1010-00001 · Client 1010 · Internal Memos

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CALDERWOOD & HARKNESS LLP

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

I. Executive Summary

On August 16, 2024, Arbor Health Technologies Inc. ("AHT" or the "Company") closed a $25,000,000 senior secured bridge loan (the "Bridge Loan") provided by Pinnacle Trust Bank, N.A. ("Pinnacle Trust" or the "Lender"). The Bridge Loan was structured as a sign-and-close transaction, with the Bridge Loan Agreement signed and funded in full on August 16, 2024. There was no separate signing date or deferred closing, and the full $25,000,000 was drawn in a single advance at closing.

The primary purpose of the Bridge Loan is to bridge AHT's near-term liquidity needs arising principally from the integration of two acquisitions completed in the second quarter of 2024: (i) MedBridge Workflow Solutions LLC, acquired for approximately $34,000,000 in a transaction that closed on April 22, 2024; and (ii) Cortland Surgical Systems, Inc., acquired for approximately $21,000,000 in a transaction that closed on May 31, 2024. In the aggregate, AHT deployed approximately $55,000,000 in Q2 2024 acquisition spend. The Company requires additional liquidity to fund integration costs, associated earnout obligations, and capital expenditures related to these acquisitions while it pursues a permanent revolving credit facility.

AHT completed its initial public offering on the Nasdaq Global Select Market (ticker: AHTI) on March 14, 2024, raising approximately $180,000,000 in gross proceeds through the issuance and sale of 10,000,000 shares of common stock at a price of $18.00 per share. Following the IPO, the Company's market capitalization was approximately $740,000,000. AHT is a Delaware-incorporated, Massachusetts-headquartered healthcare services and software-as-a-service ("SaaS") company. The Company operates a cloud-based clinical workflow platform designed for ambulatory surgical centers and specialty physician practices, currently serving clients across 22 states.

The Company's senior management team relevant to this transaction includes Dr. Priya Narayan (Chief Executive Officer), Evan Strickland (Chief Financial Officer), and Gerald Fong (General Counsel and Corporate Secretary).

The Bridge Loan facility is designed to provide working capital and platform integration funding on an interim basis while the Company negotiates a permanent revolving credit facility, which AHT expects to close in the first quarter of 2025.

Calderwood & Harkness LLP served as borrower's counsel for this transaction. Whitfield Gage & Associates LLP, led by partner Catherine Whitfield and associate Jordan Pace, served as lender's counsel. This matter was opened at Calderwood & Harkness LLP on July 8, 2024, providing a compressed timeline of approximately 39 days from engagement to closing. All closing deliverables were executed on August 16, 2024, and all post-closing deliverables were timely completed by the August 30, 2024 deadline established in the Bridge Loan Agreement.

The Lender, Pinnacle Trust Bank, N.A., is a nationally chartered commercial bank regulated by the Office of the Comptroller of the Currency ("OCC"), headquartered at 600 Lexington Avenue, 22nd Floor, New York, NY 10022. Pinnacle Trust maintains approximately $89 billion in total assets and operates a significant healthcare lending practice. The healthcare finance group at Pinnacle Trust is led by Managing Director Renata Voss, with Vice President Derek Calloway serving as the primary deal contact. Notably, Pinnacle Trust served as one of the co-managers on AHT's March 2024 IPO and maintains an existing depository relationship with the Company, which provides the Lender with familiarity regarding AHT's financial profile and cash management operations.

The following additional advisors and service providers were involved in the transaction:

• Hargrove & Patten LLP (Boston, Massachusetts; partner Lucinda Hargrove) served as AHT's general outside counsel and provided the corporate authorization certificates delivered at closing.

• Reedmore Capital Partners LLC (Managing Director Thomas Okoro) served as financial advisor to AHT in connection with the Bridge Loan.

• Greystone Audit Group LLP (engagement partner Danielle Chow) serves as AHT's independent registered public accounting firm and provided audited financial statements referenced in the closing process.

This memorandum summarizes the key transaction terms, describes the principal issues that arose during negotiation and the resolutions achieved, provides a risk assessment of the completed transaction, and identifies follow-up items requiring attention by the deal team and the client.

II. Key Transaction Terms

The following table summarizes the material terms of the Bridge Loan as set forth in the executed Bridge Loan Agreement dated August 16, 2024:

III. Negotiation Summary and Key Issues

This Section describes the principal issues that arose during the negotiation of the Bridge Loan, the positions taken by the respective parties, and the resolutions achieved. The negotiation process commenced with AHT's receipt of Pinnacle Trust's initial term sheet on July 11, 2024 and proceeded through multiple rounds of document exchange. The Bridge Loan Agreement and related ancillary documents were circulated in initial draft form by lender's counsel on July 18, 2024, and five rounds of marked drafts were exchanged prior to the execution version dated August 16, 2024.

A. Interest Rate Spread

The interest rate spread was a significant focus of negotiation. Pinnacle Trust's initial term sheet proposed an Applicable Margin of SOFR + 525 basis points. Through the negotiation process, Calderwood & Harkness LLP, on behalf of AHT, negotiated a reduction of 50 basis points, bringing the Applicable Margin down to SOFR + 475 basis points.

The principal arguments advanced by Calderwood & Harkness on behalf of AHT in support of a lower spread included the following:

• Conservative Leverage Profile. AHT's post-bridge net leverage ratio of only 0.18x is exceptionally conservative for a healthcare SaaS company and well below the 3.50x maximum net leverage covenant. The Company's balance sheet strength materially reduces credit risk to the Lender.

• No Other Funded Debt. AHT has no other funded debt outstanding. The Company used its IPO proceeds to retire a prior term loan in full, and the Bridge Loan represents the Company's only funded indebtedness.

• Public-Company Transparency. As a Nasdaq-listed company subject to SEC reporting requirements under the Securities Exchange Act of 1934, AHT is required to file quarterly reports (Form 10-Q), annual reports (Form 10-K), and current reports (Form 8-K), providing the Lender with a continuous flow of publicly available financial and operational information and reducing lender monitoring costs.

• Comprehensive Collateral Package. The all-asset collateral package, including a first-priority lien on the Company's intellectual property (which constitutes the core value of the enterprise), accounts receivable, equipment, and other assets, provides robust downside protection for the Lender.

The 50 basis point reduction yields approximately $125,000 in annualized interest savings, calculated as $25,000,000 multiplied by 0.50%. Over the 18-month term of the Bridge Loan, the total savings, assuming the facility remains outstanding for the full term, would be approximately $187,500, subject to variation based on actual SOFR rates and prepayment timing.

A note on the rate calculation methodology is warranted for reference purposes: the all-in rate at signing includes the 0.10% SOFR Adjustment component required by the Loan Agreement's definition of "Adjusted Term SOFR." Per the initial term sheet, the spread is quoted as SOFR + 475 bps, which on an unadjusted basis yields 5.34% (1-month Term SOFR) + 4.75% = 10.09%. However, as defined in the executed Loan Agreement, the rate is calculated using Adjusted Term SOFR (inclusive of the 0.10% adjustment), yielding 5.44% + 4.75% = 10.19%. The spread component attributable to the borrower's credit remains 475 basis points in either case; the 0.10% SOFR Adjustment is a market-standard component that accounts for the transition from LIBOR to SOFR and is not a borrower-specific credit premium.

B. Mandatory Prepayment Provisions

Mandatory prepayment provisions were the subject of focused negotiation, particularly with respect to the equity issuance sweep.

Pinnacle Trust initially proposed a 100% mandatory prepayment sweep on all net cash proceeds from equity issuances, with no carve-outs. Calderwood & Harkness successfully negotiated two significant modifications:

• Reduction to 75% Sweep. The equity issuance sweep was reduced from 100% to 75% of net cash proceeds, permitting the Company to retain 25% of any equity issuance proceeds for general corporate purposes. This provides important flexibility in the event AHT elects to raise additional equity capital during the bridge period, whether through a follow-on offering, a private placement, or otherwise.

• Employee Equity Compensation Carve-Out. Proceeds from employee equity compensation plans (including stock option exercises, employee stock purchase plan contributions, and restricted stock unit settlements) were carved out from the mandatory prepayment sweep up to an aggregate of $3,000,000 per fiscal year. This carve-out was identified by AHT's human resources team, led by Chief People Officer Natasha Webber, as critical for talent retention during the integration period. Without this carve-out, the mandatory prepayment mechanism could have created a disincentive for employee equity participation, potentially undermining the Company's ability to attract and retain key personnel necessary to execute the MedBridge and Cortland integrations.

With respect to the asset sale mandatory prepayment thresholds ($5,000,000 individually and $10,000,000 in the aggregate), these were proposed by the Lender in the initial term sheet and accepted without material modification. The thresholds are consistent with AHT's operational profile, as the Company does not anticipate material asset dispositions during the bridge period. The asset sale sweep includes a customary 360-day reinvestment period, provided that such reinvestment is in assets used or useful in the Company's business.

The mandatory prepayment provision requiring 100% of net cash proceeds from any Permanent Facility to be applied to repay the Bridge Loan was accepted without negotiation, as this provision is structurally consistent with the bridge-to-permanent financing approach and aligns with AHT's stated intention to refinance the Bridge Loan with a permanent revolving credit facility in Q1 2025.

C. Financial Covenants

The financial covenant package consists of three covenants: a minimum liquidity covenant, a maximum net leverage ratio, and a minimum fixed charge coverage ratio. The minimum liquidity covenant was the most significant point of financial covenant negotiation.

Minimum Liquidity. Pinnacle Trust initially proposed a minimum liquidity covenant requiring the Company to maintain at least $20,000,000 in unrestricted cash and cash equivalents, tested on a weekly basis. This proposal was aggressive in two respects: the dollar threshold and the testing frequency. Calderwood & Harkness negotiated both elements, achieving the following result:

• The minimum liquidity threshold was reduced from $20,000,000 to $15,000,000 in unrestricted cash and cash equivalents.

• The testing frequency was reduced from weekly to monthly.

The arguments advanced in support of these modifications included the following: (i) weekly liquidity testing would be operationally burdensome for a company in the process of integrating two significant acquisitions, particularly given the demands on AHT's finance and treasury teams during the integration period; (ii) the $15,000,000 minimum provides adequate protection for the Lender given the comprehensive all-asset collateral package and first-priority security interest; and (iii) at closing, AHT had approximately $72,000,000 in cash and cash equivalents ($47,000,000 in pre-existing cash as of June 30, 2024, plus the $25,000,000 in Bridge Loan proceeds), providing a margin of approximately 4.8x above the $15,000,000 minimum threshold. This substantial headroom renders weekly testing unnecessary as a credit protection mechanism.

Maximum Net Leverage Ratio. The maximum net leverage ratio of 3.50x, tested quarterly, was accepted at the level proposed by the Lender without material negotiation. At closing, the Company's net leverage ratio was calculated as follows:

• Total Funded Debt: $25,000,000

• Less: Unrestricted Cash (capped at $20,000,000 under the Loan Agreement's net debt definition): ($20,000,000)

• Net Funded Debt: $5,000,000

• Trailing Twelve Months ("TTM") Adjusted EBITDA (as of June 30, 2024): $28,400,000

• Net Leverage Ratio: $5,000,000 / $28,400,000 = 0.18x

The 0.18x net leverage ratio provides substantial headroom below the 3.50x covenant level. Even under stress scenarios in which Adjusted EBITDA declines significantly or additional debt is incurred, breach of this covenant in the near term is unlikely.

Minimum Fixed Charge Coverage Ratio. The minimum fixed charge coverage ratio of 1.25x, tested quarterly, was similarly accepted at the Lender's proposed level. At closing, the Company's fixed charge coverage ratio was calculated as follows:

• Adjusted EBITDA: $28,400,000

• Less: Unfinanced Capital Expenditures: ($12,600,000)

• Adjusted EBITDA Less Unfinanced CapEx: $15,800,000

• Fixed Charges (consisting of scheduled debt service, interest payments, and cash taxes): $4,200,000

• Fixed Charge Coverage Ratio: $15,800,000 / $4,200,000 = 3.76x

The 3.76x coverage ratio at closing provides approximately 3.0x of cushion above the 1.25x covenant threshold. Both the net leverage and fixed charge coverage ratios provide wide cushions relative to the Company's current financial profile, reflecting AHT's strong operating performance and conservative capitalization.

D. Negative Covenant Baskets

Several negative covenant baskets were the subject of negotiation.

Investments and Acquisitions. The permitted acquisition basket was a key point of contention. Pinnacle Trust initially proposed a cap of $3,000,000 on permitted acquisitions that could be consummated without Lender consent. Calderwood & Harkness negotiated this cap upward to $7,500,000 individually and $15,000,000 in the aggregate over the life of the Bridge Loan. The rationale for the increased thresholds centered on AHT's growth strategy: smaller tuck-in acquisitions are integral to the Company's strategy of expanding its footprint in the ambulatory surgical center market. A $3,000,000 cap would have unreasonably restricted ordinary-course business development activity and was inconsistent with the scale and growth trajectory of a company with a $740,000,000 market capitalization and a demonstrated acquisition strategy. The negotiated thresholds of $7,500,000/$15,000,000 provide AHT with meaningful flexibility to pursue strategic add-on opportunities while affording the Lender appropriate oversight over larger transactions.

Restricted Payments. The restricted payments covenant was negotiated to include the following key baskets:

• Common stock repurchases are permitted up to $5,000,000 per fiscal year, which is consistent with the scope of AHT's board-approved post-IPO share repurchase program.

• Dividends and distributions by subsidiaries to the Borrower are permitted without restriction, ensuring the free flow of cash within the corporate structure.

• Share repurchases in connection with employee equity compensation plans (including tax withholding repurchases) are permitted up to $3,000,000 per fiscal year.

Additional Indebtedness. The additional indebtedness covenant establishes a general cap of $2,000,000 in aggregate additional indebtedness, with the following specified Permitted Debt baskets:

• The Bridge Loan itself.

• The Permanent Facility (when executed).

• Purchase money indebtedness and capital lease obligations up to $5,000,000 in the aggregate. This basket accommodates the Company's ongoing equipment needs and existing capital lease arrangements, including the Frontier Leasing Corp. arrangement described in Section IV.C below.

E. Post-Closing Obligations

The Bridge Loan Agreement provides for a 14-day post-closing period, with all post-closing deliverables required to be completed by August 30, 2024. The following items were designated as post-closing obligations:

(i) Deposit account control agreements ("DACAs") for the Company's accounts at Ridgefield National Bank (Account Nos. ending in **5694 and **7782).

(ii) Landlord waivers and access agreements for the Company's three principal leased office locations: (a) Waltham, Massachusetts (landlord: Beacon Ridge Realty Partners LLC); (b) King of Prussia, Pennsylvania (landlord: Keystone Corporate Properties LP); and (c) Nashville, Tennessee (landlord: Cumberland Office Holdings Inc.).

(iii) Recordation of IP security agreements with the United States Patent and Trademark Office ("USPTO") and the United States Copyright Office ("USCO").

(iv) Delivery of pledged stock certificates and undated, blank stock powers for Arbor Health Holdings LLC, Arbor Health Platform Services Inc., MedBridge Workflow Solutions LLC, and Cortland Surgical Systems, Inc.

The post-closing period was itself the product of negotiation. Pinnacle Trust initially required that all perfection and collateral deliverables be completed at or prior to closing. Given the compressed overall deal timeline — 39 days from the opening of the Calderwood & Harkness matter on July 8, 2024 to closing on August 16, 2024 — completing all perfection steps at closing was not practicable. Calderwood & Harkness obtained Pinnacle Trust's agreement to a 14-day post-closing period, with the understanding that Calderwood & Harkness would coordinate the prompt completion of all outstanding items.

All post-closing items were completed on time by the August 30, 2024 deadline, as described in greater detail in Section IV.C (Collateral and Perfection) below.

F. Change of Control Definition

The Change of Control definition in Section 10.01(j) of the Bridge Loan Agreement was negotiated to include two important exclusions from the events that would constitute a Change of Control triggering an Event of Default:

(i) Changes in the ownership of AHT common stock resulting from ordinary-course public market trading on the Nasdaq Global Select Market, provided that no person or "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) acquires beneficial ownership of more than 35% of the voting power of the outstanding equity securities of the Company.

(ii) Changes in the composition of the Board of Directors resulting from ordinary-course director elections by shareholders at annual or special meetings, including the addition of new directors nominated by the Board's Nominating and Corporate Governance Committee.

These exclusions are particularly important in light of AHT's status as a newly public company. The IPO was completed on March 14, 2024, and the Company has a relatively dispersed shareholder base, with no single shareholder holding more than approximately 12% of the outstanding common stock as of the most recent proxy statement. A Change of Control definition that could be triggered by normal public market trading activity or routine board turnover would be inappropriate for a public company and could create unintended acceleration events. The 35% beneficial ownership threshold provides the Lender with meaningful protection against a hostile acquisition or creeping control scenario while accommodating the realities of public equity market dynamics.

IV. Risk Assessment

This Section identifies and assesses the principal risks associated with the Bridge Loan from the perspective of the borrower and our representation.

A. Liquidity Runway

The Company's near-term liquidity position, while adequate, warrants close monitoring. The relevant figures are as follows:

• Cash at Closing: Approximately $72,000,000, consisting of $47,000,000 in pre-existing cash and cash equivalents (as of June 30, 2024) plus $25,000,000 in Bridge Loan proceeds.

• Projected 12-Month Cash Needs: Approximately $68,000,000, broken down as follows:

• Integration costs (MedBridge and Cortland): $29,000,000

• Earnout payments to former owners of MedBridge and Cortland: $14,000,000

• Capital expenditures (including platform development): $18,000,000

• Other working capital requirements: $7,000,000

• Pre-Bridge Cash Shortfall: Approximately $21,000,000 ($68,000,000 in projected needs minus $47,000,000 in existing cash).

• Cushion with Bridge Loan Proceeds: Approximately $4,000,000 ($25,000,000 bridge proceeds minus $21,000,000 shortfall). This figure does not account for operating cash flow generation during the period.

• TTM Operating Cash Flow: Approximately $22,000,000, which provides a meaningful additional buffer against liquidity shortfalls.

For context, AHT's broader financial profile as of the most recent reporting period is as follows: TTM revenue of $162,300,000; TTM Adjusted EBITDA of $28,400,000; Adjusted EBITDA margin of 17.5%; and total assets of $411,700,000.

Assessment: While the Bridge Loan addresses the identified cash shortfall, the resulting cushion of approximately $4,000,000 (before operating cash flow) is relatively thin. If integration costs exceed projections, earnout payments are higher than anticipated, or capital expenditure requirements increase, the Company could face liquidity pressure. We note that integration projects of the scope and complexity involved here — two acquisitions totaling $55,000,000, completed within approximately five weeks of each other — frequently encounter cost overruns. The $29,000,000 integration cost estimate was prepared by AHT's management team and reviewed by Reedmore Capital Partners, but it has not been independently validated.

Recommendation: We recommend monitoring the Company's monthly liquidity reports closely during the quarterly compliance certificate review process. In particular, Calderwood & Harkness should review each quarterly compliance certificate delivered under the Loan Agreement to confirm that actual expenditures are tracking to projections and that the $15,000,000 minimum liquidity covenant is being maintained with adequate headroom.

B. Refinancing Risk

The Bridge Loan matures on February 16, 2026, which is 18 months from the closing date. AHT intends to close a permanent revolving credit facility in the first quarter of 2025, approximately 5 to 6 months after the Bridge Loan closing. If achieved on this timeline, the permanent facility would retire the Bridge Loan with approximately 12 months remaining before maturity, which would represent a successful bridge-to-permanent transition.

Several factors support the feasibility of the refinancing timeline. First, Pinnacle Trust Bank has been shortlisted, along with two other financial institutions, to serve as administrative agent on the permanent facility. Pinnacle Trust's dual role as bridge lender and potential permanent facility agent aligns the Lender's incentives toward a cooperative refinancing process. Second, the mandatory prepayment provision in the Bridge Loan Agreement ensures that 100% of the net cash proceeds from any permanent facility will be automatically applied to retire the Bridge Loan, creating a clean structural linkage between the two financings. Third, AHT's strong financial profile — conservative leverage, positive operating cash flow, and public-company status — should make the Company an attractive credit for a syndicated revolving facility.

Notwithstanding these favorable factors, refinancing risk remains a meaningful concern. If the permanent facility process is delayed due to market conditions, credit market disruption, lender appetite, or complications arising from the integration of MedBridge and Cortland, AHT could face refinancing pressure as the maturity date approaches. The Bridge Loan Agreement does not include an extension option, meaning that if the permanent facility is not in place by February 16, 2026, the full $25,000,000 outstanding balance (or any remaining balance after mandatory prepayments) would be due and payable.

Recommendation: The Company should begin the permanent facility process promptly. We recommend that Calderwood & Harkness engage with AHT and Gerald Fong regarding the scope of our representation for the permanent revolving credit facility, including the anticipated timeline, potential lender group composition, and key terms. Coordination with Reedmore Capital Partners regarding the financial advisory mandate for the permanent facility should also be initiated.

C. Collateral and Perfection

The all-asset security package supporting the Bridge Loan is comprehensive, covering substantially all tangible and intangible assets of the Borrower (AHT) and both Guarantors (Arbor Health Holdings LLC and Arbor Health Platform Services Inc.). The following summarizes the status of key perfection steps:

UCC-1 Financing Statement. A UCC-1 financing statement was filed on August 19, 2024 with the Delaware Secretary of State, assigned Filing No. 2024-3847261. The filing was prepared and submitted by Meridian Filing Services Inc., the firm's designated filing agent. This filing perfects the Lender's security interest in all personal property of the Borrower and Guarantors organized in Delaware, which encompasses all three Loan Parties. Status: Completed.

Deposit Account Control Agreements. DACAs were executed with Ridgefield National Bank for AHT's two operating accounts at that institution (Account Nos. ending in **5694 and 7782). These DACAs were completed on August 28, 2024, within the post-closing period. DACAs are not required for AHT's accounts maintained at Pinnacle Trust Bank because the Lender is itself the depository bank, and under Article 9 of the UCC, a secured party that is also the depository bank has automatic control over deposit accounts it maintains. The Company's payroll account (Account No. ending in 3201), which is maintained at a separate institution, is excluded from the collateral package as a payroll and tax account under the $2,500,000 aggregate carve-out in the Security Agreement. Status: Completed.**

IP Security Agreements. IP security agreements were recorded with the USPTO and USCO. The USPTO recordation covers the following registered intellectual property:

• Trademark Registration Nos. 6,481,723, 6,481,724, and 6,592,108

• U.S. Patent No. 11,284,671

• Patent Application No. 17/893,214

The USCO recordation covers Copyright Registration No. TXu 2-341-877. All IP recordations were completed on August 27, 2024. Status: Completed.

Pledged Equity Certificates and Stock Powers. Pledged equity certificates and undated, blank stock powers for the following entities were delivered to Pinnacle Trust on August 29, 2024: Arbor Health Holdings LLC (membership interest certificate), Arbor Health Platform Services Inc. (stock certificate), MedBridge Workflow Solutions LLC (membership interest certificate), and Cortland Surgical Systems, Inc. (stock certificate). Status: Completed.

Prior Liens. The UCC, tax lien, and judgment search conducted on August 12, 2024 in the State of Delaware identified only one existing UCC filing against AHT: Filing No. 2023-2811490, filed by Frontier Leasing Corp. on September 15, 2023. This filing relates to specific items of leased office equipment with an aggregate value of approximately $380,000. The Frontier Leasing arrangement constitutes a Permitted Lien under Section 8.02 of the Bridge Loan Agreement, and the filing does not create any conflict with the Lender's first-priority security interest in the Company's other assets. No tax liens or judgment liens were identified in the search.

D. Healthcare Regulatory Considerations

AHT operates in a regulated healthcare environment, providing technology solutions and services to ambulatory surgical centers and specialty physician practices. The Company's cloud-based clinical workflow platform processes, stores, and transmits protected health information ("PHI") and is subject to a range of federal and state healthcare regulations.

The Bridge Loan Agreement includes representations and warranties by the Borrower regarding compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the Health Information Technology for Economic and Clinical Health Act ("HITECH"), applicable state privacy and data security laws, and the Centers for Medicare and Medicaid Services ("CMS") conditions of participation applicable to the ambulatory surgical centers served by the Company's platform. No material regulatory issues were identified during the due diligence and closing process, and the Officer's Closing Certificate delivered by CFO Evan Strickland confirmed the accuracy of all representations and warranties as of the closing date.

However, the Company's healthcare regulatory risk profile warrants ongoing attention. AHT now operates across 22 states, several of which have enacted healthcare data privacy requirements that are more stringent than the federal HIPAA framework, including California (the California Consumer Privacy Act, as amended by the California Privacy Rights Act), New York (SHIELD Act), and Texas (Texas Medical Records Privacy Act, as amended). The integration of the MedBridge and Cortland operations into AHT's platform expands the Company's geographic and operational footprint and may expose the Company to new or additional regulatory requirements. In particular, the Cortland acquisition brought clients in several states where AHT did not previously operate, necessitating a review of state-specific licensing and data privacy compliance requirements.

Recommendation: AHT should ensure that its regulatory compliance programs are updated to cover the acquired MedBridge and Cortland operations and all 22 states in which the Company now operates. We recommend that AHT engage its privacy counsel (whether Hargrove & Patten LLP or separate specialized counsel) to conduct a comprehensive compliance gap analysis across the combined enterprise, with particular focus on state-level requirements that may differ from the Company's existing HIPAA compliance framework.

V. Fees and Expenses

Summary of Transaction Costs

The following table summarizes all fees and expenses incurred in connection with the Bridge Loan transaction:

Total transaction costs of $594,300 represent approximately 2.37% of the $25,000,000 facility amount. This is within the range customary for bridge loan transactions of this size and complexity.

Calderwood & Harkness LLP Fee Reconciliation

Total Calderwood & Harkness LLP fees for this engagement were $198,450, which falls within the estimated range of $185,000 to $225,000 provided in the engagement letter dated July 8, 2024. The breakdown of fees by timekeeper is as follows:

Partner Time:

Associate Time:

Paralegal Time:

Disbursements: $1,724 (consisting of filing fees, overnight delivery charges, and document production costs).

Total Calderwood & Harkness Fees:

$54,625 + $13,800 + $74,313 + $49,300 + $4,688 + $1,724 = $198,450

The total timekeeper hours for the engagement were 242.5 hours (59.5 partner hours, 170.5 associate hours, and 12.5 paralegal hours), reflecting the compressed 39-day timeline from matter opening to closing and the complexity of the all-asset collateral package and post-closing perfection requirements.

VI. Document List

The complete closing set comprises 16 deliverables, as enumerated in the Closing Memorandum dated August 16, 2024, prepared by Sophie Tremblay, reviewed by Marcus Leung, and approved by Claudia Merritt:

1. Bridge Loan Agreement (execution version, dated August 16, 2024, by and among Arbor Health Technologies Inc., the Guarantors, and Pinnacle Trust Bank, N.A.)

2. Guaranty Agreement (execution version, dated August 16, 2024, by Arbor Health Holdings LLC and Arbor Health Platform Services Inc. in favor of Pinnacle Trust Bank, N.A.)

3. Security Agreement (execution version, dated August 16, 2024, by and among each Loan Party and Pinnacle Trust Bank, N.A. as Secured Party)

4. Borrower's Counsel Legal Opinion (delivered by Calderwood & Harkness LLP to Pinnacle Trust Bank, N.A., dated August 16, 2024, covering corporate existence, authorization, enforceability, no conflicts, and perfection of security interests)

5. Secretary's Certificate of Borrower (delivered by Gerald Fong, Corporate Secretary, with the following exhibits: Exhibit A — Restated Certificate of Incorporation of AHT; Exhibit B — Amended and Restated Bylaws of AHT; Exhibit C — Board Resolutions authorizing the Bridge Loan, dated August 2, 2024; Exhibit D — Good Standing Certificates from the Delaware Secretary of State, dated August 14, 2024)

6. Officer's Closing Certificate (delivered by Evan Strickland, CFO, certifying the accuracy of representations and warranties, absence of defaults, and compliance with conditions precedent)

7. Borrowing Request / Funding Notice (requesting disbursement of $25,000,000 in a single advance on August 16, 2024)

8. Perfection Certificate (executed by each Loan Party, setting forth legal names, jurisdictions of organization, locations of chief executive offices, locations of collateral, and deposit account information)

9. Good Standing Certificates — Delaware (for each Loan Party: AHT, Arbor Health Holdings LLC, and Arbor Health Platform Services Inc., each dated no earlier than August 14, 2024)

10. Good Standing Certificate — Massachusetts (for the Borrower, from the Massachusetts Secretary of the Commonwealth, dated August 14, 2024)

11. UCC, Tax Lien, and Judgment Search Reports — Delaware (dated August 12, 2024, conducted by Meridian Filing Services Inc., covering the Borrower and each Guarantor)

12. Evidence of Insurance (certificates of insurance evidencing comprehensive general liability, professional liability/E&O, cyber liability, and property insurance, with Pinnacle Trust Bank, N.A. named as additional insured and loss payee as applicable)

13. Payment of Origination Fee ($125,000, paid by wire transfer to Pinnacle Trust Bank, N.A.)

14. Payment of Lender's Counsel Fees ($118,500, paid by wire transfer to Whitfield Gage & Associates LLP)

15. Payment of Reedmore Advisory Fee ($150,000, paid by wire transfer to Reedmore Capital Partners LLC)

16. Funding Wire ($25,000,000 disbursed by Pinnacle Trust Bank, N.A. to AHT's designated operating account; Wire Reference: PTB-2024-08162841)

All documents have been executed and filed as required. Originals of all closing documents are maintained in the Calderwood & Harkness LLP matter file (Matter No. 1010-00001) in the firm's document management system. Counterpart execution was completed electronically via Brightwater Software on August 16, 2024, with wet-ink originals to follow within five (5) Business Days of closing, as agreed among the parties.

VII. Follow-Up Items

The following items require attention in the near term and should be calendared accordingly:

1. First Quarterly Interest Payment. The first quarterly interest payment is due on September 30, 2024 (the last Business Day of the fiscal quarter). Based on the current all-in rate of 10.19% and the actual/360 day count convention, the estimated interest payment for the period from August 16, 2024 through September 30, 2024 (45 days) is approximately $318,438 ($25,000,000 × 10.19% × 45/360). The exact amount will depend on actual SOFR resets during the interest period and the precise day count calculated under the actual/360 convention. AHT's treasury team should be alerted to prepare for this payment.

2. First Compliance Certificate. The first compliance certificate under Section 9.01 of the Bridge Loan Agreement is due within 45 days after the end of the fiscal quarter ending September 30, 2024 — i.e., by November 14, 2024. The compliance certificate must include calculations demonstrating the Company's compliance with the minimum liquidity covenant ($15,000,000), the maximum net leverage ratio (3.50x), and the minimum fixed charge coverage ratio (1.25x). Calderwood & Harkness should coordinate with AHT's CFO Evan Strickland and Greystone Audit Group LLP to ensure timely preparation and delivery.

3. Monthly Liquidity Monitoring. Section 9.01 of the Bridge Loan Agreement requires monthly testing of the minimum liquidity covenant ($15,000,000 in unrestricted cash and cash equivalents). Although the Loan Agreement does not require delivery of a formal monthly compliance certificate (in contrast to the quarterly compliance certificate requirements), we recommend that AHT implement an internal process to monitor and document liquidity compliance on a monthly basis. This documentation will be important for audit trail purposes and to facilitate prompt identification of any potential compliance concerns.

4. Permanent Credit Facility Engagement. Calderwood & Harkness should promptly engage with AHT and Gerald Fong regarding the scope of our representation for the permanent revolving credit facility that the Company expects to close in Q1 2025. Pinnacle Trust Bank is on the shortlist to serve as administrative agent for the permanent facility, along with two other financial institutions. Early engagement will allow us to begin evaluating potential terms and coordinating with Reedmore Capital Partners on the refinancing process. A new matter number should be opened upon engagement.

5. Perfection Monitoring. Ongoing monitoring is required for any changes in AHT's corporate structure, legal names, jurisdictions of organization, chief executive office locations, or deposit accounts that could affect the perfection status of the Lender's security interest. Under Section 4.1(a) of the Security Agreement, each Grantor is required to provide 30 days' prior written notice to the Lender before any such change. Calderwood & Harkness should remind AHT's legal team of this requirement and establish a protocol for receiving timely notice of any contemplated changes. Additionally, the UCC-1 financing statement (Filing No. 2024-3847261) should be monitored for its five-year lapse date, and a continuation statement should be filed if the Bridge Loan remains outstanding beyond the initial filing period (which is unlikely given the February 16, 2026 maturity date, but should be tracked nonetheless).

6. Healthcare Regulatory Compliance. As discussed in Section IV.D above, ongoing compliance with HIPAA, HITECH, and applicable state privacy requirements should be monitored, particularly as the MedBridge and Cortland integration proceeds across the Company's 22-state operational footprint. Any material regulatory findings, enforcement actions, or data breach incidents could implicate the representations and warranties in the Bridge Loan Agreement and potentially trigger notice obligations or Events of Default.

Distribution: Internal only — Calderwood & Harkness LLP. This memorandum constitutes privileged and confidential attorney work product and is not intended for distribution outside the firm without prior authorization from the Responsible Partner.

Prepared by: Sophie Tremblay, Associate Calderwood & Harkness LLP

Reviewed by: Marcus Leung, Associate Calderwood & Harkness LLP

Calderwood & Harkness LLP — Matter No. 1010-00001 PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

To:	Claudia Merritt, Partner; Ian Blackwood, Partner
From:	Marcus Leung, Associate; Sophie Tremblay, Associate
Date:	August 20, 2024
Re:	Arbor Health Technologies Inc. — $25M Bridge Loan — Deal Summary and Key Issues
Matter No.:	1010-00001
Term	Detail
Borrower	Arbor Health Technologies Inc., a Delaware corporation (Nasdaq: AHTI). Headquarters: 400 Beacon Ridge Parkway, Suite 800, Waltham, MA 02451. EIN: 88-3164720; Delaware Secretary of State File No. 7284619.
Guarantors	(i) Arbor Health Holdings LLC, a Delaware limited liability company (EIN: 88-4271835), which is a wholly-owned subsidiary of AHT holding equity interests in the Company's operating subsidiaries; and (ii) Arbor Health Platform Services Inc., a Delaware corporation (EIN: 92-1058467), which is a wholly-owned subsidiary of Arbor Health Holdings LLC and operates AHT's core SaaS platform, generating substantially all of the Company's subscription revenue.
Lender	Pinnacle Trust Bank, N.A. (RSSD ID: 1048273).
Facility Type	Senior secured bridge loan (term loan, single draw).
Facility Amount	$25,000,000. The facility was fully funded at closing on August 16, 2024. Amounts repaid may not be re-borrowed.
Interest Rate	Adjusted Term SOFR + 475 basis points (the "Applicable Margin"). The Adjusted Term SOFR includes a SOFR Adjustment of 0.10% (10 basis points) added to the 1-month Term SOFR reference rate. A SOFR floor of 1.00% applies.
All-In Rate at Close	10.19%, calculated as follows: 1-month Term SOFR of 5.34% + 0.10% SOFR Adjustment = 5.44% Adjusted Term SOFR + 4.75% Applicable Margin = 10.19%.
Default Rate	The Applicable Rate plus 200 basis points (effectively, Adjusted Term SOFR + 675 basis points).
Interest Payment	Quarterly in arrears, payable on the last Business Day of each fiscal quarter (September 30, December 31, March 31, and June 30) and on the Maturity Date.
Interest Computation	Actual/360 day count convention.
Maturity Date	February 16, 2026 (18 months from the Closing Date).
Voluntary Prepayment	Permitted at any time at par, without premium or penalty, subject to customary SOFR breakage costs. Minimum prepayment amount of $1,000,000, or in multiples of $500,000 in excess thereof. Three (3) Business Days' prior written notice required.
Mandatory Prepayment	(i) 100% of net cash proceeds from any Permanent Facility (as defined in the Loan Agreement); (ii) 100% of net cash proceeds from asset sales exceeding $5,000,000 individually or $10,000,000 in the aggregate during the term of the Bridge Loan; and (iii) 75% of net cash proceeds from equity issuances, excluding proceeds from employee equity compensation plans up to $3,000,000 per fiscal year.
Origination Fee	$125,000 (calculated as 0.50% of the $25,000,000 facility amount), fully earned and paid at closing.
Security	First-priority perfected security interest in substantially all assets of the Borrower and the Guarantors, including: accounts receivable, equipment, intellectual property (software, patents, trademarks), deposit accounts (subject to carve-outs for payroll and tax accounts up to $2,500,000 in the aggregate), equity interests in direct subsidiaries (limited to 65% of the voting equity of first-tier foreign subsidiaries, if any), general intangibles, instruments, chattel paper, inventory, and investment property.
Excluded Collateral	Real property; motor vehicles; equity interests in Immaterial Subsidiaries (defined as subsidiaries with assets less than $1,000,000 individually).
Financial Covenants	(i) Minimum Liquidity: $15,000,000 in unrestricted cash and cash equivalents, tested monthly; (ii) Maximum Net Leverage Ratio: 3.50x, tested quarterly; (iii) Minimum Fixed Charge Coverage Ratio: 1.25x, tested quarterly.
Negative Covenants	(i) Additional indebtedness cap of $2,000,000 (plus specified Permitted Debt baskets, including the Bridge Loan, the Permanent Facility, and purchase money/capital lease obligations up to $5,000,000 in the aggregate); (ii) Acquisitions: $7,500,000 individually and $15,000,000 in the aggregate without Lender consent; (iii) Restricted payments limited as described herein; (iv) Asset sale restrictions with reinvestment rights.
Governing Law	State of New York.

Jurisdiction	Exclusive jurisdiction in the courts of the State of New York located in the Borough of Manhattan and the United States District Court for the Southern District of New York. All parties have waived trial by jury.
Use of Proceeds	Working capital, general corporate purposes, integration costs relating to the MedBridge and Cortland acquisitions, earnout payments to former owners of MedBridge and Cortland, and payment of transaction fees and expenses.
Lender's Counsel Fee Cap	$125,000, payable by the Borrower directly to Whitfield Gage & Associates LLP.
Payee	Amount	Description
Calderwood & Harkness LLP	$198,450	Professional fees and disbursements (final invoice)
Whitfield Gage & Associates LLP	$118,500	Lender's counsel fees (paid by Borrower; within the $125,000 contractual cap)
Pinnacle Trust Bank, N.A.	$125,000	Origination fee (0.50% × $25,000,000)
Reedmore Capital Partners LLC	$150,000	Financial advisory fee (flat fee, payable at closing)
Meridian Filing Services Inc.	$2,350	UCC search and filing fees
Total Transaction Costs	$594,300
Timekeeper	Hours	Rate	Amount
Claudia Merritt (Responsible Partner)	47.5	$1,150/hr	$54,625
Ian Blackwood (Billing Partner)	12.0	$1,150/hr	$13,800
Subtotal — Partners	59.5	$68,425
Timekeeper	Hours	Rate	Amount
Marcus Leung (Lead Associate)	102.5	$725/hr	$74,313
Sophie Tremblay (Working Associate)	68.0	$725/hr	$49,300
Subtotal — Associates	170.5	$123,613
Timekeeper	Hours	Rate	Amount
Paralegal staff (various)	12.5	$375/hr (avg.)	$4,688

CALDERWOOD & HARKNESS LLP
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
I. Executive Summary
On August 16, 2024, Arbor Health Technologies Inc. ("AHT" or the "Company") closed a $25,000,000 senior secured bridge loan (the "Bridge Loan") provided by Pinnacle Trust Bank, N.A. ("Pinnacle Trust" or the "Lender"). The Bridge Loan was structured as a sign-and-close transaction, with the Bridge Loan Agreement signed and funded in full on August 16, 2024. There was no separate signing date or deferred closing, and the full $25,000,000 was drawn in a single advance at closing.
The primary purpose of the Bridge Loan is to bridge AHT's near-term liquidity needs arising principally from the integration of two acquisitions completed in the second quarter of 2024: (i) MedBridge Workflow Solutions LLC, acquired for approximately $34,000,000 in a transaction that closed on April 22, 2024; and (ii) Cortland Surgical Systems, Inc., acquired for approximately $21,000,000 in a transaction that closed on May 31, 2024. In the aggregate, AHT deployed approximately $55,000,000 in Q2 2024 acquisition spend. The Company requires additional liquidity to fund integration costs, associated earnout obligations, and capital expenditures related to these acquisitions while it pursues a permanent revolving credit facility.
AHT completed its initial public offering on the Nasdaq Global Select Market (ticker: AHTI) on March 14, 2024, raising approximately $180,000,000 in gross proceeds through the issuance and sale of 10,000,000 shares of common stock at a price of $18.00 per share. Following the IPO, the Company's market capitalization was approximately $740,000,000. AHT is a Delaware-incorporated, Massachusetts-headquartered healthcare services and software-as-a-service ("SaaS") company. The Company operates a cloud-based clinical workflow platform designed for ambulatory surgical centers and specialty physician practices, currently serving clients across 22 states.
The Company's senior management team relevant to this transaction includes Dr. Priya Narayan (Chief Executive Officer), Evan Strickland (Chief Financial Officer), and Gerald Fong (General Counsel and Corporate Secretary).
The Bridge Loan facility is designed to provide working capital and platform integration funding on an interim basis while the Company negotiates a permanent revolving credit facility, which AHT expects to close in the first quarter of 2025.
Calderwood & Harkness LLP served as borrower's counsel for this transaction. Whitfield Gage & Associates LLP, led by partner Catherine Whitfield and associate Jordan Pace, served as lender's counsel. This matter was opened at Calderwood & Harkness LLP on July 8, 2024, providing a compressed timeline of approximately 39 days from engagement to closing. All closing deliverables were executed on August 16, 2024, and all post-closing deliverables were timely completed by the August 30, 2024 deadline established in the Bridge Loan Agreement.
The Lender, Pinnacle Trust Bank, N.A., is a nationally chartered commercial bank regulated by the Office of the Comptroller of the Currency ("OCC"), headquartered at 600 Lexington Avenue, 22nd Floor, New York, NY 10022. Pinnacle Trust maintains approximately $89 billion in total assets and operates a significant healthcare lending practice. The healthcare finance group at Pinnacle Trust is led by Managing Director Renata Voss, with Vice President Derek Calloway serving as the primary deal contact. Notably, Pinnacle Trust served as one of the co-managers on AHT's March 2024 IPO and maintains an existing depository relationship with the Company, which provides the Lender with familiarity regarding AHT's financial profile and cash management operations.
The following additional advisors and service providers were involved in the transaction:
•  Hargrove & Patten LLP (Boston, Massachusetts; partner Lucinda Hargrove) served as AHT's general outside counsel and provided the corporate authorization certificates delivered at closing.
•  Reedmore Capital Partners LLC (Managing Director Thomas Okoro) served as financial advisor to AHT in connection with the Bridge Loan.
•  Greystone Audit Group LLP (engagement partner Danielle Chow) serves as AHT's independent registered public accounting firm and provided audited financial statements referenced in the closing process.
This memorandum summarizes the key transaction terms, describes the principal issues that arose during negotiation and the resolutions achieved, provides a risk assessment of the completed transaction, and identifies follow-up items requiring attention by the deal team and the client.
II. Key Transaction Terms
The following table summarizes the material terms of the Bridge Loan as set forth in the executed Bridge Loan Agreement dated August 16, 2024:
III. Negotiation Summary and Key Issues
This Section describes the principal issues that arose during the negotiation of the Bridge Loan, the positions taken by the respective parties, and the resolutions achieved. The negotiation process commenced with AHT's receipt of Pinnacle Trust's initial term sheet on July 11, 2024 and proceeded through multiple rounds of document exchange. The Bridge Loan Agreement and related ancillary documents were circulated in initial draft form by lender's counsel on July 18, 2024, and five rounds of marked drafts were exchanged prior to the execution version dated August 16, 2024.
A. Interest Rate Spread
The interest rate spread was a significant focus of negotiation. Pinnacle Trust's initial term sheet proposed an Applicable Margin of SOFR + 525 basis points. Through the negotiation process, Calderwood & Harkness LLP, on behalf of AHT, negotiated a reduction of 50 basis points, bringing the Applicable Margin down to SOFR + 475 basis points.
The principal arguments advanced by Calderwood & Harkness on behalf of AHT in support of a lower spread included the following:
•  Conservative Leverage Profile. AHT's post-bridge net leverage ratio of only 0.18x is exceptionally conservative for a healthcare SaaS company and well below the 3.50x maximum net leverage covenant. The Company's balance sheet strength materially reduces credit risk to the Lender.
•  No Other Funded Debt. AHT has no other funded debt outstanding. The Company used its IPO proceeds to retire a prior term loan in full, and the Bridge Loan represents the Company's only funded indebtedness.
•  Public-Company Transparency. As a Nasdaq-listed company subject to SEC reporting requirements under the Securities Exchange Act of 1934, AHT is required to file quarterly reports (Form 10-Q), annual reports (Form 10-K), and current reports (Form 8-K), providing the Lender with a continuous flow of publicly available financial and operational information and reducing lender monitoring costs.
•  Comprehensive Collateral Package. The all-asset collateral package, including a first-priority lien on the Company's intellectual property (which constitutes the core value of the enterprise), accounts receivable, equipment, and other assets, provides robust downside protection for the Lender.
The 50 basis point reduction yields approximately $125,000 in annualized interest savings, calculated as $25,000,000 multiplied by 0.50%. Over the 18-month term of the Bridge Loan, the total savings, assuming the facility remains outstanding for the full term, would be approximately $187,500, subject to variation based on actual SOFR rates and prepayment timing.
A note on the rate calculation methodology is warranted for reference purposes: the all-in rate at signing includes the 0.10% SOFR Adjustment component required by the Loan Agreement's definition of "Adjusted Term SOFR." Per the initial term sheet, the spread is quoted as SOFR + 475 bps, which on an unadjusted basis yields 5.34% (1-month Term SOFR) + 4.75% = 10.09%. However, as defined in the executed Loan Agreement, the rate is calculated using Adjusted Term SOFR (inclusive of the 0.10% adjustment), yielding 5.44% + 4.75% = 10.19%. The spread component attributable to the borrower's credit remains 475 basis points in either case; the 0.10% SOFR Adjustment is a market-standard component that accounts for the transition from LIBOR to SOFR and is not a borrower-specific credit premium.
B. Mandatory Prepayment Provisions
Mandatory prepayment provisions were the subject of focused negotiation, particularly with respect to the equity issuance sweep.
Pinnacle Trust initially proposed a 100% mandatory prepayment sweep on all net cash proceeds from equity issuances, with no carve-outs. Calderwood & Harkness successfully negotiated two significant modifications:
•  Reduction to 75% Sweep. The equity issuance sweep was reduced from 100% to 75% of net cash proceeds, permitting the Company to retain 25% of any equity issuance proceeds for general corporate purposes. This provides important flexibility in the event AHT elects to raise additional equity capital during the bridge period, whether through a follow-on offering, a private placement, or otherwise.
•  Employee Equity Compensation Carve-Out. Proceeds from employee equity compensation plans (including stock option exercises, employee stock purchase plan contributions, and restricted stock unit settlements) were carved out from the mandatory prepayment sweep up to an aggregate of $3,000,000 per fiscal year. This carve-out was identified by AHT's human resources team, led by Chief People Officer Natasha Webber, as critical for talent retention during the integration period. Without this carve-out, the mandatory prepayment mechanism could have created a disincentive for employee equity participation, potentially undermining the Company's ability to attract and retain key personnel necessary to execute the MedBridge and Cortland integrations.
With respect to the asset sale mandatory prepayment thresholds ($5,000,000 individually and $10,000,000 in the aggregate), these were proposed by the Lender in the initial term sheet and accepted without material modification. The thresholds are consistent with AHT's operational profile, as the Company does not anticipate material asset dispositions during the bridge period. The asset sale sweep includes a customary 360-day reinvestment period, provided that such reinvestment is in assets used or useful in the Company's business.
The mandatory prepayment provision requiring 100% of net cash proceeds from any Permanent Facility to be applied to repay the Bridge Loan was accepted without negotiation, as this provision is structurally consistent with the bridge-to-permanent financing approach and aligns with AHT's stated intention to refinance the Bridge Loan with a permanent revolving credit facility in Q1 2025.
C. Financial Covenants
The financial covenant package consists of three covenants: a minimum liquidity covenant, a maximum net leverage ratio, and a minimum fixed charge coverage ratio. The minimum liquidity covenant was the most significant point of financial covenant negotiation.
Minimum Liquidity. Pinnacle Trust initially proposed a minimum liquidity covenant requiring the Company to maintain at least $20,000,000 in unrestricted cash and cash equivalents, tested on a weekly basis. This proposal was aggressive in two respects: the dollar threshold and the testing frequency. Calderwood & Harkness negotiated both elements, achieving the following result:
•  The minimum liquidity threshold was reduced from $20,000,000 to $15,000,000 in unrestricted cash and cash equivalents.
•  The testing frequency was reduced from weekly to monthly.
The arguments advanced in support of these modifications included the following: (i) weekly liquidity testing would be operationally burdensome for a company in the process of integrating two significant acquisitions, particularly given the demands on AHT's finance and treasury teams during the integration period; (ii) the $15,000,000 minimum provides adequate protection for the Lender given the comprehensive all-asset collateral package and first-priority security interest; and (iii) at closing, AHT had approximately $72,000,000 in cash and cash equivalents ($47,000,000 in pre-existing cash as of June 30, 2024, plus the $25,000,000 in Bridge Loan proceeds), providing a margin of approximately 4.8x above the $15,000,000 minimum threshold. This substantial headroom renders weekly testing unnecessary as a credit protection mechanism.
Maximum Net Leverage Ratio. The maximum net leverage ratio of 3.50x, tested quarterly, was accepted at the level proposed by the Lender without material negotiation. At closing, the Company's net leverage ratio was calculated as follows:
•  Total Funded Debt: $25,000,000
•  Less: Unrestricted Cash (capped at $20,000,000 under the Loan Agreement's net debt definition): ($20,000,000)
•  Net Funded Debt: $5,000,000
•  Trailing Twelve Months ("TTM") Adjusted EBITDA (as of June 30, 2024): $28,400,000
•  Net Leverage Ratio: $5,000,000 / $28,400,000 = 0.18x
The 0.18x net leverage ratio provides substantial headroom below the 3.50x covenant level. Even under stress scenarios in which Adjusted EBITDA declines significantly or additional debt is incurred, breach of this covenant in the near term is unlikely.
Minimum Fixed Charge Coverage Ratio. The minimum fixed charge coverage ratio of 1.25x, tested quarterly, was similarly accepted at the Lender's proposed level. At closing, the Company's fixed charge coverage ratio was calculated as follows:
•  Adjusted EBITDA: $28,400,000
•  Less: Unfinanced Capital Expenditures: ($12,600,000)
•  Adjusted EBITDA Less Unfinanced CapEx: $15,800,000
•  Fixed Charges (consisting of scheduled debt service, interest payments, and cash taxes): $4,200,000
•  Fixed Charge Coverage Ratio: $15,800,000 / $4,200,000 = 3.76x
The 3.76x coverage ratio at closing provides approximately 3.0x of cushion above the 1.25x covenant threshold. Both the net leverage and fixed charge coverage ratios provide wide cushions relative to the Company's current financial profile, reflecting AHT's strong operating performance and conservative capitalization.
D. Negative Covenant Baskets
Several negative covenant baskets were the subject of negotiation.
Investments and Acquisitions. The permitted acquisition basket was a key point of contention. Pinnacle Trust initially proposed a cap of $3,000,000 on permitted acquisitions that could be consummated without Lender consent. Calderwood & Harkness negotiated this cap upward to $7,500,000 individually and $15,000,000 in the aggregate over the life of the Bridge Loan. The rationale for the increased thresholds centered on AHT's growth strategy: smaller tuck-in acquisitions are integral to the Company's strategy of expanding its footprint in the ambulatory surgical center market. A $3,000,000 cap would have unreasonably restricted ordinary-course business development activity and was inconsistent with the scale and growth trajectory of a company with a $740,000,000 market capitalization and a demonstrated acquisition strategy. The negotiated thresholds of $7,500,000/$15,000,000 provide AHT with meaningful flexibility to pursue strategic add-on opportunities while affording the Lender appropriate oversight over larger transactions.
Restricted Payments. The restricted payments covenant was negotiated to include the following key baskets:
•  Common stock repurchases are permitted up to $5,000,000 per fiscal year, which is consistent with the scope of AHT's board-approved post-IPO share repurchase program.
•  Dividends and distributions by subsidiaries to the Borrower are permitted without restriction, ensuring the free flow of cash within the corporate structure.
•  Share repurchases in connection with employee equity compensation plans (including tax withholding repurchases) are permitted up to $3,000,000 per fiscal year.
Additional Indebtedness. The additional indebtedness covenant establishes a general cap of $2,000,000 in aggregate additional indebtedness, with the following specified Permitted Debt baskets:
•  The Bridge Loan itself.
•  The Permanent Facility (when executed).
•  Purchase money indebtedness and capital lease obligations up to $5,000,000 in the aggregate. This basket accommodates the Company's ongoing equipment needs and existing capital lease arrangements, including the Frontier Leasing Corp. arrangement described in Section IV.C below.
E. Post-Closing Obligations
The Bridge Loan Agreement provides for a 14-day post-closing period, with all post-closing deliverables required to be completed by August 30, 2024. The following items were designated as post-closing obligations:
(i) Deposit account control agreements ("DACAs") for the Company's accounts at Ridgefield National Bank (Account Nos. ending in **5694 and **7782).
(ii) Landlord waivers and access agreements for the Company's three principal leased office locations: (a) Waltham, Massachusetts (landlord: Beacon Ridge Realty Partners LLC); (b) King of Prussia, Pennsylvania (landlord: Keystone Corporate Properties LP); and (c) Nashville, Tennessee (landlord: Cumberland Office Holdings Inc.).
(iii) Recordation of IP security agreements with the United States Patent and Trademark Office ("USPTO") and the United States Copyright Office ("USCO").
(iv) Delivery of pledged stock certificates and undated, blank stock powers for Arbor Health Holdings LLC, Arbor Health Platform Services Inc., MedBridge Workflow Solutions LLC, and Cortland Surgical Systems, Inc.
The post-closing period was itself the product of negotiation. Pinnacle Trust initially required that all perfection and collateral deliverables be completed at or prior to closing. Given the compressed overall deal timeline — 39 days from the opening of the Calderwood & Harkness matter on July 8, 2024 to closing on August 16, 2024 — completing all perfection steps at closing was not practicable. Calderwood & Harkness obtained Pinnacle Trust's agreement to a 14-day post-closing period, with the understanding that Calderwood & Harkness would coordinate the prompt completion of all outstanding items.
All post-closing items were completed on time by the August 30, 2024 deadline, as described in greater detail in Section IV.C (Collateral and Perfection) below.
F. Change of Control Definition
The Change of Control definition in Section 10.01(j) of the Bridge Loan Agreement was negotiated to include two important exclusions from the events that would constitute a Change of Control triggering an Event of Default:
(i) Changes in the ownership of AHT common stock resulting from ordinary-course public market trading on the Nasdaq Global Select Market, provided that no person or "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) acquires beneficial ownership of more than 35% of the voting power of the outstanding equity securities of the Company.
(ii) Changes in the composition of the Board of Directors resulting from ordinary-course director elections by shareholders at annual or special meetings, including the addition of new directors nominated by the Board's Nominating and Corporate Governance Committee.
These exclusions are particularly important in light of AHT's status as a newly public company. The IPO was completed on March 14, 2024, and the Company has a relatively dispersed shareholder base, with no single shareholder holding more than approximately 12% of the outstanding common stock as of the most recent proxy statement. A Change of Control definition that could be triggered by normal public market trading activity or routine board turnover would be inappropriate for a public company and could create unintended acceleration events. The 35% beneficial ownership threshold provides the Lender with meaningful protection against a hostile acquisition or creeping control scenario while accommodating the realities of public equity market dynamics.
IV. Risk Assessment
This Section identifies and assesses the principal risks associated with the Bridge Loan from the perspective of the borrower and our representation.
A. Liquidity Runway
The Company's near-term liquidity position, while adequate, warrants close monitoring. The relevant figures are as follows:
•  Cash at Closing: Approximately $72,000,000, consisting of $47,000,000 in pre-existing cash and cash equivalents (as of June 30, 2024) plus $25,000,000 in Bridge Loan proceeds.
•  Projected 12-Month Cash Needs: Approximately $68,000,000, broken down as follows:
•  Integration costs (MedBridge and Cortland): $29,000,000
•  Earnout payments to former owners of MedBridge and Cortland: $14,000,000
•  Capital expenditures (including platform development): $18,000,000
•  Other working capital requirements: $7,000,000
•  Pre-Bridge Cash Shortfall: Approximately $21,000,000 ($68,000,000 in projected needs minus $47,000,000 in existing cash).
•  Cushion with Bridge Loan Proceeds: Approximately $4,000,000 ($25,000,000 bridge proceeds minus $21,000,000 shortfall). This figure does not account for operating cash flow generation during the period.
•  TTM Operating Cash Flow: Approximately $22,000,000, which provides a meaningful additional buffer against liquidity shortfalls.
For context, AHT's broader financial profile as of the most recent reporting period is as follows: TTM revenue of $162,300,000; TTM Adjusted EBITDA of $28,400,000; Adjusted EBITDA margin of 17.5%; and total assets of $411,700,000.
Assessment: While the Bridge Loan addresses the identified cash shortfall, the resulting cushion of approximately $4,000,000 (before operating cash flow) is relatively thin. If integration costs exceed projections, earnout payments are higher than anticipated, or capital expenditure requirements increase, the Company could face liquidity pressure. We note that integration projects of the scope and complexity involved here — two acquisitions totaling $55,000,000, completed within approximately five weeks of each other — frequently encounter cost overruns. The $29,000,000 integration cost estimate was prepared by AHT's management team and reviewed by Reedmore Capital Partners, but it has not been independently validated.
Recommendation: We recommend monitoring the Company's monthly liquidity reports closely during the quarterly compliance certificate review process. In particular, Calderwood & Harkness should review each quarterly compliance certificate delivered under the Loan Agreement to confirm that actual expenditures are tracking to projections and that the $15,000,000 minimum liquidity covenant is being maintained with adequate headroom.
B. Refinancing Risk
The Bridge Loan matures on February 16, 2026, which is 18 months from the closing date. AHT intends to close a permanent revolving credit facility in the first quarter of 2025, approximately 5 to 6 months after the Bridge Loan closing. If achieved on this timeline, the permanent facility would retire the Bridge Loan with approximately 12 months remaining before maturity, which would represent a successful bridge-to-permanent transition.
Several factors support the feasibility of the refinancing timeline. First, Pinnacle Trust Bank has been shortlisted, along with two other financial institutions, to serve as administrative agent on the permanent facility. Pinnacle Trust's dual role as bridge lender and potential permanent facility agent aligns the Lender's incentives toward a cooperative refinancing process. Second, the mandatory prepayment provision in the Bridge Loan Agreement ensures that 100% of the net cash proceeds from any permanent facility will be automatically applied to retire the Bridge Loan, creating a clean structural linkage between the two financings. Third, AHT's strong financial profile — conservative leverage, positive operating cash flow, and public-company status — should make the Company an attractive credit for a syndicated revolving facility.
Notwithstanding these favorable factors, refinancing risk remains a meaningful concern. If the permanent facility process is delayed due to market conditions, credit market disruption, lender appetite, or complications arising from the integration of MedBridge and Cortland, AHT could face refinancing pressure as the maturity date approaches. The Bridge Loan Agreement does not include an extension option, meaning that if the permanent facility is not in place by February 16, 2026, the full $25,000,000 outstanding balance (or any remaining balance after mandatory prepayments) would be due and payable.
Recommendation: The Company should begin the permanent facility process promptly. We recommend that Calderwood & Harkness engage with AHT and Gerald Fong regarding the scope of our representation for the permanent revolving credit facility, including the anticipated timeline, potential lender group composition, and key terms. Coordination with Reedmore Capital Partners regarding the financial advisory mandate for the permanent facility should also be initiated.
C. Collateral and Perfection
The all-asset security package supporting the Bridge Loan is comprehensive, covering substantially all tangible and intangible assets of the Borrower (AHT) and both Guarantors (Arbor Health Holdings LLC and Arbor Health Platform Services Inc.). The following summarizes the status of key perfection steps:
UCC-1 Financing Statement. A UCC-1 financing statement was filed on August 19, 2024 with the Delaware Secretary of State, assigned Filing No. 2024-3847261. The filing was prepared and submitted by Meridian Filing Services Inc., the firm's designated filing agent. This filing perfects the Lender's security interest in all personal property of the Borrower and Guarantors organized in Delaware, which encompasses all three Loan Parties. Status: Completed.
Deposit Account Control Agreements. DACAs were executed with Ridgefield National Bank for AHT's two operating accounts at that institution (Account Nos. ending in **5694 and 7782). These DACAs were completed on August 28, 2024, within the post-closing period. DACAs are not required for AHT's accounts maintained at Pinnacle Trust Bank because the Lender is itself the depository bank, and under Article 9 of the UCC, a secured party that is also the depository bank has automatic control over deposit accounts it maintains. The Company's payroll account (Account No. ending in 3201), which is maintained at a separate institution, is excluded from the collateral package as a payroll and tax account under the $2,500,000 aggregate carve-out in the Security Agreement. Status: Completed.**
IP Security Agreements. IP security agreements were recorded with the USPTO and USCO. The USPTO recordation covers the following registered intellectual property:
•  Trademark Registration Nos. 6,481,723, 6,481,724, and 6,592,108
•  U.S. Patent No. 11,284,671
•  Patent Application No. 17/893,214
The USCO recordation covers Copyright Registration No. TXu 2-341-877. All IP recordations were completed on August 27, 2024. Status: Completed.
Pledged Equity Certificates and Stock Powers. Pledged equity certificates and undated, blank stock powers for the following entities were delivered to Pinnacle Trust on August 29, 2024: Arbor Health Holdings LLC (membership interest certificate), Arbor Health Platform Services Inc. (stock certificate), MedBridge Workflow Solutions LLC (membership interest certificate), and Cortland Surgical Systems, Inc. (stock certificate). Status: Completed.
Prior Liens. The UCC, tax lien, and judgment search conducted on August 12, 2024 in the State of Delaware identified only one existing UCC filing against AHT: Filing No. 2023-2811490, filed by Frontier Leasing Corp. on September 15, 2023. This filing relates to specific items of leased office equipment with an aggregate value of approximately $380,000. The Frontier Leasing arrangement constitutes a Permitted Lien under Section 8.02 of the Bridge Loan Agreement, and the filing does not create any conflict with the Lender's first-priority security interest in the Company's other assets. No tax liens or judgment liens were identified in the search.
D. Healthcare Regulatory Considerations
AHT operates in a regulated healthcare environment, providing technology solutions and services to ambulatory surgical centers and specialty physician practices. The Company's cloud-based clinical workflow platform processes, stores, and transmits protected health information ("PHI") and is subject to a range of federal and state healthcare regulations.
The Bridge Loan Agreement includes representations and warranties by the Borrower regarding compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the Health Information Technology for Economic and Clinical Health Act ("HITECH"), applicable state privacy and data security laws, and the Centers for Medicare and Medicaid Services ("CMS") conditions of participation applicable to the ambulatory surgical centers served by the Company's platform. No material regulatory issues were identified during the due diligence and closing process, and the Officer's Closing Certificate delivered by CFO Evan Strickland confirmed the accuracy of all representations and warranties as of the closing date.
However, the Company's healthcare regulatory risk profile warrants ongoing attention. AHT now operates across 22 states, several of which have enacted healthcare data privacy requirements that are more stringent than the federal HIPAA framework, including California (the California Consumer Privacy Act, as amended by the California Privacy Rights Act), New York (SHIELD Act), and Texas (Texas Medical Records Privacy Act, as amended). The integration of the MedBridge and Cortland operations into AHT's platform expands the Company's geographic and operational footprint and may expose the Company to new or additional regulatory requirements. In particular, the Cortland acquisition brought clients in several states where AHT did not previously operate, necessitating a review of state-specific licensing and data privacy compliance requirements.
Recommendation: AHT should ensure that its regulatory compliance programs are updated to cover the acquired MedBridge and Cortland operations and all 22 states in which the Company now operates. We recommend that AHT engage its privacy counsel (whether Hargrove & Patten LLP or separate specialized counsel) to conduct a comprehensive compliance gap analysis across the combined enterprise, with particular focus on state-level requirements that may differ from the Company's existing HIPAA compliance framework.
V. Fees and Expenses
Summary of Transaction Costs
The following table summarizes all fees and expenses incurred in connection with the Bridge Loan transaction:
Total transaction costs of $594,300 represent approximately 2.37% of the $25,000,000 facility amount. This is within the range customary for bridge loan transactions of this size and complexity.
Calderwood & Harkness LLP Fee Reconciliation
Total Calderwood & Harkness LLP fees for this engagement were $198,450, which falls within the estimated range of $185,000 to $225,000 provided in the engagement letter dated July 8, 2024. The breakdown of fees by timekeeper is as follows:
Partner Time:
Associate Time:
Paralegal Time:
Disbursements: $1,724 (consisting of filing fees, overnight delivery charges, and document production costs).
Total Calderwood & Harkness Fees:
$54,625 + $13,800 + $74,313 + $49,300 + $4,688 + $1,724 = $198,450
The total timekeeper hours for the engagement were 242.5 hours (59.5 partner hours, 170.5 associate hours, and 12.5 paralegal hours), reflecting the compressed 39-day timeline from matter opening to closing and the complexity of the all-asset collateral package and post-closing perfection requirements.
VI. Document List
The complete closing set comprises 16 deliverables, as enumerated in the Closing Memorandum dated August 16, 2024, prepared by Sophie Tremblay, reviewed by Marcus Leung, and approved by Claudia Merritt:
1.  Bridge Loan Agreement (execution version, dated August 16, 2024, by and among Arbor Health Technologies Inc., the Guarantors, and Pinnacle Trust Bank, N.A.)
2.  Guaranty Agreement (execution version, dated August 16, 2024, by Arbor Health Holdings LLC and Arbor Health Platform Services Inc. in favor of Pinnacle Trust Bank, N.A.)
3.  Security Agreement (execution version, dated August 16, 2024, by and among each Loan Party and Pinnacle Trust Bank, N.A. as Secured Party)
4.  Borrower's Counsel Legal Opinion (delivered by Calderwood & Harkness LLP to Pinnacle Trust Bank, N.A., dated August 16, 2024, covering corporate existence, authorization, enforceability, no conflicts, and perfection of security interests)
5.  Secretary's Certificate of Borrower (delivered by Gerald Fong, Corporate Secretary, with the following exhibits: Exhibit A — Restated Certificate of Incorporation of AHT; Exhibit B — Amended and Restated Bylaws of AHT; Exhibit C — Board Resolutions authorizing the Bridge Loan, dated August 2, 2024; Exhibit D — Good Standing Certificates from the Delaware Secretary of State, dated August 14, 2024)
6.  Officer's Closing Certificate (delivered by Evan Strickland, CFO, certifying the accuracy of representations and warranties, absence of defaults, and compliance with conditions precedent)
7.  Borrowing Request / Funding Notice (requesting disbursement of $25,000,000 in a single advance on August 16, 2024)
8.  Perfection Certificate (executed by each Loan Party, setting forth legal names, jurisdictions of organization, locations of chief executive offices, locations of collateral, and deposit account information)
9.  Good Standing Certificates — Delaware (for each Loan Party: AHT, Arbor Health Holdings LLC, and Arbor Health Platform Services Inc., each dated no earlier than August 14, 2024)
10.  Good Standing Certificate — Massachusetts (for the Borrower, from the Massachusetts Secretary of the Commonwealth, dated August 14, 2024)
11.  UCC, Tax Lien, and Judgment Search Reports — Delaware (dated August 12, 2024, conducted by Meridian Filing Services Inc., covering the Borrower and each Guarantor)
12.  Evidence of Insurance (certificates of insurance evidencing comprehensive general liability, professional liability/E&O, cyber liability, and property insurance, with Pinnacle Trust Bank, N.A. named as additional insured and loss payee as applicable)
13.  Payment of Origination Fee ($125,000, paid by wire transfer to Pinnacle Trust Bank, N.A.)
14.  Payment of Lender's Counsel Fees ($118,500, paid by wire transfer to Whitfield Gage & Associates LLP)
15.  Payment of Reedmore Advisory Fee ($150,000, paid by wire transfer to Reedmore Capital Partners LLC)
16.  Funding Wire ($25,000,000 disbursed by Pinnacle Trust Bank, N.A. to AHT's designated operating account; Wire Reference: PTB-2024-08162841)
All documents have been executed and filed as required. Originals of all closing documents are maintained in the Calderwood & Harkness LLP matter file (Matter No. 1010-00001) in the firm's document management system. Counterpart execution was completed electronically via Brightwater Software on August 16, 2024, with wet-ink originals to follow within five (5) Business Days of closing, as agreed among the parties.
VII. Follow-Up Items
The following items require attention in the near term and should be calendared accordingly:
1.  First Quarterly Interest Payment. The first quarterly interest payment is due on September 30, 2024 (the last Business Day of the fiscal quarter). Based on the current all-in rate of 10.19% and the actual/360 day count convention, the estimated interest payment for the period from August 16, 2024 through September 30, 2024 (45 days) is approximately $318,438 ($25,000,000 × 10.19% × 45/360). The exact amount will depend on actual SOFR resets during the interest period and the precise day count calculated under the actual/360 convention. AHT's treasury team should be alerted to prepare for this payment.
2.  First Compliance Certificate. The first compliance certificate under Section 9.01 of the Bridge Loan Agreement is due within 45 days after the end of the fiscal quarter ending September 30, 2024 — i.e., by November 14, 2024. The compliance certificate must include calculations demonstrating the Company's compliance with the minimum liquidity covenant ($15,000,000), the maximum net leverage ratio (3.50x), and the minimum fixed charge coverage ratio (1.25x). Calderwood & Harkness should coordinate with AHT's CFO Evan Strickland and Greystone Audit Group LLP to ensure timely preparation and delivery.
3.  Monthly Liquidity Monitoring. Section 9.01 of the Bridge Loan Agreement requires monthly testing of the minimum liquidity covenant ($15,000,000 in unrestricted cash and cash equivalents). Although the Loan Agreement does not require delivery of a formal monthly compliance certificate (in contrast to the quarterly compliance certificate requirements), we recommend that AHT implement an internal process to monitor and document liquidity compliance on a monthly basis. This documentation will be important for audit trail purposes and to facilitate prompt identification of any potential compliance concerns.
4.  Permanent Credit Facility Engagement. Calderwood & Harkness should promptly engage with AHT and Gerald Fong regarding the scope of our representation for the permanent revolving credit facility that the Company expects to close in Q1 2025. Pinnacle Trust Bank is on the shortlist to serve as administrative agent for the permanent facility, along with two other financial institutions. Early engagement will allow us to begin evaluating potential terms and coordinating with Reedmore Capital Partners on the refinancing process. A new matter number should be opened upon engagement.
5.  Perfection Monitoring. Ongoing monitoring is required for any changes in AHT's corporate structure, legal names, jurisdictions of organization, chief executive office locations, or deposit accounts that could affect the perfection status of the Lender's security interest. Under Section 4.1(a) of the Security Agreement, each Grantor is required to provide 30 days' prior written notice to the Lender before any such change. Calderwood & Harkness should remind AHT's legal team of this requirement and establish a protocol for receiving timely notice of any contemplated changes. Additionally, the UCC-1 financing statement (Filing No. 2024-3847261) should be monitored for its five-year lapse date, and a continuation statement should be filed if the Bridge Loan remains outstanding beyond the initial filing period (which is unlikely given the February 16, 2026 maturity date, but should be tracked nonetheless).
6.  Healthcare Regulatory Compliance. As discussed in Section IV.D above, ongoing compliance with HIPAA, HITECH, and applicable state privacy requirements should be monitored, particularly as the MedBridge and Cortland integration proceeds across the Company's 22-state operational footprint. Any material regulatory findings, enforcement actions, or data breach incidents could implicate the representations and warranties in the Bridge Loan Agreement and potentially trigger notice obligations or Events of Default.
Distribution: Internal only — Calderwood & Harkness LLP. This memorandum constitutes privileged and confidential attorney work product and is not intended for distribution outside the firm without prior authorization from the Responsible Partner.
Prepared by: Sophie Tremblay, Associate Calderwood & Harkness LLP
Reviewed by: Marcus Leung, Associate Calderwood & Harkness LLP
Calderwood & Harkness LLP — Matter No. 1010-00001 PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
To: | Claudia Merritt, Partner; Ian Blackwood, Partner
From: | Marcus Leung, Associate; Sophie Tremblay, Associate
Date: | August 20, 2024
Re: | Arbor Health Technologies Inc. — $25M Bridge Loan — Deal Summary and Key Issues
Matter No.: | 1010-00001
Term | Detail
Borrower | Arbor Health Technologies Inc., a Delaware corporation (Nasdaq: AHTI). Headquarters: 400 Beacon Ridge Parkway, Suite 800, Waltham, MA 02451. EIN: 88-3164720; Delaware Secretary of State File No. 7284619.
Guarantors | (i) Arbor Health Holdings LLC, a Delaware limited liability company (EIN: 88-4271835), which is a wholly-owned subsidiary of AHT holding equity interests in the Company's operating subsidiaries; and (ii) Arbor Health Platform Services Inc., a Delaware corporation (EIN: 92-1058467), which is a wholly-owned subsidiary of Arbor Health Holdings LLC and operates AHT's core SaaS platform, generating substantially all of the Company's subscription revenue.
Lender | Pinnacle Trust Bank, N.A. (RSSD ID: 1048273).
Facility Type | Senior secured bridge loan (term loan, single draw).
Facility Amount | $25,000,000. The facility was fully funded at closing on August 16, 2024. Amounts repaid may not be re-borrowed.
Interest Rate | Adjusted Term SOFR + 475 basis points (the "Applicable Margin"). The Adjusted Term SOFR includes a SOFR Adjustment of 0.10% (10 basis points) added to the 1-month Term SOFR reference rate. A SOFR floor of 1.00% applies.
All-In Rate at Close | 10.19%, calculated as follows: 1-month Term SOFR of 5.34% + 0.10% SOFR Adjustment = 5.44% Adjusted Term SOFR + 4.75% Applicable Margin = 10.19%.
Default Rate | The Applicable Rate plus 200 basis points (effectively, Adjusted Term SOFR + 675 basis points).
Interest Payment | Quarterly in arrears, payable on the last Business Day of each fiscal quarter (September 30, December 31, March 31, and June 30) and on the Maturity Date.
Interest Computation | Actual/360 day count convention.
Maturity Date | February 16, 2026 (18 months from the Closing Date).
Voluntary Prepayment | Permitted at any time at par, without premium or penalty, subject to customary SOFR breakage costs. Minimum prepayment amount of $1,000,000, or in multiples of $500,000 in excess thereof. Three (3) Business Days' prior written notice required.
Mandatory Prepayment | (i) 100% of net cash proceeds from any Permanent Facility (as defined in the Loan Agreement); (ii) 100% of net cash proceeds from asset sales exceeding $5,000,000 individually or $10,000,000 in the aggregate during the term of the Bridge Loan; and (iii) 75% of net cash proceeds from equity issuances, excluding proceeds from employee equity compensation plans up to $3,000,000 per fiscal year.
Origination Fee | $125,000 (calculated as 0.50% of the $25,000,000 facility amount), fully earned and paid at closing.
Security | First-priority perfected security interest in substantially all assets of the Borrower and the Guarantors, including: accounts receivable, equipment, intellectual property (software, patents, trademarks), deposit accounts (subject to carve-outs for payroll and tax accounts up to $2,500,000 in the aggregate), equity interests in direct subsidiaries (limited to 65% of the voting equity of first-tier foreign subsidiaries, if any), general intangibles, instruments, chattel paper, inventory, and investment property.
Excluded Collateral | Real property; motor vehicles; equity interests in Immaterial Subsidiaries (defined as subsidiaries with assets less than $1,000,000 individually).
Financial Covenants | (i) Minimum Liquidity: $15,000,000 in unrestricted cash and cash equivalents, tested monthly; (ii) Maximum Net Leverage Ratio: 3.50x, tested quarterly; (iii) Minimum Fixed Charge Coverage Ratio: 1.25x, tested quarterly.
Negative Covenants | (i) Additional indebtedness cap of $2,000,000 (plus specified Permitted Debt baskets, including the Bridge Loan, the Permanent Facility, and purchase money/capital lease obligations up to $5,000,000 in the aggregate); (ii) Acquisitions: $7,500,000 individually and $15,000,000 in the aggregate without Lender consent; (iii) Restricted payments limited as described herein; (iv) Asset sale restrictions with reinvestment rights.
Governing Law | State of New York.
Jurisdiction | Exclusive jurisdiction in the courts of the State of New York located in the Borough of Manhattan and the United States District Court for the Southern District of New York. All parties have waived trial by jury.
Use of Proceeds | Working capital, general corporate purposes, integration costs relating to the MedBridge and Cortland acquisitions, earnout payments to former owners of MedBridge and Cortland, and payment of transaction fees and expenses.
Lender's Counsel Fee Cap | $125,000, payable by the Borrower directly to Whitfield Gage & Associates LLP.
Payee | Amount | Description
Calderwood & Harkness LLP | $198,450 | Professional fees and disbursements (final invoice)
Whitfield Gage & Associates LLP | $118,500 | Lender's counsel fees (paid by Borrower; within the $125,000 contractual cap)
Pinnacle Trust Bank, N.A. | $125,000 | Origination fee (0.50% × $25,000,000)
Reedmore Capital Partners LLC | $150,000 | Financial advisory fee (flat fee, payable at closing)
Meridian Filing Services Inc. | $2,350 | UCC search and filing fees
Total Transaction Costs | $594,300
Timekeeper | Hours | Rate | Amount
Claudia Merritt (Responsible Partner) | 47.5 | $1,150/hr | $54,625
Ian Blackwood (Billing Partner) | 12.0 | $1,150/hr | $13,800
Subtotal — Partners | 59.5 | $68,425
Timekeeper | Hours | Rate | Amount
Marcus Leung (Lead Associate) | 102.5 | $725/hr | $74,313
Sophie Tremblay (Working Associate) | 68.0 | $725/hr | $49,300
Subtotal — Associates | 170.5 | $123,613
Timekeeper | Hours | Rate | Amount
Paralegal staff (various) | 12.5 | $375/hr (avg.) | $4,688

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