MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO:
Jordan Samuels, Vice President, Pinnacle River Capital Partners, LP
Patricia Hsu, Chief Financial Officer, Crestline Packaging Solutions LLC
FROM:
Calderwood & Harkness LLP
James Prentice, Responsible Partner
Derek Okonkwo, Lead Associate
Tiffany Rosenthal, Working Associate
DATE: June 4, 2025
RE:
Intellectual Property Due Diligence Review — Lakewood Regional Health Partners, LLC
C&H Matter No. 1006-00008
I. EXECUTIVE SUMMARY
This memorandum presents the findings of Calderwood & Harkness LLP ("C&H") from its intellectual property due diligence review of Lakewood Regional Health Partners, LLC ("LRHP" or "Lakewood") conducted in connection with the proposed acquisition of substantially all of Lakewood's assets by Crestline Packaging Solutions LLC ("Crestline" or "CPS"), a portfolio company of Pinnacle River Capital Partners, LP ("Pinnacle River" or "Sponsor"). The acquisition is to be effectuated pursuant to an Asset Purchase Agreement (the "APA"), which is targeted for execution on or about June 16, 2025, with an anticipated Closing date of August 15, 2025 (the "Closing"). The aggregate purchase price under the APA is One Hundred Forty Million Dollars ($140,000,000), subject to customary working capital and other adjustments as further described therein.
The purpose of this memorandum is to summarize our review of Lakewood's intellectual property assets and related rights, to identify material risks and deficiencies, and to provide recommendations for resolution of open items in advance of Closing. Our review encompassed the following principal categories of IP assets:
(a) Trade names and service marks, including the "Lakewood Regional Health Partners" name, associated logos, taglines, and stylized marks used in Lakewood's healthcare operations across eleven clinic locations in New York and Pennsylvania;
(b) Domain names, including all internet domain names registered to or controlled by Lakewood and used in connection with its patient-facing and administrative web presence;
(c) Telephone numbers and fax lines, including all numbers associated with Lakewood's eleven clinic locations, toll-free lines, and related carrier agreements;
(d) Patient database and health records, including the electronic health records maintained on Lakewood's Clearpath Health Systems, Inc. EHR platform, encompassing patient demographics, clinical records, insurance and payor information, billing history, and scheduling data for the patient populations served by Lakewood's approximately 38 physicians and 24 nurse practitioners and physician assistants;
(e) Proprietary clinical protocols, including care pathways, treatment algorithms, and clinical decision-support tools developed by Lakewood's clinical leadership and medical staff; and
(f) Third-party IP licenses, both inbound (licenses granted to Lakewood by third parties) and outbound (licenses granted by Lakewood to third parties), including without limitation the Clearpath Health Systems, Inc. enterprise EHR license, software licenses for practice management, billing, imaging, and telehealth platforms, and equipment finance leases containing embedded software or firmware components.
Based on our review, we assign the following summary risk ratings to each category of IP assets:
The foregoing IP assets are to be listed as Purchased Assets on Schedule 2.1(a) (Intellectual Property Assets), Schedule 2.1(b) (Assigned Contracts), Schedule 2.1(c) (Domain Names and Telephone Numbers), and Schedule 2.1(d) (Patient Records and Data Assets) of the APA, as applicable. We note that several of these schedules remain in draft form and will require supplementation based on the findings described herein.
We have identified the following key open items requiring resolution prior to Closing:
1. Confirmatory IP assignments from Dr. Raymond Alcott and Dr. Nadia Petrosian regarding proprietary clinical protocols and individually developed intellectual property;
2. Written consent from Clearpath Health Systems, Inc. for assignment of Enterprise EHR License Agreement No. CP-ENT-2022-0487;
3. Transfer of domain name registrations currently held in Dr. Alcott's personal name to the Lakewood entity, followed by assignment to Crestline at Closing;
4. Coordination of telephone number porting and CMS re-enrollment filings;
5. HIPAA-compliant patient notification planning for the transfer of protected health information in connection with the asset sale; and
6. Confirmation that all UCC security interests encumbering IP assets of Lakewood are released at or prior to Closing.
Note on Scope. Our review was based on materials produced in the virtual data room maintained by Whitfield, Ames & Greer LLP ("WAG" or "Seller's Counsel," with Catherine Greer serving as Lead Partner), management representations and interview responses provided by Dr. Raymond Alcott (Co-Managing Member, holding a 60% membership interest), Dr. Nadia Petrosian (Co-Managing Member, holding a 40% membership interest, and serving as Medical Director), and Gretchen Unger (Chief Operating Officer), as well as public record searches conducted by our team. Where we have relied on representations that have not been independently verified, we have so noted. Certain requested documents and records remain outstanding, as identified in Section XIV of this memorandum.
II. SCOPE AND METHODOLOGY
A. Overview of Review Process
Our due diligence review was conducted over the period from April 28, 2025 through June 2, 2025, and encompassed the following principal activities:
(i) Virtual Data Room Review. We conducted a comprehensive review of documents and records uploaded to the Thackeray Solutions virtual data room (Project Ridgeline) maintained by Seller's Counsel. The data room was organized into twenty-three folders and sub-folders. We reviewed materials contained in the following data room categories relevant to our IP analysis: Corporate Records (Folder 1), intellectual Property (Folder 7), Material Contracts (Folder 8), Technology and Information Systems (Folder 9), Real Property and Leases (Folder 10, to the extent relating to signage and trade name usage), Litigation and Disputes (Folder 14), Insurance (Folder 15, to the extent relating to cyber and IP insurance), and Regulatory and Compliance (Folder 16, to the extent relating to HIPAA and data privacy). Individual document index numbers for key materials reviewed are set forth in Section XIV below.
(ii) Management Interviews. We conducted three interview sessions with Lakewood management: (a) an initial management presentation on May 5, 2025, attended by Dr. Alcott, Dr. Petrosian, and Ms. Unger; (b) a follow-up interview session focused on IT systems and clinical protocols on May 14, 2025, attended by Ms. Unger and Thomas Breck, Director of Information Technology; and (c) a supplemental interview on May 22, 2025, with Dr. Petrosian regarding clinical protocol development and authorship. We also submitted written questionnaires regarding trade secret protections and IP ownership, which were returned by Ms. Unger on May 19, 2025.
(iii) Public Record Searches. We conducted the following public record searches:
• Federal trademark search via the United States Patent and Trademark Office Trademark Electronic Search System ("USPTO TESS"), covering word marks, design marks, and phonetic equivalents in International Classes 5, 10, 35, 42, and 44 relevant to healthcare services;
• State trademark and service mark searches with the New York Department of State ("NY DOS") and the Pennsylvania Department of State ("PA DOS");
• Assumed name and DBA filing searches with the NY DOS, PA DOS, and the county clerk offices in Monroe, Onondaga, Oneida, Broome, Tompkins, Albany (New York), Lackawanna, Luzerne, and Bradford (Pennsylvania) counties;
• United States Copyright Office search via the online public catalog;
• Domain name WHOIS lookups through ICANN-accredited registrar databases;
• UCC filing searches through the New York Secretary of State, Pennsylvania Secretary of State, and relevant county filing offices; and
• Federal and state court docket searches for IP-related litigation involving Lakewood, Dr. Alcott, and Dr. Petrosian.
B. Limitations. The following limitations apply to this memorandum and should be noted:
(a) No Freedom-to-Operate Opinion. This memorandum does not constitute a formal freedom-to-operate opinion. We have not conducted a comprehensive analysis of whether Lakewood's current operations or products infringe or may infringe the intellectual property rights of any third party. Our review is limited to an assessment of the IP assets owned or controlled by Lakewood and the risks associated with the transfer of those assets in connection with the proposed transaction.
(b) No Patent Analysis. Lakewood does not hold any issued patents or pending patent applications. Accordingly, our review does not include any patent-related analysis, including freedom-to-operate, validity, or enforceability analyses.
(c) Reliance on Seller Representations. Certain findings in this memorandum are based on representations made by Lakewood's management and Seller's Counsel. We have not independently verified all such representations. Where we have identified inconsistencies or gaps, we have noted them.
(d) Outstanding Document Requests. As of the date of this memorandum, the following categories of documents requested from Seller have not been produced or have been produced only in part:
• Executed copies of employment agreements for six of the thirty-eight employed physicians (specifically, physicians hired between January 2023 and present), including IP assignment provisions;
• Work-for-hire or assignment documentation relating to the creation of Lakewood's logos and branding materials by Ridgeview Creative Agency (Rochester, NY);
• Complete inventory of social media account credentials and administrative access information;
• Historical records of any data security incidents prior to 2020; and
• Redacted copies of certain payor contracts identified only by summary in the data room (specifically, three managed care agreements in addition to the Meridian Shield agreement).
We reserve the right to supplement this memorandum upon receipt and review of these outstanding materials.
III. TRADE NAMES AND SERVICE MARKS
A. "Lakewood Regional Health Partners" Trade Name
Formation and Registration History. Lakewood Regional Health Partners, LLC was formed as a New York limited liability company on March 12, 2014, by filing its Articles of Organization with the New York Department of State. The entity's Employer Identification Number is 46-5183294. The name "Lakewood Regional Health Partners" has been in continuous use in connection with the provision of healthcare services since the entity's formation. According to management representations, the first clinical location (Rochester Main) opened for patient care on June 2, 2014.
Assumed Name and DBA Filings. We reviewed the status of assumed name and DBA filings in each county in which Lakewood operates a clinical location. Our findings are summarized as follows:
*The DBA registrations for Brighton and Henrietta (both in Monroe County, NY) are scheduled to expire on June 15, 2025, which is one day prior to the targeted APA execution date. We recommend that Seller be directed to file renewal applications for these registrations prior to or concurrently with execution of the APA to avoid any lapse in registration.
Ownership. All assumed name and DBA filings are registered in the name of Lakewood Regional Health Partners, LLC. No filings were identified under the names of Dr. Alcott, Dr. Petrosian, or any other individual.
Federal Trademark Registration Status. We conducted a comprehensive search of the USPTO TESS database for the mark "Lakewood Regional Health Partners" and variations thereof in all relevant international classes. No federal trademark or service mark registration was identified for this mark. Likewise, no pending application was identified. We note that the mark "Lakewood Regional Health Partners" is geographically descriptive in nature, as "Lakewood" is a recognized geographic place name (referencing, among other places, the Lakewood neighborhood of Rochester, New York, where the entity's original clinic is located) and "Regional Health Partners" is descriptive of the services provided. Under Section 2(e)(2) of the Lanham Act (15 U.S.C. § 1052(e)(2)), a mark that is primarily geographically descriptive of the origin of the applicant's goods or services is refused registration on the Principal Register absent a showing of acquired distinctiveness under Section 2(f). Nevertheless, with more than eleven years of continuous use in commerce, Lakewood may be able to demonstrate the requisite acquired distinctiveness to support registration, or alternatively could seek registration on the Supplemental Register.
Common Law Rights. Notwithstanding the absence of a federal registration, Lakewood has accrued common law trademark and service mark rights through its continuous use of the "Lakewood Regional Health Partners" name in commerce since 2014 in connection with healthcare services in the New York and Pennsylvania markets. Common law rights are geographically limited to the areas of actual use and reputation. Given Lakewood's operations across eleven locations in two states, with trailing twelve-month net revenue of $78,400,000 and a substantial patient base, these common law rights provide meaningful, though geographically circumscribed, protection.
Recommendation. We recommend that Crestline consider filing a federal service mark application for "Lakewood Regional Health Partners" on the Principal Register (or, if necessary, the Supplemental Register) promptly following Closing, asserting the entity's acquired distinctiveness through long-standing use. A federal registration would provide constructive nationwide notice of the mark, a legal presumption of validity and ownership, and access to federal court jurisdiction for enforcement actions. The filing should be coordinated with trademark counsel to ensure that the identification of services and classification are appropriately drafted.
B. Other Marks and Branding Elements
Logos and Design Marks. Lakewood utilizes a stylized logo consisting of a leaf-and-caduceus design rendered in forest green and navy blue, with the words "Lakewood Regional Health Partners" in a proprietary typeface arrangement. This logo appears on exterior and interior signage at all eleven clinic locations, patient intake forms, appointment reminder communications, letterhead, business cards, the Lakewood website, and social media profiles. Additionally, Lakewood uses the tagline "Your Health, Our Community" in certain marketing and advertising materials.
We conducted searches of the USPTO TESS database and the NY DOS and PA DOS registries for any registration of the stylized logo or the tagline. No federal or state registrations were identified for any design marks, logos, or taglines. Additionally, no pending applications were identified.
Ownership of Design Files. According to the management questionnaire responses provided by Ms. Unger, the current logo and branding guidelines were developed in 2017 by Ridgeview Creative Agency ("Ridgeview"), a graphic design firm located in Rochester, New York. We reviewed Data Room Document No. 7-014, which is a proposal letter from Ridgeview dated February 3, 2017, outlining the scope of branding services to be provided. However, we were unable to locate in the data room a formal services agreement, work-for-hire agreement, or written assignment of rights from Ridgeview to Lakewood. Under the Copyright Act of 1976 (17 U.S.C. § 101), a work created by an independent contractor is not a "work made for hire" unless it falls within one of the nine enumerated categories and is the subject of a written agreement signed by both parties. Graphic design and logo creation are not among the enumerated categories. Accordingly, absent a written assignment, copyright in the logo and branding materials may remain with Ridgeview.
Recommendation. Seller should be directed to produce any existing agreement with Ridgeview Creative Agency, including any work-for-hire or assignment provisions. If no written assignment exists, Lakewood should obtain a confirmatory copyright assignment from Ridgeview prior to Closing to ensure clear title to the logo and related design files. This should be added as a pre-Closing deliverable.
Cease-and-Desist Correspondence. We reviewed the data room litigation and disputes folder (Folder 14) and the correspondence sub-folders. No cease-and-desist letters or demand letters relating to Lakewood's trade names, service marks, logos, or branding were identified. Ms. Unger confirmed in her management interview that, to her knowledge, Lakewood has never received any such correspondence. Dr. Alcott confirmed the same.
C. Potential Conflicts
Clearance Search Results. Our clearance search identified the following entities using "Lakewood"-branded names in connection with healthcare services:
(i) Penrose Partners LLC — a nonprofit integrated health system based in Staples, Minnesota, operating under federal registration (Reg. No. 3,427,891) for healthcare services in International Class 44. This entity's operations are concentrated in central Minnesota and do not overlap geographically with Lakewood's New York and Pennsylvania markets. Risk of confusion is assessed as low.
(ii) Lakewood Ranch Medical Center — a hospital facility located in Lakewood Ranch, Florida. This entity operates under a distinct name and in a different geographic market. No federal registration for the "Lakewood Ranch Medical Center" name was identified. Risk of confusion is assessed as low.
(iii) Lakewood Family Medicine, P.C. — a single-physician family medicine practice located in Lakewood, New Jersey. This entity filed a New Jersey DBA registration in 2011. While the name incorporates "Lakewood," the practice is small, geographically distant, and operates under a sufficiently different name formulation. Risk of confusion is assessed as low.
(iv) Lakewood Urgent Care Partners, LLC — a New York limited liability company formed in 2022 with an address in Jamestown, New York (Chautauqua County). This entity uses the name "Lakewood Urgent Care Partners" in connection with urgent care services. While both entities operate in New York and use the "Lakewood" element in connection with healthcare services, the full names differ, the service areas do not presently overlap (Jamestown is in the western portion of New York State, whereas Lakewood's closest New York location is in Rochester), and the specific service descriptions differ. Risk of confusion is assessed as low to moderate. We recommend continued monitoring of this entity's geographic expansion and service offerings.
Opposition and Cancellation Proceedings. No pending opposition or cancellation proceedings involving the "Lakewood Regional Health Partners" mark or any variation thereof were identified in the Trademark Trial and Appeal Board electronic system.
IV. DOMAIN NAMES
A. Inventory of Registered Domains
Based on our review of WHOIS records, registrar account statements, and management representations, the following domain names are owned or controlled by Lakewood:
*Denotes domains registered to Dr. Raymond Alcott individually rather than to the Lakewood entity.
The primary domain used for Lakewood's patient-facing website is lakewoodregionalhealth.com, which is properly registered to the entity. The domain lrhppatientportal.com is used for the patient portal interface connected to the Clearpath EHR system and is hosted on Ridgeway Industries infrastructure.
B. Ownership and Transfer
Domains Registered to Entity. Five of the seven identified domains are registered to Lakewood Regional Health Partners, LLC and should be transferable at Closing as Purchased Assets under the APA. The APA should include provisions requiring Seller to deliver registrar account credentials and to cooperate in effectuating the transfer of registrant information to Crestline (or its designee) at or promptly following Closing.
Domains Registered to Dr. Alcott. Two domains — lakewoodregionalhealth.net and lakewoodhealthny.com — are registered to Dr. Raymond Alcott individually rather than to the Lakewood entity. This is a moderate risk item. These domains are used as redirect URLs that point to the primary lakewoodregionalhealth.com website and appear in certain legacy marketing materials and physician directory listings. If these domains are not properly transferred, Crestline could lose control of URL redirects that generate patient traffic.
Recommendation. Dr. Alcott should be directed to transfer the registrant records for lakewoodregionalhealth.net and lakewoodhealthny.com to Lakewood Regional Health Partners, LLC prior to Closing, or alternatively, to assign these domains directly to Crestline at Closing. This can be accomplished through the standard ICANN registrant transfer process. We recommend that the confirmatory domain transfer be included as a pre-Closing deliverable or Closing condition in the APA.
Privacy and Proxy Registration. Our WHOIS searches did not reveal the use of any privacy or proxy registration services for the identified domains. All registrant records display either the entity name or Dr. Alcott's name directly, which simplifies the transfer process.
Expired or Lapsed Domains. We identified one potentially lapsed domain — lakewoodhealth.com — which was registered by a third party (Penrose Partners LLC, Inc., of Staples, Minnesota) and is not associated with the Target. We also noted that the domain lakewoodhealthpartners.com (without "regional") is registered to an unrelated party and is currently parked with advertising content. While this does not present a direct cybersquatting risk, Crestline may wish to consider acquiring this domain defensively to prevent any future confusion.
DNS Hosting and Service Agreements. Lakewood's primary DNS hosting is provided by Kestrel Holdings under a standard business-tier account. The patient portal domain is hosted on Ridgeway Industries. We reviewed the Cobalt Ridge Solutions terms of service (Data Room Document No. 9-003) and confirmed that the service agreement is transferable upon change of account ownership. The Meridian Technologies hosting arrangement is governed by the standard Meridian Technologies Customer Agreement. Both arrangements should be addressed as part of the technology transition planning.
C. Social Media Accounts
Based on management representations, Lakewood maintains the following social media accounts:
The Kestrel Services Inc., Northpoint Services Inc., and Westmark Health IT accounts are set up as entity-level business or company accounts administered by Lakewood's marketing coordinator, Jessica Fielding. The X (Fenmore Solutions) and Crowne Albany Partners LLC accounts were originally created by Dr. Alcott and subsequently transitioned to staff management, but our review was unable to confirm whether the account ownership records have been formally updated to reflect entity ownership.
Recommendation. Seller should be directed to provide a complete inventory of all social media account credentials, including administrative access information, and to confirm that all accounts are registered to the entity (not to Dr. Alcott, Dr. Petrosian, or any other individual). Transfer of social media accounts should be coordinated at Closing as part of the broader transition of digital assets. We note that the complete social media credential inventory remains an outstanding document request.
V. TELEPHONE NUMBERS AND FAX LINES
We reviewed the telephone number and fax line inventory provided by Ms. Unger (Data Room Document No. 7-022) and confirmed the information against carrier account records and CMS enrollment data where available. Lakewood maintains a total of thirty-four (34) telephone numbers and eleven (11) fax lines across its eleven clinic locations, in addition to two (2) toll-free numbers used for centralized appointment scheduling and patient services.
Carrier Agreements and Porting Provisions. Lakewood's telephone and fax services are provided by three carriers:
(i) Harborline Industries — primary carrier for all eight New York locations. Service is provided under Master Service Agreement No. VZ-BUS-2019-48721 (Data Room Document No. 8-037), which includes standard local number portability provisions in compliance with FCC regulations. The agreement does not contain any anti-assignment or change-of-control restrictions that would prevent porting in connection with an asset sale.
(ii) Northpoint Enterprises — carrier for the Scranton and Wilkes-Barre, Pennsylvania locations. Service is provided under a business VoIP agreement (Data Room Document No. 8-041). The agreement permits number porting upon thirty (30) days' written notice.
(iii) Dunmore Services Inc. — carrier for the Towanda, Pennsylvania location. Service is provided under a small business agreement (Data Room Document No. 8-043). The agreement permits porting subject to applicable early termination fees if the service term has not expired. The current term expires November 30, 2025, which is after the anticipated Closing date. We have confirmed that porting during the term is permissible upon payment of an early termination fee estimated at $1,200.
Toll-Free Numbers. Lakewood maintains two toll-free numbers: (i) 1-800-555-LRHP (5747), used for centralized appointment scheduling, and (ii) 1-888-555-0142, used for patient billing inquiries. Both toll-free numbers are provided by Harborline Industries and are portable under the same terms as the local numbers.
Patient Communication Significance. The telephone numbers associated with Lakewood's clinic locations are deeply embedded in the practice's patient-facing communications, including printed marketing materials, physician directory listings (Healthgrades, Vitals, WebMD, and carrier-specific provider directories), CMS enrollment records, state Medicaid enrollment records, and payor credentialing files. Loss of any of these numbers in connection with the asset transfer would create material operational disruption, as patients would be unable to reach their healthcare providers using the contact information on file, potentially resulting in missed appointments, delayed care, and patient attrition.
Additionally, the CMS Certification Numbers for each Lakewood location are linked to the telephone numbers on file with the applicable Medicare Administrative Contractor (Keystone MAC Services, LLC). Any change in telephone numbers would necessitate updated CMS-855B enrollment applications for each rendering provider and CMS-855A applications for each practice location, a process that can take sixty (60) to ninety (90) days and could result in temporary gaps in Medicare billing capability if not managed proactively.
Confirmation as Purchased Assets. The telephone numbers and fax lines are included within the definition of "Purchased Assets" under Section 2.1 of the draft APA and should be specifically listed on Schedule 2.1(c). The complete inventory is set forth in Exhibit C to this memorandum.
Recommendation. We recommend the following actions:
(a) Initiate porting coordination with all three carriers no later than thirty (30) days prior to Closing to ensure seamless transfer of all telephone and fax numbers;
(b) Coordinate with Lakewood's credentialing and enrollment staff (and with Marchand Healthcare Regulatory Advisors, LLC) to prepare updated CMS and state Medicaid enrollment filings reflecting the change of ownership, to be submitted promptly upon Closing; and
(c) Negotiate a Crestline Industries early termination fee allocation as part of the Closing cost adjustments, or alternatively, arrange for Crestline to assume the remaining term of the Crestline Industries agreement.
VI. PATIENT DATABASE AND HEALTH RECORDS
A. Description of Database Assets
Lakewood maintains a comprehensive electronic patient database as part of its clinical operations. The practice employs approximately 410 full-time equivalent staff supporting approximately 38 physicians and 24 nurse practitioners and physician assistants across its eleven clinic locations. Based on Lakewood's trailing twelve-month ("TTM") net revenue of $78,400,000, and utilizing industry benchmarks for multi-specialty group practices, we estimate that Lakewood's active patient panel comprises approximately 85,000 to 110,000 unique patients, with total historical patient records (including inactive patients) significantly exceeding that range.
The patient database is maintained on the Clearpath Health Systems, Inc. electronic health record ("EHR") platform, pursuant to Enterprise License Agreement No. CP-ENT-2022-0487 (discussed in greater detail in Section VIII.A below). The database resides on Clearpath's cloud-hosted infrastructure and includes the following data categories:
• Patient demographics: name, date of birth, social security number, address, telephone number, email address, emergency contact information, preferred language, and related identifying information;
• Insurance and payor information: primary and secondary insurance coverage, subscriber identification numbers, group numbers, eligibility status, authorization records, and coordination of benefits data;
• Clinical records: encounter notes, physician orders, diagnostic test results, imaging reports, medication lists, allergy information, immunization records, problem lists, surgical histories, and referral documentation;
• Billing history: charge capture records, CPT and ICD-10 coding data, claim submission records, remittance advice, payment posting records, accounts receivable aging data, and patient balance information; and
• Scheduling data: appointment records, provider schedules, patient flow data, no-show and cancellation records, and waitlist information.
In addition to structured data, the database contains unstructured data, including scanned documents (prior medical records, insurance cards, consent forms, and advance directives), dictated and transcribed notes, and secure patient portal communications.
B. Ownership Analysis
New York Law. Under New York Public Health Law § 18 and applicable regulations, a healthcare provider generally owns the physical or electronic medical record, but the patient has a right of access to the information contained therein. The New York State Department of Health has consistently taken the position that medical records are the property of the healthcare provider or facility that created them, subject to the patient's statutory right to obtain copies. There is no statutory prohibition on the transfer of patient records in connection with a sale of a medical practice, provided that appropriate notice is given to patients and the receiving entity assumes the same obligations with respect to record maintenance and patient access.
Pennsylvania Law. Pennsylvania follows a similar framework. Under 28 Pa. Code § 115.28 and the Pennsylvania Medical Practice Act, medical records are maintained by and belong to the healthcare provider, subject to the patient's right of access under 42 Pa.C.S. § 6155 and applicable regulations. The Pennsylvania Department of Health guidelines permit transfer of records in connection with a change of practice ownership, subject to patient notification requirements.
HIPAA Considerations. The Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations at 45 C.F.R. Parts 160 and 164, permit the disclosure of protected health information ("PHI") in connection with the sale, transfer, merger, or consolidation of a covered entity or its assets, provided that the receiving entity agrees to be bound by the same restrictions and conditions that applied to the transferring entity. Specifically, 45 C.F.R. § 164.502(a)(5)(iii) authorizes a covered entity that is required by law to transfer records of PHI to another covered entity to make the required transfer. Furthermore, the HIPAA Privacy Rule permits a covered entity to disclose PHI to a successor entity in the course of a sale or transfer of assets, provided that the successor entity agrees to appropriately safeguard the PHI.
Confirmation. Based on the foregoing, Lakewood has the legal right to transfer its patient database and health records as Purchased Assets under the APA, subject to the following conditions: (i) compliance with HIPAA privacy and security requirements; (ii) provision of adequate notice to patients of the change in ownership; and (iii) assumption by Crestline of the obligations of a covered entity with respect to the transferred records.
Patient Notification Requirements. Under HIPAA (45 C.F.R. § 164.520(b)(1)(v)(C)), a covered entity's Notice of Privacy Practices must contain a statement that patients will be notified in the event of a change in ownership that affects their records. We have reviewed Lakewood's current Notice of Privacy Practices (Data Room Document No. 16-008) and confirmed that it contains the required statement. In addition, as a matter of best practice and in accordance with guidance from the New York State Department of Health and the American Medical Association, we recommend that Lakewood provide direct written notice to all active patients at least thirty (30) days prior to Closing, informing them of the change in ownership and offering the opportunity to request that records be transferred to another provider.
C. Data Privacy and Security Considerations
HIPAA Compliance Status. A comprehensive HIPAA compliance assessment was conducted by Marchand Healthcare Regulatory Advisors, LLC ("Marchand") as part of the broader healthcare regulatory due diligence stream. We have reviewed Marchand's preliminary findings (Marchand Report Draft dated May 28, 2025) and note the following items relevant to the IP due diligence analysis:
• Lakewood has designated a HIPAA Privacy Officer (currently Teresa Valdez, Director of Compliance) and a HIPAA Security Officer (currently Thomas Breck, Director of IT);
• Lakewood conducted its most recent HIPAA Security Risk Assessment in October 2024, which identified three medium-risk items relating to mobile device management and two low-risk items relating to workstation security, all of which are reported as remediated or in process;
• Business Associate Agreements ("BAAs") are in place with Clearpath Health Systems, Inc. (Data Room Document No. 8-025), Redstone Diagnostics, Inc. (Data Room Document No. 8-029), and twelve other vendors identified as business associates; and
• No breach reports were filed with the HHS Office for Civil Rights ("OCR") in the past three years. Ms. Unger reported one minor incident in 2021 involving the misdirection of a fax containing PHI for three patients, which was determined to be below the breach notification threshold.
New York SHIELD Act. The New York Stop Hacks and Improve Electronic Data Security Act ("SHIELD Act," N.Y. Gen. Bus. Law § 899-aa et seq.) requires any person or business that owns or licenses the private information of New York residents to implement and maintain reasonable safeguards to protect the security, confidentiality, and integrity of that information. Lakewood's data security program, as described in the IT security policies produced in the data room (Data Room Document Nos. 9-015 through 9-022), appears to incorporate the categories of safeguards enumerated under the SHIELD Act, including administrative, technical, and physical safeguards. However, a definitive compliance assessment is outside the scope of this IP due diligence review and is being addressed by Marchand.
Encryption and Access Controls. Based on our review of IT documentation and the May 14, 2025 interview with Mr. Breck, patient data stored on the Clearpath EHR platform is encrypted at rest (AES-256) and in transit (TLS 1.2+). Access to the EHR system is controlled through role-based access controls, with two-factor authentication required for remote access. Physical access to server rooms (for on-premise equipment) is controlled by key-card systems with audit logging.
D. Data Encumbrances
UCC Filings. Our UCC search identified a UCC-1 financing statement filed by Ironclad National Bank ("INB") against Lakewood Regional Health Partners, LLC with the New York Secretary of State (Filing No. 202109181234567), dated September 17, 2021, in connection with the Credit Agreement of the same date. The collateral description in the financing statement covers "all assets of the Debtor, including without limitation, all accounts, chattel paper, commercial tort claims, deposit accounts, equipment, fixtures, general intangibles, goods, instruments, inventory, investment property, letter-of-credit rights, and payment intangibles." The term "general intangibles" in this context would encompass intellectual property, trade names, and data assets.
We understand that the Ironclad National Bank credit facility is to be repaid in full at Closing from the purchase price proceeds, and that INB will deliver a payoff letter and UCC-3 termination statement at Closing. We have confirmed with Seller's Counsel that this is the anticipated arrangement. It is critical that the UCC-3 termination statement be obtained and filed prior to or concurrently with Closing to ensure that the IP assets are transferred free and clear of INB's security interest. This is further discussed in Section X below.
Payor Contract Restrictions. We reviewed the managed care agreement with Meridian Shield Health Plans, Inc. ("Meridian Shield"), Lakewood's largest commercial payor, accounting for approximately $17,248,000 in annual revenue (approximately 22% of TTM net revenue). The Meridian Shield agreement (Data Room Document No. 8-011) contains the following provisions relevant to data encumbrances:
• Section 7.3 (Data Use and Ownership): provides that "all clinical and claims data generated in the course of providing Covered Services to Meridian Shield Members shall be jointly owned by Provider and Plan, and Provider shall not sell, license, or otherwise transfer such data to any third party without the prior written consent of Plan, except as required by law or as necessary for Provider's own treatment, payment, and healthcare operations purposes."
• Section 11.2 (Change of Control): provides that in the event of a "Change of Control" of the Provider (defined to include a sale of all or substantially all assets), the Provider shall provide Meridian Shield with sixty (60) days' prior written notice and Meridian Shield shall have the right to terminate the agreement upon ninety (90) days' notice following receipt of such notice.
The joint ownership and consent provisions of Section 7.3 are a moderate risk item. While the APA contemplates the transfer of Lakewood's patient data to Crestline, the Meridian Shield agreement arguably restricts Lakewood's ability to transfer data pertaining to Meridian Shield members without Meridian Shield's consent. We recommend that Seller's Counsel engage with Meridian Shield to obtain consent or a waiver of this provision in connection with the transaction. Additionally, the Change of Control notice provision should be complied with promptly following execution of the APA to preserve the managed care relationship.
No other liens, pledges, or encumbrances on data assets were identified.
VII. PROPRIETARY CLINICAL PROTOCOLS
A. Identification and Description
Lakewood has developed a portfolio of proprietary clinical protocols, care pathways, treatment algorithms, and clinical decision-support tools that guide clinical practice across its eleven locations and multiple specialties. Based on our review of Data Room Document Nos. 7-031 through 7-048 and the management interviews, we have identified the following principal categories of proprietary clinical materials:
(i) Primary Care Clinical Protocols — a set of twenty-three (23) standardized protocols for the management of chronic conditions including diabetes mellitus (Type 1 and Type 2), hypertension, hyperlipidemia, asthma, chronic obstructive pulmonary disease, and congestive heart failure. These protocols specify evidence-based treatment algorithms, medication escalation pathways, laboratory monitoring schedules, and referral triggers. According to Dr. Petrosian, these protocols were developed primarily between 2015 and 2020 under her direction as Medical Director, with input from employed physicians.
(ii) Urgent Care Triage Algorithms — a proprietary triage and patient flow system used at five of the eleven locations that offer walk-in urgent care services. The system includes severity scoring rubrics, disposition decision trees, and time-to-provider benchmarks. This system was developed by Dr. Alcott in 2016 and has been refined over time.
(iii) Care Coordination Pathways — a set of care coordination and transitions-of-care protocols governing patient handoffs between primary care, specialist, and hospital settings, developed in collaboration with local hospital partners. These pathways are documented in a series of internal manuals and reference guides.
(iv) Quality Metrics and Reporting Frameworks — proprietary scorecards, benchmarking tools, and quality reporting templates used for internal performance measurement, HEDIS reporting to managed care payors, and MIPS/APM compliance under the CMS Quality Payment Program.
(v) Clinical Decision-Support Templates — a set of customized order sets, documentation templates, and clinical alerts built within the Clearpath EHR platform, designed to standardize care delivery and promote adherence to the clinical protocols described above.
These proprietary clinical materials are integral to Lakewood's operational model and clinical reputation. They represent a significant component of the institutional knowledge and operational infrastructure that supports consistent, high-quality care delivery across a geographically dispersed multi-site practice. From a valuation perspective, these materials are among the intangible assets contributing to the goodwill component of the purchase price.
B. Ownership and Work-for-Hire Analysis
Employment Agreements. We reviewed the standard-form employment agreement used by Lakewood for employed physicians (Data Room Document No. 7-050) and the standard-form employment agreement used for nurse practitioners and physician assistants (Data Room Document No. 7-051). Both forms contain the following IP-related provisions:
• Section 8 (Confidentiality): requires employees to maintain the confidentiality of "proprietary information, trade secrets, patient information, business information, and other confidential materials" of the practice during and after employment.
• Section 9 (Work Product): states that "all work product, inventions, discoveries, improvements, clinical materials, protocols, and other intellectual property created by Employee in the course of employment or using the resources of the Practice shall be the sole property of the Practice."
While Section 9 contains language that, on its face, assigns IP rights to the entity, we identified the following concerns:
(a) Incomplete Execution. Of the thirty-eight employed physicians, executed employment agreements containing the Section 9 work product provision were produced for thirty-two physicians. Executed agreements for six physicians hired between January 2023 and the present have not been produced. Ms. Unger stated that executed copies exist in personnel files but have not yet been scanned into the data room. This remains an outstanding document request.
(b) Member/Owner Status. Dr. Alcott and Dr. Petrosian are members of the LLC, not employees. They do not have employment agreements. Their rights and obligations are governed by the Second Amended and Restated Operating Agreement of Lakewood Regional Health Partners, LLC, dated January 1, 2019 (the "Operating Agreement") (Data Room Document No. 1-003). We reviewed the Operating Agreement and found no express IP assignment or work-for-hire provision. Section 4.7 (Capital Contributions) references "Intellectual property and proprietary materials contributed by the Members to the Company," but does not contain an explicit assignment of IP rights.
(c) Work-for-Hire Doctrine. Under the Copyright Act, a work prepared by an employee within the scope of employment is a "work made for hire," and the employer is considered the author and owner. 17 U.S.C. § 101. For employed physicians with executed employment agreements, the Section 9 provision provides a contractual basis for ownership, and the work-for-hire doctrine may independently vest ownership in the entity to the extent the protocols were created within the scope of employment. However, for Dr. Alcott and Dr. Petrosian, who are members/owners rather than employees, the work-for-hire doctrine does not automatically apply, and the Operating Agreement does not supply a contractual basis for assignment.
Risk Assessment. The absence of clear IP assignment provisions for Dr. Alcott and Dr. Petrosian is an elevated risk item. Dr. Petrosian was identified as the principal author of the primary care clinical protocols, and Dr. Alcott was identified as the developer of the urgent care triage algorithms. These are among the most significant proprietary clinical materials identified in our review. If ownership of these materials is not clearly vested in the entity, Crestline may acquire the asset purchase without acquiring clear title to the underlying IP.
Recommendation. We strongly recommend that Crestline require, as a condition to Closing, the execution and delivery by each of Dr. Alcott and Dr. Petrosian of a confirmatory IP assignment agreement, pursuant to which each member irrevocably assigns to Lakewood Regional Health Partners, LLC (and through the APA, to Crestline) all right, title, and interest in and to any intellectual property created, developed, or contributed by such member in connection with the Lakewood business. This recommendation is particularly important in light of the post-Closing Consulting Agreements contemplated for both individuals (two-year terms, at $450,000 per year for Dr. Alcott and $375,000 per year for Dr. Petrosian), as the ongoing consulting relationship will generate additional IP that should be addressed.
We have prepared draft forms of confirmatory IP assignment agreements and will circulate them to Seller's Counsel upon approval from the deal team.
C. Trade Secret Protections
Statutory Framework. Proprietary clinical protocols may qualify as trade secrets under both the federal Defend Trade Secrets Act of 2016 ("DTSA," 18 U.S.C. § 1836 et seq.) and applicable state law. Under the DTSA and the New York common law of trade secrets (New York has not adopted the Uniform Trade Secrets Act), a trade secret is information that (i) derives independent economic value from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Pennsylvania has adopted the Uniform Trade Secrets Act (12 Pa.C.S. § 5301 et seq.), which employs a substantially similar definition.
Assessment of Reasonable Measures. Based on our review, Lakewood has implemented the following measures to maintain the secrecy of its proprietary clinical protocols:
• Access Controls: Clinical protocols are stored in a restricted-access folder on Lakewood's internal network and within the Clearpath EHR document management module. Access is limited to physicians, nurse practitioners, physician assistants, and designated clinical support staff on a need-to-know basis.
• Confidentiality Agreements: As noted above, Lakewood's standard employment agreements contain confidentiality provisions. Additionally, Lakewood requires all clinical staff to sign a separate "Confidentiality and Non-Disclosure Acknowledgment" (Data Room Document No. 7-052) upon onboarding.
• Document Marking: We reviewed a sample of clinical protocol documents produced in the data room and noted that approximately half bear a "CONFIDENTIAL — PROPRIETARY" marking. The remaining documents do not bear any confidentiality marking. Inconsistent marking is a moderate weakness in the trade secret protection program.
• Non-Compete Covenants: The APA contemplates three-year, 75-mile-radius non-competition covenants for Dr. Alcott and Dr. Petrosian post-Closing. These covenants, while primarily directed at competitive activity, also serve to protect the proprietary protocols from competitive use.
Known Disclosures. Dr. Petrosian reported that she presented portions of the diabetes management protocol at a regional medical conference in 2019 (the Finger Lakes Primary Care Symposium). The presentation was in the form of a general overview and did not include the specific algorithmic details or proprietary scoring rubrics. Dr. Petrosian stated that the presentation slides (which we have not reviewed) did not include the complete protocol. We recommend obtaining and reviewing the presentation materials to assess whether any trade secret protection was compromised by this disclosure.
No other disclosures to competitors or the public were reported by management.
Recommendation. To strengthen the trade secret posture of the proprietary clinical protocols, we recommend that Crestline, post-Closing, implement a comprehensive trade secret management program, including: (a) consistent marking of all proprietary documents; (b) annual review and updating of access controls; (c) inclusion of specific trade secret acknowledgments in all employee and consultant agreements; and (d) periodic training on trade secret identification and protection.
VIII. THIRD-PARTY IP LICENSES — INBOUND
A. Clearpath Health Systems EHR License
Overview. Lakewood's clinical operations are centered on the electronic health record platform provided by Clearpath Health Systems, Inc. ("Clearpath"), a healthcare IT company based in Madison, Wisconsin. The relationship is governed by Enterprise License Agreement No. CP-ENT-2022-0487, dated March 1, 2022 (the "Clearpath License" or "EHR License") (Data Room Document No. 8-025).
Key Terms. The principal terms of the Clearpath License are as follows:
License Grant: Clearpath grants Lakewood a non-exclusive, non-transferable license to access and use the Clearpath EHR platform (the "Licensed Software") for Lakewood's internal healthcare operations across all of its clinical locations.
License Term: The initial term of the Clearpath License runs from March 1, 2022 through December 31, 2027. The agreement auto-renews for successive one-year terms unless either party provides written notice of non-renewal at least one hundred eighty (180) days prior to the end of the then-current term.
Annual License Fee: $840,000 per year, payable in equal quarterly installments of $210,000. The fee is subject to an annual escalator of 3% commencing January 1, 2026.
Permitted Users: The license permits use by Lakewood's employees, independent contractors, and authorized agents in connection with Lakewood's healthcare operations. The license does not extend to affiliates or related entities not identified in the agreement.
Data Ownership: Section 9.1 of the Clearpath License provides that "Customer [Lakewood] shall retain all right, title, and interest in and to Customer Data, including all patient records, clinical data, billing data, and other information entered into or generated through the Licensed Software by Customer or its Authorized Users." Section 9.2 provides that "Clearpath shall retain all right, title, and interest in and to the Licensed Software, including all underlying source code, object code, algorithms, databases, user interfaces, documentation, and associated intellectual property." Section 9.3 provides that "Clearpath shall not access, use, disclose, or sell Customer Data except as necessary to provide the Licensed Services and as otherwise directed by Customer in writing."
Hosting and Support: Clearpath hosts the Licensed Software on its cloud infrastructure and provides 24/7 technical support, system maintenance, software updates, and data backup services. The Service Level Agreement (Exhibit B to the Clearpath License) commits to 99.5% uptime availability.
Assignment and Change of Control: Section 14.3 of the Clearpath License 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 Clearpath may assign this Agreement without Customer's consent in connection with a merger, acquisition, or sale of all or substantially all of Clearpath's assets. For purposes of this Section, a Change of Control of Customer (defined as any transaction or series of related transactions resulting in a change in more than 50% of the voting equity or economic interests of Customer, or a sale of all or substantially all of Customer's assets) shall be deemed an assignment requiring Clearpath's prior written consent."
This provision is significant. The proposed asset sale by Lakewood to Crestline clearly constitutes a "sale of all or substantially all of Customer's assets" and thus a "Change of Control" requiring Clearpath's prior written consent. Notably, the provision states that consent "shall not be unreasonably withheld, conditioned, or delayed," which provides some contractual protection, but does not eliminate the risk that Clearpath could delay or impose conditions on its consent.
Status of Consent. As of the date of this memorandum, consent from Clearpath has not been obtained. Ms. Unger reported that informal discussions with Lakewood's Clearpath account representative (Mark Hensley, Enterprise Account Manager) indicated that Clearpath would likely consent, subject to Clearpath's standard account review process and possible revision of the license fee to reflect Crestline's organizational profile. Seller's Counsel has stated that a formal consent request will be submitted following execution of the APA.
Data Migration and Portability. Section 15.4 of the Clearpath License provides that upon expiration or termination of the agreement, Clearpath will, at Customer's request and expense, provide a complete export of all Customer Data in a standard, machine-readable format (HL7 FHIR, CSV, or PDF, as applicable) within sixty (60) days of termination. Clearpath shall delete all Customer Data from its systems within ninety (90) days of the data export, subject to applicable legal retention requirements. This data portability provision is critical for transition planning in the event that Clearpath withholds consent or the parties are unable to agree on revised license terms.
Configurations and Customizations. Lakewood has developed extensive customizations on the Clearpath platform, including custom order sets, documentation templates, clinical decision-support alerts, and reporting dashboards. Under Section 9.4 of the Clearpath License, "Customer Configurations" (defined as customizations developed by Customer using the Licensed Software's configuration tools) are the property of Customer, but are dependent on the Licensed Software for their operation. In the event of termination, Clearpath has no obligation to provide the Customer Configurations in a standalone format. This creates a risk that even if Lakewood's data can be exported, the proprietary configurations would be lost.
Source Code Escrow. Section 10.1 of the Clearpath License references a source code escrow arrangement with Fenmore Data Systems (Escrow Agreement No. IM-ESC-2022-7841). The escrow provides for release of the Licensed Software source code to Lakewood upon certain triggering events, including Clearpath's bankruptcy, insolvency, or material breach. We have not reviewed the escrow agreement itself, which has been requested from Seller's Counsel.
Risk Assessment. The Clearpath EHR License is the single most critical third-party IP agreement in Lakewood's portfolio. If Clearpath withholds consent, delays consent, or terminates the agreement, Lakewood (and Crestline post-Closing) would lose access to the core clinical and billing operating system upon which the entire practice depends. The consequences would include inability to access patient records, disruption of scheduling and billing operations, and potential violations of health information retention requirements. We assess this risk as elevated.
Recommendation. We strongly recommend the following:
(a) Pursue a formal consent letter from Clearpath prior to Closing. The consent request should be submitted promptly following execution of the APA and should be structured to obtain Clearpath's written consent to the assignment of the Clearpath License to Crestline on substantially the same terms;
(b) In parallel, negotiate a Transition Services Agreement ("TSA") with Clearpath providing for continued access to the EHR platform for a minimum of twelve (12) months following Closing, even in the event that the license assignment is delayed or subject to renegotiation;
(c) Ensure that the APA includes a pre-Closing covenant requiring Seller to use commercially reasonable efforts to obtain Clearpath's consent, and consider whether Clearpath consent should be elevated to a condition to Closing given the criticality of the license; and
(d) Develop a contingency plan for EHR migration in the event that Clearpath consent cannot be obtained, including identification of alternative EHR platforms and timeline estimates for migration.
B. Other Software and Technology Licenses
In addition to the Clearpath EHR License, Lakewood maintains licenses for the following material software and technology platforms:
The aggregate annual software and technology spend for the above platforms (inclusive of the Clearpath EHR License) is approximately $1,648,000.
For the three platforms identified as containing anti-assignment or change-of-control provisions (CollectMD Pro, NovaPACS, and TeleConnect Health), we recommend that consent requests be submitted in parallel with the Clearpath consent process. None of these platforms is individually as critical as the Clearpath EHR, but collectively they support material operational functions. Loss of any one could cause temporary disruption.
C. Marlowe Asset Management Medical Equipment Finance Leases
Lakewood is party to three equipment finance leases with Marlowe Asset Management Medical Equipment Finance, LLC ("Marlowe Asset Management"), a specialty healthcare equipment lessor based in Parsippany, New Jersey: