MEMORANDUM
CALDERWOOD & HARKNESS LLP 1221 Avenue of the Americas, 40th Floor New York, NY 10020
PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
I. Purpose and Scope
This memorandum summarizes Calderwood & Harkness LLP's ("C&H") review of the Phase I Environmental Site Assessments (each, a "Phase I ESA") prepared by Fieldstone Environmental Associates Inc. ("Fieldstone"), an environmental consulting firm headquartered in Atlanta, Georgia, for the three owned real properties of MedVance Health Systems, Inc. (the "Company," "MedVance," or "Target"). Fieldstone was engaged by Ardent Capital Management III LLC ("Ardent Capital" or "Sponsor") at C&H's recommendation following the execution of the letter of intent on October 28, 2024, and its engagement was governed by a master services agreement between Fieldstone and Ardent Capital dated November 4, 2024.
Each of the three Phase I ESAs was prepared in accordance with the American Society for Testing and Materials ("ASTM") Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, designation E1527-21 (the "ASTM Standard"), and the United States Environmental Protection Agency's ("EPA") All Appropriate Inquiries Final Rule, codified at 40 C.F.R. Part 312 (the "AAI Rule"). Compliance with both the ASTM Standard and the AAI Rule is a prerequisite to invoking the innocent-landowner defense under Section 101(35)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. § 9601(35)(B), the contiguous-property-owner defense under Section 107(q) of CERCLA, 42 U.S.C. § 9607(q), and the bona fide prospective purchaser defense under Section 107(r) of CERCLA, 42 U.S.C. § 9607(r). Fieldstone has confirmed in each report that its assessments satisfy the applicable standards, and C&H has independently verified that the reports meet the ASTM E1527-21 requirements with respect to scope, methodology, professional qualifications, and documentation.
This memorandum is furnished in connection with the proposed acquisition (the "Transaction") of one hundred percent (100%) of the issued and outstanding shares of capital stock of MedVance Health Systems, Inc. by Ardent Healthcare Holdings Inc. ("Purchaser"), a newly formed acquisition vehicle organized under the laws of the State of Delaware and controlled by Ardent Capital Management III LLC. The Transaction is expected to close on or about April 18, 2025, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.
This memorandum constitutes confidential attorney-client privileged communication and attorney work product prepared by counsel in anticipation of the Transaction and in furtherance of C&H's provision of legal advice to Ardent Capital. It is not intended for distribution to, or reliance by, any third party without the prior written consent of C&H and Ardent Capital.
II. Executive Summary
Based on C&H's review of the three Phase I ESA reports prepared by Fieldstone and the supplemental environmental and regulatory compliance diligence conducted by C&H as described herein, we provide the following high-level conclusions:
No Recognized Environmental Conditions Identified. Fieldstone identified no Recognized Environmental Conditions ("RECs"), no Controlled Recognized Environmental Conditions ("CRECs"), and no Historical Recognized Environmental Conditions ("HRECs") at any of the three owned properties assessed. The ASTM E1527-21 standard defines a REC as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property due to a release to the environment, under conditions indicative of a release to the environment, or under conditions that pose a material threat of a future release to the environment. A CREC is a recognized environmental condition resulting from a past release that has been addressed to the satisfaction of a regulatory authority but with residual contamination in place subject to the implementation of required controls. An HREC is a past release that has been addressed to the satisfaction of the applicable regulatory authority without controls being required. The absence of any such conditions across all three subject properties is an affirmative and favorable finding.
No Material Environmental Liabilities. Based on the Phase I ESA findings, there are no material environmental liabilities requiring further investigation through a Phase II Environmental Site Assessment (involving subsurface investigation, soil sampling, groundwater monitoring, or similar intrusive testing) or remediation. C&H has not identified any facts, circumstances, or conditions that would, in our professional judgment, give rise to a material environmental claim, remediation obligation, or regulatory enforcement action with respect to any of the three owned properties.
Standard SPA Environmental Provisions Recommended. The environmental risk profile of the Target supports the inclusion of standard environmental representations and warranties in the Stock Purchase Agreement (the "SPA") without the need for special indemnification provisions, standalone environmental escrow accounts, or holdback mechanisms attributable to environmental matters. The environmental representations and warranties can be made without material qualification or exception and should be subject to the general indemnification framework negotiated in the SPA.
R&W Insurance Coverage. We have reviewed the summary terms of the representation and warranty insurance policy to be issued by Northbridge Specialty Insurance Company (Policy No. NSI-POLI-2025-04418, with a policy limit of $62,000,000) (the "R&W Policy"). Based on our review, environmental representations are expected to fall within the anticipated scope of coverage on the same basis as other covered representations, subject to standard policy terms, conditions, and exclusions. No known environmental liabilities have been identified that would trigger exclusions or carve-outs under the R&W Policy. We recommend that Ardent Capital confirm the final policy language with its insurance broker, Velthorn Risk Advisors LLC, upon policy binding.
III. Properties Assessed
Fieldstone prepared individual Phase I ESA reports for each of the three real properties owned in fee simple by MedVance Health Systems, Inc. The properties are described below.
A. Nashville Headquarters and Administrative Campus
• Address: 4200 West End Avenue, Nashville, TN 37205
• Property Type: Corporate headquarters and administrative offices; approximately 86,500 square feet of owned commercial office space situated on approximately 4.2 acres of land. The building is a four-story Class A office structure with an attached five-level parking garage accommodating approximately 340 vehicles.
• Fieldstone Report Date and Reference Number: Phase I ESA dated December 6, 2024; Fieldstone Project No. FEA-2024-1187.
• Current Use: The property serves as MedVance's corporate headquarters and principal administrative campus. Operations conducted at the facility include executive management offices, finance and accounting, human resources, billing and revenue cycle management operations, information technology, and corporate compliance and legal departments. No clinical, surgical, diagnostic, or patient-care operations are conducted at this location. The facility does not house any laboratory, pharmaceutical compounding, radiology, or medical-waste-generating operations.
• Ownership: Fee simple interest held by MedVance Health Systems, Inc. The property was acquired by MedVance on March 15, 2017, from West End Office Park LLC for a purchase price of $22,750,000, as reflected in the Warranty Deed recorded in Instrument No. 20170315-0026194 in the Davidson County Register of Deeds.
• Title Reference: Commonwealth Abstract & Title Co. Commitment for Title Insurance No. CAT-2024-TN-08193, effective date November 12, 2024, issued in connection with the Transaction. No environmental liens, activity and use limitations, or institutional controls were identified in the title search.
B. Chattanooga Ambulatory Surgery Center
• Address: 1875 Gunbarrel Road, Suite 100, Chattanooga, TN 37421
• Property Type: Ambulatory surgery center ("ASC"); owned outpatient surgical facility comprising approximately 24,200 square feet of medical and clinical space situated on approximately 2.1 acres of land. The facility includes four operating rooms, two procedure rooms, pre-operative and post-operative recovery areas, and associated administrative and support spaces.
• Fieldstone Report Date and Reference Number: Phase I ESA dated December 9, 2024; Fieldstone Project No. FEA-2024-1188.
• Current Use: The facility operates as a licensed ambulatory surgery center in the State of Tennessee, providing outpatient surgical procedures across multiple medical specialties including orthopedics, ophthalmology, gastroenterology, and general surgery. The facility is licensed by the Tennessee Department of Health, Division of Health Care Facilities (License No. ASC-TN-00472) and is certified by the Centers for Medicare & Medicaid Services (CMS Certification No. 44-ASC-0318).
• Ownership: Fee simple interest held by MedVance Health Systems, Inc. The property was acquired by MedVance on July 22, 2019, from Parkside Medical Properties LLC for a purchase price of $8,400,000, as reflected in the Warranty Deed recorded in Book 11412, Page 238 of the Hamilton County Register of Deeds.
C. Huntsville Ambulatory Surgery Center
• Address: 3720 Memorial Parkway South, Huntsville, AL 35801
• Property Type: Ambulatory surgery center; owned outpatient surgical facility comprising approximately 21,800 square feet of medical and clinical space situated on approximately 1.9 acres of land. The facility includes three operating rooms, two procedure rooms, pre-operative and post-operative recovery areas, and associated administrative and support spaces.
• Fieldstone Report Date and Reference Number: Phase I ESA dated December 11, 2024; Fieldstone Project No. FEA-2024-1189.
• Current Use: The facility operates as a licensed ambulatory surgery center in the State of Alabama, providing outpatient surgical procedures across multiple medical specialties including orthopedics, pain management, ophthalmology, and general surgery. The facility is licensed by the Alabama Department of Public Health, Division of Health Care Facilities (License No. ASC-AL-01285) and is certified by the Centers for Medicare & Medicaid Services (CMS Certification No. 01-ASC-0197).
• Ownership: Fee simple interest held by MedVance Health Systems, Inc. The property was acquired by MedVance on January 8, 2021, from Southern Medical Realty Holdings Inc. for a purchase price of $7,150,000, as reflected in the Warranty Deed recorded in Instrument No. 2021-0108-0004217 in the Madison County Probate Office.
IV. Fieldstone Phase I ESA Methodology
Fieldstone employed a consistent methodology across all three Phase I ESA engagements, adhering to the requirements of ASTM Standard E1527-21 and the AAI Rule. The following summarizes the principal components of Fieldstone's scope of work:
(a) Regulatory Database Review. Fieldstone engaged Penrose Solutions ("EDR"), an industry-standard database provider, to conduct comprehensive searches of federal, state, tribal, and local environmental regulatory databases for each of the three subject properties and their surrounding areas. The databases searched and the minimum search distances applied were consistent with the requirements of Table 3 of ASTM E1527-21, and included, without limitation, the following:
• EPA National Priorities List ("NPL") — search radius of 1.0 mile
• EPA Comprehensive Environmental Response, Compensation, and Liability Information System / Superfund Enterprise Management System ("CERCLIS/SEMS") — search radius of 0.5 mile
• EPA RCRA Treatment, Storage, and Disposal Facilities ("RCRA TSD") — search radius of 1.0 mile
• EPA RCRA Corrective Action Facilities ("RCRA CORRACTS") — search radius of 1.0 mile
• EPA RCRA Large Quantity Generators ("RCRA LQG") and Small Quantity Generators ("RCRA SQG") — subject property and adjoining properties only
• EPA Emergency Response Notification System ("ERNS") — subject property only
• Tennessee Department of Environment and Conservation ("TDEC") state-equivalent lists (applicable to Nashville and Chattanooga properties), including the Tennessee Hazardous Substance Site Survey List, Tennessee Voluntary Cleanup Program sites, Tennessee Underground Storage Tank database, and Tennessee Solid Waste Disposal Facilities list
• Alabama Department of Environmental Management ("ADEM") state-equivalent lists (applicable to Huntsville property), including the Alabama Hazardous Substance Cleanup Fund sites, Alabama Voluntary Cleanup Program sites, Alabama Underground Storage Tank database, and Alabama Solid Waste Disposal Facilities list
• Local and tribal databases as applicable and reasonably ascertainable
(b) Historical Use Research. Fieldstone conducted historical use research for each subject property and surrounding areas to identify prior uses that may have involved the storage, handling, generation, treatment, or disposal of hazardous substances or petroleum products. Sources reviewed included, as available and reasonably ascertainable:
• Historical aerial photographs (sourced from EDR Aerial Photo Decade packages and the University of Tennessee Map Library), spanning coverage from the earliest available imagery (approximately 1940s–1950s) through the most recent available imagery (2023)
• Historical fire insurance maps (Trelwick Maps), where available for the subject property and surrounding areas
• Historical city and telephone directory listings (Polk City Directories and R.L. Polk & Co. archives)
• Chain-of-title records obtained through title searches performed in connection with the Transaction
• Historical topographic maps (USGS 7.5-minute quadrangle maps)
• Local building department records and planning department files, to the extent reasonably obtainable
(c) Site Reconnaissance. Fieldstone field personnel conducted physical site reconnaissance visits at each of the three subject properties. Site visits were conducted on the following dates: Nashville Headquarters on November 18, 2024; Chattanooga ASC on November 20, 2024; and Huntsville ASC on November 21, 2024. During each site visit, Fieldstone personnel visually inspected the interior and exterior of the subject property, including all accessible areas, parking areas, loading docks, mechanical rooms, storage areas, and grounds. Fieldstone personnel observed and documented the general condition of the properties, looked for evidence of current or former underground storage tanks ("USTs") or aboveground storage tanks ("ASTs"), staining or discoloration of soils or pavement, distressed vegetation, unusual odors, the presence of drums or containers of hazardous substances or petroleum products, the condition of building systems (including HVAC equipment and electrical transformers), evidence of polychlorinated biphenyls ("PCBs"), evidence of dumping or disposal activities, and any other conditions indicative of a release or threatened release of hazardous substances or petroleum products.
(d) Interviews. Fieldstone conducted interviews with current facility managers at each of the three properties and with designated representatives of Target management. Karen Tolliver, Chief Operating Officer of MedVance Health Systems, Inc., served as the primary point of contact for Target management and facilitated access to the properties and Company personnel. Facility-level interviews were conducted with Derek Simmons (Nashville Headquarters, Facilities Director), Maria Escobar (Chattanooga ASC, Practice Administrator), and Dr. Jeffrey Harmon (Huntsville ASC, Medical Director). Fieldstone inquired about current and historical uses of each property, the existence of environmental conditions or concerns, the presence or former presence of storage tanks, the use and storage of hazardous substances and petroleum products, the occurrence of any releases or spills, and any pending or threatened environmental claims, investigations, or enforcement actions. In each case, the interviewees reported no knowledge of environmental conditions, releases, or claims associated with the subject properties.
(e) Review of Available Environmental Records. Fieldstone reviewed available environmental records maintained by the Company, including prior environmental assessments (none were identified for any of the three owned properties), permits, registrations, manifests, and compliance records. The Company provided Fieldstone with copies of medical waste manifests, hazardous waste generator documentation, Material Safety Data Sheets (now Safety Data Sheets under the GHS-aligned Hazard Communication Standard), and facility-level environmental, health, and safety records.
(f) Professional Oversight. Each Phase I ESA was conducted under the supervision of, and signed by, a qualified environmental professional meeting the requirements of ASTM E1527-21 Section 3.2.30 and 40 C.F.R. § 312.10. Specifically, the Nashville Headquarters and Chattanooga ASC reports were supervised and signed by Michael R. Drummond, P.E. (Tennessee Professional Engineer License No. 108254), and the Huntsville ASC report was supervised and signed by Lisa A. Corbin, P.G. (Alabama Professional Geologist License No. 1847). Both Mr. Drummond and Ms. Corbin are principals of Fieldstone Environmental Associates Inc. and have extensive experience in environmental site assessment for commercial and healthcare properties.
V. Findings by Property
A. Nashville Headquarters and Administrative Campus (4200 West End Avenue, Nashville, TN 37205)
Regulatory Database Review. The EDR database search conducted for the Nashville Headquarters property revealed no listings for the subject property on any federal or State of Tennessee environmental regulatory database. Fieldstone reviewed all listings identified within the applicable ASTM E1527-21 search radii for the surrounding area. Two facilities were identified within the search radii: (i) a former dry-cleaning establishment located approximately 0.4 miles east-northeast of the subject property, listed on the Tennessee Dry Cleaner Environmental Response Program database (TDEC Site ID: DCER-47-0192), and (ii) a retail gasoline station located approximately 0.3 miles south-southwest of the subject property, listed on the Tennessee Underground Storage Tank database with a closed leaking underground storage tank ("LUST") case (TDEC LUST Case No. 47-1806, closed February 2013). Fieldstone evaluated both listings and concluded, based on their distance from the subject property, the known hydrogeological conditions in the area (groundwater flow direction is generally to the west-northwest based on USGS and TDEC data), and the regulatory closure status of both cases, that neither facility poses a migration risk to the subject property or constitutes a REC with respect to the subject property. C&H concurs with this assessment.
Historical Use. Fieldstone's historical use research indicates that the subject property was undeveloped agricultural or pastureland from the earliest available aerial photographs (1948) through approximately 1970. Between approximately 1970 and 1975, the property was developed for commercial office use, and a multi-story commercial office building and surface parking lot were constructed. The property has been continuously used for commercial office purposes since that time. No prior industrial, manufacturing, chemical storage, or gasoline station use was identified for the subject property. Fieldstone reviewed chain-of-title records and confirmed that prior owners included West End Office Park LLC (2003–2017), Cumberland Properties Inc. (1988–2003), and Nashville Commerce Associates (1974–1988), all of which operated the property as commercial office space. Fieldstone identified no historical uses that would constitute a REC.
Site Reconnaissance. Fieldstone conducted a site reconnaissance visit on November 18, 2024. The visit included inspection of the building interior (all four floors, including mechanical rooms, electrical rooms, janitorial closets, and common areas), the building exterior, the parking garage (all five levels), and the surrounding grounds and landscaping. Fieldstone observed no evidence of current or former aboveground storage tanks or underground storage tanks on the property. No staining, discoloration, or other evidence of releases of hazardous substances or petroleum products was observed on soils, pavement, or building surfaces. Vegetation on the property appeared healthy, and no areas of distressed vegetation were noted. No unusual or chemical odors were detected during the site visit. Building systems, including the HVAC system and electrical transformers, were observed to be in good operating condition. Fieldstone specifically examined the pad-mounted electrical transformers serving the building and parking garage and observed no evidence of leaking, staining, or PCB-containing equipment; nameplates on the transformers indicated "No PCBs" or "Non-PCB" designations, consistent with post-1979 manufacture.
Asbestos / Lead-Based Paint / Radon. The existing commercial office building on the subject property was originally constructed in approximately 1974, which predates the EPA's ban on most asbestos-containing materials in certain applications and the federal prohibition on lead-based paint in residential applications (effective January 1, 1978, under the Consumer Product Safety Commission's regulation of lead-based paint). Fieldstone noted that, as a commercial (non-residential) building, the property is not subject to the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X) disclosure requirements, though lead-based paint may be present in the original construction. During its visual, non-intrusive inspection, Fieldstone observed no damaged or friable suspect asbestos-containing materials. Fieldstone noted that certain building materials of the vintage present (e.g., floor tiles, pipe insulation, roofing materials, caulking, and joint compounds) may contain asbestos, but that determination cannot be made without bulk sampling, which is outside the scope of a Phase I ESA. Fieldstone recommended that, if renovation or demolition activities are planned, an asbestos survey in accordance with EPA regulations (40 C.F.R. Part 61, Subpart M — National Emission Standards for Hazardous Air Pollutants for Asbestos) be conducted prior to such activities. Radon was not evaluated as part of the Phase I ESA scope; radon assessment is excluded from the ASTM E1527-21 standard.
De Minimis Conditions Noted. Fieldstone identified the following conditions as business environmental risks ("BERs") that do not rise to the level of a REC:
• Small quantities of janitorial and cleaning chemicals (commercially available, consumer-grade products including glass cleaner, disinfectant spray, floor cleaner, and bathroom cleaning products) were observed in janitorial closets on each floor. All products were observed to be in their original, properly labeled containers, stored upright on shelving, and with no evidence of spills or leaks. These materials are maintained in quantities consistent with normal commercial office operations and are not subject to CERCLA or RCRA regulation at the quantities observed.
• A small diesel-powered emergency generator (approximately 250 kW, Granite Harbor Group Model C9) was observed on the north side of the building on a concrete pad, associated with a 500-gallon double-walled aboveground diesel fuel storage tank. The tank was observed to be in good condition with no evidence of leaking, staining, or corrosion. The tank is equipped with secondary containment (double-wall construction) and overfill protection. Fieldstone confirmed that the tank is registered with the Nashville Fire marshal's office and is not subject to EPA UST regulations. This tank does not constitute a REC.
Conclusion. Fieldstone identified no RECs, CRECs, or HRECs at the Nashville Headquarters property. No further investigation is recommended. C&H concurs with Fieldstone's findings and conclusions.
B. Chattanooga Ambulatory Surgery Center (1875 Gunbarrel Road, Suite 100, Chattanooga, TN 37421)
Regulatory Database Review. The EDR database search conducted for the Chattanooga ASC property revealed no listings for the subject property on any federal or State of Tennessee environmental regulatory database. Fieldstone reviewed all listings identified within the applicable ASTM E1527-21 search radii for the surrounding area. Three facilities were identified within the search radii: (i) a retail gasoline station located approximately 0.25 miles northeast of the subject property, listed on the Tennessee Underground Storage Tank database with an active UST registration (no LUST case associated); (ii) a commercial auto body repair shop located approximately 0.35 miles west of the subject property, listed as a RCRA Small Quantity Generator (EPA ID: TND098340187); and (iii) a former manufacturing facility located approximately 0.8 miles south-southeast of the subject property, listed on the Tennessee Hazardous Substance Site Survey List with a completed voluntary cleanup (TDEC VCP Site ID: VCP-33-0048, No Further Action letter issued September 2018). Fieldstone evaluated each listing and concluded that none of the three facilities poses a migration risk to the subject property based on distance, documented hydrogeological conditions (shallow groundwater flow direction in the area of the subject property is generally to the south-southeast based on local topography and TDEC records), the nature and status of each listing, and the absence of any evidence of migration of contamination toward the subject property. None of these listings constitutes a REC with respect to the subject property. C&H has reviewed Fieldstone's analysis and concurs with this assessment.
Historical Use. Fieldstone's historical use research indicates that the subject property was undeveloped wooded land from the earliest available aerial photographs (1951) through approximately 1990. Between approximately 1990 and 1995, the surrounding area was developed as a mixed-use commercial corridor along Gunbarrel Road. The subject property was developed in approximately 1998 with a single-story commercial medical office building. The property has been continuously used for medical office and outpatient clinical purposes since its initial development. MedVance acquired the property in 2019 and converted the facility from a multi-specialty physician office to a licensed ambulatory surgery center. No prior industrial, manufacturing, chemical storage, or gasoline station use was identified for the subject property. Fieldstone identified no historical uses that would constitute a REC.
Site Reconnaissance. Fieldstone conducted a site reconnaissance visit on November 20, 2024. The visit included inspection of the building interior (all accessible areas including operating rooms, procedure rooms, pre-operative and post-operative areas, sterile processing and instrument reprocessing areas, medical gas storage, mechanical rooms, electrical rooms, storage rooms, and administrative offices), the building exterior, the parking lot, and the surrounding grounds. Fieldstone observed no evidence of current or former aboveground or underground storage tanks on the property. No staining, discoloration, or other evidence of releases of hazardous substances or petroleum products was observed. Vegetation on the property appeared healthy, and no unusual or chemical odors were detected.
Fieldstone noted the presence of medical-waste management operations on the property, which is typical for an ambulatory surgery center and is expected for this type of facility. Regulated medical waste (including sharps containers, biohazardous waste, and pathological waste) was observed to be properly segregated, contained in approved red-bag containers and sharps disposal containers, and stored in a designated, secure, and locked medical waste storage area adjacent to the loading dock in the rear of the building. MedVance utilizes Pemberton Partners LLC as its licensed medical waste transporter and disposal contractor for the Chattanooga ASC facility, with pickups occurring on a weekly basis. While regulated medical waste management is not within the scope of CERCLA or the ASTM E1527-21 standard (medical waste is generally regulated under state medical waste regulations rather than RCRA or CERCLA), Fieldstone noted these observations for completeness and for the benefit of the client. C&H has reviewed the Company's Stericycle service agreement and waste manifests for the Chattanooga facility as part of its broader diligence review and has not identified any irregularities or compliance concerns.
Fieldstone further noted that the Chattanooga ASC generates small quantities of hazardous waste associated with waste anesthetic gases (specifically, sevoflurane and desflurane waste), spent sterilization chemicals (glutaraldehyde-based high-level disinfectants), and incidental quantities of other regulated waste streams. The facility operates as a Conditionally Exempt Small Quantity Generator ("CESQG") under RCRA (now categorized as a Very Small Quantity Generator or "VSQG" under the 2016 Generator Improvements Rule), generating less than 100 kilograms per month of hazardous waste. The facility's EPA ID number is TND098762501. Fieldstone reviewed the Company's hazardous waste records and confirmed that the facility is in compliance with applicable RCRA generator requirements, including proper waste characterization, labeling, accumulation time limits, and manifesting for off-site disposal.
Asbestos / Lead-Based Paint. The Chattanooga ASC building was originally constructed in approximately 1998, which post-dates both the EPA's regulatory actions restricting asbestos-containing building materials and the federal prohibition on lead-based paint in residential applications. Based on the construction date, the likelihood of asbestos-containing materials or lead-based paint in the building is low. Fieldstone observed no suspect asbestos-containing materials or deteriorated paint conditions during its visual inspection. No further assessment was deemed necessary.
De Minimis Conditions Noted. Fieldstone identified the following conditions as BERs that do not rise to the level of a REC:
• Small quantities of medical-grade solvents and sterilization chemicals, including glutaraldehyde-based high-level disinfectant solutions (Cidex OPA, manufactured by Pemberton Holdings), enzymatic instrument cleaners, and isopropyl alcohol, were observed in the sterile processing and instrument reprocessing area. All chemicals were observed in their original, properly labeled containers, stored in accordance with manufacturer instructions and applicable OSHA Hazard Communication Standard requirements (29 C.F.R. § 1910.1200). Safety Data Sheets were available and current. These materials are maintained in quantities consistent with normal ASC operations and do not constitute a REC.
• A small natural gas-powered emergency generator (approximately 100 kW, Camberwell Holdings Model QT100) was observed on the south side of the building on a concrete pad. The generator is fueled by a natural gas utility connection (no on-site fuel storage tank). The generator was observed in good operating condition with no evidence of leaking or staining.
Conclusion. Fieldstone identified no RECs, CRECs, or HRECs at the Chattanooga ASC property. No further investigation is recommended. C&H concurs with Fieldstone's findings and conclusions.
C. Huntsville Ambulatory Surgery Center (3720 Memorial Parkway South, Huntsville, AL 35801)
Regulatory Database Review. The EDR database search conducted for the Huntsville ASC property revealed no listings for the subject property on any federal or State of Alabama environmental regulatory database. Fieldstone reviewed all listings identified within the applicable ASTM E1527-21 search radii for the surrounding area. Two facilities were identified within the search radii: (i) a retail gasoline station and convenience store located approximately 0.2 miles north of the subject property, listed on the Alabama Underground Storage Tank database with a closed LUST case (ADEM LUST Site ID: LUST-AL-47-0893, No Further Action letter issued April 2016); and (ii) a commercial printing facility located approximately 0.6 miles west-southwest of the subject property, listed as a RCRA Small Quantity Generator (EPA ID: ALD098201407). Fieldstone evaluated both listings and concluded that neither facility poses a migration risk to the subject property based on distance, topographic position, documented hydrogeological conditions (shallow groundwater flow in the vicinity of the subject property is generally to the southwest based on regional topography and ADEM records), and the regulatory closure status of the LUST case. Neither listing constitutes a REC with respect to the subject property. C&H has reviewed Fieldstone's analysis and concurs with this assessment.
Historical Use. Fieldstone's historical use research indicates that the subject property was undeveloped land and part of a larger agricultural parcel from the earliest available aerial photographs (1950) through approximately 2000. The Memorial Parkway South corridor underwent significant commercial development beginning in the late 1990s. The subject property was developed in approximately 2004 with a single-story commercial medical office building. The property has been continuously used for medical office and outpatient clinical purposes since its initial development. MedVance acquired the property in January 2021 and operated the existing physician office as a general medical practice for approximately twelve months before completing the renovation and licensure process necessary to operate the facility as a licensed ambulatory surgery center, which commenced operations as an ASC in March 2022. No prior industrial, manufacturing, chemical storage, or gasoline station use was identified for the subject property. Fieldstone identified no historical uses that would constitute a REC.
Site Reconnaissance. Fieldstone conducted a site reconnaissance visit on November 21, 2024. The visit included inspection of the building interior (all accessible areas including operating rooms, procedure rooms, pre-operative and post-operative areas, sterile processing areas, medical gas storage, mechanical rooms, electrical rooms, storage rooms, and administrative offices), the building exterior, the parking lot, and the surrounding grounds. Fieldstone observed no evidence of current or former aboveground or underground storage tanks on the property. No staining, discoloration, or other evidence of releases of hazardous substances or petroleum products was observed. Vegetation on the property appeared healthy, and no unusual or chemical odors were detected.
Consistent with the observations at the Chattanooga ASC, Fieldstone noted the presence of medical-waste management operations on the property. Regulated medical waste was observed to be properly segregated and stored in a designated, secure, and locked medical waste storage area. MedVance utilizes Pemberton Partners LLC as its licensed medical waste transporter and disposal contractor for the Huntsville ASC facility as well, with pickups occurring on a weekly basis. C&H has reviewed the Company's Stericycle service agreement and waste manifests for the Huntsville facility and has not identified any irregularities or compliance concerns.
The Huntsville ASC generates small quantities of hazardous waste associated with waste anesthetic gases, spent sterilization chemicals, and incidental quantities of other regulated waste streams. The facility operates as a Very Small Quantity Generator under RCRA, generating less than 100 kilograms per month of hazardous waste. The facility's EPA ID number is ALD098830254. Fieldstone reviewed the Company's hazardous waste records and confirmed that the facility is in compliance with applicable RCRA generator requirements under both federal and Alabama state regulations (ADEM Admin. Code R. 335-14).
Asbestos / Lead-Based Paint. The Huntsville ASC building was originally constructed in approximately 2004, which post-dates both the EPA's regulatory actions restricting asbestos-containing building materials and the federal prohibition on lead-based paint. Based on the construction date, the likelihood of asbestos-containing materials or lead-based paint in the building is very low. Fieldstone observed no suspect asbestos-containing materials or deteriorated paint conditions during its visual inspection. No further assessment was deemed necessary.
De Minimis Conditions Noted. Fieldstone identified the following conditions as BERs that do not rise to the level of a REC:
• Small quantities of medical-grade solvents and sterilization chemicals, consistent with those observed at the Chattanooga ASC, were present in the sterile processing area. All chemicals were properly stored and labeled, with current Safety Data Sheets maintained in compliance with the OSHA Hazard Communication Standard.
• A small diesel-powered emergency generator (approximately 80 kW, Dunmore Partners LLC Model C80 D6) was observed on the east side of the building on a concrete pad, associated with a 200-gallon double-walled aboveground diesel fuel storage tank. The tank was observed to be in good condition with no evidence of leaking, staining, or corrosion. The tank is equipped with secondary containment (double-wall construction) and overfill protection. The tank is not subject to EPA UST regulations.
• Fieldstone noted the presence of a small area (approximately 100 square feet) of minor pavement cracking and deterioration in the northeast corner of the parking lot. No staining or evidence of petroleum releases was associated with this condition. Fieldstone characterized this as a maintenance item with no environmental significance.
Conclusion. Fieldstone identified no RECs, CRECs, or HRECs at the Huntsville ASC property. No further investigation is recommended. C&H concurs with Fieldstone's findings and conclusions.
VI. Data Gaps and Limitations
Fieldstone identified the following data gaps in its Phase I ESA reports, which are discussed below along with Fieldstone's professional assessment of whether such gaps affect its conclusions and C&H's independent evaluation:
Nashville Headquarters (FEA-2024-1187). Fieldstone noted that historical Trelwick fire insurance maps were not available for the specific area of the subject property, as the Trelwick map coverage for Nashville does not extend to the West End Avenue corridor at the location of the property. Fieldstone compensated for this data gap through its review of historical aerial photographs (which provided continuous coverage from 1948 through 2023), USGS topographic maps, city directory listings, and chain-of-title records. Fieldstone concluded that the unavailability of Trelwick maps does not constitute a significant data gap because the alternative historical sources reviewed provide sufficient information to characterize the historical use of the property. C&H concurs with this assessment.
Chattanooga ASC (FEA-2024-1188). Fieldstone noted that city directory listings were not available for the subject property address prior to 1998 (the approximate year of initial development), as the property was undeveloped prior to that time and was not included in city directory coverage. Fieldstone concluded that this does not constitute a significant data gap because the property was confirmed to be undeveloped wooded land prior to 1998 based on aerial photograph review and other historical sources. C&H concurs with this assessment.
Huntsville ASC (FEA-2024-1189). Fieldstone noted that it was unable to obtain historical building department records from the City of Huntsville for the period prior to 2000, as the City's records for that period have not been digitized and were not readily accessible within the assessment timeframe. Fieldstone concluded that this does not constitute a significant data gap because the property was confirmed to be undeveloped agricultural land prior to approximately 2004 based on aerial photograph review, USGS topographic maps, and other historical sources, and no evidence of structures or development was observed in any pre-2004 imagery. C&H concurs with this assessment.
In addition to the property-specific data gaps identified above, the following standard limitations of Phase I ESA methodology apply to all three reports:
(a) A Phase I ESA is a non-intrusive investigation. No soil sampling, groundwater sampling, air sampling, or other intrusive testing was performed as part of the Phase I ESA scope. The absence of identified RECs does not guarantee the absence of contamination; it reflects that no conditions indicative of contamination were identified through the non-intrusive assessment methodology prescribed by ASTM E1527-21.
(b) A Phase I ESA does not include assessment of mold, radon, lead in drinking water, wetlands, endangered species, cultural or historical resources, indoor air quality (other than observations of chemical odors), or regulatory compliance (unless specifically contracted). These items are expressly excluded from the ASTM E1527-21 scope.
(c) The conclusions of each Phase I ESA are based on conditions observed and information available at the time of the assessment. Changes in site conditions, regulatory databases, or available information after the date of each report may affect the conclusions.
(d) Pursuant to ASTM E1527-21 Section 4.6, the shelf life of a Phase I ESA is 180 days from the date of the report. If the Transaction closing occurs more than 180 days after the date of any Phase I ESA report, an update of the report (or certain components thereof) may be required to maintain CERCLA liability protections. Based on the anticipated closing date of April 18, 2025, all three Phase I ESA reports will remain within their 180-day shelf life at closing.
C&H's view is that none of the identified data gaps is material or warrants a Phase II Environmental Site Assessment in connection with the proposed acquisition. The data gaps identified by Fieldstone are minor, typical of Phase I ESAs for properties of this type and vintage, and were adequately addressed by Fieldstone through the use of alternative information sources.
VII. Regulatory Compliance Matters (Non-ASTM Observations)
The following items, while outside the scope of the ASTM E1527-21 Phase I ESA standard, were observed by Fieldstone during its site reconnaissance and interviews or were identified through C&H's broader environmental and regulatory compliance diligence. These items are relevant to Purchaser's overall environmental risk assessment and are summarized here for completeness.
Medical Waste Management. All three MedVance-owned facilities utilize licensed medical waste transporters and disposal contractors for the management of regulated medical waste. As noted above, the Chattanooga ASC and Huntsville ASC both contract with Pemberton Partners LLC for medical waste transportation and treatment/disposal services. The Nashville Headquarters does not generate regulated medical waste, as no clinical or patient-care operations are conducted at that location. C&H has reviewed the active Stericycle service agreements for both ASC facilities, which are current and in good standing. C&H has also reviewed representative samples of medical waste manifests for the twelve-month period ending November 30, 2024, and has confirmed that the manifests appear complete, properly executed, and consistent with the waste volumes and pickup frequencies described by facility management. Both ASC facilities maintain separate medical waste storage areas that are locked, access-controlled, and maintained in compliance with the Tennessee Department of Environment and Conservation Rules, Chapter 1200-01-15 (for the Chattanooga ASC) and the Alabama Department of Environmental Management Administrative Code, Chapter 335-17 (for the Huntsville ASC).
OSHA Compliance. Both ASC facilities maintain written Exposure Control Plans addressing bloodborne pathogens in accordance with OSHA's Bloodborne Pathogens Standard (29 C.F.R. § 1910.1030). Hazard Communication Programs compliant with OSHA's Hazard Communication Standard (29 C.F.R. § 1910.1200) are in place at all three owned properties, with Safety Data Sheets maintained for all chemicals on-site and accessible to employees. Both ASC facilities maintain waste anesthetic gas ("WAG") monitoring programs, including periodic air monitoring in operating rooms and post-anesthesia care units to ensure that employee exposures remain below the National Institute for Occupational Safety and Health ("NIOSH") recommended exposure limits for halogenated anesthetic agents (2 ppm ceiling) and nitrous oxide (25 ppm time-weighted average). C&H has reviewed the Company's OSHA 300 Logs for the three most recent calendar years (2022, 2023, and 2024 year-to-date) for all three owned facilities and has identified no trends or patterns of concern. No outstanding OSHA citations, open investigations, informal settlements, or consent agreements were identified in the Company's records or through a review of the OSHA Establishment Search database for MedVance Health Systems, Inc. and its facility addresses.
Wastewater Discharge. Both the Chattanooga ASC and the Huntsville ASC discharge wastewater to the municipal sanitary sewer system. The Chattanooga ASC operates under a sewer-use permit issued by the Hamilton County Water and Wastewater Treatment Authority (Permit No. HC-SU-2022-0471, expiration date June 30, 2027). The Huntsville ASC operates under a sewer-use authorization issued by the Brightwater & Co. Water Pollution Control Division (Authorization No. HU-WPC-2022-0189, expiration date December 31, 2026). In both cases, the facilities' wastewater discharges consist primarily of domestic sanitary wastewater (restrooms, break rooms, and hand-washing sinks) and medical instrument reprocessing wastewater. Based on a review of the facilities' discharge characteristics and the applicable permit conditions, no industrial pretreatment permits are required for either ASC facility. Neither facility discharges chemical or pharmaceutical wastewater that would trigger pretreatment standards under the Clean Water Act (33 U.S.C. § 1317) or applicable state regulations. The Nashville Headquarters generates only domestic sanitary wastewater discharged to the Metro Nashville Water Services sewer system under the facility's standard commercial sewer-use connection; no sewer-use permit or industrial pretreatment permit is required.
Air Emissions. None of the three owned MedVance properties conducts operations that require air emission permits under the Clean Air Act (42 U.S.C. §§ 7401–7671q) or applicable Tennessee or Alabama state air quality regulations. No operations at any of the three facilities are subject to Title V operating permit requirements or minor source permit requirements. The emergency generators at the Nashville Headquarters and Huntsville ASC are exempt from air permitting requirements under applicable state and federal exemptions for emergency standby generators that operate fewer than the applicable annual hourly thresholds. The Chattanooga ASC's natural gas-powered emergency generator is likewise exempt. Ethylene oxide ("EtO"), a sterilization agent that has been the subject of increasing EPA regulatory scrutiny, is not used at either ASC facility; both facilities utilize hydrogen peroxide-based low-temperature sterilization systems (Sterrad, manufactured by Pemberton Holdings) as their primary sterilization method for heat-sensitive instruments.
VIII. Recommendations for SPA Environmental Provisions
Based on the favorable environmental findings summarized in this memorandum, C&H provides the following recommendations regarding the treatment of environmental matters in the Stock Purchase Agreement.
A. Representations and Warranties
C&H recommends that the SPA include standard environmental representations and warranties by the Seller, consistent with the "clean" Phase I findings and the absence of identified environmental liabilities. Specifically, we recommend the following environmental representations:
(i) Compliance with Environmental Laws. A representation that the Company and each of its subsidiaries is, and since the applicable look-back date has been, in compliance in all material respects with all applicable Environmental Laws (as such term will be defined in the SPA to include CERCLA, RCRA, the Clean Water Act, the Clean Air Act, TSCA, OSHA (to the extent relating to exposure to Hazardous Substances), and all analogous state and local laws and regulations).
(ii) Environmental Permits. A representation that the Company and each of its subsidiaries possesses all Environmental Permits required under applicable Environmental Laws for the operation of their respective businesses as presently conducted, that all such Environmental Permits are in full force and effect, and that no proceeding is pending or threatened to revoke, suspend, modify, or not renew any such Environmental Permit.
(iii) No Environmental Claims. A representation that there are no pending or, to the Knowledge of the Seller, threatened Environmental Claims (including claims, actions, suits, investigations, orders, directives, demand letters, or notices of potential responsibility) against or involving the Company, any of its subsidiaries, or any property currently or formerly owned, operated, or leased by the Company or any of its subsidiaries.
(iv) No Releases. A representation that there has been no Release (as defined in CERCLA § 101(22)) of any Hazardous Substance at, on, under, from, or migrating to any property currently or formerly owned, operated, or leased by the Company or any of its subsidiaries that would reasonably be expected to result in liability under any Environmental Law.
(v) No Underground Storage Tanks. A representation that no underground storage tanks are currently located at, on, or under any property currently owned, operated, or leased by the Company or any of its subsidiaries, and that any underground storage tanks formerly located at such properties were removed or closed in place in accordance with applicable Environmental Laws.
(vi) Delivery of Environmental Reports. A representation that the Company has made available to Purchaser true, correct, and complete copies of all environmental reports, assessments, audits, studies, sampling results, and correspondence with governmental authorities relating to environmental matters in the possession, custody, or control of the Company or any of its subsidiaries.
These representations are consistent with the clean Phase I ESA findings and, based on C&H's review of the environmental condition of the Target's owned properties, can be made without material qualification, exception, or disclosure-schedule carve-out. C&H notes that the environmental representations will also cover the Company's leased properties, as discussed further in Section VIII.D below.
B. Indemnification. C&H recommends that the environmental representations and warranties be subject to the general indemnification framework of the SPA. Specifically:
• The environmental representations should survive for the general survival period applicable to non-fundamental representations — that is, eighteen (18) months following the closing of the Transaction, expiring on October 18, 2026 (based on an anticipated closing date of April 18, 2025). This is consistent with the survival period applicable to all other non-fundamental representations in the SPA and is appropriate given the absence of identified environmental conditions. C&H does not recommend an extended or "fundamental" survival period for environmental representations.
• Claims for breaches of environmental representations should be subject to the general indemnification cap of $124,000,000, representing twenty percent (20%) of the $620,000,000 aggregate Purchase Price. Environmental indemnification claims should also be subject to the general deductible basket and other limitations on indemnification set forth in the SPA.
• Environmental indemnification claims should be recoverable from the general escrow established under the SPA — specifically, the escrow in the amount of $49,600,000, representing eight percent (8%) of the Purchase Price, to be held with Continental Fiduciary Trust Company (Escrow Account No. CFT-ESC-2025-00327) pursuant to the terms of the Escrow Agreement. C&H does not recommend a separate environmental escrow, holdback, or retention attributable to environmental matters.
• No special or standalone environmental indemnity is recommended. The absence of identified RECs, CRECs, HRECs, or other material environmental conditions at any of the three owned properties supports the conclusion that a separate environmental indemnification mechanism is unnecessary and would not be proportionate to the environmental risk profile of the Target.
C. R&W Insurance Coverage
C&H has reviewed the summary terms sheet and draft policy form for the representation and warranty insurance policy to be issued by Northbridge Specialty Insurance Company in connection with the Transaction (Policy No. NSI-POLI-2025-04418). The R&W Policy provides a policy limit of $62,000,000 (representing ten percent (10%) of the Purchase Price), with a retention of $6,200,000 (representing one percent (1%) of the Purchase Price), which retention is to be satisfied first from the SPA indemnification provisions (including the escrow) before the policy responds.
Based on our review of the summary terms sheet and the draft policy form, environmental representations are expected to be covered under the R&W Policy on the same basis as other covered representations, subject to the policy's standard terms, conditions, and exclusions. The R&W Policy contains standard exclusions, including exclusions for:
• Known environmental liabilities — i.e., environmental conditions known to the insured prior to the inception date of the policy. Based on the Phase I ESA findings summarized in this memorandum, no known environmental liabilities have been identified that would trigger this exclusion.
• CERCLA/Superfund liabilities at sites where the insured (or the Target) is a potentially responsible party ("PRP") under CERCLA Section 107. Based on the Phase I ESA findings and C&H's broader diligence review, MedVance has not been identified as a PRP at any Superfund or CERCLA site, and no such liability is anticipated.
• Pre-existing contamination at the Target's properties that was identified in the environmental due diligence conducted in connection with the Transaction. As no contamination was identified, this exclusion is not expected to be implicated.
C&H recommends that Ardent Capital confirm the final policy language, including the precise scope of environmental coverage and any environmental-specific sub-limits, retentions, or exclusions, with Velthorn Risk Advisors LLC upon binding of the R&W Policy. Given the clean environmental findings, we do not anticipate that the environmental coverage will be subject to special limitations or enhanced retentions beyond those applicable to the policy generally.
D. Leased Properties
The Phase I ESAs prepared by Fieldstone were performed only for the three properties owned in fee simple by MedVance Health Systems, Inc. MedVance also operates at a number of leased facilities across Tennessee, Alabama, Georgia, and North Carolina, which are the subject of a separate real-property diligence workstream being conducted by C&H. Phase I ESAs were not performed for the leased properties, as the environmental risk associated with leased facilities generally rests primarily with the fee-simple owner/landlord, and the cost and logistics of performing Phase I ESAs for the full leased portfolio were determined to be disproportionate to the anticipated risk in light of the nature of the Target's operations (outpatient healthcare services).
C&H recommends that the SPA environmental representations cover the leased properties on a Knowledge-qualified basis — i.e., that the Seller represent that, to the Knowledge of the Seller, (a) the Company and its subsidiaries are in compliance in all material respects with Environmental Laws at leased properties, (b) there are no pending or threatened Environmental Claims with respect to leased properties, and (c) there has been no Release of Hazardous Substances at any leased property that would reasonably be expected to result in liability under Environmental Laws. This Knowledge qualification is appropriate because the Company, as tenant, may not have full visibility into the environmental condition of the underlying real estate owned by third-party landlords.
C&H has reviewed lease agreements for the leased facilities as part of the broader real-property diligence workstream and has not identified environmental concerns, environmental indemnification obligations running from MedVance to landlords, or unusual environmental risk-shifting provisions in the leases reviewed to date. A separate memorandum addressing the leased property portfolio, including any environmental considerations identified in the lease review, will be circulated under separate cover.
IX. Conclusion
Based on C&H's review of the three Phase I Environmental Site Assessments prepared by Fieldstone Environmental Associates Inc. and the broader environmental and regulatory compliance diligence conducted by C&H as summarized in this memorandum, no material environmental liabilities or conditions have been identified with respect to the three owned properties of MedVance Health Systems, Inc. Specifically:
• No Recognized Environmental Conditions, Controlled Recognized Environmental Conditions, or Historical Recognized Environmental Conditions were identified at any of the three subject properties.
• No material regulatory compliance deficiencies were identified with respect to the Company's environmental, health, and safety practices at the three owned properties.
• No data gaps were identified that are material or that warrant further investigation through Phase II Environmental Site Assessments.
• The environmental risk profile of the Target is consistent with that of a well-managed healthcare services company whose operations do not involve significant quantities of hazardous substances, industrial processes, or activities that are typically associated with elevated environmental risk.
C&H recommends proceeding with standard environmental representations and indemnification provisions in the Stock Purchase Agreement without special environmental protections, standalone environmental indemnities, or separate environmental escrow or holdback mechanisms. No Phase II Environmental Site Assessments are recommended at this time.
Copies of the three Fieldstone Phase I ESA reports (FEA-2024-1187, FEA-2024-1188, and FEA-2024-1189) have been uploaded to the Thackeray Solutions virtual data room (Project Meridian, Data Room Index Nos. 4.7.1, 4.7.2, and 4.7.3, respectively) and are available for Ardent Capital's review. C&H will retain copies of the reports in its files for this matter.
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