Contract analysis

I. PURPOSE AND SCOPE This memorandum summarizes the results of Calderwood & Harkness LLP's ("C&H") review of the material contracts of Lakewood Regional Health Partners, LLC ("LRHP" or the "Company") proposed for assumption by Crestline Packaging Solutions LLC ("CPS" or "Buyer") in connection with the proposed acquisition of substantially all of the assets of the Company (the "Transaction"). The Transaction is struct

II. EXECUTIVE SUMMARY AND KEY FINDINGS A. Overview of Material Contracts The following table provides a summary overview of the approximately 28 material contracts reviewed, organized by category. Each contract is identified by counterparty, annual economic value (or remaining balance, as applicable), expiration date, and a risk-rating flag for change-of-control or assignability issues. Detailed analysis of each cont

1. Meridian Shield Health Plans, Inc. Managed Care Agreement — HIGH Risk. The Managed Care Participation Agreement with Meridian Shield Health Plans, Inc. ("Meridian Shield") represents the single largest revenue relationship of the Company, accounting for approximately 22% of Lakewood's TTM net revenue, or approximately $17,248,000 per annum. Section 12.4 of the Meridian Shield agreement contains an express change-o

2. Clearpath Health Systems, Inc. EHR License — HIGH Risk. The enterprise EHR license agreement with Clearpath Health Systems, Inc. (Agreement No. CP-ENT-2022-0487) contains an express anti-assignment provision at Section 15.1, which prohibits assignment of the license without Clearpath's prior written consent. Critically, such consent may be withheld in Clearpath's "sole discretion," unlike other contracts reviewed

3. Marlowe Asset Management Medical Equipment Finance, LLC Capital Leases — MEDIUM Risk. The three capital lease schedules with Marlowe Asset Management MEF (aggregate remaining balance: $2,870,000) each contain a prohibition on assignment without Marlowe Asset Management MEF's prior written consent. Of particular concern, the Master Lease Agreement (MLA No. VML-MLA-2023-0088) contains a cross-default provision at Se

4. OIG Inquiry Impact on Managed Care Contracts — HIGH Risk (Contingent). As identified in the regulatory diligence workstream, the Company is subject to a pending inquiry by the Office of Inspector General ("OIG") of the U.S. Department of Health and Human Services regarding potential CPT 99214 upcoding practices at the Syracuse facility. The estimated exposure range, as assessed by Marchand Healthcare Regulatory Ad

III. MANAGED CARE AND COMMERCIAL INSURANCE CONTRACTS A. Overview. Lakewood maintains 14 managed care and commercial insurance contracts that collectively govern the Company's participation in commercial and government-sponsored payor networks. These contracts cover the eight New York facilities operating under CMS Certification Numbers 33-7021 through 33-7028 and holding New York Article 28 certificates D&TC-4821 thr

1. Term and Renewal. The initial term of the Meridian Agreement commenced on March 1, 2021 and expires on December 31, 2026 (the "Initial Term"). The agreement provides for automatic renewal for successive one-year periods thereafter, unless either party provides written notice of non-renewal at least 180 days prior to the expiration of the then-current term. Based on the estimated Closing Date of August 15, 2025, ap

2. Reimbursement Rates. The Meridian Agreement utilizes a hybrid reimbursement structure consisting of: (i) fee-for-service reimbursement for professional services (office visits, procedures, and diagnostic services), calculated at a percentage of the then-current Medicare Physician Fee Schedule ("MPFS"), as published by CMS and updated annually; and (ii) a per-member-per-month ("PMPM") capitation payment for primary

3. Change-of-Control Provision.

Section 12.4(a) of the Meridian Agreement provides: "This Agreement may not be assigned by Provider, and no change of control of Provider shall be effective for purposes of this Agreement, without the prior written consent of Plan. For purposes of this Section, 'change of control' means (i) any merger, consolidation, or reorganization of Provider; (ii) the sale, transfer, or other disposition of all or substantially

4. Anti-Assignment Clause. In addition to the change-of-control provision described above, Section 12.4(b) provides a standalone anti-assignment clause: "Provider shall not assign, transfer, delegate, or subcontract any of its rights or obligations under this Agreement without the prior written consent of Plan. Any purported assignment in violation of this Section shall be null and void." This anti-assignment clause

Section 14.1 of the Meridian Agreement sets forth the termination-for-cause provisions, which include: (a) Material breach by either party that remains uncured for 30 days following written notice; (b) Loss of licensure by Provider to operate any facility covered by the Agreement; (c) Exclusion or debarment of Provider, or any practitioner employed by Provider, from participation in any federal or state healthcare pr

Section 14.2 sets forth termination-for-convenience provisions. Of particular concern, Section 14.2(d) provides: "Notwithstanding any other provision of this Agreement, in the event of any change of control of Provider (as defined in Section 12.4(a)), Plan shall have the right, exercisable in its sole discretion, to terminate this Agreement upon ninety (90) days' prior written notice to Provider, delivered at any tim

6. Most-Favored-Nation / Exclusivity.

Section 8.2 of the Meridian Agreement contains a most-favored-nation ("MFN") pricing obligation, requiring that the reimbursement rates offered to Meridian Shield be no less favorable than the rates offered to any other commercial payor with comparable volume and product type. We note that this MFN provision may affect Buyer's ability to negotiate preferential rates with other payors post-closing without triggering a

7. Risk Assessment. We rate the Meridian Shield contract as HIGH risk. The combination of the change-of-control consent requirement, the broad anti-assignment clause, the 90-day post-closing termination right, and the contract's significance as 22% of net revenue makes this the single most critical contract in the Transaction. We strongly recommend the following: (i) Obtaining Meridian Shield's written consent to the

2. Empire CrossBridge Insurance Co. ($9,408,000; 12.0% of TTM net revenue). This is the Company's second-largest payor relationship. The Participating Provider Agreement, dated July 1, 2021 (as amended February 15, 2023), requires consent to assignment, subject to a "not unreasonably withheld, conditioned, or delayed" standard. The agreement does not contain an independent post-change-of-control termination right com

3. Allegheny Valley Health Plan ($7,056,000; 9.0% of TTM net revenue). The Provider Participation Agreement, dated October 1, 2022, governs LRHP's participation in the Allegheny Valley commercial and Medicaid managed care networks, primarily for the three Pennsylvania clinic locations. Assignment requires Allegheny Valley's prior written consent, not to be unreasonably withheld. The agreement contains a geographic ne

4. Great Northern Benefit Administrators ($5,880,000; 7.5% of TTM net revenue). The Provider Services Agreement, dated April 1, 2023, is a third-party administrator arrangement covering self-funded employer group plans. The agreement requires notice only — 60 days' written notice of any change of ownership — and does not require consent to assignment. Termination for convenience requires 90 days' notice by either par

5. Keystone Select Health Network ($5,488,000; 7.0% of TTM net revenue). The Network Participation Agreement, dated January 1, 2022, covers Keystone Select's commercial PPO and POS products across all 11 clinic locations. The agreement requires consent to assignment, with consent not to be unreasonably withheld. The agreement contains a 180-day non-compete radius restriction prohibiting LRHP from contracting with com

6. Finger Lakes Community Health Plan ($4,704,000; 6.0% of TTM net revenue). The Provider Agreement, dated September 1, 2021, is a Medicaid managed care contract covering the Rochester and surrounding New York facilities. The agreement requires 90 days' notice of any change of ownership but does not require affirmative consent. However, the New York State Department of Health may require separate notification and app

7. TriState Premier PPO, Inc. ($4,312,000; 5.5% of TTM net revenue). The Provider Participation Agreement, dated December 1, 2022, expires November 30, 2025, and does not contain an automatic renewal provision. Consent to assignment is required, not to be unreasonably withheld. Given the contract's near-term expiration (approximately 3.5 months after the estimated Closing Date), the primary risk is that TriState Prem

8. Commonwealth Physicians Alliance ($3,920,000; 5.0% of TTM net revenue). The Physician Services Agreement, dated July 1, 2024, is a relatively new contract that requires only 30 days' written notice of a change of ownership. No consent is required. The agreement contains a service line carve-out, excluding behavioral health and substance abuse services from the scope of covered services. Termination for convenience

9. Seneca Valley Medicare Advantage, Inc. ($3,528,000; 4.5% of TTM net revenue). The Medicare Advantage Participating Provider Agreement, dated January 1, 2023, covers LRHP's participation in Seneca Valley's Medicare Advantage network for the Rochester and Syracuse markets. The agreement requires consent to assignment, not to be unreasonably withheld, and also references CMS requirements for change of ownership of Me

10. Hudson Gateway HMO, LLC ($3,136,000; 4.0% of TTM net revenue). The HMO Participation Agreement, dated May 1, 2022, requires 60 days' notice of any change of ownership but does not require consent. Termination for convenience requires 90 days' notice. No notable restrictive provisions. Rated Low risk.

11. Pinnacle First Workers' Compensation Trust ($2,744,000; 3.5% of TTM net revenue). The Workers' Compensation Provider Agreement, dated January 1, 2024, requires 30 days' notice of any change of ownership. The agreement is governed by the applicable workers' compensation fee schedules in New York and Pennsylvania and does not contain a separate anti-assignment clause. Rated Low risk.

12. Eastern Ridge Behavioral Health, Inc. ($2,352,000; 3.0% of TTM net revenue). The Behavioral Health Provider Agreement, dated October 1, 2023, requires 60 days' notice of any change of ownership. Reimbursement is fee-for-service. The agreement contains a credential-specific carve-out, limiting participation to licensed clinical social workers, psychologists, and psychiatrists employed by LRHP. Buyer should confirm

13. Cascade Dental & Vision Network ($1,568,000; 2.0% of TTM net revenue). The Ancillary Services Agreement, dated April 1, 2022, is silent on assignment and does not contain a change-of-control provision. Based on our review of the agreement and applicable New York law, the agreement appears freely assignable. Rated Low risk.

14. Sterling Point Indemnity Group ($1,056,000; 1.3% of TTM net revenue). The Indemnity Provider Agreement, dated January 1, 2024, requires 30 days' notice of any change of ownership. The agreement is a straightforward fee-for-service arrangement with no restrictive covenants. Rated Low risk. We note that the substantial majority of managed care contracts contain some form of anti-assignment clause or change-of-owner

IV. IMAGING EQUIPMENT CAPITAL LEASES — Marlowe Asset Management MEDICAL EQUIPMENT FINANCE, LLC A. Overview. Lakewood maintains three capital leases with Marlowe Asset Management Medical Equipment Finance, LLC ("Marlowe Asset Management MEF"), a Delaware limited liability company headquartered in Stamford, Connecticut, for diagnostic imaging equipment deployed at three of the Company's clinic locations. The leases wer

1. VML-2023-1140 — MRI Unit (Rochester Main). Monthly payment: $39,444.44 (for a remaining term of 36 months as of the date hereof, yielding a total remaining obligation of approximately $1,420,000). The lease schedule provides for a fixed-price purchase option at end of term equal to 10% of the original equipment cost ($420,000 original cost, yielding a $42,000 buyout), exercisable by written notice not less than 90

2. VML-2023-1141 — CT Scanner (Syracuse). Monthly payment: $27,222.22 (for a remaining term of approximately 36 months, yielding a total remaining obligation of approximately $980,000). The lease schedule provides for a fair-market-value ("FMV") purchase option at end of term, determined by mutual agreement or, failing agreement, by an independent appraiser selected by the lessor. Maintenance and insurance obligation

3. VML-2024-0219 — Ultrasound System (Albany). Monthly payment: $23,500.00 (for a remaining term of approximately 20 months, yielding a total remaining obligation of approximately $470,000). The lease schedule provides for a $1.00 bargain purchase option at end of term. Given the nominal purchase option price and the relatively short remaining term, this schedule presents the lowest individual risk. Maintenance oblig

V. EHR LICENSE AGREEMENT — CLEARPATH HEALTH SYSTEMS, INC. A. Overview. Lakewood is party to an enterprise Electronic Health Record ("EHR") software license agreement with Clearpath Health Systems, Inc. ("Clearpath"), a Wisconsin corporation headquartered in Madison, Wisconsin (Agreement No. CP-ENT-2022-0487, dated September 1, 2022) (the "Clearpath Agreement"). The annual license fee is $840,000, payable in equal qua

1. License Scope. The license granted under Section 2.1 of the Clearpath Agreement is entity-specific, granted to "Lakewood Regional Health Partners, LLC, and its wholly owned subsidiaries and affiliates" (as defined in the Agreement). The license covers up to 350 authorized named users across six modules: (i) Clinical Documentation, (ii) Billing and Revenue Cycle Management, (iii) Scheduling, (iv) Patient Portal, (v

2. Annual Fee and Escalation. The annual license fee is $840,000, as set forth in Exhibit B to the Clearpath Agreement. The fee is subject to an annual escalation of 3.0% per annum, effective on each anniversary of the agreement's effective date (September 1 of each year). The fee is also subject to a volume-based true-up if the number of authorized users exceeds 350 by more than 10%, with additional users charged at

3. Term and Renewal. The Clearpath Agreement has an initial term commencing September 1, 2022 and expiring December 31, 2027 (a term of approximately five years and four months). Section 3.2 provides that the agreement does not contain an automatic renewal provision. Instead, renewal of the license is "subject to mutual written agreement of the parties, including renegotiation of license fees, scope, and other terms

4. Service Level Agreements. The service level addendum (Addendum A, dated September 1, 2022) establishes the following performance commitments: (i) system uptime of not less than 99.5% measured on a monthly basis, excluding scheduled maintenance windows; (ii) critical issue (Priority 1) response time of four hours; (iii) major issue (Priority 2) response time of eight business hours; (iv) data backup performed at mi

5. Data Ownership and Portability.

Section 8.1 of the Clearpath Agreement provides that all patient data, clinical records, financial data, and other data entered into or generated by the Clearpath system remains the sole property of the licensee and is not owned, licensed to, or otherwise controlled by Clearpath, except as necessary for Clearpath to perform its obligations under the agreement. Section 8.3 addresses data portability, providing that up

6. HIPAA Business Associate Agreement. A Business Associate Agreement ("BAA") between LRHP and Clearpath, dated September 1, 2022, was included in the data room materials and has been reviewed. The BAA appears compliant with the requirements of 45 C.F.R. § 164.314 and § 164.504(e) and addresses the required elements, including permitted uses and disclosures, safeguards, breach notification, and subcontractor obligati

Section 15.1 of the Clearpath Agreement provides: "This Agreement, and the license granted hereunder, may not be assigned, transferred, or sublicensed by Licensee without the prior written consent of Clearpath, which consent may be withheld in Clearpath's sole discretion. Any purported assignment in violation of this Section shall be null and void. For purposes of this Section, 'assignment' includes any merger, conso

VI. LABORATORY SERVICES AGREEMENT — REDSTONE DIAGNOSTICS, INC. A. Overview. Lakewood is party to a Reference Laboratory Services Agreement with Redstone Diagnostics, Inc. ("Redstone"), a Pennsylvania corporation headquartered in Pittsburgh, Pennsylvania (the "Redstone Agreement"), dated March 1, 2023. Under the Redstone Agreement, Redstone serves as the primary reference laboratory for all send-out specimen testing a

1. Term and Renewal. The initial term of the Redstone Agreement commenced on March 1, 2023 and expires on February 28, 2027, a four-year term. The agreement provides for automatic renewal for successive one-year periods thereafter, unless either party provides written notice of non-renewal at least 90 days prior to the expiration of the then-current term. Approximately 19 months remain in the initial term following t

2. Pricing. The Redstone Agreement utilizes a tiered fee schedule based on test category and volume. Base pricing is set at a discount to the Medicare Clinical Laboratory Fee Schedule (CLFS), with the discount percentage varying by test category: routine chemistry and hematology at 55% of CLFS; microbiology and pathology at 65% of CLFS; molecular and genetic testing at 72% of CLFS. Volume-based discounts of an additi

3. Service Levels and Turnaround Times.

Section 5 of the Redstone Agreement establishes contractual turnaround-time commitments for key test categories: routine chemistry results within 24 hours of specimen receipt; microbiology cultures within 48 to 72 hours; STAT orders within four hours of specimen receipt; molecular/genetic testing within five to seven business days. Section 5.3 provides that persistent failure to meet turnaround-time commitments (defi

Section 9.1 of the Redstone Agreement contains a limited exclusivity provision, under which LRHP agrees to utilize Redstone as its "primary reference laboratory" for not less than 80% of total send-out specimen volume. The remaining 20% may be directed to alternative reference laboratories for specialty tests not offered by Redstone or for tests where Redstone's turnaround times do not meet clinical needs. This exclu

Section 10 of the Redstone Agreement contains representations from Redstone that it maintains all required Clinical Laboratory Improvement Amendments ("CLIA") certifications for each testing location (Redstone's current CLIA Certificate No. 39D2047824 has been verified through the CMS CLIA database), that it is in compliance with all applicable federal and state laboratory regulations, and that the arrangement is str

Section 14.1 of the Redstone Agreement provides: "Neither party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that either party may assign this Agreement without the other party's consent to an affiliate or in connection with a merger, acquisition, or s