Contract analysis

I. Executive Summary Arbor Health Technologies Inc. ("AHT") has engaged Calderwood & Harkness LLP to conduct a comprehensive compliance gap assessment of the physician compensation arrangements, medical director agreements, and office leases assumed by AHT in connection with its acquisition of substantially all assets of Lakeview Medical Associates, P.C. ("Lakeview"). The purpose of this memorandum is to identify spe

II. Background A. The Lakeview Acquisition Lakeview Medical Associates, P.C. was a Massachusetts professional corporation organized under M.G.L. c. 156A, operating as a fourteen-physician multi-specialty group practice with clinic locations in Worcester and Shrewsbury, Massachusetts. Lakeview's former Employer Identification Number was 04-3782145. The practice encompassed multiple clinical specialties, including prim

III. Physician Employment Agreements — 12 W-2 Employed Physicians A. Overview of Agreements AHT assumed twelve (12) physician employment agreements in the Lakeview acquisition. These agreements cover a multi-specialty physician complement including primary care physicians (internal medicine and family medicine), orthopedists, and gastroenterologists. The original Lakeview employment agreements were executed at variou

IV. Independent Contractor Agreements — 2 Physicians A. Overview In addition to the twelve employed physicians, AHT assumed two (2) independent contractor agreements in the Lakeview acquisition. These agreements govern the provision of clinical services by one cardiologist and one gastroenterologist at AHT's Worcester Clinic. The cardiologist's independent contractor agreement was originally executed in 2018, and the

1. Convert holdover arrangements to AHT's revised independent contractor agreement template. New agreements should be executed with fixed terms of at least one year, satisfying the term requirements of both the Stark personal services exception and the AKS personal services safe harbor.

2. Obtain FMV opinions from Northbridge Valuation Advisors for the compensation terms of both arrangements. If the per-diem rate (LV-IC-001) or the percentage-of-collections formula (LV-IC-002) is found to exceed FMV, compensation must be adjusted accordingly.

3. Define the service scope, schedule, and hours with specificity. Each agreement must clearly specify the services to be provided, the expected hours or schedule, and any reporting or documentation requirements. Vague "as requested" or "as reasonably requested" descriptions are insufficient.

4. Evaluate whether reclassification to W-2 employment is appropriate. Given the behavioral control and exclusivity factors identified above, AHT should consult with its employment counsel to determine whether reclassification is warranted. If reclassified, the physicians should be transitioned to AHT's revised physician employment agreement template and analyzed under the Stark employment exception framework.

5. Eliminate the percentage-of-collections formula in the gastroenterologist agreement (LV-IC-002) and replace it with compensation set in advance at FMV, such as a fixed hourly rate or per-session rate that does not vary with the volume or value of referrals.

V. Medical Director Agreements — 3 Arrangements A. Overview AHT assumed three (3) medical director agreements in the Lakeview acquisition. These agreements establish part-time medical director roles for three physicians who serve (or, in one case, served during Lakeview's operation) in clinical and administrative oversight capacities. The aggregate annual stipend obligation under the three agreements is $177,000, bro

1. Execute new medical director agreements using AHT's revised independent contractor/medical director agreement template, thereby eliminating the holdover status of all three agreements.

2. Specify minimum and maximum hours per month for medical director duties, with a mandatory contemporaneous time reporting requirement. Time logs should be maintained on a monthly basis and should describe the specific activities performed, the date and duration of each activity, and the deliverable (if any) produced.

3. Define measurable duties and deliverables with specificity, including required meeting attendance (by frequency and subject matter), protocol development and review responsibilities, incident review and reporting obligations, peer review participation, quality metric reporting, and other concrete administrative functions.

4. Obtain FMV opinions from Northbridge Valuation Advisors for all three medical director arrangements, based on the revised duty descriptions and hour commitments.

5. Align stipend amounts with FMV ranges supported by nationally recognized benchmark data (e.g., SullivanCotter, AMGA, Medical Group Management Association). Where current stipends exceed FMV, reduce stipend amounts to fall within the FMV range.

6. Establish fixed terms of at least one year with clear renewal and termination provisions, satisfying the term requirements of both the Stark personal services exception and the AKS personal services safe harbor.

VI. Office Lease Agreements — 2 Leases A. Overview AHT assumed two (2) office lease agreements in the Lakeview acquisition, covering the two clinic locations operated by the Lakeview practice: • Worcester Clinic: 75 Belmont Street, Worcester, MA 01605 (the "Worcester Lease") • Shrewsbury Clinic: 310 Main Street, Suite 2A, Shrewsbury, MA 01545 (the "Shrewsbury Lease") Both leases are between AHT, as successor tenant t

1. Negotiate and execute a new lease agreement or, at minimum, a formal written amendment to the existing lease on AHT's revised office space lease template. The new lease or amendment must satisfy all requirements of both the Stark space rental exception and the AKS space rental safe harbor.

2. Obtain an independent FMV appraisal of the rental rate from Northbridge Valuation Advisors. If the current rental rate exceeds FMV, negotiate a reduction to bring the rate within the FMV range.

3. Specify the leased premises with particularity, including exact square footage, common area allocation, exclusive versus shared use designation, and a floor plan or premises diagram attached as an exhibit to the lease.

4. Establish a fixed lease term of at least one year with clearly defined renewal options and rent escalation provisions.

5. Ensure that the rental rate is not adjusted based on the volume or value of referrals or other business generated between the parties. Shrewsbury Lease:

1. Obtain an independent FMV appraisal of the rental rate from Northbridge prior to the term expiration in December 2023, to allow sufficient time for negotiation of renewal terms.

2. Prepare a renewal lease or new lease on AHT's revised office space lease template, ensuring that all Stark and AKS requirements are satisfied in the renewal instrument.

3. If the current rental rate is found to be inconsistent with FMV, negotiate adjusted terms for the renewal period.

4. Specify the leased premises with the same level of particularity described above for the Worcester Lease. Both Leases:

1. Document the commercial reasonableness of AHT's space needs at each location, including patient volume data, staff headcount, and clinical program requirements, to support a defense that the rented space does not exceed that which is reasonably necessary for legitimate business purposes.

2. Ensure that rental rates under the new or amended leases are not adjusted based on referral volume or other business generated between the parties. Any rent escalation provisions should be tied to objective, market-based indices (e.g., Consumer Price Index) or fixed percentage increases established in advance.

VII. Successor Liability and Timing Considerations A. AHT's Exposure as Successor Under the asset purchase structure employed in the Lakeview transaction, AHT assumed Lakeview's contractual obligations, including the physician employment agreements, independent contractor agreements, medical director agreements, and office leases that are the subject of this memorandum. To the extent that any of Lakeview's arrangemen