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MEMORANDUM

INTERNAL — PRIVILEGED & CONFIDENTIAL

TO: Leonard Cross, Responsible Partner Sylvia Hartwell, Billing Partner

FROM: Robert Jansen, Lead Associate Garrett Simmons, Working Associate

DATE: June 25, 2024

RE: Engagement Close-Out — Matter No. 1001-00006 (Engagement No. 1001-00006) Ardent Capital Partners III LP / Acquisition of Pinnacle Health Services Group LLC

STATUS: Closed — Completed

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1. PURPOSE AND SUMMARY

This memorandum documents the formal close-out of Calderwood & Harkness LLP Matter No. 1001-00006 (Engagement No. 1001-00006) relating to the tax structuring engagement for Ardent Capital Partners III LP's acquisition of Pinnacle Health Services Group LLC. The purpose of this memorandum is to provide a comprehensive record of the engagement, including a summary of the work performed, all deliverables issued, key structuring decisions and their outcomes, financial details of the engagement, post-closing matters handed off to the client and its ongoing advisors, and the status of document retention and conflict clearance at close-out.

The engagement was opened on January 10, 2024. The engagement letter was executed on that same date by Leonard Cross (Responsible Partner) and Sylvia Hartwell (Billing Partner) on behalf of Calderwood & Harkness LLP, with Ardent Capital Partners III LP as the client. The engagement letter was countersigned by Marcus Pellegrino, Partner, Healthcare, on behalf of Ardent Capital Partners III LP, and further acknowledged by Claire Ashworth, Co-Founder & Managing Partner, and Dominic Ferrera, Co-Founder & Managing Partner.

The underlying transaction — Ardent Capital Partners III LP's acquisition of a controlling equity interest in Pinnacle Health Services Group LLC — closed on May 31, 2024. Post-closing deliverables were completed through June 14, 2024, on which date the post-closing tax integration memorandum was delivered to the client. That memorandum constitutes the final substantive work product of the engagement.

As of the date of this memorandum, all deliverables have been issued and transmitted to the client, all outstanding billing has been rendered and collected in full, and no outstanding receivables remain. Accordingly, the matter is being closed as of June 25, 2024, with the status designation "closed_completed" in the firm's matter management system. No further work is anticipated under this engagement number, although Calderwood & Harkness LLP remains available for consultation on an as-needed basis under a separate engagement letter if the client so requests.

2. ENGAGEMENT OVERVIEW

2.1 Client and Transaction Parties

Client. Ardent Capital Partners III LP, a Delaware limited partnership (EIN 87-3491520), with its principal office located at 600 Lexington Avenue, 38th Floor, New York, New York 10022. Ardent Capital Partners III LP is the third institutional private equity fund managed by Ardent Capital, with a 2022 vintage and aggregate capital commitments of approximately $3.2 billion. Fund III is focused on control investments in healthcare services, healthcare technology, and related sectors within the broader healthcare and life sciences industry.

General Partner. Ardent Capital GP III LLC, a Delaware limited liability company, serves as the general partner of Ardent Capital Partners III LP. Ardent Capital GP III LLC is the entity through which the fund's investment professionals exercise management authority over Fund III's portfolio investments and day-to-day operations.

Client Contacts. The primary client contacts for the engagement were as follows:

• Marcus Pellegrino — Partner, Healthcare, Ardent Capital. Mr. Pellegrino served as the deal team lead and was the principal point of contact for all substantive tax structuring discussions throughout the engagement.

• Claire Ashworth — Co-Founder & Managing Partner, Ardent Capital. Ms. Ashworth was involved in high-level structuring decisions and provided final approval on the overall acquisition structure.

• Dominic Ferrera — Co-Founder & Managing Partner, Ardent Capital. Mr. Ferrera participated in key structuring sessions and co-approved the final transaction structure alongside Ms. Ashworth.

Target. Pinnacle Health Services Group LLC (EIN 82-1947632), a Delaware limited liability company taxed as a partnership for federal income tax purposes, with its principal office located at 2200 Renaissance Boulevard, Suite 400, King of Prussia, Pennsylvania 19406. At the time of the acquisition, Pinnacle operated a network of thirty-four (34) urgent care clinics and eight (8) ambulatory surgery centers across five states: Pennsylvania, Virginia, Maryland, North Carolina, and Georgia. The company employed approximately 1,620 full-time and part-time employees, including 142 employed physicians. For the fiscal year ended December 31, 2023, Pinnacle reported revenue of approximately $287.4 million and Adjusted EBITDA (as defined in the quality of earnings report prepared by Northmark Advisory Group LLC) of approximately $51.8 million.

Enterprise Value and Equity Value. The transaction was consummated at an enterprise value of $412,000,000, representing an implied EBITDA multiple of approximately 7.95x based on 2023 Adjusted EBITDA. After deduction of $72.6 million in net debt (consisting of $81.2 million in total outstanding indebtedness less $8.6 million in cash and cash equivalents), the equity value at closing was $339,400,000.

2.2 Scope of Engagement

Calderwood & Harkness LLP was engaged to provide tax structuring advisory services in connection with Ardent Capital Partners III LP's acquisition of Pinnacle Health Services Group LLC. The scope of the engagement, as set forth in the engagement letter dated January 10, 2024, encompassed the following areas of work:

1. Entity Selection for the Acquisition Vehicle. Evaluation of alternative entity structures for the acquisition vehicle, including analysis of a three-tier holding structure (partnership holding company, C-corporation blocker, and acquisition subsidiary), with a focus on federal and state tax efficiency, UBTI considerations for tax-exempt limited partners, and future exit optionality.

2. Section 338(h)(10) vs. Section 754 Election Analysis. Comprehensive comparative analysis of the availability and advisability of a Section 338(h)(10) election versus a Section 754 election to achieve a step-up in the inside tax basis of Pinnacle's assets, including quantification of the net present value of each alternative.

3. blocker Entity (C-Corporation) Analysis. Analysis of the interposition of a C-corporation entity ("Blocker") between the partnership holding company and the target, for purposes of blocking unrelated business taxable income ("UBTI") for tax-exempt Fund III limited partners and positioning the investment for a potential future initial public offering.

4. Management Rollover Equity Treatment. Tax analysis of the rollover equity contributions by Pinnacle's founding physicians and management, including a comparative assessment of Section 721 (partnership contribution) and Section 351 (corporate contribution) treatment, and a detailed analysis of the characterization of management incentive equity as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43.

5. Earnout Tax Characterization and Reporting Methodology. Analysis and structuring of the earnout provisions of the Merger Agreement to support capital gain characterization for the selling Pinnacle members, including consideration of Section 483 imputed interest implications, installment method reporting under Section 453, and open transaction versus closed transaction methodology.

6. Purchase Price Allocation. Preparation of the purchase price allocation schedule in accordance with Section 1060 of the Internal Revenue Code and the corresponding Section 743(b) methodology, with supporting memorandum detailing the allocation among the seven asset classes.

7. Tax Receivable Agreement Structuring. Structuring and drafting of a Tax Receivable Agreement providing for the sharing of realized tax benefits from the Section 743(b) basis step-up between the acquiring entity and the rollover participants and pre-closing Pinnacle members.

8. State and Local Tax Optimization. Multi-state tax analysis covering each of Pinnacle's five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia) as well as a New York nexus analysis for the holding company entities, including evaluation of apportionment methodologies, pass-through entity tax elections, nonresident withholding obligations, and state tax structuring recommendations.

9. Tax Provisions Review and Markup of the Merger Agreement. Review and markup of the tax-related representations, warranties, covenants, and indemnity provisions of the Merger Agreement, prepared in coordination with buyer's M&A counsel, Harcourt Shaw & DeVries LLP.

10. Tax Opinion on Rollover Treatment. Preparation and delivery of a formal tax opinion letter opining on the tax-deferred treatment of the rollover equity contributions under Section 721 of the Internal Revenue Code.

11. Closing Deliverables and Post-Closing Compliance Guidance. Preparation and delivery of all tax-related closing deliverables, including the tax closing certificate, Section 754 election draft, FIRPTA non-foreign status certificates, Section 83(b) election templates, and a comprehensive post-closing tax integration memorandum providing guidance to the client and its ongoing tax advisors.

The engagement did not include the preparation of any tax returns, ongoing tax compliance services, or personal tax advisory services for individual rollover participants or selling Pinnacle members. As further described in Section 7 of this memorandum, those responsibilities have been transferred to the client's ongoing tax advisor, Caldwell Pratt & Moorehouse LLP.

2.3 Calderwood & Harkness Team

The following Calderwood & Harkness LLP professionals were staffed on the engagement:

Leonard Cross served as the Responsible Partner for the engagement, providing overall strategic direction and oversight of the tax structuring advice, participating in key structuring calls and meetings with the client deal team, and reviewing and approving all major deliverables. Sylvia Hartwell served as the Billing Partner, with oversight responsibilities for billing, engagement economics, and quality control. Robert Jansen served as the Lead Associate and day-to-day engagement manager, with primary responsibility for drafting the majority of substantive deliverables and coordinating with buyer's M&A counsel, seller's counsel, and the client's financial advisors. Garrett Simmons served as the Working Associate, providing analytical and drafting support on all workstreams and taking primary responsibility for the state and local tax analysis, purchase price allocation computations, and nonresident withholding schedules.

2.4 Coordinating Counsel and Advisors

The following external counsel and advisors were involved in the transaction and coordinated with Calderwood & Harkness LLP during the course of the engagement:

Buyer's M&A Counsel: Harcourt Shaw & DeVries LLP, 51 West 52nd Street, New York, New York 10019. Thomas Kundra, Partner, served as lead transactional counsel; Allison Cho, Associate, provided day-to-day drafting and negotiation support. Calderwood & Harkness LLP worked closely with Harcourt Shaw throughout the engagement on the tax provisions of the Merger Agreement, the LLC Agreement of Holdings LLC, the Tax Receivable Agreement, and the rollover equity documentation.

Seller's Counsel: Whitford & Gaines LLP, 1735 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Patricia Engelman, Partner, Tax, served as seller's tax counsel; Kevin Driscoll, Associate, provided drafting and analytical support. Calderwood & Harkness LLP engaged in extensive negotiations with Whitford & Gaines on the tax representations, covenants, and indemnity provisions of the Merger Agreement, the purchase price allocation schedule, and the earnout characterization framework.

Buyer's Accounting/Audit Firm: Caldwell Pratt & Moorehouse LLP, New York, New York. Caldwell Pratt served as the buyer's accounting and audit firm and will serve as the ongoing tax return preparer and compliance advisor for the portfolio company post-closing. Calderwood & Harkness LLP coordinated with Caldwell Pratt on the purchase price allocation, Section 754 election mechanics, and the post-closing tax integration plan.

Target's Accounting/Audit Firm: Brewer Stanfield & Associates LLP, Philadelphia, Pennsylvania. Brewer Stanfield served as Pinnacle's historical accounting and audit firm and provided historical tax return data and supporting schedules during the due diligence and structuring phases of the engagement.

Quality of Earnings Provider: Northmark Advisory Group LLC, Chicago, Illinois. Northmark prepared the quality of earnings report on which the Adjusted EBITDA figure of $51.8 million was based.

Financial Advisor to Buyer: Meridian Tuck Partners LLC (Daniel Kessler, Managing Director), New York, New York. Meridian Tuck served as financial advisor to Ardent Capital Partners III LP in connection with the transaction.

Financial Advisor to Sellers: Larchmont & Co. (Sarah Quinlan, Managing Director), Philadelphia, Pennsylvania. Larchmont served as financial advisor to the pre-closing Pinnacle members in connection with the sale process.

3. KEY TRANSACTION DATES

The following table sets forth the key dates in the engagement and transaction timeline, from the initial conflict check through the close-out of the engagement:

The period from engagement opening (January 10, 2024) to transaction closing (May 31, 2024) was approximately four months and twenty-one days. The post-closing work phase extended an additional fourteen days through June 14, 2024. The total engagement duration from opening to close-out was approximately five months and fifteen days.

4. COMPLETE DELIVERABLES LOG

Set forth below is a complete log of all deliverables produced during the engagement, organized by workstream. Unless otherwise indicated, all deliverables were transmitted to the client (Ardent Capital Partners III LP, attention Marcus Pellegrino) and, where applicable, shared with buyer's M&A counsel (Harcourt Shaw & DeVries LLP) and the client's accounting firm (Caldwell Pratt & Moorehouse LLP).

4.1 Engagement & Administrative Documents

1. Engagement Letter — Executed January 10, 2024. Sets forth the scope of engagement, fee arrangement (hourly with a $2,000,000 fee cap), billing partner designation, responsible partner designation, and general terms and conditions of the attorney-client relationship. Countersigned by Marcus Pellegrino on behalf of Ardent Capital Partners III LP.

2. Conflict Check Memorandum — Completed January 8, 2024. Internal memorandum confirming that a comprehensive conflict check was performed against all known parties to the transaction and that no conflicts of interest were identified. Maintained in internal files.

3. Staffing & Budget Memorandum — Prepared January 10, 2024. Internal memorandum setting forth the proposed staffing plan, estimated hours by timekeeper, fee budget of $1,850,000, and fee cap of $2,000,000. Maintained in internal files.

4. Engagement Close-Out Memorandum — This document, dated June 25, 2024. Internal memorandum documenting the formal close-out of the engagement, summarizing all work performed and deliverables issued.

4.2 Structure & Entity Selection Documents

5. Preliminary Tax Structure Memorandum — Delivered February 12, 2024. Comprehensive memorandum analyzing alternative acquisition structures (asset purchase, equity purchase, merger) and entity selection options (partnership vs. C-corporation at each tier) for the acquisition vehicle. Included preliminary recommendations for a three-tier structure (partnership → C-corp blocker → target LLC).

6. Section 338(h)(10) vs. Section 754 Election Analysis Memorandum — Delivered February 28, 2024. Detailed comparative analysis of the availability, mechanics, and net present value implications of a Section 338(h)(10) election versus a Section 754 election for achieving a step-up in the inside tax basis of Pinnacle's assets. Recommended Section 754 election based on quantitative analysis demonstrating that Section 338(h)(10) was net-negative by approximately $16.6 million.

7. blocker Entity Analysis Memorandum — Delivered February 16, 2024. Memorandum analyzing the tax and structural benefits and costs of interposing a C-corporation ("Blocker") entity between the partnership holding company and the target, including UBTI blocking for tax-exempt limited partners, state tax nexus isolation, and potential future IPO readiness considerations.

8. Entity Formation Checklist and Instructions — Finalized March 1, 2024. Detailed checklist and step-by-step instructions for the formation of the three acquisition vehicle entities in Delaware, including authorized signatory designations, registered agent information, and EIN application procedures.

9. Certificate of Formation — Ardent Healthcare Holdings LLC — Filed with the Delaware Secretary of State on March 5, 2024 (File No. 7834219). Holdings LLC classified as a partnership for federal tax purposes (default classification; no Form 8832 election filed). EIN 93-2187445 obtained.

10. Certificate of Incorporation — Ardent Healthcare Intermediate Inc. — Filed with the Delaware Secretary of State on March 5, 2024 (File No. 7834223). Intermediate Inc. organized as a C-corporation for federal tax purposes. EIN 93-2187512 obtained.

Note: The Certificate of Formation for Merger Sub LLC (File No. 7834227) was also filed on March 5, 2024 by Harcourt Shaw & DeVries LLP, as buyer's M&A counsel, with tax structuring input from Calderwood & Harkness LLP. Merger Sub LLC merged with and into Pinnacle Health Services Group LLC upon closing, with Pinnacle surviving as the operating entity.

4.3 Rollover Equity Documents

11. Rollover Equity Tax Memorandum — Section 721 vs. Section 351 — Delivered February 22, 2024. Memorandum comparing the federal tax consequences of structuring the rollover equity contributions as partnership contributions under Section 721 versus corporate contributions under Section 351, with particular attention to the preservation of the Section 743(b) basis step-up and the avoidance of gain recognition at the rollover participant level. Recommended Section 721 treatment.

12. Profits Interest / Unvested Equity Memorandum — Delivered March 8, 2024. Memorandum analyzing the characterization of unvested management incentive equity as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43, including the safe harbor requirements and the consequences of failure to satisfy them. Also addressed the treatment of the vesting schedule under Section 83 and the importance of timely Section 83(b) elections.

13. Form — Section 83(b) Election Template — Delivered May 28, 2024. Template Section 83(b) election form, customized for each of the three rollover participants (Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth), with instructions for completion, execution, and filing with the Internal Revenue Service.

14. Section 83(b) Election Transmittal Letter Templates — Delivered May 31, 2024. Template transmittal letters for certified-mail filing of the Section 83(b) elections with the IRS Service Center, including instructions for obtaining and retaining certified mail receipts as proof of timely filing.

15. Tax Provisions of LLC Agreement — Draft Markup — Delivered March 10, 2024. Markup of the tax-related provisions (including tax allocation, distribution, and reporting provisions) of the Amended and Restated Limited Liability Company Agreement of Ardent Healthcare Holdings LLC, prepared for review by Harcourt Shaw & DeVries LLP and the client.

4.4 Earnout Treatment Documents

16. Earnout Tax Characterization Memorandum — Delivered March 1, 2024. Memorandum analyzing the federal tax characterization of the contingent earnout payments under the Merger Agreement, including the distinction between additional purchase price (capital gain) and compensatory payments (ordinary income), and setting forth the structuring safeguards necessary to support capital gain treatment. Recommended and adopted treatment as additional purchase price.

17. Earnout Provisions — Tax Review and Comment Letter to Harcourt Shaw & DeVries LLP — Sent March 12, 2024. Formal comment letter setting forth Calderwood & Harkness LLP's tax-related comments and suggested revisions to the earnout provisions of the Merger Agreement, with particular focus on avoiding language that could be construed as conditioning earnout payments on continued employment or service.

18. Open Transaction vs. Closed Transaction / Installment Method Memorandum — Delivered March 5, 2024. Memorandum analyzing the availability and advisability of open transaction reporting, closed transaction reporting, and installment method reporting under Section 453 for the earnout payments, with a recommendation that individual sellers utilize installment method reporting.

4.5 Purchase Price Allocation & TRA Documents

19. Purchase Price Allocation Schedule — Delivered April 18, 2024. Detailed schedule allocating the total consideration of $412.0 million across the Section 1060 asset classes (Classes I through VII), consistent with the Section 743(b) basis step-up methodology. The allocation was reviewed and agreed upon by the client, buyer's M&A counsel, and seller's counsel, and is reflected in the executed Merger Agreement.

20. Purchase Price Allocation Memorandum — Delivered April 18, 2024. Supporting memorandum providing the analytical basis for the purchase price allocation, including valuation methodologies applied to each asset class, useful life determinations for amortizable intangibles, and the interplay between the Section 1060 allocation and the Section 743(b) basis adjustment.

21. Tax Receivable Agreement — Draft — Delivered March 20, 2024. Initial draft of the Tax Receivable Agreement providing for the sharing of realized tax benefits from the Section 743(b) basis step-up between Holdings LLC / Intermediate Inc. and the TRA Holders (rollover participants and pre-closing Pinnacle members). Circulated to Harcourt Shaw & DeVries LLP, Whitford & Gaines LLP, and the client for review and comment.

22. Tax Receivable Agreement — Execution Version — Finalized May 28, 2024. Final execution version of the Tax Receivable Agreement, incorporating all negotiated revisions and approved by all parties. Executed on May 31, 2024, at closing, among Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and the TRA Holders.

4.6 State & Local Tax Documents

23. State & Local Tax Memorandum — Delivered February 20, 2024. Comprehensive memorandum analyzing the state and local tax implications of the transaction across Pinnacle's five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia), including corporate income tax rates, apportionment methodologies, pass-through entity tax elections, nonresident withholding obligations, and the New York nexus exposure for the holding company entities.

24. Nonresident Withholding Computation Schedule — Delivered May 15, 2024. Detailed computation schedule quantifying the state-level nonresident withholding tax obligations on gains recognized by individual selling Pinnacle members in Virginia ($1.46 million), Maryland ($2.41 million), and Georgia ($0.87 million), for an aggregate withholding amount of $4.74 million. Withholding amounts were remitted at closing.

25. State Tax Structuring Recommendations Letter — Delivered March 18, 2024. Letter to the client setting forth specific state tax structuring recommendations, including the recommendation to utilize a Maryland pass-through entity tax election, the recommendation to route management fee agreements through Ardent Capital GP III LLC to mitigate New York nexus risk for Holdings LLC, and guidance on apportionment factor management.

4.7 Transaction Document Tax Sections

26. Tax Representations and Covenants — Draft Markup of Merger Agreement — Circulated March 8, 2024. Detailed markup of Article V (Tax Representations) and Article VI (Tax Covenants) of the Merger Agreement, including representations regarding Pinnacle's tax classification, the absence of outstanding tax liabilities, compliance with tax filing obligations, and pre-closing tax covenants regarding the conduct of the target's tax affairs during the interim period.

27. Tax Indemnity Provisions — Draft Markup of Merger Agreement — Circulated March 10, 2024. Markup of Article IX (Indemnification) of the Merger Agreement as it relates to tax indemnification obligations, including the scope of pre-closing tax liabilities subject to seller indemnification, the treatment of transfer taxes, and the interplay between the tax indemnity and the general indemnification provisions.

28. Tax Opinion Letter — Rollover Tax-Deferred Treatment — Delivered May 29, 2024. Formal tax opinion letter, addressed to Ardent Capital Partners III LP, opining that the rollover equity contributions by Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth to Ardent Healthcare Holdings LLC should constitute tax-deferred contributions of property to a partnership under Section 721(a) of the Internal Revenue Code, subject to the assumptions and qualifications set forth therein.

29. IRS Reporting Obligations Checklist — Delivered May 30, 2024. Comprehensive checklist of all federal tax reporting obligations arising from or relating to the transaction, including Form 8594 (Asset Acquisition Statement), Form 8308 (Report of a Sale or Exchange of Certain Partnership Interests), Section 83(b) elections, Section 754 election statements, and the filing of short-period partnership returns.

4.8 Closing Deliverables

30. Tax Closing Certificate — Delivered May 31, 2024. Certificate executed on behalf of the buyer certifying the accuracy of the tax representations and the satisfaction of the tax-related closing conditions set forth in the Merger Agreement.

31. Section 754 Election — Draft Form — Delivered May 31, 2024. Draft election statement to be attached to Pinnacle Health Services Group LLC's Form 1065 for the taxable year ending December 31, 2024, electing to adjust the basis of partnership property under Section 754 of the Internal Revenue Code. Filing responsibility transferred to Caldwell Pratt & Moorehouse LLP.

32. FIRPTA Non-Foreign Status Certificates — Delivered May 31, 2024. Certificates of Non-Foreign Status under Section 1445 of the Internal Revenue Code and Treasury Regulation Section 1.1445-2(b)(2), executed by each selling Pinnacle member, certifying their status as United States persons for purposes of the Foreign Investment in Real Property Tax Act.

33. Closing Tax Memorandum — Delivered May 31, 2024. Comprehensive memorandum summarizing all tax-related matters addressed at closing, including the status of all closing deliverables, the mechanics of the purchase price allocation, the Section 754 election, the nonresident withholding remittances, and immediate post-closing tax actions required.

4.9 Post-Closing Documents

34. Post-Closing Tax Integration Memorandum — Delivered June 14, 2024. Detailed memorandum addressed to the client and to Caldwell Pratt & Moorehouse LLP (as the ongoing tax compliance advisor) providing comprehensive guidance on all post-closing tax matters, including the Section 754 election filing procedures, short-period K-1 preparation, TRA administration, earnout tax tracking methodology, estimated tax payment schedules, state income tax return filing calendar, and Section 83(b) election follow-up procedures.

35. Engagement Summary and Lessons Learned Memorandum — Prepared June 25, 2024. Internal Calderwood & Harkness LLP memorandum summarizing the engagement for quality management and knowledge management purposes. This document is maintained solely in internal files and was not delivered to the client.

Confirmation: All thirty-five (35) deliverables listed above have been issued to the client or filed internally, as applicable. Copies of all deliverables have been saved to the firm's document management system (DMS) under Matter No. 1001-00006 (Engagement No. 1001-00006). All external deliverables have been confirmed as received by Marcus Pellegrino on behalf of the client.

5. SUMMARY OF KEY STRUCTURING DECISIONS AND OUTCOMES

This Section 5 provides a summary of the principal tax structuring decisions made during the engagement, the analytical basis for each decision, and the outcomes as implemented in the transaction documentation. This summary is intended to serve as a convenient reference for the engagement record and should be read in conjunction with the detailed memoranda referenced in the Deliverables Log (Section 4 above).

5.1 Entity Structure

A three-tier acquisition structure was recommended by Calderwood & Harkness LLP and adopted by the client. The structure consists of the following entities:

• Tier 1 — Ardent Healthcare Holdings LLC (Delaware LLC; EIN 93-2187445; partnership for federal tax purposes). Holdings LLC serves as the top-level equity aggregator, holding equity interests on behalf of (a) Ardent Capital Partners III LP (Fund III capital contribution of $198.5 million), (b) the three rollover equity participants (aggregate rollover of $59.54 million, held through Class B Units), and (c) management incentive equity holders (profits interests). Holdings LLC is classified as a partnership for federal tax purposes under the default classification rules of Treasury Regulation Section 301.7701-3; no Form 8832 (Entity Classification Election) was filed.

• Tier 2 — Ardent Healthcare Intermediate Inc. (Delaware corporation; EIN 93-2187512; C-corporation for federal tax purposes). Intermediate Inc. is a wholly owned subsidiary of Holdings LLC and was interposed as a C-corporation "Blocker" to serve three purposes: (a) to block the flow-through of unrelated business taxable income ("UBTI") to tax-exempt limited partners of Fund III (including pension funds, endowments, and foundations), (b) to facilitate a potential future initial public offering by providing a corporate entity that can be listed on a public exchange without the need for a complex Up-C restructuring, and (c) to isolate state tax nexus by serving as the direct parent of the operating entity and thereby limiting the nexus exposure of Holdings LLC to its state of formation (Delaware).

• Tier 3 — Pinnacle Health Services Group LLC (Delaware LLC; EIN 82-1947632; surviving entity post-merger). At closing, Merger Sub LLC (File No. 7834227), a newly formed Delaware LLC that was a wholly owned subsidiary of Intermediate Inc., merged with and into Pinnacle Health Services Group LLC, with Pinnacle surviving the merger as a wholly owned subsidiary of Intermediate Inc. Following the merger, Pinnacle continues to be classified as a disregarded entity for federal tax purposes (single-member LLC wholly owned by Intermediate Inc.).

The three-tier structure was selected after consideration of alternative structures, including a direct partnership acquisition (rejected due to UBTI exposure for tax-exempt Fund III LPs), a direct C-corporation acquisition (rejected due to double taxation on exit), and a two-tier structure without the intermediate C-corporation blocker (rejected due to the absence of UBTI blocking and reduced IPO optionality). The adopted structure balances tax efficiency, investor requirements, and future exit flexibility.

5.2 Section 338(h)(10) vs. Section 754 Election

A central issue in the engagement was the mechanism by which the buyer would achieve a step-up in the inside tax basis of Pinnacle's assets to reflect the purchase price paid. Two principal alternatives were analyzed:

Section 338(h)(10) Election. A Section 338(h)(10) election would treat the acquisition as a deemed asset sale by the target, followed by a deemed liquidation, thereby stepping up the tax basis of all target assets to their fair market values. However, this election is available only where the target is a corporation (including an S corporation). Pinnacle Health Services Group LLC was classified as a partnership for federal tax purposes. While it would have been possible to file a Form 8832 check-the-box election to reclassify Pinnacle as a corporation immediately prior to closing, followed by a Section 338(h)(10) election, this approach was analyzed and ultimately rejected for the following reasons:

• The check-the-box election to corporate status would trigger a deemed contribution of Pinnacle's assets to a newly formed corporation under Section 351, which, depending on the circumstances, could result in immediate gain recognition at the member level if the liabilities assumed exceeded the adjusted basis of the contributed assets.

• The deemed asset sale under Section 338(h)(10) would generate incremental seller-level gain of approximately $48.3 million, calculated as the difference between the equity value of $339.4 million and the aggregate outside basis of the selling Pinnacle members of approximately $291.1 million.

• The buyer's net present value benefit from the 338(h)(10) election — arising from the amortization of the stepped-up basis of $412.0 million in total assets over an assumed 15-year useful life at a blended federal and state tax rate of 25%, discounted at 8% — was estimated at approximately $31.7 million.

• Accordingly, the net cost of the Section 338(h)(10) election was approximately $16.6 million ($48.3 million seller-level cost less $31.7 million buyer-level benefit), making this approach economically unfavorable relative to the Section 754 alternative.

Section 754 Election (Recommended and Adopted). A Section 754 election, made by Pinnacle Health Services Group LLC, would result in a Section 743(b) basis adjustment to the inside basis of Pinnacle's assets in an amount equal to the difference between the acquiring partner's (Intermediate Inc.'s) outside basis in its Pinnacle interest (equal to the purchase price) and its proportionate share of Pinnacle's inside basis. The key parameters of the Section 754 election as adopted are as follows:

• Section 743(b) Basis Step-Up: $224.4 million, calculated as $412.0 million (enterprise value / acquiring partner's outside basis) minus $187.6 million (Pinnacle's aggregate inside basis in its assets as of the closing date).

• Annual Amortization Deduction: Approximately $20.04 million per year, based on a weighted-average useful life of 11.2 years across all asset classes (reflecting the allocation between short-lived intangibles such as non-competes and assembled workforce, and longer-lived intangibles such as payor contracts, trade name, and goodwill).

• Annual Tax Benefit: Approximately $5.01 million per year at a blended federal and state tax rate of 25%.

The Section 754 election was the recommended approach because it achieved a substantial basis step-up without triggering any incremental seller-level gain and without the complexities and costs associated with a check-the-box reclassification. The draft Section 754 election statement was delivered to the client and Caldwell Pratt & Moorehouse LLP on May 31, 2024, and will be attached to Pinnacle's Form 1065 for the taxable year ending December 31, 2024.

5.3 Rollover Equity Treatment

Three members of Pinnacle's founding and management team elected to roll over a portion of their equity into the post-closing structure by contributing their Pinnacle interests to Ardent Healthcare Holdings LLC in exchange for Class B Units of Holdings LLC. The total rollover amount and allocation among participants was as follows:

The total rollover of $59.54 million represents 23.08% of the post-closing equity of Holdings LLC on a pre-dilution basis ($59.54 million ÷ $258.04 million, where $258.04 million represents the sum of Fund III's $198.5 million equity contribution and the $59.54 million rollover). On a fully diluted basis, after giving effect to the 2.5% equity interest reserved for mezzanine warrants issued to Cascadia Mezzanine Fund IV LP in connection with the mezzanine debt financing, the rollover participants hold 22.50% of the fully diluted equity of Holdings LLC.

Section 721 vs. Section 351 Analysis. Calderwood & Harkness LLP analyzed two alternative characterizations for the rollover contribution:

• Section 721 (partnership contribution): The rollover participants contribute their Pinnacle interests to Holdings LLC (a partnership for federal tax purposes) in exchange for Class B Units. Under Section 721(a), no gain or loss is recognized by the contributing partner or the partnership on a contribution of property to a partnership in exchange for a partnership interest. This treatment preserves the Section 743(b) basis step-up and avoids gain recognition to the rollover participants. This approach was recommended and adopted.

• Section 351 (corporate contribution): If Holdings LLC were classified as a corporation (or if the rollover were structured as a contribution to Intermediate Inc.), Section 351 could potentially apply to defer gain on the contribution. However, Section 351 treatment would have introduced several complications, including the potential loss of the Section 743(b) step-up, the application of Section 357(c) (gain recognition where liabilities exceed basis), and the loss of flow-through tax treatment at the Holdings LLC level. This approach was analyzed and rejected.

Vesting and Profits Interest Treatment. Fifty percent (50%) of each rollover participant's Class B Units vested upon closing ($29.77 million in the aggregate). The remaining fifty percent (50%) vests ratably over a 36-month period following closing, subject to continued employment for Dr. Carvallo and Dr. Ostrowski (Mr. Farnsworth's unvested units vest on the same schedule but are not subject to an employment condition). The unvested Class B Units are treated as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43, which provide that the receipt of a profits interest in a partnership in exchange for services is not a taxable event if the safe harbor conditions are met.

Section 83(b) Elections. Each rollover participant is required to file a Section 83(b) election with the Internal Revenue Service within thirty (30) days of the closing date (i.e., by June 30, 2024). The Section 83(b) election causes the rollover participant to include in gross income the fair market value of the unvested units at the time of grant (less any amount paid), which in the case of properly structured profits interests should be zero. Failure to file a timely Section 83(b) election would result in the rollover participant recognizing ordinary income at each vesting date based on the then-current fair market value of the vesting units, which could be substantially adverse. Calderwood & Harkness LLP prepared customized Section 83(b) election form templates and transmittal letter templates for each rollover participant (Deliverables 13 and 14) and delivered them to the client on May 28 and May 31, 2024, respectively. As further described in Section 7.1, the responsibility for filing the Section 83(b) elections rests with each individual rollover participant and his or her personal tax advisors.

5.4 Earnout Characterization

The Merger Agreement provides for contingent earnout payments with a maximum aggregate value of $35.0 million, payable to the pre-closing Pinnacle members in two tranches:

• Period 1 Earnout: $15.0 million, payable if Pinnacle achieves Adjusted EBITDA of at least $58.0 million for the twelve-month period ending May 31, 2025.

• Period 2 Earnout: $20.0 million, payable if Pinnacle achieves Adjusted EBITDA of at least $65.0 million for the twelve-month period ending May 31, 2026.

Characterization as Additional Purchase Price. Calderwood & Harkness LLP recommended, and the parties adopted, the treatment of the earnout payments as additional purchase price (resulting in capital gain to the selling Pinnacle members) rather than as compensation for services (which would result in ordinary income). To support this characterization, the following structuring safeguards were implemented in the Merger Agreement and ancillary documentation:

• The earnout payments are allocated pro rata among all pre-closing Pinnacle members (not solely to those members who continue to provide services post-closing), consistent with their respective ownership percentages.

• The earnout provisions do not contain any language conditioning payment on any individual member's continued employment, service, or compliance with restrictive covenants.

• The earnout does not contain forfeiture-for-termination provisions, such that a member's right to receive earnout payments is not contingent on continued employment or service.

Imputed Interest. Section 483 of the Internal Revenue Code applies to payments under contracts for the sale or exchange of property where some or all payments are due more than one year after the date of the sale. The Period 2 earnout payment, if earned, would be due more than one year after the May 31, 2024 closing date. Accordingly, a portion of the Period 2 payment would be recharacterized as imputed interest under Section 483. The applicable federal rates (AFR) at the time of signing (March 15, 2024) were 5.12% (short-term) and 4.67% (mid-term). Guidance on the computation of imputed interest for each earnout period is included in the post-closing tax integration memorandum (Deliverable 34).

Change of Control Acceleration. The earnout provisions include a change-of-control acceleration feature, providing that upon any change of control of Ardent Healthcare Holdings LLC during the earnout period, the maximum unpaid earnout amount becomes immediately due and payable.

Installment Method Reporting. For individual selling Pinnacle members, Calderwood & Harkness LLP recommended installment method reporting under Section 453 for the earnout payments, allowing gain to be recognized proportionally as payments are received rather than in the year of closing. Guidance on installment method reporting is set forth in the Open Transaction vs. Closed Transaction / Installment Method Memorandum (Deliverable 18).

5.5 Purchase Price Allocation

The total consideration of $412.0 million was allocated across the Section 1060 asset classes as follows, consistent with the Section 743(b) methodology adopted in connection with the Section 754 election:

The Class V intangible assets are further broken down as follows:

The purchase price allocation schedule was prepared by Calderwood & Harkness LLP in consultation with Caldwell Pratt & Moorehouse LLP and Northmark Advisory Group LLC. The allocation was reviewed and agreed upon by seller's counsel, Whitford & Gaines LLP, and is reflected in the executed Merger Agreement. The parties have agreed to file their respective Form 8594 (Asset Acquisition Statement) on a consistent basis.

5.6 Tax Receivable Agreement

A Tax Receivable Agreement ("TRA") was negotiated and executed at closing among Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and the TRA Holders (consisting of the rollover participants and the pre-closing Pinnacle members). The TRA provides that 85% of the realized cash tax benefits derived from the Section 743(b) basis step-up will be payable by Holdings LLC and Intermediate Inc. to the TRA Holders on an annual basis. The remaining 15% of the realized tax benefits is retained by Holdings LLC and Intermediate Inc. for the benefit of Ardent Capital Partners III LP as the majority equity holder.

Based on the annual tax benefit of approximately $5.01 million from the Section 743(b) amortization deductions (as described in Section 5.2 above), the estimated annual TRA payment is approximately $4.26 million (85% × $5.01 million). Actual TRA payments in each year will depend on the actual taxable income of the relevant entities and the tax rates in effect. The TRA contains customary provisions regarding the computation methodology, dispute resolution, early termination, and change-of-control treatment.

The draft TRA was delivered on March 20, 2024 (Deliverable 21), and the execution version was finalized on May 28, 2024 (Deliverable 22). The TRA was executed on May 31, 2024, at closing.

5.7 State and Local Tax

Calderwood & Harkness LLP conducted a comprehensive analysis of the state and local tax implications of the transaction across Pinnacle's five operating states and the holding company entities' potential nexus exposure. The key findings and recommendations are summarized below.

State Tax Rates and Operating Structure:

Blended Effective State Tax Rate: The blended effective state income tax rate, weighted by the allocation of EBITDA among the five operating states, was calculated at 6.42%.

Apportionment Methodologies: Pinnacle is subject to varying apportionment methodologies across its operating states:

• Single-sales-factor apportionment: Pennsylvania, Virginia, and Georgia utilize a single-sales-factor apportionment formula, under which all apportionable income is apportioned based solely on the ratio of in-state sales to total sales.

• Three-factor apportionment (double-weighted sales): Maryland and North Carolina utilize a three-factor apportionment formula with double-weighted sales, under which apportionable income is apportioned based on the weighted average of the property factor, the payroll factor, and the sales factor (with the sales factor counted twice).

Nonresident Withholding. Virginia, Maryland, and Georgia impose withholding tax obligations on the gains recognized by nonresident individual sellers in connection with the sale of a partnership interest in a partnership with operations in those states. The aggregate nonresident withholding amounts computed and remitted at closing were as follows:

The nonresident withholding computation schedule (Deliverable 24) sets forth the detailed calculations for each individual seller and each state.

New York Nexus Mitigation. Ardent Healthcare Holdings LLC, as a partnership with its principal place of management in New York (due to Ardent Capital's New York headquarters), would potentially be subject to New York nexus and the associated filing and tax obligations. To mitigate this risk, Calderwood & Harkness LLP recommended, and the client adopted, a structure whereby all management fee and advisory fee agreements between Ardent Capital and the portfolio company are routed through Ardent Capital GP III LLC (which is already nexused in New York for other Fund III portfolio investments) to Intermediate Inc., rather than directly through Holdings LLC. This approach limits the activities conducted by or attributed to Holdings LLC within New York and reduces the risk of a New York filing obligation for Holdings LLC.

Maryland PTE Election. Calderwood & Harkness LLP analyzed and recommended that Pinnacle Health Services Group LLC make a Maryland pass-through entity tax election, under which the entity-level Maryland income tax is paid at the entity level and the members receive a corresponding credit against their individual Maryland income tax liabilities. This election simplifies the compliance burden for out-of-state members and may provide a net state and local tax benefit by allowing the entity-level tax payment to be deducted at the federal level (circumventing the $10,000 state and local tax deduction cap imposed by Section 164(b)(6) of the Internal Revenue Code).

6. FINANCIAL SUMMARY — FEES AND EXPENSES

6.1 Fee Cap and Actuals

The engagement letter dated January 10, 2024, established a fee arrangement based on hourly rates, subject to an estimated fee budget of $1,850,000 and a fee cap of $2,000,000 (inclusive of out-of-pocket expenses but exclusive of government filing fees). The actual fees and expenses billed are summarized below:

Total actual fees and expenses of $1,742,350 came in $107,650 (5.8%) below the budgeted amount and $257,650 (12.9%) below the fee cap. The under-budget result was primarily attributable to efficiencies in the state and local tax workstream (where the initial scope assumed more extensive nexus analysis for additional states that were ultimately not implicated) and to the fact that the Section 338(h)(10) analysis, while thorough, required fewer hours than originally estimated due to the relatively straightforward conclusion that the election was economically unfavorable.

6.2 Billing Summary by Timekeeper

The following table provides a breakdown of hours billed and fees incurred by each timekeeper:

Out-of-pocket expenses (travel, document reproduction, Westmark Data Systems/Tidewater Technologies research charges, and courier fees), included within the fee cap, totaled $11,600.

Total Billed (Fees + Expenses): $1,742,350.

All invoices have been rendered and all payments have been received in full. There are no outstanding receivables or unbilled work-in-progress associated with this matter. The final invoice was issued on June 20, 2024, and payment was received on June 24, 2024, via wire transfer from Ardent Capital Partners III LP.

6.3 Disbursements and Filing Fees

The following filing fees were incurred in connection with the formation of the acquisition vehicle entities in Delaware. These fees are excluded from the fee cap and were billed separately to the client:

Filing fees of $1,169 were billed to and paid by the client in addition to the $1,742,350 in professional fees and out-of-pocket expenses described above.

7. POST-CLOSING MATTERS HANDED OFF TO CLIENT

7.1 Items Requiring Client Action After Engagement Close

Upon close-out of this engagement, the following post-closing matters have been identified as requiring action by the client (Ardent Capital Partners III LP), the portfolio company entities, the rollover participants, and/or the client's ongoing tax advisors. Calderwood & Harkness LLP has provided comprehensive guidance on each of these items in the post-closing tax integration memorandum (Deliverable 34, delivered June 14, 2024) and the IRS reporting obligations checklist (Deliverable 29, delivered May 30, 2024). Responsibility for each item has been transferred as indicated below.

Section 83(b) Elections. Each rollover participant — Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Marsh — must file a Section 83(b) election with the Internal Revenue Service via certified mail no later than June 30, 2024 (i.e., thirty (30) days after the May 31, 2024 closing date). Calderwood & Harkness LLP has prepared and delivered customized Section 83(b) election form templates (Deliverable 13) and transmittal letter templates (Deliverable 14) for each rollover participant. The responsibility for completing, executing, and timely filing the Section 83(b) elections has been transferred to each individual rollover participant and his or her personal tax advisors. Calderwood & Harkness LLP has emphasized to the client and to each rollover participant (through Marcus Pellegrino) the critical importance of timely filing, as failure to file within the 30-day window would result in the loss of the Section 83(b) election with potentially significant adverse tax consequences (i.e., recognition of ordinary income at each vesting date based on the then-current fair market value of the vesting units).

Section 754 Election Filing. A draft Section 754 election statement has been prepared and delivered (Deliverable 31). The election statement must be attached to Pinnacle Health Services Group LLC's Form 1065 (U.S. Return of Partnership Income) for the taxable year ending December 31, 2024. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP, as the ongoing tax return preparer for Pinnacle and the post-closing entity structure.

Form 8308 Filing. Section 6050K of the Internal Revenue Code requires that Pinnacle Health Services Group LLC file Form 8308 (Report of a Sale or Exchange of Certain Partnership Interests) with the IRS in connection with the exchange of partnership interests that occurred at closing. Form 8308 must be attached to Pinnacle's partnership return (Form 1065) for the taxable year in which the exchange occurred. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP.

Schedule K-1 Preparation. Pinnacle Health Services Group LLC is required to prepare and issue short-period Schedules K-1 to all Pinnacle members for the period beginning January 1, 2024 and ending May 31, 2024 (the closing date). The short-period K-1s must reflect each member's allocable share of Pinnacle's income, deductions, gains, losses, and credits for the pre-closing period. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP, in coordination with Brewer Stanfield & Associates LLP (Pinnacle's historical accounting firm, which will provide the historical books and records necessary for the preparation of the short-period return).

State Nonresident Withholding Remittance. The aggregate nonresident withholding amount of $4.74 million (Virginia: $1.46 million; Maryland: $2.41 million; Georgia: $0.87 million) was computed by Calderwood & Harkness LLP and remitted at closing. The required state-level filings to confirm and report the withholding amounts in each of Virginia, Maryland, and Georgia are to be completed by Caldwell Pratt & Moorehouse LLP in connection with the preparation of the state income tax returns and withholding reports for the short-period ending May 31, 2024.

Tax Receivable Agreement Administration. The TRA requires annual computation of realized tax benefits and corresponding TRA payment amounts, estimated at approximately $4.26 million per year. TRA administration — including the annual computation, payment, and audit procedures — is to be administered by Ardent Capital Partners III LP (through its fund administration team) with support from Caldwell Pratt & Moorehouse LLP. The post-closing tax integration memorandum (Deliverable 34) provides detailed guidance on the computation methodology, payment mechanics, and record-keeping requirements.

Earnout Tax Tracking. The earnout provisions of the Merger Agreement require tracking of Pinnacle's Adjusted EBITDA against the Period 1 target of $58.0 million (for the twelve-month period ending May 31, 2025) and the Period 2 target of $65.0 million (for the twelve-month period ending May 31, 2026). If either earnout target is achieved and a payment becomes due, the related Section 483 imputed interest computations must be performed. The post-closing tax integration memorandum provides a methodology and illustrative calculations for the imputed interest computations. This tracking and computation responsibility rests with Ardent Capital and Caldwell Pratt & Moorehouse LLP.

Estimated Tax Payments. A schedule of estimated federal and state income tax payment obligations for Ardent Healthcare Holdings LLC and Ardent Healthcare Intermediate Inc. for the taxable year ending December 31, 2024, is included in the post-closing tax integration memorandum. Caldwell Pratt & Moorehouse LLP will be responsible for preparing and filing the estimated tax payment vouchers and advising the client on the timing and amounts of estimated payments.

State Income Tax Return Filing. An annual state income tax return filing calendar for all five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia) is included in the post-closing tax integration memorandum. The filing calendar identifies the applicable return forms, due dates (including extension deadlines), and any applicable pass-through entity tax election deadlines (e.g., the Maryland PTE election). Coordination of state income tax return preparation and filing is the responsibility of Caldwell Pratt & Moorehouse LLP.

7.2 Ongoing Tax Advisor Coordination

The primary ongoing tax advisor for the post-closing entity structure is Caldwell Pratt & Moorehouse LLP, New York, New York, which also serves as the buyer's accounting and audit firm. Caldwell Pratt will be responsible for all ongoing tax compliance, return preparation, estimated tax payment management, TRA support, and general tax advisory services for Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and Pinnacle Health Services Group LLC.

Calderwood & Harkness LLP remains available for consultation on an as-needed basis, including with respect to any questions arising from the deliverables produced during this engagement, any future structuring matters (e.g., add-on acquisitions, refinancings, or exit planning), and any IRS audit or examination matters relating to the transaction structure. Any such consultation would require the execution of a separate engagement letter and would be billed under a new matter number.

The contact at Caldwell Pratt & Moorehouse LLP who will serve as the day-to-day tax compliance lead for the portfolio company is to be confirmed by Marcus Pellegrino. Calderwood & Harkness LLP has offered to participate in a transition call with Caldwell Pratt to review the post-closing tax integration memorandum and answer any questions.

8. DOCUMENT RETENTION AND FILE MANAGEMENT

All engagement files, both electronic and physical, are to be retained in accordance with Calderwood & Harkness LLP's Document Retention Policy (Firm Policy No. DR-2019-04, as amended). The applicable retention period for tax advisory engagement files is ten (10) years from the date of engagement close-out, unless a longer retention period is required by applicable law, regulation, or professional standards.

The following file management actions have been taken or will be taken in connection with the close-out of this engagement:

• Matter Folder in Document Management System. All electronic deliverables, correspondence, internal memoranda, research materials, and work papers have been saved to the firm's document management system (DMS) under Matter No. 1001-00006 (Engagement No. 1001-00006). The DMS folder structure follows the firm's standard taxonomy for tax advisory engagements.

• Original Executed Documents. The original executed engagement letter and the original executed tax opinion letter are maintained in the secure physical file for Matter No. 1001-00006. Copies of both documents have also been saved to the DMS.

• Client File Copies. The client has been provided with copies of all thirty-five (35) deliverables listed in the Deliverables Log (Section 4 above), transmitted electronically to Marcus Pellegrino via the firm's secure file-sharing portal. Receipt was confirmed by Marcus Pellegrino on June 18, 2024.

• Privileged and Work Product Materials. Internal memoranda, research notes, draft analyses, and attorney work product materials have been preserved in the DMS under the privileged/work product subfolder for Matter No. 1001-00006. These materials are not to be disclosed to any third party without the prior approval of the Responsible Partner and the firm's General Counsel.

9. CONFLICT CLEARANCE — CLOSE-OUT

The original conflict check for this engagement was completed on January 8, 2024, in accordance with Calderwood & Harkness LLP's Conflicts of Interest Policy (Firm Policy No. CI-2021-07). The conflict check was performed against all known parties to the transaction, including the client, the target, all selling members, all counterparty entities, and all external counsel and advisors. No conflicts of interest were identified at the time of engagement opening.

During the course of the engagement, no new conflicts of interest arose, and no circumstances were identified that wo

MEMORANDUM
INTERNAL — PRIVILEGED & CONFIDENTIAL
TO: Leonard Cross, Responsible Partner Sylvia Hartwell, Billing Partner
FROM: Robert Jansen, Lead Associate Garrett Simmons, Working Associate
DATE: June 25, 2024
RE: Engagement Close-Out — Matter No. 1001-00006 (Engagement No. 1001-00006) Ardent Capital Partners III LP / Acquisition of Pinnacle Health Services Group LLC
STATUS: Closed — Completed
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1. PURPOSE AND SUMMARY
This memorandum documents the formal close-out of Calderwood & Harkness LLP Matter No. 1001-00006 (Engagement No. 1001-00006) relating to the tax structuring engagement for Ardent Capital Partners III LP's acquisition of Pinnacle Health Services Group LLC. The purpose of this memorandum is to provide a comprehensive record of the engagement, including a summary of the work performed, all deliverables issued, key structuring decisions and their outcomes, financial details of the engagement, post-closing matters handed off to the client and its ongoing advisors, and the status of document retention and conflict clearance at close-out.
The engagement was opened on January 10, 2024. The engagement letter was executed on that same date by Leonard Cross (Responsible Partner) and Sylvia Hartwell (Billing Partner) on behalf of Calderwood & Harkness LLP, with Ardent Capital Partners III LP as the client. The engagement letter was countersigned by Marcus Pellegrino, Partner, Healthcare, on behalf of Ardent Capital Partners III LP, and further acknowledged by Claire Ashworth, Co-Founder & Managing Partner, and Dominic Ferrera, Co-Founder & Managing Partner.
The underlying transaction — Ardent Capital Partners III LP's acquisition of a controlling equity interest in Pinnacle Health Services Group LLC — closed on May 31, 2024. Post-closing deliverables were completed through June 14, 2024, on which date the post-closing tax integration memorandum was delivered to the client. That memorandum constitutes the final substantive work product of the engagement.
As of the date of this memorandum, all deliverables have been issued and transmitted to the client, all outstanding billing has been rendered and collected in full, and no outstanding receivables remain. Accordingly, the matter is being closed as of June 25, 2024, with the status designation "closed_completed" in the firm's matter management system. No further work is anticipated under this engagement number, although Calderwood & Harkness LLP remains available for consultation on an as-needed basis under a separate engagement letter if the client so requests.
2. ENGAGEMENT OVERVIEW
2.1 Client and Transaction Parties
Client. Ardent Capital Partners III LP, a Delaware limited partnership (EIN 87-3491520), with its principal office located at 600 Lexington Avenue, 38th Floor, New York, New York 10022. Ardent Capital Partners III LP is the third institutional private equity fund managed by Ardent Capital, with a 2022 vintage and aggregate capital commitments of approximately $3.2 billion. Fund III is focused on control investments in healthcare services, healthcare technology, and related sectors within the broader healthcare and life sciences industry.
General Partner. Ardent Capital GP III LLC, a Delaware limited liability company, serves as the general partner of Ardent Capital Partners III LP. Ardent Capital GP III LLC is the entity through which the fund's investment professionals exercise management authority over Fund III's portfolio investments and day-to-day operations.
Client Contacts. The primary client contacts for the engagement were as follows:
• Marcus Pellegrino — Partner, Healthcare, Ardent Capital. Mr. Pellegrino served as the deal team lead and was the principal point of contact for all substantive tax structuring discussions throughout the engagement.
• Claire Ashworth — Co-Founder & Managing Partner, Ardent Capital. Ms. Ashworth was involved in high-level structuring decisions and provided final approval on the overall acquisition structure.
• Dominic Ferrera — Co-Founder & Managing Partner, Ardent Capital. Mr. Ferrera participated in key structuring sessions and co-approved the final transaction structure alongside Ms. Ashworth.
Target. Pinnacle Health Services Group LLC (EIN 82-1947632), a Delaware limited liability company taxed as a partnership for federal income tax purposes, with its principal office located at 2200 Renaissance Boulevard, Suite 400, King of Prussia, Pennsylvania 19406. At the time of the acquisition, Pinnacle operated a network of thirty-four (34) urgent care clinics and eight (8) ambulatory surgery centers across five states: Pennsylvania, Virginia, Maryland, North Carolina, and Georgia. The company employed approximately 1,620 full-time and part-time employees, including 142 employed physicians. For the fiscal year ended December 31, 2023, Pinnacle reported revenue of approximately $287.4 million and Adjusted EBITDA (as defined in the quality of earnings report prepared by Northmark Advisory Group LLC) of approximately $51.8 million.
Enterprise Value and Equity Value. The transaction was consummated at an enterprise value of $412,000,000, representing an implied EBITDA multiple of approximately 7.95x based on 2023 Adjusted EBITDA. After deduction of $72.6 million in net debt (consisting of $81.2 million in total outstanding indebtedness less $8.6 million in cash and cash equivalents), the equity value at closing was $339,400,000.
2.2 Scope of Engagement
Calderwood & Harkness LLP was engaged to provide tax structuring advisory services in connection with Ardent Capital Partners III LP's acquisition of Pinnacle Health Services Group LLC. The scope of the engagement, as set forth in the engagement letter dated January 10, 2024, encompassed the following areas of work:
1. Entity Selection for the Acquisition Vehicle. Evaluation of alternative entity structures for the acquisition vehicle, including analysis of a three-tier holding structure (partnership holding company, C-corporation blocker, and acquisition subsidiary), with a focus on federal and state tax efficiency, UBTI considerations for tax-exempt limited partners, and future exit optionality.
2. Section 338(h)(10) vs. Section 754 Election Analysis. Comprehensive comparative analysis of the availability and advisability of a Section 338(h)(10) election versus a Section 754 election to achieve a step-up in the inside tax basis of Pinnacle's assets, including quantification of the net present value of each alternative.
3. blocker Entity (C-Corporation) Analysis. Analysis of the interposition of a C-corporation entity ("Blocker") between the partnership holding company and the target, for purposes of blocking unrelated business taxable income ("UBTI") for tax-exempt Fund III limited partners and positioning the investment for a potential future initial public offering.
4. Management Rollover Equity Treatment. Tax analysis of the rollover equity contributions by Pinnacle's founding physicians and management, including a comparative assessment of Section 721 (partnership contribution) and Section 351 (corporate contribution) treatment, and a detailed analysis of the characterization of management incentive equity as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43.
5. Earnout Tax Characterization and Reporting Methodology. Analysis and structuring of the earnout provisions of the Merger Agreement to support capital gain characterization for the selling Pinnacle members, including consideration of Section 483 imputed interest implications, installment method reporting under Section 453, and open transaction versus closed transaction methodology.
6. Purchase Price Allocation. Preparation of the purchase price allocation schedule in accordance with Section 1060 of the Internal Revenue Code and the corresponding Section 743(b) methodology, with supporting memorandum detailing the allocation among the seven asset classes.
7. Tax Receivable Agreement Structuring. Structuring and drafting of a Tax Receivable Agreement providing for the sharing of realized tax benefits from the Section 743(b) basis step-up between the acquiring entity and the rollover participants and pre-closing Pinnacle members.
8. State and Local Tax Optimization. Multi-state tax analysis covering each of Pinnacle's five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia) as well as a New York nexus analysis for the holding company entities, including evaluation of apportionment methodologies, pass-through entity tax elections, nonresident withholding obligations, and state tax structuring recommendations.
9. Tax Provisions Review and Markup of the Merger Agreement. Review and markup of the tax-related representations, warranties, covenants, and indemnity provisions of the Merger Agreement, prepared in coordination with buyer's M&A counsel, Harcourt Shaw & DeVries LLP.
10. Tax Opinion on Rollover Treatment. Preparation and delivery of a formal tax opinion letter opining on the tax-deferred treatment of the rollover equity contributions under Section 721 of the Internal Revenue Code.
11. Closing Deliverables and Post-Closing Compliance Guidance. Preparation and delivery of all tax-related closing deliverables, including the tax closing certificate, Section 754 election draft, FIRPTA non-foreign status certificates, Section 83(b) election templates, and a comprehensive post-closing tax integration memorandum providing guidance to the client and its ongoing tax advisors.
The engagement did not include the preparation of any tax returns, ongoing tax compliance services, or personal tax advisory services for individual rollover participants or selling Pinnacle members. As further described in Section 7 of this memorandum, those responsibilities have been transferred to the client's ongoing tax advisor, Caldwell Pratt & Moorehouse LLP.
2.3 Calderwood & Harkness Team
The following Calderwood & Harkness LLP professionals were staffed on the engagement:
Leonard Cross served as the Responsible Partner for the engagement, providing overall strategic direction and oversight of the tax structuring advice, participating in key structuring calls and meetings with the client deal team, and reviewing and approving all major deliverables. Sylvia Hartwell served as the Billing Partner, with oversight responsibilities for billing, engagement economics, and quality control. Robert Jansen served as the Lead Associate and day-to-day engagement manager, with primary responsibility for drafting the majority of substantive deliverables and coordinating with buyer's M&A counsel, seller's counsel, and the client's financial advisors. Garrett Simmons served as the Working Associate, providing analytical and drafting support on all workstreams and taking primary responsibility for the state and local tax analysis, purchase price allocation computations, and nonresident withholding schedules.
2.4 Coordinating Counsel and Advisors
The following external counsel and advisors were involved in the transaction and coordinated with Calderwood & Harkness LLP during the course of the engagement:
Buyer's M&A Counsel: Harcourt Shaw & DeVries LLP, 51 West 52nd Street, New York, New York 10019. Thomas Kundra, Partner, served as lead transactional counsel; Allison Cho, Associate, provided day-to-day drafting and negotiation support. Calderwood & Harkness LLP worked closely with Harcourt Shaw throughout the engagement on the tax provisions of the Merger Agreement, the LLC Agreement of Holdings LLC, the Tax Receivable Agreement, and the rollover equity documentation.
Seller's Counsel: Whitford & Gaines LLP, 1735 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Patricia Engelman, Partner, Tax, served as seller's tax counsel; Kevin Driscoll, Associate, provided drafting and analytical support. Calderwood & Harkness LLP engaged in extensive negotiations with Whitford & Gaines on the tax representations, covenants, and indemnity provisions of the Merger Agreement, the purchase price allocation schedule, and the earnout characterization framework.
Buyer's Accounting/Audit Firm: Caldwell Pratt & Moorehouse LLP, New York, New York. Caldwell Pratt served as the buyer's accounting and audit firm and will serve as the ongoing tax return preparer and compliance advisor for the portfolio company post-closing. Calderwood & Harkness LLP coordinated with Caldwell Pratt on the purchase price allocation, Section 754 election mechanics, and the post-closing tax integration plan.
Target's Accounting/Audit Firm: Brewer Stanfield & Associates LLP, Philadelphia, Pennsylvania. Brewer Stanfield served as Pinnacle's historical accounting and audit firm and provided historical tax return data and supporting schedules during the due diligence and structuring phases of the engagement.
Quality of Earnings Provider: Northmark Advisory Group LLC, Chicago, Illinois. Northmark prepared the quality of earnings report on which the Adjusted EBITDA figure of $51.8 million was based.
Financial Advisor to Buyer: Meridian Tuck Partners LLC (Daniel Kessler, Managing Director), New York, New York. Meridian Tuck served as financial advisor to Ardent Capital Partners III LP in connection with the transaction.
Financial Advisor to Sellers: Larchmont & Co. (Sarah Quinlan, Managing Director), Philadelphia, Pennsylvania. Larchmont served as financial advisor to the pre-closing Pinnacle members in connection with the sale process.
3. KEY TRANSACTION DATES
The following table sets forth the key dates in the engagement and transaction timeline, from the initial conflict check through the close-out of the engagement:
The period from engagement opening (January 10, 2024) to transaction closing (May 31, 2024) was approximately four months and twenty-one days. The post-closing work phase extended an additional fourteen days through June 14, 2024. The total engagement duration from opening to close-out was approximately five months and fifteen days.
4. COMPLETE DELIVERABLES LOG
Set forth below is a complete log of all deliverables produced during the engagement, organized by workstream. Unless otherwise indicated, all deliverables were transmitted to the client (Ardent Capital Partners III LP, attention Marcus Pellegrino) and, where applicable, shared with buyer's M&A counsel (Harcourt Shaw & DeVries LLP) and the client's accounting firm (Caldwell Pratt & Moorehouse LLP).
4.1 Engagement & Administrative Documents
1. Engagement Letter — Executed January 10, 2024. Sets forth the scope of engagement, fee arrangement (hourly with a $2,000,000 fee cap), billing partner designation, responsible partner designation, and general terms and conditions of the attorney-client relationship. Countersigned by Marcus Pellegrino on behalf of Ardent Capital Partners III LP.
2. Conflict Check Memorandum — Completed January 8, 2024. Internal memorandum confirming that a comprehensive conflict check was performed against all known parties to the transaction and that no conflicts of interest were identified. Maintained in internal files.
3. Staffing & Budget Memorandum — Prepared January 10, 2024. Internal memorandum setting forth the proposed staffing plan, estimated hours by timekeeper, fee budget of $1,850,000, and fee cap of $2,000,000. Maintained in internal files.
4. Engagement Close-Out Memorandum — This document, dated June 25, 2024. Internal memorandum documenting the formal close-out of the engagement, summarizing all work performed and deliverables issued.
4.2 Structure & Entity Selection Documents
5. Preliminary Tax Structure Memorandum — Delivered February 12, 2024. Comprehensive memorandum analyzing alternative acquisition structures (asset purchase, equity purchase, merger) and entity selection options (partnership vs. C-corporation at each tier) for the acquisition vehicle. Included preliminary recommendations for a three-tier structure (partnership → C-corp blocker → target LLC).
6. Section 338(h)(10) vs. Section 754 Election Analysis Memorandum — Delivered February 28, 2024. Detailed comparative analysis of the availability, mechanics, and net present value implications of a Section 338(h)(10) election versus a Section 754 election for achieving a step-up in the inside tax basis of Pinnacle's assets. Recommended Section 754 election based on quantitative analysis demonstrating that Section 338(h)(10) was net-negative by approximately $16.6 million.
7. blocker Entity Analysis Memorandum — Delivered February 16, 2024. Memorandum analyzing the tax and structural benefits and costs of interposing a C-corporation ("Blocker") entity between the partnership holding company and the target, including UBTI blocking for tax-exempt limited partners, state tax nexus isolation, and potential future IPO readiness considerations.
8. Entity Formation Checklist and Instructions — Finalized March 1, 2024. Detailed checklist and step-by-step instructions for the formation of the three acquisition vehicle entities in Delaware, including authorized signatory designations, registered agent information, and EIN application procedures.
9. Certificate of Formation — Ardent Healthcare Holdings LLC — Filed with the Delaware Secretary of State on March 5, 2024 (File No. 7834219). Holdings LLC classified as a partnership for federal tax purposes (default classification; no Form 8832 election filed). EIN 93-2187445 obtained.
10. Certificate of Incorporation — Ardent Healthcare Intermediate Inc. — Filed with the Delaware Secretary of State on March 5, 2024 (File No. 7834223). Intermediate Inc. organized as a C-corporation for federal tax purposes. EIN 93-2187512 obtained.
Note: The Certificate of Formation for Merger Sub LLC (File No. 7834227) was also filed on March 5, 2024 by Harcourt Shaw & DeVries LLP, as buyer's M&A counsel, with tax structuring input from Calderwood & Harkness LLP. Merger Sub LLC merged with and into Pinnacle Health Services Group LLC upon closing, with Pinnacle surviving as the operating entity.
4.3 Rollover Equity Documents
11. Rollover Equity Tax Memorandum — Section 721 vs. Section 351 — Delivered February 22, 2024. Memorandum comparing the federal tax consequences of structuring the rollover equity contributions as partnership contributions under Section 721 versus corporate contributions under Section 351, with particular attention to the preservation of the Section 743(b) basis step-up and the avoidance of gain recognition at the rollover participant level. Recommended Section 721 treatment.
12. Profits Interest / Unvested Equity Memorandum — Delivered March 8, 2024. Memorandum analyzing the characterization of unvested management incentive equity as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43, including the safe harbor requirements and the consequences of failure to satisfy them. Also addressed the treatment of the vesting schedule under Section 83 and the importance of timely Section 83(b) elections.
13. Form — Section 83(b) Election Template — Delivered May 28, 2024. Template Section 83(b) election form, customized for each of the three rollover participants (Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth), with instructions for completion, execution, and filing with the Internal Revenue Service.
14. Section 83(b) Election Transmittal Letter Templates — Delivered May 31, 2024. Template transmittal letters for certified-mail filing of the Section 83(b) elections with the IRS Service Center, including instructions for obtaining and retaining certified mail receipts as proof of timely filing.
15. Tax Provisions of LLC Agreement — Draft Markup — Delivered March 10, 2024. Markup of the tax-related provisions (including tax allocation, distribution, and reporting provisions) of the Amended and Restated Limited Liability Company Agreement of Ardent Healthcare Holdings LLC, prepared for review by Harcourt Shaw & DeVries LLP and the client.
4.4 Earnout Treatment Documents
16. Earnout Tax Characterization Memorandum — Delivered March 1, 2024. Memorandum analyzing the federal tax characterization of the contingent earnout payments under the Merger Agreement, including the distinction between additional purchase price (capital gain) and compensatory payments (ordinary income), and setting forth the structuring safeguards necessary to support capital gain treatment. Recommended and adopted treatment as additional purchase price.
17. Earnout Provisions — Tax Review and Comment Letter to Harcourt Shaw & DeVries LLP — Sent March 12, 2024. Formal comment letter setting forth Calderwood & Harkness LLP's tax-related comments and suggested revisions to the earnout provisions of the Merger Agreement, with particular focus on avoiding language that could be construed as conditioning earnout payments on continued employment or service.
18. Open Transaction vs. Closed Transaction / Installment Method Memorandum — Delivered March 5, 2024. Memorandum analyzing the availability and advisability of open transaction reporting, closed transaction reporting, and installment method reporting under Section 453 for the earnout payments, with a recommendation that individual sellers utilize installment method reporting.
4.5 Purchase Price Allocation & TRA Documents
19. Purchase Price Allocation Schedule — Delivered April 18, 2024. Detailed schedule allocating the total consideration of $412.0 million across the Section 1060 asset classes (Classes I through VII), consistent with the Section 743(b) basis step-up methodology. The allocation was reviewed and agreed upon by the client, buyer's M&A counsel, and seller's counsel, and is reflected in the executed Merger Agreement.
20. Purchase Price Allocation Memorandum — Delivered April 18, 2024. Supporting memorandum providing the analytical basis for the purchase price allocation, including valuation methodologies applied to each asset class, useful life determinations for amortizable intangibles, and the interplay between the Section 1060 allocation and the Section 743(b) basis adjustment.
21. Tax Receivable Agreement — Draft — Delivered March 20, 2024. Initial draft of the Tax Receivable Agreement providing for the sharing of realized tax benefits from the Section 743(b) basis step-up between Holdings LLC / Intermediate Inc. and the TRA Holders (rollover participants and pre-closing Pinnacle members). Circulated to Harcourt Shaw & DeVries LLP, Whitford & Gaines LLP, and the client for review and comment.
22. Tax Receivable Agreement — Execution Version — Finalized May 28, 2024. Final execution version of the Tax Receivable Agreement, incorporating all negotiated revisions and approved by all parties. Executed on May 31, 2024, at closing, among Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and the TRA Holders.
4.6 State & Local Tax Documents
23. State & Local Tax Memorandum — Delivered February 20, 2024. Comprehensive memorandum analyzing the state and local tax implications of the transaction across Pinnacle's five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia), including corporate income tax rates, apportionment methodologies, pass-through entity tax elections, nonresident withholding obligations, and the New York nexus exposure for the holding company entities.
24. Nonresident Withholding Computation Schedule — Delivered May 15, 2024. Detailed computation schedule quantifying the state-level nonresident withholding tax obligations on gains recognized by individual selling Pinnacle members in Virginia ($1.46 million), Maryland ($2.41 million), and Georgia ($0.87 million), for an aggregate withholding amount of $4.74 million. Withholding amounts were remitted at closing.
25. State Tax Structuring Recommendations Letter — Delivered March 18, 2024. Letter to the client setting forth specific state tax structuring recommendations, including the recommendation to utilize a Maryland pass-through entity tax election, the recommendation to route management fee agreements through Ardent Capital GP III LLC to mitigate New York nexus risk for Holdings LLC, and guidance on apportionment factor management.
4.7 Transaction Document Tax Sections
26. Tax Representations and Covenants — Draft Markup of Merger Agreement — Circulated March 8, 2024. Detailed markup of Article V (Tax Representations) and Article VI (Tax Covenants) of the Merger Agreement, including representations regarding Pinnacle's tax classification, the absence of outstanding tax liabilities, compliance with tax filing obligations, and pre-closing tax covenants regarding the conduct of the target's tax affairs during the interim period.
27. Tax Indemnity Provisions — Draft Markup of Merger Agreement — Circulated March 10, 2024. Markup of Article IX (Indemnification) of the Merger Agreement as it relates to tax indemnification obligations, including the scope of pre-closing tax liabilities subject to seller indemnification, the treatment of transfer taxes, and the interplay between the tax indemnity and the general indemnification provisions.
28. Tax Opinion Letter — Rollover Tax-Deferred Treatment — Delivered May 29, 2024. Formal tax opinion letter, addressed to Ardent Capital Partners III LP, opining that the rollover equity contributions by Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Farnsworth to Ardent Healthcare Holdings LLC should constitute tax-deferred contributions of property to a partnership under Section 721(a) of the Internal Revenue Code, subject to the assumptions and qualifications set forth therein.
29. IRS Reporting Obligations Checklist — Delivered May 30, 2024. Comprehensive checklist of all federal tax reporting obligations arising from or relating to the transaction, including Form 8594 (Asset Acquisition Statement), Form 8308 (Report of a Sale or Exchange of Certain Partnership Interests), Section 83(b) elections, Section 754 election statements, and the filing of short-period partnership returns.
4.8 Closing Deliverables
30. Tax Closing Certificate — Delivered May 31, 2024. Certificate executed on behalf of the buyer certifying the accuracy of the tax representations and the satisfaction of the tax-related closing conditions set forth in the Merger Agreement.
31. Section 754 Election — Draft Form — Delivered May 31, 2024. Draft election statement to be attached to Pinnacle Health Services Group LLC's Form 1065 for the taxable year ending December 31, 2024, electing to adjust the basis of partnership property under Section 754 of the Internal Revenue Code. Filing responsibility transferred to Caldwell Pratt & Moorehouse LLP.
32. FIRPTA Non-Foreign Status Certificates — Delivered May 31, 2024. Certificates of Non-Foreign Status under Section 1445 of the Internal Revenue Code and Treasury Regulation Section 1.1445-2(b)(2), executed by each selling Pinnacle member, certifying their status as United States persons for purposes of the Foreign Investment in Real Property Tax Act.
33. Closing Tax Memorandum — Delivered May 31, 2024. Comprehensive memorandum summarizing all tax-related matters addressed at closing, including the status of all closing deliverables, the mechanics of the purchase price allocation, the Section 754 election, the nonresident withholding remittances, and immediate post-closing tax actions required.
4.9 Post-Closing Documents
34. Post-Closing Tax Integration Memorandum — Delivered June 14, 2024. Detailed memorandum addressed to the client and to Caldwell Pratt & Moorehouse LLP (as the ongoing tax compliance advisor) providing comprehensive guidance on all post-closing tax matters, including the Section 754 election filing procedures, short-period K-1 preparation, TRA administration, earnout tax tracking methodology, estimated tax payment schedules, state income tax return filing calendar, and Section 83(b) election follow-up procedures.
35. Engagement Summary and Lessons Learned Memorandum — Prepared June 25, 2024. Internal Calderwood & Harkness LLP memorandum summarizing the engagement for quality management and knowledge management purposes. This document is maintained solely in internal files and was not delivered to the client.
Confirmation: All thirty-five (35) deliverables listed above have been issued to the client or filed internally, as applicable. Copies of all deliverables have been saved to the firm's document management system (DMS) under Matter No. 1001-00006 (Engagement No. 1001-00006). All external deliverables have been confirmed as received by Marcus Pellegrino on behalf of the client.
5. SUMMARY OF KEY STRUCTURING DECISIONS AND OUTCOMES
This Section 5 provides a summary of the principal tax structuring decisions made during the engagement, the analytical basis for each decision, and the outcomes as implemented in the transaction documentation. This summary is intended to serve as a convenient reference for the engagement record and should be read in conjunction with the detailed memoranda referenced in the Deliverables Log (Section 4 above).
5.1 Entity Structure
A three-tier acquisition structure was recommended by Calderwood & Harkness LLP and adopted by the client. The structure consists of the following entities:
• Tier 1 — Ardent Healthcare Holdings LLC (Delaware LLC; EIN 93-2187445; partnership for federal tax purposes). Holdings LLC serves as the top-level equity aggregator, holding equity interests on behalf of (a) Ardent Capital Partners III LP (Fund III capital contribution of $198.5 million), (b) the three rollover equity participants (aggregate rollover of $59.54 million, held through Class B Units), and (c) management incentive equity holders (profits interests). Holdings LLC is classified as a partnership for federal tax purposes under the default classification rules of Treasury Regulation Section 301.7701-3; no Form 8832 (Entity Classification Election) was filed.
• Tier 2 — Ardent Healthcare Intermediate Inc. (Delaware corporation; EIN 93-2187512; C-corporation for federal tax purposes). Intermediate Inc. is a wholly owned subsidiary of Holdings LLC and was interposed as a C-corporation "Blocker" to serve three purposes: (a) to block the flow-through of unrelated business taxable income ("UBTI") to tax-exempt limited partners of Fund III (including pension funds, endowments, and foundations), (b) to facilitate a potential future initial public offering by providing a corporate entity that can be listed on a public exchange without the need for a complex Up-C restructuring, and (c) to isolate state tax nexus by serving as the direct parent of the operating entity and thereby limiting the nexus exposure of Holdings LLC to its state of formation (Delaware).
• Tier 3 — Pinnacle Health Services Group LLC (Delaware LLC; EIN 82-1947632; surviving entity post-merger). At closing, Merger Sub LLC (File No. 7834227), a newly formed Delaware LLC that was a wholly owned subsidiary of Intermediate Inc., merged with and into Pinnacle Health Services Group LLC, with Pinnacle surviving the merger as a wholly owned subsidiary of Intermediate Inc. Following the merger, Pinnacle continues to be classified as a disregarded entity for federal tax purposes (single-member LLC wholly owned by Intermediate Inc.).
The three-tier structure was selected after consideration of alternative structures, including a direct partnership acquisition (rejected due to UBTI exposure for tax-exempt Fund III LPs), a direct C-corporation acquisition (rejected due to double taxation on exit), and a two-tier structure without the intermediate C-corporation blocker (rejected due to the absence of UBTI blocking and reduced IPO optionality). The adopted structure balances tax efficiency, investor requirements, and future exit flexibility.
5.2 Section 338(h)(10) vs. Section 754 Election
A central issue in the engagement was the mechanism by which the buyer would achieve a step-up in the inside tax basis of Pinnacle's assets to reflect the purchase price paid. Two principal alternatives were analyzed:
Section 338(h)(10) Election. A Section 338(h)(10) election would treat the acquisition as a deemed asset sale by the target, followed by a deemed liquidation, thereby stepping up the tax basis of all target assets to their fair market values. However, this election is available only where the target is a corporation (including an S corporation). Pinnacle Health Services Group LLC was classified as a partnership for federal tax purposes. While it would have been possible to file a Form 8832 check-the-box election to reclassify Pinnacle as a corporation immediately prior to closing, followed by a Section 338(h)(10) election, this approach was analyzed and ultimately rejected for the following reasons:
• The check-the-box election to corporate status would trigger a deemed contribution of Pinnacle's assets to a newly formed corporation under Section 351, which, depending on the circumstances, could result in immediate gain recognition at the member level if the liabilities assumed exceeded the adjusted basis of the contributed assets.
• The deemed asset sale under Section 338(h)(10) would generate incremental seller-level gain of approximately $48.3 million, calculated as the difference between the equity value of $339.4 million and the aggregate outside basis of the selling Pinnacle members of approximately $291.1 million.
• The buyer's net present value benefit from the 338(h)(10) election — arising from the amortization of the stepped-up basis of $412.0 million in total assets over an assumed 15-year useful life at a blended federal and state tax rate of 25%, discounted at 8% — was estimated at approximately $31.7 million.
• Accordingly, the net cost of the Section 338(h)(10) election was approximately $16.6 million ($48.3 million seller-level cost less $31.7 million buyer-level benefit), making this approach economically unfavorable relative to the Section 754 alternative.
Section 754 Election (Recommended and Adopted). A Section 754 election, made by Pinnacle Health Services Group LLC, would result in a Section 743(b) basis adjustment to the inside basis of Pinnacle's assets in an amount equal to the difference between the acquiring partner's (Intermediate Inc.'s) outside basis in its Pinnacle interest (equal to the purchase price) and its proportionate share of Pinnacle's inside basis. The key parameters of the Section 754 election as adopted are as follows:
• Section 743(b) Basis Step-Up: $224.4 million, calculated as $412.0 million (enterprise value / acquiring partner's outside basis) minus $187.6 million (Pinnacle's aggregate inside basis in its assets as of the closing date).
• Annual Amortization Deduction: Approximately $20.04 million per year, based on a weighted-average useful life of 11.2 years across all asset classes (reflecting the allocation between short-lived intangibles such as non-competes and assembled workforce, and longer-lived intangibles such as payor contracts, trade name, and goodwill).
• Annual Tax Benefit: Approximately $5.01 million per year at a blended federal and state tax rate of 25%.
The Section 754 election was the recommended approach because it achieved a substantial basis step-up without triggering any incremental seller-level gain and without the complexities and costs associated with a check-the-box reclassification. The draft Section 754 election statement was delivered to the client and Caldwell Pratt & Moorehouse LLP on May 31, 2024, and will be attached to Pinnacle's Form 1065 for the taxable year ending December 31, 2024.
5.3 Rollover Equity Treatment
Three members of Pinnacle's founding and management team elected to roll over a portion of their equity into the post-closing structure by contributing their Pinnacle interests to Ardent Healthcare Holdings LLC in exchange for Class B Units of Holdings LLC. The total rollover amount and allocation among participants was as follows:
The total rollover of $59.54 million represents 23.08% of the post-closing equity of Holdings LLC on a pre-dilution basis ($59.54 million ÷ $258.04 million, where $258.04 million represents the sum of Fund III's $198.5 million equity contribution and the $59.54 million rollover). On a fully diluted basis, after giving effect to the 2.5% equity interest reserved for mezzanine warrants issued to Cascadia Mezzanine Fund IV LP in connection with the mezzanine debt financing, the rollover participants hold 22.50% of the fully diluted equity of Holdings LLC.
Section 721 vs. Section 351 Analysis. Calderwood & Harkness LLP analyzed two alternative characterizations for the rollover contribution:
• Section 721 (partnership contribution): The rollover participants contribute their Pinnacle interests to Holdings LLC (a partnership for federal tax purposes) in exchange for Class B Units. Under Section 721(a), no gain or loss is recognized by the contributing partner or the partnership on a contribution of property to a partnership in exchange for a partnership interest. This treatment preserves the Section 743(b) basis step-up and avoids gain recognition to the rollover participants. This approach was recommended and adopted.
• Section 351 (corporate contribution): If Holdings LLC were classified as a corporation (or if the rollover were structured as a contribution to Intermediate Inc.), Section 351 could potentially apply to defer gain on the contribution. However, Section 351 treatment would have introduced several complications, including the potential loss of the Section 743(b) step-up, the application of Section 357(c) (gain recognition where liabilities exceed basis), and the loss of flow-through tax treatment at the Holdings LLC level. This approach was analyzed and rejected.
Vesting and Profits Interest Treatment. Fifty percent (50%) of each rollover participant's Class B Units vested upon closing ($29.77 million in the aggregate). The remaining fifty percent (50%) vests ratably over a 36-month period following closing, subject to continued employment for Dr. Carvallo and Dr. Ostrowski (Mr. Farnsworth's unvested units vest on the same schedule but are not subject to an employment condition). The unvested Class B Units are treated as profits interests under Revenue Procedure 93-27 and Revenue Procedure 2001-43, which provide that the receipt of a profits interest in a partnership in exchange for services is not a taxable event if the safe harbor conditions are met.
Section 83(b) Elections. Each rollover participant is required to file a Section 83(b) election with the Internal Revenue Service within thirty (30) days of the closing date (i.e., by June 30, 2024). The Section 83(b) election causes the rollover participant to include in gross income the fair market value of the unvested units at the time of grant (less any amount paid), which in the case of properly structured profits interests should be zero. Failure to file a timely Section 83(b) election would result in the rollover participant recognizing ordinary income at each vesting date based on the then-current fair market value of the vesting units, which could be substantially adverse. Calderwood & Harkness LLP prepared customized Section 83(b) election form templates and transmittal letter templates for each rollover participant (Deliverables 13 and 14) and delivered them to the client on May 28 and May 31, 2024, respectively. As further described in Section 7.1, the responsibility for filing the Section 83(b) elections rests with each individual rollover participant and his or her personal tax advisors.
5.4 Earnout Characterization
The Merger Agreement provides for contingent earnout payments with a maximum aggregate value of $35.0 million, payable to the pre-closing Pinnacle members in two tranches:
• Period 1 Earnout: $15.0 million, payable if Pinnacle achieves Adjusted EBITDA of at least $58.0 million for the twelve-month period ending May 31, 2025.
• Period 2 Earnout: $20.0 million, payable if Pinnacle achieves Adjusted EBITDA of at least $65.0 million for the twelve-month period ending May 31, 2026.
Characterization as Additional Purchase Price. Calderwood & Harkness LLP recommended, and the parties adopted, the treatment of the earnout payments as additional purchase price (resulting in capital gain to the selling Pinnacle members) rather than as compensation for services (which would result in ordinary income). To support this characterization, the following structuring safeguards were implemented in the Merger Agreement and ancillary documentation:
• The earnout payments are allocated pro rata among all pre-closing Pinnacle members (not solely to those members who continue to provide services post-closing), consistent with their respective ownership percentages.
• The earnout provisions do not contain any language conditioning payment on any individual member's continued employment, service, or compliance with restrictive covenants.
• The earnout does not contain forfeiture-for-termination provisions, such that a member's right to receive earnout payments is not contingent on continued employment or service.
Imputed Interest. Section 483 of the Internal Revenue Code applies to payments under contracts for the sale or exchange of property where some or all payments are due more than one year after the date of the sale. The Period 2 earnout payment, if earned, would be due more than one year after the May 31, 2024 closing date. Accordingly, a portion of the Period 2 payment would be recharacterized as imputed interest under Section 483. The applicable federal rates (AFR) at the time of signing (March 15, 2024) were 5.12% (short-term) and 4.67% (mid-term). Guidance on the computation of imputed interest for each earnout period is included in the post-closing tax integration memorandum (Deliverable 34).
Change of Control Acceleration. The earnout provisions include a change-of-control acceleration feature, providing that upon any change of control of Ardent Healthcare Holdings LLC during the earnout period, the maximum unpaid earnout amount becomes immediately due and payable.
Installment Method Reporting. For individual selling Pinnacle members, Calderwood & Harkness LLP recommended installment method reporting under Section 453 for the earnout payments, allowing gain to be recognized proportionally as payments are received rather than in the year of closing. Guidance on installment method reporting is set forth in the Open Transaction vs. Closed Transaction / Installment Method Memorandum (Deliverable 18).
5.5 Purchase Price Allocation
The total consideration of $412.0 million was allocated across the Section 1060 asset classes as follows, consistent with the Section 743(b) methodology adopted in connection with the Section 754 election:
The Class V intangible assets are further broken down as follows:
The purchase price allocation schedule was prepared by Calderwood & Harkness LLP in consultation with Caldwell Pratt & Moorehouse LLP and Northmark Advisory Group LLC. The allocation was reviewed and agreed upon by seller's counsel, Whitford & Gaines LLP, and is reflected in the executed Merger Agreement. The parties have agreed to file their respective Form 8594 (Asset Acquisition Statement) on a consistent basis.
5.6 Tax Receivable Agreement
A Tax Receivable Agreement ("TRA") was negotiated and executed at closing among Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and the TRA Holders (consisting of the rollover participants and the pre-closing Pinnacle members). The TRA provides that 85% of the realized cash tax benefits derived from the Section 743(b) basis step-up will be payable by Holdings LLC and Intermediate Inc. to the TRA Holders on an annual basis. The remaining 15% of the realized tax benefits is retained by Holdings LLC and Intermediate Inc. for the benefit of Ardent Capital Partners III LP as the majority equity holder.
Based on the annual tax benefit of approximately $5.01 million from the Section 743(b) amortization deductions (as described in Section 5.2 above), the estimated annual TRA payment is approximately $4.26 million (85% × $5.01 million). Actual TRA payments in each year will depend on the actual taxable income of the relevant entities and the tax rates in effect. The TRA contains customary provisions regarding the computation methodology, dispute resolution, early termination, and change-of-control treatment.
The draft TRA was delivered on March 20, 2024 (Deliverable 21), and the execution version was finalized on May 28, 2024 (Deliverable 22). The TRA was executed on May 31, 2024, at closing.
5.7 State and Local Tax
Calderwood & Harkness LLP conducted a comprehensive analysis of the state and local tax implications of the transaction across Pinnacle's five operating states and the holding company entities' potential nexus exposure. The key findings and recommendations are summarized below.
State Tax Rates and Operating Structure:
Blended Effective State Tax Rate: The blended effective state income tax rate, weighted by the allocation of EBITDA among the five operating states, was calculated at 6.42%.
Apportionment Methodologies: Pinnacle is subject to varying apportionment methodologies across its operating states:
• Single-sales-factor apportionment: Pennsylvania, Virginia, and Georgia utilize a single-sales-factor apportionment formula, under which all apportionable income is apportioned based solely on the ratio of in-state sales to total sales.
• Three-factor apportionment (double-weighted sales): Maryland and North Carolina utilize a three-factor apportionment formula with double-weighted sales, under which apportionable income is apportioned based on the weighted average of the property factor, the payroll factor, and the sales factor (with the sales factor counted twice).
Nonresident Withholding. Virginia, Maryland, and Georgia impose withholding tax obligations on the gains recognized by nonresident individual sellers in connection with the sale of a partnership interest in a partnership with operations in those states. The aggregate nonresident withholding amounts computed and remitted at closing were as follows:
The nonresident withholding computation schedule (Deliverable 24) sets forth the detailed calculations for each individual seller and each state.
New York Nexus Mitigation. Ardent Healthcare Holdings LLC, as a partnership with its principal place of management in New York (due to Ardent Capital's New York headquarters), would potentially be subject to New York nexus and the associated filing and tax obligations. To mitigate this risk, Calderwood & Harkness LLP recommended, and the client adopted, a structure whereby all management fee and advisory fee agreements between Ardent Capital and the portfolio company are routed through Ardent Capital GP III LLC (which is already nexused in New York for other Fund III portfolio investments) to Intermediate Inc., rather than directly through Holdings LLC. This approach limits the activities conducted by or attributed to Holdings LLC within New York and reduces the risk of a New York filing obligation for Holdings LLC.
Maryland PTE Election. Calderwood & Harkness LLP analyzed and recommended that Pinnacle Health Services Group LLC make a Maryland pass-through entity tax election, under which the entity-level Maryland income tax is paid at the entity level and the members receive a corresponding credit against their individual Maryland income tax liabilities. This election simplifies the compliance burden for out-of-state members and may provide a net state and local tax benefit by allowing the entity-level tax payment to be deducted at the federal level (circumventing the $10,000 state and local tax deduction cap imposed by Section 164(b)(6) of the Internal Revenue Code).
6. FINANCIAL SUMMARY — FEES AND EXPENSES
6.1 Fee Cap and Actuals
The engagement letter dated January 10, 2024, established a fee arrangement based on hourly rates, subject to an estimated fee budget of $1,850,000 and a fee cap of $2,000,000 (inclusive of out-of-pocket expenses but exclusive of government filing fees). The actual fees and expenses billed are summarized below:
Total actual fees and expenses of $1,742,350 came in $107,650 (5.8%) below the budgeted amount and $257,650 (12.9%) below the fee cap. The under-budget result was primarily attributable to efficiencies in the state and local tax workstream (where the initial scope assumed more extensive nexus analysis for additional states that were ultimately not implicated) and to the fact that the Section 338(h)(10) analysis, while thorough, required fewer hours than originally estimated due to the relatively straightforward conclusion that the election was economically unfavorable.
6.2 Billing Summary by Timekeeper
The following table provides a breakdown of hours billed and fees incurred by each timekeeper:
Out-of-pocket expenses (travel, document reproduction, Westmark Data Systems/Tidewater Technologies research charges, and courier fees), included within the fee cap, totaled $11,600.
Total Billed (Fees + Expenses): $1,742,350.
All invoices have been rendered and all payments have been received in full. There are no outstanding receivables or unbilled work-in-progress associated with this matter. The final invoice was issued on June 20, 2024, and payment was received on June 24, 2024, via wire transfer from Ardent Capital Partners III LP.
6.3 Disbursements and Filing Fees
The following filing fees were incurred in connection with the formation of the acquisition vehicle entities in Delaware. These fees are excluded from the fee cap and were billed separately to the client:
Filing fees of $1,169 were billed to and paid by the client in addition to the $1,742,350 in professional fees and out-of-pocket expenses described above.
7. POST-CLOSING MATTERS HANDED OFF TO CLIENT
7.1 Items Requiring Client Action After Engagement Close
Upon close-out of this engagement, the following post-closing matters have been identified as requiring action by the client (Ardent Capital Partners III LP), the portfolio company entities, the rollover participants, and/or the client's ongoing tax advisors. Calderwood & Harkness LLP has provided comprehensive guidance on each of these items in the post-closing tax integration memorandum (Deliverable 34, delivered June 14, 2024) and the IRS reporting obligations checklist (Deliverable 29, delivered May 30, 2024). Responsibility for each item has been transferred as indicated below.
Section 83(b) Elections. Each rollover participant — Dr. Raymond Carvallo, Dr. Nadia Ostrowski, and Jonathan Marsh — must file a Section 83(b) election with the Internal Revenue Service via certified mail no later than June 30, 2024 (i.e., thirty (30) days after the May 31, 2024 closing date). Calderwood & Harkness LLP has prepared and delivered customized Section 83(b) election form templates (Deliverable 13) and transmittal letter templates (Deliverable 14) for each rollover participant. The responsibility for completing, executing, and timely filing the Section 83(b) elections has been transferred to each individual rollover participant and his or her personal tax advisors. Calderwood & Harkness LLP has emphasized to the client and to each rollover participant (through Marcus Pellegrino) the critical importance of timely filing, as failure to file within the 30-day window would result in the loss of the Section 83(b) election with potentially significant adverse tax consequences (i.e., recognition of ordinary income at each vesting date based on the then-current fair market value of the vesting units).
Section 754 Election Filing. A draft Section 754 election statement has been prepared and delivered (Deliverable 31). The election statement must be attached to Pinnacle Health Services Group LLC's Form 1065 (U.S. Return of Partnership Income) for the taxable year ending December 31, 2024. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP, as the ongoing tax return preparer for Pinnacle and the post-closing entity structure.
Form 8308 Filing. Section 6050K of the Internal Revenue Code requires that Pinnacle Health Services Group LLC file Form 8308 (Report of a Sale or Exchange of Certain Partnership Interests) with the IRS in connection with the exchange of partnership interests that occurred at closing. Form 8308 must be attached to Pinnacle's partnership return (Form 1065) for the taxable year in which the exchange occurred. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP.
Schedule K-1 Preparation. Pinnacle Health Services Group LLC is required to prepare and issue short-period Schedules K-1 to all Pinnacle members for the period beginning January 1, 2024 and ending May 31, 2024 (the closing date). The short-period K-1s must reflect each member's allocable share of Pinnacle's income, deductions, gains, losses, and credits for the pre-closing period. Filing responsibility has been transferred to Caldwell Pratt & Moorehouse LLP, in coordination with Brewer Stanfield & Associates LLP (Pinnacle's historical accounting firm, which will provide the historical books and records necessary for the preparation of the short-period return).
State Nonresident Withholding Remittance. The aggregate nonresident withholding amount of $4.74 million (Virginia: $1.46 million; Maryland: $2.41 million; Georgia: $0.87 million) was computed by Calderwood & Harkness LLP and remitted at closing. The required state-level filings to confirm and report the withholding amounts in each of Virginia, Maryland, and Georgia are to be completed by Caldwell Pratt & Moorehouse LLP in connection with the preparation of the state income tax returns and withholding reports for the short-period ending May 31, 2024.
Tax Receivable Agreement Administration. The TRA requires annual computation of realized tax benefits and corresponding TRA payment amounts, estimated at approximately $4.26 million per year. TRA administration — including the annual computation, payment, and audit procedures — is to be administered by Ardent Capital Partners III LP (through its fund administration team) with support from Caldwell Pratt & Moorehouse LLP. The post-closing tax integration memorandum (Deliverable 34) provides detailed guidance on the computation methodology, payment mechanics, and record-keeping requirements.
Earnout Tax Tracking. The earnout provisions of the Merger Agreement require tracking of Pinnacle's Adjusted EBITDA against the Period 1 target of $58.0 million (for the twelve-month period ending May 31, 2025) and the Period 2 target of $65.0 million (for the twelve-month period ending May 31, 2026). If either earnout target is achieved and a payment becomes due, the related Section 483 imputed interest computations must be performed. The post-closing tax integration memorandum provides a methodology and illustrative calculations for the imputed interest computations. This tracking and computation responsibility rests with Ardent Capital and Caldwell Pratt & Moorehouse LLP.
Estimated Tax Payments. A schedule of estimated federal and state income tax payment obligations for Ardent Healthcare Holdings LLC and Ardent Healthcare Intermediate Inc. for the taxable year ending December 31, 2024, is included in the post-closing tax integration memorandum. Caldwell Pratt & Moorehouse LLP will be responsible for preparing and filing the estimated tax payment vouchers and advising the client on the timing and amounts of estimated payments.
State Income Tax Return Filing. An annual state income tax return filing calendar for all five operating states (Pennsylvania, Virginia, Maryland, North Carolina, and Georgia) is included in the post-closing tax integration memorandum. The filing calendar identifies the applicable return forms, due dates (including extension deadlines), and any applicable pass-through entity tax election deadlines (e.g., the Maryland PTE election). Coordination of state income tax return preparation and filing is the responsibility of Caldwell Pratt & Moorehouse LLP.
7.2 Ongoing Tax Advisor Coordination
The primary ongoing tax advisor for the post-closing entity structure is Caldwell Pratt & Moorehouse LLP, New York, New York, which also serves as the buyer's accounting and audit firm. Caldwell Pratt will be responsible for all ongoing tax compliance, return preparation, estimated tax payment management, TRA support, and general tax advisory services for Ardent Healthcare Holdings LLC, Ardent Healthcare Intermediate Inc., and Pinnacle Health Services Group LLC.
Calderwood & Harkness LLP remains available for consultation on an as-needed basis, including with respect to any questions arising from the deliverables produced during this engagement, any future structuring matters (e.g., add-on acquisitions, refinancings, or exit planning), and any IRS audit or examination matters relating to the transaction structure. Any such consultation would require the execution of a separate engagement letter and would be billed under a new matter number.
The contact at Caldwell Pratt & Moorehouse LLP who will serve as the day-to-day tax compliance lead for the portfolio company is to be confirmed by Marcus Pellegrino. Calderwood & Harkness LLP has offered to participate in a transition call with Caldwell Pratt to review the post-closing tax integration memorandum and answer any questions.
8. DOCUMENT RETENTION AND FILE MANAGEMENT
All engagement files, both electronic and physical, are to be retained in accordance with Calderwood & Harkness LLP's Document Retention Policy (Firm Policy No. DR-2019-04, as amended). The applicable retention period for tax advisory engagement files is ten (10) years from the date of engagement close-out, unless a longer retention period is required by applicable law, regulation, or professional standards.
The following file management actions have been taken or will be taken in connection with the close-out of this engagement:
• Matter Folder in Document Management System. All electronic deliverables, correspondence, internal memoranda, research materials, and work papers have been saved to the firm's document management system (DMS) under Matter No. 1001-00006 (Engagement No. 1001-00006). The DMS folder structure follows the firm's standard taxonomy for tax advisory engagements.
• Original Executed Documents. The original executed engagement letter and the original executed tax opinion letter are maintained in the secure physical file for Matter No. 1001-00006. Copies of both documents have also been saved to the DMS.
• Client File Copies. The client has been provided with copies of all thirty-five (35) deliverables listed in the Deliverables Log (Section 4 above), transmitted electronically to Marcus Pellegrino via the firm's secure file-sharing portal. Receipt was confirmed by Marcus Pellegrino on June 18, 2024.
• Privileged and Work Product Materials. Internal memoranda, research notes, draft analyses, and attorney work product materials have been preserved in the DMS under the privileged/work product subfolder for Matter No. 1001-00006. These materials are not to be disclosed to any third party without the prior approval of the Responsible Partner and the firm's General Counsel.
9. CONFLICT CLEARANCE — CLOSE-OUT
The original conflict check for this engagement was completed on January 8, 2024, in accordance with Calderwood & Harkness LLP's Conflicts of Interest Policy (Firm Policy No. CI-2021-07). The conflict check was performed against all known parties to the transaction, including the client, the target, all selling members, all counterparty entities, and all external counsel and advisors. No conflicts of interest were identified at the time of engagement opening.
During the course of the engagement, no new conflicts of interest arose, and no circumstances were identified that wo

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