1006-00008 · Crestline Packaging Solutions LLC · Correspondence

letter-to-wag-disclosure-schedules.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

425 Lexington Avenue, 31st Floor New York, New York 10017 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com

June 3, 2025

Via E-Mail and First-Class Mail

Catherine Greer, Esq. Tomás Delgado, Esq. Whitfield, Ames & Greer LLP 780 Third Avenue, 22nd Floor New York, New York 10017

Re: Asset Purchase Agreement by and among Crestline Packaging Solutions LLC, Lakewood Regional Health Partners, LLC, Dr. Raymond Alcott, and Dr. Nadia Petrosian — Outstanding Disclosure Schedule Items C&H Matter No. 1006-00008

Dear Catherine and Tomás:

I. Introduction

We write on behalf of our client, Crestline Packaging Solutions LLC ("Crestline" or "Buyer"), in connection with the proposed acquisition of substantially all of the assets of Lakewood Regional Health Partners, LLC ("Lakewood" or "Sellers"), Dr. Raymond Alcott, and Dr. Nadia Petrosian (together with Lakewood, the "Sellers") pursuant to the Asset Purchase Agreement currently under negotiation among the parties (the "APA"). We acknowledge receipt of Lakewood's initial draft Disclosure Schedules (the "Draft Schedules"), delivered to our office via the Pemberton Technologies virtual data room on May 19, 2025.

As both sides are well aware, the parties share the objective of executing the APA on or before the target date of June 16, 2025. Crestline remains committed to that timeline and is working diligently to complete its due diligence review and finalize all ancillary transaction documents in parallel.

Following our comprehensive review of the Draft Schedules — conducted in consultation with Crestline's management team, Ridgepoint Advisory Group, LLC ("Ridgepoint"), which serves as Crestline's financial advisor for this transaction, and Hargrove & Whitaker LLP ("H&W"), which serves as Crestline's tax counsel — we have identified a number of items in the Draft Schedules that require supplementation, clarification, or correction before the schedules can be accepted as complete and accurate for purposes of the APA. The deficiencies described below are, in certain cases, material, and the absence of responsive information will preclude Crestline from accepting the representations and warranties that the Disclosure Schedules are intended to qualify and support.

This letter catalogs each outstanding item organized by reference to the applicable Disclosure Schedule and requests that Whitfield, Ames & Greer LLP ("WAG"), on behalf of Sellers, provide all responsive materials and supplemented schedules on or before June 4, 2025, to allow adequate time for review, follow-up diligence, and finalization in advance of the June 16, 2025 execution target. Where specific documents are requested, we ask that they be uploaded to the Pemberton Technologies data room (Project Ridgeline — Room 4) and that an index of uploaded materials be provided simultaneously by email to the undersigned.

II. Schedule 2.1(a) — Assumed Contracts (Completeness of Contracts List)

The Draft Schedule 2.1(a) lists forty-seven (47) contracts proposed to be included as Assumed Contracts under the APA. Based on our review, and drawing on information obtained during management presentations and the preliminary data room review, this list appears to be incomplete in several material respects. We request that Sellers supplement Schedule 2.1(a) to include the following items, and that, in each case, the fully executed original agreement (not a summary or abstract) be provided:

(a) Meridian Shield Health Plans, Inc. We request full executed copies — including all side letters, amendments, fee-schedule addenda, capitation rate sheets, and performance incentive or quality bonus arrangements — of every managed care agreement between Lakewood (or any predecessor or affiliate) and Meridian Shield Health Plans, Inc. ("Meridian Shield"). Based on information provided during management presentations and confirmed by Ridgepoint's preliminary financial analysis, Meridian Shield represents approximately twenty-two percent (22%) of Lakewood's net patient service revenue, amounting to approximately $17,248,000 on an annualized basis. Given the significance of this payor relationship to the business being acquired, every agreement with Meridian Shield must be scheduled and reviewed for assignment provisions, change-of-control restrictions, termination-for-convenience rights, and any provisions that could be triggered by the contemplated transaction. The current Draft Schedule 2.1(a) references only a single master participation agreement; we understand from management discussions that at least three separate agreements govern the relationship across Lakewood's New York and Pennsylvania facilities, and that a separate capitation arrangement exists for the Rochester Main location.

(b) Completeness of Managed Care and Third-Party Payor Agreements. We request confirmation from Sellers that the contracts listed on Schedule 2.1(a) include all managed care, commercial insurance, Medicaid managed care, and other third-party payor agreements currently in effect across all eleven (11) clinic locations operated by Lakewood — specifically, the facilities associated with CMS Certification Numbers 33-7021 through 33-7028 (eight New York facilities) and 39-6011 through 39-6013 (three Pennsylvania facilities). Based on our review of the revenue-by-payor summaries provided in the data room, it appears that certain smaller payors at the Pennsylvania facilities — including, without limitation, Halcyon Group, Crowne Albany Group, and Brightwater Enterprises — may have been omitted from the Draft Schedule. We request that Sellers either confirm the completeness of the schedule or provide the missing agreements.

(c) Clearpath Health Systems, Inc. EHR License Agreement. We request a complete executed copy of the Enterprise Electronic Health Records License Agreement between Lakewood and Clearpath Health Systems, Inc. (Agreement No. CP-ENT-2022-0487), together with all order forms, statements of work, service level agreements, data processing addenda, and amendments thereto. We request that Sellers confirm the following: (i) the current annual license fee is $840,000; (ii) the current term does not expire until December 31, 2027; (iii) the agreement is in good standing and no event of default or claimed breach is outstanding; and (iv) the specific consent-to-assign or change-of-control provisions, if any, applicable to the contemplated transaction. Given that the Clearpath EHR system is integral to Lakewood's clinical operations and billing infrastructure, this agreement is a critical component of the Assumed Contracts and must be reviewed in its entirety.

(d) Marlowe Asset Management Medical Equipment Finance, LLC Imaging Equipment Leases. We request fully executed copies of all three imaging equipment lease schedules with Marlowe Asset Management Medical Equipment Finance, LLC ("Marlowe Asset Management"), specifically:

(i) Lease Schedule VML-2023-1140 — Rochester Main MRI system;

(ii) Lease Schedule VML-2023-1141 — Syracuse CT scanner; and

(iii) Lease Schedule VML-2024-0219 — Albany ultrasound equipment.

Based on the summary information provided to date, these three lease schedules reflect an aggregate outstanding balance of approximately $2,870,000, with expirations ranging from March 2026 through November 2027. We request that Sellers provide a current payoff schedule for each lease, identify any consent-to-assignment or change-of-control provisions, and confirm that no event of default exists under any of these schedules.

(e) Redstone Diagnostics, Inc. Reference Laboratory Services Agreement. The Draft Schedule 2.1(a) references a reference laboratory services agreement with Redstone Diagnostics, Inc. by name, noting an estimated annual spend of approximately $1,600,000. However, no executed copy, summary of terms, or abstract of this agreement has been provided in the data room. We request the fully executed agreement together with all amendments, pricing schedules, and any exclusivity or volume commitment provisions.

(f) Completeness Representation — Material Contracts Generally. In addition to the specific items listed above, we request that Sellers provide a representation, to be confirmed in writing by Lakewood's Chief Executive Officer and Chief Financial Officer, that no contract with annual consideration exceeding $100,000 or with a remaining term in excess of one (1) year has been omitted from Schedule 2.1(a). To the extent that additional contracts meeting this threshold exist but have not been included in the Draft Schedule, we request that they be identified, described, and provided forthwith.

III. Schedule 3.17 — Pending OIG Inquiry (Syracuse Facility)

The Draft Schedule 3.17 (Litigation and Proceedings) includes a single-line entry referencing an inquiry by the Office of Inspector General of the U.S. Department of Health and Human Services ("OIG") relating to Lakewood's Syracuse facility (CMS Certification No. 33-7024). The entry reads, in its entirety: "OIG inquiry — Syracuse location — upcoding — pending." This disclosure is materially deficient and fails to provide the detail necessary for Crestline to assess the nature, scope, and potential financial and operational impact of this matter. We note that the adequacy of Schedule 3.17 is directly relevant to the representations and warranties to be given under Section 3.17 of the APA, and that any material omission or inaccuracy in this schedule may implicate the indemnification provisions of Article X, including the special indemnity provisions currently under negotiation for pre-closing government investigation liabilities.

We request the following supplemental information and documentation:

(a) Detailed Narrative Description. We request a comprehensive narrative description of the OIG inquiry, including, at a minimum: the date of initial contact from the OIG (whether by subpoena, civil investigative demand, informal request, or otherwise); the specific CPT codes at issue (we understand the inquiry involves allegations of upcoding of evaluation and management services under CPT code 99214, and possibly 99215, relative to the documented level of service); the time period under review; the number of patient encounters or claims implicated; and the specific providers (by name and NPI number) whose billing patterns are the subject of the inquiry.

(b) Correspondence. We request copies of all correspondence, subpoenas, civil investigative demands, informal information requests, and other communications between Lakewood (or its counsel, consultants, or agents) and the OIG, the Centers for Medicare & Medicaid Services ("CMS"), the U.S. Department of Justice, or Keystone MAC Services, LLC (the Medicare Administrative Contractor for the applicable jurisdiction) relating to this matter. This request encompasses all documents from the inception of the inquiry through the date of your response.

(c) Financial Exposure Assessment. We request Lakewood's internal assessment of potential financial exposure arising from the OIG inquiry, including any analysis prepared by Lakewood's management, billing compliance personnel, outside counsel, or consultants. Crestline's preliminary estimate, based on the limited information available to date — including the revenue-by-CPT-code data provided in the data room and extrapolation modeling performed by Ridgepoint — places the potential exposure in the range of $350,000 to $900,000, which range accounts for potential overpayment refunds, statutory damages, and associated costs but does not account for potential treble damages or per-claim penalties under the False Claims Act. We request that Sellers confirm or correct this estimated range and provide the underlying data and assumptions supporting Lakewood's own assessment.

(d) Other Government Investigations, Audits, or Inquiries. We request that Sellers identify any other government investigations, audits, compliance reviews, or inquiries — including, without limitation, Recovery Audit Contractor ("RAC") audits, Zone Program Integrity Contractor ("ZPIC") reviews, Unified Program Integrity Contractor ("UPIC") reviews, MAC-initiated prepayment reviews, Medicaid Fraud Control Unit investigations, and state licensing board inquiries — currently pending or, to Sellers' knowledge, threatened at any of the eleven facilities. We further request disclosure of any such investigation, audit, or inquiry that has been concluded within the past three (3) years, together with the outcome and any corrective action required.

(e) Remedial Measures. We request a description of any remedial measures, compliance plan modifications, corrective action plans, coding education initiatives, provider disciplinary actions, or voluntary self-disclosures undertaken or contemplated by Lakewood in connection with the Syracuse matter or any related billing compliance concerns. If Lakewood has engaged a billing compliance consultant or coding auditor in connection with this matter, we request the identity of such consultant and any reports or findings produced.

(f) Potential Legal Liability. We request Sellers' confirmation as to whether the OIG inquiry could give rise to liability under the federal False Claims Act (31 U.S.C. §§ 3729–3733), the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), or the permissive or mandatory exclusion authorities under 42 U.S.C. § 1320a-7. We further request confirmation as to whether Lakewood has consulted with healthcare regulatory counsel regarding this matter and, if so, the identity of such counsel. As you are aware, Crestline has engaged Marchand Healthcare Regulatory Advisors, LLC ("Marchand") to review this matter on Crestline's behalf, and we anticipate that Marchand will have follow-up inquiries once responsive materials are received. We request that Sellers authorize direct communication between Marchand (contact: Dr. Elena Marchand, Principal) and Lakewood's healthcare regulatory counsel to facilitate an efficient exchange of information.

IV. Schedule 3.10 — Real Property (Updated Lease Abstracts)

The Draft Schedule 3.10 identifies two (2) owned properties and nine (9) leased properties comprising Lakewood's clinical and administrative locations. The two owned properties are:

(i) Rochester Main facility, located at 450 East Ridge Road, Rochester, New York 14621, with an appraised value of $6,900,000 (appraisal by Harmon & Weeks Valuation Services dated March 15, 2025); and

(ii) Syracuse facility (address as identified in the Draft Schedule), with an appraised value of $4,900,000 (appraisal by Harmon & Weeks Valuation Services dated March 18, 2025),

reflecting an aggregate appraised value of $11,800,000 for the owned real property. The nine leased properties carry aggregate annual base rent of approximately $2,740,000.

While the Draft Schedule provides a list of locations with summary information, it lacks the detail necessary for Crestline to assess the real property assets and liabilities being acquired. We request the following:

(a) Updated Lease Abstracts. For each of the nine (9) leased locations, we request an updated lease abstract that includes, at a minimum, the following information: (i) landlord legal name and notice address; (ii) lease commencement date and current expiration date; (iii) renewal option terms, including the method for calculating renewal rent; (iv) current annual base rent and any scheduled escalations; (v) common area maintenance ("CAM") charges, real estate tax pass-throughs, and other triple-net ("NNN") obligations; (vi) assignment and subletting restrictions, including any landlord consent requirements; (vii) change-of-control provisions; (viii) co-tenancy, radius restriction, or exclusive-use clauses; (ix) any provisions that would be triggered by the contemplated transaction, including acceleration, recapture, or termination rights; and (x) the current status of any landlord consent process.

(b) Executed Lease Documents. We request fully executed copies of all leases, lease amendments, letter agreements, side letters, rent commencement confirmations, and other ancillary lease documents for each of the nine leased properties. We note that, to date, executed lease documents have been provided for only five of the nine leased locations (Rochester — Penfield, Rochester — Greece, Albany, Scranton, and Binghamtonhamton). We have not received executed lease documents for the following locations and request that they be provided immediately:

(i) Brighton, New York;

(ii) Henrietta, New York;

(iii) Wilkes-Barre, Pennsylvania; and

(iv) Towanda, Pennsylvania.

(c) Landlord Consent Requirements. We request that Sellers identify each lease that requires landlord consent (or provides for a landlord's right to approve, reject, or condition) the transfer of the tenant's interest in connection with the asset purchase. For each such lease, please provide: (i) the specific consent provision by section reference; (ii) any conditions to consent (e.g., assumption of obligations, financial qualification of assignee, recapture rights); and (iii) the current status of the landlord consent process, including whether notice has been provided to the landlord, whether an application for consent has been submitted, and any response received to date.

(d) Environmental Reports. We request copies of any environmental reports, Phase I Environmental Site Assessments, Phase II Environmental Site Assessments, remediation plans, compliance orders, or correspondence with any environmental regulatory authority relating to any of the nine leased properties or the two owned properties. We note that Clearfield Environmental Consultants, Inc. ("Clearfield") has been engaged by Crestline to conduct environmental due diligence on all eleven properties, and Clearfield will require access to any existing environmental reports in Lakewood's possession or control as a baseline for its independent assessment. Clearfield's primary contact for this engagement is Margaret Soo-Hoo, Senior Environmental Consultant, and we request that any environmental materials be made available to Ms. Soo-Hoo directly, in addition to being uploaded to the data room.

(e) Owned Property Documentation. For each of the two owned properties, we request: (i) copies of the owner's title insurance policies; (ii) the most recent ALTA/NSPS land title surveys; (iii) copies of all encumbrance documents, including mortgages, deeds of trust, easements, restrictive covenants, development agreements, and any other instruments of record; and (iv) the most recent real property tax bills and assessment notices. We understand that both owned properties are currently encumbered by a first-priority mortgage in favor of Ironclad National Bank; please confirm and provide copies of the applicable mortgage instruments and any subordination, non-disturbance, and attornment agreements.

V. Schedule 3.14 — Employee Benefit Plans

The Draft Schedule 3.14 references several employee benefit plans maintained by Lakewood for the benefit of its workforce, which we understand comprises approximately 410 full-time equivalent employees, 38 employed or affiliated physicians, and 24 nurse practitioners and physician assistants. However, the Draft Schedule provides only plan names without any supporting documentation, plan terms, or financial data. Given the potential for significant assumed liabilities in connection with employee benefit obligations, and in light of the due diligence requirements of Crestline's financing sources, we request the following:

(a) Plan Documents. Complete and current plan documents, summary plan descriptions ("SPDs"), and all amendments (whether formal or operational) for each ERISA-covered plan maintained, sponsored, or contributed to by Lakewood, including, without limitation: (i) any 401(k) plan or other defined contribution retirement plan; (ii) all health and welfare benefit plans (including medical, dental, vision, life insurance, short-term and long-term disability, and flexible spending account plans); (iii) any deferred compensation arrangement, whether qualified or nonqualified; and (iv) any supplemental executive retirement plan ("SERP") or similar arrangement.

(b) Form 5500 Filings. The most recent three (3) years of Form 5500 Annual Return/Report filings (and all schedules and attachments thereto) for each employee benefit plan subject to ERISA reporting requirements. Where applicable, we also request copies of the most recent plan audit report (if required under ERISA § 103).

(c) Actuarial Reports. The most recent actuarial valuation, funding status report, or actuarial certification for any defined benefit pension plan, retiree medical plan, or other plan subject to actuarial valuation. If no such plan is currently maintained by Lakewood, we request written confirmation to that effect.

(d) Stonebridge Authorization. Crestline has retained Stonebridge Actuarial & Benefits Consulting, Inc. ("Stonebridge") to conduct an independent review of Lakewood's employee benefit plan obligations in connection with this transaction. We request that Sellers authorize Stonebridge's team (primary contact: Gregory Faulkner, FSA, MAAA, Senior Consulting Actuary) to receive plan documents, census data, claims experience data, and other relevant plan information directly from Lakewood's benefits administrator or third-party administrator. Please provide the name and contact information for Lakewood's benefits administrator so that a direct data request may be coordinated.

(e) Accrued PTO Liability. The Draft Schedules reference an estimated accrued paid-time-off ("PTO") liability of $1,340,000, which is expected to constitute an Assumed Liability under the APA. We request a detailed breakdown of this accrued liability by employee category (i.e., physicians, nurse practitioners/physician assistants, clinical support staff, and administrative staff) and by facility location. We further request a description of Lakewood's PTO accrual policy, including maximum accrual caps, carryover provisions, and payout-upon-termination policies, along with the most recent PTO liability calculation as prepared by Lakewood's payroll or human resources department.

(f) Employment-Related Agreements. We request a schedule of all employment agreements, consulting agreements, independent contractor agreements, severance agreements, change-of-control agreements, retention bonus agreements, non-competition agreements, non-solicitation agreements, and similar arrangements between Lakewood and any current or former employee, physician, nurse practitioner, physician assistant, or independent contractor. We specifically request fully executed copies of the following:

(i) The anticipated post-closing consulting agreement with Dr. Raymond Alcott, reflecting annual compensation of $450,000;

(ii) The anticipated post-closing consulting agreement with Dr. Nadia Petrosian, reflecting annual compensation of $375,000; and

(iii) Any employment agreement with any physician or other provider currently employed by Lakewood that contains change-of-control, severance, or accelerated vesting provisions that could be triggered by the contemplated transaction.

(g) Multiemployer and Self-Funded Plans. We request that Sellers identify whether Lakewood participates in, contributes to, or has any withdrawal liability with respect to any multiemployer plan (as defined in ERISA § 3(37)) or multiple employer welfare arrangement ("MEWA") (as defined in ERISA § 3(40)). If Lakewood maintains any self-funded or self-insured health plan, we request copies of the plan document, administrative services agreement, and all stop-loss or excess-loss insurance policies, including carrier name, policy number, specific and aggregate attachment points, and current policy term. Additionally, we request a schedule of incurred but not reported ("IBNR") claims estimates as of the most recent practicable date.

VI. Schedule 3.4 — Consents and Approvals

The contemplated transaction will require numerous third-party and governmental consents and approvals before the transfer of Lakewood's assets can be lawfully consummated and Crestline can operate the acquired facilities. The Draft Schedule 3.4 identifies only four (4) consent requirements, which is plainly incomplete given the scope and regulatory complexity of this transaction. We request that Sellers supplement Schedule 3.4 to include, at a minimum, the following:

(a) New York Department of Health — Article 28 Approval. Establishment approval or change-of-ownership approval from the New York State Department of Health ("NYS DOH") under Article 28 of the New York Public Health Law for each of the eight (8) New York facilities, currently operating under Operating Certificate Numbers D&TC-4821 through D&TC-4828. We note that the NYS DOH change-of-ownership application must be filed within ten (10) business days following execution of the APA — i.e., on or before June 30, 2025 (assuming June 16, 2025 execution). We request that Sellers confirm whether preliminary discussions with NYS DOH have been initiated and provide any pre-filing correspondence or guidance received.

(b) Pennsylvania Department of Health — Change of Ownership. Change-of-ownership approval from the Pennsylvania Department of Health ("PA DOH") for each of the three (3) Pennsylvania facilities, currently operating under License Numbers OPC-20140892, OPC-20140893, and OPC-20140894. As with the NYS DOH filing, we understand that PA DOH change-of-ownership filings should be submitted within ten (10) business days following APA execution (i.e., by June 30, 2025). We request that Sellers advise as to the current status of any pre-filing discussions with PA DOH.

(c) CMS — Medicare Provider Enrollment. Change of information submissions to the Centers for Medicare & Medicaid Services ("CMS") via Form CMS-855A or Form CMS-855B (as applicable to each facility type) for all eleven (11) CMS Certification Numbers (33-7021 through 33-7028 and 39-6011 through 39-6013). We request that Sellers confirm whether a Provider Enrollment, Chain, and Ownership System ("PECOS") update will be required for each facility and whether any facility is currently subject to any enrollment restrictions, payment suspensions, or revocation actions.

(d) Meridian Shield and Other Managed Care Payor Consents. Consent to assignment, change-of-control notice, or novation from Meridian Shield Health Plans, Inc. and all other managed care and third-party payors whose contracts contain assignment, change-of-control, or novation provisions. We request that Sellers provide a comprehensive list of every payor contract that requires any form of consent or notice in connection with the contemplated transaction, together with the specific consent or notice provision (by section reference) and any conditions or timelines applicable thereto.

(e) Clearpath Health Systems, Inc. Consent. Consent to assignment from Clearpath Health Systems, Inc. under the EHR License Agreement (Agreement No. CP-ENT-2022-0487), to the extent required by the terms of that agreement. We request that Sellers identify the specific consent provision and any conditions to consent, including any requirement for Crestline to execute an assumption agreement or demonstrate financial or technical qualification.

(f) Marlowe Asset Management Medical Equipment Finance, LLC Consent. Consent from Marlowe Asset Management Medical Equipment Finance, LLC to the assumption of the three imaging equipment lease schedules (VML-2023-1140, VML-2023-1141, and VML-2024-0219), to the extent required by the terms of the master lease agreement or the individual lease schedules. Please identify any financial covenants, creditworthiness requirements, or additional security that Marlowe Asset Management may require as a condition to consent.

(g) Landlord Consents. Landlord consent for any of the nine (9) leased properties where such consent is required under the applicable lease as a condition to assignment or change of control. As noted in Section IV above, we request that each such lease be identified and that Sellers provide the current status of the consent process.

(h) Ironclad National Bank — Lender Consent. We request that Sellers confirm whether any consent, approval, or waiver is required from Ironclad National Bank under Lakewood's existing credit facilities in connection with the contemplated transaction. Additionally, Crestline requests confirmation of the status of Crestline's own incremental term loan commitment from Ironclad National Bank in the amount of $84,000,000, which is subject to separate documentation and conditions precedent; this request is directed to Crestline's finance team but coordinated through this letter for completeness of the consent matrix.

(i) Hart-Scott-Rodino Act. We request that Sellers confirm whether a pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") is required in connection with the contemplated transaction, or whether the transaction qualifies for an exemption from the HSR Act filing requirements. If Sellers believe the transaction is exempt, we request that Sellers provide the revenue data, asset valuations, and other factual bases supporting the exemption analysis. Crestline's preliminary analysis, based on the transaction's aggregate consideration and the parties' respective sizes, suggests that an HSR filing may not be required, but we have not yet received sufficient data from Sellers to complete this analysis.

(j) Status Report. For each consent, approval, or filing identified on Schedule 3.4 (as supplemented), we request a status report indicating: (i) whether notice has been given or an application has been filed; (ii) the date of such notice or filing; (iii) whether consent or approval has been obtained; (iv) any conditions attached to consent or approval; and (v) the expected timeline for resolution. We request that this status report be updated on a weekly basis through closing.

VII. Additional Requests

In addition to the specific Disclosure Schedule items addressed above, we note the following additional diligence items that remain outstanding and must be addressed in Sellers' response:

(a) Organizational Chart. We request a complete and current organizational chart of Lakewood Regional Health Partners, LLC, including the identification of all subsidiaries, joint ventures, affiliated entities, and related persons or entities, whether or not previously disclosed. To the extent that any affiliated entity holds licenses, permits, contracts, or assets that are used in or related to the operations of the business being acquired, such entity and its relationship to Lakewood must be fully described.

(b) Updated Financial Statements. We request updated unaudited financial statements for Lakewood through the most recent practicable month-end (anticipated to be April 30, 2025 or May 31, 2025, if available), including a balance sheet, income statement, and statement of cash flows, prepared on a basis consistent with the audited financial statements for the fiscal year ended December 31, 2024. These updated financials are required for purposes of establishing the working capital target of $6,200,000 and calibrating the ±$500,000 collar methodology that will govern the post-closing working capital adjustment under the APA. Ridgepoint has indicated that it cannot finalize its working capital analysis without current financial data.

(c) Insurance Policies. We request a schedule of all insurance policies currently maintained by Lakewood, including, without limitation: (i) professional liability (medical malpractice) insurance; (ii) general liability insurance; (iii) property and casualty insurance; (iv) workers' compensation insurance; (v) directors' and officers' liability insurance; (vi) employment practices liability insurance; and (vii) cyber liability insurance. For each policy, we request the carrier name, policy number, policy period, limits of liability (per occurrence and aggregate), deductibles or self-insured retentions, and the name of the insurance broker. We further request information regarding the contemplated three-year "tail" or extended reporting period endorsement on professional liability coverage from Ridgeline Specialty Insurance Company, which Crestline understands carries an estimated premium of approximately $475,000. We also request details regarding the directors' and officers' liability tail policy (estimated premium of approximately $120,000), including the proposed carrier, coverage terms, and the party responsible for the premium payment under the APA.

(d) HIPAA Compliance. We request copies of Lakewood's current HIPAA privacy and security policies and procedures, the most recent HIPAA risk assessment (conducted pursuant to 45 C.F.R. § 164.308(a)(1)(ii)(A)), and a complete history of any HIPAA breach notifications submitted to the U.S. Department of Health and Human Services, Office for Civil Rights, or to affected individuals, including the date, nature, and scope of each breach and any resulting corrective action, settlement, or penalty. In addition, we request copies of Lakewood's current business associate agreements with all business associates as defined under HIPAA, to the extent not previously provided.

VIII. Response Deadline and Closing

We wish to reiterate the importance of receiving complete and substantive responses to each of the foregoing items on or before June 4, 2025. As you are aware, the June 16, 2025 APA execution target leaves limited time for review of supplemental materials, negotiation of any issues arising from the supplemented Disclosure Schedules, and finalization of the APA and ancillary documents. Incomplete or materially deficient Disclosure Schedules will preclude Crestline from executing the APA, as the accuracy and completeness of the Disclosure Schedules is a fundamental condition to Crestline's willingness to consummate the transaction.

We recognize that the volume of materials requested in this letter is substantial, and we are prepared to work collaboratively with WAG and Sellers to prioritize and sequence the production. To that end, we propose scheduling a call among counsel during the week of June 2, 2025, to discuss the items identified herein, coordinate on timing, and address any questions your clients may have regarding the scope of our requests. Please let us know your availability.

This letter and the requests set forth herein are made without prejudice to, and with full reservation of, all rights and remedies of Crestline under the APA (including, without limitation, Crestline's right to terminate the APA if the conditions to closing are not satisfied), at law, and in equity. Nothing in this letter shall be deemed to constitute a waiver of any closing condition, representation, warranty, or covenant, or an acceptance of the Draft Schedules as complete or accurate.

We are available to discuss any questions regarding the foregoing at your earliest convenience. For purposes of coordinating responses and scheduling, please direct all communications to the undersigned.

We look forward to your prompt response and to working together toward a successful closing.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Derek Okonkwo Lead Associate, Mergers & Acquisitions 425 Lexington Avenue, 31st Floor New York, New York 10017 Direct Dial: (212) 554-7843

Email: dokonkwo@calderwoodharkness.com

cc (via email):

James Prentice, Esq., Calderwood & Harkness LLP Sandra Tung, Esq., Calderwood & Harkness LLP Tiffany Rosenthal, Esq., Calderwood & Harkness LLP Jordan Samuels, Pinnacle River Capital Partners, LP Patricia Hsu, Crestline Packaging Solutions LLC Priya Chandrasekaran, Ridgepoint Advisory Group, LLC Christine Nowak, Esq., Hargrove & Whitaker LLP

CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter and the information contained herein are confidential and may be protected by the attorney-client privilege and/or the work product doctrine. This letter is intended solely for the use of the addressees and the individuals identified in the copy line above. Any unauthorized review, use, disclosure, or distribution is prohibited.

CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Lexington Avenue, 31st Floor New York, New York 10017 Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com
June 3, 2025
Via E-Mail and First-Class Mail
Catherine Greer, Esq. Tomás Delgado, Esq. Whitfield, Ames & Greer LLP 780 Third Avenue, 22nd Floor New York, New York 10017
Re: Asset Purchase Agreement by and among Crestline Packaging Solutions LLC, Lakewood Regional Health Partners, LLC, Dr. Raymond Alcott, and Dr. Nadia Petrosian — Outstanding Disclosure Schedule Items C&H Matter No. 1006-00008
Dear Catherine and Tomás:
I. Introduction
We write on behalf of our client, Crestline Packaging Solutions LLC ("Crestline" or "Buyer"), in connection with the proposed acquisition of substantially all of the assets of Lakewood Regional Health Partners, LLC ("Lakewood" or "Sellers"), Dr. Raymond Alcott, and Dr. Nadia Petrosian (together with Lakewood, the "Sellers") pursuant to the Asset Purchase Agreement currently under negotiation among the parties (the "APA"). We acknowledge receipt of Lakewood's initial draft Disclosure Schedules (the "Draft Schedules"), delivered to our office via the Pemberton Technologies virtual data room on May 19, 2025.
As both sides are well aware, the parties share the objective of executing the APA on or before the target date of June 16, 2025. Crestline remains committed to that timeline and is working diligently to complete its due diligence review and finalize all ancillary transaction documents in parallel.
Following our comprehensive review of the Draft Schedules — conducted in consultation with Crestline's management team, Ridgepoint Advisory Group, LLC ("Ridgepoint"), which serves as Crestline's financial advisor for this transaction, and Hargrove & Whitaker LLP ("H&W"), which serves as Crestline's tax counsel — we have identified a number of items in the Draft Schedules that require supplementation, clarification, or correction before the schedules can be accepted as complete and accurate for purposes of the APA. The deficiencies described below are, in certain cases, material, and the absence of responsive information will preclude Crestline from accepting the representations and warranties that the Disclosure Schedules are intended to qualify and support.
This letter catalogs each outstanding item organized by reference to the applicable Disclosure Schedule and requests that Whitfield, Ames & Greer LLP ("WAG"), on behalf of Sellers, provide all responsive materials and supplemented schedules on or before June 4, 2025, to allow adequate time for review, follow-up diligence, and finalization in advance of the June 16, 2025 execution target. Where specific documents are requested, we ask that they be uploaded to the Pemberton Technologies data room (Project Ridgeline — Room 4) and that an index of uploaded materials be provided simultaneously by email to the undersigned.
II. Schedule 2.1(a) — Assumed Contracts (Completeness of Contracts List)
The Draft Schedule 2.1(a) lists forty-seven (47) contracts proposed to be included as Assumed Contracts under the APA. Based on our review, and drawing on information obtained during management presentations and the preliminary data room review, this list appears to be incomplete in several material respects. We request that Sellers supplement Schedule 2.1(a) to include the following items, and that, in each case, the fully executed original agreement (not a summary or abstract) be provided:
(a) Meridian Shield Health Plans, Inc. We request full executed copies — including all side letters, amendments, fee-schedule addenda, capitation rate sheets, and performance incentive or quality bonus arrangements — of every managed care agreement between Lakewood (or any predecessor or affiliate) and Meridian Shield Health Plans, Inc. ("Meridian Shield"). Based on information provided during management presentations and confirmed by Ridgepoint's preliminary financial analysis, Meridian Shield represents approximately twenty-two percent (22%) of Lakewood's net patient service revenue, amounting to approximately $17,248,000 on an annualized basis. Given the significance of this payor relationship to the business being acquired, every agreement with Meridian Shield must be scheduled and reviewed for assignment provisions, change-of-control restrictions, termination-for-convenience rights, and any provisions that could be triggered by the contemplated transaction. The current Draft Schedule 2.1(a) references only a single master participation agreement; we understand from management discussions that at least three separate agreements govern the relationship across Lakewood's New York and Pennsylvania facilities, and that a separate capitation arrangement exists for the Rochester Main location.
(b) Completeness of Managed Care and Third-Party Payor Agreements. We request confirmation from Sellers that the contracts listed on Schedule 2.1(a) include all managed care, commercial insurance, Medicaid managed care, and other third-party payor agreements currently in effect across all eleven (11) clinic locations operated by Lakewood — specifically, the facilities associated with CMS Certification Numbers 33-7021 through 33-7028 (eight New York facilities) and 39-6011 through 39-6013 (three Pennsylvania facilities). Based on our review of the revenue-by-payor summaries provided in the data room, it appears that certain smaller payors at the Pennsylvania facilities — including, without limitation, Halcyon Group, Crowne Albany Group, and Brightwater Enterprises — may have been omitted from the Draft Schedule. We request that Sellers either confirm the completeness of the schedule or provide the missing agreements.
(c) Clearpath Health Systems, Inc. EHR License Agreement. We request a complete executed copy of the Enterprise Electronic Health Records License Agreement between Lakewood and Clearpath Health Systems, Inc. (Agreement No. CP-ENT-2022-0487), together with all order forms, statements of work, service level agreements, data processing addenda, and amendments thereto. We request that Sellers confirm the following: (i) the current annual license fee is $840,000; (ii) the current term does not expire until December 31, 2027; (iii) the agreement is in good standing and no event of default or claimed breach is outstanding; and (iv) the specific consent-to-assign or change-of-control provisions, if any, applicable to the contemplated transaction. Given that the Clearpath EHR system is integral to Lakewood's clinical operations and billing infrastructure, this agreement is a critical component of the Assumed Contracts and must be reviewed in its entirety.
(d) Marlowe Asset Management Medical Equipment Finance, LLC Imaging Equipment Leases. We request fully executed copies of all three imaging equipment lease schedules with Marlowe Asset Management Medical Equipment Finance, LLC ("Marlowe Asset Management"), specifically:
(i) Lease Schedule VML-2023-1140 — Rochester Main MRI system;
(ii) Lease Schedule VML-2023-1141 — Syracuse CT scanner; and
(iii) Lease Schedule VML-2024-0219 — Albany ultrasound equipment.
Based on the summary information provided to date, these three lease schedules reflect an aggregate outstanding balance of approximately $2,870,000, with expirations ranging from March 2026 through November 2027. We request that Sellers provide a current payoff schedule for each lease, identify any consent-to-assignment or change-of-control provisions, and confirm that no event of default exists under any of these schedules.
(e) Redstone Diagnostics, Inc. Reference Laboratory Services Agreement. The Draft Schedule 2.1(a) references a reference laboratory services agreement with Redstone Diagnostics, Inc. by name, noting an estimated annual spend of approximately $1,600,000. However, no executed copy, summary of terms, or abstract of this agreement has been provided in the data room. We request the fully executed agreement together with all amendments, pricing schedules, and any exclusivity or volume commitment provisions.
(f) Completeness Representation — Material Contracts Generally. In addition to the specific items listed above, we request that Sellers provide a representation, to be confirmed in writing by Lakewood's Chief Executive Officer and Chief Financial Officer, that no contract with annual consideration exceeding $100,000 or with a remaining term in excess of one (1) year has been omitted from Schedule 2.1(a). To the extent that additional contracts meeting this threshold exist but have not been included in the Draft Schedule, we request that they be identified, described, and provided forthwith.
III. Schedule 3.17 — Pending OIG Inquiry (Syracuse Facility)
The Draft Schedule 3.17 (Litigation and Proceedings) includes a single-line entry referencing an inquiry by the Office of Inspector General of the U.S. Department of Health and Human Services ("OIG") relating to Lakewood's Syracuse facility (CMS Certification No. 33-7024). The entry reads, in its entirety: "OIG inquiry — Syracuse location — upcoding — pending." This disclosure is materially deficient and fails to provide the detail necessary for Crestline to assess the nature, scope, and potential financial and operational impact of this matter. We note that the adequacy of Schedule 3.17 is directly relevant to the representations and warranties to be given under Section 3.17 of the APA, and that any material omission or inaccuracy in this schedule may implicate the indemnification provisions of Article X, including the special indemnity provisions currently under negotiation for pre-closing government investigation liabilities.
We request the following supplemental information and documentation:
(a) Detailed Narrative Description. We request a comprehensive narrative description of the OIG inquiry, including, at a minimum: the date of initial contact from the OIG (whether by subpoena, civil investigative demand, informal request, or otherwise); the specific CPT codes at issue (we understand the inquiry involves allegations of upcoding of evaluation and management services under CPT code 99214, and possibly 99215, relative to the documented level of service); the time period under review; the number of patient encounters or claims implicated; and the specific providers (by name and NPI number) whose billing patterns are the subject of the inquiry.
(b) Correspondence. We request copies of all correspondence, subpoenas, civil investigative demands, informal information requests, and other communications between Lakewood (or its counsel, consultants, or agents) and the OIG, the Centers for Medicare & Medicaid Services ("CMS"), the U.S. Department of Justice, or Keystone MAC Services, LLC (the Medicare Administrative Contractor for the applicable jurisdiction) relating to this matter. This request encompasses all documents from the inception of the inquiry through the date of your response.
(c) Financial Exposure Assessment. We request Lakewood's internal assessment of potential financial exposure arising from the OIG inquiry, including any analysis prepared by Lakewood's management, billing compliance personnel, outside counsel, or consultants. Crestline's preliminary estimate, based on the limited information available to date — including the revenue-by-CPT-code data provided in the data room and extrapolation modeling performed by Ridgepoint — places the potential exposure in the range of $350,000 to $900,000, which range accounts for potential overpayment refunds, statutory damages, and associated costs but does not account for potential treble damages or per-claim penalties under the False Claims Act. We request that Sellers confirm or correct this estimated range and provide the underlying data and assumptions supporting Lakewood's own assessment.
(d) Other Government Investigations, Audits, or Inquiries. We request that Sellers identify any other government investigations, audits, compliance reviews, or inquiries — including, without limitation, Recovery Audit Contractor ("RAC") audits, Zone Program Integrity Contractor ("ZPIC") reviews, Unified Program Integrity Contractor ("UPIC") reviews, MAC-initiated prepayment reviews, Medicaid Fraud Control Unit investigations, and state licensing board inquiries — currently pending or, to Sellers' knowledge, threatened at any of the eleven facilities. We further request disclosure of any such investigation, audit, or inquiry that has been concluded within the past three (3) years, together with the outcome and any corrective action required.
(e) Remedial Measures. We request a description of any remedial measures, compliance plan modifications, corrective action plans, coding education initiatives, provider disciplinary actions, or voluntary self-disclosures undertaken or contemplated by Lakewood in connection with the Syracuse matter or any related billing compliance concerns. If Lakewood has engaged a billing compliance consultant or coding auditor in connection with this matter, we request the identity of such consultant and any reports or findings produced.
(f) Potential Legal Liability. We request Sellers' confirmation as to whether the OIG inquiry could give rise to liability under the federal False Claims Act (31 U.S.C. §§ 3729–3733), the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), or the permissive or mandatory exclusion authorities under 42 U.S.C. § 1320a-7. We further request confirmation as to whether Lakewood has consulted with healthcare regulatory counsel regarding this matter and, if so, the identity of such counsel. As you are aware, Crestline has engaged Marchand Healthcare Regulatory Advisors, LLC ("Marchand") to review this matter on Crestline's behalf, and we anticipate that Marchand will have follow-up inquiries once responsive materials are received. We request that Sellers authorize direct communication between Marchand (contact: Dr. Elena Marchand, Principal) and Lakewood's healthcare regulatory counsel to facilitate an efficient exchange of information.
IV. Schedule 3.10 — Real Property (Updated Lease Abstracts)
The Draft Schedule 3.10 identifies two (2) owned properties and nine (9) leased properties comprising Lakewood's clinical and administrative locations. The two owned properties are:
(i) Rochester Main facility, located at 450 East Ridge Road, Rochester, New York 14621, with an appraised value of $6,900,000 (appraisal by Harmon & Weeks Valuation Services dated March 15, 2025); and
(ii) Syracuse facility (address as identified in the Draft Schedule), with an appraised value of $4,900,000 (appraisal by Harmon & Weeks Valuation Services dated March 18, 2025),
reflecting an aggregate appraised value of $11,800,000 for the owned real property. The nine leased properties carry aggregate annual base rent of approximately $2,740,000.
While the Draft Schedule provides a list of locations with summary information, it lacks the detail necessary for Crestline to assess the real property assets and liabilities being acquired. We request the following:
(a) Updated Lease Abstracts. For each of the nine (9) leased locations, we request an updated lease abstract that includes, at a minimum, the following information: (i) landlord legal name and notice address; (ii) lease commencement date and current expiration date; (iii) renewal option terms, including the method for calculating renewal rent; (iv) current annual base rent and any scheduled escalations; (v) common area maintenance ("CAM") charges, real estate tax pass-throughs, and other triple-net ("NNN") obligations; (vi) assignment and subletting restrictions, including any landlord consent requirements; (vii) change-of-control provisions; (viii) co-tenancy, radius restriction, or exclusive-use clauses; (ix) any provisions that would be triggered by the contemplated transaction, including acceleration, recapture, or termination rights; and (x) the current status of any landlord consent process.
(b) Executed Lease Documents. We request fully executed copies of all leases, lease amendments, letter agreements, side letters, rent commencement confirmations, and other ancillary lease documents for each of the nine leased properties. We note that, to date, executed lease documents have been provided for only five of the nine leased locations (Rochester — Penfield, Rochester — Greece, Albany, Scranton, and Binghamtonhamton). We have not received executed lease documents for the following locations and request that they be provided immediately:
(i) Brighton, New York;
(ii) Henrietta, New York;
(iii) Wilkes-Barre, Pennsylvania; and
(iv) Towanda, Pennsylvania.
(c) Landlord Consent Requirements. We request that Sellers identify each lease that requires landlord consent (or provides for a landlord's right to approve, reject, or condition) the transfer of the tenant's interest in connection with the asset purchase. For each such lease, please provide: (i) the specific consent provision by section reference; (ii) any conditions to consent (e.g., assumption of obligations, financial qualification of assignee, recapture rights); and (iii) the current status of the landlord consent process, including whether notice has been provided to the landlord, whether an application for consent has been submitted, and any response received to date.
(d) Environmental Reports. We request copies of any environmental reports, Phase I Environmental Site Assessments, Phase II Environmental Site Assessments, remediation plans, compliance orders, or correspondence with any environmental regulatory authority relating to any of the nine leased properties or the two owned properties. We note that Clearfield Environmental Consultants, Inc. ("Clearfield") has been engaged by Crestline to conduct environmental due diligence on all eleven properties, and Clearfield will require access to any existing environmental reports in Lakewood's possession or control as a baseline for its independent assessment. Clearfield's primary contact for this engagement is Margaret Soo-Hoo, Senior Environmental Consultant, and we request that any environmental materials be made available to Ms. Soo-Hoo directly, in addition to being uploaded to the data room.
(e) Owned Property Documentation. For each of the two owned properties, we request: (i) copies of the owner's title insurance policies; (ii) the most recent ALTA/NSPS land title surveys; (iii) copies of all encumbrance documents, including mortgages, deeds of trust, easements, restrictive covenants, development agreements, and any other instruments of record; and (iv) the most recent real property tax bills and assessment notices. We understand that both owned properties are currently encumbered by a first-priority mortgage in favor of Ironclad National Bank; please confirm and provide copies of the applicable mortgage instruments and any subordination, non-disturbance, and attornment agreements.
V. Schedule 3.14 — Employee Benefit Plans
The Draft Schedule 3.14 references several employee benefit plans maintained by Lakewood for the benefit of its workforce, which we understand comprises approximately 410 full-time equivalent employees, 38 employed or affiliated physicians, and 24 nurse practitioners and physician assistants. However, the Draft Schedule provides only plan names without any supporting documentation, plan terms, or financial data. Given the potential for significant assumed liabilities in connection with employee benefit obligations, and in light of the due diligence requirements of Crestline's financing sources, we request the following:
(a) Plan Documents. Complete and current plan documents, summary plan descriptions ("SPDs"), and all amendments (whether formal or operational) for each ERISA-covered plan maintained, sponsored, or contributed to by Lakewood, including, without limitation: (i) any 401(k) plan or other defined contribution retirement plan; (ii) all health and welfare benefit plans (including medical, dental, vision, life insurance, short-term and long-term disability, and flexible spending account plans); (iii) any deferred compensation arrangement, whether qualified or nonqualified; and (iv) any supplemental executive retirement plan ("SERP") or similar arrangement.
(b) Form 5500 Filings. The most recent three (3) years of Form 5500 Annual Return/Report filings (and all schedules and attachments thereto) for each employee benefit plan subject to ERISA reporting requirements. Where applicable, we also request copies of the most recent plan audit report (if required under ERISA § 103).
(c) Actuarial Reports. The most recent actuarial valuation, funding status report, or actuarial certification for any defined benefit pension plan, retiree medical plan, or other plan subject to actuarial valuation. If no such plan is currently maintained by Lakewood, we request written confirmation to that effect.
(d) Stonebridge Authorization. Crestline has retained Stonebridge Actuarial & Benefits Consulting, Inc. ("Stonebridge") to conduct an independent review of Lakewood's employee benefit plan obligations in connection with this transaction. We request that Sellers authorize Stonebridge's team (primary contact: Gregory Faulkner, FSA, MAAA, Senior Consulting Actuary) to receive plan documents, census data, claims experience data, and other relevant plan information directly from Lakewood's benefits administrator or third-party administrator. Please provide the name and contact information for Lakewood's benefits administrator so that a direct data request may be coordinated.
(e) Accrued PTO Liability. The Draft Schedules reference an estimated accrued paid-time-off ("PTO") liability of $1,340,000, which is expected to constitute an Assumed Liability under the APA. We request a detailed breakdown of this accrued liability by employee category (i.e., physicians, nurse practitioners/physician assistants, clinical support staff, and administrative staff) and by facility location. We further request a description of Lakewood's PTO accrual policy, including maximum accrual caps, carryover provisions, and payout-upon-termination policies, along with the most recent PTO liability calculation as prepared by Lakewood's payroll or human resources department.
(f) Employment-Related Agreements. We request a schedule of all employment agreements, consulting agreements, independent contractor agreements, severance agreements, change-of-control agreements, retention bonus agreements, non-competition agreements, non-solicitation agreements, and similar arrangements between Lakewood and any current or former employee, physician, nurse practitioner, physician assistant, or independent contractor. We specifically request fully executed copies of the following:
(i) The anticipated post-closing consulting agreement with Dr. Raymond Alcott, reflecting annual compensation of $450,000;
(ii) The anticipated post-closing consulting agreement with Dr. Nadia Petrosian, reflecting annual compensation of $375,000; and
(iii) Any employment agreement with any physician or other provider currently employed by Lakewood that contains change-of-control, severance, or accelerated vesting provisions that could be triggered by the contemplated transaction.
(g) Multiemployer and Self-Funded Plans. We request that Sellers identify whether Lakewood participates in, contributes to, or has any withdrawal liability with respect to any multiemployer plan (as defined in ERISA § 3(37)) or multiple employer welfare arrangement ("MEWA") (as defined in ERISA § 3(40)). If Lakewood maintains any self-funded or self-insured health plan, we request copies of the plan document, administrative services agreement, and all stop-loss or excess-loss insurance policies, including carrier name, policy number, specific and aggregate attachment points, and current policy term. Additionally, we request a schedule of incurred but not reported ("IBNR") claims estimates as of the most recent practicable date.
VI. Schedule 3.4 — Consents and Approvals
The contemplated transaction will require numerous third-party and governmental consents and approvals before the transfer of Lakewood's assets can be lawfully consummated and Crestline can operate the acquired facilities. The Draft Schedule 3.4 identifies only four (4) consent requirements, which is plainly incomplete given the scope and regulatory complexity of this transaction. We request that Sellers supplement Schedule 3.4 to include, at a minimum, the following:
(a) New York Department of Health — Article 28 Approval. Establishment approval or change-of-ownership approval from the New York State Department of Health ("NYS DOH") under Article 28 of the New York Public Health Law for each of the eight (8) New York facilities, currently operating under Operating Certificate Numbers D&TC-4821 through D&TC-4828. We note that the NYS DOH change-of-ownership application must be filed within ten (10) business days following execution of the APA — i.e., on or before June 30, 2025 (assuming June 16, 2025 execution). We request that Sellers confirm whether preliminary discussions with NYS DOH have been initiated and provide any pre-filing correspondence or guidance received.
(b) Pennsylvania Department of Health — Change of Ownership. Change-of-ownership approval from the Pennsylvania Department of Health ("PA DOH") for each of the three (3) Pennsylvania facilities, currently operating under License Numbers OPC-20140892, OPC-20140893, and OPC-20140894. As with the NYS DOH filing, we understand that PA DOH change-of-ownership filings should be submitted within ten (10) business days following APA execution (i.e., by June 30, 2025). We request that Sellers advise as to the current status of any pre-filing discussions with PA DOH.
(c) CMS — Medicare Provider Enrollment. Change of information submissions to the Centers for Medicare & Medicaid Services ("CMS") via Form CMS-855A or Form CMS-855B (as applicable to each facility type) for all eleven (11) CMS Certification Numbers (33-7021 through 33-7028 and 39-6011 through 39-6013). We request that Sellers confirm whether a Provider Enrollment, Chain, and Ownership System ("PECOS") update will be required for each facility and whether any facility is currently subject to any enrollment restrictions, payment suspensions, or revocation actions.
(d) Meridian Shield and Other Managed Care Payor Consents. Consent to assignment, change-of-control notice, or novation from Meridian Shield Health Plans, Inc. and all other managed care and third-party payors whose contracts contain assignment, change-of-control, or novation provisions. We request that Sellers provide a comprehensive list of every payor contract that requires any form of consent or notice in connection with the contemplated transaction, together with the specific consent or notice provision (by section reference) and any conditions or timelines applicable thereto.
(e) Clearpath Health Systems, Inc. Consent. Consent to assignment from Clearpath Health Systems, Inc. under the EHR License Agreement (Agreement No. CP-ENT-2022-0487), to the extent required by the terms of that agreement. We request that Sellers identify the specific consent provision and any conditions to consent, including any requirement for Crestline to execute an assumption agreement or demonstrate financial or technical qualification.
(f) Marlowe Asset Management Medical Equipment Finance, LLC Consent. Consent from Marlowe Asset Management Medical Equipment Finance, LLC to the assumption of the three imaging equipment lease schedules (VML-2023-1140, VML-2023-1141, and VML-2024-0219), to the extent required by the terms of the master lease agreement or the individual lease schedules. Please identify any financial covenants, creditworthiness requirements, or additional security that Marlowe Asset Management may require as a condition to consent.
(g) Landlord Consents. Landlord consent for any of the nine (9) leased properties where such consent is required under the applicable lease as a condition to assignment or change of control. As noted in Section IV above, we request that each such lease be identified and that Sellers provide the current status of the consent process.
(h) Ironclad National Bank — Lender Consent. We request that Sellers confirm whether any consent, approval, or waiver is required from Ironclad National Bank under Lakewood's existing credit facilities in connection with the contemplated transaction. Additionally, Crestline requests confirmation of the status of Crestline's own incremental term loan commitment from Ironclad National Bank in the amount of $84,000,000, which is subject to separate documentation and conditions precedent; this request is directed to Crestline's finance team but coordinated through this letter for completeness of the consent matrix.
(i) Hart-Scott-Rodino Act. We request that Sellers confirm whether a pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") is required in connection with the contemplated transaction, or whether the transaction qualifies for an exemption from the HSR Act filing requirements. If Sellers believe the transaction is exempt, we request that Sellers provide the revenue data, asset valuations, and other factual bases supporting the exemption analysis. Crestline's preliminary analysis, based on the transaction's aggregate consideration and the parties' respective sizes, suggests that an HSR filing may not be required, but we have not yet received sufficient data from Sellers to complete this analysis.
(j) Status Report. For each consent, approval, or filing identified on Schedule 3.4 (as supplemented), we request a status report indicating: (i) whether notice has been given or an application has been filed; (ii) the date of such notice or filing; (iii) whether consent or approval has been obtained; (iv) any conditions attached to consent or approval; and (v) the expected timeline for resolution. We request that this status report be updated on a weekly basis through closing.
VII. Additional Requests
In addition to the specific Disclosure Schedule items addressed above, we note the following additional diligence items that remain outstanding and must be addressed in Sellers' response:
(a) Organizational Chart. We request a complete and current organizational chart of Lakewood Regional Health Partners, LLC, including the identification of all subsidiaries, joint ventures, affiliated entities, and related persons or entities, whether or not previously disclosed. To the extent that any affiliated entity holds licenses, permits, contracts, or assets that are used in or related to the operations of the business being acquired, such entity and its relationship to Lakewood must be fully described.
(b) Updated Financial Statements. We request updated unaudited financial statements for Lakewood through the most recent practicable month-end (anticipated to be April 30, 2025 or May 31, 2025, if available), including a balance sheet, income statement, and statement of cash flows, prepared on a basis consistent with the audited financial statements for the fiscal year ended December 31, 2024. These updated financials are required for purposes of establishing the working capital target of $6,200,000 and calibrating the ±$500,000 collar methodology that will govern the post-closing working capital adjustment under the APA. Ridgepoint has indicated that it cannot finalize its working capital analysis without current financial data.
(c) Insurance Policies. We request a schedule of all insurance policies currently maintained by Lakewood, including, without limitation: (i) professional liability (medical malpractice) insurance; (ii) general liability insurance; (iii) property and casualty insurance; (iv) workers' compensation insurance; (v) directors' and officers' liability insurance; (vi) employment practices liability insurance; and (vii) cyber liability insurance. For each policy, we request the carrier name, policy number, policy period, limits of liability (per occurrence and aggregate), deductibles or self-insured retentions, and the name of the insurance broker. We further request information regarding the contemplated three-year "tail" or extended reporting period endorsement on professional liability coverage from Ridgeline Specialty Insurance Company, which Crestline understands carries an estimated premium of approximately $475,000. We also request details regarding the directors' and officers' liability tail policy (estimated premium of approximately $120,000), including the proposed carrier, coverage terms, and the party responsible for the premium payment under the APA.
(d) HIPAA Compliance. We request copies of Lakewood's current HIPAA privacy and security policies and procedures, the most recent HIPAA risk assessment (conducted pursuant to 45 C.F.R. § 164.308(a)(1)(ii)(A)), and a complete history of any HIPAA breach notifications submitted to the U.S. Department of Health and Human Services, Office for Civil Rights, or to affected individuals, including the date, nature, and scope of each breach and any resulting corrective action, settlement, or penalty. In addition, we request copies of Lakewood's current business associate agreements with all business associates as defined under HIPAA, to the extent not previously provided.
VIII. Response Deadline and Closing
We wish to reiterate the importance of receiving complete and substantive responses to each of the foregoing items on or before June 4, 2025. As you are aware, the June 16, 2025 APA execution target leaves limited time for review of supplemental materials, negotiation of any issues arising from the supplemented Disclosure Schedules, and finalization of the APA and ancillary documents. Incomplete or materially deficient Disclosure Schedules will preclude Crestline from executing the APA, as the accuracy and completeness of the Disclosure Schedules is a fundamental condition to Crestline's willingness to consummate the transaction.
We recognize that the volume of materials requested in this letter is substantial, and we are prepared to work collaboratively with WAG and Sellers to prioritize and sequence the production. To that end, we propose scheduling a call among counsel during the week of June 2, 2025, to discuss the items identified herein, coordinate on timing, and address any questions your clients may have regarding the scope of our requests. Please let us know your availability.
This letter and the requests set forth herein are made without prejudice to, and with full reservation of, all rights and remedies of Crestline under the APA (including, without limitation, Crestline's right to terminate the APA if the conditions to closing are not satisfied), at law, and in equity. Nothing in this letter shall be deemed to constitute a waiver of any closing condition, representation, warranty, or covenant, or an acceptance of the Draft Schedules as complete or accurate.
We are available to discuss any questions regarding the foregoing at your earliest convenience. For purposes of coordinating responses and scheduling, please direct all communications to the undersigned.
We look forward to your prompt response and to working together toward a successful closing.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Derek Okonkwo Lead Associate, Mergers & Acquisitions 425 Lexington Avenue, 31st Floor New York, New York 10017 Direct Dial: (212) 554-7843
Email: dokonkwo@calderwoodharkness.com
cc (via email):
James Prentice, Esq., Calderwood & Harkness LLP Sandra Tung, Esq., Calderwood & Harkness LLP Tiffany Rosenthal, Esq., Calderwood & Harkness LLP Jordan Samuels, Pinnacle River Capital Partners, LP Patricia Hsu, Crestline Packaging Solutions LLC Priya Chandrasekaran, Ridgepoint Advisory Group, LLC Christine Nowak, Esq., Hargrove & Whitaker LLP
CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter and the information contained herein are confidential and may be protected by the attorney-client privilege and/or the work product doctrine. This letter is intended solely for the use of the addressees and the individuals identified in the copy line above. Any unauthorized review, use, disclosure, or distribution is prohibited.

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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