC (a newly formed Delaware limited liability company, the "Merger Sub") will merge with and into Pinnacle, with Pinnacle surviving the merger as a wholly owned subsidiary of Ardent Healthcare Holdings LLC (the "Holding Company"), a newly formed Delaware limited liability company that will serve as the acquisition holding company for the Transaction. Upon consummation of the merger, the existing membership interests of Pinnacle will be cancelled and converted into the right to receive merger consideration in accordance with the terms of the definitive merger agreement.
Certain members of Pinnacle's senior management team, including Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth, are expected to roll over a portion of their existing equity interests into the post-closing entity structure, the terms of which will be negotiated in connection with the definitive documentation.
2.6 Target.  The Target is Pinnacle Health Services Group LLC, a Delaware limited liability company headquartered at 2200 Renaissance Boulevard, Suite 400, King of Prussia, PA 19406 (EIN 82-1947632). Pinnacle is an owner-operator of 34 urgent care clinics and 8 ambulatory surgery centers located across five states: Pennsylvania, Virginia, Maryland, North Carolina, and Georgia. The company was founded in 2016 by Dr. Raymond Carvallo and Dr. Nadia Ostrowski and currently employs approximately 1,620 individuals, including 142 employed physicians.
For the fiscal year ended December 31, 2023, Pinnacle reported total revenue of approximately $287.4 million and adjusted EBITDA of approximately $51.8 million, representing an adjusted EBITDA margin of approximately 18.0%.
2.7 Scope of Proposed Tax Structuring Services
Calderwood & Harkness's engagement as tax counsel to Ardent Capital Partners III LP in connection with the Transaction will encompass the following advisory areas:
(a) Entity selection and formation advice for the acquisition vehicle, including analysis of alternative holding company structures (partnership, disregarded entity, C corporation, and S corporation vehicles) and their respective tax consequences to the fund, its limited partners, and rollover management participants;
(b) Tax structuring for management rollover equity, including analysis of the characterization of rollover interests as profits interests, capital interests, or other equity instruments, and related Section 83 and Section 721 considerations;
(c) Earnout characterization and reporting, including analysis of whether contingent consideration payable to selling members should be characterized as purchase price adjustments, installment sale payments under Section 453, or compensation for post-closing services, and the attendant reporting obligations;
(d) Section 338(h)(10) election analysis, including evaluation of whether a protective or affirmative election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), is available and advisable in the context of the proposed reverse merger structure;
(e) Section 754 election analysis, including evaluation of whether Pinnacle should make or revoke a Section 754 election to permit basis adjustments under Sections 734(b) and 743(b) of the Code in connection with the Transaction;
(f) Purchase price allocation advisory, including assistance with the allocation of the aggregate purchase price among the assets of Pinnacle and its subsidiaries in accordance with Section 1060 of the Code and the regulations promulgated thereunder;
(g) State and local tax optimization, including analysis of the state and local tax consequences of the proposed transaction structure across Pennsylvania, Virginia, Maryland, North Carolina, Georgia, New York, Delaware, and any other relevant jurisdictions, with particular attention to transfer taxes, entity-level taxes, and withholding obligations; and
(h) Such other tax structuring advisory services as may be reasonably requested by the Client in connection with the Transaction.
3. Parties Searched
The following parties were searched in the firm's electronic conflicts database and were the subject of the manual practice group inquiries described in Section 4 below. All known name variants, abbreviations, and affiliated entity names were included in the search.
3.1 Client-Side Parties (Buyer)
3.2 Target and Seller Parties
3.3 Opposing and Co-Counsel
3.4 Financial Advisors
3.5 Lenders and Financing Sources
3.6 Other Transaction Parties
4. Search Methodology
The conflicts check was conducted in accordance with the firm's standard new matter intake procedures, as set forth in the Calderwood & Harkness LLP Conflicts of Interest Policy (revised effective September 1, 2023), and comprised the following steps:
(1) Electronic Database Search. A comprehensive search of Calderwood & Harkness's firm-wide conflicts database, the New Matter Intake System ("NMIS"), was conducted using all party names, known variants, abbreviations, trade names, and employer identification numbers listed in Section 3 above. The NMIS search encompassed (a) all current active client and matter records, (b) all closed matter records within the prior five years (January 1, 2019 through January 5, 2024), and (c) the firm's adverse party database, which includes the names of all parties adverse to firm clients in current and recently closed matters. The electronic search was performed by the firm's Conflicts & New Business Department under the supervision of Kathleen M. Duval, Director of Conflicts & New Business, on January 5 and 6, 2024. Search results were reviewed by the undersigned on January 7, 2024.
(2) Cross-Reference Against Active Client List and Adverse Party Database. In addition to the NMIS search, the names of all parties identified in Section 3 were cross-referenced against the firm's active client list (as maintained by the Finance Department) and the adverse party database (as maintained by the Office of the General Counsel) to confirm that no party on the target/seller side of the Transaction is a current client of the firm and that no party on the buyer side has previously been named as an adverse party in any matter handled by the firm.
(3) Manual Practice Group Inquiries. On January 5, 2024, a conflicts inquiry memorandum was circulated to all partners in the following practice groups: Tax, M&A, Healthcare, Private Equity, and Finance. Each partner was asked to review the list of parties set forth in Section 3 and to confirm whether he or she is aware of any current, former, or prospective representation of any such party, or any other circumstance that could give rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement. The deadline for responses was set at 5:00 p.m. Eastern Time on January 7, 2024. All responses were received by the deadline, and no partner identified a conflict or potential conflict.
(4) Review of Existing Engagement Letters and Side Letters. With respect to any party identified in Section 3 that is or has been a client of the firm, a review was conducted of the applicable engagement letters and any related side letters or supplemental agreements to determine whether any such instrument contains scope limitations, consent requirements, or other restrictive provisions that could affect the firm's ability to undertake the proposed engagement. The results of this review are discussed in Section 5 below.
All searches and inquiries described above were conducted between January 5 and January 7, 2024. Final clearance was completed on January 8, 2024, upon review and approval by the undersigned.
5. Results of Conflicts Search
5.1 No Current Client Relationships with Adverse Parties
The NMIS search and manual practice group inquiries confirm that Calderwood & Harkness LLP does not currently represent, and has no open matter for, any of the following parties:
•  Pinnacle Health Services Group LLC (or any known affiliate, predecessor, or subsidiary thereof);
•  Dr. Raymond Carvallo, individually or in any representative capacity;
•  Dr. Nadia Ostrowski, individually or in any representative capacity;
•  Jonathan Farnsworth, individually or in any representative capacity;
•  Any of the 14 minority physician-investors identified on the preliminary cap table as holding, in the aggregate, a 27.5% membership interest in Pinnacle;
•  Whitford & Gaines LLP, or any of its partners, associates, or counsel, including Patricia Engelman and Kevin Driscoll;
•  Larchmont & Co., or any of its principals, including Sarah Quinlan; or
•  Brewer Stanfield & Associates LLP.
Accordingly, no current client relationship exists between the firm and any party that is adverse to, or whose interests may be adverse to, those of the proposed client in connection with the Transaction. No consent or waiver from any existing client is required on account of any relationship with a target-side or seller-side party.
5.2 No Prior Adverse Representations
The search of the firm's closed matter records for the five-year period from January 1, 2019 through January 5, 2024, confirms that Calderwood & Harkness LLP has not previously represented any seller-side party listed in Section 3.2 above in any matter adverse to Ardent Capital Partners III LP, Ardent Capital GP III LLC, or any other Ardent-affiliated fund or entity.
In addition, the firm has not previously represented Pinnacle Health Services Group LLC, Dr. Raymond Carvallo, Dr. Nadia Ostrowski, or Jonathan Farnsworth in any capacity whatsoever — whether in matters adverse to Ardent or otherwise. No prior client relationship with any target-side or seller-side party was identified in the NMIS database or through the manual practice group inquiries.
Because the firm has no prior or current representation of any adverse party, no issues arise under Rule 1.9 (Duties to Former Clients) of the applicable Rules of Professional Conduct with respect to the proposed engagement.
5.3 Existing Client Relationships — No Conflict
The NMIS search identified the following existing or recent client relationships with parties listed in Section 3. Each such relationship has been analyzed and, as set forth below, none gives rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement.
(a) Ardent Capital Partners III LP and Affiliated Entities. The firm's Tax Department has previously provided tax structuring advice to Ardent Capital Partners II LP ("Fund II") in connection with two prior portfolio company acquisitions (Matter Nos. 3892-0011 and 4107-0019, both now closed). The firm's relationship with Fund II was limited to transaction-specific tax advice and did not involve any ongoing or general representation. Calderwood & Harkness has not previously been engaged by Fund III. Because the prior Fund II engagements were on behalf of the same sponsor platform and involved no adverse interests, these prior representations support, rather than conflict with, the proposed engagement.
(b) Harcourt Shaw & DeVries LLP. The NMIS search reflects that Calderwood & Harkness has co-counseled with Harcourt Shaw & DeVries LLP on two prior transactions in which Harcourt Shaw served as M&A counsel and Calderwood & Harkness served as tax counsel to the same buyer-side client (Matter Nos. 3741-0006 and 4213-0035). In the proposed Transaction, Harcourt Shaw & DeVries LLP is serving as M&A counsel to Ardent Capital on the buyer side, and Calderwood & Harkness would serve as tax counsel to the same client. This is a co-counsel relationship on the same side of the Transaction; it presents no adverse interest and no conflict.
(c) Graystone National Bank, N.A. The firm has represented Graystone National Bank, N.A. as borrower's counsel in connection with three revolving credit facilities obtained by firm clients (Matter Nos. 4011-0002, 4156-0028, and 4389-0007, the last of which remains active). In each instance, the firm represented the borrower, not the bank. In the proposed Transaction, Graystone is the senior lender and administrative agent providing acquisition financing to Ardent. Calderwood & Harkness's role in the Transaction is limited to tax structuring advice for the buyer; the firm will not represent any party in the negotiation of the credit facility or any financing documentation. No adverse interest exists between the firm's proposed role and any matter in which Graystone is a party. No consent or waiver is required.
(d) Ridgepoint Capital Markets LLC, Thorncrest Credit Partners LP, and Cascadia Mezzanine Fund IV LP. The NMIS search returned no current or prior client relationships with Ridgepoint Capital Markets LLC or Thorncrest Credit Partners LP. With respect to Cascadia Mezzanine Fund IV LP, the firm's Finance practice group provided regulatory advice to Cascadia Mezzanine Fund III LP (a predecessor fund under the same sponsor) in a now-closed matter (Matter No. 1001-00006, closed December 2020). The prior engagement involved regulatory compliance matters unrelated to the proposed Transaction. In the proposed Transaction, Cascadia Mezzanine Fund IV LP is a mezzanine lender on the buyer's financing side. Calderwood & Harkness's role is limited to tax structuring advice for the buyer and does not involve any representation adverse to Cascadia or any affiliated fund. No conflict exists.
(e) Caldwell Pratt & Moorehouse LLP. The NMIS search returned no current or prior client relationships with Caldwell Pratt & Moorehouse LLP. The firm has co-referred clients with Caldwell Pratt on an informal basis in the ordinary course of practice, but no formal representation or engagement has been undertaken. No conflict exists.
(f) Northmark Advisory Group LLC, Bellhaven Risk Advisors LLC, Continental Indemnity Partners Ltd., and Ironbridge Trust Company, N.A. The NMIS search returned no current or prior client relationships with any of these parties. No partner responding to the manual practice group inquiry identified any relationship with these entities. No conflict exists.
(g) Meridian Tuck Partners LLC. The NMIS search returned no current or prior client relationships with Meridian Tuck Partners LLC or Daniel Kessler. Meridian Tuck is serving as financial advisor to Ardent Capital on the buyer side of the Transaction, aligned with the proposed client. No adverse interest exists. No conflict exists.
5.4 Practice Group Confirmations
Manual conflicts inquiries were circulated on January 5, 2024, to the partners leading each of the following practice groups, with a response deadline of 5:00 p.m. Eastern Time on January 7, 2024. All responses were received timely. The results are summarized below:
Each practice group leader confirmed, after reviewing the party list set forth in Section 3 and consulting with the partners in his or her respective group, that no current, former, or prospective representation was identified that could give rise to a conflict of interest or potential conflict of interest in connection with the proposed engagement. Copies of the individual practice group response memoranda are retained in the conflicts file for Matter No. 1001-00006.
6. Conclusion and Clearance
Based on the comprehensive conflicts search described in this memorandum — including the electronic search of the firm's New Matter Intake System, cross-referencing against the firm's active client list and adverse party database, manual inquiries to all partners in the Tax, M&A, Healthcare, Private Equity, and Finance practice groups, and review of existing engagement letters and side letters with identified parties — no conflicts of interest or potential conflicts of interest have been identified with respect to the proposed engagement of Calderwood & Harkness LLP as tax counsel to Ardent Capital Partners III LP in connection with the acquisition of Pinnacle Health Services Group LLC.
Accordingly, the Conflicts Committee is respectfully requested to grant clearance for the engagement to proceed in accordance with the firm's new matter intake procedures.
The engagement letter is being prepared for execution on or about January 10, 2024, with the following staffing:
•  Responsible Partner: Leonard Cross, Partner, Tax Department
•  Billing Partner: Sylvia Hartwell, Partner, Tax Department
•  Lead Associate: Robert Jansen, Associate, Tax Department
•  Working Associate: Garrett Simmons, Associate, Tax Department
In the event that the identity of any transaction party changes, or new parties emerge during the course of the engagement (including, without limitation, additional equity co-investors, new lenders, substitute escrow agents, or additional rollover participants), a supplemental conflicts check should be conducted promptly in accordance with the firm's Conflicts of Interest Policy. The engagement team will monitor the Transaction for any such developments and will initiate supplemental searches as warranted.
This memorandum and the conflicts analysis set forth herein are subject to the attorney-client privilege and the work product doctrine and should not be disclosed outside the firm.
7. Certification and Approval
Prepared by:
________________________________________
Robert Jansen Lead Associate, Tax Department Calderwood & Harkness LLP
Date: January 8, 2024
Reviewed and Approved by:
________________________________________
Leonard Cross Partner, Tax Department Calderwood & Harkness LLP
Date: January 8, 2024
Distribution: Conflicts Committee, Office of the General Counsel, Calderwood & Harkness LLP; Engagement File, Matter No. 1001-00006 / Engagement No. 1001-00006. This memorandum is privileged and confidential and constitutes attorney work product. It is intended solely for the internal use of Calderwood & Harkness LLP and should not be disclosed to any person or entity outside the firm without the prior written authorization of the Office of the General Counsel.
Party Name | Type | Notes
Ardent Capital Partners III LP | Entity | Client; Delaware LP; also searched under variants: "Ardent Capital," "Ardent CP," "Fund III," "Ardent Capital Partners," "ACP III"
Ardent Capital GP III LLC | Entity | General partner of Fund III; Delaware LLC; also searched under variants: "Ardent GP III," "Ardent Capital GP"
Dominic Ferrera | Individual | Co-Founder & Managing Partner, Ardent Capital
Claire Ashworth | Individual | Co-Founder & Managing Partner, Ardent Capital
Marcus Pellegrino | Individual | Partner, Healthcare, Ardent Capital
Ardent Healthcare Holdings LLC | Entity (to be formed) | Acquisition holding company
Ardent Healthcare Intermediate Inc. | Entity (to be formed) | Blocker entity for tax-exempt and foreign limited partners
Ardent Healthcare Merger Sub LLC | Entity (to be formed) | Merger subsidiary
Party Name | Type | Notes
Pinnacle Health Services Group LLC | Entity | Target; Delaware LLC; also searched under variants: "Pinnacle," "PHSG," "Pinnacle Health Services," "Pinnacle Health," "the Company"
Dr. Raymond Carvallo | Individual | Co-Founder, CEO of Pinnacle; 38.2% membership interest holder; anticipated rollover participant
Dr. Nadia Ostrowski | Individual | Co-Founder, CMO of Pinnacle; 28.5% membership interest holder; anticipated rollover participant
Jonathan Farnsworth | Individual | CFO of Pinnacle; 5.8% membership interest holder; anticipated rollover participant
Pinnacle minority physician-investors | Group (14 individuals) | Collective 27.5% membership interest holders; searched by group name "Pinnacle minority members" and by individual names to the extent provided on the preliminary cap table furnished by Harcourt Shaw & DeVries LLP
Party Name | Type | Notes
Whitford & Gaines LLP | Law Firm | Counsel to Pinnacle and the Carvallo/Ostrowski founders; 1735 Market Street, Suite 2800, Philadelphia, PA 19103
Patricia Engelman | Individual | Partner, Tax, Whitford & Gaines LLP
Kevin Driscoll | Individual | Associate, M&A/Tax, Whitford & Gaines LLP
Harcourt Shaw & DeVries LLP | Law Firm | M&A counsel to Ardent Capital on the Transaction (co-counsel, buyer side); 51 West 52nd Street, New York, NY 10019
Thomas Kundra | Individual | Partner, M&A, Harcourt Shaw & DeVries LLP
Allison Cho | Individual | Associate, M&A, Harcourt Shaw & DeVries LLP
Party Name | Type | Notes
Meridian Tuck Partners LLC | Financial Advisory Firm | Financial advisor to Ardent Capital; 399 Park Avenue, 12th Floor, New York, NY 10022
Daniel Kessler | Individual | Managing Director, Meridian Tuck Partners LLC
Larchmont & Co. | Financial Advisory Firm | Financial advisor to Pinnacle/Sellers; 1500 JFK Boulevard, Suite 1200, Philadelphia, PA 19102
Sarah Quinlan | Individual | Managing Director, Larchmont & Co.
Party Name | Type | Notes
Graystone National Bank, N.A. | Bank / Senior Lender | Senior lender and administrative agent; 277 Park Avenue, New York, NY 10172
Ridgepoint Capital Markets LLC | Syndicate Lender | New York, NY
Thorncrest Credit Partners LP | Syndicate Lender | Chicago, IL
Cascadia Mezzanine Fund IV LP | Mezzanine Lender | 555 California Street, Suite 3200, San Francisco, CA 94104
Party Name | Type | Notes
Caldwell Pratt & Moorehouse LLP | Accounting/Audit Firm | Accounting and audit firm to Ardent Capital; New York, NY
Brewer Stanfield & Associates LLP | Accounting/Audit Firm | Accounting and audit firm to Pinnacle; Philadelphia, PA
Northmark Advisory Group LLC | Financial Advisory | Quality of earnings provider retained by Ardent; Chicago, IL
Bellhaven Risk Advisors LLC | Insurance Broker | R&W insurance broker; New York, NY
Continental Indemnity Partners Ltd. | Insurance Carrier | R&W insurance carrier; Hamilton, Bermuda
Ironbridge Trust Company, N.A. | Escrow Agent | Escrow agent for the Transaction; 1201 North Market Street, Wilmington, DE 19801
Practice Group | Group Leader | Response Date | Conflicts Identified
Tax | Leonard Cross | January 5, 2024 | None
M&A | Victoria Langford | January 6, 2024 | None
Healthcare | Priya Ramachandran | January 6, 2024 | None
Private Equity | Nathan Oakes | January 7, 2024 | None
Finance | Gregory Steinmetz | January 7, 2024 | None

MEMORANDUM

MATTER NUMBER: 1001-00006

ENGAGEMENT NUMBER: 1001-00006

Record

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