FIRST AMENDMENT TO CREDIT AGREEMENT
dated as of
January 18, 2024
among
ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation, as Borrower,
KEYPOINT NATIONAL BANK, NATIONAL ASSOCIATION, as Administrative Agent,
and
STONEMILL CAPITAL BANK, as Lender
FIRST AMENDMENT TO CREDIT AGREEMENT
January 18, 2024
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of January 18, 2024, by and among ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation (the "Borrower"), KEYPOINT NATIONAL BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lender (in such capacity, together with its successors and assigns in such capacity, the "Administrative Agent"), and STONEMILL CAPITAL BANK, as a lender (the "Lender," and together with the Administrative Agent and the Borrower, the "Parties").
RECITALS
A. The Borrower, the Administrative Agent, and the Lender are parties to that certain Credit Agreement dated as of March 15, 2022 (as in effect immediately prior to the effectiveness of this Amendment, the "Existing Credit Agreement"), pursuant to which the Lender has made available to the Borrower a senior secured revolving credit facility in an aggregate principal amount of One Hundred Fifty Million Dollars ($150,000,000) (the "Revolving Credit Facility"). As of the date hereof, the Existing Credit Agreement provides for borrowings under the Revolving Credit Facility at an interest rate equal to the Secured Overnight Financing Rate ("SOFR") plus 200 basis points per annum, with a stated maturity date of March 15, 2027. The Existing Credit Agreement requires the Borrower to maintain (i) a Total Net Leverage Ratio not to exceed 3.50 to 1.00, tested as of the last day of each fiscal quarter, and (ii) a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00, tested as of the last day of each fiscal quarter, in each case on a trailing four-quarter basis.
B. The Borrower has informed the Administrative Agent and the Lender that it intends to conduct an initial public offering of shares of its common stock, par value $0.001 per share (the "Common Stock"), on the New York Stock Exchange (the "Proposed IPO" or the "IPO"). In connection therewith, the Borrower has confidentially submitted a draft Registration Statement on Form S-1 (SEC File No. 333-276841) to the United States Securities and Exchange Commission (the "SEC") and intends to file publicly in connection with the Proposed IPO. The Borrower anticipates that the gross proceeds from the Proposed IPO will be at least Two Hundred Million Dollars ($200,000,000). The Borrower desires to amend the Existing Credit Agreement to (i) revise the definition of "Change of Control" in Section 1.01 of the Existing Credit Agreement to exclude the Proposed IPO and related transactions from the events constituting a Change of Control, (ii) add a permitted equity issuance carve-out for the IPO and related equity compensation plans, and (iii) update the mandatory prepayment provisions of the Existing Credit Agreement to address the application of proceeds received from the IPO to the prepayment of outstanding Revolving Loans.
C. The Administrative Agent and the Lender have agreed to amend the Existing Credit Agreement on the terms and subject to the conditions set forth herein. The Borrower has engaged Calderwood & Harkness LLP as its counsel in connection with the IPO and the negotiation of this Amendment, and the Administrative Agent has been represented by its own counsel in the negotiation and preparation of this Amendment.
D. Capitalized terms used and not otherwise defined in this Amendment shall have the meanings assigned to such terms in the Existing Credit Agreement, as amended hereby (the "Credit Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
The following new definitions are hereby added to Section 1.01 of the Existing Credit Agreement in the appropriate alphabetical order:
"Amendment Effective Date" means January 18, 2024, the date on which the First Amendment to this Agreement becomes effective in accordance with Article V thereof.
"Equity Issuance" means any issuance by the Borrower of shares of its Common Stock, preferred stock, or other equity interests, or any securities convertible into or exchangeable for equity interests of the Borrower, in each case for cash consideration. For the avoidance of doubt, "Equity Issuance" does not include (a) the issuance of equity interests upon the exercise, conversion, or exchange of any securities that were themselves issued in a prior Equity Issuance or Permitted Equity Issuance, or (b) any stock split, stock dividend, or reclassification of existing equity interests that does not involve the receipt of cash consideration by the Borrower.
"IPO" means the initial public offering by the Borrower of shares of its Common Stock, par value $0.001 per share, pursuant to an effective registration statement on Form S-1 filed with the SEC under the Securities Act of 1933, as amended (the "Securities Act"), in connection with the listing of such shares on the New York Stock Exchange or another nationally recognized securities exchange approved by the Administrative Agent.
"IPO Closing Date" means the date on which the closing of the IPO occurs and the Borrower receives the net proceeds thereof, as evidenced by the delivery of the IPO Closing Notice in substantially the form of Exhibit B attached to the First Amendment.
"IPO Net Proceeds" means the aggregate gross proceeds received by the Borrower from the sale of shares of Common Stock in the IPO (including any proceeds from the exercise of any Overallotment Option granted to the underwriters in connection with the IPO), less (a) the underwriting discounts and commissions paid or payable to the underwriters in connection therewith and (b) all other reasonable and documented fees, costs, and expenses incurred by the Borrower in connection with the IPO (including, without limitation, legal fees, accounting fees, printing costs, SEC registration fees, Financial Industry Regulatory Authority ("FINRA") filing fees, and stock exchange listing fees). For the avoidance of doubt, IPO Net Proceeds shall be calculated separately for the base offering and for any exercise of the Overallotment Option, and the aggregate of such amounts shall constitute the total IPO Net Proceeds.
"Net Equity Proceeds" means, with respect to any Equity Issuance (other than the IPO), the aggregate cash proceeds received by the Borrower from such Equity Issuance, net of (a) underwriting discounts, commissions, and placement agent fees actually paid or payable by the Borrower in connection therewith, and (b) all other reasonable and documented out-of-pocket fees and expenses incurred by the Borrower in connection therewith, in each case to the extent such amounts are paid or payable to Persons who are not Affiliates of the Borrower.
"Overallotment Option" means the option granted by the Borrower to the underwriters in the IPO to purchase additional shares of Common Stock (not to exceed 15% of the base number of shares offered in the IPO) at the IPO price per share, less the applicable underwriting discount, exercisable within thirty (30) days following the pricing of the IPO, all as set forth in the underwriting agreement entered into in connection with the IPO.
"Permitted Equity Issuance" means any of the following: (a) the IPO, including the issuance of shares of Common Stock upon the exercise of the Overallotment Option; (b) any issuance of shares of Common Stock or options, restricted stock units, performance stock units, or other equity awards to employees, officers, directors, or consultants of the Borrower or any of its Subsidiaries pursuant to equity incentive plans or employee stock purchase plans approved by the Borrower's Board of Directors (or a committee thereof), including the 2024 Equity Incentive Plan, the 2024 Employee Stock Purchase Plan, and the 2014 Stock Incentive Plan; (c) any issuance of shares of Common Stock upon the exercise of options or the settlement of restricted stock units, performance stock units, or other equity awards outstanding under equity incentive plans described in clause (b) above; and (d) any other Equity Issuance approved in writing by the Administrative Agent (acting at the direction of the Required Lenders).
"Qualified IPO" means an IPO resulting in aggregate gross proceeds to the Borrower (before deduction of underwriting discounts and expenses) of at least Two Hundred Million Dollars ($200,000,000) and the listing of the Borrower's Common Stock on the New York Stock Exchange or the Nasdaq Stock Market.
"Registration Statement" means the Registration Statement on Form S-1 (SEC File No. 333-276841) filed or to be filed by the Borrower with the SEC in connection with the IPO, including all amendments and supplements thereto (including each pre-effective amendment and each post-effective amendment), the documents incorporated by reference therein, and the prospectus (including any preliminary prospectus and any final prospectus filed pursuant to Rule 424(b) under the Securities Act) included or deemed included therein.
Section 1.2 — Amended Definitions
(a) The definition of "Change of Control" set forth in Section 1.01 of the Existing Credit Agreement is hereby deleted in its entirety and replaced with the amended and restated definition set forth in Section 2.1 of this Amendment.
(b) The definition of "Permitted Indebtedness" set forth in Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following new clause at the end thereof:
"; and (k) obligations under the underwriting agreement entered into in connection with the IPO or any Qualified IPO, to the extent such obligations constitute commitments to sell shares of Common Stock and do not represent Indebtedness for borrowed money. For the avoidance of doubt, no Permitted Equity Issuance shall give rise to Indebtedness or be deemed to constitute Permitted Indebtedness."
(c) Except as expressly amended by this Section 1.2, all definitions set forth in Section 1.01 of the Existing Credit Agreement shall remain in full force and effect.
ARTICLE II — AMENDMENTS TO THE EXISTING CREDIT AGREEMENT
Section 2.1 — Amendment to "Change of Control" Definition (Section 1.01 of the Existing Credit Agreement)
The definition of "Change of Control" in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of all classes of voting stock of the Borrower then outstanding; provided, however, that the following shall not constitute a Change of Control:
(i) the consummation of the IPO or any Qualified IPO (including the exercise of any Overallotment Option in connection therewith) and the related issuance and sale of shares of Common Stock to the public and to the underwriters;
(ii) any acquisition of beneficial ownership by any Person or group of Persons resulting solely from the IPO or a Qualified IPO, including by public stockholders acquiring shares of Common Stock in the open market or through secondary market transactions following the IPO;
(iii) any change in the relative voting power of existing stockholders of the Borrower (including, without limitation, Brindoval Trelvon Partners Fund IV, L.P., Ridgeline Growth Equity Fund III, LLC, Dr. Nathaniel Rourke, Margaret Tsujimoto, and any other existing holder of equity interests) resulting solely from the dilution occasioned by the issuance of new shares of Common Stock in the IPO or any Qualified IPO; and
(iv) any Permitted Equity Issuance (as defined herein);
(b) the Borrower merges with or into or consolidates with another Person, or any Person merges with or into or consolidates with the Borrower, in a single transaction or a series of related transactions, and, as a result of such merger or consolidation, the Persons who constituted the stockholders of the Borrower immediately prior thereto do not hold, directly or indirectly, at least 50% of the total voting power of all classes of voting stock of the surviving or resulting entity immediately following the consummation of such merger or consolidation;
(c) the Borrower sells, assigns, conveys, transfers, leases, or otherwise disposes of (whether in one transaction or a series of related transactions) all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, to any Person other than a wholly owned Subsidiary of the Borrower; or
(d) the adoption of a plan relating to the liquidation or dissolution of the Borrower.
For the avoidance of doubt, the Parties acknowledge and agree that the IPO (including the exercise of the Overallotment Option and any post-IPO dilution of existing holders such as Brindoval Trelvon Partners Fund IV, L.P. and Ridgeline Growth Equity Fund III, LLC) is expressly carved out from the definition of Change of Control, and the consummation of the IPO and the transactions contemplated thereby shall not constitute a Change of Control or give rise to any right of the Administrative Agent or the Lender to declare a Default or Event of Default under the Credit Agreement.
Section 2.2 — Amendment to Section 7.05 (Mandatory Prepayments)
Section 7.05 of the Existing Credit Agreement (Mandatory Prepayments) is hereby amended by adding the following new subsection (d) immediately following the existing subsection (c) thereof:
"(d) Equity Issuance Prepayment.
(i) IPO Proceeds. On or prior to the fifth (5th) Business Day following the IPO Closing Date, the Borrower shall prepay the outstanding Revolving Loans in an aggregate principal amount equal to the lesser of (A) the then-outstanding principal amount of all Revolving Loans as of the IPO Closing Date and (B) the IPO Net Proceeds received by the Borrower in connection with the base offering (excluding, for purposes of this clause (i), any proceeds from the exercise of the Overallotment Option, which shall be addressed in clause (iii) below); provided, however, that the Borrower shall not be required to prepay pursuant to this clause (i) in excess of the aggregate outstanding principal amount of the Revolving Loans as of the IPO Closing Date; and provided, further, that any such prepayment shall be made without premium or penalty (other than customary SOFR breakage costs, if applicable, in connection with the prepayment of any SOFR Loan on a day other than the last day of the applicable Interest Period).
(ii) Application. Any mandatory prepayment made pursuant to this subsection (d) shall be applied to outstanding Revolving Loans in the inverse order of maturity. Each such mandatory prepayment shall permanently reduce the Revolving Commitments by an amount equal to the amount so prepaid, unless the Administrative Agent and the Required Lenders otherwise agree in writing. Notwithstanding the foregoing, the Revolving Commitments shall not be permanently reduced if the Borrower prepays the Revolving Loans in full from IPO Net Proceeds and the Borrower delivers a written request to maintain the Revolving Credit Facility to the Administrative Agent within five (5) Business Days after such prepayment. In such event, the Revolving Commitments shall remain in full force and effect at their existing aggregate committed amount, and the Borrower may re-borrow under the Revolving Credit Facility in accordance with the terms and conditions of the Credit Agreement, subject to the satisfaction of all applicable conditions precedent to borrowings set forth herein and in the Credit Agreement.
(iii) Overallotment Proceeds. If the underwriters exercise the Overallotment Option in whole or in part after the IPO Closing Date, then within five (5) Business Days following the receipt by the Borrower of the net proceeds attributable to such exercise of the Overallotment Option, the Borrower shall apply such proceeds in accordance with clauses (i) and (ii) of this subsection (d) to the extent any Revolving Loans remain outstanding at such time. If no Revolving Loans are then outstanding at the time of such receipt, no further prepayment shall be required under this clause (iii), and the Borrower may retain such proceeds for general corporate purposes, subject to the other provisions of the Credit Agreement.
(iv) Other Equity Issuances. With respect to any Equity Issuance (other than a Permitted Equity Issuance), the Borrower shall, on or prior to the fifth (5th) Business Day following receipt of the Net Equity Proceeds from such Equity Issuance, prepay outstanding Revolving Loans in an aggregate principal amount equal to 50% of such Net Equity Proceeds; provided that such prepayment obligation shall not exceed the aggregate outstanding principal amount of the Revolving Loans at the time of such prepayment. Any such prepayment shall be applied in the manner set forth in clause (ii) above."
The Parties acknowledge that, as of the Amendment Effective Date, the outstanding principal balance of the Revolving Loans is approximately Sixty-Five Million Dollars ($65,000,000), and it is the intention of the Borrower that such outstanding balance be repaid from IPO Net Proceeds on or promptly following the IPO Closing Date in accordance with this Section 2.2.
Section 2.3 — Amendment to Section 7.01 (Voluntary Prepayments)
Section 7.01 of the Existing Credit Agreement (Voluntary Prepayments) is hereby amended by adding the following proviso at the end of the existing text thereof:
"; provided, further, that, for the avoidance of doubt, any voluntary prepayment of the Revolving Loans made from the proceeds of the IPO or any Qualified IPO shall be permitted at any time without premium or penalty (other than customary SOFR breakage costs, if applicable, in connection with the prepayment of any SOFR Loan on a day other than the last day of the applicable Interest Period) and shall not permanently reduce the Revolving Commitments unless the Borrower elects to do so by delivering written notice to the Administrative Agent specifying the amount by which the Revolving Commitments are to be permanently reduced."
Section 2.4 — Amendment to Section 8.06 (Restricted Payments)
Section 8.06 of the Existing Credit Agreement (Restricted Payments) is hereby amended by adding a new clause (f) immediately following the existing clause (e) thereof as follows:
"(f) IPO-Related Payments. Notwithstanding anything to the contrary contained in this Section 8.06, the Borrower may make Restricted Payments solely to the extent necessary to pay (i) all reasonable and documented fees, costs, and expenses incurred in connection with the IPO, including, without limitation, underwriting discounts and commissions payable to Whitfield Barrow & Co., LLC, Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., Pemberton Wallis LLC, and any other underwriters party to the underwriting agreement, legal fees (including fees payable to Calderwood & Harkness LLP as issuer's counsel and Meridian Hale & Quivorn LLP as underwriters' counsel), accounting fees (including fees payable to Kellerman & Associates LLP as the Borrower's independent registered public accounting firm), SEC registration fees, FINRA filing fees, New York Stock Exchange listing fees, transfer agent and registrar fees, printing costs, and other customary transaction expenses directly related to the consummation of the IPO, and (ii) any required tax payments arising from or in connection with equity compensation events related to the IPO, including, without limitation, tax withholding obligations arising from the vesting or settlement of restricted stock units, the exercise of stock options, or other equity compensation events triggered by or occurring in connection with the IPO."
Section 2.5 — Amendment to Section 8.09 (Equity Issuances; Permitted Equity Issuances)
A new Section 8.09 is hereby added to Article VIII of the Existing Credit Agreement as follows:
"Section 8.09 — Equity Issuances. The Borrower shall not issue any equity interests or securities convertible into or exchangeable for equity interests of the Borrower, except for Permitted Equity Issuances. For the avoidance of doubt:
(a) The IPO is a Permitted Equity Issuance, and the issuance by the Borrower of up to 20,000,000 shares of Common Stock in the base offering and up to 3,000,000 additional shares of Common Stock upon exercise of the Overallotment Option in connection with the IPO is hereby consented to and approved by the Administrative Agent and the Lender.
(b) The issuance of shares of Common Stock pursuant to the following equity compensation plans of the Borrower constitutes Permitted Equity Issuances:
(I) the Borrower's 2024 Equity Incentive Plan, under which 10,300,000 shares of Common Stock have been reserved for issuance, with an annual evergreen provision providing for automatic annual increases equal to 3% of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year (or such lesser number of shares as determined by the Borrower's Board of Directors);
(II) the Borrower's 2024 Employee Stock Purchase Plan, under which 2,060,000 shares of Common Stock have been reserved for issuance; and
(III) the Borrower's 2014 Stock Incentive Plan, under which 11,200,000 shares of Common Stock have been granted (of which approximately 8,400,000 shares have vested as of the Amendment Effective Date), including shares subject to outstanding stock options, restricted stock units, and other equity awards.
(c) The filing and effectiveness of the Registration Statement, the execution and delivery by the Borrower of an underwriting agreement with Whitfield Barrow & Co., LLC (as representative of the several underwriters named therein), Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., and Pemberton Wallis LLC, and the consummation of the transactions contemplated thereby, shall not constitute a breach of any covenant or provision of the Credit Agreement or any other Loan Document."
Section 2.6 — Amendment to Section 6.01 (Financial Covenants — Total Net Leverage Ratio)
Section 6.01(a) of the Existing Credit Agreement (Total Net Leverage Ratio) is hereby amended by adding the following proviso at the end of the existing text thereof:
"; provided, that, notwithstanding the foregoing, for purposes of calculating the Total Net Leverage Ratio as of the last day of the fiscal quarter ending March 31, 2024, and the fiscal quarter ending June 30, 2024, unrestricted cash proceeds received by the Borrower from the IPO (including any proceeds received from the exercise of the Overallotment Option) and remaining on the Borrower's consolidated balance sheet as of the applicable measurement date shall be netted against Consolidated Total Indebtedness in computing the Total Net Leverage Ratio. For the avoidance of doubt, the required maximum Total Net Leverage Ratio shall remain at 3.50 to 1.00 as set forth herein, and this proviso does not amend or modify the maximum permitted ratio."
Section 2.7 — Amendment to Section 6.01 (Financial Covenants — Fixed Charge Coverage Ratio)
Section 6.01(b) of the Existing Credit Agreement (Fixed Charge Coverage Ratio) is hereby amended by adding the following proviso at the end of the existing text thereof:
"; provided, that, for the avoidance of doubt, IPO Net Proceeds applied to the prepayment of Revolving Loans pursuant to Section 7.05(d) hereof shall be included as Fixed Charges for purposes of calculating the Fixed Charge Coverage Ratio for the applicable measurement period. The required minimum Fixed Charge Coverage Ratio shall remain at 1.25 to 1.00 as set forth herein, and this proviso does not amend or modify the minimum permitted ratio."
Section 2.8 — Amendment to Section 9.01 (Events of Default)
Section 9.01 of the Existing Credit Agreement (Events of Default) is hereby amended as follows:
(a) Clause (h) (Change of Control) of Section 9.01 is hereby amended by deleting the reference to the prior definition of "Change of Control" and replacing it with a reference to the amended and restated definition of "Change of Control" set forth in Section 2.1 of this Amendment, such that the consummation of the IPO, the issuance and sale of shares of Common Stock in connection therewith (including upon exercise of the Overallotment Option), and the related dilution of existing stockholders shall not constitute an Event of Default under the Credit Agreement.
(b) A new clause (m) is hereby added to Section 9.01 of the Existing Credit Agreement immediately following the existing clause (l) thereof as follows:
"(m) Failure to Apply IPO Proceeds. The failure of the Borrower to apply IPO Net Proceeds (including net proceeds from the exercise of the Overallotment Option, if applicable) to the mandatory prepayment of Revolving Loans in accordance with Section 7.05(d) within the time periods specified therein, and such failure shall continue unremedied for a period of three (3) Business Days after the date on which such prepayment was required to be made."
Section 2.9 — Amendment to Reporting Covenants (Section 7.02)
Section 7.02 of the Existing Credit Agreement (Reporting Covenants) is hereby amended by adding the following new clauses immediately following the existing clause (i) thereof:
"(j) Effective Registration Statement. Promptly (and in any event within two (2) Business Days) upon the effectiveness of the Registration Statement as declared effective by the SEC, a copy of the Registration Statement as so declared effective (including the final prospectus filed pursuant to Rule 424(b) under the Securities Act), which may be delivered by providing the Administrative Agent with a link to the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) on which such documents have been filed.
(k) IPO Closing Notice. Within three (3) Business Days following the IPO Closing Date, a written notice to the Administrative Agent in substantially the form of Exhibit B attached to the First Amendment (the "IPO Closing Notice"), setting forth (i) the IPO Closing Date, (ii) the aggregate gross proceeds from the IPO (base offering), (iii) the IPO Net Proceeds (base offering), (iv) the number of shares of Common Stock sold in the base offering, (v) the price per share at which such shares were sold to the public, (vi) the underwriting discount per share, and (vii) the intended application of proceeds, including the aggregate amount to be applied to the mandatory prepayment of the Revolving Loans pursuant to Section 7.05(d) hereof.
(l) Overallotment Exercise Notice. Within three (3) Business Days following the exercise of the Overallotment Option (if any), whether in whole or in part, a written notice to the Administrative Agent in substantially the form of Exhibit C attached to the First Amendment (the "Overallotment Exercise Notice"), setting forth the number of additional shares of Common Stock sold upon such exercise, the aggregate gross proceeds from the exercise of the Overallotment Option, the net proceeds received by the Borrower therefrom, and the settlement date for such additional shares.
(m) Underwriting Agreement. Within ten (10) Business Days following the IPO Closing Date, a copy of the fully executed underwriting agreement entered into between the Borrower and the underwriters in connection with the IPO."
ARTICLE III — REPRESENTATIONS AND WARRANTIES
Section 3.1 — Representations and Warranties of the Borrower
The Borrower hereby represents and warrants to the Administrative Agent and the Lender that, as of the Amendment Effective Date, the following statements are true and correct:
(a) Organization and Good Standing. The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Borrower is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect. The Borrower's principal place of business is located at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142. The Borrower's federal employer identification number is 47-3891205.
(b) Authorization; Enforceability. The execution, delivery, and performance by the Borrower of this Amendment and the transactions contemplated hereby (including, without limitation, the amendments to the Existing Credit Agreement set forth herein) have been duly authorized by all necessary corporate action on the part of the Borrower, including the approval of the Board of Directors of the Borrower. No approval, consent, or authorization of, or filing, registration, or qualification with, any governmental authority or other Person is required in connection with the execution, delivery, and performance of this Amendment by the Borrower, other than filings with the SEC in connection with the IPO. This Amendment has been duly executed and delivered by the Borrower and constitutes a legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(c) No Conflict. The execution, delivery, and performance by the Borrower of this Amendment and the consummation of the transactions contemplated hereby do not and will not (i) violate or conflict with the certificate of incorporation (as it may be amended and restated in connection with the IPO) or bylaws (as it may be amended and restated in connection with the IPO) of the Borrower, (ii) violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award applicable to the Borrower or any of its Subsidiaries, (iii) result in a breach of, or constitute a default under, any material agreement, indenture, mortgage, deed of trust, instrument, or other obligation to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any of its properties is bound, or (iv) result in the creation or imposition of any lien, charge, encumbrance, or security interest on any property or assets of the Borrower or any of its Subsidiaries (other than liens in favor of the Administrative Agent under the Collateral Documents).
(d) No Default. No Default or Event of Default has occurred and is continuing as of the Amendment Effective Date, or would result from the execution and delivery of this Amendment and the consummation of the transactions contemplated hereby. The Borrower is in compliance with all covenants and obligations under the Existing Credit Agreement and each of the other Loan Documents.
(e) Representations in Credit Agreement. Each of the representations and warranties made by the Borrower in Article IV of the Existing Credit Agreement and in each of the other Loan Documents is true and correct in all material respects as of the Amendment Effective Date (or, to the extent such representations and warranties expressly relate to a specific earlier date, as of such earlier date), except that (i) references to financial statements in the Existing Credit Agreement shall be deemed to refer to the most recent financial statements delivered to the Administrative Agent pursuant to Section 7.02 of the Existing Credit Agreement, and (ii) any representation or warranty that is qualified by materiality, Material Adverse Effect, or similar language shall be true and correct in all respects as so qualified.
(f) IPO-Related Representations. The Borrower has confidentially submitted a draft Registration Statement on Form S-1 (SEC File No. 333-276841, CIK No. 0001987432) to the SEC in connection with the Proposed IPO. The Borrower intends to publicly file the Registration Statement and to list its Common Stock on the New York Stock Exchange under the ticker symbol "ARHT." The Borrower represents that the Proposed IPO is expected to constitute a Qualified IPO as defined herein. The Borrower has selected Whitfield Barrow & Co., LLC to serve as lead book-running manager for the IPO, with Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., and Pemberton Wallis LLC serving as additional book-running managers. The Borrower has engaged Calderwood & Harkness LLP as issuer's counsel and Kellerman & Associates LLP as its independent registered public accounting firm in connection with the IPO.
(g) Capitalization. As of the Amendment Effective Date and immediately prior to giving effect to the IPO, the authorized capital stock of the Borrower consists of 120,000,000 shares of Common Stock, par value $0.001 per share, of which 80,000,000 shares are issued and outstanding. The principal pre-IPO stockholders and their respective ownership interests are as follows:
All outstanding shares of Common Stock have been duly authorized, validly issued, fully paid, and non-assessable. Except for the equity compensation plans described in Section 2.5 of this Amendment and the shares to be issued in the IPO, there are no outstanding options, warrants, rights, or agreements obligating the Borrower to issue additional shares of its capital stock.
(h) Outstanding Balance. As of the Amendment Effective Date, the outstanding principal balance of the Revolving Loans under the Revolving Credit Facility is approximately Sixty-Five Million Dollars ($65,000,000). The Borrower is current on all interest payments and other obligations under the Existing Credit Agreement.
ARTICLE IV — CONDITIONS PRECEDENT
Section 4.1 — Conditions to Effectiveness of this Amendment
This Amendment shall become effective on the date (the "Amendment Effective Date") on which each of the following conditions precedent has been satisfied (or waived by the Administrative Agent and the Lender):
(a) Executed Counterparts. The Administrative Agent shall have received duly executed counterparts of this Amendment from each of the Borrower, the Administrative Agent, and the Lender, each in form and substance satisfactory to the Administrative Agent.
(b) Secretary's Certificate. The Administrative Agent shall have received a certificate of the Secretary or Assistant Secretary of the Borrower (Rachel Moynihan, General Counsel and Corporate Secretary), in substantially the form of Exhibit D attached hereto, certifying (i) the resolutions of the Board of Directors of the Borrower duly authorizing the execution, delivery, and performance of this Amendment and the consummation of the transactions contemplated hereby, (ii) the incumbency, authority, and specimen signatures of the officers of the Borrower authorized to execute and deliver this Amendment on behalf of the Borrower (including David Halderman, Chief Financial Officer), and (iii) that the certificate of incorporation and bylaws of the Borrower, as attached to such certificate, are true, complete, and correct copies of such documents and are in full force and effect as of the date of such certificate.
(c) Good Standing Certificate. The Administrative Agent shall have received a certificate of good standing (or equivalent certificate) of the Borrower issued by the Secretary of State of the State of Delaware, dated no earlier than January 10, 2024.
(d) Representations and Warranties. The representations and warranties set forth in Article III hereof and in each of the other Loan Documents shall be true and correct in all material respects as of the Amendment Effective Date (or, to the extent such representations and warranties expressly relate to a specific earlier date, as of such earlier date), and the Administrative Agent shall have received a certificate of an authorized officer of the Borrower to such effect.
(e) No Default. No Default or Event of Default shall have occurred and be continuing as of the Amendment Effective Date or would result from the execution and delivery of this Amendment.
(f) Fees and Expenses. The Administrative Agent shall have received payment of all fees and expenses due and payable to it and the Lender in connection with this Amendment, including the reasonable and documented legal fees and out-of-pocket expenses of counsel to the Administrative Agent incurred in connection with the preparation, negotiation, execution, and delivery of this Amendment.
(g) Registration Statement Evidence. The Borrower shall have delivered to the Administrative Agent reasonably satisfactory evidence that a confidential draft Registration Statement on Form S-1 has been submitted to the SEC, or that such submission is imminent (which evidence may include a copy of the acknowledgment of receipt from the SEC's Division of Corporation Finance or a certification by an authorized officer of the Borrower).
ARTICLE V — LIEN RELEASE PROVISIONS
Section 5.1 — Confirmation of Security Interest; Lien Release upon Prepayment
(a) Confirmation. The Borrower hereby confirms that the security interests and liens granted by the Borrower in favor of the Administrative Agent (for the benefit of the Lender) pursuant to the Security Agreement dated as of March 15, 2022, the Pledge Agreement, and all other Collateral Documents delivered in connection with the Existing Credit Agreement (collectively, the "Collateral Documents") remain in full force and effect and continue to secure all Obligations (as defined in the Credit Agreement) of the Borrower under the Credit Agreement, as amended by this Amendment, including all outstanding Revolving Loans, all accrued and unpaid interest, all fees, and all other amounts payable thereunder. The Borrower acknowledges and agrees that nothing in this Amendment shall be deemed to release, terminate, or impair any security interest or lien in favor of the Administrative Agent or the Lender.
(b) Lien Release upon Full Prepayment. Upon the indefeasible prepayment in full in cash of all outstanding Revolving Loans and the permanent reduction of the Revolving Commitments to zero, the cash collateralization (or backstop in the form of an irrevocable standby letter of credit, in form and substance satisfactory to the Administrative Agent) of all outstanding Letters of Credit (if any), and the payment in full of all other Obligations then due and payable under the Credit Agreement, the Administrative Agent shall, at the Borrower's written request and sole cost and expense, promptly (and in any event within fifteen (15) Business Days of such request) execute and deliver to the Borrower, or authorize the Borrower to file, such UCC-3 termination statements, lien releases, mortgage releases, intellectual property lien releases, and other instruments and documents as may be reasonably necessary to evidence the release of the security interests and liens securing the Obligations; provided, however, that if the Revolving Commitments remain in effect after such prepayment (as contemplated by Section 2.2(ii) of this Amendment), the security interests and liens granted under the Collateral Documents shall continue in full force and effect and shall continue to secure any future borrowings and all other Obligations under the Revolving Credit Facility, and no lien release shall be required or delivered. The Borrower shall provide the Administrative Agent with payoff instructions and wire transfer details at least two (2) Business Days prior to the anticipated prepayment date to facilitate the orderly processing of such prepayment.
(c) Release Documentation. In the event a lien release is required pursuant to clause (b) above, the Administrative Agent shall not be required to execute or deliver any release documentation until it has received (i) a written certification from the Borrower confirming that all Obligations have been paid in full and all Revolving Commitments have been permanently terminated, (ii) such indemnification as the Administrative Agent may reasonably request, and (iii) reimbursement for all costs and expenses (including reasonable attorneys' fees) incurred in connection with the preparation and delivery of such release documentation.
ARTICLE VI — COVENANTS; POST-CLOSING OBLIGATIONS
Section 6.1 — IPO Covenant
The Borrower hereby covenants and agrees with the Administrative Agent and the Lender as follows:
(a) Commercially Reasonable Efforts. The Borrower shall use commercially reasonable efforts to consummate the IPO within one hundred eighty (180) days following the Amendment Effective Date. In the event the IPO is not consummated within such 180-day period, the Borrower shall promptly notify the Administrative Agent in writing and shall provide the Administrative Agent with a reasonably detailed explanation of the reasons for the delay and the Borrower's revised timeline for the consummation of the IPO. The failure to consummate the IPO within such 180-day period shall not, in and of itself, constitute a Default or Event of Default, but the amendments to the Existing Credit Agreement set forth in Article II hereof (other than the amendments to the "Change of Control" definition in Section 2.1 and the reporting covenants in Section 2.9) shall, at the election of the Administrative Agent (acting at the direction of the Required Lenders), cease to be effective if the IPO has not been consummated within 270 days following the Amendment Effective Date.
(b) IPO Progress Notifications. The Borrower shall promptly notify the Administrative Agent in writing of each of the following events, in each case within two (2) Business Days of the occurrence thereof: (i) the public filing of the Registration Statement with the SEC, (ii) the receipt of any comment letters from the SEC staff with respect to the Registration Statement and the filing of any amendments or supplements to the Registration Statement in response thereto, (iii) the effectiveness of the Registration Statement as declared by the SEC, (iv) the pricing of the IPO (including the price per share and the number of shares to be sold), (v) the closing of the IPO, and (vi) any exercise of the Overallotment Option (whether in whole or in part).
(c) Underwriting Agreement. The Borrower shall deliver to the Administrative Agent, promptly upon execution (and in any event within five (5) Business Days of execution), a true, complete, and correct copy of the underwriting agreement entered into between the Borrower and the underwriters in connection with the IPO, together with any amendments or supplements thereto.
(d) Application of Proceeds. The Borrower shall apply IPO Net Proceeds in accordance with the mandatory prepayment provisions of Section 7.05(d) of the Credit Agreement (as amended hereby). The Borrower shall not use IPO Net Proceeds for any purpose other than (i) the mandatory prepayment of Revolving Loans as required by Section 7.05(d), (ii) the payment of fees, costs, and expenses incurred in connection with the IPO as permitted by Section 8.06(f) of the Credit Agreement (as amended hereby), and (iii) general corporate purposes (after satisfaction of the mandatory prepayment obligation), unless the Administrative Agent otherwise consents in writing.
Section 6.2 — Post-IPO Reporting
Following the consummation of the IPO, the Borrower shall comply with all reporting and disclosure obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC promulgated thereunder, and shall deliver (or make available) to the Administrative Agent copies of the following documents, concurrently with (or promptly following) their filing with the SEC:
(a) all annual reports on Form 10-K filed with the SEC;
(b) all quarterly reports on Form 10-Q filed with the SEC;
(c) all current reports on Form 8-K filed with the SEC;
(d) all proxy statements or information statements filed with the SEC in connection with any meeting of stockholders; and
(e) any other material filings made by the Borrower with the SEC.
Delivery of such documents may be satisfied by providing the Administrative Agent with notice that such documents have been filed on the SEC's EDGAR system, together with a link to the applicable filing. The Borrower's obligation to deliver such documents under this Section 6.2 is in addition to, and not in limitation of, the Borrower's reporting obligations under Section 7.02 of the Credit Agreement.
Section 6.3 — Post-Closing Delivery of Amended and Restated Certificate of Incorporation
Within five (5) Business Days following the closing of the IPO, the Borrower shall deliver to the Administrative Agent a certified copy of its Amended and Restated Certificate of Incorporation as filed with the Secretary of State of the State of Delaware in connection with the IPO, which Amended and Restated Certificate of Incorporation shall reflect authorized capital of 400,000,000 shares of Common Stock, par value $0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per share. The Borrower shall also deliver a copy of its Amended and Restated Bylaws as adopted in connection with the IPO, certified by the Secretary or Assistant Secretary of the Borrower.
ARTICLE VII — MISCELLANEOUS
Section 7.1 — Effect of Amendment
Except as expressly modified, amended, or supplemented by this Amendment, all of the terms, covenants, conditions, and provisions of the Existing Credit Agreement and each of the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. The Existing Credit Agreement, as amended by this Amendment, is hereby ratified, approved, and confirmed. On and after the Amendment Effective Date, each reference in the Existing Credit Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Existing Credit Agreement as amended by this Amendment. Each reference in the other Loan Documents to the "Credit Agreement" or words of like import shall mean and be a reference to the Existing Credit Agreement as amended by this Amendment.
Section 7.2 — No Novation
This Amendment is not intended to be, and shall not be construed as, a novation of the Existing Credit Agreement or any of the other Loan Documents. The obligations of the Borrower under the Existing Credit Agreement and each of the other Loan Documents, as modified by this Amendment, are not extinguished, released, or discharged but continue in full force and effect as modified hereby. Without limiting the generality of the foregoing, the security interests and liens granted by the Borrower pursuant to the Collateral Documents shall continue unimpaired and shall remain in full force and effect.
Section 7.3 — Reaffirmation of Guarantees and Security
The Borrower hereby unconditionally and irrevocably reaffirms all of its obligations under the Security Agreement dated as of March 15, 2022, any Guaranty delivered in connection with the Existing Credit Agreement, and all other Loan Documents to which the Borrower is a party, and confirms that such obligations extend to and cover all Obligations under the Credit Agreement as amended by this Amendment, including any Revolving Loans made after the Amendment Effective Date. The Borrower acknowledges and agrees that the Collateral Documents and all liens and security interests created thereunder continue in full force and effect, and the Collateral (as defined in the Security Agreement) continues to secure all Obligations under the Credit Agreement as amended hereby.
Section 7.4 — Governing Law
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 7.5 — Jurisdiction; Waiver of Jury Trial
(a) Submission to Jurisdiction. Each party hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the City of New York, and the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Amendment, the Credit Agreement, or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such United States federal court.
(b) Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY) ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.5(b).
Section 7.6 — Counterparts; Electronic Execution
This Amendment may be executed in any number of counterparts (and by different parties hereto in different counterparts), each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic transmission (including by portable document format (PDF) or any electronic signature complying with the U.S. federal ESIGN Act of 2000, the Uniform Electronic Transactions Act, or any other relevant electronic signatures law) shall be effective as delivery of a manually executed original counterpart of this Amendment.
Section 7.7 — Successors and Assigns
This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns in accordance with the terms of the Credit Agreement. No party may assign or transfer any of its rights or obligations hereunder except in accordance with the provisions of the Credit Agreement governing assignments and participations.
Section 7.8 — Severability
If any provision of this Amendment is held to be illegal, invalid, or unenforceable by any court of competent jurisdiction, such provision shall be fully severable, and this Amendment shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof. The remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by such illegal, invalid, or unenforceable provision or by its severance herefrom. In lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as part of this Amendment a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible.
Section 7.9 — Entire Agreement
This Amendment, together with the Existing Credit Agreement (as amended hereby) and the other Loan Documents, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, agreements, and understandings (whether written or oral) of the parties with respect to such subject matter. There are no promises, covenants, or undertakings other than those expressly set forth or referred to herein and in the Credit Agreement and the other Loan Documents.
Section 7.10 — Expenses
The Borrower agrees to pay, promptly upon demand, all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and the Lender in connection with the preparation, negotiation, execution, and delivery of this Amendment and the consummation of the transactions contemplated hereby, including the reasonable fees, charges, and disbursements of counsel to the Administrative Agent (including allocated costs of in-house counsel). The obligations of the Borrower under this Section 7.10 shall survive the termination of this Amendment and the repayment of all Obligations under the Credit Agreement.
Section 7.11 — Headings
The headings of the articles, sections, and subsections used in this Amendment are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Amendment.
Section 7.12 — Notices
All notices, requests, demands, consents, and other communications required or permitted hereunder shall be in writing and shall be delivered in accordance with Section 11.01 of the Existing Credit Agreement, with the following notice addresses:
If to the Borrower:
Arbor Health Technologies Inc. 275 Kendall Avenue, Suite 1400 Cambridge, Massachusetts 02142
Attention: Rachel Moynihan, General Counsel & Corporate Secretary
Telephone: (617) 555-0184
Email: rmoynihan@arborhealth.com
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 125 Broad Street New York, New York 10004
Attention: Theodore Langston, Esq.
Telephone: (212) 555-0267
Email: tlangston@calderwoodharkness.com
If to the Administrative Agent:
Keypoint National Bank, National Association 200 Public Square Cleveland, Ohio 44114
Attention: Credit Administration — Syndicated Lending Group
Telephone: (216) 555-0391
Email: creditadmin@keypointnational.com
If to the Lender:
Stonemill Capital Bank 140 Broadway New York, New York 10005
Attention: Loan Administration
Telephone: (212) 555-0445
Email: loanadmin@stonemillcapital.com
Any party may change its address for notices by providing written notice of such change to the other parties in accordance with this Section 7.12.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Credit Agreement to be duly executed and delivered by their respective authorized officers as of the date first above written.
ARBOR HEALTH TECHNOLOGIES INC., as Borrower
By: ________
Name: David Halderman
Title: Chief Financial Officer
Date: ________
KEYPOINT NATIONAL BANK, NATIONAL ASSOCIATION, as Administrative Agent
By: ________
Name: ________
Title: ________
Date: ________
STONEMILL CAPITAL BANK, as Lender
By: ________
Name: ________
Title: ________
Date: ________
EXHIBIT A
AMENDED DEFINITIONS
(Marked to Show Changes from Existing Credit Agreement)
The following definitions in Section 1.01 of the Credit Agreement are hereby amended and restated as indicated below. Deletions from the Existing Credit Agreement are shown with and additions are shown with .