1010-00002 · Client 1010 · Credit Facility

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Contract analysis Extract to table

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 125 Broad Street, New York, NY 10004

MEMORANDUM

TO: Theodore Langston, Vivienne St. Claire

FROM: Eric Johannsen

DATE: January 22, 2024

RE: Arbor Health Technologies Inc. — Summary of First Amendment to Credit Agreement (IPO-Related Modifications)

MATTER NO.: 1010-00002

CLIENT: Arbor Health Technologies Inc.

I. Executive Summary

The purpose of this memorandum is to summarize the key modifications to Arbor Health Technologies Inc.'s ("AHT" or the "Company") existing senior secured revolving credit facility effected by that certain First Amendment to Credit Agreement, dated as of January 18, 2024 (the "Amendment"), among Arbor Health Technologies Inc., as Borrower, Keypoint National Bank, N.A., as Administrative Agent (the "Administrative Agent" or "Keypoint"), and Stonemill Capital Bank, as Lender ("Stonemill" and, together with Keypoint, the "Lender Parties"). The Amendment was negotiated and prepared by Calderwood & Harkness LLP on behalf of AHT in connection with the Company's proposed initial public offering (the "IPO") of shares of its common stock, par value $0.001 per share, on the New York Stock Exchange (the "NYSE").

The Amendment addresses four principal areas of the Credit Agreement that required modification in order to accommodate the IPO and the related transactions contemplated thereby:

(1) a revised "Change of Control" definition that expressly excludes a "Qualified IPO" from triggering an event of default or acceleration;

(2) a new permitted equity issuance carve-out that allows the Company to issue shares in the IPO (including overallotment shares) and under its new equity compensation plans without obtaining prior Administrative Agent consent;

(3) updated mandatory prepayment provisions that clarify the treatment of equity issuance proceeds and confirm that voluntary prepayment of the facility from IPO proceeds may be made without penalty or premium; and

(4) conforming updates to the events of default provisions to ensure consistency with the amended Change of Control definition.

As disclosed in the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the "SEC"), AHT intends to use a portion of the net proceeds from the IPO to repay the approximately $65,000,000 currently drawn on the revolving credit facility at or promptly following the closing of the offering. The facility itself will remain in place following the IPO as a source of ongoing liquidity for the Company. The maturity date of March 15, 2027 is unchanged by the Amendment, and the revolving commitments will remain available for future borrowings following repayment of the current outstanding balance.

This memorandum is intended for internal use by the Calderwood & Harkness deal team and should not be distributed externally without the prior approval of the undersigned.

II. Background — Existing Credit Facility

A. Original Credit Agreement

The Credit Agreement was originally entered into on March 15, 2022 (the "Original Credit Agreement"), among AHT, as Borrower, Keypoint National Bank, N.A., as Administrative Agent, and Stonemill Capital Bank, as Lender. The Original Credit Agreement provides for a $150,000,000 senior secured revolving credit facility (the "Facility"). Prior to the Amendment, the Original Credit Agreement had not been previously amended, restated, supplemented, or otherwise modified.

The principal terms of the Original Credit Agreement are summarized below:

Borrower: Arbor Health Technologies Inc., a Delaware corporation headquartered at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142 (Federal EIN: 47-3891205).

Administrative Agent: Keypoint National Bank, N.A., a national banking association with its principal office at 200 Public Square, Cleveland, Ohio 44114.

Lender / Syndicate Member: Stonemill Capital Bank, a New York state-chartered bank with its principal office at 140 Broadway, New York, New York 10005.

Facility Size: $150,000,000 senior secured revolving credit facility, with a letter of credit sublimit of $25,000,000 and a swingline sublimit of $15,000,000.

Maturity Date: March 15, 2027.

Interest Rate: Secured Overnight Financing Rate ("SOFR") plus an applicable margin of 200 basis points (2.00%), with a SOFR floor of 0.00%. Interest is calculated on an actual/360 day-count basis and payable quarterly in arrears.

Commitment Fee: 0.375% per annum on the unused portion of the revolving commitments, payable quarterly in arrears.

Security: The obligations under the Credit Agreement are secured by a first-priority lien on substantially all assets of AHT, including all accounts receivable, inventory, equipment, intellectual property, general intangibles, and proceeds thereof, pursuant to that certain Security Agreement, dated as of March 15, 2022, between AHT and Keypoint National Bank, N.A., as Administrative Agent and Collateral Agent. UCC-1 financing statements were filed with the Delaware Secretary of State and the Massachusetts Secretary of the Commonwealth.

Governing Law: State of New York.

The Original Credit Agreement contains customary representations and warranties, affirmative and negative covenants (including limitations on indebtedness, liens, investments, restricted payments, asset dispositions, and equity issuances), and events of default, all of which are standard for a senior secured revolving credit facility of this type and size for a company at AHT's stage of development.

B. Current Outstanding Balance

As of the date of this memorandum, the outstanding principal balance drawn on the Facility is approximately $65,000,000. The Company has utilized the Facility primarily for working capital purposes and to fund certain capital expenditures related to the expansion of its clinical data analytics platform and its SaaS-based healthcare IT solutions.

AHT has disclosed in its Registration Statement on Form S-1 (SEC File No. 333-276841), initially filed with the SEC on January 22, 2024, that it intends to use a portion of the net proceeds from the IPO to repay the outstanding balance on the Facility. Specifically, the "Use of Proceeds" section of the prospectus included in the Registration Statement states that the Company intends to repay approximately $65,000,000 of indebtedness outstanding under its revolving credit facility from IPO net proceeds at or promptly following the closing of the offering. This repayment is voluntary in nature and is not mandated by the terms of the Credit Agreement (as amended by the Amendment).

Upon repayment of the outstanding balance, the revolving commitments of $150,000,000 will remain available for future borrowings by the Company, subject to the terms and conditions of the Credit Agreement as amended by the Amendment. The Company anticipates that it will continue to use the Facility as a source of liquidity for working capital and general corporate purposes in the post-IPO operating environment.

C. Financial Covenants (Unchanged by Amendment)

The Original Credit Agreement contains two financial maintenance covenants, each tested on a quarterly basis as of the last day of each fiscal quarter:

Total Net Leverage Ratio: The Company is required to maintain a Total Net Leverage Ratio (defined as the ratio of Consolidated Total Funded Indebtedness minus Unrestricted Cash and Cash Equivalents (up to $50,000,000) to Consolidated Adjusted EBITDA for the trailing four-quarter period) of not greater than 3.50 to 1.00, tested as of the end of each fiscal quarter.

Fixed Charge Coverage Ratio: The Company is required to maintain a Fixed Charge Coverage Ratio (defined as the ratio of Consolidated Adjusted EBITDA minus Unfinanced Capital Expenditures to Consolidated Fixed Charges for the trailing four-quarter period) of not less than 1.25 to 1.00, tested as of the end of each fiscal quarter.

Neither of these financial covenants was modified by the Amendment. Both covenants remain in full force and effect following the Amendment. Based on AHT's audited financial statements for the fiscal year ended December 31, 2023, which reflect revenue of $612.4 million, Adjusted EBITDA of $138.7 million, and net income of $41.3 million, the Company's current compliance position under both financial covenants is satisfactory. The Total Net Leverage Ratio as of December 31, 2023 was approximately 0.11x (well below the 3.50x covenant threshold), reflecting the Company's moderate leverage profile. The Fixed Charge Coverage Ratio as of December 31, 2023 was approximately 4.87x (well above the 1.25x covenant threshold). Following the repayment of the outstanding balance from IPO proceeds, we anticipate that the Company's leverage metrics will improve further.

III. Summary of Key Amendments

Set forth below is a detailed summary of each of the four principal modifications effected by the Amendment.

A. Amended Change of Control Definition (Section 1 of the Amendment)

1. Prior Definition

Under the Original Credit Agreement, a "Change of Control" was defined to include any transaction or series of related transactions resulting in any of the following:

(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the outstanding Voting Stock of the Borrower (the "Ownership Threshold");

(b) the Borrower ceasing to own, directly or indirectly, 100% of the Equity Interests in each of its Material Subsidiaries (other than director qualifying shares or shares required to be held by foreign nationals under applicable law); or

(c) a change in a majority of the members of the Board of Directors of the Borrower, other than changes resulting from elections or appointments approved by a majority of the incumbent members of the Board of Directors or nominated by a nominating committee composed of incumbent directors (the "Board Composition Trigger").

Under this prior definition, the IPO itself presented a significant risk of triggering a Change of Control event under clause (a). The Company's proposed offering of 20,000,000 shares of common stock (and up to an additional 3,000,000 shares pursuant to the underwriters' overallotment option) would result in a substantial dilution of existing pre-IPO stockholders and would introduce a new, dispersed class of public stockholders. While no single public stockholder or group of stockholders was expected to acquire beneficial ownership of 35% or more of the outstanding Voting Stock as a result of the offering, the language of clause (a) — particularly its broad reference to any "person" or "group" — created ambiguity as to whether the aggregate ownership changes resulting from the IPO could be construed as meeting the Ownership Threshold. Moreover, the structure of the offering — with shares being allocated to numerous institutional and retail investors through a syndicate of underwriters led by Goldman Stanley & Co. LLC and Ridgeway Financial Rivers Securities Inc. as joint book-running managers — introduced interpretive risk regarding the treatment of shares held in "street name" and the potential aggregation of holdings.

It was therefore essential to negotiate an express carve-out for the IPO from the Change of Control definition in order to eliminate any risk of an inadvertent default under the Credit Agreement.

2. Amendment — IPO Carve-Out

The Amendment revises the Change of Control definition by adding a new proviso to clause (a) that expressly excludes from the definition of "Change of Control" any "Qualified IPO." The term "Qualified IPO" is defined in the Amendment as follows:

"Qualified IPO" means an underwritten initial public offering of shares of common stock (or equivalent equity securities) of the Borrower on a national securities exchange (including, without limitation, the New York Stock Exchange or the Nasdaq Stock Market) pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, resulting in aggregate gross proceeds to the Borrower of at least $200,000,000 (before deducting underwriting discounts, commissions, and offering expenses).

AHT's proposed IPO — which targets aggregate gross proceeds to the Company of approximately $400,000,000 (based on a base offering of 20,000,000 shares at an anticipated price range of $18.00 to $20.00 per share), to be listed on the NYSE under the ticker symbol "ARHT" — clearly satisfies each element of the Qualified IPO definition. Even at the low end of the anticipated price range, gross proceeds from the base offering alone would be $360,000,000, substantially in excess of the $200,000,000 minimum threshold.

The carve-out further provides that no Change of Control shall be deemed to have occurred solely as a result of the dilution of pre-IPO stockholders' percentage ownership of outstanding Voting Stock arising from the issuance and sale of shares of common stock in a Qualified IPO, provided that no single new stockholder (or "group" of stockholders acting in concert within the meaning of the Exchange Act) acquires beneficial ownership of 35% or more of the outstanding Voting Stock as part of the offering. This proviso ensures that the carve-out does not inadvertently shield a concentrated acquisition of control effected through the mechanism of an IPO.

Based on the expected post-IPO capitalization of the Company, the two largest stockholders following the offering will be:

• Brindoval Trelvon Partners Fund IV, L.P.: approximately 27.18% of outstanding Voting Stock (assuming the full exercise of the overallotment option by the underwriters), reduced from approximately 38.7% on a pre-IPO basis; and

• Ridgeline Growth Equity Fund III, LLC: approximately 15.53% of outstanding Voting Stock (assuming the full exercise of the overallotment option), reduced from approximately 22.1% on a pre-IPO basis.

Neither of these pre-IPO stockholders will hold 35% or more of the outstanding Voting Stock following the IPO, and no new stockholder (whether institutional or retail) is expected to acquire a position at or above the 35% threshold in the offering. Accordingly, the proviso to the carve-out is satisfied.

3. Ongoing Applicability

It is important to note that the Change of Control definition, as amended, continues to apply in full force to all post-IPO transactions and events. Any future acquisition of AHT by a third party, accumulation of voting power above the 35% Ownership Threshold by any person or group (whether through open-market purchases, tender offers, merger transactions, or otherwise), or change in a majority of the Board of Directors (other than through approved elections or appointments) will continue to constitute a Change of Control under the Credit Agreement and will trigger the related Event of Default and acceleration rights.

Additionally, AHT's Amended and Restated Certificate of Incorporation, which is expected to be filed with the Delaware Secretary of State on the date of the IPO closing, will include customary anti-takeover provisions, including a classified Board of Directors (with directors serving staggered three-year terms), a prohibition on stockholder action by written consent, advance notice requirements for stockholder nominations and proposals, and a supermajority voting requirement for amendments to certain charter provisions. These structural protections, while independent of the Credit Agreement, provide an additional layer of defense against hostile accumulations of voting power that could trigger the Change of Control definition.

B. Permitted Equity Issuance Carve-Out (Section 2 of the Amendment)

1. Issue Addressed

Section 7.06 of the Original Credit Agreement contains a negative covenant restricting the Borrower from issuing any Equity Securities (including common stock, preferred stock, warrants, options, and other convertible securities) without the prior written consent of the Administrative Agent, subject to limited exceptions. The permitted exceptions under the Original Credit Agreement were limited to:

(a) equity securities issued pursuant to employee equity compensation plans that have been approved by the Board of Directors and disclosed to the Administrative Agent in writing, provided that the aggregate number of shares issuable under all such plans does not exceed 5% of the fully diluted outstanding equity of the Borrower; and

(b) equity securities issued as consideration in connection with Permitted Acquisitions, subject to the prior written consent of the Administrative Agent (not to be unreasonably withheld, conditioned, or delayed).

The IPO, which involves the issuance and sale of up to 23,000,000 shares of common stock (including the overallotment option), constitutes an issuance of Equity Securities that fell outside the scope of both existing exceptions. Accordingly, without the Amendment, the Company would have been required to obtain the prior written consent of the Administrative Agent before proceeding with the IPO — an arrangement that was commercially undesirable, as it would have injected uncertainty into the IPO timeline and given the Lender Parties effective veto power over the offering.

2. Amendment — Specific IPO Carve-Out

The Amendment adds a new clause (c) to the permitted equity issuances definition in Section 7.06, covering the following additional categories of permitted issuances:

(i) the issuance and sale of shares of common stock of the Borrower in a Qualified IPO (as defined in Section 1 of the Amendment and described above in Section III.A.2 of this memorandum), including shares sold to the underwriters pursuant to the underwriting agreement entered into in connection with such Qualified IPO; and

(ii) the issuance and sale of additional shares of common stock pursuant to an overallotment option (or "greenshoe" option) granted to the underwriters in connection with a Qualified IPO, provided that the number of shares subject to such overallotment option does not exceed 15% of the number of shares offered in the base offering.

This formulation permits AHT to issue up to 20,000,000 shares of common stock in the base offering, plus up to 3,000,000 additional shares upon exercise of the overallotment option (representing 15% of the 20,000,000-share base offering), without triggering a covenant violation under Section 7.06 or requiring separate Administrative Agent consent. The 15% overallotment limit is consistent with industry-standard underwriting practices and the terms of AHT's proposed underwriting agreement.

In addition, the Amendment includes a further expansion of the existing employee equity compensation plan exception in clause (a) to accommodate the Company's new equity compensation plans adopted in connection with the IPO. Specifically, the Amendment adds express carve-outs for the following:

• The 2024 Equity Incentive Plan, adopted by the Board of Directors on January 15, 2024, under which 10,300,000 shares of common stock have been reserved for issuance. This share reserve represents approximately 10% of the expected post-IPO outstanding shares of approximately 103,000,000 (assuming the full exercise of the overallotment option). The 2024 Equity Incentive Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), restricted stock awards, restricted stock units, stock appreciation rights, and other equity-based and cash-based awards to employees, consultants, and non-employee directors of the Company and its subsidiaries.

• The 2024 Employee Stock Purchase Plan (the "ESPP"), also adopted by the Board of Directors on January 15, 2024, under which 2,060,000 shares of common stock have been reserved for issuance. This share reserve represents approximately 2% of the expected post-IPO outstanding shares. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended.

The aggregate share reserves under both plans (12,360,000 shares, or approximately 12% of post-IPO outstanding shares) exceed the 5% cap on equity compensation plan issuances under the Original Credit Agreement. The Amendment therefore replaces the 5% cap with an express reference to the specific plans and share reserves described above, with a further provision that any increase in the share reserves under either plan (whether through an "evergreen" provision, a Board-approved amendment, or otherwise) in excess of 3% of outstanding shares in any single fiscal year shall require prior written notice to the Administrative Agent (though not consent).

3. Continuing Restrictions

Any issuance of Equity Securities by the Company that falls outside the scope of a Qualified IPO, the overallotment option, or the approved equity compensation plans described above continues to require the prior written consent of the Administrative Agent. This restriction is particularly relevant in the context of potential future secondary offerings, follow-on offerings, or at-the-market ("ATM") offering programs that AHT may consider after it becomes a public company. Any such future equity issuance will need to be assessed for compliance with Section 7.06 as amended, and may require a further amendment to the Credit Agreement or a consent letter from the Administrative Agent.

We recommend that the Calderwood & Harkness team advise AHT to consult with counsel in advance of any future equity capital markets transaction to ensure compliance with the Credit Agreement.

C. Updated Mandatory Prepayment Provisions (Section 3 of the Amendment)

1. Prior Provisions

Section 2.11 of the Original Credit Agreement sets forth the circumstances under which the Borrower is required to make mandatory prepayments of outstanding revolving loans. Under the Original Credit Agreement, mandatory prepayments were required from the following sources:

(a) Asset Disposition Proceeds: 100% of Net Cash Proceeds from any Asset Disposition (or series of related Asset Dispositions) in which the aggregate consideration exceeds $10,000,000, subject to a reinvestment right permitting the Borrower to reinvest such proceeds in productive assets of the business within 365 days of receipt (with an additional 180-day extension if the Borrower has entered into a binding commitment to reinvest within the initial 365-day period);

(b) Debt Issuance Proceeds: 100% of Net Cash Proceeds from any incurrence of Indebtedness (other than Indebtedness constituting Permitted Refinancing Indebtedness or Indebtedness otherwise expressly permitted under the Credit Agreement); and

(c) Excess Cash Flow Sweep: 50% of Excess Cash Flow (as defined in the Credit Agreement) for any fiscal year in which the Total Net Leverage Ratio as of the last day of such fiscal year exceeds 2.50 to 1.00. The Excess Cash Flow sweep steps down to 25% when the Total Net Leverage Ratio is between 2.00x and 2.50x and is eliminated entirely when the Total Net Leverage Ratio is at or below 2.00x.

2. Amendment — IPO Proceeds Treatment

The Amendment addresses the treatment of IPO proceeds under the mandatory prepayment provisions in several respects.

First, the Amendment provides that net cash proceeds received by the Borrower from a Qualified IPO are not subject to the mandatory prepayment obligation under clause (b) of Section 2.11. This clarification, while arguably unnecessary (given that equity issuance proceeds do not constitute "Indebtedness" and therefore should not be captured by a mandatory prepayment trigger tied to debt issuance proceeds), was included at the request of AHT's management team to eliminate any ambiguity. The Amendment affirmatively states that proceeds from any issuance of Equity Securities, including proceeds from a Qualified IPO, do not constitute "Net Cash Proceeds" of an "incurrence of Indebtedness" for purposes of Section 2.11(b) and are therefore not subject to mandatory prepayment.

Second, and separately from the mandatory prepayment provisions, AHT has voluntarily committed, as disclosed in the "Use of Proceeds" section of the prospectus included in the Registration Statement on Form S-1, to use a portion of the net proceeds from the IPO to repay the approximately $65,000,000 currently outstanding under the revolving credit facility. It is important to note that this repayment is entirely voluntary in nature; it is not a mandatory prepayment under the Credit Agreement, and the Company could, in theory, choose not to make such repayment (although it has publicly committed to doing so in its SEC filings). The voluntary nature of the repayment preserves the Company's flexibility and avoids any implication that the Credit Agreement compels the use of equity proceeds for debt repayment.

Third, the Amendment expressly confirms that voluntary prepayments of outstanding revolving loans from proceeds of a Qualified IPO may be made at any time without payment of any prepayment penalty, premium, make-whole amount, or similar charge. While the Original Credit Agreement already permitted voluntary prepayment of revolving loans without penalty (subject to customary SOFR breakage costs for prepayments made on dates other than the last day of an interest period), the Amendment includes this express confirmation as a belt-and-suspenders measure to ensure that no dispute can arise regarding the terms of the IPO-related facility repayment.

Fourth, with respect to the mechanics of the repayment, per diem interest calculations and the exact payoff amount will be confirmed through a customary payoff letter to be issued by Keypoint National Bank, N.A. in its capacity as Administrative Agent in advance of the anticipated closing date of the IPO. We currently anticipate that the closing of the IPO will occur in approximately mid-February 2024, and we have requested that Keypoint prepare and deliver the payoff letter no later than two business days prior to the anticipated closing date. The payoff letter will specify the outstanding principal balance, accrued and unpaid interest (calculated through the expected repayment date), any applicable SOFR breakage costs, any other amounts due and owing under the Credit Agreement, and wire transfer instructions for remittance.

3. Lien Release Mechanics

Upon repayment of the approximately $65,000,000 outstanding balance, the security interest and liens granted under the Security Agreement in favor of the Administrative Agent and the Lender Parties will remain in full force and effect. The Facility is not being terminated as part of the IPO; rather, the revolving commitments will continue to be available for future borrowings by the Company on the terms set forth in the Credit Agreement as amended.

However, the Amendment includes a clarifying provision regarding lien release mechanics that will apply in the event the Company determines at some future date to terminate the Facility in its entirety. Specifically, the Amendment provides that if (i) the revolving commitments under the Credit Agreement are subsequently terminated in full by the Borrower and (ii) all Obligations (as defined in the Credit Agreement, including all outstanding principal, accrued interest, fees, expenses, and other amounts) are indefeasibly paid in full in cash, then the Administrative Agent shall, at the Borrower's sole cost and expense, promptly (and in any event within ten (10) business days following receipt of a written request from the Borrower) execute and deliver to the Borrower (or its designee):

(a) UCC-3 termination statements with respect to all UCC-1 financing statements filed in connection with the Security Agreement;

(b) releases and terminations of any intellectual property security agreements or other IP-related lien filings made with the United States Patent and Trademark Office or the United States Copyright Office;

(c) such other lien release, discharge, or termination documents as the Borrower may reasonably request to evidence the termination of the Administrative Agent's security interest in the Collateral; and

(d) the return of any stock certificates, promissory notes, or other instruments or documents held by the Administrative Agent as Collateral.

This lien release provision is a standard belt-and-suspenders addition that provides a clear contractual mechanism for unwinding the security arrangements in the event the Facility is terminated post-IPO.

D. Conforming Updates to Events of Default (Section 4 of the Amendment)

1. Change of Control Event of Default

Section 8.01(j) of the Original Credit Agreement provides that the occurrence of a "Change of Control" (as defined in the Credit Agreement) constitutes an Event of Default, entitling the Administrative Agent (at the direction of the Required Lenders) to declare all outstanding Obligations immediately due and payable and to terminate the revolving commitments. This is a standard "hair trigger" provision in credit agreements of this type — the occurrence of a Change of Control automatically gives rise to acceleration rights without any notice or cure period.

Because the Change of Control definition has been amended as described in Section III.A above to include the Qualified IPO carve-out, the consummation of AHT's IPO will not constitute a Change of Control under the Credit Agreement and therefore will not trigger the Event of Default under Section 8.01(j). No separate or additional modification to Section 8.01(j) itself was required; the conforming effect is achieved through the definitional amendment.

No other changes to the Events of Default provision were requested by any party or made in connection with the Amendment. All other Events of Default set forth in Section 8.01 of the Original Credit Agreement — including Events of Default arising from payment defaults, covenant breaches, misrepresentations, cross-defaults, insolvency events, judgment defaults, ERISA events, and invalidity of loan documents — remain in full force and effect without modification.

2. Cross-Default and Material Adverse Effect

The Amendment does not modify the cross-default provisions set forth in Section 8.01(e) of the Original Credit Agreement, which provide that a default under any other Indebtedness of the Borrower or its Subsidiaries in a principal amount exceeding $5,000,000 constitutes an Event of Default under the Credit Agreement. AHT has confirmed that no such cross-default exists or is reasonably expected to arise in connection with the IPO.

Similarly, the Amendment does not modify the "Material Adverse Effect" definition set forth in Section 1.01 of the Original Credit Agreement, which is used in various representations, covenants, and default provisions throughout the agreement. However, the Amendment includes an express acknowledgment by the Lender Parties that the following events and circumstances, taken individually or in the aggregate, shall not be deemed to constitute or give rise to a "Material Adverse Effect" for purposes of the Credit Agreement:

(a) AHT's execution and delivery of the Underwriting Agreement and related IPO transaction documents (including the Registration Statement, the prospectus, the lock-up agreements, and the listing application);

(b) the issuance and sale of shares of common stock in the IPO (including overallotment shares);

(d) the adoption and filing of AHT's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws in connection with the IPO;

(e) changes in AHT's corporate governance structure, including the classification of the Board of Directors, the appointment of independent directors, and the establishment of Board committees (audit, compensation, and nominating and corporate governance) required for NYSE listing; and

(f) the Company's transition to a public reporting company subject to the periodic reporting and disclosure requirements of the Exchange Act and the rules and regulations of the SEC.

This acknowledgment provides additional certainty that the operational and structural changes inherent in an IPO will not be used as a basis for claiming a Material Adverse Effect under the Credit Agreement.

E. Representations and Warranties; Conditions Precedent to Amendment Effectiveness

1. Bring-Down of Representations

As a condition precedent to the effectiveness of the Amendment, AHT was required to deliver to the Administrative Agent a certificate signed by an authorized officer of the Company certifying that all representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects as of January 18, 2024 (the date of the Amendment), with the same effect as though made on such date. This bring-down requirement is subject to the customary exception for representations and warranties that by their terms speak as of a specific earlier date (e.g., representations regarding financial statements as of the most recent fiscal year-end), which are required to be true and correct in all material respects as of such earlier date. The Company delivered the required officer's certificate on January 18, 2024, signed by David Halderman in his capacity as Chief Financial Officer.

2. No Default

AHT was further required to certify, as an additional condition to effectiveness, that no Default or Event of Default (each as defined in the Credit Agreement) has occurred and is continuing as of the date of the Amendment, or would result from the execution, delivery, and performance of the Amendment. The officer's certificate delivered on January 18, 2024 included this certification. Based on our review of the Company's compliance reports and our discussions with AHT's management team, we have no reason to believe that any Default or Event of Default exists as of the date hereof.

3. Board Authorization

AHT has represented in the Amendment that its Board of Directors (acting through the Finance and Audit Committee, an authorized committee thereof) has duly authorized the execution, delivery, and performance of the Amendment, and that the officer executing the Amendment on behalf of the Company has been duly authorized to do so. This authorization is consistent with, and was effected as part of, the broader set of Board resolutions adopted on January 15, 2024 authorizing the IPO and all related actions, including the filing of the Registration Statement, the execution of the Underwriting Agreement, and the adoption of the 2024 Equity Incentive Plan and 2024 Employee Stock Purchase Plan. We have reviewed copies of the relevant Board resolutions and are satisfied that proper corporate authorization has been obtained.

4. Delivery of Amendment Documents

The Amendment was duly executed and delivered by all three parties — AHT (as Borrower), Keypoint National Bank, N.A. (as Administrative Agent), and Stonemill Capital Bank (as Lender) — on January 18, 2024. The Amendment became effective upon execution and delivery by all parties. Executed copies of the Amendment are maintained in the Calderwood & Harkness document management system and in the transaction closing binder.

IV. Impact on IPO Timeline and Closing Mechanics

The execution date of the Amendment (January 18, 2024) was selected to ensure that the Amendment was fully effective before two critical milestones in the IPO process: (i) the public filing of the Registration Statement on Form S-1 with the SEC on January 22, 2024, and (ii) the commencement of the IPO roadshow on January 29, 2024. By securing the Amendment in advance of these events, the Company was able to disclose the Amendment as a completed action in the Registration Statement, rather than describing it as a pending or anticipated modification. This approach eliminates any potential investor uncertainty regarding the status of the Company's credit facility and demonstrates to potential investors and the SEC staff that the Company has proactively addressed the credit agreement issues arising from the IPO.

The First Amendment to Credit Agreement is disclosed as a material contract in the Registration Statement and is filed as Exhibit 10.14 to the Form S-1. The description of the Credit Agreement in the "Description of Indebtedness" section of the prospectus has been updated to reflect the amendments effected by the Amendment, including the Qualified IPO carve-out, the permitted equity issuance exception, and the clarification of mandatory prepayment treatment.

At the closing of the IPO (currently expected to occur in approximately mid-February 2024, subject to SEC review of the Registration Statement and market conditions), AHT will use a portion of the net proceeds from the offering to repay the approximately $65,000,000 outstanding revolving balance under the Credit Agreement. The mechanics of this repayment will be governed by the payoff letter to be issued by Keypoint National Bank, N.A. in advance of the closing date, which will specify the following:

• The exact principal balance outstanding as of the anticipated repayment date;

• Accrued and unpaid interest through the repayment date, calculated on a per diem basis;

• Any applicable SOFR breakage costs (if the repayment does not coincide with the last day of the applicable interest period);

• Any outstanding fees, expenses, or other amounts due and owing under the Credit Agreement or related loan documents; and

• Wire transfer instructions for remittance of the payoff amount to the Administrative Agent.

We have coordinated with Rachel Moynihan (General Counsel, AHT) and David Halderman (CFO, AHT) regarding the timeline for obtaining and executing the payoff letter, and we will ensure that the payoff letter is received and reviewed by the Calderwood & Harkness team no later than two business days prior to the anticipated closing date.

For context, the anticipated net proceeds to the Company from the base offering (after deducting the underwriting discount of 6.0%, or $24,000,000 based on $400,000,000 in gross proceeds at the midpoint of the anticipated price range, and estimated offering expenses of approximately $4,200,000) are expected to be approximately $371,800,000. This amount is more than sufficient to cover the revolving facility repayment and to fund the Company's other disclosed uses of proceeds, which include:

• Repayment of the revolving credit facility: approximately $65,000,000;

• Product development and R&D investment (including expansion of the Arbor Clinical Analytics Platform and development of next-generation AI/ML-powered diagnostic tools): approximately $120,000,000;

• Potential acquisitions and strategic investments (including bolt-on acquisitions in the healthcare IT and data analytics sectors): approximately $100,000,000; and

• General corporate purposes and working capital: the balance of net proceeds (approximately $86,800,000).

If the overallotment option is exercised in full, additional net proceeds of approximately $55,770,000 (based on 3,000,000 overallotment shares at $19.00 per share, less the 6.0% underwriting discount) would be available for general corporate purposes.

V. Items Requiring Continued Attention

The following action items remain outstanding and will require attention from the Calderwood & Harkness deal team in the coming weeks:

1. Payoff Letter. Obtain the final payoff letter from Keypoint National Bank, N.A. with wire instructions no later than two (2) business days prior to the anticipated closing date of the IPO. Coordinate with Rachel Moynihan (General Counsel, AHT) and David Halderman (CFO, AHT) regarding execution and delivery of the payoff letter and arrangement of the wire transfer.

2. Closing Checklist. Confirm that the repayment of the revolving balance under the Credit Agreement is reflected on the IPO closing checklist as a condition and/or deliverable. Ensure that the repayment is sequenced appropriately in the closing funds flow memorandum.

3. Financial Covenant Monitoring. Continue to monitor AHT's compliance with the financial covenants under the Credit Agreement (Total Net Leverage Ratio not to exceed 3.50x; Fixed Charge Coverage Ratio not less than 1.25x) through the closing date and in the first post-IPO quarterly testing period (the fiscal quarter ending March 31, 2024). While the Company is currently in a strong compliance position, the IPO-related expenses and any changes in the Company's cash position should be modeled to confirm ongoing compliance.

4. Tax Coordination. Coordinate with Sylvia Hartwell of the Calderwood & Harkness Tax Group regarding the tax treatment of interest payments made on the revolving credit facility and the repayment of the outstanding balance from IPO proceeds. A separate C&H Tax Memorandum titled "Use of Proceeds — Tax Treatment of Credit Facility Repayment" is being prepared by the Tax Group and will be circulated under separate cover.

5. Registration Statement Filings. Confirm that the executed First Amendment has been properly filed as Exhibit 10.14 to the Registration Statement on Form S-1. Review the "Description of Indebtedness" section and all other references to the Credit Agreement in the prospectus to ensure consistency with the terms of the Credit Agreement as amended by the Amendment.

6. Underwriters' Counsel Review. Confirm that Meridian Hale & Quivorn LLP (counsel to the underwriters) has completed its review of the Amendment for purposes of its closing deliverables, including the underwriters' counsel legal opinion and the 10b-5 negative assurance letter. Follow up with the Meridian Hale team to confirm that no issues or comments have been raised with respect to the Amendment.

VI. Conclusion

The First Amendment to Credit Agreement dated January 18, 2024, among Arbor Health Technologies Inc., Keypoint National Bank, N.A., and Stonemill Capital Bank, successfully addresses the principal credit agreement issues arising from AHT's proposed initial public offering of common stock on the New York Stock Exchange.

The key modifications effected by the Amendment — specifically, the "Qualified IPO" carve-out from the Change of Control definition, the permitted equity issuance exception for IPO shares, overallotment shares, and equity compensation plan shares, the clarification that equity proceeds are not subject to mandatory prepayment and that voluntary prepayment from IPO proceeds may be made without penalty, and the conforming updates to the Events of Default provisions — collectively ensure that AHT can proceed with the IPO and the related issuance and sale of common stock without breaching the Credit Agreement or triggering an Event of Default or acceleration of the outstanding indebtedness.

The financial covenants under the Credit Agreement remain unchanged, and AHT is in satisfactory compliance with both the Total Net Leverage Ratio covenant and the Fixed Charge Coverage Ratio covenant based on the Company's audited FY2023 financial results.

Following the closing of the IPO and the anticipated repayment of the approximately $65,000,000 outstanding balance, the $150,000,000 revolving credit facility will remain available to the Company as a post-IPO liquidity source through its March 15, 2027 maturity date. The Facility provides AHT with meaningful financial flexibility as it transitions to life as a public company and pursues the growth initiatives described in the Registration Statement.

A copy of the executed First Amendment is maintained in the Calderwood & Harkness document management system and in the transaction closing binder (Binder Tab 14). Please direct any questions regarding this memorandum or the Amendment to the undersigned.

Appendix A — Summary Table of Amendment Provisions

Appendix B — Key Parties and Contact Information

Distribution: Theodore Langston, Vivienne St. Claire, Claire Dempsey, Sylvia Hartwell (Calderwood & Harkness internal only)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — NOT FOR EXTERNAL DISTRIBUTION

This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP in connection with its representation of Arbor Health Technologies Inc. This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for use by the persons to whom it is addressed and should not be disclosed, copied, or distributed to any other person or entity without the prior written consent of the undersigned.

Amendment Section	Original Provision	Amended Provision	Rationale
Section 1 — Change of Control	"Change of Control" includes any person or group acquiring beneficial ownership of more than 35% of outstanding Voting Stock; no exception for IPO transactions	Adds express exclusion for any "Qualified IPO" (defined as an underwritten IPO on a national securities exchange resulting in gross proceeds of at least $200,000,000); carve-out applies provided no single new stockholder or group acquires 35% or more in the offering	Prevents the IPO from triggering a Change of Control and the resulting Event of Default and acceleration rights under the Credit Agreement
Section 2 — Permitted Equity Issuances	Equity issuances restricted; require Administrative Agent consent except for limited carve-outs for employee equity compensation plans (up to 5% of fully diluted shares) and acquisition consideration (with Agent consent)	Adds carve-out for (i) shares issued in a Qualified IPO (base offering), (ii) shares issued pursuant to underwriter overallotment option (up to 15% of base offering), and (iii) shares issued under the 2024 Equity Incentive Plan (10,300,000 shares) and 2024 ESPP (2,060,000 shares)	Permits IPO share issuance and post-IPO equity compensation without prior Administrative Agent consent
Section 3 — Mandatory Prepayment	Mandatory prepayment required from 100% of net cash proceeds of debt issuances, 100% of asset disposition proceeds (above $10M threshold, subject to reinvestment), and 50% of Excess Cash Flow (when leverage exceeds 2.50x)	Clarifies that equity issuance proceeds (including Qualified IPO proceeds) are not subject to any mandatory prepayment trigger; confirms voluntary prepayment from IPO proceeds may be made without penalty or premium	Ensures IPO proceeds are freely deployable for disclosed uses of proceeds; facilitates voluntary facility repayment at closing
Section 4 — Events of Default	Occurrence of a Change of Control constitutes an Event of Default with immediate acceleration rights	Conforms to the amended Change of Control definition; acknowledges that IPO-related events do not constitute a Material Adverse Effect	Prevents the IPO from triggering an Event of Default under the Credit Agreement
Party	Role	Key Contact(s)	Address
Arbor Health Technologies Inc.	Borrower	Rachel Moynihan, General Counsel; David Halderman, Chief Financial Officer	275 Kendall Avenue, Suite 1400, Cambridge, MA 02142
Keypoint National Bank, N.A.	Administrative Agent	Margaret Chen, Senior Vice President, Leveraged Finance Group	200 Public Square, Cleveland, OH 44114
Stonemill Capital Bank	Lender / Syndicate Member	Jonathan Frick, Managing Director, Healthcare Lending	140 Broadway, New York, NY 10005
Calderwood & Harkness LLP	Borrower's Counsel	Theodore Langston, Partner; Eric Johannsen, Associate	125 Broad Street, New York, NY 10004
Meridian Hale & Quivorn LLP	Underwriters' Counsel	Katherine Reeves, Partner	60 Ashbury Asset Advisors, Boston, MA 02109

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 125 Broad Street, New York, NY 10004
MEMORANDUM
TO: Theodore Langston, Vivienne St. Claire
FROM: Eric Johannsen
DATE: January 22, 2024
RE: Arbor Health Technologies Inc. — Summary of First Amendment to Credit Agreement (IPO-Related Modifications)
MATTER NO.: 1010-00002
CLIENT: Arbor Health Technologies Inc.
I. Executive Summary
The purpose of this memorandum is to summarize the key modifications to Arbor Health Technologies Inc.'s ("AHT" or the "Company") existing senior secured revolving credit facility effected by that certain First Amendment to Credit Agreement, dated as of January 18, 2024 (the "Amendment"), among Arbor Health Technologies Inc., as Borrower, Keypoint National Bank, N.A., as Administrative Agent (the "Administrative Agent" or "Keypoint"), and Stonemill Capital Bank, as Lender ("Stonemill" and, together with Keypoint, the "Lender Parties"). The Amendment was negotiated and prepared by Calderwood & Harkness LLP on behalf of AHT in connection with the Company's proposed initial public offering (the "IPO") of shares of its common stock, par value $0.001 per share, on the New York Stock Exchange (the "NYSE").
The Amendment addresses four principal areas of the Credit Agreement that required modification in order to accommodate the IPO and the related transactions contemplated thereby:
(1) a revised "Change of Control" definition that expressly excludes a "Qualified IPO" from triggering an event of default or acceleration;
(2) a new permitted equity issuance carve-out that allows the Company to issue shares in the IPO (including overallotment shares) and under its new equity compensation plans without obtaining prior Administrative Agent consent;
(3) updated mandatory prepayment provisions that clarify the treatment of equity issuance proceeds and confirm that voluntary prepayment of the facility from IPO proceeds may be made without penalty or premium; and
(4) conforming updates to the events of default provisions to ensure consistency with the amended Change of Control definition.
As disclosed in the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the "SEC"), AHT intends to use a portion of the net proceeds from the IPO to repay the approximately $65,000,000 currently drawn on the revolving credit facility at or promptly following the closing of the offering. The facility itself will remain in place following the IPO as a source of ongoing liquidity for the Company. The maturity date of March 15, 2027 is unchanged by the Amendment, and the revolving commitments will remain available for future borrowings following repayment of the current outstanding balance.
This memorandum is intended for internal use by the Calderwood & Harkness deal team and should not be distributed externally without the prior approval of the undersigned.
II. Background — Existing Credit Facility
A. Original Credit Agreement
The Credit Agreement was originally entered into on March 15, 2022 (the "Original Credit Agreement"), among AHT, as Borrower, Keypoint National Bank, N.A., as Administrative Agent, and Stonemill Capital Bank, as Lender. The Original Credit Agreement provides for a $150,000,000 senior secured revolving credit facility (the "Facility"). Prior to the Amendment, the Original Credit Agreement had not been previously amended, restated, supplemented, or otherwise modified.
The principal terms of the Original Credit Agreement are summarized below:
Borrower: Arbor Health Technologies Inc., a Delaware corporation headquartered at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142 (Federal EIN: 47-3891205).
Administrative Agent: Keypoint National Bank, N.A., a national banking association with its principal office at 200 Public Square, Cleveland, Ohio 44114.
Lender / Syndicate Member: Stonemill Capital Bank, a New York state-chartered bank with its principal office at 140 Broadway, New York, New York 10005.
Facility Size: $150,000,000 senior secured revolving credit facility, with a letter of credit sublimit of $25,000,000 and a swingline sublimit of $15,000,000.
Maturity Date: March 15, 2027.
Interest Rate: Secured Overnight Financing Rate ("SOFR") plus an applicable margin of 200 basis points (2.00%), with a SOFR floor of 0.00%. Interest is calculated on an actual/360 day-count basis and payable quarterly in arrears.
Commitment Fee: 0.375% per annum on the unused portion of the revolving commitments, payable quarterly in arrears.
Security: The obligations under the Credit Agreement are secured by a first-priority lien on substantially all assets of AHT, including all accounts receivable, inventory, equipment, intellectual property, general intangibles, and proceeds thereof, pursuant to that certain Security Agreement, dated as of March 15, 2022, between AHT and Keypoint National Bank, N.A., as Administrative Agent and Collateral Agent. UCC-1 financing statements were filed with the Delaware Secretary of State and the Massachusetts Secretary of the Commonwealth.
Governing Law: State of New York.
The Original Credit Agreement contains customary representations and warranties, affirmative and negative covenants (including limitations on indebtedness, liens, investments, restricted payments, asset dispositions, and equity issuances), and events of default, all of which are standard for a senior secured revolving credit facility of this type and size for a company at AHT's stage of development.
B. Current Outstanding Balance
As of the date of this memorandum, the outstanding principal balance drawn on the Facility is approximately $65,000,000. The Company has utilized the Facility primarily for working capital purposes and to fund certain capital expenditures related to the expansion of its clinical data analytics platform and its SaaS-based healthcare IT solutions.
AHT has disclosed in its Registration Statement on Form S-1 (SEC File No. 333-276841), initially filed with the SEC on January 22, 2024, that it intends to use a portion of the net proceeds from the IPO to repay the outstanding balance on the Facility. Specifically, the "Use of Proceeds" section of the prospectus included in the Registration Statement states that the Company intends to repay approximately $65,000,000 of indebtedness outstanding under its revolving credit facility from IPO net proceeds at or promptly following the closing of the offering. This repayment is voluntary in nature and is not mandated by the terms of the Credit Agreement (as amended by the Amendment).
Upon repayment of the outstanding balance, the revolving commitments of $150,000,000 will remain available for future borrowings by the Company, subject to the terms and conditions of the Credit Agreement as amended by the Amendment. The Company anticipates that it will continue to use the Facility as a source of liquidity for working capital and general corporate purposes in the post-IPO operating environment.
C. Financial Covenants (Unchanged by Amendment)
The Original Credit Agreement contains two financial maintenance covenants, each tested on a quarterly basis as of the last day of each fiscal quarter:
Total Net Leverage Ratio: The Company is required to maintain a Total Net Leverage Ratio (defined as the ratio of Consolidated Total Funded Indebtedness minus Unrestricted Cash and Cash Equivalents (up to $50,000,000) to Consolidated Adjusted EBITDA for the trailing four-quarter period) of not greater than 3.50 to 1.00, tested as of the end of each fiscal quarter.
Fixed Charge Coverage Ratio: The Company is required to maintain a Fixed Charge Coverage Ratio (defined as the ratio of Consolidated Adjusted EBITDA minus Unfinanced Capital Expenditures to Consolidated Fixed Charges for the trailing four-quarter period) of not less than 1.25 to 1.00, tested as of the end of each fiscal quarter.
Neither of these financial covenants was modified by the Amendment. Both covenants remain in full force and effect following the Amendment. Based on AHT's audited financial statements for the fiscal year ended December 31, 2023, which reflect revenue of $612.4 million, Adjusted EBITDA of $138.7 million, and net income of $41.3 million, the Company's current compliance position under both financial covenants is satisfactory. The Total Net Leverage Ratio as of December 31, 2023 was approximately 0.11x (well below the 3.50x covenant threshold), reflecting the Company's moderate leverage profile. The Fixed Charge Coverage Ratio as of December 31, 2023 was approximately 4.87x (well above the 1.25x covenant threshold). Following the repayment of the outstanding balance from IPO proceeds, we anticipate that the Company's leverage metrics will improve further.
III. Summary of Key Amendments
Set forth below is a detailed summary of each of the four principal modifications effected by the Amendment.
A. Amended Change of Control Definition (Section 1 of the Amendment)
1. Prior Definition
Under the Original Credit Agreement, a "Change of Control" was defined to include any transaction or series of related transactions resulting in any of the following:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the outstanding Voting Stock of the Borrower (the "Ownership Threshold");
(b) the Borrower ceasing to own, directly or indirectly, 100% of the Equity Interests in each of its Material Subsidiaries (other than director qualifying shares or shares required to be held by foreign nationals under applicable law); or
(c) a change in a majority of the members of the Board of Directors of the Borrower, other than changes resulting from elections or appointments approved by a majority of the incumbent members of the Board of Directors or nominated by a nominating committee composed of incumbent directors (the "Board Composition Trigger").
Under this prior definition, the IPO itself presented a significant risk of triggering a Change of Control event under clause (a). The Company's proposed offering of 20,000,000 shares of common stock (and up to an additional 3,000,000 shares pursuant to the underwriters' overallotment option) would result in a substantial dilution of existing pre-IPO stockholders and would introduce a new, dispersed class of public stockholders. While no single public stockholder or group of stockholders was expected to acquire beneficial ownership of 35% or more of the outstanding Voting Stock as a result of the offering, the language of clause (a) — particularly its broad reference to any "person" or "group" — created ambiguity as to whether the aggregate ownership changes resulting from the IPO could be construed as meeting the Ownership Threshold. Moreover, the structure of the offering — with shares being allocated to numerous institutional and retail investors through a syndicate of underwriters led by Goldman Stanley & Co. LLC and Ridgeway Financial Rivers Securities Inc. as joint book-running managers — introduced interpretive risk regarding the treatment of shares held in "street name" and the potential aggregation of holdings.
It was therefore essential to negotiate an express carve-out for the IPO from the Change of Control definition in order to eliminate any risk of an inadvertent default under the Credit Agreement.
2. Amendment — IPO Carve-Out
The Amendment revises the Change of Control definition by adding a new proviso to clause (a) that expressly excludes from the definition of "Change of Control" any "Qualified IPO." The term "Qualified IPO" is defined in the Amendment as follows:
"Qualified IPO" means an underwritten initial public offering of shares of common stock (or equivalent equity securities) of the Borrower on a national securities exchange (including, without limitation, the New York Stock Exchange or the Nasdaq Stock Market) pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, resulting in aggregate gross proceeds to the Borrower of at least $200,000,000 (before deducting underwriting discounts, commissions, and offering expenses).
AHT's proposed IPO — which targets aggregate gross proceeds to the Company of approximately $400,000,000 (based on a base offering of 20,000,000 shares at an anticipated price range of $18.00 to $20.00 per share), to be listed on the NYSE under the ticker symbol "ARHT" — clearly satisfies each element of the Qualified IPO definition. Even at the low end of the anticipated price range, gross proceeds from the base offering alone would be $360,000,000, substantially in excess of the $200,000,000 minimum threshold.
The carve-out further provides that no Change of Control shall be deemed to have occurred solely as a result of the dilution of pre-IPO stockholders' percentage ownership of outstanding Voting Stock arising from the issuance and sale of shares of common stock in a Qualified IPO, provided that no single new stockholder (or "group" of stockholders acting in concert within the meaning of the Exchange Act) acquires beneficial ownership of 35% or more of the outstanding Voting Stock as part of the offering. This proviso ensures that the carve-out does not inadvertently shield a concentrated acquisition of control effected through the mechanism of an IPO.
Based on the expected post-IPO capitalization of the Company, the two largest stockholders following the offering will be:
•  Brindoval Trelvon Partners Fund IV, L.P.: approximately 27.18% of outstanding Voting Stock (assuming the full exercise of the overallotment option by the underwriters), reduced from approximately 38.7% on a pre-IPO basis; and
•  Ridgeline Growth Equity Fund III, LLC: approximately 15.53% of outstanding Voting Stock (assuming the full exercise of the overallotment option), reduced from approximately 22.1% on a pre-IPO basis.
Neither of these pre-IPO stockholders will hold 35% or more of the outstanding Voting Stock following the IPO, and no new stockholder (whether institutional or retail) is expected to acquire a position at or above the 35% threshold in the offering. Accordingly, the proviso to the carve-out is satisfied.
3. Ongoing Applicability
It is important to note that the Change of Control definition, as amended, continues to apply in full force to all post-IPO transactions and events. Any future acquisition of AHT by a third party, accumulation of voting power above the 35% Ownership Threshold by any person or group (whether through open-market purchases, tender offers, merger transactions, or otherwise), or change in a majority of the Board of Directors (other than through approved elections or appointments) will continue to constitute a Change of Control under the Credit Agreement and will trigger the related Event of Default and acceleration rights.
Additionally, AHT's Amended and Restated Certificate of Incorporation, which is expected to be filed with the Delaware Secretary of State on the date of the IPO closing, will include customary anti-takeover provisions, including a classified Board of Directors (with directors serving staggered three-year terms), a prohibition on stockholder action by written consent, advance notice requirements for stockholder nominations and proposals, and a supermajority voting requirement for amendments to certain charter provisions. These structural protections, while independent of the Credit Agreement, provide an additional layer of defense against hostile accumulations of voting power that could trigger the Change of Control definition.
B. Permitted Equity Issuance Carve-Out (Section 2 of the Amendment)
1. Issue Addressed
Section 7.06 of the Original Credit Agreement contains a negative covenant restricting the Borrower from issuing any Equity Securities (including common stock, preferred stock, warrants, options, and other convertible securities) without the prior written consent of the Administrative Agent, subject to limited exceptions. The permitted exceptions under the Original Credit Agreement were limited to:
(a) equity securities issued pursuant to employee equity compensation plans that have been approved by the Board of Directors and disclosed to the Administrative Agent in writing, provided that the aggregate number of shares issuable under all such plans does not exceed 5% of the fully diluted outstanding equity of the Borrower; and
(b) equity securities issued as consideration in connection with Permitted Acquisitions, subject to the prior written consent of the Administrative Agent (not to be unreasonably withheld, conditioned, or delayed).
The IPO, which involves the issuance and sale of up to 23,000,000 shares of common stock (including the overallotment option), constitutes an issuance of Equity Securities that fell outside the scope of both existing exceptions. Accordingly, without the Amendment, the Company would have been required to obtain the prior written consent of the Administrative Agent before proceeding with the IPO — an arrangement that was commercially undesirable, as it would have injected uncertainty into the IPO timeline and given the Lender Parties effective veto power over the offering.
2. Amendment — Specific IPO Carve-Out
The Amendment adds a new clause (c) to the permitted equity issuances definition in Section 7.06, covering the following additional categories of permitted issuances:
(i) the issuance and sale of shares of common stock of the Borrower in a Qualified IPO (as defined in Section 1 of the Amendment and described above in Section III.A.2 of this memorandum), including shares sold to the underwriters pursuant to the underwriting agreement entered into in connection with such Qualified IPO; and
(ii) the issuance and sale of additional shares of common stock pursuant to an overallotment option (or "greenshoe" option) granted to the underwriters in connection with a Qualified IPO, provided that the number of shares subject to such overallotment option does not exceed 15% of the number of shares offered in the base offering.
This formulation permits AHT to issue up to 20,000,000 shares of common stock in the base offering, plus up to 3,000,000 additional shares upon exercise of the overallotment option (representing 15% of the 20,000,000-share base offering), without triggering a covenant violation under Section 7.06 or requiring separate Administrative Agent consent. The 15% overallotment limit is consistent with industry-standard underwriting practices and the terms of AHT's proposed underwriting agreement.
In addition, the Amendment includes a further expansion of the existing employee equity compensation plan exception in clause (a) to accommodate the Company's new equity compensation plans adopted in connection with the IPO. Specifically, the Amendment adds express carve-outs for the following:
•  The 2024 Equity Incentive Plan, adopted by the Board of Directors on January 15, 2024, under which 10,300,000 shares of common stock have been reserved for issuance. This share reserve represents approximately 10% of the expected post-IPO outstanding shares of approximately 103,000,000 (assuming the full exercise of the overallotment option). The 2024 Equity Incentive Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), restricted stock awards, restricted stock units, stock appreciation rights, and other equity-based and cash-based awards to employees, consultants, and non-employee directors of the Company and its subsidiaries.
•  The 2024 Employee Stock Purchase Plan (the "ESPP"), also adopted by the Board of Directors on January 15, 2024, under which 2,060,000 shares of common stock have been reserved for issuance. This share reserve represents approximately 2% of the expected post-IPO outstanding shares. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended.
The aggregate share reserves under both plans (12,360,000 shares, or approximately 12% of post-IPO outstanding shares) exceed the 5% cap on equity compensation plan issuances under the Original Credit Agreement. The Amendment therefore replaces the 5% cap with an express reference to the specific plans and share reserves described above, with a further provision that any increase in the share reserves under either plan (whether through an "evergreen" provision, a Board-approved amendment, or otherwise) in excess of 3% of outstanding shares in any single fiscal year shall require prior written notice to the Administrative Agent (though not consent).
3. Continuing Restrictions
Any issuance of Equity Securities by the Company that falls outside the scope of a Qualified IPO, the overallotment option, or the approved equity compensation plans described above continues to require the prior written consent of the Administrative Agent. This restriction is particularly relevant in the context of potential future secondary offerings, follow-on offerings, or at-the-market ("ATM") offering programs that AHT may consider after it becomes a public company. Any such future equity issuance will need to be assessed for compliance with Section 7.06 as amended, and may require a further amendment to the Credit Agreement or a consent letter from the Administrative Agent.
We recommend that the Calderwood & Harkness team advise AHT to consult with counsel in advance of any future equity capital markets transaction to ensure compliance with the Credit Agreement.
C. Updated Mandatory Prepayment Provisions (Section 3 of the Amendment)
1. Prior Provisions
Section 2.11 of the Original Credit Agreement sets forth the circumstances under which the Borrower is required to make mandatory prepayments of outstanding revolving loans. Under the Original Credit Agreement, mandatory prepayments were required from the following sources:
(a) Asset Disposition Proceeds: 100% of Net Cash Proceeds from any Asset Disposition (or series of related Asset Dispositions) in which the aggregate consideration exceeds $10,000,000, subject to a reinvestment right permitting the Borrower to reinvest such proceeds in productive assets of the business within 365 days of receipt (with an additional 180-day extension if the Borrower has entered into a binding commitment to reinvest within the initial 365-day period);
(b) Debt Issuance Proceeds: 100% of Net Cash Proceeds from any incurrence of Indebtedness (other than Indebtedness constituting Permitted Refinancing Indebtedness or Indebtedness otherwise expressly permitted under the Credit Agreement); and
(c) Excess Cash Flow Sweep: 50% of Excess Cash Flow (as defined in the Credit Agreement) for any fiscal year in which the Total Net Leverage Ratio as of the last day of such fiscal year exceeds 2.50 to 1.00. The Excess Cash Flow sweep steps down to 25% when the Total Net Leverage Ratio is between 2.00x and 2.50x and is eliminated entirely when the Total Net Leverage Ratio is at or below 2.00x.
2. Amendment — IPO Proceeds Treatment
The Amendment addresses the treatment of IPO proceeds under the mandatory prepayment provisions in several respects.
First, the Amendment provides that net cash proceeds received by the Borrower from a Qualified IPO are not subject to the mandatory prepayment obligation under clause (b) of Section 2.11. This clarification, while arguably unnecessary (given that equity issuance proceeds do not constitute "Indebtedness" and therefore should not be captured by a mandatory prepayment trigger tied to debt issuance proceeds), was included at the request of AHT's management team to eliminate any ambiguity. The Amendment affirmatively states that proceeds from any issuance of Equity Securities, including proceeds from a Qualified IPO, do not constitute "Net Cash Proceeds" of an "incurrence of Indebtedness" for purposes of Section 2.11(b) and are therefore not subject to mandatory prepayment.
Second, and separately from the mandatory prepayment provisions, AHT has voluntarily committed, as disclosed in the "Use of Proceeds" section of the prospectus included in the Registration Statement on Form S-1, to use a portion of the net proceeds from the IPO to repay the approximately $65,000,000 currently outstanding under the revolving credit facility. It is important to note that this repayment is entirely voluntary in nature; it is not a mandatory prepayment under the Credit Agreement, and the Company could, in theory, choose not to make such repayment (although it has publicly committed to doing so in its SEC filings). The voluntary nature of the repayment preserves the Company's flexibility and avoids any implication that the Credit Agreement compels the use of equity proceeds for debt repayment.
Third, the Amendment expressly confirms that voluntary prepayments of outstanding revolving loans from proceeds of a Qualified IPO may be made at any time without payment of any prepayment penalty, premium, make-whole amount, or similar charge. While the Original Credit Agreement already permitted voluntary prepayment of revolving loans without penalty (subject to customary SOFR breakage costs for prepayments made on dates other than the last day of an interest period), the Amendment includes this express confirmation as a belt-and-suspenders measure to ensure that no dispute can arise regarding the terms of the IPO-related facility repayment.
Fourth, with respect to the mechanics of the repayment, per diem interest calculations and the exact payoff amount will be confirmed through a customary payoff letter to be issued by Keypoint National Bank, N.A. in its capacity as Administrative Agent in advance of the anticipated closing date of the IPO. We currently anticipate that the closing of the IPO will occur in approximately mid-February 2024, and we have requested that Keypoint prepare and deliver the payoff letter no later than two business days prior to the anticipated closing date. The payoff letter will specify the outstanding principal balance, accrued and unpaid interest (calculated through the expected repayment date), any applicable SOFR breakage costs, any other amounts due and owing under the Credit Agreement, and wire transfer instructions for remittance.
3. Lien Release Mechanics
Upon repayment of the approximately $65,000,000 outstanding balance, the security interest and liens granted under the Security Agreement in favor of the Administrative Agent and the Lender Parties will remain in full force and effect. The Facility is not being terminated as part of the IPO; rather, the revolving commitments will continue to be available for future borrowings by the Company on the terms set forth in the Credit Agreement as amended.
However, the Amendment includes a clarifying provision regarding lien release mechanics that will apply in the event the Company determines at some future date to terminate the Facility in its entirety. Specifically, the Amendment provides that if (i) the revolving commitments under the Credit Agreement are subsequently terminated in full by the Borrower and (ii) all Obligations (as defined in the Credit Agreement, including all outstanding principal, accrued interest, fees, expenses, and other amounts) are indefeasibly paid in full in cash, then the Administrative Agent shall, at the Borrower's sole cost and expense, promptly (and in any event within ten (10) business days following receipt of a written request from the Borrower) execute and deliver to the Borrower (or its designee):
(a) UCC-3 termination statements with respect to all UCC-1 financing statements filed in connection with the Security Agreement;
(b) releases and terminations of any intellectual property security agreements or other IP-related lien filings made with the United States Patent and Trademark Office or the United States Copyright Office;
(c) such other lien release, discharge, or termination documents as the Borrower may reasonably request to evidence the termination of the Administrative Agent's security interest in the Collateral; and
(d) the return of any stock certificates, promissory notes, or other instruments or documents held by the Administrative Agent as Collateral.
This lien release provision is a standard belt-and-suspenders addition that provides a clear contractual mechanism for unwinding the security arrangements in the event the Facility is terminated post-IPO.
D. Conforming Updates to Events of Default (Section 4 of the Amendment)
1. Change of Control Event of Default
Section 8.01(j) of the Original Credit Agreement provides that the occurrence of a "Change of Control" (as defined in the Credit Agreement) constitutes an Event of Default, entitling the Administrative Agent (at the direction of the Required Lenders) to declare all outstanding Obligations immediately due and payable and to terminate the revolving commitments. This is a standard "hair trigger" provision in credit agreements of this type — the occurrence of a Change of Control automatically gives rise to acceleration rights without any notice or cure period.
Because the Change of Control definition has been amended as described in Section III.A above to include the Qualified IPO carve-out, the consummation of AHT's IPO will not constitute a Change of Control under the Credit Agreement and therefore will not trigger the Event of Default under Section 8.01(j). No separate or additional modification to Section 8.01(j) itself was required; the conforming effect is achieved through the definitional amendment.
No other changes to the Events of Default provision were requested by any party or made in connection with the Amendment. All other Events of Default set forth in Section 8.01 of the Original Credit Agreement — including Events of Default arising from payment defaults, covenant breaches, misrepresentations, cross-defaults, insolvency events, judgment defaults, ERISA events, and invalidity of loan documents — remain in full force and effect without modification.
2. Cross-Default and Material Adverse Effect
The Amendment does not modify the cross-default provisions set forth in Section 8.01(e) of the Original Credit Agreement, which provide that a default under any other Indebtedness of the Borrower or its Subsidiaries in a principal amount exceeding $5,000,000 constitutes an Event of Default under the Credit Agreement. AHT has confirmed that no such cross-default exists or is reasonably expected to arise in connection with the IPO.
Similarly, the Amendment does not modify the "Material Adverse Effect" definition set forth in Section 1.01 of the Original Credit Agreement, which is used in various representations, covenants, and default provisions throughout the agreement. However, the Amendment includes an express acknowledgment by the Lender Parties that the following events and circumstances, taken individually or in the aggregate, shall not be deemed to constitute or give rise to a "Material Adverse Effect" for purposes of the Credit Agreement:
(a) AHT's execution and delivery of the Underwriting Agreement and related IPO transaction documents (including the Registration Statement, the prospectus, the lock-up agreements, and the listing application);
(b) the issuance and sale of shares of common stock in the IPO (including overallotment shares);
(c) the resulting changes in AHT's capitalization, including the dilution of pre-IPO stockholders;
(d) the adoption and filing of AHT's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws in connection with the IPO;
(e) changes in AHT's corporate governance structure, including the classification of the Board of Directors, the appointment of independent directors, and the establishment of Board committees (audit, compensation, and nominating and corporate governance) required for NYSE listing; and
(f) the Company's transition to a public reporting company subject to the periodic reporting and disclosure requirements of the Exchange Act and the rules and regulations of the SEC.
This acknowledgment provides additional certainty that the operational and structural changes inherent in an IPO will not be used as a basis for claiming a Material Adverse Effect under the Credit Agreement.
E. Representations and Warranties; Conditions Precedent to Amendment Effectiveness
1. Bring-Down of Representations
As a condition precedent to the effectiveness of the Amendment, AHT was required to deliver to the Administrative Agent a certificate signed by an authorized officer of the Company certifying that all representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects as of January 18, 2024 (the date of the Amendment), with the same effect as though made on such date. This bring-down requirement is subject to the customary exception for representations and warranties that by their terms speak as of a specific earlier date (e.g., representations regarding financial statements as of the most recent fiscal year-end), which are required to be true and correct in all material respects as of such earlier date. The Company delivered the required officer's certificate on January 18, 2024, signed by David Halderman in his capacity as Chief Financial Officer.
2. No Default
AHT was further required to certify, as an additional condition to effectiveness, that no Default or Event of Default (each as defined in the Credit Agreement) has occurred and is continuing as of the date of the Amendment, or would result from the execution, delivery, and performance of the Amendment. The officer's certificate delivered on January 18, 2024 included this certification. Based on our review of the Company's compliance reports and our discussions with AHT's management team, we have no reason to believe that any Default or Event of Default exists as of the date hereof.
3. Board Authorization
AHT has represented in the Amendment that its Board of Directors (acting through the Finance and Audit Committee, an authorized committee thereof) has duly authorized the execution, delivery, and performance of the Amendment, and that the officer executing the Amendment on behalf of the Company has been duly authorized to do so. This authorization is consistent with, and was effected as part of, the broader set of Board resolutions adopted on January 15, 2024 authorizing the IPO and all related actions, including the filing of the Registration Statement, the execution of the Underwriting Agreement, and the adoption of the 2024 Equity Incentive Plan and 2024 Employee Stock Purchase Plan. We have reviewed copies of the relevant Board resolutions and are satisfied that proper corporate authorization has been obtained.
4. Delivery of Amendment Documents
The Amendment was duly executed and delivered by all three parties — AHT (as Borrower), Keypoint National Bank, N.A. (as Administrative Agent), and Stonemill Capital Bank (as Lender) — on January 18, 2024. The Amendment became effective upon execution and delivery by all parties. Executed copies of the Amendment are maintained in the Calderwood & Harkness document management system and in the transaction closing binder.
IV. Impact on IPO Timeline and Closing Mechanics
The execution date of the Amendment (January 18, 2024) was selected to ensure that the Amendment was fully effective before two critical milestones in the IPO process: (i) the public filing of the Registration Statement on Form S-1 with the SEC on January 22, 2024, and (ii) the commencement of the IPO roadshow on January 29, 2024. By securing the Amendment in advance of these events, the Company was able to disclose the Amendment as a completed action in the Registration Statement, rather than describing it as a pending or anticipated modification. This approach eliminates any potential investor uncertainty regarding the status of the Company's credit facility and demonstrates to potential investors and the SEC staff that the Company has proactively addressed the credit agreement issues arising from the IPO.
The First Amendment to Credit Agreement is disclosed as a material contract in the Registration Statement and is filed as Exhibit 10.14 to the Form S-1. The description of the Credit Agreement in the "Description of Indebtedness" section of the prospectus has been updated to reflect the amendments effected by the Amendment, including the Qualified IPO carve-out, the permitted equity issuance exception, and the clarification of mandatory prepayment treatment.
At the closing of the IPO (currently expected to occur in approximately mid-February 2024, subject to SEC review of the Registration Statement and market conditions), AHT will use a portion of the net proceeds from the offering to repay the approximately $65,000,000 outstanding revolving balance under the Credit Agreement. The mechanics of this repayment will be governed by the payoff letter to be issued by Keypoint National Bank, N.A. in advance of the closing date, which will specify the following:
•  The exact principal balance outstanding as of the anticipated repayment date;
•  Accrued and unpaid interest through the repayment date, calculated on a per diem basis;
•  Any applicable SOFR breakage costs (if the repayment does not coincide with the last day of the applicable interest period);
•  Any outstanding fees, expenses, or other amounts due and owing under the Credit Agreement or related loan documents; and
•  Wire transfer instructions for remittance of the payoff amount to the Administrative Agent.
We have coordinated with Rachel Moynihan (General Counsel, AHT) and David Halderman (CFO, AHT) regarding the timeline for obtaining and executing the payoff letter, and we will ensure that the payoff letter is received and reviewed by the Calderwood & Harkness team no later than two business days prior to the anticipated closing date.
For context, the anticipated net proceeds to the Company from the base offering (after deducting the underwriting discount of 6.0%, or $24,000,000 based on $400,000,000 in gross proceeds at the midpoint of the anticipated price range, and estimated offering expenses of approximately $4,200,000) are expected to be approximately $371,800,000. This amount is more than sufficient to cover the revolving facility repayment and to fund the Company's other disclosed uses of proceeds, which include:
•  Repayment of the revolving credit facility: approximately $65,000,000;
•  Product development and R&D investment (including expansion of the Arbor Clinical Analytics Platform and development of next-generation AI/ML-powered diagnostic tools): approximately $120,000,000;
•  Potential acquisitions and strategic investments (including bolt-on acquisitions in the healthcare IT and data analytics sectors): approximately $100,000,000; and
•  General corporate purposes and working capital: the balance of net proceeds (approximately $86,800,000).
If the overallotment option is exercised in full, additional net proceeds of approximately $55,770,000 (based on 3,000,000 overallotment shares at $19.00 per share, less the 6.0% underwriting discount) would be available for general corporate purposes.
V. Items Requiring Continued Attention
The following action items remain outstanding and will require attention from the Calderwood & Harkness deal team in the coming weeks:
1.  Payoff Letter. Obtain the final payoff letter from Keypoint National Bank, N.A. with wire instructions no later than two (2) business days prior to the anticipated closing date of the IPO. Coordinate with Rachel Moynihan (General Counsel, AHT) and David Halderman (CFO, AHT) regarding execution and delivery of the payoff letter and arrangement of the wire transfer.
2.  Closing Checklist. Confirm that the repayment of the revolving balance under the Credit Agreement is reflected on the IPO closing checklist as a condition and/or deliverable. Ensure that the repayment is sequenced appropriately in the closing funds flow memorandum.
3.  Financial Covenant Monitoring. Continue to monitor AHT's compliance with the financial covenants under the Credit Agreement (Total Net Leverage Ratio not to exceed 3.50x; Fixed Charge Coverage Ratio not less than 1.25x) through the closing date and in the first post-IPO quarterly testing period (the fiscal quarter ending March 31, 2024). While the Company is currently in a strong compliance position, the IPO-related expenses and any changes in the Company's cash position should be modeled to confirm ongoing compliance.
4.  Tax Coordination. Coordinate with Sylvia Hartwell of the Calderwood & Harkness Tax Group regarding the tax treatment of interest payments made on the revolving credit facility and the repayment of the outstanding balance from IPO proceeds. A separate C&H Tax Memorandum titled "Use of Proceeds — Tax Treatment of Credit Facility Repayment" is being prepared by the Tax Group and will be circulated under separate cover.
5.  Registration Statement Filings. Confirm that the executed First Amendment has been properly filed as Exhibit 10.14 to the Registration Statement on Form S-1. Review the "Description of Indebtedness" section and all other references to the Credit Agreement in the prospectus to ensure consistency with the terms of the Credit Agreement as amended by the Amendment.
6.  Underwriters' Counsel Review. Confirm that Meridian Hale & Quivorn LLP (counsel to the underwriters) has completed its review of the Amendment for purposes of its closing deliverables, including the underwriters' counsel legal opinion and the 10b-5 negative assurance letter. Follow up with the Meridian Hale team to confirm that no issues or comments have been raised with respect to the Amendment.
VI. Conclusion
The First Amendment to Credit Agreement dated January 18, 2024, among Arbor Health Technologies Inc., Keypoint National Bank, N.A., and Stonemill Capital Bank, successfully addresses the principal credit agreement issues arising from AHT's proposed initial public offering of common stock on the New York Stock Exchange.
The key modifications effected by the Amendment — specifically, the "Qualified IPO" carve-out from the Change of Control definition, the permitted equity issuance exception for IPO shares, overallotment shares, and equity compensation plan shares, the clarification that equity proceeds are not subject to mandatory prepayment and that voluntary prepayment from IPO proceeds may be made without penalty, and the conforming updates to the Events of Default provisions — collectively ensure that AHT can proceed with the IPO and the related issuance and sale of common stock without breaching the Credit Agreement or triggering an Event of Default or acceleration of the outstanding indebtedness.
The financial covenants under the Credit Agreement remain unchanged, and AHT is in satisfactory compliance with both the Total Net Leverage Ratio covenant and the Fixed Charge Coverage Ratio covenant based on the Company's audited FY2023 financial results.
Following the closing of the IPO and the anticipated repayment of the approximately $65,000,000 outstanding balance, the $150,000,000 revolving credit facility will remain available to the Company as a post-IPO liquidity source through its March 15, 2027 maturity date. The Facility provides AHT with meaningful financial flexibility as it transitions to life as a public company and pursues the growth initiatives described in the Registration Statement.
A copy of the executed First Amendment is maintained in the Calderwood & Harkness document management system and in the transaction closing binder (Binder Tab 14). Please direct any questions regarding this memorandum or the Amendment to the undersigned.
Appendix A — Summary Table of Amendment Provisions
Appendix B — Key Parties and Contact Information
Distribution: Theodore Langston, Vivienne St. Claire, Claire Dempsey, Sylvia Hartwell (Calderwood & Harkness internal only)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — NOT FOR EXTERNAL DISTRIBUTION
This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP in connection with its representation of Arbor Health Technologies Inc. This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for use by the persons to whom it is addressed and should not be disclosed, copied, or distributed to any other person or entity without the prior written consent of the undersigned.
Amendment Section | Original Provision | Amended Provision | Rationale
Section 1 — Change of Control | "Change of Control" includes any person or group acquiring beneficial ownership of more than 35% of outstanding Voting Stock; no exception for IPO transactions | Adds express exclusion for any "Qualified IPO" (defined as an underwritten IPO on a national securities exchange resulting in gross proceeds of at least $200,000,000); carve-out applies provided no single new stockholder or group acquires 35% or more in the offering | Prevents the IPO from triggering a Change of Control and the resulting Event of Default and acceleration rights under the Credit Agreement
Section 2 — Permitted Equity Issuances | Equity issuances restricted; require Administrative Agent consent except for limited carve-outs for employee equity compensation plans (up to 5% of fully diluted shares) and acquisition consideration (with Agent consent) | Adds carve-out for (i) shares issued in a Qualified IPO (base offering), (ii) shares issued pursuant to underwriter overallotment option (up to 15% of base offering), and (iii) shares issued under the 2024 Equity Incentive Plan (10,300,000 shares) and 2024 ESPP (2,060,000 shares) | Permits IPO share issuance and post-IPO equity compensation without prior Administrative Agent consent
Section 3 — Mandatory Prepayment | Mandatory prepayment required from 100% of net cash proceeds of debt issuances, 100% of asset disposition proceeds (above $10M threshold, subject to reinvestment), and 50% of Excess Cash Flow (when leverage exceeds 2.50x) | Clarifies that equity issuance proceeds (including Qualified IPO proceeds) are not subject to any mandatory prepayment trigger; confirms voluntary prepayment from IPO proceeds may be made without penalty or premium | Ensures IPO proceeds are freely deployable for disclosed uses of proceeds; facilitates voluntary facility repayment at closing
Section 4 — Events of Default | Occurrence of a Change of Control constitutes an Event of Default with immediate acceleration rights | Conforms to the amended Change of Control definition; acknowledges that IPO-related events do not constitute a Material Adverse Effect | Prevents the IPO from triggering an Event of Default under the Credit Agreement
Party | Role | Key Contact(s) | Address
Arbor Health Technologies Inc. | Borrower | Rachel Moynihan, General Counsel; David Halderman, Chief Financial Officer | 275 Kendall Avenue, Suite 1400, Cambridge, MA 02142
Keypoint National Bank, N.A. | Administrative Agent | Margaret Chen, Senior Vice President, Leveraged Finance Group | 200 Public Square, Cleveland, OH 44114
Stonemill Capital Bank | Lender / Syndicate Member | Jonathan Frick, Managing Director, Healthcare Lending | 140 Broadway, New York, NY 10005
Calderwood & Harkness LLP | Borrower's Counsel | Theodore Langston, Partner; Eric Johannsen, Associate | 125 Broad Street, New York, NY 10004
Meridian Hale & Quivorn LLP | Underwriters' Counsel | Katherine Reeves, Partner | 60 Ashbury Asset Advisors, Boston, MA 02109

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1010-00002

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