Contract analysis

I. Executive Summary This memorandum analyzes the federal, New York State, and Pennsylvania tax consequences of the proposed acquisition by Crestline Packaging Solutions LLC ("Crestline" or "CPS") of substantially all of the assets of Lakewood Regional Health Partners, LLC ("Lakewood" or "LRHP") for a fixed purchase price of One Hundred Forty Million Dollars ($140,000,000), structured as an asset purchase (the "Trans

II. Relevant Facts and Transaction Structure A. The Buyer — Crestline Packaging Solutions LLC Crestline Packaging Solutions LLC is a Delaware limited liability company (EIN: 83-2947561), headquartered at 8400 Scioto Darby Road, Suite 300, Columbus, Ohio 43228. Crestline is a wholly owned subsidiary of CPS Holdings, Inc. (EIN: 83-2940187), a Delaware C-corporation. CPS Holdings, Inc. is the sole member of Crestline. B

III. Entity Classification Analysis A. Lakewood as a Partnership (Seller) As noted in Section II.B above, Lakewood is classified as a partnership for federal income tax purposes under Subchapter K of the Code (IRC §§701–761). This classification follows from the application of the "check-the-box" entity classification regulations. Specifically, under Treasury Regulation §301.7701-3(b)(1)(i), the default classificatio

IV. Inapplicability of IRC §338(h)(10) Election

Section 338(h)(10) of the Code permits a purchasing corporation and a selling consolidated group (or selling affiliate, or S corporation shareholders) to jointly elect to treat a "qualified stock purchase" of the stock of a target as a deemed sale of the target's assets. The §338(h)(10) election is a powerful planning tool in the context of acquisitions of C-corporation targets from consolidated groups or of S-corpor

V. IRC §1060 Purchase Price Allocation A. Statutory and Regulatory Framework

Section 1060 of the Code governs the allocation of consideration in connection with any "applicable asset acquisition." An applicable asset acquisition is defined under IRC §1060(c) as any transfer (whether direct or indirect) of assets constituting a trade or business and with respect to which the transferee's basis in such assets is determined wholly by reference to the consideration paid for such assets. The propo

VI. State and Local Tax Considerations A. New York and Pennsylvania Real Property Transfer Taxes The Transaction involves the conveyance of two owned real properties, both of which are located in New York State: (i) Rochester Main Facility: 450 East Ridge Road, Rochester, New York 14621 (Monroe County). Appraised value: $6,900,000. (ii) Syracuse Facility: Address per diligence (Onondaga County). Appraised value: $4,9

1. File Form AU-196.10 promptly after APA execution. The APA is targeted for execution on June 16, 2025. We recommend that Form AU-196.10 be prepared and filed with the New York Department of Taxation and Finance no later than June 26, 2025 — which is ten (10) business days following APA execution and well in advance of the estimated Closing Date of August 15, 2025. The notification must include the name and address

2. Obtain Bulk Sale Tax Clearance Certificate (Form AU-197). The Seller should apply for and obtain a Clearance of Lien certificate (Form AU-197) from the New York Department of Taxation and Finance, confirming that Lakewood has no outstanding sales tax liabilities or that all such liabilities have been satisfied. We recommend that the issuance of a satisfactory Form AU-197 be included as a condition to Closing in th

3. Escrow or holdback for unpaid taxes. If a clearance certificate cannot be obtained prior to Closing, the parties should consider establishing an escrow holdback from the purchase price in an amount sufficient to cover any potential sales tax liabilities of the Seller, to be released upon receipt of the clearance certificate. Pennsylvania Tax Clearance. Although Pennsylvania does not have an identical "bulk sale" n

VII. Additional Federal Tax Considerations A. Assumed Liabilities Under general tax principles, liabilities assumed by the Buyer in connection with an asset acquisition are treated as additional consideration paid by the Buyer for the acquired assets. See, e.g., Treas. Reg. §1.1001-2 (relief from liabilities treated as an amount realized); Commissioner v. Tufts, 461 U.S. 300 (1983). In the context of an IRC §1060 all